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 5, 185 Hudson Street, Suite 3300 Jersey City, NJ 07311
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
John T. Genoy
Senior Vice President
SunAmerica Asset Management, LLC
Harborside 5,
185 Hudson Street, Suite 3300
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, 2018
-------------------------
Item 1. Reports to Stockholders
SEMI-ANNUAL REPORT 2018
SUNAMERICA
Equity Funds
[PHOTO]
[LOGO]
[LOGO] aig.com/funds-
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 (the "Equity Funds") for the six months ended March 31, 2018.
From a broad perspective, the six months ended March 31, 2018 was a period
wherein global equity markets advanced overall, despite their first quarterly
loss in two years during the first calendar quarter of 2018.
As the semi-annual period began with the fourth quarter of 2017, global
equities posted positive results for the seventh consecutive quarter. Political
concerns dominated headlines globally, while economic data across most major
economies remained largely positive. Oil prices hit a two-year high following
an extended OPEC supply-cut agreement through the end of 2018. U.S. equities
rose for the ninth straight quarter, as low unemployment, robust corporate
earnings and strong consumer and business spending contributed to positive
market sentiment and the strongest quarterly advance for the S&P 500(R)
Index/*/ in four years. U.S. tax reform was a key area of focus, culminating
with a tax reform bill signed into law at the end of December 2017. Elsewhere,
European economies continued on a path of broad improvement, and European
equities ended the fourth calendar quarter with a seventh consecutive quarter
of positive performance. Japanese equities led the rally amongst markets in the
Pacific Basin region, supported by economic activity and business sentiment
that exceeded consensus estimates, even as inflation there remained lackluster.
Producer prices accelerated and consumer confidence in Japan rose to the
highest level since 2013. On the monetary policy front, the European Central
Bank (ECB) announced at its October meeting a reduction in its monthly asset
purchases beginning in January 2018. The U.S. Federal Reserve (the "Fed") began
implementing its balance sheet normalization+ strategy in October 2017 and
raised the targeted federal funds rate by 25 basis points++ in December, citing
labor market strength and a solid rate of economic growth.
During the first quarter of 2018, a sharp correction in global equity markets
and a large spike in volatility were initially triggered by concerns about
robust labor market data and escalating inflation risks in the U.S. and, in
turn, market speculation of a faster pace of interest rate hikes. Renewed
concerns about issues such as increasingly hostile exchanges between North
Korea and the White House as well as fears of a global trade war further
unsettled financial markets. U.S. equities posted their first quarterly loss
since September 2015. Before this decline, optimistic sentiment had been strong
through most of January 2018, as better than expected corporate profits helped
drive the S&P 500(R) Index to its largest monthly gain since March 2016.
European equities declined even more than U.S. equities during the quarter,
with political uncertainty in Germany and Italy and signs of slowing economic
growth weighing on investor sentiment. Japanese equities were the worst
performing market in the Pacific Basin region for the quarter amid a strong yen
and a weakened risk appetite for export-oriented companies. As widely expected,
the ECB kept its interest rates unchanged, reiterating its key policy settings
would likely remain unchanged at least until the end of its asset purchase
program scheduled for September 2018. The Fed increased the targeted federal
funds rate by another 25 basis points in March 2018, noting that the U.S.
economic outlook had strengthened in recent months. Tensions in Asia appeared
to ease toward the end of the quarter after North Korea's leader pledged his
commitment to denuclearization and agreed to meet with U.S. officials. In a
milestone development, the U.K. reached a joint agreement with the European
Union on the legal terms of a Brexit transition deal.
Against this backdrop, international equities, as measured by the MSCI ACWI
ex-U.S. (Net),/**/ posted a return of 3.76% in U.S. dollar terms for the
six-month period ended March 31, 2018. Japanese equities, as measured by the
MSCI Japan Index (Net),/**/ posted even stronger gains, generating a return of
9.39% in U.S. dollar terms for the same period. To compare, U.S. equities, as
measured by the S&P 500(R) Index, returned 5.84%, and emerging market equities,
as measured by the MSCI Emerging Markets Index (Net),/**/ returned 8.96% for
the same six-month period.
2
Amid these conditions, each of the Equity Funds generated positive absolute
returns during the semi-annual period ended March 31, 2018. On the following
pages, you will find financial statements and portfolio information for each of
the Equity Funds.
We thank you for being a part of AIG 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 advisor or get in touch with us directly at 800-858-8850 or via our
website at www.aig.com/funds.
Sincerely,
The SunAmerica Equity Funds Investment Professionals
Timothy Pettee Jun Oh Timothy Campion
Andrew Sheridan Jane Algieri
--------
Past performance is no guarantee of future results.
* The S&P 500(R) Index is Standard & Poor's 500 Composite Stock Price Index, a
widely recognized, unmanaged index of U.S. common stock prices.
**The MSCI ACWI (Morgan Stanley Capital International All Country World Index)
ex-U.S. (Net) is a free float-adjusted market capitalization-weighted index
designed to provide a broad measure of the global equity market performance
of 45 developed and emerging markets throughout the world, 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. The MSCI Emerging Markets
Index (Net) is a free float-adjusted market capitalization index that is
designed to measure equity performance of emerging markets. It consists of 24
emerging market country indices.
Indices are not managed and an investor cannot invest directly in an index.
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.
+ Balance sheet normalization refers to the steps the Fed will take to reverse
quantitative easing and reduce the substantial monetary accommodation it has
provided to the economy since the financial crisis began in 2007.
++A basis point is 1/100/th/ of a percentage point.
3
SunAmerica Equity Funds
EXPENSE EXAMPLE -- March 31, 2018 -- (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, 2017 and held until March 31, 2018.
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, 2018" to estimate the expenses you paid on your account
during this period. For shareholder accounts in classes other than Class I and
Class W, the "Expenses Paid During the Six Months Ended March 31, 2018" column
and the "Annualized Expense Ratio" 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, 2018" 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, 2018" 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 each Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is
not the Fund's actual return. The hypothetical account values and expenses may
not be used to estimate the actual ending account balance or expenses you paid
for the period. You may use this information to compare the ongoing costs of
investing in the Funds and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder
reports of other funds. For shareholder accounts in classes other than Class I
and Class W the "Expenses Paid During the Six Months Ended March 31, 2018"
column and the "Annualized Expense Ratio" 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, 2018" 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, 2018" 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, 2018 -- (unaudited) (continued)
Actual Hypothetical
----------------------------------------- -----------------------------------------
Ending Account
Ending Account Expense Paid Value using Expense Paid
Value Using During the a 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 2017 2018 2018 2017 2018 2018
---- ------------- -------------- ------------ ------------- -------------- ------------
AIG International Dividend Strategy
Fund(2)
Class A........................... $1,000.00 $1,003.13 $ 9.49 $1,000.00 $1,015.46 $ 9.55
Class C........................... $1,000.00 $ 999.86 $12.71 $1,000.00 $1,012.22 $12.79
Class I........................... $1,000.00 $1,003.16 $ 8.99 $1,000.00 $1,015.96 $ 9.05
Class W........................... $1,000.00 $1,004.58 $ 8.50 $1,000.00 $1,016.45 $ 8.55
AIG Japan Fund(2)
Class A........................... $1,000.00 $1,038.39 $ 9.66 $1,000.00 $1,015.46 $ 9.55
Class C........................... $1,000.00 $1,035.77 $12.94 $1,000.00 $1,012.22 $12.79
Class W........................... $1,000.00 $1,039.43 $ 8.64 $1,000.00 $1,016.45 $ 8.55
Annualized
Expense
Fund Ratio(1)
---- ----------
AIG International Dividend Strategy
Fund(2)
Class A........................... 1.90%
Class C........................... 2.55%
Class I........................... 1.80%
Class W........................... 1.70%
AIG Japan Fund(2)
Class A........................... 1.90%
Class C........................... 2.55%
Class W........................... 1.70%
--------
(1)Expenses are equal to each Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 182 days divided by 365
days (to reflect the one-half year period). 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.
(2)During the stated period, the investment advisor either waived a portion of
or all of the fees 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, 2018" 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, 2018" and the annualized
"Expense Ratio" would have been lower.
