N-CSR 1 dncsr.txt SUNAMERICA EQUITY FUNDS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-04801 --------------------------------------------- SunAmerica Equity Funds -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) Harborside Financial Center, 3200 Plaza 5 Jersey City, NJ 07311 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) John T. Genoy Senior Vice President AIG SunAmerica Asset Management Corp. Harborside Financial Center, 3200 Plaza 5 Jersey City, NJ 07311 -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (201) 324-6414 ----------------------------- Date of fiscal year end: September 30 -------------------------- Date of reporting period: September 30, 2008 ------------------------- Item 1. Reports to Stockholders [PHOTO] ANNUAL REPORT 2008 SUNAMERICA Equity Funds www.sunamericafunds.com September 30, 2008 ANNUAL REPORT SUNAMERICA EQUITY FUNDS SunAmerica Blue Chip Growth Fund (SVLAX) SunAmerica Growth Opportunities Fund (SGWAX) SunAmerica New Century Fund (SEGAX) SunAmerica Growth and Income Fund (SEIAX) SunAmerica Balanced Assets Fund (SBAAX) SunAmerica International Equity Fund (SIEAX) SunAmerica Value Fund (SSVAX) SunAmerica Disciplined Growth Fund (TXMAX) SunAmerica International Small-Cap Fund (SAESX) Table of Contents SHAREHOLDER LETTER...................................... 2 EXPENSE EXAMPLE......................................... 3 STATEMENT OF ASSETS AND LIABILITIES..................... 6 STATEMENT OF OPERATIONS................................. 10 STATEMENT OF CHANGES IN NET ASSETS...................... 12 FINANCIAL HIGHLIGHTS.................................... 15 PORTFOLIO OF INVESTMENTS................................ 24 NOTES TO FINANCIAL STATEMENTS........................... 66 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. 88 APPROVAL OF ADVISORY AGREEMENTS......................... 89 TRUSTEE AND OFFICER INFORMATION......................... 94 SHAREHOLDER TAX INFORMATION............................. 97 COMPARISONS: FUNDS vs. INDEXES.......................... 99
Shareholder Letter Dear Shareholder, Enclosed is the annual report for the SunAmerica Equity Funds for the fiscal year ended September 30, 2008. Volatility in the U.S. equity markets was pronounced during the period as the financial crises deepened. Undoubtedly, the third calendar quarter of 2008 will long be remembered as one of the most challenging in the annals of financial history. Government intervention and support for major U.S. financial institutions, the failure of a top-tier investment bank, and a widespread fear and panic among investors had gripped the market. The quarter was marked by the largest single-day point drop in the Dow Jones Industrial Average--a decline of over 770 points. On top of this, but still lurking in the background, was an economy that showed clear signs of deterioration. The recessionary environment in the U.S. began impacting foreign economies, further exacerbating the impact on exporters. The U.S. economy continued to struggle under the weight of a protracted decline in housing prices, a weak labor market, and tighter credit conditions. In response to these events, the U.S. government took swift action and Congress approved a $700 billion bailout plan. Moreover, while the Federal Reserve left interest rates unchanged during the final fiscal quarter, it cut the Federal Open Market Committee (FOMC) rate a cumulative 2.75% during the annual period to 2.0%. Over the 12-month period ended September 30, 2008, seven of the nine traditional domestic mutual fund categories had declines greater than 20.0% with only Small-Cap Core (-18.7%) and Small-Cap Value (-16.4%) avoiding this conventional bear market measure. The plunge in the international market was even more pronounced, with Lipper's International and Emerging Market fund categories returning -30.5% and -33.8%, respectively. The serious challenges confronting both the equity markets and global economies are evident. We at SunAmerica Asset Management continue to work diligently, identifying potential opportunities to grow capital while keeping a keen eye on the many risks that entails. We believe the combination of quantitative tools and strong fundamental research, diligently applied, can achieve this dual objective. Thank you for your investment in SunAmerica Mutual Funds. If you have any questions regarding our products, please contact your financial adviser or contact us directly at 800-858-8850 or www.sunamericafunds.com. Sincerely, The SunAmerica Equity Funds Investment Professionals John Massey Allison Larkin Robin Thorn Steve Neimeth Brendan Voege Chantal Brennan Paul Ma Ben Barrett Jay Rushin Mike Beaulieu Soraya Benitez Andy Sheridan Sandra Salas Jay Merchant Sarah Kallok Kara Murphy Karen Forte
-------- Past performance is no guarantee of future results. 2 SunAmerica Equity Funds EXPENSE EXAMPLE -- September 30, 2008 -- (unaudited) Disclosure of Portfolio Expenses in Shareholder Reports As a shareholder of a Fund (each, a "Fund" and collectively, the "Funds") in the SunAmerica Equity Funds (the "Trust"), you may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, contingent deferred sales charges, redemption fees (applicable to Class A of International Equity Fund and International Small-Cap Fund only) and (2) ongoing costs, including management fees; distribution and service fees; and other Fund expenses. The Example set forth below is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at April 1, 2008 and held until September 30, 2008. Actual Expenses The "Actual" section of the table provides information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the column under the heading entitled "Expenses Paid During the Six Months Ended September 30, 2008" to estimate the expenses you paid on your account during this period. For shareholder accounts in classes other than Class I and Class Z, the "Expenses Paid During the Six Months Ended September 30, 2008" column does not include small account fees that may be charged if your account balance is below $500 ($250 for retirement plan accounts). In addition, the "Expenses Paid During the Six Months Ended September 30, 2008" column does not include administrative fees that may apply to qualified retirement plan accounts. See the Funds' prospectus and/or your retirement plan documents for full description of these fees. Had these fees been included, the "Expenses Paid During the Six Months Ended September 30, 2008" column would have been higher and the "Ending Account Value" would have been lower. Hypothetical Example for Comparison Purposes The "Hypothetical" section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. For shareholder accounts in classes other than Class I and Class Z the "Expenses Paid During the Six Months Ended September 30, 2008" column does not include small account fees that may be charged if your account balance is below $500 ($250 for retirement plan accounts). In addition, the "Expenses Paid During the Six Months Ended September 30, 2008" column does not include administrative fees that may apply to qualified retirement plan accounts. See the Funds' prospectus and/or your retirement plan document for full description of these fees. Had these fees been included, the "Expenses Paid During the Six Months Ended September 30, 2008" column would have been higher and the "Ending Account Value" would have been lower. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, including sales charges on purchase payments, contingent deferred sales charges, redemption fees (applicable to Class A of International Equity Fund and International Small-Cap Fund only); small account fees and administrative fees, if applicable to your account. Please refer to the Fund's prospectus and/or qualified retirement plan document 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. 3 SunAmerica Equity Funds EXPENSE EXAMPLE -- September 30, 2008 -- (unaudited) (continued)
Actual Hypothetical ------------------------------------------ ------------------------------------------ Ending Account Ending Account Expense Paid Value using Expense Paid Value Using During the a Hypothetical During the Expense Beginning Actual Six Months Beginning 5% Assumed Six Months Ratio Account Value Return at Ended Account Value Return at Ended as of at April 1, September 30, September 30, at April 1, September 30, September 30, September 30, Fund 2008 2008 2008 2008 2008 2008 2008* ----------------------------- ------------- -------------- ------------- ------------- -------------- ------------- ------------- Blue Chip Growth Fund@ Class A.................... $1,000.00 $899.82 $ 7.84 $1,000.00 $1,016.75 $ 8.32 1.65% Class B.................... $1,000.00 $896.91 $11.19 $1,000.00 $1,013.20 $11.88 2.36% Class C.................... $1,000.00 $896.05 $11.95 $1,000.00 $1,012.40 $12.68 2.52% Class I#................... $1,000.00 $900.77 $ 6.32 $1,000.00 $1,018.35 $ 6.71 1.33% Growth Opportunities Fund@ Class A#................... $1,000.00 $860.40 $ 8.93 $1,000.00 $1,015.40 $ 9.67 1.92% Class B#................... $1,000.00 $856.92 $12.07 $1,000.00 $1,012.00 $13.08 2.60% Class C#................... $1,000.00 $856.59 $12.67 $1,000.00 $1,011.35 $13.73 2.73% Class I#................... $1,000.00 $862.98 $ 6.19 $1,000.00 $1,018.35 $ 6.71 1.33% New Century Fund@ Class A#................... $1,000.00 $714.62 $ 7.07 $1,000.00 $1,016.75 $ 8.32 1.65% Class B#................... $1,000.00 $711.62 $10.74 $1,000.00 $1,012.45 $12.63 2.51% Class C#................... $1,000.00 $712.58 $ 9.16 $1,000.00 $1,014.30 $10.78 2.14% Growth and Income Fund@ Class A.................... $1,000.00 $882.44 $ 7.53 $1,000.00 $1,017.00 $ 8.07 1.60% Class B.................... $1,000.00 $879.69 $10.71 $1,000.00 $1,013.60 $11.48 2.28% Class C.................... $1,000.00 $879.60 $10.67 $1,000.00 $1,013.65 $11.43 2.27% Class I#................... $1,000.00 $883.74 $ 6.22 $1,000.00 $1,018.40 $ 6.66 1.32% Balanced Assets Fund@ Class A#................... $1,000.00 $919.74 $ 7.63 $1,000.00 $1,017.05 $ 8.02 1.59% Class B#................... $1,000.00 $916.85 $11.02 $1,000.00 $1,013.50 $11.58 2.30% Class C#................... $1,000.00 $916.32 $11.02 $1,000.00 $1,013.50 $11.58 2.30% Class I#................... $1,000.00 $920.76 $ 6.29 $1,000.00 $1,018.45 $ 6.61 1.31% International Equity Fund@ Class A.................... $1,000.00 $762.72 $ 8.59 $1,000.00 $1,015.25 $ 9.82 1.95% Class B#................... $1,000.00 $761.14 $11.23 $1,000.00 $1,012.25 $12.83 2.55% Class C#................... $1,000.00 $760.32 $11.22 $1,000.00 $1,012.25 $12.83 2.55% Class I#................... $1,000.00 $763.06 $ 7.93 $1,000.00 $1,016.00 $ 9.07 1.80% Value Fund@ Class A#................... $1,000.00 $905.47 $ 7.76 $1,000.00 $1,016.85 $ 8.22 1.63% Class B#................... $1,000.00 $902.96 $10.85 $1,000.00 $1,013.60 $11.48 2.28% Class C#................... $1,000.00 $902.96 $10.85 $1,000.00 $1,013.60 $11.48 2.28% Class I#................... $1,000.00 $906.05 $ 7.29 $1,000.00 $1,017.35 $ 7.72 1.53% Class Z#................... $1,000.00 $907.98 $ 5.06 $1,000.00 $1,019.70 $ 5.35 1.06% Disciplined Growth Fund@ Class A#................... $1,000.00 $761.87 $ 6.39 $1,000.00 $1,017.75 $ 7.31 1.45% Class B#................... $1,000.00 $759.22 $ 9.24 $1,000.00 $1,014.50 $10.58 2.10% Class C#................... $1,000.00 $759.39 $ 9.24 $1,000.00 $1,014.50 $10.58 2.10% International Small-Cap Fund Class A#................... $1,000.00 $707.98 $ 8.11 $1,000.00 $1,015.50 $ 9.57 1.90% Class B#................... $1,000.00 $705.33 $10.87 $1,000.00 $1,012.25 $12.83 2.55% Class C#................... $1,000.00 $705.33 $10.87 $1,000.00 $1,012.25 $12.83 2.55%
