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, 2019
-------------------------
Item 1. Reports to Stockholders
ANNUAL REPORT 2019
SUNAMERICA
Equity Funds
[PHOTO]
Beginning on January 1, 2021, as permitted by regulations adopted by the
Securities and Exchange Commission, paper copies of each Fund's shareholder
reports will no longer be sent by mail, unless you specifically request paper
copies of the reports from the Fund or your financial intermediary. Instead,
the reports will be made available on a website, and you will be notified by
mail each time a report is posted and provided with a website link to access
the report.
If you already elected to receive shareholder reports electronically, you will
not be affected by this change and you need not take any action. At any time,
you may elect to receive reports and other communications from a Fund
electronically by calling 800-858-8850 or contacting your financial
intermediary directly.
You may elect to receive all future reports in paper free of charge. If your
account is held directly at the Fund, you can inform the Fund that you wish to
receive paper copies of reports by calling 800-858-8850. If your account is
held through a financial intermediary, please contact the financial
intermediary to make this election. Your election to receive paper will apply
to all AIG Funds in which you are invested and may apply to all funds held with
your financial intermediary.
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aig.com/funds
Table of Contents
SHAREHOLDER LETTER...................................... 2
EXPENSE EXAMPLE......................................... 5
STATEMENT OF ASSETS AND LIABILITIES..................... 7
STATEMENT OF OPERATIONS................................. 8
STATEMENT OF CHANGES IN NET ASSETS...................... 9
FINANCIAL HIGHLIGHTS.................................... 10
PORTFOLIO OF INVESTMENTS................................ 12
NOTES TO FINANCIAL STATEMENTS........................... 18
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. 29
APPROVAL OF ADVISORY AGREEMENTS......................... 30
TRUSTEE AND OFFICER INFORMATION......................... 35
SHAREHOLDER TAX INFORMATION............................. 38
COMPARISONS: FUNDS vs. INDICES.......................... 39
Shareholder Letter -- (unaudited)
Dear Shareholders,
We are pleased to present this annual update for the SunAmerica Equity Funds
(the "Equity Funds") for the 12-month period ended September 30, 2019. From a
broad perspective, it was a period wherein global equity markets were pressured
by ongoing trade disputes, geopolitical tensions and weakening economic growth.
As the annual period began with the fourth quarter of 2018, concerns about
slowing global economic growth weighed heavily on the global equity markets.
China's economy grew at the weakest pace in a decade, and economic growth in
the Eurozone moderated. Markets also contended with myriad risks, including
increased geopolitical tensions, elevated volatility, tighter liquidity and
trade uncertainty. On the monetary policy front, the U.S. Federal Reserve (the
"Fed") raised interest rates by 25 basis points/*/ to the highest level in a
decade. The European Central Bank (ECB) concluded its asset purchase program
but announced it would continue its reinvestment policy for an extended period
of time. The People's Bank of China reduced its reserve-requirement ratio/**
/in an effort to spur economic growth in that country. For the quarter, U.S.
equities suffered their largest quarterly loss since 2011. European equities
ended the quarter lower, with concerns about budget negotiations between Italy
and the European Union, protests in France, Brexit/***/ risks and trade
developments among key areas of focus. All equity markets in the Pacific Basin
declined, with Japan underperforming by a substantial margin, as increased
global economic growth risks weighed on Japan's export-dependent economy.
Emerging markets equities fell precipitously, as sentiment was weighed upon by
unresolved U.S.-China trade issues, rising U.S. interest rates and concerns
about slowing global economic growth.
In a sharp reversal, global equity markets were buoyed during the first quarter
of 2019 by seemingly productive trade negotiations between the U.S. and China
and by dovish+++ rhetoric and policy actions from the major central banks. The
U.S. delayed its plan to increase tariffs on $200 billion of imports from
China, amid what was then viewed as constructive dialogue between U.S. and
Chinese trade representatives and growing optimism the two countries could
ultimately reach a trade agreement. Brexit remained a key area of concern, with
the British Parliament rejecting then-Prime Minister May's deal for the third
time, leaving the future relationship between the U.K. and European Union
clouded in uncertainty. Regarding monetary policy, the ECB surprised markets by
pushing back interest rate increases, slashing its economic growth forecast and
announcing an extended liquidity policy. In the U.S., the Fed left its targeted
federal funds rate unchanged, indicating its rates would likely remain stable
in 2019. The Bank of Japan maintained its key short-term interest rate at -0.1%
and guided for continued asset purchases until inflation there meets its 2%
target. For the quarter, U.S. equities rallied to their largest quarterly gain
since 2009, buoyed by the dovish shift in Fed policy and guidance, optimism for
a U.S.-China trade deal, relatively strong fourth quarter 2018 corporate
earnings and corporate share buybacks. European equities gained as central
banks put quantitative easing on hold and equity valuations appeared attractive
to many investors. Pacific Basin equities rose alongside other global markets
in the first quarter of 2019, though Japanese equities underperformed the
region as inflation there sank to 0.2% in the quarter. Emerging markets
equities were bolstered by the U.S. Fed's decision to keep interest rates
unchanged and by improved trade sentiment.
By mid-2019, global equities had risen for the second straight quarter, albeit
more modestly than in the first quarter of 2019, as sluggish global economic
growth and geopolitical events dominated headlines during the second calendar
quarter. Trade tensions between China and the U.S. escalated in May 2019 but
eased at the end of the second calendar quarter after the two countries agreed
at the June G20++ summit to resume trade negotiations. In Europe, Brexit
remained a major concern, with the U.K. avoiding an abrupt no-deal departure
from the European Union in mid-April after European Union leaders granted the
U.K. a flexible extension until October 31, 2019. Then-U.K. Prime Minister May
announced she would resign as leader of Britain's Conservative Party on June 7,
2019 after failing to secure a Brexit deal. Against this backdrop, dovish
central bank rhetoric bolstered global equity markets. The U.S. Fed signaled it
was open to interest rate cuts amid concerns about the downside risks
associated with slowing global economic growth and trade disputes. The ECB
hinted it may lower its interest rates if the outlook for economic growth and
inflation failed to improve. For the quarter, U.S. equities moved higher,
supported by better than expected first quarter 2019 corporate earnings, despite
2
concerns about slowing economic growth and unresolved U.S. trade frictions with
several of its major trading partners. European equities similarly gained.
Escalating trade tensions hurt European equity markets' performance in May but
dovish rhetoric by most central banks reignited the markets in June. The
Pacific Basin equity markets rose more modestly, with Australia the region's
top performer. The Japanese equity market was the only major equity market to
decline during the second quarter of 2019, despite reassurances from its
central bank that its interest rates would be kept lower for longer. Emerging
markets equities rose only slightly, dampened by trade tensions between the
U.S. and China, weaker Chinese economic growth momentum and geopolitical
tensions between the U.S. and Iran.
Global equities rose during the third quarter of 2019, buoyed by monetary
easing by most central banks. Keeping gains modest during these months,
however, were sluggish global economic growth and geopolitical tensions. Boris
Johnson was appointed as the new Prime Minister of the U.K. after his victory
in the Conservative Party leadership contest. The British Parliament passed
legislation requiring him to request an extension to the Brexit process if he
failed to secure an acceptable deal by October 17. Antigovernment protests in
Hong Kong took a significant toll on that country's economy, as its private
sector was mired in its worst downturn since the global financial crisis a
decade earlier. On the monetary policy front, the Fed cut interest rates in
July and September 2019for the first time since 2008, in an effort to extend
the U.S. economic expansion amid a slowdown in growth and trade uncertainty.
For similar reasons, the ECB unveiled a sweeping, long-term economic stimulus
package to bolster the Eurozone economy, including an open-ended asset purchase
program and more favorable bank lending conditions. For the quarter, U.S.
equities rose, with the U.S. economy remaining resilient despite elevated
geopolitical uncertainties and slowing global economic growth. European
equities ended the quarter higher, though volatility was also heightened given
headlines dominated by Brexit, political uncertainty in Italy, ongoing trade
tensions and renewed quantitative easing by the ECB. Pacific Basin equities
also finished the quarter in positive territory, and the Japanese equity market
was among the top performers despite ongoing declines in economic sentiment and
consumer confidence. Emerging markets equities fell in the third quarter.
Several emerging markets central banks sought to combat slowing economic growth
with more accommodative monetary policy, but equity markets were cautious amid
weaker economic indicators and political and trade uncertainty.
Against this backdrop, international equities, as measured by the MSCI ACWI
ex-U.S. (Net),+ posted a return of -1.23% in U.S. dollar terms for the 12-month
period ended September 30, 2019. Japanese equities, as measured by the MSCI
Japan Index (Net),+ were weaker, generating a return of -4.69% in U.S. dollar
terms for the same period. To compare, U.S. equities, as measured by the
S&P 500(R) Index,+ gained 4.25%, and emerging market equities, as measured by
the MSCI Emerging Markets Index (Net),+ returned -2.02% for the same 12-month
period.
On the following pages, you will find financial statements and portfolio
information for each of the Equity Funds during the annual period ended
September 30, 2019.
3
Shareholder Letter -- (unaudited) (continued)
Thank you for being a part of AIG Funds. We value your ongoing confidence in us
and look forward to serving your investment needs in the future. As always, if
you have any questions regarding your investments, please contact your
financial advisor or get in touch with us directly at 800-858-8850 or via our
website, www.aig.com/funds.
Sincerely,
The SunAmerica Equity Funds Investment Professionals
Timothy Pettee Jun Oh Timothy Campion
Andrew Sheridan Jane Bayar Algieri
--------
Past performance is no guarantee of future results.
* A basis point is 1/100/th/ of a percentage point.
** Reserve requirement ratio is the portion of reservable liabilities
commercial banks must hold onto rather than lend out or invest.
***Brexit refers to the U.K.'s path out of the European Union.
+++Dovish language suggests lower interest rates; opposite of hawkish.
++ The G20 (or Group of Twenty) is an international forum for the governments
and central bank governors from 19 countries and the European Union. It was
founded in 1999 with the aim to discuss policy pertaining to the promotion
of international financial stability.
+ 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. The MSCI Japan Index (Net) is a free-float adjusted market
capitalization-weighted index that is designed to track the equity market
performance of Japanese securities listed on Tokyo Stock Exchange, Osaka
Stock Exchange, JASDAQ and Nagoya Stock Exchange. The 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 (Morgan Stanley
Capital International) 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.
Indices are not managed and an investor cannot invest directly in an index. Net
total return indices reinvest dividends after the deduction of withholding
taxes, using (for international indices) a tax rate applicable to non-resident
institutional investors who do not benefit from double taxation treaties.