5
SunAmerica Equity Funds
STATEMENT OF ASSETS AND LIABILITIES -- March 31, 2018 -- (unaudited)
AIG International
Dividend
Strategy Fund AIG Japan Fund
----------------- --------------
ASSETS:
Investments at value (unaffiliated)*................ $ 84,154,537 $28,835,117
Repurchase agreements (cost approximates value)..... 776,000 279,000
Cash................................................ 32,440 792
Foreign cash*....................................... 636,277 145,953
Receivable for:
Fund shares sold................................... 264,782 63,901
Dividends and interest............................. 437,605 265,456
Investments sold................................... -- 237,583
Prepaid expenses and other assets................... 4,768 4,225
Due from investment adviser for expense
reimbursements/fee waivers......................... 5,362 44,052
------------ -----------
Total assets........................................ 86,311,771 29,876,079
------------ -----------
LIABILITIES:
Payable for:
Fund shares redeemed............................... 122,150 25,829
Investment advisory and management fees............ 74,190 29,651
Distribution and service maintenance fees.......... 31,118 12,704
Transfer agent fees and expenses................... 27,871 11,433
Trustees' fees and expenses........................ -- 87
Other accrued expenses............................. 142,111 38,636
------------ -----------
Total liabilities................................... 397,440 118,340
------------ -----------
Net Assets.......................................... $ 85,914,331 $29,757,739
============ ===========
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01 par value...... $ 91,569 $ 36,227
Paid-in capital..................................... 157,024,523 26,713,620
------------ -----------
157,116,092 26,749,847
Accumulated undistributed net investment income
(loss)............................................. (28,842) (142,955)
Accumulated undistributed net realized gain (loss)
on investments, futures contracts, options
contracts, securities sold short, and foreign
exchange transactions.............................. (73,683,303) 2,351,994
Unrealized appreciation (depreciation) on
investments........................................ 2,516,150 796,194
Unrealized foreign exchange gain (loss) on other
assets and liabilities............................. (5,766) 2,659
------------ -----------
Net Assets.......................................... $ 85,914,331 $29,757,739
============ ===========
*Cost
Investments (unaffiliated)......................... $ 81,638,387 $28,038,923
============ ===========
Foreign cash....................................... $ 635,811 $ 145,953
============ ===========
See Notes to Financial Statements
6
SunAmerica Equity Funds
STATEMENT OF ASSETS AND LIABILITIES -- March 31, 2018 -- (unaudited)
(continued)
AIG International
Dividend
Strategy Fund AIG Japan Fund
----------------- --------------
Class A (unlimited shares authorized):
Net assets.......................................... $71,348,483 $22,270,444
Shares of beneficial interest issued and outstanding 7,524,371 2,676,369
Net asset value and redemption price per share...... $ 9.48 $ 8.32
Maximum sales charge (5.75% of offering price)...... $ 0.58 $ 0.51
----------- -----------
Maximum offering price to public.................... $ 10.06 $ 8.83
=========== ===========
Class C (unlimited shares authorized):
Net assets.......................................... $ 8,684,183 $ 6,890,505
Shares of beneficial interest issued and outstanding 1,012,835 874,661
Net asset value, offering and redemption price per
share (excluding any applicable contingent
deferred sales charge)............................. $ 8.57 $ 7.88
=========== ===========
Class I (unlimited shares authorized):
Net assets.......................................... $ 228,783 $ --
Shares of beneficial interest issued and outstanding 23,826 --
Net asset value, offering and redemption price per
share.............................................. $ 9.60 $ --
=========== ===========
Class W+ (unlimited shares authorized):
Net assets.......................................... $ 5,652,882 $ 596,790
Shares of beneficial interest issued and outstanding 595,825 71,636
Net asset value, offering and redemption price per
share.............................................. $ 9.49 $ 8.33
=========== ===========
--------
+ See Note 1
See Notes to Financial Statements
7
SunAmerica Equity Funds
STATEMENT OF OPERATIONS -- For the six months ended March 31, 2018 --
(unaudited)
AIG International
Dividend
Strategy Fund AIG Japan Fund
----------------- --------------
INVESTMENT INCOME:
Dividends (unaffiliated)............................................................. $ 1,478,766 $ 287,485
Interest (unaffiliated).............................................................. 848 690
----------- -----------
Total investment income*............................................................ 1,479,614 288,175
----------- -----------
EXPENSES:
Investment advisory and management fees................................................ 447,603 178,056
Distributionand service maintenance fees:
Class A............................................................................. 123,624 41,346
Class C............................................................................. 61,066 32,360
Servicefees:
Class I............................................................................. 302 --
Class W............................................................................. 4,174 443
Transferagent fees and expenses:
Class A............................................................................. 89,527 27,730
Class C............................................................................. 16,829 7,987
Class I............................................................................. 581 --
Class W............................................................................. 6,580 2,343
Registrationfees:
Class A............................................................................. 8,267 8,814
Class C............................................................................. 7,258 5,928
Class I............................................................................. 642 --
Class W............................................................................. 6,306 2,062
Custodian and accounting fees........................................................ 17,652 15,259
Reports to shareholders.............................................................. 34,764 5,298
Audit and tax fees................................................................... 37,017 37,017
Legal fees........................................................................... 7,912 17,945
Trustees' fees and expenses.......................................................... 1,600 564
Interest expense..................................................................... 1,173 47
Other expenses....................................................................... 13,408 11,101
----------- -----------
Total expenses before fee waivers, expense reimbursements, and expense recoupments.. 886,285 394,300
Net (Fees waived and expenses reimbursed)/recouped by investment adviser (Note 3)... (2,498) (79,663)
----------- -----------
Net expenses........................................................................ 883,787 314,637
----------- -----------
Net investment income (loss)........................................................... 595,827 (26,462)
----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)**............................... 7,253,242 3,437,694
Net realized foreign exchange gain (loss) on other assets and liabilities.............. 27,660 12,563
----------- -----------
Net realized gain (loss) on investments and foreign currencies......................... 7,280,902 3,450,257
----------- -----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated)......... (7,635,651) (2,399,487)
Change in unrealized foreign exchange gain (loss) on other assets and liabilities...... 588 2,654
Change in accrued capital gains tax on unrealized appreciation (depreciation).......... 47,169 --
----------- -----------
Net unrealized gain (loss) on investments and foreign currencies....................... (7,587,894) (2,396,833)
----------- -----------
Net realized and unrealized gain (loss) on investments and foreign currencies.......... (306,992) 1,053,424
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 288,835 $ 1,026,962
=========== ===========
* Net of foreign withholding taxes on interest and dividends of........................ $ 109,255 $ 33,289
=========== ===========
** Net of foreign withholding taxes on capital gains of................................ $ 42,935 $ --
=========== ===========
See Notes to Financial Statements
8
SunAmerica Equity Funds
STATEMENT OF CHANGES IN NET ASSETS -- March 31, 2018
AIG International
Dividend
Strategy Fund
-------------------------------
For the six months
ended For the year
March 31, ended
2018 September 30,
(unaudited) 2017
------------------ -------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss).................................................................. $ 595,827 $ 2,805,195
Net realized gain (loss) on investments and foreign currencies................................ 7,280,902 (758,833)
Net unrealized gain (loss) on investments and foreign currencies.............................. (7,587,894) 9,359,344
----------- -----------
Net increase (decrease) in net assets resulting from operations................................ 288,835 11,405,706
----------- -----------
Distributions to shareholders from:
Net investment income (Class A)............................................................... (587,076) (2,312,658)
Net investment income (Class C)............................................................... (98,988) (401,325)
