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, LLC
Harborside Financial Center,
3200 Plaza 5
Jersey City, NJ 07311
--------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6414
-----------------------------
Date of fiscal year end: September 30
--------------------------
Date of reporting period: March 31, 2014
-------------------------
Item 1. Reports to Stockholders
[PHOTO]
SEMI-ANNUAL REPORT 2014
SUNAMERICA
Equity Funds
MARCH 31, 2014 SEMI-ANNUAL REPORT
SUNAMERICA EQUITY FUNDS
SUNAMERICA INTERNATIONAL DIVIDEND STRATEGY FUND (SIEAX)
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.................................... 12
NOTES TO FINANCIAL STATEMENTS............................... 18
SHAREHOLDER LETTER -- (UNAUDITED)
Dear Shareholders,
We are pleased to present this semi-annual update for the SunAmerica Equity
Funds for the six months ended March 31, 2014. It was a period wherein U.S. and
international equity performance was driven primarily by economic conditions
and monetary policies of global central banks. As such, there was wide
divergence amongst the global equity markets, with U.S. and European equity
markets generally strong, while the Japanese equity market faced several
headwinds.
As the semi-annual period began in October 2013, the nearly five-year-old
global stock rally marched on. Global equities advanced for the sixth
consecutive quarter in the fourth quarter of 2013, as generally solid economic
data, coupled with continued accommodative monetary policy from central banks
around the world, raised many investors' 2014 expectations. Despite liquidity
concerns in China and tepid economic growth in Europe, market participants were
emboldened by signs of expansionary traction in the U.S. and Japan, the world's
largest and third-largest economies, respectively.
U.S. equities reached a new all-time high in December 2013, as the U.S. Federal
Reserve (the "Fed") ended seven months of speculation and announced it would
finally begin tapering its asset purchases, signaling confidence in the U.S.
economy. Stock markets in Europe and Japan made fresh highs in December 2013 as
well. However, for the fourth quarter of 2013 overall, European equities rose
but lagged developed markets on the whole as the euro area's economy neared
stall speed in the third quarter of 2013, posting Gross Domestic Product (GDP)
growth of 0.1%. The export-driven economies of the Pacific Basin rose for the
sixth straight quarter, with the region led higher by Japanese equities.
Japan's equity market closed 2013 at a six-year high, as the market reflected
optimism about Prime Minister Shinzo Abe's bold reforms and big stimulus. Japan
also reported a 14.1% jump in housing starts during November 2013, the
fifteenth consecutive monthly gain, as buyers raced to sign contracts ahead of
the then-upcoming increase in the consumption tax. Also in November, Japan
posted its largest rise in exports in three years, aided by a surge in car
shipments. Japanese investors were further encouraged by steadily increasing
inflation and by the pledge of the Bank of Japan (the "BoJ") to extend its
ultra-loose monetary policy if needed.
In the first quarter of 2014, global equities continued to advance. Despite
ongoing geopolitical tensions surrounding the crisis in Ukraine, concerns about
a Chinese growth slowdown and unsettling economic and political developments in
several other emerging market countries, the global equity markets posted
positive returns. Investors appeared to take solace from comments out of the
European Central Bank (ECB) and Chinese government suggesting that stimulus
measures may be ramped up. In China, sluggish manufacturing data was
overshadowed by Premier Li Keqiang's reassurance that Beijing stood ready to
take action to bolster the world's second-largest economy, if necessary.
Continued evidence of a Eurozone recovery, solid U.S. corporate earnings and
robust merger and acquisition activity also aided bullish sentiment.
U.S. equities rose for the fifth consecutive quarter, reaching another all-time
high in March 2014. In 2013, U.S. stocks had their best year since 1997;
however, 2014 began with their worst month in nearly two years. Worries about a
slowdown in China and general angst surrounding emerging markets more than
offset a fairly benign domestic environment. But despite the economic data,
impacted by the particularly inclement Winter season, and U.S. Fed Chair Janet
Yellen unsettling some investors with comments that suggested the Fed may begin
to raise interest rates at a slightly more aggressive pace than markets
anticipated, U.S. equities subsequently rebounded from January's pullback.
European equities rose for the third consecutive quarter. Economic data was
generally solid and lent credence to the notion of a sustainable Eurozone
recovery. The export-driven economies of the Pacific Basin, however, fell for
the first time in seven quarters. Japanese equities declined particularly
sharply, after Japan's economy expanded at a slower pace than initially
estimated, dragged down by weaker capital spending and private consumption.
Consumer confidence in Japan dipped to its lowest level since September 2011
ahead of Japan's consumption tax increase, which was scheduled to take effect
in April 2014, and based on the lack of additional stimulus from the BoJ ahead
of the hike. Other disconcerting news in Japan included a record trade deficit
as a significant climb in import costs outweighed slowing export growth.
2
Against this backdrop, U.S. equities, as measured by the S&P 500(R) Index/*/,
gained 12.51% for the six months ended March 31, 2014. International equities,
as measured by the MSCI ACWI ex-U.S. (Net)/*/, posted positive returns but
lagged the U.S. equity market, advancing 5.30% for the six-month period ended
March 31, 2014. Japanese equities, as measured by the MSCI Japan Index
(Net)/*/, fell into negative territory with a return of -3.44% for the same
semi-annual period.
Amid these conditions, each of the portfolios in the SunAmerica Equity Funds
generated positive gains during the semi-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 MSCI
ACWI (ALL COUNTRY WORLD INDEX) EX-U.S. (NET) is a free float-adjusted market
capitalization-weighted index designed to measure the equity market
performance of 47 global developed and emerging markets, excluding the U.S.
The MSCI JAPAN INDEX (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 -- MARCH 31, 2014 -- (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, and (2) ongoing costs, including management
fees; distribution and service fees; and other Fund expenses. The Example set
forth below is intended to help you understand your ongoing costs (in dollars)
of investing in the Funds and to compare these costs with the ongoing costs of
investing in other mutual funds. The Example is based on an investment of
$1,000 invested at October 1, 2013 and held until March 31, 2014.
ACTUAL EXPENSES
The "Actual" section of the table provides information about actual account
values and actual expenses. You may use the information in these columns,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the column under the heading entitled "Expenses Paid During the Six
Months Ended March 31, 2014" to estimate the expenses you paid on your account
during this period. For shareholder accounts in classes other than Class I, the
"Expenses Paid During the Six Months Ended March 31, 2014" column does not
include small account fees that may be charged if your account balance is below
$500 ($250 for retirement plan accounts). In addition, the "Expenses Paid
During the Six Months Ended March 31, 2014" column does not include
administrative fees that may apply to qualified retirement plan accounts. See
the Funds' prospectus, your retirement plan document and/or materials from your
financial adviser, for a full description of these fees. Had these fees been
included, the "Expenses Paid During the Six Months Ended March 31, 2014" 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
the "Expenses Paid During the Six Months Ended March 31, 2014" column does not
include small account fees that may be charged if your account balance is below
$500 ($250 for retirement plan accounts). In addition, the "Expenses Paid
During the Six Months Ended March 31, 2014" column does not include
administrative fees that may apply to qualified retirement plan accounts. See
the Funds' prospectus, your retirement plan document and/or materials from your
financial adviser, for a full description of these fees. Had these fees been
included, the "Expenses Paid During the Six Months Ended March 31, 2014" 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, small account
fees and administrative fees, if applicable to your account. Please refer to
the Fund's prospectus, your retirement plan document and/or materials from your
financial adviser, for more information. Therefore, the "Hypothetical" example
is useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these
transaction costs and other fees were included, your costs would have been
higher.
