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
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(Address of principal executive offices) (Zip code)
Vincent M. Marra
Senior Vice President
AIG SunAmerica Asset Management Corp.
Harborside Financial Center,
3200 Plaza 5
Jersey City, NJ 07311
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(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6464
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Date of fiscal year end: September 30
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Date of reporting period: September 30, 2006
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Item 1. Reports to Stockholders
SunAmerica 2006
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[PHOTO]
Annual Report
[GRAPHIC]
Equity Funds
[LOGO] AIG SunAmerica
Mutual Funds
September 30, 2006 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)
SunAmerica International Small-Cap Fund
Table of Contents
SHAREHOLDER LETTER.......................................................... 2
EXPENSE EXAMPLE............................................................. 3
STATEMENT OF ASSETS AND LIABILITIES......................................... 6
STATEMENT OF OPERATIONS..................................................... 10
STATEMENT OF CHANGES IN NET ASSETS.......................................... 13
FINANCIAL HIGHLIGHTS........................................................ 18
PORTFOLIO OF INVESTMENTS.................................................... 28
NOTES TO FINANCIAL STATEMENTS............................................... 65
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM..................... 88
APPROVAL OF ADVISORY AGREEMENTS............................................. 89
TRUSTEE AND OFFICER INFORMATION............................................. 93
SHAREHOLDER TAX INFORMATION................................................. 95
COMPARISONS: FUNDS vs. INDEXES.............................................. 97
Shareholder Letter
Dear Shareholder:
We are pleased to present the annual report for the SunAmerica Equity Funds for
the fiscal period ending September 30, 2006. While the fiscal year provided
numerous investment challenges, domestic equity indices posted gains across the
board.
During the first half of the fiscal period, oil prices remained high, but the
primary focus for investors during the period was the outlook for U.S. and
global interest rates, which had risen at gradual and manageable pace. Overall,
the economic data was balanced with low unemployment, healthy corporate
profits, and subdued inflation. All the major domestic and international stock
indices posted positive returns during the first half of the fiscal period. In
general, the moderate-growth, low inflationary period was a very constructive
environment for stocks.
As the mid-point of the annual period approached, corporate profits remained
healthy but several challenges were emerging in response to higher energy
prices and interest rates. Inflationary concerns, decelerating growth, and
uncertainty over the direction of monetary policy resulted in negative equity
performance during the third fiscal quarter.
Chairman Bernanke began his tenure as Federal Reserve Chairman in February by
signaling that future Federal Funds rate increases would be data dependent --
which the markets interpreted as signaling a pause and perhaps the end of the
tightening cycle. However in May, the Chairman began making comments that
inflationary pressures were present and that future rate increases might be
necessary. The equity markets were unsettled by this lack of clarity. Equities
tumbled across the board during the third fiscal quarter as investors became
more concerned about even higher energy prices and its potential impact on
inflation. Following this sell-off the market traded in a sideways pattern for
most of the late-spring and early-summer months.
The uncertainty was clarified during the final quarter, as a pause in the
Federal Reserve's tightening cycle occurred along with a slide in oil prices
which helped lift U.S. equities to their highest levels of the year. After 17
consecutive interest rate increases (and a cumulative 425 basis point
increase), the Federal Open Market Committee (FOMC) left rates unchanged at the
August meeting, thus prompting a sizeable equity market rally.
As a result of the strong results in the closing months of the annual period,
domestic equity indices rose across the board. In terms of major mutual fund
categories, value outperformed growth. Specifically, the Lipper Large Cap Value
index outpaced all others, advancing 11.99% for the fiscal period while it was
another challenging year for the Lipper Large Cap Growth segment which
appreciated 3.60%. International funds continued to post strong returns with
the Lipper International Fund category returning 22.33% for the period.
We at AIG SunAmerica Asset Management continue to work diligently to identify
opportunities to grow capital while keeping a keen eye on risk management. We
believe that our combination of quantitative tools and strong fundamental
research can achieve this dual objective. During the fiscal period three new
portfolio managers dedicated to this goal have joined our team, including John
Massey (co-head Large-Cap Equity Team), Jay Rushin (co-head Small-Cap Equity
Team), and Paul Ma (head of quantitative research team and structured
portfolios).
In addition to our commitment to bringing our investors strong risk-adjusted
performance, we continually seek to identify new investment opportunities that
can assist our investors in building diversified portfolios to achieve their
financial goals. The SunAmerica International Small-Cap Fund is one such
product that was introduced during the period. Managed by our affiliate, AIG
Global Investment Corp. (AIGGIC), this Fund has investment teams based in
Europe and Asia working to identify emerging companies that offer strong growth
potential.
Thank you for your continued investment in our Funds. We encourage you to visit
our website at www.sunamericafunds.com for more information.
Sincerely,
The SunAmerica Equity Funds Investment Professionals
AIG SunAmerica Asset Management Corp. AIG Global Investment Corp.
- ---------------------------
John Massey Allison Larkin Greg Parker Hans Danielsson
Steve Neimeth Brendan Voege Soraya Benitez
Paul Ma Ben Barrett Andy Sheridan
Jay Rushin Mike Beaulieu Sandra Salas
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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.
Funds distributed by AIG SunAmerica Capital Services, Inc.
2
SunAmerica Equity Funds
EXPENSE EXAMPLE -- September 30, 2006 -- (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
(loads) on purchase payments, contingent deferred sales charges, redemption
fees (applicable to International Equity Fund and International Small-Cap 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, 2006 and held until September 30, 2006.
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, 2006" to estimate the expenses you paid on your
account during this period. For shareholder accounts in classes other than
Class I and Class Z the "Expenses Paid During the six months ended September
30, 2006" 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, 2006"
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, 2006" 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
and Class Z the "Expenses Paid During the six months ended September 30, 2006"
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, 2006" column does not
include administrative fees that may apply to qualified retirement plan
accounts. See the Funds' prospectus and/or your retirement plan document for
full description of these fees. Had these fees been included, the "Expenses
Paid During the six months ended September 30, 2006" 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 and International Small-Cap Fund only); small
account fees and administrative fees, if applicable to your account. Please
refer to the Fund's 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, 2006 -- (unaudited) (continued)
Actual Hypothetical
------------------------------------------ --------------------------------------------------------
Ending Account
Ending Account Expense Paid Value using
Value Using During the a Hypothetical Expense Paid Expense
Beginning Actual Period Beginning 5% Assumed During the Ratio
Account Value Return at Ended Account Value Return at Period Ended as of
at April 1, September 30, September 30, at April 1, September 30, September 30, September 30,
Fund 2006 2006 2006 2006 2006 2006 2006*
- ---- ------------- -------------- ------------- ------------- -------------- ------------- -------------
Blue Chip Growth Fund@
Class A#................... $1,000.00 $ 992.41 $ 7.74 $1,000.00 $1,017.30 $ 7.84 1.55%
Class B#................... $1,000.00 $ 989.35 $11.47 $1,000.00 $1,013.54 $11.61 2.30%
Class C#................... $1,000.00 $ 989.29 $11.72 $1,000.00 $1,013.29 $11.86 2.35%
Class I#................... $1,000.00 $ 993.74 $ 6.40 $1,000.00 $1,018.65 $ 6.48 1.28%
Growth Opportunities Fund@
Class A#................... $1,000.00 $ 961.63 $ 7.92 $1,000.00 $1,017.00 $ 8.14 1.61%
Class B#................... $1,000.00 $ 958.12 $11.29 $1,000.00 $1,013.54 $11.61 2.30%
Class C#................... $1,000.00 $ 958.07 $11.39 $1,000.00 $1,013.44 $11.71 2.32%
Class I#................... $1,000.00 $ 963.17 $ 6.25 $1,000.00 $1,018.70 $ 6.43 1.27%
New Century Fund@
Class A.................... $1,000.00 $ 956.30 $ 7.60 $1,000.00 $1,017.30 $ 7.84 1.55%
Class B.................... $1,000.00 $ 952.63 $10.92 $1,000.00 $1,013.89 $11.26 2.23%
Class C#................... $1,000.00 $ 952.85 $10.48 $1,000.00 $1,014.34 $10.81 2.14%
Growth and Income Fund@
Class A#................... $1,000.00 $1,042.70 $ 7.94 $1,000.00 $1,017.30 $ 7.84 1.55%
Class B#................... $1,000.00 $1,039.44 $11.35 $1,000.00 $1,013.94 $11.21 2.22%
Class C#................... $1,000.00 $1,038.65 $11.14 $1,000.00 $1,014.14 $11.01 2.18%
Class I#................... $1,000.00 $1,044.19 $ 6.71 $1,000.00 $1,018.50 $ 6.63 1.31%
Balanced Assets Fund@
Class A#................... $1,000.00 $1,031.48 $ 7.84 $1,000.00 $1,017.35 $ 7.79 1.54%
Class B#................... $1,000.00 $1,028.54 $11.24 $1,000.00 $1,013.99 $11.16 2.21%
Class C#................... $1,000.00 $1,028.50 $11.19 $1,000.00 $1,014.04 $11.11 2.20%
Class I#................... $1,000.00 $1,032.88 $ 6.52 $1,000.00 $1,018.65 $ 6.48 1.28%
International Equity Fund
Class A#................... $1,000.00 $1,028.57 $ 9.66 $1,000.00 $1,015.54 $ 9.60 1.90%
Class B#................... $1,000.00 $1,025.55 $12.95 $1,000.00 $1,012.28 $12.86 2.55%
Class C#................... $1,000.00 $1,025.57 $12.95 $1,000.00 $1,012.28 $12.86 2.55%
Class I#................... $1,000.00 $1,029.68 $ 9.16 $1,000.00 $1,016.04 $ 9.10 1.80%
Value Fund@
Class A#................... $1,000.00 $1,075.73 $ 8.48 $1,000.00 $1,016.90 $ 8.24 1.63%
Class B#................... $1,000.00 $1,071.56 $11.84 $1,000.00 $1,013.64 $11.51 2.28%
Class C#................... $1,000.00 $1,072.20 $11.84 $1,000.00 $1,013.64 $11.51 2.28%
Class I#................... $1,000.00 $1,076.35 $ 7.96 $1,000.00 $1,017.40 $ 7.74 1.53%
Class Z#................... $1,000.00 $1,078.25 $ 5.52 $1,000.00 $1,019.75 $ 5.37 1.06%
Biotech/Health Fund@
Class A#................... $1,000.00 $ 946.65 $ 7.56 $1,000.00 $1,017.30 $ 7.84 1.55%
Class B#................... $1,000.00 $ 944.50 $10.72 $1,000.00 $1,014.04 $11.11 2.20%
Class C#................... $1,000.00 $ 944.63 $10.72 $1,000.00 $1,014.04 $11.11 2.20%
Tax Managed Equity Fund@
Class A#................... $1,000.00 $ 935.71 $ 7.04 $1,000.00 $1,017.80 $ 7.33 1.45%
Class B#................... $1,000.00 $ 931.85 $10.17 $1,000.00 $1,014.54 $10.61 2.10%
Class C#................... $1,000.00 $ 932.64 $10.17 $1,000.00 $1,014.54 $10.61 2.10%
International Small-Cap Fund+
Class A#................... $1,000.00 $ 884.00 $ 7.45 $1,000.00 $1,015.54 $ 9.60 1.90%
Class B#................... $1,000.00 $ 881.60 $ 9.99 $1,000.00 $1,012.28 $12.86 2.55%
Class C#................... $1,000.00 $ 881.60 $ 9.99 $1,000.00 $1,012.28 $12.86 2.55%
- --------
* 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, except for the International Small-Cap Fund "Actual Return"
information which was multiplied by 152 days divided by 365. These ratios do
not reflect transaction costs, including sales charges on purchase payments,
contingent deferred sales charges, redemption fees (International Equity
Fund and International Small-Cap 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, 2006* and "Expense Ratios" would have been lower.
+ See Note 1
@ Through expense offset arrangements resulting from broker commission
recapture, a portion of the Fund's expenses have been reduced. Had the
expense reductions been applied, the Expense Example would have been as
follows:
4
SunAmerica Equity Funds
EXPENSE EXAMPLE -- September 30, 2006 -- (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,
Fund 2006 2006 2006 2006 2006 2006 2006*
- ---- ------------- -------------- ------------- ------------- -------------- ------------- -------------
Blue Chip Growth Fund
Class A#............... $1,000.00 $ 992.41 $ 7.64 $1,000.00 $1,017.40 $ 7.74 1.53%
Class B#............... $1,000.00 $ 989.35 $11.37 $1,000.00 $1,013.64 $11.51 2.28%
Class C#............... $1,000.00 $ 989.29 $11.62 $1,000.00 $1,013.39 $11.76 2.33%
Class I#............... $1,000.00 $ 993.74 $ 6.30 $1,000.00 $1,018.75 $ 6.38 1.26%
Growth Opportunities Fund
Class A#............... $1,000.00 $ 961.63 $ 7.47 $1,000.00 $1,017.45 $ 7.69 1.52%
Class B#............... $1,000.00 $ 958.12 $10.85 $1,000.00 $1,013.99 $11.16 2.21%
Class C#............... $1,000.00 $ 958.07 $10.95 $1,000.00 $1,013.89 $11.26 2.23%
Class I#............... $1,000.00 $ 963.17 $ 5.86 $1,000.00 $1,019.10 $ 6.02 1.19%
New Century Fund
Class A................ $1,000.00 $ 956.30 $ 7.55 $1,000.00 $1,017.35 $ 7.79 1.54%
Class B................ $1,000.00 $ 952.63 $10.87 $1,000.00 $1,013.94 $11.21 2.22%
Class C#............... $1,000.00 $ 952.85 $10.43 $1,000.00 $1,014.39 $10.76 2.13%
Growth and Income Fund
Class A#............... $1,000.00 $1,042.70 $ 7.83 $1,000.00 $1,017.40 $ 7.74 1.53%
Class B#............... $1,000.00 $1,039.44 $11.25 $1,000.00 $1,014.04 $11.11 2.20%
Class C#............... $1,000.00 $1,038.65 $11.04 $1,000.00 $1,014.24 $10.91 2.16%
Class I#............... $1,000.00 $1,044.19 $ 6.61 $1,000.00 $1,018.60 $ 6.53 1.29%
Balanced Assets Fund
Class A#............... $1,000.00 $1,031.48 $ 7.79 $1,000.00 $1,017.40 $ 7.74 1.53%
Class B#............... $1,000.00 $1,028.54 $11.19 $1,000.00 $1,014.04 $11.11 2.20%
Class C#............... $1,000.00 $1,028.50 $11.14 $1,000.00 $1,014.09 $11.06 2.19%
Class I#............... $1,000.00 $1,032.88 $ 6.47 $1,000.00 $1,018.70 $ 6.43 1.27%
Value Fund
Class A#............... $1,000.00 $1,075.73 $ 8.38 $1,000.00 $1,017.00 $ 8.14 1.61%
Class B#............... $1,000.00 $1,071.56 $11.74 $1,000.00 $1,013.74 $11.41 2.26%
Class C#............... $1,000.00 $1,072.20 $11.74 $1,000.00 $1,013.74 $11.41 2.26%
Class I#............... $1,000.00 $1,076.35 $ 7.86 $1,000.00 $1,017.50 $ 7.64 1.51%
Class Z#............... $1,000.00 $1,078.25 $ 5.42 $1,000.00 $1,019.85 $ 5.27 1.04%
Biotech/Health Fund
Class A#............... $1,000.00 $ 946.65 $ 7.37 $1,000.00 $1,017.50 $ 7.64 1.51%
Class B#............... $1,000.00 $ 944.50 $10.53 $1,000.00 $1,014.24 $10.91 2.16%
Class C#............... $1,000.00 $ 944.63 $10.53 $1,000.00 $1,014.24 $10.91 2.16%
Tax Managed Equity Fund
Class A#............... $1,000.00 $ 935.71 $ 6.75 $1,000.00 $1,018.10 $ 7.03 1.39%
Class B#............... $1,000.00 $ 931.85 $ 9.93 $1,000.00 $1,014.79 $10.35 2.05%
Class C#............... $1,000.00 $ 932.64 $ 9.88 $1,000.00 $1,014.84 $10.30 2.04%
5
SunAmerica Equity Funds
STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2006
Blue Chip Growth New
Growth Opportunities Century
Fund Fund Fund
------------ ------------- ------------
ASSETS:
Long-term investment securities, at value (unaffiliated)*................. $ 70,513,512 $ 56,841,358 $ 69,149,389
Short-term investment securities, at value (unaffiliated)*................ -- -- --
Repurchase agreements (cost equals market value).......................... 2,060,000 11,640,000 15,891,000
------------ ------------- ------------
Total investments....................................................... 72,573,512 68,481,358 85,040,389
------------ ------------- ------------
Cash...................................................................... 43 579 12
Foreign cash*............................................................. -- -- --
Receivable for:
Fund shares sold........................................................ 18,708 6,908 15,688
Dividends and interest.................................................. 45,001 9,157 31,832
Investments sold........................................................ 968,558 2,421,845 2,545,951
Prepaid expenses and other assets......................................... 8,789 33,329 6,852
Due from investment adviser for expense reimbursements/fee waivers........ 4,474 4,409 148
------------ ------------- ------------
Total Assets.............................................................. 73,619,085 70,957,585 87,640,872
------------ ------------- ------------
LIABILITIES:
Payable for:
Fund shares redeemed.................................................... 15,767 184,717 17,142
Investments purchased................................................... 1,175,176 1,927,961 2,400,950
Investment advisory and management fees................................. 44,163 42,435 52,067
Distribution and service maintenance fees............................... 32,289 36,299 29,250
Transfer agent fees and expenses........................................ 40,855 35,509 40,440
Trustees' fees and expenses............................................. 29,766 25,212 46,643
Other accrued expenses.................................................. 93,058 120,971 88,917
Interest on securities sold short....................................... -- -- --
Accrued foreign tax on capital gains.................................... -- -- --
Line of credit.......................................................... -- -- --
Due to investment adviser from expense recoupment......................... -- -- --
Due to custodian.......................................................... -- -- --
Securities sold short, at value#.......................................... -- -- --
------------ ------------- ------------
Total Liabilities......................................................... 1,431,074 2,373,104 2,675,409
------------ ------------- ------------
Net Assets................................................................ $ 72,188,011 $ 68,584,481 $ 84,965,463
============ ============= ============
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $.01 par value............................. $ 47,778 $ 42,573 $ 46,382
Paid-in capital........................................................... 141,730,146 271,135,777 176,300,165
------------ ------------- ------------
141,777,924 271,178,350 176,346,547
Accumulated undistributed net investment income (loss).................... (29,423) (25,397) (47,113)
Accumulated undistributed net realized gain (loss) on investments, futures
contracts, options contracts, securities sold short and foreign exchange
transactions............................................................. (72,355,101) (204,839,850) (93,576,049)
Unrealized appreciation (depreciation) on investments..................... 2,794,611 2,271,378 2,242,078
Unrealized foreign exchange gain (loss) on other assets and liabilities... -- -- --
Unrealized appreciation (depreciation) on securities sold short........... -- -- --
Accrued capital gains tax on unrealized appreciation (depreciation)....... -- --
------------ ------------- ------------
Net Assets.............................................................. $ 72,188,011 $ 68,584,481 $ 84,965,463
============ ============= ============
*Cost
Long-term investment securities (unaffiliated).......................... $ 67,718,901 $ 54,569,980 $ 66,907,311
============ ============= ============
Short-term investment securities (unaffiliated)......................... $ -- $ -- $ --
============ ============= ============
Foreign cash............................................................ $ -- $ -- $ --
============ ============= ============
#Proceeds from securities sold short...................................... $ -- $ -- $ --
============ ============= ============
Growth and Balanced
Income Assets
Fund Fund
------------ ------------
ASSETS:
Long-term investment securities, at value (unaffiliated)*................. $114,342,660 $163,729,011
Short-term investment securities, at value (unaffiliated)*................ -- --
Repurchase agreements (cost equals market value).......................... 2,319,000 1,893,000
------------ ------------
Total investments....................................................... 116,661,660 165,622,011
------------ ------------
Cash...................................................................... 138 412,806
Foreign cash*............................................................. -- --
Receivable for:
Fund shares sold........................................................ 49,242 4,809
Dividends and interest.................................................. 117,571 679,895
Investments sold........................................................ 3,180,677 3,077,085
Prepaid expenses and other assets......................................... 15,593 8,686
Due from investment adviser for expense reimbursements/fee waivers........ 5,042 9,758
------------ ------------
Total Assets.............................................................. 120,029,923 169,815,050
------------ ------------
LIABILITIES:
Payable for:
Fund shares redeemed.................................................... 125,066 328,559
Investments purchased................................................... 3,489,955 4,310,610
Investment advisory and management fees................................. 70,775 100,675
Distribution and service maintenance fees............................... 61,688 66,078
Transfer agent fees and expenses........................................ 56,919 88,300
Trustees' fees and expenses............................................. 39,229 81,591
Other accrued expenses.................................................. 104,601 148,655
Interest on securities sold short....................................... -- 1,938
Accrued foreign tax on capital gains.................................... -- --
Line of credit.......................................................... -- --
Due to investment adviser from expense recoupment......................... -- --
Due to custodian.......................................................... -- --
Securities sold short, at value#.......................................... -- 993,995
------------ ------------
Total Liabilities......................................................... 3,948,233 6,120,401
------------ ------------
Net Assets................................................................ $116,081,690 $163,694,649
============ ============
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $.01 par value............................. $ 88,942 $ 114,761
Paid-in capital........................................................... 159,018,069 235,672,558
------------ ------------
159,107,011 235,787,319
Accumulated undistributed net investment income (loss).................... (38,681) (88,894)
Accumulated undistributed net realized gain (loss) on investments, futures
contracts, options contracts, securities sold short and foreign exchange
transactions............................................................. (49,350,869) (78,874,255)
Unrealized appreciation (depreciation) on investments..................... 6,364,229 6,870,327
Unrealized foreign exchange gain (loss) on other assets and liabilities... -- --
Unrealized appreciation (depreciation) on securities sold short........... -- 152
Accrued capital gains tax on unrealized appreciation (depreciation)....... -- --
------------ ------------
Net Assets.............................................................. $116,081,690 $163,694,649
============ ============
*Cost
Long-term investment securities (unaffiliated).......................... $107,978,431 $156,858,684
============ ============
Short-term investment securities (unaffiliated)......................... $ -- $ --
============ ============
Foreign cash............................................................ $ -- $ --
============ ============
#Proceeds from securities sold short...................................... $ -- $ 994,147
============ ============
See Notes to Financial Statements
6
SunAmerica Equity Funds
STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2006 -- (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.................................................. $49,539,488 $37,381,560 $75,681,596 $61,872,175 $127,313,291
Shares of beneficial interest issued and outstanding........ 3,156,593 2,193,840 4,068,842 4,606,590 8,921,139
Net asset value and redemption price per share.............. $ 15.69 $ 17.04 $ 18.60 $ 13.43 $ 14.27
Maximum sales charge (5.75% of offering price).............. 0.96 1.04 1.13 0.82 0.87
----------- ----------- ----------- ----------- ------------
Maximum offering price to public............................ $ 16.65 $ 18.08 $ 19.73 $ 14.25 $ 15.14
=========== =========== =========== =========== ============
Class B (unlimited shares authorized):
Net assets.................................................. $17,478,987 $21,500,240 $ 7,527,659 $27,100,024 $ 20,463,840
Shares of beneficial interest issued and outstanding........ 1,254,043 1,423,492 462,090 2,142,878 1,438,297
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charge) $ 13.94 $ 15.10 $ 16.29 $ 12.65 $ 14.23
=========== =========== =========== =========== ============
Class C (unlimited shares authorized):
Net assets.................................................. $ 4,527,801 $ 9,280,902 $ 1,756,208 $26,821,138 $ 15,163,813
Shares of beneficial interest issued and outstanding........ 326,760 615,503 107,259 2,123,333 1,063,915
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charge) $ 13.86 $ 15.08 $ 16.37 $ 12.63 $ 14.25
=========== =========== =========== =========== ============
Class I (unlimited shares authorized):
Net assets.................................................. $ 641,735 $ 421,779 $ -- $ 288,353 $ 753,705
Shares of beneficial interest issued and outstanding........ 40,430 24,430 -- 21,407 52,740
Net asset value, offering and redemption price per share.... $ 15.87 $ 17.26 $ -- $ 13.47 $ 14.29
=========== =========== =========== =========== ============
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
7
SunAmerica Equity Funds
STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2006 -- (continued)
International Biotech/
Equity Value Health
Fund Fund Fund
------------- ------------ ------------
ASSETS:
Long-term investment securities, at value (unaffiliated)*............................ $114,415,546 $218,260,095 $ 21,349,753
Short-term investment securities, at value (unaffiliated)*........................... -- -- --
Repurchase agreements (cost equals market value)..................................... 399,000 8,402,000 1,978,000
------------ ------------ ------------
Total investments.................................................................. 114,814,546 226,662,095 23,327,753
------------ ------------ ------------
Cash................................................................................. 194 695 691
Foreign cash*........................................................................ 5,179,327 -- --
Receivable for:
Fund shares sold................................................................... 116,138 396,238 1,234
Dividends and interest............................................................. 210,721 285,224 3,080
Investments sold................................................................... 1,001,213 2,288,451 1,343,366
Prepaid expenses and other assets.................................................... 1,750 37,467 24,959
Due from investment adviser for expense reimbursements/fee waivers................... -- 10,045 4,320
------------ ------------ ------------
Total Assets......................................................................... 121,323,889 229,680,215 24,705,403
------------ ------------ ------------
LIABILITIES:
Payable for:
Fund shares redeemed............................................................... 290,141 328,063 36,887
Investments purchased.............................................................. 6,139,916 3,152,257 --
Investment advisory and management fees............................................ 93,749 181,790 15,235
Distribution and service maintenance fees.......................................... 54,895 99,914 14,480
Transfer agent fees and expenses................................................... 37,153 69,878 11,727
Trustees' fees and expenses........................................................ 17,866 31,423 5,669
Other accrued expenses............................................................. 125,865 112,121 73,143
Interest on securities sold short.................................................. -- -- --
Accrued foreign tax on capital gains............................................... -- -- --
Line of credit..................................................................... -- -- --
Due to investment adviser from expense recoupment.................................... 7,072 -- --
Due to custodian..................................................................... -- -- --
Securities sold short, at value#..................................................... -- -- --
------------ ------------ ------------
Total Liabilities.................................................................... 6,766,657 3,975,446 157,141
------------ ------------ ------------
Net Assets........................................................................... $114,557,232 $225,704,769 $ 24,548,262
============ ============ ============
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $.01 par value........................................ $ 74,079 $ 122,190 $ 27,754
Paid-in capital...................................................................... 124,123,469 182,599,198 56,067,666
------------ ------------ ------------
124,197,548 182,721,388 56,095,420
Accumulated undistributed net investment income (loss)............................... (116,139) 1,282,283 (4,308)
Accumulated undistributed net realized gain (loss) on investments, futures contracts,
options contracts, securities sold short and foreign exchange transactions.......... (19,159,587) 21,822,143 (31,585,950)
Unrealized appreciation (depreciation) on investments................................ 9,636,626 19,878,955 43,100
Unrealized foreign exchange gain (loss) on other assets and liabilities.............. (1,216) -- --
Unrealized appreciation (depreciation) on securities sold short...................... -- -- --
Accrued capital gains tax on unrealized appreciation (depreciation).................. -- -- --
------------ ------------ ------------
Net Assets......................................................................... $114,557,232 $225,704,769 $ 24,548,262
============ ============ ============
*Cost
Long-term investment securities (unaffiliated)..................................... $104,778,920 $198,381,140 $ 21,306,653
============ ============ ============
Short-term investment securities (unaffiliated).................................... $ $ -- $ --
============ ============ ============
Foreign cash....................................................................... $ 5,185,976 $ -- $ --
============ ============ ============
#Proceeds from securities sold short................................................. $ -- $ -- $ --
============ ============ ============
Tax Managed International
Equity Small-Cap
Fund Fund
------------ -------------
ASSETS:
Long-term investment securities, at value (unaffiliated)*............................ $ 56,934,113 $24,108,652
Short-term investment securities, at value (unaffiliated)*........................... -- 487,000
Repurchase agreements (cost equals market value)..................................... -- --
------------ -----------
Total investments.................................................................. 56,934,113 24,595,652
------------ -----------
Cash................................................................................. -- 671
Foreign cash*........................................................................ 23,880 831,614
Receivable for:
Fund shares sold................................................................... 74,063 104,834
Dividends and interest............................................................. 89,095 47,510
Investments sold................................................................... 6,632,560 299,739
Prepaid expenses and other assets.................................................... 15,698 --
Due from investment adviser for expense reimbursements/fee waivers................... 7,569 52,379
------------ -----------
Total Assets......................................................................... 63,776,978 25,932,399
------------ -----------
LIABILITIES:
Payable for:
Fund shares redeemed............................................................... 395,210 161,944
Investments purchased.............................................................. 4,048,538 140,609
Investment advisory and management fees............................................ 42,307 23,964
Distribution and service maintenance fees.......................................... 37,216 9,402
Transfer agent fees and expenses................................................... 15,548 9,727
Trustees' fees and expenses........................................................ 10,523 617
Other accrued expenses............................................................. 80,565 82,063
Interest on securities sold short.................................................. -- --
Accrued foreign tax on capital gains............................................... -- 149
Line of credit..................................................................... 367,927 --
Due to investment adviser from expense recoupment.................................... -- --
Due to custodian..................................................................... 6 --
Securities sold short, at value#..................................................... -- --
------------ -----------
Total Liabilities.................................................................... 4,997,840 428,475
------------ -----------
Net Assets........................................................................... $ 58,779,138 $25,503,924
============ ===========
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $.01 par value........................................ $ 45,986 $ 23,088
Paid-in capital...................................................................... 85,098,225 28,057,900
------------ -----------
85,144,211 28,080,988
Accumulated undistributed net investment income (loss)............................... (62,579) --
Accumulated undistributed net realized gain (loss) on investments, futures contracts,
options contracts, securities sold short and foreign exchange transactions.......... (29,275,809) (1,207,583)
Unrealized appreciation (depreciation) on investments................................ 2,973,455 (1,366,034)
Unrealized foreign exchange gain (loss) on other assets and liabilities.............. (140) (3,298)
Unrealized appreciation (depreciation) on securities sold short...................... -- --
Accrued capital gains tax on unrealized appreciation (depreciation).................. -- (149)
------------ -----------
Net Assets......................................................................... $ 58,779,138 $25,503,924
============ ===========
*Cost
Long-term investment securities (unaffiliated)..................................... $ 53,960,658 $25,474,686
============ ===========
Short-term investment securities (unaffiliated).................................... $ -- $ 487,000
============ ===========
Foreign cash....................................................................... $ 24,012 $ 834,116
============ ===========
#Proceeds from securities sold short................................................. $ -- $ --
============ ===========
See Notes to Financial Statements
8
SunAmerica Equity Funds
STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2006 -- (continued)
International Biotech/ Tax Managed International
Equity Value Health Equity Small-Cap
Fund Fund Fund Fund Fund
------------- ------------ ----------- ----------- -------------
Class A (unlimited shares authorized):
Net assets.................................................. $62,189,580 $121,729,287 $10,870,996 $22,553,575 $21,557,283
Shares of beneficial interest issued and outstanding........ 3,924,944 6,492,083 1,201,044 1,721,967 1,950,638
Net asset value and redemption price per share.............. $ 15.84 $ 18.75 $ 9.05 $ 13.10 $ 11.05
Maximum sales charge (5.75% of offering price).............. 0.97 1.14 0.55 0.80 0.67
----------- ------------ ----------- ----------- -----------
Maximum offering price to public............................ $ 16.81 $ 19.89 $ 9.60 $ 13.90 $ 11.72
=========== ============ =========== =========== ===========
Class B (unlimited shares authorized):
Net assets.................................................. $21,240,103 $ 47,099,698 $ 8,041,346 $ 9,298,842 $ 583,301
Shares of beneficial interest issued and outstanding........ 1,429,978 2,642,371 926,397 739,035 52,921
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charge) $ 14.85 $ 17.82 $ 8.68 $ 12.58 $ 11.02
=========== ============ =========== =========== ===========
Class C (unlimited shares authorized):
Net assets.................................................. $21,645,738 $ 33,848,680 $ 5,635,920 $26,926,721 $ 3,363,340
Shares of beneficial interest issued and outstanding........ 1,458,845 1,899,270 647,947 2,137,610 305,214
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charge) $ 14.84 $ 17.82 $ 8.70 $ 12.60 $ 11.02
=========== ============ =========== =========== ===========
Class I (unlimited shares authorized):
Net assets.................................................. $ 9,481,811 $ 173,863 $ -- $ -- $ --
Shares of beneficial interest issued and outstanding........ 594,084 9,274 -- -- --
Net asset value, offering and redemption price per share.... $ 15.96 $ 18.75 $ -- $ -- $ --
=========== ============ =========== =========== ===========
Class Z (unlimited shares authorized):
Net assets.................................................. $ -- $ 22,853,241 $ -- $ -- $ --
Shares of beneficial interest issued and outstanding........ -- 1,176,020 -- -- --
Net asset value, offering and redemption price per share.... $ -- $ 19.43 $ -- $ -- $ --
=========== ============ =========== =========== ===========
See Notes to Financial Statements
9
SunAmerica Equity Funds
STATEMENT OF OPERATIONS -- For the period ended September 30, 2006
Blue Chip Growth New
Growth Opportunities Century
Fund Fund Fund
----------- ------------- -----------
INVESTMENT INCOME:
Dividends (unaffiliated)............................................................ $ 758,363 $ 430,383 $ 718,117
Interest (unaffiliated)............................................................. 102,113 213,965 349,837
----------- ----------- -----------
Total investment income*........................................................... 860,476 644,348 1,067,954
----------- ----------- -----------
EXPENSES:
Investment advisory and management fees............................................. 589,484 576,043 695,182
Distribution and service maintenance fees
Class A............................................................................ 184,915 143,383 285,950
Class B............................................................................ 199,229 244,208 90,884
Class C............................................................................ 49,340 107,179 19,027
Service fees Class I................................................................ 2,270 1,751 --
Transfer agent fees and expenses
Class A............................................................................ 147,285 115,432 221,680
Class B............................................................................ 70,912 75,507 27,128
Class C............................................................................ 15,260 31,719 6,833
Class I............................................................................ 1,997 1,789 --
Registration fees
Class A............................................................................ 14,418 9,388 12,879
Class B............................................................................ 8,077 12,946 7,821
Class C............................................................................ 5,018 4,681 5,959
Class I............................................................................ 9,172 9,678 --
Class Z............................................................................ -- -- --
Custodian and accounting fees....................................................... 52,950 61,552 54,286
Reports to shareholders............................................................. 40,802 66,696 34,726
Audit and tax fees.................................................................. 32,897 31,936 31,928
Legal fees.......................................................................... 6,676 6,206 7,164
Trustees' fees and expenses......................................................... 5,253 5,092 6,059
Interest expense.................................................................... 1,139 193 42
Other expenses...................................................................... 13,509 13,395 13,663
----------- ----------- -----------
Total expenses before fee waivers, expense reimbursements, expense recoupments,
custody credits and fees paid indirectly.......................................... 1,450,603 1,518,774 1,521,211
Net (fees waived and expenses reimbursed)/recouped by investment adviser (Note 3).. (50,412) (50,318) (8,459)
Custody credits earned on cash balances............................................ (35) (1,030) (127)
Fees paid indirectly (Note 4)...................................................... (7,202) (31,825) (5,047)
----------- ----------- -----------
Net expenses....................................................................... 1,392,954 1,435,601 1,507,578
----------- ----------- -----------
Net investment income (loss).......................................................... (532,478) (791,253) (439,624)
----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)**.............................. 5,198,168 13,908,169 11,743,685
Net realized foreign exchange gain (loss) on other assets and liabilities............. -- -- --
Net realized gain (loss) on securities sold short..................................... -- -- --
Net realized gain (loss) on futures contracts and options contracts................... -- 40,481 71,996
----------- ----------- -----------
Net realized gain (loss) on investments and foreign currencies........................ 5,198,168 13,948,650 11,815,681
----------- ----------- -----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated)........ (2,357,467) (9,975,076) (8,389,295)
Change in unrealized foreign exchange gain (loss) on other assets and liabilities..... -- -- --
Change in unrealized appreciation (depreciation) on securities sold short............. -- -- --
Change in accrued capital gains tax on unrealized appreciation (depreciation)......... -- -- --
----------- ----------- -----------
Net unrealized gain (loss) on investments and foreign currencies...................... (2,357,467) (9,975,076) (8,389,295)
----------- ----------- -----------
Net realized and unrealized gain (loss) on investments and foreign currencies......... 2,840,701 3,973,574 3,426,386
----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $ 2,308,223 $ 3,182,321 $ 2,986,762
=========== =========== ===========
- --------
*Net of foreign withholding taxes on interest and dividends of........................ $ 4,684 $ -- $ 1,511
=========== =========== ===========
**Net of foreign withholding taxes on capital gains of................................ $ -- $ -- $ --
=========== =========== ===========
Growth and
Income
Fund
-----------
INVESTMENT INCOME:
Dividends (unaffiliated)............................................................ $ 2,263,255
Interest (unaffiliated)............................................................. 74,896
-----------
Total investment income*........................................................... 2,338,151
-----------
EXPENSES:
Investment advisory and management fees............................................. 955,334
Distribution and service maintenance fees
Class A............................................................................ 220,091
Class B............................................................................ 332,924
Class C............................................................................ 307,803
Service fees Class I................................................................ 1,057
Transfer agent fees and expenses
Class A............................................................................ 173,530
Class B............................................................................ 99,119
Class C............................................................................ 83,069
Class I............................................................................ 930
Registration fees
Class A............................................................................ 11,939
Class B............................................................................ 9,546
Class C............................................................................ 8,643
Class I............................................................................ 9,241
Class Z............................................................................ --
Custodian and accounting fees....................................................... 65,534
Reports to shareholders............................................................. 52,469
Audit and tax fees.................................................................. 31,939
Legal fees.......................................................................... 7,174
Trustees' fees and expenses......................................................... 8,496
Interest expense.................................................................... 2,334
Other expenses...................................................................... 15,857
-----------
Total expenses before fee waivers, expense reimbursements, expense recoupments,
custody credits and fees paid indirectly.......................................... 2,397,029
Net (fees waived and expenses reimbursed)/recouped by investment adviser (Note 3).. (14,134)
Custody credits earned on cash balances............................................ (155)
Fees paid indirectly (Note 4)...................................................... (11,848)
-----------
Net expenses....................................................................... 2,370,892
-----------
Net investment income (loss).......................................................... (32,741)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)**.............................. 14,027,002
Net realized foreign exchange gain (loss) on other assets and liabilities............. --
Net realized gain (loss) on securities sold short..................................... --
Net realized gain (loss) on futures contracts and options contracts................... --
-----------
Net realized gain (loss) on investments and foreign currencies........................ 14,027,002
-----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated)........ (4,359,123)
Change in unrealized foreign exchange gain (loss) on other assets and liabilities..... --
Change in unrealized appreciation (depreciation) on securities sold short............. --
Change in accrued capital gains tax on unrealized appreciation (depreciation)......... --
-----------
Net unrealized gain (loss) on investments and foreign currencies...................... (4,359,123)
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies......... 9,667,879
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $ 9,635,138
===========
- --------
*Net of foreign withholding taxes on interest and dividends of........................ $ --
===========
**Net of foreign withholding taxes on capital gains of................................ $ --
===========
See Notes to Financial Statements
10
SunAmerica Equity Funds
STATEMENT OF OPERATIONS -- For the period ended September 30, 2006 --
(continued)
Balanced International
Assets Equity Value
Fund Fund Fund
---------- ------------- -----------
INVESTMENT INCOME:
Dividends (unaffiliated)............................................................ $1,849,154 $ 1,836,470 $ 5,516,802
Interest (unaffiliated)............................................................. 3,627,623 57,489 250,402
---------- ----------- -----------
Total investment income*........................................................... 5,476,777 1,893,959 5,767,204
---------- ----------- -----------
EXPENSES:
Investment advisory and management fees............................................. 1,319,493 1,055,665 2,320,345
Distribution and service maintenance fees
Class A............................................................................ 465,827 193,158 427,512
Class B............................................................................ 251,850 210,973 507,869
Class C............................................................................ 169,140 203,709 371,048
Service fees Class I................................................................ 1,848 22,276 6,473
Transfer agent fees and expenses
Class A............................................................................ 383,052 142,728 306,873
Class B............................................................................ 75,055 62,648 134,832
Class C............................................................................ 45,721 54,640 91,301
Class I............................................................................ 1,839 19,794 5,857
Registration fees
Class A............................................................................ 16,321 10,100 15,070
Class B............................................................................ 8,809 8,129 9,071
Class C............................................................................ 6,255 7,402 7,388
Class I............................................................................ 9,139 8,248 6,699
Class Z............................................................................ -- -- 6,538
Custodian and accounting fees....................................................... 158,570 150,860 87,546
Reports to shareholders............................................................. 73,493 32,957 52,923
Audit and tax fees.................................................................. 31,368 37,104 32,678
Legal fees.......................................................................... 9,866 4,965 8,591
Trustees' fees and expenses......................................................... 11,408 6,066 15,005
Interest expense.................................................................... 699 -- 339
Other expenses...................................................................... 19,152 13,335 20,506
---------- ----------- -----------
Total expenses before fee waivers, expense reimbursements, expense recoupments,
custody credits and fees paid indirectly.......................................... 3,058,905 2,244,757 4,434,464
Net (fees waived and expenses reimbursed)/recouped by investment adviser (Note 3).. (100,475) 22,211 (193,961)
Custody credits earned on cash balances............................................ (841) (572) (258)
Fees paid indirectly (Note 4)...................................................... (5,224) -- (24,568)
---------- ----------- -----------
Net expenses....................................................................... 2,952,365 2,266,396 4,215,677
---------- ----------- -----------
Net investment income (loss).......................................................... 2,524,412 (372,437) 1,551,527
---------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)**.............................. 5,389,083 22,264,451 22,506,011
Net realized foreign exchange gain (loss) on other assets and liabilities............. -- (43,097) --
Net realized gain (loss) on securities sold short..................................... 19,531 -- --
Net realized gain (loss) on futures contracts and options contracts................... -- -- --
---------- ----------- -----------
Net realized gain (loss) on investments and foreign currencies........................ 5,408,614 22,221,354 22,506,011
---------- ----------- -----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated)........ 1,638,023 (2,825,295) 1,434,818
Change in unrealized foreign exchange gain (loss) on other assets and liabilities..... -- 1,981 --
Change in unrealized appreciation (depreciation) on securities sold short............. 152 -- --
Change in accrued capital gains tax on unrealized appreciation (depreciation)......... -- -- --
---------- ----------- -----------
Net unrealized gain (loss) on investments and foreign currencies...................... 1,638,175 (2,823,314) 1,434,818
---------- ----------- -----------
Net realized and unrealized gain (loss) on investments and foreign currencies......... 7,046,789 19,398,040 23,940,829
---------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $9,571,201 $19,025,603 $25,492,356
========== =========== ===========
- --------
*Net of foreign withholding taxes on interest and dividends of........................ $ 5,117 $ 223,155 $ --
========== =========== ===========
**Net of foreign withholding taxes on capital gains of................................ $ -- $ -- $ --
========== =========== ===========