4
SunAmerica Equity Funds
EXPENSE EXAMPLE -- September 30, 2019 -- (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, 2019 and held until September 30, 2019.
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, 2019" to estimate the expenses you paid on your
account during this period. For shareholder accounts, the "Expenses Paid During
the Period Ended September 30, 2019" 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, 2019" 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, 2019" 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, 2019" 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, 2019" 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, 2019" 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.
5
SunAmerica Equity Funds
EXPENSE EXAMPLE -- September 30, 2019 -- (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 Annualized
at April 1, September 30, September 30, at April 1, September 30, September 30, Expense
Fund 2019 2019 2019 2019 2019 2019 Ratio(1)
---- ------------- -------------- ------------- ------------- -------------- ------------- ----------
AIG International
Dividend Strategy
Fund(2)
Class A............ $1,000.00 $ 963.12 $ 9.35 $1,000.00 $1,015.54 $ 9.60 1.90%
Class C............ $1,000.00 $ 960.46 $12.53 $1,000.00 $1,012.28 $12.86 2.55%
Class W............ $1,000.00 $ 964.51 $ 8.37 $1,000.00 $1,016.55 $ 8.59 1.70%
AIG Japan Fund(2)
Class A............ $1,000.00 $1,049.13 $ 9.76 $1,000.00 $1,015.54 $ 9.60 1.90%
Class C............ $1,000.00 $1,046.00 $13.08 $1,000.00 $1,012.28 $12.86 2.55%
Class W............ $1,000.00 $1,050.55 $ 8.74 $1,000.00 $1,016.55 $ 8.59 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, 2019" 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, 2019" and the annualized
"Expense Ratio" would have been lower.
6
SunAmerica Equity Funds
STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2019
AIG International
Dividend
Strategy Fund AIG Japan Fund
----------------- --------------
ASSETS:
Investments at value (unaffiliated)*................ $ 59,525,182 $17,248,590
Repurchase agreements (cost approximates value)..... -- 439,000
Cash................................................ -- 970
Foreign cash*....................................... 568,932 7,306
Receivable for:
Fund shares sold................................... 19,987 594
Dividends and interest............................. 468,516 150,517
Investments sold................................... -- 346,085
Prepaid expenses and other assets................... 6,790 6,078
Due from investment adviser for expense
reimbursements/fee waivers......................... 5,580 15,153
------------ -----------
Total assets........................................ 60,594,987 18,214,293
------------ -----------
LIABILITIES:
Payable for:
Fund shares redeemed............................... 32,559 4,352
Investments purchased.............................. -- 142,058
Investment advisory and management fees............ 49,842 16,716
Distribution and service maintenance fees.......... 19,548 6,752
Transfer agent fees and expenses................... 15,272 4,750
Trustees' fees and expenses........................ 1,218 699
Other accrued expenses............................. 208,638 114,811
Line of credit..................................... 100,000 --
Due to custodian.................................... 11,944 --
------------ -----------
Total liabilities................................... 439,021 290,138
------------ -----------
Net Assets.......................................... $ 60,155,966 $17,924,155
============ ===========
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01 par value...... $ 77,075 $ 27,484
Paid-in capital..................................... 125,822,319 20,834,561
------------ -----------
125,899,394 20,862,045
Total accumulated earnings (loss)................... (65,743,428) (2,937,890)
------------ -----------
Net Assets.......................................... $ 60,155,966 $17,924,155
============ ===========
*Cost
Investments (unaffiliated)......................... $ 65,522,075 $18,168,954
============ ===========
Foreign cash....................................... $ 572,311 $ 7,318
============ ===========
Class A (unlimited shares authorized):
Net assets.......................................... $ 54,827,468 $13,750,307
Shares of beneficial interest issued and outstanding 6,974,305 2,078,436
Net asset value and redemption price per share...... $ 7.86 $ 6.62
Maximum sales charge (5.75% of offering price)...... $ 0.48 $ 0.40
------------ -----------
Maximum offering price to public.................... $ 8.34 $ 7.02
============ ===========
Class C (unlimited shares authorized):
Net assets.......................................... $ 4,105,518 $ 3,395,850
Shares of beneficial interest issued and outstanding 577,799 552,951
Net asset value, offering and redemption price per
share (excluding any applicable contingent
deferred sales charge)............................. $ 7.11 $ 6.14
============ ===========
Class W (unlimited shares authorized):
Net assets.......................................... $ 1,222,980 $ 777,998
Shares of beneficial interest issued and outstanding 155,428 117,023
Net asset value, offering and redemption price per
share.............................................. $ 7.87 $ 6.65
============ ===========
See Notes to Financial Statements
7
SunAmerica Equity Funds
STATEMENT OF OPERATIONS -- September 30, 2019
AIG International
Dividend
Strategy Fund AIG Japan Fund
----------------- --------------
INVESTMENT INCOME:
Dividends (unaffiliated)............................................................. $ 2,751,610 $ 447,804
Interest (unaffiliated).............................................................. 1,611 1,484
----------- -----------
Total investment income*............................................................ 2,753,221 449,288
----------- -----------
EXPENSES:
Investment advisory and management fees................................................ 628,179 222,382
Distributionand service maintenance fees:
Class A............................................................................. 193,396 50,882
Class C............................................................................. 52,414 41,953
Servicefees:
Class W............................................................................. 2,245 510
Transferagent fees and expenses:
Class A............................................................................. 145,227 35,568
Class C............................................................................. 15,777 10,641
Class W............................................................................. 4,132 1,252
Registrationfees:
Class A............................................................................. 25,994 17,557
Class C............................................................................. 12,931 12,479
Class W............................................................................. 10,749 10,705
Custodian and accounting fees........................................................ 32,103 31,200
Reports to shareholders.............................................................. 67,469 11,132
Audit and tax fees................................................................... 76,238 76,238
Legal fees........................................................................... 52,976 40,084
Trustees' fees and expenses.......................................................... 4,668 1,591
Interest expense..................................................................... 537 57
Other expenses....................................................................... 26,587 25,122
----------- -----------
Total expenses before fee waivers, expense reimbursements, and expense recoupments.. 1,351,622 589,353
Net (Fees waived and expenses reimbursed)/recouped by investment adviser (Note 3)... (126,845) (195,312)
----------- -----------
Net expenses........................................................................ 1,224,777 394,041
----------- -----------
Net investment income (loss)........................................................... 1,528,444 55,247
----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)**............................... (5,645,302) (1,727,833)
Net realized foreign exchange gain (loss) on other assets and liabilities.............. (36,989) 7,533
----------- -----------
Net realized gain (loss) on investments and foreign currencies......................... (5,682,291) (1,720,300)
----------- -----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated)......... (277,239) 89,445
Change in unrealized foreign exchange gain (loss) on other assets and liabilities...... (9,019) 645
----------- -----------
Net unrealized gain (loss) on investments and foreign currencies....................... (286,258) 90,090
----------- -----------
Net realized and unrealized gain (loss) on investments and foreign currencies.......... (5,968,549) (1,630,210)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ $(4,440,105) $(1,574,963)
=========== ===========
* Net of foreign withholding taxes on interest and dividends of........................ $ 264,028 $ 49,466
=========== ===========
** Net of foreign withholding taxes on capital gains of................................ $ -- $ --
=========== ===========
See Notes to Financial Statements
8
SunAmerica Equity Funds
STATEMENT OF CHANGES IN NET ASSETS -- September 30, 2019
AIG International
Dividend
Strategy Fund
--------------------------
For the year For the year
ended ended
September 30, September 30,
2019 2018
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss).................................................................. $ 1,528,444 $ 2,378,732
Net realized gain (loss) on investments and foreign currencies................................ (5,682,291) 7,427,297
Net unrealized gain (loss) on investments and foreign currencies.............................. (286,258) (15,824,245)
------------ ------------
Net increase (decrease) in net assets resulting from operations................................ (4,440,105) (6,018,216)
------------ ------------
Distributions to shareholders from:
Distributable earnings (Class A)............................................................... (1,379,400) (2,032,857)
Distributable earnings (Class C)............................................................... (104,393) (227,075)
Distributable earnings (Class I)+.............................................................. -- (4,650)
Distributable earnings (Class W)............................................................... (36,439) (126,742)
------------ ------------
Total distributions to shareholders............................................................ (1,520,232) (2,391,324)
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 6)....... (5,120,537) (12,539,781)
------------ ------------
Total increase (decrease) in net assets........................................................ (11,080,874) (20,949,321)
NET ASSETS:
Beginning of period............................................................................ $ 71,236,840 $ 92,186,161
------------ ------------
End of period.................................................................................. $ 60,155,966 $ 71,236,840
============ ============
AIG Japan Fund
--------------------------
For the year For the year
ended ended
September 30, September 30,
2019 2018
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss).................................................................. $ 55,247 $ (99,478)
Net realized gain (loss) on investments and foreign currencies................................ (1,720,300) 4,288,154
Net unrealized gain (loss) on investments and foreign currencies.............................. 90,090 (4,205,967)
----------- -----------
Net increase (decrease) in net assets resulting from operations................................ (1,574,963) (17,291)
