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: September 30, 2012
-------------------------
Item 1. Reports to Stockholders
[PHOTO]
ANNUAL REPORT 2012
SUNAMERICA
Equity Funds
SEPTEMBER 30, 2012 ANNUAL REPORT
SUNAMERICA EQUITY FUNDS
SUNAMERICA INTERNATIONAL DIVIDEND STRATEGY FUND (SIEAX)
SUNAMERICA VALUE FUND (SSVAX)
SUNAMERICA JAPAN FUND (SAESX)
TABLE OF CONTENTS
SHAREHOLDER LETTER.......................................... 2
EXPENSE EXAMPLE............................................. 4
STATEMENT OF ASSETS AND LIABILITIES......................... 6
STATEMENT OF OPERATIONS..................................... 8
STATEMENT OF CHANGES IN NET ASSETS.......................... 9
FINANCIAL HIGHLIGHTS........................................ 10
PORTFOLIO OF INVESTMENTS.................................... 14
NOTES TO FINANCIAL STATEMENTS............................... 22
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM..... 36
APPROVAL OF ADVISORY AGREEMENTS............................. 37
TRUSTEE AND OFFICER INFORMATION............................. 42
SHAREHOLDER TAX INFORMATION................................. 45
COMPARISONS: FUNDS VS. INDICES.............................. 46
SHAREHOLDER LETTER -- (UNAUDITED)
Dear Shareholders,
We are pleased to present this annual update for the SunAmerica Equity Funds
for the 12 months ended September 30, 2012. It was a period wherein U.S. and
international equity performance was strong overall, despite a wide range of
economic and geopolitical events causing significant volatility. Investors
generally looked past lingering uncertainty regarding Eurozone sovereign debt
and focused instead on improving economic data and strong corporate earnings
news. Japanese equities, however, proved to be an exception.
The equity markets generally posted positive returns as the annual period began
with the fourth quarter of 2011, as investors grew more optimistic about the
global economy. In the U.S., unemployment trends appeared to stabilize, and
corporate profits improved. Investors were hopeful that these early signs of an
economic recovery in the U.S. would lift equity valuations from ten-year trough
levels. Internationally, results were a bit more mixed. International equities
rallied forcefully in October 2011, largely on optimism that European leaders
would work out a solution for the sovereign debt crisis at a summit later in
the month. An agreement was indeed reached, but on October 31, the Greek prime
minister surprised other European leaders and the financial markets by calling
for a referendum on the proposal, which could threaten the agreement. As a
result, European equities retreated in November 2011. Concern for the fate of
the European Monetary Union intensified during the latter part of the fourth
quarter of 2011 as the Greek and Italian government leaders were replaced,
credit conditions tightened for banks, yields on Italian and Spanish government
debt hovered near unsustainable levels, and Germany had a surprisingly
disappointing bond auction. Despite reporting economic growth, Japanese
equities were also weak late in the fourth quarter of 2011 in part because of
production disruptions from the floods in Thailand and in part because Japan's
expansion showed signs of slowing in November based on weakening overseas
demand.
U.S. equities continued to advance during the first quarter of 2012, as the
domestic economy continued to improve. Accommodative monetary policy kept
short-term U.S. interest rates at historically low levels, while consumer
spending and corporate profit trends remained strong. Another factor boosting
the U.S. equity markets during the quarter was what seemed to be solid steps
toward resolution of the European sovereign debt crisis. Both the U.S. and
international equity markets rallied strongly after Eurozone finance ministers
set the overall ceiling for the rescue of the region's indebted nations at $1.1
trillion. Investors also responded favorably to Spain's proposed budget for
cutting spending and raising taxes to try to bring its deficit under control.
Japanese equities rallied, fueled by the Bank of Japan's surprise move to ease
monetary policy. Japan's retail sales surged and overall household spending
surpassed expectations, signaling, it appeared, that the Japanese economy was
poised for a rebound.
After posting broad-based gains during the first quarter of 2012, the strongest
opening quarter since 1998 for the S&P 500 Index*, equity indices stumbled
during the second quarter of 2012. Drivers included weaker U.S. economic
trends, including lackluster job formation, and continued destabilization of
European financial markets. More specifically, concerns regarding Spain's
sovereign debt market and banking system reignited worries about the region
overall. China's decelerating economic growth further muted returns in select
sectors. Japanese equities led the East Asian region lower. The Bank of Japan
kept its monetary policy steady in the second quarter of 2012 but warned of
lingering risks to the country's recovery prospects. Japanese industrial
production missed forecasts, underscoring concern that Europe's sovereign debt
crisis and a stronger yen may hamper the rebound of the world's third-largest
economy.
In the last months of the annual period, that is, during the third quarter of
2012, the U.S. and international equity markets generally rallied as investors
reacted positively to strong corporate profit reports and to central bank
action taken in September. First was a bond-buying announcement by the European
Central Bank, which raised hopes for a longer-term solution even though
Europe's sovereign debt problems continued to dominate headlines. This
announcement was followed by the Federal Reserve's announcement of a third
round of quantitative easing, wherein it would buy bonds to lower interest
rates. Indeed, consumer confidence improved despite higher energy prices, as
short-term U.S. interest rates remained low. The Japanese equity market,
however, declined for the
2
second consecutive quarter. Japan's consumer prices slid, and industrial
production unexpectedly weakened, raising the danger that the nation's economy
had slipped back into contraction. Additionally, Japan's exports disappointed,
as shipments to Europe and China both fell, elevating concerns about softening
global demand. Indeed, for investors in virtually all U.S. and international
equity markets, several concerns persisted at the end of the annual period,
including below-trend U.S. economic growth, an ailing job market, an impending
fiscal cliff, persistent European sovereign debt troubles, slowing Chinese
growth rates and regulatory uncertainty.
Against this backdrop, U.S. equities, as measured by the S&P 500 Index,
returned 30.20% for the 12 months ended September 30, 2012. International
equities, as measured by the MSCI All Country (AC) World ex-U.S. Index*, lagged
the U.S. equity market but still produced strong gains, returning 15.04% for
the 12-month period ended September 30, 2012. Japanese equities, as measured by
the MSCI Japan Index*, returned -1.51%. For the annual period overall, there
was no clear distinction in performance trends between the more
economically-sensitive, cyclical sectors and the more traditionally defensive
sectors of the equity markets.
Amid these conditions, each of the portfolios in the SunAmerica Equity Funds
generated positive gains during the annual period. The 12-month period ended
September 30, 2012 was a meaningful one for the SunAmerica Equity Funds in
other ways as well, which are detailed on the following pages. There you will
find detailed financials statements and portfolio information for each of the
SunAmerica Equity Funds.
We thank you for being a part of the SunAmerica Equity Funds. We value your
ongoing confidence in us and look forward to serving your investment needs in
the future. As always, if you have any questions regarding your investments,
please contact your financial adviser or get in touch with us directly at
800-858-8850 or www.safunds.com.
Sincerely,
THE SUNAMERICA EQUITY FUNDS INVESTMENT PROFESSIONALS
Steve Neimeth Jun Oh Brendan Voege Timothy Campion
Sarah Kallok Ben Barrett Mike Beaulieu Kara Murphy
Jay Merchant Chris Kagaoan Jennifer Coombs Jane Bayar
Jayme Liesiewski Kei Yamamoto
--------
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 U.S. common stock prices. The MORGAN
STANLEY CAPITAL INTERNATIONAL (MSCI) ALL COUNTRY (AC) WORLD EX-U.S. INDEX is a
free float-adjusted market capitalization-weighted index designed to measure
the equity market performance of 47 global developed and emerging markets,
excluding the U.S. The MSCI JAPAN INDEX is a free-float adjusted market
capitalization weighted index that is designed to track the equity market
performance of Japanese securities listed on Tokyo Stock Exchange, Osaka Stock
Exchange, JASDAQ and Nagoya Stock Exchange. Indices are not managed and an
investor cannot invest directly in an index.
3
SUNAMERICA EQUITY FUNDS
EXPENSE EXAMPLE -- SEPTEMBER 30, 2012 -- (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 Dividend Strategy Fund and SunAmerica Japan
Fund only) and (2) ongoing costs, including management fees; distribution and
service fees; and other Fund expenses. The Example set forth below is intended
to help you understand your ongoing costs (in dollars) of investing in the
Funds and to compare these costs with the ongoing costs of investing in other
mutual funds. The Example is based on an investment of $1,000 invested at
April 1, 2012 and held until September 30, 2012.
ACTUAL EXPENSES
The "Actual" section of the table provides information about actual account
values and actual expenses. You may use the information in these columns,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the column under the heading entitled "Expenses Paid During the Six
Months Ended September 30, 2012" to estimate the expenses you paid on your
account during this period. For shareholder accounts in classes other than
Class I and Class Z, the "Expenses Paid During the Six Months Ended
September 30, 2012" column does not include small account fees that may be
charged if your account balance is below $500 ($250 for retirement plan
accounts). In addition, the "Expenses Paid During the Six Months Ended
September 30, 2012" 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 September 30, 2012" column would have been
higher and the "Ending Account Value" would have been lower.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The "Hypothetical" section of the table provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is
not the Fund's actual return. The hypothetical account values and expenses may
not be used to estimate the actual ending account balance or expenses you paid
for the period. You may use this information to compare the ongoing costs of
investing in the Funds and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder
reports of other funds. For shareholder accounts in classes other than Class I
and Class Z the "Expenses Paid During the Six Months Ended September 30, 2012"
column does not include small account fees that may be charged if your account
balance is below $500 ($250 for retirement plan accounts). In addition, the
"Expenses Paid During the Six Months Ended September 30, 2012" 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
September 30, 2012" 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 Dividend
Strategy Fund and SunAmerica Japan 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.
4
SUNAMERICA EQUITY FUNDS
EXPENSE EXAMPLE -- SEPTEMBER 30, 2012 -- (UNAUDITED) (CONTINUED)
ACTUAL HYPOTHETICAL
------------------------------------------ -----------------------------------------
ENDING ACCOUNT
ENDING ACCOUNT EXPENSE PAID VALUE USING A EXPENSE PAID
VALUE USING DURING THE HYPOTHETICAL DURING THE
BEGINNING ACTUAL SIX MONTHS BEGINNING 5% ASSUMED SIX MONTHS
ACCOUNT VALUE RETURN AT ENDED ACCOUNT VALUE RETURN AT ENDED
AT APRIL 1, SEPTEMBER 30, SEPTEMBER 30, AT APRIL 1, SEPTEMBER 30, SEPTEMBER
FUND 2012 2012 2012 2012 2012 30, 2012
---- ------------- -------------- ------------- ------------- -------------- ------------
INTERNATIONAL DIVIDEND STRATEGY
FUND#+
Class A....................... $1,000.00 $ 945.33 $ 9.24 $1,000.00 $1,015.50 $ 9.57
Class B....................... $1,000.00 $ 941.79 $12.38 $1,000.00 $1,012.25 $12.83
Class C....................... $1,000.00 $ 941.74 $12.38 $1,000.00 $1,012.25 $12.83
Class I....................... $1,000.00 $ 945.48 $ 8.75 $1,000.00 $1,016.00 $ 9.07
VALUE FUND
Class A....................... $1,000.00 $1,007.61 $ 7.63 $1,000.00 $1,017.40 $ 7.67
Class B#...................... $1,000.00 $1,003.25 $11.42 $1,000.00 $1,013.60 $11.48
Class C....................... $1,000.00 $1,004.07 $11.32 $1,000.00 $1,013.70 $11.38
Class Z....................... $1,000.00 $1,010.86 $ 4.57 $1,000.00 $1,020.45 $ 4.60
JAPAN FUND#+
Class A....................... $1,000.00 $ 919.66 $ 9.12 $1,000.00 $1,015.50 $ 9.57
Class B....................... $1,000.00 $ 917.28 $12.22 $1,000.00 $1,012.25 $12.83
Class C....................... $1,000.00 $ 915.81 $12.21 $1,000.00 $1,012.25 $12.83
EXPENSE
RATIO
AS OF
SEPTEMBER 30,
FUND 2012*
---- -------------
INTERNATIONAL DIVIDEND STRATEGY
FUND#+
Class A....................... 1.90%
Class B....................... 2.55%
Class C....................... 2.55%
Class I....................... 1.80%
VALUE FUND
Class A....................... 1.52%
Class B#...................... 2.28%
Class C....................... 2.26%
Class Z....................... 0.91%
JAPAN FUND#+
Class A....................... 1.90%
Class B....................... 2.55%
Class C....................... 2.55%
--------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 183 days divided by 366
days. These ratios do not reflect transaction costs, including sales charges
on purchase payments, contingent deferred sales charges, redemption fees
(International Dividend Strategy Fund and Japan Fund only), small account
fees and administrative fees, if applicable to your account. Please refer to
your Prospectus, your retirement plan documents and/or materials from your
financial advisor for more information.
# During the stated period, the investment advisor either waived a portion of
or all of the fees and assumed a portion of or all expenses for the Funds or
through recoupment provisions, recovered a portion of or all fees and
expenses waived or reimbursed in the previous two fiscal years. As a result,
if these fees and expenses had not been waived or assumed, the
"Actual/Hypothetical Ending Account Value" would have been lower and the
"Actual/Hypothetical Expenses Paid During the Six Months Ended September 30,
2012" 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 September 30, 2012" and "Expense Ratios" would
have been lower.
+ See Note 1
5
SUNAMERICA EQUITY FUNDS
STATEMENT OF ASSETS AND LIABILITIES -- SEPTEMBER 30, 2012
INTERNATIONAL
DIVIDEND
STRATEGY VALUE JAPAN
FUND+ FUND FUND+
------------- ------------ -----------
ASSETS:
Investments at value (unaffiliated)*.. $ 68,951,134 $107,676,050 $20,977,696
Repurchase agreements (cost
approximates value).................. 446,000 495,000 --
------------- ------------ -----------
Total investments.................... 69,397,134 108,171,050 20,977,696
------------- ------------ -----------
Cash.................................. -- 704 --
Foreign cash*......................... 4,382,757 -- 160,324
Receivable for:
Fund shares sold..................... 451,295 2,003 --
Dividends and interest............... 412,868 108,000 221,459
Investments sold..................... -- 3,991,680 282,178
Prepaid expenses and other assets..... 1,528 10,395 1,578
Due from investment adviser for
expense reimbursements/fee waivers... 72,703 -- 1,958
------------- ------------ -----------
Total assets.......................... 74,718,285 112,283,832 21,645,193
------------- ------------ -----------
LIABILITIES:
Payable for:
Fund shares redeemed................. 83,759 85,742 31,325
Investments purchased................ 4,290,246 1,738,455 --
Investment advisory and management
fees............................... 56,231 68,294 20,727
Distribution and service maintenance
fees............................... 28,446 42,517 6,673
Transfer agent fees and expenses..... 20,309 36,493 4,966
Trustees' fees and expenses.......... 3,104 6,268 783
Other accrued expenses............... 153,316 72,381 69,147
Line of credit....................... -- -- 161,852
Due to investment adviser from
expense recoupment................... -- 270 --
Due to custodian...................... 341,811 -- --
------------- ------------ -----------
Total liabilities..................... 4,977,222 2,050,420 295,473
------------- ------------ -----------
Net assets............................ $ 69,741,063 $110,233,412 $21,349,720
============= ============ ===========
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01
par value............................ $ 65,307 $ 84,361 $ 33,321
Paid-in capital....................... 170,945,985 183,625,951 22,191,230
------------- ------------ -----------
171,011,292 183,710,312 22,224,551
Accumulated undistributed net
investment income (loss)............. 221,270 543,565 442,154
Accumulated undistributed net
realized gain (loss) on investments,
futures contracts, options
contracts, securities sold short and
foreign exchange transactions........ (101,549,271) (81,995,906) (177,639)
Unrealized appreciation
(depreciation) on investments........ 59,158 7,975,441 (1,141,354)
Unrealized foreign exchange gain
(loss) on other assets and
liabilities.......................... (1,386) -- 2,008
------------- ------------ -----------
Net assets............................ $ 69,741,063 $110,233,412 $21,349,720
============= ============ ===========
*Cost Investments (unaffiliated)...... $ 68,891,976 $ 99,700,609 $22,119,050
============= ============ ===========
Foreign cash......................... $ 4,383,320 $ -- $ 158,020
============= ============ ===========
--------
+ See Note 1
See Notes to Financial Statements
6
SUNAMERICA EQUITY FUNDS
STATEMENT OF ASSETS AND LIABILITIES -- SEPTEMBER 30, 2012 -- (CONTINUED)
INTERNATIONAL
DIVIDEND
STRATEGY VALUE JAPAN
FUND+ FUND FUND+
------------- ----------- -----------
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net assets.............................. $51,309,244 $90,132,021 $20,714,278
Shares of beneficial interest issued
and outstanding........................ 4,704,844 6,807,638 3,229,649
Net asset value and redemption price
per share.............................. $ 10.91 $ 13.24 $ 6.41
Maximum sales charge (5.75% of offering
price)................................. $ 0.67 $ 0.81 $ 0.39
----------- ----------- -----------
Maximum offering price to public........ $ 11.58 $ 14.05 $ 6.80
=========== =========== ===========
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net assets.............................. $ 4,571,802 $ 5,276,572 $ 197,357
Shares of beneficial interest issued
and outstanding........................ 455,183 427,329 31,800
Net asset value, offering and
redemption price per share (excluding
any applicable contingent deferred
sales charge).......................... $ 10.04 $ 12.35 $ 6.21
=========== =========== ===========
CLASS C (UNLIMITED SHARES AUTHORIZED):
Net assets.............................. $12,570,750 $14,687,980 $ 438,085
Shares of beneficial interest issued
and outstanding........................ 1,253,354 1,191,335 70,632
Net asset value, offering and
redemption price per share (excluding
any applicable contingent deferred
sales charge).......................... $ 10.03 $ 12.33 $ 6.20
=========== =========== ===========
CLASS I (UNLIMITED SHARES AUTHORIZED):
Net assets.............................. $ 1,289,267 $ -- $ --
Shares of beneficial interest issued
and outstanding........................ 117,315 -- --
Net asset value, offering and
redemption price per share............. $ 10.99 $ -- $ --
=========== =========== ===========
CLASS Z (UNLIMITED SHARES AUTHORIZED):
Net assets.............................. $ -- $ 136,839 $ --
Shares of beneficial interest issued
and outstanding........................ -- 9,803 --
Net asset value, offering and
redemption price per share............. $ -- $ 13.96 $ --
=========== =========== ===========
--------
+ See Note 1
See Notes to Financial Statements
7
SUNAMERICA EQUITY FUNDS
STATEMENT OF OPERATIONS -- SEPTEMBER 30, 2012
INTERNATIONAL
DIVIDEND
STRATEGY VALUE
FUND+ FUND JAPAN FUND+
------------- ----------- -----------
INVESTMENT INCOME:
Dividends (unaffiliated)................ $ 2,730,317 $ 2,640,328 $ 618,371
Interest (unaffiliated)................. 1,877 683 --
----------- ----------- ----------
Total investment income*.............. 2,732,194 2,641,011 618,371
----------- ----------- ----------
EXPENSES:
Investment advisory and management fees. 691,212 848,571 294,035
Distribution and service maintenance
fees:
Class A............................... 177,110 320,328 86,234
Class B............................... 46,574 61,349 2,681
Class C............................... 124,520 153,417 6,617
Service fees Class I.................... 3,522 -- --
Transfer agent fees and expenses:
Class A............................... 133,768 227,425 56,476
Class B............................... 16,199 19,681 1,982
Class C............................... 34,978 40,533 2,904
Class I............................... 3,154 -- --
Registration fees:
Class A............................... 18,462 21,013 15,889
Class B............................... 11,340 10,959 13,694
Class C............................... 12,573 12,528 13,691
Class I............................... 78 -- --
Custodian and accounting fees........... 109,846 50,908 71,979
Reports to shareholders................. 75,804 45,554 7,809
Audit and tax fees...................... 59,711 40,181 50,802
Legal fees.............................. 67,233 12,039 22,757
Directors' fees and expenses............ 11,732 13,192 2,700
Interest expense........................ 406 1,474 167
Other expenses.......................... 22,171 21,074 21,121
----------- ----------- ----------
Total expenses before fee waivers,
expense reimbursements, expense
recoupments, custody credits and
fees paid indirectly................. 1,620,393 1,900,226 671,538
Net (Fees waived and expenses
reimbursed)/recouped by investment
adviser (Note 3)..................... (197,265) (8,270) (179,642)
Custody credits earned on cash
balances............................. (21) (7) (28)
Fees paid indirectly (Note 4)......... -- (5,453) --
----------- ----------- ----------
Net expenses.......................... 1,423,107 1,886,496 491,868
----------- ----------- ----------
Net investment income (loss)............. 1,309,087 754,515 126,503
----------- ----------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments
(unaffiliated)**........................ (6,835,838) 3,765,375 376,528
Net realized foreign exchange gain
(loss) on other assets and liabilities.. 97,972 -- 121,161
----------- ----------- ----------
Net realized gain (loss) on investments
and foreign currencies.................. (6,737,866) 3,765,375 497,689
----------- ----------- ----------
Change in unrealized appreciation
(depreciation) on investments
(unaffiliated).......................... 11,489,507 22,892,776 543,256
Change in unrealized foreign exchange
gain (loss) on other assets and
liabilities............................. (17,939) -- 8,091
Change in accrued capital gains tax on
unrealized appreciation (depreciation).. -- -- 10,730
----------- ----------- ----------
Net unrealized gain (loss) on
investments and foreign currencies...... 11,471,568 22,892,776 562,077
----------- ----------- ----------
Net realized and unrealized gain (loss)
on investments and foreign currencies... 4,733,702 26,658,151 1,059,766
----------- ----------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............... $ 6,042,789 $27,412,666 $1,186,269
=========== =========== ==========
--------
*Net of foreign withholding taxes on
interest and dividends of............... $ 394,633 $ 645 $ 43,524
=========== =========== ==========
**Net of foreign withholding taxes on
capital gains of........................ $ 83,304 $ -- $ 15,873
=========== =========== ==========
+ See Note 1
See Notes to Financial Statements
8
SUNAMERICA EQUITY FUNDS
STATEMENT OF CHANGES IN NET ASSETS -- SEPTEMBER 30, 2012
INTERNATIONAL DIVIDEND
STRATEGY FUND* VALUE FUND
-------------------------- --------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2012 2011 2012 2011
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................... $ 1,309,087 $ 546,579 $ 754,515 $ 856,894
Net realized gain (loss) on investments and foreign
currencies............................................ (6,737,866) 14,263,854 3,765,375 15,983,709
Net unrealized gain (loss) on investments and foreign
currencies............................................ 11,471,568 (22,181,040) 22,892,776 (19,723,223)
----------- ------------ ------------ ------------
Net increase (decrease) in net assets resulting from
operations.............................................. 6,042,789 (7,370,607) 27,412,666 (2,882,620)
----------- ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................ (1,234,410) (9,532) (898,865) (569,403)
Net investment income (Class B)........................ (64,930) -- (27,012) --
Net investment income (Class C)........................ (173,790) -- (88,986) --
Net investment income (Class I)........................ (33,449) (788) -- --
Net investment income (Class Z)........................ -- -- (3,390) (248,232)
Net realized gain on securities (Class A).............. -- -- -- --
Net realized gain on securities (Class B).............. -- -- -- --
Net realized gain on securities (Class C).............. -- -- -- --
Net realized gain on securities (Class I).............. -- -- -- --
Net realized gain on securities (Class Z).............. -- -- -- --
----------- ------------ ------------ ------------
Total distributions to shareholders...................... (1,506,579) (10,320) (1,018,253) (817,635)
----------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
CAPITAL SHARE TRANSACTIONS (NOTE 7)..................... (4,916,682) (54,664,911) (32,552,724) (58,976,424)
----------- ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................. (380,472) (62,045,838) (6,158,311) (62,676,679)
NET ASSETS:
Beginning of period...................................... 70,121,535 132,167,373 116,391,723 179,068,402
----------- ------------ ------------ ------------
End of period+........................................... $69,741,063 $ 70,121,535 $110,233,412 $116,391,723
=========== ============ ============ ============
--------
+ Includes accumulated undistributed net investment
income (loss)........................................... $ 221,270 $ (6,843) $ 543,565 $ 807,303
=========== ============ ============ ============
JAPAN FUND*
--------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2012 2011
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................... $ 126,503 $ 8,842
Net realized gain (loss) on investments and foreign
currencies............................................ 497,689 12,891,580
Net unrealized gain (loss) on investments and foreign
currencies............................................ 562,077 (16,152,745)
------------ ------------
Net increase (decrease) in net assets resulting from
operations.............................................. 1,186,269 (3,252,323)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................ (47,904) (1,290,403)
Net investment income (Class B)........................ -- (10,171)
Net investment income (Class C)........................ -- (27,548)
Net investment income (Class I)........................ -- --
Net investment income (Class Z)........................ -- --
Net realized gain on securities (Class A).............. (4,495,773) --
Net realized gain on securities (Class B).............. (55,170) --
Net realized gain on securities (Class C).............. (160,446) --
Net realized gain on securities (Class I).............. -- --
Net realized gain on securities (Class Z).............. -- --
------------ ------------
Total distributions to shareholders...................... (4,759,293) (1,328,122)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
CAPITAL SHARE TRANSACTIONS (NOTE 7)..................... (7,572,688) (22,530,336)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................. (11,145,712) (27,110,781)
NET ASSETS:
Beginning of period...................................... 32,495,432 59,606,213
------------ ------------
End of period+........................................... $ 21,349,720 $ 32,495,432
============ ============
--------
+ Includes accumulated undistributed net investment
income (loss)........................................... $ 442,154 $ (208,724)
============ ============
* See Note 1
See Notes to Financial Statements
9
SUNAMERICA EQUITY FUNDS
FINANCIAL HIGHLIGHTS
INTERNATIONAL DIVIDEND STRATEGY FUND*
-------------------------------------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRI- NET NET
ASSET NET (BOTH DIVIDENDS BUTIONS ASSET ASSETS
VALUE INVESTMENT REALIZED TOTAL FROM FROM NET FROM 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
-
09/30/08 $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
09/30/10 11.58 (0.01) 0.33 0.32 (0.00) -- (0.06) (0.06) 11.84 2.79 100,990
09/30/11 11.84 0.08 (1.64) (1.56) (0.00) -- -- (0.00) 10.28 (13.17) 50,177
09/30/12 10.28 0.23 0.66 0.89 (0.26) -- -- (0.26) 10.91 8.77 51,309
CLASS B
-
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
09/30/10 10.72 (0.09) 0.31 0.22 -- -- -- -- 10.94 2.05 8,815
09/30/11 10.94 (0.02) (1.49) (1.51) -- -- -- -- 9.43 (13.80) 5,130
09/30/12 9.43 0.13 0.62 0.75 (0.14) -- -- (0.14) 10.04 7.97 4,572
CLASS C
-
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
09/30/10 10.70 (0.09) 0.32 0.23 -- -- -- -- 10.93 2.15 19,763
09/30/11 10.93 (0.02) (1.49) (1.51) -- -- -- -- 9.42 (13.82) 13,190
09/30/12 9.42 0.14 0.61 0.75 (0.14) -- -- (0.14) 10.03 7.98 12,571
CLASS I
-
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
09/30/10 11.67 (0.02) 0.35 0.33 (0.01) -- (0.06) (0.07) 11.93 2.80 2,600
09/30/11 11.93 0.08 (1.65) (1.57) (0.00) -- -- (0.00) 10.36 (13.13) 1,625
09/30/12 10.36 0.24 0.66 0.90 (0.27) -- -- (0.27) 10.99 8.84 1,289
RATIO
OF NET
RATIO OF INVESTMENT
EXPENSES INCOME (LOSS)
TO AVERAGE TO AVERAGE PORTFOLIO
NET ASSETS NET ASSETS TURNOVER
---------- ------------- ---------
1.90%(4) 0.98%(4) 199%
1.89(3)(4) 1.14(3)(4) 431
1.85(4) (0.11)(4) 295
1.84 0.63 262
1.90(3) 2.07(3) 248
2.55(3)(4) 0.25(3)(4) 199%
2.55(3)(4) 0.36(3)(4) 431
2.55(3)(4) (0.86)(3)(4) 295
2.55(3) (0.18)(3) 262
2.55(3) 1.29(3) 248
2.55(3)(4) 0.31(3)(4) 199%
2.55(3)(4) 0.41(3)(4) 431
2.55(3)(4) (0.82)(3)(4) 295
2.55(3) (0.14)(3) 262
2.55(3) 1.38(3) 248
1.80(3)(4) 1.01(3)(4) 199%
1.80(3)(4) 0.95(3)(4) 431
1.80(3)(4) (0.16)(3)(4) 295
1.80(3) 0.59(3) 262
1.80(3) 2.14(3) 248
--------
(1)Calculated based upon average shares outstanding.