4
SUNAMERICA EQUITY FUNDS
EXPENSE EXAMPLE -- MARCH 31, 2014 -- (UNAUDITED) (CONTINUED)
ACTUAL HYPOTHETICAL
----------------------------------------- -----------------------------------------
ENDING ACCOUNT
ENDING ACCOUNT EXPENSE PAID VALUE USING A EXPENSE PAID
VALUE USING DURING THE HYPOTHETICAL DURING THE
BEGINNING ACTUAL SIX MONTHS BEGINNING 5% ASSUMED SIX MONTHS
ACCOUNT VALUE RETURN AT ENDED ACCOUNT VALUE RETURN AT ENDED
AT OCTOBER 1, MARCH 31, MARCH 31, AT OCTOBER 1, MARCH 31, MARCH 31,
FUND 2013 2014 2014* 2013 2014 2014*
---- ------------- -------------- ------------ ------------- -------------- ------------
INTERNATIONAL DIVIDEND STRATEGY FUND#
Class A............................. $1,000.00 $1,039.34 $ 9.66 $1,000.00 $1,015.46 $ 9.55
Class B............................. $1,000.00 $1,035.70 $12.94 $1,000.00 $1,012.22 $12.79
Class C............................. $1,000.00 $1,035.77 $12.94 $1,000.00 $1,012.22 $12.79
Class I............................. $1,000.00 $1,040.04 $ 9.16 $1,000.00 $1,015.96 $ 9.05
JAPAN FUND#
Class A............................. $1,000.00 $1,004.66 $ 9.50 $1,000.00 $1,015.46 $ 9.55
Class B............................. $1,000.00 $1,001.53 $12.72 $1,000.00 $1,012.22 $12.79
Class C............................. $1,000.00 $1,002.93 $12.73 $1,000.00 $1,012.22 $12.79
EXPENSE
RATIO
AS OF
MARCH 31,
FUND 2014*
---- ---------
INTERNATIONAL DIVIDEND STRATEGY FUND#
Class A............................. 1.90%
Class B............................. 2.55%
Class C............................. 2.55%
Class I............................. 1.80%
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 182 days divided by 365
days. These ratios do not reflect transaction costs, including sales charges
on purchase payments, contingent deferred sales charges, 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 March 31,
2014" and the "Expense Ratios" would have been higher. If these fees and
expenses had not been recouped, the "Actual/Hypothetical Ending Account
Value" would have been higher and the "Actual/Hypothetical Expenses Paid
During the Six Months Ended March 31, 2014" and "Expense Ratios" would have
been lower.
5
SUNAMERICA EQUITY FUNDS
STATEMENT OF ASSETS AND LIABILITIES -- MARCH 31, 2014 -- (UNAUDITED)
INTERNATIONAL
DIVIDEND
STRATEGY FUND JAPAN FUND
------------- -----------
ASSETS:
Investments at value (unaffiliated)*.............. $142,481,327 $30,107,153
Repurchase Agreements (cost approximates value)... 1,928,000 1,018,000
------------ -----------
Total investments................................ 144,409,327 31,125,153
------------ -----------
Cash.............................................. 648 886
Foreign cash*..................................... 1,006,126 156,061
Receivable for:
Fund shares sold................................. 593,042 55,055
Dividends and interest........................... 1,053,159 273,816
Investments sold................................. -- --
Prepaid expenses and other assets................. 1,054 261
Due from investment adviser for expense
reimbursements/fee waivers....................... -- 10,000
------------ -----------
Total assets...................................... 147,063,356 31,621,232
------------ -----------
LIABILITIES:
Payable for:
Fund shares redeemed............................. 345,161 6,100
Investments purchased............................ 19 279,813
Investment advisory and management fees.......... 119,521 29,594
Distribution and service maintenance fees........ 60,309 10,846
Transfer agent fees and expenses................. 37,149 6,477
Trustees' fees and expenses...................... 1,381 471
Other accrued expenses........................... 170,577 71,876
Accrued foreign tax on capital gains............. 206 --
Due to investment adviser from expense recoupment. 6,922 --
------------ -----------
Total liabilities................................. 741,245 405,177
------------ -----------
Net Assets........................................ $146,322,111 $31,216,055
============ ===========
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01 par value.... $ 127,354 $ 42,276
Paid-in capital................................... 239,651,910 29,550,396
------------ -----------
239,779,264 29,592,672
Accumulated undistributed net investment income
(loss)........................................... (167,233) (497,359)
Accumulated undistributed net realized gain
(loss) on investments, futures contracts,
options contracts, securities sold short,
foreign exchange transactions.................... (99,662,912) 2,164,225
Unrealized appreciation (depreciation) on
investments...................................... 6,368,638 (35,688)
Unrealized foreign exchange gain (loss) on other
assets and liabilities........................... 4,560 (7,795)
Accrued capital gains tax on unrealized
appreciation (depreciation)...................... (206) --
------------ -----------
Net Assets........................................ $146,322,111 $31,216,055
============ ===========
*Cost
Investments (unaffiliated)....................... $136,112,689 $30,142,841
------------ -----------
Foreign cash..................................... $ 1,005,589 $ 159,756
============ ===========
See Notes to Financial Statements
6
SUNAMERICA EQUITY FUNDS
STATEMENT OF ASSETS AND LIABILITIES -- MARCH 31, 2014 -- (UNAUDITED)
(CONTINUED)
INTERNATIONAL
DIVIDEND
STRATEGY FUND JAPAN FUND
------------- -----------
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net assets........................................ $110,575,987 $27,649,974
Shares of beneficial interest issued and
outstanding...................................... 9,410,327 3,729,232
Net asset value and redemption price per share.... $ 11.75 $ 7.41
Maximum sales charge (5.75% of offering price).... $ 0.72 $ 0.45
------------ -----------
Maximum offering price to public.................. $ 12.47 $ 7.86
============ ===========
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net assets........................................ $ 6,138,743 $ 353,389
Shares of beneficial interest issued and
outstanding...................................... 571,047 49,337
Net asset value, offering and redemption price
per share (excluding any applicable contingent
deferred sales charge)........................... $ 10.75 $ 7.16
============ ===========
CLASS C (UNLIMITED SHARES AUTHORIZED):
Net assets........................................ $ 29,147,577 $ 3,212,692
Shares of beneficial interest issued and
outstanding...................................... 2,715,289 449,002
Net asset value, offering and redemption price
per share (excluding any applicable contingent
deferred sales charge)........................... $ 10.73 $ 7.16
============ ===========
CLASS I (UNLIMITED SHARES AUTHORIZED):
Net assets........................................ $ 459,804 $ --
Shares of beneficial interest issued and
outstanding...................................... 38,754 --
Net asset value, offering and redemption price
per share........................................ $ 11.86 $ --
============ ===========
See Notes to Financial Statements
7
SUNAMERICA EQUITY FUNDS
STATEMENT OF OPERATIONS -- MARCH 31, 2014 -- (UNAUDITED)
INTERNATIONAL
DIVIDEND
STRATEGY FUND JAPAN FUND
------------- -----------
INVESTMENT INCOME:
Dividends (unaffiliated).......................... $2,472,550 $ 291,287
Interest (unaffiliated)........................... 5,183 --
---------- -----------
Total investment income*........................ 2,477,733 291,287
---------- -----------
EXPENSES:
Investment advisory and management fees........... 694,195 171,433
Distribution and service maintenance fees:
Class A......................................... 183,480 47,090
Class B......................................... 31,589 1,447
Class C......................................... 134,169 13,082
Service Fees Class I............................ 1,052 --
Transfer agent fees and expenses:
Class A......................................... 128,628 30,725
Class B......................................... 9,878 923
Class C......................................... 33,971 3,470
Class I......................................... 964 --
Registration fees:
Class A......................................... 16,536 9,034
Class B......................................... 7,808 6,781
Class C......................................... 8,415 6,956
Class I......................................... -- --
Custodian and accounting fees..................... 46,070 9,212
Reports to shareholders........................... 35,234 2,139
Audit and tax fees................................ 25,636 28,304
Legal fees........................................ 13,144 6,563
Directors' fees and expenses...................... 4,111 907
Interest expense.................................. 298 173
Other expenses.................................... 22,926 7,942
---------- -----------
Total expenses before fee waivers, expense
reimbursements, expense recoupments, custody
credits and fees paid indirectly............... 1,398,104 346,181
Net (Fees waived and expenses
reimbursed)/recouped by investment adviser
(Note 3)....................................... 28,187 (53,498)
---------- -----------
Net expenses.................................... 1,426,291 292,683
---------- -----------
Net investment income (loss)....................... 1,051,442 (1,396)
---------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments
(unaffiliated).................................... 2,702,168 2,519,655
Net realized foreign exchange gain (loss) on
other assets and liabilities...................... (248,647) (6,532)
---------- -----------
Net realized gain (loss) on investments and
foreign currencies................................ 2,453,521 2,513,123
---------- -----------
Change in unrealized appreciation (depreciation)
on investments (unaffiliated)..................... 1,787,216 (2,371,523)
Change in unrealized foreign exchange gain (loss)
on other assets and liabilities................... (2,900) (9,585)
Change in accrued capital gains tax on unrealized
appreciation (depreciation)....................... (206) --
---------- -----------
Net unrealized gain (loss) on investments and
foreign currencies................................ 1,784,110 (2,381,108)
---------- -----------
Net realized and unrealized gain (loss) on
