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, 2013
-------------------------
Item 1. Reports to Stockholders
[PHOTO]
ANNUAL REPORT 2013
SUNAMERICA
Equity Funds
[LOGO]
SEPTEMBER 30, 2013 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............................... 23
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM..... 37
APPROVAL OF ADVISORY AGREEMENTS............................. 38
TRUSTEE AND OFFICER INFORMATION............................. 43
SHAREHOLDER TAX INFORMATION................................. 46
COMPARISONS: FUNDS VS. INDICES.............................. 47
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, 2013. It was a period wherein U.S. and
international equity performance was generally quite strong, though volatility
persisted driven by anticipated and actual monetary policies of central banks
in the U.S., Europe and Japan.
The U.S. equity markets generally posted flat to slightly negative returns as
the annual period began with the fourth quarter of 2012. In the U.S.,
lackluster economic trends, uncertainty surrounding the presidential election
and political gridlock surrounding the fiscal cliff of scheduled automatic tax
increases and spending cuts were only partially offset by the Federal Reserve's
(the "Fed's") continued commitment to low interest rates. In December 2012, the
Fed updated its low interest rate policy to tie any potential shift to
conditions regarding U.S. unemployment rate and inflation levels. International
equity markets overall fared better. European equity markets rallied, driven by
positive sentiment toward European Central Bank (ECB) president Mario Draghi's
commitment to the euro and the ECB's Outright Monetary Transactions (OMT)
program to buy unlimited amounts of short-term government bonds. The Bank of
Japan (the "BoJ") continued to increase its asset purchase program and extended
it through the end of 2012. The leader of Japan's Liberal Democratic Party,
Shinzo Abe, was elected in December 2012 on a campaign that promoted the idea
of adopting a higher inflation target and a depreciating yen, which was
perceived as good for the nation's export-oriented economy.
The first quarter of 2013 got off to an exceptionally strong start for U.S. and
international equity investors. Risk was rewarded, and the U.S. stock market
delivered three successive months of positive returns. Toward the end of the
quarter, the S&P 500(R) Index* hit an all-time high, surpassing its previous
peak from 2007, and the Dow Jones Industrial Average* also reached a historic
high, achieving its best quarter in 15 years. The resolution of the fiscal
cliff on the first day of 2013, aided by continued Fed commitment to
quantitative easing and multiple signs of a growing U.S. economy, provided
support for the rally. European equity markets continued to rise despite a
banking crisis in Cyprus and further economic contraction in the region. The
Japanese equity market posted gains on the hope that aggressive stimulus by
Shinzo Abe's government would indeed promote growth and inflation in Japan. The
yen weakened to its lowest level against the dollar since mid-2009 on
expectations the new head of the BoJ would aggressively pursue a higher
inflation target.
U.S. equities were higher in the second quarter of 2013 overall, but pulled
back in late May and June. In May 2013, the Fed led the market to believe it
was about to begin winding down its asset purchases via its quantitative easing
program, which created concern about a future tightening of interest rates.
Meanwhile, Japanese equities hit a five-year high before taking a sharp turn
downward, along with a number of other international equity markets, as
overseas equity markets as a whole reacted negatively to Fed Chair Bernanke's
mid-May tapering announcement. Signs of slowing economic conditions in China
further dampened performance. Breaking a streak of seven consecutive positive
months, the U.S. equity markets were driven lower in June by Fed officials
seeking to clarify what was meant by their May statements and by financial
market participants attempting to interpret the Fed's statements. By the end of
the second quarter, there appeared to be an emerging consensus that the Fed
would begin tapering its asset purchases if economic data showed signs of a
strong U.S. economy. International equity markets again responded negatively to
this consensus sentiment.
In the last months of the annual period, that is, the third quarter of 2013,
the equity markets overall were solid but volatile. The U.S. equity market
rebounded in July, retreated in August and then rallied back in September.
European equity markets similarly rallied back in July as the Eurozone reported
economic growth in the second quarter of 2013, ending six consecutive quarters
of economic contraction. However, uncertainty from worsening situations in
Egypt and Syria weighed on international equity markets during August, before
bouncing back in September on rising executive and consumer sentiment data
exceeding consensus estimates, despite European unemployment holding steady at
12.1%. Japanese equities moved higher during the quarter, as Japan's ruling
party won a majority in its parliament's upper house in July along with a
mandate to push economic reforms, an outcome considered a victory for Shinzo
Abe and his "Abenomics" program. Still, there were a number of unanticipated
events that occurred during the third calendar
2
quarter that had yet to be resolved by the end of the annual period. First,
after the Fed spent months discussing the conditions for tapering its
quantitative easing, the markets had widely anticipated that such tapering
would begin in September 2013. Instead, the Fed chose not to do so, stating it
needs more evidence of lasting improvement in the economy. The unexpected
non-action provided support to the financial markets, reassured that Fed
liquidity would continue for some time. Second, after months of public debate
over the next Fed Chair, Larry Summers officially withdrew his name from
consideration, which left current Fed Vice Chair Janet Yellen as the clear
front-runner. The third unanticipated event of the quarter was the appearance
that the U.S. may have been on the verge of military action against Syria in
response to its use of chemical weapons. By the end of the quarter, the U.S.
and Russia had agreed on a plan for Syria to disarm its chemical weapons,
reducing, at least for the time being, the threat of a wider Middle East
conflict. Finally, with the failure to pass a budget, the U.S. government
entered a partial shutdown at the close of business on September 30, 2013, with
the debate over the U.S. debt ceiling looming.
Against this backdrop, U.S. equities, as measured by the S&P 500(R) Index,
returned 19.34% for the 12 months ended September 30, 2013. International
equities, as measured by the MSCI ACWI ex-U.S. Index (Net)*, lagged the U.S.
equity market but still produced strong gains, returning 16.48% for the
12-month period ended September 30, 2013. Japanese equities, as measured by the
MSCI Japan Index (Net)*, returned 31.50%.
Amid these conditions, each of the portfolios in the SunAmerica Equity Funds
generated positive absolute gains during the annual period. On the following
pages, 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
Timothy Pettee Jun Oh Timothy Campion
Andrew Sheridan Kara Murphy Jane Bayar
--------
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 DOW JONES
INDUSTRIAL AVERAGE is a price-weighted average of 30 actively traded blue-chip
stocks, primarily industrials including stocks that trade on the New York
Stock Exchange. The MSCI ACWI EX-U.S. INDEX (NET) is a free float-adjusted
market capitalization-weighted index designed to measure the equity market
performance of 44 global developed and emerging markets, excluding the U.S.
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 in an index.
3
SUNAMERICA EQUITY FUNDS
EXPENSE EXAMPLE -- SEPTEMBER 30, 2013 -- (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, 2013 and held until September 30, 2013.
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, 2013" 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, 2013" 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, 2013" 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, 2013" 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, 2013"
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, 2013" 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, 2013" 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.
--------
+See Note 1
4
SUNAMERICA EQUITY FUNDS
EXPENSE EXAMPLE -- SEPTEMBER 30, 2013 -- (UNAUDITED) (CONTINUED)
ACTUAL HYPOTHETICAL
------------------------------------------ -------------------------------------------
ENDING ACCOUNT
ENDING ACCOUNT EXPENSE PAID VALUE USING A
VALUE USING DURING THE HYPOTHETICAL EXPENSE PAID
BEGINNING ACTUAL SIX MONTHS BEGINNING 5% ASSUMED DURING THE SIX
ACCOUNT VALUE RETURN AT ENDED ACCOUNT VALUE RETURN AT MONTHS ENDED
AT APRIL 1, SEPTEMBER 30, SEPTEMBER 30, AT APRIL 1, SEPTEMBER 30, SEPTEMBER 30,
FUND 2013 2013 2013 2013 2013 2013
---- ------------- -------------- ------------- ------------- -------------- --------------
INTERNATIONAL DIVIDEND STRATEGY
FUND#
Class A....................... $1,000.00 $1,061.76 $ 9.82 $1,000.00 $1,015.54 $ 9.60
Class B....................... $1,000.00 $1,058.21 $13.16 $1,000.00 $1,012.28 $12.86
Class C....................... $1,000.00 $1,058.33 $13.16 $1,000.00 $1,012.28 $12.86
Class I....................... $1,000.00 $1,062.43 $ 9.31 $1,000.00 $1,016.04 $ 9.10
VALUE FUND
Class A....................... $1,000.00 $1,093.41 $ 8.13 $1,000.00 $1,017.30 $ 7.84
Class B#...................... $1,000.00 $1,088.71 $11.94 $1,000.00 $1,013.64 $11.51
Class C....................... $1,000.00 $1,089.77 $11.89 $1,000.00 $1,013.69 $11.46
JAPAN FUND#
Class A....................... $1,000.00 $1,136.05 $10.17 $1,000.00 $1,015.54 $ 9.60
Class B....................... $1,000.00 $1,131.12 $13.62 $1,000.00 $1,012.28 $12.86
Class C....................... $1,000.00 $1,131.31 $13.62 $1,000.00 $1,012.28 $12.86
-------------
EXPENSE
RATIO
AS OF
SEPTEMBER 30,
FUND 2013*
---- -------------
INTERNATIONAL DIVIDEND STRATEGY
FUND#
Class A....................... 1.90%
Class B....................... 2.55%
Class C....................... 2.55%
Class I....................... 1.80%
VALUE FUND
Class A....................... 1.55%
Class B#...................... 2.28%
Class C....................... 2.27%
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 365
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,
2013" 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, 2013" and "Expense Ratios" would
have been lower.
+ See Note 1
5
SUNAMERICA EQUITY FUNDS
STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2013
INTERNATIONAL
DIVIDEND
STRATEGY FUND VALUE FUND JAPAN FUND
------------- ------------ -----------
ASSETS:
Investments at value (unaffiliated)*............................................ $ 120,112,234 $108,896,881 $26,644,118
Repurchase agreements (cost approximates value)................................. 5,003,000 2,756,000 808,000
------------- ------------ -----------
Total investments.............................................................. 125,115,234 111,652,881 27,452,118
------------- ------------ -----------
Cash............................................................................ 572 32 608
Foreign cash*................................................................... 1,838,018 -- 158,949
Receivable for:
Fund shares sold............................................................... 1,009,852 42,143 13,531
Dividends and interest......................................................... 355,589 145,434 196,789
Investments sold............................................................... -- -- 29,470
Prepaid expenses and other assets............................................... 3,051 11,415 2,381
Due from investment adviser for expense reimbursements/fee waivers.............. 17,228 -- 10,111
------------- ------------ -----------
Total assets.................................................................... 128,339,544 111,851,905 27,863,957
------------- ------------ -----------
LIABILITIES:
Payable for:
Fund shares redeemed........................................................... 64,122 97,294 --
Investments purchased.......................................................... -- -- 235,203
Investment advisory and management fees........................................ 100,474 69,102 25,047
Distribution and service maintenance fees...................................... 50,534 43,151 8,891
Transfer agent fees and expenses............................................... 31,346 38,927 5,931
Trustees' fees and expenses.................................................... 1,882 3,012 463
Other accrued expenses......................................................... 163,347 101,739 75,144
Due to investment adviser from expense recoupment............................... -- 2,340 --
------------- ------------ -----------
Total liabilities............................................................... 411,705 355,565 350,679
------------- ------------ -----------
Net assets...................................................................... $ 127,927,839 $111,496,340 $27,513,278
============= ============ ===========
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01 par value.................................. $ 114,586 $ 71,000 $ 34,071
Paid-in capital................................................................. 225,304,091 164,381,463 23,251,772
------------- ------------ -----------
225,418,677 164,452,463 23,285,843
Accumulated undistributed net investment income (loss).......................... 36,713 707,750 45,538
Accumulated undistributed net realized gain (loss) on investments, futures
contracts, options contracts, securities sold short, foreign exchange
transactions................................................................... (102,116,433) (58,565,133) 1,844,272
Unrealized appreciation (depreciation) on investments........................... 4,581,422 4,901,260 2,335,835
Unrealized foreign exchange gain (loss) on other assets and liabilities......... 7,460 -- 1,790
------------- ------------ -----------
Net assets...................................................................... $ 127,927,839 $111,496,340 $27,513,278
============= ============ ===========
*Cost
Investments (unaffiliated)..................................................... $ 115,530,812 $103,995,621 $24,308,283
============= ============ ===========
Foreign cash................................................................... $ 1,828,467 $ -- $ 158,020
============= ============ ===========
See Notes to Financial Statements
6
SUNAMERICA EQUITY FUNDS
STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2013 -- (continued)
INTERNATIONAL
DIVIDEND
STRATEGY FUND VALUE FUND JAPAN FUND
------------- ----------- -----------
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net assets...................................................................... $96,020,462 $91,235,253 $25,053,183
Shares of beneficial interest issued and outstanding............................ 8,416,636 5,732,525 3,093,460
Net asset value and redemption price per share.................................. $ 11.41 $ 15.92 $ 8.10
Maximum sales charge (5.75% of offering price).................................. $ 0.70 $ 0.97 $ 0.49
----------- ----------- -----------
Maximum offering price to public................................................ $ 12.11 $ 16.89 $ 8.59
=========== =========== ===========
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net assets...................................................................... $ 5,947,544 $ 4,630,646 $ 238,419
Shares of beneficial interest issued and outstanding............................ 568,282 311,767 30,376
Net asset value, offering and redemption price per share (excluding any
applicable contingent deferred sales charge)................................... $ 10.47 $ 14.85 $ 7.85
=========== =========== ===========
CLASS C (UNLIMITED SHARES AUTHORIZED):
Net assets...................................................................... $24,775,616 $15,630,441 $ 2,221,676
Shares of beneficial interest issued and outstanding............................ 2,370,785 1,055,673 283,279
Net asset value, offering and redemption price per share (excluding any
applicable contingent deferred sales charge)................................... $ 10.45 $ 14.81 $ 7.84
=========== =========== ===========
CLASS I (UNLIMITED SHARES AUTHORIZED):
Net assets...................................................................... $ 1,184,217 $ -- $ --
Shares of beneficial interest issued and outstanding............................ 102,917 -- --
Net asset value, offering and redemption price per share........................ $ 11.51 $ -- $ --
=========== =========== ===========
See Notes to Financial Statements
7
SUNAMERICA EQUITY FUNDS
STATEMENT OF OPERATIONS -- September 30, 2013
INTERNATIONAL
DIVIDEND
STRATEGY FUND VALUE FUND JAPAN FUND
------------- ----------- ----------
INVESTMENT INCOME:
Dividends (unaffiliated)........................................................ $5,985,264 $ 2,793,408 $ 409,949
Interest (unaffiliated)......................................................... 8,449 586 --
---------- ----------- ----------
Total investment income*...................................................... 5,993,713 2,793,994 409,949
---------- ----------- ----------
EXPENSES:
Investment advisory and management fees......................................... 954,253 834,524 261,866
Distribution and service maintenance fees:
Class A....................................................................... 247,910 318,591 75,279
Class B....................................................................... 51,028 49,574 2,063
Class C....................................................................... 182,719 152,188 10,563
Service Fees Class I............................................................ 3,048 -- --
Transfer agent fees and expenses:
Class A....................................................................... 180,042 229,176 49,177
Class B....................................................................... 15,613 16,320 1,447
Class C....................................................................... 46,884 38,908 3,421
Class I....................................................................... 2,833 -- --
Registration fees:
Class A....................................................................... 33,960 30,704 14,052
Class B....................................................................... 13,987 11,879 10,917
Class C....................................................................... 17,241 13,828 11,005
Class I....................................................................... -- -- --
Custodian and accounting fees................................................... 175,379 47,946 55,705
Reports to shareholders......................................................... 64,784 62,213 4,115
Audit and tax fees.............................................................. 50,681 45,148 55,370
Legal fees...................................................................... 39,082 15,214 12,627
Directors' fees and expenses.................................................... 6,866 7,817 1,505
Interest expense................................................................ -- -- 134
Other expenses.................................................................. 48,509 21,444 18,737
---------- ----------- ----------
Total expenses before fee waivers, expense reimbursements, expense
recoupments, custody credits and fees paid indirectly........................ 2,134,819 1,895,474 587,983
Net (Fees waived and expenses reimbursed)/recouped by investment adviser
(Note 3)..................................................................... (171,022) (10,860) (147,128)
Custody credits earned on cash balances....................................... -- (3) --
Fees paid indirectly (Note 4)................................................. -- (9,625) --
---------- ----------- ----------
Net expenses.................................................................. 1,963,797 1,874,986 440,855
---------- ----------- ----------
Net investment income (loss)..................................................... 4,029,916 919,008 (30,906)
---------- ----------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)........................... (567,036) 23,462,159 2,147,792
Net realized foreign exchange gain (loss) on other assets and liabilities........ (97,244) -- (10,770)
---------- ----------- ----------
Net realized gain (loss) on investments and foreign currencies................... (664,280) 23,462,159 2,137,022
---------- ----------- ----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated)... 4,522,264 (3,074,181) 3,477,189
Change in unrealized foreign exchange gain (loss) on other assets and
liabilities..................................................................... 8,846 -- (218)
---------- ----------- ----------
Net unrealized gain (loss) on investments and foreign currencies................. 4,531,110 (3,074,181) 3,476,971
---------- ----------- ----------
Net realized and unrealized gain (loss) on investments and foreign currencies.... 3,866,830 20,387,978 5,613,993
---------- ----------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.................. $7,896,746 $21,306,986 $5,583,087
========== =========== ==========
--------
* Net of foreign withholding taxes on interest and dividends of.................. $ 891,426 $ 3,564 $ 31,534
========== =========== ==========
See Notes to Financial Statements
8
SUNAMERICA EQUITY FUNDS
STATEMENT OF CHANGES IN NET ASSETS -- September 30, 2013
INTERNATIONAL DIVIDEND
STRATEGY FUND VALUE FUND JAPAN FUND
-------------------------- -------------------------- --------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2013 2012 2013 2012 2013 2012
------------- ------------- ------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)...... $ 4,029,916 $ 1,309,087 $ 919,008 $ 754,515 $ (30,906) $ 126,503
Net realized gain (loss) on
investments and foreign
currencies...................... (664,280) (6,737,866) 23,462,159 3,765,375 2,137,022 497,689
Net unrealized gain (loss) on
investments and foreign
currencies...................... 4,531,110 11,471,568 (3,074,181) 22,892,776 3,476,971 562,077
------------ ----------- ------------ ------------ ----------- ------------
Net increase (decrease) in net
assets resulting from operations.. 7,896,746 6,042,789 21,306,986 27,412,666 5,583,087 1,186,269
------------ ----------- ------------ ------------ ----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)... (3,097,332) (1,234,410) (743,703) (898,865) (470,762) (47,904)
Net investment income (Class B)... (207,523) (64,930) (4,399) (27,012) (3,078) --
Net investment income (Class C)... (761,162) (173,790) (36,119) (88,986) (6,981) --
Net investment income (Class I)... (51,338) (33,449) -- -- -- --
Net investment income (Class Z)*.. -- -- (1,988) (3,390) -- --
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 (4,117,355) (1,506,579) (786,209) (1,018,253) (480,821) (4,759,293)
------------ ----------- ------------ ------------ ----------- ------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM CAPITAL
SHARE TRANSACTIONS (NOTE 7)....... 54,407,385 (4,916,682) (19,257,849) (32,552,724) 1,061,292 (7,572,688)
------------ ----------- ------------ ------------ ----------- ------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS............................ 58,186,776 (380,472) 1,262,928 (6,158,311) 6,163,558 (11,145,712)
NET ASSETS:
Beginning of period................ 69,741,063 70,121,535 110,233,412 116,391,723 21,349,720 32,495,432
------------ ----------- ------------ ------------ ----------- ------------
End of period+..................... $127,927,839 $69,741,063 $111,496,340 $110,233,412 $27,513,278 $ 21,349,720
============ =========== ============ ============ =========== ============
--------
+ Includes accumulated
undistributed net investment
income (loss)..................... $ 36,713 $ 221,270 $ 707,750 $ 543,565 $ 45,538 $ 442,154
============ =========== ============ ============ =========== ============
* 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
-
09/30/09 $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
09/30/13 10.91 0.47 0.50 0.97 (0.47) -- -- (0.47) 11.41 9.24 96,020
CLASS B
-
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
09/30/13 10.04 0.34 0.50 0.84 (0.41) -- -- (0.41) 10.47 8.65 5,948
CLASS C
-
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
09/30/13 10.03 0.36 0.47 0.83 (0.41) -- -- (0.41) 10.45 8.56 24,776
CLASS I
-
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
09/30/13 10.99 0.44 0.56 1.00 (0.48) -- -- (0.48) 11.51 9.41 1,184
RATIO
OF NET
RATIO OF INVESTMENT
EXPENSES INCOME (LOSS)
TO AVERAGE TO AVERAGE PORTFOLIO
NET ASSETS NET ASSETS TURNOVER
---------- ------------- ---------
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
1.90(3) 4.42(3) 32
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) 3.40(3) 32
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
2.55(3) 3.70(3) 32
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
1.80(3) 3.98(3) 32
--------
(1)Calculated based upon average shares outstanding.
(2)Total return does not reflect sales load. Total return does include expense
reimbursements.
(3)Net of the following expense reimbursements (recoupments) (based on average
net assets) (See Note 3):
09/30/09 09/30/10 09/30/11 09/30/12 09/30/13
-------- -------- -------- -------- --------
International Dividend Strategy Class A. 0.00% -- % -- % 0.25% 0.16%
International Dividend Strategy Class B. 0.22 0.11 0.07 0.53 0.44
International Dividend Strategy Class C. 0.08 0.02 (0.00) 0.33 0.20
International Dividend Strategy Class I. 0.27 0.01 (0.09) 0.17 0.09
(4)Includes expense reimbursements, but excludes expense reductions. If the
expense reductions had been applied the ratio of expenses to average net
assets would have been lower and the ratio of net investment income to
average net assets would have been higher by:
09/30/09 09/30/10
-------- --------
International Dividend Strategy Class A. 0.00% 0.01%
International Dividend Strategy Class B. 0.00 0.00
International Dividend Strategy Class C. 0.00 0.01
International Dividend Strategy Class I. 0.00 0.00
(5)Includes the effect of a merger.
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
-
09/30/09 $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
09/30/13 13.24 0.14 2.65 2.79 (0.11) -- -- (0.11) 15.92 21.28 91,235
CLASS B
-
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
09/30/13 12.35 0.03 2.48 2.51 (0.01) -- -- (0.01) 14.85 20.35 4,631
CLASS C
-
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
09/30/13 12.33 0.03 2.48 2.51 (0.03) -- -- (0.03) 14.81 20.41 15,630
RATIO
OF NET
RATIO OF INVESTMENT
EXPENSES INCOME (LOSS)
TO AVERAGE TO AVERAGE PORTFOLIO
NET ASSETS(4) NET ASSETS(4) TURNOVER
------------- ------------- ---------
1.63%(3) 1.68%(3) 204%
1.61(3) 0.64(3) 157(6)
1.50(3) 0.67(3) 231
1.53 0.80 214
1.57 0.94 286
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) 0.24(3) 286
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
2.28 0.23 286
--------
(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):
09/30/09 09/30/10 09/30/11 09/30/12 09/30/13
-------- -------- -------- -------- --------
Value Class A........................... 0.21% (0.10)% (0.02)% -- % -- %
Value Class B........................... 0.29 0.01 (0.04) 0.13 0.22
Value Class C........................... 0.28 (0.08) (0.08) -- --
(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:
09/30/09 09/30/10 09/30/11 09/30/12 09/30/13
-------- -------- -------- -------- --------
Value Class A........................... 0.02% 0.01% 0.01% 0.00% 0.01%
Value Class B........................... 0.02 0.01 0.01 0.00 0.01
Value Class C........................... 0.02 0.01 0.01 0.00 0.01
(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
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
09/30/09 $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
09/30/13 6.41 (0.01) 1.86 1.85 (0.16) -- -- (0.16) 8.10 29.54 25,053
CLASS B
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
09/30/13 6.21 (0.05) 1.79 1.74 (0.10) -- -- (0.10) 7.85 28.54 238
CLASS C
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
09/30/13 6.20 (0.03) 1.77 1.74 (0.10) -- -- (0.10) 7.84 28.58 2,222
RATIO
OF NET
RATIO OF INVESTMENT
EXPENSES INCOME (LOSS)
TO AVERAGE TO AVERAGE PORTFOLIO
NET ASSETS(3) NET ASSETS(3) TURNOVER
------------- ------------- ---------
1.90% 0.19% 148%
1.90 (0.24) 77
1.90 0.04 79
1.90 0.52 192
1.90 (0.12) 162
2.55 (0.53) 148%
2.55 (0.85) 77
2.55 (0.55) 79
2.55 (0.16) 192
2.55 (0.76) 162
2.55 (0.58) 148%
2.55 (0.86) 77
2.55 (0.48) 79
2.55 (0.23) 192
2.55 (0.43) 162
--------
(1)Calculated based upon average shares outstanding.
(2)Total return does not reflect sales load. Total return does include expense
reimbursements.
(3)Net of the following expense reimbursements (based on average net assets)
(See Note 3):
09/30/09 09/30/10 09/30/11 09/30/12 09/30/13
-------- -------- -------- -------- --------
Japan Class A........................... 0.31% 0.18% 0.27% 0.59% 0.55%
Japan Class B........................... 4.07 5.60 3.06 6.15 6.25
Japan Class C........................... 1.68 2.66 1.19 2.80 1.57
(4)The Fund's performance was increased by less than 0.01% from gains on
disposal of investments in violation of investment restrictions.