(2)Total return 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 3):
09/30/08 09/30/09 09/30/10 09/30/11 09/30/12
-------- -------- -------- -------- --------
International Dividend Strategy Class A. -- % 0.00% -- % -- % 0.25%
International Dividend Strategy Class B. 0.06 0.22 0.11 0.07 0.53
International Dividend Strategy Class C. 0.01 0.08 0.02 (0.00) 0.33
International Dividend Strategy Class I. 0.09 0.27 0.01 (0.09) 0.17
(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 09/30/10
-------- -------- --------
International Dividend Strategy Class A. 0.00% 0.00% 0.01%
International Dividend Strategy Class B. 0.00 0.00 0.00
International Dividend Strategy Class C. 0.00 0.00 0.01
International Dividend Strategy Class I. 0.00 0.00 0.00
(5)Includes the effect of a merger.
* See Note 1
See Notes to Financial Statements
10
SUNAMERICA EQUITY FUNDS
FINANCIAL HIGHLIGHTS -- (CONTINUED)
VALUE FUND
----------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRI- NET NET
ASSET NET (BOTH DIVIDENDS BUTIONS ASSET ASSETS
VALUE INVESTMENT REALIZED TOTAL FROM FROM NET FROM 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
-
09/30/08 $19.32 $ 0.19 $(3.86) $(3.67) $(0.21) $(2.70) $-- $(2.91) $12.74 (21.70)% $ 77,903
09/30/09 12.74 0.16 (1.88) (1.72) (0.23) -- -- (0.23) 10.79 (13.24) 52,112
09/30/10 10.79 0.14 0.30(5) 0.44 (0.07) -- -- (0.07) 11.16 4.13 122,673
09/30/11 11.16 0.08 (0.70) (0.62) (0.06) -- -- (0.06) 10.48 (5.63) 94,560
09/30/12 10.48 0.10 2.79 2.89 (0.13) -- -- (0.13) 13.24 27.84 90,132
CLASS B
-
09/30/08 18.24 0.09 (3.62) (3.53) (0.10) (2.70) -- (2.80) 11.91 (22.16) 21,304
09/30/09 11.91 0.10 (1.76) (1.66) (0.14) -- -- (0.14) 10.11 (13.78) 11,213
09/30/10 10.11 (0.00) 0.35(5) 0.35 (0.02) -- -- (0.02) 10.44 3.43 12,416
09/30/11 10.44 (0.01) (0.66) (0.67) -- -- -- -- 9.77 (6.42) 6,732
09/30/12 9.77 0.01 2.61 2.62 (0.04) -- -- (0.04) 12.35 26.92 5,277
CLASS C
-
09/30/08 18.24 0.09 (3.62) (3.53) (0.10) (2.70) -- (2.80) 11.91 (22.16) 14,194
09/30/09 11.91 0.09 (1.76) (1.67) (0.14) -- -- (0.14) 10.10 (13.86) 9,386
09/30/10 10.10 (0.00) 0.35(5) 0.35 (0.02) -- -- (0.02) 10.43 3.44 21,389
09/30/11 10.43 (0.01) (0.65) (0.66) -- -- -- -- 9.77 (6.33) 14,941
09/30/12 9.77 0.01 2.61 2.62 (0.06) -- -- (0.06) 12.33 26.95 14,688
CLASS Z
-
09/30/08 20.16 0.29 (4.05) (3.76) (0.28) (2.70) -- (2.98) 13.42 (21.28) 25,827
09/30/09 13.42 0.22 (1.98) (1.76) (0.30) -- -- (0.30) 11.36 (12.75) 21,138
09/30/10 11.36 0.15 0.38(5) 0.53 (0.11) -- -- (0.11) 11.78 4.72 22,591
09/30/11 11.78 0.19 (0.77) (0.58) (0.13) -- -- (0.13) 11.07 (5.03) 159
09/30/12 11.07 0.19 2.94 3.13 (0.24) -- -- (0.24) 13.96 28.63 137
RATIO
OF NET
RATIO OF INVESTMENT
EXPENSES INCOME (LOSS)
TO AVERAGE TO AVERAGE PORTFOLIO
NET ASSETS(4) NET ASSETS(4) TURNOVER
------------- ------------- ---------
1.63%(3) 1.23%(3) 207%
1.63(3) 1.68(3) 204
1.61(3) 0.64(3) 157(6)
1.50(3) 0.67(3) 231
1.53 0.80 214
2.28(3) 0.58(3) 207%
2.28(3) 1.06(3) 204
2.28(3) (0.02)(3) 157(6)
2.28(3) (0.13)(3) 231
2.28(3) 0.08(3) 214
2.28(3) 0.58(3) 207%
2.28(3) 1.02(3) 204
2.28(3) (0.02)(3) 157(6)
2.26(3) (0.10)(3) 231
2.26 0.08 214
1.06(3) 1.81(3) 207%
1.06(3) 2.20(3) 204
0.98(3) 1.26(3) 157(6)
0.87(3) 1.05(3) 231
0.92 1.45 214
--------
(1)Calculated based upon average shares outstanding.
(2)Total return 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 3):
09/30/08 09/30/09 09/30/10 09/30/11 09/30/12
-------- -------- -------- -------- --------
Value Class A........................... 0.11% 0.21% (0.10)% (0.02)% -- %
Value Class B........................... 0.14 0.29 0.01 (0.04) 0.13
Value Class C........................... 0.14 0.28 (0.08) (0.08) --
Value Class Z........................... 0.10 0.13 (0.09) (0.00) --
(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 09/30/10 09/30/11 09/30/12
-------- -------- -------- -------- --------
Value Class A........................... 0.03% 0.02% 0.01% 0.01% 0.00%
Value Class B........................... 0.03 0.02 0.01 0.01 0.00
Value Class C........................... 0.03 0.02 0.01 0.01 0.00
Value Class Z........................... 0.03 0.02 0.01 0.00 0.00
(5)Includes the effect of a merger.
(6)Excludes purchases due to a fund merger.
See Notes to Financial Statements
11
SUNAMERICA EQUITY FUNDS
FINANCIAL HIGHLIGHTS -- (CONTINUED)
JAPAN FUND*
-----------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRI- NET NET
ASSET NET (BOTH DIVIDENDS BUTIONS ASSET ASSETS
VALUE INVESTMENT REALIZED TOTAL FROM FROM NET FROM DISTRIBUTIONS TOTAL VALUE END OF
PERIOD 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) (000'S)
-------- --------- ---------- ----------- ---------- ---------- ------- ------------- ------- ------ --------- -------
CLASS A
09/30/08 $14.00 $(0.00) $(5.52) $(5.52) $ -- $(0.13) $(0.01) $(0.14) $8.34 (39.79)% $16,830
09/30/09 8.34 0.01 (0.01) 0.00 (0.00) -- -- (0.00) 8.34 0.02(4) 68,492
09/30/10 8.34 (0.02) 1.07 1.05 (0.29) -- -- (0.29) 9.10 13.01 58,538
09/30/11 9.10 0.00 (1.11) (1.11) (0.26) -- -- (0.26) 7.73 (12.68) 31,292
09/30/12 7.73 0.04 0.02 0.06 (0.01) (1.37) -- (1.38) 6.41 1.38 20,714
CLASS B
09/30/08 13.88 (0.08) (5.45) (5.53) -- (0.13) (0.01) (0.14) 8.21 (40.21) 633
09/30/09 8.21 (0.04) 0.00 (0.04) -- -- -- -- 8.17 (0.49)(4) 313
09/30/10 8.17 (0.07) 1.04 0.97 (0.22) -- -- (0.22) 8.92 12.16 377
09/30/11 8.92 (0.05) (1.09) (1.14) (0.23) -- -- (0.23) 7.55 (13.24) 316
09/30/12 7.55 (0.01) 0.04 0.03 -- (1.37) -- (1.37) 6.21 0.87 197
CLASS C
09/30/08 13.88 (0.09) (5.44) (5.53) -- (0.13) (0.01) (0.14) 8.21 (40.20) 2,199
09/30/09 8.21 (0.04) (0.01) (0.05) -- -- -- -- 8.16 (0.61)(4) 724
09/30/10 8.16 (0.07) 1.05 0.98 (0.22) -- -- (0.22) 8.92 12.30 691
09/30/11 8.92 (0.04) (1.11) (1.15) (0.23) -- -- (0.23) 7.54 (13.35) 888
09/30/12 7.54 (0.02) 0.05 0.03 -- (1.37) -- (1.37) 6.20 0.85 438
RATIO
OF NET
RATIO OF INVESTMENT
EXPENSES INCOME (LOSS)
TO AVERAGE TO AVERAGE PORTFOLIO
NET ASSETS(3) NET ASSETS(3) TURNOVER
------------- ------------- ---------
1.90% (0.04)% 93%
1.90 0.19 148
1.90 (0.24) 77
1.90 0.04 79
1.90 0.52 192
2.55 (0.68) 93%
2.55 (0.53) 148
2.55 (0.85) 77
2.55 (0.55) 79
2.55 (0.16) 192
2.55 (0.78) 93%
2.55 (0.58) 148
2.55 (0.86) 77
2.55 (0.48) 79
2.55 (0.23) 192
--------
(1)Calculated based upon average shares outstanding.
(2)Total return does not reflect sales load. Total return does include expense
reimbursements and expense reductions.
(3)Net of the following expense reimbursements (based on average net assets)
(See Note 3):
09/30/08 09/30/09 09/30/10 09/30/11 09/30/12
-------- -------- -------- -------- --------
Japan Class A........................... 0.54% 0.31% 0.18% 0.27% 0.59%
Japan Class B........................... 1.53 4.07 5.60 3.06 6.15
Japan Class C........................... 0.77 1.68 2.66 1.19 2.80
(4)The Fund's performance was increased by less than 0.01% from gains on
disposal of investments in violation of investment restrictions.
* See Note 1
See Notes to Financial Statements
12
SUNAMERICA INTERNATIONAL DIVIDEND STRATEGY FUND@
PORTFOLIO PROFILE -- SEPTEMBER 30, 2012 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Telephone-Integrated................... 10.4%
Electric-Integrated.................... 6.7
Television............................. 6.3
Cellular Telecom....................... 4.7
Non-Ferrous Metals..................... 4.2
Medical-Drugs.......................... 4.2
Oil Companies-Integrated............... 4.1
Real Estate Operations & Development... 4.1
Chemicals-Diversified.................. 4.1
Steel-Producers........................ 3.8
Building-Residential/Commercial........ 2.4
Insurance-Multi-line................... 2.3
Telecom Services....................... 2.2
Oil Companies-Exploration & Production. 2.2
Metal-Diversified...................... 2.1
Building-Heavy Construction............ 2.1
Metal-Copper........................... 2.1
Machinery-General Industrial........... 2.0
Computer Services...................... 2.0
Commercial Services-Finance............ 2.0
Banks-Commercial....................... 2.0
Computers-Periphery Equipment.......... 2.0
Shipbuilding........................... 1.9
Petrochemicals......................... 1.9
Miscellaneous Manufacturing............ 1.8
Rubber & Vinyl......................... 1.8
Electronic Components-Misc............. 1.8
Building & Construction-Misc........... 1.8
Metal-Iron............................. 1.7
Gambling (Non-Hotel)................... 1.7
Investment Companies................... 1.7
Electric-Distribution.................. 1.5
Wireless Equipment..................... 1.4
Electric-Transmission.................. 1.1
Exchange-Traded Funds.................. 0.8
Repurchase Agreements.................. 0.6
----
99.5%
====
COUNTRY ALLOCATION*
Brazil......... 19.5%
Taiwan......... 10.9
Israel......... 6.6
South Korea.... 6.5
Finland........ 6.3
Poland......... 6.0
France......... 5.9
Sweden......... 4.3
Italy.......... 4.1
Singapore...... 4.0
United States.. 3.5
Germany........ 2.2
Canada......... 2.2
Mexico......... 2.1
Indonesia...... 2.1
Spain.......... 2.0
Belgium........ 2.0
United Kingdom. 2.0
Denmark........ 2.0
China.......... 1.8
Chile.......... 1.8
Greece......... 1.7
----
99.5%
====
--------
*Calculated as a percentage of net assets
@See Note 1
13
SUNAMERICA INTERNATIONAL DIVIDEND STRATEGY FUND@
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
------------------------------------------------------------------------
COMMON STOCK -- 86.8%
BELGIUM -- 2.0%
Belgacom SA....................................... 46,567 $1,421,222
----------
BERMUDA -- 0.0%
Peace Mark Holdings, Ltd.+(1)(2).................. 800,000 0
Peregrine Investments Holdings, Ltd.+(1)(2)....... 91,000 0
----------
0
----------
BRAZIL -- 10.4%
Brookfield Incorporacoes SA....................... 829,600 1,616,436
Cia Siderurgica Nacional SA....................... 243,600 1,372,259
Light SA.......................................... 108,700 1,260,593
Porto Seguro SA................................... 157,000 1,579,100
Redecard SA....................................... 81,000 1,396,448
----------
7,224,836
----------
CANADA -- 2.2%
Canadian Oil Sands, Ltd........................... 69,994 1,498,702
----------
CHILE -- 1.8%
CAP SA............................................ 35,678 1,243,296
----------
CHINA -- 1.8%
China International Marine Containers Group Co.,
Ltd., Class B.................................... 1,032,900 1,286,787
----------
DENMARK -- 2.0%
TDC A/S........................................... 189,910 1,383,366
----------
FINLAND -- 6.3%
Elisa Oyj......................................... 64,620 1,460,672
Metso Oyj......................................... 40,166 1,435,422
Orion Oyj, Class B................................ 70,929 1,517,602
----------
4,413,696
----------
FRANCE -- 5.9%
Bouygues SA....................................... 50,330 1,228,854
Societe Television Francaise 1.................... 169,996 1,415,359
Total SA.......................................... 30,088 1,492,453
----------
4,136,666
----------
GREECE -- 1.7%
OPAP SA........................................... 223,631 1,149,508
----------
INDONESIA -- 2.1%
Vale Indonesia Tbk PT............................. 4,822,500 1,486,560
----------
ISRAEL -- 6.6%
Bezeq The Israeli Telecommunication Corp., Ltd.... 1,233,366 1,432,316
Israel Chemicals, Ltd............................. 119,488 1,448,617
Partner Communications Co., Ltd................... 321,767 1,735,308
----------
4,616,241
----------
ITALY -- 4.1%
Eni SpA........................................... 63,814 1,395,711
Mediaset SpA...................................... 785,454 1,474,657
----------
2,870,368
----------
MEXICO -- 2.1%
Grupo Mexico SAB de CV, Class B................... 450,400 1,488,532
----------
POLAND -- 6.0%
KGHM Polska Miedz SA.............................. 30,970 1,474,232
PGE SA............................................ 229,049 1,322,681
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
----------------------------------------------------------------------
POLAND (CONTINUED)
Synthos SA..................................... 759,545 $ 1,351,398
-----------
4,148,311
-----------
SINGAPORE -- 4.0%
Keppel Land, Ltd............................... 516,000 1,492,666
Yangzijiang Shipbuilding Holdings, Ltd......... 1,638,000 1,308,051
-----------
2,800,717
-----------
SOUTH KOREA -- 6.5%
Korea Exchange Bank+........................... 181,990 1,390,193
KT Corp........................................ 49,820 1,577,852
SK Telecom Co., Ltd............................ 11,920 1,576,570
-----------
4,544,615
-----------
SPAIN -- 2.0%
Indra Sistemas SA.............................. 146,780 1,422,192
-----------
SWEDEN -- 4.3%
Skanska AB, Class B............................ 89,563 1,449,359
Tele2 AB, Class B.............................. 86,297 1,565,979
-----------
3,015,338
-----------
TAIWAN -- 10.9%
China Petrochemical Development Corp........... 1,542,000 1,307,203
E Ink Holdings, Inc............................ 1,172,000 1,279,411
Farglory Land Development Co., Ltd............. 728,000 1,360,957
HTC Corp....................................... 101,000 978,525
Lite-On Technology Corp........................ 1,066,910 1,377,609
TSRC Corp...................................... 579,800 1,285,653
-----------
7,589,358
-----------
UNITED KINGDOM -- 2.0%
AstraZeneca PLC................................ 29,035 1,385,472
-----------
UNITED STATES -- 2.1%
Southern Copper Corp........................... 41,650 1,431,094
-----------
TOTAL COMMON STOCK
(cost $58,992,562)............................ 60,556,877
-----------
PREFERRED STOCK -- 11.2%
BRAZIL -- 9.0%
Bradespar SA................................... 82,800 1,149,336
Centrais Eletricas Brasileiras SA, Class B..... 137,100 1,232,869
Cia de Transmissao de Energia Eletrica
Paulista...................................... 41,500 771,350
Cia Energetica de Minas Gerais................. 70,500 854,799
Eletropaulo Metropolitana Eletricidade de Sao
Paulo SA...................................... 106,500 1,034,924
Vale SA, Class A............................... 69,200 1,203,938
-----------
6,247,216
-----------
14
SUNAMERICA INTERNATIONAL DIVIDEND STRATEGY FUND@
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (CONTINUED)
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------
PREFERRED STOCK (CONTINUED)
GERMANY -- 2.2%
ProSiebenSat.1 Media AG............. 60,803 $ 1,531,834
-----------
TOTAL PREFERRED STOCK
(cost $9,364,504).................. 7,779,050
-----------
EXCHANGE-TRADED FUNDS -- 0.8%
UNITED STATES -- 0.8%
iShares MSCI ACWI ex-US Index Fund
(cost $534,910).................... 13,137 518,386
-----------
RIGHTS -- 0.1%
BRAZIL -- 0.1%
Brookfield Incorporacoes SA
Expires 10/18/2012
(subscription price 3.06 BRL)+
(cost $0).......................... 228,232 96,821
-----------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $68,891,976)................. 68,951,134
-----------
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 0.6%
State Street Bank and Trust Co. Joint Repurchase
Agreement(3)
(cost $446,000).................................. $446,000 $ 446,000
-----------
TOTAL INVESTMENTS --
(cost $69,337,976)(4)............................ 99.5% 69,397,134
Other assets less liabilities....................... 0.5 343,929
-------- -----------
NET ASSETS -- 100.0% $69,741,063
======== ===========
--------
+ Non-income producing security
@ See Note 1
(1)Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs; see Note 2.