-------- * Expenses are equal to the Fund's annualized expense ratio multiplied by the average account value over the period, multiplied by 183 days divided by 366 days. These ratios do not reflect transaction costs, including sales charges on purchase payments, contingent deferred sales charges, redemption fees (International Equity Fund and International Small-Cap Fund only), small account fees and administrative fees, if applicable to your account. Please refer to your Prospectus and/or qualified retirement plan document for more information. # During the stated period, the investment advisor either waived a portion of or all of the fees and assumed a portion of or all expenses for the Funds or through recoupment provisions, recovered a portion of or all fees and expenses waived or reimbursed in the previous two fiscal years. As a result, if these fees and expenses had not been waived or assumed, the "Actual/Hypothetical Ending Account Value" would have been lower and the "Actual/Hypothetical Expenses Paid During the Six Months Ended September 30, 2008" and the "Expense Ratios" would have been higher. If these fees and expenses had not been recouped, the "Actual/Hypothetical Ending Account Value" would have been higher and the "Actual/Hypothetical Expenses Paid During the Six Months Ended September 30, 2008" and "Expense Ratios" would have been lower. @ Through expense offset arrangements resulting from broker commission recapture, a portion of the Fund's expenses have been reduced. Had the expense reductions been applied, the Expense Example would have been as follows: 4 SunAmerica Equity Funds EXPENSE EXAMPLE -- September 30, 2008 -- (unaudited) (continued)
Actual Hypothetical ------------------------------------------ ------------------------------------------ Ending Account Ending Account Expense Paid Value using Expense Paid Value Using During the a Hypothetical During the Expense Beginning Actual Six Months Beginning 5% Assumed Six Months Ratio Account Value Return at Ended Account Value Return at Ended as of at April 1, September 30, September 30, at April 1, September 30, September 30, September 30, Fund 2008 2008 2008 2008 2008 2008 2008* -------------------------- ------------- -------------- ------------- ------------- -------------- ------------- ------------- Blue Chip Growth Fund Class A................. $1,000.00 $899.82 $ 7.84 $1,000.00 $1,016.75 $ 8.32 1.65% Class B................. $1,000.00 $896.91 $11.19 $1,000.00 $1,013.20 $11.88 2.36% Class C................. $1,000.00 $896.05 $11.95 $1,000.00 $1,012.40 $12.68 2.52% Class I#................ $1,000.00 $900.77 $ 6.32 $1,000.00 $1,018.35 $ 6.71 1.33% Growth Opportunities Fund Class A#................ $1,000.00 $860.40 $ 8.09 $1,000.00 $1,016.30 $ 8.77 1.74% Class B#................ $1,000.00 $856.92 $11.23 $1,000.00 $1,012.90 $12.18 2.42% Class C#................ $1,000.00 $856.59 $11.84 $1,000.00 $1,012.25 $12.83 2.55% Class I#................ $1,000.00 $862.98 $ 5.36 $1,000.00 $1,019.25 $ 5.81 1.15% New Century Fund Class A#................ $1,000.00 $714.62 $ 6.17 $1,000.00 $1,017.80 $ 7.26 1.44% Class B#................ $1,000.00 $711.62 $ 9.80 $1,000.00 $1,013.55 $11.53 2.29% Class C#................ $1,000.00 $712.58 $ 8.26 $1,000.00 $1,015.35 $ 9.72 1.93% Growth and Income Fund Class A................. $1,000.00 $882.44 $ 7.39 $1,000.00 $1,017.15 $ 7.92 1.57% Class B................. $1,000.00 $879.69 $10.57 $1,000.00 $1,013.75 $11.33 2.25% Class C................. $1,000.00 $879.60 $10.53 $1,000.00 $1,013.80 $11.28 2.24% Class I#................ $1,000.00 $883.74 $ 6.08 $1,000.00 $1,018.55 $ 6.51 1.29% Balanced Assets Fund Class A#................ $1,000.00 $919.74 $ 7.58 $1,000.00 $1,017.10 $ 7.97 1.58% Class B#................ $1,000.00 $916.85 $10.97 $1,000.00 $1,013.55 $11.53 2.29% Class C#................ $1,000.00 $916.32 $10.97 $1,000.00 $1,013.55 $11.53 2.29% Class I#................ $1,000.00 $920.76 $ 6.24 $1,000.00 $1,018.50 $ 6.56 1.30% International Equity Fund Class A................. $1,000.00 $762.72 $ 8.59 $1,000.00 $1,015.25 $ 9.82 1.95% Class B#................ $1,000.00 $761.14 $11.23 $1,000.00 $1,012.25 $12.83 2.55% Class C#................ $1,000.00 $760.32 $11.22 $1,000.00 $1,012.25 $12.83 2.55% Class I#................ $1,000.00 $763.06 $ 7.93 $1,000.00 $1,016.00 $ 9.07 1.80% Value Fund Class A#................ $1,000.00 $905.47 $ 7.62 $1,000.00 $1,017.00 $ 8.07 1.60% Class B#................ $1,000.00 $902.96 $10.70 $1,000.00 $1,013.75 $11.33 2.25% Class C#................ $1,000.00 $902.96 $10.70 $1,000.00 $1,013.75 $11.33 2.25% Class I#................ $1,000.00 $906.05 $ 7.15 $1,000.00 $1,017.50 $ 7.57 1.50% Class Z#................ $1,000.00 $907.98 $ 4.91 $1,000.00 $1,019.85 $ 5.20 1.03% Disciplined Growth Fund Class A#................ $1,000.00 $761.87 $ 6.03 $1,000.00 $1,018.15 $ 6.91 1.37% Class B#................ $1,000.00 $759.22 $ 8.88 $1,000.00 $1,014.90 $10.18 2.02% Class C#................ $1,000.00 $759.39 $ 8.88 $1,000.00 $1,014.90 $10.18 2.02%
5 SunAmerica Equity Funds STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2008
Blue Chip Growth New Growth Opportunities Century Fund Fund Fund ------------ ------------- ------------- ASSETS: Long-term investment securities, at market value (unaffiliated)*........... $ 47,535,215 $ 24,421,823 $ 36,051,352 Short-term investment securities, at market value (unaffiliated)*.......... -- -- -- Repurchase agreements (cost approximates market value)..................... 2,332,000 7,923,000 5,662,000 ------------ ------------- ------------- Total investments........................................................ 49,867,215 32,344,823 41,713,352 ------------ ------------- ------------- Cash....................................................................... 155 138 572 Foreign cash*.............................................................. -- -- -- Receivable for: Fund shares sold......................................................... 3,247 903 1,160 Dividends and interest................................................... 19,912 375 1,628 Investments sold......................................................... 322,036 1,459,739 13,630,427 Prepaid expenses and other assets.......................................... 3,732 40,330 65,790 Due from investment adviser for expense reimbursements/fee waivers......... 498 3,054 935 ------------ ------------- ------------- Total assets............................................................... 50,216,795 33,849,362 55,413,864 ------------ ------------- ------------- LIABILITIES: Payable for: Fund shares redeemed..................................................... 133,990 35,300 47,739 Investments purchased.................................................... -- 1,489,199 7,340,356 Investment advisory and management fees.................................. 33,002 21,435 33,011 Distribution and service maintenance fees................................ 21,376 15,939 19,238 Transfer agent fees and expenses......................................... 20,979 16,184 25,054 Trustees' fees and expenses.............................................. 27,883 24,411 47,785 Other accrued expenses................................................... 65,413 77,804 85,971 ------------ ------------- ------------- Total liabilities.......................................................... 302,643 1,680,272 7,599,154 ------------ ------------- ------------- Net Assets................................................................. $ 49,914,152 $ 32,169,090 $ 47,814,710 ============ ============= ============= NET ASSETS REPRESENTED BY: Shares of beneficial interest, $.01 par value.............................. $ 34,494 $ 26,275 $ 39,461 Paid-in capital............................................................ 105,580,532 238,106,158 182,181,352 ------------ ------------- ------------- 105,615,026 238,132,433 182,220,813 Accumulated undistributed net investment income (loss)..................... (27,741) (24,529) (47,437) Accumulated undistributed net realized gain (loss) on investments, futures contracts, options contracts, securities sold short, and foreign exchange transactions.............................................................. (53,435,163) (204,349,969) (132,794,047) Unrealized appreciation (depreciation) on investments...................... (2,237,970) (1,588,845) (1,564,619) Unrealized foreign exchange gain (loss) on other assets and liabilities.... -- -- -- Accrued capital gains tax on unrealized appreciation (depreciation)........ -- -- -- ------------ ------------- ------------- Net Assets............................................................... $ 49,914,152 $ 32,169,090 $ 47,814,710 ============ ============= ============= *Cost Long-term investment securities (unaffiliated)........................... $ 49,773,185 $ 26,010,668 $ 37,615,971 ============ ============= ============= Short-term investment securities (unaffiliated).......................... $ -- $ -- $ -- ============ ============= ============= Foreign cash............................................................. $ -- $ -- $ -- ============ ============= =============