----------- -----------
Distributions to shareholders from:
Distributable earnings (Class A)............................................................... (2,106,312) (1,695,027)
Distributable earnings (Class C)............................................................... (745,654) (434,048)
Distributable earnings (Class I)+.............................................................. -- --
Distributable earnings (Class W)............................................................... (35,310) (49,128)
----------- -----------
Total distributions to shareholders............................................................ (2,887,276) (2,178,203)
----------- -----------
Net increase (decrease) in net assets resulting from capital share transactions (Note 6)....... (3,100,389) (1,255,132)
----------- -----------
Total increase (decrease) in net assets........................................................ (7,562,628) (3,450,626)
NET ASSETS:
Beginning of period............................................................................ $25,486,783 $28,937,409
----------- -----------
End of period.................................................................................. $17,924,155 $25,486,783
=========== ===========
--------
+ See Note 1
See Notes to Financial Statements
9
SunAmerica Equity Funds
FINANCIAL HIGHLIGHTS
AIG INTERNATIONAL DIVIDEND STRATEGY FUND
----------------------------------------
Net gain
(loss) on
Net investments Distri- Net Net
Asset Net (both Dividends butions Asset Assets
Value investment realized Total from from net from Total Value end of
beginning income and investment investment capital distri- end of Total period
Period Ended of period (loss)(1) unrealized) operations income gains butions period Return(2) (000's)
------------------ --------- ---------- ----------- ---------- ---------- ------- ------- ------ --------- -------
Class A
-
09/30/15 $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
09/30/19 8.57 0.20 (0.71) (0.51) (0.20) -- (0.20) 7.86 (5.96) 54,827
Class C
-
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
09/30/19 7.76 0.12 (0.62) (0.50) (0.15) -- (0.15) 7.11 (6.45) 4,106
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
09/30/19 8.57 0.21 (0.70) (0.49) (0.21) -- (0.21) 7.87 (5.68) 1,223
Ratio
of net
Ratio of investment
expenses income (loss)
to average to average Portfolio
net assets(3) net assets(3) Turnover
------------- ------------- ---------
1.88% 2.31% 160%
1.90(5) 2.61 80
1.90 3.28 22
1.90 2.97 59
1.90 2.51 66
2.55 1.69 160%
2.55(5) 1.78 80
2.55 2.48 22
2.55 1.95 59
2.55 1.64 66
1.70(4) 3.98(4) 160%
1.70(5) 2.50 80
1.70 3.55 22
1.70 2.98 59
1.70 2.50 66
--------
* 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):
09/30/15 09/30/16 09/30/17 09/30/18 09/30/19
-------- -------- -------- -------- --------
AIG International Dividend Strategy Class A. (0.01)% 0.03% (0.02)% 0.06% 0.17%
AIG International Dividend Strategy Class C. (0.02) 0.08 0.08 0.12 0.41
AIG International Dividend Strategy Class W. 0.20 0.15 0.17 0.22 0.86
(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
10
SunAmerica Equity Funds
FINANCIAL HIGHLIGHTS -- (continued)
AIG JAPAN FUND
--------------
Net gain
(loss) on
Net investments Distri- Net Net
Asset Net (both Dividends butions Asset Assets Ratio of
Value investment realized Total from from net from Total Value end of expenses
beginning income and investment investment capital distri- end of Total period to average
Period Ended of period (loss)(1) unrealized) operations income gains butions period Return(2) (000's) net assets(3)
------------------ --------- ---------- ----------- ---------- ---------- ------- ------- ------ --------- ------- -------------
Class A
-
09/30/15 $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
09/30/19 8.04 0.03 (0.49) (0.46) -- (0.96) (0.96) 6.62 (4.52) 13,750 1.90
Class C
-
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
09/30/19 7.58 (0.02) (0.46) (0.48) -- (0.96) (0.96) 6.14 (5.15) 3,396 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
09/30/19 8.06 0.09 (0.54) (0.45) -- (0.96) (0.96) 6.65 (4.37) 778 1.70
Ratio
of net
investment
income (loss)
to average Portfolio
net assets(3) Turnover
------------- ---------
(0.46)% 144%
0.01 151
(0.28) 115
(0.22) 101
0.43 82
(0.95) 144%
(0.78) 151
(0.89) 115
(0.77) 101
(0.33) 82
1.80(4) 115%
(0.03) 101
1.44 82
--------
* 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):
09/30/15 09/30/16 09/30/17 09/30/18 09/30/19
-------- -------- -------- -------- --------
AIG Japan Class A....................... 0.24% 0.41% 0.55% 0.56% 0.91%
AIG Japan Class C....................... 0.50 0.56 0.75 0.70 1.10
AIG Japan Class W....................... -- -- 17.99(4) 2.75 4.10
(4)Annualized
(5)Total return is not annualized.
See Notes to Financial Statements
11
AIG International Dividend Strategy Fund
PORTFOLIO PROFILE -- September 30, 2019 -- (unaudited)
Industry Allocation*
Real Estate Operations & Development... 8.8%
Medical-Drugs.......................... 7.0
Telephone-Integrated................... 5.8
Auto-Cars/Light Trucks................. 5.4
Tobacco................................ 4.9
Metal-Diversified...................... 4.6
Food-Retail............................ 4.1
Oil Companies-Integrated............... 3.0
Chemicals-Diversified.................. 3.0
Semiconductor Equipment................ 2.9
Telecom Services....................... 2.5
Building-Heavy Construction............ 2.5
Public Thoroughfares................... 2.5
Food-Dairy Products.................... 2.4
Power Converter/Supply Equipment....... 2.4
Cosmetics & Toiletries................. 2.3
Machinery-General Industrial........... 2.3
Human Resources........................ 2.3
Finance-Other Services................. 2.3
Building Products-Cement............... 2.2
Real Estate Management/Services........ 2.2
Electronic Components-Semiconductors... 2.1
Diversified Minerals................... 2.1
Building & Construction Products-Misc.. 2.0
Coal................................... 1.9
Cellular Telecom....................... 1.8
Instruments-Controls................... 1.8
Advertising Agencies................... 1.8
Office Automation & Equipment.......... 1.8
Advertising Services................... 1.8
Rubber-Tires........................... 1.5
Metal Processors & Fabrication......... 1.5
Retail-Jewelry......................... 1.4
Electronic Components-Misc............. 1.1
Gas-Distribution....................... 1.0
----
99.0%
====
Country Allocation*
France.................................. 16.8%
United Kingdom.......................... 12.5
Japan................................... 10.7
China................................... 7.1
Switzerland............................. 6.6
Hong Kong............................... 6.3
Australia............................... 6.2
Cayman Islands.......................... 4.9
Germany................................. 4.5
Netherlands............................. 4.4
Italy................................... 4.2
Taiwan.................................. 2.6
Canada.................................. 2.5
Sweden.................................. 2.3
South Korea............................. 2.1
Spain................................... 2.1
Jersey.................................. 1.8
Denmark................................. 1.4
----
99.0%
====
--------
*Calculated as a percentage of net assets
12
AIG International Dividend Strategy Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2019
Value
Security Description Shares (Note 2)
COMMON STOCKS -- 99.0%
Australia -- 6.2%
BHP Group, Ltd......................... 51,461 $ 1,274,047
Rio Tinto, Ltd......................... 22,872 1,438,492
Wesfarmers, Ltd........................ 36,578 984,080
-----------
3,696,619
-----------
Bermuda -- 0.0%
Peace Mark Holdings, Ltd.+(1).......... 800,000 0
-----------
Canada -- 2.5%
BCE, Inc............................... 31,508 1,523,971
-----------
Cayman Islands -- 4.9%
China Resources Land, Ltd.............. 382,000 1,592,627
Country Garden Holdings Co., Ltd....... 1,048,000 1,320,118
-----------
2,912,745
-----------
China -- 7.1%
Anhui Conch Cement Co., Ltd............ 224,000 1,336,090
China Evergrande Group................. 458,000 981,197
China Petroleum & Chemical Corp........ 1,320,000 787,934
China Shenhua Energy Co., Ltd.......... 568,700 1,138,380
-----------
4,243,601
-----------
Denmark -- 1.4%
Pandora A/S............................ 20,864 838,462
-----------
France -- 16.8%
Cie de Saint-Gobain.................... 30,682 1,205,220
Danone SA.............................. 16,453 1,449,114
Orange SA.............................. 81,755 1,283,257
Publicis Groupe SA..................... 21,292 1,046,825
Renault SA............................. 14,998 861,800
Sanofi................................. 14,464 1,341,225
Schneider Electric SE.................. 16,435 1,441,357
Vinci SA............................... 13,697 1,476,375
-----------
10,105,173
-----------
Germany -- 4.5%
BASF SE................................ 14,592 1,020,766
Continental AG......................... 7,285 935,206
Covestro AG*........................... 15,668 775,277
-----------
2,731,249
-----------
Hong Kong -- 6.3%
China Mobile, Ltd...................... 132,900 1,102,970
China Overseas Land & Investment, Ltd.. 423,000 1,338,157
Hong Kong Exchanges & Clearing, Ltd.... 46,000 1,357,789
-----------
3,798,916
-----------
Italy -- 4.2%
Atlantia SpA........................... 60,688 1,469,461
Eni SpA................................ 68,089 1,039,903
-----------
2,509,364
-----------
Japan -- 10.7%
Canon, Inc............................. 40,000 1,067,817
Daito Trust Construction Co., Ltd...... 10,200 1,307,731
Japan Tobacco, Inc..................... 48,800 1,069,349
Subaru Corp............................ 42,700 1,207,025
Tokyo Electron, Ltd.................... 9,300 1,786,352
-----------
6,438,274
-----------
Value
Security Description Shares (Note 2)
Jersey -- 1.8%
WPP PLC............................. 86,689 $ 1,085,195
-----------
Netherlands -- 4.4%
Fiat Chrysler Automobiles NV........ 91,888 1,190,593
Koninklijke Ahold Delhaize NV....... 57,444 1,436,988
-----------
2,627,581
-----------
South Korea -- 2.1%
Samsung Electronics Co., Ltd........ 31,492 1,284,871
-----------
Spain -- 2.1%
Telefonica SA....................... 164,769 1,258,168
-----------
Sweden -- 2.3%
Atlas Copco AB, Class A............. 45,171 1,390,615
-----------
Switzerland -- 6.6%
ABB, Ltd............................ 55,501 1,090,111
Adecco Group AG..................... 24,588 1,360,035
Roche Holding AG.................... 5,267 1,535,989
-----------
3,986,135
-----------
Taiwan -- 2.6%
Catcher Technology Co., Ltd......... 118,000 893,810
Yageo Corp.......................... 85,000 675,353
-----------
1,569,163
-----------
United Kingdom -- 12.5%
Anglo American PLC.................. 56,881 1,310,393
British American Tobacco PLC........ 27,844 1,029,437
BT Group PLC........................ 441,759 970,639
Centrica PLC........................ 649,459 588,827
GlaxoSmithKline PLC................. 64,372 1,377,921
Imperial Brands PLC................. 36,955 830,156
Unilever PLC........................ 23,578 1,417,707
-----------
7,525,080
-----------
Total Long-Term Investment Securities
(cost $65,522,075)................. 59,525,182
-----------
TOTAL INVESTMENTS --
(cost $65,522,075)(2).............. 99.0% 59,525,182
Other assets less liabilities......... 1.0 630,784
------- -----------
NET ASSETS -- 100.0% $60,155,966
======= ===========
--------
+ Non-income producing security
* Securities exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from registration,
normally to qualified institutional buyers. The Fund has no right to demand
registration of these securities. At September 30, 2019, the aggregate value
of these securities was $775,277 representing 1.3% of net assets.
(1)Securities classified as Level 3 (see Note 2).
(2)See Note 5 for cost of investments on a tax basis.