(2)Illiquid security. At September 30, 2012, the aggregate value of these
securities was $0 representing 0.0% of net assets.
(3)See Note 2 for details of Joint Repurchase Agreements.
(4)See Note 6 for cost of investments on a tax basis.
BRL -- Brazilian Real
The following is a summary of the inputs used to value the Fund's net assets as
of September 30, 2012 (see Note 2):
LEVEL 1 -- UNADJUSTED LEVEL 2 -- OTHER LEVEL 3 -- SIGNIFCANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
--------------------- ----------------- --------------------- -----------
ASSETS
Long-Term Investment Securities:
Common Stock:
Bermuda...................... $ -- $ -- $ 0 $ 0
Brazil....................... 7,224,836 -- -- 7,224,836
Finland...................... 4,413,696 -- -- 4,413,696
France....................... 4,136,666 -- -- 4,136,666
Israel....................... 4,616,241 -- -- 4,616,241
Poland....................... 4,148,311 -- -- 4,148,311
South Korea.................. 4,544,615 -- -- 4,544,615
Taiwan....................... 7,589,358 -- -- 7,589,358
Other Countries*............. 23,883,154 -- -- 23,883,154
Preferred Stock:
Brazil....................... 6,247,216 -- -- 6,247,216
Other Countries*............. 1,531,834 -- -- 1,531,834
Exchange Traded Funds.......... 518,386 -- -- 518,386
Rights......................... 96,821 -- -- 96,821
Repurchase Agreement............. -- 446,000 -- 446,000
----------- -------- --- -----------
TOTAL............................ $68,951,134 $446,000 $ 0 $69,397,134
=========== ======== === ===========
--------
* 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 Fund's policy is to recognize transfers between levels as of the end of the
reporting period. A security held at the beginning of the period currently
valued at $1,492,453 was transferred from Level 2 to Level 1 due to foreign
equity securities whose values were previously adjusted for fair value pricing
procedures for foreign equity securities. There were no additional transfers
between levels during the reporting period.
At the beginning and/or end of the reporting period, Level 3 investments in
securities and other financial instruments were not considered a material
portion of the Fund.
See Notes to Financial Statements
15
SUNAMERICA VALUE FUND
PORTFOLIO PROFILE -- SEPTEMBER 30, 2012 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Diversified Banking Institutions....... 11.2%
Oil Companies-Integrated............... 8.6
Medical-Drugs.......................... 8.3
Banks-Super Regional................... 6.8
Oil Companies-Exploration & Production. 5.1
Retail-Apparel/Shoe.................... 4.1
Medical-HMO............................ 3.7
Food-Misc./Diversified................. 3.5
Telephone-Integrated................... 3.3
Aerospace/Defense...................... 3.1
Cable/Satellite TV..................... 3.0
Insurance-Multi-line................... 3.0
Applications Software.................. 2.7
Multimedia............................. 2.7
Medical Products....................... 2.1
Diversified Manufacturing Operations... 2.1
Transport-Rail......................... 1.9
Networking Products.................... 1.7
Medical-Hospitals...................... 1.7
Instruments-Controls................... 1.6
Engineering/R&D Services............... 1.5
Machinery-Construction & Mining........ 1.5
Enterprise Software/Service............ 1.4
Aerospace/Defense-Equipment............ 1.4
Paper & Related Products............... 1.3
Cellular Telecom....................... 1.3
Cosmetics & Toiletries................. 1.3
Banks-Fiduciary........................ 1.1
Retail-Building Products............... 1.1
Metal-Copper........................... 1.1
Electronic Components-Semiconductors... 1.0
Oil & Gas Drilling..................... 1.0
Chemicals-Diversified.................. 0.9
Tobacco................................ 0.8
Computers.............................. 0.8
Repurchase Agreements.................. 0.4
----
98.1%
====
--------
*Calculated as a percentage of net assets
16
SUNAMERICA VALUE FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
-----------------------------------------------------------------
COMMON STOCK -- 97.7%
AEROSPACE/DEFENSE -- 3.1%
Boeing Co.................................. 20,000 $ 1,392,400
General Dynamics Corp...................... 30,000 1,983,600
-----------
3,376,000
-----------
AEROSPACE/DEFENSE-EQUIPMENT -- 1.4%
United Technologies Corp................... 20,000 1,565,800
-----------
APPLICATIONS SOFTWARE -- 2.7%
Microsoft Corp............................. 100,000 2,978,000
-----------
BANKS-FIDUCIARY -- 1.1%
State Street Corp.......................... 30,000 1,258,800
-----------
BANKS-SUPER REGIONAL -- 6.8%
Capital One Financial Corp................. 40,000 2,280,400
US Bancorp................................. 50,000 1,715,000
Wells Fargo & Co........................... 100,000 3,453,000
-----------
7,448,400
-----------
CABLE/SATELLITE TV -- 3.0%
Comcast Corp., Class A..................... 50,000 1,788,500
DISH Network Corp., Class A................ 50,000 1,530,500
-----------
3,319,000
-----------
CELLULAR TELECOM -- 1.3%
Vodafone Group PLC ADR..................... 50,000 1,424,750
-----------
CHEMICALS-DIVERSIFIED -- 0.9%
E.I. du Pont de Nemours & Co............... 20,000 1,005,400
-----------
COMPUTERS -- 0.8%
Hewlett-Packard Co......................... 50,000 853,000
-----------
COSMETICS & TOILETRIES -- 1.3%
Procter & Gamble Co........................ 20,000 1,387,200
-----------
DIVERSIFIED BANKING INSTITUTIONS -- 11.2%
Bank of America Corp....................... 400,000 3,532,000
Citigroup, Inc............................. 100,000 3,272,000
Goldman Sachs Group, Inc................... 20,000 2,273,600
JPMorgan Chase & Co........................ 80,000 3,238,400
-----------
12,316,000
-----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 2.1%
General Electric Co........................ 100,000 2,271,000
-----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 1.0%
Intel Corp................................. 50,000 1,134,000
-----------
ENGINEERING/R&D SERVICES -- 1.5%
Fluor Corp................................. 30,000 1,688,400
-----------
ENTERPRISE SOFTWARE/SERVICE -- 1.4%
Oracle Corp................................ 50,000 1,574,500
-----------
FOOD-MISC./DIVERSIFIED -- 3.5%
ConAgra Foods, Inc......................... 80,000 2,207,200
Mondelez International, Inc.+.............. 40,000 1,654,000
-----------
3,861,200
-----------
INSTRUMENTS-CONTROLS -- 1.6%
Honeywell International, Inc............... 30,000 1,792,500
-----------
INSURANCE-MULTI-LINE -- 3.0%
Hartford Financial Services Group, Inc..... 80,000 1,555,200
MetLife, Inc............................... 50,000 1,723,000
-----------
3,278,200
-----------
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
--------------------------------------------------------------------
MACHINERY-CONSTRUCTION & MINING -- 1.5%
Joy Global, Inc.............................. 30,000 $ 1,681,800
------------
MEDICAL PRODUCTS -- 2.1%
Covidien PLC................................. 40,000 2,376,800
------------
MEDICAL-DRUGS -- 8.3%
Johnson & Johnson............................ 40,000 2,756,400
Merck & Co., Inc............................. 60,000 2,706,000
Pfizer, Inc.................................. 150,000 3,727,500
------------
9,189,900
------------
MEDICAL-HMO -- 3.7%
Aetna, Inc................................... 60,000 2,376,000
UnitedHealth Group, Inc...................... 30,000 1,662,300
------------
4,038,300
------------
MEDICAL-HOSPITALS -- 1.7%
Universal Health Services, Inc., Class B..... 40,000 1,829,200
------------
METAL-COPPER -- 1.1%
Freeport-McMoRan Copper & Gold, Inc.......... 30,000 1,187,400
------------
MULTIMEDIA -- 2.7%
Time Warner, Inc............................. 30,000 1,359,900
Viacom, Inc., Class B........................ 30,000 1,607,700
------------
2,967,600
------------
NETWORKING PRODUCTS -- 1.7%
Cisco Systems, Inc........................... 100,000 1,909,000
------------
OIL & GAS DRILLING -- 1.0%
Ensco PLC, Class A........................... 20,000 1,091,200
------------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 5.1%
Anadarko Petroleum Corp...................... 30,000 2,097,600
Devon Energy Corp............................ 30,000 1,815,000
Occidental Petroleum Corp.................... 20,000 1,721,200
------------
5,633,800
------------
OIL COMPANIES-INTEGRATED -- 8.6%
Chevron Corp................................. 30,000 3,496,800
ConocoPhillips............................... 40,000 2,287,200
Exxon Mobil Corp............................. 40,000 3,658,000
------------
9,442,000
------------
PAPER & RELATED PRODUCTS -- 1.3%
International Paper Co....................... 40,000 1,452,800
------------
RETAIL-APPAREL/SHOE -- 4.1%
Abercrombie & Fitch Co., Class A............. 50,000 1,696,000
Aeropostale, Inc.+........................... 100,000 1,353,000
Express, Inc.+............................... 100,000 1,482,000
------------
4,531,000
------------
RETAIL-BUILDING PRODUCTS -- 1.1%
Lowe's Cos., Inc............................. 40,000 1,209,600
------------
TELEPHONE-INTEGRATED -- 3.3%
AT&T, Inc.................................... 60,000 2,262,000
Verizon Communications, Inc.................. 30,000 1,367,100
------------
3,629,100
------------
TOBACCO -- 0.8%
Philip Morris International, Inc............. 10,000 899,400
------------
TRANSPORT-RAIL -- 1.9%
CSX Corp..................................... 100,000 2,075,000
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $99,700,609).......................... 107,676,050
------------
17
SUNAMERICA VALUE FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------
REPURCHASE AGREEMENT -- 0.4%
State Street Bank and Trust Co. Joint
Repurchase Agreement(1)
(cost $495,000)....................... $495,000 $ 495,000
------------
TOTAL INVESTMENTS
(cost $100,195,609)(2)................ 98.1% 108,171,050
Other assets less liabilities............ 1.9 2,062,362
-------- ------------
NET ASSETS 100.0 % $110,233,412
======== ============
--------
+ Non-income producing security
(1)See Note 2 for details of Joint Repurchase Agreements.
(2)See Note 6 for cost of investments on a tax basis.
ADR --American Depository Receipt
The following is a summary of the inputs used to value the Fund's net assets as
of September 30, 2012 (see Note 2):
LEVEL 1 --UNADJUSTED LEVEL 2 -- OTHER LEVEL 3 --SIGNIFCANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
-------------------- ----------------- -------------------- ------------
ASSETS:
Long-Term Investment Securities:
Common Stock:
Banks-Super Regional..................... $ 7,448,400 $ -- $-- $ 7,448,400
Diversified Banking Institutions......... 12,316,000 -- -- 12,316,000
Medical-Drugs............................ 9,189,900 -- -- 9,189,900
Oil Companies-Exploration & Production... 5,633,800 -- -- 5,633,800
Oil Companies-Integrated................. 9,442,000 -- -- 9,442,000
Other Industries*........................ 63,645,950 -- -- 63,645,950
Repurchase Agreement......................... -- 495,000 -- 495,000
------------ -------- --- ------------
TOTAL........................................ $107,676,050 $495,000 $-- $108,171,050
============ ======== === ============
--------
* 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.
The Fund's policy is to recognize transfers between levels as of the end of the
reporting period. There were no transfers between levels during the reporting
period.
See Notes to Financial Statements
18
SUNAMERICA JAPAN FUND@
PORTFOLIO PROFILE -- SEPTEMBER 30, 2012 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Auto/Truck Parts & Equipment-Original.. 11.0%
Diversified Banking Institutions....... 4.7
E-Commerce/Services.................... 4.7
Oil Refining & Marketing............... 4.5
Cosmetics & Toiletries................. 4.0
Medical-Drugs.......................... 3.7
Entertainment Software................. 3.7
Oil Companies-Exploration & Production. 3.6
Retail-Consumer Electronics............ 3.5
Electric Products-Misc................. 3.3
Auto-Cars/Light Trucks................. 2.7
Photo Equipment & Supplies............. 2.5
Chemicals-Diversified.................. 2.3
Web Portals/ISP........................ 2.3
Schools................................ 2.2
Import/Export.......................... 2.2
Security Services...................... 2.1
Electronic Measurement Instruments..... 2.1
Television............................. 2.1
Steel-Producers........................ 2.1
Rubber-Tires........................... 2.1
Real Estate Operations & Development... 1.9
Leisure Products....................... 1.9
Machinery-General Industrial........... 1.9
Retail-Discount........................ 1.8
Insurance-Property/Casualty............ 1.7
Office Automation & Equipment.......... 1.5
Industrial Automated/Robotic........... 1.3
Telephone-Integrated................... 1.3
Travel Services........................ 1.3
Commercial Services.................... 1.2
E-Services/Consulting.................. 1.2
Retail-Misc./Diversified............... 1.0
Transport-Truck........................ 1.0
Chemicals-Specialty.................... 1.0
Internet Content-Information/News...... 1.0
Retail-Apparel/Shoe.................... 1.0
Transport-Marine....................... 0.7
Machine Tools & Related Products....... 0.6
Finance-Consumer Loans................. 0.6
Machinery-Construction & Mining........ 0.6
Medical-Nursing Homes.................. 0.5
E-Marketing/Info....................... 0.5
Computers-Integrated Systems........... 0.5
Electronic Components-Misc............. 0.5
Wireless Equipment..................... 0.4
----
98.3%
====
COUNTRY ALLOCATION*
Japan..... 98.3%
Australia. 0.0
Bermuda... 0.0
----
98.3%
====
--------
*Calculated as a percentage of net assets
@See Note 1
19
SUNAMERICA JAPAN FUND@
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
------------------------------------------------------------------
COMMON STOCK -- 98.3%
AUTO-CARS/LIGHT TRUCKS -- 2.7%
Nissan Motor Co., Ltd........................ 67,300 $ 573,482
----------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 11.0%
Exedy Corp................................... 43,100 851,065
NOK Corp..................................... 23,300 372,908
Stanley Electric Co., Ltd.................... 38,900 576,222
TACHI-S Co., Ltd............................. 32,900 559,013
----------
2,359,208
----------
CHEMICALS-DIVERSIFIED -- 2.3%
Mitsubishi Gas Chemical Co., Inc............. 55,000 276,269
Nitto Denko Corp............................. 4,500 214,505
----------
490,774
----------
CHEMICALS-SPECIALTY -- 1.0%
Lintec Corp.................................. 11,600 211,369
----------
COAL -- 0.0%
White Energy Co., Ltd.+...................... 446 153
----------
COMMERCIAL SERVICES -- 1.2%
Nichii Gakkan Co............................. 27,700 266,565
----------
COMPUTERS-INTEGRATED SYSTEMS -- 0.5%
Fujitsu, Ltd................................. 28,000 105,126
----------
COSMETICS & TOILETRIES -- 4.0%
Dr. Ci:Labo Co., Ltd......................... 27 91,026
Pigeon Corp.................................. 3,200 146,387
Pola Orbis Holdings, Inc..................... 19,500 614,685
----------
852,098
----------
DIVERSIFIED BANKING INSTITUTIONS -- 4.7%
Mitsubishi UFJ Financial Group, Inc.......... 213,000 998,949
----------
E-COMMERCE/SERVICES -- 4.7%
Dena Co., Ltd................................ 23,400 777,201
Rakuten, Inc................................. 21,600 220,041
----------
997,242
----------
E-MARKETING/INFO -- 0.5%
CyberAgent, Inc.............................. 53 114,367
----------
E-SERVICES/CONSULTING -- 1.2%
Digital Garage, Inc.......................... 146 257,988
----------
ELECTRIC PRODUCTS-MISC. -- 3.3%
Brother Industries, Ltd...................... 25,100 232,860
Funai Electric Co., Ltd...................... 4,600 64,897
Mitsubishi Electric Corp..................... 56,000 413,327
----------
711,084
----------
ELECTRONIC COMPONENTS-MISC. -- 0.5%
Kyocera Corp................................. 1,200 103,947
----------
ELECTRONIC MEASUREMENT INSTRUMENTS -- 2.1%
Azbil Corp................................... 22,600 454,375
----------
ENTERTAINMENT SOFTWARE -- 3.7%
Konami Corp.................................. 34,700 788,353
----------
FINANCE-CONSUMER LOANS -- 0.6%
ACOM Co., Ltd.+.............................. 4,780 121,582
----------
IMPORT/EXPORT -- 2.2%
Sumitomo Corp................................ 34,100 460,114
----------
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
----------------------------------------------------------------
INDUSTRIAL AUTOMATED/ROBOTIC -- 1.3%
FANUC Corp................................... 1,700 $274,039
--------
INSURANCE-PROPERTY/CASUALTY -- 1.7%
Tokio Marine Holdings, Inc................... 14,500 370,489
--------
INTERNET CONTENT-INFORMATION/NEWS -- 1.0%
Kakaku.com, Inc.............................. 5,600 210,753
--------
LEISURE PRODUCTS -- 1.9%
Sega Sammy Holdings, Inc..................... 21,200 402,322
--------
MACHINE TOOLS & RELATED PRODUCTS -- 0.6%
THK Co., Ltd................................. 8,200 125,879
--------
MACHINERY-CONSTRUCTION & MINING -- 0.6%
Hitachi Construction Machinery Co., Ltd...... 3,600 58,262
Komatsu, Ltd................................. 3,100 61,055
--------
119,317
--------
MACHINERY-GENERAL INDUSTRIAL -- 1.9%
Amada Co., Ltd............................... 91,000 398,795
--------
MEDICAL-DRUGS -- 3.7%
Eisai Co., Ltd............................... 12,600 568,324
Shionogi & Co., Ltd.......................... 14,700 224,531
--------
792,855
--------
MEDICAL-NURSING HOMES -- 0.5%
Message Co., Ltd............................. 32 116,043
--------
MISCELLANEOUS MANUFACTURING -- 0.0%
Peace Mark Holdings, Ltd.+(1)(2)............. 8,000 0
--------
OFFICE AUTOMATION & EQUIPMENT -- 1.5%
Canon, Inc................................... 10,000 319,708
--------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 3.6%
Inpex Corp................................... 129 769,471
--------
OIL REFINING & MARKETING -- 4.5%
JX Holdings, Inc............................. 173,900 951,503
--------
PHOTO EQUIPMENT & SUPPLIES -- 2.5%
FUJIFILM Holdings Corp....................... 32,300 541,368
--------
REAL ESTATE OPERATIONS & DEVELOPMENT -- 1.9%
Mitsui Fudosan Co., Ltd...................... 20,400 408,575
--------
RETAIL-APPAREL/SHOE -- 1.0%
Nishimatsuya Chain Co., Ltd.................. 10,400 86,756
Point, Inc................................... 3,400 122,642
--------
209,398
--------
RETAIL-CONSUMER ELECTRONICS -- 3.5%
K's Holdings Corp............................ 30,100 751,343
--------
RETAIL-DISCOUNT -- 1.8%
Don Quijote Co., Ltd......................... 10,000 385,059
--------
RETAIL-MISC./DIVERSIFIED -- 1.0%
Ryohin Keikaku Co., Ltd...................... 3,500 221,105
--------
RUBBER-TIRES -- 2.1%
Bridgestone Corp............................. 19,200 445,310
--------
SCHOOLS -- 2.2%
Benesse Holdings, Inc........................ 9,800 474,680
--------
SECURITY SERVICES -- 2.1%
Secom Co., Ltd............................... 8,800 458,944
--------
20
SUNAMERICA JAPAN FUND@
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (CONTINUED)
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
------------------------------------------------
COMMON STOCK (CONTINUED)
STEEL-PRODUCERS -- 2.1%
Yamato Kogyo Co., Ltd........ 15,100 $445,609
--------
TELEPHONE-INTEGRATED -- 1.3%
Softbank Corp................ 6,600 267,248
--------
TELEVISION -- 2.1%
Fuji Media Holdings, Inc..... 273 447,071
--------
TRANSPORT-MARINE -- 0.7%
Kawasaki Kisen Kaisha, Ltd.+. 120,000 150,692
--------
TRANSPORT-TRUCK -- 1.0%
Sankyu, Inc.................. 57,000 215,466
--------
TRAVEL SERVICES -- 1.3%
HIS Co., Ltd................. 8,500 267,177
--------
WEB PORTALS/ISP -- 2.3%
Yahoo Japan Corp............. 1,272 484,579
--------
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
-----------------------------------------------------
WIRELESS EQUIPMENT -- 0.4%
Hitachi Kokusai Electric, Inc.. 13,000 $ 86,122
-----------
TOTAL INVESTMENTS
(cost $22,119,050)(3)......... 98.3% 20,977,696
Other assets less liabilities.... 1.7 372,024
------ -----------
NET ASSETS 100.0% $21,349,720
====== ===========
--------
+ Non-income producing security
@ See Note 1
(1)Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs; see Note 2.