Net investment income (Class I)............................................................... (1,881) (8,541)
Net investment income (Class W)++............................................................. (47,575) (206,258)
Net realized gain on securities (Class A)..................................................... -- --
Net realized gain on securities (Class C)..................................................... -- --
Net realized gain on securities (Class I)..................................................... -- --
Net realized gain on securities (Class W)++................................................... -- --
----------- -----------
Total distributions to shareholders............................................................ (735,520) (2,928,782)
----------- -----------
Net increase (decrease) in net assets resulting from capital share transactions (Note 6)....... (5,825,145) (6,007,193)
----------- -----------
Total increase (decrease) in net assets........................................................ (6,271,830) 2,469,731
NET ASSETS:
Beginning of period............................................................................ $92,186,161 $89,716,430
----------- -----------
End of period+................................................................................. $85,914,331 $92,186,161
=========== ===========
+ Includes accumulated undistributed net investment income (loss).............................. $ (28,842) $ 110,851
=========== ===========
AIG Japan Fund
-------------------------------
For the six months
ended For the year
March 31, ended
2018 September 30,
(unaudited) 2017
------------------ -------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss).................................................................. $ (26,462) $ (112,692)
Net realized gain (loss) on investments and foreign currencies................................ 3,450,257 3,548,131
Net unrealized gain (loss) on investments and foreign currencies.............................. (2,396,833) 1,822,899
----------- ------------
Net increase (decrease) in net assets resulting from operations................................ 1,026,962 5,258,338
----------- ------------
Distributions to shareholders from:
Net investment income (Class A)............................................................... (202,642) (133,702)
Net investment income (Class C)............................................................... (20,532) (1,525)
Net investment income (Class I)............................................................... -- --
Net investment income (Class W)++............................................................. (6,507) --
Net realized gain on securities (Class A)..................................................... (1,492,385) --
Net realized gain on securities (Class C)..................................................... (413,516) --
Net realized gain on securities (Class I)..................................................... -- --
Net realized gain on securities (Class W)++................................................... (42,621) --
----------- ------------
Total distributions to shareholders............................................................ (2,178,203) (135,227)
----------- ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 6)....... 1,971,571 (12,866,375)
----------- ------------
Total increase (decrease) in net assets........................................................ 820,330 (7,743,264)
NET ASSETS:
Beginning of period............................................................................ $28,937,409 $ 36,680,673
----------- ------------
End of period+................................................................................. $29,757,739 $ 28,937,409
=========== ============
+ Includes accumulated undistributed net investment income (loss).............................. $ (142,955) $ 113,188
=========== ============
++ See Note 1
See Notes to Financial Statements
9
SunAmerica Equity Funds
FINANCIAL HIGHLIGHTS
AIG 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 Total Value end of
beginning income and investment investment capital distri- end of Total period
Period Ended of period (loss)(1) unrealized) operations income gains butions period Return(2) (000's)
------------------ --------- ---------- ----------- ---------- ---------- ------- ------- ------ --------- --------
Class A
-
09/30/13 $10.91 $0.47 $ 0.50 $ 0.97 $(0.47) $-- $(0.47) $11.41 9.24% $ 96,020
09/30/14 11.41 0.40 (0.14) 0.26 (0.34) -- (0.34) 11.33 2.20 162,284
09/30/15 11.33 0.23 (3.29) (3.06) (0.22) -- (0.22) 8.05 (27.24) 71,969
09/30/16 8.05 0.21 0.54 0.75 (0.17) -- (0.17) 8.63 9.49(6) 68,775
09/30/17 8.63 0.30 0.91 1.21 (0.31) -- (0.31) 9.53 14.11 72,696
03/31/2018(7) 9.53 0.07 (0.04) 0.03 (0.08) -- (0.08) 9.48 0.31 71,348
Class C
-
09/30/13 10.03 0.36 0.47 0.83 (0.41) -- (0.41) 10.45 8.56 24,776
09/30/14 10.45 0.30 (0.13) 0.17 (0.27) -- (0.27) 10.35 1.56 46,349
09/30/15 10.35 0.16 (3.01) (2.85) (0.16) -- (0.16) 7.34 (27.70) 22,445
09/30/16 7.34 0.14 0.49 0.63 (0.12) -- (0.12) 7.85 8.73(6) 15,182
09/30/17 7.85 0.21 0.83 1.04 (0.25) -- (0.25) 8.64 13.40 13,126
03/31/2018(7) 8.64 0.03 (0.03) 0.00 (0.07) -- (0.07) 8.57 (0.01) 8,684
Class I
-
09/30/13 10.99 0.44 0.56 1.00 (0.48) -- (0.48) 11.51 9.41 1,184
09/30/14 11.51 0.32 (0.02) 0.30 (0.36) -- (0.36) 11.45 2.45 426
09/30/15 11.45 0.26 (3.34) (3.08) (0.23) -- (0.23) 8.14 (27.13) 283
09/30/16 8.14 0.22 0.55 0.77 (0.18) -- (0.18) 8.73 9.60(6) 260
09/30/17 8.73 0.30 0.93 1.23 (0.31) -- (0.31) 9.65 14.28 265
03/31/2018(7) 9.65 0.07 (0.04) 0.03 (0.08) -- (0.08) 9.60 0.32 229
Class W
-
01/29/15*-09/30/15 9.80 0.27 (1.84) (1.57) (0.19) -- (0.19) 8.04 (16.23) 10,644
09/30/16 8.04 0.21 0.57 0.78 (0.19) -- (0.19) 8.63 9.83(6) 5,500
09/30/17 8.63 0.32 0.90 1.22 (0.32) -- (0.32) 9.53 14.33 6,099
03/31/2018(7) 9.53 0.08 (0.04) 0.04 (0.08) -- (0.08) 9.49 0.46 5,653
Ratio
of net
Ratio of investment
expenses income (loss)
to average to average Portfolio
net assets net assets Turnover
---------- ------------- ---------
1.90%(3) 4.42%(3) 32%
1.90(3) 3.47(3) 80
1.88(3) 2.31(3) 160
1.90(3)(5) 2.61(3) 80
1.90(3) 3.28(3) 22
1.90(3)(4) 1.42(3)(4) 52
2.55(3) 3.70(3) 32%
2.55(3) 2.85(3) 80
2.55(3) 1.69(3) 160
2.55(3)(5) 1.78(3) 80
2.55(3) 2.48(3) 22
2.55(3)(4) 0.68(3)(4) 52
1.80(3) 3.98(3) 32%
1.77(3) 2.66(3) 80
1.71 2.61 160
1.80(3)(5) 2.66(3) 80
1.80(3) 3.32(3) 22
1.80(3)(4) 1.51(3)(4) 52
1.70(3)(4) 3.98(3)(4) 160%
1.70(3)(5) 2.50(3) 80
1.70(3) 3.55(3) 22
1.70(3)(4) 1.58(3)(4) 52
--------
* Commencement of Operations.
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load. Total return
does include expense reimbursements (recoupments).
(3)Net of the following expense reimbursements (recoupments) (based on average
net assets) (See Note 3):
09/30/13 09/30/14 09/30/15 09/30/16 09/30/17 03/31/18(4)(7)
-------- -------- -------- -------- -------- --------------
AIG International Dividend Strategy Class A. 0.16% (0.09)% (0.01)% 0.03% (0.02)% (0.02)%
AIG International Dividend Strategy Class C. 0.20 (0.05) (0.02) 0.08 0.08 0.08
AIG International Dividend Strategy Class I. 0.09 (0.09) -- 1.95 0.69 0.71
AIG International Dividend Strategy Class W. -- -- 0.20(4) 0.15 0.17 0.17
(4)Annualized
(5)Excludes a one time reimbursement the Fund received for custody expenses
paid in the prior years. If the reimbursement had been applied, the ratio of
expenses to the average net assets would have been 1.68%, 2.35%, 1.59% and
1.51% for Class A, Class C, Class I and Class W, respectively.
(6)The Fund's performance figure was increased by 0.25%, 0.28%, 0.25%, 0.25%
for Class A, Class C, Class I and Class W, respectively, for a reimbursement
of custody expenses from prior years.
(7)Unaudited
See Notes to Financial Statements
10
SunAmerica Equity Funds
FINANCIAL HIGHLIGHTS -- (continued)
AIG JAPAN FUND
--------------
Net gain
(loss) on
Net investments Distri- Net Net
Asset Net (both Dividends butions Asset Assets Ratio of
Value investment realized Total from from net from Total Value end of expenses
beginning income and investment investment capital distri- end of Total period to average
Period Ended of period (loss)(1) unrealized) operations income gains butions period Return(2) (000's) net assets(3)
------------------ --------- ---------- ----------- ---------- ---------- ------- ------- ------ --------- ------- -------------
Class A
-
09/30/13 $6.41 $(0.01) $ 1.86 $ 1.85 $(0.16) $ -- $(0.16) $8.10 29.54% $25,053 1.90%
09/30/14 8.10 (0.01) 0.37 0.36 (0.15) (0.58) (0.73) 7.73 4.81 35,178 1.90
09/30/15 7.73 (0.03) (0.36) (0.39) (0.05) (0.58) (0.63) 6.71 (4.91) 32,241 1.90
09/30/16 6.71 0.00 0.75 0.75 -- (0.22) (0.22) 7.24 11.26 30,895 1.90
09/30/17 7.24 (0.02) 1.44 1.42 (0.04) -- (0.04) 8.62 19.69 23,423 1.90
03/31/2018(5) 8.62 (0.00) 0.35 0.35 (0.08) (0.57) (0.65) 8.32 3.84 22,270 1.90(4)
Class C
-
09/30/13 6.20 (0.03) 1.77 1.74 (0.10) -- (0.10) 7.84 28.58 2,222 2.55
09/30/14 7.84 (0.05) 0.34 0.29 (0.12) (0.58) (0.70) 7.43 4.07 4,542 2.55
09/30/15 7.43 (0.07) (0.35) (0.42) (0.01) (0.58) (0.59) 6.42 (5.52) 7,343 2.55
09/30/16 6.42 (0.05) 0.72 0.67 -- (0.22) (0.22) 6.87 10.50 5,785 2.55
09/30/17 6.87 (0.07) 1.37 1.30 (0.00) -- (0.00) 8.17 18.96 5,274 2.55
03/31/2018(5) 8.17 (0.02) 0.33 0.31 (0.03) (0.57) (0.60) 7.88 3.58 6,891 2.55(4)
Class W
-
04/20/17*-09/30/17 7.72 0.06 0.85 0.91 -- -- -- 8.63 11.79 241 1.70(4)
03/31/2018(5) 8.63 0.01 0.35 0.36 (0.09) (0.57) (0.66) 8.33 3.94 597 1.70(4)
Ratio
of net
investment
income (loss)
to average Portfolio
net assets(3) Turnover
------------- ---------
(0.12)% 162%
(0.19) 111
(0.46) 144
0.01 151
(0.28) 115
(0.08)(4) 61
(0.43) 162%
(0.65) 111
(0.95) 144
(0.78) 151
(0.89) 115
(0.53)(4) 61
1.80(4) 115%
0.26(4) 61
--------
* Commencement of Operations.
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load. Total return
does include expense reimbursements (recoupments).