13
AIG International Dividend Strategy Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2019 -- (continued)
The following is a summary of the inputs used to value the Fund's net assets as
of September 30, 2019 (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
Canada................... 1,523,971 -- -- 1,523,971
Other Countries.......... -- 58,001,211** -- 58,001,211
---------- ----------- --- -----------
Total Investments at Value. $1,523,971 $58,001,211 $ 0 $59,525,182
========== =========== === ===========
--------
* For a detailed presentation of investments, please refer to the Portfolio of
Investments.
** Represents foreign equity securities that have been fair valued in
accordance with pricing procedures approved by the Board. See Note 2.
At the beginning and end of the reporting period, Level 3 investments in
securities were not considered a material portion of the Fund. There were no
Level 3 transfers during the reporting period.
See Notes to Financial Statements
14
AIG Japan Fund
PORTFOLIO PROFILE -- September 30, 2019 -- (unaudited)
Industry Allocation*
Auto/Truck Parts & Equipment-Original.. 8.6%
Electronic Components-Misc............. 6.3
Auto-Cars/Light Trucks................. 5.7
Building & Construction-Misc........... 5.5
Motorcycle/Motor Scooter............... 5.0
Medical Products....................... 4.9
Rubber-Tires........................... 4.6
Machinery-Electrical................... 4.3
Oil Refining & Marketing............... 4.0
Entertainment Software................. 3.5
Real Estate Management/Services........ 3.5
Food-Retail............................ 3.0
Electronic Components-Semiconductors... 3.0
Medical-Drugs.......................... 2.9
Diversified Banking Institutions....... 2.9
Engineering/R&D Services............... 2.6
Repurchase Agreements.................. 2.5
Banks-Commercial....................... 2.4
Chemicals-Diversified.................. 2.4
Chemicals-Specialty.................... 2.1
Building-Maintenance & Services........ 1.9
Industrial Automated/Robotic........... 1.7
Building-Heavy Construction............ 1.5
Tobacco................................ 1.5
Insurance-Property/Casualty............ 1.5
Computer Services...................... 1.5
Insurance-Life/Health.................. 1.4
Transport-Rail......................... 1.3
Photo Equipment & Supplies............. 1.3
Casino Services........................ 1.1
Retail-Catalog Shopping................ 1.0
Oil Companies-Exploration & Production. 1.0
Cosmetics & Toiletries................. 1.0
Human Resources........................ 0.8
Retail-Misc./Diversified............... 0.5
----
98.7%
====
Country Allocation*
Japan................................... 96.2%
United States........................... 2.5
----
98.7%
====
--------
*Calculated as a percentage of net assets
15
AIG Japan Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2019
Value
Security Description Shares (Note 2)
COMMON STOCKS -- 96.2%
Auto-Cars/Light Trucks -- 5.7%
Suzuki Motor Corp.................... 24,263 $1,030,632
----------
Auto/Truck Parts & Equipment-Original -- 8.6%
Denso Corp........................... 5,300 234,148
NGK Insulators, Ltd.................. 63,601 911,072
TS Tech Co., Ltd..................... 13,100 400,969
----------
1,546,189
----------
Banks-Commercial -- 2.4%
AEON Financial Service Co., Ltd...... 16,400 248,143
Fukuoka Financial Group, Inc......... 9,600 182,577
----------
430,720
----------
Building & Construction-Misc. -- 5.5%
Hazama Ando Corp..................... 60,239 448,293
Maeda Corp........................... 30,300 265,527
Taisei Corp.......................... 7,000 272,547
----------
986,367
----------
Building-Heavy Construction -- 1.5%
Daiho Corp........................... 10,250 272,156
----------
Building-Maintenance & Services -- 1.9%
Kyoritsu Maintenance Co., Ltd........ 8,033 345,517
----------
Casino Services -- 1.1%
Sega Sammy Holdings, Inc............. 13,500 189,871
----------
Chemicals-Diversified -- 2.4%
Tokuyama Corp........................ 18,322 423,475
----------
Chemicals-Specialty -- 2.1%
Shin-Etsu Chemical Co., Ltd.......... 3,442 370,865
----------
Computer Services -- 1.5%
Fujitsu, Ltd......................... 3,323 266,889
----------
Cosmetics & Toiletries -- 1.0%
Mandom Corp.......................... 7,100 176,614
----------
Diversified Banking Institutions -- 2.9%
Mitsubishi UFJ Financial Group, Inc.. 100,696 513,216
----------
Electronic Components-Misc. -- 6.3%
Fujitsu General, Ltd................. 30,115 503,459
Hitachi High-Technologies Corp....... 3,382 195,415
Minebea Mitsumi, Inc................. 27,003 431,492
----------
1,130,366
----------
Electronic Components-Semiconductors -- 3.0%
Rohm Co., Ltd........................ 7,012 540,734
----------
Engineering/R&D Services -- 2.6%
JGC Corp............................. 14,400 189,878
Kyudenko Corp........................ 2,800 93,816
Meitec Corp.......................... 3,700 181,940
----------
465,634
----------
Entertainment Software -- 3.5%
DeNA Co., Ltd........................ 16,987 299,755
Nexon Co., Ltd.+..................... 27,494 333,682
----------
633,437
----------
Value
Security Description Shares (Note 2)
Food-Retail -- 3.0%
Seven & i Holdings Co., Ltd......... 14,091 $ 540,739
-----------
Human Resources -- 0.8%
Persol Holdings Co., Ltd............ 7,300 138,955
-----------
Industrial Automated/Robotic -- 1.7%
THK Co., Ltd........................ 11,731 311,014
-----------
Insurance-Life/Health -- 1.4%
T&D Holdings, Inc................... 24,200 258,400
-----------
Insurance-Property/Casualty -- 1.5%
Tokio Marine Holdings, Inc.......... 4,982 267,478
-----------
Machinery-Electrical -- 4.3%
Hitachi, Ltd........................ 20,600 771,453
-----------
Medical Products -- 4.9%
Nipro Corp.......................... 77,943 877,293
-----------
Medical-Drugs -- 2.9%
Eisai Co., Ltd...................... 5,300 270,692
Ono Pharmaceutical Co., Ltd......... 13,984 254,322
-----------
525,014
-----------
Miscellaneous Manufacturing -- 0.0%
Peace Mark Holdings, Ltd.+(1)....... 8,000 0
-----------
Motorcycle/Motor Scooter -- 5.0%
Yamaha Motor Co., Ltd............... 49,344 899,895
-----------
Oil Companies-Exploration & Production -- 1.0%
Inpex Corp.......................... 20,300 185,177
-----------
Oil Refining & Marketing -- 4.0%
JXTG Holdings, Inc.................. 156,600 710,308
-----------
Photo Equipment & Supplies -- 1.3%
FUJIFILM Holdings Corp.............. 5,093 224,449
-----------
Real Estate Management/Services -- 3.5%
Mitsubishi Estate Co., Ltd.......... 31,960 618,856
-----------
Retail-Catalog Shopping -- 1.0%
ASKUL Corp.......................... 6,955 187,944
-----------
Retail-Misc./Diversified -- 0.5%
Ryohin Keikaku Co., Ltd............. 4,800 90,077
-----------
Rubber-Tires -- 4.6%
Toyo Tire Corp...................... 64,372 818,783
-----------
Tobacco -- 1.5%
Japan Tobacco, Inc.................. 12,214 267,644
-----------
Transport-Rail -- 1.3%
Seibu Holdings, Inc................. 13,300 232,429
-----------
Total Long-Term Investment Securities
(cost $18,168,954)................. 17,248,590
-----------
16
AIG Japan Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2019 -- (continued)
Principal Value
Security Description Amount (Note 2)
REPURCHASE AGREEMENTS -- 2.5%
Agreement with Fixed Income Clearing Corp.,
bearing interest at 0.35%, dated 09/30/2019, to
be repurchased 10/01/2019 in the amount of
$439,004 collateralized by $435,000 of United
States Treasury Notes, bearing interest at
2.50% due 08/15/2023 and having an
approximate value of $451,472
(cost $439,000).................................. $439,000 $ 439,000
-----------
TOTAL INVESTMENTS --
(cost $18,607,954)(2)............................ 98.7% 17,687,590
Other assets less liabilities....................... 1.3 236,565
-------- -----------
NET ASSETS -- 100.0% $17,924,155
======== ===========
--------
+ Non-income producing security
(1)Securities classified as Level 3 (see Note 2).
(2)See Note 5 for cost of investments on a tax basis.
The following is a summary of the inputs used to value the Fund's net assets as
of September 30, 2019 (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............ -- 17,248,590** -- 17,248,590
Repurchase Agreements......... -- 439,000 -- 439,000
--- ----------- --- -----------
Total Investments at Value.... $-- $17,687,590 $ 0 $17,687,590
=== =========== === ===========
--------
* For a detailed presentation of investments, please refer to the Portfolio of
Investments.
** Represents foreign equity securities that have been fair valued in
accordance with pricing procedures approved by the Board. See Note 2.
At the beginning and end of the reporting period, Level 3 investments in
securities were not considered a material portion of the Fund. There were no
Level 3 transfers during the reporting period.
See Notes to Financial Statements
17
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2019
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 indemnify others. The Trust's
maximum exposure under these arrangements is unknown. Currently, however,
the Trust expects the risk of loss to be remote.
18
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2019 -- (continued)
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, 2019, 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.
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
19
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2019 -- (continued)
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, 2019, the repurchase
agreements held by the Funds are subject to master netting agreements. See
the Portfolio of Investments for more information about a Fund's holdings in
repurchase agreements.
Repurchase Agreements: The Funds, along with other affiliated registered
investment companies, pursuant to procedures adopted by the Board and
applicable guidance from the Securities and Exchange Commission ("SEC"), may
transfer uninvested
20
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2019 -- (continued)
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
2016 -- 2018 or expected to be taken in each Fund's 2019 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
21
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2019 -- (continued)
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 2016.
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 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. The ASU allows for early adoption
of either the entire standard or only the provisions that eliminate or
modify the requirements. Management has elected to early adopt the
provisions that eliminate disclosure requirements and is still evaluating
the impact of applying the rest of the ASU.
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, 2019, SunAmerica earned fees in the amounts
stated in the Statement of Operations.
The AIG Japan Fund is subadvised by Wellington Management Company LLP
("Wellington Management") pursuant to a subadvisory agreement with
SunAmerica. Payments to Wellington for its services are made by SunAmerica
and not by the Fund.
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 the 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 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.