investments and foreign currencies................ 4,237,631 132,015
---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................... $5,289,073 $ 130,619
========== ===========
--------
* Net of foreign withholding taxes on interest
and dividends of $ 254,081 $ 32,399
========== ===========
See Notes to Financial Statements
8
SUNAMERICA EQUITY FUNDS
STATEMENT OF CHANGES IN NET ASSETS -- MARCH 31, 2014
INTERNATIONAL DIVIDEND
STRATEGY FUND
-------------------------------
FOR THE SIX MONTHS
ENDED FOR THE YEAR
MARCH 31, ENDED
2014 SEPTEMBER 30,
(UNAUDITED) 2013
------------------ -------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 1,051,442 $ 4,029,916
Net realized gain (loss) on investments and foreign currencies......................... 2,453,521 (664,280)
Net unrealized gain (loss) on investments and foreign currencies....................... 1,784,110 4,531,110
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... 5,289,073 7,896,746
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (958,733) (3,097,332)
Net investment income (Class B)........................................................ (51,514) (207,523)
Net investment income (Class C)........................................................ (234,545) (761,162)
Net investment income (Class I)........................................................ (10,596) (51,338)
Net realized gain on securities (Class A).............................................. -- --
Net realized gain on securities (Class B).............................................. -- --
Net realized gain on securities (Class C).............................................. -- --
Net realized gain on securities (Class I).............................................. -- --
------------ ------------
Total distributions to shareholders...................................................... (1,255,388) (4,117,355)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). 14,360,587 54,407,385
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. 18,394,272 58,186,776
NET ASSETS:
Beginning of period...................................................................... 127,927,839 69,741,063
------------ ------------
End of period+........................................................................... $146,322,111 $127,927,839
============ ============
--------
+ Includes accumulated undistributed net investment income (loss)........................ $ (167,233) $ 36,713
============ ============
JAPAN FUND
-------------------------------
FOR THE SIX MONTHS
ENDED FOR THE YEAR
MARCH 31, ENDED
2014 SEPTEMBER 30,
(UNAUDITED) 2013
------------------ -------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ (1,396) $ (30,906)
Net realized gain (loss) on investments and foreign currencies......................... 2,513,123 2,137,022
Net unrealized gain (loss) on investments and foreign currencies....................... (2,381,108) 3,476,971
----------- -----------
Net increase (decrease) in net assets resulting from operations.......................... 130,619 5,583,087
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (495,798) (470,762)
Net investment income (Class B)........................................................ (5,794) (3,078)
Net investment income (Class C)........................................................ (39,909) (6,981)
Net investment income (Class I)........................................................ -- --
Net realized gain on securities (Class A).............................................. (1,975,339) --
Net realized gain on securities (Class B).............................................. (27,616) --
Net realized gain on securities (Class C).............................................. (190,215) --
Net realized gain on securities (Class I).............................................. -- --
----------- -----------
Total distributions to shareholders...................................................... (2,734,671) (480,821)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). 6,306,829 1,061,292
----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. 3,702,777 6,163,558
NET ASSETS:
Beginning of period...................................................................... 27,513,278 21,349,720
----------- -----------
End of period+........................................................................... $31,216,055 $27,513,278
=========== ===========
--------
+ Includes accumulated undistributed net investment income (loss)........................ $ (497,359) $ 45,538
=========== ===========
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
03/31/14(6) 11.41 0.09 0.35 0.44 (0.10) -- -- (0.10) 11.75 3.93 110,576
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
03/31/14(6) 10.47 0.05 0.32 0.37 (0.09) -- -- (0.09) 10.75 3.57 6,139
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
03/31/14(6) 10.45 0.05 0.32 0.37 (0.09) -- -- (0.09) 10.73 3.58 29,148
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
03/31/14(6) 11.51 0.08 0.38 0.46 (0.11) -- -- (0.11) 11.86 4.00 460
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
1.90(3)(7) 1.68(3)(7) 61
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)(7) 0.92(3)(7) 61
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
2.55(3)(7) 1.03(3)(7) 61
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
1.80(3)(7) 1.28(3)(7) 61
--------
(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 03/31/14(6)(7)
-------- -------- -------- -------- -------- --------------
International Dividend Strategy Class A. 0.00% -- % -- % 0.25% 0.16% (0.06)%
International Dividend Strategy Class B. 0.22 0.11 0.07 0.53 0.44 0.22
International Dividend Strategy Class C. 0.08 0.02 (0.00) 0.33 0.20 (0.02)
International Dividend Strategy Class I. 0.27 0.01 (0.09) 0.17 0.09 (0.10)
(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.
(6)Unaudited
(7)Annualized
See Notes to Financial Statements
10
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
03/31/14(5) 8.10 0.00 0.03 0.03 (0.14) (0.58) -- (0.72) 7.41 0.47 27,650
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
03/31/14(5) 7.85 (0.01) 0.02 0.01 (0.12) (0.58) -- (0.70) 7.16 0.15 353
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
03/31/14(5) 7.84 (0.01) 0.03 0.02 (0.12) (0.58) -- (0.70) 7.16 0.29 3,213
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
1.90(6) 0.02(6) 53
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(6) (0.29)(6) 53
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
2.55(6) (0.29)(6) 53
--------
(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 03/31/14(5)(6)
-------- -------- -------- -------- -------- --------------
Japan Class A........................... 0.31% 0.18% 0.27% 0.59% 0.55% 0.27%
Japan Class B........................... 4.07 5.60 3.06 6.15 6.25 5.30
Japan Class C........................... 1.68 2.66 1.19 2.80 1.57 0.77
(4)The Fund's performance was increased by less than 0.01% from gains on
disposal of investments in violation of investment restrictions.
(5)Unaudited
(6)Annualized
See Notes to Financial Statements
11
SUNAMERICA INTERNATIONAL DIVIDEND STRATEGY FUND
PORTFOLIO PROFILE -- MARCH 31, 2014 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Oil Companies-Integrated............... 12.0%
Telephone-Integrated................... 8.3
Electric-Integrated.................... 8.3
Medical-Drugs.......................... 6.6
Chemicals-Diversified.................. 6.2
Water.................................. 3.7
Oil Refining & Marketing............... 3.4
Electric-Generation.................... 3.4
Electronic Components-Misc............. 3.3
Gambling (Non-Hotel)................... 2.7
Medical-Generic Drugs.................. 2.7
Computers.............................. 2.4
Insurance-Property/Casualty............ 2.3
Insurance-Multi-line................... 2.1
Oil Companies-Exploration & Production. 2.1
Metal-Copper........................... 2.0
Machinery-General Industrial........... 2.0
Television............................. 2.0
Computers-Periphery Equipment.......... 1.9
Non-Ferrous Metals..................... 1.9
Cellular Telecom....................... 1.9
Coal................................... 1.9
Telecom Services....................... 1.8
Brewery................................ 1.8
Shipbuilding........................... 1.8
Insurance-Life/Health.................. 1.7
Metal-Iron............................. 1.6
Public Thoroughfares................... 1.6
Transport-Services..................... 1.6
Cosmetics & Toiletries................. 1.4
Repurchase Agreements.................. 1.3
Exchange-Traded Funds.................. 1.0
----
98.7%
====
COUNTRY ALLOCATION*
Brazil......... 23.8%
United Kingdom. 6.5
Israel......... 6.5
Finland........ 6.5
Taiwan......... 6.4
Thailand....... 5.3
Germany........ 4.4
United States.. 4.3
Canada......... 3.9
Japan.......... 3.7
Singapore...... 3.4
Greece......... 2.7
Norway......... 2.4
South Korea.... 2.3
Belgium........ 2.2
France......... 2.1
Denmark........ 2.0
Italy.......... 2.0
Mexico......... 1.9
Chile.......... 1.8
Austria........ 1.7
Colombia....... 1.7
Cayman Islands. 1.2
----
98.7%
====
--------
*Calculated as a percentage of net assets
12
SUNAMERICA INTERNATIONAL DIVIDEND STRATEGY FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (UNAUDITED)
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
-------------------------------------------------------------------
COMMON STOCKS -- 89.9%
AUSTRIA -- 1.7%
OMV AG(1)................................... 56,220 $ 2,553,285
-----------
BELGIUM -- 2.2%
Belgacom SA(1).............................. 102,508 3,217,104
-----------
BERMUDA -- 0.0%
Peace Mark Holdings, Ltd.+(2)(3)............ 800,000 0
-----------
BRAZIL -- 17.3%
AMBEV SA.................................... 357,500 2,670,615
Cia de Saneamento Basico do Estado de Sao
Paulo...................................... 281,400 2,616,809
Cia de Saneamento de Minas Gerais-COPASA.... 176,900 2,832,427
EcoRodovias Infraestrutura e Logistica SA... 393,300 2,357,373
EDP - Energias do Brasil SA................. 500,100 2,270,176
Natura Cosmeticos SA........................ 123,054 2,067,351
Odontoprev SA............................... 615,900 2,448,399
Porto Seguro SA............................. 216,000 3,031,997
Tractebel Energia SA........................ 166,100 2,569,462
Transmissora Alianca de Energia.............