(3)Net of the following expense reimbursements (based on average net assets)
(See Note 3):
09/30/13 09/30/14 09/30/15 09/30/16 09/30/17 03/31/18(4)(5)
-------- -------- -------- -------- -------- --------------
AIG Japan Class A....................... 0.55% 0.29% 0.24% 0.41% 0.55% 0.46%
AIG Japan Class C....................... 1.57 0.84 0.50 0.56 0.75 0.60
AIG Japan Class W....................... -- -- -- -- 17.99(4) 1.67
(4)Annualized
(5)Unaudited
See Notes to Financial Statements
11
AIG International Dividend Strategy Fund
PORTFOLIO PROFILE -- March 31, 2018 -- (unaudited)
Industry Allocation*
Food-Retail.......................... 7.9%
Cellular Telecom..................... 7.8
Medical-Drugs........................ 7.3
Auto-Cars/Light Trucks............... 6.2
Building-Residential/Commercial...... 5.9
Metal-Diversified.................... 4.2
Electronic Components-Misc........... 4.1
Television........................... 3.7
Telephone-Integrated................. 3.6
Tobacco.............................. 3.3
Real Estate Operations & Development. 2.8
Metal Processors & Fabrication....... 2.6
Chemicals-Diversified................ 2.4
Steel-Producers...................... 2.4
Oil Companies-Integrated............. 2.3
Retail-Jewelry....................... 2.2
Retail-Building Products............. 2.0
Fisheries............................ 2.0
Power Converter/Supply Equipment..... 2.0
Advertising Services................. 2.0
Insurance-Multi-line................. 1.9
Aerospace/Defense.................... 1.9
Cosmetics & Toiletries............... 1.9
Machinery-General Industrial......... 1.9
Computers............................ 1.8
Telecom Services..................... 1.8
Human Resources...................... 1.8
Diversified Manufacturing Operations. 1.8
Advertising Agencies................. 1.7
Metal-Iron........................... 1.6
Oil Refining & Marketing............. 1.6
Gas-Distribution..................... 1.6
Repurchase Agreements................ 0.9
----
98.9%
====
Country Allocation*
United Kingdom. 22.1%
France......... 14.0
Turkey......... 8.5
Australia...... 7.5
Taiwan......... 6.7
China.......... 5.1
Germany........ 3.8
Hong Kong...... 3.6
Switzerland.... 3.6
Japan.......... 3.5
Netherlands.... 2.5
Denmark........ 2.2
South Africa... 2.1
Russia......... 2.1
Norway......... 2.0
Brazil......... 1.9
Finland........ 1.9
Canada......... 1.8
Jersey......... 1.7
Spain.......... 1.4
United States.. 0.9
----
98.9%
====
--------
*Calculated as a percentage of net assets
12
AIG International Dividend Strategy Fund
PORTFOLIO OF INVESTMENTS -- March 31, 2018 -- (unaudited)
Value
Security Description Shares (Note 2)
COMMON STOCKS -- 98.0%
Australia -- 7.5%
Fortescue Metals Group, Ltd...... 418,833 $ 1,401,878
Rio Tinto, Ltd................... 32,358 1,818,711
Telstra Corp., Ltd............... 616,848 1,496,647
Wesfarmers, Ltd.................. 53,400 1,713,411
-----------
6,430,647
-----------
Bermuda -- 0.0%
Peace Mark Holdings, Ltd.+(1)(2). 800,000 0
-----------
Brazil -- 1.9%
BB Seguridade Participacoes SA... 186,574 1,654,128
-----------
Canada -- 1.8%
BCE, Inc......................... 36,157 1,555,900
-----------
China -- 5.1%
China Petroleum & Chemical Corp.. 2,254,000 1,998,568
China Vanke Co., Ltd............. 513,400 2,367,412
-----------
4,365,980
-----------
Denmark -- 2.2%
Pandora A/S...................... 17,109 1,854,573
-----------
Finland -- 1.9%
Kone Oyj, Class B................ 31,894 1,593,120
-----------
France -- 14.0%
Carrefour SA..................... 83,583 1,735,960
Orange SA........................ 103,092 1,750,784
Peugeot SA....................... 70,910 1,707,671
Publicis Groupe SA............... 24,182 1,684,870
Renault SA....................... 17,191 2,088,490
Sanofi........................... 17,008 1,366,681
Schneider Electric SE............ 19,405 1,706,880
-----------
12,041,336
-----------
Germany -- 3.8%
ProSiebenSat.1 Media SE.......... 49,553 1,718,690
Siemens AG....................... 11,987 1,528,944
-----------
3,247,634
-----------
Hong Kong -- 3.6%
China Mobile, Ltd................ 167,000 1,527,978
Lenovo Group, Ltd................ 3,060,000 1,573,962
-----------
3,101,940
-----------
Japan -- 3.5%
Japan Tobacco, Inc............... 51,600 1,476,543
Subaru Corp...................... 46,800 1,549,008
-----------
3,025,551
-----------
Jersey -- 1.7%
WPP PLC.......................... 90,905 1,444,844
-----------
Netherlands -- 2.5%
Koninklijke Ahold Delhaize NV.... 90,320 2,141,605
-----------
Norway -- 2.0%
Marine Harvest ASA............... 85,374 1,715,411
-----------
Russia -- 2.1%
MMC Norilsk Nickel PJSC ADR...... 98,124 1,821,033
-----------
South Africa -- 2.1%
Vodacom Group, Ltd............... 141,543 1,831,646
-----------
Shares/
Principal Value
Security Description Amount (Note 2)
Spain -- 1.4%
Distribuidora Internacional de
Alimentacion SA................................. 289,536 $ 1,229,810
-----------
Switzerland -- 3.6%
Adecco Group AG.................................. 21,678 1,544,574
Roche Holding AG................................. 6,612 1,516,528
-----------
3,061,102
-----------
Taiwan -- 6.7%
AU Optronics Corp................................ 4,217,000 1,974,210
Catcher Technology Co., Ltd...................... 182,000 2,215,934
Hon Hai Precision Industry Co., Ltd.............. 488,000 1,529,760
-----------
5,719,904
-----------
Turkey -- 8.5%
Eregli Demir ve Celik Fabrikalari TAS............ 777,096 2,064,220
Petkim Petrokimya Holding AS..................... 1,004,506 2,072,511
Tupras Turkiye Petrol Rafinerileri AS............ 49,398 1,357,246
Turkcell Iletisim Hizmetleri AS.................. 473,360 1,817,708
-----------
7,311,685
-----------
United Kingdom -- 22.1%
AstraZeneca PLC.................................. 25,410 1,747,738
BAE Systems PLC.................................. 199,374 1,628,578
Barratt Developments PLC......................... 204,889 1,526,176
Berkeley Group Holdings PLC...................... 33,872 1,802,790
BT Group PLC..................................... 443,482 1,417,064
Centrica PLC..................................... 673,285 1,344,443
GlaxoSmithKline PLC.............................. 84,586 1,643,334
Imperial Brands PLC.............................. 39,542 1,347,528
ITV PLC.......................................... 720,689 1,459,781
Kingfisher PLC................................... 421,790 1,735,732
Persimmon PLC.................................... 48,763 1,733,643
Unilever PLC..................................... 29,152 1,619,881
-----------
19,006,688
-----------
Total Long-Term Investment Securities
(cost $81,638,387)....................................... 84,154,537
-----------
REPURCHASE AGREEMENTS -- 0.9%
Agreement with Fixed Income Clearing Corp.,
bearing interest at 0.28%, dated 03/29/2018,
to be repurchased 04/02/2018 in the amount
of $776,024 collateralized by $805,000 of
United States Treasury Notes, bearing interest
at 2.38% due 08/15/2024 and having an
approximate value of $792,223
(cost $776,000)................................. $ 776,000 776,000
-----------
TOTAL INVESTMENTS --
(cost $82,414,387)(3)........................... 98.9% 84,930,537
Other assets less liabilities...................... 1.1 983,794
---------- -----------
NET ASSETS -- 100.0% $85,914,331
========== ===========
--------
+ Non-income producing security
(1)Securities classified as Level 3 (see Note 2).
(2)Illiquid security. At March 31, 2018, the aggregate value of these
securities was $0 representing 0.0% of net assets.
(3)See Note 5 for cost of investments on a tax basis.
ADR -- AmericanDepositary Receipt
13
AIG International Dividend Strategy Fund
PORTFOLIO OF INVESTMENTS -- March 31, 2018 -- (unaudited) (continued)
The following is a summary of the inputs used to value the Funds's net assets
as of March 31, 2018 (see Note 2):
Level 1 -- Unadjusted Level 2 -- Other Level 3 -- Significant
Quoted Prices Observable Inputs Unobservable Inputs Total
- --------------------- ----------------- ---------------------- -----------
ASSETS:
Investments at Value:*
Common Stocks:
Bermuda.................. $ -- $ -- $ 0 $ 0
Other Countries.......... 16,241,617 67,912,920** -- 84,154,537
Repurchase Agreements...... -- 776,000 -- 776,000
----------- ----------- --- -----------
Total Investments at Value. $16,241,617 $68,688,920 $ 0 $84,930,537
=========== =========== === ===========
--------
* For a detailed presentation of investments, please refer to the Portfolio of
Investments.
** Represents foreign equity securities that have been fair valued in
accordance with pricing procedures approved by the Board. See Note 2.
The Fund's policy is to recognize transfers between Levels as of the end of the
reporting period. Securities currently valued at $37,692,808 were transferred
from Level 1 to Level 2 due to foreign equity securities whose values were
previously adjusted for fair value pricing procedures for foreign equity
securities. There were no additional transfers between Levels during the
reporting period.