22
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2019 -- (continued)
Fund Percentage
---------------
International Dividend Strategy Fund Class A.................. 1.90%
International Dividend Strategy Fund Class C.................. 2.55
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, 2019, pursuant to the contractual expense
limitations referred to above, SunAmerica has waived or reimbursed expenses
as follows:
Other Expense
Reimbursed
-------------
Japan Fund.................................................... $109,446
Amount
-------
International Dividend Strategy Fund Class A........................ $92,667
International Dividend Strategy Fund Class C........................ 21,336
International Dividend Strategy Fund Class W........................ 12,842
Japan Fund Class A.................................................. 51,177
Japan Fund Class C.................................................. 22,731
Japan Fund Class W.................................................. 11,958
For the year ended September 30, 2019, SunAmerica did not recoup any
expenses.
At September 30, 2019, 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, 2020 September 30, 2021
------------------ ------------------
Japan Fund............................ $75,182 $109,446
Class Specific Expenses Reimbursed
-------------------------------------
September 30, 2020 September 30, 2021
------------------ ------------------
International Dividend Strategy Fund Class A.... $49,388 $92,667
International Dividend Strategy Fund Class C.... 12,338 21,336
International Dividend Strategy Fund Class W.... 10,384 12,842
Japan Fund Class A.............................. 67,003 51,177
Japan Fund Class C.............................. 28,092 22,731
Japan Fund Class W.............................. 12,736 11,958
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.
23
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2019 -- (continued)
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, 2019, ACS received fees (see Statement of Operations) based
upon the aforementioned rates.
The Trust, on behalf of each Fund, has entered into an Administrative and
Shareholder Services Agreement with ACS, pursuant to which ACS is paid an
annual fee of 0.15% of average daily net assets of Class W shares as
compensation for providing additional shareholder services to Class W
shareholders. The Distributor does not receive or retain any distribution
and/or account maintenance fees for any shares when the shareholder does not
have a broker of record. For the six months ended March 31, 2019, ACS earned
fees as reflected in the Statements of Operations based on the
aforementioned rate.
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, 2019, 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.. $19,631 $7,206 $9,273 $230 $116
Japan Fund............................ 5,280 1,086 3,478 -- 738
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, 2019, the Funds incurred the following
expenses which are included in transfer agent fees payable in the Statement
of Asset and Liabilities and in transfer agent fees and expenses in the
Statement of Operations to compensate AFS pursuant to the terms of the
Service Agreement.
Expense Payable at September 30, 2019
------------------------ -----------------------------
Fund Class A Class C Class W Class A Class C Class W
---- -------- ------- ------- -------- -------- --------
International Dividend Strategy Fund.. $123,327 $11,580 $3,292 $9,948 $784 $233
Japan Fund............................ 32,551 9,243 748 2,453 606 138
At September 30, 2019, 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 24% and 16%,
respectively, of the International Dividend Strategy Fund and AIG
Multi-Asset Allocation Portfolio and AIG Active Allocation Portfolio owned
38% and 19%, respectively, of the Japan Fund.
24
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2019 -- (continued)
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, 2019 were as follows:
International
Dividend Strategy
Fund Japan Fund
----------------- -----------
Purchases (excluding U.S. government securities).......... $40,814,666 $15,695,032
Sales (excluding U.S. government securities).............. 45,472,160 21,878,351
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.
For the year ended September 30, 2019
----------------------------------------------------------------
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.. $46,133 $(59,648,825) $(6,128,081) $1,520,232 $ --
Japan Fund............................ 68,789 (1,736,085) (1,253,884) 1,221,073 1,666,203
--------
* Unrealized appreciation (depreciation) includes amounts for derivatives and
other assets and liabilities denominated in foreign currency.
Tax Distributions
For the year ended
September 30, 2018
------------------------
Ordinary Long-Term
Income Capital Gains
---------- -------------
International Dividend Strategy Fund...................... $2,391,324 $ --
Japan Fund................................................ 1,819,884 358,319
As of September 30, 2019, 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...................... $34,779,989 $24,868,836
Japan Fund................................................ 486,892 1,249,193
For the year ended September 30, 2019, the reclassifications arising from
book/tax differences resulted in increases (decreases) that were primarily
due to disposition of passive foreign investment companies' securities 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............ $(36,989) $ 36,989 $--
Japan Fund...................................... 63,565 (63,565) --
25
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2019 -- (continued)
The amounts of aggregate unrealized gain (loss) and the cost of investment
securities for federal income tax purposes, including short-term securities
and repurchase agreements, were as follows at September 30, 2019:
International
Dividend
Strategy Fund Japan Fund
------------- -----------
Cost (tax basis).......................................... $ 65,637,931 $18,941,647
============ ===========
Appreciation.............................................. 3,979,151 670,710
Depreciation.............................................. (10,091,900) (1,924,767)
------------ -----------
Net unrealized appreciation (depreciation)................ $ (6,112,749) $(1,254,057)
============ ===========
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, 2019 September 30, 2018 September 30, 2019 September 30, 2018
------------------------ ------------------------ --------------------- ---------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Shares sold................. 1,014,517 $ 8,278,568 1,119,724 $ 10,390,018 65,126 $ 457,353 112,299 $ 953,815
Reinvested dividends........ 171,987 1,345,014 225,143 1,969,964 12,940 90,915 24,178 193,946
Shares redeemed............. (1,486,047) (11,826,297) (1,698,056) (15,740,245) (366,055) (2,643,465) (789,566) (6,652,049)
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Net increase (decrease) in
shares outstanding before
automatic conversion....... (299,543) $ (2,202,715) (353,189) (3,380,263) (287,989) $(2,095,197) (653,089) (5,504,288)
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Shares issued (reacquired)
upon automatic conversion.. 15,544 125,993 189,426 1,793,517 (17,200) (125,993) (209,540) (1,793,517)
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Net increase (decrease)..... (283,999) $ (2,076,722) (163,763) $ (1,586,746) (305,189) $(2,221,190) (862,629) $(7,297,805)
========== ============ ========== ============ ======== =========== ======== ===========
International Dividend Strategy Fund
-------------------------------------------------------------------------
Class I Class W
------------------------ -----------------------------------------------
For the For the For the
period ended year ended year ended
September 30, 2018+ September 30, 2019 September 30, 2018
------------------------ ------------------------ ---------------------
Shares Amount Shares Amount Shares A mount
---------- ------------ ---------- ------------ -------- -----------
Shares sold................. -- $ -- 52,355 $ 417,470 311,937 $ 2,940,438
Reinvested dividends........ 521 4,650 4,264 33,336 9,006 78,460
Shares redeemed............. (27,974) (242,795) (158,201) (1,273,431) (703,930) (6,435,983)
---------- ------------ ---------- ------------ -------- -----------
Net increase (decrease) in
shares outstanding before
automatic conversion....... (27,453) (238,145) (101,582) $ (822,625) (382,987) (3,417,085)
---------- ------------ ---------- ------------ -------- -----------
Shares issued (reacquired)
upon automatic conversion.. -- -- -- -- -- --
---------- ------------ ---------- ------------ -------- -----------
Net increase (decrease)..... (27,453) $ (238,145) (101,582) $ (822,625) (382,987) $(3,417,085)
========== ============ ========== ============ ======== ===========
--------
+ See Note 1
26
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2019 -- (continued)
Japan Fund
------------------------------------------------------------------------------------------
Class A Class C
-------------------------------------------- --------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
--------------------- --------------------- --------------------- ---------------------
Shares Amount Shares Amount Shares Amount Shares Amount
-------- ----------- -------- ----------- -------- ----------- -------- -----------
Shares sold................. 121,770 $ 789,738 215,016 $ 1,851,167 21,396 $ 128,400 276,430 $ 2,304,407
Reinvested dividends........ 343,619 2,068,588 187,031 1,597,246 122,766 689,943 48,340 391,553
Shares redeemed............. (744,470) (4,849,036) (761,542) (6,375,516) (411,979) (2,422,166) (149,288) (1,173,464)
-------- ----------- -------- ----------- -------- ----------- -------- -----------
Net increase (decrease) in
shares outstanding before
automatic conversion....... (279,081) $(1,990,710) (359,495) (2,927,103) (267,817) $(1,603,823) 175,482 1,522,496
-------- ----------- -------- ----------- -------- ----------- -------- -----------
Shares issued (reacquired)
upon automatic conversion.. 1,673 10,769 17,435 143,478 (1,794) (10,769) (18,397) (143,478)
-------- ----------- -------- ----------- -------- ----------- -------- -----------
Net increase (decrease)..... (277,408) $(1,979,941) (342,060) $(2,783,625) (269,611) $(1,614,592) 157,085 $ 1,379,018
======== =========== ======== =========== ======== =========== ======== ===========
Japan Fund
--------------------------------------------
Class W
--------------------------------------------
For the For the
year ended year ended
September 30, 2019 September 30, 2018
--------------------- ---------------------
Shares Amount Shares Amount
-------- ----------- -------- -----------
Shares sold................. 97,952 $ 624,289 66,113 $ 599,650
Reinvested dividends........ 5,846 35,310 2,319 19,827
Shares redeemed............. (25,548) (165,455) (57,600) (470,002)
-------- ----------- -------- -----------
Net increase (decrease) in
shares outstanding before
automatic conversion....... 78,250 $ 494,144 10,832 149,475
-------- ----------- -------- -----------
Shares issued (reacquired)
upon automatic conversion.. -- -- -- --
-------- ----------- -------- -----------
Net increase (decrease)..... 78,250 $ 494,144 10,832 $ 149,475
======== =========== ======== ===========
Note 7. Line of Credit
The Trust has access to a $75 million committed unsecured line of credit
and, along with certain other funds managed by the Adviser, 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. The
Trust, on behalf of each of the Funds, has paid State Street for its own
account, such Fund's ratable portion of an upfront fee in an amount equal to
$25,000 in the aggregate for the uncommitted line of credit made available
by State Street to certain other funds managed by the Adviser, which are
also party to the uncommitted line of credit. There is also a commitment fee
of 25 basis points per annum on the daily unused portion of the committed
line of credit. Borrowings under the line of credit will commence when the
respective Fund's cash shortfall exceeds $100,000. For the year ended
September 30, 2019, the following Funds had borrowings:
Days Interest Average Debt Weighted Average
Outstanding Charges Utilized Interest
----------- -------- ------------ ----------------
International Dividend Strategy Fund.. 25 $537 $215,530 3.57%
Japan Fund............................ 2 57 276,214 3.74
At September 30, 2019, the following Fund had an outstanding borrowing:
Amount
--------
International Dividend Strategy Fund................................ $100,000
27
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2019 -- (continued)
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, 2019, 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.
