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, 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,
Jersey City, NJ 07311
--------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6414
-----------------------------
Date of fiscal year end: September 30
--------------------------
Date of reporting period: September 30, 2018
-------------------------
Item 1. Reports to Stockholders
ANNUAL REPORT 2018
SUNAMERICA
Equity Funds
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Table of Contents
SHAREHOLDER LETTER...................................... 2
EXPENSE EXAMPLE......................................... 4
STATEMENT OF ASSETS AND LIABILITIES..................... 6
STATEMENT OF OPERATIONS................................. 7
STATEMENT OF CHANGES IN NET ASSETS...................... 8
FINANCIAL HIGHLIGHTS.................................... 9
PORTFOLIO OF INVESTMENTS................................ 11
NOTES TO FINANCIAL STATEMENTS........................... 17
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. 28
APPROVAL OF ADVISORY AGREEMENTS......................... 29
TRUSTEE AND OFFICER INFORMATION......................... 33
SHAREHOLDER TAX INFORMATION............................. 36
COMPARISONS: FUNDS vs. INDICES.......................... 37
Shareholder Letter -- (unaudited)
Dear Shareholders,
We are pleased to present this annual report for the SunAmerica Equity Funds
for the 12-month period ended September 30, 2018. From a broad perspective, it
was a period wherein global equity markets advanced overall, despite their
first quarterly loss in two years during the first quarter of 2018. The
Japanese equities market was among the leading equity markets around the globe
during the annual period, supported by robust economic activity within the
nation.
As the 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 developed
markets remained largely positive. Oil prices hit a two-year high following an
extended OPEC supply-cut agreement through the end of 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. That said, the persistence of low inflation in developed countries
confounded central bankers and increased anxiety over interest rate policy in
light of a global acceleration in economic growth and low unemployment. In
Japan, economic activity and business sentiment exceeded consensus estimates,
even as inflation remained lackluster. Producer prices accelerated, and
consumer confidence rose to its highest level since 2013.
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. Fears of a
global trade war further unsettled financial markets after the U.S.
Administration imposed stiff tariffs on steel and aluminum and announced plans
to implement tariffs on Chinese imports, while also enacting tighter
restrictions on acquisitions and technology transfers. The Fed increased the
targeted federal funds rate by another 25 basis points in March 2018, noting
the U.S. economic outlook had strengthened in recent months. Geo-political
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. Japan was among the worst performing markets during the
quarter, amid a strong yen and a weakened risk appetite for export-oriented
companies. In a milestone development, the U.K. reached a joint agreement with
the European Union on the legal terms of a Brexit transition deal.
By mid-2018, global equities rebounded from the first calendar quarter's
decline. During the second calendar quarter, trade concerns escalated, as the
U.S. Administration threatened tariffs on European autos in response to the
European Union's retaliatory tariffs on U.S. products. The U.S. also imposed
additional levies on Chinese goods, and China responded with additional tariffs
on U.S. products. Strong U.S. economic data gave the Fed confidence to raise
interest rates in June 2018 and signal the potential for two additional rate
increases later in the year. The People's Bank of China lowered its
reserve-requirement ratio, the amount of cash banks must keep on reserve, in an
effort to boost economic growth. In Japan, unemployment declined to its lowest
level since 1992, and consumer sentiment firmed. Industrial production in Japan
declined slightly, but its exports rose.
During the third quarter of 2018, global equity markets stabilized somewhat in
the wake of robust U.S. economic data, while political uncertainty and trade
concerns weighed on some regions. U.S. - China trade relations remained
volatile, with tit-for-tat tariffs taking effect in September. Emerging markets
volatility spiked after Turkey's financial crisis rattled global markets but
then receded at the end of the quarter. Oil prices approached a four-year high
amidst global supply uncertainties and strong global economic growth. Oil
inventories declined after OPEC refrained from increasing output and as the
first round of U.S. sanctions on Iran went into effect. The Fed, the Bank of
England and the Bank of Canada each raised its respective interest rates, while
the European Central Bank left its interest rates unchanged and reiterated its
pledge to keep them low at least until the summer of 2019. The Japanese equity
market was particularly strong on the back of expanding industrial production,
inflation increasing toward the Bank of Japan's target rate, unemployment
remaining low and retail sales gaining momentum. The Bank of Japan, however,
left its policy rate unchanged.
2
Against this backdrop, international equities, as measured by the MSCI ACWI
ex-U.S. (Net),/*/ posted a return of 1.76% in U.S. dollar terms for the
12-month period ended September 30, 2018. Japanese equities, as measured by the
MSCI Japan Index (Net),/*/ posted more robust gains, generating a return of
10.20% in U.S. dollar terms for the same period. To compare, U.S. equities, as
measured by the S&P 500(R) Index,/*/ returned 17.91%, and emerging market
equities, as measured by the MSCI Emerging Markets Index (Net),/*/ returned
-0.81% for the same 12-month period.
On the following pages, you will find financial statements and portfolio
information for each of the SunAmerica Equity Funds during the annual period
ended September 30, 2018.
Thank you for being a part of the SunAmerica Equity Funds. We value your
ongoing confidence in us and look forward to serving your investment needs in
the future. As always, if you have any questions regarding your investments,
please contact your financial advisor or get in touch with us directly at
800-858-8850 or via our website, 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.
+ 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.
* The Morgan Stanley Capital International All Country World Index (MSCI ACWI)
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.
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. The MSCI Japan Index (Net) is a free float-adjusted market
capitalization-weighted index that is designed to track the equity market
performance of Japanese securities listed on Tokyo Stock Exchange, Osaka
Stock Exchange, JASDAQ and Nagoya Stock Exchange. Net total return indices
reinvest dividends after the deduction of withholding taxes, using (for
international indices) a tax rate applicable to non-resident institutional
investors who do not benefit from double taxation treaties. The S&P 500 Index
is Standard & Poor's 500 Composite Stock Price Index, a widely recognized,
unmanaged index of U.S. common stock prices. The MSCI 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 23 emerging
market country indices. Net total return indices reinvest dividends after the
deduction of withholding taxes, using (for international indices) a tax rate
applicable to non-resident institutional investors who do not benefit from
double taxation treaties. Indices are not managed and an investor cannot
invest directly in an index.
3
SunAmerica Equity Funds
EXPENSE EXAMPLE -- September 30, 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 April 1, 2018 and held until September 30, 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
Period Ended September 30, 2018" to estimate the expenses you paid on your
account during this period. For shareholder accounts, the "Expenses Paid During
the Period Ended September 30, 2018" column and the "Annualized Expense Ratio"
column do 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 Period Ended September 30, 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 Period Ended
September 30, 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, the "Expenses Paid During the
Period Ended September 30, 2018" column and the "Annualized Expense Ratio"
column do 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 Period Ended September 30, 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 Period Ended
September 30, 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 -- September 30, 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 Period Beginning 5% Assumed Period
Account Value Return at Ended Account Value Return at Ended
at April 1, September 30, September 30, at April 1, September 30, September 30,
Fund 2018 2018 2018 2018 2018 2018
---- ------------- -------------- ------------- ------------- -------------- -------------
AIG International Dividend Strategy
Fund(2)
Class A........................... $1,000.00 $924.30 $ 9.17 $1,000.00 $1,015.54 $ 9.60
Class C........................... $1,000.00 $921.10 $12.28 $1,000.00 $1,012.28 $12.86
Class W........................... $1,000.00 $925.18 $ 8.20 $1,000.00 $1,016.55 $ 8.59
AIG Japan Fund(2)
Class A........................... $1,000.00 $962.87 $ 9.35 $1,000.00 $1,015.54 $ 9.60
Class C........................... $1,000.00 $958.28 $12.52 $1,000.00 $1,012.28 $12.86
Class W........................... $1,000.00 $964.11 $ 8.37 $1,000.00 $1,016.55 $ 8.59
Annualized
Expense
Fund Ratio(1)
---- ----------
AIG International Dividend Strategy
Fund(2)
Class A........................... 1.90%
Class C........................... 2.55%
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 183 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 Period
Ended September 30, 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 Period Ended September 30, 2018" and the annualized
"Expense Ratio" would have been lower.
5
SunAmerica Equity Funds
STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2018
AIG International
Dividend
Strategy Fund AIG Japan Fund
----------------- --------------
ASSETS:
Investments at value (unaffiliated)*................ $ 70,106,857 $25,070,354
Repurchase agreements (cost approximates value)..... 468,000 216,000
Cash................................................ 282 720
Foreign cash*....................................... 417,704 5
Receivable for:
Fund shares sold................................... 121,470 25
Dividends and interest............................. 377,782 171,882
Investments sold................................... -- 293,414
Prepaid expenses and other assets................... 5,634 5,565
Due from investment adviser for expense
reimbursements/fee waivers......................... 32,324 29,391
------------ -----------
Total assets........................................ 71,530,053 25,787,356
------------ -----------
LIABILITIES:
Payable for:
Fund shares redeemed............................... 19,509 11,729
Investments purchased.............................. -- 156,698
Investment advisory and management fees............ 58,434 23,707
Distribution and service maintenance fees.......... 23,630 10,430
Transfer agent fees and expenses................... 16,763 6,281
Trustees' fees and expenses........................ 611 393
Other accrued expenses............................. 174,266 91,335
------------ -----------
Total liabilities................................... 293,213 300,573
------------ -----------
Net Assets.......................................... $ 71,236,840 $25,486,783
============ ===========
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01 par value...... $ 83,966 $ 32,171
Paid-in capital..................................... 130,935,965 23,930,263
------------ -----------
131,019,931 23,962,434
Total distributable earnings (loss)................. (59,783,091) 1,524,349
------------ -----------
Net Assets.......................................... $ 71,236,840 $25,486,783
============ ===========
*Cost
Investments (unaffiliated)......................... $ 75,826,511 $26,080,163
============ ===========
Foreign cash....................................... $ 415,243 $ 5
============ ===========
Class A (unlimited shares authorized):
Net assets.......................................... $ 62,314,756 $18,949,141
Shares of beneficial interest issued and outstanding 7,273,848 2,357,517
Net asset value and redemption price per share...... $ 8.57 $ 8.04
Maximum sales charge (5.75% of offering price)...... $ 0.52 $ 0.49
------------ -----------
Maximum offering price to public.................... $ 9.09 $ 8.53
============ ===========
Class C (unlimited shares authorized):
Net assets.......................................... $ 6,718,809 $ 6,225,319
Shares of beneficial interest issued and outstanding 865,788 820,768
Net asset value, offering and redemption price per
share (excluding any applicable contingent
deferred sales charge)............................. $ 7.76 $ 7.58
============ ===========
Class W (unlimited shares authorized):
Net assets.......................................... $ 2,203,275 $ 312,323
Shares of beneficial interest issued and outstanding 257,010 38,773
Net asset value, offering and redemption price per
share.............................................. $ 8.57 $ 8.06
============ ===========
See Notes to Financial Statements
6
SunAmerica Equity Funds
STATEMENT OF OPERATIONS -- September 30, 2018
AIG International
Dividend
Strategy Fund AIG Japan Fund
----------------- --------------
INVESTMENT INCOME:
Dividends (unaffiliated)............................................................. $ 4,019,525 $ 492,956
Interest (unaffiliated).............................................................. 696 1,325
------------ -----------
Total investment income*............................................................ 4,020,221 494,281
------------ -----------
EXPENSES:
Investment advisory and management fees................................................ 834,942 334,510
Distributionand service maintenance fees:
Class A............................................................................. 237,133 76,351
Class C............................................................................. 98,782 64,722
Servicefees:
Class I+............................................................................ 524 --
Class W............................................................................. 7,135 764
Transferagent fees and expenses:
Class A............................................................................. 170,857 50,509
Class C............................................................................. 25,988 15,600
Class I+............................................................................ 1,227 --
Class W............................................................................. 11,302 1,321
Registrationfees:
Class A............................................................................. 20,854 17,479
Class C............................................................................. 10,667 12,547
Class I+............................................................................ 1,699 --
Class W............................................................................. 10,562 11,419
Custodian and accounting fees........................................................ 36,573 32,440
Reports to shareholders.............................................................. 78,440 20,579
Audit and tax fees................................................................... 76,121 77,241
Legal fees........................................................................... 56,536 41,476
Trustees' fees and expenses.......................................................... 4,803 1,635
Interest expense..................................................................... 590 88
Other expenses....................................................................... 23,456 18,091
------------ -----------
Total expenses before fee waivers, expense reimbursements, and expense recoupments.. 1,708,191 776,772
Net (Fees waived and expenses reimbursed)/recouped by investment adviser (Note 3)... (66,702) (183,013)
------------ -----------
Net expenses........................................................................ 1,641,489 593,759
------------ -----------
Net investment income (loss)........................................................... 2,378,732 (99,478)
------------ -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)**............................... 7,424,981 4,286,400
Net realized foreign exchange gain (loss) on other assets and liabilities.............. 2,316 1,754
------------ -----------
Net realized gain (loss) on investments and foreign currencies......................... 7,427,297 4,288,154
------------ -----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated)......... (15,871,455) (4,205,490)
Change in unrealized foreign exchange gain (loss) on other assets and liabilities...... 41 (477)
Change in accrued capital gains tax on unrealized appreciation (depreciation).......... 47,169 --
------------ -----------
Net unrealized gain (loss) on investments and foreign currencies....................... (15,824,245) (4,205,967)
------------ -----------
Net realized and unrealized gain (loss) on investments and foreign currencies.......... (8,396,948) 82,187
------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ $ (6,018,216) $ (17,291)
============ ===========
* Net of foreign withholding taxes on interest and dividends of........................ $ 378,176 $ 56,326
============ ===========
** Net of foreign withholding taxes on capital gains of................................ $ 42,935 $ --
============ ===========
--------
+ See Note 1
See Notes to Financial Statements
7
SunAmerica Equity Funds
STATEMENT OF CHANGES IN NET ASSETS -- September 30, 2018
AIG International
Dividend
Strategy Fund
---------------------------
For the year For the year
ended ended
September 30, September 30,
2018 2017
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss).................................................................. $2,378,732 $ 2,805,195
Net realized gain (loss) on investments and foreign currencies................................ 7,427,297 (758,833)
Net unrealized gain (loss) on investments and foreign currencies.............................. (15,824,245) 9,359,344
------------- -----------
Net increase (decrease) in net assets resulting from operations................................ (6,018,216) 11,405,706
------------- -----------
Distributions to shareholders from:(1)
Distributable earnings (Class A).............................................................. (2,032,857) (2,312,658)
Distributable earnings (Class C).............................................................. (227,075) (401,325)
Distributable earnings (Class I)++............................................................ (4,650) (8,541)
Distributable earnings (Class W).............................................................. (126,742) (206,258)
------------- -----------
Total distributions to shareholders............................................................ (2,391,324) (2,928,782)
------------- -----------
Net increase (decrease) in net assets resulting from capital share transactions (Note 6)....... (12,539,781) (6,007,193)
------------- -----------
Total increase (decrease) in net assets........................................................ (20,949,321) 2,469,731
NET ASSETS:
Beginning of period............................................................................ $ 92,186,161 $89,716,430
------------- -----------
End of period+................................................................................. $ 71,236,840 $92,186,161
============= ===========
AIG Japan Fund
--------------------------
For the year For the year
ended ended
September 30, September 30,
2018 2017
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss).................................................................. $ (99,478) $ (112,692)
Net realized gain (loss) on investments and foreign currencies................................ 4,288,154 3,548,131
Net unrealized gain (loss) on investments and foreign currencies.............................. (4,205,967) 1,822,899
----------- ------------
Net increase (decrease) in net assets resulting from operations................................ (17,291) 5,258,338
----------- ------------
Distributions to shareholders from:(1)
Distributable earnings (Class A).............................................................. (1,695,027) (133,702)
Distributable earnings (Class C).............................................................. (434,048) (1,525)
Distributable earnings (Class I)++............................................................ -- --
Distributable earnings (Class W).............................................................. (49,128) --
----------- ------------
Total distributions to shareholders............................................................ (2,178,203) (135,227)
----------- ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 6)....... (1,255,132) (12,866,375)
----------- ------------
Total increase (decrease) in net assets........................................................ (3,450,626) (7,743,264)
NET ASSETS:
Beginning of period............................................................................ $28,937,409 $ 36,680,673
----------- ------------
End of period+................................................................................. $25,486,783 $ 28,937,409
=========== ============
--------
++ See Note 1
(1)The prior year amounts have been restated to reflect the adoption of
amendments to Rule 6-09.3 of Regulation S-X. Below are the amounts as stated
in the September 30, 2017 annual report.