See Notes to Financial Statements
11
SunAmerica Equity Funds
STATEMENT OF OPERATIONS -- For the period ended September 30, 2006 --
(continued)
Biotech/ Tax Managed International
Health Equity Small-Cap
Fund Fund Fund
----------- ----------- -------------
INVESTMENT INCOME:
Dividends (unaffiliated)............................................................ $ 157,858 $ 581,613 $ 160,033
Interest (unaffiliated)............................................................. 68,644 59,742 25,524
----------- ---------- -----------
Total investment income*........................................................... 226,502 641,355 185,557
----------- ---------- -----------
EXPENSES:
Investment advisory and management fees............................................. 212,705 408,577 110,760
Distribution and service maintenance fees
Class A............................................................................ 43,003 57,081 29,757
Class B............................................................................ 95,858 131,427 1,576
Class C............................................................................ 64,883 186,167 9,717
Service fees Class I................................................................ -- -- --
Transfer agent fees and expenses
Class A............................................................................ 35,113 40,027 20,556
Class B............................................................................ 28,593 34,185 2,199
Class C............................................................................ 19,274 45,020 3,990
Class I............................................................................ -- -- --
Registration fees
Class A............................................................................ 11,322 7,022 17,504
Class B............................................................................ 11,393 7,381 16,415
Class C............................................................................ 10,423 7,091 16,415
Class I............................................................................ -- -- --
Class Z............................................................................ -- -- --
Custodian and accounting fees....................................................... 34,914 46,049 47,895
Reports to shareholders............................................................. 26,879 20,722 4,728
Audit and tax fees.................................................................. 32,677 32,591 38,395
Legal fees.......................................................................... 5,544 5,554 21,584
Trustees' fees and expenses......................................................... 2,091 2,586 857
Interest expense.................................................................... -- 17,723 --
Other expenses...................................................................... 10,735 11,311 4,079
----------- ---------- -----------
Total expenses before fee waivers, expense reimbursements, expense recoupments,
custody credits and fees paid indirectly.......................................... 645,407 1,060,514 346,427
Net (fees waived and expenses reimbursed)/recouped by investment adviser (Note 3).. (102,009) (155,182) (155,793)
Custody credits earned on cash balances............................................ (342) (1,909) (298)
Fees paid indirectly (Note 4)...................................................... (4,716) (14,979) --
----------- ---------- -----------
Net expenses....................................................................... 538,340 888,444 190,336
----------- ---------- -----------
Net investment income (loss).......................................................... (311,838) (247,089) (4,779)
----------- ---------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)**.............................. 1,503,475 2,591,624 (1,207,583)
Net realized foreign exchange gain (loss) on other assets and liabilities............. -- (53,723) (68,624)
Net realized gain (loss) on securities sold short..................................... -- -- --
Net realized gain (loss) on futures contracts and options contracts................... -- -- --
----------- ---------- -----------
Net realized gain (loss) on investments and foreign currencies........................ 1,503,475 2,537,901 (1,276,207)
----------- ---------- -----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated)........ (2,395,269) 950,724 (1,366,034)
Change in unrealized foreign exchange gain (loss) on other assets and liabilities..... -- (140) (3,298)
Change in unrealized appreciation (depreciation) on securities sold short............. -- -- --
Change in accrued capital gains tax on unrealized appreciation (depreciation)......... -- -- (149)
----------- ---------- -----------
Net unrealized gain (loss) on investments and foreign currencies...................... (2,395,269) 950,584 (1,369,481)
----------- ---------- -----------
Net realized and unrealized gain (loss) on investments and foreign currencies......... (891,794) 3,488,485 (2,645,688)
----------- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $(1,203,632) $3,241,396 $(2,650,467)
=========== ========== ===========
- --------
*Net of foreign withholding taxes on interest and dividends of........................ $ 4,579 $ 10,091 $ 17,298
=========== ========== ===========
**Net of foreign withholding taxes on capital gains of................................ $ -- $ -- $ --
=========== ========== ===========
See Notes to Financial Statements
12
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,
2006 2005
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss).......................................................... $ (532,478) $ (315,261)
Net realized gain (loss) on investments and foreign currencies........................ 5,198,168 7,805,094
Net unrealized gain (loss) on investments and foreign currencies...................... (2,357,467) (380,611)
------------ ------------
Net increase (decrease) in net assets resulting from operations......................... 2,308,223 7,109,222
------------ ------------
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 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 Z)............................................. -- --
------------ ------------
Total distributions to shareholders..................................................... -- --
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 7) (16,165,295) (19,947,968)
------------ ------------
Total increase (decrease) in net assets................................................. (13,857,072) (12,838,746)
NET ASSETS:
Beginning of period..................................................................... 86,045,083 98,883,829
------------ ------------
End of period+.......................................................................... $ 72,188,011 $ 86,045,083
============ ============
- --------
+Includes accumulated undistributed net investment income (loss)........................ $ (29,423) $ (30,597)
============ ============
Growth Opportunities Fund
--------------------------
For the year For the year
ended ended
September 30, September 30,
2006 2005
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss).......................................................... $ (791,253) $ (1,354,671)
Net realized gain (loss) on investments and foreign currencies........................ 13,948,650 2,100,231
Net unrealized gain (loss) on investments and foreign currencies...................... (9,975,076) 15,610,477
------------ ------------
Net increase (decrease) in net assets resulting from operations......................... 3,182,321 16,356,037
------------ ------------
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 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 Z)............................................. -- --
------------ ------------
Total distributions to shareholders..................................................... -- --
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 7) (20,760,692) (29,708,256)
------------ ------------
Total increase (decrease) in net assets................................................. (17,578,371) (13,352,219)
NET ASSETS:
Beginning of period..................................................................... $ 86,162,852 99,515,071
------------ ------------
End of period+.......................................................................... $ 68,584,481 $ 86,162,852
============ ============
- --------
+Includes accumulated undistributed net investment income (loss)........................ $ (25,397) $ (25,993)
============ ============
See Notes to Financial Statements
13
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,
2006 2005
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss).......................................................... $ (439,624) $ (978,944)
Net realized gain (loss) on investments and foreign currencies........................ 11,815,681 20,006,729
Net unrealized gain (loss) on investments and foreign currencies...................... (8,389,295) 370,558
------------ ------------
Net increase (decrease) in net assets resulting from operations......................... 2,986,762 19,398,343
------------ ------------
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 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 Z)............................................. -- --
------------ ------------
Total distributions to shareholders..................................................... -- --
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 7) (17,643,382) (14,242,469)
------------ ------------
Total increase (decrease) in net assets................................................. (14,656,620) 5,155,874
NET ASSETS:
Beginning of period..................................................................... $ 99,622,083 94,466,209
============ ============
End of period+.......................................................................... $ 84,965,463 $ 99,622,083
============ ============
- --------
+Includes accumulated undistributed net investment income (loss)........................ $ (47,113) $ (49,853)
============ ============
Growth and Income Fund
--------------------------
For the year For the year
ended ended
September 30, September 30,
2006 2005
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss).......................................................... $ (32,741) $ 690,534
Net realized gain (loss) on investments and foreign currencies........................ 14,027,002 10,983,468
Net unrealized gain (loss) on investments and foreign currencies...................... (4,359,123) 3,664,558
------------ ------------
Net increase (decrease) in net assets resulting from operations......................... 9,635,138 15,338,560
------------ ------------
Distributions to shareholders from:
Net investment income (Class A)....................................................... (99,245) (579,790)
Net investment income (Class B)....................................................... -- --
Net investment income (Class C)....................................................... -- --
Net investment income (Class I)....................................................... (2,121) (9,046)
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 Z)............................................. -- --
------------ ------------
Total distributions to shareholders..................................................... (101,366) (588,836)
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 7) (38,443,036) (37,788,265)
------------ ------------
Total increase (decrease) in net assets................................................. (28,909,264) (23,038,541)
NET ASSETS:
Beginning of period..................................................................... 144,990,954 168,029,495
============ ============
End of period+.......................................................................... $116,081,690 $144,990,954
============ ============
- --------
+Includes accumulated undistributed net investment income (loss)........................ $ (38,681) $ 62,110
============ ============
See Notes to Financial Statements
14
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,
2006 2005
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss).......................................................... $ 2,524,412 $ 2,915,164
Net realized gain (loss) on investments and foreign currencies........................ 5,408,614 12,701,272
Net unrealized gain (loss) on investments and foreign currencies...................... 1,638,175 (3,690,068)
------------ ------------
Net increase (decrease) in net assets resulting from operations......................... 9,571,201 11,926,368
------------ ------------
Distributions to shareholders from:
Net investment income (Class A)....................................................... (2,367,072) (2,655,391)
Net investment income (Class B)....................................................... (256,828) (380,072)
Net investment income (Class C)....................................................... (176,512) (227,801)
Net investment income (Class I)....................................................... (15,164) (15,336)
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 Z)............................................. -- --
------------ ------------
Total distributions to shareholders..................................................... (2,815,576) (3,278,600)
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 7) (35,679,423) (38,444,884)
------------ ------------
Total increase (decrease) in net assets................................................. (28,923,798) (29,797,116)
NET ASSETS:
Beginning of period..................................................................... 192,618,447 222,415,563
------------ ------------
End of period+.......................................................................... $163,694,649 $192,618,447
============ ============
- --------
+Includes accumulated undistributed net investment income (loss)........................ $ (88,894) $ (75,110)
============ ============
International Equity Fund
--------------------------
For the year For the year
ended ended
September 30, September 30,
2006 2005
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss).......................................................... $ (372,437) $ (97,309)
Net realized gain (loss) on investments and foreign currencies........................ 22,221,354 10,161,598
Net unrealized gain (loss) on investments and foreign currencies...................... (2,823,314) 9,246,405
------------ -----------
Net increase (decrease) in net assets resulting from operations......................... 19,025,603 19,310,694
------------ -----------
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 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 Z)............................................. -- --
------------ -----------
Total distributions to shareholders..................................................... -- --
------------ -----------
Net increase (decrease) in net assets resulting from capital share transactions (Note 7) 8,501,813 (5,206,184)
------------ -----------
Total increase (decrease) in net assets................................................. 27,527,416 14,104,510
NET ASSETS:
Beginning of period..................................................................... 87,029,816 72,925,306
------------ -----------
End of period+.......................................................................... $114,557,232 $87,029,816
============ ===========
- --------
+Includes accumulated undistributed net investment income (loss)........................ $ (116,139) $ (85,242)
============ ===========
See Notes to Financial Statements
15
SunAmerica Equity Funds
STATEMENT OF CHANGES IN NET ASSETS -- (continued)
Value Fund
--------------------------
For the year For the year
ended ended
September 30, September 30,
2006 2005
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss).......................................................... $ 1,551,527 $ 1,814,549
Net realized gain (loss) on investments and foreign currencies........................ 22,506,011 16,075,488
Net unrealized gain (loss) on investments and foreign currencies...................... 1,434,818 11,418,921
------------ ------------
Net increase (decrease) in net assets resulting from operations......................... 25,492,356 29,308,958
------------ ------------
Distributions to shareholders from:
Net investment income (Class A)....................................................... (937,019) (1,618,502)
Net investment income (Class B)....................................................... (80,387) (693,156)
Net investment income (Class C)....................................................... (58,523) (345,179)
Net investment income (Class I)....................................................... (27,586) (84,084)
Net investment income (Class Z)....................................................... (189,399) (191,677)
Net realized gain on securities (Class A)............................................. (8,311,112) (9,914,545)
Net realized gain on securities (Class B)............................................. (3,719,250) (6,829,375)
Net realized gain on securities (Class C)............................................. (2,707,693) (3,400,905)
Net realized gain on securities (Class I)............................................. (214,316) (502,260)
Net realized gain on securities (Class Z)............................................. (1,144,085) (868,391)
------------ ------------
Total distributions to shareholders..................................................... (17,389,370) (24,448,074)
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 7) (32,363,644) 41,739,610
------------ ------------
Total increase (decrease) in net assets................................................. (24,260,658) 46,600,494
NET ASSETS:
Beginning of period..................................................................... 249,965,427 203,364,933
------------ ------------
End of period+.......................................................................... $225,704,769 $249,965,427
============ ============
- --------
+Includes accumulated undistributed net investment income (loss)........................ $ 1,282,283 $ 1,023,670
============ ============
Biotech/Health Fund
--------------------------
For the year For the year
ended ended
September 30, September 30,
2006 2005
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss).......................................................... $ (311,838) $ (549,402)
Net realized gain (loss) on investments and foreign currencies........................ 1,503,475 1,462,261
Net unrealized gain (loss) on investments and foreign currencies...................... (2,395,269) 5,712
----------- -----------
Net increase (decrease) in net assets resulting from operations......................... (1,203,632) 918,571
----------- -----------
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 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 Z)............................................. -- --
----------- -----------
Total distributions to shareholders..................................................... -- --
----------- -----------
Net increase (decrease) in net assets resulting from capital share transactions (Note 7) (7,081,837) (8,724,957)
----------- -----------
Total increase (decrease) in net assets................................................. (8,285,469) (7,806,386)
NET ASSETS:
Beginning of period..................................................................... 32,833,731 40,640,117
----------- -----------
End of period+.......................................................................... $24,548,262 $32,833,731
=========== ===========
- --------
+Includes accumulated undistributed net investment income (loss)........................ $ (4,308) $ (4,145)
=========== ===========
See Notes to Financial Statements
16
SunAmerica Equity Funds
STATEMENT OF CHANGES IN NET ASSETS -- (continued)
Tax Managed Equity Fund
--------------------------
For the year For the year
ended ended
September 30, September 30,
2006 2005
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss).......................................................... $ (247,089) $ 123,767
Net realized gain (loss) on investments and foreign currencies........................ 2,537,901 (347,518)
Net unrealized gain (loss) on investments and foreign currencies...................... 950,584 2,730,123
----------- ------------
Net increase (decrease) in net assets resulting from operations......................... 3,241,396 2,506,372
----------- ------------
Distributions to shareholders from:
Net investment income (Class A)....................................................... (51,047) (69,828)
Net investment income (Class B)....................................................... (1,497) --
Net investment income (Class C)....................................................... (1,412) --
Net investment income (Class I)....................................................... -- --
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 Z)............................................. -- --
----------- ------------
Total distributions to shareholders..................................................... (53,956) (69,828)
----------- ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 7) 15,240,310 (13,611,181)
----------- ------------
Total increase (decrease) in net assets................................................. 18,427,750 (11,174,637)
NET ASSETS:
Beginning of period..................................................................... 40,351,388 51,526,025
----------- ------------
End of period+.......................................................................... $58,779,138 $ 40,351,388
=========== ============
- --------
+Includes accumulated undistributed net investment income (loss)........................ $ (62,579) $ 45,069
=========== ============
International Small-Cap Fund
----------------------------
For the period
May 2, 2006@ through
September 30,
2006
----------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss).......................................................... $ (4,779)
Net realized gain (loss) on investments and foreign currencies........................ (1,276,207)
Net unrealized gain (loss) on investments and foreign currencies...................... (1,369,481)
-----------
Net increase (decrease) in net assets resulting from operations......................... (2,650,467)
-----------
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 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 Z)............................................. --
-----------
Total distributions to shareholders..................................................... --
-----------
Net increase (decrease) in net assets resulting from capital share transactions (Note 7) 28,154,391
-----------
Total increase (decrease) in net assets................................................. 25,503,924
NET ASSETS:
Beginning of period..................................................................... --
-----------
End of period+.......................................................................... $25,503,924
===========
- --------
+Includes accumulated undistributed net investment income (loss)........................ $ --
===========
@ Commencement of operations
See Notes to Financial Statements
17
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
- -
09/30/02 $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
09/30/06 15.21 (0.07) 0.55 0.48 -- -- -- 15.69 3.16 49,539
Class B
- -
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
09/30/06 13.61 (0.17) 0.50 0.33 -- -- -- 13.94 2.42 17,479
Class C+
- -
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
09/30/06 13.53 (0.17) 0.50 0.33 -- -- -- 13.86 2.44 4,528
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
09/30/06 15.34 (0.04) 0.57 0.53 -- -- -- 15.87 3.45 642
Ratio
of net
Ratio of investment
expenses income (loss)
to average to average Portfolio
net assets net assets Turnover
- ---------- ------------- ---------
1.47%(6) (0.47)%(6) 107%
1.54 (0.50) 114
1.60 (0.59) 145
1.59 (0.09) 120
1.55(5)(6) (0.45)(5)(6) 154
2.18%(6) (1.18)%(6) 107%
2.32 (1.28) 114
2.26 (1.25) 145
2.32 (0.80) 120
2.29(5)(6) (1.20)(5)(6) 154
2.23%(6) (1.25)%(6) 107%
2.44 (1.40) 114
2.37 (1.37) 145
2.49 (0.98) 120
2.30(5)(6) (1.21)(5)(6) 154
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
1.28(5)(6) (0.22)(5)(6) 154
- --------
(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/fee waivers (based on average
net assets):
09/30/02 09/30/03 09/30/04 09/30/05 09/30/06
-------- -------- -------- -------- --------
Blue Chip Growth Class A. -- % -- % -- % -- % 0.05%
Blue Chip Growth Class B. -- -- -- -- 0.05
Blue Chip Growth Class C+ -- -- -- -- 0.05
Blue Chip Growth Class I. 0.08(4) 0.33 0.13 0.49 1.15
(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 and the ratio of net investment income to
average net assets would have been higher by:
09/30/02 09/30/06
-------- --------
Blue Chip Growth Class A. 0.01% 0.01%
Blue Chip Growth Class B. 0.01 0.01
Blue Chip Growth Class C+ 0.01 0.01
Blue Chip Growth Class I. 0.01 0.01
+ 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)
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
- -
09/30/02 $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
09/30/06 16.27 (0.12) 0.89 0.77 -- -- -- 17.04 4.73 37,382
Class B
- -
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
09/30/06 14.52 (0.21) 0.79 0.58 -- -- -- 15.10 3.99 21,500
Class C+
- -
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
09/30/06 14.50 (0.21) 0.79 0.58 -- -- -- 15.08 4.00 9,281
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
09/30/06 16.44 (0.06) 0.88 0.82 -- -- -- 17.26 4.99 422
Ratio
of net
Ratio of investment
expenses income (loss)
to average to average Portfolio
net assets net assets Turnover
- ---------- ------------- ---------
1.49%(6) (1.11)%(6) 344%
1.63 (1.11) 204
1.58 (1.09) 170
1.65 (1.15) 86
1.59(5)(6) (0.76)(5)(6) 278
2.18%(6) (1.80)%(6) 344%
2.36 (1.85) 204
2.27 (1.78) 170
2.32 (1.82) 86
2.30(5)(6) (1.46)(5)(6) 278
2.21%(6) (1.82)%(6) 344%
2.33 (1.82) 204
2.29 (1.80) 170
2.39 (1.89) 86
2.28(5)(6) (1.44)(5)(6) 278
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
1.28(5)(6) (0.35)(5)(6) 278
- --------
(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/fee waivers (based on average
net assets):
09/30/02 09/30/03 09/30/04 09/30/05 09/30/06
-------- -------- -------- -------- --------
Growth Opportunities Class A. -- % -- % -- % -- % 0.05%
Growth Opportunities Class B. -- -- -- -- 0.05
Growth Opportunities Class C+ -- -- -- -- 0.05
Growth Opportunities Class I. 0.18(4) 0.50 0.18 0.49 1.59
(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 and the ratio of net investment income to
average net assets would have been higher by:
09/30/02 09/30/06
-------- --------
Growth Opportunities Class A. 0.00% 0.04%
Growth Opportunities Class B. 0.00 0.04
Growth Opportunities Class C+ 0.00 0.04
Growth Opportunities Class I. 0.00 0.03
(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
19
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
- -
09/30/02 $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
09/30/06 18.00 (0.07) 0.67 0.60 -- -- -- 18.60 3.33 75,682 1.55(4)
Class B
- -
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
09/30/06 15.88 (0.19) 0.60 0.41 -- -- -- 16.29 2.58 7,528 2.29(4)
Class C+
- -
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)
09/30/06 15.94 (0.16) 0.59 0.43 -- -- -- 16.37 2.70 1,756 2.14(3)(4)
Ratio
of net
investment
income (loss)
to average Portfolio
net assets Turnover
- ------------- ---------
(0.92)% 199%
(1.08) 123
(1.20) 110
(0.89) 80
(0.39)(4) 235
(1.60)% 199%
(1.77) 123
(1.91) 110
(1.64) 80
(1.14)(4) 235
(1.56)%(3) 199%
(1.63)(3) 123
(1.73)(3) 110
(1.45)(3) 80
(0.98)(3)(4) 235
- --------
(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):
09/30/02 09/30/03 09/30/04 09/30/05 09/30/06
-------- -------- -------- -------- --------
New Century Class C+ 0.27% 0.66% 0.48% 0.66% 0.44%
(4)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 and the ratio of net investment income to
average net assets would have been higher by:
09/30/06
--------
New Century Class A 0.01%
New Century Class B 0.01
New Century Class C 0.01
+ 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)
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
- -
09/30/02 $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
09/30/06 12.40 0.04 1.01 1.05 (0.02) -- (0.02) 13.43 8.47 61,872
Class B
- -
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
09/30/06 11.74 (0.05) 0.96 0.91 -- -- -- 12.65 7.75 27,100
Class C+
- -
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
09/30/06 11.72 (0.04) 0.95 0.91 -- -- -- 12.63 7.76 26,821
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
09/30/06 12.43 0.07 1.01 1.08 (0.04) -- (0.04) 13.47 8.69 288
Ratio
of net
Ratio of investment
expenses income (loss)
to average to average Portfolio
net assets net assets Turnover
- ---------- ------------- ---------
1.50%(6) (0.01)%(6) 118%
1.50 0.06 123
1.50 0.01 139
1.55 0.78 79
1.54(5)(6) 0.31(5)(6) 152
2.13%(6) (0.66)%(6) 118%
2.16 (0.59) 123
2.17 (0.67) 139
2.20 0.16 79
2.22(5)(6) (0.39)(5)(6) 152
2.17%(6) (0.68)%(6) 118%
2.16 (0.60) 123
2.14 (0.64) 139
2.18 0.17 79
2.19(5)(6) (0.36)(5)(6) 152
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
1.32(5)(6) 0.48(5)(6) 152
- --------
(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/fee waivers (based on average
net assets):
09/30/02 09/30/03 09/30/04 09/30/05 09/30/06
-------- -------- -------- -------- --------
Growth and Income Class A. -- % -- % -- % -- 0.00%
Growth and Income Class B. -- -- -- -- 0.00
Growth and Income Class C+ -- -- -- -- 0.00
Growth and Income Class I. 0.12(4) 0.37 0.14 0.96 2.23
(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 and the ratio of net investment income to
average net assets would have been higher by:
09/30/02 09/30/06
-------- --------
Growth and Income Class A. 0.02% 0.01%
Growth and Income Class B. 0.02 0.01
Growth and Income Class C+ 0.02 0.01
Growth and Income Class I. 0.02 0.01
+ 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)
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
- -
09/30/02(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
09/30/06 13.72 0.22 0.58 0.80 (0.25) -- (0.25) 14.27 5.90 127,313
Class B
- -
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
09/30/06 13.67 0.13 0.58 0.71 (0.15) -- (0.15) 14.23 5.23 20,464
Class C+
- -
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
09/30/06 13.69 0.13 0.58 0.71 (0.15) -- (0.15) 14.25 5.22 15,164
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
09/30/06 13.73 0.26 0.59 0.85 (0.29) -- (0.29) 14.29 6.24 754
Ratio
of net
Ratio of investment
expenses income (loss)
to average to average Portfolio
net assets net assets Turnover
- ---------- ------------- ---------
1.47%(6) 1.39%(6) 485%
1.49 0.86 409
1.50 0.89 181
1.62 1.56 160
1.52(5)(6) 1.59(5)(6) 154
2.12%(6) 0.73%(6) 485%
2.16 0.22 409
2.18 0.20 181
2.27 0.91 160
2.20(5)(6) 0.91(5)(6) 154
2.13%(6) 0.72%(6) 485%
2.15 0.22 409
2.18 0.21 181
2.26 0.92 160
2.18(5)(6) 0.93(5)(6) 154
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
1.28(5)(6) 1.84(5)(6) 154
- --------
(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/fee waivers (based on average
net assets):
09/30/02 09/30/03 09/30/04 09/30/05 09/30/06
-------- -------- -------- -------- --------
Balanced Assets Class A. -- % -- % -- % -- % 0.05%
Balanced Assets Class B. -- -- -- -- 0.05
Balanced Assets Class C+ -- -- -- -- 0.05
Balanced Assets Class I. 0.19(4) 0.19 0.24 1.47 1.38
(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 and the ratio of net investment income to
average net assets would have been higher by:
09/30/02 09/30/06
-------- --------
Balanced Assets Class A. 0.01% 0.00%
Balanced Assets Class B. 0.01 0.00
Balanced Assets Class C+ 0.01 0.00
Balanced Assets Class I. 0.01 0.00
(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
22
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
- -
10/31/01 $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
09/30/06 13.04 (0.01) 2.81 2.80 -- -- -- 15.84 21.47 62,190
Class B
- -
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
09/30/06 12.31 (0.11) 2.65 2.54 -- -- -- 14.85 20.63 21,240
Class C+
- -
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
09/30/06 12.29 (0.11) 2.66 2.55 -- -- -- 14.84 20.75 21,646
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
09/30/06 13.12 0.00 2.84 2.84 -- -- -- 15.96 21.65 9,482
Ratio
Ratio of of net
expenses investment
to average income (loss)
net to average Portfolio
assets(4) net assets(4) Turnover
- ---------- ------------- ---------
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
1.90 (0.09) 152
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
2.55 (0.80) 152
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
2.55 (0.76) 152
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
1.80 (0.01) 152
- --------
(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):
10/31/01 09/30/02(3) 09/30/03 09/30/04 09/30/05 09/30/06
-------- ----------- -------- -------- -------- --------
International Equity Class A. 0.03% 0.08% 0.18% 0.10% 0.09% (0.04)%
International Equity Class B. 0.06 0.14 0.13 0.11 0.17 0.02
International Equity Class C+ 0.14 0.13 0.28 0.06 0.14 (0.01)
International Equity Class I. -- 0.11 0.16 0.12 0.14 0.00
(5)The ratio reflects an expense cap which is net of custody credits of (0.01)%.
(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
23
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
- -
10/31/01 $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
09/30/06 18.01 0.15 1.89 2.04 (0.13) (1.17) (1.30) 18.75 12.02 121,729
Class B
- -
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
09/30/06 17.18 0.04 1.80 1.84 (0.03) (1.17) (1.20) 17.82 11.29 47,100
Class C+
- -
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
09/30/06 17.18 0.04 1.80 1.84 (0.03) (1.17) (1.20) 17.82 11.30 33,849
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
09/30/06 18.00 0.16 1.91 2.07 (0.15) (1.17) (1.32) 18.75 12.20 174
Class Z
- -
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
09/30/06 18.58 0.26 1.95 2.21 (0.19) (1.17) (1.36) 19.43 12.64 22,853
Ratio
of net
Ratio of investment
expenses income (loss)
to average to average Portfolio
net assets(4) net assets(4) Turnover
- ------------- ------------- ---------
1.78%(5) 0.68%(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
1.63(7) 0.88(7) 140
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
2.28(7) 0.23(7) 140
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
2.28(7) 0.23(7) 140
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
1.53(7) 0.90(7) 140
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
1.06(7) 1.45(7) 140
- --------
(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):
10/31/01 10/31/02 10/31/03 09/30/04(3) 09/30/05 09/30/06
-------- -------- -------- ----------- -------- --------
Value Class A. 0.00% 0.01% (0.01)% 0.04% 0.08% 0.08%
Value Class B. -- (0.02) (0.01) 0.02 0.14 0.10
Value Class C+ 0.05 0.03 0.02 0.06 0.08 0.08
Value Class I. -- 0.19(3) -- 0.10 0.25 0.30
Value Class Z. 6.55 5.52 1.00 0.16 0.10 0.07
(5)The ratio reflects an expense cap which is net of custody credits of (0.01)%.
(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 and the ratio of net investment income to
average net assets would have been higher by:
10/31/03 09/30/06
-------- --------
Value Class A. 0.01% 0.01%
Value Class B. 0.01 0.01
Value Class C+ 0.01 0.01
Value Class I. 0.01 0.01
Value Class Z. 0.00 0.01
(8)The Fund changed its fiscal year end from October 31 to September 30.
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
See Notes to Financial Statements
24
SunAmerica Equity Funds
FINANCIAL HIGHLIGHTS -- (continued)
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
- -
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(6) 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
09/30/06 9.41 (0.07) (0.29) (0.36) -- -- -- 9.05 (3.83) 10,871
Class B
- -
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(6) 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
09/30/06 9.08 (0.12) (0.28) (0.40) -- -- -- 8.68 (4.41) 8,041
Class C+
- -
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(6) 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
09/30/06 9.10 (0.12) (0.28) (0.40) -- -- -- 8.70 (4.40) 5,636
Ratio
of net
Ratio of investment
expenses income (loss)
to average to average Portfolio
net assets(4) net assets(4) Turnover
- ------------- ------------- ---------
1.55%(5) (0.50)%(5) 333%
1.55 (1.38) 340
1.55 (1.32) 236
1.55(3) (1.15)(3) 149
1.55 (1.17) 171
1.55(7) (0.71)(7) 114
2.20%(5) (1.18)%(5) 333%
2.20 (2.03) 340
2.20 (1.97) 236
2.20(3) (1.80)(3) 149
2.20 (1.82) 171
2.20(7) (1.36)(7) 114
2.20%(5) (1.17)%(5) 333%
2.20 (2.03) 340
2.20 (1.97) 236
2.20(3) (1.80)(3) 149
2.20 (1.83) 171
2.20(7) (1.37)(7) 114
- --------
(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):
10/31/01 10/31/02 10/31/03 09/30/04(3) 09/30/05 09/30/06
-------- -------- -------- ----------- -------- --------
Biotech/Health Class A. 0.19% 0.20% 0.23% 0.28% 0.26% 0.33%
Biotech/Health Class B. 0.21 0.20 0.26 0.26 0.29 0.37
Biotech/Health Class C+ 0.20 0.21 0.33 0.26 0.31 0.41
(5)The ratio reflects an expense cap which is net of custody credits of less
than (0.01)%.
(6)The Fund changed its fiscal year end from October 31 to September 30.
(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 and the ratio of net investment income to
average net assets would have been higher by:
09/30/06
--------
Biotech/Health Class A 0.02%
Biotech/Health Class B 0.02
Biotech/Health Class C 0.02
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
See Notes to Financial Statements
25
SunAmerica Equity Funds
FINANCIAL HIGHLIGHTS -- (continued)
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
- -
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(3) 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
09/30/06 11.83 (0.01) 1.34 1.33 (0.06) -- (0.06) 13.10 11.25 22,554
Class B
- -
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(3) 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
09/30/06 11.39 (0.10) 1.29 1.19 0.00 -- 0.00 12.58 10.46 9,299
Class C+
- -
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(3) 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
09/30/06 11.40 (0.09) 1.29 1.20 0.00 -- 0.00 12.60 10.54 26,927
Ratio
of net
Ratio of investment
expenses income (loss)
to average to average Portfolio
net assets(5) net assets(5) Turnover
- ------------- ------------- ---------
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
1.45(7) (0.02)(7) 999
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(7) (0.77)(7) 999
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(7) (0.68)(7) 999
- --------
(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)The Fund changed its fiscal year end from October 31 to September 30.
(4)Annualized
(5)Net of the following expense reimbursements (based on average net assets):
10/31/01 10/31/02 10/31/03 09/30/04(4) 09/30/05 09/30/06
-------- -------- -------- ----------- -------- --------
Tax Managed Equity Class A. 0.15% 0.00% 0.26% 0.24% 0.38% 0.31%
Tax Managed Equity Class B. 0.15 0.20 0.23 0.25 0.35 0.37
Tax Managed Equity Class C+ 0.14 0.21 0.23 0.24 0.33 0.30
(6)The ratio reflects an expense cap which is net of custody credits of less
than (0.01)%.
(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 and the ratio of net investment income to
average net assets would have been higher by:
09/30/06
--------
Tax Managed Equity Class A 0.04%
Tax Managed Equity Class B 0.02
Tax Managed Equity Class C 0.03
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
See Notes to Financial Statements
26
SunAmerica Equity Funds
FINANCIAL HIGHLIGHTS -- (continued)
INTERNATIONAL SMALL-CAP 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
- -
05/02/06-09/30/06(3) $12.50 $ 0.00 $(1.45) $(1.45) $-- $-- $-- $11.05 (11.60)% $21,557
Class B
- -
05/02/06-09/30/06(3) $12.50 $(0.04) $(1.44) $(1.48) $-- $-- $-- $11.02 (11.84)% $ 583
Class C
- -
05/02/06-09/30/06(3) $12.50 $(0.04) $(1.44) $(1.48) $-- $-- $-- $11.02 (11.84)% $ 3,363
Ratio
of net
investment
Ratio of income (loss)
expenses to average
to average net Portfolio
net assets(4)(5) assets(4)(5) Turnover
- ---------------- ------------- ---------
1.90% 0.08% 55%
2.55% (0.93)% 55%
2.55% (1.07)% 55%
- --------
(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):
09/30/06(4)
-----------
International Small-Cap Class A 1.27%
International Small-Cap Class B 12.63
International Small-Cap Class C 2.88
See Notes to Financial Statements
27
SunAmerica Blue Chip Growth Fund
PORTFOLIO PROFILE -- September 30, 2006 -- (unaudited)
Industry Allocation*
Diversified Manufactured Operations.......... 9.0%
Finance-Investment Banker/Broker............. 4.7
Computers.................................... 4.5
Medical-HMO.................................. 4.4
Medical Products............................. 4.2
Web Portals/ISP.............................. 3.9
Medical-Biomedical/Gene...................... 3.5
Applications Software........................ 3.4
Cosmetics & Toiletries....................... 3.3
Wireless Equipment........................... 3.2
Retail-Discount.............................. 3.1
Electronic Components-Semiconductors......... 3.0
Beverages-Non-alcoholic...................... 2.8
Repurchase Agreement......................... 2.8
Networking Products.......................... 2.7
Electric Products-Misc....................... 2.6
Medical-Drugs................................ 2.6
Aerospace/Defense............................ 1.9
Medical Instruments.......................... 1.9
Pharmacy Services............................ 1.9
Machinery-General Industrial................. 1.8
Multimedia................................... 1.8
Finance-Credit Card.......................... 1.6
Cable TV..................................... 1.5
Retail-Drug Store............................ 1.4
Aerospace/Defense-Equipment.................. 1.3
Chemicals-Speciality......................... 1.1
Metal Processors & Fabrication............... 1.1
Retail-Apparel/Shoe.......................... 1.1
Computer Aided Design........................ 1.0
Electric-Intergrated......................... 1.0
Electronic-Military.......................... 1.0
Insurance Broker............................. 1.0
Invest Management/Advisor Services........... 1.0
Oil Comp-Integrated.......................... 1.0
Retail-Building Products..................... 1.0
Retail-Regional Department Stores............ 1.0
Telecom Equipment-Fiber Optics............... 1.0
Advertising Agency........................... 0.8
Entertainment Software....................... 0.8
Oil Refining & Marketing..................... 0.8
Oil-Field Services........................... 0.8
Transport-Services........................... 0.8
Enterprise Software/Service.................. 0.7
Commercial Services.......................... 0.6
Electronic Forms............................. 0.6
Electronic Measurement Instruments........... 0.6
Finance-Consumer Loans....................... 0.6
Athletic Footwear............................ 0.5
Food-Wholesale/Distribution.................. 0.5
Semiconductor Equipment...................... 0.5
Oil Field Machinery & Equipment.............. 0.4
Semiconductors Components-Integrated Circuits 0.4
-----
100.5%
=====
- --------
* Calculated as a percentage of net assets.
28
SunAmerica Blue Chip Growth Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006
Value
Security Description Shares (Note 2)
--------------------------------------------------------------
COMMON STOCKS -- 97.7%
Advertising Agency -- 0.8%
Omnicom Group, Inc........................ 5,900 $ 552,240
----------
Aerospace/Defense -- 1.9%
The Boeing Co............................. 17,500 1,379,875
----------
Aerospace/Defense-Equipment -- 1.3%
United Technologies Corp.................. 14,700 931,245
----------
Applications Software -- 3.4%
Microsoft Corp............................ 77,000 2,104,410
Red Hat, Inc.+............................ 15,600 328,848
----------
2,433,258
----------
Athletic Footwear -- 0.5%
NIKE, Inc., Class B....................... 4,400 385,528
----------
Beverages-Non-alcoholic -- 2.8%
PepsiCo, Inc.............................. 30,900 2,016,534
----------
Cable TV -- 1.5%
Comcast Corp., Class A+................... 28,900 1,064,965
----------
Chemicals-Specialty -- 1.1%
Sigma-Aldrich Corp........................ 10,100 764,267
----------
Commercial Services -- 0.6%
Alliance Data Systems Corp.+.............. 7,200 397,368
----------
Computer Aided Design -- 1.0%
Autodesk, Inc.+........................... 20,000 695,600
----------
Computers -- 4.5%
Apple Computer, Inc.+..................... 17,300 1,332,619
Hewlett-Packard Co........................ 19,900 730,131
International Business Machines Corp...... 14,500 1,188,130
----------
3,250,880
----------
Cosmetics & Toiletries -- 3.3%
Procter & Gamble Co....................... 38,200 2,367,636
----------
Diversified Manufactured Operations -- 9.0%
3M Co..................................... 9,900 736,758
Danaher Corp.............................. 15,700 1,078,119
Dover Corp................................ 15,400 730,576
General Electric Co....................... 89,100 3,145,230
ITT Industries, Inc....................... 15,900 815,193
----------
6,505,876
----------
Electric Products-Misc. -- 2.6%
AMETEK, Inc............................... 25,800 1,123,590
Emerson Electric Co....................... 9,300 779,898
----------
1,903,488
----------
Electric-Integrated -- 1.0%
Exelon Corp............................... 6,500 393,510
TXU Corp.................................. 5,100 318,852
----------
712,362
----------
Electronic Components-Semiconductors -- 3.0%
Intel Corp................................ 40,004 822,882
Texas Instruments, Inc.................... 40,000 1,330,000
----------
2,152,882
----------
Value
Security Description Shares (Note 2)
------------------------------------------------------------
Electronic Forms -- 0.6%
Adobe Systems, Inc.+.................... 11,000 $ 411,950
----------
Electronic Measurement Instruments -- 0.6%
Agilent Technologies, Inc.+............. 14,300 467,467
----------
Electronics-Military -- 1.0%
L-3 Communications Holdings, Inc........ 9,600 751,968
----------
Enterprise Software/Service -- 0.7%
Oracle Corp.+........................... 30,200 535,748
----------
Entertainment Software -- 0.8%
Electronic Arts, Inc.+.................. 10,400 579,072
----------
Finance-Consumer Loans -- 0.6%
SLM Corp................................ 8,300 431,434
----------
Finance-Credit Card -- 1.6%
American Express Co..................... 20,300 1,138,424
----------
Finance-Investment Banker/Broker -- 4.7%
Citigroup, Inc.......................... 21,900 1,087,773
Merrill Lynch & Co., Inc................ 14,600 1,142,012
The Goldman Sachs Group, Inc............ 6,900 1,167,273
----------
3,397,058
----------
Food-Wholesale/Distribution -- 0.5%
Sysco Corp.............................. 11,300 377,985
----------
Insurance Broker -- 1.0%
Marsh & McLennan Cos., Inc.............. 24,900 700,935
----------
Invest Management/Advisor Services -- 1.0%
Legg Mason, Inc......................... 7,200 726,192
----------
Machinery-General Industrial -- 1.8%
IDEX Corp............................... 30,021 1,292,404
----------
Medical Instruments -- 1.9%
Boston Scientific Corp.+................ 22,200 328,338
Medtronic, Inc.......................... 22,700 1,054,188
----------
1,382,526
----------
Medical Products -- 4.2%
Johnson & Johnson....................... 30,700 1,993,658
The Cooper Cos., Inc.................... 20,000 1,070,000
----------
3,063,658
----------
Medical-Biomedical/Gene -- 3.5%
Amgen, Inc.+............................ 13,900 994,267
Genzyme Corp.+.......................... 13,100 883,857
Invitrogen Corp.+....................... 10,700 678,487
----------
2,556,611
----------
Medical-Drugs -- 2.6%
Abbott Laboratories..................... 19,900 966,344
Novartis AG ADR......................... 15,300 894,132
----------
1,860,476
----------
Medical-HMO -- 4.4%
Aetna, Inc.............................. 21,900 866,145
Coventry Health Care, Inc.+............. 12,100 623,392
UnitedHealth Group, Inc................. 16,200 797,040
WellPoint, Inc.+........................ 11,300 870,665
----------
3,157,242
----------
29
SunAmerica Blue Chip Growth Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006 -- (continued)
Value
Security Description Shares (Note 2)
-----------------------------------------------------------
COMMON STOCKS (continued)
Metal Processors & Fabrication -- 1.1%
Precision Castparts Corp............... 12,100 $ 764,236
----------
Multimedia -- 1.8%
News Corp., Class A.................... 49,200 966,780
Time Warner, Inc....................... 19,800 360,954
----------
1,327,734
----------
Networking Products -- 2.7%
Cisco Systems, Inc.+................... 84,400 1,941,200
----------
Oil Comp-Integrated -- 1.0%
Exxon Mobil Corp....................... 10,700 717,970
----------
Oil Field Machinery & Equipment -- 0.4%
Smith International, Inc............... 8,169 316,957
----------
Oil Refining & Marketing -- 0.8%
Valero Energy Corp..................... 11,200 576,464
----------
Oil-Field Services -- 0.8%
Schlumberger, Ltd...................... 8,900 552,067
----------
Pharmacy Services -- 1.9%
Medco Health Solutions, Inc.+.......... 19,300 1,160,123
Omnicare, Inc.......................... 5,000 215,450
----------
1,375,573
----------
Retail-Apparel/Shoe -- 1.1%
Abercrombie & Fitch Co., Class A....... 11,400 792,072
----------
Retail-Building Products -- 1.0%
Home Depot, Inc........................ 20,100 729,027
----------
Retail-Discount -- 3.1%
Target Corp............................ 15,400 850,850
Wal-Mart Stores, Inc................... 28,300 1,395,756
----------
2,246,606
----------
Retail-Drug Store -- 1.4%
CVS Corp............................... 32,200 1,034,264
----------
Retail-Regional Department Stores -- 1.0%
Kohl's Corp.+.......................... 11,000 714,120
----------
Semiconductor Equipment -- 0.5%
Applied Materials, Inc................. 20,200 358,146
----------
Semiconductors Components-Integrated
Circuits -- 0.4%
Linear Technology Corp................. 9,700 301,864
----------
Telecom Equipment-Fiber Optics -- 1.0%
Corning, Inc.+......................... 30,900 754,269
----------
Transport-Services -- 0.8%
United Parcel Service, Inc., Class B... 7,600 546,744
----------
Web Portals/ISP -- 3.9%
Google, Inc., Class A+................. 3,600 1,446,840
Yahoo!, Inc.+.......................... 52,900 1,337,312
----------
2,784,152
----------
Wireless Equipment -- 3.2%
American Tower Corp., Class A+......... 19,700 719,050
Motorola, Inc.......................... 44,932 1,123,300
Shares/
Principal Value
Security Description Amount (Note 2)
--------------------------------------------------------------
Wireless Equipment (continued)
QUALCOMM, Inc...................... 13,550 $ 492,543
-----------
2,334,893
-----------
Total Long-Term Investment Securities
(cost $67,718,901)................. 70,513,512
-----------
REPURCHASE AGREEMENT -- 2.8%
State Street Bank & Trust Co.
Joint Repurchase Agreement(1)
(cost $2,060,000)................. $2,060,000 2,060,000
-----------
TOTAL INVESTMENTS --
(cost $69,778,901)(2)............. 100.5% 72,573,512
Liabilities in excess of other assets (0.5) (385,501)
---------- -----------
NET ASSETS -- 100.0% $72,188,011
========== ===========
- --------
+ Non-income producing security.
(1)See Note 2 for details of Joint Repurchase Agreement.
(2)See Note 6 for cost of investment on a tax basis.
ADR-- American Depository Receipt
See Notes to Financial Statements
30
SunAmerica Growth Opportunities Fund
PORTFOLIO PROFILE -- September 30, 2006 -- (unaudited)
Industry Allocation*
Repurchase Agreement................ 16.9%
Commercial Services................. 8.3
Consulting Services................. 4.1
Distribution/Wholesale.............. 4.0
Commercial Services-Finance......... 3.9
Medical-Outpatient/Home Medical..... 2.8
Human Resources..................... 2.2
Direct Marketing.................... 1.9
Finance-Consumer Loans.............. 1.9
Retail-Music Store.................. 1.9
Semiconductor Equipment............. 1.9
Diversified Manufactured Operations. 1.8
Insurance-Reinsurance............... 1.8
Retail-Petroleum Products........... 1.8
Telecom Services.................... 1.7
Building Projects-Air & Heating..... 1.6
Insurance-Property/Casualty......... 1.6
Machinery-Material Handling......... 1.6
Medical Instruments................. 1.6
Retail-Catalog Shopping............. 1.6
Advanced Materials.................. 1.4
Building-Maintenance & Services..... 1.4
Casino Services..................... 1.4
Finance-Other Services.............. 1.3
Financial Guarantee Insurance....... 1.3
Networking Products................. 1.3
Oil Field Machinery & Equipment..... 1.3
Telecommunication Equipment......... 1.3
Electronic Components-Semiconductors 1.2
Machinery-General Industrial........ 1.2
Office Supplies & Forms............. 1.2
Retail-Restaurants.................. 1.2
Building-Heavy Construction......... 1.1
Dialysis Centers.................... 1.1
Banks-Commercial.................... 1.0
Containers-Metal/Glass.............. 1.0
Internet Infrastructure Software.... 1.0
Theater............................. 1.0
Veterinary Products................. 1.0
Enterprise Software/Service......... 0.9
Machinery-Print Trade............... 0.8
Medical Information Systems......... 0.8
Medical Products.................... 0.8
Rental Auto/Equipment............... 0.8
Transactional Software.............. 0.8
Water............................... 0.8
Web Hosting/Design.................. 0.8
Apparel Manufacturer................ 0.7
Decision Support Software........... 0.7
Machinery-Construction & Mining..... 0.6
Computer Aided Design............... 0.5
Computers-Integrated Systems........ 0.5
Drug Delivery Systems............... 0.5
Hotel/Motel......................... 0.5
Medical-Biomedical/Gene............. 0.5
Medical-Hospitals................... 0.5
Instruments-Controls................ 0.4
E-Commerce/Products................. 0.3
----
99.8%
====
- --------
* Calculated as a percentage of net assets.