Growth and Balanced Income Assets Fund Fund ------------ ------------ ASSETS: Long-term investment securities, at market value (unaffiliated)*........... $ 69,185,716 $105,922,684 Short-term investment securities, at market value (unaffiliated)*.......... -- -- Repurchase agreements (cost approximates market value)..................... 4,283,000 4,099,000 ------------ ------------ Total investments........................................................ 73,468,716 110,021,684 ------------ ------------ Cash....................................................................... 75 1,383 Foreign cash*.............................................................. -- -- Receivable for: Fund shares sold......................................................... 12,629 2,183 Dividends and interest................................................... 150,360 560,823 Investments sold......................................................... 2,356,191 2,576,354 Prepaid expenses and other assets.......................................... 6,506 8,568 Due from investment adviser for expense reimbursements/fee waivers......... 2,936 2,562 ------------ ------------ Total assets............................................................... 75,997,413 113,173,557 ------------ ------------ LIABILITIES: Payable for: Fund shares redeemed..................................................... 151,268 71,276 Investments purchased.................................................... 2,803,169 2,111,528 Investment advisory and management fees.................................. 47,595 71,758 Distribution and service maintenance fees................................ 36,202 44,066 Transfer agent fees and expenses......................................... 27,939 38,321 Trustees' fees and expenses.............................................. 38,145 74,430 Other accrued expenses................................................... 67,053 95,373 ------------ ------------ Total liabilities.......................................................... 3,171,371 2,506,752 ------------ ------------ Net Assets................................................................. $ 72,826,042 $110,666,805 ============ ============ NET ASSETS REPRESENTED BY: Shares of beneficial interest, $.01 par value.............................. $ 60,634 $ 85,329 Paid-in capital............................................................ 120,016,880 191,846,041 ------------ ------------ 120,077,514 191,931,370 Accumulated undistributed net investment income (loss)..................... 649,285 241,557 Accumulated undistributed net realized gain (loss) on investments, futures contracts, options contracts, securities sold short, and foreign exchange transactions.............................................................. (40,487,192) (74,341,894) Unrealized appreciation (depreciation) on investments...................... (7,413,565) (7,164,228) Unrealized foreign exchange gain (loss) on other assets and liabilities.... -- -- Accrued capital gains tax on unrealized appreciation (depreciation)........ -- -- ------------ ------------ Net Assets............................................................... $ 72,826,042 $110,666,805 ============ ============ *Cost Long-term investment securities (unaffiliated)........................... $ 76,599,281 $113,086,912 ============ ============ Short-term investment securities (unaffiliated).......................... $ -- $ -- ============ ============ Foreign cash............................................................. $ -- $ -- ============ ============
See Notes to Financial Statements 6 SunAmerica Equity Funds STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2008 -- (continued)
Blue Chip Growth New Growth and Balanced Growth Opportunities Century Income Assets Fund Fund Fund Fund Fund ----------- ------------- ----------- ----------- ----------- Class A (unlimited shares authorized): Net assets................................................... $38,926,997 $21,704,891 $41,425,343 $48,021,741 $91,315,624 Shares of beneficial interest issued and outstanding......... 2,610,804 1,693,360 3,349,023 3,902,587 7,040,136 Net asset value and redemption price per share............... $ 14.91 $ 12.82 $ 12.37 $ 12.31 $ 12.97 Maximum sales charge (5.75% of offering price)............... 0.91 0.78 0.75 0.75 0.79 ----------- ----------- ----------- ----------- ----------- Maximum offering price to public............................. $ 15.82 $ 13.60 $ 13.12 13.06 13.76 =========== =========== =========== =========== =========== Class B (unlimited shares authorized): Net assets................................................... $ 7,524,995 $ 6,404,911 $ 3,906,540 $ 9,729,265 $ 9,252,464 Shares of beneficial interest issued and outstanding......... 576,713 571,725 366,392 847,830 714,337 Net asset value, offering and redemption price per share (excluding any applicable contingent deferred sales charge). $ 13.05 $ 11.20 $ 10.66 $ 11.48 $ 12.95 =========== =========== =========== =========== =========== Class C (unlimited shares authorized): Net assets................................................... $ 2,938,529 $ 3,977,038 $ 2,482,827 $14,815,841 $ 9,552,294 Shares of beneficial interest issued and outstanding......... 227,344 356,118 230,681 1,292,027 736,330 Net asset value, offering and redemption price per share (excluding any applicable contingent deferred sales charge). $ 12.93 $ 11.17 $ 10.76 $ 11.47 $ 12.97 =========== =========== =========== =========== =========== Class I (unlimited shares authorized): Net assets................................................... $ 523,631 $ 82,250 $ -- $ 259,195 $ 546,423 Shares of beneficial interest issued and outstanding......... 34,535 6,280 -- 20,916 42,089 Net asset value, offering and redemption price per share..... $ 15.16 $ 13.10 $ -- $ 12.39 $ 12.98 =========== =========== =========== =========== =========== Class Z (unlimited shares authorized): Net assets................................................... $ -- $ -- $ -- $ -- $ -- Shares of beneficial interest issued and outstanding......... -- -- -- -- -- Net asset value, offering and redemption price per share..... $ -- $ -- $ -- $ -- $ -- =========== =========== =========== =========== ===========
See Notes to Financial Statements 7 SunAmerica Equity Funds STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2008 -- (continued)
International Equity Value Fund Fund ------------- ------------ ASSETS: Long-term investment securities, at market value (unaffiliated)*.............................. $ 70,810,186 $132,124,677 Short-term investment securities, at market value (unaffiliated)*............................. -- -- Repurchase agreements (cost approximates market value)........................................ 2,809,000 4,305,000 ------------ ------------ Total investments........................................................................... 73,619,186 136,429,677 ------------ ------------ Cash.......................................................................................... 70,735 528 Foreign cash*................................................................................. 491,463 -- Receivable for: Fund shares sold............................................................................ 23,445 81,705 Dividends and interest...................................................................... 293,937 291,955 Investments sold............................................................................ 3,205,614 9,247,093 Prepaid expenses and other assets............................................................. 3,975 14,527 Due from investment adviser for expense reimbursements/fee waivers............................ 4,665 4,797 ------------ ------------ Total assets.................................................................................. 77,713,020 146,070,282 ------------ ------------ LIABILITIES: Payable for: Fund shares redeemed........................................................................ 587,862 518,995 Investments purchased....................................................................... 2,027,515 5,967,602 Investment advisory and management fees..................................................... 68,219 121,164 Distribution and service maintenance fees................................................... 37,628 54,540 Transfer agent fees and expenses............................................................ 25,823 43,220 Trustees' fees and expenses................................................................. 20,312 35,528 Other accrued expenses...................................................................... 98,143 76,692 ------------ ------------ Total liabilities............................................................................. 2,865,502 6,817,741 ------------ ------------ Net Assets.................................................................................... $ 74,847,518 $139,252,541 ============ ============ NET ASSETS REPRESENTED BY: Shares of beneficial interest, $.01 par value................................................. $ 61,817 $ 110,200 Paid-in capital............................................................................... 94,328,696 166,102,604 ------------ ------------ 94,390,513 166,212,804 Accumulated undistributed net investment income (loss)........................................ (31,117) 1,540,237 Accumulated undistributed net realized gain (loss) on investments, futures contracts, options contracts, securities sold short, and foreign exchange transactions.......................... (5,274,053) (19,345,336) Unrealized appreciation (depreciation) on investments......................................... (14,234,345) (9,155,164) Unrealized foreign exchange gain (loss) on other assets and liabilities....................... (3,480) -- Accrued capital gains tax on unrealized appreciation (depreciation)........................... -- -- ------------ ------------ Net Assets.................................................................................. $ 74,847,518 $139,252,541 ============ ============ *Cost Long-term investment securities (unaffiliated).............................................. $ 85,044,531 $141,279,841 ============ ============ Short-term investment securities (unaffiliated)............................................. $ -- $ -- ============ ============ Foreign cash................................................................................ $ 494,050 $ -- ============ ============