See Notes to Financial Statements
12
SUNAMERICA INTERNATIONAL DIVIDEND STRATEGY FUND
PORTFOLIO PROFILE -- SEPTEMBER 30, 2013 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Telephone-Integrated................... 10.7%
Television............................. 7.1
Cellular Telecom....................... 6.4
Electric-Integrated.................... 6.1
Oil Companies-Integrated............... 6.0
Telecom Services....................... 4.5
Medical-Drugs.......................... 4.2
Repurchase Agreements.................. 3.9
Exchange-Traded Funds.................. 3.8
Real Estate Operations & Development... 3.7
Gambling (Non-Hotel)................... 3.2
Electric-Generation.................... 3.0
Computer Services...................... 2.8
Chemicals-Diversified.................. 2.8
Insurance-Multi-line................... 2.5
Building & Construction-Misc........... 2.4
Steel-Producers........................ 2.3
Computers-Periphery Equipment.......... 2.3
Building-Heavy Construction............ 2.2
Machinery-General Industrial........... 2.0
Shipbuilding........................... 1.8
Oil Companies-Exploration & Production. 1.7
Cosmetics & Toiletries................. 1.6
Metal-Diversified...................... 1.5
Metal-Copper........................... 1.5
Rubber & Vinyl......................... 1.3
Metal-Iron............................. 1.2
Investment Companies................... 1.2
Petrochemicals......................... 1.1
Coal................................... 0.9
Electric-Transmission.................. 0.8
Building-Residential/Commercial........ 0.8
Electric-Distribution.................. 0.5
----
97.8%
====
COUNTRY ALLOCATION*
Brazil......... 17.4%
United States.. 9.2
France......... 8.4
Israel......... 7.5
Taiwan......... 6.5
Finland........ 6.3
South Korea.... 5.2
Poland......... 4.6
Singapore...... 3.7
Sweden......... 3.6
Belgium........ 3.5
Germany........ 3.3
Greece......... 3.2
Canada......... 2.9
Spain.......... 2.8
Denmark........ 2.1
United Kingdom. 1.9
Colombia....... 1.9
Italy.......... 1.9
Chile.......... 1.0
Indonesia...... 0.9
----
97.8%
====
--------
*Calculated as a percentage of net assets
13
SUNAMERICA INTERNATIONAL DIVIDEND STRATEGY FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
--------------------------------------------------------------------
COMMON STOCK -- 81.8%
BELGIUM -- 3.5%
Belgacom SA(1).............................. 76,276 $ 2,028,213
Telenet Group Holding NV(1)................. 49,387 2,459,331
-----------
4,487,544
-----------
BERMUDA -- 0.0%
Peace Mark Holdings, Ltd.+(2)(3)............ 800,000 0
Peregrine Investments Holdings, Ltd.+(2)(3). 91,000 0
-----------
0
-----------
BRAZIL -- 9.1%
Brookfield Incorporacoes SA+................ 1,358,500 986,863
Cia Siderurgica Nacional SA................. 398,600 1,701,374
Light SA.................................... 177,700 1,517,782
Natura Cosmeticos SA........................ 89,954 2,009,080
Porto Seguro SA............................. 257,000 3,246,853
Tractebel Energia SA........................ 131,800 2,178,331
-----------
11,640,283
-----------
CANADA -- 2.9%
Bell Aliant, Inc............................ 59,880 1,491,114
Canadian Oil Sands, Ltd..................... 114,651 2,221,673
-----------
3,712,787
-----------
CHILE -- 1.0%
CAP SA...................................... 58,438 1,296,693
-----------
COLOMBIA -- 1.9%
Ecopetrol SA................................ 1,075,400 2,470,900
-----------
DENMARK -- 2.1%
TDC A/S(1).................................. 311,077 2,631,855
-----------
FINLAND -- 6.3%
Elisa Oyj(1)................................ 105,848 2,524,417
Metso Oyj(1)................................ 65,789 2,582,234
Orion Oyj, Class B(1)....................... 116,182 2,927,180
-----------
8,033,831
-----------
FRANCE -- 8.4%
Bouygues SA(1).............................. 82,439 3,009,643
Societe Television Francaise 1(1)........... 278,458 4,848,600
Total SA(1)................................. 49,281 2,864,278
-----------
10,722,521
-----------
GERMANY -- 3.3%
ProSiebenSat.1 Media AG(1).................. 99,596 4,227,836
-----------
GREECE -- 3.2%
OPAP SA(1).................................. 366,315 4,094,932
-----------
INDONESIA -- 0.9%
Indo Tambangraya Megah Tbk PT(1)............ 518,500 1,178,074
-----------
ISRAEL -- 7.5%
Bezeq The Israeli Telecommunication Corp.,
Ltd.(1).................................... 2,020,087 3,715,072
Israel Chemicals, Ltd.(1)................... 195,388 1,649,231
Partner Communications Co., Ltd.+(1)........ 526,667 4,183,505
-----------
9,547,808
-----------
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
-----------------------------------------------------------------------
ITALY -- 1.9%
Eni SpA(1)..................................... 104,527 $ 2,409,928
------------
POLAND -- 4.6%
KGHM Polska Miedz SA(1)........................ 50,726 1,997,263
PGE SA(1)...................................... 375,188 1,999,881
Synthos SA(1).................................. 1,244,166 1,899,982
------------
5,897,126
------------
SINGAPORE -- 3.7%
Keppel Land, Ltd.(1)........................... 840,000 2,372,323
Yangzijiang Shipbuilding Holdings, Ltd.(1)..... 2,679,000 2,339,151
------------
4,711,474
------------
SOUTH KOREA -- 5.2%
KT Corp.(1).................................... 81,570 2,734,042
SK Telecom Co., Ltd.(1)........................ 19,480 3,974,047
------------
6,708,089
------------
SPAIN -- 2.8%
Indra Sistemas SA(1)........................... 240,427 3,615,078
------------
SWEDEN -- 3.6%
Skanska AB, Class B(1)......................... 146,704 2,822,099
Tele2 AB, Series B(1).......................... 141,356 1,808,340
------------
4,630,439
------------
TAIWAN -- 6.5%
China Petrochemical Development Corp.(1)....... 2,792,850 1,375,059
Farglory Land Development Co., Ltd.(1)......... 1,190,000 2,214,165
Lite-On Technology Corp.(1).................... 1,751,589 2,974,714
TSRC Corp.(1).................................. 945,800 1,689,572
------------
8,253,510
------------
UNITED KINGDOM -- 1.9%
AstraZeneca PLC(1)............................. 47,556 2,471,521
------------
UNITED STATES -- 1.5%
Soft Brands, Inc.+(2)(3)....................... 40 0
Southern Copper Corp........................... 68,220 1,858,313
------------
1,858,313
------------
TOTAL COMMON STOCK
(cost $96,492,063)............................ 104,600,542
------------
PREFERRED SECURITIES -- 8.3%
BRAZIL -- 8.3%
AES Tiete SA................................... 173,602 1,684,088
Bradespar SA................................... 135,300 1,501,773
Centrais Eletricas Brasileiras SA, Class B..... 224,300 1,059,613
Cia de Transmissao de Energia Eletrica
Paulista...................................... 67,600 1,056,870
Cia Energetica de Minas Gerais................. 127,376 1,105,768
Cia Paranaense de Energia, Class B............. 137,706 1,954,092
Eletropaulo Metropolitana Eletricidade de Sao
Paulo SA...................................... 174,000 671,254
Vale SA........................................ 110,200 1,568,248
------------
TOTAL PREFERRED SECURITIES
(cost $14,449,191)............................ 10,601,706
------------
14
SUNAMERICA INTERNATIONAL DIVIDEND STRATEGY FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (CONTINUED)
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------
EXCHANGE-TRADED FUNDS -- 3.8%
UNITED STATES -- 3.8%
iShares MSCI ACWI ex US Index Fund
(cost $4,589,558)................... 109,549 $ 4,909,986
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $115,530,812)................. 120,112,234
------------
REPURCHASE AGREEMENT -- 3.9%
State Street Bank & Trust Co. Joint
Repurchase Agreement(4)
(cost $5,003,000)................... $5,003,000 5,003,000
------------
TOTAL INVESTMENTS
(cost $120,533,812)(5).............. 97.8% 125,115,234
Other assets less liabilities.......... 2.2 2,812,605
---------- ------------
NET ASSETS 100.0% $127,927,839
========== ============
--------
+ Non-income producing security
(1)Security was valued using fair value procedures at September 30, 2013. The
aggregate value of these securities was $83,621,566 representing 65.4% of
net assets. Securities are classified as Level 2 based on the securities
valuation inputs. See Note 2 regarding fair value pricing for foreign equity
securities.
(2)Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs; see Note 2.
(3)Illiquid security. At September 30, 2013, the aggregate value of these
securities was $0 representing 0.0% of net assets.
(4)See Note 2 for details of Joint Repurchase Agreements.
(5)See Note 6 for cost of investments on a tax basis.
15
SUNAMERICA INTERNATIONAL DIVIDEND STRATEGY FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (CONTINUED)
The following is a summary of the inputs used to value the Fund's net assets as
of September 30, 2013 (see Note 2):
LEVEL 1 -- UNADJUSTED LEVEL 2 -- OTHER LEVEL 3 -- SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
- --------------------- ----------------- ---------------------- ------------
ASSETS
LONG-TERM INVESTMENT SECURITIES:
Common Stock:
Bermuda....................... $ -- $ -- $ 0 $ 0
Brazil........................ 11,640,283 -- -- 11,640,283
Canada........................ 3,712,787 -- -- 3,712,787
Chile......................... 1,296,693 -- -- 1,296,693
Colombia...................... 2,470,900 -- -- 2,470,900
Finland....................... -- 8,033,831 -- 8,033,831
France........................ -- 10,722,521 -- 10,722,521
Israel........................ -- 9,547,808 -- 9,547,808
South Korea................... -- 6,708,089 -- 6,708,089
Taiwan........................ -- 8,253,510 -- 8,253,510
United States................. 1,858,313 -- 0 1,858,313
Other Countries*.............. -- 40,355,807 -- 40,355,807
Preferred Securities:
Brazil........................ 10,601,706 -- -- 10,601,706
Exchange Traded Funds.......... 4,909,986 -- -- 4,909,986
Repurchase Agreement............. -- 5,003,000 -- 5,003,000
----------- ----------- --- ------------
Total............................ $36,490,668 $88,624,566 $ 0 $125,115,234
=========== =========== === ============
--------
* 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
securities by country 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 $73,947,986 were transferred from Level 1 to Level 2 due to foreign
equity securities whose values were 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 end of the reporting period, Level 3 investments in
securities were not considered a material portion of the Fund.
See Notes to Financial Statements
16
SUNAMERICA VALUE FUND
PORTFOLIO PROFILE -- SEPTEMBER 30, 2013 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Diversified Banking Institutions....... 11.0%
Medical-Drugs.......................... 8.7
Banks-Super Regional................... 8.2
Oil Companies-Integrated............... 5.2
Oil Companies-Exploration & Production. 4.8
Electronic Components-Semiconductors... 3.9
Insurance-Property/Casualty............ 3.8
Medical-HMO............................ 3.2
Oil Field Machinery & Equipment........ 3.0
Applications Software.................. 2.7
Diversified Manufacturing Operations... 2.5
Repurchase Agreements.................. 2.5
Networking Products.................... 2.4
Oil-Field Services..................... 2.2
Beverages-Non-alcoholic................ 2.1
Instruments-Controls................... 2.1
Transport-Services..................... 2.1
Aerospace/Defense-Equipment............ 2.1
Aerospace/Defense...................... 2.0
Computers.............................. 1.8
Metal-Copper........................... 1.7
Telephone-Integrated................... 1.7
Cable/Satellite TV..................... 1.6
Cosmetics & Toiletries................. 1.5
Tobacco................................ 1.5
Multimedia............................. 1.3
Retail-Regional Department Stores...... 1.2
Retail-Building Products............... 1.2
Engines-Internal Combustion............ 1.2
Retail-Restaurants..................... 1.1
Chemicals-Diversified.................. 1.1
Auto/Truck Parts & Equipment-Original.. 1.1
Retail-Major Department Stores......... 1.1
Auto-Cars/Light Trucks................. 1.0
Food-Retail............................ 1.0
Cellular Telecom....................... 1.0
Chemicals-Specialty.................... 1.0
Retail-Apparel/Shoe.................... 0.8
Rental Auto/Equipment.................. 0.7
Television............................. 0.5
Containers-Metal/Glass................. 0.5
-----
100.1%
=====
--------
*Calculated as a percentage of net assets
17
SUNAMERICA VALUE FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
------------------------------------------------------------------
COMMON STOCK -- 97.6%
AEROSPACE/DEFENSE -- 2.0%
Boeing Co................................... 19,000 $ 2,232,500
-----------
AEROSPACE/DEFENSE-EQUIPMENT -- 2.1%
United Technologies Corp.................... 21,553 2,323,844
-----------
APPLICATIONS SOFTWARE -- 2.7%
Microsoft Corp.............................. 91,177 3,037,106
-----------
AUTO-CARS/LIGHT TRUCKS -- 1.0%
General Motors Co.+......................... 32,311 1,162,227
-----------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 1.1%
Delphi Automotive PLC....................... 20,117 1,175,235
-----------
BANKS-SUPER REGIONAL -- 8.2%
Capital One Financial Corp.................. 24,224 1,665,158
US Bancorp.................................. 89,890 3,288,176
Wells Fargo & Co............................ 100,000 4,132,000
-----------
9,085,334
-----------
BEVERAGES-NON-ALCOHOLIC -- 2.1%
PepsiCo, Inc................................ 30,000 2,385,000
-----------
CABLE/SATELLITE TV -- 1.6%
Comcast Corp., Class A...................... 39,170 1,768,526
-----------
CELLULAR TELECOM -- 1.0%
Sprint Corp.+............................... 87,484 543,275