(2)Illiquid security. At September 30, 2012, the aggregate value of these
securities was $0 representing 0% of net assets.
(3)See Note 6 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 September 30, 2012 (see Note 2):
LEVEL 1 -- UNADJUSTED LEVEL 2 -- OTHER LEVEL 3 -- SIGNIFCANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
--------------------- ----------------- --------------------- -----------
ASSETS:
Long-Term Investment Securities:
Common Stock:
Auto/Truck Parts & Equipment-Original... $ 2,359,208 $-- $-- $ 2,359,208
Miscellaneous Manufacturing............. -- -- 0 0
Other Industries*....................... 18,618,488 -- -- 18,618,488
----------- --- --- -----------
TOTAL....................................... $20,977,696 $-- $ 0 $20,977,696
=========== === === ===========
--------
* 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.
The Fund's policy is to recognize transfers between levels as of the end of the
reporting period. Securities held at the beginning of the period currently
valued at $999,259 were transferred from Level 2 to Level 1 due to foreign
equity securities whose values were previously adjusted for fair value pricing
procedures for foreign equity securities. There were no additional transfers
between levels during the reporting period.
At the beginning and/or end of the reporting period, Level 3 investments in
securities and other financial instruments were not considered a material
portion of the Fund.
See Notes to Financial Statements
21
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012
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 Dividend Strategy Fund
("International Dividend Strategy Fund"), SunAmerica Value Fund ("Value
Fund"), and SunAmerica Japan Fund ("Japan Fund"). The Funds are considered
to be separate entities for financial and tax reporting purposes.
Effective January 27, 2012, the name of the International Small-Cap Fund was
changed to the Japan Fund and certain changes were made to the Fund's
principal investment strategy and techniques. Effective July 2, 2012, the
name of the International Equity Fund was changed to the International
Dividend Strategy Fund and certain changes were made to the Fund's
investment goal, principal investment strategy and principal investment
techniques. These changes are reflected below.
The investment goal and principal investment techniques for each of the
Funds are as follows:
INTERNATIONAL DIVIDEND STRATEGY FUND seeks total return by employing a "buy
and hold" strategy to identify approximately 50 to 100 high dividend
yielding equity securities selected annually from the MSCI ACWI ex-U.S.
Index. At least 80% of the Fund's net assets, plus any borrowings for
investment purposes, will be invested in dividend yielding equity securities.
VALUE FUND seeks long-term growth of capital by active trading of equity
securities selected on the basis of a value criteria, issued by companies of
any market capitalization, that offer the potential for long-term growth of
capital.
JAPAN FUND seeks long-term capital appreciation by active trading of
securities of Japanese issuers and other investments that are tied
economically to Japan ("Japanese companies"). Under normal circumstances, at
least 80% of the Fund's net assets, plus any borrowings for investment
purposes, will be invested in Japanese companies.
Each Fund is organized as a "diversified" fund within the meaning of the
1940 Act.
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 Dividend
Strategy Fund and Japan 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 Dividend Strategy Fund and Japan 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.
22
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (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. Significant Accounting Policies
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from these estimates and
those differences could be significant. The following is a summary of
significant accounting policies consistently followed by the Trust in the
preparation of its financial statements:
SECURITY VALUATION: In accordance with the authoritative guidance on fair
value measurements and disclosures under accounting principles generally
accepted in the United States of America ("GAAP"), the Funds disclose the
fair value of their investments in a hierarchy that prioritizes the inputs
to valuation techniques used to measure the fair value. In accordance with
GAAP, fair value is defined as the price that the Funds would receive upon
selling an asset or transferring a liability in a timely transaction to an
independent third party in the principal or most advantageous market. GAAP
established a three-tier hierarchy to provide more transparency around the
inputs used to measure fair value and to establish classification of fair
value measurements for disclosure purposes. Inputs refer broadly to the
assumptions that market participants would use in pricing the asset or
liability, including assumptions about risk. Inputs may be observable or
unobservable. Observable inputs are inputs that reflect the assumptions
market participants would use in pricing the asset or liability developed
based on market data obtained from sources independent of the reporting
entity. Unobservable inputs are inputs that reflect the reporting entity's
own assumptions about the assumptions market participants would use in
pricing the asset or liability developed based on the best information
available in the circumstances. The three-tiers are as follows:
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, 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.)
Changes in valuation techniques may result in transfers in or out of an
investment's assigned Level within the hierarchy. The methodology used for
valuing investments are not necessarily an indication of the risk associated
with investing in those investments and the determination of the
significance of a particular input to the fair value measurement in its
entirety requires judgment and consideration of factors specific to each
security.
The availability of observable inputs can vary from security to security and
is affected by a wide variety of factors, including, for example, the type
of security, whether the security is recently issued and not yet established
in the marketplace, the liquidity of markets, and other characteristics
particular to the security. To the extent that valuation is based on models
or inputs that are less
23
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (CONTINUED)
observable or unobservable in the market, the determination of fair value
requires more judgment. Accordingly, the degree of judgment exercised in
determining fair value is greatest for instruments categorized in Level 3.
The summary of inputs used to value the Funds' net assets as of
September 30, 2012 are reported on a schedule following the Portfolio of
Investments.
Stocks are generally valued based upon closing sales prices reported on
recognized securities exchanges for which the securities are principally
traded and are generally categorized as Level 1. 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, the
Funds use the exchange that is the primary market for the security. Such
securities are generally categorized as Level 1. However, depending on the
foreign market, closing prices may be up to 15 hours old when they are used
to price the Fund's shares, and the Fund may determine that certain closing
prices do not reflect the fair value of the security. 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 and foreign equity futures
contracts, the Funds use an outside pricing service to provide it with
closing market prices and information used for adjusting those prices, and,
when so adjusted, such securities and futures are generally categorized as
Level 2.
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 and are generally categorized as Level 2 or Level 3
depending on the observability of inputs. 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, and are generally
categorized as Level 2.
Investments in registered investment companies that do not trade on an
exchange are valued at the end of day net asset value per share. Investments
in registered investment companies that trade on an exchange are valued at
the last sales price or official closing price as of the close of the
customary trading session on the exchange where the security is principally
traded. Registered investment companies are generally categorized as Level 1.
Other securities are valued on the basis of last sale or bid price (if a
last sale price is not available) which is, in the opinion of the Adviser,
the broadest and most representative market, that may be either a securities
exchange or over-the-counter market and are generally categorized as Level 1
or Level 2.
The Board is responsible for the share valuation process and has adopted a
policy and procedures (the "PRC Procedures") for valuing the securities and
other assets held by the Funds, including procedures for the fair valuation
of securities and other assets
24
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (CONTINUED)
for which market quotations are not readily available or are unreliable. The
PRC Procedures provide for the establishment of a pricing review committee,
which is responsible for, among other things, making certain determinations
in connection with the Trust's fair valuation procedures. Securities for
which market quotations are not readily available or the values of which may
be significantly impacted by the occurrence of developments or significant
events are generally categorized as Level 3. There is no single standard for
making fair value determinations, which may result in prices that vary from
those of other funds.
REPURCHASE AGREEMENTS: The Funds, along with other affiliated registered
investment companies, pursuant to procedures adopted by the Board and
applicable guidance from the 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. In
a repurchase agreement, the seller of a security agrees to repurchase the
security at a mutually agreed-upon time and price, which reflects the
effective rate of return for the term of the agreement. For repurchase
agreements and joint repurchase agreements, the Funds' custodian takes
possession of the collateral pledged for investments in such 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 September 30, 2012, the following Funds held an undivided interest in
the joint repurchase agreement with State Street Bank & Trust Co.:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- ---------
International Dividend Strategy. 0.16% $446,000
Value........................... 0.18 495,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
State Street Bank & Trust Co., dated September 28, 2012, bearing interest at
a rate of 0.01% per annum, with a principal amount of $278,920,000, a
repurchase price of $278,920,232, and a maturity date of October 1, 2012.
The repurchase agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL MARKET
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- -------- ------------ ------------
U.S. Treasury Bonds. 3.50% 02/15/39 $ 78,770,000 $ 91,333,579
U.S. Treasury Notes. 1.75 05/15/22 188,915,000 193,165,588
SECURITIES TRANSACTIONS, INVESTMENT INCOME, EXPENSES, DIVIDENDS AND
DISTRIBUTIONS TO SHAREHOLDERS: Security transactions are recorded on a trade
date basis. Realized gains and losses on the sale of investments are
calculated on the identified cost basis. For financial statement purposes,
the Funds amortize all premiums and accrete all discounts on fixed income
securities.
Interest income is accrued daily from settlement date 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 Trust 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 from the sale of foreign securities at various rates.
Net investment income, expenses 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
current capital shares activity of the respective class).
25
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (CONTINUED)
Expenses common to all Funds, not directly related to individual Funds are
allocated among the Funds based upon relative net assets or other
appropriate allocation 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 normally paid quarterly
for the International Dividend Strategy Fund. All other Funds pay annually.
Capital gain distributions, if any, are paid annually. Each of the Funds
reserves the right to declare and pay dividends less frequently than
disclosed above, provided that the net realized capital gains and net
investment income, if any, are paid at least annually. The 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 assets are not
affected by these reclassifications.
Each Fund is considered a separate entity for tax purposes and 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 capital gains on investments, to its
shareholders. Each Fund also intends to distribute sufficient net investment
income and net capital gains, if any, so that each Fund will not be subject
to excise tax on undistributed income and gains. Therefore, no federal
income tax or excise tax provision is required.
Each Fund recognizes the tax benefits of uncertain tax positions only when
the position is more likely than not to be sustained, assuming examination
by tax authorities. Management has analyzed each Fund's tax positions and
concluded that no liability for unrecognized tax benefits should be recorded
related to uncertain tax positions taken on returns filed for open tax years
2009 - 2011 or expected to be taken in each Funds' 2012 tax return. The
Funds are not aware of any tax provisions for which it is reasonably
possible that the total amounts of unrecognized tax benefits will change
materially in the next twelve months. 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 examinations by tax authorities
for tax returns ending before 2009.
FOREIGN CURRENCY TRANSLATION: The books and records of the Funds are
maintained in U.S. dollars. Assets and liabilities denominated in foreign
currencies and commitments under forward foreign currency contracts are
translated into U.S. dollars based on the exchange rate of such currencies
against U.S. dollars on the date of valuation.
The Funds do not isolate that portion of the results of operations arising
as a result of changes in the foreign exchange rates from the changes in the
market prices of securities held at the end of the year.
Similarly, the Funds do not isolate the effect of changes in foreign
exchange rates from the changes in the market prices of portfolio securities
sold during the year.
Realized foreign exchange gains and losses on other assets and liabilities
and change in unrealized foreign exchange gains and losses on other assets
and liabilities located in the Statement of Operations include realized
foreign exchange gains and losses from currency gains or losses between the
trade and the 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 the other assets and liabilities arising as a result of
changes in the exchange rates.
NEW ACCOUNTING PRONOUNCEMENTS: In May 2011, the FASB issued ASU No. 2011-04,
"Amendments to Achieve Common Fair Value Measurement and Disclosure
Requirements in U.S. GAAP and IFRSs." ASU 2011-04 requires common fair value
measurement and disclosure requirements between U.S. GAAP and International
Financial Reporting Standards. The new and revised disclosures are effective
for interim and annual reporting periods beginning after December 15, 2011.
All required changes to accounting policies have been made in accordance
with ASU No. 2011-04.
In December 2011, the FASB issued ASU No. 2011-11, "Disclosures about
Offsetting Assets and Liabilities". ASU 2011-11 requires an entity to
disclose information about offsetting and related arrangements to enable
users of its financial statements to
26
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (CONTINUED)
understand the effect of those arrangements on its financial position. The
new and revised disclosures are effective for annual reporting periods
beginning on or after January 1, 2013, and interim periods within those
annual periods. At this time, management is evaluating the implications of
ASU 2011-11 and its impact on the financial statements.
Note 3. Investment Advisory and Management Agreement, Distribution Agreement
and Service Agreement
The Trust, on behalf of each Fund, has an Investment Advisory and Management
Agreement (the "Agreement") with 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.
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 Dividend Strategy Fund+. 1.00%
Value Fund............................ 0.75
Japan Fund............................ 1.15
For the year ended September 30, 2012, SunAmerica earned fees in the amounts
stated in the Statement of Operations.
Effective July 2, 2012 SunAmerica assumed day to day portfolio management
responsibility for the International Dividend Strategy Fund, replacing
PineBridge Investments, LLC ("PineBridge").
The Japan Fund is subadvised by Wellington Management Company, LLP
("Wellington Management") pursuant to a subadvisory agreement with
SunAmerica. Wellington Management receives an annual fee of 0.45% of average
daily net assets of the Japan Fund, which is paid by SunAmerica. Pinebridge
served as subadviser to the Japan Fund through January 26, 2012. In
addition, Wellington Management has agreed to voluntarily waive 50% or
0.225% of the subadvisory fee payable to it by SunAmerica. The voluntary fee
waiver may be discontinued at any time by Wellington Management.
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 Class's average daily net assets. For the
purposes of waived fee and/or reimbursed expense calculations, annual fund
operating expenses shall not include extraordinary expenses, as determined
under generally accepted accounting principals, or acquired fund fees and
expenses. The contractual fee waivers and expense reimbursements will
continue in effect indefinitely unless terminated by the Trustees, including
a majority of the Disinterested Trustees.
FUND PERCENTAGE
---- ----------
International Dividend Strategy Fund Class A. 1.90%
International Dividend Strategy Fund Class B. 2.55
International Dividend Strategy Fund Class C. 2.55
International Dividend Strategy Fund Class I. 1.80
Value Fund Class A........................... 1.63
Value Fund Class B........................... 2.28
Value Fund Class C........................... 2.28
Value Fund Class Z........................... 1.06
Japan Fund Class A........................... 1.90
Japan Fund Class B........................... 2.55
Japan Fund Class C........................... 2.55
--------
+ Pursuant to a Fee Waiver Agreement, SunAmerica is contractually obligated to
waive its advisory fee so that the aggregate advisory fee payable by the
Fund to SunAmerica does not exceed an annual rate of 0.95% of average daily
net assets. This Fee Waiver Agreement became effective on July 2, 2012 and
will continue in effect until January 31, 2014, unless earlier terminated by
the Board including a majority of the Disinterested Trustees. For the year
ended September 30, 2012, the amount of the advisory fees waived were
$8,045. These amounts are reflected in the Statement of Operations.
27
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (CONTINUED)
Any contractual waivers and/or reimbursements made by SunAmerica are subject
to recoupment from the Funds within two years after the occurrence of the
waiver and/or reimbursement, provided that the Funds are able to effect such
payments to SunAmerica and remain in compliance with the expense limitations
in effect at the time the waivers and/or reimbursements were made.
For the year ended September 30, 2012, pursuant to the contractual expense
limitations referred to above, SunAmerica has waived or reimbursed expenses
as follows:
OTHER
EXPENSES
FUND REIMBURSED
---- ----------
International Dividend Strategy Fund......... $130,452
Japan Fund................................... 131,442
FUND AMOUNT
---- ----------
International Dividend Strategy Fund Class A. $ 34,297
International Dividend Strategy Fund Class B. 16,021
International Dividend Strategy Fund Class C. 18,097
International Dividend Strategy Fund Class I. 89
Value Fund Class B........................... 9,064
Value Fund Class C........................... 947
Japan Fund Class A........................... 17,985
Japan Fund Class B........................... 15,081
Japan Fund Class C........................... 15,134
For the year ended September 30, 2012, the amounts recouped by SunAmerica
are as follows:
OTHER
EXPENSES
FUND RECOUPED
---- --------
International Dividend Strategy Fund......... $ 738
FUND AMOUNT
---- --------
International Dividend Strategy Fund Class A. $7,324
International Dividend Strategy Fund Class C. 1,328
International Dividend Strategy Fund Class I. 346
Value Fund Class B........................... 794
Value Fund Class C........................... 947
At September 30, 2012, expenses previously waived and/or reimbursed by
SunAmerica that are subject to recoupment and expire during the time periods
indicated are as follows:
FUND OTHER EXPENSES REIMBURSED
---- -------------------------------------
SEPTEMBER 30, 2013 SEPTEMBER 30, 2014
- ------------------ ------------------
International Dividend Strategy Fund......... $ -- $129,712
Japan Fund................................... 102,329 131,442
FUND CLASS SPECIFIC EXPENSES REIMBURSED
---- -------------------------------------
SEPTEMBER 30, 2013 SEPTEMBER 30, 2014
- ------------------ ------------------
International Dividend Strategy Fund Class A. $ -- $ 26,974
International Dividend Strategy Fund Class B. 9,054 16,021
International Dividend Strategy Fund Class C. 4,966 18,097
International Dividend Strategy Fund Class I. 20 89
Value Fund Class B........................... 262 9,064
Japan Fund Class A........................... 16,720 17,985
Japan Fund Class B........................... 13,832 15,081
Japan Fund Class C........................... 13,811 15,134
28
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (CONTINUED)
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 year ended September 30, 2012, 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 year ended September 30, 2012,
SACS earned fees (see Statement of Operations) based upon the aforementioned
rates.
SACS receives sales charges on each Fund's Class A shares, portions of which
are reallocated to affiliated broker-dealers and non-affiliated
broker-dealers. SACS also receives the proceeds of contingent deferred sales
charges paid by investors in connection with certain redemptions of each
Fund's Class A, Class B and Class C shares. SACS has advised the Funds that
for the year ended September 30, 2012, the proceeds received from sales (and
paid out to affiliated and non-affiliated broker-dealers) and redemptions
are as follows:
CLASS A CLASS B CLASS C
--------------------------------------------------- ------------- -------------
CONTINGENT CONTINGENT CONTINGENT
SALES AFFILIATED NON-AFFILIATED DEFERRED DEFERRED DEFERRED
FUND CHARGES BROKER-DEALERS BROKER-DEALERS SALES CHARGES SALES CHARGES SALES CHARGES
---- ------- -------------- -------------- ------------- ------------- -------------
International Dividend Strategy Fund. $77,244 $8,779 $57,123 $16 $6,802 $134
Value Fund........................... 29,303 8,761 16,400 -- 7,629 969
Japan Fund........................... 4,726 2,009 2,045 -- 704 17
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, State Street Bank and Trust Company, 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 year ended September 30, 2012, 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.
PAYABLE AT
EXPENSE SEPTEMBER 30, 2012
-------------------------------- -------------------------------
FUND CLASS A CLASS B CLASS C CLASS I CLASS A CLASS B CLASS C CLASS I
---- -------- ------- ------- ------- ------- ------- ------- -------
International Dividend Strategy Fund. $110,203 $10,111 $27,159 $3,099 $ 8,007 $658 $1,974 $235
Value Fund........................... 199,894 13,384 33,584 -- 14,937 849 2,488 --
Japan Fund........................... 53,851 553 1,456 -- 3,487 -- 87 --
29
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (CONTINUED)
At September 30, 2012, the following affiliates owned a percentage of the
outstanding shares of the following funds: Focused Multi-Asset Strategy
Portfolio owned 27% of the International Dividend Strategy Fund; Focused
Multi-Asset Strategy Portfolio and Focused Balanced Strategy Portfolio owned
18% and 13%, respectively, of the Value Fund; and Focused Multi-Asset
Strategy Portfolio owned 90% of the Japan Fund.
As of the date of this report, the United States Department of the Treasury
("Department of the Treasury") owned less than 25% of the outstanding shares
of common stock of American International Group, Inc. ("AIG"), the ultimate
parent of SunAmerica, SACS, and SAFS. AIG has stated that it understands
that, subject to market conditions, the Department of the Treasury intends
to dispose of its ownership interest in AIG over time, and that AIG has
granted certain registration rights to the Department of the Treasury to
facilitate such sales.
Note 4. Expense Reductions
Through expense offset arrangements resulting from broker commission
recapture, a portion of the expenses of the Funds set forth below have been
reduced. For the year ended September 30, 2012, the amount of expense
reductions received by each Fund used to offset the Fund's non-affiliated
expenses were as follows:
TOTAL EXPENSE
REDUCTIONS
- -------------
Value Fund. $5,453
Note 5. Purchases and Sales of Securities
The cost of purchases and proceeds from sales and maturities of long-term
investments during the year ended September 30, 2012 were as follows:
INTERNATIONAL DIVIDEND
STRATEGY FUND VALUE FUND JAPAN FUND
---------------------- ------------ -----------
Purchases (excluding U.S. government securities)... $168,602,864 $224,082,488 $47,922,328
Sales (excluding U.S. government securities)....... 170,886,185 245,442,429 58,179,554
Purchase of U.S. government securities............. -- -- --
Sales and maturities of U.S. government securities. -- -- --
Note 6. Federal Income Taxes
The following details the tax basis of distributions as well as the
components of distributable earnings. The tax basis components of
distributable earnings differ from the amounts reflected in the Statement of
Assets and Liabilities by temporary book/tax differences primarily arising
from wash sales, post October capital losses, investments in passive foreign
investment companies, and derivative transactions.
FOR THE YEAR ENDED SEPTEMBER 30, 2012
---------------------------------------------------------------
DISTRIBUTABLE EARNINGS TAX DISTRIBUTIONS
---------------------------------------- ---------------------
LONG-TERM GAINS/ UNREALIZED LONG-TERM
ORDINARY CAPITAL LOSS APPRECIATION ORDINARY CAPITAL
INCOME CARRYOVER (DEPRECIATION)* INCOME GAINS
-------- ---------------- --------------- ---------- ----------
International Dividend Strategy Fund. $269,339 $(92,699,294) $ 57,772 $1,506,579 $ --
Value Fund........................... 547,426 (78,839,105) 4,818,646 1,018,253 --
Japan Fund........................... 480,814 (168,220) (1,171,183) 47,904 4,711,389
--------
* Unrealized appreciation (depreciation) includes amounts for other assets and
liabilities denominated in foreign currency.