Disciplined International Growth Small-Cap Fund Fund ------------ ------------- ASSETS: Long-term investment securities, at market value (unaffiliated)*.............................. $ 34,462,587 $18,946,489 Short-term investment securities, at market value (unaffiliated)*............................. -- 340,000 Repurchase agreements (cost approximates market value)........................................ 998,000 -- ------------ ----------- Total investments........................................................................... 35,460,587 19,286,489 ------------ ----------- Cash.......................................................................................... 1,184,585 534 Foreign cash*................................................................................. 54,121 196,754 Receivable for: Fund shares sold............................................................................ 41,820 621 Dividends and interest...................................................................... 13,556 62,575 Investments sold............................................................................ 11,969,856 1,006,726 Prepaid expenses and other assets............................................................. 47,581 2,066 Due from investment adviser for expense reimbursements/fee waivers............................ 391 10,733 ------------ ----------- Total assets.................................................................................. 48,772,497 20,566,498 ------------ ----------- LIABILITIES: Payable for: Fund shares redeemed........................................................................ 744,541 29,484 Investments purchased....................................................................... 7,702,739 777,363 Investment advisory and management fees..................................................... 32,127 20,439 Distribution and service maintenance fees................................................... 25,395 7,932 Transfer agent fees and expenses............................................................ 11,563 3,169 Trustees' fees and expenses................................................................. 12,012 836 Other accrued expenses...................................................................... 55,625 65,704 ------------ ----------- Total liabilities............................................................................. 8,584,002 904,927 ------------ ----------- Net Assets.................................................................................... $ 40,188,495 $19,661,571 ============ =========== NET ASSETS REPRESENTED BY: Shares of beneficial interest, $.01 par value................................................. $ 37,266 $ 23,632 Paid-in capital............................................................................... 75,800,356 29,646,948 ------------ ----------- 75,837,622 29,670,580 Accumulated undistributed net investment income (loss)........................................ (10,004) (2,969) Accumulated undistributed net realized gain (loss) on investments, futures contracts, options contracts, securities sold short, and foreign exchange transactions.......................... (33,813,824) (4,477,441) Unrealized appreciation (depreciation) on investments......................................... (1,826,215) (5,520,826) Unrealized foreign exchange gain (loss) on other assets and liabilities....................... 916 (7,806) Accrued capital gains tax on unrealized appreciation (depreciation)........................... -- 33 ------------ ----------- Net Assets.................................................................................. $ 40,188,495 $19,661,571 ============ =========== *Cost Long-term investment securities (unaffiliated).............................................. $ 36,288,802 $24,467,315 ============ =========== Short-term investment securities (unaffiliated)............................................. $ -- $ 340,000 ============ =========== Foreign cash................................................................................ $ 53,266 $ 200,490 ============ ===========
See Notes to Financial Statements 8 SunAmerica Equity Funds STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2008 -- (continued)
International Disciplined International Equity Value Growth Small-Cap Fund Fund Fund Fund ------------- ----------- ----------- ------------- Class A (unlimited shares authorized): Net assets................................................... $46,383,992 $77,903,128 $19,949,267 $16,829,600 Shares of beneficial interest issued and outstanding......... 3,729,693 6,113,328 1,801,299 2,018,280 Net asset value and redemption price per share............... $ 12.44 $ 12.74 $ 11.07 $ 8.34 Maximum sales charge (5.75% of offering price)............... 0.76 0.78 0.68 0.51 ----------- ----------- ----------- ----------- Maximum offering price to public............................. $ 13.20 $ 13.52 $ 11.75 $ 8.85 =========== =========== =========== =========== Class B (unlimited shares authorized): Net assets................................................... $ 9,278,586 $21,303,802 $ 3,820,396 $ 632,890 Shares of beneficial interest issued and outstanding......... 811,393 1,788,484 363,677 77,063 Net asset value, offering and redemption price per share (excluding any applicable contingent deferred sales charge). $ 11.44 $ 11.91 $ 10.50 $ 8.21 =========== =========== =========== =========== Class C (unlimited shares authorized): Net assets................................................... $14,221,063 $14,194,130 $16,418,832 $ 2,199,081 Shares of beneficial interest issued and outstanding......... 1,245,467 1,192,102 1,561,648 267,811 Net asset value, offering and redemption price per share (excluding any applicable contingent deferred sales charge). $ 11.42 $ 11.91 $ 10.51 $ 8.21 =========== =========== =========== =========== Class I (unlimited shares authorized): Net assets................................................... $ 4,963,877 $ 24,517 $ -- $ -- Shares of beneficial interest issued and outstanding......... 395,175 1,926 -- -- Net asset value, offering and redemption price per share..... $ 12.56 $ 12.73 $ -- $ -- =========== =========== =========== =========== Class Z (unlimited shares authorized): Net assets................................................... $ -- $25,826,964 $ -- $ -- Shares of beneficial interest issued and outstanding......... -- 1,924,180 -- -- Net asset value, offering and redemption price per share..... $ -- $ 13.42 $ -- $ -- =========== =========== =========== ===========
See Notes to Financial Statements 9 SunAmerica Equity Funds STATEMENT OF OPERATIONS -- For the year ended September 30, 2008
Blue Chip Growth Growth Opportunities Fund Fund ------------ ------------- INVESTMENT INCOME: Dividends (unaffiliated)................................................................... $ 565,499 $ 209,356 Interest (unaffiliated).................................................................... 46,210 193,996 ------------ ------------ Total investment income*.................................................................. 611,709 403,352 ------------ ------------ EXPENSES: Investment advisory and management fees.................................................... 471,577 340,144 Distribution and service maintenance fees Class A................................................................................... 164,668 103,889 Class B................................................................................... 113,225 100,057 Class C................................................................................... 38,847 55,519 Service fees Class I....................................................................... 1,554 281 Transfer agent fees and expenses Class A................................................................................... 135,076 93,681 Class B................................................................................... 38,550 33,745 Class C................................................................................... 11,864 17,771 Class I................................................................................... 1,741 563 Registration fees Class A................................................................................... 13,571 12,676 Class B................................................................................... 7,959 9,145 Class C................................................................................... 9,325 10,478 Class I................................................................................... 7,392 9,085 Class Z................................................................................... -- -- Custodian and accounting fees.............................................................. 41,591 69,253 Reports to shareholders.................................................................... 26,497 32,573 Audit and tax fees......................................................................... 37,039 37,052 Legal fees................................................................................. 16,274 12,216 Trustees' fees and expenses................................................................ 5,462 4,316 Interest expense........................................................................... -- -- Other expenses............................................................................. 10,763 7,985 ------------ ------------ Total expenses before fee waivers, expense reimbursements, expense recoupments, custody credits and fees paid indirectly................................................. 1,152,975 950,429 Net (fees waived and expenses reimbursed)/recouped by investment adviser (Note 4)......... (8,443) (10,252) Custody credits earned on cash balances................................................... (28) (546) Fees paid indirectly (Note 5)............................................................. (5,629) (85,021) ------------ ------------ Net expenses.............................................................................. 1,138,875 854,610 ------------ ------------ Net investment income (loss)................................................................. (527,166) (451,258) ------------ ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments (unaffiliated)**..................................... 