At the beginning and 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
AIG Japan Fund
PORTFOLIO PROFILE -- March 31, 2018 -- (unaudited)
Industry Allocation*
Auto/Truck Parts & Equipment-Original. 12.2%
Electronic Components-Misc............ 11.7
Telephone-Integrated.................. 5.8
Computer Services..................... 5.6
Diversified Banking Institutions...... 5.2
Chemicals-Specialty................... 4.7
Rubber-Tires.......................... 4.6
Food-Confectionery.................... 4.0
Aerospace/Defense..................... 3.6
Medical Products...................... 3.5
Building-Maintenance & Services....... 3.2
Entertainment Software................ 3.0
Insurance-Property/Casualty........... 3.0
Food-Retail........................... 2.9
Finance-Consumer Loans................ 2.9
Food-Misc./Diversified................ 2.8
Steel-Producers....................... 2.2
Retail-Catalog Shopping............... 2.1
Auto-Heavy Duty Trucks................ 2.0
Photo Equipment & Supplies............ 1.9
Transport-Marine...................... 1.5
Toys.................................. 1.5
Television............................ 1.4
Real Estate Management/Services....... 1.1
Web Portals/ISP....................... 1.0
Chemicals-Diversified................. 1.0
Metal-Diversified..................... 1.0
Finance-Credit Card................... 0.9
Repurchase Agreements................. 0.9
Athletic Footwear..................... 0.6
----
97.8%
====
Country Allocation*
Japan......... 96.9%
United States. 0.9
----
97.8%
====
--------
*Calculated as a percentage of net assets
15
Value
Security Description Shares (Note 2)
COMMON STOCKS -- 96.9%
Aerospace/Defense -- 3.6%
Kawasaki Heavy Industries, Ltd....... 32,869 $1,062,632
----------
Athletic Footwear -- 0.6%
Asics Corp........................... 10,300 190,599
----------
Auto-Heavy Duty Trucks -- 2.0%
Hino Motors, Ltd..................... 46,804 602,177
----------
Auto/Truck Parts & Equipment-Original -- 12.2%
NGK Insulators, Ltd.................. 64,567 1,112,879
NGK Spark Plug Co., Ltd.............. 24,588 592,256
Sumitomo Electric Industries, Ltd.... 100,868 1,539,018
Toyota Industries Corp............... 6,608 399,939
----------
3,644,092
----------
Building-Maintenance & Services -- 3.2%
Kyoritsu Maintenance Co., Ltd........ 19,655 940,219
----------
Chemicals-Diversified -- 1.0%
Tokuyama Corp........................ 9,520 302,854
----------
Chemicals-Specialty -- 4.7%
Shin-Etsu Chemical Co., Ltd.......... 13,501 1,396,349
----------
Computer Services -- 5.6%
Fujitsu, Ltd......................... 203,018 1,249,342
SCSK Corp............................ 9,759 421,433
----------
1,670,775
----------
Diversified Banking Institutions -- 5.2%
Mitsubishi UFJ Financial Group, Inc.. 237,935 1,558,580
----------
Electronic Components-Misc. -- 11.7%
Alps Electric Co., Ltd............... 23,080 565,694
Fujitsu General, Ltd................. 23,700 423,863
Hitachi High-Technologies Corp....... 20,130 957,265
Hitachi Maxell, Ltd.................. 15,300 297,933
Kyocera Corp......................... 5,150 290,593
MinebeaMitsumi, Inc.................. 43,971 938,886
----------
3,474,234
----------
Entertainment Software -- 3.0%
DeNA Co., Ltd........................ 50,123 904,433
----------
Finance-Consumer Loans -- 2.9%
Acom Co., Ltd.+...................... 191,005 850,866
----------
Finance-Credit Card -- 0.9%
Credit Saison Co., Ltd............... 17,019 279,425
----------
Food-Confectionery -- 4.0%
Ezaki Glico Co., Ltd................. 22,509 1,178,282
----------
Food-Misc./Diversified -- 2.8%
Ajinomoto Co., Inc................... 45,939 831,094
----------
Food-Retail -- 2.9%
Seven & i Holdings Co., Ltd.......... 20,495 879,086
----------
Insurance-Property/Casualty -- 3.0%
Tokio Marine Holdings, Inc........... 19,954 887,949
----------
Medical Products -- 3.5%
Nipro Corp........................... 72,461 1,046,685
----------
Metal-Diversified -- 1.0%
Mitsui Mining & Smelting Co., Ltd.... 6,350 288,243
----------
Shares/
Principal Value
Security Description Amount (Note 2)
Miscellaneous Manufacturing -- 0.0%
Peace Mark Holdings, Ltd.+(1)(2).................. 8,000 $ 0
-----------
Photo Equipment & Supplies -- 1.9%
FUJIFILM Holdings Corp............................ 13,832 551,824
-----------
Real Estate Management/Services -- 1.1%
Mitsubishi Estate Co., Ltd........................ 19,294 326,115
-----------
Retail-Catalog Shopping -- 2.1%
ASKUL Corp.+...................................... 18,550 624,987
-----------
Rubber-Tires -- 4.6%
Toyo Tire & Rubber Co., Ltd....................... 79,212 1,363,812
-----------
Steel-Producers -- 2.2%
JFE Holdings, Inc................................. 32,683 658,390
-----------
Telephone-Integrated -- 5.8%
Nippon Telegraph & Telephone Corp................. 25,543 1,176,267
SoftBank Group Corp............................... 7,202 538,094
-----------
1,714,361
-----------
Television -- 1.4%
Nippon Television Holdings, Inc................... 22,793 403,786
-----------
Toys -- 1.5%
Bandai Namco Holdings, Inc........................ 13,500 443,424
-----------
Transport-Marine -- 1.5%
Nippon Yusen KK................................... 22,378 451,745
-----------
Web Portals/ISP -- 1.0%
Yahoo Japan Corp.................................. 66,363 308,099
-----------
Total Long-Term Investment Securities
(cost $28,038,923)............................... 28,835,117
-----------
REPURCHASE AGREEMENTS -- 0.9%
Agreement with Fixed Income Clearing Corp.,
bearing interest at 0.28%, dated 03/29/2018, to
be repurchased 04/02/2018 in the amount of
$279,009 collateralized by $295,000 of United
States Treasury Notes, bearing interest at
2.13% due 09/30/2024 and having an
approximate value of $287,950
(cost $279,000).................................. $279,000 279,000
-----------
TOTAL INVESTMENTS
(cost $28,317,923)(3)............................ 97.8% 29,114,117
Other assets less liabilities....................... 2.2 643,622
-------- -----------
NET ASSETS 100.0% $29,757,739
======== ===========
--------
+ Non-income producing security
(1)Securities classified as Level 3 (see Note 2).
(2)Illiquid security. At March 31, 2018, the aggregate value of these
securities was $0 representing 0.0% of net assets.
(3)See Note 5 for cost of investments on a tax basis.
16
AIG Japan Fund
PORTFOLIO OF INVESTMENTS -- March 31, 2018 -- (unaudited)
AIG Japan Fund
PORTFOLIO OF INVESTMENTS -- March 31, 2018 -- (unaudited) (continued)
The following is a summary of the inputs used to value the Portfolio's net
assets as of March 31, 2018 (see Note 2):
Level 1 -- Unadjusted Level 2 -- Other Level 3 -- Significant
Quoted Prices Observable Inputs Unobservable Inputs Total
- --------------------- ----------------- ---------------------- -----------
ASSETS:
Investments at Value:*
Common Stocks:
Miscellaneous Manufacturing. $ -- $ -- $ 0 $ 0
Other Industries............ 28,835,117 -- -- 28,835,117
Repurchase Agreements......... -- 279,000 -- 279,000
----------- -------- --- -----------
Total Investments at Value.... $28,835,117 $279,000 $ 0 $29,114,117
=========== ======== === ===========
--------
* For a detailed presentation of investments, 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, 2018 -- (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 18, 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: AIG International Dividend Strategy Fund ("International
Dividend Strategy Fund"), or AIG Japan Fund ("Japan Fund"). The Funds are
considered to be separate entities for financial and tax reporting purposes.
The investment objective and principal investment techniques for each of the
Funds are as follows:
International Dividend Strategy Fund seeks total return by employing a "buy
and hold" strategy to identify approximately 50 to 100 high dividend
yielding equity securities selected annually from the MSCI ACWI ex-U.S.
Index. At least 80% of the Fund's net assets, plus any borrowing 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 of
$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 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. Effective March 1, 2018,
Class C shares convert automatically to Class A shares on the 19th day (or
next business day following the 19th) of the month following the tenth
anniversary of the issuance of Class C shares and at such time will be
subject to the lower distribution fee applicable to Class A shares.
Class I shares are closed to new purchases, however, existing investors may
continue to acquire shares through reinvestments of dividends and capital
gains distributions.
Class W shares are offered at net asset value per share. The class is
offered exclusively through advisory fee-based programs sponsored by certain
financial intermediaries and other programs. Class W shares of the Japan
Fund commenced operations effective April 20, 2017.
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 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, with Class C shares being subject to
higher distribution fee rates. Class I and Class W shares have not adopted a
12b-1 plan and make no payments thereunder, however, Class I and Class W
shares pay a service fee to the Funds' distributor for providing
administrative and shareholder services.
Indemnifications: Under the Trust's organizational documents, its officers
and trustees are indemnified against certain liabilities arising out of the
performance of their duties to the Trust. In addition, pursuant to
Indemnification Agreements between the Trust and each of the current
trustees who is not an "interested person," as defined in Section 2(a)(19)
of the 1940 Act, of the Trust (collectively, the "Disinterested Trustees"),
the Trust provides the Disinterested Trustees with a limited indemnification
against
18
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- March 31, 2018 -- (unaudited)
(continued)
liabilities arising out of the performance of their duties to the Trust,
whether such liabilities are asserted during or after their service as
trustees. In addition, in the normal course of business the Trust enters
into contracts that contain the obligation to indemnify others. The Trust's
maximum exposure under these arrangements is unknown. Currently, however,
the Trust expects the risk of loss to be remote.