Distributions to shareholders from:
Net investment income (Class A)............................................................. $(2,312,658)
Net investment income (Class C)............................................................. (401,325)
Net investment income (Class I)............................................................. (8,541)
Net investment income (Class W)............................................................. (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.......................................................... $(2,928,782)
===========
Distributions to shareholders from:
Net investment income (Class A)............................................................. $(133,702)
Net investment income (Class C)............................................................. (1,525)
Net investment income (Class I)............................................................. --
Net investment income (Class W)............................................................. --
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.......................................................... $(135,227)
=========
See Notes to Financial Statements
8
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
-
09/30/14 $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
09/30/18 9.53 0.27 (0.95) (0.68) (0.28) -- (0.28) 8.57 (7.18) 62,315
Class C
-
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
09/30/18 8.64 0.17 (0.84) (0.67) (0.21) -- (0.21) 7.76 (7.80) 6,719
Class W
-
01/29/15*-09/30/15 9.80 0.27 (1.84) (1.57) (0.19) -- (0.19) 8.04 (16.23)(7) 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
09/30/18 9.53 0.29 (0.96) (0.67) (0.29) -- (0.29) 8.57 (7.06) 2,203
Ratio
of net
Ratio of investment
expenses income (loss)
to average to average Portfolio
net assets net assets Turnover
---------- ------------- ---------
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) 2.97(3) 59
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) 1.95(3) 59
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) 2.98(3) 59
--------
* Commencement of Operations.
(1)Calculated based upon average shares outstanding.
(2)Total return 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):
09/30/14 09/30/15 09/30/16 09/30/17 09/30/18
-------- -------- -------- -------- --------
AIG International Dividend Strategy Class A. (0.09)% (0.01)% 0.03% (0.02)% 0.06%
AIG International Dividend Strategy Class C. (0.05) (0.02) 0.08 0.08 0.12
AIG International Dividend Strategy Class W. -- 0.20 0.15 0.17 0.22
(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% and 1.51%
for Class A, Class C and Class W, respectively.
(6)The Fund's performance figure was increased by 0.25%, 0.28%, 0.25% for
Class A, Class C and Class W, respectively, for a reimbursement of custody
expenses from prior years.
(7)Total return is not annualized.
See Notes to Financial Statements
9
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
-
09/30/14 $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
09/30/18 8.62 (0.02) 0.09 0.07 (0.08) (0.57) (0.65) 8.04 0.34 18,949 1.90
Class C
-
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
09/30/18 8.17 (0.06) 0.07 0.01 (0.03) (0.57) (0.60) 7.58 (0.37) 6,225 2.55
Class W
-
04/20/17*-09/30/17 7.72 0.06 0.85 0.91 -- -- -- 8.63 11.79(5) 241 1.70(4)
09/30/18 8.63 (0.00) 0.09 0.09 (0.09) (0.57) (0.66) 8.06 0.57 312 1.70
Ratio
of net
investment
income (loss)
to average Portfolio
net assets(3) Turnover
------------- ---------
(0.19)% 111%
(0.46) 144
0.01 151
(0.28) 115
(0.22) 101
(0.65) 111%
(0.95) 144
(0.78) 151
(0.89) 115
(0.77) 101
1.80(4) 115%
(0.03) 101
--------
* Commencement of Operations.
(1)Calculated based upon average shares outstanding.
(2)Total return 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):
09/30/14 09/30/15 09/30/16 09/30/17 09/30/18
-------- -------- -------- -------- --------
AIG Japan Class A....................... 0.29% 0.24% 0.41% 0.55% 0.56%
AIG Japan Class C....................... 0.84 0.50 0.56 0.75 0.70
AIG Japan Class W....................... -- -- -- 17.99(4) 2.75
(4)Annualized
(5)Total return is not annualized.
See Notes to Financial Statements
10
AIG International Dividend Strategy Fund
PORTFOLIO PROFILE -- September 30, 2018 -- (unaudited)
Industry Allocation*
Medical-Drugs........................ 8.9%
Food-Retail.......................... 8.2
Cellular Telecom..................... 6.8
Building-Residential/Commercial...... 6.1
Metal-Diversified.................... 4.6
Telephone-Integrated................. 3.9
Real Estate Operations & Development. 3.8
Auto-Cars/Light Trucks............... 3.8
Television........................... 3.6
Tobacco.............................. 3.5
Oil Companies-Integrated............. 3.0
Computers............................ 2.9
Metal Processors & Fabrication....... 2.6
Fisheries............................ 2.6
Electronic Components-Misc........... 2.3
Machinery-General Industrial......... 2.2
Aerospace/Defense.................... 2.1
Cosmetics & Toiletries............... 2.1
Power Converter/Supply Equipment..... 2.0
Diversified Manufacturing Operations. 2.0
Telecom Services..................... 1.9
Coal................................. 1.9
Advertising Services................. 1.9
Steel-Producers...................... 1.8
Retail-Building Products............. 1.8
Gas-Distribution..................... 1.8
Advertising Agencies................. 1.7
Metal-Iron........................... 1.5
Human Resources...................... 1.5
Insurance-Multi-line................. 1.5
Oil Refining & Marketing............. 1.4
Retail-Jewelry....................... 1.4
Chemicals-Diversified................ 1.3
Repurchase Agreements................ 0.7
----
99.1%
====
Country Allocation*
United Kingdom.......................... 24.1%
France.................................. 12.1
Australia............................... 8.3
China................................... 7.1
Turkey.................................. 5.7
Hong Kong............................... 5.0
Taiwan.................................. 4.9
Germany................................. 3.7
Japan................................... 3.6
Switzerland............................. 3.6
Netherlands............................. 2.7
Norway.................................. 2.6
Finland................................. 2.2
Russia.................................. 2.2
Canada.................................. 1.9
Jersey.................................. 1.7
Cayman Islands.......................... 1.6
South Africa............................ 1.6
Brazil.................................. 1.5
Denmark................................. 1.4
Spain................................... 0.9
United States........................... 0.7
----
99.1%
====
--------
*Calculated as a percentage of net assets
11
AIG International Dividend Strategy Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2018
Value
Security Description Shares (Note 2)
COMMON STOCKS -- 98.4%
Australia -- 8.3%
Fortescue Metals Group, Ltd....... 388,632 $1,101,217
Rio Tinto, Ltd.................... 30,025 1,709,373
Telstra Corp., Ltd................ 572,368 1,319,818
Wesfarmers, Ltd................... 49,550 1,785,488
----------
5,915,896
----------
Bermuda -- 0.0%
Peace Mark Holdings, Ltd.+(1)(2).. 800,000 0
----------
Brazil -- 1.5%
BB Seguridade Participacoes SA.... 173,074 1,032,817
----------
Canada -- 1.9%
BCE, Inc.......................... 33,549 1,359,207
----------
Cayman Islands -- 1.6%
Country Garden Holdings Co., Ltd.. 932,000 1,175,068
----------
China -- 7.1%
China Petroleum & Chemical Corp... 2,092,000 2,095,113
China Vanke Co., Ltd.............. 476,400 1,576,164
Yanzhou Coal Mining Co., Ltd...... 1,168,000 1,353,256
----------
5,024,533
----------
Denmark -- 1.4%
Pandora A/S....................... 15,875 991,369
----------
Finland -- 2.2%
Kone Oyj, Class B................. 29,593 1,581,200
----------
France -- 12.1%
Carrefour SA...................... 77,555 1,485,747
Orange SA......................... 95,659 1,525,477
Publicis Groupe SA................ 22,438 1,341,139
Renault SA........................ 15,952 1,379,820
Sanofi............................ 15,781 1,402,773
Schneider Electric SE............. 18,006 1,448,777
----------
8,583,733
----------
Germany -- 3.7%
ProSiebenSat.1 Media SE........... 45,980 1,194,225
Siemens AG........................ 11,123 1,424,971
----------
2,619,196
----------
Hong Kong -- 5.0%
China Mobile, Ltd................. 154,500 1,522,629
Lenovo Group, Ltd................. 2,838,000 2,073,663
----------
3,596,292
----------
Japan -- 3.6%
Japan Tobacco, Inc................ 47,900 1,250,408
Subaru Corp....................... 43,400 1,329,273
----------
2,579,681
----------
Jersey -- 1.7%
WPP PLC........................... 84,350 1,236,296
----------
Netherlands -- 2.7%
Koninklijke Ahold Delhaize NV..... 83,808 1,921,780
----------
Norway -- 2.6%
Marine Harvest ASA................ 79,219 1,835,262
----------
Russia -- 2.2%
MMC Norilsk Nickel PJSC ADR....... 91,048 1,575,130
----------
Shares/
Principal Value
Security Description Amount (Note 2)
South Africa -- 1.6%
Vodacom Group, Ltd............................... 131,336 $ 1,169,567
-----------
Spain -- 0.9%
Distribuidora Internacional de Alimentacion
SA.............................................. 268,658 623,851
-----------
Switzerland -- 3.6%
Adecco Group AG.................................. 20,115 1,056,376
Roche Holding AG................................. 6,135 1,486,240
-----------
2,542,616
-----------
Taiwan -- 4.9%
AU Optronics Corp................................ 3,913,000 1,653,218
Catcher Technology Co., Ltd...................... 168,000 1,848,754
-----------
3,501,972
-----------
Turkey -- 5.7%
Eregli Demir ve Celik Fabrikalari TAS............ 721,061 1,317,841
Petkim Petrokimya Holding AS..................... 1,025,281 908,892
Tupras Turkiye Petrol Rafinerileri AS............ 45,836 1,019,236
Turkcell Iletisim Hizmetleri AS.................. 439,228 839,869
-----------
4,085,838
-----------
United Kingdom -- 24.1%
AstraZeneca PLC.................................. 23,578 1,832,524
BAE Systems PLC.................................. 184,997 1,518,606
Barratt Developments PLC......................... 190,115 1,405,003
Berkeley Group Holdings PLC...................... 31,429 1,507,086
BT Group PLC..................................... 411,504 1,208,407
Centrica PLC..................................... 624,736 1,261,321
GlaxoSmithKline PLC.............................. 78,487 1,572,146
Imperial Brands PLC.............................. 36,690 1,277,319
ITV PLC.......................................... 668,722 1,375,840
Kingfisher PLC................................... 391,376 1,316,109
Persimmon PLC.................................... 45,247 1,394,758
Unilever PLC..................................... 27,050 1,486,434
-----------
17,155,553
-----------
Total Long-Term Investment Securities
(cost $75,826,511).............................. 70,106,857
-----------
REPURCHASE AGREEMENTS -- 0.7%
Agreement with Fixed Income Clearing Corp.,
bearing interest at 0.42%, dated 09/28/2018,
to be repurchased 10/01/2018 in the amount
of $468,016 collateralized by $490,000 of
United States Treasury Notes, bearing interest
at 3.00% due 11/15/2044 and having an
approximate value of $479,457
(cost $468,000)................................. $ 468,000 468,000
-----------
TOTAL INVESTMENTS --
(cost $76,294,511)(3)........................... 99.1% 70,574,857
Other assets less liabilities...................... 0.9 661,983
---------- -----------
NET ASSETS -- 100.0% $71,236,840
========== ===========
--------
+ Non-income producing security
(1) Securities classified as Level 3 (see Note 2).