31
SunAmerica Growth Opportunities Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006
Value
Security Description Shares (Note 2)
--------------------------------------------------------------
COMMON STOCKS -- 82.9%
Advanced Materials -- 1.4%
Ceradyne, Inc.+.......................... 23,200 $ 953,288
----------
Apparel Manufacturer -- 0.7%
Carter's, Inc.+.......................... 19,300 509,327
----------
Banks-Commercial -- 1.0%
UCBH Holdings, Inc....................... 37,200 649,512
----------
Building Products-Air & Heating -- 1.6%
Goodman Global, Inc.+.................... 79,900 1,066,665
----------
Building-Heavy Construction -- 1.1%
Sterling Construction, Inc............... 38,900 780,334
----------
Building-Maintance & Services -- 1.4%
Rollins, Inc............................. 46,100 973,171
----------
Casino Services -- 1.4%
Shuffle Master, Inc.+.................... 36,200 977,762
----------
Commercial Services -- 8.3%
Alliance Data Systems Corp.+............. 46,300 2,555,297
Source Interlink Cos., Inc.+............. 129,000 1,225,500
The Providence Service Corp.+............ 30,400 838,736
Weight Watchers International, Inc....... 24,600 1,090,764
----------
5,710,297
----------
Commercial Services-Finance -- 3.9%
Euronet Worldwide, Inc.+................. 44,800 1,099,840
Heartland Payment Systems, Inc........... 61,500 1,599,000
----------
2,698,840
----------
Computer Aided Design -- 0.5%
Parametric Technology Corp.+............. 19,660 343,264
----------
Computers-Integrated Systems -- 0.5%
Jack Henry & Assoc., Inc................. 17,100 372,267
----------
Consulting Services -- 4.1%
FTI Consulting, Inc.+.................... 22,300 558,838
Navigant Consulting, Inc.+............... 52,100 1,045,126
The Advisory Board Co.+.................. 24,000 1,212,480
----------
2,816,444
----------
Containers-Metal/Glass -- 1.0%
Owens-Illinois, Inc.+.................... 45,300 698,526
----------
Decision Support Software -- 0.7%
Cognos, Inc.+............................ 14,000 511,000
----------
Dialysis Centers -- 1.1%
Dialysis Corp. of America................ 56,500 754,275
----------
Direct Marketing -- 1.9%
Harte-Hanks, Inc......................... 49,300 1,299,055
----------
Distribution/Wholesale -- 4.0%
Central European Distribution Corp.+..... 36,300 849,783
Pool Corp................................ 18,400 708,400
Watsco, Inc.............................. 25,600 1,177,856
----------
2,736,039
----------
Diversified Manufactured Operations -- 1.8%
Barnes Group, Inc........................ 69,900 1,227,444
----------
Value
Security Description Shares (Note 2)
---------------------------------------------------------------
Drug Delivery Systems -- 0.5%
I-Flow Corp.+............................. 28,700 $ 344,974
----------
E-Commerce/Products -- 0.3%
Shutterfly, Inc.+......................... 11,500 178,825
----------
Electronic Components-Semiconductors -- 1.2%
ON Semiconductor Corp.+................... 84,200 495,096
Semtech Corp.+............................ 27,200 347,072
----------
842,168
----------
Enterprise Software/Service -- 0.9%
Lawson Software, Inc.+.................... 84,900 615,525
----------
Finance-Consumer Loans -- 1.9%
Portfolio Recovery Associates, Inc.+...... 29,900 1,311,713
----------
Finance-Other Services -- 1.3%
Nasdaq Stock Market, Inc.+................ 28,300 855,792
----------
Financial Guarantee Insurance -- 1.3%
Primus Guaranty, Ltd.+.................... 72,500 877,975
----------
Hotel/Motel -- 0.5%
Gaylord Entertainment Co.+................ 7,800 342,030
----------
Human Resources -- 2.2%
Barrett Business Services, Inc+........... 24,200 519,574
Labor Ready, Inc.+........................ 63,100 1,005,183
----------
1,524,757
----------
Instruments-Controls -- 0.4%
X-Rite, Inc............................... 27,500 295,350
----------
Insurance-Property/Casualty -- 1.6%
ProAssurance Corp.+....................... 22,900 1,128,512
----------
Insurance-Reinsurance -- 1.8%
Aspen Insurance Holdings, Ltd............. 47,800 1,234,674
----------
Internet Infrastructure Software -- 1.0%
F5 Networks, Inc.+........................ 12,600 676,872
----------
Machinery-Construction & Mining -- 0.6%
Astec Industries, Inc.+................... 16,600 419,150
----------
Machinery-General Industrial -- 1.2%
IDEX Corp................................. 19,700 848,085
----------
Machinery-Material Handling -- 1.6%
Columbus McKinnon Corp.+.................. 59,700 1,076,391
----------
Machinery-Print Trade -- 0.8%
Presstek, Inc.+........................... 105,600 569,184
----------
Medical Information Systems -- 0.8%
Allscripts Heathcare Solutions, Inc.+..... 24,500 550,025
----------
Medical Instruments -- 1.6%
Dexcom, Inc+.............................. 43,700 486,381
ev3, Inc.................................. 33,800 574,938
----------
1,061,319
----------
Medical Products -- 0.8%
PolyMedica Corp........................... 12,500 535,125
----------
Medical-Biomedical/Gene -- 0.5%
BioMimetic Therapeutics, Inc.+............ 39,150 306,153
----------
32
SunAmerica Growth Opportunities Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006 -- (continued)
Value
Security Description Shares (Note 2)
-------------------------------------------------------------------
COMMON STOCKS (continued)
Medical-Hospitals -- 0.5%
United Surgical Partners International, Inc.+. 13,300 $ 330,239
-----------
Medical-Outpatient/Home Medical -- 2.8%
Air Methods Corp.............................. 27,300 644,280
Lincare Holdings, Inc.+....................... 37,000 1,281,680
-----------
1,925,960
-----------
Networking Products -- 1.3%
Aeroflex, Inc.+............................... 86,300 887,164
-----------
Office Supplies & Forms -- 1.2%
ACCO Brands Corp.+............................ 13,800 307,188
The Standard Register Co...................... 39,000 514,800
-----------
821,988
-----------
Oil Field Machinery & Equipment -- 1.3%
Metretek Technologies, Inc.+.................. 76,800 916,992
-----------
Rental Auto/Equipment -- 0.8%
United Rentals, Inc.+......................... 22,100 513,825
-----------
Retail-Catalog Shopping -- 1.6%
MSC Industrial Direct Co., Inc., Class A...... 26,500 1,079,610
-----------
Retail-Music Store -- 1.9%
Guitar Center, Inc.+.......................... 29,000 1,295,720
-----------
Retail-Petroleum Products -- 1.8%
World Fuel Services Corp...................... 31,000 1,253,950
-----------
Retail-Restaurants -- 1.2%
Morton's Restaurant Group, Inc.+.............. 54,500 839,845
-----------
Semiconductor Equipment -- 1.9%
Entegris, Inc.+............................... 63,300 690,603
Rudolph Technologies, Inc.+................... 35,100 643,383
-----------
1,333,986
-----------
Telecom Services -- 1.7%
NeuStar, Inc., Class A+....................... 42,200 1,171,050
-----------
Telecommunication Equipment -- 1.3%
Arris Group, Inc.+............................ 47,400 543,204
Comtech Telecommunications Corp.+............. 10,100 338,148
-----------
881,352
-----------
Theater -- 1.0%
Regal Entertainment Group, Class A............ 35,000 693,700
-----------
Transactional Software -- 0.8%
VeriFone Holdings, Inc.+...................... 18,300 522,465
-----------
Veterinary Products -- 1.0%
PetMed Express, Inc.+......................... 63,600 663,984
-----------
Water -- 0.8%
Aqua America, Inc............................. 23,600 517,784
-----------
Web Hosting/Design -- 0.8%
NIC, Inc.+.................................... 100,900 519,635
-----------
Total Long-Term Investment Securities
(cost $54,569,980)........................... 56,841,358
-----------
Principal Value
Security Description Amount (Note 2)
---------------------------------------------------------
REPURCHASE AGREEMENT -- 16.9%
UBS Securities, LLC
Joint Repurchase Agreement(1)
(cost $11,640,000)............ $11,640,000 $11,640,000
-----------
TOTAL INVESTMENTS --
(cost $66,209,980)(2)......... 99.8% 68,481,358
Other assets less liabilities.... 0.2 103,123
----------- -----------
NET ASSETS -- 100.0% $68,584,481
=========== ===========
- --------
+ Non-income producing security.
(1)See Note 2 for details of Joint Repurchase Agreement.
(2)See Note 6 for cost of investment on a tax basis.
See Notes to Financial Statements
33
SunAmerica New Century Fund
PORTFOLIO PROFILE -- September 30, 2006 -- (unaudited)
Industry Allocation*
Repurchase Agreement......................... 18.7%
Commercial Services.......................... 5.6
Food-Confectionery........................... 5.1
Data Processing/Management................... 4.7
Diversified Manufactured Operations.......... 3.0
Distribution/Wholesale....................... 2.8
Electronics-Military......................... 2.6
Aerospace/Defense-Equipment.................. 2.5
Semiconductor Equipment...................... 2.5
Computer Aided Design........................ 2.2
Linen Supply & Related Items................. 2.2
Medical-Hospitals............................ 2.1
Direct Marketing............................. 1.9
Finance-Consumer Loans....................... 1.9
Machinery-Construction & Mining.............. 1.9
Medical-Outpatient/Home Medical.............. 1.9
Retail-Music Store........................... 1.9
Insurance-Reinsurance........................ 1.8
Retail-Petroleum Products.................... 1.8
Insurance-Property/Casualty.................. 1.7
Telecom Services............................. 1.7
Human Resources.............................. 1.6
Invest Management/Advisor Services........... 1.6
Printing-Commercial.......................... 1.5
Retail-Catalog Shopping...................... 1.5
Advanced Materials........................... 1.4
Electronic Components-Semiconductors......... 1.4
Food-Wholesale/Distribution.................. 1.4
Drug Delivery Systems........................ 1.3
Medical Products............................. 1.3
Savings & Loans/Thrifts...................... 1.3
Finance-Other Services....................... 1.2
Telecommunication Equipment.................. 1.2
Containers-Metal/Glass....................... 1.0
Internet Infrastructure Software............. 1.0
Medical-Biomedical/Gene...................... 1.0
Retail-Bedding............................... 1.0
Theater...................................... 1.0
Banks-Commercial............................. 0.9
Casino Services.............................. 0.9
Oil & Gas Drilling........................... 0.8
Semiconductors Components-Intergated Circuits 0.8
Water........................................ 0.8
Decision Support Software.................... 0.7
Electronic Components-Misc................... 0.7
Rental Auto/Equipment........................ 0.7
Transactional Software....................... 0.7
Hotel/Motel.................................. 0.5
Office Supplies & Forms...................... 0.4
-----
100.1%
=====
- --------
* Calculated as a percentage of net assets.
34
SunAmerica New Century Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006
Value
Security Description Shares (Note 2)
-----------------------------------------------------------------
COMMON STOCKS -- 81.4%
Advanced Materials -- 1.4%
Ceradyne, Inc.+.............................. 28,200 $1,158,738
----------
Aerospace/Defense-Equipment -- 2.5%
Goodrich Corp................................ 51,600 2,090,832
----------
Banks-Commercial -- 0.9%
UCBH Holdings, Inc........................... 45,800 799,668
----------
Casino Services -- 0.9%
Shuffle Master, Inc.+........................ 27,400 740,074
----------
Commercial Services -- 5.6%
Alliance Data Systems Corp.+................. 60,200 3,322,438
Weight Watchers International, Inc........... 32,000 1,418,880
----------
4,741,318
----------
Computer Aided Design -- 2.2%
Autodesk, Inc.+.............................. 53,600 1,864,208
----------
Containers-Metal/Glass -- 1.0%
Owens-Illinois, Inc.+........................ 55,900 861,978
----------
Data Processing/Management -- 4.7%
Fidelity National Information Services, Inc.. 48,300 1,787,100
Fiserv, Inc.+................................ 8,600 404,974
Paychex, Inc................................. 47,900 1,765,115
----------
3,957,189
----------
Decision Support Software -- 0.7%
Cognos, Inc.+................................ 16,800 613,200
----------
Direct Marketing -- 1.9%
Harte-Hanks, Inc............................. 60,900 1,604,715
----------
Distribution/Wholesale -- 2.8%
Pool Corp.................................... 23,300 897,050
Watsco, Inc.................................. 32,300 1,486,123
----------
2,383,173
----------
Diversified Manufactured Operations -- 3.0%
ITT Industries, Inc.......................... 42,000 2,153,340
Pentair, Inc................................. 15,800 413,802
----------
2,567,142
----------
Drug Delivery Systems -- 1.3%
Hospira, Inc.+............................... 28,700 1,098,349
----------
Electronic Components-Misc. -- 0.7%
Jabil Circuit, Inc........................... 21,100 602,827
----------
Electronic Components-Semiconductors -- 1.4%
Altera Corp.+................................ 32,700 601,026
ON Semiconductor Corp.+...................... 104,000 611,520
----------
1,212,546
----------
Electronics-Military -- 2.6%
L-3 Communications Holdings, Inc............. 27,900 2,185,407
----------
Finance-Consumer Loans -- 1.9%
SLM Corp..................................... 31,200 1,621,776
----------
Finance-Other Services -- 1.2%
Nasdaq Stock Market, Inc.+................... 34,900 1,055,376
----------
Value
Security Description Shares (Note 2)
-----------------------------------------------------------------
Food-Confectionery -- 5.1%
The Hershey Co................................ 39,100 $2,089,895
WM. Wrigley Jr. Co............................ 48,650 2,240,819
----------
4,330,714
----------
Food-Wholesale/Distribution -- 1.4%
SUPERVALU, Inc................................ 40,600 1,203,790
----------
Hotel/Motel -- 0.5%
Gaylord Entertainment Co.+.................... 9,400 412,190
----------
Human Resources -- 1.6%
Robert Half International, Inc................ 40,800 1,385,976
----------
Insurance-Property/Casualty -- 1.7%
ProAssurance Corp.+........................... 28,500 1,404,480
----------
Insurance-Reinsurance -- 1.8%
Aspen Insurance Holdings, Ltd................. 59,600 1,539,468
----------
Internet Infrastructure Software -- 1.0%
F5 Networks, Inc.+............................ 15,600 838,032
----------
Invest Management/Advisor Services -- 1.6%
Legg Mason, Inc............................... 13,600 1,371,696
----------
Linen Supply & Related Items -- 2.2%
Cintas Corp................................... 46,600 1,902,678
----------
Machinery-Construction & Mining -- 1.9%
Joy Global, Inc............................... 43,500 1,636,035
----------
Medical Products -- 1.3%
Biomet, Inc................................... 34,900 1,123,431
----------
Medical-Biomedical/Gene -- 1.0%
Genzyme Corp.+................................ 12,000 809,640
----------
Medical-Hospitals -- 2.1%
Triad Hospitals, Inc.+........................ 30,700 1,351,721
United Surgical Partners International, Inc.+. 16,100 399,763
----------
1,751,484
----------
Medical-Outpatient/Home Medical -- 1.9%
Lincare Holdings, Inc.+....................... 46,100 1,596,904
----------
Office Supplies & Forms -- 0.4%
ACCO Brands Corp.+............................ 16,800 373,968
----------
Oil & Gas Drilling -- 0.8%
Noble Corp.................................... 11,100 712,398
----------
Printing-Commercial -- 1.5%
R. R. Donnelley & Sons Co..................... 37,600 1,239,296
----------
Rental Auto/Equipment -- 0.7%
United Rentals, Inc.+......................... 27,300 634,725
----------
Retail-Bedding -- 1.0%
Bed Bath & Beyond, Inc.+...................... 21,300 814,938
----------
Retail-Catalog Shopping -- 1.5%
MSC Industrial Direct Co., Inc., Class A...... 32,000 1,303,680
----------
Retail-Music Store -- 1.9%
Guitar Center, Inc.+.......................... 36,100 1,612,948
----------
Retail-Petroleum Products -- 1.8%
World Fuel Services Corp...................... 37,600 1,520,920
----------
35
SunAmerica New Century Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006 -- (continued)
Shares/
Principal Value
Security Description Amount (Note 2)
---------------------------------------------------------------
COMMON STOCKS (continued)
Savings & Loans/Thrifts -- 1.3%
New York Community Bancorp, Inc.... 69,000 $ 1,130,220
-----------
Semiconductor Equipment -- 2.5%
Entegris, Inc.+.................... 77,000 840,070
KLA-Tencor Corp.................... 28,200 1,254,054
-----------
2,094,124
-----------
Semiconductors Components-Intergated
Circuits -- 0.8%
Maxim Integrated Products, Inc..... 22,800 639,996
-----------
Telecom Services -- 1.7%
NeuStar, Inc., Class A+............ 52,500 1,456,875
-----------
Telecommunication Equipment -- 1.2%
Comverse Technology, Inc.+......... 46,600 999,104
-----------
Theater -- 1.0%
Regal Entertainment Group, Class A. 44,200 876,044
-----------
Transactional Software -- 0.7%
VeriFone Holdings, Inc.+........... 22,300 636,665
-----------
Water -- 0.8%
Aqua America, Inc.................. 29,100 638,454
-----------
Total Long-Term Investment Securities
(cost $66,907,311)................. 69,149,389
-----------
REPURCHASE AGREEMENT -- 18.7%
UBS Securities, LLC
Joint Repurchase Agreement
(cost $15,891,000)(1)............. $15,891,000 15,891,000
-----------
TOTAL INVESTMENTS --
(cost $82,798,311)(2)............. 100.1% 85,040,389
Liabilities in excess of other assets (0.1) (74,926)
----------- -----------
NET ASSETS -- 100.0% $84,965,463
=========== ===========
- --------
+ Non-income producing security.
(1)See Note 2 for details of Joint Repurchase Agreements.
(2)See Note 6 for cost of investment on a tax basis.
See Notes to Financial Statements
36
SunAmerica Growth and Income Fund
PORTFOLIO PROFILE -- September 30, 2006 -- (unaudited)
Industry Allocation*
Diversified Manufactured Operations... 8.4%
Finance-Investment Banker/Broker...... 8.2
Oil Comp-Integrated................... 5.4
Banks-Super Regional.................. 5.2
Multimedia............................ 4.7
Telephone-Integrated.................. 4.6
Insurance-Multi-line.................. 3.5
Medical-Drugs......................... 3.5
Retail-Discount....................... 3.2
Wireless Equipment.................... 2.8
Oil-Field Services.................... 2.5
Electronic Components-Semiconductors.. 2.4
Applications Software................. 2.2
Aerospace/Defense..................... 2.1
Electric-Integrated................... 2.1
Finance-Credit Card................... 2.1
Medical Products...................... 2.0
Repurchase Agreement.................. 2.0
Networking Products................... 1.8
Cosmetics & Toiletries................ 1.7
Computers............................. 1.6
Disposable Medical Products........... 1.6
Food-Misc............................. 1.6
Food-Wholesale/Distribution........... 1.6
Tobacco............................... 1.6
Beverages-Non-alcoholic............... 1.5
Insurance-Property/Casualty........... 1.5
Medical-Biomedical/Gene............... 1.5
Oil Refining & Marketing.............. 1.5
Electric Products-Misc................ 1.4
Retail-Building Products.............. 1.4
Aerospace/Defense-Equipment........... 1.3
Medical Instruments................... 1.3
Medical-HMO........................... 1.3
Semiconductor Equipment............... 1.3
Transport-Services.................... 1.3
Chemicals-Diversified................. 1.0
Industrial Gases...................... 1.0
Retail-Drug Store..................... 1.0
Retail-Jewelry........................ 1.0
Retail-Restaurants.................... 1.0
Oil Companies-Exploration & Production 0.9
Web Portals/ISP....................... 0.9
-----
100.5%
=====
- --------
* Calculated as a percentage of net assets.
37
SunAmerica Growth and Income Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006
Value
Security Description Shares (Note 2)
---------------------------------------------------------------
COMMON STOCKS -- 98.5%
Aerospace/Defense -- 2.1%
The Boeing Co............................. 30,900 $2,436,465
----------
Aerospace/Defense-Equipment -- 1.3%
United Technologies Corp.................. 24,100 1,526,735
----------
Applications Software -- 2.2%
Microsoft Corp............................ 93,700 2,560,821
----------
Banks-Super Regional -- 5.2%
Bank of America Corp...................... 57,600 3,085,632
Wachovia Corp............................. 20,700 1,155,060
Wells Fargo & Co.......................... 49,200 1,780,056
----------
6,020,748
----------
Beverages-Non-alcoholic -- 1.5%
PepsiCo, Inc.............................. 26,200 1,709,812
----------
Chemicals-Diversified -- 1.0%
Dow Chemical Co........................... 30,400 1,184,992
----------
Computers -- 1.6%
International Business Machines Corp...... 22,100 1,810,874
----------
Cosmetics & Toiletries -- 1.7%
Procter & Gamble Co....................... 31,900 1,977,162
----------
Disposable Medical Products -- 1.6%
C.R. Bard, Inc............................ 24,200 1,815,000
----------
Diversified Manufactured Operations -- 8.4%
3M Co..................................... 32,600 2,426,092
General Electric Co....................... 105,800 3,734,740
ITT Industries, Inc....................... 69,000 3,537,630
----------
9,698,462
----------
Electric Products-Misc. -- 1.4%
AMETEK, Inc............................... 37,700 1,641,835
----------
Electric-Integrated -- 2.1%
Duke Energy Corp.......................... 37,500 1,132,500
The Southern Co........................... 36,800 1,268,128
----------
2,400,628
----------
Electronic Components-Semiconductors -- 2.4%
Intel Corp................................ 64,900 1,334,993
Texas Instruments, Inc.................... 42,000 1,396,500
----------
2,731,493
----------
Finance-Credit Card -- 2.1%
American Express Co....................... 44,300 2,484,344
----------
Finance-Investment Banker/Broker -- 8.2%
Bear Stearns Cos., Inc.................... 12,300 1,723,230
Citigroup, Inc............................ 73,900 3,670,613
JPMorgan Chase & Co....................... 48,600 2,282,256
Merrill Lynch & Co., Inc.................. 23,500 1,838,170
----------
9,514,269
----------
Food-Misc. -- 1.6%
General Mills, Inc........................ 32,600 1,845,160
----------
Value
Security Description Shares (Note 2)
-----------------------------------------------------------------
Food-Wholesale/Distribution -- 1.6%
Sysco Corp.................................. 56,400 $1,886,580
----------
Industrial Gases -- 1.0%
Air Products and Chemicals, Inc............. 18,000 1,194,660
----------
Insurance-Multi-line -- 3.5%
Allstate Corp............................... 35,200 2,208,096
Metlife, Inc................................ 32,600 1,847,768
----------
4,055,864
----------
Insurance-Property/Casualty -- 1.5%
Chubb Corp.................................. 33,800 1,756,248
----------
Medical Instruments -- 1.3%
Medtronic, Inc.............................. 33,600 1,560,384
----------
Medical Products -- 2.0%
Johnson & Johnson........................... 36,100 2,344,334
----------
Medical-Biomedical/Gene -- 1.5%
Amgen, Inc.+................................ 24,600 1,759,638
----------
Medical-Drugs -- 3.5%
Pfizer, Inc................................. 73,950 2,097,222
Schering-Plough Corp........................ 90,800 2,005,772
----------
4,102,994
----------
Medical-HMO -- 1.3%
Aetna, Inc.................................. 37,400 1,479,170
----------
Multimedia -- 4.7%
News Corp., Class A......................... 146,600 2,880,690
Time Warner, Inc............................ 138,500 2,524,855
----------
5,405,545
----------
Networking Products -- 1.8%
Cisco Systems, Inc.+........................ 88,600 2,037,800
----------
Oil Comp-Integrated -- 5.4%
Chevron Corp................................ 25,600 1,660,416
ConocoPhillips.............................. 25,400 1,512,062
Exxon Mobil Corp............................ 46,400 3,113,440
----------
6,285,918
----------
Oil Companies-Exploration & Production -- 0.9%
XTO Energy, Inc............................. 23,600 994,268
----------
Oil Refining & Marketing -- 1.5%
Valero Energy Corp.......................... 33,500 1,724,245
----------
Oil-Field Services -- 2.5%
Schlumberger, Ltd........................... 19,400 1,203,382
Smith International, Inc.................... 42,900 1,664,520
----------
2,867,902
----------
Retail-Building Products -- 1.4%
Home Depot, Inc............................. 46,500 1,686,555
----------
Retail-Discount -- 3.2%
Target Corp................................. 33,400 1,845,350
Wal-Mart Stores, Inc........................ 39,100 1,928,412
----------
3,773,762
----------
38
SunAmerica Growth and Income Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006 -- (continued)
Shares/
Principal Value
Security Description Amount (Note 2)
----------------------------------------------------------------
COMMON STOCKS (continued)
Retail-Drug Store -- 1.0%
CVS Corp............................. 35,600 $ 1,143,472
------------
Retail-Jewelry -- 1.0%
Tiffany & Co......................... 34,700 1,152,040
------------
Retail-Restaurants -- 1.0%
McDonald's Corp...................... 31,100 1,216,632
------------
Semiconductor Equipment -- 1.3%
Applied Materials, Inc............... 86,800 1,538,964
------------
Telephone-Integrated -- 4.6%
AT&T, Inc............................ 59,500 1,937,320
Sprint Corp.......................... 97,000 1,663,550
Verizon Communications, Inc.......... 47,400 1,759,962
------------
5,360,832
------------
Tobacco -- 1.6%
Altria Group, Inc.................... 24,300 1,860,165
------------
Transport-Services -- 1.3%
United Parcel Service, Inc., Class B. 21,600 1,553,904
------------
Web Portals/ISP -- 0.9%
Yahoo!, Inc.+........................ 40,800 1,031,424
------------
Wireless Equipment -- 2.8%
Motorola, Inc........................ 91,200 2,280,000
QUALCOMM, Inc........................ 25,600 930,560
------------
3,210,560
------------
Total Long-Term Investment Securities
(cost $107,978,431).................. 114,342,660
------------
REPURCHASE AGREEMENT -- 2.0%
State Street Bank & Trust Co.
Joint Repurchase Agreement
(cost $2,319,000)(1)................ $2,319,000 2,319,000
------------
TOTAL INVESTMENTS --
(cost $110,297,431)(2)............... 100.5% 116,661,660
Liabilities in excess of other assets.. (0.5) (579,970)
---------- ------------
NET ASSETS -- 100.0% $116,081,690
========== ============
- --------
+ Non-income producing security
(1)See Note 2 for details of Joint Repurchase Agreements.
(2)See Note 6 for cost of investment on a tax basis
See Notes to Financial Statements
39
SunAmerica Balanced Assets Fund
PORTFOLIO PROFILE -- September 30, 2006 -- (unaudited)
Industry Allocation*
U.S. Government Agencies.............. 13.1%
Finance-Investment Banker/Broker...... 6.4
Diversified Manufactured Operations... 5.8
Diversified Financial Services........ 5.6
Banks-Super Regional.................. 3.5
Oil Comp-Integrated................... 3.3
Electric-Integrated................... 2.9
Telephone-Integrated.................. 2.5
Multimedia............................ 2.4
Medical Products...................... 2.2
Medical-Drugs......................... 2.0
Medical-HMO........................... 1.9
Cosmetics & Toiletries................ 1.8
Foreign Government Agencies........... 1.8
Wireless Equipment.................... 1.7
Computers............................. 1.6
Insurance-Multi-line.................. 1.6
Retail-Discount....................... 1.6
Beverages-Non-alcoholic............... 1.4
Electric Products-Misc................ 1.4
Finance-Credit Card................... 1.3
Medical-Biomedical/Gene............... 1.3
Web Portals/ISP....................... 1.3
Applications Software................. 1.2
Repurchase Agreements................. 1.2
Electronic Components-Semiconductors.. 1.1
Oil Companies-Exploration & Production 1.1
Networking Products................... 1.0
Aerospace/Defense..................... 0.9
Banks-Commercial...................... 0.9
Special Purpose Entities.............. 0.9
Oil Refining & Marketing.............. 0.8
Retail-Building Products.............. 0.8
Cellular Telcom....................... 0.7
Medical Instruments................... 0.7
Oil-Field Services.................... 0.7
Pharmacy Services..................... 0.7
Savings & Loans/Thrifts............... 0.7
Banks-Fiduciary....................... 0.6
Cable TV.............................. 0.6
Food-Misc............................. 0.6
Insurance-Property/Casualty........... 0.6
Machinery-General Industrial.......... 0.6
Tobacco............................... 0.6
U.S. Government Treasuries............ 0.6
Aerospace/Defense-Equipment........... 0.5
Chemicals-Diversified................. 0.5
Chemicals-Speciality.................. 0.5
Insurance-Life/Health................. 0.5
Metal Processors & Fabrication........ 0.5
Retail-Drug Store..................... 0.5
Telecom Equipment-Fiber Optics........ 0.5
Banks-Money Center.................... 0.4
Electronics-Military.................. 0.4
Finance-Mortgage Loan/Banker.......... 0.4
Industrial Gases...................... 0.4
Invest Management/Advisor Services.... 0.4
Pipelines............................. 0.4
Retail-Apparel/Shoe................... 0.4
Transport-Services........................... 0.4%
Advertising Agency........................... 0.3
Computer Aided Design........................ 0.3
Enterprise Software/Service.................. 0.3
Entertainment Software....................... 0.3
Finance-Auto Loans........................... 0.3
Insurance Brokers............................ 0.3
Real Estate Investment Trusts................ 0.3
Retail-Regional Department Stores............ 0.3
Retail-Restaurants........................... 0.3
Telecom Services............................. 0.3
Athletic Footwear............................ 0.2
Casino Hotels................................ 0.2
Commercial Services.......................... 0.2
Electronic Forms............................. 0.2
Electronic Measurement Instruments........... 0.2
Finance-Consumer Loans....................... 0.2
Food-Wholesale/Distribution.................. 0.2
Independent Power Producers.................. 0.2
Metal-Diversified............................ 0.2
Paper & Related Products..................... 0.2
Semiconductor Equipment...................... 0.2
Television................................... 0.2
Transport-Air Freight........................ 0.2
Transport-Rail............................... 0.2
Agricultural Operations...................... 0.1
Airlines..................................... 0.1
Auto-Cars/Light Trucks....................... 0.1
Broadcast Services/Program................... 0.1
Chemicals-Plastics........................... 0.1
Electronic Parts Distribution................ 0.1
Finance-Commercial........................... 0.1
Financial Guarantee Insurance................ 0.1
Gas-Distribution............................. 0.1
Gold Mining.................................. 0.1
Insurance-Mutual............................. 0.1
Insurance-Reinsurance........................ 0.1
Investment Companies......................... 0.1
Leisure Products............................. 0.1
Medical-Hospitals............................ 0.1
Medical-Wholesale Drug Distribution.......... 0.1
Office Automation & Equipment................ 0.1
Precious Metals.............................. 0.1
Property Trust............................... 0.1
Protection/Safety............................ 0.1
Publishing-Newspapers........................ 0.1
Radio........................................ 0.1
Real Estate Management/Services.............. 0.1
Real Estate Operations & Development......... 0.1
Seismic Data Collection...................... 0.1
Semiconductors Components-Integrated Circuits 0.1
Specified Purpose Acquisitions............... 0.1
-----
101.2%
=====
- --------
* Calculated as a percentage of net assets.
40
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006
Value
Security Description Shares (Note 2)
--------------------------------------------------------------
COMMON STOCKS -- 64.3%
Advertising Agency -- 0.3%
Omnicom Group, Inc....................... 4,700 $ 439,920
----------
Aerospace/Defense -- 0.7%
The Boeing Co............................ 14,200 1,119,670
----------
Aerospace/Defense-Equipment -- 0.5%
United Technologies Corp................. 11,900 753,865
----------
Applications Software -- 1.2%
Microsoft Corp........................... 60,878 1,663,796
Red Hat, Inc.+........................... 12,300 259,284
----------
1,923,080
----------
Athletic Footwear -- 0.2%
NIKE, Inc., Class B...................... 3,500 306,670
----------
Banks-Fiduciary -- 0.6%
Bank of New York Co., Inc................ 28,800 1,015,488
----------
Banks-Super Regional -- 3.3%
Bank of America Corp..................... 42,488 2,276,082
US Bancorp............................... 30,700 1,019,854
Wachovia Corp............................ 19,000 1,060,200
Wells Fargo & Co......................... 28,200 1,020,276
----------
5,376,412
----------
Beverages-Non-alcoholic -- 1.4%
PepsiCo, Inc............................. 36,100 2,355,886
----------
Cable TV -- 0.5%
Comcast Corp., Class A+.................. 22,800 840,180
----------
Cellular Telecom -- 0.5%
Vodafone Group PLC ADR................... 32,700 747,522
----------
Chemicals-Diversified -- 0.4%
The Dow Chemical Co...................... 18,600 725,028
----------
Chemicals-Specialty -- 0.4%
Sigma-Aldrich Corp....................... 7,900 597,793
----------
Commercial Services -- 0.2%
Alliance Data Systems Corp.+............. 5,700 314,583
----------
Computer Aided Design -- 0.3%
Autodesk, Inc.+.......................... 16,000 556,480
----------
Computers -- 1.6%
Apple Computer, Inc.+.................... 13,700 1,055,311
Hewlett-Packard Co....................... 15,600 572,364
International Business Machines Corp..... 11,700 958,698
----------
2,586,373
----------
Cosmetics & Toiletries -- 1.8%
Procter & Gamble Co...................... 47,500 2,944,050
----------
Diversified Manufactured Operations -- 5.7%
3M Co.................................... 21,800 1,622,356
Danaher Corp............................. 12,400 851,508
Dover Corp............................... 12,290 583,038
General Electric Co...................... 116,400 4,108,920
ITT Industries, Inc...................... 41,522 2,128,833
----------
9,294,655
----------
Electric Products-Misc. -- 1.4%
AMETEK, Inc.............................. 20,500 892,775
Emerson Electric Co...................... 15,800 1,324,988
----------
2,217,763
----------
Value
Security Description Shares (Note 2)
--------------------------------------------------------------
Electric-Integrated -- 1.7%
Duke Energy Corp.......................... 24,200 $ 730,840
Exelon Corp............................... 17,200 1,041,288
The Southern Co........................... 21,700 747,782
TXU Corp.................................. 4,100 256,332
----------
2,776,242
----------
Electronic Components-Semiconductors -- 1.1%
Intel Corp................................ 32,500 668,525
Texas Instruments, Inc.................... 32,200 1,070,650
----------
1,739,175
----------
Electronic Forms -- 0.2%
Adobe Systems, Inc.+...................... 8,700 325,815
----------
Electronic Measurement Instruments -- 0.2%
Agilent Technologies, Inc.+............... 11,500 375,935
----------
Electronics-Military -- 0.4%
L-3 Communications Holdings, Inc.......... 7,600 595,308
----------
Enterprise Software/Service -- 0.3%
Oracle Corp.+............................. 23,800 422,212
----------
Entertainment Software -- 0.3%
Electronic Arts, Inc.+.................... 8,200 456,576
----------
Finance-Consumer Loans -- 0.2%
SLM Corp.................................. 6,500 337,870
----------
Finance-Credit Card -- 1.2%
American Express Co....................... 35,300 1,979,624
----------
Finance-Investment Banker/Broker -- 5.9%
Bear Stearns Cos., Inc.................... 5,300 742,530
Citigroup, Inc............................ 63,788 3,168,350
JPMorgan Chase & Co....................... 38,000 1,784,480
Merrill Lynch & Co., Inc.................. 24,966 1,952,841
Morgan Stanley............................ 14,900 1,086,359
The Goldman Sachs Group, Inc.............. 5,484 927,728
----------
9,662,288
----------
Food-Misc. -- 0.6%
General Mills, Inc........................ 18,200 1,030,120
----------
Food-Wholesale/Distribution -- 0.2%
Sysco Corp................................ 9,000 301,050
----------
Industrial Gases -- 0.4%
Air Products & Chemicals, Inc............. 10,700 710,159
----------
Insurance Broker -- 0.3%
Marsh & McLennan Cos., Inc................ 20,000 563,000
----------
Insurance-Multi-line -- 1.2%
Allstate Corp............................. 14,600 915,858
MetLife, Inc.............................. 19,200 1,088,256
----------
2,004,114
----------
Insurance-Property/Casualty -- 0.6%
Chubb Corp................................ 20,400 1,059,984
----------
Invest Management/Advisor Services -- 0.4%
Legg Mason, Inc........................... 5,700 574,902
----------
Machinery-General Industrial -- 0.6%
IDEX Corp................................. 24,239 1,043,489
----------
41
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006 -- (continued)
Value
Security Description Shares (Note 2)
---------------------------------------------------------
COMMON STOCKS (continued)
Medical Instruments -- 0.7%
Boston Scientific Corp.+............ 17,600 $ 260,304
Medtronic, Inc...................... 18,300 849,852
----------
1,110,156
----------
Medical Products -- 2.1%
Johnson & Johnson................... 40,600 2,636,564
The Cooper Cos., Inc................ 15,800 845,300
----------
3,481,864
----------
Medical-Biomedical/Gene -- 1.3%
Amgen, Inc.+........................ 11,200 801,136
Genzyme Corp.+...................... 10,600 715,182
Invitrogen Corp.+................... 8,600 545,326
----------
2,061,644
----------
Medical-Drugs -- 1.7%
Abbott Laboratories................. 16,100 781,816
Novartis AG ADR..................... 12,400 724,656
Pfizer, Inc......................... 47,814 1,356,005
----------
2,862,477
----------
Medical-HMO -- 1.9%
Aetna, Inc.......................... 33,400 1,320,970
Coventry Health Care, Inc.+......... 9,600 494,592
UnitedHealth Group, Inc............. 13,000 639,600
WellPoint, Inc.+.................... 9,000 693,450
----------
3,148,612
----------
Metal Processors & Fabrication -- 0.4%
Precision Castparts Corp............ 9,600 606,336
----------
Multimedia -- 2.0%
News Corp., Class A................. 101,174 1,988,069
Time Warner, Inc.................... 72,744 1,326,123
----------
3,314,192
----------
Networking Products -- 1.0%
Cisco Systems, Inc.+................ 67,900 1,561,700
----------
Oil Comp-Integrated -- 3.0%
Chevron Corp........................ 21,728 1,409,278
ConocoPhillips...................... 17,600 1,047,728
Exxon Mobil Corp.................... 36,700 2,462,570
----------
4,919,576
----------
Oil Companies-Exploration & Production -- 0.8%
Anadarko Petroleum Corp............. 15,600 683,748
XTO Energy, Inc..................... 14,900 627,737
----------
1,311,485
----------
Oil Refining & Marketing -- 0.7%
Valero Energy Corp.................. 23,100 1,188,957
----------
Oil-Field Services -- 0.7%
Schlumberger, Ltd................... 15,300 949,059
Smith International, Inc............ 6,464 250,803
----------
1,199,862
----------
Pharmacy Services -- 0.7%
Medco Health Solutions, Inc.+....... 15,200 913,672
Omnicare, Inc....................... 4,000 172,360
----------
1,086,032
----------
Value
Security Description Shares (Note 2)
-----------------------------------------------------------------
Retail-Apparel/Shoe -- 0.4%
Abercrombie & Fitch Co., Class A.......... 9,000 $ 625,320
------------
Retail-Building Products -- 0.8%
Home Depot, Inc........................... 37,800 1,371,006
------------
Retail-Discount -- 1.6%
Target Corp............................... 12,400 685,100
Wal-Mart Stores, Inc...................... 38,800 1,913,616
------------
2,598,716
------------
Retail-Drug Store -- 0.5%
CVS Corp.................................. 25,600 822,272
------------
Retail-Regional Deptment Stores -- 0.3%
Kohl's Corp.+............................. 8,800 571,296
------------
Retail-Restaurants -- 0.3%
McDonald's Corp........................... 13,200 516,384
------------
Semiconductor Equipment -- 0.2%
Applied Materials, Inc.................... 16,200 287,226
------------
Semiconductors Components-Intergated Circuits -- 0.1%
Linear Technology Corp.................... 7,700 239,624
------------
Telecom Equipment-Fiber Optics -- 0.4%
Corning, Inc.+............................ 25,100 612,691
------------
Telephone-Integrated -- 2.0%
AT&T, Inc................................. 25,400 827,024
BellSouth Corp............................ 17,000 726,750
Sprint Corp............................... 41,400 710,010
Verizon Communications, Inc............... 27,200 1,009,936
------------
3,273,720
------------
Tobacco -- 0.6%
Altria Group, Inc......................... 12,800 979,840
------------
Transport-Services -- 0.3%
United Parcel Service, Inc., Class B...... 6,000 431,640
------------
Web Portals/ISP -- 1.3%
Google, Inc., Class A+.................... 2,800 1,125,320
Yahoo!, Inc.+............................. 41,700 1,054,176
------------
2,179,496
------------
Wireless Equipment -- 1.7%
American Tower Corp., Class A+............ 15,800 576,700
Motorola, Inc............................. 71,982 1,799,550
QUALCOMM, Inc............................. 10,850 394,398
------------
2,770,648
------------
Total Common Stocks
(cost $98,533,314)....................... 105,206,053
------------
PREFERRED STOCKS -- 0.3%
Diversified Financial Services -- 0.2%
General Electric Capital Corp. 8.00%(1)... 14,000 322,000
------------
Finance-Mortgage Loan/Banker -- 0.1%
Fannie Mae,
Series O
7.09%(2)................................. 2,250 119,109
------------
Total Preferred Stocks
(cost $471,375).......................... 441,109
------------
42
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006 -- (continued)
Principal Value
Security Description Amount (Note 2)
----------------------------------------------------------------------
ASSET BACKED SECURITIES -- 5.1%
Diversified Financial Services -- 5.1%
Banc of America Commercial Mtg., Inc.,
Series 2006-4, Class AJ,
5.70% due 07/10/46(3)(4)...................... $ 840,000 $ 855,448
Bear Stearns Commercial Mtg. Securities, Inc.,
Series 2006-PW12, Class G,
5.75% due 09/11/38*(2)........................ 58,000 57,870
Bear Stearns Commercial Mtg. Securities, Inc.
Series 2006-PW12, Class F,
5.93% due 09/11/38*(3)(4)..................... 340,000 342,194
Commercial Mtg. Pass Through Certificates,
Series 2004-LB2A, Class A3,
4.22% due 03/10/39(3)......................... 1,574,000 1,521,916
Countrywide Asset-Backed Certificates,
Series 2006-S6, Class A3,
5.66% due 03/25/34(5)......................... 928,000 926,422
Countrywide Asset-Backed Certificates,
Series 2006-S4, Class A 3,
5.80% due 10/25/36............................ 920,000 926,900
Credit Suisse Mtg. Capital Certificates,
Series 2006-TFLA, Class C,
5.59% due 04/15/21*(2)(3)..................... 260,000 260,080
Credit Suisse Mtg. Capital Certificates,
Series 2006-TFLA, Class D,
5.61% due 04/15/21*(2)(3)..................... 282,000 282,086
JP Morgan Chase Commercial Mtg. Securities
Corp.,
Series 2006-CB16, Class E,
5.84% due 05/12/45*(3)(4)..................... 230,000 233,395
JP Morgan Chase Commercial Mtg. Securities
Corp.,
Series 2006-LDP8, Class H,
5.99% due 05/15/45*(3)(4)(5).................. 195,000 193,561
LB-UBS Commercial Mtg. Trust,
Series 2004-C4, Class C,
5.30% due 06/15/36(3)(4)...................... 95,000 95,345
LB-UBS Commercial Mtg. Trust,
Series 2006-C6, Class K,
6.06% due 06/15/36*(3)(4)..................... 462,000 463,918
Merrill Lynch/Countrywide Commercial Mtg.
Trust,
Series 2006-3, Class AJ,
5.49% due 07/12/46(3)(4)...................... 525,000 526,843
Morgan Stanley Capital I,
Series 2004-IQ8, Class C,
5.30% due 06/15/40(3)......................... 240,000 236,565
Providian Master Note Trust
Series 2006-C1A, Class C1
5.88% due 03/16/15*(2)........................ 700,000 707,219
Wachovia Bank Commercial Mtg. Trust,
Series 2006-WL7A, Class E,
5.60% due 09/15/21*(2)(3)(5).................. 180,000 180,000
Wachovia Bank Commercial Mtg. Trust,
Series 2006-WL7A, Class F,
5.66% due 09/15/21*(2)(3)(5).................. 515,000 515,000
----------
Total Asset Backed Securities
(cost $8,278,944)............................. 8,324,762
----------
CORPORATE BONDS & NOTES -- 11.3%
Aerospace/Defense -- 0.2%
Raytheon Co.
Senior Notes
6.75% due 08/15/07............................ 220,000 222,382
Raytheon Co.
Debentures
6.00% due 12/15/10............................ 55,000 56,451
----------
278,833
----------
Principal Value
Security Description Amount (Note 2)
-------------------------------------------------------
Agricultural Operations -- 0.1%
Bunge Ltd. Finance Corp
Notes
5.35% due 04/15/14................ $107,000 $102,481
--------
Airlines -- 0.1%
American Airlines, Inc.
Pass Through Certs.,
Series 2001-1, Class A-2
6.82% due 05/23/11................ 125,000 122,969
--------
Auto-Cars/Light Trucks -- 0.1%
DaimlerChrysler NA Holding Corp.
Notes
5.75% due 09/08/11................ 55,000 54,741
DaimlerChrysler NA Holding Corp.
Company Guar. Notes
7.30% due 01/15/12................ 60,000 63,773
General Motors Corp.
Senior Notes
7.13% due 07/15/13................ 85,000 74,694
General Motors Corp.
Debentures
8.25% due 07/15/23................ 40,000 34,650
--------
227,858
--------
Banks-Commercial -- 0.5%
Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sub. Notes
7.40% due 06/15/11................ 60,000 64,818
Branch Banking & Trust Co.
Sub. Notes
5.63% due 09/15/16................ 55,000 55,573
First Maryland Capital II
Company Guar. Bonds
6.34% due 02/01/27(2)............. 196,000 191,585
Popular North America, Inc.
Company Guar. Notes
5.65% due 04/15/09................ 90,000 90,306
SouthTrust Bank
Sub. Notes
4.75% due 03/01/13................ 120,000 116,426
UBS AG
Sub. Notes
5.88% due 07/15/16................ 55,000 56,607
Union Bank of California NA
Sub. Notes
5.95% due 05/11/16................ 120,000 123,743
US Bank NA
Notes
3.90% due 08/15/08................ 38,000 37,248
--------
736,306
--------
Banks-Money Center -- 0.1%
BankBoston Capital Trust IV
Company Guar. Bonds
5.99% due 06/08/28(2)............. 222,000 214,906
--------
Banks-Super Regional -- 0.2%
Chemical Bank NA
Sub. Notes
6.13% due 11/01/08................ 136,000 138,858
Comerica, Inc.
Sub. Notes
4.80% due 05/01/15................ 60,000 56,646
43
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006 -- (continued)
Principal Value
Security Description Amount (Note 2)
--------------------------------------------------------------------
CORPORATE BONDS & NOTES (continued)
Banks-Super Regional (continued)
Huntington National Bank
Sub. Notes
6.60% due 06/15/18............................. $ 69,000 $ 73,326
Wells Fargo & Co.
Notes
3.98% due 10/29/10............................. 132,000 126,419
--------
395,249
--------
Broadcast Services/Program -- 0.1%
Clear Channel Communications, Inc.
Bonds
4.90% due 05/15/15............................. 127,000 112,189
Nexstar Finance, Inc.
Senior Sub. Notes
7.00% due 01/15/14............................. 35,000 31,850
--------
144,039
--------
Building Products-Air & Heating -- 0.0%
American Standard, Inc.
Company Guar. Notes
7.38% due 02/01/08............................. 51,000 51,973
--------
Cable TV -- 0.1%
CCH I Holdings LLC/CCH I Holdings Capital Corp.
Bonds
11.00% due 10/01/15*........................... 88,000 79,420
CCH II LLC/CCH II Capital Corp.
Company Guar. Notes
10.25% due 10/01/13*........................... 30,000 30,525
COX Communications, Inc.
Bonds
5.50% due 10/01/15............................. 110,000 105,998
--------
215,943
--------
Casino Hotels -- 0.2%
Harrah's Operating Co., Inc.
Notes
6.50% due 06/01/16............................. 254,000 248,993
MGM Mirage, Inc.
Senior Notes
5.88% due 02/27/14............................. 100,000 92,625
Riviera Holdings Corp.
Company Guar. Notes
11.00% due 06/15/10............................ 55,000 58,025
--------
399,643
--------
Cellular Telecom -- 0.1%
American Cellular Corp.
Senior Notes Series B
10.00% due 08/01/11............................ 100,000 104,750
Centennial Communications Corp.
Senior Notes
11.26% due 01/01/13(2)......................... 100,000 103,250
--------
208,000
--------
Chemicals-Diversified -- 0.1%
EI Du Pont de Nemours & Co.
Senior Notes
4.88% due 04/30/14............................. 38,000 36,836
ICI Wilmington, Inc.
Company Guar. Notes
7.05% due 09/15/07............................. 170,000 172,229
--------
209,065
--------
Principal Value
Security Description Amount (Note 2)
------------------------------------------------------------
Chemicals-Plastics -- 0.1%
BCI US Finance Corp.
Sec. Notes
11.20% due 07/15/10*(2)................ $150,000 $153,000
--------
Chemicals-Specialty -- 0.1%
Cytec Industries, Inc.
Notes
6.00% due 10/01/15..................... 110,000 108,649
Eastman Chemical Co.
Debentures
7.63% due 06/15/24..................... 65,000 71,240
--------
179,889
--------
Commercial Services -- 0.0%
The ServiceMaster Co.
Notes
7.88% due 08/15/09..................... 44,000 46,169
--------
Computer Services -- 0.0%
Computer Sciences Corp.
Notes
3.50% due 04/15/08..................... 65,000 63,104
--------
Containers-Paper/Plastic -- 0.0%
Pliant Corp.
Sec. Notes
11.13% due 09/01/09.................... 82,000 80,155
--------
Cruise Lines -- 0.0%
Royal Caribbean Cruises, Ltd.
Senior Notes
7.00% due 06/15/13..................... 70,000 70,767
--------
Direct Marketing -- 0.0%
Affinity Group, Inc.
Senior Sub. Notes
9.00% due 02/15/12..................... 65,000 65,000
--------
Diversified Financial Services -- 0.3%
ANZ Capital Trust II
Bonds
5.36% due 12/15/13*(6)................. 130,000 125,307
General Electric Capital Corp.
Notes
2.80% due 01/15/07..................... 261,000 259,205
ZFS Finance USA Trust I
Bonds
6.45% due 06/15/16*.................... 110,000 108,795
--------
493,307
--------
Electric-Generation -- 0.0%
The AES Corp.
Senior Notes
8.88% due 02/15/11..................... 75,000 80,250
--------
Electric-Integrated -- 1.2%
American Electric Power Co., Inc.
Senior Notes
4.71% due 08/16/07(1).................. 72,000 71,508
Appalachian Power Co.