28
SunAmerica Equity Funds
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of SunAmerica Equity Funds and Shareholders of each of
the two funds listed in the table below
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of each of the funds listed in the
table below (two funds constituting SunAmerica Equity Funds, hereafter
collectively referred to as the "Funds") as of September 30, 2019, the related
statements of operations for the year ended September 30, 2019, the statements
of changes in net assets for each of the two years in the period ended
September 30, 2019, 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, 2019, 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, 2019 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.
SunAmerica Equity Funds
AIG International Dividend Strategy Fund
AIG Japan Fund
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, 2019 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 26, 2019
We have served as the auditor of one or more investment companies in the AIG
family of funds since 1984.
29
SunAmerica Equity Funds
APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2019 -- (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, 2020 at an in-person meeting held on June 4-5, 2019 (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, 2020 (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. The Board also considered the significant risks assumed by
SunAmerica in connection with the services provided to the Funds including
entrepreneurial risk in sponsoring new funds and ongoing risks including
investment, operational, enterprise, litigation, regulatory and compliance
risks with respect to all Funds.
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
30
SunAmerica Equity Funds
APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2019 -- (unaudited)
(continued)
has kept the Board apprised of developments relating to the Funds and the
industry in general. The Board concluded that the nature and extent of services
provided under the Advisory Agreement were reasonable and appropriate in
relation to the management fee and that the quality of services continues to be
high.
The Board also considered SunAmerica's reputation and long-standing
relationship with the Funds and considered the benefit to shareholders of
investing in funds that are part of a family of funds offering a variety of
types of mutual funds and shareholder services. The Board considered
SunAmerica's experience in providing management and investment advisory and
administrative services to advisory clients and noted that as of March 31,
2019, SunAmerica managed, advised and/or administered approximately
$85.8 billion in assets. In addition, the Board considered SunAmerica's code of
ethics and its commitment to compliance generally and with respect to its
management and administration of the Funds. The Board also considered
SunAmerica's risk management 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, 2019. 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-, three- and five-year periods.
The Board noted management's discussion of the Fund's performance, including
the impact of market conditions on the Fund's performance. The Board also noted
that management is considering various actions to improve the Fund's
performance. The Board concluded that the Fund's performance was being
addressed.
Japan Fund. The Board noted the limited size of the Peer Group. The Board
further noted that the Fund's performance was equal to the median of its Peer
Universe for the three-year period and was below the median of its Peer
Universe for the one- and five-year periods. The Board also considered that the
Fund underperformed its Broadridge Index for the one-, three- and five-year
periods. The
31
SunAmerica Equity Funds
APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2019 -- (unaudited)
(continued)
Board took into account management's discussion of the reasons for the Fund's
recent underperformance, including the impact of market conditions on the
Fund's performance, and concluded that the Fund'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 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.
32
SunAmerica Equity Funds
APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2019 -- (unaudited)
(continued)
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.
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. 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.
33
SunAmerica Equity Funds
APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2019 -- (unaudited)
(continued)
Conclusion. After a full and complete discussion, the Board approved the
Agreements, each for a one-year period ending June 30, 2020. 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.
34
SunAmerica Equity Funds
TRUSTEE AND OFFICER INFORMATION -- September 30, 2019 -- (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
Funds in
Position(s) Fund Complex Other Directorship(s)
Held With Length of Principal Occupation(s) Overseen by Held by Trustee
Name and Age Trust Time Served(1) During Past 5 Years Trustee(2) During Past Five Years(3)
----------------------- ----------- -------------- ------------------------------- ------------ ------------------------------
Disinterested Trustees
Dr. Judith L. Craven Trustee 2001-present Retired. 73 Director A.G. Belo Corp.
Age: 73 (media company) (1992 to
2014); Director, Sysco Corp.
(food marketing and
distribution company) (1996
to 2017); Director, Luby's,
Inc. (1998 to present).
William F. Devin Trustee 2001-present Retired. 24 None
Age: 80
Richard W. Grant Trustee 2011-present Retired. 24 None
Age: 73 Chairman
of the
Board
Stephen J. Gutman Trustee 2001-present Senior Vice President and 24 None
Age: 76 Associate Broker, The
Corcoran Group (real estate)
(2002 to present); President,
SJG Marketing Inc. (2009 to
present).
Eileen A. Kamerick Trustee 2018-present National Association of 24 Hochschild Mining plc
Age: 60 Corporate Directors Board (precious metals company)
Leadership Fellow and (2016 to Present); Associated
financial expert; Adjunct Banc-Corp (financial services
Professor of Law, University company) (2007 to Present);
of Chicago, Washington Legg Mason Closed End
University in St. Louis and Funds (registered investment
University of Iowa law companies) (2013 to
schools (2007 to Present); Present); Westell
formerly, Senior Advisor to Technologies, Inc.
the Chief Executive Officer (technology company)
and Executive Vice President (2003 to 2016).
and Chief Financial Officer
of ConnectWise, Inc.
(software and services
company) (2015 to 2016);
Chief Financial Officer, Press
Ganey Associates (health
care informatics company)
(2012 to 2014).
35
SunAmerica Equity Funds
TRUSTEE AND OFFICER INFORMATION -- September 30, 2019 -- (unaudited)
(continued)
Number of
Funds in
Position(s) Fund Complex Other Directorship(s)
Held With Length of Principal Occupation(s) Overseen by Held by Trustee
Name and Age Trust Time Served(1) During Past 5 Years Trustee(2) During Past Five Years(3)
-------------------- ----------- -------------- ---------------------------- ------------ -------------------------
Interested Trustee
Peter A. Harbeck(4) Trustee 2001-present Retired June 2019, formerly 73 None
Age: 65 President (1995-2019), CEO
(1997-2019) and Director
(1992-2019), SunAmerica;
Director, AIG Capital
Services, Inc. ("ACS")
(1993-2019); Chairman,
President and CEO, Advisor
Group, Inc. (2004-2016).
--------
(1)Trustees serve until their successors are duly elected and qualified.
(2)The term "Fund Complex" means two or more registered investment companies
that hold themselves out to investors as related companies for purposes of
investment services or have a common investment adviser or any investment
adviser that is an affiliate of the Adviser. The "Fund Complex" includes the
Trust (2 funds), SunAmerica Money Market Funds, Inc. ("SAMMF") (1 fund),
SunAmerica Income Funds (3 funds), SunAmerica Series, Inc. ("SA Series")
(6 funds), Anchor Series Trust ("AST") (5 portfolios), SunAmerica Senior
Floating Rate Fund, Inc. ("SASFRF") (1 fund), SunAmerica Series Trust
("SAST") (59 portfolios), VALIC Company I ("VALIC I") (34 portfolios), VALIC
Company II "VALIC II" (15 funds), Seasons Series Trust ("SST") (19
portfolios) and SunAmerica Specialty Series (6 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 because he owns shares
of American International Group, Inc., the ultimate parent of the Adviser.
Until his retirement on June 28, 2019, he served as President, CEO and
Director of SunAmerica and Director of ACS.
Additional information concerning the Trustees is contained in the Statement of
Additional Information which is available, without charge, by calling (800)
858-8850.
36
SunAmerica Equity Funds
TRUSTEE AND OFFICER INFORMATION -- September 30, 2019 -- (unaudited)
(continued)
Position(s)
Held With Length of Principal Occupation(s)
Name and Age Trust Time Served(1) During Past 5 Years
--------------------- -------------------- ---------------- -------------------------------------------------------------------
Officers
John T. Genoy President 2007-present Chief Financial Officer, SunAmerica (2002 to present); Senior Vice
Age: 51 President, SunAmerica (2004 to present); Chief Operating Officer,
SunAmerica (2006 to present).
Sharon French Executive Vice 2019-present President and CEO of SunAmerica (since 2019); Vice President of
Age: 54 President AIG (since 2019); Executive Vice President and Head of Beta
Solutions, OppenheimerFunds (2016-2019); President, F-Squared
Capital, LLC (financial services) (2013-2015).
Gregory N. Bressler Secretary 2005-present Senior Vice President and General Counsel, SunAmerica (2005 to
Age: 53 present).
Kathleen Fuentes Chief Legal Officer 2013-present Vice President and Deputy General Counsel, SunAmerica (2006 to
Age: 50 and Assistant present).
Secretary
James Nichols Vice President 2006-present Director, President and CEO, ACS (2006 to present); Senior Vice
Age: 53 President, SunAmerica (2002 to present).
Gregory R. Kingston Treasurer 2014-present Vice President, SunAmerica (2001 to present); Head of Mutual Fund
Age: 53 Administration, SunAmerica (2014 to present).
2919 Allen Parkway
Houston, Texas 77019
Shawn Parry Vice President and 2014-present Assistant Vice President, SunAmerica (2005 to 2014); Vice
Age: 47 Assistant Treasurer President, SunAmerica (2014 to present).
2919 Allen Parkway
Houston, Texas 77019
Donna McManus Vice President and 2014-present Managing Director, BNY Mellon (2009-2014); Vice President,
Age: 58 Assistant Treasurer SunAmerica, (2014 to present).
Timothy Pettee Vice President 2018-present Chief Investment Officer, SunAmerica (2018 to Present); Lead
Age: 60 Portfolio Manager-Rules Based Funds (2013 to Present); Chief
Investment Officer (2003 to 2013).
Christopher C. Joe Chief Compliance 2017 to present Chief Compliance Officer, AIG Funds, Anchor Series Trust, Seasons
Age: 50 Officer Series Trust, SunAmerica Series Trust, VALIC Company I and
2919 Allen Parkway VALIC Company II (2017-Present); Chief Compliance Officer, The
Houston, Texas 77019 Variable Annuity Life Insurance 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-Money 2006-present Acting Chief Compliance Officer, AIG Funds, Anchor Series Trust,
Age: 47 Laundering Seasons Series Trust, SunAmerica Series Trust, VALIC Company I
("AML") and VALIC Company II (2016 to 2017); Chief Compliance Officer,
Compliance SunAmerica (2006 to Present); Chief Compliance Officer, The
Officer Variable Annuity Life Insurance Company (2016 to 2017); AML
Compliance Officer, AIG Funds, Anchor Series Trust, Seasons
Series Trust, SunAmerica Series Trust, VALIC Company I and
VALIC Company II (2006 to Present); and Vice President,
SunAmerica (2011 to Present).
37
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, 2019. 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, 2019. The information necessary to complete your tax returns will
be included with your Form 1099-DIV to be received under separate cover in
early 2020.
During the year ended September 30, 2019, 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 W. -- --
Japan Class A........................... 0.22 --
Japan Class C........................... 0.22 --
Japan Class W........................... 0.22 --
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, 2019 was
$175,055 and $51,818, respectively. The gross foreign source income for the
information reporting is $3,015,639 and $498,754, respectively.