(2) Illiquid security. At September 30, 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
12
AIG International Dividend Strategy Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2018 -- (continued)
The following is a summary of the inputs used to value the Funds's net assets
as of September 30, 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.......... 70,106,857 -- -- 70,106,857
Repurchase Agreements...... -- 468,000 -- 468,000
----------- -------- --- -----------
Total Investments at Value. $70,106,857 $468,000 $ 0 $70,574,857
=========== ======== === ===========
--------
* 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
13
AIG Japan Fund
PORTFOLIO PROFILE -- September 30, 2018 -- (unaudited)
Industry Allocation*
Electronic Components-Misc............ 13.7%
Auto/Truck Parts & Equipment-Original. 9.4
Rubber-Tires.......................... 6.5
Diversified Banking Institutions...... 5.2
Entertainment Software................ 4.7
Telephone-Integrated.................. 4.2
Medical Products...................... 4.2
Chemicals-Specialty................... 4.1
Food-Retail........................... 3.1
Aerospace/Defense..................... 3.1
Chemicals-Diversified................. 2.9
Motorcycle/Motor Scooter.............. 2.7
Tobacco............................... 2.5
Food-Misc./Diversified................ 2.5
Electronic Components-Semiconductors.. 2.4
Real Estate Management/Services....... 2.2
Insurance-Property/Casualty........... 2.1
Finance-Consumer Loans................ 2.0
Retail-Catalog Shopping............... 1.9
Metal-Diversified..................... 1.8
Steel-Producers....................... 1.8
Computer Services..................... 1.7
Photo Equipment & Supplies............ 1.6
Machinery-Electrical.................. 1.5
Transport-Marine...................... 1.5
Industrial Automated/Robotic.......... 1.4
Building-Maintenance & Services....... 1.4
Medical-Drugs......................... 1.1
Distribution/Wholesale................ 1.1
Building & Construction-Misc.......... 1.0
Food-Confectionery.................... 1.0
Transport-Rail........................ 0.9
Repurchase Agreements................. 0.8
Web Portals/ISP....................... 0.8
Retail-Discount....................... 0.4
----
99.2%
====
Country Allocation*
Japan......... 98.4%
United States. 0.8
----
99.2%
====
--------
*Calculated as a percentage of net assets
14
AIG Japan Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2018
Value
Security Description Shares (Note 2)
COMMON STOCKS -- 98.4%
Aerospace/Defense -- 3.1%
Kawasaki Heavy Industries, Ltd....... 27,550 $ 777,132
----------
Auto/Truck Parts & Equipment-Original -- 9.4%
NGK Insulators, Ltd.................. 69,301 1,143,021
Sumitomo Electric Industries, Ltd.... 68,389 1,072,604
Toyota Industries Corp............... 3,143 185,891
----------
2,401,516
----------
Building & Construction-Misc. -- 1.0%
Hazama Ando Corp..................... 32,839 250,584
----------
Building-Maintenance & Services -- 1.4%
Kyoritsu Maintenance Co., Ltd........ 8,635 365,175
----------
Chemicals-Diversified -- 2.9%
Hitachi Chemical Co., Ltd............ 26,823 546,044
Tokuyama Corp........................ 7,272 197,769
----------
743,813
----------
Chemicals-Specialty -- 4.1%
Shin-Etsu Chemical Co., Ltd.......... 11,850 1,049,729
----------
Computer Services -- 1.7%
Fujitsu, Ltd......................... 6,037 430,160
----------
Distribution/Wholesale -- 1.1%
Trusco Nakayama Corp................. 9,708 268,717
----------
Diversified Banking Institutions -- 5.2%
Mitsubishi UFJ Financial Group, Inc.. 210,396 1,313,077
----------
Electronic Components-Misc. -- 13.7%
Fujitsu General, Ltd................. 31,115 522,235
Hitachi High-Technologies Corp....... 18,182 626,496
Hitachi Maxell, Ltd.................. 32,723 512,647
Kyocera Corp......................... 12,185 731,400
Minebea Mitsumi, Inc................. 26,903 487,768
Murata Manufacturing Co., Ltd........ 3,898 599,178
----------
3,479,724
----------
Electronic Components-Semiconductors -- 2.4%
Rohm Co., Ltd........................ 8,412 613,020
----------
Entertainment Software -- 4.7%
DeNA Co., Ltd........................ 37,587 663,942
Nexon Co., Ltd.+..................... 40,333 527,148
----------
1,191,090
----------
Finance-Consumer Loans -- 2.0%
Acom Co., Ltd........................ 128,124 516,465
----------
Food-Confectionery -- 1.0%
Ezaki Glico Co., Ltd................. 4,933 242,265
----------
Food-Misc./Diversified -- 2.5%
Ajinomoto Co., Inc................... 37,653 646,384
----------
Food-Retail -- 3.1%
Seven & i Holdings Co., Ltd.......... 17,479 778,417
----------
Industrial Automated/Robotic -- 1.4%
THK Co., Ltd......................... 14,381 366,043
----------
Insurance-Property/Casualty -- 2.1%
Tokio Marine Holdings, Inc........... 10,882 539,886
----------
Machinery-Electrical -- 1.5%
Mitsubishi Electric Corp............. 28,280 387,413
----------
Medical Products -- 4.2%
Nipro Corp........................... 77,793 1,063,988
----------
Shares/
Principal Value
Security Description Amount (Note 2)
Medical-Drugs -- 1.1%
Ono Pharmaceutical Co., Ltd....................... 10,284 $ 290,997
-----------
Metal-Diversified -- 1.8%
Mitsui Mining & Smelting Co., Ltd................. 15,958 462,083
-----------
Miscellaneous Manufacturing -- 0.0%
Peace Mark Holdings, Ltd.+(1)(2).................. 8,000 0
-----------
Motorcycle/Motor Scooter -- 2.7%
Yamaha Motor Co., Ltd............................. 24,634 690,541
-----------
Photo Equipment & Supplies -- 1.6%
FUJIFILM Holdings Corp............................ 8,993 404,851
-----------
Real Estate Management/Services -- 2.2%
Mitsubishi Estate Co., Ltd........................ 32,260 548,551
-----------
Retail-Catalog Shopping -- 1.9%
ASKUL Corp........................................ 16,455 493,853
-----------
Retail-Discount -- 0.4%
Seria Co., Ltd.................................... 2,694 95,317
-----------
Rubber-Tires -- 6.5%
Toyo Tire & Rubber Co., Ltd....................... 92,472 1,665,993
-----------
Steel-Producers -- 1.8%
JFE Holdings, Inc................................. 19,810 454,539
-----------
Telephone-Integrated -- 4.2%
Nippon Telegraph & Telephone Corp................. 13,922 628,830
SoftBank Group Corp............................... 4,451 449,331
-----------
1,078,161
-----------
Tobacco -- 2.5%
Japan Tobacco, Inc................................ 24,814 647,759
-----------
Transport-Marine -- 1.5%
Nippon Yusen KK................................... 19,719 370,881
-----------
Transport-Rail -- 0.9%
Seibu Holdings, Inc............................... 12,646 227,388
-----------
Web Portals/ISP -- 0.8%
Yahoo Japan Corp.................................. 59,683 214,842
-----------
Total Long-Term Investment Securities
(cost $26,080,163)............................... 25,070,354
-----------
REPURCHASE AGREEMENTS -- 0.8%
Agreement with Fixed Income Clearing Corp.,
bearing interest at 0.42%, dated 09/28/2018, to
be repurchased 10/01/2018 in the amount of
$216,008 collateralized by $225,000 of United
States Treasury Notes, bearing interest at
2.13% due 08/15/2044 and having an
approximate value of $223,468
(cost $216,000).................................. $216,000 216,000
-----------
TOTAL INVESTMENTS
(cost $26,296,163)(3)............................ 99.2% 25,286,354
Other assets less liabilities....................... 0.8 200,429
-------- -----------
NET ASSETS 100.0% $25,486,783
======== ===========
--------
+ Non-income producing security
(1)Securities classified as Level 3 (see Note 2).
(2)Illiquid security. At September 30, 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.
15
AIG Japan Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2018 -- (continued)
The following is a summary of the inputs used to value the Portfolio's net
assets as of September 30, 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............ 25,070,354 -- -- 25,070,354
Repurchase Agreements......... -- 216,000 -- 216,000
----------- -------- --- -----------
Total Investments at Value.... $25,070,354 $216,000 $ 0 $25,286,354
=========== ======== === ===========
--------
* 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
16
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2018
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 will convert automatically to Class A shares approximately
ten years after purchase and at the such time will be subject to the lower
distribution fee applicable to Class A shares.
Class I shares of the International Dividend Strategy Fund were liquidated
effective September 7, 2018.
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.
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, except Class C shares are 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 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
17
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2018 -- (continued)
indemnify others. The Trust's maximum exposure under these arrangements is
unknown. Currently, however, the Trust expects the risk of loss to be remote.
Note 2. Significant Accounting Policies
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles ("GAAP") requires management to make
estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those
estimates and those differences could be significant. The following is a
summary of significant accounting policies consistently followed by the
Trust 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 September 30, 2018, is reported on a schedule at the
end of each Fund's 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.
18
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2018 -- (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.
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. Investment 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 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 September 30, 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.
19
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2018 -- (continued)
Repurchase Agreements: The Funds, along with other affiliated registered
investment companies, pursuant to procedures adopted by the Board and
applicable guidance from the Securities and Exchange Commission ("SEC"), may
transfer uninvested cash balances into a single joint account, the daily
aggregate balance of which is invested in one or more repurchase agreements
collateralized by U.S. Treasury or federal agency obligations. In a
repurchase agreement, the seller of a security agrees to repurchase the
security at a mutually agreed-upon time and price, which reflects the
effective rate of return for the term of the agreement. For repurchase
agreements and joint repurchase agreements, the 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 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
20
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2018 -- (continued)
2015 -- 2017 or expected to be taken in each Fund's 2018 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 2015.
Foreign Currency Translation: The books and records of the Funds are
maintained in U.S. dollars. Assets and liabilities denominated in foreign
currencies and commitments under forward foreign currency contracts are
translated into U.S. dollars based on the exchange rate of such currencies
against U.S. dollars on the date of valuation.
The Funds do not isolate that portion of the results of operations arising
as a result of changes in the foreign exchange rates from the changes in the
market prices of securities held at the end of the year.
Similarly, the Funds do not isolate the effect of changes in foreign
exchange rates from the changes in the market prices of portfolio securities
sold during the year.
Realized foreign exchange gains and losses on other assets and liabilities
and change in unrealized foreign exchange gains and losses on other assets
and liabilities located in the Statement of Operations include realized
foreign exchange gains and losses from currency gains or losses between the
trade and the settlement dates of securities transactions, the difference
between the amounts of interest, dividends and foreign withholding taxes
recorded on the Funds' books and the U.S. dollar equivalent amounts actually
received or paid and changes in the unrealized foreign exchange gains and
losses relating to the other assets and liabilities arising as a result of
changes in the exchange rates.
New Accounting Pronouncements: In August 2018, the SEC adopted amendments to
certain financial statement disclosure requirements of Regulation S-X to
conform them to GAAP for investment companies. The final rule became
effective on November 5, 2018. All required changes have been made in
accordance with Regulation S-X.
In August 2018, the FASB issued Accounting Standards Update ("ASU") No.
2018-13 "Disclosure Framework -- Changes to the Disclosure Requirements for
Fair Value Measurement". The ASU eliminates, modifies, and adds disclosure
requirements for fair value measurements and is effective for fiscal years,
and interim periods within those fiscal years, beginning after December 15,
2019. Management is currently evaluating the amendments and their impact, if
any, on the Funds' financial statements.
Note 3. Investment Advisory and Management Agreement, Distribution Agreement
and Service Agreement
The Trust, on behalf of each Fund, has an Investment Advisory and Management
Agreement (the "Agreement") with SunAmerica. Under the Agreement, SunAmerica
provides continuous supervision of a Fund's portfolio and administers its
corporate affairs, subject to general review by the Trustees. In connection
therewith, SunAmerica furnishes the Funds with office facilities, maintains
certain of the Funds' books and records, and pays the salaries and expenses
of all personnel, including officers of the Funds who are employees of
SunAmerica and its affiliates.
The Funds pay SunAmerica a monthly investment advisory and management fee
calculated daily at the following annual percentages of each Fund's average
daily net assets:
Management
Fees
----------
International Dividend Strategy Fund. 1.00%
Japan Fund........................... 1.15
For the year ended September 30, 2018, SunAmerica earned fees in the amounts
stated in the Statement of Operations.