Eletrica SA+................................ 281,800 2,390,767
-----------
25,255,376
-----------
CANADA -- 3.9%
Bell Aliant, Inc............................ 109,719 2,683,674
Canadian Oil Sands, Ltd..................... 144,052 3,021,769
-----------
5,705,443
-----------
CAYMAN ISLANDS -- 1.2%
TPK Holding Co., Ltd.(1).................... 294,000 1,739,158
-----------
CHILE -- 1.8%
Enersis SA.................................. 8,544,953 2,669,251
-----------
COLOMBIA -- 1.7%
Ecopetrol SA................................ 1,200,800 2,454,042
-----------
DENMARK -- 2.0%
TDC A/S(1).................................. 324,167 2,996,110
-----------
FINLAND -- 6.5%
Elisa Oyj(1)................................ 114,258 3,290,218
Metso Oyj(1)................................ 88,815 2,902,801
Orion Oyj, Class B(1)....................... 108,817 3,287,666
-----------
9,480,685
-----------
FRANCE -- 2.1%
Total SA(1)................................. 47,405 3,113,557
-----------
GERMANY -- 4.4%
K+S AG(1)................................... 109,225 3,587,631
ProSiebenSat.1 Media AG(1).................. 62,947 2,886,828
-----------
6,474,459
-----------
GREECE -- 2.7%
OPAP SA(1).................................. 241,832 3,896,975
-----------
ISRAEL -- 6.5%
Bezeq The Israeli Telecommunication Corp.,
Ltd.(1).................................... 1,517,126 2,701,593
Israel Chemicals, Ltd.(1)................... 331,935 2,901,580
Teva Pharmaceutical Industries, Ltd.(1)..... 73,573 3,879,776
-----------
9,482,949
-----------
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
--------------------------------------------------------------------
ITALY -- 2.0%
Eni SpA(1)................................. 118,106 $ 2,965,953
------------
JAPAN -- 3.7%
NTT DOCOMO, Inc.(1)........................ 173,925 2,739,244
TonenGeneral Sekiyu KK(1).................. 300,408 2,648,121
------------
5,387,365
------------
MEXICO -- 1.9%
Grupo Mexico SAB de CV, Class B............ 891,300 2,812,727
------------
NORWAY -- 2.4%
Statoil ASA(1)............................. 123,108 3,477,178
------------
SINGAPORE -- 3.4%
Hutchison Port Holdings Trust(1)........... 3,518,000 2,289,912
Yangzijiang Shipbuilding Holdings, Ltd.(1). 3,041,000 2,615,594
------------
4,905,506
------------
SOUTH KOREA -- 2.3%
Dongbu Insurance Co., Ltd.(1).............. 64,160 3,334,112
------------
TAIWAN -- 6.4%
Asustek Computer, Inc.(1).................. 354,000 3,498,460
Chicony Electronics Co., Ltd.(1)........... 1,094,000 2,839,487
Radiant Opto-Electronics Corp.(1).......... 766,000 3,096,402
------------
9,434,349
------------
THAILAND -- 5.3%
Banpu PCL.................................. 3,144,238 2,713,892
PTT Global Chemical PCL.................... 1,181,500 2,631,423
Thai Oil PCL............................... 1,467,100 2,396,927
------------
7,742,242
------------
UNITED KINGDOM -- 6.5%
AstraZeneca PLC(1)......................... 53,382 3,458,782
BP PLC(1).................................. 393,986 3,155,167
GlaxoSmithKline PLC(1)..................... 110,131 2,933,851
------------
9,547,800
------------
UNITED STATES -- 2.0%
Southern Copper Corp....................... 101,886 2,965,901
------------
TOTAL COMMON STOCKS
(cost $124,116,872)....................... 131,611,527
------------
PREFERRED SECURITIES -- 6.5%
BRAZIL -- 6.5%
AES Tiete SA............................... 284,102 2,258,793
Cia Energetica de Minas Gerais............. 330,471 2,221,106
Cia Paranaense de Energia, Class B......... 196,606 2,582,999
Vale SA.................................... 191,300 2,390,196
------------
TOTAL PREFERRED SECURITIES
(cost $10,593,068)........................ 9,453,094
------------
EXCHANGE-TRADED FUNDS -- 1.0%
iShares MSCI ACWI ex US Index Fund
(cost $1,402,749)......................... 30,421 1,416,706
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $136,112,689)....................... 142,481,327
------------
13
SUNAMERICA INTERNATIONAL DIVIDEND STRATEGY FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (UNAUDITED) (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
----------------------------------------------------------
REPURCHASE AGREEMENT -- 1.3%
State Street Bank & Trust Co.
Joint Repurchase Agreement(4)
(cost $1,928,000).............. $1,928,000 $ 1,928,000
------------
TOTAL INVESTMENTS --
(cost $138,040,689)(5)......... 98.7% 144,409,327
Other assets less liabilities..... 1.3 1,912,784
---------- ------------
NET ASSETS -- 100.0% $146,322,111
========== ============
--------
+ Non-income producing security
(1)Security was valued using fair value procedures at March 31, 2014. The
aggregate value of these securities was $39,873,783 representing 27.3% 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 March 31, 2014, 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 5 for cost of investments on a tax basis.
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2014 (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........................... 25,255,376 -- -- 25,255,376
Canada........................... 5,705,443 -- -- 5,705,443
Chile............................ 2,669,251 -- -- 2,669,251
Colombia......................... 2,454,042 -- -- 2,454,042
Finland.......................... -- 9,480,685 -- 9,480,685
Israel........................... -- 9,482,949 -- 9,482,949
Mexico........................... 2,812,727 -- -- 2,812,727
Taiwan........................... -- 9,434,349 -- 9,434,349
Thailand......................... 7,742,242 -- -- 7,742,242
United Kingdom................... -- 9,547,800 -- 9,547,800
United States.................... 2,965,901 -- -- 2,965,901
Other Countries*................. 44,060,762 -- -- 44,060,762
Preferred Securities:
Brazil........................... 9,453,094 -- -- 9,453,094
Exchange Traded Funds 1,416,706 -- -- 1,416,706
Repurchase Agreement................ -- 1,928,000 -- 1,928,000
------------ ----------- --- ------------
Total............................... $104,535,544 $39,873,783 $ 0 $144,409,327
============ =========== === ============
--------
* 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. There were no 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
14
SUNAMERICA JAPAN FUND
PORTFOLIO PROFILE -- MARCH 31, 2014 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Auto/Truck Parts & Equipment-Original.. 11.2%
Telephone-Integrated................... 6.0
Auto-Cars/Light Trucks................. 5.4
Electronic Components-Misc............. 5.2
Insurance-Life/Health.................. 4.9
Television............................. 4.4
Computers-Integrated Systems........... 4.4
Diversified Banking Institutions....... 3.9
Oil Refining & Marketing............... 3.5
Repurchase Agreements.................. 3.3
Tobacco................................ 3.0
Real Estate Management/Services........ 3.0
Machinery-General Industrial........... 2.7
Banks-Commercial....................... 2.4
Chemicals-Specialty.................... 2.3
Retail-Consumer Electronics............ 2.2
Steel-Specialty........................ 2.1
E-Commerce/Products.................... 2.0
Retail-Drug Store...................... 1.9
Building-Residential/Commercial........ 1.7
Medical-Drugs.......................... 1.7
Hospital Beds/Equipment................ 1.6
Brewery................................ 1.6
Oil Companies-Exploration & Production. 1.6
Finance-Leasing Companies.............. 1.6
Fisheries.............................. 1.5
Machinery-Construction & Mining........ 1.4
Computer Services...................... 1.3
Insurance-Property/Casualty............ 1.3
Medical Instruments.................... 1.2
Transport-Marine....................... 1.2
Photo Equipment & Supplies............. 1.1
