UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-04801
---------------------------------------------
SunAmerica Equity Funds
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Harborside Financial Center, 3200 Plaza 5 Jersey City, NJ 07311
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
John T. Genoy
Senior Vice President
SunAmerica Asset Management Corp.
Harborside Financial Center,
3200 Plaza 5
Jersey City, NJ 07311
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6414
-----------------------------
Date of fiscal year end: September 30
--------------------------
Date of reporting period: March 31, 2010
-------------------------
Item 1. Reports to Stockholders
[PHOTO]
SEMI-ANNUAL REPORT 2010
SUNAMERICA
Equity Funds
[LOGO]
Sun America Mutual Funds
MARCH 31, 2010 SEMI-ANNUAL REPORT
SUNAMERICA EQUITY FUNDS
SUNAMERICA INTERNATIONAL EQUITY FUND (SIEAX)
SUNAMERICA VALUE FUND (SSVAX)
SUNAMERICA INTERNATIONAL SMALL-CAP FUND (SAESX)
TABLE OF CONTENTS
SHAREHOLDER LETTER...................... 2
EXPENSE EXAMPLE......................... 3
STATEMENT OF ASSETS AND LIABILITIES..... 5
STATEMENT OF OPERATIONS................. 7
STATEMENT OF CHANGES IN NET ASSETS...... 8
FINANCIAL HIGHLIGHTS.................... 9
PORTFOLIO OF INVESTMENTS................ 12
NOTES TO FINANCIAL STATEMENTS........... 23
RESULTS OF SPECIAL SHAREHOLDER MEETINGS. 37
APPROVAL OF ADVISORY AGREEMENTS......... 38
SHAREHOLDER LETTER -- (UNAUDITED)
Dear Shareholder,
Enclosed is the semi-annual report for the SunAmerica Equity Funds for the
six-month period ended March 31, 2010.
The semi-annual period was a strong one for the equity markets as low interest
rates and solid corporate earnings helped to fuel the equity markets. While the
Standard & Poor's ("S&P") 500(R) Index* returned 11.75% for the six-month
period, performance of small-cap indices was even stronger. The Russell 2000
Value Index* returned 14.01% while the Russell 2000 Growth Index* returned
12.07% for the same period. International markets lagged the U.S. during this
period with the MSCI EAFE Index* delivering a 3.06% return.
Solid performance in the equity markets has finally calmed investors somewhat
as the financial markets have shown signs of stabilization. Nevertheless, there
are weighty issues facing our economy which remain lurking over the equity
markets. How and when will the U.S. government remove the financial backstop it
provided to the economy? When will the Federal Reserve move to increase
interest rates? Can the U.S. economy generate sufficient jobs to reduce
unemployment? How will we deal with the growing budget deficit? The future of
the equity markets will become clearer as these questions are addressed.
Be sure to consult with your financial advisor when determining how to best
position your portfolio to fit with your individual requirements. We encourage
you to utilize our website, www.sunamericafunds.com, for ongoing updates
throughout the year.
Thank you for your investment in the SunAmerica Equity Funds. We remain focused
on managing your assets and continue to work diligently to help grow your
capital as is consistent with each Fund's individual objective.
Sincerely,
THE SUNAMERICA EQUITY FUNDS INVESTMENT PROFESSIONALS
Steve Neimeth Ben Barrett Robin Thorn
Andy Sheridan Mike Beaulieu Chantal Brennan
Brendan Voege Karen Forte
Kara Murphy Sarah Kallok
Jay Merchant
- --------
Past performance is no guarantee of future results.
* The S&P 500 INDEX is Standard & Poor's 500 Composite Stock Price Index, a
widely recognized, unmanaged index of common stock prices. The RUSSELL 2000
VALUE INDEX measures the performance of those Russell 2000 Index companies
with lower price-to-book ratios and lower forecasted growth values. The
RUSSELL 2000 GROWTH INDEX measures the performance of those Russell 2000
Index companies with higher price-to-book ratios and higher forecasted growth
values. (The Russell 2000 Index consists of the smallest 2,000 of the largest
3,000 U.S. companies.) The Morgan Stanley Capital International Europe,
Australasia, and the Far East (MSCI EAFE) INDEX is a free float-adjusted
market capitalization index that is designed to measure developed market
equity performance, excluding the US & Canada. Indices are not managed and an
investor cannot invest directly into an index.
2
SUNAMERICA EQUITY FUNDS
EXPENSE EXAMPLE -- MARCH 31, 2010 -- (UNAUDITED)
DISCLOSURE OF PORTFOLIO EXPENSES IN SHAREHOLDER REPORTS
As a shareholder of a fund (each, a "Fund" and collectively, the "Funds") 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 Class A
shares of SunAmerica International Equity Fund and SunAmerica 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 October 1, 2009 and held until March 31, 2010.
ACTUAL EXPENSES
The "Actual" section of the table provides information about actual account
values and actual expenses. You may use the information in these columns,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the column under the heading entitled "Expenses Paid During the Six
Months Ended March 31, 2010" 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 March 31, 2010" column
does not include small account fees that may be charged if your account balance
is below $500 ($250 for retirement plan accounts). In addition, the "Expenses
Paid During the Six Months Ended March 31, 2010" column does not include
administrative fees that may apply to qualified retirement plan accounts. See
the Funds' prospectus, your retirement plan document and/or materials from your
financial adviser, for a full description of these fees. Had these fees been
included, the "Expenses Paid During the Six Months Ended March 31, 2010" 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 March 31, 2010"
column does not include small account fees that may be charged if your account
balance is below $500 ($250 for retirement plan accounts). In addition, the
"Expenses Paid During the Six Months Ended March 31, 2010" column does not
include administrative fees that may apply to qualified retirement plan
accounts. See the Funds' prospectus, your retirement plan document and/or
materials from your financial adviser, for a full description of these fees.
Had these fees been included, the "Expenses Paid During the Six Months Ended
March 31, 2010" 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 (applicable to Class A shares of SunAmerica International Equity Fund and
SunAmerica International Small-Cap Fund only); small account fees and
administrative fees, if applicable to your account. Please refer to the Fund's
prospectus, your retirement plan document and/or materials from your financial
adviser, 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 -- MARCH 31, 2010 -- (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 SIX MONTHS BEGINNING 5% ASSUMED SIX MONTHS RATIO
ACCOUNT VALUE RETURN AT ENDED ACCOUNT VALUE RETURN AT ENDED AS OF
AT OCTOBER 1, MARCH 31, MARCH 31, AT OCTOBER 1, MARCH 31, MARCH 31, MARCH 31,
FUND 2009 2010 2010 2009 2010 2010 2010*
- ---- ------------- -------------- ------------ ------------- -------------- ------------ ---------
INTERNATIONAL EQUITY FUND
Class A..................... $1,000.00 $1,061.79 $ 9.51 $1,000.00 $1,015.71 $ 9.30 1.85%
Class B#.................... $1,000.00 $1,057.84 $13.08 $1,000.00 $1,012.22 $12.79 2.55%
Class C# ................... $1,000.00 $1,057.94 $13.08 $1,000.00 $1,012.22 $12.79 2.55%
Class I#.................... $1,000.00 $1,061.63 $ 9.25 $1,000.00 $1,015.96 $ 9.05 1.80%
VALUE FUND#@
Class A..................... $1,000.00 $1,076.71 $ 8.44 $1,000.00 $1,016.80 $ 8.20 1.63%
Class B..................... $1,000.00 $1,072.97 $11.78 $1,000.00 $1,013.56 $11.45 2.28%
Class C .................... $1,000.00 $1,074.03 $11.79 $1,000.00 $1,013.56 $11.45 2.28%
Class Z..................... $1,000.00 $1,079.21 $ 5.49 $1,000.00 $1,019.65 $ 5.34 1.06%
INTERNATIONAL SMALL-CAP FUND#
Class A..................... $1,000.00 $1,045.67 $ 9.69 $1,000.00 $1,015.46 $ 9.55 1.90%
Class B..................... $1,000.00 $1,042.37 $12.98 $1,000.00 $1,012.22 $12.79 2.55%
Class C .................... $1,000.00 $1,042.39 $12.98 $1,000.00 $1,012.22 $12.79 2.55%
- --------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 182 days divided by 365
days. These ratios do not reflect transaction costs, including sales charges
on purchase payments, contingent deferred sales charges, redemption fees
(International Equity Fund and International Small-Cap Fund only), small
account fees and administrative fees, if applicable to your account. Please
refer to your prospectus, your retirement plan document and/or materials
from your financial advisor.
# 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 Six Months Ended March 31,
2010" 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 Six Months Ended March 31, 2010" and "Expense Ratios" would have
been lower.
@ 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:
ACTUAL HYPOTHETICAL
----------------------------------------- -----------------------------------------
ENDING ACCOUNT
ENDING ACCOUNT EXPENSE PAID VALUE USING EXPENSE PAID
VALUE USING DURING THE A HYPOTHETICAL DURING THE EXPENSE
BEGINNING ACTUAL SIX MONTHS BEGINNING 5% ASSUMED SIX MONTHS RATIO
ACCOUNT VALUE RETURN AT ENDED ACCOUNT VALUE RETURN AT ENDED AS OF
AT OCTOBER 1, MARCH 31 MARCH 31 AT OCTOBER 1, MARCH 31, MARCH 31 MARCH 31
FUND 2009 2010 2010 2009 2010 2010 2010*
- ---- ------------- -------------- ------------ ------------- -------------- ------------ --------
VALUE FUND#
Class A... $1,000.00 $1,076.71 $ 8.39 $1,000.00 $1,016.85 $ 8.15 1.62%
Class B... $1,000.00 $1,072.97 $11.73 $1,000.00 $1,013.61 $11.40 2.27%
Class C .. $1,000.00 $1,074.03 $11.74 $1,000.00 $1,013.61 $11.40 2.27%
Class Z... $1,000.00 $1,079.21 $ 5.44 $1,000.00 $1,019.70 $ 5.29 1.05%
4
SUNAMERICA EQUITY FUNDS
STATEMENT OF ASSETS AND LIABILITIES -- MARCH 31, 2010 -- (UNAUDITED)
INTERNATIONAL INTERNATIONAL
EQUITY FUND VALUE FUND SMALL-CAP FUND
------------- ------------ --------------
ASSETS:
Investments at value (unaffiliated)*.... $ 150,301,789 $167,054,759 $65,822,861
Repurchase agreements (cost
approximates value).................... 984,000 1,206,000 --
------------- ------------ -----------
Total investments...................... 151,285,789 168,260,759 65,822,861
------------- ------------ -----------
Cash.................................... 415 164 249
Foreign cash*........................... 2,141,739 -- 486,839
Receivable for:
Fund shares sold....................... 51,985 12,760 4,953
Dividends and interest................. 593,745 237,573 234,707
Investments sold....................... 5,223,104 3,036,181 56,261
Prepaid expenses and other assets....... 6,326 19,993 5,759
Due from investment adviser for expense
reimbursements/fee waivers............. -- 6,463 3,891
------------- ------------ -----------
Total assets............................ 159,303,103 171,573,893 66,615,520
------------- ------------ -----------
LIABILITIES:
Payable for:
Fund shares redeemed................... 239,300 250,802 78,925
Investments purchased.................. 4,362,953 -- 1,081,020
Investment advisory and management fees 129,647 107,648 63,380
Distribution and service maintenance
fees................................. 64,366 66,094 19,873
Transfer agent fees and expenses....... 43,065 53,704 13,804
Trustees' fees and expenses............ 4,108 7,485 35
Other accrued expenses................. 178,704 121,584 69,349
Accrued foreign tax on capital gains... -- -- 19,224
Due to investment adviser for expense
recoupment............................. 1,712 -- --
------------- ------------ -----------
Total liabilities....................... 5,023,855 607,317 1,345,610
------------- ------------ -----------
Net Assets.............................. $ 154,279,248 $170,966,576 $65,269,910
============= ============ ===========
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01
par value.............................. $ 128,404 $ 149,458 $ 77,498
Paid-in capital......................... 247,408,844 207,403,759 60,659,302
------------- ------------ -----------
247,537,248 207,553,217 60,736,800
Accumulated undistributed net
investment income (loss)............... (1,484,302) 289,707 (1,958,546)
Accumulated undistributed net realized
gain (loss) on investments, futures
contracts, options contracts,
securities sold short, and foreign
exchange transactions.................. (102,760,913) (49,649,112) (7,147,010)
Unrealized appreciation (depreciation)
on investments......................... 11,012,036 12,772,764 13,660,007
Unrealized foreign exchange gain (loss)
on other assets and liabilities........ (24,821) -- (2,117)
Accrued capital gains tax on unrealized
appreciation (depreciation)............ -- -- (19,224)
------------- ------------ -----------
Net Assets.............................. $ 154,279,248 $170,966,576 $65,269,910
============= ============ ===========
* Cost
Investments (unaffiliated)............. $ 139,289,753 $154,281,995 $52,162,854
============= ============ ===========
Foreign cash........................... $ 2,149,247 $ -- $ 480,739
============= ============ ===========
See Notes to Financial Statements
5
SUNAMERICA EQUITY FUNDS
STATEMENT OF ASSETS AND LIABILITIES -- MARCH 31, 2010 -- (UNAUDITED)
(CONTINUED)
INTERNATIONAL INTERNATIONAL
EQUITY FUND VALUE FUND SMALL-CAP FUND
------------- ------------ --------------
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net assets.............................. $115,092,135 $107,752,374 $64,208,739
Shares of beneficial interest issued
and outstanding........................ 9,409,076 9,334,268 7,621,690
Net asset value and redemption price
per share.............................. $ 12.23 $ 11.54 $ 8.42
Maximum sales charge (5.75% of offering
price)................................. 0.75 0.70 0.51
------------ ------------ -----------
Maximum offering price to public........ $ 12.98 $ 12.24 $ 8.93
============ ============ ===========
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net assets.............................. $ 11,286,093 $ 15,784,210 $ 317,437
Shares of beneficial interest issued
and outstanding........................ 995,318 1,457,439 38,290
Net asset value, offering and
redemption price per share (excluding
any applicable contingent deferred
sales charge).......................... $ 11.34 $ 10.83 $ 8.29
============ ============ ===========
CLASS C (UNLIMITED SHARES AUTHORIZED):
Net assets.............................. $ 23,974,983 $ 24,835,612 $ 743,734
Shares of beneficial interest issued
and outstanding........................ 2,117,363 2,293,637 89,780
Net asset value, offering and
redemption price per share (excluding
any applicable contingent deferred
sales charge).......................... $ 11.32 $ 10.83 $ 8.28
============ ============ ===========
CLASS I (UNLIMITED SHARES AUTHORIZED):
Net assets.............................. $ 3,926,037 $ -- $ --
Shares of beneficial interest issued
and outstanding........................ 318,613 -- --
Net asset value, offering and
redemption price per share............. $ 12.32 $ -- $ --
============ ============ ===========
CLASS Z (UNLIMITED SHARES AUTHORIZED):
Net assets.............................. $ -- $ 22,594,380 $ --
Shares of beneficial interest issued
and outstanding........................ -- 1,860,418 --
Net asset value, offering and
redemption price per share............. $ -- $ 12.14 $ --
============ ============ ===========
See Notes to Financial Statements
6
SUNAMERICA EQUITY FUNDS
STATEMENT OF OPERATIONS -- FOR THE SIX MONTHS ENDED MARCH 31, 2010 --
(UNAUDITED)
INTERNATIONAL INTERNATIONAL
EQUITY FUND VALUE FUND SMALL-CAP FUND
------------- ----------- --------------
INVESTMENT INCOME:
Dividends (unaffiliated)................ $ 765,280 $ 1,836,842 $ 413,782
Interest (unaffiliated)................. 90 219 82
----------- ----------- -----------
Total investment income*.............. 765,370 1,837,061 413,864
----------- ----------- -----------
EXPENSES:
Investment advisory and management fees. 784,835 610,537 379,768
Distribution and service maintenance
fees:
Class A............................... 203,111 171,322 113,766
Class B............................... 61,244 79,624 1,581
Class C............................... 122,356 116,417 3,605
Service fees Class I+................... 5,230 4 --
Transfer agent fees and expenses:
Class A............................... 139,648 128,366 72,762