The Japan Fund is subadvised by Wellington Management Company LLP
("Wellington Management") pursuant to a subadvisory agreement with
SunAmerica. Wellington Management receives an annual fee of 0.45% of average
daily net assets of the Japan Fund, which is paid by SunAmerica.
21
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2018 -- (continued)
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 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 recoupment 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 year ended September 30, 2018, pursuant to the contractual expense
limitations referred to above, SunAmerica has waived or reimbursed expenses
as follows:
Other Expense
Reimbursed
-------------
Japan Fund. $75,182
Amount
-------
International Dividend Strategy Fund Class A. $49,388
International Dividend Strategy Fund Class C. 12,338
International Dividend Strategy Fund Class I. 2,394
International Dividend Strategy Fund Class W. 10,384
Japan Fund Class A........................... 67,003
Japan Fund Class C........................... 28,092
Japan Fund Class W........................... 12,736
For the year ended September 30, 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 September 30, 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, 2019 September 30, 2020
- ------------------ ------------------
Japan Fund. $98,361 $75,182
22
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2018 -- (continued)
Class Specific Expenses Reimbursed
-------------------------------------
September 30, 2019 September 30, 2020
- ------------------ ------------------
International Dividend Strategy Fund Class A. $ -- $49,388
International Dividend Strategy Fund Class C. 16,366 12,338
International Dividend Strategy Fund Class I. 4,719 2,394
International Dividend Strategy Fund Class W. 11,959 10,384
Japan Fund Class A........................... 78,562 67,003
Japan Fund Class C........................... 28,032 28,092
Japan Fund Class W........................... 8,912 12,736
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. Accordingly, for the year ended
September 30, 2018, ACS received fees (see 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 year ended September 30, 2018, ACS earned fees (see
Statement of Operations) based upon the aforementioned rates.
ACS receives sales charges on each Fund's Class A shares, portions of which
are reallocated to affiliated broker-dealers and non-affiliated
broker-dealers. ACS also receives the proceeds of contingent deferred sales
charges paid by investors in connection with certain redemptions of each
Fund's Class A and Class C shares. ACS has advised the Funds that for the
year ended September 30, 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. $43,079 $12,052 $24,092 $ 81 $ 869
Japan Fund........................... 16,064 3,699 8,364 957 1,182
The Trust has entered into a Service Agreement with AIG 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 year ended September 30, 2018, the Funds incurred the following
expenses which are included in
23
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2018 -- (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 September 30, 2018
-------------------------------- -------------------------------
Fund Class A Class C Class I Class W Class A Class C Class I Class W
---- -------- ------- ------- ------- ------- ------- ------- -------
International Dividend Strategy Fund.. $148,528 $21,908 $461 $10,464 $8,919 $1,179 $-- $432
Japan Fund............................ 48,368 14,251 -- 1,120 3,120 1,106 -- 56
At September 30, 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
32% and 15%, 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 year ended September 30, 2018 were as follows:
International
Dividend Strategy
Fund Japan Fund
----------------- -----------
Purchases (excluding U.S. government securities)... $48,931,871 $28,506,883
Sales (excluding U.S. government securities)....... 61,300,425 31,697,757
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, investments in passive foreign investment companies and
derivative transactions.
For the year ended September 30, 2018
------------------------------------------------------------------
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. $ 80,882 $(54,009,207) $(5,836,138) $2,391,324 $ --
Japan Fund........................... 1,220,918 1,666,203 (1,343,710) 1,819,884 358,319
--------
* Unrealized appreciation (depreciation) includes amounts for derivatives and
other assets and liabilities denominated in foreign currency.
Tax Distributions
For the year ended
September 30, 2017
------------------------
Ordinary Long-Term
Income Capital Gains
---------- -------------
International Dividend Strategy Fund....... $2,928,782 $--
Japan Fund................................. 135,227 --
As of September 30, 2018, for Federal income tax purposes, the Funds
indicated below have capital loss carryforwards, which are available to
offset future capital gains, if any:
Unlimited
-----------------------
ST LT
- ----------- -----------
International Dividend Strategy Fund. $34,178,030 $19,831,177
Japan Fund........................... -- --
24
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2018 -- (continued)
The Funds indicated below had expired or utilized capital loss carryforwards
in the year ended September 30, 2018.
Capital Loss Capital Loss
Carryforward Carryforward
Expired Utilized
- ------------ ------------
International Dividend Strategy Fund. $19,381,525 $6,640,143
Japan Fund........................... -- --
For the year ended September 30, 2018, the reclassifications arising from
book/tax differences resulted in increases (decreases) that were primarily
due to disposition of passive foreign investment companies' securities,
litigation payments, capital gains tax, expired capital loss carryforwards,
equalization debits and foreign currency transactions to the components of
net assets as follows:
Accumulated Accumulated
Undistributed Net Undistributed Net
Investment Income Realized Gain
(Loss) (Loss) Capital Paid-in
- ----------------- ----------------- ---------------
International Dividend Strategy Fund. $(36,004) $19,417,529 $(19,381,525)
Japan Fund........................... 149,381 (588,671) 439,290
The amounts of aggregate unrealized gain (loss) and the cost of investment
securities for federal income tax purposes, including short-term securities
and repurchase agreements, were as follows at September 30, 2018:
International
Dividend
Strategy Fund Japan Fund
------------- -----------
Cost (tax basis)........................... $ 76,404,682 $26,628,534
============ ===========
Appreciation............................... 5,083,424 846,356
Depreciation............................... (10,913,249) (2,188,536)
------------ -----------
Net unrealized appreciation (depreciation). $ (5,829,825) $(1,342,180)
============ ===========
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 Class C
-------------------------------------------------- --------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017
------------------------ ------------------------ --------------------- ---------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Shares sold(1).......... 1,119,724 $ 10,390,018 1,256,158 $ 11,745,810 112,299 $ 953,815 115,788 $ 944,316
Reinvested dividends.... 225,143 1,969,964 241,092 2,227,089 24,178 193,946 39,818 332,504
Shares redeemed(1)...... (1,698,056) (15,740,245) (1,841,297) (16,609,583) (789,566) (6,652,049) (570,527) (4,650,398)
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Net increase (decrease). (353,189) $ (3,380,263) (344,047) $ (2,636,684) (653,089) $(5,504,288) (414,921) $(3,373,578)
========== ============ ========== ============ ======== =========== ======== ===========
25
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2018 -- (continued)
International Dividend Strategy Fund
----------------------------------------------------------------------------------
Class I Class W
------------------------------------ --------------------------------------------
For the For the For the For the
period ended year ended year ended year ended
September 7, 2018+ September 30, 2017 September 30, 2018 September 30, 2017
------------------ ---------------- --------------------- ---------------------
Shares Amount Shares Amount Shares Amount Shares Amount
------- --------- ------ -------- -------- ----------- -------- -----------
Shares sold............. -- $ -- -- $ -- 311,937 $ 2,940,438 268,665 $ 2,409,779
Reinvested dividends.... 521 4,650 914 8,541 9,006 78,460 8,258 76,254
Shares redeemed......... (27,974) (242,795) (3,303) (28,608) (703,930) (6,435,983) (274,420) (2,462,897)
------- --------- ------ -------- -------- ----------- -------- -----------
Net increase (decrease). (27,453) $(238,145) (2,389) $(20,067) (382,987) $(3,417,085) 2,503 $ 23,136
======= ========= ====== ======== ======== =========== ======== ===========
--------
+ See Note 1
(1)For the year ended September 30, 2018, includes automatic conversion of
209,540 shares of Class C shares in the amount of $1,793,517 to 189,426
shares of Class A shares in the amount of $1,793,517.
Japan Fund
---------------------------------------------------------------------------------------------
Class A Class C
----------------------------------------------- --------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017
--------------------- ------------------------ --------------------- ---------------------
Shares Amount Shares Amount Shares Amount Shares Amount
-------- ----------- ---------- ------------ -------- ----------- -------- -----------
Shares sold(1).......... 215,016 $ 1,851,167 387,039 $ 3,097,090 276,430 $ 2,304,407 113,256 $ 877,588
Reinvested dividends.... 187,031 1,597,246 15,982 118,111 48,340 391,553 181 1,271
Shares redeemed(1)...... (761,542) (6,375,516) (1,954,658) (14,922,789) (149,288) (1,173,464) (309,948) (2,263,843)
-------- ----------- ---------- ------------ -------- ----------- -------- -----------
Net increase (decrease). (359,495) $(2,927,103) (1,551,637) $(11,707,588) 175,482 $ 1,522,496 (196,511) $(1,384,984)
======== =========== ========== ============ ======== =========== ======== ===========
Japan Fund
-----------------------------------------------
Class W
-----------------------------------------------
For the
For the period April 20, 2017*
year ended through
September 30, 2018 September 30, 2017
--------------------- ------------------------
Shares Amount Shares Amount
-------- ----------- ---------- ------------
Shares sold............. 66,113 $ 599,650 27,941 $ 226,197
Reinvested dividends.... 2,319 19,827 -- --
Shares redeemed......... (57,600) (470,002) -- --
-------- ----------- ---------- ------------
Net increase (decrease). 10,832 $ 149,475 27,941 $ 226,197
======== =========== ========== ============
--------
* Commencement of operations
(1)For the year ended September 30, 2018, includes automatic conversion of
18,397 shares of Class C shares in the amount of $143,478 to 17,435 shares
of Class A shares in the amount of $143,478.
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 annual basis with State Street Bank and Trust
Company ("State Street"), 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'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 and a one-time closing fee of
$25,000 on the uncommitted line of credit. Borrowings under the line of
credit will commence when the respective Fund's cash shortfall exceeds
$100,000. For the year ended September 30, 2018, the following Funds had
borrowings:
Days Interest Average Debt Weighted Average
Outstanding Charges Utilized Interest
----------- -------- ------------ ----------------
International Dividend Strategy Fund. 15 $590 $486,360 3.17%
Japan Fund........................... 5 88 196,440 3.29
26
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2018 -- (continued)
At September 30, 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 year ended September 30, 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 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.
Note 10. Security Transactions with Affiliated Portfolios
The Funds are permitted to transfer securities by purchasing from and/or
selling to other affiliated funds under certain conditions approved by the
Board. The affiliated funds involved in such transactions must have a common
investment adviser or investment advisers which are affiliated persons of
each other, common trustees, and/or common officers in compliance with Rule
17a-7 of the 1940 Act. Pursuant to the 1940 Act, such a transaction must be
either a purchase or a sale, for no consideration other than cash payment
against prompt delivery of the security at the current market price. No
brokerage commission or fee (except for customary transfer fees), or other
remuneration is paid in connection with such transactions.
For the year ended September 30, 2018, the following Fund engaged in
security transactions with affiliated funds:
Cost of Proceeds Realized
Fund Purchases from Sales Gain/(Loss)
---- --------- ---------- -----------
Japan Fund. $ -- $25,880 $436
==== ======= ====
27
SunAmerica Equity Funds
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of the SunAmerica Equity Funds and Shareholders of the
AIG International Dividend Strategy Fund and AIG Japan Fund:
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of each of AIG International Dividend
Strategy Fund and AIG Japan Fund (constituting SunAmerica Equity Funds,
hereafter collectively referred to as the "Funds") as of September 30, 2018,
the related statements of operations for the year ended September 30, 2018, the
statements of changes in net assets for each of the two years in the period
ended September 30, 2018, including the related notes, and the financial
highlights for each of the periods indicated therein (collectively referred to
as the "financial statements"). In our opinion, the financial statements
present fairly, in all material respects, the financial position of each of the
Funds as of September 30, 2018, the results of each of their operations for the
year then ended, the changes in each of their net assets for each of the two
years in the period ended September 30, 2018 and each of the financial
highlights for each of the periods indicated therein in conformity with
accounting principles generally accepted in the United States of America.
Basis for Opinions
These financial statements are the responsibility of the Funds' management. Our
responsibility is to express an opinion on the Funds' financial statements
based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) ("PCAOB") and are required
to be independent with respect to the Funds in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. Our procedures
included confirmation of securities owned as of September 30, 2018 by
correspondence with the custodian, transfer agent and brokers; when replies
were not received from brokers, we performed other auditing procedures. We
believe that our audits provide a reasonable basis for our opinions.
/s/ PricewaterhouseCoopers LLP
Houston, Texas
November 27, 2018
We have served as the auditor of one or more investment companies in the AIG
Funds family of funds since 1984.
28
SunAmerica Equity Funds
APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2018 -- (unaudited)
Approval of the Investment Advisory and Management Agreement and Subadvisory
Agreement
The Board of Trustees (the "Board," the members of which are referred to as
"Trustees") of SunAmerica Equity Funds (the "Trust"), including the Trustees
who are not "interested persons," as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended (the "1940 Act") (the "Independent
Trustees"), of the Trust or its separate series (each, a "Fund," and
collectively, the "Funds"), SunAmerica Asset Management, LLC ("SunAmerica") or
Wellington Management Company LLP (the "Subadviser"), approved the continuation
of the Investment Advisory and Management Agreement between the Trust, on
behalf of the Funds, and SunAmerica (the "Advisory Agreement") for a one-year
period ending June 30, 2019 at an in-person meeting held on June 5-6, 2018 (the
"Meeting"). The Trust currently consists of the following two separate Funds:
AIG International Dividend Strategy Fund ("International Dividend Strategy
Fund") and the AIG Japan Fund ("Japan Fund"). At the Meeting, the Board,
including the Independent Trustees, also approved the continuation of the
Subadvisory Agreement between SunAmerica and the Subadviser with respect to the
Japan Fund for a one-year period ending June 30, 2019 (the "Subadvisory
Agreement," and together with the Advisory Agreement, the "Agreements").