Travel Services........................ 1.1
Steel-Producers........................ 1.0
Retail-Apparel/Shoe.................... 1.0
Retail-Misc./Diversified............... 0.9
Petrochemicals......................... 0.9
Cosmetics & Toiletries................. 0.8
Machinery-Electrical................... 0.5
Finance-Credit Card.................... 0.5
Medical-Wholesale Drug Distribution.... 0.4
----
99.7%
====
COUNTRY ALLOCATION*
Japan......... 96.4%
United States. 3.3
----
99.7%
====
--------
*Calculated as a percentage of net assets
15
SUNAMERICA JAPAN FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (UNAUDITED)
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
------------------------------------------------------------------
COMMON STOCKS -- 96.4%
AUTO-CARS/LIGHT TRUCKS -- 5.4%
Daihatsu Motor Co., Ltd.(1).................. 11,020 $ 194,394
Isuzu Motors, Ltd.(1)........................ 135,000 781,341
Nissan Motor Co., Ltd.(1).................... 80,200 713,772
----------
1,689,507
----------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 11.2%
Aisin Seiki Co., Ltd.(1)..................... 6,820 245,644
Exedy Corp.(1)............................... 5,400 151,510
Keihin Corp.(1).............................. 31,500 461,015
Stanley Electric Co., Ltd.(1)................ 9,580 212,140
Sumitomo Electric Industries, Ltd.(1)........ 32,140 477,496
TACHI-S Co., Ltd.(1)......................... 60,580 996,737
Toyota Industries Corp.(1)................... 19,880 953,312
----------
3,497,854
----------
BANKS-COMMERCIAL -- 2.4%
Sumitomo Mitsui Financial Group, Inc.(1)..... 17,880 762,162
----------
BREWERY -- 1.6%
Asahi Group Holdings, Ltd.(1)................ 18,100 507,750
----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 1.7%
Daiwa House Industry Co., Ltd.(1)............ 32,000 541,754
----------
CHEMICALS-SPECIALTY -- 2.3%
Tokyo Ohka Kogyo Co., Ltd.(1)................ 32,010 708,898
----------
COMPUTER SERVICES -- 1.3%
SCSK Corp.(1)................................ 15,600 419,559
----------
COMPUTERS-INTEGRATED SYSTEMS -- 4.4%
ITOCHU Techno-Solutions Corp.(1)............. 10,180 430,115
Net One Systems Co., Ltd.(1)................. 38,000 258,539
OBIC Co., Ltd.(1)............................ 14,400 453,900
Otsuka Corp.(1).............................. 1,650 215,352
----------
1,357,906
----------
COSMETICS & TOILETRIES -- 0.8%
Pola Orbis Holdings, Inc.(1)................. 6,470 257,985
----------
DIVERSIFIED BANKING INSTITUTIONS -- 3.9%
Mitsubishi UFJ Financial Group, Inc.(1) ..... 223,820 1,227,803
----------
E-COMMERCE/PRODUCTS -- 2.0%
Rakuten, Inc.(1)............................. 47,410 631,391
----------
ELECTRONIC COMPONENTS-MISC. -- 5.2%
Anritsu Corp.(1)............................. 40,400 463,061
Futaba Corp./Chiba(1)........................ 9,000 154,940
Inaba Denki Sangyo Co., Ltd.(1).............. 4,740 152,207
Kyocera Corp.(1)............................. 9,300 418,665
Toshiba Corp.(1)............................. 101,000 426,900
----------
1,615,773
----------
FINANCE-CREDIT CARD -- 0.5%
Credit Saison Co., Ltd.(1)................... 7,500 148,950
----------
FINANCE-LEASING COMPANIES -- 1.6%
IBJ Leasing Co., Ltd.(1)..................... 19,600 493,191
----------
FISHERIES -- 1.5%
Toyo Suisan Kaisha, Ltd.(1).................. 13,950 465,027
----------
HOSPITAL BEDS/EQUIPMENT -- 1.6%
Paramount Bed Holdings Co., Ltd.(1).......... 16,300 512,129
----------
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
-----------------------------------------------------------------
INSURANCE-LIFE/HEALTH -- 4.9%
Sony Financial Holdings, Inc.(1)............. 47,980 784,661
T&D Holdings, Inc.(1)........................ 61,980 735,611
---------
1,520,272
---------
INSURANCE-PROPERTY/CASUALTY -- 1.3%
Tokio Marine Holdings, Inc.(1)............... 13,800 413,728
---------
MACHINERY-CONSTRUCTION & MINING -- 1.4%
Komatsu, Ltd.(1)............................. 20,700 428,085
---------
MACHINERY-ELECTRICAL -- 0.5%
Mitsubishi Electric Corp.(1)................. 13,430 150,794
---------
MACHINERY-GENERAL INDUSTRIAL -- 2.7%
Makino Milling Machine Co., Ltd.(1).......... 89,460 628,922
Okuma Corp.(1)............................... 27,500 221,547
---------
850,469
---------
MEDICAL INSTRUMENTS -- 1.2%
Nihon Kohden Corp.(1)........................ 9,430 375,403
---------
MEDICAL-DRUGS -- 1.7%
Shionogi & Co., Ltd.(1)...................... 28,500 527,233
---------
MEDICAL-WHOLESALE DRUG DISTRIBUTION -- 0.4%
Suzuken Co., Ltd.(1)......................... 2,880 111,301
---------
MISCELLANEOUS MANUFACTURING -- 0.0%
Peace Mark Holdings, Ltd.+(2)(3)............. 8,000 0
---------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 1.6%
Inpex Corp.(1)............................... 38,600 499,909
---------
OIL REFINING & MARKETING -- 3.5%
JX Holdings, Inc.(1)......................... 227,600 1,094,194
---------
PETROCHEMICALS -- 0.9%
Mitsui Chemicals, Inc.(1).................... 118,000 288,941
---------
PHOTO EQUIPMENT & SUPPLIES -- 1.1%
FUJIFILM Holdings Corp.(1)................... 12,820 343,602
---------
REAL ESTATE MANAGEMENT/SERVICES -- 3.0%
Mitsubishi Estate Co., Ltd.(1)............... 39,430 938,354
---------
RETAIL-APPAREL/SHOE -- 1.0%
Chiyoda Co., Ltd.(1)......................... 14,300 309,460
---------
RETAIL-CONSUMER ELECTRONICS -- 2.2%
K's Holdings Corp.(1)........................ 24,590 683,018
---------
RETAIL-DRUG STORE -- 1.9%
Tsuruha Holdings, Inc.(1).................... 6,100 599,492
---------
RETAIL-MISC./DIVERSIFIED -- 0.9%
Ryohin Keikaku Co., Ltd.(1).................. 3,025 290,981
---------
STEEL-PRODUCERS -- 1.0%
Yamato Kogyo Co., Ltd.(1).................... 10,100 315,933
---------
STEEL-SPECIALTY -- 2.1%
Hitachi Metals, Ltd.(1)...................... 45,100 640,438
---------
TELEPHONE-INTEGRATED -- 6.0%
KDDI Corp.(1)................................ 13,000 756,508
Nippon Telegraph & Telephone Corp.(1)........ 20,570 1,118,077
---------
1,874,585
---------
16
SUNAMERICA JAPAN FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (UNAUDITED) (CONTINUED)
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
--------------------------------------------------------
COMMON STOCKS (CONTINUED)
TELEVISION -- 4.4%
Nippon Television Holdings, Inc.(1). 27,750 452,455
TV Asahi Corp.(1)................... 50,160 907,539
----------
1,359,994
----------
TOBACCO -- 3.0%
Japan Tobacco, Inc.(1).............. 30,180 946,333
----------
TRANSPORT-MARINE -- 1.2%
Mitsui OSK Lines, Ltd.(1)........... 94,000 365,683
----------
TRAVEL SERVICES -- 1.1%
HIS Co., Ltd.(1).................... 6,000 341,312
----------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $30,142,841)................. 30,107,153
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 3.3%
Agreement with State Street Bank & Trust
bearing interest at 0.00%, dated 03/31/2014,
to be repurchased 04/01/2014 in the amount
of $1,018,000 collateralized by $1,140,000 of
Federal Home Loan Mtg. Assoc. Notes,
bearing interest at 2.00% due 01/30/2023
and having an approximate value of
$1,040,105 (cost $1,018,000)................... $1,018,000 $ 1,018,000
-----------
TOTAL INVESTMENTS
(cost $31,160,841)(4).......................... 99.7% 31,125,153
Other assets less liabilities..................... 0.3 90,902
---------- -----------
NET ASSETS 100.0% $31,216,055
========== ===========
--------
+ Non-income producing security
(1)Security was valued using fair value procedures at March 31, 2014. The
aggregate value of these securities was $30,107,153 representing 96.4% 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)Illiquid security. At March 31, 2014, the aggregate value of these
securities was $0 representing 0.0% of net assets.