Vodafone Group PLC ADR...................... 16,715 588,034
-----------
1,131,309
-----------
CHEMICALS-DIVERSIFIED -- 1.1%
LyondellBasell Industries NV, Class A....... 16,130 1,181,200
-----------
CHEMICALS-SPECIALTY -- 1.0%
Albemarle Corp.............................. 17,919 1,127,822
-----------
COMPUTERS -- 1.8%
Apple, Inc.................................. 4,179 1,992,338
-----------
CONTAINERS-METAL/GLASS -- 0.5%
Owens-Illinois, Inc.+....................... 18,349 550,837
-----------
COSMETICS & TOILETRIES -- 1.5%
Procter & Gamble Co......................... 22,761 1,720,504
-----------
DIVERSIFIED BANKING INSTITUTIONS -- 11.0%
Bank of America Corp........................ 251,327 3,468,312
Citigroup, Inc.............................. 70,868 3,437,807
Goldman Sachs Group, Inc.................... 8,677 1,372,788
JPMorgan Chase & Co......................... 77,326 3,996,981
-----------
12,275,888
-----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 2.5%
General Electric Co......................... 118,087 2,821,098
-----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 3.9%
Altera Corp................................. 71,061 2,640,627
Intel Corp.................................. 74,313 1,703,254
-----------
4,343,881
-----------
ENGINES-INTERNAL COMBUSTION -- 1.2%
Cummins, Inc................................ 9,907 1,316,343
-----------
FOOD-RETAIL -- 1.0%
Whole Foods Market, Inc..................... 19,604 1,146,834
-----------
INSTRUMENTS-CONTROLS -- 2.1%
Honeywell International, Inc................ 28,380 2,356,675
-----------
INSURANCE-PROPERTY/CASUALTY -- 3.8%
Travelers Cos., Inc......................... 50,000 4,238,500
-----------
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
--------------------------------------------------------------------
MEDICAL-DRUGS -- 8.7%
Johnson & Johnson............................ 24,860 $ 2,155,113
Merck & Co., Inc............................. 84,072 4,002,668
Pfizer, Inc.................................. 124,517 3,574,883
------------
9,732,664
------------
MEDICAL-HMO -- 3.2%
UnitedHealth Group, Inc...................... 50,000 3,580,500
------------
METAL-COPPER -- 1.7%
Freeport-McMoRan Copper & Gold, Inc.......... 58,597 1,938,389
------------
MULTIMEDIA -- 1.3%
Time Warner, Inc............................. 13,406 882,249
Viacom, Inc., Class B........................ 6,998 584,893
------------
1,467,142
------------
NETWORKING PRODUCTS -- 2.4%
Cisco Systems, Inc........................... 113,423 2,656,367
------------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 4.8%
Anadarko Petroleum Corp...................... 15,459 1,437,533
Apache Corp.................................. 6,938 590,701
Devon Energy Corp............................ 33,846 1,954,945
Occidental Petroleum Corp.................... 14,767 1,381,305
------------
5,364,484
------------
OIL COMPANIES-INTEGRATED -- 5.2%
Chevron Corp................................. 20,872 2,535,948
Exxon Mobil Corp............................. 25,273 2,174,489
Marathon Oil Corp............................ 32,392 1,129,833
------------
5,840,270
------------
OIL FIELD MACHINERY & EQUIPMENT -- 3.0%
National Oilwell Varco, Inc.................. 43,171 3,372,087
------------
OIL-FIELD SERVICES -- 2.2%
Halliburton Co............................... 50,000 2,407,500
------------
RENTAL AUTO/EQUIPMENT -- 0.7%
United Rentals, Inc.+........................ 12,646 737,135
------------
RETAIL-APPAREL/SHOE -- 0.8%
Ross Stores, Inc............................. 12,099 880,807
------------
RETAIL-BUILDING PRODUCTS -- 1.2%
Home Depot, Inc.............................. 17,419 1,321,231
------------
RETAIL-MAJOR DEPARTMENT STORES -- 1.1%
TJX Cos., Inc................................ 20,666 1,165,356
------------
RETAIL-REGIONAL DEPARTMENT STORES -- 1.2%
Macy's, Inc.................................. 31,845 1,377,933
------------
RETAIL-RESTAURANTS -- 1.1%
Starbucks Corp............................... 15,476 1,191,188
------------
TELEPHONE-INTEGRATED -- 1.7%
AT&T, Inc.................................... 55,600 1,880,392
------------
TELEVISION -- 0.5%
CBS Corp., Class B........................... 10,767 593,908
------------
TOBACCO -- 1.5%
Altria Group, Inc............................ 49,088 1,686,173
------------
TRANSPORT-SERVICES -- 2.1%
FedEx Corp................................... 20,422 2,330,354
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $103,995,621)......................... 108,896,881
------------
18
SUNAMERICA VALUE FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
REPURCHASE AGREEMENT -- 2.5%
State Street Bank and Trust Co. Joint
Repurchase Agreement(1)
(cost $2,756,000)..................... $2,756,000 $ 2,756,000
------------
TOTAL INVESTMENTS
(cost $106,751,621)(2)................ 100.1% 111,652,881
Liabilities in excess of other assets.... (0.1) (156,541)
---------- ------------
NET ASSETS 100.0% $111,496,340
========== ============
--------
+ 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, 2013 (see Note 2):
LEVEL 1 -- UNADJUSTED LEVEL 2 -- OTHER LEVEL 3 -- SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
- --------------------- ----------------- ---------------------- ------------
ASSETS:
LONG-TERM INVESTMENT SECURITIES:
Common Stock:
Banks-Super Regional.............. $ 9,085,334 $ -- $-- $ 9,085,334
Diversified Banking Institutions.. 12,275,888 -- -- 12,275,888
Medical-Drugs..................... 9,732,664 -- -- 9,732,664
Oil Companies-Integrated.......... 5,840,270 -- -- 5,840,270
Other Industries*................. 71,962,725 -- -- 71,962,725
Repurchase Agreement................. -- 2,756,000 -- 2,756,000
------------ ---------- --- ------------
Total................................ $108,896,881 $2,756,000 $-- $111,652,881
============ ========== === ============
--------
* 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
securities 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
19
SUNAMERICA JAPAN FUND
PORTFOLIO PROFILE -- SEPTEMBER 30, 2013 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Auto/Truck Parts & Equipment-Original.. 10.0%
Electronic Components-Misc............. 7.8
Computers-Integrated Systems........... 6.6
Telephone-Integrated................... 6.0
Auto-Cars/Light Trucks................. 5.3
Real Estate Management/Services........ 4.6
Machinery-General Industrial........... 4.2
Banks-Commercial....................... 3.6
Tobacco................................ 3.4
Diversified Banking Institutions....... 3.0
Repurchase Agreements.................. 2.9
Insurance-Life/Health.................. 2.9
Steel-Specialty........................ 2.8
Medical-Drugs.......................... 2.5
Medical-Wholesale Drug Distribution.... 2.5
Insurance-Property/Casualty............ 2.4
Chemicals-Specialty.................... 2.3
Fisheries.............................. 2.3
Photo Equipment & Supplies............. 2.1
Computer Services...................... 2.0
Television............................. 2.0
Finance-Credit Card.................... 1.9
E-Commerce/Products.................... 1.7
Travel Services........................ 1.6
Airlines............................... 1.6
Retail-Discount........................ 1.6
Oil Companies-Exploration & Production. 1.5
Retail-Drug Store...................... 1.5
Building-Residential/Commercial........ 1.4
Oil Refining & Marketing............... 1.3
Retail-Apparel/Shoe.................... 1.0
Retail-Consumer Electronics............ 1.0
Cosmetics & Toiletries................. 0.9
Casino Services........................ 0.8
Leisure Products....................... 0.8
----
99.8%
====
COUNTRY ALLOCATION*
Japan......... 96.9%
United States. 2.9
Australia..... 0.0
Bermuda....... 0.0
----
99.8%
====
--------
*Calculated as a percentage of net assets
20
SUNAMERICA JAPAN FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
--------------------------------------------------------------
COMMON STOCK -- 96.9%
AIRLINES -- 1.6%
Japan Airlines Co., Ltd.(3).............. 7,200 $ 436,388
----------
AUTO-CARS/LIGHT TRUCKS -- 5.3%
Isuzu Motors, Ltd.(3).................... 104,000 689,447
Nissan Motor Co., Ltd.(3)................ 76,300 768,206
----------
1,457,653
----------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 10.0%
Exedy Corp.(3)........................... 24,000 591,295
Stanley Electric Co., Ltd.(3)............ 31,930 680,898
TACHI-S Co., Ltd.(3)..................... 54,260 823,697
Toyota Industries Corp.(3)............... 15,300 662,652
----------
2,758,542
----------
BANKS-COMMERCIAL -- 3.6%
Sumitomo Mitsui Financial Group, Inc.(3). 20,410 990,864
----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 1.4%
Daiwa House Industry Co., Ltd.(3)........ 21,000 393,753
----------
CASINO SERVICES -- 0.8%
Sankyo Co., Ltd.(3)...................... 4,590 224,601
----------
CHEMICALS-SPECIALTY -- 2.3%
Tokyo Ohka Kogyo Co., Ltd.(3)............ 28,700 640,028
----------
COAL -- 0.0%
White Energy Co., Ltd.+(3)............... 446 77
----------
COMPUTER SERVICES -- 2.0%
SCSK Corp.(3)............................ 22,900 552,138
----------
COMPUTERS-INTEGRATED SYSTEMS -- 6.6%
ITOCHU Techno-Solutions Corp.(3)......... 14,800 526,995
Net One Systems Co., Ltd.(3)............. 35,200 266,454
OBIC Co., Ltd.(3)........................ 18,100 584,916
Otsuka Corp.(3).......................... 3,320 424,282
----------
1,802,647
----------
COSMETICS & TOILETRIES -- 0.9%
Kose Corp.(3)............................ 8,820 255,521
----------
DIVERSIFIED BANKING INSTITUTIONS -- 3.0%
Mitsubishi UFJ Financial Group, Inc.(3).. 128,200 822,384
----------
E-COMMERCE/PRODUCTS -- 1.7%
Rakuten, Inc.(3)......................... 31,210 474,252
----------
ELECTRONIC COMPONENTS-MISC. -- 7.8%
Futaba Corp./Chiba(3).................... 42,900 550,987
Inaba Denki Sangyo Co., Ltd.(3).......... 17,900 537,716
Kyocera Corp.(3)......................... 9,900 527,469
Minebea Co., Ltd.(3)..................... 104,000 531,720
----------
2,147,892
----------
FINANCE-CREDIT CARD -- 1.9%
Credit Saison Co., Ltd.(3)............... 19,600 533,060
----------
FISHERIES -- 2.3%
Toyo Suisan Kaisha, Ltd.(3).............. 21,300 626,119
----------
INSURANCE-LIFE/HEALTH -- 2.9%
Sony Financial Holdings, Inc.(3)......... 14,600 268,450
T&D Holdings, Inc.(3).................... 42,100 523,053
----------
791,503
----------
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
-----------------------------------------------------------
INSURANCE-PROPERTY/CASUALTY -- 2.4%
Tokio Marine Holdings, Inc.(3)........ 20,000 $ 656,106
-----------
LEISURE PRODUCTS -- 0.8%
Sega Sammy Holdings, Inc.(3).......... 7,660 221,896
-----------
MACHINERY-GENERAL INDUSTRIAL -- 4.2%
Makino Milling Machine Co., Ltd.(3)... 91,000 646,261
Okuma Corp.(3)........................ 58,500 510,249
-----------
1,156,510
-----------
MEDICAL-DRUGS -- 2.5%
Shionogi & Co., Ltd.(3)............... 32,300 680,651
-----------
MEDICAL-WHOLESALE DRUG DISTRIBUTION -- 2.5%
Suzuken Co., Ltd.(3).................. 20,500 675,959
-----------
MISCELLANEOUS MANUFACTURING -- 0.0%
Peace Mark Holdings, Ltd.+(1)(2)...... 8,000 0
-----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 1.5%
Inpex Corp.(3)........................ 35,200 416,099
-----------
OIL REFINING & MARKETING -- 1.3%
JX Holdings, Inc.(3).................. 69,900 363,526
-----------
PHOTO EQUIPMENT & SUPPLIES -- 2.1%
FUJIFILM Holdings Corp.(3)............ 23,920 576,026
-----------
REAL ESTATE MANAGEMENT/SERVICES -- 4.6%
Aeon Mall Co., Ltd.(3)................ 14,560 432,906
Mitsubishi Estate Co., Ltd.(3)........ 28,000 830,814
-----------
1,263,720
-----------
RETAIL-APPAREL/SHOE -- 1.0%
Chiyoda Co., Ltd.(3).................. 12,700 270,364
-----------
RETAIL-CONSUMER ELECTRONICS -- 1.0%
K's Holdings Corp.(3)................. 9,770 267,616
-----------
RETAIL-DISCOUNT -- 1.6%
Don Quijote Co., Ltd.(3).............. 6,900 433,128
-----------
RETAIL-DRUG STORE -- 1.5%
Tsuruha Holdings, Inc.(3)............. 4,500 397,261
-----------
STEEL-SPECIALTY -- 2.8%
Hitachi Metals, Ltd.(3)............... 63,500 780,556
-----------
TELEPHONE-INTEGRATED -- 6.0%
KDDI Corp.(3)......................... 14,600 751,516
Nippon Telegraph & Telephone Corp.(3). 17,390 902,621
-----------
1,654,137
-----------
TELEVISION -- 2.0%
TV Asahi Corp.(3)..................... 23,560 548,441
-----------
TOBACCO -- 3.4%
Japan Tobacco, Inc.(3)................ 25,880 934,475
-----------
TRAVEL SERVICES -- 1.6%
HIS Co., Ltd.(3)...................... 7,500 440,225
-----------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $24,308,283)................... 26,644,118
-----------
21
SUNAMERICA JAPAN FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
--------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 2.9%
State Street Bank & Trust Co. bearing interest at
0.00%, dated 09/30/2013 to be repurchased
10/01/2013 in the amount of $808,000 and
collateralized by $910,000 Federal Home Loan
Mtg. Corp. Bonds, bearing interest at 2.00%
due 01/30/2023 and having approximate value
of $827,648 (cost $808,000)....................... $808,000 $ 808,000
-----------
TOTAL INVESTMENTS
(cost $25,116,283)(4)............................. 99.8% 27,452,118
Other assets less liabilities........................ 0.2 61,160
-------- -----------
NET ASSETS 100.0% $27,513,278
======== ===========
--------
+ Non-income producing security
(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, 2013, the aggregate value of these
securities was $0 representing 0.0% of net assets.
(3)Security was valued using fair value procedures at September 30, 2013. The
aggregate value of these securities was $26,644,118 representing 96.9% of
net assets. Securities are classified as Level 2 based on the securities
valuation inputs. See Note 2 regarding fair value pricing for foreign equity
securities.