Class B............................... 17,690 25,593 1,036
Class C............................... 31,294 30,486 1,363
Class I+.............................. 4,796 4 --
Registration fees:
Class A............................... 8,826 6,800 6,892
Class B............................... 4,580 4,569 5,494
Class C............................... 6,034 5,096 5,500
Class I+.............................. 3,540 1,032 --
Class Z............................... -- 1,498 --
Custodian and accounting fees........... 93,687 29,668 65,309
Reports to shareholders................. 43,214 42,094 574
Audit and tax fees...................... 22,454 21,942 23,302
Legal fees.............................. 12,478 5,752 3,554
Trustees' fees and expenses............. 9,316 7,109 3,338
Interest expense........................ 258 -- 123
Other expenses.......................... 9,694 10,564 9,144
----------- ----------- -----------
Total expenses before fee waivers,
expense reimbursements, expense
recoupments, custody credits and
fees paid indirectly................. 1,584,285 1,298,477 697,111
Net (fees waived and expenses
reimbursed)/recouped by investment
adviser (Note 4)..................... (5,080) 59,712 (66,297)
Custody credits earned on cash
balances............................. (7) (2) (3)
Fees paid indirectly (Note 5)......... -- (7,488) --
----------- ----------- -----------
Net expenses.......................... 1,579,198 1,350,699 630,811
----------- ----------- -----------
Net investment income (loss)............. (813,828) 486,362 (216,947)
----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments
(unaffiliated).......................... 18,789,575 6,577,739 5,527,319
Net realized foreign exchange gain
(loss) on other assets and liabilities.. (379,738) -- (91,684)
----------- ----------- -----------
Net realized gain (loss) on investments
and foreign currencies.................. 18,409,837 6,577,739 5,435,635
----------- ----------- -----------
Change in unrealized appreciation
(depreciation) on investments
(unaffiliated).......................... (8,226,025) 4,087,613 (2,117,317)
Change in unrealized foreign exchange
gain (loss) on other assets and
liabilities............................. (43,149) -- (9,028)
Change in accrued capital gains tax on
unrealized appreciation (depreciation).. 29,518 -- (8,092)
----------- ----------- -----------
Net unrealized gain (loss) on
investments and foreign currencies...... (8,239,656) 4,087,613 (2,134,437)
----------- ----------- -----------
Net realized and unrealized gain (loss)
on investments and foreign currencies... 10,170,181 10,665,352 3,301,198
----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............... $ 9,356,353 $11,151,714 $ 3,084,251
=========== =========== ===========
- --------
*Net of foreign withholding taxes on
interest and dividends of............... $ 88,798 $ -- $ 25,881
=========== =========== ===========
+ See Note 1
See Notes to Financial Statements
7
SUNAMERICA EQUITY FUNDS
STATEMENT OF CHANGES IN NET ASSETS
INTERNATIONAL EQUITY FUND VALUE FUND INTERNATIONAL SMALL-CAP FUND
--------------------------- --------------------------- ---------------------------
FOR THE SIX FOR THE YEAR FOR THE SIX FOR THE YEAR FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED MONTHS ENDED ENDED MONTHS ENDED ENDED
MARCH 31, 2010 SEPTEMBER 30, MARCH 31, 2010 SEPTEMBER 30, MARCH 31, 2010 SEPTEMBER 30,
(UNAUDITED) 2009 (UNAUDITED) 2009 (UNAUDITED) 2009
-------------- ------------- -------------- ------------- -------------- -------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........... $ (813,828) $ 1,111,980 $ 486,362 $ 1,547,054 $ (216,947) $ 89,563
Net realized gain (loss) on
investments and foreign currencies... 18,409,837 (44,108,289) 6,577,739 (36,881,515) 5,435,635 (7,642,648)
Net unrealized gain (loss) on
investments and foreign currencies... (8,239,656) 61,754,668 4,087,613 12,553,880 (2,134,437) 21,301,702
------------ ------------ ------------ ------------ ----------- -----------
Net increase (decrease) in net assets
resulting from operations.............. 9,356,353 18,758,359 11,151,714 (22,780,581) 3,084,251 13,748,617
------------ ------------ ------------ ------------ ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........ (627,747) (716,458) (711,835) (1,308,678) (2,253,549) (11,219)
Net investment income (Class B)........ -- (69,620) (28,234) (236,161) (8,543) --
Net investment income (Class C)........ -- (101,385) (42,742) (158,369) (18,855) --
Net investment income (Class I)........ (23,599) (100,260) -- (478) -- --
Net investment income (Class Z)........ -- -- (209,196) (588,253) -- --
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)................................... -- -- -- -- -- --
Return of capital (Class A)............ -- (90,648) -- -- -- --
Return of capital (Class B)............ -- (19,887) -- -- -- --
Return of capital (Class C)............ -- (28,960) -- -- -- --
Return of capital (Class I)............ -- (11,005) -- -- -- --
Return of capital (Class Z)............ -- -- -- -- -- --
------------ ------------ ------------ ------------ ----------- -----------
Total distributions to shareholders..... (651,346) (1,138,223) (992,007) (2,291,939) (2,280,947) (11,219)
------------ ------------ ------------ ------------ ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS (NOTE 8).................. (19,651,251) 72,757,838 66,942,705 (20,315,857) (5,061,804) 36,129,441
------------ ------------ ------------ ------------ ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS. (10,946,244) 90,377,974 77,102,412 (45,388,377) (4,258,500) 49,866,839
NET ASSETS:
Beginning of period..................... 165,225,492 74,847,518 93,864,164 139,252,541 69,528,410 19,661,571
------------ ------------ ------------ ------------ ----------- -----------
End of period+.......................... $154,279,248 $165,225,492 $170,966,576 $ 93,864,164 $65,269,910 $69,528,410
============ ============ ============ ============ =========== ===========
- --------
+Includes accumulated undistributed net
investment income (loss)............... $ (1,484,302) $ (19,128) $ 289,707 $ 795,352 $(1,958,546) $ 539,348
============ ============ ============ ============ =========== ===========
See Notes to Financial Statements
8
SUNAMERICA EQUITY FUNDS
FINANCIAL HIGHLIGHTS
INTERNATIONAL EQUITY FUND
-------------------------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRI- NET
ASSET NET (BOTH DIVIDENDS BUTIONS ASSET NET ASSETS
VALUE INVESTMENT REALIZED TOTAL FROM FROM NET FROM DISTRIBUTIONS TOTAL VALUE END OF
BEGINNING INCOME AND INVESTMENT INVESTMENT CAPITAL FROM RETURN DISTRI- END OF TOTAL PERIOD
PERIOD ENDED OF PERIOD (LOSS)(1) UNREALIZED) OPERATIONS INCOME GAINS OF CAPITAL BUTIONS PERIOD RETURN(2) (000'S)
- ------------ --------- ---------- ----------- ---------- ---------- ------- ------------- ------- ------ --------- ----------
CLASS A
- -
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
09/30/07 15.84 0.02 3.94 3.96 -- -- -- -- 19.80 25.00 75,408
09/30/08 19.80 0.17 (5.85) (5.68) -- (1.68) -- (1.68) 12.44 (31.34) 46,384
09/30/09 12.44 0.10 (0.71)(5) (0.61) (0.22) -- (0.03) (0.25) 11.58 (4.28) 122,343
03/31/10(6) 11.58 (0.05) 0.76 0.71 (0.06) -- -- (0.06) 12.23 6.18 115,092
CLASS B
- -
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
09/30/07 14.85 (0.10) 3.69 3.59 -- -- -- -- 18.44 24.18 20,509
09/30/08 18.44 0.04 (5.36) (5.32) -- (1.68) -- (1.68) 11.44 (31.72) 9,279
09/30/09 11.44 0.03 (0.63)(5) (0.60) (0.09) -- (0.03) (0.12) 10.72 (4.85) 12,960
03/31/10(6) 10.72 (0.09) 0.71 0.62 -- -- -- -- 11.34 5.78 11,286
CLASS C
- -
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
09/30/07 14.84 (0.09) 3.67 3.58 -- -- -- -- 18.42 24.12 26,683
09/30/08 18.42 0.05 (5.37) (5.32) -- (1.68) -- (1.68) 11.42 (31.77) 14,221
09/30/09 11.42 0.03 (0.63)(5) (0.60) (0.09) -- (0.03) (0.12) 10.70 (4.86) 25,123
03/31/10(6) 10.70 (0.09) 0.71 0.62 -- -- -- -- 11.32 5.79 23,975
CLASS I
- -
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
09/30/07 15.96 0.04 3.96 4.00 -- -- -- -- 19.96 25.06 7,997
09/30/08 19.96 0.17 (5.89) (5.72) -- (1.68) -- (1.68) 12.56 (31.29) 4,964
09/30/09 12.56 0.09 (0.70)(5) (0.61) (0.25) -- (0.03) (0.28) 11.67 (4.12) 4,799
03/31/10(6) 11.67 (0.05) 0.77 0.72 (0.07) -- -- (0.07) 12.32 6.16 3,926
RATIO
OF NET
RATIO OF INVESTMENT
EXPENSES INCOME (LOSS)
TO AVERAGE TO AVERAGE PORTFOLIO
NET ASSETS NET ASSETS TURNOVER
- ---------- ------------- ---------
1.90%(3) 0.17%(3) 126%
1.90(3) (0.09)(3) 152
1.90(3) 0.13(3) 132
1.90(4) 0.98(4) 199
1.89(3)(4) 1.14(3)(4) 431
1.85(7) (0.87)(7) 140
2.55%(3) (0.51)%(3) 126%
2.55(3) (0.80)(3) 152
2.55(3) (0.59)(3) 132
2.55(3)(4) 0.25(3)(4) 199
2.55(3)(4) 0.36(3)(4) 431
2.55(3)(7) (1.59)(3)(7) 140
2.55%(3) (0.49)%(3) 126%
2.55(3) (0.76)(3) 152
2.55(3) (0.52)(3) 132
2.55(3)(4) 0.31(3)(4) 199
2.55(3)(4) 0.41(3)(4) 431
2.55(3)(7) (1.58)(3)(7) 140
1.80%(3) 0.43%(3) 126%
1.80(3) (0.01)(3) 152
1.80(3) 0.24(3) 132
1.80(3)(4) 1.01(3)(4) 199
1.80(3)(4) 0.95(3)(4) 431
1.80(3)(7) (0.83)(3)(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)Net of the following expense reimbursements (recoupments) (based on average
net assets) (See Note 4):
09/30/05 09/30/06 09/30/07 09/30/08 09/30/09 03/31/10(6)(7)
-------- -------- -------- -------- -------- --------------
International Equity Class A............ 0.09% (0.04)% (0.05)% -- % 0.00% -- %
International Equity Class B............ 0.17 0.02 0.04 0.06 0.22 0.06
International Equity Class C............ 0.14 (0.01) (0.00) 0.01 0.08 (0.00)
International Equity Class I............ 0.14 0.00 0.04 0.09 0.27 0.09
(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:
09/30/08 09/30/09
-------- --------
International Equity Class A. 0.00% 0.00%
International Equity Class B. 0.00 0.00
International Equity Class C. 0.00 0.00
International Equity Class I. 0.00 0.00
(5)Includes the effect of a merger.
(6)Unaudited
(7)Annualized
See Notes to Financial Statements
9
SUNAMERICA EQUITY FUNDS
FINANCIAL HIGHLIGHTS -- (CONTINUED)
VALUE 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(3)
- ------------ --------- ---------- ----------- ---------- ---------- ------- ------- ------ --------- -------- -------------
CLASS A
- -
09/30/05 $17.69 $0.17 $ 2.22 $ 2.39 $(0.29) $(1.78) $(2.07) $18.01 14.06% $130,754 1.63%
09/30/06 18.01 0.15 1.89 2.04 (0.13) (1.17) (1.30) 18.75 12.02 121,729 1.63(4)
09/30/07 18.75 0.18 2.59 2.77 (0.16) (2.04) (2.20) 19.32 15.80 126,788 1.63(4)
09/30/08 19.32 0.19 (3.86) (3.67) (0.21) (2.70) (2.91) 12.74 (21.70) 77,903 1.63(4)
09/30/09 12.74 0.16 (1.88) (1.72) (0.23) -- (0.23) 10.79 (13.24) 52,112 1.63(4)
03/31/10(6) 10.79 0.08 0.74(5) 0.82 (0.07) -- (0.07) 11.54 7.67 107,752 1.63(4)(7)
CLASS B
- -
09/30/05 $16.96 $0.07 $ 2.11 $ 2.18 $(0.18) $(1.78) $(1.96) $17.18 13.34% $ 57,704 2.28%
09/30/06 17.18 0.04 1.80 1.84 (0.03) (1.17) (1.20) 17.82 11.29 47,100 2.28(4)
09/30/07 17.82 0.05 2.46 2.51 (0.05) (2.04) (2.09) 18.24 15.07 39,355 2.28(4)
09/30/08 18.24 0.09 (3.62) (3.53) (0.10) (2.70) (2.80) 11.91 (22.16) 21,304 2.28(4)
09/30/09 11.91 0.10 (1.76) (1.66) (0.14) -- (0.14) 10.11 (13.78) 11,213 2.28(4)
03/31/10(6) 10.11 0.00 0.74(5) 0.74 (0.02) -- (0.02) 10.83 7.30 15,784 2.28(4)(7)
CLASS C
- -
09/30/05 $16.96 $0.06 $ 2.12 $ 2.18 $(0.18) $(1.78) $(1.96) $17.18 13.34% $ 41,095 2.28%
09/30/06 17.18 0.04 1.80 1.84 (0.03) (1.17) (1.20) 17.82 11.30 33,849 2.28(4)
09/30/07 17.82 0.06 2.45 2.51 (0.05) (2.04) (2.09) 18.24 15.07 26,071 2.28(4)
09/30/08 18.24 0.09 (3.62) (3.53) (0.10) (2.70) (2.80) 11.91 (22.16) 14,194 2.28(4)
09/30/09 11.91 0.09 (1.76) (1.67) (0.14) -- (0.14) 10.10 (13.86) 9,386 2.28(4)
03/31/10(6) 10.10 0.01 0.74(5) 0.75 (0.02) -- (0.02) 10.83 7.40 24,836 2.28(4)(7)
CLASS Z
- -
09/30/05 $18.18 $0.27 $ 2.30 $ 2.57 $(0.39) $(1.78) $(2.17) $18.58 14.77% $ 17,307 1.06%
09/30/06 18.58 0.26 1.95 2.21 (0.19) (1.17) (1.36) 19.43 12.64 22,853 1.06(4)
09/30/07 19.43 0.29 2.70 2.99 (0.22) (2.04) (2.26) 20.16 16.48 34,644 1.06(4)
09/30/08 20.16 0.29 (4.05) (3.76) (0.28) (2.70) (2.98) 13.42 (21.28) 25,827 1.06(4)
09/30/09 13.42 0.22 (1.98) (1.76) (0.30) -- (0.30) 11.36 (12.75) 21,138 1.06(4)
03/31/10(6) 11.36 0.07 0.82(5) 0.89 (0.11) -- (0.11) 12.14 7.92 22,594 1.06(4)(7)
RATIO
OF NET
INVESTMENT
INCOME (LOSS)
TO AVERAGE PORTFOLIO
NET ASSETS(3) TURNOVER
- ------------- ---------
1.00% 82%
0.88(4) 140
0.97(4) 143
1.23(4) 207
1.68(4) 204
0.69(4)(7) 67
0.38% 82%
0.23(4) 140
0.31(4) 143
0.58(4) 207
1.06(4) 204
0.04(4)(7) 67
0.36% 82%
0.23(4) 140
0.32(4) 143
0.58(4) 207
1.02(4) 204
0.05(4)(7) 67
1.54% 82%
1.45(4) 140
1.54(4) 143
1.81(4) 207
2.20(4) 204
1.24(4)(7) 67
- --------
(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 (recoupments) (based on average
net assets) (See Note 4):
09/30/05 09/30/06 09/30/07 09/30/08 09/30/09 03/31/10(6)(7)
-------- -------- -------- -------- -------- --------------
Value Class A........................... 0.08% 0.08% 0.07% 0.11% 0.21% (0.09)%
Value Class B........................... 0.14 0.10 0.11 0.14 0.29 0.02
Value Class C........................... 0.08 0.08 0.09 0.14 0.28 (0.06)
Value Class Z........................... 0.10 0.07 0.07 0.10 0.13 (0.11)
(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 09/30/07 09/30/08 09/30/09 03/31/10(6)(7)
-------- -------- -------- -------- --------------
Value Class A........................... 0.01% 0.01% 0.03% 0.02% 0.01%
Value Class B........................... 0.01 0.01 0.03 0.02 0.01
Value Class C........................... 0.01 0.01 0.03 0.02 0.01
Value Class Z........................... 0.01 0.01 0.03 0.02 0.01
(5)Includes the effect of a merger (See Note 2).
(6)Unaudited
(7)Annualized
See Notes to Financial Statements
10
SUNAMERICA EQUITY FUNDS
FINANCIAL HIGHLIGHTS -- (CONTINUED)
INTERNATIONAL SMALL-CAP FUND
----------------------------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRI- NET
ASSET NET (BOTH DIVIDENDS BUTIONS ASSET
VALUE INVESTMENT REALIZED TOTAL FROM FROM NET FROM DISTRIBUTIONS TOTAL VALUE
BEGINNING INCOME AND INVESTMENT INVESTMENT CAPITAL FROM RETURN DISTRI- END OF TOTAL
PERIOD ENDED OF PERIOD (LOSS)(1) UNREALIZED) OPERATIONS INCOME GAINS OF CAPITAL BUTIONS PERIOD RETURN(2)
- -------------------- --------- ---------- ----------- ---------- ---------- ------- ------------- ------- ------ ---------
CLASS A
05/02/06-09/30/06(3) $12.50 $ 0.00 $(1.45) $(1.45) $ -- $ -- $ -- $ -- $11.05 (11.60)%
09/30/07 11.05 (0.04) 2.99 2.95 -- -- -- -- 14.00 26.70
09/30/08 14.00 (0.00) (5.52) (5.52) -- (0.13) (0.01) (0.14) 8.34 (39.79)
09/30/09 8.34 0.01 (0.01) 0.00 (0.00) -- -- (0.00) 8.34 0.02(6)
03/31/10(7) 8.34 (0.03) 0.40 0.37 (0.29) -- -- (0.29) 8.42 4.57
CLASS B
05/02/06-09/30/06(3) $12.50 $(0.04) $(1.44) $(1.48) $ -- $ -- $ -- $ -- $11.02 (11.84)%
09/30/07 11.02 (0.11) 2.97 2.86 -- -- -- -- 13.88 25.95
09/30/08 13.88 (0.08) (5.45) (5.53) -- (0.13) (0.01) (0.14) 8.21 (40.21)
09/30/09 8.21 (0.04) 0.00 (0.04) -- -- -- -- 8.17 (0.49)(6)
03/31/10(7) 8.17 (0.05) 0.39 0.34 (0.22) -- -- (0.22) 8.29 4.24
CLASS C
05/02/06-09/30/06(3) $12.50 $(0.04) $(1.44) $(1.48) $ -- $ -- $ -- $ -- $11.02 (11.84)%
09/30/07 11.02 (0.12) 2.98 2.86 -- -- -- -- 13.88 25.95
09/30/08 13.88 (0.09) (5.44) (5.53) -- (0.13) (0.01) (0.14) 8.21 (40.20)
09/30/09 8.21 (0.04) (0.01) (0.05) -- -- -- -- 8.16 (0.61)(6)
03/31/10(7) 8.16 (0.05) 0.39 0.34 (0.22) -- -- (0.22) 8.28 4.24
RATIO
NET OF NET
ASSETS RATIO OF INVESTMENT
END OF EXPENSES INCOME (LOSS)
PERIOD TO AVERAGE TO AVERAGE PORTFOLIO
(000'S) NET ASSETS(5) NET ASSETS(5) TURNOVER
- ------- ------------- ------------- ---------
$21,557 1.90%(4) 0.08%(4) 55%
30,845 1.90 (0.30) 70
16,830 1.90 (0.04) 93
68,492 1.90 0.19 148
64,209 1.90(4) (0.65)(4) 47
$ 583 2.55%(4) (0.93)%(4) 55%
1,181 2.55 (0.89) 70
633 2.55 (0.68) 93
313 2.55 (0.53) 148
317 2.55(4) (1.29)(4) 47
$ 3,363 2.55%(4) (1.07)%(4) 55%
5,357 2.55 (0.94) 70
2,199 2.55 (0.78) 93
724 2.55 (0.58) 148
744 2.55(4) (1.27)(4) 47
- --------
(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)
(See Note 4):
09/30/06(4) 09/30/07 09/30/08 09/30/09 03/31/10(4)(7)
----------- -------- -------- -------- --------------
International Small-Cap Class A......... 1.27% 0.45% 0.54% 0.31% 0.16%
International Small-Cap Class B......... 12.63 2.10 1.53 4.07 4.05
International Small-Cap Class C......... 2.88 0.77 0.77 1.68 1.82
(6)The Fund's performance was increased by less than 0.01% from gains on
disposal of investments in violation of investment restrictions.