30
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (CONTINUED)
TAX DISTRIBUTIONS
FOR THE YEAR ENDED
SEPTEMBER 30, 2011
--------------------
LONG-TERM
ORDINARY CAPITAL
INCOME GAINS
---------- ---------
International Dividend Strategy Fund. $ 10,320 $--
Value Fund........................... 817,635 --
Japan Fund........................... 1,328,122 --
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 September 30, 2012:
INTERNATIONAL
DIVIDEND
STRATEGY VALUE JAPAN
FUND FUND FUND
------------- ------------ -----------
Cost (tax basis)........................... $69,337,976 $103,352,404 $22,150,148
=========== ============ ===========
Appreciation............................... 3,846,642 8,832,301 930,493
Depreciation............................... (3,787,484) (4,013,655) (2,102,945)
----------- ------------ -----------
Net unrealized appreciation (depreciation). $ 59,158 $ 4,818,646 $(1,172,452)
=========== ============ ===========
For the year ended September 30, 2012, the reclassifications arising from
book/tax differences that were primarily due to treatment of disposition of
passive foreign investment companies securities, and foreign currency
transactions, resulted in increases (decreases) to the components of net
assets as follows:
ACCUMULATED ACCUMULATED
UNDISTRIBUTED UNDISTRIBUTED
NET INVESTMENT NET REALIZED CAPITAL
FUND INCOME (LOSS) GAIN (LOSS) PAID-IN
---- -------------- ------------- -------
International Dividend Strategy Fund. $425,605 $(425,605) $--
Value Fund........................... -- -- --
Japan Fund........................... 572,279 (572,279) --
For Federal income tax purposes, the Funds indicated below have capital loss
carryforwards, which expire in the year indicated, as of September 30, 2012,
which are available to offset future capital gains, if any:
CAPITAL LOSS CARRYFORWARD+ UNLIMITED
----------------------------------------------- ------------
FUND 2015 2016 2017 2018 ST LT
---- ----------- ----------- ----------- ----------- -------- ---
International Dividend Strategy Fund*. $31,528,888 $25,210,425 $16,578,456 $19,381,525 $ -- $--
Value Fund*........................... -- 21,181,582 36,272,125 21,385,398 -- --
Japan Fund............................ -- -- -- -- 168,220 --
--------
+ On December 22, 2010, the Regulated Investment Company Modernization Act of
2010 (the "Act") was enacted, which changed various technical rules
governing the tax treatment of regulated investment companies. The changes
are generally effective for taxable years beginning after the date of
enactment. Under the Act, the Funds will be permitted to carry forward
capital losses incurred in taxable years beginning after the date of
enactment for an unlimited period. However, any losses incurred during those
future taxable years will be required to be utilized prior to the losses
incurred in pre-enactment taxable years, which carry an expiration date. As
a result of this ordering rule, pre-enactment capital loss carryforwards may
be more likely to expire unused. Additionally, post-enactment capital losses
that are carried forward will retain their character as either short-term or
long-term losses rather than being considered all short-term as under
previous law.
* The capital loss carryforwards include realized capital losses from the
acquisition of other funds. Certain losses may be subject to annual
limitations imposed by the Internal Revenue Code. Therefore, it is possible
that not all of the capital losses will be available for use. As of
September 30, 2012, based on current tax law, the International Dividend
Strategy Fund and the Value Fund have $0 and $19,837,903, respectively, of
capital losses that will not be available for use.
31
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (CONTINUED)
The Funds indicated below utilized capital loss carryforwards, which offset
net taxable gains realized in the current year ended September 30, 2012.
CAPITAL LOSS CAPITAL LOSS
CARRYFORWARD CARRYFORWARD
FUND UTILIZED EXPIRED
---- ------------ ------------
International Dividend Strategy Fund. $285,771 $--
Value Fund........................... 471,603 --
Japan Fund........................... -- --
Under the current tax law, capital losses realized after October 31 and late
year ordinary losses may be deferred and treated as occurring on the first
day of the following year. For the fiscal year ended September 30, 2012, the
Funds elected to defer late year ordinary losses and post October capital
losses as follows:
DEFERRED DEFERRED
DEFERRED POST-OCTOBER POST-OCTOBER
LATE YEAR SHORT-TERM LONG-TERM
FUND ORDINARY LOSS CAPITAL LOSS CAPITAL LOSS
---- ------------- ------------ ------------
International Dividend Strategy Fund. $-- $8,590,786 $259,191
Value Fund........................... -- -- --
Japan Fund........................... -- -- --
Note 7. Capital Share Transactions
Transactions in capital shares of each class of each Fund were as follows:
INTERNATIONAL DIVIDEND STRATEGY FUND
------------------------------------------------------------------------------------------------
CLASS A CLASS B
-------------------------------------------------- --------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2012 SEPTEMBER 30, 2011 SEPTEMBER 30, 2012 SEPTEMBER 30, 2011
------------------------ ------------------------ --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Shares sold(1)(2)............ 1,019,549 $ 11,094,004 1,998,861 $ 25,245,848 86,088 $ 870,181 40,719 $ 474,694
Reinvested dividends......... 112,965 1,177,713 743 9,227 6,312 60,708 -- --
Shares redeemed(1)(2)(3)(4).. (1,308,627) (14,378,854) (5,645,038) (71,397,455) (181,208) (1,830,341) (302,366) (3,511,424)
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Net increase (decrease)...... (176,113) $ (2,107,137) (3,645,434) $(46,142,380) (88,808) $ (899,452) (261,647) $(3,036,730)
========== ============ ========== ============ ======== =========== ======== ===========
INTERNATIONAL DIVIDEND STRATEGY FUND
------------------------------------------------------------------------------------
CLASS C CLASS I
-------------------------------------------- --------------------------------------
FOR THE FOR THE
FOR THE FOR THE YEAR ENDED YEAR ENDED
YEAR ENDED YEAR ENDED SEPTEMBER 30, SEPTEMBER 30,
SEPTEMBER 30, 2012 SEPTEMBER 30, 2011 2012 2011
--------------------- --------------------- ------------------ ------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- ----------- -------- ----------- ------- --------- ------- ---------
Shares sold............. 185,050 $ 1,865,186 71,165 $ 835,085 -- $ -- -- $ --
Reinvested dividends.... 15,621 150,588 -- -- 3,185 33,449 63 788
Shares redeemed(3)(4)... (348,129) (3,492,494) (479,188) (5,542,375) (42,711) (466,822) (61,044) (779,299)
-------- ----------- -------- ----------- ------- --------- ------- ---------
Net increase (decrease). (147,458) $(1,476,720) (408,023) $(4,707,290) (39,526) $(433,373) (60,981) $(778,511)
======== =========== ======== =========== ======= ========= ======= =========
--------
(1)For the year ended September 30, 2012, includes automatic conversion of
79,774 shares of Class B shares in the amount of $804,583 to 73,386 shares
of Class A shares in the amount of $804,583.
(2)For the year ended September 30, 2011, includes automatic conversion of
117,150 shares of Class B shares in the amount of $1,345,767 to 107,837
shares of Class A shares in the amount of $1,345,767.
(3)For the year ended September 30, 2012, net of redemption fees of $1,248,
$119, $308 and $33 for Class A, Class B, Class C and Class I shares,
respectively.
(4)For the year ended September 30, 2011, net of redemption fees of $11,061,
$1,151, $2,967, and $356 for Class A, Class B, Class C and Class I shares,
respectively.
32
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (CONTINUED)
VALUE FUND
------------------------------------------------------------------------------------------------
CLASS A CLASS B
-------------------------------------------------- --------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2012 SEPTEMBER 30, 2011 SEPTEMBER 30, 2012 SEPTEMBER 30, 2011
------------------------ ------------------------ --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Shares sold(1)(2)....... 2,524,070 $ 30,914,234 2,553,891 $ 31,023,654 44,099 $ 499,807 49,155 $ 571,420
Reinvested dividends.... 74,831 840,354 45,185 539,510 2,340 24,642 -- --
Shares redeemed(1)(2)... (4,811,741) (57,374,168) (4,569,055) (54,596,834) (307,988) (3,539,177) (550,104) (6,176,764)
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Net increase (decrease). (2,212,840) $(25,619,580) (1,969,979) $(23,033,670) (261,549) $(3,014,728) (500,949) $(5,605,344)
========== ============ ========== ============ ======== =========== ======== ===========
VALUE FUND
----------------------------------------------------------------------------------------
CLASS C CLASS Z
-------------------------------------------- ------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2012 SEPTEMBER 30, 2011 SEPTEMBER 30, 2012 SEPTEMBER 30, 2011
--------------------- --------------------- ---------------- ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- ----------- -------- ----------- ------ -------- ---------- ------------
Shares sold............. 21,594 $ 246,087 51,311 $ 597,065 -- $ -- 53,205 $ 651,862
Reinvested dividends.... 6,436 67,705 -- -- 288 3,390 19,779 248,232
Shares redeemed......... (365,452) (4,173,442) (572,566) (6,479,852) (4,890) (62,156) (1,975,845) (25,354,717)
-------- ----------- -------- ----------- ------ -------- ---------- ------------
Net increase (decrease). (337,422) $(3,859,650) (521,255) $(5,882,787) (4,602) $(58,766) (1,902,861) $(24,454,623)
======== =========== ======== =========== ====== ======== ========== ============
--------
(1)For the year ended September 30, 2012, includes automatic conversion of
168,077 shares of Class B shares in the amount of $1,938,494 to 157,217
shares of Class A shares in the amount of $1,938,494.
(2)For the year ended September 30, 2011, includes automatic conversion of
241,771 shares of Class B shares in the amount of $2,759,483 to 226,124
shares of Class A shares in the amount of $2,759,483.
JAPAN FUND
------------------------------------------------------------------------------------------
CLASS A CLASS B
-------------------------------------------------- --------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2012 SEPTEMBER 30, 2011 SEPTEMBER 30, 2012 SEPTEMBER 30, 2011
------------------------ ------------------------ ------------------ ------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ ------- --------- ------- ---------
Shares sold (1)(2)............ 262,298 $ 1,634,936 1,117,986 $ 10,650,844 4,006 $ 25,910 15,809 $ 148,420
Reinvested dividends.......... 724,542 4,513,895 99,495 941,225 9,104 55,170 1,094 10,171
Shares redeemed (1)(2)(3)(4).. (1,806,599) (13,332,511) (3,601,844) (34,521,715) (23,141) (151,723) (17,344) (161,875)
---------- ------------ ---------- ------------ ------- --------- ------- ---------
Net increase (decrease)....... (819,759) $ (7,183,680) (2,384,363) $(22,929,646) (10,031) $ (70,643) (441) $ (3,284)
========== ============ ========== ============ ======= ========= ======= =========
JAPAN FUND
--------------------------------------
CLASS C
--------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
2012 2011
------------------ ------------------
SHARES AMOUNT SHARES AMOUNT
------- --------- ------- ---------
Shares sold............. 10,819 $ 74,500 78,018 $ 728,678
Reinvested dividends.... 24,675 149,530 2,763 25,672
Shares redeemed (3)(4).. (82,544) (542,395) (40,612) (351,756)
------- --------- ------- ---------
Net increase (decrease). (47,050) $(318,365) 40,169 $ 402,594
======= ========= ======= =========
--------
(1)For the year ended September 30, 2012, includes automatic conversion of
2,148 shares of Class B shares in the amount of $14,704 to 2,090 shares of
Class A shares in the amount of $14,704.
(2)For the year ended September 30, 2011, includes automatic conversion of
2,879 shares of Class B shares in the amount of $26,999 to 2,821 shares of
Class A shares in the amount of $26,999.
(3)For the year ended September 30, 2012, net of redemption fees of $272, $3,
and $8 for Class A, Class B, and Class C shares, respectively.
(4)For the year ended September 30, 2011, net of redemption fees of $964, $10,
and $31 for Class A, Class B, and Class C shares, respectively.
33
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (CONTINUED)
Note 8. Line of Credit
The SunAmerica family of mutual funds has established a $75 million
committed and a $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 plus 125 basis points or the
overnight 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 10
basis points per annum on the daily unused portion of the committed line of
credit which is included in other expenses on the Statement of Operations.
Borrowings under the line of credit will commence when the respective Fund's
cash shortfall exceeds $100,000. For the year ended September 30, 2012, the
following Funds had borrowings:
AVERAGE WEIGHTED
DAYS INTEREST DEBT AVERAGE
FUND OUTSTANDING CHARGES UTILIZED INTEREST
---- ----------- -------- ----------- --------
International Dividend Strategy Fund. 7 $ 406 $ 1,442,970 1.44%
Value Fund........................... 2 1,474 19,061,793 1.39
Japan Fund........................... 34 167 126,301 1.40
At September 30, 2012, the Japan Fund had an outstanding loan balance of
$161,852.
Note 9. Interfund Lending Agreement
Pursuant to the exemptive relief granted by the Securities and Exchange
Commission, the Funds are permitted to participate in an interfund lending
program among investment companies advised by SunAmerica or an affiliate.
The interfund lending program allows the participating Funds to borrow money
from and lend money to each other for temporary or emergency purposes. An
interfund loan will be made under this facility only if the participating
Funds receive a more favorable interest rate than would otherwise be
available from a typical bank for a comparable transaction. For the year
ended September 30, 2012, none of the Funds participated in this program.
Note 10. Trustees' Retirement Plan
The Board has adopted the SunAmerica Disinterested Trustees' and Directors'
Retirement Plan (the "Retirement Plan") effective January 1, 1993, as
amended, for the Disinterested Trustees. The Retirement Plan provides
generally that a Disinterested 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/Director"). 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.
34
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (CONTINUED)
The following amounts for the Retirement Plan Liabilities are included in
the Trustees' 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 SEPTEMBER 30, 2012
---- -----------------------------------------------
International Dividend Strategy Fund. $2,157 $142 $ 926
Value Fund........................... 3,864 197 1,687
Note 11. Investment Concentration
Some of the Fund may invest internationally, including in "emerging market"
countries. Emerging market securities involve risks not typically associated
with investing in securities of issuers in more developed markets. These
investments are subject to various risk factors including market, credit,
exchange rate and sovereign risk. The markets in which these securities
trade can be volatile and at times illiquid. These securities may be
denominated in currencies other than U.S. dollars. While investing
internationally may reduce portfolio risk by increasing the diversification
of portfolio investments, the value of the investment may be affected by
fluctuating currency values, changing local and regional economic, political
and social conditions, and greater market volatility. These risks are
primary risks of the International Dividend Strategy Fund and the Japan
Fund. At September 30, 2012, the International Dividend Strategy Fund had
19.5% and 10.9% of its net assets invested in equity securities domiciled in
Brazil and Taiwan, respectively, while the Japan Fund had 98.3% of its net
assets invested in equity securities domiciled in Japan.
35
SUNAMERICA EQUITY FUNDS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of SunAmerica Equity Funds:
In our opinion, the accompanying statements of assets and liabilities,
including the portfolios of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position each of the three
funds constituting SunAmerica Equity Funds (the "Trust") at September 30, 2012,
the results of each of their operations for the year then ended, the changes in
each of their net assets for each of the two years in the period then ended and
the financial highlights for each of the five years in the period then ended,
in conformity with accounting principles generally accepted in the United
States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Trust's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at September 30, 2012 by correspondence with the custodian and
brokers, and the application of alternative auditing procedures where
securities purchased had not been received, provide a reasonable basis for the
opinion expressed above.
PricewaterhouseCoopers LLP
Houston, Texas
November 26, 2012
36
SUNAMERICA EQUITY FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND SUBADVISORY
AGREEMENT
The Board of the Trust, including the Trustees who are not "interested
persons," as defined in Section 2(a)(19) of the 1940 Act, of the Trust or its
separate series (each a "Fund" and collectively, the "Funds"), SunAmerica or
PineBridge (the "Subadviser") (the "Disinterested Trustees"), approved the
continuation of the Investment Advisory and Management Agreement between the
Trust, on behalf of the Funds, and SunAmerica (the "Advisory Agreement") for a
one-year period ending June 30, 2013 at an in-person meeting held on May 29,
2012 (the "Meeting"). The Trust currently consists of three separate Funds,
including the SunAmerica International Equity Fund ("International Equity
Fund"), the Japan Fund, and the Value Fund./1/ At the Meeting, the Board,
including the Disinterested Trustees, also approved the continuation of the
Subadvisory Agreement between SunAmerica and the Subadviser with respect to the
International Equity Fund for a one-year period ending June 30, 2013 (the
"Subadvisory Agreement," and together with the Advisory Agreement, the
"Agreements")./2/
In accordance with Section 15(c) of the 1940 Act, the Board requested, and
SunAmerica and the Subadviser provided, materials relating to the Board's
consideration of whether to approve the continuation of the Agreements. These
materials included, among other things, (a) a summary of the services provided
to the Funds by SunAmerica and its affiliates, and by the Subadviser;
(b) information independently compiled and prepared by Lipper, Inc. ("Lipper")
on fees and expenses of the Funds, and the investment performance of the Funds
as compared with a peer group of funds, along with fee and performance data
with respect to the Funds and any other mutual funds or other accounts advised
or subadvised by SunAmerica or the Subadviser with similar investment
objectives and/or strategies, as applicable; (c) information on the
profitability of SunAmerica, and its affiliates, and a discussion relating to
indirect benefits; (d) a report on economies of scale; (e) information about
SunAmerica's general compliance policies and procedures and the services it
provides in connection with its oversight of subadvisers; (f) information about
SunAmerica's and the Subadviser's risk management process; (g) information
regarding brokerage and soft dollar practices; and (h) information about the
key personnel of SunAmerica and its affiliates, and the Subadviser, that are
involved in the investment management, administration, compliance and risk
management activities with respect to the Funds, as well as current and
projected staffing levels and compensation practices.
In determining whether to approve the continuation of the Agreements, the
Board, including Disinterested Trustees, considered at the Meeting, and from
time to time as appropriate, factors that it deemed relevant, including the
following information:
NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY SUNAMERICA AND THE
SUBADVISER. The Board, including the Disinterested Trustees, considered the
nature, quality and extent of services provided by SunAmerica. The Board noted
that the services include acting as investment manager and adviser to the
Funds, managing the daily business affairs of the Funds, and obtaining and
evaluating economic, statistical and financial information to formulate and
implement investment policies. Additionally, the Board observed that SunAmerica
provides office space, bookkeeping, accounting, legal, and compliance, clerical
and administrative services and has authorized its officers and employees, if
elected, to serve as officers or trustees of the Funds without compensation.
Finally, the Board noted that SunAmerica is responsible for monitoring and
reviewing the activities of affiliated and unaffiliated third-party service
providers, including the Subadviser. In addition to the quality of the advisory
services provided by SunAmerica, the Board considered the quality of the
administrative and other services provided by SunAmerica to the Funds pursuant
to the Advisory Agreement.
In connection with the services provided by SunAmerica, the Board analyzed the
structure and duties of SunAmerica's fund administration, accounting,
operations, legal and compliance departments and concluded that they were
adequate to meet the needs of the Funds. The Board also reviewed the personnel
responsible for providing advisory services to the Funds and other key
personnel of SunAmerica, in addition to current and projected staffing levels
and compensation practices, and concluded, based on their experience and
interaction with SunAmerica, that: (i) SunAmerica has been able to retain
quality portfolio managers, analysts and other personnel; (ii) SunAmerica has
exhibited a high level of diligence and attention to detail in carrying out its
advisory and other
--------
/1/On March 7, 2012, the Board approved the change in the name of the
International Equity Fund to the "SunAmerica International Dividend Strategy
Fund," along with certain changes to the Fund's investment goal, principal
investment strategies and principal investment techniques. These changes
became effective on July 2, 2012 (the "Effective Date"). SunAmerica assumed
day-to-day portfolio management responsibility for the Fund, replacing the
Subadviser, as of the Effective Date.
/2/At an in-person Board meeting held on December 6, 2011, the Board approved a
subadvisory agreement between SunAmerica and Wellington Management Company,
LLP ("Wellington Management"), with respect to the Japan Fund, for an
initial two-year period ending June 30, 2013. Therefore, this subadvisory
agreement was not subject to renewal at the Meeting.
37
SUNAMERICA EQUITY FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
responsibilities under the Advisory Agreement; (iii) SunAmerica has been
responsive to requests of the Board; and (iv) SunAmerica has kept the Board
apprised of developments relating to the Funds and the industry in general. The
Board concluded that the nature and extent of services provided under the
Advisory Agreement were reasonable and appropriate in relation to the
management fee and that the quality of services continues to be high.
The Board also considered SunAmerica's reputation and long-standing
relationship with the Funds and considered the benefit to shareholders of
investing in funds that are part of a family of funds offering a variety of
types of mutual funds and shareholder services. The Board considered
SunAmerica's experience in providing management and investment advisory and
administrative services to advisory clients and noted that as of March 31,
2012, SunAmerica managed, advised and/or administered approximately $46.3
billion in assets. In addition, the Board considered SunAmerica's code of
ethics and its commitment to compliance generally and with respect to its
management and administration of the Funds. The Board also considered
SunAmerica's risk management process. The Board further observed that
SunAmerica has developed internal procedures for monitoring compliance with the
investment objectives, policies and restrictions of the Funds as set forth in
the Funds' prospectus. The Board also reviewed SunAmerica's compliance and
regulatory history and noted that there were no material legal, regulatory or
compliance issues that would potentially impact SunAmerica from effectively
serving as the investment adviser to the Funds.
The Board also considered the nature, quality and extent of services provided
by the Subadviser with respect to the International Equity Fund. The Board
observed that the Subadviser is responsible for providing day-to-day investment
management services, including investment research, advice and supervision, and
determining which securities will be purchased or sold by the International
Equity Fund, subject to the oversight and review of SunAmerica. The Board
reviewed the Subadviser's history, structure, size, visibility and resources,
which are needed to attract and retain highly qualified investment
professionals. The Board reviewed the personnel that are responsible for
providing subadvisory services to the Funds and other key personnel of the
Subadviser, in addition to current and projected staffing levels and
compensation practices, and concluded, based on its experience with the
Subadviser, that the Subadviser: (i) has been able to retain high quality
portfolio managers and other investment personnel; (ii) has exhibited a high
level of diligence and attention to detail in carrying out its responsibilities
under the Subadvisory Agreement; and (iii) has been responsive to requests of
the Board and of SunAmerica. In addition, the Board considered the Subadviser's
code of ethics and its risk management process. The Board further observed that
the Subadviser has developed internal policies and procedures for monitoring
compliance with the investment objectives, policies and restrictions of the
Funds as set forth in the Funds' prospectus. The Board also reviewed the
Subadviser's compliance and regulatory history and noted that there were no
material legal, regulatory or compliance issues that would potentially impact
the Subadviser from effectively serving as a subadviser to the Fund. The Board
concluded that the nature and extent of services provided by the Subadviser
under the Subadvisory Agreement were reasonable and appropriate in relation to
the subadvisory fees and that the quality of services continues to be high.