308,634 (16,211,550) Net realized foreign exchange gain (loss) on other assets and liabilities.................... -- -- Net realized gain (loss) on disposal of investments in violation of investments restrictions (Note 4).................................................................................... 19 -- ------------ ------------ Net realized gain (loss) on investments and foreign currencies............................... 308,653 (16,211,550) ------------ ------------ Change in unrealized appreciation (depreciation) on investments (unaffiliated)............... (13,548,306) (2,017,924) Change in unrealized foreign exchange gain (loss) on other assets and liabilities............ -- -- Change in unrealized appreciation (depreciation) on securities sold short.................... -- -- Change in accrued capital gains tax on unrealized appreciation (depreciation)................ -- -- ------------ ------------ Net unrealized gain (loss) on investments and foreign currencies............................. (13,548,306) (2,017,924) ------------ ------------ Net realized and unrealized gain (loss) on investments and foreign currencies................ (13,239,653) (18,229,474) ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.............................. $(13,766,819) $(18,680,732) ============ ============ -------- * Net of foreign withholding taxes on interest and dividends of.............................. $ 1,227 $ 139 ============ ============ ** Net of foreign withholding taxes on capital gains of...................................... $ -- $ -- ============ ============
New Growth and Century Income Fund Fund ------------ ------------ INVESTMENT INCOME: Dividends (unaffiliated)................................................................... $ 389,549 $ 2,255,216 Interest (unaffiliated).................................................................... 258,371 84,865 ------------ ------------ Total investment income*.................................................................. 647,920 2,340,081 ------------ ------------ EXPENSES: Investment advisory and management fees.................................................... 585,692 689,444 Distribution and service maintenance fees Class A................................................................................... 233,238 202,769 Class B................................................................................... 72,414 144,469 Class C................................................................................... 42,115 192,412 Service fees Class I....................................................................... -- 759 Transfer agent fees and expenses Class A................................................................................... 188,641 161,799 Class B................................................................................... 24,837 43,457 Class C................................................................................... 15,167 52,878 Class I................................................................................... -- 1,443 Registration fees Class A................................................................................... 14,275 13,334 Class B................................................................................... 10,165 8,151 Class C................................................................................... 8,751 9,725 Class I................................................................................... -- 9,173 Class Z................................................................................... -- -- Custodian and accounting fees.............................................................. 55,417 47,470 Reports to shareholders.................................................................... 37,234 35,080 Audit and tax fees......................................................................... 38,040 37,960 Legal fees................................................................................. 21,371 21,780 Trustees' fees and expenses................................................................ 8,177 7,924 Interest expense........................................................................... -- 130 Other expenses............................................................................. 16,892 14,893 ------------ ------------ Total expenses before fee waivers, expense reimbursements, expense recoupments, custody credits and fees paid indirectly................................................. 1,372,426 1,695,050 Net (fees waived and expenses reimbursed)/recouped by investment adviser (Note 4)......... (17,639) (10,198) Custody credits earned on cash balances................................................... (4,688) (35) Fees paid indirectly (Note 5)............................................................. (106,303) (32,244) ------------ ------------ Net expenses.............................................................................. 1,243,796 1,652,573 ------------ ------------ Net investment income (loss)................................................................. (595,876) 687,508 ------------ ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments (unaffiliated)**..................................... (38,250,023) (6,333,715) Net realized foreign exchange gain (loss) on other assets and liabilities.................... -- -- Net realized gain (loss) on disposal of investments in violation of investments restrictions (Note 4).................................................................................... -- -- ------------ ------------ Net realized gain (loss) on investments and foreign currencies............................... (38,250,023) (6,333,715) ------------ ------------ Change in unrealized appreciation (depreciation) on investments (unaffiliated)............... (2,122,695) (17,055,222) Change in unrealized foreign exchange gain (loss) on other assets and liabilities............ -- -- Change in unrealized appreciation (depreciation) on securities sold short.................... -- -- Change in accrued capital gains tax on unrealized appreciation (depreciation)................ -- -- ------------ ------------ Net unrealized gain (loss) on investments and foreign currencies............................. (2,122,695) (17,055,222) ------------ ------------ Net realized and unrealized gain (loss) on investments and foreign currencies................ (40,372,718) (23,388,937) ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.............................. $(40,968,594) $(22,701,429) ============ ============ -------- * Net of foreign withholding taxes on interest and dividends of.............................. $ 250 $ (4,409) ============ ============ ** Net of foreign withholding taxes on capital gains of...................................... $ -- $ -- ============ ============
Balanced Assets Fund ------------ INVESTMENT INCOME: Dividends (unaffiliated)................................................................... $ 1,591,549 Interest (unaffiliated).................................................................... 2,818,603 ------------ Total investment income*.................................................................. 4,410,152 ------------ EXPENSES: Investment advisory and management fees.................................................... 1,000,910 Distribution and service maintenance fees Class A................................................................................... 381,835 Class B................................................................................... 119,860 Class C................................................................................... 117,638 Service fees Class I....................................................................... 1,523 Transfer agent fees and expenses Class A................................................................................... 317,791 Class B................................................................................... 37,144 Class C................................................................................... 31,390 Class I................................................................................... 1,515 Registration fees Class A................................................................................... 14,960 Class B................................................................................... 7,992 Class C................................................................................... 9,698 Class I................................................................................... 9,190 Class Z................................................................................... -- Custodian and accounting fees.............................................................. 124,559 Reports to shareholders.................................................................... 49,716 Audit and tax fees......................................................................... 41,115 Legal fees................................................................................. 23,933 Trustees' fees and expenses................................................................ 11,677 Interest expense........................................................................... 427 Other expenses............................................................................. 20,500 ------------ Total expenses before fee waivers, expense reimbursements, expense recoupments, custody credits and fees paid indirectly................................................. 2,323,373 Net (fees waived and expenses reimbursed)/recouped by investment adviser (Note 4)......... (34,384) Custody credits earned on cash balances................................................... (758) Fees paid indirectly (Note 5)............................................................. (16,487) ------------ Net expenses.............................................................................. 2,271,744 ------------ Net investment income (loss)................................................................. 2,138,408 ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments (unaffiliated)**..................................... (5,243,564) Net realized foreign exchange gain (loss) on other assets and liabilities.................... -- Net realized gain (loss) on disposal of investments in violation of investments restrictions (Note 4).................................................................................... 12 ------------ Net realized gain (loss) on investments and foreign currencies............................... (5,243,552) ------------ Change in unrealized appreciation (depreciation) on investments (unaffiliated)............... (20,160,308) Change in unrealized foreign exchange gain (loss) on other assets and liabilities............ -- Change in unrealized appreciation (depreciation) on securities sold short.................... (6,456) Change in accrued capital gains tax on unrealized appreciation (depreciation)................ -- ------------ Net unrealized gain (loss) on investments and foreign currencies............................. (20,166,764) ------------ Net realized and unrealized gain (loss) on investments and foreign currencies................ (25,410,316) ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.............................. $(23,271,908) ============ -------- * Net of foreign withholding taxes on interest and dividends of.............................. $ (1,190) ============ ** Net of foreign withholding taxes on capital gains of...................................... $ -- ============