(4)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, 2013 (see Note 2):
LEVEL 1 -- UNADJUSTED LEVEL 2 -- OTHER LEVEL 3 -- SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
- --------------------- ----------------- ---------------------- -----------
ASSETS:
LONG-TERM INVESTMENT SECURITIES:
Common Stock:
Auto-Cars/Light Trucks................. $-- $ 1,457,653 $-- $ 1,457,653
Auto/Truck Parts & Equipment-Original.. -- 2,758,542 -- 2,758,542
Computers-Integrated Systems........... -- 1,802,647 -- 1,802,647
Electronic Components-Misc............. -- 2,147,892 -- 2,147,892
Miscellaneous Manufacturing............ -- -- 0 0
Telephone-Integrated................... -- 1,654,137 -- 1,654,137
Other Industries*...................... -- 16,823,247 -- 16,823,247
Repurchase Agreement...................... -- 808,000 -- 808,000
--- ----------- --- -----------
Total..................................... $-- $27,452,118 $ 0 $27,452,118
=== =========== === ===========
--------
* 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
securities 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 $8,743,550 were transferred from Level 1 to Level 2 due to foreign
equity securities whose values were 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 end of the reporting period, Level 3 investments in
securities were not considered a material portion of the Fund.
See Notes to Financial Statements
22
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013
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.
The investment objective 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. Prior to May 1, 2013 Class A shares of the International
Dividend Strategy Fund and Japan Fund were subject to a redemption fee of 2%
on the proceeds of any redemption or exchange of shares that were purchased
within ninety (90) calendar days prior to the date of such redemption or
exchange. Those redemption fees were terminated on May 1, 2013 and no longer
apply.
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 shares are closed to new purchases, however, existing investors may
continue to purchase shares through reinvestments of dividends and capital
gains distributions.
As of July 22, 2013, there were no Class Z shares outstanding, and effective
July 29, 2013, the Value Fund no longer offered Class Z shares.
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
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.
23
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (CONTINUED)
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 ("GAAP") requires management to make
estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those
estimates and those differences could be significant. The following is a
summary of significant accounting policies consistently followed by the
Trust/Fund 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, the Funds disclose the fair value
of its 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 of Trustees ("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 is 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 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, 2013 are reported on a schedule following the Portfolio of
Investments.
24
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (CONTINUED)
Stocks are generally valued based upon closing sales prices reported on
recognized securities exchanges on 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 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. 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
policies 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 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.
25
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (CONTINUED)
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"), 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, the 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, 2013, 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. 2.67% $5,003,000
Value........................... 1.47 2,756,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
State Street Bank & Trust Co., dated September 30, 2013, bearing interest at
a rate of 0.00% per annum, with a principal amount of $187,306,000, a
repurchase price of $187,306,000, and a maturity date of October 1, 2013.
The repurchase agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- ---------- ------------ ------------
U.S. Treasury Notes. 0.25% 10/15/2015 $ 53,835,000 $ 53,787,410
U.S. Treasury Notes. 0.63 07/15/2016 7,385,000 7,403,315
U.S. Treasury Notes. 0.88 02/28/2017 925,000 926,827
U.S. Treasury Notes. 2.13 12/31/2015 123,525,000 128,938,854
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).
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.
26
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (CONTINUED)
Dividends from net investment income, if any, are paid quarterly for the
International Dividend Strategy Fund. All other Funds pay annually. Capital
gain distributions, if any, are paid annually. The International Dividend
Strategy Fund 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
2010 -- 2012 or expected to be taken in each Fund's 2013 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 2010.
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 December 2011 the FASB issued Accounting Standards Update ("ASU")
No. 2011-11 "Disclosures about Offsetting Assets and Liabilities which was
subsequently clarified in FASB ASU 2013-01 "Clarifying the Scope of
Disclosures about Offsetting Assets and Liabilities" which was issued
January 2013. The amended Standard requires an entity to disclose
information about offsetting and related arrangements to enable users of its
financial statements to 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 2013-01 and its impact on the financial
statements.
27
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (CONTINUED)
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, 2013, SunAmerica earned fees in the amounts
stated in the Statement of Operations.
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. 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
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. For the year ended September 30, 2013, the amount of the
advisory fees waived were $47,713. These amounts are reflected in the
Statement of Operations.
28
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (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, 2013, pursuant to the contractual expense
limitations referred to above, SunAmerica has waived or reimbursed expenses
as follows:
OTHER
EXPENSES
FUND REIMBURSED
---- ----------
Japan Fund................................... $58,268
FUND AMOUNT
---- ----------
International Dividend Strategy Fund Class A. $74,654
International Dividend Strategy Fund Class B. 19,805
International Dividend Strategy Fund Class C. 28,315
International Dividend Strategy Fund Class I. 628
Value Fund Class B........................... 11,030
Value Fund Class C........................... 2,712
Japan Fund Class A........................... 62,143
Japan Fund Class B........................... 12,355
Japan Fund Class C........................... 14,362
For the year ended September 30, 2013, the amounts recouped by SunAmerica
are as follows:
FUND AMOUNT
---- ------
International Dividend Strategy Fund Class I. $ 93
Value Fund Class B........................... 170
Value Fund Class C........................... 2,712
At September 30, 2013, expenses previously waived and/or reimbursed by
SunAmerica during the prior two years that remain subject to recoupment and
expire during the time period indicated are as follows:
OTHER EXPENSES REIMBURSED
---------------------------
SEPTEMBER 30, SEPTEMBER 30,
FUND 2014 2015
---- ------------- -------------
International Dividend Strategy Fund......... $129,712 $ 0
Japan Fund................................... 131,442 58,268
CLASS SPECIFIC EXPENSES
REIMBURSED
---------------------------
SEPTEMBER 30, SEPTEMBER 30,
FUND 2014 2015
---- ------------- -------------
International Dividend Strategy Fund Class A. $ 26,974 $74,654
International Dividend Strategy Fund Class B. 16,021 19,805
International Dividend Strategy Fund Class C. 18,097 28,315
International Dividend Strategy Fund Class I. -- 624
Value Fund Class B........................... 8,894 11,030
Japan Fund Class A........................... 17,985 62,143
Japan Fund Class B........................... 15,081 12,355
Japan Fund Class C........................... 15,134 14,362
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 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
29
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (CONTINUED)
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, 2013, 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, 2013,
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, 2013, 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. $255,613 $35,721 $180,747 $6,225 $4,248 $2,768
Value Fund........................... 49,133 17,985 23,661 48 5,048 806
Japan Fund........................... 26,639 3,853 20,122 220 343 164
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 pay a fee to SAFS for
services rendered based upon an annual rate of 0.22% of average daily net
assets. For the year ended September 30, 2013, the Funds incurred the
following expenses which are included in transfer agent fees payable in the
Statement of Asset and Liabilities and in transfer agent fees and expenses
in the Statement of Operations to compensate SAFS pursuant to the terms of
the Service Agreement.
EXPENSE PAYABLE AT SEPTEMBER 30, 2013
-------------------------------- -------------------------------
FUND CLASS A CLASS B CLASS C CLASS I CLASS A CLASS B CLASS C CLASS I
---- -------- ------- ------- ------- ------- ------- ------- -------
International Dividend Strategy Fund. $154,960 $11,111 $40,061 $2,682 $15,787 $901 $4,082 $212
Value Fund........................... 199,215 10,858 33,411 -- 15,537 803 2,769 --
Japan Fund........................... 47,033 423 2,324 -- 4,077 9 388 --
At September 30, 2013, the following affiliates owned a percentage of the
outstanding shares of the following funds: Focused Multi-Asset Strategy
Portfolio and Focused Balanced Strategy Portfolio owned 14% and 9%,
respectively of the International Dividend Strategy Fund; Focused
Multi-Asset Strategy Portfolio and Focused Balanced Strategy Portfolio owned
15% and 13%, respectively, of Value Fund; and Focused Multi-Asset Strategy
Portfolio and Focused Balanced Strategy Portfolio owned 63% and 13%,
respectively of the Japan Fund.
30
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (CONTINUED)
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, 2013, 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. $9,625
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, 2013 were as follows:
INTERNATIONAL
DIVIDEND
STRATEGY
FUND VALUE FUND JAPAN FUND
------------- ------------ -----------
Purchases (excluding U.S. government securities)... $79,186,117 $300,071,876 $36,160,073
Sales (excluding U.S. government securities)....... 29,921,039 319,195,499 36,118,633
Purchases 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 losses, investments in passive foreign
investment companies, deferred compensation payments, foreign taxes payable
and derivative transactions.
FOR THE YEAR ENDED SEPTEMBER 30, 2013
------------------------------------------------------------------
DISTRIBUTABLE EARNINGS TAX DISTRIBUTIONS
----------------------------------------- ------------------------
LONG-TERM UNREALIZED
ORDINARY GAINS/CAPITAL APPRECIATION ORDINARY LONG-TERM
FUND INCOME LOSS CARRYOVER (DEPRECIATION)* INCOME CAPITAL GAINS
---- ---------- -------------- --------------- ---------- -------------
International Dividend Strategy Fund. $ 288,634 $(101,082,212) $4,316,481 $4,117,355 $--
Value Fund........................... 710,067 (57,608,448) 3,944,581 786,209 --
Japan Fund........................... 1,744,627 774,030 1,723,467 480,821 --
--------
* Unrealized appreciation (depreciation) includes amounts for derivatives and
other assets and liabilities denominated in foreign currency.
TAX DISTRIBUTIONS
FOR THE YEAR ENDED
SEPTEMBER 30, 2012
------------------------
ORDINARY LONG-TERM
FUND INCOME CAPITAL GAINS
---- ---------- -------------
International Dividend Strategy Fund. $1,506,579 $ --
Value Fund........................... 1,018,253 --
Japan Fund........................... 47,904 4,711,389
31
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (CONTINUED)
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, 2013:
INTERNATIONAL
DIVIDEND
STRATEGY VALUE JAPAN
FUND FUND FUND
------------- ------------ -----------
Cost (tax basis)........................... $120,806,213 $107,708,300 $25,730,152
============ ============ ===========
Appreciation............................... 16,688,378 5,887,154 2,662,597
Depreciation............................... (12,379,357) (1,942,573) (940,631)
------------ ------------ -----------
Net unrealized appreciation (depreciation). $ 4,309,021 $ 3,944,581 $ 1,721,966
============ ============ ===========
For the year ended September 30, 2013, the reclassifications arising from
book/tax differences resulted in increases (decreases) that were primarily
due to fair fund payments, disposition of passive foreign investment
companies securities, and foreign currency transactions 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. $(97,118) $ 97,118 $--
Value Fund........................... 31,386 (31,386) --
Japan Fund........................... 115,111 (115,111) --
For Federal income tax purposes, the Funds indicated below have capital loss
carryforwards, which expire in the year indicated, as of September 30, 2013,
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 $8,123,727 $259,191
Value Fund*........................... -- 14,550,295 21,672,755 21,385,398 -- --
Japan Fund............................ -- -- -- -- -- --
--------
+ 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 fund 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, 2013, 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.
The Funds indicated below utilized capital loss carryforwards, which offset
net taxable gains realized in the current year ended September 30, 2013.
CAPITAL LOSS
CARRYFORWARD
FUND UTILIZED
---- ------------
International Dividend Strategy Fund. $ --
Value Fund........................... 21,230,657
Japan Fund........................... 168,220
32
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (CONTINUED)
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, 2013, 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. $-- $-- $999,837
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, 2013 SEPTEMBER 30, 2012 SEPTEMBER 30, 2013 SEPTEMBER 30, 2012
------------------------ ------------------------ --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Shares sold(1)(2)........... 5,798,641 $ 64,710,792 1,019,549 $ 11,094,004 235,651 $ 2,417,773 86,088 $ 870,181
Reinvested dividends........ 255,296 2,731,325 112,965 1,177,713 16,359 161,707 6,312 60,708
Shares redeemed(1)(2)(3)(4). (2,342,145) (25,651,140) (1,308,627) (14,378,854) (138,911) (1,403,186) (181,208) (1,830,341)
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Net increase (decrease)..... 3,711,792 $ 41,790,977 (176,113) $ (2,107,137) 113,099 $ 1,176,294 (88,808) $ (899,452)
========== ============ ========== ============ ======== =========== ======== ===========
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, 2013 SEPTEMBER 30, 2012 SEPTEMBER 30, 2013 SEPTEMBER 30, 2012
------------------------ ------------------------ --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Shares sold................. 1,498,326 $ 15,393,857 185,050 $ 1,865,186 -- $ -- -- $ --
Reinvested dividends........ 63,771 627,446 15,621 150,588 4,748 51,338 3,185 33,449
Shares redeemed(3)(4)....... (444,666) (4,419,530) (348,129) (3,492,494) (19,146) (212,997) (42,711) (466,822)
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Net increase (decrease)..... 1,117,431 $ 11,601,773 (147,458) $ (1,476,720) (14,398) $ (161,659) (39,526) $ (433,373)
========== ============ ========== ============ ======== =========== ======== ===========
--------
(1)For the year ended September 30, 2013, includes automatic conversion of
49,437 shares of Class B shares in the amount of $502,149 to 45,403 shares
of Class A shares in the amount of $502,149.
(2)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.
(3)For the year ended September 30, 2013, net of redemption fees of $13,719,
$1,004, $3,582 and $244 for Class A, Class B, Class C and Class I shares,
respectively.
(4)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.