For the year ended September 30, 2019, certain dividends paid by the following
funds may be subject to a maximum tax rate of 15%, as provided by the Jobs and
Growth Tax Relief Reconciliation Act of 2003. Of the distributions paid during
the fiscal year, the following represents the maximum amount that may be
considered qualified dividend income:
Fund Income
---- ----------
International Dividend Strategy. $1,520,232
Japan........................... 1,221,073
38
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.
39
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDICES -- (unaudited) (continued)
AIG International Dividend Strategy Fund
The AIG International Dividend Strategy Fund Class A shares returned -5.96%
(before maximum sales charge) for the 12-month period ended September 30, 2019.
The Fund underperformed its benchmark, the MSCI ACWI ex-U.S. (Net),/*/ which
returned -1.23%/**/ during the same period. Importantly, however, the Fund's
holdings had an average dividend yield as of September 30, 2019 of 4.93%
compared to a 3.23% 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.
In terms of regional factors, the Fund's relative results were dampened most by
positioning in the U.K. and Taiwan and by weak stock selection among German
equities. These detractors were partially offset by positioning in France and
by both having underweight exposure to and effective stock selection among
Japanese and South Korean companies, which contributed positively.
From a sector perspective, the primary drivers of underperformance were having
underweighted allocations to and weak stock selection in the Consumer
Discretionary and Utilities sectors, both of which outpaced the MSCI ACWI
ex-U.S. (Net) during the annual period, and an overweighted allocation to
Materials, which was the second-weakest sector in the MSCI ACWI ex-U.S. (Net)
during the annual period. Stock selection among Energy, Consumer Staples and
Information Technology further hindered the Fund's relative results. Such
detractors were only partially offset by the positive contributions made by
prudent positioning in Industrials and by having an underweighted allocation to
the poorly performing Financials sector. Effective stock selection in
Financials, Health Care and Materials added value as well.
The top individual detractors from Fund performance during the annual period
were U.K. utilities company Centrica PLC; Hong Kong-based energy and chemical
company China Petroleum & Chemical Corp.; Hong Kong-based integrated
residential property developer China Evergrande Group; German chemicals
manufacturer Covestro AG; and Danish jewelry retailer Pandora A/S. Individual
stock holdings that contributed most positively to the Fund's relative
performance during the annual period were Japanese semiconductor company Tokyo
Electron, Ltd.; Hong Kong-based real estate company China Resources Land, Ltd.;
Canadian telecommunications company BCE, Inc.; Australian mining company Rio
Tinto, Ltd.; and Italian transportation infrastructure manager Atlantia SpA.
--------
Past performance is no guarantee of future results.
When investing internationally, the value of an investment may be affected by
fluctuation currency values, changing local and regional economic, political
and social conditions, and greater market volatility. In addition, foreign
securities may not be as liquid as domestic securities. Also, while the Fund
seeks to invest in a wide range of countries, volatility in a single country or
region in which the Fund invests a significant portion of its assets may affect
performance. In addition, the markets of emerging market countries are
typically more volatile and potentially less liquid than more developed
markets. Stocks of small-cap companies, and to a lesser extent, mid-cap
companies, may be more volatile than, and not as readily marketable as, those
of larger companies.
The Fund employs a Disciplined Strategy and will not deviate from its strategy
(except to the extent necessary to comply with federal tax laws or other
applicable laws). If the Fund is committed to a strategy that is unsuccessful,
the Fund will not meet its investment goal. Because the Fund will not use
certain techniques available to other mutual funds to reduce stock market
exposure, the Fund may be more susceptible to general market declines than
other mutual funds.
*The MSCI ACWI (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.
40
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 $8,103. The same amount
invested in securities mirroring the performance of the MSCI ACWI ex-U.S. (Net)
would be valued at $15,463.
[CHART]
AIG International Dividend
Date Strategy Class A/#/ MSCI ACWI ex-U.S. (Net)/*/*/
---------- --------------------------- ----------------------------
9/30/2009 9,422 10,000
10/31/2009 9,203 9,876
11/30/2009 9,634 10,159
12/31/2009 9,931 10,374
1/31/2010 9,227 9,867
2/28/2010 9,309 9,867
3/31/2010 10,004 10,538
4/30/2010 9,751 10,445
5/31/2010 8,622 9,346
6/30/2010 8,327 9,226
7/31/2010 9,039 10,059
8/31/2010 8,745 9,783
9/30/2010 9,685 10,756
10/31/2010 10,135 11,123
11/30/2010 9,636 10,693
12/31/2010 10,374 11,531
1/31/2011 10,488 11,644
2/28/2011 10,717 11,951
3/31/2011 10,766 11,923
4/30/2011 11,265 12,506
5/31/2011 10,979 12,145
6/30/2011 10,783 11,969
7/31/2011 10,635 11,806
8/31/2011 9,555 10,794
9/30/2011 8,410 9,593
10/31/2011 9,179 10,604
11/30/2011 8,893 10,063
12/31/2011 8,656 9,950
1/31/2012 9,328 10,625
2/29/2012 9,743 11,222
3/31/2012 9,677 11,068
4/30/2012 9,618 10,893
5/31/2012 8,531 9,656
6/30/2012 8,855 10,226
7/31/2012 8,623 10,370
8/31/2012 8,855 10,587
9/30/2012 9,148 10,983
10/31/2012 9,005 11,025
11/30/2012 9,030 11,235
12/31/2012 9,616 11,625
1/31/2013 9,914 12,097
2/28/2013 9,727 11,969
3/31/2013 9,411 11,993
4/30/2013 9,658 12,434
5/31/2013 9,215 12,147
6/30/2013 8,777 11,620
7/31/2013 9,228 12,129
8/31/2013 9,254 11,961
9/30/2013 9,992 12,792
10/31/2013 10,203 13,262
11/30/2013 10,071 13,285
12/31/2013 10,120 13,402
1/31/2014 9,599 12,793
2/28/2014 10,032 13,435
3/31/2014 10,385 13,470
4/30/2014 10,730 13,648
5/31/2014 10,836 13,913
6/30/2014 11,244 14,147
7/31/2014 10,886 14,007
8/31/2014 11,200 14,084
9/30/2014 10,212 13,402
10/31/2014 9,825 13,270
11/30/2014 9,626 13,366
12/31/2014 8,901 12,884
1/31/2015 8,702 12,865
2/28/2015 9,064 13,552
3/31/2015 8,810 13,333
4/30/2015 9,481 14,007
5/31/2015 9,100 13,788
6/30/2015 8,861 13,404
7/31/2015 8,494 13,366
8/31/2015 7,844 12,345
9/30/2015 7,430 11,772
10/31/2015 7,910 12,649
11/30/2015 7,643 12,388
12/31/2015 7,410 12,154
1/31/2016 6,929 11,327
2/29/2016 6,938 11,198
3/31/2016 7,641 12,109
4/30/2016 7,780 12,427
5/31/2016 7,391 12,217
6/30/2016 7,545 12,030
7/31/2016 8,022 12,625
8/31/2016 8,059 12,705
9/30/2016 8,135 12,862
10/31/2016 8,003 12,677
11/30/2016 7,740 12,384
12/31/2016 7,976 12,701
1/31/2017 8,194 13,151
2/28/2017 8,337 13,360
3/31/2017 8,641 13,699
4/30/2017 8,898 13,992
5/31/2017 9,183 14,446
6/30/2017 9,100 14,491
7/31/2017 9,282 15,025
8/31/2017 9,215 15,104
9/30/2017 9,284 15,384
10/31/2017 9,196 15,674
11/30/2017 9,069 15,801
12/31/2017 9,391 16,154
1/31/2018 9,804 17,054
2/28/2018 9,470 16,250
3/31/2018 9,323 15,963
4/30/2018 9,254 16,218
5/31/2018 8,831 15,843
6/30/2018 8,592 15,546
7/31/2018 8,861 15,917
8/31/2018 8,572 15,584
9/30/2018 8,617 15,655
10/31/2018 7,963 14,382
11/30/2018 8,054 14,518
12/31/2018 7,652 13,861
1/31/2019 8,251 14,908
2/28/2019 8,322 15,200
3/31/2019 8,413 15,290
4/30/2019 8,464 15,694
5/31/2019 7,845 14,852
6/30/2019 8,366 15,746
7/31/2019 8,039 15,555
8/31/2019 7,835 15,075
9/30/2019 8,103 15,463
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 -11.34% -5.96% -7.37% -6.45% -5.68% -5.68%
---------------------------------------------------------------------------
5 Year Return -5.64% -20.65% -5.12% -23.10% N/A N/A
---------------------------------------------------------------------------
10 Year Return -2.08% -14.00% -2.13% -19.41% N/A N/A
---------------------------------------------------------------------------
Since Inception* -0.28% -0.46% -0.71% -14.77% -1.72% -7.78%
---------------------------------------------------------------------------
+ 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, 2019, the AIG International
Dividend Strategy Class A returned -11.34% compared to -1.23% 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.
41
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDICES -- (unaudited) (continued)
AIG Japan Fund
The AIG Japan Fund Class A shares returned -4.52% (before maximum sales charge)
for the 12-month period ended September 30, 2019. While posting negative
absolute returns, the Fund modestly outperformed its benchmark, the MSCI Japan
Index (Net),/*/ which returned -4.69% during the same period.
The Fund's relative outperformance during the annual period was driven
primarily by favorable sector allocation. Having overweighted allocations to
Information Technology and Consumer Discretionary, which each outperformed the
MSCI Japan Index (Net) during the annual period, and having an underweighted
exposure to Consumer Staples, which underperformed the MSCI Japan Index (Net)
during the annual period, contributed most positively. These contributors were
only partially offset by the detracting effect of having underweighted
allocations to Real Estate and Communication Services and an overweighted
exposure to Materials. The Fund is managed using a bottom-up,
benchmark-agnostic approach, and sector exposure is a residual of our
stock-level positioning.
Stock selection overall also contributed positively to the Fund's relative
results, albeit more modestly. During the annual period, the Japanese equity
market delivered a negative absolute return, as increased global economic
growth concerns amid U.S.-China trade tensions weighed on Japan's
export-dependent economy, especially during the first three quarters of the
annual period. During the third quarter of 2019, however, Japan was among the
top-performing countries among the world's equity markets, buoyed by
encouraging developments in U.S.-Japan trade relations. The broad apathy toward
the Japanese equity market during the annual period overall provided what we
saw as compelling investment opportunities for bottom-up, contrarian investors.