Note 2. Significant Accounting Policies
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles ("GAAP") requires management to make
estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those
estimates and those differences could be significant. The Funds are
considered investment companies under GAAP and follow the accounting and
reporting guidance applicable to investment companies. 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 GAAP, the Funds disclose the fair
value of their investments in a hierarchy that prioritizes the inputs to
valuation techniques used to measure the fair value. In accordance with
GAAP, fair value is defined as the price that the Funds would receive upon
selling an asset or transferring a liability in a timely transaction to an
independent third party in the principal or most advantageous market. GAAP
establishes a three-tier hierarchy to provide more transparency around the
inputs used to measure fair value and to establish classification of fair
value measurements for disclosure purposes. Inputs refer broadly to the
assumptions that market participants would use in pricing the asset or
liability, including assumptions about risk. Inputs may be observable or
unobservable. Observable inputs are inputs that reflect the assumptions
market participants would use in pricing the asset or liability developed
based on market data obtained from sources independent of the reporting
entity. Unobservable inputs are inputs that reflect the reporting entity's
own assumptions about the assumptions market participants would use in
pricing the asset or liability developed based on the best information
available in the circumstances. The three-tiers are as follows:
Level 1 -- Unadjusted quoted prices in active markets for identical
securities
Level 2 -- Other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
referenced indices, quoted prices in inactive markets, adjusted quoted
prices in active markets, adjusted quoted prices on foreign equity
securities that were adjusted in accordance with pricing procedures approved
by the Board of Trustees (the "Board") , etc.)
Level 3 -- Significant unobservable inputs (includes inputs that reflect the
Funds' own assumptions about the assumptions market participants would use
in pricing the security, developed based on the best information available
under the circumstances)
Changes in valuation techniques may result in transfers in or out of an
investment's assigned Level within the hierarchy. The methodology used for
valuing investments is not necessarily an indication of the risk associated
with investing in those investments and the determination of the
significance of a particular input to the fair value measurement in its
entirety requires judgment and consideration of factors specific to each
security.
The availability of observable inputs can vary from security to security and
is affected by a wide variety of factors, including, for example, the type
of security, whether the security is recently issued and not yet established
in the marketplace, the liquidity of markets, and other characteristics
particular to the security. To the extent that valuation is based on models
or inputs that are less observable or unobservable in the market, the
determination of fair value requires more judgment. Accordingly, the degree
of judgment exercised in determining fair value is greatest for instruments
categorized in Level 3.
The Summary of the Funds' assets and liabilities classified in the fair
value hierarchy as of March 31, 2018, is 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 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.
19
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- March 31, 2018 -- (unaudited)
(continued)
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 a Fund's shares, and a Fund may determine that certain closing
prices do not reflect the fair value of the security. This determination
will be based on the 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.
On March 30, 2018, the NYSE was closed for Good Friday; however, certain
foreign markets were open. As a result, the Funds' priced securities that
traded on the open foreign markets at the closing price of the applicable
market and the remaining securities were valued at their applicable closing
or fair value prices on March 29, 2018, the last day in the reporting period
that the Funds were open.
Bonds, debentures, and other debt securities 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 service 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, maturity date, option
adjusted spread 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.
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. Investments in 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 OTC market, and are generally categorized as Level 1 or Level 2.
The Board is responsible for the share valuation process and has adopted
policies and procedures (the "PRC Procedures") for valuing the securities
and other assets held by the Funds, including procedures for the fair
valuation of securities and other assets for which market quotations are not
readily available or are unreliable. The PRC Procedures provide for the
establishment of a pricing review committee, which is responsible for, among
other things, making certain determinations in connection with the Trust's
fair valuation procedures. Securities for which market quotations are not
readily available or the values of which may be significantly impacted by
the occurrence of developments or significant events are generally
categorized as Level 3. There is no single standard for making fair value
determinations, which may result in prices that vary from those of other
funds.
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 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
20
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- March 31, 2018 -- (unaudited)
(continued)
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, 2018, the repurchase agreements
held by the Funds are subject to master netting agreements. See the
Portfolio of Investments for more information about a Fund'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 Trust's custodian takes
possession of the collateral pledged for investments in such repurchase
agreements ("repo" or collectively "repos"). The underlying collateral is
valued daily on a mark to market basis, plus accrued interest to ensure that
the value, at the time the agreement is entered into, is equal to at least
102% of the repurchase price, including accrued interest. In the event of
default of the obligation to repurchase, a Fund has the right to liquidate
the collateral and apply the proceeds in satisfaction of the obligation. If
the seller defaults and the value of the collateral declines or if
bankruptcy proceedings are commenced with respect to the seller of the
security, realization of the collateral by a Fund may be delayed or limited.
Securities Transactions, Investment Income, Expenses, Dividends and
Distributions to Shareholders: Security transactions are recorded on a trade
date basis. Realized gains and losses on the sale of investments are
calculated on the identified cost basis. For financial statement purposes,
the Funds amortize all premiums and accrete all discounts on fixed income
securities.
Interest income is accrued daily from settlement date except when collection
is not expected. Dividend income is recorded on the ex-dividend date except
for certain dividends from foreign securities, which are recorded as soon as
the Trust is informed after the ex-dividend date.
Funds which earn foreign income and capital gains may be subject to foreign
withholding taxes and capital gains taxes at various rates. Under applicable
foreign law, a withholding of tax may be imposed on interest, dividends, and
capital gains from the sale of foreign securities at various rates.
Net investment income, expenses other than class specific expenses, and
realized and unrealized gains and losses are allocated daily to each class
of shares based upon the relative net asset value of outstanding shares of
each class of shares at the beginning of the day (after adjusting for
current capital share activity of the respective class).
Expenses common to all 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.
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 in accordance with federal income tax
regulations, which may differ from GAAP. 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
21
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- March 31, 2018 -- (unaudited)
(continued)
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 2014 - 2016 or expected to be taken in each Fund's 2017 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 2014.
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 period.
Similarly, the Funds do not isolate the effect of changes in foreign
exchange rates from the changes in the market prices of portfolio securities
sold during the period.
Realized foreign exchange gains and losses on other assets and liabilities
and change in unrealized foreign exchange gains and losses on other assets
and liabilities 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.
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
Fees
----------
International Dividend Strategy Fund. 1.00%
Japan Fund........................... 1.15
For the six months ended March 31, 2018, SunAmerica earned fees in the
amounts stated in the Statement of Operations.
The AIG 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 AIG Japan Fund, which is paid by SunAmerica.
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 fees and/or
22
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- March 31, 2018 -- (unaudited)
(continued)
reimbursed expense calculations, annual fund operating expenses shall not
include extraordinary expenses (i.e., expenses that are unusual in nature
and/or infrequent in occurrence, 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 C... 2.55
International Dividend Strategy Fund Class I .. 1.80
International Dividend Strategy Fund Class W... 1.70
Japan Fund Class A............................. 1.90
Japan Fund Class C............................. 2.55
Japan Fund Class W............................. 1.70
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 recapment does not cause the
expense ratio of the share class to exceed the lesser of (a) the limitation
in effect at the time the waivers and/or reimbursements occurred or (b) the
current expense limitation of that share class.
For the six months ended March 31, 2018, pursuant to the contractual expense
limitations referred to above, SunAmerica has waived or reimbursed expenses
as follows:
Other Expense
Reimbursed
-------------
AIG Japan Fund. $25,284
Amount
-------
International Dividend Strategy Fund Class A... $ --
International Dividend Strategy Fund Class C... 4,854
International Dividend Strategy Fund Class I .. 863
International Dividend Strategy Fund Class W... 4,583
Japan Fund Class A............................. 36,084
Japan Fund Class C............................. 13,892
Japan Fund Class W............................. 4,403
For the year ended March 31, 2018, the amounts recouped by SunAmerica are as
follows:
Amount
------
International Dividend Strategy Fund Class A... $7,802
International Dividend Strategy Fund Class C... --
International Dividend Strategy Fund Class I .. --
International Dividend Strategy Fund Class W... --
Japan Fund Class A............................. --
Japan Fund Class C............................. --
Japan Fund Class W............................. --
At March 31, 2018, expenses previously waived and/or reimbursed by
SunAmerica during the prior two years that remain subject to recoupment and
expire during the time periods indicated are as follows:
Other Expenses Reimbursed
----------------------------------------------------
September 30, 2018 September 30, 2019 March 31, 2020
------------------ ------------------ --------------
Japan Fund. $58,839 $98,361 $25,284
23
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- March 31, 2018 -- (unaudited)
(continued)
Class Specific Expenses Reimbursed
----------------------------------------------------
September 30, 2018 September 30, 2019 March 31, 2020
------------------ ------------------ --------------
International Dividend Strategy Fund Class A... $ -- $ -- $ --
International Dividend Strategy Fund Class C... 7,764 16,366 4,854
International Dividend Strategy Fund Class I .. 2,197 4,719 863
International Dividend Strategy Fund Class W... 11,734 11,959 4,583
Japan Fund Class A............................. 49,037 78,562 36,084
Japan Fund Class C............................. 20,107 28,032 13,892
Japan Fund Class W............................. -- 8,912 4,403
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 and Class W 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" and
"Class C Plan." In adopting the Plans, the Trustees determined that there
was a reasonable likelihood that each such Plan would benefit each 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 and Class C Plan, the Distributor receives a
distribution fee from a Fund at an annual rate of 0.10% and 0.75%,
respectively, of the average daily net assets of the Fund's Class A and
Class C shares to compensate the Distributor and certain securities firms
for providing sales and promotional activities for distributing that class
of shares. The distribution costs for which the Distributor may be
compensated include fees paid to broker-dealers that have sold Fund shares,
commissions and other expenses such as those incurred for sales literature,
prospectus printing and distribution and compensation to wholesalers. It is
possible that in any given year the amount paid to the Distributor under
each Plan may exceed the Distributor's distribution costs as described
above. The Plans provide that the Class A 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. The Distributor does not receive or retain
any distribution and/or account maintenance fees for any shares when the
shareholder does not have a broker of record. For the six months ended
March 31, 2018, ACS received fees as reflected in the Statement of
Operations, based upon the aforementioned rates.