INVESTMENT PERFORMANCE. The Board, including the Disinterested Trustees, also
considered the investment performance of SunAmerica and the Subadviser with
respect to the Funds, as applicable. In connection with its review, the Board
received and reviewed information regarding the investment performance of the
Funds as compared to each Fund's peer group ("Peer Group") and/or peer universe
("Peer Universe") as independently determined by Lipper and to an appropriate
index or combination of indices, including the Funds' benchmarks. The Board was
provided with a description of the methodology used by Lipper to select the
funds in the Peer Groups and Peer Universes.
It was noted that performance information was for the periods ended March 31,
2012. The Board also noted that it regularly reviews the performance of the
Funds throughout the year. The Board further noted that, while it monitors
performance of the Funds closely, it generally attaches more importance to
performance over relatively long periods of time, typically three to five years.
Value Fund. The Board considered that the Fund's performance was below the
median of its Peer Group and Peer Universe for the one-, three- and five-year
periods and above the median of its Peer Group and Peer Universe for the
ten-year period. The Board also considered that the Fund underperformed its
Lipper Index for the one-, three- and five-year periods and outperformed its
Lipper Index for the ten-year period. The Board then noted management's
continued monitoring of the Fund, and observed that the Fund's recent
performance had improved. The Board concluded that the Fund's performance was
being addressed.
International Equity Fund. The Board considered that the Fund's performance was
below the median of its Peer Group and Peer Universe for the one-, three- and
five-year periods. The Board also considered that the Fund underperformed its
Lipper Index for the
38
SUNAMERICA EQUITY FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
one-, three- and five-year periods. The Board noted management's discussion of
the Fund's performance and considered that the Board had previously approved
the change in the name of the International Equity Fund to the "SunAmerica
International Dividend Strategy Fund," along with certain changes to the Fund's
investment goal, principal investment strategies and principal investment
techniques, which changes were anticipated to become effective on or about
June 18, 2012./3/ The Board further considered that SunAmerica would assume
day-to-day portfolio management responsibility for the Fund, replacing the
Subadviser, as of the effective date of these changes. The Board concluded that
the Fund's performance was being addressed.
Japan Fund. The Board considered that the Fund's performance was below the
median of its Peer Group and Peer Universe for the one- and five-year periods
and above the median of its Peer Group and Peer Universe for the three-year
period. The Board also considered that the Fund underperformed its Lipper Index
for the one- and five-year periods and outperformed this Index for the
three-year period. The Board further considered that effective January 27,
2012, the name of the Fund was changed from the SunAmerica International
Small-Cap Fund to the SunAmerica Japan Fund, certain of the Fund's principal
investment strategies and techniques were also changed, and Wellington
Management was appointed as the subadviser to the Fund, replacing PineBridge.
The Board also noted that, due to the short period of time since the
implementation of such changes, it was not yet possible to effectively evaluate
the Fund's performance within the new Lipper classification. The Board
concluded that the Fund's performance was being addressed.
While the Board noted its concern with respect to the performance of the Funds,
it also considered the recent strategy and manager changes that had been made
to the International Equity Fund and the Japan Fund and that appropriate
resources were being dedicated to the Funds to address these performance
concerns. The Board further noted that it would continue to evaluate each
Fund's performance, including in connection with the recent strategy and
manager changes
CONSIDERATION OF THE MANAGEMENT FEES AND SUBADVISORY FEES AND THE COST OF THE
SERVICES AND PROFITS TO BE REALIZED BY SUNAMERICA, THE SUBADVISER AND THEIR
AFFILIATES FROM THE RELATIONSHIP WITH THE FUNDS. The Board, including the
Disinterested Trustees, received and reviewed information regarding the fees to
be paid by the Funds to SunAmerica pursuant to the Advisory Agreement and the
fees paid by SunAmerica to the Subadviser pursuant to the Subadvisory
Agreement. 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 SunAmerica,
the Subadviser or their affiliates in connection with providing such services
to the Funds.
To assist in analyzing the reasonableness of the management fee for each of the
Funds, the Board received reports independently prepared by Lipper. The reports
showed comparative fee information for each Fund's Peer Group and/or Peer
Universe as determined by Lipper, including rankings within each category. In
considering the reasonableness of the management fee to be paid by each Fund to
SunAmerica, the Board reviewed a number of expense comparisons, including:
(i) contractual and actual management fees; and (ii) actual total operating
expenses. With respect to the International Equity Fund's management fee, the
Board further considered that SunAmerica has contractually agreed to waive
0.05% of its management fee upon the effective date of the strategy changes to
the Fund through January 31, 2014. In considering each Fund's total operating
expenses, the Board analyzed the level of fee waivers and expense
reimbursements and the net expense caps contractually agreed upon by SunAmerica
with respect to the Funds. The Board further considered that, unlike the funds
in the Peer Group and Peer Universe, the fee waivers and/or reimbursements
being made by SunAmerica with respect to the Funds are only reflected in the
total expenses category of the Lipper reports, rather than also being reflected
as specific management fee waivers in the actual management fees category of
the Lipper reports. As a result, the Board took into account that the actual
management fees presented by Lipper for the funds in the Peer Group and Peer
Universe may appear lower on a relative basis. The Board also considered the
various expense components of the Funds and compared each Fund's net expense
ratio (taking into account the contractual fee caps) to those of other funds
within its Peer Group and/or Peer Universe as a guide to help assess the
reasonableness of the Fund's management fee. The Board acknowledged that it was
difficult to make precise comparisons with other funds in the Peer Groups and
Peer Universes since the exact nature of services provided under the various
fund agreements is often not apparent. The Board noted, however, that the
comparative fee information provided by Lipper as a whole was useful in
assessing whether SunAmerica was providing services at a cost that was
competitive with other, similar funds.
--------
/3/These changes became effective on July 2, 2012.
39
SUNAMERICA EQUITY FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
The Board also considered the management fees received by SunAmerica with
respect to other mutual funds and accounts with similar investment strategies
to the Funds, to the extent applicable. The Board then noted the management
fees paid by the Funds were reasonable as compared to the fees SunAmerica was
receiving from other mutual funds and accounts for which it serves as adviser
or subadviser.
The Board also received and reviewed information regarding the fees paid by
SunAmerica to the Subadviser pursuant to the Subadvisory Agreement. To assist
in analyzing the reasonableness of the subadvisory fees, the Board received a
report independently prepared by Lipper. The report showed comparative fee
information of each Portfolio's Peer Group and/or Peer Universe that the Board
used as a guide to help assess the reasonableness of the subadvisory fees. The
Board noted that the Peer Group/Universe 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 Directors also considered that the
subadvisory fees are paid by SunAmerica out of its management fee and not by
the International Equity Fund, 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
further considered the amount of subadvisory fees paid out by SunAmerica and
the amount of the management fees which it retained and determined that these
amounts were reasonable in light of the services performed by SunAmerica and
the Subadviser, respectively.
The Board also considered fees received by the Subadviser with respect to other
mutual funds and accounts with similar investment strategies to the
International Equity Fund for which it serves as subadviser, to the extent
applicable. The Board then noted that the subadvisory fees paid by SunAmerica
to the Subadviser were reasonable as compared to fees the Subadviser receives
for other mutual funds and accounts for which it serves as adviser or
subadviser.
Value Fund. The Board considered that the Fund's actual management fees were
above the median of its Peer Group and Peer Universe. The Board also considered
that the Fund's total expenses were above the median of its Peer Group and Peer
Universe. The Board took into account management's discussion of the Fund's
expenses.
International Equity Fund. The Board considered that the Fund's actual
management fees were above the median of its Peer Group and Peer Universe. The
Board also considered that the Fund's total expenses were above the median of
its Peer Group and Peer Universe. The Board took into account management's
discussion of the Fund's expenses and also considered that SunAmerica had
contractually agreed to waiver 0.05% of its management fee upon the
effectiveness of the International Equity Fund's strategy changes.
Japan Fund. The Board considered that the Fund's actual management fees were
above the median of its Peer Group and Peer Universe. The Board also considered
that the Fund's total expenses were above the median of its Peer Group and Peer
Universe. The Board took into account management's discussion of the Fund's
expenses, including the limited size of the Peer Group and Peer Universe.
PROFITABILITY. The Board also considered SunAmerica's profitability and the
benefits SunAmerica and its affiliates received from its relationship with the
Funds. The Board received and reviewed financial statements relating to
SunAmerica's financial condition and profitability with respect to the services
it provided the Funds and considered how profit margins could affect
SunAmerica's ability to attract and retain high quality investment
professionals and other key personnel. The Board was also provided with a
profitability analysis that detailed the revenues earned and the expenses
incurred by SunAmerica and its affiliates that provide services to the Funds on
a Fund by Fund basis. In particular, the Board considered the contractual fee
waivers and/or expense reimbursement agreed to by SunAmerica.
The Board considered the profitability of SunAmerica under the Advisory
Agreement, including the amount of management fees it retained after payment to
the Subadviser, and considered the profitability of SunAmerica's affiliates
under the Rule 12b-1 Plans, Service Agreements, and Administrative and
Shareholder Services Agreements. Additionally, the Board considered whether
SunAmerica and its affiliates received any indirect benefits from the
relationship with the Funds. Specifically, the Board observed that AIG Federal
Savings Bank, an affiliate of SunAmerica, serves as custodian with respect to
certain shareholder retirement accounts that are administered by SunAmerica and
receives a fee payable by the qualifying shareholders. The Board further
considered whether there were any collateral or "fall-out" benefits that
SunAmerica and its affiliates may derive as a result of their relationship with
the
40
SUNAMERICA EQUITY FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
Funds. The Board noted that SunAmerica believes that any such benefits are de
minimis and do not impact the reasonableness of the management fees.
The Board also reviewed financial reports from the Subadviser and considered
whether the Subadviser had the financial resources necessary to attract and
retain high quality investment management personnel and to provide a high
quality of services.
The Board concluded that SunAmerica and the Subadviser had the financial
resources necessary to perform their obligations under the Agreements and to
continue to provide the Funds with the high quality services that they had
provided in the past. The Board also concluded that the management fees and
subadvisory fees were reasonable in light of the factors discussed above.
ECONOMIES OF SCALE. The Board, including the Disinterested Trustees, considered
whether the shareholders would benefit from economies of scale and whether
there was potential for future realization of economies with respect to the
Funds. The Board considered that as a result of being part of the SunAmerica
fund complex, the Funds share common resources and may share certain expenses,
and if the size of the complex increases, each Fund could incur lower expenses
than they otherwise would achieve as stand-alone entities. The Board further
noted that SunAmerica has agreed to contractually cap the total annual
operating expenses of one or more classes of the Funds, at certain levels. The
Board observed that those expense caps benefited shareholders by keeping total
fees down even in the absence of breakpoints or economies of scale. The Board
concluded that the Funds' management fee structure was reasonable and that it
would continue to review fees in connection with the renewal of the Advisory
Agreement, including whether the implementation of additional breakpoints would
be appropriate in the future due to an increase in asset size or otherwise.
The Board did not review specific information regarding whether there have been
economies of scale with respect to the Subadviser's management of the Fund
because it regards that information as less relevant at the subadviser level.
Rather, the Board considered information regarding economies of scale in the
context of the renewal of the Advisory Agreement.
OTHER FACTORS. In consideration of the Agreements, the Board also received
information regarding SunAmerica's and the Subadviser's brokerage and soft
dollar practices. The Board considered that SunAmerica and the Subadviser are
responsible for decisions to buy and sell securities for the Funds, selection
of broker-dealers and negotiation of commission rates. The Board also noted
that it receives reports from SunAmerica and from an independent third party
that include information on brokerage commissions and execution throughout the
year. The Board further considered the benefits SunAmerica and the Subadviser
derive from their soft dollar arrangements, including arrangement under which
brokers provide brokerage and/or research services to SunAmerica and/or the
Subadviser in return for allocating brokerage.
CONCLUSION. After a full and complete discussion, the Board approved the
Agreements, each for a one-year period ending June 30, 2013. Based upon their
evaluation of all these factors in their totality, the Board, including the
Disinterested Trustees, was satisfied that the terms of the Agreements were
fair and reasonable and in the best interests of the Funds and the Funds'
shareholders. In arriving at a decision to approve the Agreements, the Board
did not identify any single factor or group of factors as all-important or
controlling, but considered all factors together. The Disinterested Trustees
were also assisted by the advice of independent counsel in making this
determination.
41
SUNAMERICA EQUITY FUNDS
TRUSTEE AND OFFICER INFORMATION -- SEPTEMBER 30, 2012 -- (UNAUDITED)
The following table contains basic information regarding the Trustees and
Officers that oversee operations of the Funds and other investment companies
within the Fund complex.
NUMBER OF
POSITION TERM OF PORTFOLIOS IN
NAME, HELD WITH OFFICE AND FUND COMPLEX
ADDRESS AND SUNAMERICA LENGTH OF PRINCIPAL OCCUPATIONS OVERSEEN BY OTHER DIRECTORSHIPS
AGE* COMPLEX TIME SERVED(4) DURING PAST 5 YEARS TRUSTEE(1) HELD BY TRUSTEE(2)
----------------------- ---------- -------------- ------------------------------ ------------- ------------------------------
DISINTERESTED TRUSTEES
Dr. Judith L. Craven Trustee 2001-present Retired. 77 Director, Belo Corp. (1992 to
Age: 67 present); Director, Sysco
Corp. (1996 to present);
Director, Luby's, Inc. (1998
to present).
William F. Devin Trustee 2001-present Retired. 77 Director, Boston Options
Age: 73 Exchange (2001 to present).
Richard W. Grant Trustee 2011-present Retired. Prior to that, 29 None
Age: 66 Chairman Attorney and partner at
of the Morgan Lewis & Bockius
Board LLP (1989 to 2011).
Stephen J. Gutman Trustee 1985-present Vice President and Associate 29 None
Age: 69 Broker, Corcoran Group (real
estate) (2002 to present);
Managing Member, Beau
Brummell Soho LLC
(licensing of menswear
specialty retailing) (1995 to
2009). President, SJG
Marketing Inc. (2009 to
present).
William J. Shea Trustee 2004-present Executive Chairman, Lucid, 29 Chairman of the Board, Royal
Age: 64 Inc., (medical devices) (2007 and SunAlliance U.S.A., Inc.
to present); Managing (2004 to 2006); Director,
Director, DLB Capital, LLC Boston Private Financial
(private equity) (2006 to Holdings (2004 to present);
2007). Chairman, Demoulas
Supermarkets (1999-present).
42
SUNAMERICA EQUITY FUNDS
TRUSTEE AND OFFICER INFORMATION -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
NUMBER OF
POSITION TERM OF PORTFOLIOS IN
NAME, HELD WITH OFFICE AND FUND COMPLEX
ADDRESS AND SUNAMERICA LENGTH OF PRINCIPAL OCCUPATIONS OVERSEEN BY OTHER DIRECTORSHIPS
AGE* COMPLEX TIME SERVED(4) DURING PAST 5 YEARS TRUSTEE(1) HELD BY TRUSTEE(2)
-------------------- ----------- -------------- ----------------------------- ------------- -------------------
INTERESTED TRUSTEE
Peter A. Harbeck(3) Trustee 1995-present President, CEO and 77 None
Age: 58 Director, SunAmerica.
(1995 to present); Director,
SunAmerica Capital
Services, Inc. ("SACS")
(1993 to present); Chairman,
Advisor Group, Inc. (2004
to present).
OFFICERS
John T. Genoy President 2007-present Chief Financial Officer, N/A N/A
Age: 44 SunAmerica (2002 to
present); Senior Vice
President, SunAmerica
(2003 to present); Chief
Operating Officer,
SunAmerica (2006
to present).
Donna M. Handel Treasurer 2002-present Senior Vice President, N/A N/A
Age: 46 SunAmerica (2004 to
present).
Gregory N. Bressler Secretary 2005-present Senior Vice President and N/A N/A
Age: 46 and Chief General Counsel,
Legal SunAmerica (2005 to
Officer present).
James Nichols Vice 2006-present Director, President and N/A N/A
Age: 46 President CEO, SACS (2006 to
present); Senior Vice
President, SunAmerica
(2002 to present).
Katherine Stoner Chief 2011-present Vice President, SunAmerica N/A N/A
Age: 56 Compliance (2011 to present). Vice
Officer President, The Variable
("CCO") Annuity Life Insurance
Company ("VALIC") and
Western National Life
Insurance Company
("WNL") (2006-present);
Deputy General Counsel and
Secretary, VALIC and WNL
(2007-present); Vice
President, VALIC Financial
Advisors, Inc. and VALIC
Retirement Services
Company (2010-present).
43
SUNAMERICA EQUITY FUNDS
TRUSTEE AND OFFICER INFORMATION -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
NUMBER OF
POSITION TERM OF PORTFOLIOS IN
NAME, HELD WITH OFFICE AND FUND COMPLEX
ADDRESS AND SUNAMERICA LENGTH OF PRINCIPAL OCCUPATIONS OVERSEEN BY OTHER DIRECTORSHIPS
AGE* COMPLEX TIME SERVED(4) DURING PAST 5 YEARS TRUSTEE(1) HELD BY TRUSTEE(2)
--------------------- ----------- -------------- --------------------------- ------------- -------------------
Nori L. Gabert Vice 2002-present Vice President and Deputy N/A N/A
Age: 59 President General Counsel,
and SunAmerica (2005 to
Assistant present).
Secretary
Timothy Pettee Vice 2004-present Chief Investment Officer, N/A N/A
Age: 54 President SunAmerica (2003 to
present).
Gregory R. Kingston Vice 2002-present Vice President, SunAmerica N/A N/A
Age: 46 President (2001 to present).
and
Assistant
Treasurer
Matthew J. Hackethal Anti- 2006-present Chief Compliance Officer, N/A N/A
Age: 40 Money SunAmerica (2006 to
Laundering present).
Compliance
Officer
--------
* The business address for each Trustee is the Harborside Financial Center,
3200 Plaza 5, Jersey City, NJ 07311-4992.
(1)The "Fund Complex" means two or more registered investment companies that
hold themselves out to investors as related companies for purposes of
investment services or have a common investment adviser or an investment
adviser that is an affiliated person of the Adviser. The "Fund Complex"
includes the Trust (3 funds), SunAmerica Money Market Funds Inc. (1 fund),
SunAmerica Income Funds (4 funds), SunAmerica Series, Inc. (7 portfolios),
Anchor Series Trust (8 portfolios), SunAmerica Senior Floating Rate Fund,
Inc. (1 fund), SunAmerica Series Trust (38 portfolios), VALIC Company I
(33 portfolios), VALIC Company II (15 funds), Seasons Series Trust (21
portfolios) and SunAmerica Specialty Series (5 portfolios).
(2)Directorships of companies required to report to the SEC under the
Securities Exchange Act of 1934 (i.e., "public companies") or other
investment companies registered under the 1940 Act.
(3)Interested Trustee, as defined within the 1940 Act, because he is an officer
and a director of the Adviser and a director of the principal underwriter of
the Trust.
(4)Trustees serve until their successors are duly elected and qualified,
subject to the Trustee's Retirement Plan as discussed in Note 10 of the
financial statements. Each officer will hold office for an indefinite term,
until the date he or she resigns or retires or until his/her successor is
duly elected and qualifies.
Additional information concerning the Trustees is contained in the Statement of
Additional Information which is available, without charge, by calling (800)
858-8850.
44
SUNAMERICA EQUITY FUNDS
SHAREHOLDER TAX INFORMATION -- (UNAUDITED)
Certain tax information regarding the SunAmerica Equity Funds is required to be
provided to the shareholders based upon each Fund's income and distributions
for the taxable year ended September 30, 2012. The information and
distributions reported herein may differ from the information and distributions
taxable to the shareholders for the calendar year ending December 31, 2012. The
information necessary to complete your tax returns will be included with your
Form 1099-DIV to be received under separate cover in early 2013.
During the year ended September 30, 2012, the Portfolios paid the following
long-term capital gains dividends along with the percentage of ordinary income
dividends that qualified for the 70% dividends received deduction for
corporations:
NET LONG- QUALIFYING % FOR THE
TERM 70% DIVIDENDS
FUND CAPITAL GAINS RECEIVED DEDUCTIONS
---- ------------- --------------------
International Dividend Strategy Class A. $ -- 0.48%
International Dividend Strategy Class B. -- 0.48
International Dividend Strategy Class C. -- 0.48
International Dividend Strategy Class I. -- 0.48
Value Class A........................... -- 100.00
Value Class B........................... -- 100.00
Value Class C........................... -- 100.00
Value Class Z........................... -- 100.00
Japan Class A........................... 4,495,773 2.09
Japan Class B........................... 55,170 2.09
Japan Class C........................... 160,446 2.09
The International Dividend Strategy Fund and Japan Fund intend to make an
election under Internal Revenue Code Section 853 to pass through foreign taxes
paid by the Fund to its shareholders. The total amount of foreign taxes passed
through to the shareholders for the fiscal year ended September 30, 2012 was
$324,749 and $45,855, respectively. The gross foreign source income for the
information reporting is $3,113,696 and $661,891, respectively.
For the year ended September 30, 2012, certain dividends paid by the following
funds may be subject to a maximum tax rate of 15%, as provided by the Jobs and
Growth Tax Relief Reconciliation Act of 2003. Of the distributions paid during
the fiscal year, the following represents the maximum amount that may be
considered qualified dividend income:
FUND INCOME
---- ----------
International Dividend Strategy. $1,506,579
Value........................... 1,018,253
Japan........................... 47,904
45
SUNAMERICA EQUITY FUNDS
COMPARISONS: FUNDS VS. INDICES -- (UNAUDITED)
As required by the Securities and Exchange Commission, the following graphs
compare the performance of a $10,000 investment in the SunAmerica Equity Funds'
portfolios to a similar investment in an index. Please note that "inception",
as used herein, reflects the date on which a specific class of shares commenced
operations. It is important to note that the SunAmerica Equity Funds are
professionally managed mutual funds, while the indices are not available for
investment and are unmanaged. The comparison is shown for illustrative purposes
only. The graphs present the performance of the largest class of that
particular Fund. The performance of the other classes will vary based upon the
difference in sales charges and fees assessed to shareholders of that class.