Senior Notes
5.00% due 06/01/17..................... 72,000 67,446
CenterPoint Energy Houston Electric LLC
Sec. Notes Series L2
5.60% due 07/01/23..................... 100,000 96,867
Centerpoint Energy, Inc.
Senior Notes Series B
5.88% due 06/01/08..................... 140,000 140,657
44
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006 -- (continued)
Principal Value
Security Description Amount (Note 2)
----------------------------------------------------------
CORPORATE BONDS & NOTES (continued)
Electric-Integrated (continued)
Commonwealth Edison Co.
1st Mtg. Notes
5.95% due 08/15/16................ $110,000 $ 111,522
Consumers Energy Co.
1st Mtg. Bonds
Series C
4.25% due 04/15/08................ 140,000 137,544
Dominion Resources, Inc.
Senior Notes
Series A
5.69% due 05/15/08(1)............. 132,000 132,540
Duke Energy Corp.
Senior Notes
4.20% due 10/01/08................ 120,000 117,493
Energy East Corp.
Notes
6.75% due 07/15/36................ 125,000 130,841
Entergy Louisiana LLC
1st Mtg. Bonds
5.83% due 11/01/10................ 195,000 194,499
Florida Power & Light Co.
1st Mtg. Bonds
5.95% due 10/01/33................ 79,000 81,527
Pepco Holdings, Inc.
Notes
5.50% due 08/15/07................ 142,000 141,967
Pepco Holdings, Inc.
Notes
6.45% due 08/15/12................ 55,000 56,919
PSEG Power LLC
Company Guar. Notes
7.75% due 04/15/11................ 65,000 70,525
PSI Energy, Inc.
Debentures
7.85% due 10/15/07................ 219,000 224,260
Public Service Electric & Gas Co.
Sec. Notes
5.00% due 08/15/14................ 66,000 64,269
Puget Sound Energy, Inc.
Senior Notes
5.20% due 10/01/15................ 212,000 204,104
Southern Energy, Inc.
Notes
7.90% due 07/15/09+(5)(7)(12)..... 150,000 0
----------
2,044,488
----------
Electronic Parts Distribution -- 0.1%
Arrow Electronics, Inc.
Debentures
6.88% due 06/01/18................ 108,000 110,376
----------
Enterprise Software/Service -- 0.0%
Oracle Corp.
Notes
5.00% due 01/15/11................ 54,000 53,484
----------
Finance-Auto Loans -- 0.3%
Ford Motor Credit Co.
Notes
7.38% due 10/28/09................ 105,000 102,039
Ford Motor Credit Co.
Notes
9.96% due 04/15/12(2)............. 55,000 57,552
General Motors Acceptance Corp.
Notes
6.75% due 12/01/14................ 15,000 14,644
General Motors Acceptance Corp.
Notes
6.88% due 09/15/11................ 355,000 353,119
Principal Value
Security Description Amount (Note 2)
-----------------------------------------------------------
Finance-Auto Loans (continued)
General Motors Acceptance Corp.
Notes
6.88% due 08/28/12................... $ 13,000 $ 12,868
--------
540,222
--------
Finance-Commercial -- 0.1%
CIT Group, Inc.
Notes
5.85% due 09/15/16................... 55,000 55,650
Transamerica Finance Corp.
Senior Notes
6.40% due 09/15/08................... 75,000 76,475
--------
132,125
--------
Finance-Credit Card -- 0.1%
Capital One Financial Corp.
Senior Notes
5.70% due 09/15/11................... 110,000 110,775
Capital One Financial Corp.
Sub. Notes
6.15% due 09/01/16................... 110,000 111,305
--------
222,080
--------
Finance-Investment Banker/Broker -- 0.5%
Citigroup, Inc.
Sub. Notes
5.00% due 09/15/14................... 55,000 53,585
Goldman Sachs Group, Inc.
Notes
6.13% due 02/15/33................... 130,000 129,502
JP Morgan Chase Capital XVIII
Bonds
Series R
6.95% due 08/17/36................... 55,000 58,420
Lehman Brothers Holdings, Inc.
Notes
4.50% due 07/26/10................... 130,000 126,436
Lehman Brothers Holdings, Inc.
Senior Notes
5.75% due 05/17/13................... 120,000 122,131
Merrill Lynch & Co., Inc.
Sub. Notes
6.22% due 09/15/26................... 130,000 132,242
Morgan Stanley
Senior Notes
5.63% due 01/09/12................... 100,000 101,296
Morgan Stanley
Senior Notes
6.25% due 08/09/26................... 100,000 103,525
--------
827,137
--------
Finance-Mortgage Loan/Banker -- 0.3%
Residential Capital Corp.
Senior Notes
6.38% due 06/30/10................... 411,000 415,840
Residential Capital Corp.
Senior Notes
6.50% due 04/17/13................... 60,000 60,933
--------
476,773
--------
Financial Guarantee Insurance -- 0.1%
The PMI Group, Inc.
Notes
6.00% due 09/15/16................... 84,000 85,064
--------
Forestry -- 0.0%
Weyerhaeuser Co.
Debentures
6.88% due 12/15/33................... 65,000 63,837
--------
45
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006 -- (continued)
Principal Value
Security Description Amount (Note 2)
------------------------------------------------------------
CORPORATE BONDS & NOTES (continued)
Funeral Services & Related Items -- 0.0%
Service Corp. International
Senior Notes
6.75% due 04/01/16..................... $ 60,000 $ 57,525
--------
Gas-Distribution -- 0.1%
Sempra Energy
Senior Notes
4.62% due 05/17/07..................... 60,000 59,709
Southern California Gas Co.
1st Mtg. Bonds
5.75% due 11/15/35..................... 75,000 75,354
--------
135,063
--------
Gold Mining -- 0.1%
Newmont Mining Corp.
Notes
8.63% due 05/15/11..................... 65,000 73,025
--------
Independant Power Producers -- 0.2%
Calpine Corp.
Sec. Notes
8.75% due 07/15/13*(8)(9).............. 150,000 151,125
NRG Energy, Inc.
Company Guar. Notes
7.38% due 02/01/16..................... 160,000 159,000
Reliant Energy, Inc.
Sec. Notes
9.50% due 07/15/13..................... 75,000 77,813
--------
387,938
--------
Insurance-Life/Health -- 0.5%
Americo Life, Inc.
Notes
7.88% due 05/01/13*.................... 134,000 134,749
AmerUs Group Co.
Senior Notes
5.83% due 05/16/11..................... 120,000 124,803
Great West Life & Annuity Insurance Co.
Bonds
7.15% due 05/16/16*.................... 198,000 205,642
MIC Financing Trust I
Pass Through Certs.
8.38% due 02/01/27*.................... 67,000 67,375
Monumental Global Funding II
Notes
5.65% due 07/14/11*.................... 66,000 67,116
Nationwide Life Global Funding I
Notes
5.35% due 03/15/11*.................... 120,000 120,645
--------
720,330
--------
Insurance-Multi-line -- 0.2%
MetLife, Inc.
Senior Notes
5.00% due 11/24/13..................... 72,000 70,001
Metropolitan Life Global Funding I
Sec. Notes
5.75% due 07/25/11*.................... 55,000 56,184
The Allstate Corp.
Senior Notes
7.20% due 12/01/09..................... 238,000 252,243
--------
378,428
--------
Principal Value
Security Description Amount (Note 2)
--------------------------------------------------------------
Insurance-Mutual -- 0.1%
Liberty Mutual Group, Inc.
Bonds
7.50% due 08/15/36*..................... $100,000 $107,270
--------
Leisure Products -- 0.1%
Brunswick Corp.
Notes
5.00% due 06/01/11...................... 103,000 98,497
--------
Medical Products -- 0.1%
Baxter International, Inc.
Senior Bonds
5.90% due 09/01/16...................... 55,000 56,486
Universal Hospital Services, Inc.
Senior Notes
10.13% due 11/01/11..................... 65,000 68,250
--------
124,736
--------
Medical-Drugs -- 0.3%
Abbott Laboratories
Notes
5.88% due 05/15/16...................... 132,000 136,745
American Home Products Corp.
Notes
6.95% due 03/15/11...................... 123,000 130,793
Merck & Co., Inc.
Notes
2.50% due 03/30/07...................... 129,000 127,278
Wyeth
Bonds
5.50% due 02/01/14...................... 126,000 126,238
--------
521,054
--------
Medical-Hospitals -- 0.1%
HCA, Inc.
Senior Notes
6.95% due 05/01/12...................... 100,000 87,625
--------
Medical-Wholesale Drug Distribution -- 0.1%
Cardinal Health, Inc.
Notes
5.80% due 10/15/16*..................... 110,000 109,848
--------
Metal Processors & Fabrication -- 0.1%
Timken Co.
Notes
5.75% due 02/15/10...................... 96,000 95,615
--------
Multimedia -- 0.4%
Belo Corp.
Senior Notes
6.75% due 05/30/13...................... 60,000 61,508
News America, Inc.
Company Guar. Bonds
7.30% due 04/30/28...................... 80,000 85,330
Time Warner Cos., Inc.
Company Guar. Notes
7.25% due 10/15/17...................... 57,000 61,526
Time Warner Entertainment Co., LP
Senior Debentures
8.38% due 03/15/23...................... 221,000 255,227
Time Warner Entertainment Co. LP
Senior Notes
8.38% due 07/15/33...................... 60,000 70,764
46
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006 -- (continued)
Principal Value
Security Description Amount (Note 2)
-----------------------------------------------------------------
CORPORATE BONDS & NOTES (continued)
Multimedia (continued)
Time Warner, Inc.
Company Guar. Notes
6.75% due 04/15/11......................... $ 60,000 $ 62,753
Viacom, Inc.
Senior Notes
6.88% due 04/30/36*........................ 50,000 49,428
--------
646,536
--------
Office Automation & Equipment -- 0.1%
Pitney Bowes, Inc.
Senior Notes
4.75% due 01/15/16......................... 111,000 105,623
--------
Oil Comp-Integrated -- 0.1%
Hess Corp.
Bonds
7.88% due 10/01/29......................... 80,000 94,538
--------
Oil Companies-Exploration & Production -- 0.3%
Anadarko Petroleum Corp.
Senior Notes
5.95% due 09/15/16......................... 110,000 111,314
El Paso Production Holding Co.
Company Guar. Notes
7.75% due 06/01/13......................... 165,000 168,713
Encore Acquisition Co.
Senior Sub. Notes
6.00% due 07/15/15......................... 41,000 37,515
Encore Acquisition Co.
Senior Sub. Notes
6.25% due 04/15/14......................... 24,000 22,440
Hilcorp Energy I LP
Senior Notes
10.50% due 09/01/10*....................... 61,000 65,651
--------
405,633
--------
Oil Refining & Marketing -- 0.1%
The Premcor Refining Group, Inc.
Senior Notes
6.75% due 02/01/11......................... 126,000 131,552
--------
Oil-Field Services -- 0.0%
Hanover Compressor Co.
Senior Notes
9.00% due 06/01/14......................... 75,000 79,500
--------
Paper & Related Products -- 0.1%
Plum Creek Timberlands LP
Company Guar. Notes
5.88% due 11/15/15......................... 103,000 101,885
--------
Pipelines -- 0.3%
Consolidated Natural Gas Co.
Senior Notes Series B
5.38% due 11/01/06......................... 82,000 81,987
Duke Energy Field Services LLC
Notes
6.88% due 02/01/11......................... 60,000 63,063
NGC Corp Capital Trust
Company Guar. Bonds Series B
8.32% due 06/01/27......................... 90,000 81,900
ONEOK Partners LP
Bonds
6.15% due 10/01/16......................... 55,000 55,518
Principal Value
Security Description Amount (Note 2)
----------------------------------------------------------
Pipelines (continued)
Reliant Energy, Inc.
Notes
7.75% due 02/15/11.................. $130,000 $140,994
--------
423,462
--------
Protection/Safety -- 0.1%
Monitronics International, Inc.
Senior Sub. Notes
11.75% due 09/01/10................. 85,000 82,238
--------
Publishing-Newspapers -- 0.1%
Knight Ridder, Inc.
Debentures
6.88% due 03/15/29.................. 70,000 66,810
Knight Ridder, Inc.
Debentures
7.15% due 11/01/27.................. 75,000 72,312
--------
139,122
--------
Radio -- 0.1%
Chancellor Media Corp.
Company Guar. Notes
8.00% due 11/01/08.................. 182,000 190,299
--------
Real Estate Investment Trusts -- 0.3%
AvalonBay Communities, Inc.
Senior Notes
5.75% due 09/15/16.................. 110,000 111,097
Equity One, Inc.
Senior Notes
6.25% due 01/15/17.................. 50,000 51,149
Heritage Property Investment Trust
Notes
4.50% due 10/15/09.................. 60,000 58,558
Mack-Cali Realty LP
Bonds
5.80% due 01/15/16.................. 60,000 60,122
Reckson Operating Partnership LP
Senior Notes
6.00% due 03/31/16.................. 35,000 35,314
Simon Property Group LP
Notes
5.38% due 08/28/08.................. 40,000 39,977
Simon Property Group LP
Notes
5.60% due 09/01/11.................. 55,000 55,409
--------
411,626
--------
Real Estate Management/Services -- 0.1%
AMB Property LP
Company Guar. Notes
5.90% due 08/15/13.................. 44,000 44,689
EOP Operating LP
Senior Notes
7.00% due 07/15/11.................. 120,000 127,027
--------
171,716
--------
Rental Auto/Equipment -- 0.0%
Rent-Way, Inc.
Sec. Notes
11.88% due 06/15/10................. 55,000 63,800
--------
47
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006 -- (continued)
Principal Value
Security Description Amount (Note 2)
-----------------------------------------------------------------
CORPORATE BONDS & NOTES (continued)
Rubber-Tires -- 0.0%
Cooper-Standard Automotive, Inc.
Company Guar. Notes
8.38% due 12/15/14........................ $ 9,000 $ 6,615
----------
Savings & Loans/Thrifts -- 0.6%
Downey Financial Corp.
Notes
6.50% due 07/01/14........................ 140,000 140,375
Golden West Financial Corp.
Senior Notes
4.75% due 10/01/12........................ 129,000 125,583
Independence Community Bank Corp.
Notes
3.50% due 06/20/08........................ 64,000 62,065
Sovereign Bancorp, Inc.
Senior Notes
4.80% due 09/01/10*....................... 206,000 201,694
Washington Mutual Bank
Sub. Notes
5.50% due 01/15/13........................ 238,000 237,867
Washington Mutual Bank
Sub. Notes
5.95% due 05/20/13........................ 120,000 122,494
Western Financial Bank
Senior Debentures
9.63% due 05/15/12........................ 126,000 139,234
----------
1,029,312
----------
Seismic Data Collection -- 0.1%
Seitel, Inc.
Senior Notes
11.75% due 07/15/11....................... 75,000 89,063
----------
Special Purpose Entities -- 0.4%
BAE Systems Holdings, Inc.
Notes
5.20% due 08/15/15*....................... 175,000 167,439
Consolidated Communications Illinois/Texas
Holdings, Inc.
Senior Notes
9.75% due 04/01/12........................ 159,000 167,745
Pricoa Global Funding I
Notes
5.30% due 09/27/13*....................... 110,000 109,935
Principal Life Global Funding I Sec.
Notes
5.25% due 01/15/13*....................... 184,000 183,121
Swiss Re Capital I LP
Company Guar. Bonds
6.85% due 05/25/16*(6).................... 62,000 63,857
----------
692,097
----------
Telecom Equipment-Fiber Optics -- 0.1%
Corning, Inc.
Bonds
7.25% due 08/15/36........................ 117,000 124,609
----------
Telecom Services -- 0.0%
Embarq Corp.
Notes
7.08% due 06/01/16........................ 14,000 14,281
Principal Value
Security Description Amount (Note 2)
-------------------------------------------------------------
Telecom Services (continued)
Qwest Corp.
Senior Notes
7.50% due 10/01/14*.................. $ 25,000 $ 25,813
-----------
40,094
-----------
Telephone-Integrated -- 0.3%
GTE Northwest, Inc.
Debentures
Series D
5.55% due 10/15/08................... 70,000 70,040
GTE Southwest, Inc.
1st Mtg. Bonds
8.50% due 11/15/31................... 140,000 167,569
LCI International, Inc.
Senior Notes
7.25% due 06/15/07................... 140,000 140,350
New England Telephone & Telegraph Co.
Debentures
7.88% due 11/15/29................... 80,000 86,828
Verizon New York, Inc.
Debentures
Series A
6.88% due 04/01/12................... 102,000 106,369
-----------
571,156
-----------
Television -- 0.2%
CBS Corp.
Company Guar. Notes
6.63% due 05/15/11................... 120,000 124,684
Paxson Communications, Inc.
Sec. Notes
11.76% due 01/15/13*(2).............. 150,000 151,125
Young Broadcasting, Inc.
Company Guar. Bonds
10.00% due 03/01/11.................. 20,000 18,675
-----------
294,484
-----------
Transport-Air Freight -- 0.2%
Atlas Air, Inc.
Pass Through Certs.
Series 1991-B
7.63% due 01/02/15................... 366,911 381,587
-----------
Transport-Rail -- 0.1%
Burlington Northern Santa Fe Corp.
Debentures
7.29% due 06/01/36................... 156,000 184,871
-----------
Transport-Services -- 0.1%
FedEx Corp.
Company Guar. Notes
5.50% due 08/15/09................... 55,000 55,353
Ryder System, Inc.
Notes
5.00% due 06/15/12................... 138,000 132,806
-----------
188,159
-----------
Total Corporate Bonds & Notes
(cost $18,383,875) 18,641,023
-----------
48
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006 -- (continued)
Principal Value
Security Description Amount (Note 2)
-----------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES -- 3.5%
Banks-Commercial -- 0.4%
Banco Continental de Panama SA
Notes
6.63% due 12/01/10*......................... $ 35,000 $ 35,000
Barclays Bank PLC
Notes
5.93% due 12/15/16*(6)...................... 130,000 129,800
Caisse Nationale des Caisses d'Epargne et de
Prevoyance
Notes
5.55% due 12/30/09(2)(6).................... 109,000 87,745
Glitnir Banki HF
Sub. Notes
6.69% due 06/15/11*......................... 62,000 63,401
Landsbanki Islands HF
Notes
6.10% due 08/25/11*......................... 55,000 55,576
NIBC Bank NV
Bonds
5.82% due 12/11/13*......................... 60,000 58,405
Standard Bank PLC
Sub. Bonds
8.01% due 07/27/16(6)....................... 172,000 177,871
--------
607,798
--------
Banks-Money Center -- 0.3%
HBOS Capital Funding LP
Bank Guar. Bonds
6.85% due 03/23/09(6)....................... 200,000 200,500
Mizuho Financial Group Cayman, Ltd.
Bank Guar. Notes
8.38% due 04/27/09(6)....................... 145,000 153,613
National Westminster Bank PLC
Sub. Notes
7.75% due 10/16/07(6)....................... 55,000 56,146
--------
410,259
--------
Beverages-Wine/Spirits -- 0.0%
Diageo Capital PLC
Company Guar. Notes
5.13% due 01/30/13.......................... 110,000 108,942
--------
Brewery -- 0.0%
SABMiller PLC
Notes
6.50% due 07/01/16*......................... 100,000 104,462
--------
Broadcast Services/Program -- 0.0%
Grupo Televisa SA
Senior Notes
6.63% due 03/18/25.......................... 139,000 141,808
--------
Cellular Telecom -- 0.1%
America Movil SA de CV
Bonds
6.38% due 03/01/35.......................... 112,000 107,039
--------
Diversified Manufactured Operations -- 0.1%
Siemens Financieringsmaatschappij NV
Notes
5.75% due 10/17/16*......................... 55,000 55,823
Tyco International Group SA
Company Guar. Notes
6.00% due 11/15/13.......................... 120,000 124,180
--------
180,003
--------
Finance-Consumer Loans -- 0.0%
Aiful Corp.
Notes
4.45% due 02/16/10*......................... 55,000 52,708
--------
Principal Value
Security Description Amount (Note 2)
-----------------------------------------------------------------
Insurance-Multi-line -- 0.2%
Aegon NV
Sub. Notes
5.80% due 07/15/14(2)...................... $156,000 $129,558
Fairfax Financial Holdings, Ltd.
Notes
8.25% due 10/01/15......................... 70,000 64,838
ING Groep NV
Bonds
5.78% due 12/08/15(6)...................... 140,000 138,148
--------
332,544
--------
Insurance-Reinsurance -- 0.1%
Montpelier Re Holdings, Ltd.
Senior Notes
6.13% due 08/15/13......................... 100,000 96,606
--------
Investment Companies -- 0.1%
Canadian Oil Sands, Ltd.
Notes
5.80% due 08/15/13*........................ 124,000 124,875
--------
Machinery-Construction & Mining -- 0.0%
Atlas Copco AB
Notes
6.50% due 04/01/08*........................ 89,000 90,399
--------
Metal-Diversified -- 0.2%
Inco Ltd
Bonds
5.70% due 10/15/15......................... 110,000 106,017
Inco, Ltd.
Bonds
7.20% due 09/15/32......................... 60,000 61,278
Inco, Ltd.
Notes
7.75% due 05/15/12......................... 100,000 108,042
--------
275,337
--------
Oil Comp-Integrated -- 0.2%
Petrobras International Finance Co.
Senior Notes
6.13% due 10/06/16......................... 132,000 131,415
Shell International Finance BV
Company Guar. Notes
5.63% due 06/27/11......................... 120,000 122,866
--------
254,281
--------
Oil Companies-Exploration & Production -- 0.0%
Nexen, Inc.
Bonds
5.88% due 03/10/35......................... 65,000 61,973
--------
Paper & Related Products -- 0.1%
Stora Enso Oyj
Bonds
7.25% due 04/15/36*........................ 100,000 103,534
--------
Pipelines -- 0.1%
Kinder Morgan Finance Co. ULC
Company Guar. Notes
5.70% due 01/05/16......................... 105,000 96,927
--------
Precious Metals -- 0.1%
Barrick Gold Finance Co.
Company Guar. Bonds
7.50% due 05/01/07......................... 97,000 98,148
Barrick Gold Finance Co.
Bonds
5.80% due 11/15/34......................... 60,000 55,833
--------
153,981
--------
49
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006 -- (continued)
Principal Value
Security Description Amount (Note 2)
---------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (continued)
Property Trust -- 0.1%
WEA Finance LLC/WCI Finance LLC
Senior Notes
5.70% due 10/01/16*....................... $110,000 $109,854
--------
Real Estate Operations & Development -- 0.1%
Brookfield Asset Management, Inc.
Notes
8.13% due 12/15/08........................ 157,000 165,294
--------
Retail-Drug Store -- 0.0%
Jean Coutu Group, Inc.
Senior Notes
7.63% due 08/01/12........................ 2,000 2,103
--------
Satellite Telecom -- 0.0%
Intelsat Bermuda, Ltd.
Company Guar. Notes
9.25% due 06/15/16*....................... 50,000 52,563
--------
Savings & Loans/Thrifts -- 0.1%
Washington Mutual Preferred Funding Cayman
Bonds
7.25% due 03/15/11*(6).................... 130,000 129,997
--------
Special Purpose Entities -- 0.5%
Aries Vermoegensverwaltungs GmbH
Bonds
9.60% due 10/25/14........................ 250,000 322,975
Hybrid Capital Funding I LP
(Westlab performance linked)
Sub. Notes
8.00% due 06/30/11(6)..................... 286,000 295,578
SovRisc BV
Notes
4.63% due 10/31/08*....................... 133,000 131,938
--------
750,491
--------
Specified Purpose Acquisitions -- 0.1%
Nell AF SARL
Company Guar. Bonds
8.38% due 08/15/15*....................... 120,000 119,100
--------
Telecom Services -- 0.3%
Telenet Group Holding NV
Disc. Notes
11.50% due 06/15/14*(1)................... 146,000 127,750
TELUS Corp
Notes
7.50% due 06/01/07........................ 143,000 144,865
TELUS Corp
Notes
8.00% due 06/01/11........................ 238,000 262,349
--------
534,964
--------
Telephone-Integrated -- 0.2%
British Telecommunications PLC
Bonds
8.63% due 12/15/30........................ 70,000 93,385
Telecom Italia Capital SA
Company Guar. Notes
4.00% due 01/15/10........................ 165,000 156,339
Telecom Italia Capital SA
Notes
5.25% due 10/01/15........................ 55,000 50,963
Telecom Italia Capital SA
Company Guar. Bonds
6.38% due 11/15/33........................ 46,000 43,020
--------
343,707
--------
Principal Value
Security Description Amount (Note 2)
---------------------------------------------------------------
Transport-Rail -- 0.1%
Canadian National Railway Co.
Notes
6.38% due 10/15/11.................. $ 130,000 $ 136,220
-----------
Total Foreign Corporate Bonds & Notes
(cost $5,647,184)................... 5,647,769
-----------
FOREIGN GOVERNMENT AGENCIES -- 1.8%
Sovereign -- 1.8%
Federal Republic of Brazil
Notes
8.00% due 01/15/18.................. 200,000 219,700
Federal Republic of Brazil
Bonds
10.50% due 07/14/14................. 205,000 257,583
Republic of Argentina
Bonds
5.59% due 08/03/12(2)............... 230,000 160,885
Republic of Argentina
Notes
8.28% due 12/31/33.................. 355,998 342,648
Republic of Turkey
Notes
9.00% due 06/30/11.................. 190,000 207,575
Republic of Turkey
Senior Notes
11.88% due 01/15/30................. 380,000 560,025
Republic of Venezuela
Notes
8.50% due 10/08/14.................. 100,000 110,750
Republic of Venezuela
Bonds
9.25% due 09/15/27.................. 500,000 612,250
Russia Federation
Bonds
7.75% due 03/31/30*(1).............. 125,000 139,298
Russian Federation
Bonds
7.75% due 03/31/30(1)............... 350,000 390,634
-----------
Total Foreign Government Agencies
(cost $2,725,308)................... 3,001,348
-----------
U.S. GOVERNMENT AGENCIES -- 13.1%
Federal Home Loan Mtg. Corp. -- 7.0%
Federal Home Loan Mtg. Corp..........
4.50% due 04/01/19.................. 1,673,113 1,616,502
4.75% due 01/18/11.................. 155,000 154,063
5.00% due 05/01/34.................. 1,220,876 1,176,488
5.00% due 06/01/34.................. 1,596,205 1,538,171
5.00% due 11/01/35.................. 1,150,973 1,107,571
5.50% due 07/01/34.................. 662,558 654,698
5.74% due 08/01/36.................. 1,500,000 1,504,679
6.00% due October TBA............... 976,000 980,270
6.00% due 12/01/33.................. 1,052,436 1,060,932
6.50% due 03/01/36.................. 350,118 356,656
6.50% due 05/01/36.................. 1,000,000 1,018,675
6.88% due 09/15/10.................. 231,000 247,188
7.00% due 04/01/32.................. 188,863 194,393
-----------
11,610,286
-----------
Federal Home Loan Mtg. Corp. Reference REMIC -- 0.2%
Series R004, Class AL
5.13% due 12/15/13................... 247,647 245,576
-----------
50
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006 -- (continued)
Principal Value
Security Description Amount (Note 2)
-------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (continued)
Federal National Mtg. Assoc. -- 4.6%
5.00% due 07/01/18........................... $ 857,639 $ 845,085
5.00% due 08/01/18........................... 384,230 378,605
5.00% due 07/01/33........................... 1,515,508 1,461,386
5.50% due 10/01/17........................... 164,661 165,026
5.50% due 11/01/17........................... 475,133 476,188
5.50% due 12/01/33........................... 1,053,255 1,040,594
5.82% due 02/01/36........................... 370,141 370,101
6.00% due 06/01/17........................... 337,993 343,257
6.00% due 12/01/33........................... 794,039 799,445
6.00% due 07/01/34........................... 472,795 476,212
6.50% due 09/01/10........................... 111,859 113,308
6.50% due 09/01/32........................... 828,084 846,356
6.50% due 04/01/34........................... 158,414 161,487
------------
7,477,050
------------
Federal National Mtg. Assoc. Benchmark REMIC -- 0.3%
Series 2006-B1, Class AB
6.00% due 06/25/16.......................... 518,197 521,435
------------
Government National Mtg. Assoc. -- 1.0%
5.50% due 05/15/33........................... 545,563 542,454
5.50% due 09/15/33........................... 251,201 249,770
5.50% due 12/15/33........................... 675,686 671,835
7.50% due 01/15/32........................... 165,800 172,566
------------
1,636,625
------------
Total U.S. Government Agencies
(cost $21,844,476)........................... 21,490,972
------------
U.S. GOVERNMENT TREASURIES -- 0.6%
United States Treasury Bonds
4.50% due 02/15/36........................... 511,000 489,642
6.25% due 08/15/23........................... 308,000 357,593
United States Treasury Notes
4.50% due 11/15/15........................... 130,000 128,740
------------
Total U.S. Government Treasuries
(cost $974,208).............................. 975,975
------------
Total Long-Term Investment Securities
(cost $156,858,684).......................... 163,729,011
------------
REPURCHASE AGREEMENTS -- 1.2%
Agreement with State Street Bank & Trust Co.,
bearing interest at 3.00%, dated 09/30/06,
to be repurchased 10/01/06 in the amount
of $176,044 and collateralized by $180,000
of Federal Home Loan Mtg. Notes, bearing
interest at 6.08%, due 07/26/13 and having
an approximate value of $182,700............. 176,000 176,000
State Street Bank & Trust Co.
Joint Repurchase Agreement(10)............... 1,717,000 1,717,000
------------
Total Repurchase Agreements -- 1.2%
(cost $1,893,000)............................ 1,893,000
------------
TOTAL INVESTMENTS --
(cost $158,751,684)(11)...................... 101.2% 165,622,011
Liabilities in excess of other assets........... (1.2) (1,927,362)
---------- ------------
NET ASSETS -- 100.0% $163,694,649
========== ============
Bond & Notes Sold Short -- (0.6%)
U.S. Government Agencies -- (0.6%)
Federal Home Loan Mtg. Corp.
6.50% due October TBA
(proceeds $(994,147))........................ $ (976,000) $ (993,995)
============
- --------
+ Non-income producing security.
* Securities exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from registration,
normally to qualified institutional buyers. The Fund has no rights to demand
registration of these securities. At September 30, 2006, the aggregate value
of these securities was $7,454,870 representing 4.6% of net assets. Unless
otherwise indicated, these securities are not considered to be illiquid.
(1)"Step-up" security where the rate increases ("steps-up") at a predetermined
rate. Rate shown reflects the increased rate.
(2)Floating rate security where the rate fluctuates. The rate moves up or down
at each reset date. The rate reflected is as of September 30,2006.
(3)Commercial Mortgaged Back Security.
(4)Variable Rate Security -- the rate reflected is as of September 30, 2006,
maturity date reflects the stated maturity date.
(5)Fair valued security; see Note 2.
(6)Perpetual maturity -- maturity date reflects the next call date.
(7)Illiquid security
(8)Bond in default
(9)Company has filed Chapter 11 bankruptcy protection.
(10)See Note 2 for details of Joint Repurchase Agreement.
(11)See Note 6 for cost of investment on a tax basis.
(12)To the extent permitted by the Statement of Additional Information, the
Balanced Assets Fund may invest in restricted securities. The Fund has no
right to demand registration of these securities. The securities are valued
pursuant to Note 2. Restricted securities held by a Fund may not be sold
except in exempt transactions or in a public offering registered under the
Securities Act of 1933. The risk of investing in such securities is
generally greater than the risk of investing in the securities of widely
held, publicly traded companies. Lack of a secondary market and resale
restrictions may result in the inability of a Fund to sell a security at a
fair price and may substantially delay the sale of the security. In
addition, these securities may exhibit greater price volatility than
securities for which secondary markets exist. As of September 30, 2006, the
Balanced Assets fund held the following restricted security:
Market
Value
Acquisition Principal Acquisition Market Per Par % of
Name Date Amount Cost Value Amount Net Assets
---- ----------- --------- ----------- ------ ------- ----------
Southern
Energy, Inc.
7.90% due
07/15/09.... 1/10/2006 150,000 $0 $0 $0 0%
ADR -- American Depository Receipt
REMIC -- RealEstate Mortgage Investments Conducts
TBA -- Securities purchased on a forward commitment basis with an approximate
principal amount and no definitive maturity date. The actual principal
and maturity date will be determined upon settlement date.
See Notes to Financial Statements
51
SunAmerica International Equity Fund
PORTFOLIO PROFILE -- September 30, 2006 -- (unaudited)
Industry Allocation*
Banks-Commercial.................... 24.9%
Medical-Drugs....................... 11.2
Index Fund.......................... 5.5
Auto-Cars/Light Trucks.............. 4.4
Gas-Distribution.................... 4.2
Applications Software............... 3.6
Oil-Field Services.................. 3.5
Tobacco............................. 3.1
Insurance-Multi-line................ 2.8
Telephone-Integrated................ 2.8
Chemicals-Diversified............... 2.4
Machinery-General Industrial........ 2.2
Electronic Components-Misc.......... 2.1
Office Automation & Equipment....... 2.1
Electric Products-Misc.............. 2.0
Building-Heavy Construction......... 2.0
Diversified Manufactured Operations. 2.0
Athletic Footwear................... 1.8
Oil Comp-Integrated................. 1.7
Food-Misc........................... 1.6
Steel-Producers..................... 1.6
Audio/Video Products................ 1.6
Finance-Leasing Companies........... 1.4
Retail-Consumer Electronics......... 1.4
Import/Export....................... 1.3
Wireless Equipment.................. 1.2
Food-Retail......................... 1.1
Beverages-Non-alcoholic............. 0.9
Diversified Minerals................ 0.9
Insurance-Property/Casualty......... 0.7
Electronic Components-Semiconductors 0.6
Footwear & Related Apparel.......... 0.5
Real Estate Operations & Development 0.4
Telecom Services.................... 0.4
Repurchase Agreements............... 0.3
-----
100.2%
=====
- --------
* Calculated as a percentage of net assets.
Country Allocation*
Japan......... 22.8%
France........ 18.8
Germany....... 8.8
United Kingdom 7.7
Switzerland... 6.0
Spain......... 5.9
Italy......... 5.1
Australia..... 3.7
Norway........ 3.6
Ireland....... 2.7
Greece........ 2.6
Sweden........ 2.3
Belgium....... 2.2
United States. 2.2
Netherlands... 1.7
Hong Kong..... 1.0
Finland....... 1.2
Singapore..... 0.8
Korea......... 0.6
Cayman Islands 0.5
-----
100.2%
=====
52
SunAmerica International Equity Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006
Value
Security Description Shares (Note 2)
------------------------------------------------------------------
EXCHANGE-TRADED FUNDS -- 5.5%
France -- 3.6%
streetTRACKS MSCI Europe+................... 25,200 $ 4,126,014
------------
United States -- 1.9%
iShares MSCI Japan Index Fund............... 160,700 2,175,878
------------
Total Exchange-Traded Funds
(cost $6,079,307).......................... 6,301,892
------------
COMMON STOCKS -- 94.4%
Australia -- 3.7%
BHP Billiton, Ltd........................... 51,800 989,485
CIH, Ltd.................................... 28,600 1,151,681
QBE Insurance Group, Ltd.................... 45,200 825,345
Woolworths, Ltd............................. 82,880 1,251,469
------------
4,217,980
------------
Belgium -- 2.2%
KBC Groep NV................................ 23,520 2,476,929
------------
Cayman Island -- 0.5%
Prime Success International Group, Ltd...... 748,000 524,228
------------
China -- 0.0%
China Merchants Bank Co., Ltd.+............. 879 1,239
------------
Finland -- 1.2%
Nokia Oyj ADR............................... 69,090 1,360,382
------------
France -- 15.2%
Alstom+..................................... 28,000 2,533,312
AXA SA...................................... 87,350 3,221,024
BNP Paribas................................. 38,260 4,116,550
Renault SA.................................. 20,200 2,316,843
Sanofi-Aventis.............................. 33,180 2,953,589
Vinci SA.................................... 20,700 2,304,631
------------
17,445,949
------------
Germany -- 8.8%
Adidas-Salomon AG........................... 43,800 2,060,557
Bayer AG.................................... 55,020 2,804,680
Deutsche Bank AG............................ 23,800 2,871,891
Siemens AG.................................. 26,400 2,303,186
------------
10,040,314
------------
Greece -- 2.6%
Coca-Cola Hellenic Bottling Co. SA.......... 30,620 1,055,337
Piraeus Bank SA............................. 74,500 1,930,962
------------
2,986,299
------------
Hong Kong -- 1.0%
Hong Kong & China Gas Co., Ltd.............. 485,000 1,138,005
Peregrine Investments Holdings, Ltd.+(2)(3). 91,000 0
------------
1,138,005
------------
Ireland -- 2.7%
Anglo Irish Bank Corp. PLC.................. 189,110 3,105,424
------------
Italy -- 5.1%
Saipem SpA.................................. 183,340 3,984,783
Unicredito Italiano SpA..................... 222,590 1,847,362
------------
5,832,145
------------
Value
Security Description Shares (Note 2)
----------------------------------------------------------------
Japan -- 22.8%
Canon, Inc................................ 45,700 $ 2,383,170
Casio Computer Co......................... 115,400 2,325,096
Daiichi Sankyo Co., Ltd................... 62,700 1,778,159
FANUC, Ltd................................ 30,600 2,388,419
Matsushita Electric Industrial Co., Ltd... 84,000 1,777,778
Mitsui & Co., Ltd......................... 116,000 1,474,980
Mizuho Financial Group, Inc............... 257 1,992,906
Nihon Unisys, Ltd......................... 111,900 2,003,543
ORIX Corp................................. 5,890 1,628,009
Sumitomo Metal Industries, Ltd............ 474,000 1,817,752
Sumitomo Mitsui Financial Group, Inc...... 220 2,309,418
Toyota Motor Corp......................... 50,000 2,717,460
Yamada Denki Co., Ltd..................... 15,590 1,562,629
------------
26,159,319
------------
Korea -- 0.6%
Hynix Semiconductor, Inc. GDR+*........... 18,824 739,407
------------
Netherlands -- 1.7%
Koninklijke Numico NV..................... 41,900 1,886,162
------------
Norway -- 3.6%
DNB NOR ASA............................... 176,070 2,155,486
Statoil ASA............................... 84,150 1,988,805
------------
4,144,291
------------
Singapore -- 0.8%
CapitaLand, Ltd........................... 159,000 505,557
StarHub, Ltd.............................. 306,857 434,710
------------
940,267
------------
Spain -- 5.9%
Banco Bilbao Vizcaya Argentaria SA........ 133,290 3,084,587
Enagas.................................... 150,140 3,638,260
------------
6,722,847
------------
Sweden -- 2.3%
Skandinaviska Enskilda Banken AB, Class A. 98,700 2,653,316
------------
Switzerland -- 6.0%
Novartis AG............................... 53,000 3,094,086
Roche Holding AG.......................... 21,810 3,770,900
------------
6,864,986
------------
United Kingdom -- 7.7%
British America Tobacco PLC............... 133,390 3,606,431
BT Group PLC.............................. 630,900 3,165,793
The Sage Group PLC........................ 446,800 2,101,873
------------
8,874,097
------------
United States -- 0.0%
Softbrands, Inc.+......................... 40 68
------------
Total Common Stock
(cost $98,699,613)....................... 108,113,654
------------
Total Long-Term Investment Securities
(cost $104,778,920)...................... 114,415,546
------------
53
SunAmerica International Equity Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006 -- (continued)
Principal Value
Amount (Note 2)
------------
REPURCHASE AGREEMENT -- 0.3%
Agreement with State Street Bank & Trust Co.,
bearing interest at 3.00%, dated 09/29/06, to
be repurchased 10/02/06 in the amount of
$399,100 and collateralized by $400,000 of
Federal National Mtg. Notes, bearing interest
at 6.13%, due 08/17/26 and having an
approximate value of $412,000
(cost $399,000)............................... $399,000 $ 399,000
------------
TOTAL INVESTMENTS --
(cost $105,177,920)(1)........................ 100.2% 114,814,546
Liabilities in excess of other assets............ (0.2) (257,314)
-------- ------------
NET ASSETS -- 100.0% $114,557,232
======== ============
- --------
+ Non-income producing securities
* Securities exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from registration,
normally to qualified institutional buyers. The Fund has no rights to demand
registration of these securities. At September 30, 2006, the aggregate value
of these securities was $739,407 representing 0.6% of net assets. Unless
otherwise indicated, these securities are not considered to be illiquid.
(1)See Note 6 for cost of investments on a tax basis
(2)Fair valued security. See Note 2
(3)Illiquid security
ADR -- AmericanDepository Receipt
GDR -- GlobalDepository Receipt
See Notes to Financial Statements
54
SunAmerica Value Fund
PORTFOLIO PROFILE -- September 30, 2006 -- (unaudited)
Industry Allocation*
Finance-Investment Banker/Broker...... 13.8%
Banks-Super Regional.................. 10.6
Oil Comp-Integrated................... 8.6
Diversified Manufactured Operations... 8.0
Telephone-Integrated.................. 6.5
Multimedia............................ 4.5
Electric-Integrated................... 4.4
Insurance-Multi-line.................. 4.0
Repurchase Agreement.................. 3.7
Medical-Drugs......................... 2.7
Oil Companies-Exploration & Production 2.6
Cosmetics & Toiletries................ 2.1
Finance-Credit Card................... 2.1
Insurance-Property/Casualty........... 2.1
Banks-Fiduciary....................... 2.0
Food-Misc............................. 2.0
Medical Products...................... 2.0
Tobacco............................... 1.9
Wireless Equipment.................... 1.8
Retail-Building Products.............. 1.6
Cellular Telecom...................... 1.5
Oil Refining & Marketing.............. 1.5
Retail-Discount....................... 1.5
Beverages-Non-alcoholic............... 1.4
Chemicals-Diversified................. 1.4
Electric Products-Misc................ 1.4
Industrial Gases...................... 1.4
Medical-HMO........................... 1.3
Oil-Field Services.................... 1.0
Retail-Restaurants.................... 1.0
-----
100.4%
=====
- --------
* Calculated as a percentage of net assets.
55
SunAmerica Value Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006
Value
Security Description Shares (Note 2)
---------------------------------------------------------------
COMMON STOCKS -- 96.7%
Banks-Fiduciary -- 2.0%
Bank of New York Co., Inc................ 127,500 $ 4,495,650
-----------
Banks-Super Regional -- 10.6%
Bank of America Corp..................... 188,900 10,119,373
US Bancorp............................... 137,500 4,567,750
Wachovia Corp............................ 84,900 4,737,420
Wells Fargo & Co......................... 125,000 4,522,500
-----------
23,947,043
-----------
Beverages-Non-alcoholic -- 1.4%
PepsiCo, Inc............................. 50,000 3,263,000
-----------
Cellular Telecom -- 1.5%
Vodafone Group PLC ADR................... 145,600 3,328,416
-----------
Chemicals-Diversified -- 1.4%
Dow Chemical Co.......................... 82,800 3,227,544
-----------
Cosmetics & Toiletries -- 2.1%
Procter & Gamble Co...................... 75,600 4,685,688
-----------
Diversified Manufactured Operations -- 8.0%
3M Co.................................... 62,000 4,614,040
General Electric Co...................... 195,100 6,887,030
ITT Industries, Inc...................... 128,800 6,603,576
-----------
18,104,646
-----------
Electric Products-Misc. -- 1.4%
Emerson Electric Co...................... 36,900 3,094,434
-----------
Electric-Integrated -- 4.4%
Duke Energy Corp......................... 108,500 3,276,700
Exelon Corp.............................. 53,900 3,263,106
The Southern Co.......................... 97,400 3,356,404
-----------
9,896,210
-----------
Finance-Credit Card -- 2.1%
American Express Co...................... 85,900 4,817,272
-----------
Finance-Investment Banker/Broker -- 13.8%
Bear Stearns Cos., Inc................... 23,800 3,334,380
Citigroup, Inc........................... 206,600 10,261,822
JPMorgan Chase & Co...................... 170,300 7,997,288
Merrill Lynch & Co., Inc................. 60,000 4,693,200
Morgan Stanley........................... 66,000 4,812,060
-----------
31,098,750
-----------
Food-Misc. -- 2.0%
General Mills, Inc....................... 81,000 4,584,600
-----------
Industrial Gases -- 1.4%
Air Products and Chemicals, Inc.......... 47,800 3,172,486
-----------
Insurance-Multi-line -- 4.0%
Allstate Corp............................ 64,800 4,064,904
Metlife, Inc............................. 85,900 4,868,812
-----------
8,933,716
-----------
Insurance-Property/Casualty -- 2.1%
Chubb Corp............................... 90,200 4,686,792
-----------
Medical Products -- 2.0%
Johnson & Johnson........................ 70,500 4,578,270
-----------
Medical-Drugs -- 2.7%
Pfizer, Inc.............................. 213,000 6,040,680
-----------
Shares/
Principal Value
Security Description Amount (Note 2)
---------------------------------------------------------------
Medical-HMO -- 1.3%
Aetna, Inc......................... 72,000 $ 2,847,600
------------
Multimedia -- 4.5%
News Corp., Class A................ 278,500 5,472,525
Time Warner, Inc................... 255,000 4,648,650
------------
10,121,175
------------
Oil Comp-Integrated -- 8.6%
Chevron Corp....................... 96,700 6,271,962
ConocoPhillips..................... 78,500 4,673,105
Exxon Mobil Corp................... 126,000 8,454,600
------------
19,399,667
------------
Oil Companies-Exploration & Production -- 2.6%
Anadarko Petroleum Corp............ 69,600 3,050,568
XTO Energy, Inc.................... 66,300 2,793,219
------------
5,843,787
------------
Oil Refining & Marketing -- 1.5%
Valero Energy Corp................. 64,100 3,299,227
------------
Oil-Field Services -- 1.0%
Schlumberger, Ltd.................. 37,600 2,332,328
------------
Retail-Building Products -- 1.6%
Home Depot, Inc.................... 96,600 3,503,682
------------
Retail-Discount -- 1.5%
Wal-Mart Stores, Inc............... 71,000 3,501,720
------------
Retail-Restaurants -- 1.0%
McDonald's Corp.................... 59,700 2,335,464
------------
Telephone-Integrated -- 6.5%
AT&T, Inc.......................... 113,000 3,679,280
BellSouth Corp..................... 77,100 3,296,025
Sprint Corp........................ 184,600 3,165,890
Verizon Communications, Inc........ 123,100 4,570,703
------------
14,711,898
------------
Tobacco -- 1.9%
Altria Group, Inc.................. 57,000 4,363,350
------------
Wireless Equipment -- 1.8%
Motorola, Inc...................... 161,800 4,045,000
------------
Total Long-Term Investment Securities
(cost $198,381,140)............... 218,260,095
------------
REPURCHASE AGREEMENT -- 3.7%
State Street Bank & Trust Co.
Joint Repurchase Agreement
(cost $8,402,000)(1).............. $8,402,000 8,402,000
------------
TOTAL INVESTMENTS --
(cost $206,783,140)(2)............ 100.4% 226,662,095
Liabilities in excess of other assets (0.4) (957,326)
---------- ------------
NET ASSETS -- 100.0% $225,704,769
========== ============
- --------
(1)See Note 2 for details of Joint Repurchase Agreement.