In addition, ACS is paid a fee of 0.25% and 0.15% of average daily net
assets of Class I and Class W shares, respectively, in connection with
providing administrative and shareholder services to Class I and Class W
shareholders. For the six months ended March 31, 2018, ACS earned fees as
reflected in the 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 and Class C shares. ACS has advised the Funds that for the
six months ended March 31, 2018, the proceeds received from sales (and paid
out to affiliated and non-affiliated broker-dealers) and redemptions are as
follows:
Class A Class C
--------------------------------------------------- -------------
Contingent Contingent
Sales Affiliated Non-affiliated Deferred Deferred
Charges Broker-dealers Broker-dealers Sales Charges Sales Charges
------- -------------- -------------- ------------- -------------
International Dividend Strategy Fund. $26,381 $6,670 $15,339 $81 $411
Japan Fund........................... 6,169 1,138 4,045 -- 98
The Trust has entered into a Service Agreement with SunAmerica Fund
Services, Inc. ("AFS"), an affiliate of the Adviser. Under the Service
Agreement, AFS performs certain shareholder account functions by assisting
the Funds' transfer agent, DST Asset Manager Solutions, Inc. ("DST"), 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 AFS for
services rendered based upon an annual rate of 0.22% of average daily net
assets of such Fund. For the six months ended March 31, 2018, the Funds
incurred the following expenses which are included in
24
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- March 31, 2018 -- (unaudited)
(continued)
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 AFS pursuant to the terms of the Service Agreement.
Expense Payable at March 31, 2018
------------------------------- -------------------------------
Class A Class C Class I Class W Class A Class C Class I Class W
------- ------- ------- ------- ------- ------- ------- -------
International Dividend Strategy Fund. $78,481 $13,604 $266 $6,121 $13,182 $2,067 $43 $1,030
Japan Fund........................... 26,288 7,124 -- 650 4,255 1,286 -- 131
At March 31, 2018, the following affiliates owned a percentage of the
outstanding shares of the following funds: AIG Multi-Asset Allocation
Portfolio and AIG Active Allocation Portfolio owned 19% and 13%,
respectively, of the International Dividend Strategy Fund and AIG
Multi-Asset Allocation Portfolio and AIG Active Allocation Portfolio owned
30% and 16%, respectively, of the Japan Fund.
Note 4. Purchases and Sales of Investment Securities
The cost of purchases and proceeds from sales and maturities of long-term
investments during the six months ended March 31, 2018 were as follows:
International
Dividend Strategy
Fund Japan Fund
----------------- -----------
Purchases (excluding U.S. government securities)... $46,167,919 $18,406,548
Sales (excluding U.S. government securities)....... 52,552,860 18,789,957
Purchase of U.S. government securities............. -- --
Sales and maturities of U.S. government securities. -- --
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, 2017
------------------------------------------------------------------
Distributable Earnings Tax Distributions
----------------------------------------- ------------------------
Long-term Unrealized
Ordinary Gains/Capital Appreciation Ordinary Long-Term
Income Loss Carryover (Depreciation)* Income Capital Gains
---------- -------------- --------------- ---------- -------------
International Dividend Strategy Fund. $ 155,134 $(80,030,875) $9,921,842 $2,928,782 $ --
Japan Fund........................... 1,578,427 -- 2,602,919 135,227 --
--------
* Unrealized appreciation (depreciation) includes amounts for derivatives and
other assets and liabilities denominated in foreign currency.
25
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- March 31, 2018 -- (unaudited)
(continued)
As of March 31, 2018, for Federal income tax purposes, the Funds indicated
below have capital loss carryforwards, which expire in the year indicated,
which are available to offset future capital gains, if any:
Capital Loss Carryforward+ Unlimited+
-------------------------- -----------------------
2018 ST LT
-------------------------- ----------- -----------
International Dividend Strategy Fund*. $19,381,525 $34,226,655 $26,422,695
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, a fund will be permitted to carry forward capital
losses incurred in taxable years beginning after the date of enactment for
an unlimited period. However, any losses incurred during those future
taxable years will be required to be utilized prior to the losses incurred
in pre-enactment taxable years, which carry an expiration date. As a result
of this ordering rule, pre-enactment capital loss carryforwards may be more
likely to expire unused. Additionally, post-enactment capital losses that
are carried forward will retain their character as either short-term or
long-term losses rather than being considered all short-term as under
previous law.
* The capital loss carryforwards include realized capital losses from the
acquisition of other funds. Certain losses may be subject to annual
limitations imposed by the Internal Revenue Code. Therefore, it is possible
that not all of the capital losses will be available for use. As of
March 31, 2018, based on current tax law, the International Dividend
Strategy Fund has $0 of capital losses that will not be available for use.
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, 2018:
International
Dividend
Strategy Fund Japan Fund
------------- -----------
Cost (tax basis)........................... $82,590,823 $28,910,648
=========== ===========
Appreciation............................... 8,702,742 1,146,439
Depreciation............................... (6,363,028) (943,011)
----------- -----------
Net unrealized appreciation (depreciation). $ 2,339,714 $ 203,428
=========== ===========
On December 22, 2017, the Tax Cuts and Jobs Act (the "Act") was signed into
law. Certain provisions of the Act were effective upon enactment with the
remainder becoming effective for tax years beginning after December 31,
2017. Management is currently evaluating the impact, if any, on the
financial statements and the accompanying notes to financial statements.
Note 6. Capital Share Transactions
Transactions in capital shares of each class of each Fund were as follows:
International Dividend Strategy Fund
-----------------------------------------------
Class A
-----------------------------------------------
For the
six months ended For the
March 31, 2018 year ended
(unaudited) September 30, 2017
--------------------- ------------------------
Shares Amount Shares Amount
-------- ----------- ---------- ------------
Shares sold(1).......... 769,242 $ 7,281,198 1,256,158 $ 11,745,810
Reinvested dividends.... 61,177 566,502 241,092 2,227,089
Shares redeemed......... (933,085) (8,897,311) (1,841,297) (16,609,583)
-------- ----------- ---------- ------------
Net increase (decrease). (102,666) $(1,049,611) (344,047) $ (2,636,684)
======== =========== ========== ============
26
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- March 31, 2018 -- (unaudited)
(continued)
International Dividend Strategy Fund
--------------------------------------------------------------------------------
Class C Class I
-------------------------------------------- ----------------------------------
For the For the
six months ended For the six months ended For the
March 31, 2018 year ended March 31, 2018 year ended
(unaudited) September 30, 2017 (unaudited) September 30, 2017
--------------------- --------------------- ---------------- ----------------
Shares Amount Shares Amount Shares Amount Shares Amount
-------- ----------- -------- ----------- ------- -------- ------ --------
Shares sold............. 85,854 $ 737,680 115,788 $ 944,316 -- $ -- -- $ --
Reinvested dividends.... 10,090 84,654 39,818 332,504 201 1,881 914 8,541
Shares redeemed(1)...... (601,986) (5,133,837) (570,527) (4,650,398) (3,828) (35,900) (3,303) (28,608)
-------- ----------- -------- ----------- ------ -------- ------ --------
Net increase (decrease). (506,042) $(4,311,503) (414,921) $(3,373,578) (3,627) $(34,019) (2,389) $(20,067)
======== =========== ======== =========== ====== ======== ====== ========
International Dividend Strategy Fund
--------------------------------------------
Class W
--------------------------------------------
For the
six months ended For the
March 31, 2018 year ended
(unaudited) September 30, 2017
--------------------- ---------------------
Shares Amount Shares Amount
-------- ----------- -------- -----------
Shares sold............. 219,646 $ 2,095,356 268,665 $ 2,409,779
Reinvested dividends.... 2,018 18,687 8,258 76,254
Shares redeemed......... (265,836) (2,544,055) (274,420) (2,462,897)
-------- ----------- -------- -----------
Net increase (decrease). (44,172) $ (430,012) 2,503 $ 23,136
======== =========== ======== ===========
--------
(1)For the six months ended March 31, 2018, includes automatic conversion of
202,203 shares of Class C shares in the amount of $1,732,879 to 182,793
shares of Class A shares in the amount of $1,732,879.