(3)Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs; see Note 2.
(4)See Note 5 for cost of investments on a tax basis. See Notes to Financial
Statements
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2014 (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................. $-- $ 1,689,507 $-- $ 1,689,507
Auto/Truck Parts & Equipment-Original.. -- 3,497,854 -- 3,497,854
Electronic Components-Misc............. -- 1,615,773 -- 1,615,773
Miscellaneous Manufacturing............ -- -- 0 0
Telephone-Integrated................... -- 1,874,585 -- 1,874,585
Other Industries*...................... -- 21,429,434 -- 21,429,434
Repurchase Agreement...................... -- 1,018,000 -- 1,018,000
--- ----------- --- -----------
Total..................................... $-- $31,125,153 $ 0 $31,125,153
=== =========== === ===========
--------
* 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.
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
17
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (UNAUDITED)
Note 1. Organization
SunAmerica Equity Funds is registered under the Investment Company Act of
1940, as amended (the "1940 Act") as an open-end management investment
company and was organized as a Massachusetts business trust (the "Trust" or
"Equity Funds") on June 16, 1986. It currently consists of two 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, LLC. (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"), or SunAmerica Japan Fund ("Japan
Fund"). On October 28, 2013 the SunAmerica Value Fund was reorganized into
SunAmerica Focused Alpha Large Cap Fund, a series of SunAmerica Specialty
Series. 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.
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.
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.
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.
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
18
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (UNAUDITED)
(CONTINUED)
(collectively, the "Disinterested Trustees"), the Trust provides the
Disinterested Trustees with a limited indemnification against liabilities
arising out of the performance of their duties to the Trust, whether such
liabilities are asserted during or after their service as trustees. In
addition, in the normal course of business the Trust enters into contracts
that contain the obligation to indemnify others. The Trust's maximum
exposure under these arrangements is unknown. Currently, however, the Trust
expects the risk of loss to be remote.
Note 2. Significant Accounting Policies
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates and
those differences could be significant. The following is a summary of
significant accounting policies consistently followed by the Trust in the
preparation of its financial statements:
SECURITY VALUATION: In accordance with the authoritative guidance on fair
value measurements and disclosures under accounting principles generally
accepted in the United States of America ("GAAP"), the Funds disclose the
fair value of 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 are not necessarily an indication of the risk associated
with investing in those investments and the determination of the
significance of a particular input to the fair value measurement in its
entirety requires judgment and consideration of factors specific to each
security.
The availability of observable inputs can vary from security to security and
is affected by a wide variety of factors, including, for example, the type
of security, whether the security is recently issued and not yet established
in the marketplace, the liquidity of markets, and other characteristics
particular to the security. To the extent that valuation is based on models
or inputs that are less 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 March 31,
2014 are reported on a schedule following the Portfolio of Investments.
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
19
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (UNAUDITED)
(CONTINUED)
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 evaluated bid
prices obtained for the day of valuation from a board-approved pricing
service, 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 price is unavailable from a
board-approved pricing service, the securities may be priced at the mean of
two independent quotes obtained from brokers.
Short-term securities with 60 days or less to maturity are amortized to
maturity based on their cost to the Fund if acquired within 60 days of
maturity or, if already held by the Fund on the 60th day, are amortized to
maturity based on the value determined on the 61st day, and are generally
categorized as Level 2.
Investments in registered investment companies that do not trade on an
exchange are valued at the end of day net asset value per share. Investments
in registered investment companies that trade on an exchange are valued at
the last sales price or official closing price as of the close of the
customary trading session on the exchange where the security is principally
traded. Registered investment companies are generally categorized as Level 1.
Other securities are valued on the basis of last sale or bid price (if a
last sale price is not available) which is, in the opinion of the Adviser,
the broadest and most representative market, that may be either a securities
exchange or over-the-counter market and are generally categorized as Level 1
or Level 2.
The Board is responsible for the share valuation process and has adopted a
policy and procedures (the "PRC Procedures") for valuing the securities and
other assets held by the Funds, including procedures for the fair valuation
of securities and other assets 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.
MASTER AGREEMENTS: The Funds have entered into Master Repurchase Agreements
("Master Agreements") with certain counterparties that govern repurchase
agreement transactions. The Master Agreements may contain provisions
regarding, among other things, the parties' general obligations,
representations, agreements, collateral requirements and events of default.
Collateral can be in the form of cash or securities as agreed to by the
Funds and applicable counterparty. The Master Agreements typically specify
certain standard termination events, such as failure of a party to pay or
deliver, credit support defaults and other
20
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (UNAUDITED)
(CONTINUED)
events of default. Upon the occurrence of an event of default, the other
party may elect to terminate early and cause settlement of all repurchase
agreement transactions outstanding pursuant to a particular Master
Agreement, including the payment of any losses and costs resulting from such
early termination, as reasonably determined by the terminating party. Any
decision by one or more of the Funds' counterparties to elect early
termination could cause the Funds to accelerate the payment of liabilities.
Typically, the Master Agreement will permit a single net payment in the
event of default. Note, however, that bankruptcy or insolvency laws of a
particular jurisdiction may impose restrictions on or prohibitions against
the right of offset in bankruptcy, insolvency or other events. As of
March 31, 2014, the repurchase agreements held by the Funds are subject to
master netting agreements. See the Portfolio of Investments and Notes to the
Financial Statements for more information about a Portfolio's holdings in
repurchase agreements.
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 March 31, 2014, the following Fund held an undivided interest in the
joint repurchase agreement with State Street Bank & Trust Co.:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- ----------
International Dividend Strategy. 0.98% $1,928,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
State Street Bank & Trust Co., dated March 31, 2014, bearing interest at a
rate of 0.00% per annum, with a principal amount of $196,232,000, a
repurchase price of $196,232,000, and a maturity date of April 1, 2014. The
repurchase agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- ---------- ------------ ------------
U.S. Treasury Bills. 0.11% 03/05/2015 $ 50,000,000 $ 49,950,000
U.S. Treasury Notes. 0.75 06/15/2014 10,000,000 10,037,500
U.S. Treasury Notes. 0.75 12/31/2017 3,175,000 3,115,469
U.S. Treasury Notes. 2.00 02/28/2021 139,790,000 137,055,008
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.
21
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (UNAUDITED)
(CONTINUED)
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.
Dividends from net investment income, if any, are normally paid quarterly
for the International Dividend Strategy Fund. The Japan Fund pays annually.
Capital gain distributions, if any, are paid annually. Each of the Funds
reserves the right to declare and pay dividends less frequently than
disclosed above, provided that the net realized capital gains and net
investment income, if any, are paid at least annually. The Funds record
dividends and distributions to their shareholders on the ex-dividend date.
The amount of dividends and distributions from net investment income and net
realized capital gains are determined and presented in accordance with
federal income tax regulations, which may differ from U.S. generally
accepted accounting principles. These "book/tax" differences are either
considered temporary or permanent in nature. To the extent these differences
are permanent in nature, such amounts are reclassified within the capital
accounts at fiscal year end based on their federal tax-basis treatment;
temporary differences do not require reclassification. Net assets are not
affected by these reclassifications.
Each Fund is considered a separate entity for tax purposes and intends to
comply with the requirements of the Internal Revenue Code, as amended,
applicable to regulated investment companies and distribute all of its
taxable income, including any net capital gains on investments, to its
shareholders. Each Fund also intends to distribute sufficient net investment
income and net capital gains, if any, so that each Fund will not be subject
to excise tax on undistributed income and gains. Therefore, no federal
income tax or excise tax provision is required.
Each Fund recognizes the tax benefits of uncertain tax positions only when
the position is more likely than not to be sustained, assuming examination
by tax authorities. Management has analyzed each Fund's tax positions and
concluded that no liability for unrecognized tax benefits should be recorded
related to uncertain tax positions taken on returns filed for open tax years
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 period.
Realized foreign exchange gains and losses on other assets and liabilities
and change in unrealized foreign exchange gains and losses on other assets
and liabilities 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.