In accordance with Section 15(c) of the 1940 Act, the Board requested, and
SunAmerica and the Subadviser provided, materials relating to the Board's
consideration of whether to approve the continuation of the Agreements. These
materials included, among other things: (a) a summary of the services provided
to the Funds by SunAmerica and its affiliates, and by the Subadviser;
(b) information independently compiled and prepared by Broadridge Financial
Solutions, Inc. ("Broadridge"), an independent third-party provider of mutual
fund data, on fees and expenses of the Funds, and the investment performance of
the Funds as compared with a peer group of funds, along with fee and
performance data with respect to the Funds and any other mutual funds or other
accounts advised or subadvised by SunAmerica or the Subadviser with similar
investment objectives and/or strategies, as applicable; (c) information on the
profitability of SunAmerica and its affiliates, and a discussion relating to
indirect benefits; (d) information relating to economies of scale;
(e) information about SunAmerica's general compliance policies and procedures
and the services it provides in connection with its oversight of subadvisers;
(f) information about SunAmerica's and the Subadviser's risk management
processes; (g) information regarding brokerage and soft dollar practices; and
(h) information about the key personnel of SunAmerica and its affiliates, and
the Subadviser, that are involved in the investment management, administration,
compliance and risk management activities with respect to the Funds, as well as
current and projected staffing levels and compensation practices.
In determining whether to approve the continuation of the Agreements, the
Board, including the Independent Trustees, considered at the Meeting, and from
time to time as appropriate, factors that it deemed relevant, including the
following information:
Nature, Extent and Quality of Services Provided by SunAmerica and the
Subadviser. The Board, including the Independent Trustees, considered the
nature, extent and quality of services provided by SunAmerica. The Board noted
that the services include acting as investment manager and adviser to the
Funds, managing the daily business affairs of the Funds, and obtaining and
evaluating economic, statistical and financial information to formulate and
implement investment policies. Additionally, the Board observed that SunAmerica
provides office space, bookkeeping, accounting, legal, and compliance, clerical
and administrative services and has authorized its officers and employees, if
elected, to serve as officers or trustees of the Trust without compensation.
The Board noted that SunAmerica is responsible for monitoring and reviewing the
activities of affiliated and unaffiliated third-party service providers,
including the Subadviser. In addition to the quality of the advisory services
provided by SunAmerica, the Board considered the quality of the administrative
and other services provided by SunAmerica to the Funds pursuant to the Advisory
Agreement.
In connection with the services provided by SunAmerica, the Board analyzed the
structure and duties of SunAmerica's fund administration, accounting,
operations, legal and compliance departments and concluded that they were
adequate to meet the needs of the Funds. The Board also reviewed the personnel
responsible for providing advisory services to the Funds and other key
personnel of SunAmerica, in addition to current and projected staffing levels
and compensation practices. The Board concluded, based on its experience and
interaction with SunAmerica, that: (i) SunAmerica would continue to be able to
retain quality investment and other personnel; (ii) SunAmerica has exhibited a
high level of diligence and attention to detail in carrying out its advisory
and other responsibilities under the Advisory Agreement; (iii) SunAmerica has
been responsive to requests of the Board; and (iv) SunAmerica has kept the
Board apprised of developments relating to the Funds and the industry in
general. The Board concluded that the nature and extent of services provided
under the Advisory Agreement were reasonable and appropriate in relation to the
management fee and that the quality of services continues to be high.
The Board also considered SunAmerica's reputation and long-standing
relationship with the Funds and considered the benefit to shareholders of
investing in funds that are part of a family of funds offering a variety of
types of mutual funds and shareholder
29
SunAmerica Equity Funds
APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2018 -- (unaudited)
(continued)
services. The Board considered SunAmerica's experience in providing management
and investment advisory and administrative services to advisory clients and
noted that as of March 31, 2018, SunAmerica managed, advised and/or
administered approximately $89.5 billion in assets. In addition, the Board
considered SunAmerica's code of ethics and its commitment to compliance
generally and with respect to its management and administration of the Funds.
The Board also considered SunAmerica's risk management processes. The Board
further observed that SunAmerica has developed internal procedures for
monitoring compliance with the investment objectives, policies and restrictions
of the Funds as set forth in the Funds' prospectuses. The Board also reviewed
SunAmerica's compliance and regulatory history and noted that there were no
material legal, regulatory or compliance issues that would potentially impact
SunAmerica in effectively serving as the investment adviser to the Funds.
The Board also considered the nature, extent and quality of services provided
by the Subadviser with respect to the Japan Fund. The Board observed that the
Subadviser is responsible for providing day-to-day investment management
services, including investment research, advice and supervision, and
determining which securities will be purchased or sold by the Japan Fund,
subject to the oversight and review of SunAmerica. The Board reviewed the
Subadviser's history, structure, size, visibility and resources, which are
needed to attract and retain highly qualified investment professionals. The
Board reviewed the personnel that are responsible for providing subadvisory
services to the Funds and other key personnel of the Subadviser, in addition to
current and projected staffing levels and compensation practices, and
concluded, based on its experience with the Subadviser, that the Subadviser:
(i) has been able to retain high quality portfolio managers and other
investment personnel; (ii) has exhibited a high level of diligence and
attention to detail in carrying out its responsibilities under the Subadvisory
Agreement; and (iii) has been responsive to requests of the Board and of
SunAmerica. In addition, the Board considered the Subadviser's code of ethics
and its risk management processes. The Board further observed that the
Subadviser has developed internal policies and procedures for monitoring
compliance with the investment objectives, policies and restrictions of the
Fund as set forth in the Fund's prospectuses. The Board also reviewed the
Subadviser's compliance and regulatory history and noted that there were no
material legal, regulatory or compliance issues that would potentially impact
the Subadviser from effectively serving as a subadviser to the Fund. The Board
concluded that the nature and extent of services provided by the Subadviser
under the Subadvisory Agreement were reasonable and appropriate in relation to
the subadvisory fee and that the quality of services continues to be high.
Investment Performance. The Board, including the Independent Trustees, also
considered the investment performance of SunAmerica and the Subadviser with
respect to the Funds, as applicable. In connection with its review, the Board
received and reviewed information regarding the investment performance of the
Funds as compared to each Fund's peer group ("Peer Group") and/or peer universe
("Peer Universe") as independently determined by Broadridge and to an
appropriate index or combination of indices, including the Funds' benchmarks.
The Board was provided with a description of the methodology used by Broadridge
to select the funds in the Peer Groups and Peer Universes.
The Board noted that performance information was for the periods ended
March 31, 2018. The Board also noted that it regularly reviews the performance
of the Funds throughout the year. The Board further noted that, while it
monitors performance of the Funds closely, it generally attaches more
importance to performance over relatively long periods of time, typically three
to five years.
International Dividend Strategy Fund. The Board considered that the Fund's
performance was below the medians of its Peer Group and Peer Universe for the
one-, three- and five-year periods. The Board further noted that the Fund
underperformed its Broadridge Index for the one- and three-year periods
(Broadridge returns were not available for the five-year period). The Board
noted management's discussion of the Fund's performance and concluded that the
Fund's performance was being addressed.
Japan Fund. The Board considered that the Fund's performance was below the
median of its Peer Group for the one- and three- year periods and equal to the
median of its Peer Group for the five-year period. The Board further noted that
the Fund's performance was below the median of its Peer Universe for the one-,
three- and five-year periods. The Board also considered that the Fund
underperformed its Broadridge Index for the one-, three- and five-year periods.
The Board took into account management's discussion of the reasons for the
Portfolio's recent underperformance and concluded that the Portfolio's
performance was being appropriately monitored.
Consideration of the Management Fees and Subadvisory Fee and the Cost of the
Services and Profits to be Realized by SunAmerica, the Subadviser and their
Affiliates from the Relationship with the Funds. The Board, including the
Independent Trustees, received and reviewed information regarding the fees paid
by the Funds to SunAmerica pursuant to the Advisory Agreement and the fees paid
by SunAmerica to the Subadviser pursuant to the Subadvisory Agreement. The
Board examined this information in order to determine
30
SunAmerica Equity Funds
APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2018 -- (unaudited)
(continued)
the reasonableness of the fees in light of the nature and quality of services
to be provided and any potential additional benefits to be received by
SunAmerica, the Subadviser or their affiliates in connection with providing
such services to the Funds.
To assist in analyzing the reasonableness of the management fee for each of the
Funds, the Board received reports independently prepared by Broadridge. The
reports showed comparative fee information for each Fund's Peer Group and/or
Peer Universe as determined by Broadridge, including rankings within each
category. In considering the reasonableness of the management fee to be paid by
each Fund to SunAmerica, the Board reviewed a number of expense comparisons,
including: (i) contractual and actual management fees; and (ii) actual total
operating expenses. In considering each Fund's total operating expenses, the
Board analyzed the level of fee waivers and expense reimbursements and the net
expense caps contractually agreed upon by SunAmerica with respect to the Funds.
The Board further considered that, unlike the funds in the Peer Group and Peer
Universe, the fee waivers and/or reimbursements being made by SunAmerica with
respect to the Funds are only reflected in the total expenses category of the
Broadridge reports, rather than also being reflected as specific management fee
waivers in the actual management fees category of the Broadridge reports. As a
result, the Board took into account that the actual management fees presented
by Broadridge for the funds in the Peer Group and Peer Universe may appear
lower on a relative basis. The Board also considered the various expense
components of the Funds and compared each Fund's net expense ratio (taking into
account the contractual fee caps) to those of other funds within its Peer Group
and/or Peer Universe as a guide to help assess the reasonableness of the Fund's
management fee. The Board acknowledged that it was difficult to make precise
comparisons with other funds in the Peer Groups and Peer Universes since the
exact nature of services provided under the various fund agreements is often
not apparent. The Board noted, however, that the comparative fee information
provided by Broadridge as a whole was useful in assessing whether SunAmerica
was providing services at a cost that was competitive with other, similar funds.
The Board also considered the management fees received by SunAmerica with
respect to other mutual funds and accounts with similar investment strategies
to the Funds, to the extent applicable. The Board further noted that SunAmerica
serves as subadviser to certain of these similar mutual funds and observed that
the services SunAmerica provides as subadviser are much more limited in scope
than in its role as investment manager and adviser to the Fund. The Board then
noted the management fees paid by the Funds were reasonable as compared to the
fees SunAmerica was receiving from other mutual funds and accounts for which it
serves as adviser or subadviser.
The Board also received and reviewed information regarding the fees paid by
SunAmerica to the Subadviser pursuant to the Subadvisory Agreement. To assist
in analyzing the reasonableness of the subadvisory fee, the Board received a
report independently prepared by Broadridge. The report showed comparative fee
information of the Fund's Peer Group and/or Peer Universe that the Board used
as a guide to help assess the reasonableness of the subadvisory fee. The Board
noted that the Peer Group/Universe information as a whole was useful in
assessing whether the Subadviser was providing services at a cost that was
competitive with other, similar funds. The Trustees also considered that the
subadvisory fee is paid by SunAmerica out of its management fee and not by the
Japan Fund, and that subadvisory fees may vary widely within a Peer Group for
various reasons, including market pricing demands, existing relationships,
experience and success, and individual client needs. The Board further
considered the amount of subadvisory fee paid out by SunAmerica and the amount
of the management fee which it retained and determined that these amounts were
reasonable in light of the services performed by SunAmerica and the Subadviser,
respectively.
The Board also considered fees received by the Subadviser with respect to other
mutual funds and accounts with similar investment strategies to the Japan Fund
for which it serves as subadviser, to the extent applicable. The Board noted in
particular that the similar accounts identified by the Subadviser were
institutional separate accounts, and the Subadviser highlighted certain
differences between these separate accounts and the Fund, including that these
separate accounts are subject to different investment limitations and
restrictions and do not experience daily cash flows in a manner similar to the
Fund. The Board then noted that the subadvisory fee paid by SunAmerica to the
Subadviser was reasonable as compared to fees the Subadviser receives for other
accounts for which it serves as subadviser.
International Dividend Strategy Fund. The Board considered that the Fund's
actual management fees were above the medians of its Peer Group and Peer
Universe. The Board also considered that the Fund's total expenses were above
the medians of its Peer Group and Peer Universe. The Board also took into
account management's discussion of the Fund's expenses.
Japan Fund. The Board considered that the Fund's actual management fees were
above the medians of its Peer Group and Peer Universe. The Board also
considered that the Fund's total expenses were above the medians of its Peer
Group and Peer Universe. The Board took into account management's discussion of
the Fund's expenses.
31
SunAmerica Equity Funds
APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2018 -- (unaudited)
(continued)
Profitability. The Board also considered SunAmerica's profitability and the
benefits SunAmerica and its affiliates received from their relationship with
the Funds. The Board received and reviewed financial statements relating to
SunAmerica's financial condition and profitability with respect to the services
it provided the Funds and considered how profit margins could affect
SunAmerica's ability to attract and retain high quality investment
professionals and other key personnel. The Board was also provided with a
profitability analysis that detailed the revenues earned and the expenses
incurred by SunAmerica and its affiliates that provide services to the Funds on
a Fund by Fund basis, as well as an Investment Management Profitability
Analysis prepared by an independent information service, Broadridge. In
particular, the Board considered the contractual fee waivers and/or expense
reimbursement agreed to by SunAmerica.