(2)See Note 6 for cost of investment on a tax basis.
ADR-- American Depository Receipt
See Notes to Financial Statements
56
SunAmerica Biotech/Health Fund
PORTFOLIO PROFILE -- September 30, 2006 -- (unaudited)
Industry Allocation*
Medical-Biomedical/Gene............ 28.4%
Medical-Drugs...................... 20.6
Repurchase Agreement............... 8.0
Medical-HMO........................ 5.8
Medical-Generic Drugs.............. 5.0
Drug Delivery Systems.............. 4.1
Pharmacy Services.................. 3.8
Disposable Medical Products........ 3.5
Medical Instruments................ 3.4
Therapeutics....................... 3.3
Medical Products................... 2.8
Medical-Wholesale Drug Distribution 2.8
Physicians Practice Management..... 2.6
Retail-Drug Store.................. 0.9
----
95.0%
====
- --------
* Calculated as a percentage of net assets.
57
SunAmerica Biotech/Health Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006
Value
Security Description Shares (Note 2)
------------------------------------------------------------
COMMON STOCKS -- 87.0%
Disposable Medical Products -- 3.5%
C.R. Bard, Inc........................... 11,400 $ 855,000
----------
Drug Delivery Systems -- 4.1%
Andrx Corp.+............................. 26,300 642,509
Noven Pharmaceuticals, Inc.+............. 15,500 373,860
----------
1,016,369
----------
Medical Instruments -- 3.4%
Medtronic, Inc........................... 18,200 845,208
----------
Medical Products -- 2.8%
Johnson & Johnson........................ 10,400 675,376
----------
Medical-Biomedical/Gene -- 28.4%
Amgen, Inc.+............................. 20,300 1,452,059
Biogen Idec, Inc.+....................... 15,300 683,604
Coley Pharmaceutical Group, Inc.+........ 24,000 274,080
Genentech, Inc.+......................... 6,400 529,280
Genzyme Corp.+........................... 23,400 1,578,798
Invitrogen Corp.+........................ 6,400 405,824
Keryx Biopharmaceuticals, Inc.+.......... 21,000 248,430
MedImmune, Inc.+......................... 19,700 575,437
Myriad Genetics, Inc.+................... 24,100 594,065
Nektar Therapeutics+..................... 43,800 631,158
----------
6,972,735
----------
Medical-Drugs -- 20.6%
Abbott Laboratories...................... 24,100 1,170,296
Eli Lilly & Co........................... 4,200 239,400
Novartis AG ADR.......................... 18,600 1,086,984
Pfizer, Inc.............................. 31,800 901,848
Schering-Plough Corp..................... 56,900 1,256,921
Wyeth.................................... 7,800 396,552
----------
5,052,001
----------
Medical-Generic Drugs -- 5.0%
Barr Pharmaceuticals, Inc.+.............. 14,200 737,548
Teva Pharmaceutical Industries, Ltd. ADR. 14,100 480,669
----------
1,218,217
----------
Shares/
Principal Value
Security Description Amount (Note 2)
-------------------------------------------------------------------
Medical-HMO -- 5.8%
Centene Corp.+........................... 25,800 $ 424,152
Coventry Health Care, Inc.+.............. 6,800 350,336
UnitedHealth Group, Inc.................. 13,300 654,360
-----------
1,428,848
-----------
Medical-Wholesale Drug Distribution -- 2.8%
Cardinal Health, Inc..................... 10,500 690,270
-----------
Pharmacy Services -- 3.8%
Caremark Rx, Inc......................... 16,400 929,388
-----------
Physicians Practice Management -- 2.6%
Matria Healthcare, Inc.+................. 23,000 639,170
-----------
Retail-Drug Store -- 0.9%
Allion Healthcare, Inc.+................. 50,400 210,672
-----------
Therapeutics -- 3.3%
Altus Pharmaceuticals, Inc.+............. 17,000 271,490
BioMarin Pharmaceutical, Inc.+........... 38,300 545,009
-----------
816,499
-----------
Total Long-Term Investment Securities
(cost $21,306,653)...................... 21,349,753
-----------
REPURCHASE AGREEMENT -- 8.0%
State Street Bank & Trust Co.
Joint Repurchase Agreement
(cost $1,978,000)(1).................... $1,978,000 1,978,000
-----------
TOTAL INVESTMENTS --
(cost $23,284,653)(2)................... 95.0% 23,327,753
Other assets less liabilities.............. 5.0 1,220,509
---------- -----------
NET ASSETS -- 100.0% $24,548,262
========== ===========
- --------
+ Non-income producing security
(1) See Note 2 for details of Joint Repurchase Agreement.
(2) See Note 6 for cost of investment on a tax basis
ADR --American Depository Receipt
See Notes to Financial Statements
58
Tax Managed Equity Fund
PORTFOLIO PROFILE -- September 30, 2006 -- (unaudited)
Industry Allocation*
Semiconductor Equipment........... 8.2%
Drug Delivery Systems............. 7.2
Aerospace/Defense................. 6.9
Banks-Super Regional.............. 6.1
Finance-Investment Banker/Broker.. 6.1
Insurance-Multi-line.............. 5.0
Oil Comp-Integrated............... 4.5
Medical-Drugs..................... 3.8
Linen Supply & Related Items...... 2.8
Electronic Measurement Instruments 2.6
Enterprise Software/Service....... 2.6
Casino Services................... 2.5
Health Care Cost Containment...... 2.5
Metal Processors & Fabrication.... 2.4
Real Estate Investment Trusts..... 2.4
Aerospace/Defense-Equipment....... 2.3
Beverages-Non-alcoholic........... 2.3
Electric-Integrated............... 2.3
Medical-Biomedical/Gene........... 2.2
Retail-Consumer Electronics....... 2.1
Food-Misc......................... 2.0
Invest Management/Advisor Services 1.4
Telephone-Integrated.............. 1.4
Computers......................... 1.3
Electric-Generation............... 1.3
Retail-Restaurants................ 1.3
Disposable Medical Products....... 1.2
Internet Security................. 1.2
Medical-HMO....................... 1.2
Medical-Nursing Homes............. 1.2
Food-Wholesale/Distribution....... 1.1
Human Resources................... 1.1
Insurance-Property/Casualty....... 1.1
Networking Products............... 1.1
Telecom Equipment-Fiber Optics.... 1.1
Entertainment Software............ 1.0
----
96.8%
====
- --------
* Calculated as a percentage of net assets.
59
Tax Managed Equity Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006
Value
Security Description Shares (Note 2)
-------------------------------------------------------------
COMMON STOCKS -- 96.8%
Aerospace/Defense -- 6.9%
General Dynamics Corp................... 20,000 $1,433,400
The Boeing Co........................... 33,300 2,625,705
----------
4,059,105
----------
Aerospace/Defense-Equipment -- 2.3%
Alliant Techsystems, Inc.+.............. 16,600 1,345,596
----------
Banks-Super Regional -- 6.1%
Bank of America Corp.................... 41,300 2,212,441
US Bancorp.............................. 21,000 697,620
Wachovia Corp........................... 12,000 669,600
----------
3,579,661
----------
Beverages-Non-alcoholic -- 2.3%
Coca-Cola Co............................ 30,000 1,340,400
----------
Casino Services -- 2.5%
International Game Technology........... 36,000 1,494,000
----------
Computers -- 1.3%
Apple Computer, Inc.+................... 10,000 770,300
----------
Disposable Medical Products -- 1.2%
Merit Medical Systems, Inc.+............ 50,000 679,000
----------
Drug Delivery Systems -- 7.2%
Noven Pharmaceuticals, Inc.+............ 175,000 4,221,000
----------
Electric-Generation -- 1.3%
The AES Corp.+.......................... 37,000 754,430
----------
Electric-Integrated -- 2.3%
Duke Energy Corp........................ 22,000 664,400
Exelon Corp............................. 11,000 665,940
----------
1,330,340
----------
Electronic Measurement Instruments -- 2.6%
Itron, Inc.+............................ 27,400 1,528,920
----------
Enterprise Software/Service -- 2.6%
Oracle Corp.+........................... 86,000 1,525,640
----------
Entertainment Software -- 1.0%
Electronic Arts, Inc.+.................. 11,000 612,480
----------
Finance-Investment Banker/Broker -- 6.1%
Citigroup, Inc.......................... 40,300 2,001,701
Merrill Lynch & Co., Inc................ 20,000 1,564,400
----------
3,566,101
----------
Food-Misc. -- 2.0%
Kellogg Co.............................. 24,300 1,203,336
----------
Food-Wholesale/Distribution -- 1.1%
Sysco Corp.............................. 20,000 669,000
----------
Health Care Cost Containment -- 2.5%
McKesson Corp........................... 28,000 1,476,160
----------
Human Resources -- 1.1%
AMN Healthcare Services, Inc.+.......... 27,000 641,250
----------
Insurance-Multi-line -- 5.0%
Allstate Corp........................... 24,000 1,505,520
Metlife, Inc............................ 25,000 1,417,000
----------
2,922,520
----------
Insurance-Property/Casualty -- 1.1%
Chubb Corp.............................. 13,000 675,480
----------
Value
Security Description Shares (Note 2)
----------------------------------------------------------------------
Internet Security -- 1.2%
Symantec Corp.+.................................. 32,000 $ 680,960
-----------
Invest Management/Advisor Services -- 1.4%
Legg Mason, Inc.................................. 8,000 806,880
-----------
Linen Supply & Related Items -- 2.8%
Cintas Corp...................................... 40,000 1,633,200
-----------
Medical-Biomedical/Gene -- 2.2%
Amgen, Inc.+..................................... 10,000 715,300
MedImmune, Inc.+................................. 20,000 584,200
-----------
1,299,500
-----------
Medical-Drugs -- 3.8%
Merck & Co., Inc................................. 36,000 1,508,400
Schering-Plough Corp............................. 34,000 751,060
-----------
2,259,460
-----------
Medical-HMO -- 1.2%
WellPoint, Inc.+................................. 9,000 693,450
-----------
Medical-Nursing Homes -- 1.2%
Manor Care, Inc.................................. 14,000 731,920
-----------
Metal Processors & Fabrication -- 2.4%
Precision Castparts Corp......................... 22,000 1,389,520
-----------
Networking Products -- 1.1%
Atheros Communications, Inc.+.................... 36,000 652,680
-----------
Oil Comp-Integrated -- 4.5%
Chevron Corp..................................... 10,000 648,600
Exxon Mobil Corp................................. 30,000 2,013,000
-----------
2,661,600
-----------
Real Estate Investment Trusts -- 2.4%
Archstone-Smith Trust............................ 26,000 1,415,440
-----------
Retail-Consumer Electronics -- 2.1%
Best Buy Co., Inc................................ 23,400 1,253,304
-----------
Retail-Restaurants -- 1.3%
McDonald's Corp.................................. 19,000 743,280
-----------
Semiconductor Equipment -- 8.2%
Lam Research Corp.+.............................. 13,000 589,290
Rudolph Technologies, Inc.+...................... 68,000 1,246,440
Varian Semiconductor Equipment Associates, Inc.+. 82,000 3,009,400
-----------
4,845,130
-----------
Telecom Equipment-Fiber Optics -- 1.1%
Corning, Inc.+................................... 27,000 659,070
-----------
Telephone-Integrated -- 1.4%
AT&T, Inc........................................ 25,000 814,000
-----------
Total Long-Term Investment Securities
(cost $53,960,658).............................. 56,934,113
-----------
TOTAL INVESTMENTS --
(cost $53,960,658)(1)........................... 96.8% 56,934,113
Other assets less liabilities...................... 3.2 1,845,025
------ -----------
NET ASSETS -- 100.0% $58,779,138
====== ===========
- --------
+ Non-income producing security.
(1)See Note 6 for cost of investment on a tax basis.
See Notes to Financial Statements
60
SunAmerica International Small-Cap Fund
PORTFOLIO PROFILE -- September 30, 2006 -- (unaudited)
Industry Allocation*
Banks-Commercial............................. 4.0%
Finance-Investment Banker/Broker............. 2.6
Auto/Truck Parts & Equipment-Original........ 2.4
Building & Construction Products-Misc........ 2.3
Machinery-General Industrial................. 2.2
Miscellaneous Manufacturing.................. 2.1
Transport-Truck.............................. 2.1
Medical-Drugs................................ 2.1
Building & Construction-Misc................. 2.1
Computers-Integrated Systems................. 2.0
Time Deposits................................ 1.9
Medical Instruments.......................... 1.8
Apparel Manufacturers........................ 1.8
Real Estate Operations & Development......... 1.7
Office Automation & Equipment................ 1.7
Medical Products............................. 1.6
Financial Guarantee Insurance................ 1.5
Consulting Services.......................... 1.4
Transport-Services........................... 1.4
Brewery...................................... 1.4
Food-Misc.................................... 1.3
Retail-Consumer Electronics.................. 1.3
Retail-Misc./Diversified..................... 1.2
Retail-Building Products..................... 1.2
Audio/Video Products......................... 1.2
Computers.................................... 1.1
Finance-Leasing Companies.................... 1.1
Cosmetics & Toiletries....................... 1.1
Engineering/R&D Services..................... 1.1
Television................................... 1.1
Retail-Pubs.................................. 1.1
Footwear & Related Apparel................... 1.1
Retail-Restaurants........................... 1.1
Diversified Financial Services............... 1.1
Chemicals-Other.............................. 1.0
Machinery-Construction & Mining.............. 1.0
E-Services/Consulting........................ 0.9
Telecommunication Equipment.................. 0.9
Appliances................................... 0.9
Oil-Field Services........................... 0.9
Electric-Integrated.......................... 0.9
Semiconductors Components-Integrated Circuits 0.9
Building-Residential/Commercial.............. 0.9
Food-Flour & Grain........................... 0.9
Resorts/Theme Parks.......................... 0.9
Gambling (Non-Hotel)......................... 0.9
Invest Management/Advisor Services........... 0.8
Environmental Monitoring & Detection......... 0.8
Electric-Distribution........................ 0.8
Retail-Automobile............................ 0.8
Retail-Discount.............................. 0.8
Travel Services.............................. 0.8
Diversified Minerals............... 0.8%
Internet Connectivity Services..... 0.8
E-Commerce/Services................ 0.8
Chemicals-Specialty................ 0.8
Beverages-Non-alcoholic............ 0.8
Finance-Other Services............. 0.8
Retail-Bookstore................... 0.7
Cellular Telecom................... 0.7
Rubber/Plastic Products............ 0.7
Electronics-Military............... 0.7
Medical-Hospitals.................. 0.7
Commercial Services................ 0.7
Gold Mining........................ 0.7
Direct Marketing................... 0.6
Auto-Cars/Light Trucks............. 0.6
Medical-Biomedical/Gene............ 0.6
Engines-Internal Combustion........ 0.6
Computer Data Security............. 0.6
Machinery-Electrical............... 0.6
Motion Pictures & Services......... 0.6
Textile-Products................... 0.6
Recreational Centers............... 0.5
Computer Services.................. 0.5
Protection/Safety.................. 0.5
Oil Field Machinery & Equipment.... 0.5
Electronic Parts Distribution...... 0.5
Building-Maintenance & Services.... 0.5
Internet Content-Information/News.. 0.5
Electronic Components-Misc......... 0.5
Machinery-Material Handling........ 0.5
Coatings/Paint..................... 0.5
Beverages-Wine/Spirits............. 0.5
Human Resources.................... 0.4
Leisure Products................... 0.4
Transport-Marine................... 0.4
Non-Ferrous Metals................. 0.4
Printing-Commercial................ 0.4
Chemicals-Diversified.............. 0.3
Medical-Generic Drugs.............. 0.3
Electronic Connectors.............. 0.3
Medical-Wholesale Drug Distribution 0.3
Applications Software.............. 0.2
Entertainment Software............. 0.2
Shipbuilding....................... 0.2
Rental Auto/Equipment.............. 0.2
Retail-Apparel/Shoe................ 0.2
Circuit Boards..................... 0.1
Schools............................ 0.1
----
96.4%
====
- --------
* Calculated as a percentage of net assets.
61
SunAmerica International Small-Cap Fund
PORTFOLIO PROFILE -- September 30, 2006 -- (unaudited) (continued)
Country Allocation*
Japan......... 31.9%
Germany....... 9.4
Sweden........ 8.7
France........ 6.0
United Kingdom 5.5
Denmark....... 5.4
Australia..... 3.0
Italy......... 2.9
Greece........ 2.9
Ireland....... 2.5
Switzerland... 2.2
Bermuda....... 2.1
Singapore..... 2.0
United States. 1.9
Spain......... 1.6
Finland....... 1.5
Norway........ 1.4
Korea......... 1.3
Cayman Islands 1.3
Hong Kong..... 0.8
Taiwan........ 0.6
Austria....... 0.6
Indonesia..... 0.5
Thailand...... 0.3
Malaysia...... 0.1
----
96.4%
====
- --------
* Calculated as a percentage of net assets.
62
SunAmerica International Small-Cap Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006
Value
Security Description Shares (Note 2)
-------------------------------------------------------------------
COMMON STOCK - 92.7%
Australia -- 3.0%
Bradken, Ltd................................. 26,826 $ 119,960
Independence Group NL........................ 66,690 198,816
JB Hi-Fi, Ltd................................ 73,264 283,393
Sino Gold, Ltd.+............................. 53,313 166,884
-----------
769,053
-----------
Austria -- 0.6%
Andritz AG................................... 961 146,597
-----------
Bermuda -- 2.1%
Celestial Nutrifoods, Ltd.+.................. 235,000 227,861
Integrated Distribution Services Group, Ltd.. 77,000 142,720
Synear Food Holdings, Ltd.+.................. 26,000 16,861
Texwinca Holdings, Ltd....................... 18,000 142,430
-----------
529,872
-----------
Cayman Islands -- 1.3%
Kingboard Chemical Holdings, Ltd............. 73,500 266,050
The9, Ltd. ADR+.............................. 2,800 59,920
-----------
325,970
-----------
Denmark -- 5.4%
Bang & Olufsen A/S........................... 2,770 297,264
DSV A/S...................................... 1,989 347,746
FLSmidth & Co A/S............................ 5,170 239,602
Genmab A/S+.................................. 3,720 155,004
Royal UNIBREW A/S............................ 3,020 352,856
-----------
1,392,472
-----------
Finland -- 1.5%
Cargotec Corp................................ 5,061 214,155
Ramirent Oyj................................. 1,010 43,558
YIT Oyj...................................... 5,760 133,444
-----------
391,157
-----------
France -- 6.0%
Alten+....................................... 4,220 133,779
Euler Hermes SA.............................. 3,160 376,261
Groupe Steria SCA............................ 4,000 213,033
Icade+....................................... 4,850 242,619
Kaufman & Broad SA........................... 2,460 145,832
Neopost SA................................... 3,600 429,565
-----------
1,541,089
-----------
Germany -- 7.6%
Bauer AG+.................................... 5,700 151,641
ElringKlinger AG............................. 7,085 363,858
Fielmann AG.................................. 6,580 316,646
Grenkeleasing AG............................. 2,241 128,729
Pfleiderer AG................................ 7,650 183,729
Rational AG.................................. 1,250 240,216
Thielert AG+................................. 5,240 152,892
Washtec AG+.................................. 7,230 115,517
Wincor Nixdorf AG............................ 1,980 287,857
-----------
1,941,085
-----------
Value
Security Description Shares (Note 2)
----------------------------------------------------------------
Greece -- 2.9%
Hellenic Exchanges Holding SA............. 12,140 $ 192,427
Marfin Financial Group SA Holdings........ 6,820 268,091
Piraeus Bank SA........................... 10,472 271,423
-----------
731,941
-----------
Hong Kong -- 0.8%
Singamas Container Holdings, Ltd.......... 380,000 199,983
-----------
Indonesia -- 0.5%
United Tractors Tbk PT.................... 199,500 130,837
-----------
Ireland -- 2.5%
Grafton Group PLC+(2)..................... 22,640 298,570
Iaws Group PLC, Class A................... 13,180 245,179
Kingspan Group PLC........................ 4,650 95,522
-----------
639,271
-----------
Italy -- 2.9%
ASM....................................... 46,680 229,519
Digital Multimedia Technologies SpA+...... 4,070 241,585
Tod's SpA................................. 3,450 272,767
-----------
743,871
-----------
Japan -- 31.9%
Amano Corp................................ 3,900 49,986
Asahi Soft Drinks Co, Ltd................. 13,000 192,593
Chugoku Marine Paints, Ltd................ 20,000 115,132
Culture Convenience Club Co, Ltd.......... 19,500 190,006
Daikoku Denki Co, Ltd..................... 4,600 111,568
Dena Co, Ltd.+............................ 41 112,457
Disco Corp................................ 2,400 147,302
Don Quijote Co, Ltd....................... 9,700 205,291
EDION Corp................................ 2,800 48,000
en-japan, Inc............................. 18 83,962
Exedy Corp................................ 4,700 127,323
Fujimi, Inc............................... 3,100 87,653
Fullcast Co, Ltd.......................... 37 112,762
Harmonic Drive Systems, Inc............... 11 55,687
HIS Co, Ltd............................... 7,900 199,966
Hisamitsu Pharmaceutical Co., Inc......... 7,000 193,778
Hitachi Systems & Services, Ltd........... 8,200 159,314
Iriso Electronics Co, Ltd................. 1,800 66,895
Japan Aviation Electronics Industry, Ltd.. 12,000 169,854
Kaga Electronics Co, Ltd.................. 6,700 125,634
Kakaku.com, Inc........................... 37 119,340
Kenedix, Inc.............................. 38 211,996
Kyoritsu Maintenance Co., Ltd............. 5,160 119,472
Kyoto Kimono Yuzen Co, Ltd................ 31 39,890
Kyowa Exeo Corp........................... 15,000 156,698
La Parler Co, Ltd......................... 16 44,292
Lintec Corp............................... 8,200 189,858
Milbon Co, Ltd............................ 3,400 116,859
Miraca Holdings, Inc...................... 6,200 153,786
Modec, Inc................................ 5,600 116,148
Moshi Moshi Hotline, Inc.................. 4,350 163,873
Nabtesco Corp............................. 11,000 124,783
Nichias Corp.............................. 18,000 126,629
Nippon Chemiphar Co, Ltd.+................ 12,000 69,079
Nissha Printing Co, Ltd................... 2,000 90,751
Obic Co, Ltd.............................. 820 173,337
63
SunAmerica International Small-Cap Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2006 -- (continued)
Value
Security Description Shares (Note 2)
-----------------------------------------------------------------------
Japan (continued)
Oenon Holdings, Inc.............................. 31,000 $ 114,946
Okasan Holdings, Inc............................. 17,000 149,960
OKUMA Corp....................................... 15,000 132,698
Otsuka Corp...................................... 1,700 180,758
Park24 Co, Ltd................................... 5,100 167,517
Pigeon Corp...................................... 4,200 72,000
Renaissance, Inc................................. 8,000 140,190
Resorttrust, Inc................................. 7,700 224,889
Sankyu, Inc...................................... 18,000 103,467
Sasebo Heavy Industries Co., Ltd.+............... 15,000 41,016
SBS Holdings, Inc................................ 27 82,286
Secom Techno Service Co, Ltd..................... 3,000 132,063
Shin-Etsu Polymer Co., Ltd....................... 11,700 168,183
St Marc Holdings Co., Ltd........................ 2,100 134,222
Star Micronics Co., Ltd.......................... 6,200 117,833
Sysmex Corp...................................... 4,100 156,190
Taiyo Ink Manufacturing Co., Ltd................. 100 5,553
Teikoku Piston Ring Co., Ltd..................... 13,700 143,234
Telepark Corp.................................... 74 186,684
The Japan Steel Works, Ltd....................... 17,000 116,284
The Kagoshima Bank, Ltd.......................... 7,000 51,437
The Yamaguchi Bank, Ltd.(3)...................... 4,000 55,907
Toho Pharmaceutical Co., Ltd..................... 3,700 66,091
Tokyo Individualized Educational Institute, Inc.. 13,000 33,016
Toyo Tanso Co, Ltd............................... 1,800 122,819
Tsumura & Co..................................... 8,000 184,889
UFJ Central Leasing Co, Ltd...................... 3,300 151,136
Unicharm Petcare Corp............................ 1,300 53,266
USS Co, Ltd...................................... 3,200 205,613
Works Applications Co., Ltd.+.................... 103 63,217
-----------
8,129,318
-----------
Korea -- 1.3%
Amorepacific Corp.+.............................. 96 44,639
CJ Internet Corp................................. 5,940 146,891
Core Logic, Inc.................................. 1,170 37,898
Korea Zinc Co, Ltd............................... 1,070 96,682
-----------
326,110
-----------
Malaysia -- 0.1%
Wellcall Holdings Bhd............................ 25,300 13,446
-----------
Norway -- 1.4%
ProSafe ASA...................................... 3,770 231,054
Sevan Marine ASA+................................ 23,770 125,650
-----------
356,704
-----------
Singapore -- 2.0%
China Kangda Food Co, Ltd.+(3)................... 3,000 869
Cosco Corp Singapore, Ltd........................ 103,000 107,653
Raffles Medical Group, Ltd....................... 288,000 168,638
SembCorp Marine, Ltd............................. 8,000 16,824
Singapore Food Industries, Ltd................... 44,000 25,210
The Ascott Group, Ltd............................ 313,000 201,014
-----------
520,208
-----------
Spain -- 1.6%
Banco Pastor SA.................................. 14,340 219,661
Mecalux SA....................................... 5,770 196,818
-----------
416,479
-----------
Shares/
Principal Value
Security Description Amount (Note 2)
----------------------------------------------------------------------------
Sweden -- 8.7%
D Carnegie AB........................................ 19,440 $ 409,855
Elekta AB, Series B.................................. 16,395 308,742
JM AB................................................ 11,970 210,304
Modern Times Group AB, Class B+...................... 5,320 275,142
Munters AB........................................... 5,380 208,500
Protect Data AB...................................... 8,880 151,471
Q-Med AB............................................. 20,160 287,483
RaySearch Laboratories AB+........................... 6,530 116,732
Transcom WorldWide S, Class B SDR.................... 24,540 241,946
-----------
2,210,175
-----------
Switzerland -- 2.2%
Banque Cantonale Vaudoise............................ 1,100 442,041
Financiere Tradition................................. 940 117,195
-----------
559,236
-----------
Taiwan -- 0.6%
Sanyang Industrial Co., Ltd.......................... 302,000 155,117
-----------
Thailand -- 0.3%
Asian Property Development PCL....................... 812,200 83,025
-----------
United Kingdom -- 5.5%
Detica Group PLC..................................... 25,700 145,561
Gondola Holdings PLC................................. 18,190 137,084
IG Group Holdings PLC................................ 45,550 220,890
NDS Group PLC ADR+................................... 4,490 197,246
Punch Taverns PLC.................................... 15,030 272,831
Viridian Group PLC................................... 10,260 205,742
Wolfson Microelectronics PLC+........................ 26,100 229,193
-----------
1,408,547
-----------
Total Common Stock
(cost $24,990,487)................................... 23,661,563
-----------
PREFERRED STOCK -- 1.8%
Germany -- 1.8%
Hugo Boss AG
(cost $484,199)...................................... 10,370 447,089
-----------
Total Long-Term Investment Securities
(cost $25,474,686)................................... 24,108,652
-----------
SHORT-TERM INVESTMENT SECURITIES -- 1.9%
Time Deposits -- 1.9%
Euro Time Deposit with State Street Bank & Trust Co.
1.80% due 10/02/06
(cost $487,000)...................................... $487,000 487,000
-----------
TOTAL INVESTMENTS
(cost $25,961,686)(1)................................ 96.4% 24,595,652
Other Assets Less Liabilities.......................... 3.6 908,272
-------- -----------
NET ASSETS 100.0% $25,503,924
======== ===========
- --------
+ Non-income producing securities
(1) See Note 6 for cost of investments on a tax basis
(2) Consists of more than one class of securities traded together as a unit
(3) Fair valued security; see Note 2.
ADR --American Depository Receipt
SDR --Swedish Depository Receipt
See Notes to Financial Statements
64
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2006
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 ten different
funds (each, a "Fund" and collectively, the "Funds"). Each Fund is a
separate series of the Trust with a distinct objective and/or strategy. Each
Fund is advised and/or managed by AIG SunAmerica Asset Management Corp. (the
"Adviser" or "AIG SunAmerica"), an indirect wholly-owned subsidiary of
American International Group, Inc. ("AIG"). An investor may invest in one or
more of the following Funds: SunAmerica 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"), Tax Managed Equity
Fund ("Tax Managed Equity Fund") and SunAmerica International Small-Cap Fund
("International Small-Cap Fund"). The Funds are considered to be separate
entities for financial and tax reporting purposes. The investment objective
and principal investment techniques for each of the Funds is as follows:
Effective May 2, 2006, the International Small-Cap Fund was added to the
Trust.
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 investment-grade
fixed income securities.
International Equity Fund seeks capital appreciation by investing in equity
securities and other securities with equity characteristics of non-U.S.
issuers located in a number of different 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.
65
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2006 -- (continued)
International Small-Cap Fund seeks capital appreciation by investing in
equity and equity-related securities of small-capitalization companies
throughout the world, excluding the U.S. Under normal circumstances, at
least 80% of the Fund's net assets, plus any borrowings for investment
purposes will be invested in such securities.
The Blue Chip Growth Fund, Growth Opportunities Fund, New Century Fund,
Growth and Income Fund, Balanced Assets Fund, Tax Managed Equity Fund and
International Small-Cap Fund are organized as "diversified" funds within the
meaning of the Investment Company Act of 1940, as amended (the "1940 Act").
The International Equity Fund, Value Fund and Biotech/Health Fund are
organized as "non-diversified" funds.
Each Fund offers multiple classes of shares. The classes within each Fund
are presented in the Statement of Assets and Liabilities. The cost structure
for each class is as follows:
Class A shares are offered at net asset value per share plus an initial
sales charge. Additionally, purchases of Class A shares in excess of
$1,000,000 will be purchased at net asset value but will be subject to a
contingent deferred sales charge on redemptions made within two years of
purchase. With respect to Class A shares of the International Equity Fund
and International Small-Cap 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 and International Small-Cap 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. Certain Class C shares of
particular Funds issued in connection with particular reorganizations or
mergers will convert automatically to Class A shares approximately ten years
after purchase and at such time will be subject to the lower distribution
fee applicable to Class A shares.
Class I and Class Z shares are offered at net asset value per share. These
classes are offered exclusively to participants in certain employee benefit
plans and other programs. As of 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, except as may otherwise be provided in the Trust's
registration statement. Class A, Class B and Class C shares each makes
distribution and account maintenance and service fee payments under the
distribution plans pursuant to Rule 12b-1 under the 1940 Act, except that
Class B and Class C shares are subject to higher distribution fee rates.
There are no distribution payments applicable to Class I, and no
distribution or service fee payments applicable to 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 the obligation to
indemnify others. The Trust's maximum exposure under these arrangements is
unknown. Currently, however, the Trust expects the risk of loss to be remote.
Note 2. Significant Accounting Policies
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from these estimates. The
following is a summary of the significant accounting policies followed by
the Trust in the preparation of their financial statements:
Security Valuations: Stocks are generally valued based upon closing sales
prices reported on recognized securities exchanges. Stocks listed on the
NASDAQ are valued using the NASDAQ Official Closing Price ("NOCP").
Generally, the NOCP will be the
66
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2006 -- (continued)
last sale price unless the reported trade for the stock is outside the range
of the bid/ask price. In such cases, the NOCP will be normalized to the
nearer of the bid or ask price. For listed securities having no sales
reported and for unlisted securities, such securities will be valued based
upon the last reported bid price.
As of the close of regular trading on the New York Stock Exchange ("NYSE"),
securities traded primarily on security exchanges outside the United States
are valued at the last sale price on such exchanges on the day of valuation,
or if there is no sale on the day of valuation, at the last-reported bid
price. If a security's price is available from more than one exchange, a
portfolio uses the exchange that is the primary market for the security.
However, depending on the foreign market, closing prices may be up to 15
hours old when they are used to price a Fund's shares, and the Fund may
determine that certain closing prices are unreliable. This determination
will be based on review of a number of factors, including developments in
foreign markets, the performance of U.S. securities markets, and the
performance of instruments trading in U.S. markets that represent foreign
securities and baskets of foreign securities. If a Fund determines that
closing prices do not reflect the fair value of the securities, the Fund
will adjust the previous closing prices in accordance with pricing
procedures approved by the Board to reflect what it believes to be the fair
value of the securities as of the close of regular trading on the NYSE. The
Funds may also fair value securities in other situations, for example, when
a particular foreign market is closed but a Fund is open. For foreign equity
securities, the Funds use an outside pricing service to provide it with
closing market prices and information used for adjusting those prices.
Non-convertible bonds and debentures, other long-term debt securities, and
short term debt securities with maturities in excess of 60 days, are valued
at bid prices obtained for the day of valuation from a bond pricing service,
when such prices are available. If a vendor quote is unavailable the
securities may be priced at the mean of two independent quotes obtained from
brokers. Securities for which market quotations are not readily available
are valued as determined pursuant to procedures adopted in good faith by the
Board of Trustees.
Short-term securities with 60 days or less to maturity are amortized to
maturity based on their cost to the Fund if acquired within 60 days of
maturity or, if already held by the Fund on the 60th day, are amortized to
maturity based on the value determined on the 61st day.
Securities for which market quotations are not readily available or where a
development/significant event occurs that may significantly impact the value
of the security, are fair valued, as determined pursuant to procedures
adopted in good faith by the Board of Trustees.
On July 13, 2006, the Financial Accounting Standards Board (FASB) released
FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes"
("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should
be recognized, measured, presented and disclosed in the financial
statements. FIN 48 requires the evaluation of tax positions taken or
expected to be taken in the course of preparing the Fund's tax returns to
determine whether the tax positions are "more-likely-than-not" of being
sustained by the applicable tax authority. Adoption of FIN 48 is required
for fiscal years beginning after December 15, 2006 and is to be applied to
all open tax years as of the effective date. At this time, management is
evaluating the implications of FIN 48 and its impact in the financial
statements, if any, has not yet been determined.
In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement on Financial Accounting Standards No. 157, "Fair Value
Measurements" ("FAS 157"). This standard clarifies the definition of fair
value for financial reporting, establishes a framework for measuring fair
value and requires additional disclosures about the use of fair value
measurements. FAS 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007 and interim periods within
those fiscal years. As of September 30, 2006, the Funds do not believe the
adoption of FAS 157 will impact the amounts reported in the financial
statements, however, additional disclosures will be required about the
inputs used to develop the measurements of fair value.
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
67
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2006 -- (continued)
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, 2006, 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 1.87% $2,060,000
Growth & Income. 2.10 2,319,000
Balanced Assets. 1.56 1,717,000
Value........... 7.61 8,402,000
Biotech/Health.. 1.79 1,978,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
State Street Bank & Trust Co., dated September 30, 2006, bearing interest at
a rate of 4.50% per annum, with a principle amount of $110,353,000, a
repurchase price of $110,394,382 and a maturity date of October 2, 2006. The
repurchase agreement is collateralized by the following:
Maturity Principal
Type of Collateral Interest Rate Date Amount Market Value
- ------------------ ------------- -------- ----------- ------------
U.S. Treasury Notes 5.13% 06/30/08 $66,965,000 $68,220,594
U.S. Treasury Notes 4.88 05/15/09 43,315,000 44,343,731
In addition, at September 30, 2006, the following Funds held an undivided
interest in a joint repurchase agreement with UBS Securities LLC:
Percentage Principal
Fund Interest Amount
- ---- ---------- -----------
Growth Opportunities 5.82% $11,640,000
New Century......... 7.95 15,891,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
UBS Securities LLC, dated September 30, 2006, bearing interest at a rate of
5.00% per annum, with a principal amount of $200,000,000 a repurchase price
of $200,083,333, and a maturity date of October 2, 2006. The repurchase
agreement is is collateralized by the following:
Maturity Principal
Type of Collateral Interest Rate Date Amount Market Value
- ------------------ ------------- -------- ------------ ------------
U.S. Treasury Inflation Index Bonds 2.38% 01/15/25 $161,580,000 $164,812,500
U.S. Treasury Inflation Index Bonds 3.38 04/15/32 38,420,000 39,188,673
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. 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).
68
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2006 -- (continued)
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 Balanced
Assets Fund and Growth and Income Fund reserve the right to declare and pay
dividends less frequently than disclosed above, provided that net realized
capital gains and net investment income, if any, are paid annually.
The Funds record dividends and distributions to their shareholders on the
ex-dividend date. The amount of dividends and distributions from net
investment income and net realized capital gains are determined and
presented in accordance with federal 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: 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. For the period ended September 30, 2006, none of the Funds
participated in securities lending with qualified brokers.
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.
69
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2006 -- (continued)
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 a futures transaction, a Fund will be required to segregate an
initial margin payment of cash or other liquid securities with the Futures
Commission Merchant ("the broker"). The Funds' activities in futures
contracts are used primarily for hedging purposes and from time to time for
income enhancement. Futures contracts are conducted through regulated
exchanges that minimize counter-party credit risks. A Funds' participation
in the futures markets 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. Futures contracts involve
elements of risk in excess of the amount reflected in the Statement of
Assets and Liabilities. 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.
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.
During the period ended September 30, 2006 the following Funds had options
written:
Written Options
--------------------------------------------
Growth Opportunities Fund New Century Fund
------------------------ ------------------
Number of Premiums Number of Premiums
Contracts Received Contracts Received
--------- -------- --------- --------
Options outstanding as of September 30, 2005....... -- $ -- -- $ --
Options Written.................................... (552) (43,484) (999) (75,944)
Options terminated in closing purchase transactions 143 13,148 188 17,286
Options exercised.................................. -- -- -- --
Options expired.................................... 409 30,336 811 58,658
---- -------- ---- --------
Options outstanding as of September 30, 2006....... -- $ -- -- $ --
==== ======== ==== ========
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, International Equity Fund and International Small-Cap 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
70
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2006 -- (continued)
statements. Such liabilities are subject to off balance sheet risk to the
extent of any future increases in market value of the securities sold short.
The ultimate liability for securities sold short could exceed the
liabilities recorded in the Statement of Assets and Liabilities. The Fund
bears the risk of potential inability of the broker to meet their obligation
to perform.
Note 3. Investment Advisory and Management Agreement, Distribution Agreement
and Service Agreement
The Trust, on behalf of each Fund, has an Investment Advisory and Management
Agreement (the "Agreement") with AIG SunAmerica. Under the Agreement, AIG
SunAmerica provides continuous supervision of a Fund's portfolio and
administers its corporate affairs, subject to general review by the
Trustees. In connection therewith, AIG SunAmerica furnishes the Funds with
office facilities, maintains certain of the Funds' books and records, and
pays the salaries and expenses of all personnel, including officers of the
Funds who are employees of AIG SunAmerica and its affiliates.
The Funds pay AIG SunAmerica a monthly investment advisory and management
fee calculated daily at the following annual percentages of each Fund's
average daily net assets:
Management
Assets Fees
--------------------------- ----------
Blue Chip Growth Fund *..... $0 - $350 million 0.75%
(greater than) $350 million 0.70%
(greater than) $700 million 0.65%
Growth Opportunities Fund *. $0 - $350 million 0.75%
(greater than) $350 million 0.70%
(greater than) $700 million 0.65%
New Century Fund............ $0 - $350 million 0.75%
(greater than) $350 million 0.70%
(greater than) $700 million 0.65%
Growth and Income Fund+..... $0 - $350 million 0.75%
(greater than) $350 million 0.70%
(greater than) $700 million 0.65%
Balanced Assets Fund *...... $0 - $350 million 0.75%
(greater than) $350 million 0.70%
(greater than) $700 million 0.65%
International Equity Fund... (greater than) $0 1.00%
Value Fund.................. $0 - $750 million 1.00%
(greater than) $750 million 0.95%
(greater than) $1.5 billion 0.90%
Biotech/Health Fund+........ (greater than) $0 0.75%
Tax Managed Equity Fund..... (greater than) $0 0.85%
International Small-Cap Fund (greater than) $0 1.15%
- --------
* On August 29, 2006, AIG SunAmerica agreed to the continuation of a 0.05%
waiver of the investment advisory fees for the Blue Chip Growth Fund, Growth
Opportunities Fund and Balanced Assets Fund. Effective September 1, 2006,
AIG SunAmerica agreed to, until further notice, an additional 0.02% waiver
of the investment advisory fee for these funds. For the period ended
September 30, 2006, the amount of investment advisory fees waived were
$40,477, $39,534 and $90,651, respectively. These amounts are reflected in
the Statement of Operations. Effective October 1, 2006, AIG SunAmerica
agreed to, until further notice, reduce the waiver of the investment
advisory fee for the funds to 0.02%.
+ Effective September 1, 2006, AIG SunAmerica agreed, until further notice, to
waive 0.05% of the investment advisory fees for the Growth and Income Fund
and Biotech/Health Fund. For the period ended September 30, 2006, the amount
of investment advisory fees waived were $4,718 and $1,016, respectively.
These amounts are reflected in the Statement of Operations.
For the period ended September 30, 2006, AIG SunAmerica earned fees in the
amounts stated in the Statement of Operations.
The International Equity Fund and International Small-Cap Fund are
subadvised by AIG Global Investment Corp. ("AIGGIC") pursuant to a
subadvisory agreement with AIG SunAmerica. AIGGIC is an indirect
wholly-owned subsidiary of AIG and an affiliate of AIG SunAmerica. AIGGIC
receives an annual fee of 0.47% of average daily net assets for the
International Equity Fund and 0.60% of average daily net assets for the
International Small-Cap Fund, which is paid by AIG SunAmerica. For the
period ended September 30, 2006, AIGGIC waived 0.05% of the fee paid by AIG
SunAmerica for the International Small-Cap Fund. Effective November 1, 2005,
AIG SunAmerica assumed the day to day management of the Tax Managed Equity
Fund, which was previously managed by J.P. Morgan Fleming Asset Management,
Inc.
71
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2006 -- (continued)
AIG SunAmerica 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
International Small-Cap Class A 1.90
International Small-Cap Class B 2.55
International Small-Cap Class C 2.55
AIG SunAmerica 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, Tax
Managed Fund and International Small-Cap Fund, any waivers or reimbursements
made by AIG SunAmerica 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 AIG SunAmerica and remain in
compliance with the foregoing expense limitations.
72
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2006 -- (continued)
For the period ending September 30, 2006, AIG SunAmerica has agreed to
reimburse expenses as follows:
Fund
- ----
Blue Chip Growth Class I....... $ 9,935
Growth Opportunities Class I... 10,784
New Century Fund Class C....... 8,459
Growth & Income Class I........ 9,416
Balanced Assets Class I........ 9,824
International Equity Class A... 1,897
International Equity Class B... 6,457
International Equity Class C... 4,006
International Equity Class I... 1,909
Value Fund Class A............. 94,371
Value Fund Class B............. 49,175
Value Fund Class C............. 29,491
Value Fund Class I............. 7,717
Value Fund Class Z............. 13,207
Biotech/Health Class A......... 39,912
Biotech/Health Class B......... 34,846
Biotech/Health Class C......... 26,235
Tax Managed Equity Class A..... 50,565
Tax Managed Equity Class B..... 48,036
Tax Managed Equity Class C..... 56,581
International Small-Cap Class A 107,906
International Small-Cap Class B 19,901
International Small-Cap Class C 27,986
For the period ended September 30, 2006, the amounts recouped by the Adviser
are as follows:
Fund
- ----
International Equity Class A $24,685
International Equity Class B 2,766
International Equity Class C 6,805
International Equity Class I 2,224
At September 30, 2006, expenses previously waived or reimbursed by AIG
SunAmerica that are subject to recoupment are as follows:
Class
Other Specific
Expenses Expenses
Fund Reimbursed Reimbursed
- ---- ---------- ----------
International Equity Class A... $ -- $ 39,308
International Equity Class B... -- 44,576
International Equity Class C... -- 28,992
International Equity Class I... -- 10,532
Value Fund Class A............. 107,893 96,261
Value Fund Class B............. 62,800 81,850
Value Fund Class C............. 34,815 30,177
Value Fund Class I............. 4,431 17,197
Value Fund Class Z............. 11,994 16,834
Biotech/Health Class A......... 3,471 74,366
Biotech/Health Class B......... 3,084 70,954
Biotech/Health Class C......... 2,216 52,600
Tax Managed Equity Class A..... 13,705 90,760
Tax Managed Equity Class B..... 18,037 99,939
Tax Managed Equity Class C..... 17,150 102,948
International Small-Cap Class A 81,971 25,935
International Small-Cap Class B 1,332 18,569
International Small-Cap Class C 6,131 21,855
73
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2006 -- (continued)
The Trust, on behalf of each Fund, has entered into a Distribution Agreement
with AIG SunAmerica Capital Services, Inc. ("SACS" or the "Distributor"), an
affiliate of the Adviser. Each Fund has adopted a Distribution Plan on
behalf of each class (each a "Plan" and collectively, the "Plans") in
accordance with the provisions of Rule 12b-1 under the 1940 Act, hereinafter
referred to as the "Class A Plan," "Class B Plan" and "Class C Plan." In
adopting the 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
Plans provide that each class of shares of each Fund will 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, 2006, 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, 2006, SACS
earned fees (see Statement of Operations) based upon the aforementioned
rates.
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, 2006, 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....... $ 43,398 $ 18,678 $ 18,736 $ 210 $38,709 $ 161
Growth Opportunities... 55,794 22,824 25,028 44 53,182 1,086
New Century............ 49,583 25,056 17,932 32 16,233 50
Growth & Income........ 64,464 29,148 26,344 8,555 74,210 767
Balanced Assets........ 199,779 123,555 49,546 -- 69,965 1,134
International Equity... 121,110 26,541 76,962 341 26,648 1,420
Value.................. 128,447 41,126 68,622 1,129 84,463 7,683
Biotech/Health......... 30,733 12,158 14,014 -- 28,392 578
Tax Managed Equity..... 148,955 15,626 110,353 4,863 20,778 3,613
International Small-Cap 40,661 12,304 20,242 -- 68 --
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, 2006, 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.
74
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2006 -- (continued)
Expense Payable At September 30, 2006
--------------------------------- -------------------------------
Fund Class A Class B Class C Class I Class A Class B Class C Class I
- ---- -------- -------- ------- ------- ------- ------- ------- -------
Blue Chip Growth....... $113,053 $ 40,925 $10,243 $ 1,997 $ 8,868 $3,158 $ 813 $ 114
Growth Opportunities... 85,587 50,448 22,202 1,541 6,777 3,913 1,683 76
New Century............ 173,315 19,350 3,961 -- 13,597 1,365 310 --
Growth and Income...... 132,835 71,504 66,678 930 11,001 4,866 4,842 51
Balanced Assets........ 270,833 52,797 36,701 1,626 22,914 3,753 2,731 134
International Equity... 118,863 44,894 43,691 19,603 11,163 3,861 3,878 1,720
Value.................. 265,970 110,788 81,391 5,696 21,528 8,426 6,012 31
Biotech/Health......... 26,303 20,434 13,967 -- 1,974 1,473 1,021 --
Tax Managed Equity..... 35,731 28,842 40,886 -- 4,250 1,774 4,927 --
International Small-Cap 18,704 347 2,138 -- 3,871 103 610 --
At September 30, 2006, AIG SunAmerica, Inc. an affiliated company of the
adviser, owned 8.03% and 5.02% of the total outstanding shares of
International Equity and Biotech/Health, respectively.