22
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (UNAUDITED)
(CONTINUED)
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. All required changes to accounting policies
have been made in accordance with ASU No. 2011-11 and 2013-01.
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%
Japan Fund............................ 1.15
For the six months ended March 31, 2014, 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. Effective
June 1, 2014, this voluntary fee waiver will be discontinued.
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 principles, such as litigation, or
acquired fund fees and expenses, brokerage commissions and other
transactional expenses relating to the purchase and sale of portfolio
securities, interest, taxes, governmental fees and other expenses not
incurred in the ordinary course of the Funds' business. 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
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 six months ended March 31, 2014, the amount of the
advisory fees waived were $23,391. These amounts are reflected in the
Statement of Operations. Effective January 31, 2014, this Fee Waiver
Agreement terminated pursuant to its terms.
23
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (UNAUDITED)
(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 six months ended March 31, 2014, pursuant to the contractual expense
limitations referred to above, SunAmerica has waived or reimbursed expenses
as follows:
OTHER EXPENSES
FUND REIMBURSED
---- --------------
Japan Fund. $5,548
FUND AMOUNT
---- -------
International Dividend Strategy Fund Class B. $ 5,955
International Dividend Strategy Fund Class C. 453
Japan Fund Class A........................... 33,517
Japan Fund Class B........................... 7,626
Japan Fund Class C........................... 9,629
For the six months ended March 31, 2014, the amounts recouped by SunAmerica
are as follows:
FUND AMOUNT
---- -------
International Dividend Strategy Fund Class A. $49,485
International Dividend Strategy Fund Class C. 7,907
International Dividend Strategy Fund Class I. 594
Japan Fund Class A........................... 2,822
At March 31, 2014, expenses previously waived and/or reimbursed by
SunAmerica that remain subject to recoupment and expire during the time
periods indicated are as follows:
OTHER EXPENSES REIMBURSED
-------------------------------------
SEPTEMBER 30, SEPTEMBER 30, MARCH 31,
FUND 2014 2015 2016
---- ------------- ------------- ---------
International Dividend Strategy Fund. $119,517 $ -- $ --
Japan Fund........................... 52,547 58,268 5,548
CLASS SPECIFIC EXPENSES REIMBURSED
-------------------------------------
SEPTEMBER 30, SEPTEMBER 30, MARCH 31,
FUND 2014 2015 2016
---- ------------- ------------- ---------
International Dividend Strategy Fund Class A. $ -- $52,143 $ --
International Dividend Strategy Fund Class B. 6,452 19,805 5,955
International Dividend Strategy Fund Class C. 8,021 28,315 453
International Dividend Strategy Fund Class I. -- 30 --
Japan Fund Class A........................... 9,499 62,143 33,517
Japan Fund Class B........................... 8,433 12,355 7,626
Japan Fund Class C........................... 8,463 14,362 9,629
The Trust, on behalf of each Fund, has entered into a Distribution Agreement
with AIG Capital Services, Inc.* ("ACS" 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 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
--------
*Effective February 28, 2014, SunAmerica Capital Services, Inc. changed its
name to AIG Capital Services, Inc.
24
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (UNAUDITED)
(CONTINUED)
Fund shares, commissions and other expenses such as those incurred for sales
literature, prospectus printing and distribution and compensation to
wholesalers. It is possible that in any given year the amount paid to the
Distributor under each Class' Plan may exceed the Distributor's distribution
costs as described above. The Plans provide that the Class A, Class B and
Class C shares of each Fund will pay the Distributor an account maintenance
fee up to an annual rate of 0.25% of the aggregate average daily net assets
of such class of shares for payments to compensate the Distributor and
certain securities firms for account maintenance activities. Accordingly,
for the six months ended March 31, 2014, ACS received fees (see Statement of
Operations) based upon the aforementioned rates.
In addition, ACS is paid a fee of 0.25% of average daily net assets of Class
I shares in connection with providing administrative and shareholder
services to Class I shareholders. For the six months ended March 31, 2014,
ACS earned fees (see Statement of Operations) based upon the aforementioned
rates.
ACS receives sales charges on each Fund's Class A shares, portions of which
are reallocated to affiliated broker-dealers and non-affiliated
broker-dealers. ACS 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. ACS has advised the Funds that
for the six months ended March 31, 2014, the proceeds received from sales
(and paid out to affiliated and non-affiliated broker-dealers) and
redemptions are as follows:
CLASS A CLASS B CLASS C
--------------------------------------------- ---------- ----------
CONTINGENT CONTINGENT CONTINGENT
AFFILIATED DEFERRED DEFERRED DEFERRED
SALES BROKER- NON-AFFILIATED SALES SALES SALES
FUND CHARGES DEALERS BROKER-DEALERS CHARGES CHARGES CHARGES
---- -------- ---------- -------------- ---------- ---------- ----------
International Dividend Strategy Fund. $166,486 $21,338 $119,689 $7,026 $3,223 $3,010
Japan Fund........................... 118,316 3,365 95,535 3,143 25 1,556
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 six months ended March 31, 2014, the Funds incurred the
following expenses which are included in transfer agent fees payable in the
Statement of Asset and Liabilities and in transfer agent fees and expenses
in the Statement of Operations to compensate SAFS pursuant to the terms of
the Service Agreement.
EXPENSE PAYABLE AT MARCH 31, 2014
-------------------------------- -------------------------------
FUND CLASS A CLASS B CLASS C CLASS I CLASS A CLASS B CLASS C CLASS I
---- -------- ------- ------- ------- ------- ------- ------- -------
International Dividend Strategy Fund. $115,330 $6,950 $29,517 $926 $19,940 $1,107 $5,159 $84
Japan Fund........................... 29,600 318 2,878 -- 5,039 65 557 --
At March 31, 2014, 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 16% and 14%,
respectively of the SunAmerica International Dividend Strategy Fund; Focused
Multi-Asset Strategy Portfolio and Focused Balanced Strategy Portfolio owned
60% and 13%, respectively of the Japan Fund.
Note 4. Purchases and Sales of Securities
The cost of purchases and proceeds from sales and maturities of long-term
investments during the six months ended March 31, 2014 were as follows:
INTERNATIONAL
DIVIDEND
STRATEGY
FUND JAPAN FUND
------------- -----------
Purchases (excluding U.S. government securities)... $99,593,372 $18,714,230
Sales (excluding U.S. government securities)....... 81,713,663 15,399,328
Purchase of U.S. government securities............. -- --
Sales and maturities of U.S. government securities. -- --
25
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (UNAUDITED)
(CONTINUED)
Note 5. 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, and derivative transactions.
FOR THE YEAR ENDED SEPTEMBER 30, 2013
--------------------------------------------------------------
DISTRIBUTABLE EARNINGS TAX DISTRIBUTIONS
------------------------------------------- ------------------
LONG-
LONG-TERM GAINS/ UNREALIZED TERM
ORDINARY CAPITAL LOSS APPRECIATION ORDINARY CAPITAL
INCOME CARRYOVER (DEPRECIATION)* INCOME GAINS
---------- ---------------- --------------- ---------- -------
International Dividend Strategy Fund. $ 288,634 $(101,082,212) $4,316,481 $4,117,355 $--
Japan Fund........................... 1,744,627 774,030 1,723,467 480,821 --
--------
* Unrealized appreciation (depreciation) includes amounts for other assets and
liabilities denominated in foreign currency.
The amounts of aggregate unrealized gain (loss) and the cost of investment
securities for federal income tax purposes, including short-term securities
and repurchase agreements, were as follows at March 31, 2014:
INTERNATIONAL
DIVIDEND JAPAN
STRATEGY FUND FUND
------------- -----------
Cost (tax basis)........................... $138,113,806 $31,293,749
============ ===========
Appreciation............................... 13,656,655 1,170,876
Depreciation............................... (7,361,134) (1,339,472)
------------ -----------
Net unrealized appreciation (depreciation). $ 6,295,521 (168,596)
============ ===========
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
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 Funds will be permitted to carry forward
capital losses incurred in taxable years beginning after the date of
enactment for an unlimited period. However, any losses incurred during those
future taxable years will be required to be utilized prior to the losses
incurred in pre-enactment taxable years, which carry an expiration date. As
a result of this ordering rule, pre-enactment capital loss carryforwards may
be more likely to expire unused. Additionally, post-enactment capital losses
that are carried forward will retain their character as either short-term or
long-term losses rather than being considered all short-term as under
previous law.