See Notes to Financial Statements 10 SunAmerica Equity Funds STATEMENT OF OPERATIONS -- For the year ended September 30, 2008 -- (continued)
International Equity Value Fund Fund ------------- ------------ INVESTMENT INCOME: Dividends (unaffiliated)................................................................... $ 3,235,254 $ 4,897,841 Interest (unaffiliated).................................................................... 19,469 204,634 ------------ ------------ Total investment income*.................................................................. 3,254,723 5,102,475 ------------ ------------ EXPENSES: Investment advisory and management fees.................................................... 1,137,864 1,782,717 Distribution and service maintenance fees Class A................................................................................... 233,932 349,432 Class B................................................................................... 164,766 291,895 Class C................................................................................... 234,793 190,593 Service fees Class I....................................................................... 17,485 73 Transfer agent fees and expenses Class A................................................................................... 176,792 254,349 Class B................................................................................... 46,949 79,830 Class C................................................................................... 61,466 48,564 Class I................................................................................... 15,893 65 Registration fees Class A................................................................................... 16,879 14,758 Class B................................................................................... 10,730 9,358 Class C................................................................................... 8,633 8,599 Class I................................................................................... 10,507 4,965 Class Z................................................................................... -- 11,011 Custodian and accounting fees.............................................................. 165,974 70,585 Reports to shareholders.................................................................... 31,543 44,530 Audit and tax fees......................................................................... 46,509 37,944 Legal fees................................................................................. 22,375 26,778 Trustees' fees and expenses................................................................ 11,347 17,103 Interest expense........................................................................... 719 -- Other expenses............................................................................. 18,993 16,256 ------------ ------------ Total expenses before fee waivers, expense reimbursements, expense recoupments, custody credits and fees paid indirectly................................................. 2,434,149 3,259,405 Net (fees waived and expenses reimbursed)/recouped by investment adviser (Note 4)......... (17,098) (211,663) Custody credits earned on cash balances................................................... (2,455) (215) Fees paid indirectly (Note 5)............................................................. (1,910) (57,737) ------------ ------------ Net expenses.............................................................................. 2,412,686 2,989,790 ------------ ------------ Net investment income (loss)................................................................. 842,037 2,112,685 ------------ ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments (unaffiliated)**..................................... (1,483,662) (15,674,539) Net realized foreign exchange gain (loss) on other assets and liabilities.................... 67,437 -- Net realized gain (loss) on disposal of investments in violation of investments restrictions (Note 4).................................................................................... -- -- ------------ ------------ Net realized gain (loss) on investments and foreign currencies............................... (1,416,225) (15,674,539) ------------ ------------ Change in unrealized appreciation (depreciation) on investments (unaffiliated)............... (37,539,385) (30,590,663) Change in unrealized foreign exchange gain (loss) on other assets and liabilities............ 1,961 -- Change in unrealized appreciation (depreciation) on securities sold short.................... -- -- Change in accrued capital gains tax on unrealized appreciation (depreciation)................ -- -- ------------ ------------ Net unrealized gain (loss) on investments and foreign currencies............................. (37,537,424) (30,590,663) ------------ ------------ Net realized and unrealized gain (loss) on investments and foreign currencies................ (38,953,649) (46,265,202) ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.............................. $(38,111,612) $(44,152,517) ============ ============ -------- * Net of foreign withholding taxes on interest and dividends of.............................. $ 255,655 $ (8,816) ============ ============ ** Net of foreign withholding taxes on capital gains of...................................... $ 6 $ -- ============ ============
Disciplined International Growth Small-Cap Fund Fund ------------ ------------- INVESTMENT INCOME: Dividends (unaffiliated)................................................................... $ 652,911 $ 550,343 Interest (unaffiliated).................................................................... 72,778 8,783 ------------ ------------ Total investment income*.................................................................. 725,689 559,126 ------------ ------------ EXPENSES: Investment advisory and management fees.................................................... 537,828 347,943 Distribution and service maintenance fees Class A................................................................................... 103,383 88,267 Class B................................................................................... 51,536 10,295 Class C................................................................................... 285,822 40,073 Service fees Class I....................................................................... -- -- Transfer agent fees and expenses Class A................................................................................... 73,544 57,512 Class B................................................................................... 14,472 3,947 Class C................................................................................... 69,355 10,992 Class I................................................................................... -- -- Registration fees Class A................................................................................... 11,864 9,955 Class B................................................................................... 7,668 9,021 Class C................................................................................... 9,729 9,318 Class I................................................................................... -- -- Class Z................................................................................... -- -- Custodian and accounting fees.............................................................. 49,231 116,751 Reports to shareholders.................................................................... 994 3,758 Audit and tax fees......................................................................... 37,943 47,378 Legal fees................................................................................. 25,851 12,246 Trustees' fees and expenses................................................................ 6,141 2,643 Interest expense........................................................................... 7,443 1,155 Other expenses............................................................................. 11,771 19,695 ------------ ------------ Total expenses before fee waivers, expense reimbursements, expense recoupments, custody credits and fees paid indirectly................................................. 1,304,575 790,949 Net (fees waived and expenses reimbursed)/recouped by investment adviser (Note 4)......... (162,465) (183,293) Custody credits earned on cash balances................................................... (5,356) (55) Fees paid indirectly (Note 5)............................................................. (44,763) -- ------------ ------------ Net expenses.............................................................................. 1,091,991 607,601 ------------ ------------ Net investment income (loss)................................................................. (366,302) (48,475) ------------ ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments (unaffiliated)**..................................... (15,011,532) (4,009,264) Net realized foreign exchange gain (loss) on other assets and liabilities.................... 