The Board considered the profitability of SunAmerica under the Advisory
Agreement, including the amount of management fees it retained after payment to
the Subadviser, and considered the profitability of SunAmerica's affiliates
under the Rule 12b-1 Plans, Service Agreements, and Administrative and
Shareholder Services Agreements. Additionally, the Board considered whether
SunAmerica, the Subadviser and their affiliates received any indirect benefits
from the relationship with the Funds. The Board further considered whether
there were any collateral or "fall-out" benefits that SunAmerica and its
affiliates may derive as a result of their relationship with the Funds. The
Board noted that SunAmerica believes that any such benefits are de minimis and
do not impact the reasonableness of the management fees.
The Board also reviewed financial reports from the Subadviser and considered
whether the Subadviser had the financial resources necessary to attract and
retain high quality investment management personnel and to provide a high
quality of services.
The Board concluded that SunAmerica and the Subadviser had the financial
resources necessary to perform their obligations under the Agreements and to
continue to provide the Funds with the high quality services that they had
provided in the past. The Board also concluded that the management fees and
subadvisory fees were reasonable in light of the factors discussed above.
Economies of Scale. The Board, including the Independent Trustees, considered
whether the shareholders would benefit from economies of scale and whether
there was potential for future realization of economies with respect to the
Funds. The Board considered that as a result of being part of the AIG fund
complex, the Funds share common resources and may share certain expenses, and
if the size of the complex increases, each Fund could incur lower expenses than
they otherwise would achieve as stand-alone entities. The Board further noted
that SunAmerica has agreed to contractually cap the total annual operating
expenses of one or more classes of the Funds, at certain levels. The Board
observed that those expense caps benefited shareholders by limiting total fees
even in the absence of breakpoints or economies of scale. The Board concluded
that the Funds' management fee structure was reasonable and that it would
continue to review fees in connection with the renewal of the Advisory
Agreement, including whether the implementation of breakpoints would be
appropriate in the future due to an increase in asset size or otherwise.
The Board did not review specific information regarding whether there have been
economies of scale with respect to the Subadviser's management of the Fund
because it regards that information as less relevant at the subadviser level.
Rather, the Board considered information regarding economies of scale in the
context of the renewal of the Advisory Agreement.
Other Factors. In consideration of the Agreements, the Board also received
information regarding SunAmerica's and the Subadviser's brokerage and soft
dollar practices. The Board considered that SunAmerica and the Subadviser are
responsible for decisions to buy and sell securities for the applicable Funds,
selection of broker-dealers and negotiation of commission rates. The Board
noted that it receives reports from SunAmerica and from an independent third
party that include information on brokerage commissions and execution
throughout the year. The Board also considered the benefits SunAmerica and the
Subadviser derive from their soft dollar arrangements, including arrangements
under which brokers provide brokerage and/or research services to SunAmerica
and/or the Subadviser in return for allocating brokerage.
Conclusion. After a full and complete discussion, the Board approved the
Agreements, each for a one-year period ending June 30, 2019. Based upon their
evaluation of all these factors in their totality, the Board, including the
Independent Trustees, was satisfied that the terms of the Agreements were fair
and reasonable and in the best interests of the Funds and the Funds'
shareholders. In arriving at a decision to approve the Agreements, the Board
did not identify any single factor or group of factors as all-important or
controlling, but considered all factors together, and each Independent Trustee
may have attributed different weights to different factors. The Independent
Trustees were also assisted by the advice of independent legal counsel in
making this determination.
32
SunAmerica Equity Funds
TRUSTEE AND OFFICER INFORMATION -- September 30, 2018 -- (unaudited)
The following table contains basic information regarding the Trustees and
Officers that oversee operations of the Funds and other investment companies
within the Fund Complex.
Number of
Term of Funds in
Position(s) Office and Fund Complex
Held With Length of Principal Occupation(s) Overseen by Other Trusteeship(s)
Name and Age* Trust Time Served(1) During Past 5 Years Trustee(2) Held by Trustee(3)
----------------------- ----------- ---------------- ------------------------------ ------------ -------------------------------
Disinterested Trustees
Dr. Judith L. Craven Trustee 2001-present Retired. 78 Director, Sysco Corp. (1996
Age: 72 to present); Director, Luby's,
Inc. (1998 to present).
William F. Devin Trustee 2001-present Retired. 78 None
Age: 79
Richard W. Grant Trustee 2011-present Retired. Prior to that, 29 None
Age: 72 Chairman Attorney and partner at
of the Morgan Lewis & Bockius
Board LLP (1989 to 2011).
Stephen J. Gutman Trustee 1985-present Vice President and Associate 29 None
Age: 75 Broker, Corcoran Group (real
estate) (2002 to present);
President and Member of
Managing Directors, Beau
Brummell Soho LLC
(licensing of menswear
specialty retailing and other
activities) (1995 to 2009).
President, SJG Marketing
Inc. (2009 to present).
Eileen A. Kamerick Director 2018 to present National Association of 29 Hochschild Mining plc (2016
Age: 59 Corporate Directors Board to Present); Director of
Leadership Fellow and Associated Banc-Corp (2007
financial expert; Adjunct to Present); Legg Mason
Professor of Law, University Closed End Funds (2013 to
of Chicago, Washington Present); Westell
University in St. Louis and Technologies, Inc. (2003 to
University of Iowa law 2016)
schools (2007 to Present);
formerly, Senior Advisor to
the Chief Executive Officer
and Executive Vice President
and Chief Financial Officer
of ConnectWise, Inc. (2015
to 2016); Chief Financial
Officer, Press Ganey
Associates (2012 to 2014).
Interested Trustees
Peter A. Harbeck(4) Trustee 1995-present President, CEO and Director, 159 None
Age: 64 SunAmerica. (1995 to
present); Director, AIG
Capital Services, Inc.
("ACS") (1993 to present).
33
SunAmerica Equity Funds
TRUSTEE AND OFFICER INFORMATION -- September 30, 2018 -- (unaudited)
(continued)
Number of
Term of Funds in
Position(s) Office and Fund Complex
Held With Length of Principal Occupation(s) Overseen by Other Trusteeship(s)
Name and Age* Trust Time Served(1) During Past 5 Years Officer(2) Held by Officer(3)
-------------------- ----------- -------------- ----------------------------- ------------ --------------------
Officers
John T. Genoy President 2007-present Chief Financial Officer, N/A N/A
Age: 50 SunAmerica (2002 to
present); Senior Vice
President, SunAmerica (2003
to present); Chief Operating
Officer, SunAmerica
(2006 to present).
Gregory N. Bressler Secretary 2005-present Senior Vice President and N/A N/A
Age: 52 General Counsel,
SunAmerica (2005 to
present).
Kathleen Fuentes Chief 2013-present Vice President and Deputy N/A N/A
Age: 49 Legal General Counsel,
Officer SunAmerica (2006 to
and present).
Assistant
Secretary
James Nichols Vice 2006-present Director, President and CEO, N/A N/A
Age: 52 President ACS (2006 to present);
Senior Vice President,
SunAmerica (2002 to
present).
Gregory R. Kingston Treasurer 2014-present Vice President and Head of N/A N/A
Age: 52 Mutual Fund Administration,
SunAmerica (2014 to
present).
Shawn Parry Vice 2005-present Vice President (2014 to N/A N/A
Age: 46 President present) and Assistant Vice
and President, SunAmerica (2005
Assistant to 2014).
Treasurer
Donna McManus Vice 2014-present Vice President, SunAmerica N/A N/A
Age: 57 President (2014 to present); Managing
and Director, BNY Mellon (2009
Assistant to 2014).
Treasurer
34
SunAmerica Equity Funds
TRUSTEE AND OFFICER INFORMATION -- September 30, 2018 -- (unaudited)
(continued)
Number of
Term of Funds in
Position(s) Office and Fund Complex
Held With Length of Principal Occupation(s) Overseen by Other Trusteeship(s)
Name and Age* Trust Time Served(1) During Past 5 Years Officer(2) Held by Officer(3)
--------------------- ----------- -------------- ------------------------------ ------------ --------------------
Christopher C. Joe Chief 2017 to Chief Compliance Officer, N/A N/A
Age: 49 Compliance Present AIG Funds, Anchor Series
Officer Trust, Seasons Series Trust,
SunAmerica Series Trust,
VALIC Company I and
VALIC Company II (2017-
Present); Chief Compliance
Officer, VALIC Retirement
Services Company (2017-
Present); Chief Compliance
Officer, Invesco PowerShares
(2012-2017); Chief
Compliance Officer, Invesco
Investment Advisers, LLC
(2010-2013); U.S.
Compliance Director,
Invesco Ltd. (2006-2014);
Deputy Chief Compliance
Officer, Invesco Advisers,
LLC (2014-2015).
Matthew J. Hackethal Anti- 2006-present Acting Chief Compliance N/A N/A
Age: 46 Money Officer (2016 to 2017); Chief
Laundering Compliance Officer (2006 to
Compliance present) and Vice President,
Officer SunAmerica (2011 to
present).
--------
* The business address for each Trustee is Harborside 5,185 Hudson Street,
Suite 3300 Jersey City, NJ 07311.
(1)Trustees serve until their successors are duly elected and qualified. Each
officer will hold office for an indefinite term, until the date he or she
resigns or retires or until his/her successor is duly elected and qualifies.
(2)The "Fund Complex" means, as of September 30, 2018, two or more registered
investment companies that hold themselves out to investors as related
companies for purposes of investment services or have a common investment
adviser or an investment adviser that is an affiliated person of the
Adviser. The "Fund Complex" includes the Trust (2 funds), SunAmerica Money
Market Funds Inc. (1 fund), SunAmerica Income Funds (3 funds), SunAmerica
Series, Inc. (6 portfolios), Anchor Series Trust (8 portfolios), SunAmerica
Senior Floating Rate Fund, Inc. (1 fund), SunAmerica Series Trust (61
portfolios), VALIC Company I (34 portfolios), VALIC Company II (15 funds),
Seasons Series Trust (20 portfolios) and SunAmerica Specialty Series
(8 portfolios).
(3)Directorships of companies required to report to the SEC under the
Securities Exchange Act of 1934 (i.e., "public companies") or other
investment companies registered under the 1940 Act.
(4)Mr. Harbeck is considered to be an Interested Trustee, as defined within the
1940 Act, because he is an officer and a director of the Adviser and a
director of the principal underwriter of the Trust.
Additional information concerning the Trustees is contained in the Statement of
Additional Information which is available, without charge, by calling (800)
858-8850.
35
SunAmerica Equity Funds
SHAREHOLDER TAX INFORMATION -- (unaudited)
Certain tax information regarding the SunAmerica Equity Funds is required to be
provided to the shareholders based upon each Fund's income and capital gain
distributions for the taxable year ended September 30, 2018. The information
and capital gain distributions reported herein may differ from the information
and distributions taxable to the shareholders for the calendar year ending
December 31, 2018. The information necessary to complete your tax returns will
be included with your Form 1099-DIV to be received under separate cover in
early 2019.
During the year ended September 30, 2018, the Funds paid the following
long-term capital gains dividends along with the percentage of ordinary income
dividends that qualified for the 70% dividends received deduction for
corporations:
Net Long- Qualifying % for the
Term 70% Dividends
Fund Capital Gains Received Deductions
---- ------------- --------------------
International Dividend Strategy Class A. $ -- -- %
International Dividend Strategy Class C. -- --
International Dividend Strategy Class I. -- --
International Dividend Strategy Class W. -- --
Japan Class A........................... 0.10 --
Japan Class C........................... 0.10 --
Japan Class W........................... 0.10 --
The International Dividend Strategy Fund and Japan Fund intend to make an
election under Internal Revenue Code Section 853 to pass through foreign taxes
paid by the Fund to its shareholders. The total amount of foreign taxes passed
through to the shareholders for the fiscal year ended September 30, 2018 was
$296,195 and $59,478, respectively. The gross foreign source income for the
information reporting is $4,397,701 and $549,282, respectively.
For the year ended September 30, 2018, certain dividends paid by the following
funds may be subject to a maximum tax rate of 15%, as provided by the Jobs and
Growth Tax Relief Reconciliation Act of 2003. Of the distributions paid during
the fiscal year, the following represents the maximum amount that may be
considered qualified dividend income:
Fund Income
---- ----------
International Dividend Strategy. $2,391,324
Japan........................... 1,819,884
36
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDICES -- (unaudited)
As required by the Securities and Exchange Commission, the graphs on the
following pages compare the performance of a $10,000 investment in the
SunAmerica Equity Funds' portfolios to a similar investment in an index. Please
note that "inception," as used herein, reflects the date on which a specific
class of shares commenced operations. It is important to note that the
SunAmerica Equity Funds are professionally managed mutual funds, while the
indices are not available for investment and are unmanaged. The comparison is
shown for illustrative purposes only. The graphs present the performance of the
largest class of that particular Fund. The performance of the other classes
will vary based upon the difference in sales charges and fees assessed to
shareholders of that class.
37
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDICES -- (unaudited) (continued)
AIG International Dividend Strategy Fund
The AIG International Dividend Strategy Fund Class A shares returned -7.18%
(before maximum sales charge) for the 12-month period ended September 30, 2018.