(7)Unaudited
See Notes to Financial Statements
11
SUNAMERICA INTERNATIONAL EQUITY FUND
PORTFOLIO PROFILE -- MARCH 31, 2010 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Banks-Commercial....................... 10.9%
Diversified Banking Institutions....... 8.8
Electronic Components-Misc............. 4.4
Oil Companies-Exploration & Production. 4.4
Cellular Telecom....................... 3.1
Chemicals-Diversified.................. 3.1
Index Fund............................. 3.1
Medical-Drugs.......................... 3.0
Distribution/Wholesale................. 2.9
Diversified Minerals................... 2.6
Agricultural Chemicals................. 2.5
Medical Products....................... 2.3
Oil Companies-Integrated............... 2.2
Insurance-Multi-line................... 2.2
Steel-Producers........................ 2.1
Cosmetics & Toiletries................. 2.0
Retail-Apparel/Shoe.................... 2.0
Building-Residential/Commercial........ 2.0
Beverages-Wine/Spirits................. 1.9
Food-Retail............................ 1.8
Oil-Field Services..................... 1.8
Building Products-Cement............... 1.8
Shipbuilding........................... 1.7
Diversified Manufacturing Operations... 1.6
Telecom Services....................... 1.6
Transport-Services..................... 1.6
Enterprise Software/Service............ 1.5
Industrial Gases....................... 1.5
Equity Fund-Emerging Market............ 1.4
Diversified Operations................. 1.3
Import/Export.......................... 1.1
Building Products-Air & Heating........ 1.0
Transport-Marine....................... 1.0
Auto-Cars/Light Trucks................. 1.0
Textile-Products....................... 1.0
Auto/Truck Parts & Equipment-Original.. 0.9
Computers-Memory Devices............... 0.9
Food-Dairy Products.................... 0.9
Internet Application Software.......... 0.8
Electronic Measurement Instruments..... 0.8
Semiconductor Equipment................ 0.8
Machinery-Farming...................... 0.8
Repurchase Agreement................... 0.7
Chemicals-Specialty.................... 0.6
Building Products-Doors & Windows...... 0.6
Coatings/Paint......................... 0.6
Metal Processors & Fabrication......... 0.6
Rubber/Plastic Products................ 0.5
Retail-Building Products............... 0.3
Insurance-Life/Health.................. 0.1
----
98.1%
====
COUNTRY ALLOCATION*
Germany................................. 17.9%
Japan................................... 16.5
United Kingdom.......................... 12.8
Australia............................... 6.1
United States........................... 5.9
Canada.................................. 5.7
France.................................. 4.9
Luxembourg.............................. 4.8
Switzerland............................. 4.5
Singapore............................... 3.6
Italy................................... 3.6
Brazil.................................. 3.0
Cayman Islands.......................... 1.7
Taiwan.................................. 1.5
Bermuda................................. 1.3
Russia.................................. 1.0
South Korea............................. 0.8
India................................... 0.7
Turkey.................................. 0.6
Hungary................................. 0.6
Ireland................................. 0.6
----
98.1%
====
- --------
*Calculated as a percentage of net assets
12
SUNAMERICA INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (UNAUDITED)
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
--------------------------------------------------------------------
COMMON STOCK -- 90.7%
AUSTRALIA -- 6.1%
Asciano Group+.............................. 1,376,190 $ 2,393,121
Australia and New Zealand Banking Group,
Ltd........................................ 133,100 3,097,451
Incitec Pivot, Ltd.......................... 1,220,590 3,886,659
-----------
9,377,231
-----------
BERMUDA -- 1.3%
Li & Fung, Ltd.............................. 412,720 2,027,919
Peace Mark Holdings, Ltd.+(1)(2)............ 800,000 0
Peregrine Investments Holdings, Ltd.+(1)(2). 91,000 0
-----------
2,027,919
-----------
BRAZIL -- 3.0%
Itau Unibanco Holding SA ADR................ 37,790 831,002
MRV Engenharia e Participacoes SA........... 262,890 1,834,546
Vale SA ADR................................. 59,010 1,899,532
-----------
4,565,080
-----------
CANADA -- 5.7%
Talisman Energy, Inc........................ 188,250 3,219,517
Teck Resources, Ltd.+....................... 48,700 2,121,769
Toronto-Dominion Bank....................... 46,738 3,483,549
-----------
8,824,835
-----------
CAYMAN ISLANDS -- 1.7%
China Mengniu Dairy Co., Ltd.+.............. 444,650 1,385,907
Tencent Holdings, Ltd....................... 63,890 1,281,215
-----------
2,667,122
-----------
FRANCE -- 4.1%
BNP Paribas................................. 39,666 3,046,269
Natixis+.................................... 611,900 3,301,720
-----------
6,347,989
-----------
GERMANY -- 15.6%
Bayer AG.................................... 42,355 2,864,917
Deutsche Bank AG............................ 88,200 6,793,834
GEA Group AG................................ 89,077 2,064,552
HeidelbergCement AG......................... 49,651 2,769,625
Kloeckner & Co. AG+......................... 79,900 2,361,763
Linde AG.................................... 19,606 2,339,319
SAP AG...................................... 49,100 2,378,125
Siemens AG.................................. 24,564 2,460,103
-----------
24,032,238
-----------
HUNGARY -- 0.6%
OTP Bank PLC+............................... 27,340 956,185
-----------
INDIA -- 0.7%
Dr. Reddy's Laboratories, Ltd. ADR.......... 36,190 1,021,644
-----------
IRELAND -- 0.6%
Dragon Oil PLC+............................. 117,190 860,725
-----------
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
---------------------------------------------------------------
ITALY -- 3.6%
Intesa Sanpaolo SpA+..................... 755,291 $ 2,813,020
Saipem SpA............................... 71,700 2,774,513
-----------
5,587,533
-----------
JAPAN -- 16.5%
Central Glass Co., Ltd................... 200,000 988,341
Daicel Chemical Industries, Ltd.......... 159,000 1,093,561
Kaneka Corp.............................. 132,000 855,621
Keyence Corp............................. 5,300 1,266,467
Kubota Corp.............................. 126,000 1,148,273
Kuraray Co., Ltd......................... 108,000 1,453,246
Kureha Corp.............................. 147,000 712,279
Mitsubishi UFJ Financial Group, Inc...... 78,600 411,959
Mitsui & Co., Ltd........................ 104,500 1,756,011
Mitsui O.S.K. Lines, Ltd................. 209,000 1,500,043
Nidec Corp............................... 17,400 1,864,884
Nippon Paint Co., Ltd.................... 147,000 962,285
Nissan Chemical Industries, Ltd.......... 79,000 1,105,273
Nissan Motor Co., Ltd.+.................. 173,100 1,483,079
NTT DoCoMo, Inc.......................... 332 505,688
Omron Corp............................... 59,200 1,374,094
Rinnai Corp.............................. 28,900 1,517,799
Sekisui Chemical Co., Ltd................ 182,000 1,234,228
Takata Corp.............................. 56,400 1,445,442
TDK Corp................................. 20,900 1,390,502
The Dai-ichi Life Insurance Co., Ltd.(1). 47 70,382
Tokyo Electron, Ltd...................... 18,800 1,246,764
-----------
25,386,221
-----------
LUXEMBOURG -- 4.8%
ArcelorMittal............................ 74,293 3,260,173
Oriflame Cosmetics SA SDR................ 50,500 3,147,245
Ternium SA ADR........................... 23,200 951,896
-----------
7,359,314
-----------
RUSSIA -- 1.0%
Sberbank................................. 533,310 1,562,598
-----------
SINGAPORE -- 3.6%
DBS Group Holdings, Ltd.................. 302,900 3,096,229
Sembcorp Marine, Ltd..................... 846,404 2,535,068
-----------
5,631,297
-----------
SOUTH KOREA -- 0.8%
Samsung Electro-Mechanics Co., Ltd....... 12,823 1,303,323
-----------
SWITZERLAND -- 4.5%
Novartis AG.............................. 67,058 3,621,920
Zurich Financial Services AG............. 12,937 3,316,456
-----------
6,938,376
-----------
TAIWAN -- 1.5%
Hon Hai Precision Industry Co., Ltd. GDR. 251,571 2,306,906
-----------
TURKEY -- 0.6%
Turkiye Is Bankasi, Class C.............. 294,990 960,139
-----------
13
SUNAMERICA INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (UNAUDITED) (CONTINUED)
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
------------------------------------------------------------------
COMMON STOCK (CONTINUED)
UNITED KINGDOM -- 12.8%
BG Group PLC............................. 193,700 $ 3,352,381
Cairn Energy PLC+........................ 425,385 2,691,824
Diageo PLC............................... 177,300 2,975,722
Kingfisher PLC........................... 144,432 469,912
Next PLC................................. 95,100 3,122,958
Vodafone Group PLC....................... 1,878,200 4,332,253
WM Morrison Supermarkets PLC............. 634,600 2,826,419
------------
19,771,469
------------
UNITED STATES -- 1.6%
Virgin Media, Inc........................ 141,200 2,437,112
------------
TOTAL COMMON STOCK
(cost $130,012,923)..................... 139,925,256
------------
EXCHANGE-TRADED FUNDS -- 4.4%
FRANCE -- 0.8%
streetTRACKS MSCI Europe+................ 8,430 1,238,340
------------
UNITED STATES -- 3.6%
iShares MSCI Canada Index Fund........... 124,068 3,460,256
iShares MSCI Emerging Markets Index Fund. 50,580 2,130,430
------------
5,590,686
------------
TOTAL EXCHANGE-TRADED FUNDS
(cost $6,526,638)....................... 6,829,026
------------
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
-------------------------------------------------------------------------
PREFERRED STOCK -- 2.3%
GERMANY -- 2.3%
Fresenius SE
(cost $2,750,192)............................... 46,986 $ 3,547,507
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $139,289,753)............................. 150,301,789
------------
REPURCHASE AGREEMENT -- 0.7%
Agreement with State Street Bank and Trust Co.,
bearing interest at 0.00%, dated 03/31/10, to
be repurchased 04/01/10 in the amount of
$984,000 and collateralized by $985,000 of
Federal Home Loan Bank Notes, bearing
interest at 4.38% due 09/17/10 and having
approximate value of $1,005,193
(cost $984,000)................................. $984,000 984,000
------------
TOTAL INVESTMENTS --
(cost $140,273,753)(3).......................... 98.1% 151,285,789
Other assets less liabilities...................... 1.9 2,993,459
-------- ------------
NET ASSETS -- 100.0% $154,279,248
======== ============
- --------
+ Non-income producing security
(1) Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs; see Note 3.
(2) Illiquid security. At March 31, 2010, the aggregate value of these
securities was $0 representing 0.0% of net assets.
(3) See Note 7 for cost of investments on a tax basis.
ADR --American Depository Receipt
GDR --Global Depository Receipt
SDR --Swedish Depository Receipt
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2010 (see Note 3):
LEVEL 1 -- UNADJUSTED LEVEL 2 -- OTHER LEVEL 3 -- SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
--------------------- ----------------- ---------------------- ------------
Long-Term Investment Securities:
Common Stock:
Australia..................... $ 9,377,231 $ -- $ -- $ 9,377,231
Canada........................ 8,824,835 -- -- 8,824,835
Germany....................... 24,032,238 -- -- 24,032,238
Japan......................... 25,315,839 -- 70,382 25,386,221
United Kingdom................ 19,771,469 -- -- 19,771,469
Other Countries*.............. 52,533,262 -- 0 52,533,262
Exchange-Traded Funds.......... 6,829,026 -- -- 6,829,026
Preferred Stock................ 3,547,507 -- -- 3,547,507
Repurchase Agreement............. -- 984,000 -- 984,000
------------ -------- ------- ------------
TOTAL $150,231,407 $984,000 $70,382 $151,285,789
============ ======== ======= ============
- --------
* Sum of all other countries each of which individually has an aggregate
market value of less than 5% of net assets. For a detailed presentation of
common stocks by country, please refer to the Portfolio of Investments.