46
SUNAMERICA EQUITY FUNDS
COMPARISONS: FUNDS VS. INDICES -- (UNAUDITED) (CONTINUED)
SUNAMERICA INTERNATIONAL DIVIDEND STRATEGY FUND
The SunAmerica International Dividend Strategy Fund Class A shares returned
8.77% (before maximum sales charge) for the 12-month period ended September 30,
2012. The Fund underperformed its benchmark, the MSCI All Country World ex-U.S.
Index (Net)*, which returned 14.48% during the same annual period.
The Fund operated as the SunAmerica International Equity Fund from the start of
the annual period on October 1, 2011 through July 1, 2012, and PineBridge
Investments LLC served as the Fund's subadviser. During this portion of the
annual period, the Fund Class A shares returned 5.29% (before maximum sales
charge) as compared to a return of 7.14% for the Fund's benchmark, the MSCI All
Country World ex-U.S. Index (Net). Below, we discuss the Fund's performance
from October 1, 2011 through July 1, 2012.
From October 1, 2011 through July 1, 2012, both sector weightings and country
allocations within the Fund's portfolio were largely the result of the
subadviser's bottom-up stock selection process rather than any top-down
macroeconomic or industry decisions. That said, the Fund's overweighted
position in the information technology sector, which lagged the benchmark index
during the annual period, detracted from relative performance. So, too, did the
Fund's positioning in the telecommunication services sector. Stock selection in
the consumer discretionary and materials sectors hampered relative results as
well. Partially offsetting these detractors was the positive effect of an
underweighted exposure to the materials sector, which was the poorest performer
in the benchmark index during this period, and an overweighted allocation to
the consumer discretionary sector, which outpaced the benchmark index during
this period. Individual stock selection in the financials and information
technology sectors also added value.
From a country perspective, individual stock selection in the United Kingdom
and South Korea detracted most. Both an overweighted position and stock
selection in Japan, which lagged the benchmark index during the period from
October 1, 2011 through July 1, 2012, further hampered results. Conversely,
weighting positions and individual stock selection in South Africa and France
contributed positively to the Fund's results during this same period as did
individual stock selection in Taiwan.
Individual stock holdings that detracted most from Fund performance during the
period from October 1, 2011 through July 1, 2012 were German-based diversified
banking institution Deutsche Bank, Hong Kong watch and jewelry retailer Emperor
Watch and Jewellery, U.K.-based mining company Anglo American, Cayman
Islands-based footwear retailer Daphne International and Brazil-based
residential real estate builder MRV Engenharia e Participacoes. The top
individual contributors to Fund performance during this same period were
Radiant Opto-Electronics, a Taiwanese electronic component manufacturer; Mr.
Price Group, a South African diversified retailer and franchise operator; Swiss
Re, a Swiss reinsurance company; Henkel, a German specialty chemical products
manufacturer; and Kasikornbank, a Thailand-based commercial bank.
Effective July 2, 2012, the Fund changed its name to the SunAmerica
International Dividend Strategy Fund and certain changes were made to the
Fund's investment goal, principal investment strategy and principal investment
techniques. In addition, on this same date, SunAmerica Asset Management Corp.
assumed portfolio management responsibility for the Fund. From July 2, 2012
through September 30, 2012, the Fund Class A shares returned 3.30% (before
maximum sales charge) as compared to a return of 6.85% for the Fund's
benchmark, the MSCI All Country World ex-U.S. Index (Net), which did not change
with the new name and strategy. Below, we discuss the Fund's performance from
July 2, 2012 through September 30, 2012.
From July 2, 2012 through September 30, 2012, sector allocation and individual
stock selection each detracted from the Fund's results relative to the MSCI All
Country World ex-U.S. Index (Net). Having an underweighted allocation to
financials, which outpaced the benchmark index from July 2, 2012 through
September 30, 2012, and having an overweighted exposure to utilities, which
lagged the benchmark index during this same period, hampered results most.
Individual stock selection within the financials, utilities and industrials
sectors also hurt. Such detractors were only partially offset by the positive
contributions made by having no exposure to consumer staples, which lagged the
benchmark index during this period, and by effective stock selection within the
consumer discretionary, telecommunication services and energy sectors.
Individual stock holdings that detracted most from Fund performance during the
period from July 2, 2012 through September 30, 2012 were Brazilian electricity
companies Cia de Transmissao de Energia Eletrica Paulista and Cia Energetica de
Minas Gerais (CEMIG). Other positions that disappointed included Bradespar SA,
a Brazilian company that holds equity interests in other
47
SUNAMERICA EQUITY FUNDS
COMPARISONS: FUNDS VS. INDICES -- (UNAUDITED) (CONTINUED)
companies as a partner or shareholder; OPAP SA, a Greek company that organizes
and conducts lottery games; and Vale SA, a Brazilian diversified miner. The top
individual contributors to Fund performance during this same period were
Israeli mobile telephony and wireless communications company Partner
Communications Co., Ltd., Brazilian residential property developer Brookfield
Incorporacoes SA, Polish copper and silver miner KGHM Polska Miedz SA, Spanish
information technology services provider Indra Sisternas SA and Israeli
telecommunication services company Bezeq The Israeli Telecommunication Corp.,
Ltd.
--------
Past performance is no guarantee of future results.
When investing internationally, the value of an 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. Also, while the Fund
seeks to invest in a wide range of countries, volatility in a single country or
region in which the Fund invests a significant portion of its assets may affect
performance. In addition, the markets of emerging market countries are
typically more volatile and potentially less liquid than more developed
markets. Stocks of small-cap companies, and to a lesser extent, mid-cap
companies, may be more volatile than, and not as readily marketable as, those
of larger companies.
The Fund employs a Disciplined Strategy and will not deviate from its strategy
(except to the extent necessary to comply with federal tax laws or other
applicable laws). If the Fund is committed to a strategy that is unsuccessful,
the Fund will not meet its investment goal. Because the Fund will not use
certain techniques available to other mutual funds to reduce stock market
exposure, the Fund may be more susceptible to general market declines than
other mutual funds.
*The MSCI All Country World ex-U.S. Index (Net) is a free float-adjusted market
capitalization index designed to measure the equity market performance of 47
global developed and emerging markets, excluding the U.S. Net total return
indices reinvest dividends after the deduction of withholding taxes, using
(for international indices) a tax rate applicable to non-resident
institutional investors who do not benefit from double taxation treaties.
Indices are not managed and an investor cannot invest directly into an index.
The Fund's holdings are subject to change. Accordingly, securities listed may
or may not be a part of current portfolio construction.
48
SUNAMERICA EQUITY FUNDS
COMPARISONS: FUNDS VS. INDICES -- (UNAUDITED) (CONTINUED)
Over the past ten years, $10,000 invested in International Dividend Strategy
Fund Class A shares would be valued at $17,009. The same amount invested in
securities mirroring the performance of the MSCI All Country World ex-U.S.
Index (Net) would be valued at $25,567.
[CHART]
International MSCI All Country
Dividend Strategy World ex-U.S.
Class A/#/ Index (Net)**
------------------ ------------------
9/30/2001 $9,428 $10,000
10/31/2001 9,590 10,280
11/30/2001 9,654 10,750
12/31/2001 9,795 10,889
1/31/2002 9,546 10,423
2/28/2002 9,698 10,498
3/31/2002 10,097 11,068
4/30/2002 10,108 11,140
5/31/2002 10,227 11,261
6/30/2002 9,838 10,775
7/31/2002 8,790 9,725
8/31/2002 8,618 9,725
9/30/2002 7,559 8,695
10/31/2002 7,959 9,161
11/30/2002 8,294 9,602
12/31/2002 8,024 9,292
1/31/2003 7,797 8,965
2/28/2003 7,700 8,784
3/31/2003 7,549 8,613
4/30/2003 8,153 9,443
5/31/2003 8,596 10,045
6/30/2003 8,812 10,323
7/31/2003 9,082 10,598
8/31/2003 9,341 10,914
9/30/2003 9,428 11,219
10/31/2003 10,043 11,947
11/30/2003 10,194 12,207
12/31/2003 11,008 13,139
1/31/2004 11,062 13,350
2/29/2004 11,105 13,690
3/31/2004 11,224 13,774
4/30/2004 10,868 13,346
5/31/2004 10,835 13,388
6/30/2004 11,105 13,678
7/31/2004 10,673 13,280
8/31/2004 10,770 13,386
9/30/2004 11,019 13,816
10/31/2004 11,440 14,297
11/30/2004 12,153 15,289
12/31/2004 12,726 15,946
1/31/2005 12,521 15,671
2/28/2005 13,115 16,444
3/31/2005 12,737 15,998
4/30/2005 12,553 15,603
5/31/2005 12,564 15,701
6/30/2005 12,737 15,997
7/31/2005 13,201 16,587
8/31/2005 13,730 17,011
9/30/2005 14,087 17,889
10/31/2005 13,741 17,238
11/30/2005 14,163 17,817
12/31/2005 15,232 18,674
1/31/2006 16,356 19,976
2/28/2006 16,086 19,919
3/31/2006 16,636 20,497
4/30/2006 17,641 21,554
5/31/2006 16,961 20,560
6/30/2006 16,712 20,540
7/31/2006 16,831 20,750
8/31/2006 17,198 21,338
9/30/2006 17,123 21,352
10/31/2006 17,609 22,222
11/30/2006 18,095 23,028
12/31/2006 18,570 23,746
1/31/2007 18,711 23,835
2/28/2007 18,657 23,980
3/31/2007 19,132 24,656
4/30/2007 19,748 25,799
5/31/2007 20,158 26,506
6/30/2007 20,417 26,732
7/31/2007 20,147 26,656
8/31/2007 19,921 26,247
9/30/2007 21,390 27,985
10/31/2007 22,762 29,547
11/30/2007 21,487 28,219
12/31/2007 21,368 27,811
1/31/2008 18,995 25,120
2/29/2008 19,408 25,848
3/31/2008 19,255 25,291
4/30/2008 20,589 26,847
5/31/2008 20,978 27,313
6/30/2008 19,432 25,074
7/31/2008 18,464 24,177
8/31/2008 17,354 23,053
9/30/2008 14,686 19,597
10/31/2008 11,192 15,284
11/30/2008 10,483 14,406
12/31/2008 10,841 15,230
1/31/2009 9,736 13,887
2/28/2009 8,935 12,596
3/31/2009 9,457 13,612
4/30/2009 10,550 15,484
5/31/2009 12,152 17,604
6/30/2009 11,970 17,415
7/31/2009 12,990 19,123
8/31/2009 13,245 19,835
9/30/2009 14,058 20,858
10/31/2009 13,730 20,601
11/30/2009 14,374 21,196
12/31/2009 14,817 21,648
1/31/2010 13,767 20,592
2/28/2010 13,889 20,595
3/31/2010 14,927 22,007
4/30/2010 14,548 21,828
5/31/2010 12,864 19,555
6/30/2010 12,425 19,309
7/31/2010 13,486 21,058
8/31/2010 13,047 20,484
9/30/2010 14,451 22,526
10/31/2010 15,122 23,296
11/30/2010 14,377 22,402
12/31/2010 15,477 24,159
1/31/2011 15,648 24,401
2/28/2011 15,990 25,049
3/31/2011 16,063 25,002
4/30/2011 16,808 26,242
5/31/2011 16,380 25,515
6/30/2011 16,087 25,153
7/31/2011 15,868 24,818
8/31/2011 14,257 22,696
9/30/2011 12,548 20,178
10/31/2011 17,068 24,685
11/30/2011 16,536 23,426
12/31/2011 16,095 23,164
1/31/2012 17,345 24,735
2/29/2012 18,117 26,125
3/31/2012 17,993 25,766
4/30/2012 17,885 25,359
5/31/2012 15,864 22,480
6/30/2012 16,465 23,805
7/31/2012 16,033 24,142
8/31/2012 16,465 24,646
9/30/2012 17,009 25,567
Class A Class B Class C++ Class I
------------------ ------------------ ------------------ ------------------
International Average Average Average Average
Dividend Strategy Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
Fund# Return Return+ Return Return+ Return Return+ Return Return+
----------------- ------- ---------- ------- ---------- ------- ---------- ------- ----------
1 Year Return 2.49% 8.77% 3.97% 7.97% 6.98% 7.98% 8.84% 8.84%
----------------------------------------------------------------------------------------------
5 Year Return -9.67% -36.19% -9.54% -38.33% -9.21% -38.32% -8.54% -35.99%
----------------------------------------------------------------------------------------------
10 Year Return 5.46% 80.54% 5.55% 71.56% 5.38% 68.90% 6.17% 81.96%
----------------------------------------------------------------------------------------------
Since Inception* 0.36% 12.37% 0.42% 6.82% 0.03% 0.54% 3.19% 40.72%
----------------------------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would have been lower.
* Inception date: Class A and Class B: 11/19/96; Class C: 03/06/97; Class I:
11/16/01.
# For the purposes of the graph, it has been assumed that the maximum sales
charge of 5.75% of offering price, was deducted from the initial $10,000
investment in the Fund. For purposes of the average annual returns in the
table, it has been assumed that the maximum sales charge with respect to the
Class A shares was deducted from the initial investment in the Fund and that
the CDSCs with respect to the Class B and Class C shares have been deducted,
as applicable.
++ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
For the 12 month period ended September 30, 2012, the SunAmerica International
Equity Class A returned 2.49% compared to 14.48% for the MSCI All Country World
ex-U.S. Index (Net). (The performance data and graph do not reflect the
deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares.)
--------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 5.75%, Class B: 4.00% Contingent
Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. The fund's daily net assets
values are not guaranteed and shares are not insured by the FDIC, the Federal
Reserve Board or any other agency. The investment return and principal value of
an investment will fluctuate so that an investor's shares, when redeemed, may
be higher or lower than the original cost. Current performance may be higher or
lower than that shown. Performance as of the most recent month end is available
at www.safunds.com.
** The MSCI All Country World ex-U.S. Index (Net) is a free float-adjusted
market capitalization index designed to measure the equity market
performance of 47 global developed and emerging markets, excluding the U.S.
Net total return indices reinvest dividends after the deduction withholding
taxes, of using (for internation indices) a tax rate applicable to
non-resident institutional investor who do not benefit from double taxation
treaties. Indices are not managed and an investor cannot invest directly
into an index.
49
SUNAMERICA EQUITY FUNDS
COMPARISONS: FUNDS VS. INDICES -- (UNAUDITED) (CONTINUED)
SUNAMERICA VALUE FUND
The SunAmerica Value Fund Class A shares returned 27.84% (before maximum sales
charge) for the 12-month period ended September 30, 2012. The Fund
underperformed its benchmark, the Russell 1000 Value Index*, which returned
30.92% during the same annual period.
The Fund produced strong double-digit gains, as U.S. value-oriented equities
modestly outpaced U.S. growth-oriented equities during the annual period, as
measured by the Russell 1000 Value Index and Russell 1000 Growth Index,
respectively.
The Fund's relative underperformance was driven primarily by holding an average
position in cash of approximately 5.8% of the Fund's total net assets during an
annual period when the U.S. equity market rallied rather strongly.
Disappointing stock selection, particularly within the energy, consumer
discretionary and utilities sectors, further hindered relative results.
Partially offsetting these detractors was security selection in the materials,
information technology and financials sectors, which contributed positively to
the Fund's results. Sector allocation overall also added value, with decisions
to underweight utilities, the weakest performing sector in the Russell 1000
Value Index during the annual period, and to overweight consumer discretionary,
the best performing sector in the Russell 1000 Value Index during the annual
period, proving particularly prudent.
The top individual contributors to Fund performance during the annual period
were pharmaceutical company Pfizer, Inc., diversified technology, manufacturing
and financial services company General Electric Co., diversified financial
services company Wells Fargo & Co., diversified banking institution JPMorgan
Chase & Co. and integrated oil and gas company Chevron Corp. Conversely, the
biggest individual detractors from the Fund's performance during the annual
period were oil and gas exploration and production companies Devon Energy Corp.
and Whiting Petroleum Corp., computers and peripherals company Hewlett-Packard
Co., drugstore retail operator Walgreen Co. and rail and freight transportation
company CSX Corp. We sold the Fund's positions in Whiting Petroleum Corp. and
Walgreen Co. by the end of the annual period.
--------
Past performance is no guarantee of future results.
* The Russell 1000 Value Index measures the performance of those Russell 1000
companies with lower price-to-book ratios and lower forecasted growth values.
The Russell 1000 Index is a comprehensive large-cap index measuring the
performance of the largest 1,000 U.S. incorporated companies. Indices are not
managed and an investor cannot invest directly into an index.
The Fund is actively managed and its holdings are subject to change.
Accordingly, securities listed may or may not be a part of current portfolio
construction.
50
SUNAMERICA EQUITY FUNDS
COMPARISONS: FUNDS VS. INDICES -- (UNAUDITED) (CONTINUED)
Over the past ten years, $10,000 invested in SunAmerica Value Fund Class A
shares would have increased to $16,636. The same amount invested in securities
mirroring the performance of the Russell 1000@ Value Index would be valued at
$21,926.
[CHART]
Value Class A# Russell 1000/a/Value Index
----------------- ----------------------------
9/30/2001 $9,425 $10,000
10/31/2001 9,432 9,914
11/30/2001 10,031 10,490
12/31/2001 10,398 10,737
1/31/2002 10,287 10,655
2/28/2002 10,385 10,672
3/31/2002 10,751 11,177
4/30/2002 10,516 10,793
5/31/2002 10,620 10,847
6/30/2002 10,215 10,225
7/31/2002 9,653 9,274
8/31/2002 9,738 9,344
9/30/2002 9,077 8,305
10/31/2002 9,567 8,921
11/30/2002 10,006 9,482
12/31/2002 9,775 9,071
1/31/2003 9,515 8,851
2/28/2003 9,297 8,615
3/31/2003 9,351 8,629
4/30/2003 10,007 9,389
5/31/2003 10,615 9,995
6/30/2003 10,608 10,120
7/31/2003 10,663 10,271
8/31/2003 10,868 10,431
9/30/2003 10,820 10,329
10/31/2003 11,155 10,961
11/30/2003 11,312 11,110
12/31/2003 12,040 11,795
1/31/2004 12,054 12,002
2/29/2004 12,298 12,259
3/31/2004 12,191 12,152
4/30/2004 12,191 11,855
5/31/2004 12,183 11,976
6/30/2004 12,499 12,259
7/31/2004 12,334 12,086
8/31/2004 12,463 12,258
9/30/2004 12,693 12,448
10/31/2004 12,922 12,655
11/30/2004 13,489 13,295
12/31/2004 13,931 13,740
1/31/2005 13,762 13,496
2/28/2005 14,108 13,943
3/31/2005 14,019 13,752
4/30/2005 13,786 13,506
5/31/2005 14,035 13,831
6/30/2005 14,092 13,982
7/31/2005 14,381 14,387
8/31/2005 14,317 14,324
9/30/2005 14,478 14,525
10/31/2005 14,164 14,156
11/30/2005 14,582 14,619
12/31/2005 14,522 14,709
1/31/2006 14,825 15,280
2/28/2006 14,946 15,374
3/31/2006 15,075 15,582
4/30/2006 15,430 15,978
5/31/2006 15,084 15,574
6/30/2006 15,197 15,674
7/31/2006 15,594 16,055
8/31/2006 15,811 16,324
9/30/2006 16,217 16,649
10/31/2006 16,693 17,194
11/30/2006 16,918 17,586
12/31/2006 17,331 17,981
1/31/2007 17,438 18,211
2/28/2007 17,059 17,927
3/31/2007 17,292 18,204
4/30/2007 18,002 18,877
5/31/2007 18,673 19,558
6/30/2007 18,362 19,101
7/31/2007 17,798 18,218
8/31/2007 18,226 18,422
9/30/2007 18,780 19,055
10/31/2007 18,731 19,057
11/30/2007 17,866 18,125
12/31/2007 17,739 17,950
1/31/2008 17,058 17,231
2/29/2008 16,285 16,509
3/31/2008 16,239 16,385
4/30/2008 16,747 17,184
5/31/2008 16,943 17,156
6/30/2008 15,362 15,514
7/31/2008 15,362 15,458
8/31/2008 15,731 15,721
9/30/2008 14,727 14,566
10/31/2008 12,442 12,044
11/30/2008 11,530 11,181
12/31/2008 11,658 11,336
1/31/2009 10,440 10,032
2/28/2009 9,116 8,692
3/31/2009 9,872 9,435
4/30/2009 10,594 10,446
5/31/2009 11,350 11,092
6/30/2009 11,303 11,010
7/31/2009 12,012 11,912
8/31/2009 12,485 12,535
9/30/2009 12,757 13,019
10/31/2009 12,473 12,621
11/30/2009 13,041 13,332
12/31/2009 13,057 13,568
1/31/2010 12,724 13,186
2/28/2010 12,998 13,602
3/31/2010 13,748 14,488
4/30/2010 13,879 14,863
5/31/2010 12,724 13,641
6/30/2010 12,117 12,873
7/31/2010 13,010 13,745
8/31/2010 12,307 13,157
9/30/2010 13,283 14,177
10/31/2010 13,664 14,603
11/30/2010 13,569 14,525
12/31/2010 14,628 15,672
1/31/2011 15,047 16,026
2/28/2011 15,549 16,617
3/31/2011 15,549 16,683
4/30/2011 15,908 17,127
5/31/2011 15,621 16,947
6/30/2011 15,250 16,599
7/31/2011 14,664 16,048
8/31/2011 13,636 15,047
9/30/2011 12,535 13,910
Class A Class B Class C++ Class Z
------------------ ------------------ ------------------ ------------------
SunAmerica Average Average Average Average
Value Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
Fund# Return Return+ Return Return+ Return Return+ Return Return+
----------------- ------- ---------- ------- ---------- ------- ---------- ------- ----------
1 Year Return 20.48% 27.84% 22.92% 26.92% 25.95% 26.95% 28.63% 28.63%
---------------------------------------------------------------------------------------------
5 Year Return -4.26% -14.67% -4.11% -17.59% -3.78% -17.53% -2.56% -12.14%
---------------------------------------------------------------------------------------------
10 Year Return 5.22% 76.55% 5.32% 67.87% 5.15% 65.31% 6.47% 87.21%
---------------------------------------------------------------------------------------------
Since Inception* 5.58% 151.11% 5.63% 138.57% 4.84% 108.69% 4.40% 86.55%
---------------------------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would have been lower.