26 5,331 Net realized gain (loss) on disposal of investments in violation of investments restrictions (Note 4).................................................................................... -- -- ------------ ------------ Net realized gain (loss) on investments and foreign currencies............................... (15,011,506) (4,003,933) ------------ ------------ Change in unrealized appreciation (depreciation) on investments (unaffiliated)............... (10,519,309) (10,005,040) Change in unrealized foreign exchange gain (loss) on other assets and liabilities............ (1,765) (15,660) Change in unrealized appreciation (depreciation) on securities sold short.................... -- -- Change in accrued capital gains tax on unrealized appreciation (depreciation)................ -- 33 ------------ ------------ Net unrealized gain (loss) on investments and foreign currencies............................. (10,521,074) (10,020,667) ------------ ------------ Net realized and unrealized gain (loss) on investments and foreign currencies................ (25,532,580) (14,024,600) ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.............................. $(25,898,882) $(14,073,075) ============ ============ -------- * Net of foreign withholding taxes on interest and dividends of.............................. $ 6,982 $ 51,043 ============ ============ ** Net of foreign withholding taxes on capital gains of...................................... $ -- $ 33 ============ ============
See Notes to Financial Statements 11 SunAmerica Equity Funds STATEMENT OF CHANGES IN NET ASSETS
Blue Chip Growth Fund Growth Opportunities Fund -------------------------- -------------------------- For the year For the year For the year For the year ended ended ended ended September 30, September 30, September 30, September 30, 2008 2007 2008 2007 ------------- ------------- ------------- ------------- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss)........................... $ (527,166) $ (428,681) $ (451,258) $ (729,282) Net realized gain (loss) on investments and foreign currencies............................................ 308,653 4,257,622 (16,211,550) 11,409,851 Net unrealized gain (loss) on investments and foreign currencies............................................ (13,548,306) 8,515,725 (2,017,924) (1,842,299) ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations.............................................. (13,766,819) 12,344,666 (18,680,732) 8,838,270 ------------ ------------ ------------ ------------ Distributions to shareholders from: Net investment income (Class A)........................ -- -- -- -- Net investment income (Class B)........................ -- -- -- -- Net investment income (Class C)........................ -- -- -- -- Net investment income (Class I)........................ -- -- -- -- Net investment income (Class Z)........................ -- -- -- -- Net realized gain on securities (Class A).............. -- -- -- -- Net realized gain on securities (Class B).............. -- -- -- -- Net realized gain on securities (Class C).............. -- -- -- -- Net realized gain on securities (Class I).............. -- -- -- -- Net realized gain on securities (Class Z).............. -- -- -- -- Return of capital (Class A)............................ -- -- -- -- Return of capital (Class B)............................ -- -- -- -- Return of capital (Class C)............................ -- -- -- -- Return of capital (Class I)............................ -- -- -- -- Return of capital (Class Z)............................ -- -- -- -- ------------ ------------ ------------ ------------ Total distributions to shareholders...................... -- -- -- -- ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from capital share transactions (Note 8)..................... (7,226,436) (13,625,270) (12,400,973) (14,171,956) ------------ ------------ ------------ ------------ Total increase (decrease) in net assets.................. (20,993,255) (1,280,604) (31,081,705) (5,333,686) NET ASSETS: Beginning of period...................................... 70,907,407 72,188,011 63,250,795 68,584,481 ------------ ------------ ------------ ------------ End of period +.......................................... $ 49,914,152 $ 70,907,407 $ 32,169,090 $ 63,250,795 ============ ============ ============ ============ -------- + Includes accumulated undistributed net investment income (loss)........................................... $ (27,741) $ (28,338) $ (24,529) $ 24,866 ============ ============ ============ ============
New Century Fund -------------------------- For the year For the year ended ended September 30, September 30, 2008 2007 ------------- ------------- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss)........................... $ (595,876) $ (294,293) Net realized gain (loss) on investments and foreign currencies............................................ (38,250,023) 18,717,708 Net unrealized gain (loss) on investments and foreign currencies............................................ (2,122,695) (1,684,002) ------------ ------------ Net increase (decrease) in net assets resulting from operations.............................................. (40,968,594) 16,739,413 ------------ ------------ Distributions to shareholders from: Net investment income (Class A)........................ -- -- Net investment income (Class B)........................ -- -- Net investment income (Class C)........................ -- -- Net investment income (Class I)........................ -- Net investment income (Class Z)........................ -- -- Net realized gain on securities (Class A).............. -- -- Net realized gain on securities (Class B).............. -- -- Net realized gain on securities (Class C).............. -- -- Net realized gain on securities (Class I).............. -- Net realized gain on securities (Class Z).............. -- -- Return of capital (Class A)............................ -- -- Return of capital (Class B)............................ -- -- Return of capital (Class C)............................ -- -- Return of capital (Class I)............................ -- -- Return of capital (Class Z)............................ -- -- ------------ ------------ Total distributions to shareholders...................... -- -- ------------ ------------ Net increase (decrease) in net assets resulting from capital share transactions (Note 8)..................... (16,250,879) 3,329,307 ------------ ------------ Total increase (decrease) in net assets.................. (57,219,473) 20,068,720 NET ASSETS: Beginning of period...................................... 105,034,183 84,965,463 ------------ ------------ End of period +.......................................... $ 47,814,710 $105,034,183 ============ ============ -------- + Includes accumulated undistributed net investment income (loss)........................................... $ (47,437) $ (49,536) ============ ============
See Notes to Financial Statements 12 SunAmerica Equity Funds STATEMENT OF CHANGES IN NET ASSETS -- (continued)
Growth and Income Fund Balanced Assets Fund -------------------------- -------------------------- For the year For the year For the year For the year ended ended ended ended September 30, September 30, September 30, September 30, 2008 2007 2008 2007 ------------- ------------- ------------- ------------- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss)........................... $ 687,508 $ 242,350 $ 2,138,408 $ 2,415,467 Net realized gain (loss) on investments and foreign currencies............................................ (6,333,715) 15,197,922 (5,243,552) 10,008,735 Net unrealized gain (loss) on investments and foreign currencies............................................ (17,055,222) 3,277,428 (20,166,764) 6,132,057 ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations.............................................. (22,701,429) 18,717,700 (23,271,908) 18,556,259 ------------ ------------ ------------ ------------ Distributions to shareholders from: Net investment income (Class A)........................ (240,971) -- (1,944,922) (1,990,178) Net investment income (Class B)........................ -- -- (127,852) (133,492) Net investment income (Class C)........................ -- -- (126,190) (113,780) Net investment income (Class I)........................ (1,451) -- (12,607) (13,500) Net investment income (Class Z)........................ -- -- -- -- Net realized gain on securities (Class A).............. -- -- -- -- Net realized gain on securities (Class B).............. -- -- -- -- Net realized gain on securities (Class C).............. -- -- -- -- Net realized gain on securities (Class I).............. -- -- -- -- Net realized gain on securities (Class Z).............. -- -- -- -- Return of capital (Class A)............................ -- -- -- -- Return of capital (Class B)............................ -- -- -- -- Return of capital (Class C)............................ -- -- -- -- Return of capital (Class I)............................ -- -- -- -- Return of capital (Class Z)............................ -- -- -- -- ------------ ------------ ------------ ------------ Total distributions to shareholders...................... (242,422) -- (2,211,571) (2,250,950) ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from capital share transactions (Note 8)..................... (14,928,379) (24,101,118) (17,362,771) (26,486,903) ------------ ------------ ------------ ------------ Total increase (decrease) in net assets.................. (37,872,230) (5,383,418) (42,846,250) (10,181,594) NET ASSETS: Beginning of period...................................... 110,698,272 116,081,690 153,513,055 163,694,649 ------------ ------------ ------------ ------------ End of period +.......................................... $ 72,826,042 $110,698,272 $110,666,805 $153,513,055 ============ ============ ============ ============ -------- + Includes accumulated undistributed net investment income (loss)........................................... $ 649,285 $ 204,199 $ 241,557 $ 236,935 ============ ============ ============ ============