The following is a reconciliation of Level 3 assets for which significant
unobservable inputs were used to determine fair value:
COMMON STOCK
------------
Balance as of 9/30/2009.......................... $ 0
Accrued discounts/premiums....................... --
Realized gain (loss)............................. --
Change in unrealized appreciation (depreciation). (607)
Net purchases (sales)............................ 70,989
Transfers in and/or out of Level 3............... --
-------
Balance as of 3/31/2010.......................... $70,382
=======
See Notes to Financial Statements
14
SUNAMERICA VALUE FUND
PORTFOLIO PROFILE -- MARCH 31, 2010 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Oil Companies-Integrated............... 10.8%
Diversified Banking Institutions....... 9.2
Aerospace/Defense...................... 5.5
Medical-Drugs.......................... 4.9
Electric-Integrated.................... 4.0
Telephone-Integrated................... 3.7
Multimedia............................. 3.2
Diversified Manufacturing Operations... 3.2
Banks-Super Regional................... 3.1
Oil Companies-Exploration & Production. 3.1
Insurance-Multi-line................... 3.0
Retail-Discount........................ 3.0
Food-Misc.............................. 3.0
Oil & Gas Drilling..................... 2.2
Medical Products....................... 2.1
Computers.............................. 2.0
Aerospace/Defense-Equipment............ 2.0
Transport-Rail......................... 1.9
Cable/Satellite TV..................... 1.7
Retail-Restaurants..................... 1.6
Retail-Building Products............... 1.6
Finance-Credit Card.................... 1.6
Beverages-Non-alcoholic................ 1.5
Medical Instruments.................... 1.5
Medical-HMO............................ 1.5
Cosmetics & Toiletries................. 1.4
Investment Management/Advisor Services. 1.3
Electronic Components-Semiconductors... 1.2
Enterprise Software/Service............ 1.1
E-Commerce/Services.................... 1.1
Tobacco................................ 1.1
Chemicals-Diversified.................. 1.1
Retail-Drug Store...................... 1.1
Industrial Gases....................... 1.1
Semiconductor Equipment................ 1.1
Insurance-Property/Casualty............ 1.1
Oil-Field Services..................... 1.1
Applications Software.................. 1.0
Networking Products.................... 1.0
Metal-Copper........................... 1.0
Repurchase Agreement................... 0.7
----
98.4%
====
- --------
*Calculated as a percentage of net assets
15
SUNAMERICA VALUE FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (UNAUDITED)
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
------------------------------------------------------------------
COMMON STOCK -- 97.7%
AEROSPACE/DEFENSE -- 5.5%
General Dynamics Corp....................... 36,400 $ 2,810,080
Raytheon Co................................. 81,700 4,666,704
Spirit Aerosystems Holdings, Inc., Class A+. 80,000 1,870,400
-----------
9,347,184
-----------
AEROSPACE/DEFENSE-EQUIPMENT -- 2.0%
United Technologies Corp.................... 46,400 3,415,504
-----------
APPLICATIONS SOFTWARE -- 1.0%
Microsoft Corp.............................. 60,000 1,756,200
-----------
BANKS-SUPER REGIONAL -- 3.1%
Wells Fargo & Co............................ 172,400 5,365,088
-----------
BEVERAGES-NON-ALCOHOLIC -- 1.5%
PepsiCo, Inc................................ 40,000 2,646,400
-----------
CABLE/SATELLITE TV -- 1.7%
Comcast Corp., Class A...................... 151,600 2,853,112
-----------
CHEMICALS-DIVERSIFIED -- 1.1%
E.I. du Pont de Nemours & Co................ 50,000 1,862,000
-----------
COMPUTERS -- 2.0%
Hewlett-Packard Co.......................... 32,900 1,748,635
International Business Machines Corp........ 13,300 1,705,725
-----------
3,454,360
-----------
COSMETICS & TOILETRIES -- 1.4%
The Procter & Gamble Co..................... 38,700 2,448,549
-----------
DIVERSIFIED BANKING INSTITUTIONS -- 9.2%
Bank of America Corp........................ 217,100 3,875,235
Citigroup, Inc.+............................ 500,000 2,025,000
JPMorgan Chase & Co......................... 120,100 5,374,475
Morgan Stanley.............................. 85,600 2,507,224
The Goldman Sachs Group, Inc................ 11,100 1,893,993
-----------
15,675,927
-----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 3.2%
General Electric Co......................... 303,200 5,518,240
-----------
E-COMMERCE/SERVICES -- 1.1%
eBay, Inc.+................................. 70,000 1,886,500
-----------
ELECTRIC-INTEGRATED -- 4.0%
Entergy Corp................................ 30,000 2,440,500
FPL Group, Inc.............................. 53,200 2,571,156
PG&E Corp................................... 45,000 1,908,900
-----------
6,920,556
-----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 1.2%
Intel Corp.................................. 88,700 1,974,462
-----------
ENTERPRISE SOFTWARE/SERVICE -- 1.1%
Oracle Corp................................. 75,000 1,926,750
-----------
FINANCE-CREDIT CARD -- 1.6%
Discover Financial Services................. 180,000 2,682,000
-----------
FOOD-MISC. -- 3.0%
H.J. Heinz Co............................... 53,400 2,435,574
Kraft Foods, Inc., Class A.................. 88,500 2,676,240
-----------
5,111,814
-----------
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
-----------------------------------------------------------
INDUSTRIAL GASES -- 1.1%
Praxair, Inc......................... 22,000 $ 1,826,000
-----------
INSURANCE-MULTI-LINE -- 3.0%
Assurant, Inc........................ 65,000 2,234,700
The Allstate Corp.................... 91,000 2,940,210
-----------
5,174,910
-----------
INSURANCE-PROPERTY/CASUALTY -- 1.1%
Chubb Corp........................... 35,000 1,814,750
-----------
INVESTMENT MANAGEMENT/ADVISOR SERVICES -- 1.3%
Invesco, Ltd......................... 100,000 2,191,000
-----------
MEDICAL INSTRUMENTS -- 1.5%
Medtronic, Inc....................... 56,000 2,521,680
-----------
MEDICAL PRODUCTS -- 2.1%
Johnson & Johnson.................... 55,300 3,605,560
-----------
MEDICAL-DRUGS -- 4.9%
Abbott Laboratories.................. 45,600 2,402,208
Merck & Co., Inc..................... 70,000 2,614,500
Pfizer, Inc.......................... 200,000 3,430,000
-----------
8,446,708
-----------
MEDICAL-HMO -- 1.5%
UnitedHealth Group, Inc.............. 76,700 2,505,789
-----------
METAL-COPPER -- 1.0%
Freeport-McMoRan Copper & Gold, Inc.. 20,000 1,670,800
-----------
MULTIMEDIA -- 3.2%
The Walt Disney Co................... 80,000 2,792,800
Viacom, Inc., Class B+............... 80,000 2,750,400
-----------
5,543,200
-----------
NETWORKING PRODUCTS -- 1.0%
Cisco Systems, Inc.+................. 66,900 1,741,407
-----------
OIL & GAS DRILLING -- 2.2%
Noble Corp........................... 45,000 1,881,900
Transocean, Ltd.+.................... 21,800 1,883,084
-----------
3,764,984
-----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 3.1%
Apache Corp.......................... 16,000 1,624,000
Devon Energy Corp.................... 25,000 1,610,750
Occidental Petroleum Corp............ 25,000 2,113,500
-----------
5,348,250
-----------
OIL COMPANIES-INTEGRATED -- 10.8%
Chevron Corp......................... 67,100 5,088,193
ConocoPhillips....................... 69,200 3,540,964
Exxon Mobil Corp..................... 81,100 5,432,078
Hess Corp............................ 30,000 1,876,500
Marathon Oil Corp.................... 79,600 2,518,544
-----------
18,456,279
-----------
OIL-FIELD SERVICES -- 1.1%
Halliburton Co....................... 60,000 1,807,800
-----------
RETAIL-BUILDING PRODUCTS -- 1.6%
Lowe's Cos., Inc..................... 110,800 2,685,792
-----------
16
SUNAMERICA VALUE FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (UNAUDITED) (CONTINUED)
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
-------------------------------------------------------
COMMON STOCK (CONTINUED)
RETAIL-DISCOUNT -- 3.0%
Target Corp....................... 47,400 $2,493,240
Wal-Mart Stores, Inc.............. 48,200 2,679,920
----------
5,173,160
----------
RETAIL-DRUG STORE -- 1.1%
CVS Caremark Corp................. 50,000 1,828,000
----------
RETAIL-RESTAURANTS -- 1.6%
McDonald's Corp................... 40,900 2,728,848
----------
SEMICONDUCTOR EQUIPMENT -- 1.1%
Applied Materials, Inc............ 135,000 1,819,800
----------
TELEPHONE-INTEGRATED -- 3.7%
AT&T, Inc......................... 141,950 3,667,988
Verizon Communications, Inc....... 87,400 2,711,148
----------
6,379,136
----------
TOBACCO -- 1.1%
Philip Morris International, Inc.. 36,000 1,877,760
----------
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
---------------------------------------------------------------
TRANSPORT-RAIL -- 1.9%
Union Pacific Corp.................. 45,000 $ 3,298,500
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $154,281,995)................ 167,054,759
------------
REPURCHASE AGREEMENT -- 0.7%
State Street Bank and Trust Co.
Joint Repurchase Agreement(1)
(cost $1,206,000).................. $1,206,000 1,206,000
------------
TOTAL INVESTMENTS --
(cost $155,487,995)(2)............. 98.4% 168,260,759
Other assets less liabilities......... 1.6 2,705,817
---------- ------------
NET ASSETS -- 100.0% $170,966,576
========== ============
- --------
+ Non-income producing security
(1)See Note 3 for details of Joint Repurchase Agreement.
(2)See Note 7 for cost of investments on a tax basis.
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2010 (see Note 3):
LEVEL 1 -- UNADJUSTED LEVEL 2 -- OTHER LEVEL 3 -- SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
--------------------- ----------------- ---------------------- ------------
Long-Term Investment Securities:
Common Stock:
Aerospace/Defense................. $ 9,347,184 $ -- $-- $ 9,347,184
Diversified Banking Institutions.. 15,675,927 -- -- 15,675,927
Oil Companies-Integrated.......... 18,456,279 -- -- 18,456,279
Other Industries*................. 123,575,369 -- -- 123,575,369
Repurchase Agreement................. -- 1,206,000 -- 1,206,000
------------ ---------- --- ------------
TOTAL $167,054,759 $1,206,000 $-- $168,260,759
============ ========== === ============
- --------
* Sum of all other industries each of which individually has an aggregate
market value of less than 5% of net assets. For a detailed presentation of
common stocks by industry classification, please refer to the Portfolio of
Investments.
See Notes to Financial Statements
17
SUNAMERICA INTERNATIONAL SMALL-CAP FUND
PORTFOLIO PROFILE -- MARCH 31, 2010 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Index Fund............................... 10.3%
Banks-Commercial......................... 4.3
Time Deposit............................. 3.3
Electronic Components-Misc............... 3.1
Auto/Truck Parts & Equipment-Original.... 3.0
Diversified Manufacturing Operations..... 2.7
Food-Misc................................ 2.3
Medical-Drugs............................ 2.1
Electronic Components-Semiconductors..... 1.8
Chemicals-Diversified.................... 1.8
Oil Companies-Exploration & Production... 1.6
Finance-Other Services................... 1.6
Internet Content-Information/News........ 1.6
Transport-Services....................... 1.5
Investment Management/Advisor Services... 1.4
Machinery-General Industrial............. 1.4
Paper & Related Products................. 1.3
Diversified Minerals..................... 1.3
Machinery-Material Handling.............. 1.3
Machinery-Electrical..................... 1.3
Distribution/Wholesale................... 1.3
Beverages-Non-alcoholic.................. 1.3
Retail-Misc./Diversified................. 1.3
Insurance-Life/Health.................... 1.3
Publishing-Newspapers.................... 1.2
Telecom Services......................... 1.2
Diagnostic Kits.......................... 1.2
Building & Construction-Misc............. 1.2
Computer Services........................ 1.2
Oil-Field Services....................... 1.2
Hotels/Motels............................ 1.2
Theaters................................. 1.2
Metal Processors & Fabrication........... 1.1
Computers-Periphery Equipment............ 1.1
Retail-Apparel/Shoe...................... 1.0
Auto/Truck Parts & Equipment-Replacement. 1.0
Electric Products-Misc................... 0.9
Entertainment Software................... 0.9
Motorcycle/Motor Scooter................. 0.8
Insurance-Property/Casualty.............. 0.8
Retail-Restaurants....................... 0.8
Cosmetics & Toiletries................... 0.8
Applications Software.................... 0.8
Electronic Security Devices.............. 0.8
Human Resources.......................... 0.8
Food-Meat Products....................... 0.8
Building-Residential/Commercial.......... 0.8
Alternative Waste Technology............. 0.7
Real Estate Operations & Development..... 0.7
Containers-Paper/Plastic................. 0.7
Apparel Manufacturers.................... 0.7
Agricultural Operations.................. 0.7
Pipelines................................ 0.7
Internet Infrastructure Software......... 0.6
Commercial Services...................... 0.6
Machinery-Construction & Mining.......... 0.6
E-Commerce/Services...................... 0.6
Medical Labs & Testing Services.......... 0.6
Auto-Cars/Light Trucks................... 0.6
Electronic Connectors.................... 0.6
Medical Products.................... 0.6
Transport-Truck..................... 0.6
Retail-Sporting Goods............... 0.6
Food-Dairy Products................. 0.6
Audio/Video Products................ 0.5
Power Converter/Supply Equipment.... 0.5
Machine Tools & Related Products.... 0.5
Coatings/Paint...................... 0.5
Advanced Materials.................. 0.5
Retail-Bookstores................... 0.5
Real Estate Investment Trusts....... 0.5
Diversified Operations.............. 0.5
Computers-Integrated Systems........ 0.5
Transport-Marine.................... 0.5
Computers........................... 0.4
Water Treatment Systems............. 0.4
Coal................................ 0.4
Medical-Nursing Homes............... 0.4
Food-Retail......................... 0.4
Real Estate Management/Services..... 0.4
Venture Capital..................... 0.4
Electronic Measurement Instruments.. 0.4
Finance-Credit Card................. 0.3
Telecommunication Equipment......... 0.3
E-Services/Consulting............... 0.3
Direct Marketing.................... 0.3
Medical-Wholesale Drug Distribution. 0.3
Consulting Services................. 0.2
Cellular Telecom.................... 0.2
Mining Services..................... 0.2
Miscellaneous Manufacturing......... 0.2
Machinery-Pumps..................... 0.2
Machinery-Thermal Process........... 0.2
Textile-Products.................... 0.2
Batteries/Battery Systems........... 0.2
Medical Instruments................. 0.2
Finance-Investment Banker/Broker.... 0.2
Medical Information Systems......... 0.2
Retail-Discount..................... 0.2
Travel Services..................... 0.2
Rental Auto/Equipment............... 0.2
Mining.............................. 0.2
Investment Companies................ 0.1
Retail-Toy Stores................... 0.1
Engines-Internal Combustion......... 0.1
-----
100.8%
=====
- --------
*Calculated as a percentage of net assets
18
SUNAMERICA INTERNATIONAL SMALL-CAP FUND
PORTFOLIO PROFILE -- MARCH 31, 2010 -- (UNAUDITED) (CONTINUED)
COUNTRY ALLOCATION*
Japan.......... 19.0%
United Kingdom. 8.8
Luxembourg..... 7.7
United States.. 6.7
Australia...... 6.1
Cayman Islands. 5.6
Switzerland.... 4.9
Italy.......... 4.6
France......... 4.2
South Korea.... 4.1
Bermuda........ 3.8
Finland........ 3.4
Germany........ 2.6
Ireland........ 2.5
Hong Kong...... 2.2
Taiwan......... 1.8
China.......... 1.7
Indonesia...... 1.7
Singapore...... 1.7
Sweden......... 1.2
Portugal....... 1.2
Belgium........ 1.2
Guernsey....... 1.0
Netherlands.... 0.8
Norway......... 0.8
Thailand....... 0.5
Malaysia....... 0.4
Mauritius...... 0.3
New Zealand.... 0.2
Spain.......... 0.1
-----
100.8%
=====
- --------
*Calculated as a percentage of net assets
19
SUNAMERICA INTERNATIONAL SMALL-CAP FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (UNAUDITED)
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
---------------------------------------------------------------------
COMMON STOCK -- 85.9%
AUSTRALIA -- 6.1%
Asciano Group+................................... 175,640 $ 305,429
Bendigo and Adelaide Bank, Ltd................... 59,997 550,563
Billabong International, Ltd..................... 12,012 124,558
carsales.com.au, Ltd.+........................... 74,959 370,069
Centamin Egypt, Ltd.+............................ 423,745 872,917
Centennial Coal Co., Ltd......................... 71,974 281,360
CSR, Ltd......................................... 409,581 622,035
Domino's Pizza Enterprises, Ltd.................. 40,499 199,570
Emeco Holdings, Ltd.............................. 190,000 106,356
Mineral Resources, Ltd........................... 22,000 149,999
Nufarm, Ltd...................................... 25,519 192,726
Premier Investments, Ltd......................... 9,394 65,515
South Australia Coal Corp.(1).................... 11,316 1,038
Webjet, Ltd...................................... 46,563 107,676
----------
3,949,811
----------
BELGIUM -- 1.2%
Kinepolis Group NV............................... 13,866 759,238
----------
BERMUDA -- 3.8%
China Gas Holdings, Ltd.......................... 774,000 434,638
China Yurun Food Group, Ltd...................... 77,000 235,039
Digital China Holdings, Ltd...................... 328,000 553,408
Lancashire Holdings, Ltd......................... 75,360 550,523
Pacific Basin Shipping, Ltd...................... 182,000 144,395
Peace Mark Holdings, Ltd.+(1)(2)................. 8,000 0
Ports Design, Ltd................................ 131,000 330,695
Rexcapital Financial Holdings, Ltd.+............. 850,000 121,519
Texwinca Holdings, Ltd........................... 114,000 125,831
----------
2,496,048
----------
CAYMAN ISLANDS -- 5.6%
AAC Acoustic Technologies Holdings, Inc.......... 448,000 748,951
Agile Property Holdings, Ltd..................... 230,000 314,003
China Dongxiang Group Co......................... 403,000 289,108
China High Speed Transmission Equipment Group
Co., Ltd........................................ 152,000 335,940
China Mengniu Dairy Co., Ltd.+................... 123,000 383,372
Foxconn International Holdings, Ltd.+............ 187,000 197,736
Fufeng Group, Ltd................................ 254,000 168,804
Li Ning Co., Ltd................................. 79,000 286,422
Shenguan Holdings Group, Ltd..................... 530,000 510,597
Shui On Land, Ltd................................ 299,000 152,499
Xinyi Glass Holding Co., Ltd..................... 264,000 240,734
----------
3,628,166
----------
CHINA -- 1.7%
Beijing Jingkelong Supermarket Chain Group Co.,
Ltd............................................. 269,000 273,356
Weichai Power Co., Ltd........................... 46,000 384,506
Zhuzhou CSR Times Electric Co., Ltd.............. 248,000 468,898
----------
1,126,760
----------
FINLAND -- 3.4%
Konecranes Oyj................................... 25,042 739,709
Oriola-KD Oyj Series B........................... 115,628 760,562
Pohjola Bank PLC, Class A........................ 66,243 744,400
----------
2,244,671
----------
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
---------------------------------------------------------------
FRANCE -- 3.3%
GameLoft................................ 121,342 $ 585,090
SOITEC+................................. 51,424 792,491
Sopra Group SA.......................... 10,896 779,690
----------
2,157,271
----------
GERMANY -- 1.3%
Rheinmetall AG.......................... 11,771 843,098
----------
GUERNSEY -- 1.0%
Stobart Group, Ltd...................... 304,751 665,479
----------
HONG KONG -- 2.2%
China Everbright International, Ltd..... 926,000 471,095
Dah Sing Banking Group, Ltd............. 118,400 161,948
Denway Motors, Ltd...................... 748,000 398,844
Shanghai Industrial Holdings, Ltd....... 15,000 68,777
Techtronic Industries Co................ 397,500 322,536
----------
1,423,200
----------
INDONESIA -- 1.7%
PT BW Plantation Tbk.................... 2,829,000 230,063
PT Delta Dunia Makmur Tbk............... 899,500 105,771
PT Indofood Sukses Makmur Tbk........... 1,202,500 498,867
PT United Tractors Tbk.................. 144,666 291,733
----------
1,126,434
----------
ITALY -- 4.6%
Amplifon SpA............................ 161,507 831,657
DiaSorin SpA............................ 20,898 786,655