For the period January 27, 2005 through April 4, 2006, less than 80% of the
Blue Chip Growth Fund's net assets plus any borrowing for investment
purposes were invested in equity securities of "Blue Chip" companies, as
that term is defined in the Fund's prospectus. The Fund did not experience a
loss as a result of the investment restriction violation.
Note 4. Expense Reductions
Through expense offset arrangements resulting from broker commission
recapture, a portion of the expenses of the Funds set forth below have been
reduced. For the period ended September 30, 2006, the amount of expense
reductions received by each Fund, used to offset the Fund's non-affiliated
expenses were as follows:
Total Expense
Fund Reductions
- ---- -------------
Blue Chip Growth.... $ 7,202
Growth Opportunities 31,825
New Century......... 5,047
Growth and Income... 11,848
Balanced Assets..... 5,224
Value............... 24,568
Biotech/Health...... 4,716
Tax Managed Equity.. 14,979
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, 2006, were as follows:
Blue Chip Growth New Growth and Balanced
Growth Opportunities Century Income Assets
Fund Fund Fund Fund Fund
------------- ------------- ------------ ------------ -------------
Purchases (excluding U.S. government securities).. $117,479,854 $198,614,933 $197,053,562 $192,089,377 $238,083,400
Sales and maturities (excluding U.S. government
securities)...................................... 135,046,042 225,622,339 223,610,573 230,777,707 262,656,610
Purchases of U.S. government securities........... -- -- -- -- 26,406,924
Sales and maturities of U.S. government securities -- -- -- -- 31,941,810
International Tax International
Equity Value Biotech/ Managed Small-Cap
Fund Fund Health Fund Equity Fund Fund
------------- ------------- ------------ ------------ -------------
Purchases (excluding U.S. government securities).. $167,102,915 $320,048,851 $ 30,295,901 $488,080,341 $ 31,570,066
Sales and maturities (excluding U.S. government
securities)...................................... 157,938,498 372,561,869 39,204,396 473,799,218 4,869,799
Purchases of U.S. government securities........... -- -- -- -- --
Sales and maturities of U.S. government securities -- -- -- -- --
75
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2006 -- (continued)
Note 6. Federal Income Taxes
The amounts of aggregate unrealized gain (loss) and the cost of investment
securities for federal income tax purposed, 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).......................... $ 70,035,182 $ 66,349,279 $83,076,328 $111,189,978 $159,206,054
============ ============ =========== ============ ============
Appreciation.............................. 4,966,623 3,685,592 3,668,811 8,749,199 9,366,940
Depreciation.............................. (2,428,293) (1,553,513) (1,704,750) (3,277,517) (2,950,984)
------------ ------------ ----------- ------------ ------------
Net unrealized appreciation (depreciation) $ 2,538,330 $ 2,132,079 $ 1,964,061 $ 5,471,682 $ 6,415,956
============ ============ =========== ============ ============
International Biotech/ Tax International
Equity Health Managed Equity Small-Cap
Fund Value Fund Fund Fund Fund
------------- ------------- ----------- -------------- -------------
Cost (tax basis).......................... $105,410,907 $207,357,729 $23,364,686 $ 54,324,748 $ 25,977,511
============ ============ =========== ============ ============
Appreciation.............................. 11,042,948 21,156,795 1,290,663 3,131,009 823,757
Depreciation.............................. (1,639,309) (1,852,429) (1,327,596) (521,644) (2,205,616)
------------ ------------ ----------- ------------ ------------
Net unrealized appreciation (depreciation) $ 9,403,639 $ 19,304,366 $ (36,933) $ 2,609,365 $ (1,381,859)
============ ============ =========== ============ ============
The following details the tax basis of distributions as well as the
components of distributable earnings. The tax basis components of
distributable earnings differ from the amounts reflected in the Statement of
Assets and Liabilities due to temporary book/tax differences primarily
arising from wash sales, post October losses and derivative transactions.
Distributable Earnings Tax Distributions
--------------------------------------- ----------------------
For the year ended September 30, 2006
---------------------------------------------------------------
Long-Term
Gains/Capital Unrealized Long-Term
Ordinary and Other Appreciation Ordinary Capital
Fund Income Losses (Depreciation) Income Gains
- ---- ---------- ------------- -------------- ----------- ----------
Blue Chip Growth....... $ -- $ (72,098,821) $ 2,538,330 $ -- $ --
Growth Opportunities... -- (204,700,551) 2,132,079 -- --
New Century............ -- (93,298,032) 1,964,061 -- --
Growth and Income...... -- (48,458,322) 5,471,682 101,366 --
Balanced Assets........ 101,844 (78,516,188) 6,416,109 2,815,576 --
International Equity... -- (19,024,974) 9,402,423 -- --
Value.................. 7,336,415 16,373,310 19,304,366 14,799,743 2,589,627
Biotech/Health......... -- (31,505,917) (36,933) -- --
Tax Managed Equity..... -- (28,965,441) 2,609,225 53,956 --
International Small-Cap -- (1,191,758) (1,385,306) -- --
76
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2006 -- (continued)
Tax Distributions
----------------------
For the year ended
September 30, 2005
----------------------
Long-Term
Ordinary Capital
Fund Income Gains
- ---- ----------- ----------
Blue Chip Growth....... $ -- $ --
Growth Opportunities... -- --
New Century............ -- --
Growth and Income...... 588,836 --
Balanced Assets........ 3,278,600 --
International Equity... -- --
Value.................. 16,513,550 7,934,524
Biotech/Health......... -- --
Tax Managed Equity..... 69,828 --
International Small-Cap -- --
For the period ended September 30, 2006, 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, principle paydown adjustments and investments
in real estate investment trusts to the components of net assets as follows:
Accumulated Accumulated
Undistributed Net Undistributed
Investment Net Realized Capital
Fund Income (Loss) Gain (Loss) Paid-in
- ---- ----------------- ------------- ---------
Blue Chip Growth....... $533,652 $ -- $(533,652)
Growth Opportunities... 791,849 -- (791,849)
New Century............ 442,364 -- (442,364)
Growth and Income...... 33,316 -- (33,316)
Balanced Assets........ 277,380 (277,380) --
International Equity... 341,540 43,097 (384,637)
Value.................. -- -- --
Biotech/Health......... 311,675 -- (311,675)
Tax Managed Equity..... 193,397 53,723 (247,120)
International Small-Cap 4,779 68,624 (73,403)
77
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2006 -- (continued)
For Federal income tax purposes, the Funds indicated below have capital loss
carryforwards, which expire in the year indicated, as of September 30, 2006,
which are available to offset future capital gains, if any:
Capital Loss Carryforward
-------------------------------------------------------------------- ----------
Fund 2008 2009 2010 2011 2012 2013 2014
- ---- ----------- ----------- ------------ ----------- ---------- -------- ----------
Blue Chip Growth*...... $17,540,769 $ -- $ 12,497,108 $42,060,944 $ -- $ -- $ --
Growth Opportunities*.. 8,188,458 151,316 131,047,975 65,312,802 -- -- --
New Century............ -- -- 56,946,876 36,351,156 -- -- --
Growth and Income...... -- -- 12,105,429 30,630,503 5,722,390 -- --
Balanced Assets........ -- -- 18,956,073 55,685,563 3,874,552 -- --
International Equity*.. 15,141,007 -- 1,895,003 1,952,562 -- -- --
Value.................. -- -- -- -- -- -- --
Biotech/Health......... -- 13,376,483 17,583,650 545,784 -- -- --
Tax Managed Equity..... 2,013,208 6,189,990 15,675,665 4,260,050 594,906 177,899 --
International Small-Cap -- -- -- -- -- -- 1,191,758
- --------
* 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.
The Fund's indicated below, utilized capital loss carryforwards, which
offset net taxable gains realized in the year ended September 30, 2006
Capital Loss
Carryforward
Fund Utilized
- ---- ------------
Blue Chip Growth....... $ 5,410,261
Growth Opportunities... 14,087,949
New Century............ 12,012,220
Growth and Income...... 13,974,770
Balanced Assets........ 5,268,029
International Equity... 22,425,530
Value.................. --
Biotech/Health......... 1,579,645
Tax Managed Equity..... 2,784,931
International Small-Cap --
Under the current law, capital losses related to securities and foreign
currency realized after October 31 and prior to the Fund's fiscal year end
may be deferred as occurring the first day of the following year. For the
fiscal year ended September 30, 2006, the Funds elected to defer capital
losses as follows:
Deferred Deferred
Post- Post-
October October
Capital Currency
Fund Loss Loss
- ---- -------- --------
International Equity $-- $34,696
Tax Managed Equity.. -- 53,723
78
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2006 -- (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, 2006 September 30, 2005 September 30, 2006 September 30, 2005
---------------------- ------------------------ --------------------- ---------------------
Shares Amount Shares Amount Shares Amount Shares Amount
-------- ------------ ---------- ------------ -------- ----------- -------- -----------
Shares sold(1)(2)(3)... 286,191 $ 4,393,307 318,097 $ 4,691,601 107,187 $ 1,479,959 127,065 $ 1,685,024
Reinvested dividends... -- -- -- -- -- -- -- --
Shares redeemed(1)(2).. (861,719) (13,297,858) (1,010,053) (14,942,148) (511,064) (7,023,069) (670,464) (8,912,621)
-------- ------------ ---------- ------------ -------- ----------- -------- -----------
Net increase (decrease) (575,528) $ (8,904,551) (691,956) $(10,250,547) (403,877) $(5,543,110) (543,399) $(7,227,597)
======== ============ ========== ============ ======== =========== ======== ===========
Blue Chip Growth Fund
----------------------------------------------------------------------------------------------
Class C Class I
------------------------------------------------ --------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2006 September 30, 2005 September 30, 2006 September 30, 2005
---------------------- ------------------------ --------------------- ---------------------
Shares Amount Shares Amount Shares Amount Shares Amount
-------- ------------ ---------- ------------ -------- ----------- -------- -----------
Shares sold............ 42,327 $ 583,163 32,571 $ 430,311 10,100 $ 157,155 29,610 $ 439,602
Reinvested dividends... -- -- -- -- -- -- -- --
Shares redeemed(3)..... (105,697) (1,448,494) (153,116) (2,033,335) (64,498) (1,009,458) (87,497) (1,306,402)
-------- ------------ ---------- ------------ -------- ----------- -------- -----------
Net increase (decrease) (63,370) $ (865,331) (120,545) $ (1,603,024) (54,398) $ (852,303) (57,887) $ (866,800)
======== ============ ========== ============ ======== =========== ======== ===========
- --------
(1)For the year ended September 30, 2006, includes automatic conversion of
140,669 shares of Class B shares in the amount of $1,929,214 to 125,387
shares of Class A shares in the amount of $1,929,214.
(2)For the year ended September 30, 2005, 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.
(3)For the year ended September 30, 2006, includes automatic conversion of
13,646 shares of Class C shares in the amount of $184,614 to 12,078 shares
of Class A shares in the amount of $184,614.
79
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2006 -- (continued)
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, 2006 September 30, 2005 September 30, 2006 September 30, 2005
------------------------ ------------------------ ---------------------- ----------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ -------- ----------- -------- ------------
Shares sold(1)(2)(3)... 308,492 $ 5,164,212 246,991 $ 3,723,609 76,853 $ 1,138,934 91,850 $ 1,231,312
Reinvested dividends... -- -- -- -- -- -- -- --
Shares redeemed(1)(2).. (858,318) (14,201,135) (1,159,786) (17,443,762) (558,658) (8,294,844) (748,216) (10,067,500)
---------- ------------ ---------- ------------ -------- ----------- -------- ------------
Net increase (decrease) (549,826) $ (9,036,923) (912,795) $(13,720,153) (481,805) $(7,155,910) (656,366) $ (8,836,188)
========== ============ ========== ============ ======== =========== ======== ============
Growth Opportunities Fund
--------------------------------------------------------------------------------------------------
Class C Class I
-------------------------------------------------- ----------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2006 September 30, 2005 September 30, 2006 September 30, 2005
------------------------ ------------------------ ---------------------- ----------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ -------- ----------- -------- ------------
Shares sold............ 35,295 $ 519,835 52,972 $ 704,930 6,157 $ 104,273 20,915 $ 314,055
Reinvested dividends... -- -- -- -- -- -- -- --
Shares redeemed(3)..... (253,692) (3,730,537) (410,425) (5,495,557) (88,753) (1,461,430) (167,934) (2,588,381)
---------- ------------ ---------- ------------ -------- ----------- -------- ------------
Net increase (decrease) (218,397) $ (3,210,702) (357,453) $ (4,790,627) (82,596) $(1,357,157) (147,019) $ (2,274,326)
========== ============ ========== ============ ======== =========== ======== ============
Growth Opportunities Fund
------------------------
Class X+
------------------------
For the
year ended
September 30, 2005
------------------------
Shares Amount
---------- ------------
Shares sold............ -- $ --
Reinvested dividends... -- --
Shares redeemed........ (5,500) (86,962)
---------- ------------
Net increase (decrease) (5,500) $ (86,962)
========== ============
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, 2006 September 30, 2005 September 30, 2006 September 30, 2005
------------------------ ------------------------ ---------------------- ----------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ -------- ----------- -------- ------------
Shares sold(4)(5)...... 251,417 $ 4,619,033 358,049 $ 6,008,446 52,369 $ 849,797 63,441 $ 952,686
Reinvested dividends... -- -- -- -- -- -- -- --
Shares redeemed(4)(5).. (1,032,640) (18,939,346) (984,135) (16,434,485) (241,463)* (3,911,556) (281,736) (4,143,297)
---------- ------------ ---------- ------------ -------- ----------- -------- ------------
Net increase (decrease) (781,223) $(14,320,313) (626,086) $(10,426,039) (189,094) $(3,061,759) (218,295) $ (3,190,611)
========== ============ ========== ============ ======== =========== ======== ============
- --------
(1)For the year ended September 30, 2006, includes automatic conversion of
89,673 shares of Class B shares in the amount of $1,335,833 to 79,800 shares
of Class A shares in the amount of $1,335,833.
(2)For the year ended September 30, 2005, 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.
(3)For the year ended September 30, 2006, includes automatic conversion of
14,961 shares of Class C shares in the amount of $217,480 to 13,265 shares
of Class A shares in the amount of $217,480.
(4)For the year ended September 30, 2006, includes automatic conversion of
94,711 shares of Class B shares in the amount of $1,533,530 to 83,219 shares
of Class A shares in the amount of $1,533,530.
(5)For the year ended September 30, 2005, 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.
+ See Note 1
80
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2006 -- (continued)
New Century Fund
--------------------------------------------------
Class C
--------------------------------------------------
For the For the
year ended year ended
September 30, 2006 September 30, 2005
------------------------ ------------------------
Shares Amount Shares Amount
---------- ------------ ---------- ------------
Shares sold............ 18,023 $ 288,668 16,515 $ 248,611
Reinvested dividends... -- -- -- --
Shares redeemed........ (33,993) (549,978) (59,097) (874,430)
---------- ------------ ---------- ------------
Net increase (decrease) (15,970) $ (261,310) (42,582) $ (625,819)
========== ============ ========== ============
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, 2006 September 30, 2005 September 30, 2006 September 30, 2005
------------------------ ------------------------ ------------------------ ------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Shares sold(1)(2)(3)... 1,037,304 $ 13,187,347 879,119 $ 10,753,528 138,475 $ 1,670,363 242,630 $ 2,807,143
Reinvested dividends... 7,291 92,385 43,416 537,570 -- -- -- --
Shares redeemed(1)(2).. (1,733,300) (22,055,189) (1,697,725) (20,789,044) (1,498,815) (18,023,263) (1,782,268) (20,575,616)
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Net increase (decrease) (688,705) $ (8,775,457) (775,190) $ (9,497,946) (1,360,340) $(16,352,900) (1,539,638) $(17,768,473)
========== ============ ========== ============ ========== ============ ========== ============
Growth and Income Fund
------------------------------------------------------------------------------------------------------
Class C Class I
-------------------------------------------------- --------------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2006 September 30, 2005 September 30, 2006 September 30, 2005
------------------------ ------------------------ ------------------------ ------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Shares sold............ 50,775 $ 607,720 136,365 $ 1,581,328 4,901 $ 62,493 21,133 $ 258,364
Reinvested dividends... -- -- -- -- 167 2,121 729 9,047
Shares redeemed(3)..... (1,122,450) (13,426,842) (1,041,425) (12,022,770) (44,644) (560,171) (28,258) (347,815)
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Net increase (decrease) (1,071,675) $(12,819,122) (905,060) $(10,441,442) (39,576) $ (495,557) (6,396) $ (80,404)
========== ============ ========== ============ ========== ============ ========== ============
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, 2006 September 30, 2005 September 30, 2006 September 30, 2005
------------------------ ------------------------ ------------------------ ------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Shares sold(4)(5)(6)... 740,185 $ 10,265,397 744,224 $ 10,112,127 103,140 $ 1,423,304 202,218 $ 2,733,921
Reinvested dividends... 160,938 2,242,794 184,510 2,518,942 16,817 233,746 25,821 351,754
Shares redeemed(4)(5).. (2,374,864) (32,919,295) (2,685,598) (36,608,551) (876,652) (12,118,388) (976,565) (13,227,507)
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Net increase (decrease) (1,473,741) $(20,411,104) (1,756,864) $(23,977,482) (756,695) $(10,461,338) (748,526) $(10,141,832)
========== ============ ========== ============ ========== ============ ========== ============
- --------
(1)For the year ended September 30, 2006, includes automatic conversion of
569,345 shares of Class B shares in the amount of $6,846,288 to 537,783
shares of Class A shares in the amount of $6,846,288.
(2)For the year ended September 30, 2005, 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.
(3)For the year ended September 30, 2006, includes automatic conversion of
257,374 shares of Class C shares in the amount of $3,090,506 to 244,371
shares of Class A shares in the amount of $3,090,506.
(4)For the year ended September 30, 2006, includes automatic conversion of
289,554 shares of Class B shares in the amount of $4,003,645 to 288,356
shares of Class A shares in the amount of $4,003,645.
(5)For the year ended September 30, 2005, 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.
(6)For the year ended September 30, 2006, includes automatic conversion of
29,174 shares of Class C shares in the amount of $403,247 to 29,117 shares
of Class A shares in the amount of $403,247.
81
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2006 -- (continued)
Balanced Assets Fund
------------------------------------------------------------------------------------------------------
Class C Class I
-------------------------------------------------- --------------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2006 September 30, 2005 September 30, 2006 September 30, 2005
------------------------ ------------------------ ------------------------ ------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Shares sold............. 59,887 $ 822,679 94,054 $ 1,276,760 3,998 $ 55,500 20,395 $ 277,145
Reinvested dividends.... 11,763 163,790 15,020 204,890 1,087 15,163 1,122 15,336
Shares redeemed(1)...... (417,497) (5,771,742) (430,337) (5,844,582) (6,630) (92,371) (18,641) (255,119)
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Net increase (decrease). (345,847) $ (4,785,273) (321,263) $ (4,362,932) (1,545) $ (21,708) 2,876 $ 37,362
========== ============ ========== ============ ========== ============ ========== ============
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, 2006 September 30, 2005 September 30, 2006 September 30, 2005
------------------------ ------------------------ ------------------------ ------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Shares sold(2)(3)(4).... 1,792,340 $ 26,707,517 1,043,869 $ 12,291,775 422,480 $ 5,960,828 261,068 $ 2,907,036
Reinvested dividends.... -- -- -- -- -- -- -- --
Shares redeemed(2)(3)(5) (1,204,676) (17,947,877) (865,086) (10,105,312) (580,769) (8,067,772) (806,858) (8,933,931)
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Net increase (decrease). 587,664 $ 8,759,640 178,783 $ 2,186,463 (158,289) $ (2,106,944) (545,790) $ (6,026,895)
========== ============ ========== ============ ========== ============ ========== ============
International Equity Fund
------------------------------------------------------------------------------------------------------
Class C Class I
-------------------------------------------------- --------------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2006 September 30, 2005 September 30, 2006 September 30, 2005
------------------------ ------------------------ ------------------------ ------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Shares sold............. 499,169 $ 6,840,120 162,124 $ 1,805,329 318,984 $ 4,744,366 335,007 $ 3,994,607
Reinvested dividends.... -- -- -- -- -- -- -- --
Shares redeemed(4)(5)... (414,380) (5,730,063) (420,394) (4,662,221) (263,235) (4,005,306) (209,537) (2,503,467)
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Net increase (decrease). 84,789 $ 1,110,057 (258,270) $ (2,856,892) 55,749 $ 739,060 125,470 $ 1,491,140
========== ============ ========== ============ ========== ============ ========== ============
Value Fund
------------------------------------------------------------------------------------------------------
Class A Class B
-------------------------------------------------- --------------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2006 September 30, 2005 September 30, 2006 September 30, 2005
------------------------ ------------------------ ------------------------ ------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Shares sold(6)(7)(8).... 1,120,447 $ 19,761,774 3,076,062 $ 54,117,019 249,089 $ 4,201,032 741,367 $ 12,542,807
Reinvested dividends.... 470,358 8,066,638 587,633 10,101,410 205,229 3,363,708 402,122 6,626,965
Shares redeemed(6)(7)... (2,359,246) (41,370,087) (1,591,136) (28,099,693) (1,169,879) (19,607,142) (1,822,991) (30,700,307)
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Net increase (decrease). (768,441) $(13,541,675) 2,072,559 $ 36,118,736 (715,561) $(12,042,402) (679,502) $(11,530,535)
========== ============ ========== ============ ========== ============ ========== ============
- --------
(1)For the year ended September 30, 2006, includes automatic conversion of
29,174 shares of Class C shares in the amount of $403,247 to 29,117 shares
of Class A shares in the amount of $403,247.
(2)For the year ended September 30, 2006, includes automatic conversion of
213,551 shares of Class B shares in the amount of $2,955,239 to 200,881
shares of Class A shares in the amount of $2,955,239.
(3)For the year ended September 30, 2005, includes automatic conversion of
316,984 shares of Class B shares in the amount of $3,494,617 to 300,045
shares of Class A shares in the amount of $3,494,617.
(4)For the year ended September 30, 2006, includes automatic conversion of
62,893 shares of Class C shares in the amount of $842,371 to 59,154 shares
of Class A shares in the amount of $842,371.
(5)For the year ended September 30, 2006, net of redemption fees of $3,190,
$1,102, $1,103 and $501 for Class A, Class B, Class C and Class I shares,
respectively.
(6)For the year ended September 30, 2006, includes automatic conversion of
414,287 shares of Class B shares in the amount of $6,940,648 to 395,001
shares of Class A shares in the amount of $6,940,648.
(7)For the year ended September 30, 2005, 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.
(8)For the year ended September 30, 2006, includes automatic conversion of
3,114 shares of Class C shares in the amount of $38,164 to 3,019 shares of
Class A shares in the amount of $38,164.
82
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2006 -- (continued)
Value Fund
-------------------------------------------------------------------------------------------
Class C Class I
--------------------------------------------- --------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2006 September 30, 2005 September 30, 2006 September 30, 2005
---------------------- --------------------- --------------------- ---------------------
Shares Amount Shares Amount Shares Amount Shares Amount
-------- ------------ -------- ----------- -------- ----------- -------- -----------
Shares sold............ 220,948 $ 3,715,419 829,763 $14,010,774 42,694 $ 745,901 94,037 $ 1,658,733
Reinvested dividends... 147,920 2,422,937 198,515 3,271,530 14,121 241,900 34,149 586,340
Shares redeemed(1)..... (861,447) (14,432,704) (463,163) (7,853,358) (220,088) (3,918,465) (224,168) (4,025,285)
-------- ------------ -------- ----------- -------- ----------- -------- -----------
Net increase (decrease) (492,579) $ (8,294,348) 565,115 $ 9,428,946 (163,273) $(2,930,664) (95,982) $(1,780,212)
======== ============ ======== =========== ======== =========== ======== ===========
Value Fund
---------------------------------------------
Class Z
---------------------------------------------
For the For the
year ended year ended
September 30, 2006 September 30, 2005
---------------------- ---------------------
Shares Amount Shares Amount
-------- ------------ -------- -----------
Shares sold............ 327,401 $ 5,980,931 569,182 $10,322,268
Reinvested dividends... 75,381 1,333,483 60,060 1,060,065
Shares redeemed........ (158,366) (2,868,969) (102,946) (1,879,658)
-------- ------------ -------- -----------
Net increase (decrease) 244,416 $ 4,445,445 526,296 $ 9,502,675
======== ============ ======== ===========
Biotech/Health Fund
-------------------------------------------------------------------------------------------
Class A Class B
--------------------------------------------- --------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2006 September 30, 2005 September 30, 2006 September 30, 2005
---------------------- --------------------- --------------------- ---------------------
Shares Amount Shares Amount Shares Amount Shares Amount
-------- ------------ -------- ----------- -------- ----------- -------- -----------
Shares sold(2)(3)...... 255,374 $ 2,349,650 452,295 $ 4,107,482 64,171 $ 573,837 86,406 $ 726,533
Reinvested dividends... -- -- -- -- -- -- -- --
Shares redeemed(2)(3).. (532,419) (4,912,419) (728,911) (6,446,238) (398,787) (3,538,730) (468,621) (4,030,746)
-------- ------------ -------- ----------- -------- ----------- -------- -----------
Net increase (decrease) (277,045) $ (2,562,769) (276,616) $(2,338,756) (334,616) $(2,964,893) (382,215) $(3,304,213)
======== ============ ======== =========== ======== =========== ======== ===========
Biotech/Health Fund
---------------------------------------------
Class C
---------------------------------------------
For the For the
year ended year ended
September 30, 2006 September 30, 2005
---------------------- ---------------------
Shares Amount Shares Amount
-------- ------------ -------- -----------
Shares sold............ 69,552 $ 625,177 94,298 $ 818,695
Reinvested dividends... -- -- -- --
Shares redeemed........ (244,363) (2,179,352) (453,210) (3,900,683)
-------- ------------ -------- -----------
Net increase (decrease) (174,811) $ (1,554,175) (358,912) $(3,081,988)
======== ============ ======== ===========
- --------
(1)For the year ended September 30, 2006, includes automatic conversion of
3,114 shares of Class C shares in the amount of $38,164 to 3,019 shares of
Class A shares in the amount of $38,164.
(2)For the year ended September 30, 2006, includes automatic conversion of
21,097 shares of Class B shares in the amount of $187,200 to 20,301 shares
of Class A shares in the amount of $187,200.
(3)For the year ended September 30, 2005, 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.
83
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2006 -- (continued)
Tax Managed Equity Fund
-------------------------------------------------------------------------------------------
Class A Class B
--------------------------------------------- --------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2006 September 30, 2005 September 30, 2006 September 30, 2005
---------------------- --------------------- --------------------- ---------------------
Shares Amount Shares Amount Shares Amount Shares Amount
--------- ----------- -------- ----------- -------- ----------- -------- -----------
Shares sold(1)(2)...... 1,402,693 $18,992,948 48,008 $ 561,687 78,337 $ 1,037,524 18,771 $ 212,088
Reinvested dividends... 3,627 44,146 5,392 64,327 109 1,276 -- --
Shares redeemed(1)(2).. (635,487) (8,323,021) (305,640) (3,583,246) (666,910) (8,467,051) (501,702) (5,676,515)
--------- ----------- -------- ----------- -------- ----------- -------- -----------
Net increase (decrease) 770,833 $10,714,073 (252,240) $(2,957,232) (588,464) $(7,428,251) (482,931) $(5,464,427)
========= =========== ======== =========== ======== =========== ======== ===========
Tax Managed Equity Fund
---------------------------------------------
Class C
---------------------------------------------
For the For the
year ended year ended
September 30, 2006 September 30, 2005
---------------------- ---------------------
Shares Amount Shares Amount
--------- ----------- -------- -----------
Shares sold............ 1,260,574 $16,302,699 67,543 $ 758,473
Reinvested dividends... 105 1,242 -- --
Shares redeemed........ (349,343) (4,349,453) (522,887) (5,947,995)
--------- ----------- -------- -----------
Net increase (decrease) 911,336 $11,954,488 (455,344) $(5,189,522)
========= =========== ======== ===========
International Small-Cap Fund
--------------------------------------------------------------------
Class A Class B Class C
---------------------- --------------------- ---------------------
For the For the For the
period May 2, 2006@ period May 2, 2006@ period May 2, 2006@
through through through
September 30, 2006 September 30, 2006 September 30, 2006
---------------------- --------------------- ---------------------
Shares Amount Shares Amount Shares Amount
--------- ----------- -------- ----------- -------- -----------
Shares sold............ 1,979,431 $24,347,088 53,478 $ 612,219 313,677 $ 3,605,692
Reinvested dividends... -- -- -- -- -- --
Shares redeemed........ (28,793) (311,514) (557) (6,051) (8,463) (93,043)
--------- ----------- -------- ----------- -------- -----------
Net increase (decrease) 1,950,638 $24,035,574 52,921 $ 606,168 305,214 $ 3,512,649
========= =========== ======== =========== ======== ===========
- --------
(1)For the year ended September 30, 2006, includes automatic conversion of
239,315 shares of Class B shares in the amount of $3,094,224 to 230,195
shares of Class A shares in the amount of $3,094,224.
(2)For the year ended September 30, 2005, 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.
@ Commencement of operations
84
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2006 -- (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, 2006, the following
Funds had borrowings:
Weighted
Days Interest Average Debt Average
Fund Outstanding Charges Utilized Interest
- ---- ----------- -------- ------------ --------
Blue Chip Growth.............. 23 $ 1,139 $ 403,749 4.48%
Growth Opportunities.......... 1 193 1,250,813 5.56%
New Century................... 1 42 271,763 5.56%
Growth and Income............. 34 2,334 491,740 5.12%
Balanced Assets............... 17 699 299,138 4.89%
Value......................... 3 339 812,615 5.02%
Tax Managed Equity............ 92 17,723 1,300,118 5.23%
At September 30, 2006, Tax Managed Equity Fund had a balance open under the
line of credit of $367,927.
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 AIG SunAmerica or an
affiliate. The interfund lending program allows the participating Funds to
borrow money from and loan money to each other for temporary or emergency
purposes. An interfund loan will be made under this facility only if the
participating Funds receive a more favorable interest rate than would
otherwise be available from a typical bank for a comparable transaction. For
the period ended September 30, 2006, none of the Funds participated in this
program.
Note 10. Trustees Retirement Plan
The Trustees of the SunAmerica Equity Funds have adopted the AIG SunAmerica
Disinterested Trustees' and Directors' Retirement Plan (the "Retirement
Plan") effective January 1, 1993 for the unaffiliated Trustees. The
Retirement Plan provides generally that if an unaffiliated Trustee who has
at least 10 years of consecutive service as a Disinterested Trustee of any
of the AIG SunAmerica mutual funds (an "Eligible Trustee") retires after
reaching age 60 but before age 70, or who has at least 5 years of
consecutive service after reaching age 65 but before 70, or dies while a
Trustee, such person will be eligible to receive a retirement or death
benefit from each SunAmerica mutual fund with respect to which he or she is
an Eligible Trustee. As of each birthday, prior to the 70th birthday, but in
no event for a period greater than 10 years, each Eligible Trustee will be
credited with an amount equal to 50% of his or her regular fees (excluding
committee fees) for services as a Disinterested Trustee of each AIG
SunAmerica mutual fund for the calendar year in which such birthday occurs.
In addition, an amount equal to 8.5% of any amounts credited under the
preceding clause during prior years is added to each Eligible Trustee's
account until such Eligible Trustee reaches his or her 70th birthday. An
Eligible Trustee may receive any benefits payable under the Retirement Plan,
at his or her election, either in one lump sum or in up to fifteen annual
installments. Any undistributed amounts shall continue to accrue interest at
8.50%.
85
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2006 -- (continued)
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, 2006
-----------------------------------------------
Blue Chip Growth.............. $29,373 $1,112 $2,286
Growth Opportunities.......... 24,853 1,080 1,676
New Century................... 46,331 1,233 3,973
Growth and Income............. 38,579 1,826 2,364
Balanced Assets............... 80,905 2,452 6,681
International Equity.......... 17,765 1,182 1,202
Value......................... 30,710 3,046 1,855
Biotech/Health................ 5,407 419 256
Tax Managed Equity............ 10,537 521 571
International Small-Cap Equity -- -- --
Note 11. 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 and
International Small-Cap Fund. At September 30, 2006, the International
Equity Fund and International Small-Cap Fund had approximately 23% and 32%,
respectively, of their net assets invested in equity securities of companies
domiciled in Japan.
Note 12. Subsequent Event
At a meeting of the Board of Trustees ("the Board") of the Trust held on
November 9, 2006, the Board approved the reorganization of the
Biotech/Health Fund into the New Century Fund, subject to approval by the
shareholders of the Biotech/Health Fund. Pursuant to the proposed
Reorganization, all of the Biotech/Health Fund's assets and liabilities will
be transferred to the New Century Fund, in exchange for shares of the New
Century Fund. If the Biotech/Health Fund's shareholders approve the
proposal, they will receive shares of the New Century Fund, the total value
of which is equal to the total value of their shares of the Biotech/Health
Fund on the date of the merger, after which the Biotech/Health Fund will
cease operations.
Note 13. Other Information
On February 9, 2006, American International Group, Inc. ("AIG"), the parent
company and an affiliated person of the Adviser, the Distributor and AIGGIC,
the subadviser to two Funds, (the "Subadviser"), announced that it had
consented to the settlement of an injunctive action instituted by the
Securities and Exchange Commission ("SEC"). In its complaint, the SEC
alleged that AIG violated Section 17(a) of the Securities Act of 1933, as
amended, Sections 10(b), 13(a), 13(b)(2) and 13(b)(5) of the Securities
Exchange Act of 1934, as amended, and Rules 10b-5, 12b-20, 13a-1 and 13b2-1
promulgated thereunder, in connection with AIG's accounting and public
reporting practices. The conduct described in the complaint did not involve
any conduct of AIG or its subsidiaries related to their investment advisory
or distribution activities with respect to the assets of the Funds.
AIG, without admitting or denying the allegations in the complaint (except
as to jurisdiction), consented to the entry of an injunction against further
violations of the statutes referred to above. Absent exemptive relief
granted by the SEC, the entry of such an injunction would prohibit AIG and
its affiliated persons from, among other things, serving as an investment
adviser of any registered investment management company or principal
underwriter for any registered open-end investment company pursuant to
Section 9(a) of the Investment Company Act of 1940, as amended ("1940 Act").
Certain affiliated persons of AIG, including the Adviser, the Subadviser and
the Distributor, received a temporary order from the SEC pursuant to Section
9(c) of
86
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2006 -- (continued)
the 1940 Act with respect to the entry of the injunction, granting exemptive
relief from the provisions of Section 9(a) of the 1940 Act. The temporary
order permits AIG and its affiliated persons, including AIG's investment
management subsidiaries, to serve as investment adviser, sub-adviser,
principal underwriter or sponsor of the Funds. The Adviser expects that a
permanent exemptive order will be granted, although there is no assurance
the SEC will issue the order.
Additionally, AIG and its subsidiaries reached a resolution of claims and
matters under investigation with the United State Department of Justice
("DOJ"), the Attorney General of the State of New York ("NYAG") and the New
York State Department of Insurance ("DOI"), regarding accounting, financial
reporting and insurance brokerage practices of AIG and its subsidiaries, as
well as claims relating to the underpayment of certain workers compensation
premium taxes and other assessments.
As a result of the settlements with the SEC, the DOJ, the NYAG and the DOI,
AIG will make payments totaling approximately $1.64 billion. In addition, as
part of its settlements, AIG has agreed to retain for a period of three
years an Independent Consultant who will conduct a review that will include
the adequacy of AIG's internal controls over financial reporting and the
remediation plan that AIG has implemented as a result of its own internal
review.
Subject to receipt of permanent relief, the Adviser, Distributor and the
Subadviser believe that the settlements are not likely to have a material
adverse effect on their ability to perform their respective investment
advisory or distribution services relating to the Funds.
87
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, SunAmerica International Equity Fund, and SunAmerica
New Century Fund as of September 30, 2006, 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 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, 2006, 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 three 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 Small-Cap Fund as of September 30,
2006, and the related statement of operations, the statement of changes in net
assets, and the financial highlights for the period then ended. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. The financial
highlights for each of the periods presented through October 31, 2001 for the
SunAmerica International Equity Fund were audited by other auditors whose
report dated December 14, 2001, expressed an unqualified opinion on those
financial highlights. The 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, 2006, 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, SunAmerica
International Equity Fund, and SunAmerica New Century Fund, as of September 30,
2006, 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 Biotech/Health Fund, SunAmerica Value Fund, and Tax Managed Equity
Fund, as of September 30, 2006, 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 three years in the period then ended, in
conformity with U.S. generally accepted accounting principles. Also in our
opinion, the financial statements and financial highlights referred to above
present fairly, in all material respects, the financial position of the
SunAmerica International Small-Cap Fund as of September 30, 2006, the results
of its operations, the changes in its net assets, and the financial highlights
for the period then ended, in conformity with U.S. generally accepted
accounting principles.
Houston, Texas
November 17, 2006 [LOGO] Ernst &
Young LLP
88
SunAmerica Equity Funds
APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2006 -- (unaudited)
Approval of the Investment Advisory and Management Agreement and Subadvisory
Agreement
The Board, including the Trustees that are not interested persons of the Trust,
AIG SunAmerica or AIG Global Investment Corp. ("AIGGIC" or the "Subadviser"),
within the meaning of the 1940 Act (the "Disinterested Trustees"), approved the
continuation of the Investment Advisory and Management Agreement between the
Funds and AIG SunAmerica (the "Advisory Agreement") for a one-year period
ending August 31, 2007, at a meeting held on August 29, 2006. At this same
meeting, the Board also approved the continuation of the Subadvisory Agreement
between AIG SunAmerica and AIGGIC with respect to the International Equity Fund
for a one-year period ending August 31, 2007.
In accordance with Section 15(c) of the 1940 Act, the Board requested and the
Adviser provided materials relating to the Board's consideration of whether to
approve the continuation of the Advisory Agreement and Subadvisory Agreement.
In determining whether to approve the continuation of the Advisory Agreement
and Subadvisory Agreement, the Board, including Disinterested Trustees,
considered the following information:
Nature, Extent and Quality of Services Provided by the Adviser and Subadviser
The Board, including the Disinterested Trustees, considered the nature, quality
and extent of services to be provided by AIG SunAmerica and AIGGIC. The Board
noted that the services include acting as investment manager and adviser to the
Funds, managing the daily business affairs of the Funds, and obtaining and
evaluating economic, statistical and financial information to formulate and
implement investment policies. Additionally, the Board observed that AIG
SunAmerica 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, including the
Subadviser), and has authorized any of its officers and employees, if elected,
to serve as officers or trustees of the Funds without compensation. Finally,
the Board noted that AIG SunAmerica is responsible for monitoring and reviewing
the activities of affiliated and unaffiliated third-party service providers,
including the Subadviser.
In connection with the services provided by AIG SunAmerica, the Board analyzed
the structure and duties of AIG SunAmerica's fund administration, accounting,
legal and compliance departments and concluded that they were adequate to meet
the needs of the Funds. The Board further noted that AIG SunAmerica provides
and compensates a Chief Compliance Officer for the Funds and reviewed
information concerning AIG SunAmerica's compliance staff. The Board also
reviewed the personnel responsible for providing advisory services to the
Funds, and the level and process of monitoring the portfolio managers, and
concluded, based on their experience and interaction with the Adviser, that (i)
the Adviser was able to retain quality portfolio managers and other personnel;
(ii) the Adviser exhibited a high level of diligence and attention to detail in
carrying out its advisory responsibilities under the Advisory Agreement; (iii)
the Adviser was responsive to requests of the Board; and (iv) the Adviser had
kept the Board apprised of developments relating to the Funds and the industry
in general. The Board concluded that the nature and extent of services provided
under the Advisory Agreement were reasonable and appropriate in relation to the
management fee and that the quality of services continues to be high.
The Board also considered AIG SunAmerica's reputation and long-standing
relationship with the Funds and considered the benefit to shareholders of
investing in funds that are part of a family of funds offering a variety of
types of mutual fund and shareholder services. The Board considered AIG
SunAmerica's experience in providing management and investment advisory and
administrative services to advisory clients, including approximately 155
registered mutual funds and the fact that as of June 30, 2006 AIG SunAmerica
managed, advised an/or administered approximately $44.7 billion of assets.
With respect to the International Equity Fund, for which AIG SunAmerica has
delegated daily investment management responsibilities to AIGGIC, the Board
also considered the nature, quality and extent of services provided by AIGGIC.
The Board observed that AIGGIC is responsible for providing investment
management services, including investment research, advice and supervision, and
determining which securities will be purchased or sold by the International
Equity Fund. The Board reviewed AIGGIC's history, structure, size, visibility
and resources, which are needed to attract and retain highly qualified
investment professionals. The Board reviewed the personnel responsible for
providing subadvisory services to the International Equity Fund and concluded,
based on their experience with AIGGIC, that (i) AIGGIC was able to retain high
quality portfolio managers and other investment personnel; (ii) AIGGIC
exhibited a high level of diligence and attention to detail in carrying out its
responsibilities under
the Subadvisory Agreement; and (iii) AIGGIC was responsive to requests of the
Board and of AIG SunAmerica. With respect to the
89
SunAmerica Equity Funds
APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2006 -- (unaudited)
(continued)
administrative services provided by AIGGIC, the Board considered that AIGGIC
provides general marketing assistance and has developed internal policies and
procedures for monitoring compliance with the investment objectives, policies
and restrictions of the International Equity Fund as set forth in the
prospectus. The Board concluded that the nature and extent of services provided
by AIGGIC under the Subadvisory Agreement were reasonable and appropriate in
relation to the subadvisory fee and that the quality of services continues to
be high.
The Board also considered AIG SunAmerica's and AIGGIC's compliance and
regulatory history, and noted that neither AIG SunAmerica nor AIGGIC had been
the target of any regulatory actions or investigations that could potentially
affect its ability to provide investment management and advisory services to
the Funds.
Investment Performance of the Funds and the Adviser and Subadviser
The Board also reviewed and considered the performance of the Funds. In
connection with its review, the Board received and reviewed information
regarding the investment performance of the Funds as compared to each Fund's
peer group ("Peer Group") as determined by Lipper, Inc. ("Lipper"), and to an
appropriate index or combination of indices. The Board also noted that it
regularly reviews the performance of the Funds periodically throughout the year.
In preparation for the August 29, 2006 meeting, the Board was provided with
reports independently prepared by Lipper. Based on the Lipper reports, the
Board reviewed each Fund's annualized total return for the prior one-, two-,
three-, four-, five- and ten-year periods ended June 30, 2006. The Board also
received a report prepared by AIG SunAmerica that detailed the Funds
performance for the one-, three-, six-, and nine-month periods ended July 31,
2006 as well as investment performance of Funds that have new portfolio
managers from the date of the manager change through July 31, 2006.
Specifically, the Board considered that the performance of each of the Balanced
Assets Fund, Blue Chip Growth Fund and Growth Opportunities Fund ranked in the
fourth or fifth quintile of their respective Peer Groups during the one-,
three- and five-year periods but ranked in the first and second quartile during
the one-, three- and six-month periods ending June 30, 2006. The Board observed
that AIG SunAmerica had recently replaced portfolio managers for these Funds
and that the new managers were beginning to improve Fund performance.
The Board further considered that the performance of both the Value Fund and
the New Century Fund ranked in the fifth quintile for the one-year period but
that each Fund had stronger rankings in longer periods and ranked in the first
or second quartile over recent periods. Additionally, the Board considered that
the performance of the Tax Managed Equity Fund had generally ranked in the
first or second quintile during the relevant periods and that performance had
even improved since AIG SunAmerica had assumed daily management
responsibilities of the Fund. In particular, the Board noted that AIG
SunAmerica had proposed, and the Board had approved, the termination of J.P.
Morgan Investment Management as subadviser to the Tax Managed Equity Fund, that
AIG SunAmerica had hired a new portfolio manager to manage the Fund and that
the Fund's performance had subsequently improved. Additionally, the Board
considered that the performance of the Biotech/Health Fund ranked in the fifth
quintile during each of the relevant periods and that the Growth and Income
Fund ranked in the fifth quintile for the one-year period and the fourth
quintile for the two-, three- and ten-year periods.
The Board discussed its concerns regarding the performance of certain Funds
with management of AIG SunAmerica and noted that AIG SunAmerica had satisfied
previous commitments to enhance the Investments Department in an effort to
improve performance and that performance had subsequently begun to improve.
Additionally, the Board considered that AIG SunAmerica had also satisfied its
commitments to the Funds by hiring additional securities analysts. The Board
noted that the hiring of analysts and the willingness to replace portfolio
managers when necessary demonstrated AIG SunAmerica's commitment to improving
the Funds' performance. In considering AIG SunAmerica's commitment to enhancing
the Investments Department, the Board was provided with a presentation that
compared the present and historical staffing levels and annual budget of the
Investments Department. Based on this presentation, the Board noted that AIG
SunAmerica had made significant enhancements to the Investments Department in
an effort to improve Fund performance. The Board also noted that with respect
to the Biotech/Health Fund that performance had not improved and that the Board
asked AIG SunAmerica to consider other strategic plans to improve Fund
performance and to report back to the Board at a later date. In considering the
performance of AIG SunAmerica, the Board did not rely upon comparisons of AIG
SunAmerica's performance with respect to its other advisory clients.
In considering the performance of AIGGIC, the Board noted that it was satisfied
with its performance in managing the International Equity Fund. The Board
considered that the Fund's performance ranked in the top quartile within its
Peer Group for the one-year
90
SunAmerica Equity Funds
APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2006 -- (unaudited)
(continued)
period ending June 30, 2006, and that its rankings for the other periods were
also favorable. In considering the performance of AIGGIC, the Board did not
rely upon comparisons of AIGGIC's performance with respect to its other
advisory clients.
Consideration of the Management Fee and Subadvisory Fee and the Cost of the
Services and Profits Realized by the Investment Adviser, Subadviser and their
Affiliates from the Relationship with the Funds
The Board, including the Disinterested Trustees, received and reviewed
information regarding the fees paid by the Funds to AIG SunAmerica 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 services provided and any potential additional
benefits received by AIG SunAmerica, the Subadviser or their 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. The reports showed comparative fee
information of the Funds' Peer Groups, and rankings within the relevant Lipper
categories, as well as reports prepared by AIG SunAmerica. In considering the
reasonableness of the management fee, the Board reviewed a number of expense
comparisons, including: (i) contractual advisory and subadvisory fees; and (ii)
actual total operating expenses. The Board also received information on fees
charged by the Subadviser for management of funds similar to the International
Equity Fund. This information assisted the Board in considering what other
clients pay AIGGIC for similar services. The Board did not rely upon
comparisons of the fees earned by AIG SunAmerica with respect to other
investment advisory contracts. In considering the Funds' total operating
expenses, the Board analyzed the level of fee waivers and expense
reimbursements and the net expense caps contractually agreed upon by AIG
SunAmerica. The Board compared the Funds' net expense ratios to those of other
funds within the Funds' respective Peer Groups as a guide to help assess the
reasonableness of the Fund's management fee. The Board acknowledged that it was
difficult to make precise comparisons with other funds in the Peer Groups since
the exact nature of services provided under the Peer Groups' fund agreements is
often not apparent. The Board noted that the Peer Group fee information as a
whole was useful in assessing whether the Adviser was providing services at a
cost that was competitive with other, similar funds.