33
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (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, 2013 SEPTEMBER 30, 2012 SEPTEMBER 30, 2013 SEPTEMBER 30, 2012
------------------------ ------------------------ --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Shares sold(1)(2)....... 502,271 $ 7,186,388 2,524,070 $ 30,914,234 45,505 $ 632,439 44,100 $ 499,807
Reinvested dividends.... 53,495 705,602 74,831 840,354 338 4,187 2,340 24,642
Shares redeemed(1)(2)... (1,630,879) (23,598,077) (4,811,741) (57,374,168) (161,405) (2,196,069) (307,988) (3,539,177)
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Net increase (decrease). (1,075,113) $(15,706,087) (2,212,840) $(25,619,580) (115,562) $(1,559,443) (261,548) $(3,014,728)
========== ============ ========== ============ ======== =========== ======== ===========
VALUE FUND
------------------------------------------------------------------------------------------------
CLASS C CLASS Z
-------------------------------------------------- --------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2013 SEPTEMBER 30, 2012 SEPTEMBER 30, 2013 SEPTEMBER 30, 2012
------------------------ ------------------------ --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Shares sold............. 75,880 $ 994,709 21,595 $ 246,087 -- $ -- -- $ --
Reinvested dividends.... 2,279 28,121 6,436 67,705 144 1,988 288 3,390
Shares redeemed......... (213,821) (2,865,741) (365,452) (4,173,442) (9,947) (151,396) (4,890) (62,156)
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Net increase (decrease). (135,662) $ (1,842,911) (337,421) $ (3,859,650) (9,803) $ (149,408) (4,602) $ (58,766)
========== ============ ========== ============ ======== =========== ======== ===========
--------
(1)For the year ended September 30, 2013, includes automatic conversion of
60,217 shares of Class B shares in the amount of $813,861 to 56,332 shares
of Class A shares in the amount of $813,861.
(2)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.
JAPAN FUND
---------------------------------------------------------------------------------------
CLASS A CLASS B
------------------------------------------------- ------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2013 SEPTEMBER 30, 2012 SEPTEMBER 30, 2013 SEPTEMBER 30, 2012
----------------------- ------------------------ ---------------- ------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- ---------- ------------ ------ -------- ------- ---------
Shares sold(1)(2)........... 1,031,698 $ 7,749,168 262,298 $ 1,634,936 5,743 $ 41,942 4,006 $ 25,910
Reinvested dividends........ 73,705 468,763 724,542 4,513,895 496 3,078 9,104 55,170
Shares redeemed(1)(2)(3)(4). (1,241,592) (8,747,150) (1,806,599) (13,332,511) (7,663) (51,206) (23,141) (151,723)
---------- ----------- ---------- ------------ ------ -------- ------- ---------
Net increase (decrease)..... (136,189) $ (529,219) (819,759) $ (7,183,680) (1,424) $ (6,186) (10,031) $ (70,643)
========== =========== ========== ============ ====== ======== ======= =========
JAPAN FUND
-------------------------------------------------
CLASS C
-------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2013 SEPTEMBER 30, 2012
----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- ---------- ------------
Shares sold................. 233,230 $ 1,735,449 10,819 $ 74,500
Reinvested dividends........ 1,039 6,443 24,675 149,530
Shares redeemed(3)(4)....... (21,622) (145,195) (82,544) (542,395)
---------- ----------- ---------- ------------
Net increase (decrease)..... 212,647 $ 1,596,697 (47,050) $ (318,365)
========== =========== ========== ============
--------
(1)For the year ended September 30, 2013, includes automatic conversion of
1,472 shares of Class B shares in the amount of $10,020 to 1,428 shares of
Class A shares in the amount of $10,020.
(2)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.
(3)For the year ended September 30, 2013, net of redemption fees of $1,974,
$19, and $43 for Class A, Class B, and Class C shares, respectively.
(4)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.
34
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (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, 2013, the
following Funds had borrowings:
AVERAGE WEIGHTED
DAYS INTEREST DEBT AVERAGE
FUND OUTSTANDING CHARGES UTILIZED INTEREST
---- ----------- -------- -------- --------
Japan Fund. 22 $134 $153,464 1.43%
At September 30, 2013, there were no borrowings outstanding.
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, 2013, 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.
35
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (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 RETIREMENT RETIREMENT
PLAN PLAN PLAN
LIABILITY EXPENSE PAYMENTS
---------- ---------- ----------
FUND AS OF SEPTEMBER 30, 2013
---- --------------------------------
International Dividend Strategy Fund. $1,299 $50 $ 908
Value Fund........................... 2,315 78 1,627
Note 11. Investment Concentration
Some of the Funds 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. The
markets of emerging market countries are typically more volatile and
potentially less liquid than more developed markets. Emerging market
countries may have relatively unstable government and may present the risk
of nationalization of businesses, expropriation, confiscatory taxation or,
in certain instances, reversion to closed market, centrally planned
economies. 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. In addition, because the Japan 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. These risks are primary
risks of the International Dividend Strategy Fund and the Japan Fund. At
September 30, 2013, the International Dividend Strategy Fund had 17.4% of
its net assets invested in equity securities domiciled in Brazil, while the
Japan Fund had 96.9% of its net assets invested in equity securities
domiciled in Japan.
Note 12. Subsequent Events
At a meeting of the Board held on July 18, 2013 (the "July 18 Meeting"), the
Board approved, subject to shareholder approval, a proposed Agreement and
Plan of Reorganization (the "Plan of Reorganization") pursuant to which the
Value Fund would transfer all of its assets to the SunAmerica Focused Alpha
Large-Cap Fund (the "Alpha Large-Cap Fund"), a series of SunAmerica
Specialty Series, in exchange solely for the assumption of the Value Fund's
liabilities by the Alpha Large-Cap Fund and Class A, Class C and Class W
shares of the Alpha Large-Cap Fund, which shares will be distributed by the
Value Fund to the holders of its shares in complete liquidation thereof (the
"Alpha Large-Cap Reorganization"). At a special meeting of shareholders of
the Value Fund on October 10, 2013, shareholders approved the Alpha
Large-Cap Reorganization and the voting results will be provided in the
Fund's next shareholder report. The closing of the Alpha Large-Cap
Reorganization occurred on October 28, 2013.
36
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, 2013,
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, 2013 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 our
opinion.
As discussed in Note 12 to the financial statements, on October 25, 2013, the
Value Fund was reorganized into SunAmerica Focused Alpha Large-Cap Fund, a
series of SunAmerica Specialty Series.
PricewaterhouseCoopers LLP
Houston, Texas
November 25, 2013
37
SUNAMERICA EQUITY FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND SUBADVISORY
AGREEMENT
The Board of Trustees (the "Board," the members of which are referred to as
"Trustees") of SunAmerica Equity Funds (the "Trust"), including the Trustees
who are not "interested persons," as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended (the "1940 Act"), of the Trust or
its separate series (each a "Fund" and collectively, the "Funds"), SunAmerica
Asset Management Corp. ("SunAmerica") or Wellington Management Company, LLP ("
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, 2014 at an in-person meeting held on June 4-5, 2013 (the
"Meeting"). The Trust currently consists of three separate Funds, including the
SunAmerica International Dividend Strategy Fund ("International Dividend
Strategy Fund"), SunAmerica Japan Fund ("Japan Fund"), and SunAmerica Value
Fund ("Value Fund"). 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 Japan Fund for a one-year
period ending June 30, 2014 (the "Subadvisory Agreement," and together with the
Advisory Agreement, the "Agreements").
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) information relating to 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 Trust 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. The Board further considered certain strategic
changes that SunAmerica intended to implement with respect to its investment
department, and concluded, based on their experience and interaction with
SunAmerica, that: (i) SunAmerica would continue to be able to retain quality
investment and other personnel; (ii) SunAmerica has exhibited a high level of
diligence and attention to detail in carrying out its advisory and other
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.
38
SUNAMERICA EQUITY FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
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,
2013, SunAmerica managed, advised and/or administered approximately $54.8
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 Japan 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 Japan 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,
2013. 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. The Board also considered that the Fund underperformed its Lipper
Index for the one-, three-, and five-year periods. The Board noted management's
discussion of the Fund's performance, including management's continued
monitoring of the Fund's performance, and also considered that management had
provided the Board with information regarding certain strategic options that
were under consideration by management with respect to the Fund in order to
address these performance concerns. The Board concluded that the Fund's
performance was being addressed.
International Dividend Strategy 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 noted management's discussion of
the Fund's performance, including the fact that SunAmerica had assumed
day-to-day management of the Fund in July 2012 and that, in connection with
this change, the Fund changed its name and certain other changes were made to
the Fund's investment goal, principal investment strategy and principal
investment techniques, and that performance prior to July 2012 does not reflect
that of the Fund's current strategy. The Board concluded that the Fund's
performance was being addressed.
39
SUNAMERICA EQUITY FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
Japan Fund. The Board considered that the Fund's performance was below the
median of its Peer Group and Peer Universe for the one-year period. The Board
also considered that the Fund underperformed its Lipper Index for the one-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 the Subadviser was appointed as the
subadviser to the Fund. The Board also noted that, due to the short period of
time since the implementation of such changes, it was not yet possible to fully
evaluate the Fund's performance within the Lipper classification, however, the
Board did note management's discussion of the Fund's performance, including
that such performance had improved recently.
While the Board noted its concern with respect to the performance of the Funds,
it also considered that management had provided the Board with information
regarding certain strategic options that were under consideration by management
with respect to the Value Fund, and further considered the strategy and manager
changes that had been made to the International Dividend Strategy Fund and the
Japan Fund in July 2012 and January 2012, respectively. Accordingly, the Board
observed that appropriate resources were being dedicated to the Funds to
address these performance concerns. The Board also noted that it would continue
to evaluate each Fund's performance, including in connection with the 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 Dividend Strategy 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.
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 noted that the mutual funds
identified as similar to the Value Fund are sold only in the variable annuity
market and, accordingly, are in a different Lipper classification, with a peer
group consisting of funds underlying variable insurance products. The Board
further noted that SunAmerica serves as subadviser to certain of these similar
mutual funds and observed that the services SunAmerica provides as subadviser
are much more limited in scope than in its role as investment manager and
adviser to the Fund. 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
40
SUNAMERICA EQUITY FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
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 Japan 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 Japan Fund
for which it serves as subadviser, to the extent applicable. The Board noted in
particular that the similar accounts identified by the Subadviser were
institutional separate accounts, and the Subadviser highlighted certain
differences between these separate accounts and the Fund, including that these
separate accounts are subject to different investment limitations and
restrictions and do not experience daily cash flows in a manner similar to the
Fund. 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 accounts for which it serves as subadviser.
Value Fund. The Board considered that the Fund's actual management fees were
above the median of its Peer Group and above the median of its 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 Dividend Strategy 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 waive 0.05% of its management fee
through January 31, 2014.
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 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.
41
SUNAMERICA EQUITY FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
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 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 applicable 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, 2014. 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, and each Disinterested
Trustee may have attributed different weights to different factors. The
Disinterested Trustees were also assisted by the advice of independent counsel
in making this determination.
42
SUNAMERICA EQUITY FUNDS
TRUSTEE AND OFFICER INFORMATION -- SEPTEMBER 30, 2013 -- (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. 76 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. 76 None
Age: 74
Richard W. Grant Trustee 2011-present Retired. Prior to that, 28 None
Age: 67 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 28 None
Age: 70 Broker, Corcoran Group (real
estate) (2002 to present);
President and Member of
Managing Directors, Beau
Brummell Soho LLC
(licensing of menswear
specialty retailing and other
activities) (1995 to 2009).
President, SJG Marketing
Inc. (2009 to present).
William J. Shea Trustee 2004-present Executive Chairman, Caliber, 28 Director, Boston Private
Age: 65 Inc. (formerly Lucid, Inc.), Financial Holdings (2004 to
(medical devices) (2007 to present); Chairman, Demoulas
present); Managing Partner, Supermarkets (1999-present).
DLB Capital, LLC (private
equity) (2006 to 2007).
43
SUNAMERICA EQUITY FUNDS
TRUSTEE AND OFFICER INFORMATION -- SEPTEMBER 30, 2013 -- (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 76 None
Age: 59 Director, SunAmerica.
(1995 to present); Director,
SunAmerica Capital
Services, Inc. ("SACS")
(1993 to present).
OFFICERS
John T. Genoy President 2007-present Chief Financial Officer, N/A N/A
Age: 45 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: 47 SunAmerica (2004 to
present).
Gregory N. Bressler Secretary 2005-present Senior Vice President and N/A N/A
Age: 47 and Chief General Counsel,
Legal SunAmerica (2005 to
Officer present).
James Nichols Vice 2006-present Director, President and N/A N/A
Age: 47 President CEO, SACS (2006 to
present); Senior Vice
President, SunAmerica
(2002 to present).
Katherine Stoner Vice 2011-present Vice President, SunAmerica N/A N/A
Age: 56 President (2011 to present). Vice
and President, The Variable
Chief Annuity Life Insurance
Compliance Company ("VALIC") and
Officer Western National Life
("CCO") Insurance Company
("WNL") and American
General Distributors, Inc.
(2006-present); Deputy
General Counsel and
Secretary, VALIC and WNL
(2007-2011); Vice
President, VALIC Financial
Advisors, Inc. and VALIC
Retirement Services
Company (2010-present).
44
SUNAMERICA EQUITY FUNDS
TRUSTEE AND OFFICER INFORMATION -- SEPTEMBER 30, 2013 -- (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: 60 President General Counsel,
and SunAmerica (2005 to
Assistant present).
Secretary
Timothy Pettee Vice 2004-present Chief Investment Officer, N/A N/A
Age: 55 President SunAmerica (2003 to
present).
Gregory R. Kingston Vice 2002-present Vice President, SunAmerica N/A N/A
Age: 47 President (2001 to present).
and
Assistant
Treasurer
Matthew J. Hackethal Anti- 2006-present Chief Compliance Officer, N/A N/A
Age: 41 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. (5 portfolios),
Anchor Series Trust (8 portfolios), SunAmerica Senior Floating Rate Fund,
Inc. (1 fund), SunAmerica Series Trust (38 portfolios), VALIC Company I
(34 portfolios), VALIC Company II (15 funds), Seasons Series Trust (21
portfolios) and SunAmerica Specialty Series (6 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.