Gruppo Editoriale L'Espresso SpA........ 281,113 795,441
Piaggio & C SpA......................... 173,893 554,290
----------
2,968,043
----------
JAPAN -- 19.0%
Acrodea, Inc.+.......................... 45 64,499
Ahresty Corp............................ 8,700 90,546
Ain Pharmaciez, Inc..................... 13,800 403,121
Amiyaki Tei Co., Ltd.................... 21 60,311
Asahi Intecc Co., Ltd................... 4,700 74,353
Axell Corp.............................. 11,500 412,691
Benefit One, Inc........................ 182 139,386
CanBas Co., Ltd.+....................... 3,400 52,078
Chugoku Marine Paints, Ltd.............. 46,000 316,376
Credit Saison Co., Ltd.................. 13,500 209,381
Dai-ichi Seiko Co., Ltd................. 7,900 258,573
Daihatsu Diesel Manufacturing Co., Ltd.. 16,000 59,044
Daiseki Co., Ltd........................ 9,200 191,597
Don Quijote Co., Ltd.................... 4,600 114,840
Doshisha Co., Ltd....................... 5,500 142,721
en-japan, Inc........................... 223 298,160
Enplas Corp............................. 4,700 92,452
EPS Co., Ltd............................ 86 208,722
Foster Electric Co., Ltd................ 12,300 341,542
FP Corp................................. 10,000 457,268
Funai Electric Co., Ltd................. 3,200 134,859
GCA Savvian Group Corp.................. 136 129,323
Hajime Construction Co., Ltd............ 8,700 288,480
HIRANO TECSEED Co., Ltd................. 11,000 127,308
H.I.S. Co., Ltd......................... 5,600 114,707
20
SUNAMERICA INTERNATIONAL SMALL-CAP FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (UNAUDITED) (CONTINUED)
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
---------------------------------------------------------------
COMMON STOCK (CONTINUED)
Hisamitsu Pharmaceutical Co., Inc........ 1,900 $ 70,623
Intage, Inc.............................. 5,100 87,337
Iriso Electronics Co., Ltd............... 8,100 133,946
Jafco Co., Ltd........................... 9,300 244,213
Japan Electronic Materials Corp.......... 6,000 39,469
Kakaku.com, Inc.......................... 81 293,711
Koito Manufacturing Co., Ltd............. 23,000 341,470
Kokusai Co., Ltd......................... 26,800 151,071
MACROMILL, Inc........................... 127 183,660
Mani, Inc................................ 8,000 314,044
Matsuda Sangyo Co., Ltd.................. 8,500 158,017
Message Co., Ltd......................... 129 276,931
MICRONICS JAPAN CO., LTD................. 5,300 92,236
Modec, Inc............................... 6,900 123,770
Moshi Moshi Hotline, Inc................. 6,400 122,332
Nichi-iko Pharmaceutical Co., Ltd........ 8,400 236,034
Nihon M&A Center, Inc.................... 22 75,420
Nishimatsuya Chain Co., Ltd.............. 36,200 376,365
Nomura Real Estate Holdings, Inc......... 6,200 95,629
Osaka Securities Exchange Co., Ltd....... 48 251,064
Otsuka Corp.............................. 4,800 304,974
OUTSOURCING, Inc......................... 242 89,045
Proto Corp.+............................. 10,400 352,637
Roland DG Corp........................... 9,400 167,006
Sintokogio, Ltd.......................... 8,200 68,151
Software Service, Inc.................... 8,100 121,210
Sysmex Corp.............................. 2,100 123,093
Taiko Pharmaceutical Co., Ltd............ 4,000 64,392
Teikoku Electric Manufacturing Co., Ltd.. 6,100 130,430
The Hiroshima Bank, Ltd.................. 20,000 84,501
Tocalo Co., Ltd.......................... 13,400 279,782
Toho Holdings Co., Ltd................... 13,400 175,437
Token Corp............................... 7,530 215,212
TOKYU LIVABLE, Inc....................... 17,100 155,837
Toridoll.corp............................ 160 288,886
Towa Corp.+.............................. 17,100 132,059
Tri-Stage, Inc.+......................... 2,000 53,311
Union Tool Co............................ 4,400 123,072
Unipres Corp............................. 4,500 63,536
Village Vanguard Co., Ltd................ 77 314,622
VSN, Inc................................. 10,000 65,462
Works Applications Co., Ltd.............. 697 465,213
Yamaguchi Financial Group, Inc........... 12,000 131,308
-----------
12,418,856
-----------
LUXEMBOURG -- 1.2%
Acergy SA................................ 42,373 774,994
-----------
MALAYSIA -- 0.4%
IJM Corp. Bhd............................ 158,760 237,507
-----------
MAURITIUS -- 0.3%
Golden Agri-Resources, Ltd.+............. 526,670 218,356
-----------
NETHERLANDS -- 0.8%
Smartrac NV+............................. 24,116 524,414
-----------
NEW ZEALAND -- 0.2%
Kathmandu Holdings, Ltd.+................ 55,000 95,390
-----------
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
----------------------------------------------------------------
NORWAY -- 0.8%
Norwegian Energy Co. AS+................. 166,454 $ 515,337
----------
PORTUGAL -- 1.2%
Altri SGPS SA+........................... 113,001 760,072
----------
SINGAPORE -- 1.7%
CapitaCommercial Trust................... 407,000 314,207
Epure International, Ltd................. 423,000 285,740
Ezra Holdings, Ltd....................... 94,000 158,576
Venture Corp., Ltd....................... 58,000 361,528
----------
1,120,051
----------
SOUTH KOREA -- 4.1%
Cheil Industries, Inc.................... 5,330 301,018
Glovis Co., Ltd.......................... 4,457 387,617
Hansol Paper Co., Ltd.+.................. 13,670 124,443
Hyundai Mobis............................ 3,372 447,037
LG Household & Health Care, Ltd.......... 2,021 540,327
SODIFF Advanced Materials Co., Ltd....... 4,201 315,599
Sungwoo Hitech Co., Ltd.................. 23,102 306,271
Taewoong Co., Ltd........................ 4,115 257,494
----------
2,679,806
----------
SPAIN -- 0.1%
Imaginarium SA+.......................... 15,982 60,657
----------
SWEDEN -- 1.2%
AarhusKarlshamn AB....................... 28,320 768,734
----------
SWITZERLAND -- 4.9%
EFG International AG..................... 46,175 801,406
Implenia AG+............................. 27,829 786,518
Partners Group Holding AG................ 5,668 802,572
Sulzer AG................................ 8,490 825,327
----------
3,215,823
----------
TAIWAN -- 1.8%
Advantech Co., Ltd....................... 61,000 130,228
Chicony Electronics Co., Ltd............. 198,318 527,674
Far EasTone Telecommunications Co., Ltd.. 133,000 159,141
Shin Zu Shing Co., Ltd................... 21,884 93,027
Simplo Technology Co., Ltd............... 22,000 125,386
Wistron Corp............................. 90,058 163,623
----------
1,199,079
----------
THAILAND -- 0.5%
TMB Bank PCL (Foreign Shares)+(3)........ 7,856,300 340,152
----------
UNITED KINGDOM -- 8.8%
Britvic PLC.............................. 119,002 837,916
Chemring Group PLC....................... 15,658 786,727
Croda International PLC.................. 56,178 798,793
Dana Petroleum PLC+...................... 28,647 522,531
IG Group Holdings PLC.................... 126,730 773,482
Millennium & Copthorne Hotels PLC........ 103,490 761,830
Robert Walters PLC....................... 131,650 449,502
St James's Place PLC..................... 209,563 828,420
----------
5,759,201
----------
21
SUNAMERICA INTERNATIONAL SMALL-CAP FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (UNAUDITED) (CONTINUED)
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
UNITED STATES -- 3.0%
AsiaInfo Holdings, Inc.............................. 16,100 $ 426,328
Autoliv, Inc.+...................................... 14,986 772,229
Virgin Media, Inc................................... 45,708 788,920
-----------
1,987,477
-----------
TOTAL COMMON STOCK
(cost $44,564,596)................................. 56,064,125
-----------
EXCHANGE-TRADED FUNDS -- 10.3%
FRANCE -- 0.9%
Lyxor ETF Eastern Europe............................ 21,786 604,983
-----------
IRELAND -- 2.5%
iShares MSCI Latin America Fund..................... 61,745 1,674,861
-----------
LUXEMBOURG -- 6.5%
db x-trackers-MSCI Emerging Latin America
TRN Index ETF...................................... 32,415 1,957,866
db x-trackers-MSCI Emerging Markets
TRN Index ETF...................................... 70,038 2,267,130
-----------
4,224,996
-----------
UNITED STATES -- 0.4%
iShares MSCI Israel Capped Investable Market Index
Fund............................................... 4,320 254,275
-----------
TOTAL EXCHANGE-TRADED FUNDS
(cost $4,682,172).................................. 6,759,115
-----------
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
------------------------------------------------------------------------
PREFERRED STOCK -- 1.3%
GERMANY -- 1.3%
Jungheinrich AG
(cost $786,086).............................. 37,212 $ 867,997
-----------
WARRANTS+ -- 0.0%
MAURITIUS -- 0.0%
Golden Agri-Resources, Ltd.
Expires 07/23/12
(strike price $0.54)
(cost $0).................................... 18,172 1,624
-----------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $50,032,854)........................... 63,692,861
-----------
SHORT-TERM INVESTMENT SECURITIES -- 3.3%
TIME DEPOSIT -- 3.3%
Euro Time Deposit with State Street Bank and
Trust Co. 0.01% due 04/01/10
(cost $2,130,000)............................ $2,130,000 2,130,000
-----------
TOTAL INVESTMENTS --
(cost $52,162,854)(4)........................ 100.8% 65,822,861
Liabilities in excess of other assets........... (0.8) (552,951)
---------- -----------
NET ASSETS -- 100.0% $65,269,910
========== ===========
- --------
+ Non-income producing security
(1) Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs. See Note 3.
(2) Illiquid security. At March 31, 2010, the aggregate value of these
securities was $0 representing 0.0% of net assets.
(3) Fair valued security. Securities are classified as Level 2 based on the
securities valuation inputs. See Note 3.
(4) See Note 7 for cost of investments on a tax basis.
ETF --Exchange-Traded Fund
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2010 (see Note 3):
LEVEL 1 -- UNADJUSTED LEVEL 2-- OTHER LEVEL 3 -- SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
--------------------- ----------------- ---------------------- -----------
Long-Term Investment Securities:
Common Stock:
Australia...................... $ 3,948,773 $ -- $1,038 $ 3,949,811
Cayman Islands................. 3,628,166 -- -- 3,628,166
Japan.......................... 12,418,856 -- -- 12,418,856
United Kingdom................. 5,759,201 -- -- 5,759,201
Other Countries*............... 29,967,939 340,152 0 30,308,091
Exchange-Traded Funds
Luxemburg...................... 4,224,996 -- -- 4,224,996
Other Countries*............... 2,534,119 -- -- 2,534,119
Preferred Stock................. 867,997 -- -- 867,997
Warrants........................ 1,624 -- -- 1,624
Short-Term Investment Securities:
Time Deposit.................... -- 2,130,000 -- 2,130,000
----------- ---------- ------ -----------
TOTAL $63,351,671 $2,470,152 $1,038 $65,822,861
=========== ========== ====== ===========
- --------
* Sum of all other countries each of which individually has an aggregate
market value of less than 5% of net assets. For a detailed presentation of
common stocks by country, please refer to the Portfolio of Investments.
The following is a reconciliation of Level 3 assets for which significant
unobservable inputs were used to determine fair value:
COMMON STOCK
------------
Balance as of 9/30/2009.......................... $ 0
Accrued discounts/premiums....................... --
Realized gain (loss)............................. --
Change in unrealized appreciation (depreciation). 680
Net purchases (sales)............................ 358
Transfers in and/or out of Level 3............... --
------
Balance as of 3/31/2010.......................... $1,038
======
See Notes to Financial Statements
22
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (UNAUDITED)
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 three 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 SunAmerica Asset Management Corp. (the
"Adviser" or "SunAmerica"). An investor may invest in one or more of the
following Funds: SunAmerica International Equity Fund ("International Equity
Fund"), SunAmerica Value Fund ("Value 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 are as follows:
INTERNATIONAL EQUITY FUND seeks capital appreciation by active trading of
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. Under normal
circumstances, at least 80% of the Fund's net assets, plus any borrowing for
investment purposes, will be invested in equity securities.
VALUE FUND seeks long-term growth of capital by active trading of equity
securities selected on the basis of value criteria, issued by companies of
any market capitalization, that offer the potential for long-term growth of
capital.
INTERNATIONAL SMALL-CAP FUND seeks long-term capital appreciation by active
trading of equity securities and other securities with equity
characteristics of non-U.S. small-cap companies throughout the world,
including emerging market countries. 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 International Small-Cap Fund is organized as a "diversified" fund within
the meaning of the 1940 Act. The International Equity Fund and Value 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 amounts
$1,000,000 or more will be purchased at net asset value but will be subject
to a contingent deferred sales charge on redemptions made within two years
of purchase. 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) calendar 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) calendar days prior to the date of such
exchange.
Class B shares are offered without an initial sales charge, although a
declining contingent deferred sales charge may be imposed on redemptions
made within six years of purchase. Class B shares of each Fund convert
automatically to Class A shares 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.
Class I and Class Z shares are offered at net asset value per share. These
classes are offered exclusively to certain institutions and to participants
in certain employee benefit plans and other programs. Class I shares are
closed to new purchases, however, existing investors may continue to
purchase shares through reinvestments of dividends and capital gains
distributions.
23
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (UNAUDITED)
(CONTINUED)
Each class of shares bears the same voting, dividend, liquidation and other
rights and conditions, except as may otherwise be provided in the Trust's
registration statement. Class A, Class B and Class C shares each make
distribution and account maintenance 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. Class I shares
and Class Z shares have not adopted 12b-1 plans and make no payments
thereunder, however, Class I shares pay a service fee to the Funds'
distributor for providing administrative and shareholder services.
INDEMNIFICATIONS: Under the Trust's organizational documents, its officers
and trustees are indemnified against certain liabilities arising out of the
performance of their duties to the Trust. In addition, pursuant to
Indemnification Agreements between the Trust and each of the current
trustees who is not an "interested person," as defined in Section 2(a)(19)
of the 1940 Act, of the Trust (collectively, the "Disinterested Trustees"),
the Trust provides the Disinterested Trustees with a limited indemnification
against liabilities arising out of the performance of their duties to the
Trust, whether such liabilities are asserted during or after their service
as trustees. 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. Fund Mergers
Pursuant to a plan of reorganization, all of the assets and liabilities of
the SunAmerica Focused International Equity Portfolio ("Focused
International Equity Portfolio"), a series of SunAmerica Focused Series,
Inc. (the "Corporation"), were transferred in a tax-free exchange to the
International Equity Fund, in exchange for shares of the International
Equity Fund. The reorganization was consummated on January 12, 2009. The
acquiring fund acquired all of the assets and liabilities of the target fund
as shown in the table below. Class A, Class B and Class C shares of the
Focused International Equity Portfolio were exchanged tax-free for Class A,
Class B and Class C shares of International Equity Fund at an exchange ratio
of 1.10 to 1, 1.14 to 1 and 1.13 to 1, respectively. Shares of the
International Equity Fund issued in connection with the acquisition of the
Focused International Equity Portfolio were 12,447,732 with a value of
$107,741,476. The assets in the investment portfolio of the Focused
International Equity Portfolio with a value of $107,598,677 and identified
cost of $135,888,649 as of the date of the reorganization, were the
principal assets acquired by the acquiring fund. For financial statement
purposes, assets received and shares issued by the acquiring fund were
recorded at value; however, the cost basis of the investments received from
the target fund were carried forward to align ongoing reporting of the
acquiring fund's realized and unrealized gains and losses with amounts
distributable to shareholders for tax purposes.
The following is a summary of the shares outstanding, net assets, net asset
value per share and net unrealized appreciation/(depreciation) immediately
before and after the reorganizations:
NET ASSET NET UNREALIZED
SHARES NET VALUE APPRECIATION
OUTSTANDING ASSETS PER SHARE (DEPRECIATION)
----------- ------------ --------- --------------
Target Fund
Focused International Equity Portfolio. $(28,289,972)
Class A.............................. 8,676,911 $ 84,069,949 $9.69
Class B.............................. 817,621 7,600,518 9.30
Class C.............................. 1,733,400 16,071,009 9.27
Acquiring Fund
International Equity Fund.............. $ (7,162,629)
Class A.............................. 3,315,688 $ 29,181,894 $8.80
Class B.............................. 700,833 5,734,759 8.18
Class C.............................. 1,084,491 8,861,529 8.17
Class I.............................. 409,771 3,631,300 8.86
Post Reorganization
International Equity Fund.............. $(35,452,601)
Class A.............................. 12,867,763 $113,251,843 $8.80
Class B.............................. 1,629,674 13,335,277 8.18
Class C.............................. 3,051,307 24,932,538 8.17
Class I.............................. 409,771 3,631,300 8.86
24
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (UNAUDITED)
(CONTINUED)
Assuming the reorganization had been completed on October 1, 2008, the
beginning of the annual reporting period for the acquiring fund, the pro
forma results of operations for the period ended September 30, 2009, are as
follows:
Net investment income (loss)................... $ 1,012,413
Net realized/unrealized gains (losses)......... (29,717,769)
------------
Change in net assets resulting from operations. $(28,705,356)
============
Because the combined investment portfolios have been managed as a single
integrated portfolio since the reorganization was completed, it is not
practicable to separate the amounts of revenue and earnings of the target
fund that have been included in the Statement of Operations since January
12, 2009.
Pursuant to a plan of reorganization, all of the assets and liabilities of
the SunAmerica Focused Large-Cap Value Portfolio ("Focused Large-Cap Value
Portfolio"), a series of the Corporation, were transferred in a tax-free
exchange to the Value Fund, in exchange for shares of the Value Fund. The
reorganization was consummated on October 26, 2009. The acquiring fund
acquired all of the assets and liabilities of the target fund as shown in
the table below. Class A, Class B and Class C shares of the Focused
Large-Cap Value Portfolio were exchanged tax-free for Class A, Class B and
Class C shares of Value Fund at an exchange ratio of 0.78 to 1, 0.77 to 1
and 0.77 to 1, respectively. Shares of the Value Fund issued in connection
with the acquisition of the Focused Large-Cap Value Portfolio were 7,374,611
with a value of $79,273,334. The assets in the investment portfolio of the
Focused Large-Cap Value Portfolio with a value of $79,261,700 and identified
cost of $73,975,265 as of the date of the reorganization, were the principal
assets acquired by the acquiring fund. For financial statement purposes,
assets received and shares issued by the acquiring fund were recorded at
value; however, the cost basis of the investments received from the target
fund were carried forward to align ongoing reporting of the acquiring fund's
realized and unrealized gains and losses with amounts distributable to
shareholders for tax purposes.