The Board also took into account that certain management 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 management fee arrangements for the
International Equity Fund, Value Fund, Biotech/Health Fund and the Tax Managed
Equity Fund, which do not contain breakpoints, contractual expense caps have
been implemented. The Board further noted that these expense caps agreed to by
AIG SunAmerica and approved by the Board, benefited shareholders by keeping
fees down even in the absence of breakpoints or economies of scale.
In considering the subadvisory fees, the Board, including the Disinterested
Trustees, considered that the International Equity Fund pays a fee to AIG
SunAmerica pursuant to its Advisory Agreement, and that, in turn, AIG
SunAmerica and not the Fund, pays a fee to AIGGIC. Therefore, the Board
considered the amount of the advisory fee retained by AIG SunAmerica and the
fee paid to AIGGIC in connection with the services provided. The Board also
considered that the Subadvisory Agreement contained breakpoints in the fee
schedule that would adjust the subadvisory fee downward if the International
Equity Fund increased its assets to certain levels. The Board noted that such
breakpoints would not directly benefit the shareholders, but would result in
AIG SunAmerica retaining a larger portion of the advisory fee. The Board,
however, was satisfied that AIG SunAmerica had implemented expense caps in
order to keep shareholder costs down, as described above.
The Board also considered AIG SunAmerica's profitability and the benefits AIG
SunAmerica and its affiliates received from its relationship with the Funds.
The Board reviewed financial statements relating to AIG SunAmerica's
profitability and financial condition with respect to the services it provided
the Funds and considered how profit margins could affect AIG SunAmerica's
ability to attract and retain high quality investment professionals. The Board
was also provided with a profitability analysis that detailed the revenues
earned and the expenses incurred on a Fund by Fund basis by AIG SunAmerica and
its affiliates in providing services to the Funds. Based on this information,
the Board considered the revenues received by AIG SunAmerica under the Advisory
Agreements, and where applicable, the Administrative Agreements. The Board also
considered revenues received by AIG SunAmerica's affiliates under the Rule
12b-1 Plans, Service Agreements, and Administrative and Shareholder Service
Agreements. Additionally, the Board reviewed AIGGIC's financial statements and
considered whether AIGGIC had the financial resources necessary to attract and
retain high quality investment management personnel, continue to perform its
obligations under the Subadvisory Agreement and to continue to provide the high
quality of services that it had provided to the International Equity Fund to
date.
91
SunAmerica Equity Funds
APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2006 -- (unaudited)
(continued)
With respect to indirect costs and benefits, the Board considered that (1) any
indirect costs incurred by AIG SunAmerica in connection with rendering
investment advisory services to the Funds are inconsequential based on
management's judgment 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 according to management and do not impact upon the
reasonableness of the advisory fee. The Board did, however, consider the
reputational value to AIG SunAmerica from serving as investment adviser.
The Board concluded that AIG SunAmerica had the financial resources necessary
to perform its obligations under the Advisory Agreement and to continue to
provide the high quality of services that it had provided to the Funds to date
and that the profitability of the Adviser and its affiliates as a result of
their relationships with the Funds was reasonable. Based upon the reports
prepared by Lipper and other information provided by AIG SunAmerica, the Board
was satisfied that the fee and expense ratios of the Funds were reasonable
given the nature and quality of services provided and were reasonable to the
fee and expense ratios of funds within the Lipper Peer Groups. The Board also
concluded that the level of the management fee was reasonable in light of these
factors.
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. Based on the current
management fee levels, the Board concluded that any potential economies of
scale will be shared between shareholders and AIG SunAmerica 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 AIG SunAmerica as it adds labor
and capital to expand the scale of operations.
The Board concluded that the management 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.
Other Factors
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 services AIG SunAmerica obtained in connection with soft dollar
commissions. The Board also considered the potential benefits the Adviser
derived from the Fund's soft dollar arrangements whereby brokers provide
research to the Adviser in return for allocating fund brokerage.
Conclusion
After a full and complete discussion, and following negotiations with
management of AIG SunAmerica, the Board approved the continuation of the
Advisory Agreement for each of the Funds, and the Subadvisory Agreement with
respect to the International Equity Fund, for a one-year period ending August
31, 2007. In approving the Advisory Agreement the Board noted that while the
performance of the Balanced Assets Fund, Blue Chip Growth Fund and Growth
Opportunities Fund had recently improved, it was still concerned about under
performance with respect to these Funds as well as the Growth and Income Fund
and the Biotech/Health Fund. As a result, the Board noted that its approval of
the Advisory Agreement was subject to the continuation of a waiver by AIG
SunAmerica of management fees in the amount of 0.05% of average daily net
assets with respect to the Blue Chip Growth Fund, Balanced Assets Fund and the
Growth Opportunities Fund, as agreed upon at the August 30, 2006 Board meeting,
and that the continuation of the 0.05% waiver would be subject to the same
conditions for discontinuation. Additionally, the Board and AIG SunAmerica
agreed upon an additional 0.02% waiver of management fees for the same Funds
and a waiver of 0.05% of average daily net assets with respect to the Growth
and Income Fund and Biotech/Health Fund effective as of September 1, 2006. The
Board noted that the waivers may be discontinued without notice to
shareholders, subject to the satisfaction of conditions, including in certain
instances improved Fund performance. The Board indicated that it would continue
to carefully monitor the performance of the Funds and the actions taken by AIG
SunAmerica in an effort to enhance performance.
Based upon their evaluation of all these factors in their totality, the Board,
including the Disinterested Trustees, was satisfied that the terms of the
Advisory Agreement and Subadvisory Agreement were fair and reasonable and in
the best interests of the Funds and the Funds' shareholders. In arriving at a
decision to approve the continuation of the Advisory Agreement and Subadvisory
Agreement, the Board did not identify any single factor or group of factors as
all-important or controlling, but considered all factors together. The
Disinterested Trustees were also assisted by the advice of independent counsel
in making this determination.
92
SunAmerica Equity Funds
TRUSTEE AND OFFICER INFORMATION -- September 30, 2006 -- (unaudited)
The following table contains 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)
- ---------------------- ---------- -------------- ----------------------------- ------------- -----------------------------
Disinterested Trustees
Jeffrey S. Burum Trustee 2004-Present Founder and CEO of 42 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. 90 Director, A.G. Belo Corp.
DOB: October 6, 1945 (1992 to present); Director,
Sysco Corp. (1996 to
present); Director, Luby's,
Inc. (1998 to present):
Director, University of Texas
Board of Regents
(May 2001-present).
William F. Devin Trustee 2001-Present Retired. 90 Member of the Board of
DOB: December 30, 1938 Governors, Boston Stock
Exchange (1985-present).
Samuel M. Eisenstat Chairman 1986-Present Attorney, solo practitioner. 52 Director, North European Oil
DOB: March 7, 1940 of the Royalty Trust.
Board
Stephen J. Gutman Trustee 1986-Present Senior Associate, Corcoran 52 None
DOB: May 10, 1943 Group (Real Estate) (2003 to
present); Partner and
Managing Member, Beau
Brummell-Soho LLC
(licensing of menswear
specialty retailing and other
activities) (June 1988 to
present).
William J. Shea Trustee 2004-Present President and CEO, Conseco, 52 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 Financial Holdings
2001); Vice Chairman, Bank (October 2004 to present).
Boston Corp. (1993-1998)
Interested Trustee
Peter A. Harbeck(3) Trustee 1995-Present President, CEO and Director, 99 None
DOB: January 23, 1954 AIG SunAmerica. (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).
93
SunAmerica Equity Funds
TRUSTEE AND OFFICER INFORMATION -- September 30, 2006 -- (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)
- ---------------------- ---------- -------------- ----------------------------- ------------- -------------------
Officers
Vincent M. Marra President 2004-Present Senior Vice President, AIG N/A N/A
DOB: May 28, 1950 and Chief SunAmerica (February 2003
Executive to present); Chief
Officer 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, AIG N/A N/A
DOB: June 25, 1966 SunAmerica (December 2004
to present); Vice President,
AIG SunAmerica (1997 to
December 2004), Assistant
Treasurer (1993 to 2002)
Gregory N. Bressler Secretary September Senior Vice President and N/A N/A
DOB: November 17, 1966 and Chief 2005 to General Counsel, AIG
Legal Present SunAmerica (June 2005 to
Officer present); Vice President and
Director of U.S. Asset
Management Compliance,
Goldman Sachs Asset
Management (June 2004 to
June 2005); Deputy General
Counsel, Credit Suisse Asset
Management (June 2002 to
June 2004); Counsel, Credit
Suisse Asset Management
(January 2000 to June 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 AIG SunAmerica serves as investment adviser or administrator. The
"Fund Complex" includes the SunAmerica Money Market Funds (2 funds),
SunAmerica Equity Funds (10 funds), SunAmerica Income Funds (5 funds),
SunAmerica Focused Series, Inc. (17 portfolios), SunAmerica Focused Alpha
Growth Fund, Inc. (1 fund), SunAmerica Focused Alpha Large-Cap Fund, Inc.
(1 fund), Anchor Series Trust (9 portfolios), SunAmerica Senior Floating
Rate Fund, Inc. (1 fund), SunAmerica Series Trust (36 portfolios), VALIC
Company I (32 portfolios), VALIC Company II (15 funds), Seasons Series
Trust (24 portfolios) and AIG Series Trust (6 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 Adviser and a director of
the principal underwriter of the Trust.
(4) Trustees serve until their successors are duly elected and qualified,
subject to the Trustee's retirement plan as discussed in Note 10 of the
financial statements. Each officer will hold office for an indefinite term,
until the date he or she resigns or retires or until his/her successor is
duly elected and qualifies.
Additional information concerning the Trustees is contained in the Statement of
Additional Information which is available, without charge, by calling (800)
858-8850.
94
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, 2006. The information and distributions
reported herein may differ from the information and distributions taxable to
the shareholders for the calendar year ending December 31, 2006. 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 2007.
During the year ended September 30, 2006 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 Qualifying % for the
Total Investment Short-Term Long-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 and Income Class A..... 0.02 0.02 -- -- 100.00
Growth and Income Class B..... -- -- -- -- --
Growth and Income Class C..... -- -- -- -- --
Growth and Income Class I..... 0.04 0.04 -- -- 100.00
Balanced Assets Class A....... 0.25 0.25 -- -- 63.49
Balanced Assets Class B....... 0.15 0.15 -- -- 63.49
Balanced Assets Class C....... 0.15 0.15 -- -- 63.49
Balanced Assets Class I....... 0.29 0.29 -- -- 63.49
International Equity Class A.. -- -- -- -- --
International Equity Class B.. -- -- -- -- --
International Equity Class C.. -- -- -- -- --
International Equity Class I.. -- -- -- -- --
Value Class A................. 1.30 0.13 0.98 0.19 48.06
Value Class B................. 1.20 0.03 0.98 0.19 48.06
Value Class C................. 1.20 0.03 0.98 0.19 48.06
Value Class I................. 1.32 0.15 0.98 0.19 48.06
Value Class Z................. 1.36 0.19 0.98 0.19 48.06
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.... 0.00 0.00 -- -- 100.00
Tax Managed Equity Class C.... 0.00 0.00 -- -- 100.00
International Small Cap Class
A............................ -- -- -- -- --
International Small Cap Class
B............................ -- -- -- -- --
International Small Cap Class
C............................ -- -- -- -- --
The International Equity Fund and International Small Cap Fund intend 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, 2006
was $223,155 and 17,298, respectively. The gross foreign source income for the
information reporting is $1,941,542 and 177,332, respectively.
95
SunAmerica Equity Funds
SHAREHOLDER TAX INFORMATION -- (unaudited) (continued)
For the year ended September 30, 2006, 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 and Income............. $ 101,366
Balanced Assets............... 2,815,576
Value......................... 14,799,743
Tax Managed Equity............ 53,956
96
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (unaudited)
The following graphs show how the value of a $10,000 investment in each of the
SunAmerica Equity Funds would have changed over the period shown in the graphs,
and also shows how the indices shown performed over the same period of time.
The graphs and tables shown below do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.
Please note that the term "inception" as used herein reflects the date on which
a specific class of 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
Class A shares of each Fund. The performance of the other classes will vary
based upon the difference in sales charges and fees assessed to shareholders of
that class. Past performance does not predict future results.
97
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued)
SunAmerica Blue Chip Growth Fund
For the annual period ending September 30, 2006, the SunAmerica Blue Chip
Growth Fund Class A returned 3.16% at NAV trailing its benchmarks, the Russell
1000 Growth Index and the S&P 500 Index, which returned 6.04% and 10.79%,
respectively, during the period.
As a result of the strong results in the closing months of the annual period,
domestic equity indices rose across the board. In terms of asset categories,
the Lipper Large Cap Value Index outpaced all others, advancing 12.11% for the
fiscal period. It was another challenging year for the Lipper Large Cap Growth
segment which appreciated only 3.60%, under-performing all major Lipper asset
classes.
With respect to the Russell 1000 Growth Index, Telecommunications Services
(0.71% weight) advanced 18.05% and was the top-performing sector in the Russell
1000 Growth Index, followed by the Financial group (6.96% weight), which
returned 17.09%. The two largest components of the index, Information
Technology (23.84% weight) and Healthcare (18.87%) appreciated 4.01% and 3.41%,
respectively. The Energy group (3.20% weight), one of the top-performing groups
in the same period one year ago, was the only industry segment to post negative
results, returning -6.12%.
Stock selection in the Consumer Discretionary sector contributed to
performance, particularly the Media and Retailing categories. Underweight
exposure and security selection in the Materials group also boosted returns as
did a 3% average cash position and an Information Technology overweight. These
gains were offset, however, by disappointing stock selection in the Healthcare
and Information Technology sectors, most notably among pharmaceutical &
biotechnology and software & services subgroups. Top-performing equity
selections included Apple Computer Inc., Transocean Inc., Mastercard Inc.,
Kohl's Corp. and Goldman Sachs Group Inc., while the positions which detracted
most significantly from the portfolio's performance were eBay Inc., Yahoo!
Inc., Boston Scientific Corp., Intel Corp., and Symantec Corp.
John Massey assumed management of the Fund in February 2006. Mr. Massey leads
the AIG SunAmerica Large-Cap Equity Team and has over 17 years of investment
experience spanning portfolio management, research analysis, and merchant
banking.
- --------
The S&P 500 Index is the Standard & Poor's 500 Composite Stock Price Index, a
widely recognized, unmanaged index of common stock prices. The Russell 1000
Growth Index measures the performance of those Russell 1000 companies with
higher price-to-book ratios ad higher forecasted growth values. The Russell
1000 Index is a comprehensive large-cap index measuring the performance of the
largest 1,000 U.S. incorporated companies. Indices are not managed and an
investor cannot invest directly into an index. Indices are not managed and an
investor cannot invest directly into an index.
98
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued)
Over the past ten years, $10,000 invested in Blue Chip Growth Fund Class A
shares would have increased to $15,272. 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 $22,791 and $17,009, respectively.
[CHART]
Blue Chip Russell 1000
Growth Class A/@//#/ S&P 500 Index Growth Index
-------------------- ------------- ------------
9/30/1996 $ 9,427 $10,000 $10,000
10/31/1996 9,294 10,276 10,060
11/30/1996 9,807 11,054 10,816
12/31/1996 9,621 10,835 10,604
1/31/1997 10,248 11,511 11,348
2/28/1997 10,303 11,602 11,271
3/31/1997 9,801 11,126 10,661
4/30/1997 10,186 11,789 11,369
5/31/1997 10,818 12,507 12,189
6/30/1997 11,339 13,067 12,677
7/31/1997 12,393 14,106 13,798
8/31/1997 11,804 13,317 12,991
9/30/1997 12,535 14,046 13,630
10/31/1997 12,200 13,577 13,126
11/30/1997 12,386 14,205 13,684
12/31/1997 12,621 14,449 13,837
1/31/1998 12,614 14,609 14,251
2/28/1998 13,633 15,662 15,323
3/31/1998 14,334 16,463 15,933
4/30/1998 14,667 16,629 16,154
5/31/1998 14,270 16,343 15,696
6/30/1998 14,914 17,007 16,657
7/31/1998 14,950 16,826 16,547
8/31/1998 12,203 14,396 14,063
9/30/1998 13,173 15,319 15,144
10/31/1998 13,973 16,564 16,361
11/30/1998 14,893 17,567 17,605
12/31/1998 16,182 18,579 19,193
1/31/1999 17,414 19,355 20,320
2/28/1999 16,691 18,754 19,391
3/31/1999 17,611 19,504 20,413
4/30/1999 17,953 20,260 20,439
5/31/1999 17,307 19,782 19,810
6/30/1999 18,523 20,879 21,198
7/31/1999 18,022 20,228 20,525
8/31/1999 18,120 20,128 20,860
9/30/1999 17,953 19,577 20,421
10/31/1999 19,276 20,815 21,964
11/30/1999 20,446 21,239 23,149
12/31/1999 23,418 22,489 25,557
1/31/2000 22,551 21,359 24,358
2/29/2000 23,992 20,955 25,549
3/31/2000 25,084 23,005 27,378
4/30/2000 23,209 22,313 26,075
5/31/2000 21,826 21,855 24,762
6/30/2000 23,443 22,393 26,639
7/31/2000 23,051 22,044 25,528
8/31/2000 25,750 23,413 27,839
9/30/2000 24,176 22,177 25,206
10/31/2000 22,318 22,083 24,013
11/30/2000 19,685 20,342 20,474
12/31/2000 20,031 20,441 19,826
1/31/2001 20,294 21,167 21,195
2/28/2001 18,016 19,237 17,597
3/31/2001 16,751 18,018 15,682
4/30/2001 18,065 19,418 17,666
5/31/2001 18,016 19,548 17,405
6/30/2001 17,452 19,073 17,002
7/31/2001 17,033 18,885 16,577
8/31/2001 15,778 17,703 15,222
9/30/2001 13,967 16,273 13,702
10/31/2001 14,425 16,584 14,421
11/30/2001 15,914 17,856 15,806
12/31/2001 15,865 18,012 15,777
1/31/2002 15,242 17,749 15,498
2/28/2002 14,736 17,407 14,855
3/31/2002 15,330 18,062 15,369
4/30/2002 14,357 16,967 14,114
5/31/2002 14,016 16,842 13,773
6/30/2002 12,897 15,642 12,499
7/31/2002 11,943 14,423 11,812
8/31/2002 11,904 14,517 11,847
9/30/2002 10,853 12,940 10,618
10/31/2002 11,602 14,079 11,592
11/30/2002 12,186 14,907 12,222
12/31/2002 11,222 14,031 11,377
1/31/2003 10,989 13,665 11,101
2/28/2003 10,940 13,459 11,050
3/31/2003 11,038 13,590 11,256
4/30/2003 11,836 14,708 12,088
5/31/2003 12,371 15,483 12,692
6/30/2003 12,468 15,680 12,867
7/31/2003 12,790 15,957 13,187
8/31/2003 13,072 16,268 13,515
9/30/2003 12,770 16,095 13,370
10/31/2003 13,724 17,005 14,121
11/30/2003 13,792 17,155 14,269
12/31/2003 14,142 18,054 14,762
1/31/2004 14,327 18,385 15,064
2/29/2004 14,434 18,641 15,159
3/31/2004 14,162 18,359 14,878
4/30/2004 13,928 18,072 14,705
5/31/2004 14,094 18,320 14,979
6/30/2004 14,327 18,676 15,166
7/31/2004 13,558 18,058 14,309
8/31/2004 13,471 18,130 14,238
9/30/2004 13,714 18,327 14,374
10/31/2004 13,899 18,607 14,598
11/30/2004 14,347 19,359 15,100
12/31/2004 14,824 20,018 15,692
1/31/2005 14,347 19,530 15,169
2/28/2005 14,405 19,941 15,330
3/31/2005 14,152 19,588 15,051
4/30/2005 13,763 19,217 14,764
5/31/2005 14,444 19,828 15,479
6/30/2005 14,318 19,856 15,422
7/31/2005 14,989 20,594 16,175
8/31/2005 14,775 20,406 15,967
9/30/2005 14,804 20,571 16,041
10/31/2005 14,610 20,228 15,885
11/30/2005 15,213 20,993 16,570
12/31/2005 15,067 21,001 16,518
1/31/2006 15,359 21,557 16,808
2/28/2006 15,213 21,615 16,781
3/31/2006 15,388 21,884 17,029
4/30/2006 15,320 22,178 17,006
5/31/2006 14,814 21,540 16,430
6/30/2006 14,668 21,569 16,365
7/31/2006 14,483 21,702 16,053
8/31/2006 14,902 22,218 16,554
9/30/2006 15,272 22,791 17,009
Class A Class B Class C++ Class I
------------------ ------------------ ------------------ ------------------
Blue Average Average Average Average
Chip Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
Fund Return Return+ Return Return+ Return Return+ Return Return+
- ---------------- ------- ---------- ------- ---------- ------- ---------- ------- ----------
1 Year Return (2.79)% 3.16% (1.58)% 2.42% 1.44% 2.44% 3.45% 3.45%
- --------------------------------------------------------------------------------------------
5 Year Return 0.60% 9.34% 0.68% 5.45% 0.97% 4.92% N/A N/A
- --------------------------------------------------------------------------------------------
10 Year Return 4.32% 61.99% 4.30% 52.42% N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------
Since Inception* 5.83% 121.39% 7.99% 424.13% (2.43)% (17.16)% (0.55)% (2.64)%
- --------------------------------------------------------------------------------------------
+ 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.
# 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.
@ Beginning with the fiscal year ended September 30, 2006, the average annual
total return displayed in the Line Graph is for Class A shares. Returns of
Class A shares have replaced the returns of Class B shares in the Line Graph
because Class A currently has the largest amount of net assets of any Class
of the Fund.
For the 12 month period ended September 30, 2006, the SunAmerica Blue Chip
Growth Class A returned (2.79)% compared to 6.04% for the Russell 1000 Growth
Index and 10.79% for the S&P 500 Index. (The performance data and graph do not
reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares.)
- --------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 5.75%, Class B: 4.00% Contingent
Deferred Sales Charge (CDSC), Class C 1.00% CDSC. The fund's daily net asset
values are not guaranteed and shares are not insured by the FDIC, the Federal
Reserve Board or any other agency. The investment return and principal value of
an investment will fluctuate so that an investor's shares, when redeemed, may
be higher or lower than the original cost. Current performance may be higher or
lower than that shown. Performance as of the most recent month end is available
at www.sunamericafunds.com
99
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued)
SunAmerica Growth Opportunities Fund
For the annual period ending September 30, 2006, the SunAmerica Growth
Opportunities Class A returned 4.73% at NAV, trailing its Russell Mid-Cap
Growth Index benchmark, which returned 7.03% during the period.
Within the Russell Mid-Cap Growth Index, the Energy group (7.27% weight), one
of the top-performing groups in the year-ago period, was the principal laggard
and only sector to post negative results, returned -12.00%. Overall, the
Telecommunications Services sector (1.68% weight) outperformed all other
industry groups, advancing 38.66%. The Financial group (8.60% weight) increased
19.98%. The index's largest constituents, Consumer Discretionary (21.97%
weight) and Information Technology (17.36% weight) had more muted returns of
4.59% and 7.46%, respectively.
The Fund benefited from successful trading within the volatile Energy sector.
Other factors which enhanced returns included 1) stock selection in the Energy,
Industrial, and Financial groups; 2) a Healthcare overweight, and 3)
underweight exposure to the Consumer Discretionary and Materials segments.
Stock selection in the Information Technology and Healthcare detracted most
from relative performance. The portfolio's underweight exposure to the
Financial and Telecommunications sectors also negatively impacted results.
Continental Airlines Inc., Alliance Data Systems Corp., Salesforce.com Inc.,
Gymboree Corp., and Centene Corp. are examples of top stock contributors during
the annual period. SafeNet Inc., Symantec Corp., Tekelec, United Surgical
Partners International Inc., and Astec Industries Inc. are stocks which
detracted from performance.
Jay Rushin, CFA, assumed management of this Fund on December 19, 2005. Mr.
Rushin has over 12 years of experience in the investment industry, focusing the
past eight years on the small- and mid-cap growth segments of the market.
- --------
The Russell Mid-Cap Growth Index measures the performance of those Russell
Midcap companies with higher price-to-book ratios and higher forecasted growth
values. The stocks are also members of the Russell 1000 Growth index. Indices
are not managed and an investor cannot invest directly into an index.
100
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued)
Over the past ten years, $10,000 invested in Growth Opportunities Fund Class A
shares would have increased to $15,603. The same amount invested in securities
mirroring the performance of the Russell Mid-Cap Growth Index would be valued
at $21,984.
[CHART]
Growth Opportunities Russell Mid-Cap
Class A/#/ Growth Index
---------- ---------------
9/30/1996 $ 9,427 $10,000
10/31/1996 9,327 9,883
11/30/1996 9,745 10,465
12/31/1996 9,811 10,289
1/31/1997 10,249 10,744
2/28/1997 9,761 10,507
3/31/1997 9,179 9,914
4/30/1997 9,184 10,156
5/31/1997 9,855 11,067
6/30/1997 10,066 11,373
7/31/1997 10,859 12,461
8/31/1997 10,782 12,340
9/30/1997 11,458 12,964
10/31/1997 10,893 12,315
11/30/1997 10,887 12,445
12/31/1997 11,153 12,608
1/31/1998 10,713 12,381
2/28/1998 11,471 13,545
3/31/1998 12,148 14,113
4/30/1998 12,412 14,304
5/31/1998 11,715 13,716
6/30/1998 12,229 14,104
7/31/1998 11,958 13,500
8/31/1998 9,630 10,923
9/30/1998 10,977 11,750
10/31/1998 11,024 12,615
11/30/1998 12,412 13,466
12/31/1998 13,735 14,860
1/31/1999 15,204 15,306
2/28/1999 13,931 14,557
3/31/1999 15,494 15,368
4/30/1999 15,762 16,068
5/31/1999 15,241 15,861
6/30/1999 16,239 16,969
7/31/1999 16,348 16,429
8/31/1999 16,442 16,258
9/30/1999 16,731 16,119
10/31/1999 18,396 17,366
11/30/1999 20,509 19,164
12/31/1999 25,964 22,482
1/31/2000 25,906 22,478
2/29/2000 35,056 27,203
3/31/2000 32,428 27,231
4/30/2000 29,337 24,588
5/31/2000 26,801 22,796
6/30/2000 31,857 25,214
7/31/2000 29,495 23,618
8/31/2000 34,625 27,180
9/30/2000 33,804 25,851
10/31/2000 31,061 24,082
11/30/2000 23,420 18,848
12/31/2000 25,301 19,841
1/31/2001 25,328 20,974
2/28/2001 20,768 17,346
3/31/2001 18,634 14,864
4/30/2001 20,438 17,342
5/31/2001 19,980 17,260
6/30/2001 19,037 17,269
7/31/2001 17,398 16,104
8/31/2001 15,869 14,937
9/30/2001 14,120 12,469
10/31/2001 15,027 13,779
11/30/2001 16,510 15,263
12/31/2001 16,931 15,843
1/31/2002 16,620 15,328
2/28/2002 14,834 14,459
3/31/2002 16,409 15,563
4/30/2002 14,779 14,739
5/31/2002 13,717 14,299
6/30/2002 11,968 12,721
7/31/2002 10,173 11,485
8/31/2002 9,706 11,445
9/30/2002 9,139 10,536
10/31/2002 9,990 11,352
11/30/2002 10,878 12,241
12/31/2002 9,807 11,501
1/31/2003 9,716 11,388
2/28/2003 9,789 11,289
3/31/2003 10,045 11,499
4/30/2003 10,714 12,282
5/31/2003 11,858 13,464
6/30/2003 11,858 13,656
7/31/2003 12,078 14,144
8/31/2003 12,838 14,923
9/30/2003 12,582 14,634
10/31/2003 13,241 15,813
11/30/2003 13,552 16,236
12/31/2003 13,699 16,413
1/31/2004 14,111 16,955
2/29/2004 14,239 17,240
3/31/2004 14,202 17,207
4/30/2004 13,369 16,721
5/31/2004 13,470 17,116
6/30/2004 13,845 17,388
7/31/2004 12,554 16,236
8/31/2004 12,087 16,036
9/30/2004 12,508 16,635
10/31/2004 12,737 17,199
11/30/2004 13,635 18,087
12/31/2004 14,047 18,954
1/31/2005 13,772 18,447
2/28/2005 14,120 18,914
3/31/2005 13,735 18,637
4/30/2005 13,040 17,900
5/31/2005 13,616 18,925
6/30/2005 13,919 19,277
7/31/2005 14,523 20,402
8/31/2005 14,697 20,277
9/30/2005 14,898 20,540
10/31/2005 14,395 19,935
11/30/2005 14,889 21,017
12/31/2005 14,898 21,247
1/31/2006 15,695 22,520
2/28/2006 15,594 22,243
3/31/2006 16,226 22,864
4/30/2006 16,345 22,961
5/31/2006 15,658 21,880
6/30/2006 15,182 21,791
7/31/2006 14,642 21,010
8/31/2006 15,219 21,494
9/30/2006 15,603 21,984
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 (1.27)% 4.73% (0.01)% 3.99% 3.00% 4.00% 4.99% 4.99%
- --------------------------------------------------------------------------------------------
5 Year Return 0.82% 10.51% 0.91% 6.64% 1.28% 6.57% N/A N/A
- --------------------------------------------------------------------------------------------
10 Year Return 4.55% 65.51% 4.56% 56.21% N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------
Since Inception* 8.51% 429.06% 5.71% 105.64% (0.31)% (2.33)% (0.96)% (4.59)%
- --------------------------------------------------------------------------------------------
+ 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, 2006, the SunAmerica Growth
Opportunities Class A returned (1.27)% compared to 7.03% for the Russell MidCap
Growth Index. (The performance data and graph do not reflect the deduction of
taxes that a shareholder would pay on fund distributions or the redemption of
fund shares.)
- --------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 5.75%, Class B: 4.00% Contingent
Deferred Sales Charge (CDSC), Class C 1.00% CDSC. The fund's daily net asset
values are not guaranteed and shares are not insured by the FDIC, the Federal
Reserve Board or any other agency. The investment return and principal value of
an investment will fluctuate so that an investor's shares, when redeemed, may
be higher or lower than the original cost. Current performance may be higher or
lower than that shown. Performance as of the most recent month end is available
at www.sunamericafunds.com
101
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued)
SunAmerica New Century Fund
For the annual period ending September 30, 2006, the SunAmerica New Century
Fund Class A returned 3.33% at NAV, trailing the Russell 3000 Growth Index
benchmark, which returned 6.05% during the period.
For the annual period, the Russell 3000 Growth Index appreciated 6.05%, as the
Telecommunications Services sector (0.74% weight) led the market higher,
advancing 17.18%. The Financial group (7.21% weight) increased 16.65%. The
index's largest constituents, Information Technology (23.61% weight) and
Healthcare (18.95% weight) had more muted returns of 3.85% and 2.86%,
respectively. The Energy group (3.51% weight), the market leader in the same
period one year ago, was the principal laggard and only sector to post negative
results, returned -5.36%.
With respect to stock sector weightings versus the portfolio's benchmark, the
combination of an Energy overweight and stock selection in the Financial and
Consumer Discretionary groups assisted performance. It is important to note
that while the Fund had a net overweight in the Energy sector during the
period, the Fund benefited from successful trading within this volatile sector.
Underweight exposure to the Information Technology, Healthcare and Material
groups was also beneficial. Conversely, factors that hindered results included
security selection in the Healthcare, Industrials, and Consumer Staples sectors
as well as an 8% average cash position.
At the individual stock level, Alliance Data Systems Corp., Adobe Systems,
Inc., Marvell Technology Group, Ltd., Rockwell Automation, Inc., and Caremark
Rx, Inc. enhanced results, while portfolio laggards included Symantec Corp.,
Urban Outfitters, Inc., United Surgical Partners International, Inc., Pacific
Sunwear of California, Inc., and Flextronics International, Ltd.
Jay Rushin, CFA, assumed management of this fund on December 19, 2005. Mr.
Rushin has over 12 years of experience in the investment industry, focusing the
past eight years on the small- and mid-cap growth segments of the market.
- --------
The Russell 3000 Growth Index measures the performance of those Russell 3000
Index companies with higher price-to-book ratios and higher forecasted growth
values. Russell 3000 Index consists of the 3,000 largest U.S. companies based
on total market capitalization. Indices are not managed and an investor cannot
invest directly into an index. Indices are not managed and an investor cannot
invest directly into an index.
102
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued)
Over the past ten years, $10,000 invested in New Century Fund Class A shares
would have increased to $14,342. The same amount invested in securities
mirroring the performance of the Russell 3000 Growth Index would be valued at
$16,718.
[CHART]
New Century Class A/#/ Russell 3000 Growth Index
------------------------ -------------------------
9/30/1996 $ 9,425 $10,000
10/31/1996 9,308 10,011
11/30/1996 9,537 10,717
12/31/1996 9,741 10,546
1/31/1997 10,168 11,239
2/28/1997 9,181 11,107
3/31/1997 8,218 10,489
4/30/1997 7,957 11,115
5/31/1997 8,734 11,987
6/30/1997 9,068 12,460
7/31/1997 10,152 13,518
8/31/1997 10,523 12,838
9/30/1997 11,389 13,510
10/31/1997 10,321 12,978
11/30/1997 9,987 13,440
12/31/1997 10,066 13,577
1/31/1998 9,579 13,926
2/28/1998 10,299 14,990
3/31/1998 10,791 15,591
4/30/1998 10,764 15,795
5/31/1998 10,084 15,282
6/30/1998 10,679 16,148
7/31/1998 10,080 15,931
8/31/1998 8,130 13,435
9/30/1998 8,541 14,492
10/31/1998 8,894 15,624
11/30/1998 9,927 16,815
12/31/1998 11,345 18,331
1/31/1999 12,663 19,389
2/28/1999 11,536 18,438
3/31/1999 13,188 19,386
4/30/1999 13,646 19,528
5/31/1999 12,830 18,974
6/30/1999 13,608 20,279
7/31/1999 12,868 19,635
8/31/1999 12,949 19,879
9/30/1999 13,068 19,516
10/31/1999 13,818 20,921
11/30/1999 16,171 22,122
12/31/1999 20,940 24,532
1/31/2000 20,221 23,447
2/29/2000 25,823 24,912
3/31/2000 22,514 26,321
4/30/2000 20,232 24,967
5/31/2000 18,723 23,646
6/30/2000 22,514 25,522
7/31/2000 20,281 24,380
8/31/2000 23,321 26,611
9/30/2000 22,575 24,174
10/31/2000 19,913 22,973
11/30/2000 16,451 19,534
12/31/2000 17,049 19,032
1/31/2001 16,594 20,363
2/28/2001 14,350 16,953
3/31/2001 13,201 15,130
4/30/2001 14,435 17,039
5/31/2001 14,396 16,836
6/30/2001 14,096 16,512
7/31/2001 13,140 16,029
8/31/2001 12,052 14,739
9/30/2001 10,186 13,207
10/31/2001 10,649 13,936
11/30/2001 11,374 15,263
12/31/2001 11,605 15,297
1/31/2002 11,320 15,008
2/28/2002 10,757 14,362
3/31/2002 11,381 14,908
4/30/2002 11,073 13,753
5/31/2002 10,765 13,386
6/30/2002 10,047 12,155
7/31/2002 9,037 11,404
8/31/2002 9,053 11,436
9/30/2002 8,652 10,272
10/31/2002 8,821 11,187
11/30/2002 9,153 11,825
12/31/2002 8,752 11,009
1/31/2003 8,590 10,739
2/28/2003 8,436 10,675
3/31/2003 8,505 10,871
4/30/2003 9,076 11,689
5/31/2003 9,754 12,319
6/30/2003 9,909 12,494
7/31/2003 10,225 12,848
8/31/2003 10,757 13,195
9/30/2003 10,364 13,039
10/31/2003 11,150 13,800
11/30/2003 11,173 13,968
12/31/2003 11,189 14,418
1/31/2004 11,351 14,747
2/29/2004 11,381 14,832
3/31/2004 11,397 14,583
4/30/2004 11,004 14,370
5/31/2004 11,289 14,639
6/30/2004 11,713 14,845
7/31/2004 11,050 13,965
8/31/2004 10,795 13,877
9/30/2004 11,389 14,059
10/31/2004 11,767 14,289
11/30/2004 12,530 14,839
12/31/2004 12,924 15,417
1/31/2005 12,793 14,887
2/28/2005 13,178 15,050
3/31/2005 12,908 14,750
4/30/2005 12,314 14,413
5/31/2005 13,147 15,137
6/30/2005 13,371 15,127
7/31/2005 14,080 15,894
8/31/2005 13,895 15,687
9/30/2005 13,880 15,764
10/31/2005 13,433 15,573
11/30/2005 13,980 16,263
12/31/2005 13,918 16,214
1/31/2006 14,597 16,610
2/28/2006 14,589 16,578
3/31/2006 14,998 16,875
4/30/2006 15,121 16,849
5/31/2006 14,427 16,219
6/30/2006 14,073 16,162
7/31/2006 13,564 15,808
8/31/2006 13,995 16,298
9/30/2006 14,342 16,718
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 (2.62)% 3.33% (1.42)% 2.58% 1.70% 2.70%
- -------------------------------------------------------------------------
5 Year Return 5.82% 40.80% 6.01% 35.86% 6.48% 36.87%
- -------------------------------------------------------------------------
10 Year Return 3.67% 52.18% 3.74% 44.41% N/A N/A
- -------------------------------------------------------------------------
Since Inception* 9.36% 516.70% 6.97% 140.29% 3.88% 39.01%
- -------------------------------------------------------------------------
+ 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, 2006, the SunAmerica New Century
Class A returned (2.62)% compared to 6.05% for the Russell 3000 Growth Index.
(The performance data and graph do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.)
- --------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 5.75%, Class B: 4.00% Contingent
Deferred Sales Charge (CDSC), Class C 1.00% CDSC. The fund's daily net asset
values are not guaranteed and shares are not insured by the FDIC, the Federal
Reserve Board or any other agency. The investment return and principal value of
an investment will fluctuate so that an investor's shares, when redeemed, may
be higher or lower than the original cost. Current performance may be higher or
lower than that shown. Performance as of the most recent month end is available
at www.sunamericafunds.com
103
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued)
SunAmerica Growth and Income Fund
For the annual period ending September 30, 2006, the SunAmerica Growth and
Income Fund Class A returned 8.47% at NAV, lagging its benchmark, the S&P 500
Index, which returned 10.79%.
For the annual period, the S&P 500 increased 10.79% led higher by Telecom
(25.82%), Financial (20.55%), Materials (17.63%), and Consumer Staples (10.57%)
groups. Energy was the worst performing sector, advancing only 3.82%. Large-cap
indices outperformed small-cap indices during the period. Overall, value
outperformed its growth counterpart across the small-, mid-, multi- and
large-cap spectrum.
The Fund's strict valuation discipline proved beneficial amid a market
environment that favored large-cap value stocks. The Fund focuses its
investment selection on large-cap equities that have greater growth rates and
more attractive valuations relative to the S&P 500 Index. Additionally,
outstanding stock selection in two of the top-performing industry segments,
Financials and Consumer Staples, also proved beneficial.
While the Fund benefited from over-weight exposure to the Telecom sector over
the past 12 months, that group only accounted for 3.23% of the benchmark. To a
greater extent, performance was primarily driven by outstanding security
selection in the Consumer Staples, Financial, and Information Technology
groups. On the other hand, stock selection in the Materials, Utilities, and
Healthcare sectors detracted from returns.
JPMorgan Chase & Co., Bank of America Corp., Schlumberger, Ltd., Cisco Systems,
Inc., and AT&T, Inc. were among the top contributing securities during the
period. Stocks which detracted from performance included FPL Group, Inc.,
Yahoo!, Inc., Valero Energy Corp., Intel Corp. and Viacom, Inc.
- --------
The S&P 500 Index is the Standard & Poor's 500 Composite Stock Price Index, a
widely recognized, unmanaged index of common stock prices. Indices are not
managed and an investor cannot invest directly into an index.
104
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued)
Over the past ten years, $10,000 invested in Growth and Income Fund Class A
shares would have increased to $16,505. The same amount invested in securities
mirroring the performance of the S&P 500 Index would be valued at $22,791.
[CHART]
Growth & Income Class A/#/ S&P 500 Index
-------------------------- --------------
9/30/1996 $ 9,424 $10,000
10/31/1996 9,532 10,276
11/30/1996 10,135 11,054
12/31/1996 10,107 10,835
1/31/1997 10,633 11,511
2/28/1997 10,643 11,602
3/31/1997 10,238 11,126
4/30/1997 10,765 11,789
5/31/1997 11,460 12,507
6/30/1997 11,893 13,067
7/31/1997 12,795 14,106
8/31/1997 12,213 13,317
9/30/1997 12,645 14,046
10/31/1997 12,335 13,577
11/30/1997 12,880 14,205
12/31/1997 13,157 14,449
1/31/1998 13,199 14,609
2/28/1998 14,064 15,662
3/31/1998 14,731 16,463
4/30/1998 14,773 16,629
5/31/1998 14,471 16,343
6/30/1998 14,982 17,007
7/31/1998 14,836 16,826
8/31/1998 12,459 14,396
9/30/1998 13,345 15,319
10/31/1998 14,137 16,564
11/30/1998 14,982 17,567
12/31/1998 16,231 18,579
1/31/1999 17,222 19,355
2/28/1999 16,597 18,754
3/31/1999 17,448 19,504
4/30/1999 17,814 20,260
5/31/1999 17,179 19,782
6/30/1999 18,256 20,879
7/31/1999 17,858 20,228
8/31/1999 17,707 20,128
9/30/1999 17,491 19,577
10/31/1999 18,644 20,815
11/30/1999 19,409 21,239
12/31/1999 21,634 22,489
1/31/2000 20,853 21,359
2/29/2000 21,612 20,955
3/31/2000 22,851 23,005
4/30/2000 21,243 22,313
5/31/2000 20,228 21,855
6/30/2000 21,511 22,393
7/31/2000 21,143 22,044
8/31/2000 23,565 23,413
9/30/2000 22,326 22,177
10/31/2000 21,042 22,083
11/30/2000 18,743 20,342
12/31/2000 19,285 20,441
1/31/2001 19,395 21,167
2/28/2001 17,594 19,237
3/31/2001 16,426 18,018
4/30/2001 17,618 19,418
5/31/2001 17,533 19,548
6/30/2001 16,815 19,073
7/31/2001 16,450 18,885
8/31/2001 15,233 17,703
9/30/2001 13,518 16,273
10/31/2001 13,725 16,584
11/30/2001 15,027 17,856
12/31/2001 15,124 18,012
1/31/2002 14,406 17,749
2/28/2002 14,187 17,407
3/31/2002 14,820 18,062
4/30/2002 14,078 16,967
5/31/2002 13,907 16,842
6/30/2002 12,946 15,642
7/31/2002 11,851 14,423
8/31/2002 12,021 14,517
9/30/2002 10,792 12,940
10/31/2002 11,510 14,079
11/30/2002 12,082 14,907
12/31/2002 11,267 14,031
1/31/2003 10,902 13,665
2/28/2003 10,792 13,459
3/31/2003 10,853 13,590
4/30/2003 11,559 14,708
5/31/2003 12,058 15,483
6/30/2003 12,131 15,680
7/31/2003 12,411 15,957
8/31/2003 12,630 16,268
9/30/2003 12,398 16,095
10/31/2003 13,262 17,005
11/30/2003 13,384 17,155
12/31/2003 13,822 18,054
1/31/2004 13,956 18,385
2/29/2004 14,163 18,641
3/31/2004 13,907 18,359
4/30/2004 13,627 18,072
5/31/2004 13,712 18,320
6/30/2004 13,932 18,676
7/31/2004 13,603 18,058
8/31/2004 13,615 18,130
9/30/2004 13,846 18,327
10/31/2004 14,102 18,607
11/30/2004 14,674 19,359
12/31/2004 15,185 20,018
1/31/2005 14,893 19,530
2/28/2005 15,173 19,941
3/31/2005 14,941 19,588
4/30/2005 14,648 19,217
5/31/2005 15,051 19,828
6/30/2005 14,954 19,856
7/31/2005 15,295 20,594
8/31/2005 15,173 20,406
9/30/2005 15,216 20,571
10/31/2005 14,922 20,228
11/30/2005 15,351 20,993
12/31/2005 15,289 21,001
1/31/2006 15,534 21,557
2/28/2006 15,682 21,615
3/31/2006 15,829 21,884
4/30/2006 16,137 22,178
5/31/2006 15,743 21,540
6/30/2006 15,694 21,569
7/31/2006 15,780 21,702
8/31/2006 16,124 22,218
9/30/2006 16,505 22,791
Class A Class B Class C++ Class I
------------------ ------------------ ------------------ ------------------
Growth Average Average Average Average
and Income Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
Fund Return Return+ Return Return+ Return Return+ Return Return+
- ---------------- ------- ---------- ------- ---------- ------- ---------- ------- ----------
1 Year Return 2.21% 8.47% 3.75% 7.75% 6.76% 7.76% 8.69% 8.69%
- --------------------------------------------------------------------------------------------
5 Year Return 2.85% 22.10% 3.05% 18.22% 3.41% 18.26% N/A N/A
- --------------------------------------------------------------------------------------------
10 Year Return 5.14% 75.14% 5.22% 66.40% N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------
Since Inception* 8.37% 184.06% 8.48% 170.75% 1.71% 15.83% 2.20% 11.18%
- --------------------------------------------------------------------------------------------
+ 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, 2006, the SunAmerica Growth and
Income Class A returned 2.21% compared to 10.79% 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
105
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued)
SunAmerica Balanced Assets Fund
For the annual period ending September 30, 2006, the SunAmerica Balanced Assets
Fund Class A returned 5.90% at NAV. The Fund invests approximately 65% of its
total portfolio in equities and 35% in fixed-income securities. The Fund's
equity benchmark, the S&P 500 Index, returned 10.79%, whereas its fixed income
benchmark, the Lehman Brothers Aggregate Bond Index, returned 3.67% for the
same period.
The Fund was aided by outstanding security selection in the Financial group,
one of the top-performing sectors during the annual period. Stock selection in
the Consumer Discretionary and Consumer Staples groups also had a positive
impact on results, as did an Energy underweight, the worst-performing sector
during the fiscal period. On the other hand, stock selection in the Healthcare,
Industrials, and Information Technology sectors detracted the most from
relative performance and results were further hindered by a Financial
underweight.