Japan Fund
-------------------------------------------------------------------------------------------
Class A Class C
----------------------------------------------- ------------------------------------------
For the For the
six months ended For the six months ended For the
March 31, 2018 year ended March 31, 2018 year ended
(unaudited) September 30, 2017 (unaudited) September 30, 2017
--------------------- ------------------------ ------------------- ---------------------
Shares Amount Shares Amount Shares Amount Shares Amount
-------- ----------- ---------- ------------ ------- ---------- -------- -----------
Shares sold(1).......... 153,959 $ 1,345,767 387,039 $ 3,097,090 254,315 $2,129,171 113,256 $ 877,588
Reinvested dividends.... 187,031 1,597,246 15,982 118,111 48,340 391,553 181 1,271
Shares redeemed(1)...... (381,633) (3,316,600) (1,954,658) (14,922,789) (73,280) (590,049) (309,948) (2,263,843)
-------- ----------- ---------- ------------ ------- ---------- -------- -----------
Net increase (decrease). (40,643) $ (373,587) (1,551,637) $(11,707,588) 229,375 $1,930,675 (196,511) $(1,384,984)
======== =========== ========== ============ ======= ========== ======== ===========
Japan Fund
-----------------------------------------------
Class W
-----------------------------------------------
For the For the
six months ended period April 20, 2017*
March 31, 2018 through
(unaudited) September 30, 2017
--------------------- ------------------------
Shares Amount Shares Amount
-------- ----------- ---------- ------------
Shares sold............. 64,443 $ 586,662 27,941 $ 226,197
Reinvested dividends.... 2,319 19,827 -- --
Shares redeemed......... (23,067) (192,006) -- --
-------- ----------- ---------- ------------
Net increase (decrease). 43,695 $ 414,483 27,941 $ 226,197
======== =========== ========== ============
--------
* Commencement of operations
(1)For the six months ended March 31, 2018, includes automatic conversion of
17,998 shares of Class C shares in the amount of $140,387 to 17,058 shares
of Class A shares in the amount of $140,387.
Note 7. Line of Credit
The Trust, along with certain other funds managed by the Adviser, has access
to a $75 million committed unsecured line of credit and a $50 million
uncommitted unsecured line of credit. The committed and uncommitted lines of
credit are renewable on an
27
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- March 31, 2018 -- (unaudited)
(continued)
annual basis with State Street Bank and Trust Company, the Trust's
custodian. Interest is currently payable on the committed line of credit at
the higher of the Federal Funds Rate (but not less than zero) plus 125 basis
points or the One-Month London Interbank Offered Rate (but not less than
zero) plus 125 basis points and State Street Bank and Trust Company's
discretionary bid rate on the uncommitted line of credit. There is also a
commitment fee of 25 basis points per annum on the daily unused portion of
the committed line of credit. 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, 2018, the following Fund had borrowings:
Days Interest Average Debt Weighted Average
Outstanding Charges Utilized Interest
- ----------- -------- ------------ ----------------
International Dividend Strategy Fund. 2 $238 $1,720,120 2.49%
Japan Fund........................... 1 47 546,370 3.13
At March 31, 2018, there were no borrowings outstanding.
Note 8. Interfund Lending Agreement
Pursuant to the exemptive relief granted by the SEC, the Funds are permitted
to participate in an interfund lending program among investment companies
advised by SunAmerica or an affiliate. The interfund lending program allows
the participating Funds to borrow money from and 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, 2018, the Funds did not participate in
this program.
Note 9. Investment Concentration
The Funds 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 countries. These securities may be denominated in
currencies other than U.S. dollars. While investing internationally may
reduce portfolio risk by increasing the diversification of portfolio
investments, the value of the investment may be affected by fluctuating
currency values, changing local and regional economic, political and social
conditions, and greater market volatility. In addition, because the AIG
Japan Fund concentrates its investments in Japan, the Fund's performance is
expected to be closely tied to social, political and economic conditions of
that country. These risks are primary risks of the Japan Fund.
28
AIG Funds
Harborside 5
185 Hudson Street, Suite 3300
Jersey City, NJ 07311
Trustees VOTING PROXIES ON TRUST DELIVERY OF SHAREHOLDER
Richard W. Grant PORTFOLIO SECURITIES DOCUMENTS
Peter A. Harbeck A description of the The Funds have adopted a
Dr. Judith L. Craven policies and proce-dures policy that allows them
William F. Devin that the Trust uses to to send only one copy of
Stephen J. Gutman determine how to vote a Fund's prospectus,
Eileen A. Kamerick proxies relating to proxy material, annual
Officers secu-rities held in a report and semi-annual
John T. Genoy, President Fund's portfolio which is report (the "shareholder
and Chief Executive available in the Trust's documents") to
Officer Statement of Additional shareholders with
James Nichols, Vice Information, may be multiple accounts
President ob-tained without charge residing at the same
Gregory N. Bressler, upon request, by calling "household." This
Secretary (800) 858-8850. This practice is called
Christopher C. Joe, in-formation is also householding and reduces
Chief Compliance available from the EDGAR Fund expenses, which
Officer database on the U.S. benefits you and other
Gregory R. Kingston, Secu-rities and Exchange shareholders. Unless the
Treasurer Commission's website at Funds receive
Shawn Parry, Vice http://www.sec.gov. instructions to the
President and PROXY VOTING RECORD ON con-trary, you will only
Assistant Treasurer SUNAMERICA EQUITY FUNDS receive one copy of the
Donna McManus, Vice Information regarding how shareholder documents.
President and SunAmer-ica Equity Funds The Funds will continue
Assistant Treasurer voted proxies relating to to household the
Kathleen Fuentes, Chief securities held in share-holder documents
Legal Officer and SunAmerica Equity Funds indefinitely, until we
Assistant Secretary during the most recent are instructed otherwise.
Matthew J. Hackethal, twelve month period ended If you do not wish to
Anti-Money Laundering June 30 is avail-able, participate in
Compliance Officer once filed with the U.S. householding, please
Investment Adviser Securities and Exchange contact Shareholder
SunAmerica Asset Commission, without Services at (800)
Management, LLC charge, upon request, by 858-8850 ext. 6010 or
Harborside 5 calling (800) 858-8850 or send a written request
185 Hudson Street, Suite on the U.S. Secu-rities with your name, the name
3300 and Exchange Commission's of your fund(s) and your
Jersey City, NJ 07311 website at account number(s) to AIG
Distributor http://www.sec.gov. Funds c/o DST, P.O. Box
AIG Capital Services, DISCLOSURE OF QUARTERLY 219186, Kansas City MO,
Inc. PORTFOLIO HOLDINGS 64121-9186. We will
Harborside 5 The Trust is required to resume in-dividual
185 Hudson Street, Suite file its com-plete mailings for your account
3300 schedule of portfolio within thirty (30) days
Jersey City, NJ 07311 holdings with the U.S. of receipt of your
Shareholder Servicing Securities and Exchange request.
Agent Commission for its first This report is submitted
AIG Fund Services, Inc. and third fiscal quarters solely for the general
Harborside 5 on Form N-Q. The Trust's information of
185 Hudson Street, Suite Forms N-Q are available shareholders of the
3300 on the U.S. Securities Funds. Distribution of
Jersey City, NJ 07311 and Exchange Commission's this report to persons
Custodian website at other than shareholders
State Street Bank and http://www.sec.gov. You of the Funds is
Trust Company can also review and authorized only in
P.O. Box 5607 obtain copies of the con-nection with a
Boston, MA 02110 Forms N-Q at the U.S. currently effective
Transfer Agent Securities and Exchange pro-spectus, setting
DST Asset Manager Commission's Public forth details of the
Solutions, Inc. Refer-ence Room in Funds, which must precede
333 W. 11/th/ Street Washington, DC or accom-pany this report.
Kansas City, MO 64105 (information on the The accompanying report
operation of Pub-lic has not been audited by
Reference Room may be independent accountants
obtained by calling and accordingly no
1-800-SEC-0330). opinion has been
expressed thereon.
[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.aig.com/funds
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.aig.com/funds 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.
AIG Funds are advised by SunAmerica Asset Management, LLC (SAAMCo) and
distributed by AIG Capital Services, Inc. (ACS), Member FINRA. Harborside 5,
185 Hudson Street, Suite 3300, Jersey City, NJ 07311, 800-858-8850. SAAMCo and
ACS are members of American International Group, Inc. (AIG).
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
AIG Funds Sales Desk at 800-858-8850, ext. 6003, or at aig.com/funds. Read the
prospectus carefully before investing.
aig.com/funds
EQSAN - 3/18
[LOGO]
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
229.407) (as required by 22(b)(15)) of Schedule 14A (17 CFR 240.14a-
101), or this Item 10.
Item 11. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures (as defined under Rule 30a-3(c)
under the Investment Company Act of 1940 (17 CFR 270. 30a-3(c))). Based
on that evaluation, the registrant's management, including the
President and Treasurer, concluded that the registrant's disclosure
controls and procedures are effective.
(b) There was no change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act
of 1940 (17 CFR 270.30a-3(d))) that occurred during the registrant's
last fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal contro1 over financial reporting.
Item 12. Disclosure of Securities Lending Activities for Closed-End Management
Investment Companies.
Not applicable.
Item 13. 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 8, 2018
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 8, 2018
By: /s/ Gregory R. Kingston
-------------------
Gregory R. Kingston
Treasurer
Date: June 8, 2018