The Fund underperformed its benchmark, the MSCI ACWI ex-U.S. (Net),/*/ which
returned 1.76%/**/ during the same period. Importantly, however, the Fund's
holdings had an average dividend yield as of September 30, 2018 of 5.40%
compared to a 3.01% average dividend yield for the constituents of the MSCI
ACWI ex-U.S. (Net).
The Fund seeks total return, including capital appreciation and current income,
by investing primarily in high dividend-yielding equity securities of non-U.S.
companies. Stocks are selected using a rules-based screening process based on
dividend yield, profitability and valuation. The Fund's performance was
adversely affected during the annual period by dislocations in the emerging
markets and by rising interest rates, as these factors within the global equity
markets were not in favor amid these conditions.
In terms of regional factors, the Fund's relative results were dampened most by
having an overweight exposure to Turkey, by far the worst performing
constituent of the MSCI ACWI ex-U.S. (Net) during the annual period. To a
somewhat lesser extent, positioning in the U.K., Switzerland, Japan, France and
Spain also detracted. These detractors were partially offset by positioning in
Hong Kong, the Netherlands, Norway, Russia and Sweden, which contributed
positively.
From a sector perspective, the primary drivers of underperformance during the
annual period were having overweighted allocations to and weak stock selection
in the poorly performing Consumer Discretionary and Telecommunication Services
sectors. Stock selection among Financials, Industrials and Materials companies
further hindered the Fund's relative results. Such detractors were only
partially offset by the positive contributions made by effective stock
selection in the Information Technology and Real Estate sectors and by having
an underweight to the poorly performing Financials sector.
The top individual detractors from Fund performance during the annual period
were Spanish consumer staples retailer Distribuidora Internacional de
Alimentacion SA; Turkish petrochemicals manufacturer Petkim Petrokimya Holding
AS; Turkish telecommunications company Turkcell Iletisim Hizmetleri AS; Danish
jewelry retailer Pandora A/S; and Swiss human resource services provider Adecco
Group AG. Individual stock holdings that contributed most positively to the
Fund's relative performance during the annual period were Hong Kong-based
energy and chemical company China Petroleum & Chemical Corporation Class H;
Hong Kong-based technology hardware manufacturer Lenovo Group Limited;
Netherlands-based food retailer Koninklijke Ahold Delhaize N.V.;
Norwegian-based fish farming plant Marine Harvest ASA; and Taiwanese aluminum
and magnesium die casting products manufacturer Catcher Technology Co., Ltd.
--------
Past performance is no guarantee of future results.
When investing internationally, the value of an investment may be affected by
fluctuating currency values, changing local and regional economic, political
and social conditions, and greater market volatility. In addition, foreign
securities may not be as liquid as domestic securities. Also, while the Fund
seeks to invest in a wide range of countries, volatility in a single country or
region in which the Fund invests a significant portion of its assets may affect
performance. In addition, the markets of emerging market countries are
typically more volatile and potentially less liquid than more developed
markets. Stocks of small-cap companies, and to a lesser extent, mid-cap
companies, may be more volatile than, and not as readily marketable as, those
of larger companies.
The Fund employs a Disciplined Strategy and will not deviate from its strategy
(except to the extent necessary to comply with federal tax laws or other
applicable laws). If the Fund is committed to a strategy that is unsuccessful,
the Fund will not meet its investment goal. Because the Fund will not use
certain techniques available to other mutual funds to reduce stock market
exposure, the Fund may be more susceptible to general market declines than
other mutual funds.
* The MSCI ACWI (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. Net total return
indices reinvest dividends after the deduction of withholding taxes, using
(for international indices) a tax rate applicable to non-resident
institutional investors who do not benefit from double taxation treaties.
Indices are not managed and an investor cannot invest directly into an index.
**All market returns are expressed in U.S. dollar terms unless specified
otherwise.
The Fund's holdings are subject to change. Accordingly, securities listed may
or may not be a part of current portfolio construction.
38
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDICES -- (unaudited) (continued)
Over the past ten years, $10,000 invested in AIG International Dividend
Strategy Fund Class A shares would be valued at $8,250 The same amount invested
in securities mirroring the performance of the MSCI ACWI ex-U.S. (Net) would be
valued at $16,577.
[chart]
Date AIG International Dividend MSCI ACWI ex-U.S. (Net)**
Strategy Class A#
---------- -------------------------- -------------------------
9/30/2008 9424 10000.00
10/31/2008 7182 7798.11
11/30/2008 6727 7347.06
12/31/2008 6957 7765.65
1/31/2009 6248 7079.36
2/28/2009 5734 6418.68
3/31/2009 6069 6933.87
4/30/2009 6770 7878.76
5/31/2009 7798 8945.43
6/30/2009 7681 8846.92
7/31/2009 8336 9711.94
8/31/2009 8499 10071.39
9/30/2009 9021 10588.64
10/31/2009 8811 10457.46
11/30/2009 9224 10757.19
12/31/2009 9508 10984.39
1/31/2010 8835 10447.57
2/28/2010 8913 10447.64
3/31/2010 9579 11158.35
4/30/2010 9336 11060.20
5/31/2010 8255 9896.22
6/30/2010 7973 9769.24
7/31/2010 8654 10651.42
8/31/2010 8372 10358.81
9/30/2010 9273 11389.25
10/31/2010 9704 11777.24
11/30/2010 9226 11322.77
12/31/2010 9932 12209.43
1/31/2011 10042 12329.58
2/28/2011 10261 12654.37
3/31/2011 10308 12625.26
4/30/2011 10786 13242.08
5/31/2011 10512 12860.14
6/30/2011 10324 12673.59
7/31/2011 10183 12500.62
8/31/2011 9149 11429.39
9/30/2011 8052 10157.87
10/31/2011 8788 11227.89
11/30/2011 8514 10654.91
12/31/2011 8287 10535.83
1/31/2012 8931 11250.60
2/29/2012 9328 11882.66
3/31/2012 9265 11719.23
4/30/2012 9209 11534.45
5/31/2012 8168 10224.64
6/30/2012 8478 10827.66
7/31/2012 8256 10980.62
8/31/2012 8478 11210.24
9/30/2012 8758 11629.05
10/31/2012 8622 11674.25
11/30/2012 8646 11896.75
12/31/2012 9206 12309.01
1/31/2013 9492 12809.46
2/28/2013 9313 12673.94
3/31/2013 9011 12699.28
4/30/2013 9247 13166.07
5/31/2013 8823 12861.49
6/30/2013 8404 12303.74
7/31/2013 8835 12842.56
8/31/2013 8860 12665.40
9/30/2013 9567 13545.30
10/31/2013 9768 14042.69
11/30/2013 9642 14066.75
12/31/2013 9689 14190.81
1/31/2014 9190 13545.87
2/28/2014 9605 14226.33
3/31/2014 9943 14262.85
4/30/2014 10273 14451.18
5/31/2014 10375 14732.12
6/30/2014 10766 14980.03
7/31/2014 10423 14830.99
8/31/2014 10723 14913.20
9/30/2014 9777 14191.24
10/31/2014 9406 14050.74
11/30/2014 9217 14152.38
12/31/2014 8522 13642.10
1/31/2015 8331 13621.89
2/28/2015 8678 14350.18
3/31/2015 8435 14118.21
4/30/2015 9077 14831.41
5/31/2015 8713 14599.87
6/30/2015 8483 14192.52
7/31/2015 8133 14153.09
8/31/2015 7510 13071.33
9/30/2015 7114 12465.25
10/31/2015 7574 13393.19
11/30/2015 7317 13116.74
12/31/2015 7094 12869.68
1/31/2016 6634 11994.26
2/29/2016 6643 11857.17
3/31/2016 7316 12821.28
4/30/2016 7448 13158.66
5/31/2016 7076 12936.59
6/30/2016 7224 12738.64
7/31/2016 7680 13368.64
8/31/2016 7716 13453.20
9/30/2016 7789 13619.04
10/31/2016 7663 13423.23
11/30/2016 7410 13112.75
12/31/2016 7636 13448.21
1/31/2017 7845 13924.61
2/28/2017 7982 14146.61
3/31/2017 8273 14505.28
4/30/2017 8519 14815.76
5/31/2017 8792 15296.56
6/30/2017 8713 15344.04
7/31/2017 8887 15909.62
8/31/2017 8822 15992.83
9/30/2017 8888 16289.71
10/31/2017 8804 16596.20
11/30/2017 8683 16731.01
12/31/2017 8992 17104.98
1/31/2018 9387 18057.63
2/28/2018 9067 17206.20
3/31/2018 8926 16902.69
4/30/2018 8860 17172.60
5/31/2018 8455 16776.07
6/30/2018 8227 16460.75
7/31/2018 8484 16854.43
8/31/2018 8208 16501.68
9/30/2018 8250 16576.84
Class A Class C++ Class W
------------------ ------------------ ------------------
AIG International Average Average Average
Dividend Strategy Annual Cumulative Annual Cumulative Annual Cumulative
Fund# Return Return+ Return Return+ Return Return+
----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return -12.51% -7.18% -8.69% -7.80% -7.06% -7.06%
---------------------------------------------------------------------------
5 Year Return -4.07% -13.77% -3.55% -16.52% N/A N/A
---------------------------------------------------------------------------
10 Year Return -1.91% -12.46% -1.97% -18.04% N/A N/A
---------------------------------------------------------------------------
Since Inception* -0.01% 5.85% -0.43% -8.89% -0.61% -2.23%
---------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would have been lower.
* Inception date: Class A: 11/19/96; Class C: 03/06/97; Class W: 01/29/15.
# For the purposes of the graph, it has been assumed that the maximum sales
charge of 5.75% of offering price, was deducted from the initial $10,000
investment in the Fund. For purposes of the average annual returns in the
table, it has been assumed that the maximum sales charge with respect to the
Class A shares was deducted from the initial investment in the Fund and that
the CDSCs with respect to the Class C shares have been deducted, as
applicable.
++ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
For the 12 month period ended September 30, 2018, the AIG International
Dividend Strategy Class A returned -12.51% compared to 1.76% for the MSCI ACWI
ex-U.S. Index (Net). (The performance data and graph do not reflect the
deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares.)
--------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 5.75% Contingent Deferred Sales
Charge (CDSC), Class C: 1.00% CDSC. The fund's daily net assets values are not
guaranteed and shares are not insured by the FDIC, the Federal Reserve Board or
any other agency. The investment return and principal value of an investment
will fluctuate so that an investor's shares, when redeemed, may be higher or
lower than the original cost. Current performance may be higher or lower than
that shown. Performance as of the most recent month end is available at
www.safunds.com.
** The MSCI ACWI (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. Net total return
indices reinvest dividends after the deduction of withholding taxes, using
(for international indices) a tax rate applicable to non-resident
institutional investors who do not benefit from double taxation treaties.
Indices are not managed and an investor cannot invest directly into an index.
39
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDICES -- (unaudited) (continued)
AIG Japan Fund
The AIG Japan Fund Class A shares returned 0.34% (before maximum sales charge)
for the 12-month period ended September 30, 2018. The Fund underperformed its
benchmark, the MSCI Japan Index (Net),/*/ which returned 10.20% during the same
period.
The Fund's relative underperformance during the annual period was driven
primarily by challenged stock selection. We identify contrarian ideas wherein a
stock price does not reflect, in our view, the intrinsic value of a company's
fundamentals. This results in a value bias within the Fund's portfolio.
Reflecting this bias, our approach may underperform in periods when markets are
driven by shorter-term speculative factors.
More specifically, individual security selection was weakest in the
Industrials, Information Technology, Consumer Staples, and Health Care sectors.
Partially offsetting these detractors was effective stock selection in Consumer
Discretionary, which contributed positively.
Sector allocation, a residual of our bottom-up stock selection process, also
detracted from the Fund's relative results, albeit more modestly. An
underweighted allocation to Health Care and a lack of exposure to Energy, the
two strongest performing sectors in the MSCI Japan Index (Net) during the
annual period, detracted significantly from relative returns. Having an
overweighted allocation to Information Technology, one of the weakest sectors
in the MSCI Japan Index (Net) during the annual period, also hurt. These
detractors were only partially offset by the positive contributions made by
having an underweighted exposure to Real Estate, the second weakest sector in
the MSCI Japan Index (Net) during the annual period, and an overweighted
exposure to Consumer Staples, which outperformed the MSCI Japan Index (Net)
during the annual period.
The individual stocks that detracted from Fund performance most during the
annual period were Toyo Tire & Rubber Co., Ltd., a leading tire maker in Japan;
DeNA Co., Ltd., a social media, auction and shopping web sites operator; Mitsui
Mining & Smelting Co., Ltd., primarily a non-ferrous metals producer; Kawasaki
Heavy Industries Ltd., a transport equipment and industrial heavy machinery
manufacturer; and NGK Insulators, Ltd., an industrial insulator and ceramics
manufacturer. The top individual positive contributors to Fund performance
during the annual period were Kyoritsu Maintenance Co., Ltd., a hotel and
dormitory manager; Capcom Co., Ltd., a video game software developer; Suzuki
Motor Corp., a leading Japanese car maker and motorcycle manufacturer; NGK
Spark Plug Co., Ltd., a spark plug manufacturer; and JFE Holdings, Inc., a
steel production and integrated engineering services company.
--------
Past performance is no guarantee of future results.