Several banks and brokers led the list of top-performing equity holdings,
including Bank of America, Goldman Sachs, Bear Stearns, and JPMorgan Chase.
BellSouth was another top contributor. The positions which detracted most
significantly from the Portfolio's performance included several technology and
energy concerns such as Ebay, Yahoo, Valero Energy, ConocoPhillips and Intel.
Sector selection played an important role in fixed income returns. Broadly
speaking, Emerging Markets Debt performed strongly. Conditions in that asset
class were hallmarked by a very strong fundamental backdrop and a relatively
benign interest rate environment. The U.S. High Yield category was also a
strong contributor as conditions in that asset class remained sanguine. Within
the investment-grade credit category, investments in the Financial sector
provided the largest boost, while mortgage-backed securities offered through
the Federal Home Loan Mortgage Corporation were a drag on performance.
Specific fixed income security selection proved once again to be a primary
driver of returns in the Fund. Each asset class is managed from a bottoms-up
perspective which places a high degree of weight on the manager's ability to
select the best-performing securities available. Moreover, market conditions
over the past year have called for a particular focus on individual security
selection as differentiation among broader sectors and asset classes has been
increasingly difficult. Top-performing securities for the year included Calpine
secured debt, Republic of Venezuela and Republic of Turkey bonds, and Atlas Air
secured notes. Poor performers included Calpine unsecured notes, Verizon New
York and Republic of Argentina bonds.
John Massey assumed management of the Fund's growth equity sleeve in February
2006. Mr. Massey has over 17 years of investment experience spanning portfolio
management, research analysis, and merchant banking and heads the AIG
SunAmerica Large-Cap Equity Team.
- --------
The S&P 500 Index is the Standard & Poor's 500 Composite Stock Price Index, a
widely recognized, unmanaged index of common stock prices. The Lehman Brothers
Aggregate Bond Index represents securities that are U.S. domestic, taxable and
dollar denominated. The index covers components for government and corporate
securities, mortgage pass-through securities and asset-backed securities.
Indices are not managed and an investor cannot invest directly into an index.
106
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued)
Over the past ten years, $10,000 invested in Balanced Assets Fund Class A
shares would have increased to $15,076. The same amount invested in securities
mirroring the performance of the Lehman Brothers Aggregate Bond Index and the
S&P 500 Index would be valued at $18,631 and $22,791, respectively.
[CHART]
Balanced Assets Lehman Bros.Aggregate
Class A/#@/ Bond Index S&P 500 Index
----------- ---------- -------------
9/30/1996 $ 9,423 $10,000 $10,000
10/31/1996 9,501 10,222 10,276
11/30/1996 9,916 10,397 11,054
12/31/1996 9,705 10,300 10,835
1/31/1997 10,138 10,332 11,511
2/28/1997 10,163 10,358 11,602
3/31/1997 9,809 10,243 11,126
4/30/1997 10,149 10,397 11,789
5/31/1997 10,559 10,495 12,507
6/30/1997 10,899 10,620 13,067
7/31/1997 11,685 10,907 14,106
8/31/1997 11,261 10,814 13,317
9/30/1997 11,761 10,974 14,046
10/31/1997 11,640 11,133 13,577
11/30/1997 11,831 11,185 14,205
12/31/1997 12,046 11,298 14,449
1/31/1998 12,075 11,442 14,609
2/28/1998 12,722 11,433 15,662
3/31/1998 13,183 11,472 16,463
4/30/1998 13,416 11,532 16,629
5/31/1998 13,247 11,641 16,343
6/30/1998 13,672 11,740 17,007
7/31/1998 13,672 11,765 16,826
8/31/1998 12,103 11,956 14,396
9/30/1998 12,857 12,236 15,319
10/31/1998 13,342 12,171 16,564
11/30/1998 14,012 12,241 17,567
12/31/1998 14,859 12,278 18,579
1/31/1999 15,563 12,365 19,355
2/28/1999 15,029 12,148 18,754
3/31/1999 15,672 12,215 19,504
4/30/1999 15,928 12,254 20,260
5/31/1999 15,401 12,146 19,782
6/30/1999 16,142 12,108 20,879
7/31/1999 15,808 12,057 20,228
8/31/1999 15,847 12,051 20,128
9/30/1999 15,699 12,190 19,577
10/31/1999 16,417 12,236 20,815
11/30/1999 16,768 12,234 21,239
12/31/1999 18,080 12,176 22,489
1/31/2000 17,555 12,135 21,359
2/29/2000 17,934 12,282 20,955
3/31/2000 18,865 12,444 23,005
4/30/2000 17,830 12,408 22,313
5/31/2000 17,208 12,402 21,855
6/30/2000 18,036 12,660 22,393
7/31/2000 17,958 12,775 22,044
8/31/2000 19,237 12,960 23,413
9/30/2000 18,163 13,042 22,177
10/31/2000 17,262 13,128 22,083
11/30/2000 16,023 13,344 20,342
12/31/2000 16,335 13,592 20,441
1/31/2001 16,529 13,813 21,167
2/28/2001 15,352 13,933 19,237
3/31/2001 14,610 14,003 18,018
4/30/2001 15,205 13,944 19,418
5/31/2001 15,166 14,028 19,548
6/30/2001 14,869 14,081 19,073
7/31/2001 14,703 14,397 18,885
8/31/2001 13,968 14,562 17,703
9/30/2001 13,014 14,731 16,273
10/31/2001 13,436 15,039 16,584
11/30/2001 14,115 14,831 17,856
12/31/2001 14,000 14,737 18,012
1/31/2002 13,694 14,857 17,749
2/28/2002 13,496 15,000 17,407
3/31/2002 13,641 14,751 18,062
4/30/2002 13,275 15,037 16,967
5/31/2002 13,107 15,165 16,842
6/30/2002 12,627 15,296 15,642
7/31/2002 12,180 15,480 14,423
8/31/2002 12,319 15,742 14,517
9/30/2002 11,758 15,997 12,940
10/31/2002 11,928 15,924 14,079
11/30/2002 12,177 15,920 14,907
12/31/2002 11,759 16,249 14,031
1/31/2003 11,518 16,262 13,665
2/28/2003 11,508 16,488 13,459
3/31/2003 11,520 16,475 13,590
4/30/2003 12,042 16,611 14,708
5/31/2003 12,423 16,920 15,483
6/30/2003 12,444 16,887 15,680
7/31/2003 12,394 16,319 15,957
8/31/2003 12,555 16,427 16,268
9/30/2003 12,540 16,862 16,095
10/31/2003 13,053 16,705 17,005
11/30/2003 13,114 16,745 17,155
12/31/2003 13,424 16,915 18,054
1/31/2004 13,545 17,052 18,385
2/29/2004 13,696 17,236 18,641
3/31/2004 13,558 17,365 18,359
4/30/2004 13,275 16,913 18,072
5/31/2004 13,315 16,846 18,320
6/30/2004 13,525 16,941 18,676
7/31/2004 13,220 17,109 18,058
8/31/2004 13,291 17,435 18,130
9/30/2004 13,451 17,482 18,327
10/31/2004 13,594 17,629 18,607
11/30/2004 13,849 17,488 19,359
12/31/2004 14,208 17,649 20,018
1/31/2005 14,024 17,760 19,530
2/28/2005 14,137 17,655 19,941
3/31/2005 13,878 17,565 19,588
4/30/2005 13,734 17,802 19,217
5/31/2005 14,002 17,995 19,828
6/30/2005 13,991 18,093 19,856
7/31/2005 14,270 17,928 20,594
8/31/2005 14,229 18,158 20,406
9/30/2005 14,236 17,971 20,571
10/31/2005 14,029 17,829 20,228
11/30/2005 14,361 17,908 20,993
12/31/2005 14,352 18,078 21,001
1/31/2006 14,550 18,079 21,557
2/28/2006 14,571 18,139 21,615
3/31/2006 14,616 17,961 21,884
4/30/2006 14,679 17,929 22,178
5/31/2006 14,407 17,909 21,540
6/30/2006 14,386 17,947 21,569
7/31/2006 14,512 18,190 21,702
8/31/2006 14,796 18,469 22,218
9/30/2006 15,076 18,631 22,791
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 (0.21)% 5.90% 1.23% 5.23% 4.22% 5.22% 6.24% 6.24%
- --------------------------------------------------------------------------------------------
5 Year Return 1.77% 15.85% 1.94% 12.08% 2.32% 12.15% N/A N/A
- --------------------------------------------------------------------------------------------
10 Year Return 4.19% 60.00% 4.24% 51.43% N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------
Since Inception* 5.60% 115.59% 8.52% 488.26% (0.99)% (7.37)% 1.69% 8.50%
- --------------------------------------------------------------------------------------------
+ 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.
# 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.
@ Beginning with the fiscal year ended September 30, 2006, the average annual
total return displayed in the Line Graph is for Class A shares. Returns of
Class A shares have replaced the returns of Class B shares in the Line Graph
because Class A currently has the largest amount of net assets of any Class
of the Fund.
For the 12 month period ended September 30, 2006, the SunAmerica Balanced
Assets Class A returned (0.21)% compared to 10.79% for the S&P 500 Index and
3.67% for the Lehman Bros. Aggregate Bond Index. (The performance data and
graph do not reflect the deduction of taxes that a shareholder would pay on
fund distributions or the redemption of fund shares.)
- --------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 5.75%, Class B: 4.00% Contingent
Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. The fund's daily net asset
values are not guaranteed and shares are not insured by the FDIC, the Federal
Reserve Board or any other agency. The investment return and principal value of
an investment will fluctuate so that an investor's shares, when redeemed, may
be higher or lower than the original cost. Current performance may be higher or
lower than that shown. Performance as of the most recent month end is available
at www.sunamericafunds.com
107
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued)
SunAmerica International Equity Fund
For the annual period ending September 30, 2006, the SunAmerica International
Equity Fund Class A returned 21.47% at NAV, outperforming its benchmark, the
MSCI EAFE Index, which returned 19.16% during the period.
The global economy and equity markets have shown remarkable resilience and
sustained growth over the last 12 months in spite of various macroeconomic and
geo-political cross-currents. Stock markets did not entirely escape the
consequences of uncertainty, however, as they experienced a correction and
severe bout of risk aversion in the third quarter of the period brought on by
spiking oil prices, fears of slowing growth and inflation, and increased
conflict in the Middle East. The correction was marked by a sharp sell-off in
emerging markets and smaller companies -- two asset classes that had been
experiencing excellent returns. A shift to more defensive sectors also occurred
at this time.
Booming cyclical sectors such as Materials, Consumer Discretionary, and
Industrials, which had been benefiting from China's rapid growth and the
maintained spending power of the U.S. consumer, gave way to Utilities and
Staples with stable earnings and yield. That said, it appears that the markets
and economy have withstood these hiccups and corporate profits have been
robust; though risks remain in the scenario. The U.S. Federal Reserve's
sustained campaign of interest rate increases seems to have finished; the U.S.
housing market has been undergoing an orderly correction; and Europe and Japan
look poised to pick-up the slack for a dip in the U.S. economic growth.
Overall, the economic outlook has beat expectations on the upside, and has
therefore been positive for equity markets.
Our investment approach remains focused on fundamental research and stock
selection. While this approach resulted in a high overall contribution from
stock selection, the markets also affected fund performance as they were highly
supportive of cyclical stocks with higher betas in the first three quarters of
the reporting period. Market conditions shifted in May of 2006 on fears of
slowing growth and accelerating inflation. The result was a sharp sell-off of
perceived riskier assets as well as cyclical sectors -- the same sectors in
which the Fund had been delivering excellent returns during the first three
quarters of the period. In the Europe and Japan, the effects are seen in a
slight underperformance in Staples and Utilities, which picked up momentum in
the period in question. Markets shifted back to cyclical and growth-leveraged
bias in the last quarter of the period.
Sector allocation presented somewhat of a drag on the Fund performance due
primarily to our underweights in Telecom and Materials. However, country
allocation was a positive factor in performance with the United Kingdom,
Norway, Greece, France, and Spain providing the greatest contribution.
Security selection was the overriding reason for the Fund's overperformance as
compared to its benchmark. Italian oil-field services provider Saipem SpA
provided the greatest overall contribution as high oil prices drove upstream
demand for exploration and platform construction, and investors cheered smart,
value-enhancing acquisitions. Petroleum Geo-Services and Telenor ASA of Norway
as well as German pharmaceutical and chemical firm Bayer AG also contributed
positively. On the negative side, Ericsson SpA and Vodafone Group PLC both
detracted from performance.
- --------
Investing internationally involves special risks, such as currency
fluctuations, and economic and political instability. Diversification does not
insure against market loss.
The MSCI EAFE Index is a developed market equity index that includes
approximately 1,100 securities listed on the stock exchanges of 21 developed
countries, excluding the U.S. and Canada. Indices are not managed and an
investor cannot invest directly into an index.
108
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued)
Since the Fund's inception on November 19, 1996, $10,000 invested in
International Equity Fund Class A shares would have increased to $13,290. The
same amount invested in securities mirroring the performance of the MSCI EAFE
Index would be valued at $18,793.
[CHART]
International Equity Class A/#@/ MSCI EAFE Index
--------------------------------- ---------------
11/19/1996 $ 9,427 $10,000
11/30/1996 9,480 10,000
12/31/1996 9,472 9,871
1/31/1997 9,419 9,526
2/28/1997 9,548 9,682
3/31/1997 9,449 9,717
4/30/1997 9,412 9,768
5/31/1997 9,925 10,404
6/30/1997 10,392 10,978
7/31/1997 10,611 11,155
8/31/1997 9,744 10,322
9/30/1997 10,234 10,900
10/31/1997 9,397 10,063
11/30/1997 9,253 9,960
12/31/1997 9,211 10,047
1/31/1998 9,427 10,506
2/28/1998 9,895 11,181
3/31/1998 10,395 11,525
4/30/1998 10,617 11,616
5/31/1998 10,610 11,560
6/30/1998 10,518 11,647
7/31/1998 10,664 11,765
8/31/1998 9,181 10,308
9/30/1998 8,797 9,992
10/31/1998 9,388 11,033
11/30/1998 9,849 11,598
12/31/1998 10,158 12,056
1/31/1999 10,181 12,020
2/28/1999 9,826 11,734
3/31/1999 10,081 12,224
4/30/1999 10,412 12,719
5/31/1999 9,934 12,064
6/30/1999 10,381 12,534
7/31/1999 10,582 12,907
8/31/1999 10,574 12,954
9/30/1999 10,574 13,084
10/31/1999 10,998 13,574
11/30/1999 11,847 14,046
12/31/1999 13,567 15,307
1/31/2000 12,780 14,334
2/29/2000 13,752 14,720
3/31/2000 13,551 15,291
4/30/2000 12,603 14,486
5/31/2000 12,240 14,132
6/30/2000 12,742 14,685
7/31/2000 12,371 14,069
8/31/2000 12,641 14,191
9/30/2000 11,762 13,500
10/31/2000 11,137 13,181
11/30/2000 10,520 12,687
12/31/2000 10,846 13,138
1/31/2001 10,804 13,131
2/28/2001 9,907 12,147
3/31/2001 9,036 11,337
4/30/2001 9,589 12,125
5/31/2001 9,220 11,697
6/30/2001 8,868 11,219
7/31/2001 8,608 11,015
8/31/2001 8,332 10,735
9/30/2001 7,317 9,648
10/31/2001 7,443 9,895
11/30/2001 7,493 10,260
12/31/2001 7,602 10,321
1/31/2002 7,410 9,773
2/28/2002 7,527 9,841
3/31/2002 7,837 10,373
4/30/2002 7,846 10,442
5/31/2002 7,938 10,574
6/30/2002 7,636 10,154
7/31/2002 6,823 9,151
8/31/2002 6,689 9,130
9/30/2002 5,867 8,150
10/31/2002 6,178 8,588
11/30/2002 6,437 8,978
12/31/2002 6,228 8,676
1/31/2003 6,052 8,314
2/28/2003 5,976 8,123
3/31/2003 5,859 7,963
4/30/2003 6,328 8,744
5/31/2003 6,672 9,273
6/30/2003 6,840 9,498
7/31/2003 7,049 9,727
8/31/2003 7,250 9,962
9/30/2003 7,317 10,270
10/31/2003 7,795 10,910
11/30/2003 7,913 11,152
12/31/2003 8,544 12,023
1/31/2004 8,586 12,193
2/29/2004 8,620 12,475
3/31/2004 8,712 12,545
4/30/2004 8,435 12,261
5/31/2004 8,410 12,303
6/30/2004 8,620 12,572
7/31/2004 8,284 12,164
8/31/2004 8,360 12,218
9/30/2004 8,553 12,537
10/31/2004 8,880 12,965
11/30/2004 9,433 13,850
12/31/2004 9,877 14,458
1/31/2005 9,718 14,193
2/28/2005 10,179 14,806
3/31/2005 9,886 14,434
4/30/2005 9,743 14,094
5/31/2005 9,752 14,101
6/30/2005 9,886 14,288
7/31/2005 10,246 14,726
8/31/2005 10,657 15,099
9/30/2005 10,934 15,771
10/31/2005 10,666 15,310
11/30/2005 10,993 15,685
12/31/2005 11,823 16,415
1/31/2006 12,695 17,423
2/28/2006 12,485 17,384
3/31/2006 12,913 17,957
4/30/2006 13,693 18,815
5/31/2006 13,164 18,084
6/30/2006 12,971 18,083
7/31/2006 13,064 18,262
8/31/2006 13,349 18,764
9/30/2006 13,290 18,793
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 14.45% 21.47% 16.63% 20.63% 19.75% 20.75% 21.65% 21.65%
- --------------------------------------------------------------------------------------------
5 Year Return 11.36% 81.62% 11.76% 76.37% 12.00% 76.25% N/A N/A
- --------------------------------------------------------------------------------------------
Since Inception* 2.93% 40.98% 3.01% 34.02% 2.88% 31.25% 12.28% 75.71%
- --------------------------------------------------------------------------------------------
+ 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.
# 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.
@ Beginning with the fiscal year ended September 30, 2006, the average annual
total return displayed in the Line Graph is for Class A shares. Returns of
Class A shares have replaced the returns of Class B shares in the Line Graph
because Class A currently has the largest amount of net assets of any Class
of the Fund.
For the 12 month period ended September 30, 2006, the SunAmerica International
Equity Class A returned 14.45% compared to 19.16% for the MSCI EAFE Index. (The
performance data and graph do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.)
- --------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 5.75%, Class B: 4.00% Contingent
Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. The fund's daily net asset
values are not guaranteed and shares are not insured by the FDIC, the Federal
Reserve Board or any other agency. The investment return and principal value of
an investment will fluctuate so that an investor's shares, when redeemed, may
be higher or lower than the original cost. Current performance may be higher or
lower than that shown. Performance as of the most recent month end is available
at www.sunamericafunds.com
109
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued)
SunAmerica Value Fund
For the annual period ending September 30, 2006, the SunAmerica Value Fund
Class A returned 12.02% at NAV, trailing the Russell 3000 Value Index
benchmark, which returned 14.55% during the period.
For the annual period, the Telecommunications Services (5.41% weight) advanced
27.17% and was the top-performing sector in the Russell 3000 Value Index,
followed by the Financial group, the largest constituent (36.46% weight), which
returned 20.51%. The Energy group (12.88% weight), the market leader in the
same period a year ago, was the principal laggard, returning only 1.81%.
SunAmerica Value Fund benefited from the out-performance of large-cap value
stocks during the annual period. The Fund focuses its investment selection on
large-cap equities that have greater growth rates and more attractive
valuations relative to its benchmark. Additionally, outstanding stock selection
in the Financial group, one of the top-performing industry segments, also
proved beneficial.
SunAmerica Value Fund also benefited from over-weight exposure to the Telecom
Services sector over the past 12 months. To a greater extent, performance was
primarily driven by outstanding security selection in the Financial, Consumer
Discretionary, and Consumer Staples groups, particularly banks, media, and
food, beverage and tobacco companies. On the other hand, stock selection in the
Materials, Utilities, and Industrial sectors detracted from returns.
Several financial firms headed the list of top contributing securities during
the annual period including Bank of America Corp., JPMorgan Chase & Co., Wells
Fargo & Co., Wachovia Corp., and Bear Stearns Cos. BellSouth Corp., was another
top performer during the annual period. Stocks which detracted from performance
included ConocoPhilipps, FPL Group Inc., Valero Energy Corp., TXU Corp. and
Intel Corp.
- --------
The Russell 3000 Value Index measures the performance of those Russell 3000
Index companies with lower price-to-book ratios and lower forecasted growth
values. The Russell 3000 Index consists of the 3,000 largest U.S. companies
based on total market capitalization. Indices are not managed and an investor
cannot invest directly into an index.
110
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued)
Since the Fund's inception on November 19, 1996, $10,000 invested in Value Fund
Class A shares would have increased to $23,956. The same amount invested in
securities mirroring the performance of the Russell 3000 Value Index would be
valued at $26,900.
[CHART]
Value Class A/#@/ Russell 3000 Value Index
----------------- ------------------------
11/19/1996 $ 9,427 $10,000
11/30/1996 9,646 10,221
12/31/1996 9,638 10,137
1/31/1997 10,060 10,594
2/28/1997 10,121 10,744
3/31/1997 9,781 10,367
4/30/1997 10,211 10,774
5/31/1997 10,845 11,401
6/30/1997 11,244 11,899
7/31/1997 12,187 12,755
8/31/1997 11,953 12,364
9/30/1997 12,662 13,119
10/31/1997 12,134 12,753
11/30/1997 12,300 13,274
12/31/1997 12,474 13,668
1/31/1998 12,216 13,469
2/28/1998 13,132 14,367
3/31/1998 13,633 15,217
4/30/1998 13,766 15,316
5/31/1998 13,226 15,059
6/30/1998 13,140 15,226
7/31/1998 12,631 14,875
8/31/1998 10,354 12,651
9/30/1998 10,698 13,376
10/31/1998 11,731 14,359
11/30/1998 12,208 15,006
12/31/1998 12,482 15,513
1/31/1999 12,467 15,600
2/28/1999 12,177 15,315
3/31/1999 12,521 15,600
4/30/1999 13,484 17,054
5/31/1999 13,500 16,917
6/30/1999 14,055 17,417
7/31/1999 13,594 16,913
8/31/1999 13,171 16,287
9/30/1999 12,670 15,736
10/31/1999 13,148 16,553
11/30/1999 13,249 16,438
12/31/1999 13,616 16,545
1/31/2000 13,214 16,013
2/29/2000 12,919 14,969
3/31/2000 14,149 16,662
4/30/2000 14,002 16,488
5/31/2000 14,149 16,633
6/30/2000 13,944 15,957
7/31/2000 13,789 16,178
8/31/2000 14,748 17,067
9/30/2000 14,363 17,206
10/31/2000 14,576 17,598
11/30/2000 14,067 16,963
12/31/2000 15,012 17,875
1/31/2001 15,353 17,972
2/28/2001 14,707 17,504
3/31/2001 14,135 16,909
4/30/2001 14,827 17,735
5/31/2001 15,215 18,137
6/30/2001 15,132 17,814
7/31/2001 15,215 17,751
8/31/2001 14,873 17,084
9/30/2001 13,923 15,834
10/31/2001 13,932 15,734
11/30/2001 14,818 16,664
12/31/2001 15,360 17,100
1/31/2002 15,196 16,995
2/28/2002 15,341 17,028
3/31/2002 15,881 17,868
4/30/2002 15,534 17,350
5/31/2002 15,688 17,383
6/30/2002 15,089 16,434
7/31/2002 14,259 14,838
8/31/2002 14,384 14,938
9/30/2002 13,408 13,318
10/31/2002 14,133 14,248
11/30/2002 14,780 15,162
12/31/2002 14,439 14,504
1/31/2003 14,056 14,149
2/28/2003 13,733 13,765
3/31/2003 13,814 13,796
4/30/2003 14,782 15,017
5/31/2003 15,680 16,026
6/30/2003 15,670 16,232
7/31/2003 15,751 16,514
8/31/2003 16,054 16,799
9/30/2003 15,983 16,633
10/31/2003 16,478 17,676
11/30/2003 16,710 17,950
12/31/2003 17,785 19,020
1/31/2004 17,806 19,380
2/29/2004 18,167 19,792
3/31/2004 18,008 19,653
4/30/2004 18,008 19,130
5/31/2004 17,997 19,328
6/30/2004 18,463 19,826
7/31/2004 18,220 19,493
8/31/2004 18,410 19,763
9/30/2004 18,750 20,108
10/31/2004 19,089 20,441
11/30/2004 19,926 21,540
12/31/2004 20,579 22,243
1/31/2005 20,329 21,808
2/28/2005 20,840 22,506
3/31/2005 20,709 22,184
4/30/2005 20,365 21,724
5/31/2005 20,733 22,312
6/30/2005 20,816 22,619
7/31/2005 21,244 23,329
8/31/2005 21,149 23,189
9/30/2005 21,386 23,482
10/31/2005 20,923 22,886
11/30/2005 21,540 23,650
12/31/2005 21,452 23,767
1/31/2006 21,899 24,781
2/28/2006 22,078 24,918
3/31/2006 22,269 25,334
4/30/2006 22,793 25,924
5/31/2006 22,282 25,231
6/30/2006 22,448 25,406
7/31/2006 23,036 25,933
8/31/2006 23,355 26,398
9/30/2006 23,956 26,900
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 5.57% 12.02% 7.29% 11.29% 10.30% 11.30% 12.20% 12.20% 12.64% 12.64%
- ---------------------------------------------------------------------------------------------------------------
5 Year Return 10.15% 72.06% 10.47% 66.50% 10.74% 66.51% N/A N/A 12.11% 77.07%
- ---------------------------------------------------------------------------------------------------------------
Since Inception* 9.26% 154.12% 9.35% 141.43% 8.58% 119.90% 10.65% 63.64% 7.32% 82.28%
- ---------------------------------------------------------------------------------------------------------------
+ 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.
# 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.
@ Beginning with the fiscal year ended September 30, 2006, the average annual
total return displayed in the Line Graph is for Class A shares. Returns of
Class A shares have replaced the returns of Class B shares in the Line Graph
because Class A currently has the largest amount of net assets of any Class
of the Fund.
For the 12 month period ended September 30, 2006, the SunAmerica Value Class A
returned 5.57% compared to 14.55% for the Russell 3000 Value Index (The
performance data and graph do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.)
- --------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 5.75%, Class B: 4.00% Contingent
Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. The fund's daily net asset
values are not guaranteed and shares are not insured by the FDIC, the Federal
Reserve Board or any other agency. The investment return and principal value of
an investment will fluctuate so that an investor's shares, when redeemed, may
be higher or lower than the original cost. Current performance may be higher or
lower than that shown. Performance as of the most recent month end is available
at www.sunamericafunds.com
111
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued)
SunAmerica Biotech/Health Fund
For the annual period ending September 30, 2006, the SunAmerica Biotech Fund
Class A returned -3.83% at NAV, trailing both its S&P Composite 1500 Healthcare
Index and the NASDAQ 100 Index benchmarks which returned 6.89% and 3.75%,
respectively during the period.
Along with the broader markets, the healthcare sector began the fiscal period
on a promising note, as the S&P Composite 1500 Healthcare, NASDAQ 100, and
Lipper Health/Biotechnology indices advanced during the final three months of
2005. At that time, Pharmaceutical companies recovered during the quarter due
to a combination of restructuring costs as well as a favorable ruling on the
Lipitor patent challenge. The biotechnology segment posted outsized gains on
the heels of merger & acquisitions activity and solid earnings expectations.
Once again, the HMO sector registered positive gains ahead of strong earnings
expectations from the upcoming implementation of the 2006 Medicare Drug Benefit
legislation.
Momentum shifted mid-year. Amid the difficult market environment, high-beta
segments such as biotechnology were particularly vulnerable in the third fiscal
quarter, as investors shifted assets into more defensive positions. For the
three month period ending June 30, 2006, the S&P Composite 1500 Healthcare,
NASDAQ 100, and Lipper Science/Health indices incurred losses. In terms of
sub-sectors, the Managed Care segment continued to be weak due to softening
pricing trends and the backlash from stock option pricing scandals at United
Healthcare and other companies. On the other hand, large-cap pharmaceutical
companies continued to outperform other sub-sectors due to the new government
funded Medicare Part D drug benefit plan that was initiated in January 2006.
Pharmaceuticals recovered in the final fiscal quarter as a result of increasing
volumes associated with the new Medicare drug benefit plan. There was also a
rotation into the biotechnology sector due to the perception that it would be a
safe haven ahead of the November mid-term elections. On the other hand, managed
care and equipment stocks were generally mixed due to pricing and expense
pressure as well as inconsistent clinical data.
The portfolio's investments were focused in two sub-groups: Pharmaceuticals &
Biotechnology and Healthcare Equipment & Services. The average weight of each
of these sub-sectors throughout the period was 55% and 39%, respectively. The
balance of the assets was held in cash.
In terms of sector selection relative to the S&P 1500 Composite Healthcare
Index, the Fund benefited from stock selection in the biotechnology and managed
care categories. Results were limited, however, by a combination of 1)
underweight exposure and stock selection in the major pharmaceutical
sub-sector, 2) biotechnology overweight, and 3) security selection in the
medical specialties group.
Stock performance leaders during the annual period included Noven
Pharmaceuticals Inc., a manufacturer of advanced transdermal drug delivery
technologies; Celgene Corp., a biotechnology company developing cancer and
immune-inflammatory-related diseases; Cephalon Inc., a manufacturer of drugs
that treat central nervous system disorders; Fisher Scientific Inc., a provider
of scientific and technical instruments; and Abbott Laboratories, a major drug
manufacturer.
Stock holdings that detracted from performance included Allion Healthcare Inc.,
a specialty pharmacy and disease management service provider focused on
HIV/AIDS patients; Kinetic Concepts Inc., a company that designs and
manufactures wound care and therapeutic products; Cooper Companies Inc., a
medical instrument and supply company; National Medical Health Card Systems
Inc., a provider of pharmacy benefit management services; and Neurocrine
Biosciences Inc., a biotechnology company focused on the treatment of
neurological and endocrine-related diseases and disorders.
- --------
Both biotechnology and healthcare companies may be significantly affected by
government regulations and government approvals of products and services,
legislative or regulatory changes, patent considerations, intense competition
and rapid obsolescence due to advancing technology. As a result, the Fund's
returns may be considerably more volatile than a fund that does not invest in
biotechnology and/or healthcare. Stocks of smaller companies may be more
volatile than, and not as readily marketable as those of large companies.
The S&P Composite 1500 Healthcare Index combines three leading indices -- the
S&P 500, the S&P MidCap 400, and the S&P SmallCap 600 -- to form an investable
benchmark of the U.S. equity market. Covering approximately 90% of the U.S.
market capitalization, the S&P Composite 1500 offers investors an index with
the familiar characteristics of the S&P 500 but with broader market exposure.
The NASDAQ 100 Index includes 100 of the largest domestic and international
non-financial securities listed on The NASDAQ Stock Market based on market
capitalization. The Index reflects companies across major industry groups
including computer hardware and software, telecommunications, retail/wholesale
trade and biotechnology. It does not contain securities of financial companies
including investment companies. The Lipper Health/Biotechnology Index buy
medical-device and biotechnology stocks and some concentrate on a single
technology industry. Indices are not managed and an investor cannot invest
directly into an index.
112
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued)
Since the Fund's inception on June 14, 2000, $10,000 invested in Biotech/Health
Fund Class A shares would be valued at $7,118. The same amount invested in
securities mirroring the performance of the S&P Composite 1500 Healthcare Index
and the NASDAQ 100 Index would be valued at $11,058 and $4,457, respectively.
[CHART]
Biotech/Health NASDAQ 100 S&P Composite 1500
Class A/#/ Index Healthcare Index
--------- ----- -----------------
6/14/2000 $ 9,427 $10,000 $10,000
6/30/2000 10,166 10,000 10,000
7/31/2000 9,879 9,590 9,489
8/31/2000 11,953 10,834 9,669
9/30/2000 12,451 9,487 10,146
10/31/2000 12,036 8,722 10,451
11/30/2000 9,940 6,661 10,793
12/31/2000 10,115 6,223 11,158
1/31/2001 9,485 6,891 10,230
2/28/2001 9,171 5,071 10,234
3/31/2001 8,117 4,181 9,447
4/30/2001 8,880 4,931 9,792
5/31/2001 9,297 4,784 9,949
6/30/2001 9,603 4,865 9,605
7/31/2001 8,738 4,475 10,019
8/31/2001 8,888 3,907 9,700
9/30/2001 8,235 3,106 9,729
10/31/2001 8,675 3,628 9,706
11/30/2001 9,336 4,243 10,180
12/31/2001 9,187 4,193 9,918
1/31/2002 8,258 4,122 9,786
2/28/2002 8,117 3,615 9,799
3/31/2002 8,463 3,863 9,868
4/30/2002 7,252 3,396 9,318
5/31/2002 6,764 3,214 9,122
6/30/2002 6,379 2,796 8,292
7/31/2002 6,245 2,559 8,088
8/31/2002 5,820 2,507 8,181
9/30/2002 5,742 2,215 7,701
10/31/2002 5,993 2,633 8,127
11/30/2002 6,308 2,970 8,313
12/31/2002 5,836 2,619 8,037
1/31/2003 5,726 2,616 8,013
2/28/2003 5,647 2,689 7,855
3/31/2003 5,867 2,713 8,138
4/30/2003 6,048 2,946 8,423
5/31/2003 7,031 3,191 8,651
6/30/2003 7,181 3,201 9,018
7/31/2003 7,582 3,402 8,966
8/31/2003 7,700 3,574 8,675
9/30/2003 7,708 3,474 8,705
10/31/2003 7,716 3,777 8,809
11/30/2003 7,905 3,798 8,978
12/31/2003 7,960 3,915 9,454
1/31/2004 8,400 3,983 9,736
2/29/2004 8,361 3,924 9,822
3/31/2004 8,314 3,838 9,483
4/30/2004 8,329 3,740 9,744
5/31/2004 8,023 3,914 9,740
6/30/2004 8,054 4,049 9,748
7/31/2004 7,039 3,739 9,200
8/31/2004 6,929 3,657 9,353
9/30/2004 7,102 3,775 9,226
10/31/2004 6,780 3,973 9,043
11/30/2004 6,984 4,202 9,244
12/31/2004 7,551 4,336 9,770
1/31/2005 7,055 4,065 9,491
2/28/2005 6,693 4,045 9,779
3/31/2005 6,505 3,969 9,737
4/30/2005 6,607 3,805 10,030
5/31/2005 6,890 4,134 10,159
6/30/2005 6,945 4,003 10,156
7/31/2005 7,315 4,302 10,393
8/31/2005 7,370 4,243 10,389
9/30/2005 7,401 4,296 10,345
10/31/2005 7,134 4,236 10,040
11/30/2005 7,260 4,490 10,192
12/31/2005 7,417 4,418 10,502
1/31/2006 7,535 4,596 10,692
2/28/2006 7,614 4,491 10,784
3/31/2006 7,519 4,581 10,677
4/30/2006 7,220 4,574 10,350
5/31/2006 6,953 4,251 10,122
6/30/2006 6,819 4,240 10,134
7/31/2006 6,953 4,064 10,602
8/31/2006 7,149 4,257 10,920
9/30/2006 7,118 4,457 11,058
Class A Class B Class C++
------------------ ------------------ ------------------
Biotech/ Average Average Average
Health Annual Cumulative Annual Cumulative Annual Cumulative
Fund Return Return+ Return Return+ Return Return+
- ---------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return (9.32)% (3.83)% (8.23)% (4.41)% (5.35)% (4.40)%
- -------------------------------------------------------------------------
5 Year Return (4.02)% (13.56)% (3.90)% (16.38)% (3.49)% (16.27)%
- -------------------------------------------------------------------------
Since Inception* (5.26)% (24.49)% (4.99)% (27.57)% (4.96)% (27.40)%
- -------------------------------------------------------------------------
+ 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, 2006, the SunAmerica Biotech/Health
Class A returned (9.32)% compared to 6.89% for the S&P Composite 1500
Healthcare Index and 3.75% for the NASDAQ 100 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
113
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued)
Tax Managed Equity Fund
For the annual period ending September 30, 2006, the Tax Managed Equity Fund
Class A returned 11.25% at NAV, outperforming the S&P 500 Index benchmark which
returned 10.79% over the same period.
Over the past 12 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, they
significantly lagged returns generated by the large-cap value category.
Additionally, large-cap growth, small-cap growth, and mid-cap growth were the
three worst performing assets classes during the annual period as measured by
Lipper, Inc.
The key to the turnaround in performance was a focus on total return that not
only applies a rigorous tax management process, but also uses a quantitative
stock selection model that ranks stocks by valuation, momentum, and behavioral
factors.
A leading contributor to overall Fund performance during the annual period was
stock selection in the Financial, Utilities, and Consumer Staples sectors.
Overweight exposure to the Materials and Information Technology groups assisted
portfolio performance as did Consumer Discretionary and Healthcare
underweights. These gains were offset, however, by a combination of 1)
disappointing stock selection in the Materials and Industrials categories, and
2) an Energy underweight.
The following holdings contributed to performance: Boliden AB, Pacific Ethanol
Inc., Knight Capital Group Inc., Suntech Power Holdings Co. Ltd., and Noven
Pharmaceuticals Inc.. Individual portfolio holdings that detracted from
performance included Merix Corp., Evergreen Solar Inc., QUALCOMM Inc., Mattson
Technology Inc. and Mueller Industries Inc..
Paul Ma assumed management of the Fund in November 2005. In addition to his
portfolio management responsibilities, Mr. Ma heads the firm's quantitative
research team and is responsible for the firm's structured portfolios.
- --------
The S&P 500 Index is the Standard & Poor's 500 Composite Stock Price Index, a
widely recognized, unmanaged index of common stock prices. Indices are not
managed and an investor cannot invest directly into an index.
114
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued)
Since the Fund's inception on March 1, 1999, $10,000 invested in Tax Managed
Equity Fund Class A shares would be valued at $9,976. The same amount invested
in securities mirroring the performance of the S&P 500 Index would be valued at
$12,152.
[CHART]
Tax Managed Equity
Equity Class A/#/ S&P 500 Index
-------------------- -------------
3/1/1999 $ 9,427 $10,000
3/31/1999 9,842 10,400
4/30/1999 10,324 10,803
5/31/1999 10,091 10,548
6/30/1999 10,581 11,133
7/31/1999 10,204 10,786
8/31/1999 10,068 10,732
9/30/1999 9,759 10,439
10/31/1999 10,294 11,099
11/30/1999 10,535 11,325
12/31/1999 10,950 11,991
1/31/2000 10,716 11,389
2/29/2000 10,626 11,173
3/31/2000 11,561 12,267
4/30/2000 10,943 11,897
5/31/2000 10,596 11,653
6/30/2000 10,837 11,941
7/31/2000 10,837 11,754
8/31/2000 11,471 12,484
9/30/2000 10,965 11,825
10/31/2000 10,965 11,775
11/30/2000 10,113 10,847
12/31/2000 10,128 10,900
1/31/2001 10,475 11,286
2/28/2001 9,472 10,257
3/31/2001 8,824 9,608
4/30/2001 9,517 10,354
5/31/2001 9,608 10,424
6/30/2001 9,382 10,170
7/31/2001 9,306 10,070
8/31/2001 8,786 9,439
9/30/2001 8,183 8,677
10/31/2001 8,326 8,843
11/30/2001 8,974 9,521
12/31/2001 9,035 9,604
1/31/2002 8,733 9,464
2/28/2002 8,529 9,282
3/31/2002 8,876 9,631
4/30/2002 8,198 9,047
5/31/2002 8,190 8,980
6/30/2002 7,609 8,340
7/31/2002 7,006 7,690
8/31/2002 7,081 7,741
9/30/2002 6,282 6,900
10/31/2002 6,787 7,507
11/30/2002 7,142 7,949
12/31/2002 6,742 7,482
1/31/2003 6,531 7,286
2/28/2003 6,440 7,177
3/31/2003 6,478 7,246
4/30/2003 7,014 7,843
5/31/2003 7,315 8,256
6/30/2003 7,376 8,361
7/31/2003 7,481 8,508
8/31/2003 7,579 8,674
9/30/2003 7,489 8,582
10/31/2003 7,911 9,067
11/30/2003 7,979 9,147
12/31/2003 8,416 9,627
1/31/2004 8,514 9,803
2/29/2004 8,620 9,939
3/31/2004 8,499 9,789
4/30/2004 8,371 9,636
5/31/2004 8,439 9,768
6/30/2004 8,590 9,958
7/31/2004 8,348 9,629
8/31/2004 8,424 9,667
9/30/2004 8,499 9,772
10/31/2004 8,567 9,921
11/30/2004 8,846 10,323
12/31/2004 9,112 10,674
1/31/2005 8,877 10,414
2/28/2005 9,013 10,633
3/31/2005 8,854 10,445
4/30/2005 8,657 10,247
5/31/2005 8,861 10,572
6/30/2005 8,824 10,588
7/31/2005 9,036 10,981
8/31/2005 8,907 10,881
9/30/2005 8,968 10,969
10/31/2005 8,778 10,786
11/30/2005 9,043 11,194
12/31/2005 9,260 11,198
1/31/2006 10,799 11,494
2/28/2006 10,273 11,525
3/31/2006 10,662 11,669
4/30/2006 11,073 11,826
5/31/2006 10,372 11,485
6/30/2006 10,342 11,501
7/31/2006 9,946 11,572
8/31/2006 10,060 11,847
9/30/2006 9,976 12,152
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 4.87% 11.25% 6.46% 10.46% 9.54% 10.54%
- -------------------------------------------------------------------------
5 Year Return 2.82% 21.92% 3.02% 18.02% 3.36% 17.99%
- -------------------------------------------------------------------------
Since Inception* (0.03)% 5.83% 0.09% 0.65% 0.11% 0.81%
- -------------------------------------------------------------------------
+ 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, 2006, the SunAmerica Tax Managed
Equity Fund Class A returned 4.87% compared to 10.79% 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
115
[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. The Trust's
Vincent M. Marra, AIG SunAmerica Capital Forms N-Q are available
President and Chief Services, Inc. on the U.S. Securities
Executive Officer Harborside Financial and Exchange Commission's
Donna M. Handel, Center website at www.sec.gov.
Treasurer 3200 Plaza 5 You can also review and
Timothy P. Pettee, Vice Jersey City, NJ obtain copies of the
President 07311-4992 Forms N-Q at the U.S.
James Nichols, Vice Securities and Ex-change
President Shareholder Servicing Commission's Public
Cynthia Gibbons, Vice Agent Reference Room in
President and Chief AIG SunAmerica Fund Washington, DC
Compliance Officer Services, Inc. (information on the
Gregory N. Bressler, Harborside Financial operation of Pub-lic
Chief Legal Officer Center Reference Room may be
and Secretary 3200 Plaza 5 obtained by calling
Gregory R. Kingston, Jersey City, NJ 1-800-SEC-0330).
Vice President and 07311-4992
Assistant Treasurer This report is submitted
Corey A. Issing, Custodian and Transfer solely for the general
Assistant Secretary Agent information of
Kathleen Fuentes, State Street Bank and shareholders of the
Assistant Secretary Trust Company Funds. Distribution of
Nori L. Gabert, Vice P.O. Box 419572 this report to persons
President and Kansas City, MO other than shareholders
Assistant Secretary 64141-6572 of the Funds is
authorized only in
VOTING PROXIES ON TRUST con-nection with a
PORTFOLIO SECURITIES currently effective
A description of the pro-spectus, setting
policies and proce-dures forth details of the
that the Trust uses to Funds, which must precede
determine how to vote or accom-pany this report.
proxies relating to
secu-rities held in a
Fund's portfolio which is
available in the Trust's
Statement of Additional
Information, may be
ob-tained without charge
upon request, by calling
(800) 858-8850. This
in-formation 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 proxies relating to
securities held in
SunAmerica Equity Funds
during the most recent
twelve month period ended
June 30 is available,
once filed with the U.S.
Securities and Exchange
Commission, 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.
116
[LOGO] AIG SunAmerica
Mutual Funds
Distributed by:
AIG SunAmerica Capital Services, Inc.
Harborside Financial Center
3200 Plaza 5
Jersey City, NJ 07311-4992
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-9/06
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.
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:
2005 2006
(a) Audit Fees ....................$ 207,000 $ 241,000
(b) Audit-Related Fees ............$ 60,480 $ 0
(c) Tax Fees ......................$ 70,200 $ 71,550
(d) All Other Fees ................$ 0 $ 0
Audit Fees include amounts related to the audit of the registrant's
annual financial statements and services normally provided by the
principal accountant in connection with statutory and regulatory
filings. 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.
Aggregate fees billed to the investment adviser and Adviser Affiliates
(as defined below in Item 4(e)) that are required to be pre-approved
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X for
the last two fiscal years for professional services rendered by the
Registrant's principal accountant were as follows:
2005 2006
(a) Audit Fees ....................$ 0 $ 0
(b) Audit-Related Fees ............$ 0 $ 0
(c) Tax Fees ......................$ 0 $ 0
(d) All Other Fees ................$ 471,713 $ 1,768,468
All other fees include amounts related to a SAS 70 Report on the
Processing of Transactions by Service Organizations.
(e) (1) The Registrant's audit committee pre-approves all audit services
provided by the registrant's principal accountant for the Registrant
and all non-audit services provided by the registrant's principal
accountant for the registrant, its investment adviser and any entity
controlling, controlled by, or under common control with the
investment adviser ("Adviser Affiliates") that provides ongoing
services to the registrant, if the engagement by the investment
adviser or Adviser Affiliate relates directly to the operations and
financial reporting of the registrant. The audit committee has not
presently established any pre-approval policies and procedures that
permit the pre-approval of the above services other than by the full
audit committee. Certain de minimis exceptions are allowed for non-
audit services in accordance with Rule 2-01(c)(7)(i)(C) of Regulation
S-X as set forth in the Registrant's audit committee charter.
(2) No services included in (b)-(d) above were approved pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not Applicable.
(g) The aggregate fees billed for the most recent fiscal year and the
preceding fiscal year by the registrant's principal accountant for
non-audit services rendered to the registrant, its investment adviser,
and Adviser Affiliates that provides ongoing services to the registrant
for 2006 and 2005 were $1,856,118 and $649,679, 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.
There were no material changes to the procedures by which shareholders
may recommend nominees to the Registrant's board of trustees that were
implemented after the Registrant last provided disclosure in response
to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by 22(b)(15)) of Schedule 14A (17 CFR 240.14a-
101), or this Item 10.
Item 11. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures as defined under Rule 30a-3(c) under
the Investment Company Act of 1940 (17 CFR 270.30a-3(c)). Based on
that evaluation, the registrant's management, including the President
and Treasurer, concluded that the registrant's disclosure controls and
procedures are effective.
(b) There was no change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act
of 1940 (17 CFR 270.30a-3(d))) that occurred during the 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) Certifications pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit
99.CERT.
(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the Sarbanes-
Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Equity Funds
By: /s/ Vincent M. Marra
-------------------
Vincent M. Marra
President
Date: December 8, 2006
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, 2006
By: /s/ Donna M. Handel
-------------------
Donna M. Handel
Treasurer
Date: December 8, 2006