We were focused on identifying what we viewed as positive changes in
fundamentals that the broad market was largely ignoring due to negative
sentiment. The Japanese equity market remained highly inefficient and
opportunities to find value in names that saw sentiment and price diverge from
fundamentals remained abundant, in our opinion. We continued to focus on
identifying companies that have as large a gap as possible between our
understanding of company fundamentals, financial strength and market
expectations. More specifically, individual security selection was most
effective during the annual period in the Information Technology, Materials and
Communication Services sectors. Partially offsetting these positive
contributors was stock selection in Consumer Discretionary, Health Care and
Financials, which detracted.
The top individual positive contributors to Fund performance during the annual
period were Hitachi High-Technologies Corp., a technology hardware and
industrials company; Shin-Etsu Chemical Co., Ltd., a chemicals and electronic
materials producer; ZOZO, Inc., an online fashion retailer; Nexon Co., Ltd., an
online game developer; and Hitachi, Ltd., a communications and electronic
equipment, heavy electrical and industrial machinery and consumer electronics
manufacturer. The individual stocks that detracted most from Fund performance
during the annual period were Toyo Tire Corp., an automotive parts
manufacturer; Yamaha Motor Co., Ltd., a motorcycle, motor vehicle engine and
specialty product manufacturer; Toyota Motor Corp., a leading automobile
company; Nipro Corp., a medical equipment manufacturer; and Mitsubishi UFJ
Financial Group, Inc., a banking 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.
42
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 $15,530. The same amount invested in securities mirroring
the performance of the MSCI Japan Index (Net) would be valued at $17,094.
[CHART]
Date AIG Japan Class A/#/ MSCI Japan Index (Net)@
---------- -------------------- -----------------------
9/30/2009 9,424 10,000
10/31/2009 9,311 9,749
11/30/2009 9,537 9,649
12/31/2009 9,643 9,724
1/31/2010 9,409 9,908
2/28/2010 9,374 10,019
3/31/2010 9,854 10,520
4/30/2010 10,053 10,503
5/31/2010 8,941 9,654
6/30/2010 8,965 9,460
7/31/2010 9,854 9,797
8/31/2010 9,573 9,573
9/30/2010 10,650 10,011
10/31/2010 11,060 10,215
11/30/2010 10,755 10,430
12/31/2010 11,670 11,225
1/31/2011 11,561 11,239
2/28/2011 11,730 11,751
3/31/2011 11,814 10,672
4/30/2011 12,343 10,711
5/31/2011 12,055 10,536
6/30/2011 11,910 10,691
7/31/2011 11,742 11,069
8/31/2011 10,527 10,170
9/30/2011 9,300 10,002
10/31/2011 9,925 9,978
11/30/2011 9,661 9,537
12/31/2011 9,428 9,616
1/31/2012 9,855 10,051
2/29/2012 10,134 10,558
3/31/2012 10,252 10,699
4/30/2012 10,164 10,358
5/31/2012 8,943 9,433
6/30/2012 9,472 9,918
7/31/2012 9,340 9,681
8/31/2012 9,443 9,611
9/30/2012 9,428 9,834
10/31/2012 9,325 9,650
11/30/2012 9,516 9,879
12/31/2012 9,785 10,403
1/31/2013 10,147 10,785
2/28/2013 10,313 11,072
3/31/2013 10,750 11,613
4/30/2013 11,715 12,631
5/31/2013 10,962 11,916
6/30/2013 11,489 12,124
7/31/2013 11,565 12,197
8/31/2013 11,293 11,935
9/30/2013 12,213 12,932
10/31/2013 12,319 12,932
11/30/2013 12,469 13,124
12/31/2013 12,518 13,228
1/31/2014 12,088 12,718
2/28/2014 12,369 12,650
3/31/2014 12,270 12,487
4/30/2014 12,104 12,164
5/31/2014 12,485 12,656
6/30/2014 13,214 13,318
7/31/2014 13,048 13,395
8/31/2014 12,833 13,104
9/30/2014 12,800 13,011
10/31/2014 12,833 12,842
11/30/2014 12,419 12,881
12/31/2014 12,172 12,696
1/31/2015 12,444 12,993
2/28/2015 13,224 13,781
3/31/2015 13,423 13,992
4/30/2015 14,131 14,488
5/31/2015 14,221 14,677
6/30/2015 13,986 14,425
7/31/2015 14,022 14,493
8/31/2015 13,115 13,651
9/30/2015 12,172 12,722
10/31/2015 13,387 14,006
11/30/2015 13,532 13,866
12/31/2015 13,075 13,911
1/31/2016 12,383 12,767
2/29/2016 11,447 12,417
3/31/2016 11,859 13,004
4/30/2016 11,878 13,609
5/31/2016 12,383 13,467
6/30/2016 11,952 13,136
7/31/2016 12,775 13,987
8/31/2016 13,168 14,040
9/30/2016 13,542 14,265
10/31/2016 13,767 14,453
11/30/2016 13,187 14,105
12/31/2016 13,426 14,242
1/31/2017 13,915 14,772
2/28/2017 14,516 14,937
3/31/2017 14,686 14,882
4/30/2017 14,780 15,038
5/31/2017 15,231 15,490
6/30/2017 15,494 15,655
7/31/2017 15,964 15,971
8/31/2017 15,889 15,963
9/30/2017 16,209 16,276
10/31/2017 17,074 17,026
11/30/2017 17,431 17,535
12/31/2017 17,397 17,658
1/31/2018 18,085 18,467
2/28/2018 17,256 18,189
3/31/2018 16,892 17,805
4/30/2018 16,952 17,924
5/31/2018 16,386 17,747
6/30/2018 15,860 17,300
7/31/2018 16,163 17,369
8/31/2018 16,103 17,408
9/30/2018 16,265 17,936
10/31/2018 14,909 16,420
11/30/2018 15,010 16,485
12/31/2018 13,794 15,383
1/31/2019 15,108 16,322
2/28/2019 14,920 16,316
3/31/2019 14,803 16,409
4/30/2019 15,108 16,636
5/31/2019 14,333 15,977
6/30/2019 15,131 16,575
7/31/2019 15,108 16,599
8/31/2019 14,615 16,430
9/30/2019 15,530 17,094
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 -10.00% -4.52% -5.96% -5.15% -4.37% -4.37%
--------------------------------------------------------------------------
5 Year Return 2.72% 21.33% 3.26% 17.38% N/A N/A
--------------------------------------------------------------------------
10 Year Return 4.50% 64.80% 4.42% 54.13% N/A N/A
--------------------------------------------------------------------------
Since Inception* 0.35% 11.16% 0.13% 1.71% 3.00% 7.52%
--------------------------------------------------------------------------
+ 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, 2019, the AIG Japan Class A
returned -10.00% compared to -4.69% 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.
43
[LOGO]
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
Sharon French, Executive Information, may be multiple accounts
Vice President ob-tained without charge residing at the same
James Nichols, Vice upon request, by calling "household." This
President (800) 858-8850. This practice is called
Gregory N. Bressler, in-formation is also householding and reduces
Secretary available from the EDGAR Fund expenses, which
Christopher C. Joe, database on the U.S. benefits you and other
Chief Compliance Secu-rities and Exchange shareholders. Unless the
Officer Commission's website at Funds receive
Gregory R. Kingston, http://www.sec.gov. instructions to the
Treasurer PROXY VOTING RECORD ON con-trary, you will only
Shawn Parry, Vice SUNAMERICA EQUITY FUNDS receive one copy of the
President and Information regarding how shareholder documents.
Assistant Treasurer SunAmerica Equity Funds The Funds will continue
Donna McManus, Vice voted proxies relating to to household the
President and securities held in share-holder documents
Assistant Treasurer SunAmerica Equity Funds indefinitely, until we
Kathleen Fuentes, Chief during the most recent are instructed otherwise.
Legal Officer and twelve month period ended If you do not wish to
Assistant Secretary June 30 is avail-able, participate in
Matthew J. Hackethal, once filed with the U.S. householding, please
Anti-Money Laundering Securities and Exchange contact Shareholder
Compliance Officer Commission, without Services at (800)
Investment Adviser charge, upon request, by 858-8850 ext. 6010 or
SunAmerica Asset calling (800) 858-8850 or send a written request
Management, LLC on the U.S. Securities with your name, the name
Harborside 5 and Exchange Commission's of your fund(s) and your
185 Hudson Street, Suite website at account number(s) to AIG
3300 http://www.sec.gov. Funds, P.O. Box 219186,
Jersey City, NJ 07311 DISCLOSURE OF QUARTERLY Kansas City MO,
Distributor PORTFOLIO HOLDINGS 64121-9186. We will
AIG Capital Services, The Trust is required to resume in-dividual
Inc. file its complete mailings for your account
Harborside 5 schedule of portfolio within thirty (30) days
185 Hudson Street, Suite holdings quarterly with of receipt of your
3300 the U.S. Securities and request.
Jersey City, NJ 07311 Exchange Commission on This report is submitted
Shareholder Servicing Form N-PORT. The Trusts' solely for the general
Agent Forms N-PORT are information of
AIG Fund Services, Inc. available on the U.S. shareholders of the
Harborside 5 Securities and Exchange Funds. Distribution of
185 Hudson Street, Suite Com-mission's website at this report to persons
3300 http://www.sec.gov. other than shareholders
Jersey City, NJ 07311 of the Funds is
Custodian authorized only in
State Street Bank and con-nection with a
Trust Company currently effective
One Lincoln Street pro-spectus, setting
Boston, MA 02110 forth details of the
Transfer Agent Funds, which must precede
DST Asset Manager or accom-pany this report.
Solutions, Inc.
303 W 11th Street
Kansas City, MO 64105
[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 - 9/19
[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, 2019, 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"). During the fiscal year
ended September 30, 2019, however, the Code has been amended to reflect
changes to the titles of the Covered Officers.
Item 3. Audit Committee Financial Expert.
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:
2018 2019
(a) Audit Fees ....................$ 115,835 $ 119,310
(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:
2018 2019
(b) Audit-Related Fees ............$ 0 $ 0
(c) Tax Fees ......................$ 0 $ 0
(d) All Other Fees ................$ 0 $ 36,429
(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 2018 and 2019 were $0 and $105,000, 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 most recent
fiscal-half year 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.
(4) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the Sarbanes-
Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Equity Funds
By: /s/ John T. Genoy
------------------
John T. Genoy
President
Date: December 6, 2019
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John T. Genoy
-----------------
John T. Genoy
President
Date: December 6, 2019
By: /s/ Gregory R. Kingston
-----------------------
Gregory R. Kingston
Treasurer
Date: December 6, 2019