* The capital loss carryforwards include realized capital losses from the
acquisition of other funds. Certain losses may be subject to annual
limitations imposed by the Internal Revenue Code. Therefore, it is possible
that not all of the capital losses will be available for use. As of
September 30, 2013, based on current tax law, the International Dividend
Strategy Fund has $0 of capital losses that will not be available for use.
26
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (UNAUDITED)
(CONTINUED)
Note 6. 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
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
MARCH 31, 2014 YEAR ENDED MARCH 31, 2014 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2013 (UNAUDITED) SEPTEMBER 30, 2013
------------------------ ------------------------ --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Shares sold(1)(2)........ 3,040,401 $ 34,472,091 5,798,641 $ 64,710,792 261,527 $ 2,795,598 235,651 $ 2,417,773
Reinvested dividends..... 72,894 820,056 255,296 2,731,325 3,690 38,048 16,359 161,707
Shares redeemed(1)(2)(3). (2,119,604) (23,946,642) (2,342,145) (25,651,140) (262,452) (2,734,022) (138,911) (1,403,186)
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Net increase (decrease).. 993,691 $ 11,345,505 3,711,792 $ 41,790,977 2,765 $ 99,624 113,099 $ 1,176,294
========== ============ ========== ============ ======== =========== ======== ===========
INTERNATIONAL DIVIDEND STRATEGY FUND
------------------------------------------------------------------------------------------------
CLASS C CLASS I
-------------------------------------------------- --------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
MARCH 31, 2014 YEAR ENDED MARCH 31, 2014 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2013 (UNAUDITED) SEPTEMBER 30, 2013
------------------------ ------------------------ --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Shares sold.............. 667,284 $ 6,981,396 1,498,326 $ 15,393,857 -- $ -- -- $ --
Reinvested dividends..... 18,329 188,609 63,771 627,446 934 10,596 4,748 51,338
Shares redeemed(3)....... (341,109) (3,529,130) (444,666) (4,419,530) (65,097) (736,013) (19,146) (212,997)
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Net increase (decrease).. 344,504 $ 3,640,875 1,117,431 $ 11,601,773 (64,163) $ (725,417) (14,398) $ (161,659)
========== ============ ========== ============ ======== =========== ======== ===========
--------
(1)For the six months ended March 31, 2014, includes automatic conversion of
23,455 shares of Class B shares in the amount of $244,267 to 21,487 shares
of Class A shares in the amount of $244,267.
(2)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.
(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.
27
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (UNAUDITED)
(CONTINUED)
JAPAN FUND JAPAN FUND
---------------------------------------------- ------------------------------------
CLASS A CLASS B
---------------------------------------------- ------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
MARCH 31, 2014 YEAR ENDED MARCH 31, 2014 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2013 (UNAUDITED) SEPTEMBER 30, 2013
--------------------- ----------------------- ------------------ ----------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- ----------- ---------- ----------- ------- --------- ------ --------
Shares sold(1)(2)........ 951,188 $ 7,409,392 1,031,698 $ 7,749,168 36,487 $ 275,109 5,743 $ 41,942
Reinvested dividends..... 309,873 2,283,764 73,705 468,763 4,679 33,410 496 3,078
Shares redeemed(1)(2)(3). (625,289) (4,753,083) (1,241,592) (8,747,150) (22,205) (160,403) (7,663) (51,206)
-------- ----------- ---------- ----------- ------- --------- ------ --------
Net increase (decrease).. 635,772 $ 4,940,073 (136,189) $ (529,219) 18,961 $ 148,116 (1,424) $ (6,186)
======== =========== ========== =========== ======= ========= ====== ========
JAPAN FUND
----------------------------------------------
CLASS C
----------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
MARCH 31, 2014 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2013
--------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- ---------- -----------
Shares sold.............. 186,581 $ 1,373,521 233,230 $ 1,735,449
Reinvested dividends..... 9,799 69,866 1,039 6,443
Shares redeemed(3)....... (30,657) (224,747) (21,622) (145,195)
-------- ----------- ---------- -----------
Net increase (decrease).. 165,723 $ 1,218,640 212,647 $ 1,596,697
======== =========== ========== ===========
--------
(1)For the six months ended March 31, 2014, includes automatic conversion of
111 shares of Class B shares in the amount of $847 to 108 shares of Class A
shares in the amount of $847.
(2)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.
(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.
28
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (UNAUDITED)
(CONTINUED)
Note 7. Line of Credit
The SAAMCo 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 six months ended March 31, 2014,
the following Funds had borrowings:
AVERAGE WEIGHTED
DAYS INTEREST DEBT AVERAGE
FUND OUTSTANDING CHARGES UTILIZED INTEREST
---- ----------- -------- ---------- --------
International Dividend Strategy Fund. 7 298 $1,144,288 1.34%
Japan Fund........................... 6 173 772,612 1.34
At March 31, 2014, there were no borrowings outstanding.
Note 8. 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 six
months ended March 31, 2014, none of the Funds participated in this program.
Note 9. 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.
29
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (UNAUDITED)
(CONTINUED)
The following amounts for the Retirement Plan Liabilities are included in
the Trustees' fees and expenses payable line on the Statement of Assets and
Liabilities and the amounts for the Retirement Plan Expenses are included in
the Trustees' fees and expenses line on the Statement of Operations.
RETIREMENT PLAN RETIREMENT PLAN RETIREMENT PLAN
LIABILITY EXPENSE PAYMENTS
--------------- --------------- ---------------
FUND AS OF MARCH 31, 2014
---- -----------------------------------------------
International Dividend Strategy Fund. $870 $10 $439
Note 10. 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. When investing internationally, 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. At March 31, 2014, the International
Dividend Strategy Fund had 23.8% of its net assets invested in equity
securities domiciled in Brazil, while the Japan Fund had 96.4% of its net
assets invested in equity securities domiciled Japan.
30
[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
Timothy P. Pettee, Vice State Street Bank and forth details of the
President Trust Company Funds, which must precede
James Nichols, Vice P.O. Box 5607 or accom-pany this report.
President Boston, MA 02110
Katherine Stoner, Vice DELIVERY OF SHAREHOLDER
President and Chief VOTING PROXIES ON TRUST DOCUMENTS
Compliance Officer PORTFOLIO SECURITIES The Funds have adopted a
Gregory N. Bressler, A description of the policy that allows them
Secretary policies and procedures to send only one copy of
Gregory R. Kingston, that the Trust uses to a Fund's prospectus,
Vice President and determine how to vote proxy material, annual
Treasurer proxies relating to report and semi-annual
Kathleen Fuentes, Chief securities held in a report (the "shareholder
Legal Officer and Fund's portfolio which is documents") to
Assistant Secretary available in the Trust's shareholders with
Thomas D. Peeney, 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, LLC 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
AIG Capital Services, June 30 is available, contact Shareholder
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 The accompanying report
Commission for its first has not been audited by
and third fiscal quarters independent accountants
on Form N-Q. The Trust's and accordingly no
Forms N-Q are available opinion has been
on the U.S. Securities expressed thereon.
and Exchange Commission's
website at
http://www.sec.gov. You
can also review and
obtain copies of the
Forms N-Q at the U.S.
Securities and Exchange
Com-mission's Public
Reference Room in
Wash-ington, DC
(information on the
operation of Public
Reference Room may be
obtained by calling
1-800-SEC-0330).
[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 AIG 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
EQSAN - 3/14
[LOGO]
AIG
Sun America
Mutual Funds
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
Included in Item 1 to the Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders
may recommend nominees to the registrant's Board of Trustees that were
implemented after the registrant last provided disclosure in response
to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
299.407) (as required by 22(b)(15)) of Schedule 14A (17 CFR 240.14a-
101), or this Item 10.
Item 11. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures (as defined under Rule 30a-3(c)
under the Investment Company Act of 1940 (17 CFR 270. 30a-3(c))). Based
on that evaluation, the registrant's management, including the
President and Treasurer, concluded that the registrant's disclosure
controls and procedures are effective.
(b) There was no change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act
of 1940 (17 CFR 270.30a-3(d))) that occurred during the registrant's
last fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal contro1 over financial reporting.
Item 12. Exhibits.
(a) (1) Not applicable.
(2) Certifications pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit
99.CERT.
(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b)under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the
Sarbanes-Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Equity Funds
By: /s/ John T. Genoy
------------------
John T. Genoy
President
Date: June 6, 2014
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: June 6, 2014
By: /s/ Gregory R. Kingston
-------------------
Gregory R. Kingston
Treasurer
Date: June 6, 2014