The following is a summary of the shares outstanding, net assets, net asset
value per share and net unrealized appreciation/(depreciation) immediately
before and after the reorganizations:
NET ASSET NET UNREALIZED
SHARES NET VALUE APPRECIATION
OUTSTANDING ASSETS PER SHARE (DEPRECIATION)
----------- ------------ --------- --------------
Target Fund
Focused Large Cap-Value Portfolio. $ 5,286,435
Class A......................... 6,439,768 $ 54,815,779 $ 8.51
Class B......................... 867,878 6,871,725 7.92
Class C......................... 2,213,883 17,585,830 7.94
Acquiring Fund
Value Fund........................ $ 4,908,527
Class A......................... 4,784,330 $ 52,515,489 $10.98
Class B......................... 1,102,538 11,329,123 10.28
Class C......................... 921,634 9,467,172 10.27
Class Z......................... 1,862,199 21,520,775 11.56
Class I......................... 1,377 15,085 10.96
Post Reorganization
Value Fund........................ $10,194,962
Class A......................... 9,778,221 $107,331,268 $10.98
Class B......................... 1,771,282 18,200,848 10.28
Class C......................... 2,633,610 27,053,002 10.27
Class Z......................... 1,862,199 21,520,775 11.56
Class I......................... 1,377 15,085 10.96
25
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (UNAUDITED)
(CONTINUED)
Assuming the reorganization had been completed on October 1, 2009, the
beginning of the annual reporting period for the acquiring fund, the pro
forma results of operations for the period ended March 31, 2010, are as
follows:
Net investment income (loss)................... $ 502,287
Net realized/unrealized gains (losses)......... 12,848,148
-----------
Change in net assets resulting from operations. $13,350,435
===========
Because the combined investment portfolios have been managed as a single
integrated portfolio since the reorganization was completed, it is not
practicable to separate the amounts of revenue and earnings of the target
fund that have been included in the Statement of Operations since
October 26, 2009.
Note 3. Significant Accounting Policies
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates and
those differences could be significant. 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 for which the securities
are principally traded. Stocks listed on the NASDAQ are valued using the
NASDAQ Official Closing Price ("NOCP"). Generally, the NOCP will be the last
sale price unless the reported trade for the stock is outside the range of
the bid/ask price. In such cases, the NOCP will be normalized to the nearer
of the bid or ask price. For listed securities having no sales reported and
for unlisted securities, such securities will be valued based upon the last
reported bid price.
As of the close of regular trading on the New York Stock Exchange ("NYSE"),
securities traded primarily on security exchanges outside the United States
are valued at the last sale price on such exchanges on the day of valuation,
or if there is no sale on the day of valuation, at the last-reported bid
price. If a security's price is available from more than one exchange, a
portfolio uses the exchange that is the primary market for the security.
However, depending on the foreign market, closing prices may be up to 15
hours old when they are used to price a Fund's shares, and the Fund may
determine that certain closing prices are unreliable. This determination
will be based on review of a number of factors, including developments in
foreign markets, the performance of U.S. securities markets, and the
performance of instruments trading in U.S. markets that represent foreign
securities and baskets of foreign securities. If a Fund determines that
closing prices do not reflect the fair value of the securities, the Fund
will adjust the previous closing prices in accordance with pricing
procedures approved by the Board of Trustees (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. The pricing services may use valuation
models or matrix pricing which considers information with respect to
comparable bond and note transactions, quotations from bond dealers, or by
reference to other securities that are considered comparable in such
characteristics as rating, interest rate, and maturity date, option adjusted
spreads models, prepayments projections, interest rate spreads, and yield
curves to determine current value. If a vendor quote is unavailable the
securities may be priced at the mean of two independent quotes obtained from
brokers.
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.
Investments in open-end and closed-end registered investment companies that
do not trade on an exchange are valued at the end of day net asset value per
share. Investments in open-end and closed-end registered investment
companies that trade on an
26
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (UNAUDITED)
(CONTINUED)
exchange are valued at the last sales price or official closing price as of
the close of the customary trading session on the exchange where the
security is principally traded.
Securities for which market quotations are not readily available or if a
development/significant event occurs that may significantly impact the value
of the security, then these securities are valued, as determined pursuant to
procedures adopted in good faith by the Board. There is no single standard
for making fair value determinations, which may result in prices that vary
from those of other funds.
The various inputs that may be used to determine the value of the Funds'
investments are summarized into three broad levels listed below:
Level 1 -- Unadjusted quoted prices in active markets for identical
securities
Level 2 -- Other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
referenced indices, quoted prices in inactive markets, adjusted quoted
prices in active markets, adjusted quoted prices on foreign equity
securities that were adjusted in accordance with pricing procedures approved
by the Board of Trustees, etc.)
Level 3 -- Significant unobservable inputs (includes inputs that reflect the
Funds' own assumptions about the assumptions market participants would use
in pricing the security, developed based on the best information available
under the circumstances.)
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities.
The summary of the inputs used to value the Funds' net assets as of March
31, 2010 are reported on a schedule following the Portfolio of Investments.
REPURCHASE AGREEMENTS: The Funds, along with other affiliated registered
investment companies, pursuant to and in accordance with applicable
Securities and Exchange Commission ("SEC") guidance, 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, plus accrued interest, to ensure that the value at the time
the agreement is entered into, is equal to at least 102% of the repurchase
price, including accrued interest. In the event of default of the obligation
to repurchase, a Fund has the right to liquidate the collateral and apply
the proceeds in satisfaction of the obligation. If the seller defaults and
the value of the collateral declines or if bankruptcy proceedings are
commenced with respect to the seller of the security, realization of the
collateral by the Fund may be delayed or limited.
As of March 31, 2010, the following Funds held an undivided interest in a
joint repurchase agreement with State Street Bank and Trust Co.:
PERCENTAGE PRINCIPAL
FUND INTEREST AMOUNT
- ---- ---------- ----------
Value. 0.49% $1,206,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
State Street Bank and Trust Co., dated March 31, 2010, bearing interest at a
rate of 0.01% per annum, with a principal amount of $246,749,000, a
repurchase price of $246,749,000, and a maturity date of April 1, 2010. The
repurchase agreement is collateralized by the following:
MATURITY PRINCIPAL
TYPE OF COLLATERAL INTEREST RATE DATE AMOUNT MARKET VALUE
- ------------------ ------------- -------- ------------ ------------
U.S. Treasury Bills. 0.10% 05/06/10 $248,535,000 $248,510,147
U.S. Treasury Bills. 0.17 06/03/10 3,175,000 3,174,048
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.
27
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (UNAUDITED)
(CONTINUED)
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).
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. Capital
gain distributions, if any, are paid at least annually.
The Funds record dividends and distributions to their shareholders on the
ex-dividend date. The amount of dividends and distributions from net
investment income and net realized capital gains are determined and
presented in accordance with federal income tax regulations, which may
differ from 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. The
Funds file U.S. federal and certain state income tax returns. With few
exceptions, the Funds are no longer subject to U.S. federal and state tax
examination by tax authorities for tax years ending before 2006.
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.
Note 4. Investment Advisory and Management Agreement, Distribution Agreement
and Service Agreement
The Trust, on behalf of each Fund, has an Investment Advisory and Management
Agreement (the "Agreement") with SunAmerica. Under the Agreement, SunAmerica
provides continuous supervision of a Fund's portfolio and administers its
corporate affairs, subject to general review by the Trustees. In connection
therewith, 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
SunAmerica and its affiliates.
28
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (UNAUDITED)
(CONTINUED)
The Funds pay SunAmerica a monthly investment advisory and management fee
calculated daily at the following annual percentages of each Fund's average
daily net assets:
MANAGEMENT
FUND FEES
- ---- ----------
International Equity Fund.... 1.00%
Value Fund*.................. 0.75
International Small-Cap Fund. 1.15
- --------
* Effective October 26, 2009, the investment advisory and management fee was
decreased from 1.00% of average daily net assets to 0.75% of average daily
net assets.
For the six months ended March 31, 2010, SunAmerica earned fees in the
amounts stated in the Statement of Operations.
The International Equity Fund and International Small-Cap Fund are
subadvised by PineBridge Investments, LLC ("PineBridge") pursuant to a
subadvisory agreement with SunAmerica. PineBridge 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 SunAmerica. For the six months ended March 31, 2010,
PineBridge voluntary waived 0.05% of the fee payable by SunAmerica to
PineBridge for the International Small-Cap Fund.
SunAmerica has contractually agreed to waive fees or reimburse expenses to
the extent necessary to cap the Funds' annual fund operating expenses at the
following percentages of each Fund's average daily net assets. Annual Fund
operating expenses shall not include extraordinary expenses, as determined
under generally accepted accounting principals, or acquired fund fees and
expenses. The contractual expense waivers and fee reimbursements will
continue in effect indefinitely unless terminated by the Trustees, including
a majority of the Disinterested Trustees.
FUND PERCENTAGE
- ---- ----------
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
International Small-Cap Class A. 1.90
International Small-Cap Class B. 2.55
International Small-Cap Class C. 2.55
Any voluntary or contractual waivers and/or reimbursements made by
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 SunAmerica and remain in compliance with the
foregoing expense limitations.
For the six months ended March 31, 2010, pursuant to the contractual and
voluntary expense limitations referred to above, SunAmerica has waived or
reimbursed expenses as follows:
FUND
- ----
International Equity Class A.... $ --
International Equity Class B.... 5,102
International Equity Class C.... 1,003
International Equity Class I.... 1,883
Value Fund Class A.............. 11,741
Value Fund Class B.............. 5,573
Value Fund Class C.............. 3,844
Value Fund Class I+............. 1,032
Value Fund Class Z.............. 2,083
International Small-Cap Class A. 53,330
International Small-Cap Class B. 6,401
International Small-Cap Class C. 6,566
- --------
+ See Note 1.
29
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (UNAUDITED)
(CONTINUED)
For the six months ended March 31, 2010, the amounts recouped by SunAmerica
are as follows:
CLASS
OTHER SPECIFIC
EXPENSES EXPENSES
FUND RECOUPED RECOUPED
- ---- -------- --------
International Equity Class B. $ -- $ 1,702
International Equity Class C. -- 1,206
Value Fund Class A........... 12,803 41,867
Value Fund Class B........... 2,120 1,869
Value Fund Class C........... 3,073 8,256
Value Fund Class Z........... 2,795 11,202
At March 31, 2010, expenses previously waived and/or reimbursed by
SunAmerica during the prior two years that remain subject to recoupment are
as follows:
CLASS
OTHER SPECIFIC
EXPENSES EXPENSES
FUND REIMBURSED REIMBURSED
- ---- ---------- ----------
International Equity Class A......... $ 492 $ --
International Equity Class B......... 99 35,510
International Equity Class C......... 146 23,749
International Equity Class I......... 57 17,240
Value Fund Class A................... 105,524 48,058
Value Fund Class B................... 28,537 34,356
Value Fund Class C................... 19,573 22,534
Value Fund Class Z................... 33,935 3,847
International Small-Cap Fund Class A. 88,933 202,177
International Small-Cap Fund Class B. 2,401 28,547
International Small-Cap Fund Class C. 9,062 33,192
The Trust, on behalf of each Fund, has entered into a Distribution Agreement
with 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 of shares (other than Class I and Class Z shares) (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 a distribution fee from a Fund at an annual rate of 0.10%, 0.75%
and 0.75%, respectively, of the average daily net assets of the Fund's Class
A, Class B and Class C shares 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 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 the Class A, Class B and
Class C shares of each Fund will pay the Distributor an account maintenance
fee up to an annual rate of 0.25% of the aggregate average daily net assets
of such class of shares for payments to compensate the Distributor and
certain securities firms for account maintenance activities. Accordingly,
for the six months ended March 31, 2010, 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 administrative and shareholder
services to Class I shareholders. For the six months ended March 31, 2010,
SACS earned fees (see Statement of Operations) based upon the aforementioned
rates.
30
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (UNAUDITED)
(CONTINUED)
SACS receives sales charges on each Fund's Class A shares, portions of which
are reallocated to affiliated broker-dealers and non-affiliated
broker-dealers. SACS also receives the proceeds of contingent deferred sales
charges paid by investors in connection with certain redemptions of each
Fund's Class A, Class B and Class C shares. SACS has advised the Funds that
for the six months ended March 31, 2010, 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
AFFILIATED DEFERRED DEFERRED DEFERRED
SALES BROKER- NON-AFFILIATED SALES SALES SALES
FUND CHARGES DEALERS BROKER-DEALERS CHARGES CHARGES CHARGES
- ---- ------- ---------- -------------- ---------- ---------- ----------
International Equity.... $26,528 $7,428 $15,636 $-- $10,871 $334
Value................... 26,527 8,206 14,516 -- 13,862 813
International Small-Cap. 3,777 1,108 2,042 -- 182 --
The Trust has entered into a Service Agreement with 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. Pursuant to the Service Agreement, the Funds
(except for Class Z shares of the Funds) pay a fee to SAFS for services
rendered based upon an annual rate of 0.22% of average daily net assets. No
portion of this fee is paid or reimbursed by the Class Z shares, however,
Class Z shares pay all direct transfer agency fees and out-of-pocket
expenses relating to Class Z shares. For the six months ended March 31,
2010, the Funds incurred the following expenses which are included in
transfer agent fees payable in the Statement of Asset and Liabilities and in
transfer agent fees and expenses in the Statement of Operations to
compensate SAFS pursuant to the terms of the Service Agreement.
EXPENSE PAYABLE AT MARCH 31, 2010
-------------------------------- ---------------------------
CLASS CLASS CLASS
FUND CLASS A CLASS B CLASS C CLASS I CLASS A B C I
- ---- -------- ------- ------- ------- ------- ------ ------ -----
International Equity.... $127,670 $13,474 $26,918 $4,602 $21,252 $2,128 $4,411 $728
Value................... 107,688 17,517 25,612 4 19,850 2,960 4,633 --
International Small-Cap. 71,510 348 793 -- 11,927 58 140 --
At March 31, 2010, the following affiliates owned a percentage of the
outstanding shares of the following funds; Focused Multi-Asset Strategy
Portfolio, Focused Balanced Strategy Portfolio and Focused Equity Strategy
Portfolio owned 30.8%, 6.1%, and 7.7% of the SunAmerica International Equity
Fund, respectively; Focused Multi-Asset Strategy Portfolio and American Home
Assurance Company owned 73.4% and 21.6% of SunAmerica International
Small-Cap Fund, respectively; and Focused Multi-Asset Strategy Portfolio and
Focused Equity Strategy Portfolio owned 6.9% and 14.3%, respectively of
SunAmerica Value Fund.
On March 4, 2009, AIG, the ultimate parent of SunAmerica, SACS, and SAFS,
issued and sold to the AIG Credit Facility Trust, a trust established for
the sole benefit of the United States Treasury (the "Trust"), 100,000 shares
of AIG's Series C Perpetual, Convertible, Participating Preferred Stock (the
"Stock") for an aggregate purchase price of $500,000, with an understanding
that additional and independently sufficient consideration was also
furnished to AIG by the Federal Reserve Bank of New York (the "FRBNY") in
the form of its lending commitment (the "Credit Facility") under the Credit
Agreement, dated as of September 22, 2008, between AIG and the FRBNY. The
Stock has preferential liquidation rights over AIG common stock, and, to the
extent permitted by law, votes with AIG's common stock on all matters
submitted to AIG's shareholders. The Trust has approximately 79.8% of the
aggregate voting power of AIG's common stock and is entitled to
approximately 79.8% of all dividends paid on AIG's common stock, in each
case treating the Stock as if converted. The Stock will remain outstanding
even if the Credit Facility is repaid in full or otherwise terminates.
Note 5. 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 six months ended March 31, 2010, 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
- ---- -------------
Value. $7,488
31
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (UNAUDITED)
(CONTINUED)
Note 6. Purchases and Sales of Investment Securities
The cost of purchases and proceeds from sales and maturities of long-term
investments during the six months ended March 31, 2010, were as follows:
INTERNATIONAL INTERNATIONAL
EQUITY VALUE SMALL-CAP
FUND FUND FUND
------------- ------------ -------------
Purchases (excluding U.S. government securities)............ $217,193,558 $102,296,163 $29,948,883
Sales and maturities (excluding U.S. government securities). 237,176,579 117,101,594 35,764,013
Purchases of U.S. government securities..................... -- -- --
Sales and maturities of U.S. government securities.......... -- -- --
Note 7. Federal Income Taxes
The amounts of aggregate unrealized gain (loss) and the cost of investment
securities for federal income tax purposes, including short-term securities
and repurchase agreements, were as follows at March 31, 2010:
INTERNATIONAL INTERNATIONAL
EQUITY VALUE SMALL-CAP
FUND FUND FUND
------------- ------------ -------------
Cost (tax basis)........................... $141,632,841 $162,388,658 $54,047,053
============ ============ ===========
Appreciation............................... 13,983,315 16,480,472 14,498,624
Depreciation............................... (4,330,367) (10,608,371) (2,722,816)
------------ ------------ -----------
Net unrealized appreciation (depreciation). $ 9,652,948 $ 5,872,101 $11,775,808
============ ============ ===========
The following details the tax basis of distributions as well as the
components of distributable earnings. The tax character of distributions
paid may differ from the character of distributions shown on the Statement
of Changes in Net Assets due to short-term capital gains being treated as
ordinary income for tax purposes. 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.