When investing internationally, the value of your investment may be affected by
fluctuating currency values, changing local and regional economic, political
and social conditions, and greater market volatility. Also, foreign securities
may not be as liquid as domestic securities. In addition, the Fund's
performance may be affected by the broader Asian region, which includes
emerging markets. Emerging markets are typically more volatile than more
developed markets. Stocks of small-cap companies, and to a lesser extent,
mid-cap companies, may be more volatile than, and not as readily marketable as,
those of larger companies.
Because the Fund concentrates its investments in Japan, the Fund's performance
is expected to be closely tied to social, political and economic conditions of
that country. As a result, the Fund is likely to be more volatile than more
geographically diverse international funds.
*The MSCI Japan Index (Net) is a free float-adjusted market
capitalization-weighted index that is designed to track the equity market
performance of Japanese securities listed on Tokyo Stock Exchange, Osaka Stock
Exchange, JASDAQ and Nagoya Stock Exchange. Net total return indices reinvest
dividends after the deduction of withholding taxes, using (for international
indices) a tax rate applicable to non-resident institutional investors who do
not benefit from double taxation treaties. Indices are not managed and an
investor cannot invest directly into an index.
The Fund is actively managed and its holdings are subject to change.
Accordingly, securities listed may or may not be a part of current portfolio
construction.
40
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDICES -- (unaudited) (continued)
Over the past ten years, $10,000 invested in AIG Japan Fund Class A shares
would be valued at $16,268. The same amount invested in securities mirroring
the performance of the MSCI Japan Index (Net) would be valued at $17,835.
[chart]
Date AIG Japan Class A# MSCI Japan Index (Net)@
---------- ------------------ -----------------------
9/30/2008 9424 10000.00
10/31/2008 6983 8521.77
11/30/2008 6689 8415.60
12/31/2008 7131 9099.49
1/31/2009 6758 8481.01
2/28/2009 6193 7430.88
3/31/2009 6386 7586.90
4/30/2009 6860 8317.20
5/31/2009 7787 9174.00
6/30/2009 7889 9335.33
7/31/2009 8635 9734.58
8/31/2009 8872 10117.64
9/30/2009 9426 9943.40
10/31/2009 9313 9694.03
11/30/2009 9539 9594.63
12/31/2009 9645 9668.63
1/31/2010 9411 9852.16
2/28/2010 9376 9962.42
3/31/2010 9856 10459.95
4/30/2010 10055 10443.60
5/31/2010 8943 9599.05
6/30/2010 8967 9406.45
7/31/2010 9856 9741.30
8/31/2010 9575 9518.78
9/30/2010 10652 9954.48
10/31/2010 11062 10157.55
11/30/2010 10758 10371.06
12/31/2010 11672 11161.13
1/31/2011 11564 11175.28
2/28/2011 11732 11684.86
3/31/2011 11817 10611.37
4/30/2011 12346 10650.07
5/31/2011 12057 10476.64
6/30/2011 11913 10630.11
7/31/2011 11744 11006.59
8/31/2011 10529 10112.00
9/30/2011 9302 9945.65
10/31/2011 9927 9921.11
11/30/2011 9663 9483.06
12/31/2011 9430 9561.60
1/31/2012 9857 9993.86
2/29/2012 10136 10498.20
3/31/2012 10254 10638.69
4/30/2012 10166 10298.94
5/31/2012 8945 9379.57
6/30/2012 9474 9861.72
7/31/2012 9342 9626.22
8/31/2012 9445 9556.31
9/30/2012 9430 9778.58
10/31/2012 9327 9595.47
11/30/2012 9518 9823.32
12/31/2012 9788 10343.73
1/31/2013 10150 10723.50
2/28/2013 10315 11009.41
3/31/2013 10753 11547.00
4/30/2013 11718 12559.76
5/31/2013 10964 11848.33
6/30/2013 11492 12055.46
7/31/2013 11567 12128.15
8/31/2013 11296 11867.19
9/30/2013 12216 12858.48
10/31/2013 12321 12858.35
11/30/2013 12472 13049.58
12/31/2013 12521 13153.42
1/31/2014 12090 12645.95
2/28/2014 12372 12578.11
3/31/2014 12273 12416.14
4/30/2014 12107 12095.56
5/31/2014 12488 12584.68
6/30/2014 13217 13242.76
7/31/2014 13051 13319.43
8/31/2014 12836 13030.23
9/30/2014 12803 12937.56
10/31/2014 12836 12768.95
11/30/2014 12422 12808.14
12/31/2014 12174 12624.40
1/31/2015 12446 12919.25
2/28/2015 13226 13703.17
3/31/2015 13426 13913.21
4/30/2015 14134 14405.96
5/31/2015 14224 14593.69
6/30/2015 13988 14343.46
7/31/2015 14025 14410.97
8/31/2015 13118 13573.43
9/30/2015 12174 12650.33
10/31/2015 13390 13926.75
11/30/2015 13535 13787.66
12/31/2015 13077 13832.42
1/31/2016 12385 12694.63
2/29/2016 11450 12346.48
3/31/2016 11861 12930.55
4/30/2016 11880 13531.67
5/31/2016 12385 13391.14
6/30/2016 11955 13061.19
7/31/2016 12778 13907.78
8/31/2016 13171 13960.88
9/30/2016 13545 14184.44
10/31/2016 13770 14371.59
11/30/2016 13190 14024.97
12/31/2016 13429 14161.06
1/31/2017 13918 14687.93
2/28/2017 14519 14852.16
3/31/2017 14689 14797.47
4/30/2017 14783 14952.72
5/31/2017 15234 15402.56
6/30/2017 15497 15565.94
7/31/2017 15968 15880.85
8/31/2017 15892 15872.66
9/30/2017 16212 16183.73
10/31/2017 17077 16929.79
11/30/2017 17435 17436.16
12/31/2017 17401 17557.70
1/31/2018 18089 18362.39
2/28/2018 17259 18085.84
3/31/2018 16895 17703.98
4/30/2018 16956 17822.11
5/31/2018 16389 17646.55
6/30/2018 15863 17202.07
7/31/2018 16167 17270.76
8/31/2018 16106 17308.99
9/30/2018 16268 17834.82
Class A Class C Class W
------------------ ------------------ ------------------
AIG Average Average Average
Japan Annual Cumulative Annual Cumulative Annual Cumulative
Fund# Return Return+ Return Return+ Return Return+
----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return -5.47% 0.34% -1.29% -0.37% 0.57% 0.57%
--------------------------------------------------------------------------
5 Year Return 4.66% 33.17% 5.19% 28.79% N/A N/A
--------------------------------------------------------------------------
10 Year Return 4.99% 72.63% 4.91% 61.50% N/A N/A
--------------------------------------------------------------------------
Since Inception* 0.75% 16.42% 0.56% 7.23% 8.42% 12.43%
--------------------------------------------------------------------------
+Cumulative returns do not include sales load. If sales load had been included,
the return would have been lower.
*Inception date: Class A and Class C: 05/02/06; Class W: 04/20/17.
#For the purposes of the graph, it has been assumed that the maximum sales
charge of 5.75% of offering price, was deducted from the initial $10,000
investment in the Fund. For purposes of the average annual returns in the
table, it has been assumed that the maximum sales charge with respect to the
Class A shares was deducted from the initial investment in the Fund and that
the CDSCs with respect to the Class C shares have been deducted, as applicable.
For the 12 month period ended September 30, 2018, the AIG Japan Class A
returned -5.47% compared to 10.20% for the MSCI Japan Index (Net). (The
performance data and graph do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.)
--------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 5.75% Contingent Deferred Sales
Charge (CDSC), Class C: 1.00% CDSC. The fund's daily net assets values are not
guaranteed and shares are not insured by the FDIC, the Federal Reserve Board or
any other agency. The investment return and principal value of an investment
will fluctuate so that an investor's shares, when redeemed, may be higher or
lower than the original cost. Current performance may be higher or lower than
that shown. Performance as of the most recent month end is available at
www.safunds.com.
@ The MSCI Japan Index (Net) is a free float-adjusted market
capitalization-weighted index that is designed to track the equity market
performance of Japanese securities listed on the Tokyo Stock Exchange, Osaka
Stock Exchange, JASDAQ and Nagoya Stock Exchange. Net total return indices
reinvest dividends after the deduction of withholding taxes, using (for
international indices) a tax rate applicable to non-resident institutional
investors who do not benefit from double taxation treaties. Indices are not
managed and an investor cannot invest directly into an index.
41
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. Securities 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
One Lincoln Street 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
303 W 11th Street Washington, DC or accom-pany this report.
Kansas City, MO 64105 (information on the
operation of Pub-lic
Reference Room may be
obtained by calling
1-800-SEC-0330).
[GRAPHIC]
Go Paperless!!
Did you know that you have the option to
receive your shareholder reports online?
By choosing this convenient service, you will no longer receive paper copies of
Fund documents such as annual reports, semi-annual reports, prospectuses and
proxy statements in the mail. Instead, you are provided with quick and easy
access to this information via the Internet.
Why Choose Electronic Delivery?
It's Quick -- Fund documents will be received faster than via traditional mail.
It's Convenient -- Elimination of bulky documents from personal files.
It's Cost Effective -- Reduction of your Fund's printing and mailing costs.
To sign up for electronic delivery, follow
these simple steps:
1 Go to www.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
EQANN - 9/18
[LOGO]
Item 2. Code of Ethics
The SunAmerica Equity Funds (the "registrant") has adopted a Code of
Ethics applicable to its Principal Executive and Principal Accounting
Officers pursuant to Section 406 of the Sarbanes-Oxley Act of 2002 (the
Code"). During the fiscal year ended September 30, 2018, there were no
reportable waivers or implicit waivers to a provision of the Code that
applies to the registrant's Principal Executive and Principal
Accounting Officers (the "Covered Officers").
Item 3. Audit Committee Financial Expert.
As of January 16, 2018, the registrant's Board of Trustees has
determined that Eileen A. Kamerick, a Trustee of the registrant,
qualifies as an audit committee financial expert, as defined in
Item 3(b) of Form N-CSR. Ms. Kamerick is considered to be "independent"
for purposes of Item 3(a)(2) of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
(a)--(d) Aggregate fees billed to the registrant for the last two
fiscal years for professional services rendered by the registrant's
principal accountant were as follows:
2017 2018
(a) Audit Fees ....................$ 112,460 $ 115,835
(b) Audit-Related Fees ............$ 0 $ 0
(c) Tax Fees ......................$ 0 $ 0
(d) All Other Fees ................$ 0 $ 0
Audit Fees include amounts related to the audit of the registrant's
annual financial statements and services normally provided by the
principal accountant in connection with statutory and regulatory
filings.
Aggregate fees billed to the investment adviser and Adviser Affiliates
(as defined below in Item 4(e)) that are required to be pre-approved
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X for
the last two fiscal years for services rendered by the registrant's
principal accountant were as follows:
2017 2018
(b) Audit-Related Fees ............$ 0 $ 0
(c) Tax Fees ......................$ 0 $ 0
(d) All Other Fees ................$ 0 $ 0
(e) (1) The registrant's audit committee pre-approves all audit services
provided by the registrant's principal accountant for the registrant
and all non-audit services provided by the registrant's principal
accountant for the registrant, its investment adviser and any entity
controlling, controlled by, or under common control with the
investment adviser ("Adviser Affiliates") that provides ongoing
services to the registrant, if the engagement by the investment
adviser or Adviser Affiliate relates directly to the operations and
financial reporting of the registrant. The audit committee has not
presently established any pre-approval policies and procedures that
permit the pre-approval of the above services other than by the full
audit committee. Certain de minimis exceptions are allowed for non-
audit services in accordance with Rule 2-01(c)(7)(i)(C) of Regulation
S-X as set forth in the registrant's audit committee charter.
(2) No services included in (b)-(d) above in connection with fees
billed to the registrant or the investment adviser or Adviser
Affiliates were approved pursuant to paragraph (c)(7)(i)(C) of
Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate fees billed for the most recent fiscal year and the
preceding fiscal year by the registrant's principal accountant for
non-audit services rendered to the registrant, its investment adviser,
and Adviser Affiliates that provides ongoing services to the registrant
for 2017 and 2018 were $0 and $0, respectively.
(h) Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
Included in Item 1 to the Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders
may recommend nominees to the registrant's Board of Trustees that were
implemented after the registrant last provided disclosure in response
to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by 22(b)(15)) of Schedule 14A (17 CFR 240.14a-
101), or this Item 10.
Item 11. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures (as defined under Rule 30a-3(c)
under the Investment Company Act of 1940 (17 CFR 270.30a-3(c))). Based
on that evaluation, the registrant's management, including the
President and Treasurer, concluded that the registrant's disclosure
controls and procedures are effective.
(b) There was no change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act
of 1940 (17 CFR 270.30a-3(d))) that occurred during the registrant's
last fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal contro1 over financial reporting.
Item 12. Disclosure of Securities Lending Activities for Closed-End Management
Investment Companies.
Not applicable.
Item 13. Exhibits.
(a) (1) Code of Ethics applicable to its Principal Executive and
Principle Accounting Officers pursuant to Section 406 of the
Sarbanes-Oxley Act of 2002 attached hereto as Exhibit 99.406.
Code of Ethics.
(2) Certifications pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit
99.CERT.
(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the Sarbanes-
Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Equity Funds
By: /s/ John T. Genoy
------------------
John T. Genoy
President
Date: December 7, 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: December 7, 2018
By: /s/ Gregory R. Kingston
-----------------------
Gregory R. Kingston
Treasurer
Date: December 7, 2018