45
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, 2013. The information and
distributions reported herein may differ from the information and distributions
taxable to the shareholders for the calendar year ending December 31, 2013. The
information necessary to complete your tax returns will be included with your
Form 1099-DIV to be received under separate cover in early 2014.
During the year ended September 30, 2013, 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. $-- 0.01 %
International Dividend Strategy Class B. -- 0.01
International Dividend Strategy Class C. -- 0.01
International Dividend Strategy Class I. -- 0.01
Value Class A........................... -- 100.00
Value Class B........................... -- 100.00
Value Class C........................... -- 100.00
Japan Class A........................... -- --
Japan Class B........................... -- --
Japan Class C........................... -- --
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, 2013 was
$682,651 and $33,086, respectively. The gross foreign source income for the
information reporting is $6,679,331 and $441,483, respectively.
For the year ended September 30, 2013, 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. $4,117,355
Value........................... 786,209
Japan........................... 480,821
46
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.
47
SUNAMERICA EQUITY FUNDS
COMPARISONS: FUNDS VS. INDICES -- (UNAUDITED) (CONTINUED)
SUNAMERICA INTERNATIONAL DIVIDEND STRATEGY FUND
The SunAmerica International Dividend Strategy Fund Class A shares returned
9.24% (before maximum sales charge) for the 12-month period ended September 30,
2013. The Fund underperformed its benchmark, the MSCI ACWI ex-U.S. Index
(Net)*, which returned 16.48% during the same annual period.
The Fund produced solid positive absolute gains during the annual period but
regional and sector allocation and individual stock selection detracted from
its results relative to the MSCI ACWI ex-U.S. Index (Net), more than offsetting
the positive effect of the Fund's bias toward high dividend-yielding companies.
In terms of regional factors, the Fund's overweighted allocation to South
American equities detracted from relative results, particularly exposure to
Brazilian Utilities due to the Brazilian government's decision to regulate
profits. Security selection among Pacific Rim countries also hindered results.
Conversely, security selection in Europe proved effective, and individual stock
selection in the Middle East also helped, albeit more modestly. Having no
exposure in the Fund to Central Asia and Africa during the annual period
further boosted the Fund's results relative to the benchmark index.
From a sector perspective, having an overweighted allocation to Materials,
which was the worst performing sector in the benchmark index during the annual
period, hampered results most. To a lesser degree, having underweighted
allocations to Financials, which outpaced the benchmark index during the annual
period, and overweighted exposure to Utilities and Telecommunication Services,
which lagged the benchmark index during this same period, also hurt. Individual
stock selection within the Financials, Utilities, Materials and Information
Technology sectors also detracted from relative results as did having a
position in cash of approximately 3% of the Fund's total net assets during an
annual period when the equity market rallied strongly. Such detractors were
only partially offset by the positive contributions made by having an
underweighted allocation to the Energy sector, which was the second weakest
sector in the MSCI ACWI ex-U.S. Index (Net) during the annual period, and by
effective stock selection within the Consumer Discretionary, Consumer Staples,
Energy, Telecommunication Services and Industrials sectors.
Individual stock holdings that detracted most from Fund performance during the
annual period were Brazilian residential property developer Brookfield
Incorporacoes SA, Taiwan-based thin film transistor liquid crystal display
manufacturer E Ink Holdings, Inc., Brazilian electricity companies Eletropaulo
Metropolitana Eletricidade de Sao Paulo and Centrais Eletricas Brasileiras, and
Indonesian diversified mineral exploration and production company Indo
Tambangraya Megah Tbk PT. The top individual positive contributors to Fund
performance during the annual period were French television content producer
Societe Television Francaise 1, German television program producer
ProSiebenSat.1 Media AG, Greek lottery game organizer OPAP SA, Israeli
telecommunication services company Bezeq The Israeli Telecommunication Corp.,
Ltd. and Italian television content producer Mediaset SpA. We sold the Fund's
positions in E Ink Holdings, Inc. and Mediaset SpA by the end of the annual
period.
--------
Past performance is no guarantee of future results.
When investing internationally, the value of an investment may be affected by
fluctuation 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 ACWI ex-U.S. Index (Net) is a free float-adjusted market
capitalization index designed to measure the equity market performance of 44
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 $14,908. The same amount invested in
securities mirroring the performance of the MSCI ACWI ex-U.S. Index (Net) would
be valued at $23,174.
[CHART]
International MSCI All Country
Dividend Strategy World ex-U.S.
Class A/#/ Index (Net)**
------------------ ------------------
9/30/2003 $9,428 $10,000
10/31/2003 10,043 10,647
11/30/2003 10,194 10,878
12/31/2003 11,008 11,708
1/31/2004 11,062 11,894
2/29/2004 11,105 12,194
3/31/2004 11,224 12,265
4/30/2004 10,868 11,874
5/31/2004 10,835 11,902
6/30/2004 11,105 12,155
7/31/2004 10,673 11,798
8/31/2004 10,770 11,890
9/30/2004 11,019 12,270
10/31/2004 11,440 12,696
11/30/2004 12,153 13,574
12/31/2004 12,726 14,155
1/31/2005 12,521 13,910
2/28/2005 13,115 14,592
3/31/2005 12,737 14,191
4/30/2005 12,553 13,827
5/31/2005 12,564 13,900
6/30/2005 12,737 14,156
7/31/2005 13,201 14,676
8/31/2005 13,730 15,047
9/30/2005 14,087 15,820
10/31/2005 13,741 15,243
11/30/2005 14,163 15,752
12/31/2005 15,232 16,508
1/31/2006 16,356 17,657
2/28/2006 16,086 17,602
3/31/2006 16,636 18,106
4/30/2006 17,641 19,028
5/31/2006 16,961 18,132
6/30/2006 16,712 18,106
7/31/2006 16,831 18,287
8/31/2006 17,198 18,800
9/30/2006 17,123 18,808
10/31/2006 17,609 19,572
11/30/2006 18,095 20,278
12/31/2006 18,570 20,908
1/31/2007 18,711 20,983
2/28/2007 18,657 21,108
3/31/2007 19,132 21,693
4/30/2007 19,748 22,682
5/31/2007 20,158 23,278
6/30/2007 20,417 23,468
7/31/2007 20,147 23,397
8/31/2007 19,921 23,032
9/30/2007 21,390 24,552
10/31/2007 22,762 25,920
11/30/2007 21,487 24,749
12/31/2007 21,368 24,389
1/31/2008 18,995 22,026
2/29/2008 19,408 22,657
3/31/2008 19,255 22,159
4/30/2008 20,589 23,500
5/31/2008 20,978 23,872
6/30/2008 19,432 21,910
7/31/2008 18,464 21,121
8/31/2008 17,354 20,133
9/30/2008 14,686 17,109
10/31/2008 11,192 13,342
11/30/2008 10,483 12,570
12/31/2008 10,841 13,286
1/31/2009 9,736 12,112
2/28/2009 8,935 10,982
3/31/2009 9,457 11,863
4/30/2009 10,550 13,480
5/31/2009 12,152 15,304
6/30/2009 11,970 15,136
7/31/2009 12,990 16,616
8/31/2009 13,245 17,231
9/30/2009 14,058 18,116
10/31/2009 13,730 17,891
11/30/2009 14,374 18,404
12/31/2009 14,817 18,793
1/31/2010 13,767 17,874
2/28/2010 13,889 17,875
3/31/2010 14,927 19,090
4/30/2010 14,548 18,923
5/31/2010 12,864 16,931
6/30/2010 12,425 16,714
7/31/2010 13,486 18,223
8/31/2010 13,047 17,723
9/30/2010 14,451 19,486
10/31/2010 15,122 20,149
11/30/2010 14,377 19,372
12/31/2010 15,477 20,889
1/31/2011 15,648 21,094
2/28/2011 15,990 21,650
3/31/2011 16,063 21,600
4/30/2011 16,808 22,655
5/31/2011 16,380 22,002
6/30/2011 16,087 21,683
7/31/2011 15,868 21,387
8/31/2011 14,257 19,554
9/30/2011 12,548 17,379
10/31/2011 13,695 19,209
11/30/2011 13,268 18,229
12/31/2011 12,914 18,025
1/31/2012 13,917 19,248
2/29/2012 14,536 20,330
3/31/2012 14,437 20,050
4/30/2012 14,351 19,734
5/31/2012 12,729 17,493
6/30/2012 13,212 18,525
7/31/2012 12,865 18,786
8/31/2012 13,212 19,179
9/30/2012 13,648 19,896
10/31/2012 13,435 19,973
11/30/2012 13,473 20,354
12/31/2012 14,347 21,059
1/31/2013 14,792 21,915
2/28/2013 14,512 21,683
3/31/2013 14,041 21,727
4/30/2013 14,410 22,525
5/31/2013 13,749 22,004
6/30/2013 13,096 21,050
7/31/2013 13,768 21,972
8/31/2013 13,807 21,669
9/30/2013 14,908 23,174
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 2.92% 9.24% 4.65% 8.65% 7.56% 8.56% 9.41% 9.41%
----------------------------------------------------------------------------------------------
5 Year Return -0.88% 1.51% -0.74% -1.81% -0.37% -1.82% 0.39% 1.97%
----------------------------------------------------------------------------------------------
10 Year Return 4.07% 58.13% 4.15% 50.12% 4.01% 48.14% 4.79% 59.59%
----------------------------------------------------------------------------------------------
Since Inception* 0.87% 22.75% 0.92% 16.69% 0.53% 9.14% 3.70% 53.97%
----------------------------------------------------------------------------------------------
+ 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, 2013, the SunAmerica International
Dividend Strategy Class A returned 2.92% compared to 16.48% for the MSCI ACWI
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 ACWI ex-U.S. Index (Net) is a free float-adjusted market
capitalization index designed to measure the equity market performance of
44 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.
49
SUNAMERICA EQUITY FUNDS
COMPARISONS: FUNDS VS. INDICES -- (UNAUDITED) (CONTINUED)
SUNAMERICA VALUE FUND
The SunAmerica Value Fund Class A shares returned 21.28% (before maximum sales
charge) for the 12-month period ended September 30, 2013. The Fund slightly
underperformed its benchmark, the Russell 1000(R) Value Index*, which returned
22.30% during the same annual period.
The Fund produced strong double-digit absolute gains, as U.S. large-cap
value-oriented equities modestly outpaced U.S. large-cap growth-oriented
equities during the annual period, as measured by the Russell 1000(R) Value
Index and Russell 1000(R) 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 strongly. Disappointing stock
selection, particularly within the Information Technology and Consumer
Discretionary sectors, further hindered relative results. Partially offsetting
these detractors was security selection in the Financials, Energy, Industrials
and Consumer Staples sectors, which contributed positively to the Fund's
results. A decision to have no exposure to the Utilities sector during the
annual period, which significantly lagged the Russell 1000(R) Value Index
during the annual period, also added value.
The biggest individual detractors from the Fund's performance during the annual
period were mobile communications provider NII Holdings, Inc., metals and
mining company Freeport-McMoRan Copper & Gold, Inc., specialty retail apparel
store operator Express, Inc., personal computer and related personal computing
and mobile communication devices giant Apple Inc. and oil and gas exploration
and production company Devon Energy Corp. Conversely, the top individual
contributors to Fund performance during the annual period were insurance
company MetLife, Inc., aerospace and defense company The Boeing Co.,
diversified banking institution Citigroup, Inc., insurance company The Hartford
Financial Services Group, Inc. and diversified banking institution JPMorgan
Chase & Co. We sold the Fund's positions in NII Holdings, Inc., Express, Inc.,
MetLife, Inc. and The Hartford Financial Services Group, Inc. 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 measures the performance of the large-cap segment of
the U.S. equity universe. It includes approximately 1,000 of the largest
securities based on a combination of their market cap and current index
membership. 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 $16,926. The same amount invested in securities
mirroring the performance of the Russell 1000@ Value Index would be valued at
$21,562.