FOR THE YEAR ENDED SEPTEMBER 30, 2009
------------------------------------------------------------------------
DISTRIBUTABLE EARNINGS TAX DISTRIBUTIONS
---------------------------------------- ------------------------------
LONG-TERM
GAINS/CAPITAL UNREALIZED LONG-TERM
ORDINARY LOSS APPRECIATION ORDINARY CAPITAL RETURN OF
FUND INCOME CARRYOVER (DEPRECIATION)* INCOME GAINS CAPITAL
- ---- ---------- ------------- --------------- ---------- --------- ---------
International Equity.... $ -- $(98,567,104)@ $17,867,783 $ 987,723 $-- $150,500
Value................... 799,696 (19,719,989) (3,501,947) 2,291,939 -- --
International Small-Cap. 2,219,408 (6,116,326) 13,888,948 11,219 -- --
- --------
* Unrealized appreciation (depreciation) includes amounts for derivatives and
other assets and liabilities denominated in foreign currency.
@ Includes realized capital losses of $10,093,998 which as the result of the
merger may be subject to annual limitation imposed by the Internal Revenue
Code.
For Federal income tax purposes, the Funds indicated below have capital loss
carryforwards, which expire in the year indicated, as of September 30, 2009,
which are available to offset future capital gains, if any:
CAPITAL LOSS CARRYFORWARD
-----------------------------------
FUND 2015 2016 2017
- ---- ----------- ----------- -----------
International Equity*... $46,684,225 $25,210,425 $16,578,456
Value................... -- -- 19,719,989
International Small-Cap. -- -- 6,116,326
- --------
* 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.
32
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (UNAUDITED)
(CONTINUED)
Note 8. Capital Share Transactions
Transactions in capital shares of each class of each fund were as follows:
INTERNATIONAL EQUITY FUND
------------------------------------------------------------------------------------------------
CLASS A CLASS B
-------------------------------------------------- --------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
MARCH 31, 2010 YEAR ENDED MARCH 31, 2010 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2009 (UNAUDITED) SEPTEMBER 30, 2009
------------------------ ------------------------ --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Shares sold (1)(2)(3)........ 255,602 $ 3,040,278 597,710 $ 5,571,131 36,027 $ 395,101 105,795 $ 907,568
Shares issued in merger+..... -- -- 9,552,075 84,069,949 -- -- 928,841 7,600,518
Reinvested dividends......... 51,192 610,725 88,444 769,459 -- -- 10,395 84,199
Shares redeemed (1)(2)(4)(5). (1,460,460) (17,346,530) (3,405,180) (30,007,709) (249,979) (2,745,293) (647,154) (5,399,341)
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Net increase (decrease)...... (1,153,666) $(13,695,527) 6,833,049 $ 60,402,830 (213,952) $(2,350,192) 397,877 $ 3,192,944
========== ============ ========== ============ ======== =========== ======== ===========
INTERNATIONAL EQUITY FUND
------------------------------------------------------------------------------------------------
CLASS C CLASS I
-------------------------------------------------- --------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
MARCH 31, 2010 YEAR ENDED MARCH 31, 2010 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2009 (UNAUDITED) SEPTEMBER 30, 2009
------------------------ ------------------------ --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Shares sold.................. 167,875 $ 1,867,275 268,142 $ 2,379,512 -- $ -- 105,467 $ 946,917
Shares issued in merger+..... -- -- 1,966,816 16,071,009 -- -- -- --
Reinvested dividends......... -- -- 14,687 118,818 1,963 23,695 12,701 111,265
Shares redeemed (3)(4)(5).... (398,063) (4,378,792) (1,147,561) (9,508,735) (94,651) (1,117,710) (102,042) (956,722)
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Net increase (decrease)...... (230,188) $ (2,511,517) 1,102,084 $ 9,060,604 (92,688) $(1,094,015) 16,126 $ 101,460
========== ============ ========== ============ ======== =========== ======== ===========
- --------
(1)For the six months ended March 31, 2010, includes automatic conversion of
103,451 shares of Class B shares in the amount of $1,137,410 to 95,921
shares of Class A shares in the amount of $1,137,410.
(2)For the year ended September 30, 2009, includes automatic conversion of
237,710 shares of Class B shares in the amount of $2,002,438 to 220,396
shares of Class A shares in the amount of $2,002,438.
(3)For the year ended September 30, 2009, includes automatic conversion of
7,454 shares of Class C shares in the amount of $60,644 to 6,898 shares of
Class A shares in the amount of $60,644.
(4)For the six months ended March 31, 2010, net of redemption fees of $2,616,
$280, $551, and $96 for Class A, Class B, Class C and Class I shares,
respectively.
(5)For the year ended September 30, 2009, net of redemption fees of $4,152,
$571, $972, and $342 for Class A, Class B, Class C and Class I shares,
respectively.
+ See Note 2.
33
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (UNAUDITED)
(CONTINUED)
VALUE FUND
----------------------------------------------------------------------------------------------
CLASS A CLASS B
------------------------------------------------ --------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
MARCH 31, 2010 YEAR ENDED MARCH 31, 2010 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2009 (UNAUDITED) SEPTEMBER 30, 2009
---------------------- ------------------------ --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ----------- ---------- ------------ -------- ----------- -------- -----------
Shares sold (1)(2)(3).... 271,117 $ 3,000,954 860,978 $ 8,101,106 24,192 $ 250,513 101,838 $ 912,273
Shares issued in merger+. 4,993,891 54,815,779 -- -- 668,744 6,871,725 -- --
Reinvested dividends..... 60,401 665,014 125,403 1,175,028 2,477 25,635 24,162 213,106
Shares redeemed (1)(2)... (820,179) (9,048,542) (2,270,671) (20,866,202) (347,425) (3,601,713) (805,033) (7,047,624)
--------- ----------- ---------- ------------ -------- ----------- -------- -----------
Net increase (decrease).. 4,505,230 $49,433,205 (1,284,290) $(11,590,068) 347,988 $ 3,546,160 (679,033) $(5,922,245)
========= =========== ========== ============ ======== =========== ======== ===========
VALUE FUND
----------------------------------------------------------------------------------------------
CLASS C CLASS I
------------------------------------------------ --------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
MARCH 31, 2010 YEAR ENDED MARCH 31, 2010 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2009 (UNAUDITED) SEPTEMBER 30, 2009
---------------------- ------------------------ --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ----------- ---------- ------------ -------- ----------- -------- -----------
Shares sold.............. 33,303 $ 348,558 137,154 $ 1,236,276 -- $ -- -- $ --
Shares issued in merger+. 1,711,976 17,585,830 -- -- -- -- -- --
Reinvested dividends..... 3,285 33,995 14,733 129,943 -- -- 51 478
Shares redeemed (3)...... (383,888) (3,973,679) (415,028) (3,645,150) (1,379) (15,201) (598) (5,164)
--------- ----------- ---------- ------------ -------- ----------- -------- -----------
Net increase (decrease).. 1,364,676 $13,994,704 (263,141) $ (2,278,931) (1,379) $ (15,201) (547) $ (4,686)
========= =========== ========== ============ ======== =========== ======== ===========
VALUE FUND
------------------------------------------------
CLASS Z
------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
MARCH 31, 2010 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2009
---------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- ---------- ------------
Shares sold.............. 167,952 $ 1,944,676 466,705 $ 4,638,603
Shares issued in merger+. -- -- -- --
Reinvested dividends..... 18,096 209,196 59,903 588,253
Shares redeemed.......... (186,830) (2,170,035) (589,588) (5,746,783)
--------- ----------- ---------- ------------
Net increase (decrease).. (782) $ (16,163) (62,980) $ (519,927)
========= =========== ========== ============
- --------
(1)For the six months ended March 31, 2010, includes automatic conversion of
136,416 shares of Class B shares in the amount of $1,415,532 to 127,943
shares of Class A shares in the amount of $1,415,532.
(2)For the year ended September 30, 2009, includes automatic conversion of
394,962 shares of Class B shares in the amount of $3,407,930 to 370,955
shares of Class A shares in the amount of $3,407,930.
(3)For the year ended September 30, 2009, includes automatic conversion of
8,112 shares of Class C shares in the amount of $67,882 to 7,615 shares of
Class A shares in the amount of $67,882.
+ See Note 2.
34
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (UNAUDITED)
(CONTINUED)
INTERNATIONAL SMALL-CAP FUND
-----------------------------------------------------------------------------------
CLASS A CLASS B
--------------------------------------------- ------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
MARCH 31, 2010 YEAR ENDED MARCH 31, 2010 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2009 (UNAUDITED) SEPTEMBER 30, 2009
--------------------- ---------------------- ---------------- ------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- ----------- --------- ----------- ------ -------- ------- ---------
Shares sold (1)(2)........... 67,826 $ 568,486 6,912,481 $42,180,929 3,404 $ 27,973 16,736 $ 116,273
Reinvested dividends......... 270,947 2,219,058 1,826 11,121 1,059 8,543 -- --
Shares redeemed (1)(2)(3)(4). (930,191) (7,857,559) (719,479) (4,748,220) (4,483) (36,113) (55,489) (358,727)
-------- ----------- --------- ----------- ------ -------- ------- ---------
Net increase (decrease)...... (591,418) $(5,070,015) 6,194,828 $37,443,830 (20) $ 403 (38,753) $(242,454)
======== =========== ========= =========== ====== ======== ======= =========
INTERNATIONAL SMALL-CAP FUND
---------------------------------------------
CLASS C
---------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
MARCH 31, 2010 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2009
--------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- --------- -----------
Shares sold.................. 12,490 $ 100,861 72,501 $ 446,670
Reinvested dividends......... 2,062 16,643 -- --
Shares redeemed (3)(4)....... (13,503) (109,696) (251,581) (1,518,605)
-------- ----------- --------- -----------
Net increase (decrease)...... 1,049 $ 7,808 (179,080) $(1,071,935)
======== =========== ========= ===========
- --------
(1)For the six months ended March 31, 2010, includes automatic conversion of
1,016 shares of Class B shares in the amount of $8,275 to 1,000 shares of
Class A shares in the amount of $8,275.
(2)For the year ended September 30, 2009, includes automatic conversion of
3,490 shares of Class B shares in the amount of $24,015 to 3,424 shares of
Class A shares in the amount of $24,015.
(3)For the six months ended March 31, 2010, net of redemption fees of $361, $2,
and $4 for Class A, Class B, and Class C shares, respectively.
(4)For the year ended September 30, 2009, net of redemption fees of $2,877,
$17, and $57 for Class A, Class B, and Class C shares, respectively.
Note 9. Line of Credit
The SunAmerica family of mutual funds has established a $75 million
committed and $50 million uncommitted line of credit with State Street Bank
and Trust Company, the Funds' custodian. Interest is currently payable at
the higher of the Federal Funds Rate or London Interbank Offered Rate plus
125 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 15 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
six months ended March 31, 2010, the following Funds had borrowings:
DAYS INTEREST AVERAGE WEIGHTED
FUND OUTSTANDING CHARGES DEBT AVERAGE
International Equity.. 11 $258 $591,132 1.43%
International
Small-Cap............ 7 123 438,711 1.44
At March 31, 2010, there were no borrowings outstanding.
35
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (UNAUDITED)
(CONTINUED)
Note 10. Interfund Lending Agreement
Pursuant to exemptive relief granted by the SEC, the Funds are permitted to
participate in an interfund lending program among investment companies
advised by 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 six months ended March 31, 2010, none of the
Funds participated in this program.
Note 11. Trustees Retirement Plan
The Trustees of the Trust have adopted the SunAmerica Disinterested
Trustees' and Directors' Retirement Plan (the "Retirement Plan") effective
January 1, 1993, as amended, for the unaffiliated Trustees. The Retirement
Plan provides generally that an unaffiliated Trustee may become a
participant ("Participant") in the Retirement Plan if he or she has at least
10 years of consecutive service as a Disinterested Trustee of any of the
adopting SunAmerica mutual funds (the "Adopting Funds") or has attained the
age of 60 while a Trustee and completed five (5) consecutive years of
service as a Trustee of any Adopting Fund (an "Eligible Trustee"). Pursuant
to the Retirement Plan, an Eligible Trustee may receive benefits upon (i)
his or her death or disability while a Trustee or (ii) the termination of
his or her tenure as a Trustee, other than removal for cause from each of
the Adopting Funds with respect to which he or she is an Eligible Trustee.
As of each of the first 10 birthdays after becoming a Participant and on
which he or she is both a Trustee and Participant, each Eligible Trustee
will be credited with an amount equal to 50% of his or her regular fees
(excluding committee fees) for services as a Disinterested Trustee of each
Adopting Fund for the calendar year in which such birthday occurs. In
addition, an amount equal to 8.50% of any amounts credited under the
preceding statement during prior years is added to each Eligible Trustee's
account. The rights of any Participant to benefits under the Retirement Plan
shall be an unsecured claim against the assets of the Adopting Funds. An
Eligible Trustee may receive any benefits payable under the Retirement Plan,
at his or her election, either in one lump sum or in up to 15 annual
installments. Any undistributed amounts shall continue to accrue interest at
8.50%.
Effective December 3, 2008, the Retirement Plan was amended to, among other
things, (1) freeze the Retirement Plan as to future accruals for active
Participants as of December 31, 2008, (2) prohibit Disinterested Trustees
from first becoming participants in the Retirement Plan after December 31,
2008 and (3) permit active Participants to elect to receive a distribution
of their entire Retirement Plan account balance in 2009. The freeze on
future accruals does not apply to Participants that have commenced receiving
benefits under the Retirement Plan on or before December 31, 2008.
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
LIABILITY EXPENSE PAYMENTS
--------------- --------------- ---------------
FUND AS OF MARCH 31, 2010
- ---- -----------------------------------------------
International Equity. $3,994 $ 60 $469
Value................ 3,742 219 819
Note 12. Investment Concentration
Some of the Funds may invest internationally, including in "emerging market"
countries. These securities may be denominated in currencies other than U.S.
dollars. While investing internationally may reduce your risk by increasing
the diversification of your investment, the value of your investment may be
affected by fluctuating currency values, changing local and regional
economic, political and social conditions, and greater market volatility. In
addition, foreign securities may not be as liquid as domestic securities.
These risks are primary risks of the International Equity Fund and
International Small-Cap Fund. At March 31, 2010, the International Equity
Fund had approximately 17.9% and 16.5% of its net assets invested in equity
securities of companies domiciled in Germany and Japan, respectively. At
March 31, 2010, the International Small-Cap Fund had approximately 19.0% of
its net assets invested in equity securities of companies domiciled in Japan.
36
SUNAMERICA EQUITY FUNDS
RESULTS OF SPECIAL SHAREHOLDER MEETINGS -- MARCH 31, 2010 -- (UNAUDITED)
INTERNATIONAL EQUITY FUND
A special meeting of shareholders of the International Equity Fund was held on
February 16, 2010 (the "International Equity Meeting"). At the International
Equity Meeting, shareholders approved (i) a new subadvisory agreement between
SunAmerica and PineBridge and (ii) the operation of the International Equity
Fund in a manner consistent with the exemptive order received from the
Securities and Exchange Commission that permits SunAmerica to, among other
things, enter into or amend subadvisory agreements with unaffiliated
subadvisers upon approval by the Board of Trustees, but without obtaining
shareholder approval (the "Manager of Managers Proposal").
The voting results were as follows:
To approve a new subadvisory agreement between SunAmerica and PineBridge:
FOR AGAINST ABSTAIN
--- ------- -------
6,222,727 412,805 449,305
To approve the Manager of Managers Proposal:
FOR AGAINST ABSTAIN
--- ------- -------
5,917,807 719,156 447,870
INTERNATIONAL SMALL-CAP FUND
A special meeting of shareholders of the International Small-Cap Fund was held
on February 16, 2010 (the "International Small-Cap Meeting"). At the
International Small-Cap Meeting, shareholders approved a new subadvisory
agreement between SunAmerica and PineBridge.
The voting results were as follows:
To approve a new subadvisory agreement between SunAmerica and PineBridge:
FOR AGAINST ABSTAIN
--- ------- -------
4,251,203 1,422,214 210,896
37
SUNAMERICA EQUITY FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- MARCH 31, 2010 -- (unaudited)
APPROVAL OF NEW SUBADVISORY AGREEMENTS
At an in-person meeting held on November 9, 2009, the Board of Trustees (the
"Board" the members of which are referred to as "Trustees") of the Trust,
including the Disinterested Trustees, approved new subadvisory agreements
between SunAmerica and PineBridge with respect to each of the International
Equity Fund and International Small-Cap Fund (each a "Fund" and together, the
"Funds"), subject to shareholder approval. These subadvisory agreements are
each referred to as a "New Subadvisory Agreement" and collectively as the "New
Subadvisory Agreements"). The Board approved the New Subadvisory Agreements in
response to the anticipated termination of the prior subadvisory agreements
between SunAmerica and AIG Global Investment Corp. ("AIGGIC") with respect to
the Funds (the "Prior Subadvisory Agreements") as a result of the announcement
that, on September 5, 2009, AIG entered into an agreement to sell a portion of
AIG Investments, including its interest in AIGGIC, to Bridge Partners, L.P.
("Bridge"), a partnership formed by the Pacific Century Group ("PCG"), an
Asia-based private investment group (the "Transaction"). In preparation for the
closing of the Transaction, AIG merged AIGGIC with and into PineBridge on
December 31, 2009.
Shareholders of each of the Funds approved a respective New Subadvisory
Agreement at a special meeting of shareholders held on February 16, 2010 and
the Transaction closed on March 29, 2010. Upon the closing of the Transaction,
PineBridge became an indirect, wholly-owned subsidiary of Bridge. The closing
of the Transaction resulted in an "assignment" of the Prior Subadvisory
Agreements which, under the terms of the Prior Subadvisory Agreements and as
required by law, resulted in the automatic termination of the Prior Subadvisory
Agreements. The New Subadvisory Agreements, which became effective upon the
closing of the Transaction, will remain in effect until August 31, 2011, and
are subject to continuance thereafter for successive one-year periods in the
manner required by the 1940 Act and the rules thereunder.