* Inception date: Class A and Class B: 11/19/96; Class C: 03/06/97; Class Z:
04/03/98.
# For the purposes of the graph, it has been assumed that the maximum sales
charge of 5.75% of offering price, was deducted from the initial $10,000
investment in the Fund. For purposes of the average annual returns in the
table, it has been assumed that the maximum sales charge with respect to the
Class A shares was deducted from the initial investment in the Fund and that
the CDSCs with respect to the Class B and Class C shares have been deducted,
as applicable.
++ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
For the 12 month period ended September 30, 2012, the SunAmerica Value Class A
returned 20.48% compared to 30.92% for the Russell 1000 Value Index. (The
performance data and graph do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.)
--------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 5.75%, Class B: 4.00% Contingent
Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. The fund's daily net assets
values are not guaranteed and shares are not insured by the FDIC, the Federal
Reserve Board or any other agency. The investment return and principal value of
an investment will fluctuate so that an investor's shares, when redeemed, may
be higher or lower than the original cost. Current performance may be higher or
lower than that shown. Performance as of the most recent month end is available
at www.safunds.com.
** The Russell 1000 Value Index measures the performance of those Russell 1000
companies with lower price-to-book ratios and lower forecasted growth
values. The Russell 1000 Index is a comprehensive large-cap index measuring
the performance of the largest 1,000 U.S. incorporated companies. Indices
are not managed and an investor cannot invest directly into an index.
51
SUNAMERICA EQUITY FUNDS
COMPARISONS: FUNDS VS. INDICES -- (UNAUDITED) (CONTINUED)
SUNAMERICA JAPAN FUND
The SunAmerica Japan Fund Class A shares returned 1.38% (before maximum sales
charge) for the 12-month period ended September 30, 2012. The Fund outperformed
its benchmark, the MSCI Japan Index (Net)*, which returned -1.68% during the
same annual period.
The Fund operated as the SunAmerica International Small-Cap Fund from the start
of the annual period on October 1, 2011 through January 26, 2012, and
PineBridge Investments LLC served as the Fund's subadviser. During this portion
of the annual period, the Fund Class A shares returned 6.13% (before maximum
sales charge) as compared to a return of 7.84% for the Fund's former benchmark,
the MSCI EAFE Small Cap Index (Net)*. Below, we discuss the Fund's performance
from October 1, 2011 through January 26, 2012.
From October 1, 2011 through January 26, 2012, stock selection in the health
care and industrials sectors detracted. Having an underweighted allocation to
energy, the best performing sector in the MSCI EAFE Small Cap Index (Net), also
hampered relative results. Such factors were only partially offset by the
positive contributions made by effective stock selection in the information
technology, financials, utilities and materials sectors. Having an
underweighted exposure to financials, the second-weakest sector in the MSCI
EAFE Small Cap Index (Net), also added value.
From a regional perspective, individual stock selection in Japan detracted
most. Both stock selection and allocation decisions within Australia and the
U.K. also hurt the Fund's relative results from October 1, 2011 through January
26, 2012. These detractors were partially offset by the positive contributions
made by effective stock selection in China and Brazil. Both stock selection and
exposure decisions within Germany further buoyed the Fund's results.
Individual stock holdings that detracted from Fund performance most during the
period from October 1, 2011 through January 26, 2012 were Japanese airline
Skymark Airlines, U.K. cash loan provider International Personal Finance,
Japanese residential home construction company Hajime Construction, Japanese
electronic commerce service provider Kakaku.com and French veterinary
pharmaceutical products manufacturer Virbac. The top individual contributors to
Fund performance during this same period were Brazilian retailer Restoque
Comercio E Confeccoes de Roupas, Hong Kong natural gas pipeline company China
Gas Holdings, German mortgage bank Aareal Bank, French entertainment software
publisher GameLoft and Luxembourg-based exchange-traded fund Db X-Trackers MSCI
Emerging Market TRN Index ETF.
Effective January 27, 2012, the Fund changed its name to the SunAmerica Japan
Fund and certain changes were made to the Fund's investment goal, principal
investment strategies and techniques. In addition, on this same date,
Wellington Management assumed day-to-day portfolio management responsibility
for the Fund as its new subadviser. From the date Wellington Management became
the Fund's subadviser through September 30, 2012, the Fund Class A shares
returned -4.47% (before maximum sales charge) as compared to a return of -2.15%
for the Fund's new benchmark, the MSCI Japan Index (Net)*. Below, we discuss
the Fund's performance from January 27, 2012 through September 30, 2012.
From January 27, 2012 through September 30, 2012, sector allocation was the
primary driver of the Fund's underperformance relative to the MSCI Japan Index
(Net). A residual of Wellington Management's bottom-up stock selection process,
underweighted allocations to telecommunication services and financials, each of
which outpaced the MSCI Japan Index (Net), and an overweighted exposure to
information technology, which lagged the benchmark index, detracted most from
relative results. Partially offsetting these detractors were the positive
contributions made by the Fund's underweighted allocations to utilities and
industrials, which each lagged the MSCI Japan Index (Net) during this same
period.
Security selection overall contributed positively to the Fund's relative
performance during the period since Wellington Management became sub-adviser.
Individual security selection was particularly strong within the information
technology, materials and financials sectors and was only partially offset by
weaker selection within the consumer discretionary, health care and industrials
sectors.
The top individual contributors to Fund performance since it became the
SunAmerica Japan Fund through September 30, 2012 were social media and
marketing services company Dena Co., Ltd., electronic commerce service provider
Kakaku.com Inc., cosmetics
52
SUNAMERICA EQUITY FUNDS
COMPARISONS: FUNDS VS. INDICES -- (UNAUDITED) (CONTINUED)
manufacturer Pola Orbis Holdings, Inc. and Internet portal Yahoo Japan Corp.
Individual stock holdings that detracted from Fund performance most during this
same period were specialized auto parts company Exedy Corp., metal processing
machine manufacturer Amada Co., Ltd., electronics retailer K's Holdings Corp.,
photo equipment and supplies company FUJIFILM Holdings Corp. and consumer video
game software and amusement facility arcade game machine developer Konami Corp.
--------
Past performance is no guarantee of future results.
When investing internationally, 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. In addition, the Fund's
performance may be affected by the broader Asian region, which includes
emerging markets. Emerging markets are typically more volatile than more
developed markets. Stocks of small-cap companies, and to a lesser extent,
mid-cap companies, may be more volatile than, and not as readily marketable as,
those of larger companies.
Because the Fund concentrates its investments in Japan, the Fund's performance
is expected to be closely tied to social, political and economic conditions of
that country. As a result, the Fund is likely to be more volatile than more
geographically diverse international funds.
*The MSCI EUROPE, AUSTRALASIA AND THE FAR EAST ("MSCI EAFE") SMALL CAP INDEX
(NET) is comprised of 40% of the full market capitalization of the eligible
small cap universe with each industry group and each country in the MSCI EAFE
Index. The MSCI EAFE (Europe, Australasia, Far East) Index is a free
float-adjusted market capitalization index designed to measure the equity
market performance of developed markets, excluding the U.S. and Canada. The
MSCI JAPAN INDEX (NET) is a free-float adjusted market capitalization weighted
index that is designed to track the equity market performance of Japanese
securities listed on Tokyo Stock Exchange, Osaka Stock Exchange, JASDAQ and
Nagoya Stock Exchange. Net total return indices reinvest dividends after the
deduction of withholding taxes, using (for international indices) a tax rate
applicable to non-resident institutional investors who do not benefit from
double taxation treaties. Indices are not managed and an investor cannot
invest directly into an index.
The Fund is actively managed and its holdings are subject to change.
Accordingly, securities listed may or may not be a part of current portfolio
construction.
53
SUNAMERICA EQUITY FUNDS
COMPARISONS: FUNDS VS. INDICES -- (UNAUDITED) (CONTINUED)
Since the Fund's inception on May 2, 2006, $10,000 invested in SunAmerica Japan
Fund Class A shares would be valued at $6,362. The same amount invested in
securities mirroring the performance of the MSCI Japan Index (Net) and the MSCI
EAFE Small Cap Index (Net) would be valued at $6,891 and $9,356, respectively.
[CHART]
Japan MSCI EAFE
Class A/#/ Small Cap Index(Net) MSCI Japan/a/
----------- -------------------- -----------
5/1/2006 $9,427 $10,000 $10,000
5/31/2006 8,650 9,309 9,175
6/30/2006 8,431 9,104 9,073
7/31/2006 8,213 8,858 9,023
8/31/2006 8,311 9,106 9,158
9/30/2006 8,333 9,141 9,008
10/31/2006 8,673 9,476 9,165
11/30/2006 8,959 9,883 9,230
12/31/2006 9,336 10,211 9,459
1/31/2007 9,578 10,425 9,539
2/28/2007 9,608 10,599 9,923
3/31/2007 9,970 10,937 9,792
4/30/2007 10,294 11,342 9,601
5/31/2007 10,558 11,424 9,758
6/30/2007 10,596 11,399 9,729
7/31/2007 10,603 11,354 9,713
8/31/2007 10,181 10,768 9,428
9/30/2007 10,558 10,887 9,645
10/31/2007 10,988 11,565 9,608
11/30/2007 10,113 10,733 9,432
12/31/2007 9,712 10,359 9,059
1/31/2008 8,675 9,348 8,645
2/29/2008 8,896 9,745 8,704
3/31/2008 8,980 9,713 8,351
4/30/2008 9,163 9,939 8,958
5/31/2008 9,422 10,105 9,183
6/30/2008 8,743 9,274 8,557
7/31/2008 8,195 8,850 8,266
8/31/2008 7,569 8,510 7,937
9/30/2008 6,357 7,051 7,047
10/31/2008 4,711 5,377 6,005
11/30/2008 4,513 5,139 5,931
12/31/2008 4,811 5,489 6,413
1/31/2009 4,559 5,138 5,977
2/28/2009 4,178 4,662 5,237
3/31/2009 4,308 4,965 5,347
4/30/2009 4,628 5,727 5,861
5/31/2009 5,253 6,539 6,465
6/30/2009 5,322 6,665 6,579
7/31/2009 5,825 7,174 6,860
8/31/2009 5,985 7,754 7,130
9/30/2009 6,359 8,141 7,007
10/31/2009 6,283 7,997 6,832
11/30/2009 6,435 7,997 6,762
12/31/2009 6,507 8,057 6,814
1/31/2010 6,349 7,978 6,943
2/28/2010 6,325 7,867 7,021
3/31/2010 6,649 8,441 7,371
4/30/2010 6,783 8,585 7,360
5/31/2010 6,033 7,518 6,765
6/30/2010 6,049 7,485 6,629
7/31/2010 6,649 8,131 6,865
8/31/2010 6,460 7,895 6,708
9/30/2010 7,186 8,795 7,015
10/31/2010 7,463 9,135 7,158
11/30/2010 7,257 8,808 7,309
12/31/2010 7,874 9,833 7,865
1/31/2011 7,801 9,911 7,875
2/28/2011 7,915 10,135 8,235
3/31/2011 7,972 10,124 7,478
4/30/2011 8,329 10,658 7,505
5/31/2011 8,134 10,385 7,383
6/30/2011 8,037 10,210 7,491
7/31/2011 7,923 10,103 7,757
8/31/2011 7,103 9,272 7,126
9/30/2011 6,275 8,312 7,009
10/31/2011 6,697 8,910 6,992
11/30/2011 6,519 8,428 6,683
12/31/2011 6,362 8,265 6,738
1/31/2012 6,650 8,949 7,043
2/29/2012 6,838 9,487 7,398
3/31/2012 6,918 9,494 7,497
4/30/2012 6,858 9,448 7,258
5/31/2012 6,034 8,336 6,610
6/30/2012 6,392 8,672 6,950
7/31/2012 6,302 8,705 6,784
8/31/2012 6,372 8,937 6,735
9/30/2012 6,362 9,356 6,891
Class A Class B Class C
------------------ ------------------ ------------------
SunAmerica Average Average Average
Japan Annual Cumulative Annual Cumulative Annual Cumulative
Fund# Return Return+ Return Return+ Return Return+
----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return -4.43% 1.38% -2.42% 0.87% 0.02% 0.85%
--------------------------------------------------------------------------
5 Year Return -10.69% -39.74% -10.47% -41.59% -10.21% -41.64%
--------------------------------------------------------------------------
Since Inception* -6.81% -32.51% -6.53% -35.14% -6.55% -35.25%
--------------------------------------------------------------------------
+Cumulative returns do not include sales load. If sales load had been included,
the return would have been lower.
*Inception date: Class A, Class B and Class C: 05/02/06.
# For the purposes of the graph, it has been assumed that the maximum sales
charge of 5.75% of offering price, was deducted from the initial $10,000
investment in the Fund. For purposes of the average annual returns in the
table, it has been assumed that the maximum sales charge with respect to the
Class A shares was deducted from the initial investment in the Fund and that
the CDSCs with respect to the Class B and Class C shares have been deducted,
as applicable.
For the 12 month period ended September 30, 2012, the SunAmerica Japan Class A
returned -4.43% compared to -1.68% for the MSCI Japan Index (Net). (The
performance data and graph do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.)
--------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 5.75%, Class B: 4.00% Contingent
Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. The fund's daily net assets
values are not guaranteed and shares are not insured by the FDIC, the Federal
Reserve Board or any other agency. The investment return and principal value of
an investment will fluctuate so that an investor's shares, when redeemed, may
be higher or lower than the original cost. Current performance may be higher or
lower than that shown. Performance as of the most recent month end is available
at www.safunds.com.
** The MSCI EUROPE, AUSTRALASIA AND THE FAR EAST ("MSCI EAFE") SMALL CAP INDEX
(NET) is comprised of 40% of the full market capitalization of the eligible
small cap universe with each industry group and each country in the MSCI
EAFE Index. The MSCI EAFE (Europe, Australasia, Far East) Index is a free
float-adjusted market capitalization index designed to measure the equity
market performance of developed markets, excluding the U.S. and Canada.
@ The fund changed its benchmark from the MSCI EAFE Small Cap Index (Net) to
the MSCI Japan Index (Net) in the light of the change in the name of the
Fund and changes to the Fund's principal investment strategies and
techniques that became effective as of January 27, 2012.
The MSCI JAPAN INDEX (NET) is a free-float adjusted market capitalization
weighted index that is designed to track the equity market performance of
Japanese securities listed on Tokyo Stock Exchange, Osaka Stock Exchange,
JASDAQ and Nagoya Stock Exchange. Net total return indices reinvest
dividends after the deduction of withholding taxes, using (for international
indices) a tax rate applicable to non-resident institutional investors who
do not benefit from double taxation treaties. Indices are not managed and an
investor cannot invest directly into an index.
54
[LOGO]
HARBORSIDE FINANCIAL CENTER
3200 PLAZA 5
JERSEY CITY, NJ 07311-4992
TRUSTEES SHAREHOLDER SERVICING This report is submitted
Richard W. Grant 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
William J. Shea 3200 Plaza 5 other than shareholders
Jersey City, NJ of the Funds is
OFFICERS 07311-4992 authorized only in
John T. Genoy, President con-nection with a
and Chief Executive CUSTODIAN AND TRANSFER currently effective
Officer AGENT pro-spectus, setting
Donna M. Handel, State Street Bank and forth details of the
Treasurer Trust Company Funds, which must precede
Timothy P. Pettee, Vice P.O. Box 5607 or accom-pany this report.
President Boston, MA 02110
James Nichols, Vice DELIVERY OF SHAREHOLDER
President VOTING PROXIES ON TRUST DOCUMENTS
Katherine Stoner, Vice PORTFOLIO SECURITIES The Funds have adopted a
President and Chief A description of the policy that allows them
Compliance Officer policies and procedures to send only one copy of
Gregory N. Bressler, that the Trust uses to a Fund's prospectus,
Chief Legal Officer determine how to vote proxy material, annual
and Secretary proxies relating to report and semi-annual
Gregory R. Kingston, securities held in a report (the "shareholder
Vice President and Fund's portfolio which is documents") to
Assistant Treasurer available in the Trust's shareholders with
Kathleen Fuentes, Statement of Additional multiple accounts
Assistant Secretary Information, may be residing at the same
John E. McLean, obtained without charge "household." This
Assistant Secretary upon request, by calling practice is called
Nori L. Gabert, Vice (800) 858-8850. This householding and reduces
President and in-formation is also Fund expenses, which
Assistant Secretary available from the EDGAR benefits you and other
Matthew Hackethal, database on the U.S. shareholders. Unless the
Anti-Money Laundering Securities and Ex-change Funds receive
Compliance Officer Commission's website at instructions to the
Diedre L. Shepherd, http://www.sec.gov. con-trary, you will only
Assistant Treasurer receive one copy of the
PROXY VOTING RECORD ON shareholder documents.
INVESTMENT ADVISER SUNAMERICA EQUITY FUNDS The Funds will continue
SunAmerica Asset Information regarding how to household the
Management Corp. SunAmerica Equity Funds share-holder documents
Harborside Financial voted proxies relating to indefinitely, until we
Center securities held in are instructed otherwise.
3200 Plaza 5 SunAmerica Equity Funds If you do not wish to
Jersey City, NJ during the most recent participate in
07311-4992 twelve month period ended householding, please
June 30 is available, contact Shareholder
DISTRIBUTOR once filed with the U.S. Services at (800)
SunAmerica Capital Securities and Exchange 858-8850 ext. 6010 or
Services, Inc. Commission, without send a written request
Harborside Financial charge, upon request, by with your name, the name
Center calling (800) 858-8850 or of your fund(s) and your
3200 Plaza 5 on the U.S. Securities account number(s) to
Jersey City, NJ and Exchange Commission's SunAmerica Mutual Funds
07311-4992 website at c/o BFDS, P.O. Box
http://www.sec.gov. 219186, Kansas City MO,
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
Commission for its first
and third fiscal quarters
on Form N-Q. The Trust's
Forms N-Q are available
on the U.S. Securities
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).
[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.SAFUNDS.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.safunds.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.
FUNDS DISTRIBUTED BY SUNAMERICA CAPITAL SERVICES, INC.
This fund report must be preceded by or accompanied by a prospectus.
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.safunds.com. Read
the prospectus carefully before investing.
WWW.SAFUNDS.COM
EQANN - 9/12
[LOGO]
AIG
Sun America
Mutual Funds
Item 2. Code of Ethics
The SunAmerica Equity Funds (the "registrant") has adopted a Code of
Ethics applicable to its Principal Executive and Principal Accounting
Officers pursuant to Section 406 of the Sarbanes-Oxley Act of 2002.
During the fiscal year ended 2012, there were no reportable amendments,
waivers or implicit waivers to a provision of the Code of Ethics that
applies to the registrant's Principal Executive and Principal
Accounting Officers.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Trustees has determined that William J. Shea,
the Chairman of the registrant's Audit Committee, qualifies as an audit
committee financial expert, as defined in Item 3(b) of Form N-CSR.
Mr. Shea is considered to be "independent" for purposes of Item 3(a)(2)
of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
(a)--(d) Aggregate fees billed to the registrant for the last two
fiscal years for professional services rendered by the registrant's
principal accountant were as follows:
2011 2012
(a) Audit Fees ....................$ 90,210 $ 97,202
(b) Audit-Related Fees ............$ 0 $ 10,740
(c) Tax Fees ......................$ 0 $ 0
(d) All Other Fees ................$ 0 $ 0
Audit Fees include amounts related to the audit of the registrant's
annual financial statements and services normally provided by the
principal accountant in connection with statutory and regulatory
filings. Audit-Related Fees include amounts related to the review
an amendment to the registrant's registration statement.
Aggregate fees billed to the investment adviser and Adviser Affiliates
(as defined below in Item 4(e)) that are required to be pre-approved
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X for
the last two fiscal years for services rendered by the registrant's
principal accountant were as follows:
2011 2012
(b) Audit-Related Fees ............$ 0 $ 0
(c) Tax Fees ......................$ 0 $ 0
(d) All Other Fees ................$ 0 $ 0
(e) (1) The registrant's audit committee pre-approves all audit services
provided by the registrant's principal accountant for the registrant
and all non-audit services provided by the registrant's principal
accountant for the registrant, its investment adviser and any entity
controlling, controlled by, or under common control with the
investment adviser ("Adviser Affiliates") that provides ongoing
services to the registrant, if the engagement by the investment
adviser or Adviser Affiliate relates directly to the operations and
financial reporting of the registrant. The audit committee has not
presently established any pre-approval policies and procedures that
permit the pre-approval of the above services other than by the full
audit committee. Certain de minimis exceptions are allowed for non-
audit services in accordance with Rule 2-01(c)(7)(i)(C) of Regulation
S-X as set forth in the registrant's audit committee charter.
(2) No services included in (b)-(d) above in connection with fees
billed to the registrant or the investment adviser or Adviser
Affiliates were approved pursuant to paragraph (c)(7)(i)(C) of
Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate fees billed for the most recent fiscal year and the
preceding fiscal year by the registrant's principal accountant for
non-audit services rendered to the registrant, its investment adviser,
and Adviser Affiliates that provides ongoing services to the registrant
for 2011 and 2012 were $91,846 and $53,590, respectively.
(h) 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
229.407) (as required by 22(b)(15)) of Schedule 14A (17 CFR 240.14a-
101), or this Item 10.
Item 11. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures (as defined under Rule 30a-3(c)
under the Investment Company Act of 1940 (17 CFR 270.30a-3(c))). Based
on that evaluation, the registrant's management, including the
President and Treasurer, concluded that the registrant's disclosure
controls and procedures are effective.
(b) There was no change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act
of 1940 (17 CFR 270.30a-3(d))) that occurred during the registrant's
last fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal contro1 over financial reporting.
Item 12. Exhibits.
(a) (1) Code of Ethics applicable to its Principal Executive and
Principle Accounting Officers pursuant to Section 406 of the
Sarbanes-Oxley Act of 2002 attached hereto as Exhibit 99.406.
Code of Ethics.
(2) Certifications pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit
99.CERT.
(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the Sarbanes-
Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Equity Funds
By: /s/ John T. Genoy
------------------
John T. Genoy
President
Date: December 7, 2012
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John T. Genoy
-----------------
John T. Genoy
President
Date: December 7, 2012
By: /s/ Donna M. Handel
-------------------
Donna M. Handel
Treasurer
Date: December 7, 2012