[CHART]
Value Class A# Russell 1000/a/Value Index
----------------- ----------------------------
9/30/2003 $9,423 $10,000
10/31/2003 9,714 10,612
11/30/2003 9,851 10,756
12/31/2003 10,485 11,419
1/31/2004 10,498 11,620
2/29/2004 10,710 11,869
3/31/2004 10,617 11,765
4/30/2004 10,617 11,477
5/31/2004 10,610 11,594
6/30/2004 10,885 11,868
7/31/2004 10,742 11,701
8/31/2004 10,854 11,868
9/30/2004 11,054 12,052
10/31/2004 11,254 12,252
11/30/2004 11,748 12,871
12/31/2004 12,132 13,302
1/31/2005 11,985 13,066
2/28/2005 12,286 13,499
3/31/2005 12,209 13,314
4/30/2005 12,006 13,076
5/31/2005 12,223 13,390
6/30/2005 12,272 13,537
7/31/2005 12,524 13,929
8/31/2005 12,468 13,868
9/30/2005 12,608 14,063
10/31/2005 12,335 13,706
11/30/2005 12,699 14,154
12/31/2005 12,647 14,241
1/31/2006 12,911 14,794
2/28/2006 13,016 14,884
3/31/2006 13,129 15,086
4/30/2006 13,438 15,469
5/31/2006 13,137 15,078
6/30/2006 13,235 15,175
7/31/2006 13,581 15,544
8/31/2006 13,769 15,804
9/30/2006 14,123 16,119
10/31/2006 14,538 16,646
11/30/2006 14,733 17,026
12/31/2006 15,094 17,409
1/31/2007 15,187 17,631
2/28/2007 14,857 17,356
3/31/2007 15,060 17,625
4/30/2007 15,678 18,276
5/31/2007 16,262 18,935
6/30/2007 15,991 18,493
7/31/2007 15,500 17,638
8/31/2007 15,872 17,835
9/30/2007 16,355 18,448
10/31/2007 16,313 18,450
11/30/2007 15,559 17,548
12/31/2007 15,449 17,378
1/31/2008 14,856 16,682
2/29/2008 14,182 15,983
3/31/2008 14,142 15,863
4/30/2008 14,584 16,636
5/31/2008 14,755 16,610
6/30/2008 13,378 15,020
7/31/2008 13,378 14,966
8/31/2008 13,700 15,220
9/30/2008 12,825 14,102
10/31/2008 10,835 11,661
11/30/2008 10,041 10,825
12/31/2008 10,153 10,975
1/31/2009 9,092 9,713
2/28/2009 7,939 8,415
3/31/2009 8,598 9,135
4/30/2009 9,226 10,114
5/31/2009 9,885 10,739
6/30/2009 9,844 10,660
7/31/2009 10,461 11,532
8/31/2009 10,873 12,136
9/30/2009 11,110 12,604
10/31/2009 10,863 12,219
11/30/2009 11,357 12,907
12/31/2009 11,371 13,136
1/31/2010 11,081 12,766
2/28/2010 11,320 13,169
3/31/2010 11,973 14,027
4/30/2010 12,087 14,390
5/31/2010 11,081 13,207
6/30/2010 10,553 12,463
7/31/2010 11,330 13,307
8/31/2010 10,718 12,738
9/30/2010 11,568 13,726
10/31/2010 11,900 14,138
11/30/2010 11,817 14,063
12/31/2010 12,740 15,173
1/31/2011 13,104 15,516
2/28/2011 13,542 16,088
3/31/2011 13,542 16,152
4/30/2011 13,854 16,582
5/31/2011 13,604 16,407
6/30/2011 13,281 16,070
7/31/2011 12,771 15,537
8/31/2011 11,875 14,568
9/30/2011 10,917 13,467
10/31/2011 12,208 15,009
11/30/2011 12,146 14,931
12/31/2011 12,322 15,232
1/31/2012 12,902 15,808
2/29/2012 13,429 16,438
3/31/2012 13,851 16,925
4/30/2012 13,671 16,753
5/31/2012 12,733 15,770
6/30/2012 13,197 16,553
7/31/2012 13,260 16,725
8/31/2012 13,566 17,088
9/30/2012 13,956 17,630
10/31/2012 13,956 17,544
11/30/2012 13,861 17,536
12/31/2012 14,077 17,899
1/31/2013 14,906 19,062
2/28/2013 14,927 19,336
3/31/2013 15,480 20,102
4/30/2013 15,916 20,406
5/31/2013 16,480 20,929
6/30/2013 16,267 20,745
7/31/2013 16,862 21,865
8/31/2013 16,490 21,036
9/30/2013 16,926 21,562
Class A Class B Class C++
------------------ ------------------ ------------------
SunAmerica Average Average Average
Value Annual Cumulative Annual Cumulative Annual Cumulative
Fund# Return Return+ Return Return+ Return Return+
----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return 14.29% 21.28% 16.35% 20.35% 19.41% 20.41%
--------------------------------------------------------------------------
5 Year Return 4.46% 31.97% 4.61% 27.27% 4.97% 27.47%
--------------------------------------------------------------------------
10 Year Return 5.40% 79.63% 5.47% 70.34% 5.32% 67.94%
--------------------------------------------------------------------------
Since Inception* 6.45% 204.55% 6.50% 189.35% 5.72% 151.28%
--------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would have been lower.
* Inception date: Class A and Class B: 11/19/96; Class C: 03/06/97;
# 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, 2013, the SunAmerica Value Class A
returned 14.29% compared to 22.30% 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 measures the performance of the large-cap
segment of the U.S. equity universe. It includes approximately 1,000 of the
largest securities based on a combination of their market cap and current
index membership. 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 29.54% (before maximum sales
charge) for the 12-month period ended September 30, 2013. The Fund slightly
lagged its benchmark, the MSCI Japan Index (Net)*, which returned 31.50% during
the same annual period.
The Fund produced strong double-digit absolute gains, as Japanese equities
rallied robustly during the annual period. Early in the annual period, housing
starts in Japan rebounded sharply to 25.2% on a year-over-year basis, partly
owing to earthquake-related rebuilding efforts. Investors also cheered the
election of Prime Minister Shinzo Abe in December 2012, as he vowed to pursue
aggressive monetary easing to end deflation and get the Japanese economy
growing again. Japanese equities continued to rise after Mr. Abe announced in
January 2013 a US$116 billion spending program aimed at reversing deflation and
fueling economic growth. Market participants applauded the late February 2013
nomination of former Asian Development Bank President Haruhiko Kuroda as
Japan's new central bank chief, a move that pointed to continued monetary
stimulus. During the second half of the annual period, annualized Gross
Domestic Product (GDP) growth in Japan appeared to indicate Abe's strategies
were generating favorable results. In addition, the yen's more than 20% decline
against the U.S. dollar improved the outlook for Japanese exporters. Toward the
end of the annual period, Japan's ruling party won a majority in its
parliament's upper house along with a mandate to continue to push economic
reforms. The outcome was considered a victory for Abe and his "Abenomics"
program, which helped support the Japanese equity market through the end of the
annual period.
The Fund's relative performance during the annual period was driven primarily
by sector allocation. An underweighted allocation to Financials, particularly
to banks and brokerage firms, which outpaced the MSCI Japan Index (Net), and
overweighted exposures to Energy and Information Technology, each of which
lagged the benchmark index, detracted from the Fund's relative results.
Partially offsetting these detractors were the positive contributions made by
the Fund's overweighted allocation to Consumer Discretionary, which
outperformed the MSCI Japan Index (Net), and its underweighted allocations to
Health Care and Telecommunication Services, which each lagged the benchmark
index during the annual period.
Security selection overall contributed positively to the Fund's relative
performance during the annual period. Individual security selection was
especially strong within the Industrials, Information Technology, Consumer
Staples and Financials sectors and was only partially offset by weaker
selection within the Consumer Discretionary, Health Care, Energy and Materials
sectors.
The top individual contributors to Fund performance during the annual period
were machine tools manufacturer Amada Co., Ltd., travel business company HIS
Co., Ltd. and system integrator Otsuka Corp. Shares of Amada Co., Ltd.
outperformed the MSCI Japan Index (Net) because the market expected a cyclical
recovery. We sold the Fund's position in Amada Co., Ltd. by the end of the
annual period, taking profits. HIS Co., Ltd. shares performed well, as the
company gained market share in both domestic and international travel. Shares
of Otsuka Corp., a new purchase for the Fund during the annual period, gained
strongly as the company gained market share and found new drivers of growth.
The individual stock that detracted from Fund performance most during the
annual period was auto manufacturer Toyota Industries Corp. Not owning
benchmark constituent Toyota Industries Corp. detracted, as the stock rose
sharply due to yen depreciation during the annual period. Holdings in auto
parts company TACHI-S Co., Ltd. and network integration company Net One Systems
Co., Ltd. also detracted from the Fund's performance during the annual period.
Shares of TACHI-S Co., Ltd. performed poorly due to its weak earnings guidance.
A newly established Fund position in Net One Systems Co., Ltd. disappointed on
the company's reduction in its fiscal year forecast, which weighed on the
company's share price.
--------
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 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.
52
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 $8,241. The same amount invested in
securities mirroring the performance of the MSCI Japan Index (Net) would be
valued at $9,062.
[CHART]
Japan
Class A/#/ MSCI Japan/a/
----------- --------------------
5/1/2006 $9,427 $10,000
5/31/2006 8,650 9,175
6/30/2006 8,431 9,073
7/31/2006 8,213 9,023
8/31/2006 8,311 9,158
9/30/2006 8,333 9,008
10/31/2006 8,673 9,165
11/30/2006 8,959 9,230
12/31/2006 9,336 9,459
1/31/2007 9,578 9,539
2/28/2007 9,608 9,923
3/31/2007 9,970 9,792
4/30/2007 10,294 9,601
5/31/2007 10,558 9,758
6/30/2007 10,596 9,729
7/31/2007 10,603 9,713
8/31/2007 10,181 9,428
9/30/2007 10,558 9,645
10/31/2007 10,988 9,608
11/30/2007 10,113 9,432
12/31/2007 9,712 9,059
1/31/2008 8,675 8,645
2/29/2008 8,896 8,704
3/31/2008 8,980 8,351
4/30/2008 9,163 8,958
5/31/2008 9,422 9,183
6/30/2008 8,743 8,557
7/31/2008 8,195 8,266
8/31/2008 7,569 7,937
9/30/2008 6,357 7,047
10/31/2008 4,711 6,005
11/30/2008 4,513 5,931
12/31/2008 4,811 6,413
1/31/2009 4,559 5,977
2/28/2009 4,178 5,237
3/31/2009 4,308 5,347
4/30/2009 4,628 5,861
5/31/2009 5,253 6,465
6/30/2009 5,322 6,579
7/31/2009 5,825 6,860
8/31/2009 5,985 7,130
9/30/2009 6,359 7,007
10/31/2009 6,283 6,832
11/30/2009 6,435 6,762
12/31/2009 6,507 6,814
1/31/2010 6,349 6,943
2/28/2010 6,325 7,021
3/31/2010 6,649 7,371
4/30/2010 6,783 7,360
5/31/2010 6,033 6,765
6/30/2010 6,049 6,629
7/31/2010 6,649 6,865
8/31/2010 6,460 6,708
9/30/2010 7,186 7,015
10/31/2010 7,463 7,158
11/30/2010 7,257 7,309
12/31/2010 7,874 7,865
1/31/2011 7,801 7,875
2/28/2011 7,915 8,235
3/31/2011 7,972 7,478
4/30/2011 8,329 7,505
5/31/2011 8,134 7,383
6/30/2011 8,037 7,491
7/31/2011 7,923 7,757
8/31/2011 7,103 7,126
9/30/2011 6,275 7,009
10/31/2011 6,697 6,992
11/30/2011 6,519 6,683
12/31/2011 6,362 6,738
1/31/2012 6,650 7,043
2/29/2012 6,838 7,398
3/31/2012 6,918 7,497
4/30/2012 6,858 7,258
5/31/2012 6,034 6,610
6/30/2012 6,392 6,950
7/31/2012 6,302 6,784
8/31/2012 6,372 6,735
9/30/2012 6,362 6,891
10/31/2012 6,292 6,762
11/30/2012 6,421 6,923
12/31/2012 6,603 7,289
1/31/2013 6,847 7,557
2/28/2013 6,959 7,759
3/31/2013 7,254 8,137
4/30/2013 7,905 8,851
5/31/2013 7,396 8,350
6/30/2013 7,753 8,496
7/31/2013 7,803 8,547
8/31/2013 7,620 8,363
9/30/2013 8,241 9,062
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 22.11% 29.54% 24.54% 28.54% 27.58% 28.58%
--------------------------------------------------------------------------
5 Year Return 4.08% 29.63% 4.34% 25.56% 4.63% 25.40%
--------------------------------------------------------------------------
Since Inception* -2.57% -12.58% -2.42% -16.64% -2.44% -16.74%
--------------------------------------------------------------------------
+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, 2013, the SunAmerica Japan Class A
returned 22.11% compared to 31.50% 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 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.
53
[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,
Secretary determine how to vote proxy material, annual
Gregory R. Kingston, proxies relating to report and semi-annual
Vice President and securities held in a report (the "shareholder
Assistant Treasurer Fund's portfolio which is documents") to
Kathleen Fuentes, Chief available in the Trust's shareholders with
Legal Officer and Statement of Additional multiple accounts
Assistant Secretary Information, may be residing at the same
Nori L. Gabert, Vice obtained without charge "household." This
President and upon request, by calling practice is called
Assistant Secretary (800) 858-8850. This householding and reduces
Matthew Hackethal, in-formation is also Fund expenses, which
Anti-Money Laundering available from the EDGAR benefits you and other
Compliance Officer database on the U.S. shareholders. Unless the
Diedre L. Shepherd, Securities and Ex-change Funds receive
Assistant Treasurer Commission's website at instructions to the
http://www.sec.gov. con-trary, you will only
INVESTMENT ADVISER receive one copy of the
SunAmerica Asset PROXY VOTING RECORD ON shareholder documents.
Management Corp. SUNAMERICA EQUITY FUNDS The Funds will continue
Harborside Financial Information regarding how to household the
Center SunAmerica Equity Funds share-holder documents
3200 Plaza 5 voted proxies relating to indefinitely, until we
Jersey City, NJ securities held in are instructed otherwise.
07311-4992 SunAmerica Equity Funds If you do not wish to
during the most recent participate in
DISTRIBUTOR twelve month period ended householding, please
SunAmerica Capital June 30 is available, contact Shareholder
Services, Inc. once filed with the U.S. Services at (800)
Harborside Financial Securities and Exchange 858-8850 ext. 6010 or
Center Commission, without send a written request
3200 Plaza 5 charge, upon request, by with your name, the name
Jersey City, NJ calling (800) 858-8850 or of your fund(s) and your
07311-4992 on the U.S. Securities account number(s) to
and Exchange Commission's SunAmerica Mutual Funds
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 - 9/13
[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 2013, 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:
2012 2013
(a) Audit Fees ....................$ 97,202 $ 100,119
(b) Audit-Related Fees ............$ 10,740 $ 0
(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:
2012 2013
(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 2012 and 2013 were $53,590 and $45,982, 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 6, 2013
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 6, 2013
By: /s/ Donna M. Handel
-------------------
Donna M. Handel
Treasurer
Date: December 6, 2013