In accordance with Section 15(c) of the 1940 Act, the Board requested, and
SunAmerica and AIGGIC provided, materials relating to the Board's consideration
of whether to approve the New Subadvisory Agreements. These materials included
(a) information concerning the Transaction, including the corporate
restructuring of AIGGIC into PineBridge in anticipation of the closing of the
Transaction; (b) a summary of the services to be provided by PineBridge;
(c) information independently compiled by Lipper on fees and expenses of the
Funds as compared to a representative group of similar funds as determined by
Lipper; (d) information provided by AIGGIC on fees and expenses of funds with
similar investment styles as the Funds; (e) performance information of the
Funds as well as performance information of funds and accounts managed by
AIGGIC with investment policies and/or strategies similar to the Funds; (f) a
discussion of indirect benefits to PineBridge; (g) a report by SunAmerica of
PineBridge's compliance policies and procedures; (h) a summary of brokerage and
soft dollar practices; and (i) a discussion of the key personnel of PineBridge.
In determining whether to approve the New Subadvisory Agreements, the Board,
including the Disinterested Trustees, considered the following information:
NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY PINEBRIDGE.
The Board, including the Disinterested Trustees, considered the nature, extent
and quality of services to be provided to the Funds by PineBridge. The Board
observed that they had a long-standing relationship with AIGGIC. The Board also
considered information relating to the Transaction and representations from
AIGGIC and PCG, which would be the ultimate parent company of PineBridge, that
PCG was committed to PineBridge and would devote sufficient resources to
PineBridge. The Board concluded that the services to be provided by PineBridge
would be identical to the services that AIGGIC has provided to the Funds, which
would include investment management services such as investment research,
advice and supervision, and determining which securities will be purchased or
sold by the Funds, subject to the oversight and review of SunAmerica. In
addition, the Board reviewed AIGGIC's history, structure, size, visibility and
resources, which are needed to attract and retain highly qualified investment
professionals, and considered the resources PineBridge was expected to have
under its new ownership structure. The Board also reviewed the personnel that
would be responsible for providing subadvisory services to the Funds and
considered that the key investment personnel at AIGGIC that were responsible
for managing the Funds would continue to manage the Funds as portfolio managers
at PineBridge. The Board also considered that certain other key personnel of
AIGGIC would continue with PineBridge and that PCG anticipated allowing
PineBridge to manage its day-to-day operations. In light of these
considerations, the Board concluded that PineBridge would be able to continue
to provide a high level of service to the Funds.
The Board concluded, based on the materials provided and its prior experience
with AIGGIC, that: (i) PineBridge would be able to retain high quality
portfolio managers and other investment personnel; (ii) PineBridge would
continue to exhibit a high level of diligence and attention to detail in
carrying out its responsibilities as a subadviser; and (iii) PineBridge would
be responsive to requests of the Board and of SunAmerica. The Board concluded
that AIGGIC had developed internal policies and procedures for
38
SUNAMERICA EQUITY FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- MARCH 31, 2010 -- (UNAUDITED)
(CONTINUED)
monitoring compliance with the investment objectives, policies and restrictions
of the Funds as set forth in its prospectus, and that such policies and
procedures were expected to continue. The Board also concluded that it was
satisfied with AIGGIC's code of ethics and compliance and regulatory history.
The Board concluded that the nature and extent of services to be provided by
PineBridge to the Funds under the New Subadvisory Agreements were reasonable
and appropriate in relation to the proposed subadvisory fees and that the
quality of services was reasonably expected to be high.
INVESTMENT PERFORMANCE.
The Board, including the Disinterested Trustees, considered the investment
performance of AIGGIC. In connection with its review, the Board received
information prepared by AIGGIC regarding the performance information of the
International Small-Cap Fund as compared to a variable annuity fund subadvised
by AIGGIC whose investment policies and/or strategies are similar to those of
the International Small-Cap Fund. The Board noted that the performance of this
comparable fund was similar to the performance of the International Small-Cap
Fund, with the exception of the three-year period ended September 30, 2009,
where the performance of the comparable fund outperformed the International
Small-Cap Fund. The Board did not review comparisons of other account
information for the International Equity Fund as AIGGIC reported that it did
not act as the subadviser to any other registered investment companies with
investment policies and/or strategies substantially similar to that of the
International Equity Fund. The Board also reviewed certain composite
performance information relating to AIGGIC's institutional small-cap equity
mandates.
The Board also reviewed Lipper reports with respect to the Funds that were
provided at the August 25-26, 2009 Board meeting in connection with the annual
renewal of the Funds' Prior Subadvisory Agreements. The Lipper reports provided
performance information through May 31, 2009 with respect to the Funds and a
representative group of similar funds as determined by Lipper. The Board also
considered the performance information of the Funds through September 30, 2009.
With respect to the International Equity Fund, the Board considered that the
International Equity Fund ranked in the fourth quintile of its Peer Group for
the five-year period ended May 31, 2009 and ranked in the fifth quintile for
the one-, two-, three- and four-year periods. The Board also considered that
the International Equity Fund ranked in the fourth quintile of its larger Peer
Universe for the ten-year period ended May 31, 2009. The Board further
considered that the Fund's performance over the six-month period ended
September 30, 2009 had improved. Nonetheless, the Board concluded that the
Fund's performance does not meet the Board's expectations and that it would
continue to monitor the performance of this Fund. The Board noted that it may
consider further actions if the Fund's performance does not meet the Board's
expectations in the future.
With respect to the International Small-Cap Fund, the Board noted that the Fund
has a relatively small Peer Group; however, the Board considered that the Fund
ranked in the fourth quintile of its Peer Group for the two-year period ended
May 31, 2009 and ranked in the fifth quintile for the one-year period. The
Board also considered that the Fund ranked in the fifth quintile of its larger
Peer Universe for the three-year period ended May 31, 2009. The Board further
considered that the Fund's performance over the six-month period ended
September 30, 2009 had improved. Nonetheless, the Board concluded that the
Fund's performance does not meet the Board's expectations and that it would
continue to monitor the performance of this Fund. The Board noted that it may
consider further actions if the Fund's performance does not meet the Board's
expectations in the future.
CONSIDERATION OF THE SUBADVISORY FEES AND THE COST OF THE SERVICES AND PROFITS
TO BE REALIZED BY PINEBRIDGE AND ITS AFFILIATES FROM THE RELATIONSHIP WITH THE
FUNDS.
The Board, including the Disinterested Trustees, received and reviewed
information regarding the fees to be paid by SunAmerica to PineBridge pursuant
to the New Subadvisory Agreements. The Board examined this information in order
to determine the reasonableness of the fees in light of the nature and quality
of services to be provided and any potential additional benefits to be received
by PineBridge or its affiliates in connection with providing such services to
the Funds.
To assist in analyzing the reasonableness of the subadvisory fees under the New
Subadvisory Agreements, which are identical to the subadvisory fees of the
Prior Subadvisory Agreements, the Board reviewed the Lipper reports referenced
above that were provided at the August 25-26, 2009 Board meeting in connection
with the annual renewal of the Funds' Prior Subadvisory Agreements. The Lipper
reports addressed the expense information with respect to the Funds and a
representative group of similar funds as determined by Lipper. In considering
the reasonableness of the subadvisory fee to be paid by SunAmerica to
PineBridge on behalf of the Funds, the Board reviewed expense comparisons by
Lipper including contractual and actual subadvisor fees as a portion of actual
net
39
SUNAMERICA EQUITY FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- MARCH 31, 2010 -- (UNAUDITED)
(CONTINUED)
management fees. The Board compared the Funds' contractual subadvisory fees to
those of other funds within their Peer Group and Peer Universe as a guide to
help assess the subadvisory fees to be paid to PineBridge. The Board noted that
the Peer Group information as a whole was useful in assessing whether the
subadviser was providing services at a cost that was competitive with other
similar funds. The Board also considered information provided by AIGGIC on fees
relating to the variable annuity fund subadvised by AIGGIC whose investment
policies and/or strategies are substantially similar to those of the
International Small-Cap Fund, and noted that the fees payable to AIGGIC with
respect to the respective comparable fund were similar to those payable to
AIGGIC for the International Small-Cap Fund. The Board further reviewed the
standard investment management fee schedule for AIGGIC's small-cap composite
accounts and noted that the standard fees were higher than the subadvisory fee
payable to AIGGIC for the International Small-Cap Fund but observed that these
accounts were not registered investment companies and were generally not
subadvised accounts, and further that such fees could vary among accounts. The
Board also considered that the subadvisory fees are paid by SunAmerica out of
its management fee and not by the Funds, and that subadvisory fees may vary
widely within a Peer Group for various reasons, including market pricing
demands, existing relationships, experience and success, and individual client
needs. The Board noted that the subadvisory fees paid under the Prior
Subadvisory Agreements and the proposed subadvisory fees that will be paid to
PineBridge under the New Subadvisory Agreements are identical. The Board also
considered the amount of subadvisory fees paid out by SunAmerica and the amount
of the management fees which it retained. The Board further considered whether
there were any collateral or "fall-out" benefits that PineBridge and its
affiliates may derive as a result of their relationship with the Funds. The
Board concluded that any such benefits would be de minimis and would not impact
the reasonableness of the management fees.
The Board also reviewed financial information and other reports from PineBridge
and considered whether PineBridge would have the financial resources necessary
to attract and retain high quality investment management personnel and to
provide a high quality of services. In connection with its review, the Board
received the consolidated financial statements of AIG and its subsidiaries,
including AIGGIC, for the year ended December 31, 2008. The Board also received
pro forma financial information for Bridge. The Board concluded that PineBridge
had the financial resources necessary to perform its obligations under the New
Subadvisory Agreements and would provide the Funds with high quality services.
The Board also concluded that the subadvisory fees were reasonable in light of
the factors discussed above.
ECONOMIES OF SCALE.
The Board did not review specific information regarding whether there would be
economies of scale with respect to PineBridge's management of the Funds because
it regards that information as less relevant at the subadviser level. Rather,
the Board noted that it considered information regarding economies of scale in
the context of the renewal of the Investment Advisory and Management Agreement
with SunAmerica.
OTHER FACTORS.
In consideration of the New Subadvisory Agreements, the Board also received
information regarding PineBridge's brokerage and soft dollar practices. The
Board considered that SunAmerica and PineBridge are responsible for decisions
to buy and sell securities, selection of broker-dealers and negotiation of
commission rates.
CONCLUSION.
After a full and complete discussion, the Board approved the New Subadvisory
Agreements for each of the International Equity Fund and International
Small-Cap Fund. Based upon their evaluation, the Board, including its
Disinterested Trustees, was satisfied that the terms of the New Subadvisory
Agreements were fair and reasonable and in the best interests of each of the
Funds and its shareholders. In arriving at a decision to approve the New
Subadvisory Agreements, the Board did not identify a 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 these determinations.
40
[LOGO]
HARBORSIDE FINANCIAL CENTER
3200 PLAZA 5
JERSEY CITY, NJ 07311-4992
TRUSTEES SHAREHOLDER SERVICING This report is submitted
Samuel M. Eisenstat AGENT solely for the general
Peter A. Harbeck SunAmerica Fund information of
Dr. Judith L. Craven Services, Inc. shareholders of the
William F. Devin Harborside Financial Funds. Distribution of
Stephen J. Gutman Center this report to persons
Jeffrey S. Burum 3200 Plaza 5 other than shareholders
William J. Shea Jersey City, NJ of the Funds is
07311-4992 authorized only in
OFFICERS con-nection with a
John T. Genoy, President CUSTODIAN AND TRANSFER currently effective
and Chief Executive AGENT pro-spectus, setting
Officer State Street Bank and forth details of the
Donna M. Handel, Trust Company Funds, which must precede
Treasurer P.O. Box 5607 or accom-pany this report.
Timothy P. Pettee, Vice Boston, MA 02110
President DELIVERY OF SHAREHOLDER
James Nichols, Vice VOTING PROXIES ON TRUST DOCUMENTS
President PORTFOLIO SECURITIES The Funds have adopted a
Cynthia A. A description of the policy that allows them
Gibbons-Skrehot, Vice policies and procedures to send only one copy of
President and Chief that the Trust uses to a Fund's prospectus,
Compliance Officer determine how to vote proxy material, annual
Gregory N. Bressler, proxies relating to report and semi-annual
Chief Legal Officer securities held in a report (the "shareholder
and Secretary Fund's portfolio which is documents") to
Gregory R. Kingston, available in the Trust's shareholders with
Vice President and Statement of Additional multiple accounts
Assistant Treasurer Information, may be residing at the same
Kathleen Fuentes, obtained without charge "household." This
Assistant Secretary upon request, by calling practice is called
John E. McLean, (800) 858-8850. This householding and reduces
Assistant Secretary in-formation is also Fund expenses, which
Nori L. Gabert, Vice available from the EDGAR benefits you and other
President and database on the U.S. shareholders. Unless the
Assistant Secretary Securities and Ex-change Funds receive
Matthew Hackethal, Commission's website at instructions to the
Anti-Money Laundering http://www.sec.gov. con-trary, you will only
Compliance Officer receive one copy of the
John E. Smith Jr., PROXY VOTING RECORD ON shareholder documents.
Assistant Treasurer SUNAMERICA EQUITY FUNDS The Funds will continue
Information regarding how to household the
INVESTMENT ADVISER SunAmerica Equity Funds share-holder documents
SunAmerica Asset voted proxies relating to indefinitely, until we
Management Corp. securities held in are instructed otherwise.
Harborside Financial SunAmerica Equity Funds If you do not wish to
Center during the most recent participate in
3200 Plaza 5 twelve month period ended householding, please
Jersey City, NJ June 30 is available, contact Shareholder
07311-4992 once filed with the U.S. Services at (800)
Securities and Exchange 858-8850 ext. 6010 or
DISTRIBUTOR Commission, without send a written request
SunAmerica Capital charge, upon request, by with your name, the name
Services, Inc. calling (800) 858-8850 or of your fund(s) and your
Harborside Financial on the U.S. Securities account number(s) to
Center and Exchange Commission's SunAmerica Mutual Funds
3200 Plaza 5 website at c/o BFDS, P.O. Box
Jersey City, NJ http://www.sec.gov. 219186, Kansas City MO,
07311-4992 64121-9186. We will
DISCLOSURE OF QUARTERLY resume individual
PORTFOLIO HOLDINGS mailings for your account
The Trust is required to within thirty (30) days
file its complete of receipt of your
schedule of portfolio request.
holdings with the U.S.
Securities and Exchange The accompanying report
Commission for its first has not been audited by
and third fiscal quarters independent accountants
on Form N-Q. The Trust's and accordingly no
Forms N-Q are available opinion has been
on the U.S. Securities expressed thereon.
and Exchange Commission's
website at
http://www.sec.gov. You
can also review and
obtain copies of the
Forms N-Q at the U.S.
Securities and Exchange
Com-mission's Public
Reference Room in
Wash-ington, DC
(information on the
operation of Public
Reference Room may be
obtained by calling
1-800-SEC-0330).
41
[GRAPHIC]
GO PAPERLESS!!
DID YOU KNOW THAT YOU HAVE THE OPTION TO
RECEIVE YOUR SHAREHOLDER REPORTS ONLINE?
By choosing this convenient service, you will no longer receive paper copies of
Fund documents such as annual reports, semi-annual reports, prospectuses and
proxy statements in the mail. Instead, you are provided with quick and easy
access to this information via the Internet.
Why Choose Electronic Delivery?
IT'S QUICK -- Fund documents will be received faster than via traditional mail.
IT'S CONVENIENT -- Elimination of bulky documents from personal files.
IT'S COST EFFECTIVE -- Reduction of your Fund's printing and mailing costs.
TO SIGN UP FOR ELECTRONIC DELIVERY, FOLLOW
THESE SIMPLE STEPS:
1 GO TO
WWW.SUNAMERICAFUNDS.COM
2 CLICK ON THE LINK TO "GO PAPERLESS!!"
The email address you provide will be kept strictly confidential. Once your
enrollment has been processed, you will begin receiving email notifications
when anything you receive electronically is available online.
You can return to www.sunamericafunds.com at any time to change your email
address, edit your preferences or to cancel this service if you choose to
resume physical delivery of your Fund documents.
Please note - this option is only available to accounts opened through the
Funds.
FOR INFORMATION ON RECEIVING THIS REPORT ONLINE, SEE INSIDE BACK COVER.
FOR INFORMATION ON RECEIVING THIS REPORT ONLINE, SEE INSIDE BACK COVER.
FUNDS DISTRIBUTED BY SUNAMERICA CAPITAL SERVICES, INC.
Investors should carefully consider a Fund's investment objectives, risks,
charges and expenses before investing. The prospectus, containing this and
other important information, can be obtained from your financial adviser, the
SunAmerica Sales Desk at 800-858-8850, ext. 6003, or at
www.sunamericafunds.com. Read the prospectus carefully before investing.
WWW.SUNAMERICAFUNDS.COM
EQSAN - 3/10
[LOGO]
AIG
Sun America
Mutual Funds
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. 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
299.407) (as required by 22(b)(15)) of Schedule 14A (17 CFR 240.14a-
101), or this Item 10.
Item 11. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures (as defined under Rule 30a-3(c)
under the Investment Company Act of 1940 (17 CFR 270. 30a-3(c))). Based
on that evaluation, the registrant's management, including the
President and Treasurer, concluded that the registrant's disclosure
controls and procedures are effective.
(b) There was no change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act
of 1940 (17 CFR 270.30a-3(d))) that occurred during the registrant's
last fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal contro1 over financial reporting.
Item 12. Exhibits.
(a) (1) Not applicable.
(2) Certifications pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit
99.CERT.
(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b)under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the
Sarbanes-Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Equity Funds
By: /s/ John T. Genoy
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John T. Genoy
President
Date: June 8, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John T. Genoy
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John T. Genoy
President
Date: June 8, 2010
By: /s/ Donna M. Handel
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Donna M. Handel
Treasurer
Date: June 8, 2010