International Equity Fund -------------------------- For the year For the year ended ended September 30, September 30, 2008 2007 ------------- ------------- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss)........................... $ 842,037 $ (141,323) Net realized gain (loss) on investments and foreign currencies............................................ (1,416,225) 13,471,646 Net unrealized gain (loss) on investments and foreign currencies............................................ (37,537,424) 13,664,189 ------------ ------------ Net increase (decrease) in net assets resulting from operations.............................................. (38,111,612) 26,994,512 ------------ ------------ Distributions to shareholders from: Net investment income (Class A)........................ -- -- Net investment income (Class B)........................ -- -- Net investment income (Class C)........................ -- -- Net investment income (Class I)........................ -- -- Net investment income (Class Z)........................ -- -- Net realized gain on securities (Class A).............. (6,405,167) -- Net realized gain on securities (Class B).............. (1,777,695) -- Net realized gain on securities (Class C).............. (2,438,019) -- Net realized gain on securities (Class I).............. (706,303) -- Net realized gain on securities (Class Z).............. -- -- Return of capital (Class A)............................ -- -- Return of capital (Class B)............................ -- -- Return of capital (Class C)............................ -- -- Return of capital (Class I)............................ -- -- Return of capital (Class Z)............................ -- -- ------------ ------------ Total distributions to shareholders...................... (11,327,184) -- ------------ ------------ Net increase (decrease) in net assets resulting from capital share transactions (Note 8)..................... (6,309,775) (10,955,655) ------------ ------------ Total increase (decrease) in net assets.................. (55,748,571) 16,038,857 NET ASSETS: Beginning of period...................................... 130,596,089 114,557,232 ------------ ------------ End of period +.......................................... $ 74,847,518 $130,596,089 ============ ============ -------- + Includes accumulated undistributed net investment income (loss)........................................... $ (31,117) $ (125,271) ============ ============
See Notes to Financial Statements 13 SunAmerica Equity Funds STATEMENT OF CHANGES IN NET ASSETS -- (continued)
Value Fund Disciplined Growth Fund -------------------------- -------------------------- For the year For the year For the year For the year ended ended ended ended September 30, September 30, September 30, September 30, 2008 2007 2008 2007 ------------- ------------- ------------- ------------- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss)........................... $ 2,112,685 $ 1,902,699 $ (366,302) $ (359,066) Net realized gain (loss) on investments and foreign currencies............................................ (15,674,539) 30,254,544 (15,011,506) 10,478,279 Net unrealized gain (loss) on investments and foreign currencies............................................ (30,590,663) 1,556,544 (10,521,074) 5,722,460 ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations.............................................. (44,152,517) 33,713,787 (25,898,882) 15,841,673 ------------ ------------ ------------ ------------ Distributions to shareholders from: Net investment income (Class A)........................ (1,348,358) (1,037,323) -- -- Net investment income (Class B)........................ (210,886) (138,581) -- -- Net investment income (Class C)........................ (136,301) (102,287) -- -- Net investment income (Class I)........................ (425) (285) -- -- Net investment income (Class Z)........................ (468,654) (294,735) -- -- Net realized gain on securities (Class A).............. (17,163,009) (13,182,325) -- -- Net realized gain on securities (Class B).............. (5,445,543) (5,278,693) -- -- Net realized gain on securities (Class C).............. (3,519,589) (3,896,204) -- -- Net realized gain on securities (Class I).............. (4,981) (3,186) -- -- Net realized gain on securities (Class Z).............. (4,579,895) (2,693,654) -- -- Return of capital (Class A)............................ -- -- -- -- Return of capital (Class B)............................ -- -- -- -- Return of capital (Class C)............................ -- -- -- -- Return of capital (Class I)............................ -- -- -- -- Return of capital (Class Z)............................ -- -- -- -- ------------ ------------ ------------ ------------ Total distributions to shareholders...................... (32,877,641) (26,627,273) -- -- ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from capital share transactions (Note 8)..................... (10,609,320) (5,899,264) 5,710,433 (14,243,867) ------------ ------------ ------------ ------------ Total increase (decrease) in net assets.................. (87,639,478) 1,187,250 (20,188,449) 1,597,806 NET ASSETS: Beginning of period...................................... 226,892,019 225,704,769 60,376,944 58,779,138 ------------ ------------ ------------ ------------ End of period +.......................................... $139,252,541 $226,892,019 $ 40,188,495 $ 60,376,944 ============ ============ ============ ============ -------- + Includes accumulated undistributed net investment income (loss)........................................... $ 1,540,237 $ 1,613,189 $ (10,004) $ (9,070) ============ ============ ============ ============
International Small-Cap Fund -------------------------- For the year For the year ended ended September 30, September 30, 2008 2007 ------------- ------------- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss)........................... $ (48,475) $ (126,780) Net realized gain (loss) on investments and foreign currencies............................................ (4,003,933) 1,240,543 Net unrealized gain (loss) on investments and foreign currencies............................................ (10,020,667) 5,861,549 ------------ ----------- Net increase (decrease) in net assets resulting from operations.............................................. (14,073,075) 6,975,312 ------------ ----------- Distributions to shareholders from: Net investment income (Class A)........................ -- -- Net investment income (Class B)........................ -- -- Net investment income (Class C)........................ -- -- Net investment income (Class I)........................ -- -- Net investment income (Class Z)........................ -- -- Net realized gain on securities (Class A).............. (273,789) -- Net realized gain on securities (Class B).............. (11,114) -- Net realized gain on securities (Class C).............. (49,279) -- Net realized gain on securities (Class I).............. -- -- Net realized gain on securities (Class Z).............. -- -- Return of capital (Class A)............................ (32,125) -- Return of capital (Class B)............................ (1,304) -- Return of capital (Class C)............................ (5,782) -- Return of capital (Class I)............................ -- -- Return of capital (Class Z)............................ -- -- ------------ ----------- Total distributions to shareholders...................... (373,393) -- ------------ ----------- Net increase (decrease) in net assets resulting from capital share transactions (Note 8)..................... (3,274,935) 4,903,738 ------------ ----------- Total increase (decrease) in net assets.................. (17,721,403) 11,879,050 NET ASSETS: Beginning of period...................................... 37,382,974 25,503,924 ------------ ----------- End of period +.......................................... $ 19,661,571 $37,382,974 ============ =========== -------- + Includes accumulated undistributed net investment income (loss)........................................... $ (2,969) $ (250) ============ ===========
See Notes to Financial Statements 14 SunAmerica Equity Funds FINANCIAL HIGHLIGHTS
BLUE CHIP GROWTH 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 ------------ --------- ---------- ----------- ---------- ---------- ------- ------- ------ --------- ------- ---------- Class A - 09/30/04 $13.12 $(0.08) $ 1.05 $ 0.97 $-- $-- $-- $14.09 7.39% $62,316 1.60% 09/30/05 14.09 (0.01) 1.13 1.12 -- -- -- 15.21 7.95 56,755 1.59 09/30/06 15.21 (0.07) 0.55 0.48 -- -- -- 15.69 3.16 49,539 1.55(3)(4) 09/30/07 15.69 (0.07) 3.12 3.05 -- -- -- 18.74 19.44 51,961 1.60(3)(4) 09/30/08 18.74 (0.11) (3.72) (3.83) -- -- -- 14.91 (20.44)(5) 38,927 1.64(4) Class B - 09/30/04 $11.90 $(0.16) $ 0.96 $ 0.80 $-- $-- $-- $12.70 6.72% $27,946 2.26% 09/30/05 12.70 (0.11) 1.02 0.91 -- -- -- 13.61 7.17 22,558 2.32 09/30/06 13.61 (0.17) 0.50 0.33 -- -- -- 13.94 2.42 17,479 2.29(3)(4) 09/30/07 13.94 (0.17) 2.75 2.58 -- -- -- 16.52 18.51 14,314 2.36(3)(4) 09/30/08 16.52 (0.22) (3.25) (3.47) -- -- -- 13.05 (21.00)(5) 7,525 2.38(4) Class C+ - 09/30/04 $11.87 $(0.18) $ 0.96 $ 0.78 $-- $-- $-- $12.65 6.57% $ 6,458 2.37% 09/30/05 12.65 (0.13) 1.01 0.88 -- -- -- 13.53 6.96 5,278 2.49 09/30/06 13.53 (0.17) 0.50 0.33 -- -- -- 13.86 2.44 4,528 2.30(3)(4) 09/30/07 13.86 (0.20) 2.73 2.53 -- -- -- 16.39 18.25 3,959 2.55(3)(4) 09/30/08 16.39 (0.23) (3.23) (3.46) -- -- -- 12.93 (21.11)(5) 2,939 2.51(4) Class I - 09/30/04 $13.16 $(0.04) $ 1.05 $ 1.01 $-- $-- $-- $14.17 7.67% $ 2,164 1.33%(3) 09/30/05 14.17 0.03 1.14 1.17 -- -- -- 15.34 8.26 1,454 1.33(3) 09/30/06 15.34 (0.04) 0.57 0.53 -- -- -- 15.87 3.45 642 1.28(3)(4) 09/30/07 15.87 (0.02) 3.16 3.14 -- -- -- 19.01 19.79 673 1.32(3)(4) 09/30/08 19.01 (0.06) (3.79) (3.85) -- -- -- 15.16 (20.25)(5) 524 1.33(3)(4)
Ratio of net investment income (loss) to average Portfolio net assets Turnover ------------- --------- (0.59)% 145% (0.09) 120 (0.45)(3)(4) 154 (0.40)(3)(4) 72 (0.66)(4) 49 (1.25)% 145% (0.80) 120 (1.20)(3)(4) 154 (1.14)(3)(4) 72 (1.41)(4) 49 (1.37)% 145% (0.98) 120 (1.21)(3)(4) 154 (1.35)(3)(4) 72 (1.54)(4) 49 (0.26)%(3) 145% 0.22(3) 120 (0.22)(3)(4) 154 (0.11)(3)(4) 72 (0.36)(3)(4) 49
-------- (1)Calculated based upon average shares outstanding. (2)Total return is not annualized and does not reflect sales load. Total return does include expense reimbursements and expense reductions. (3)Net of the following expense reimbursements/fee waivers (based on average net assets):
09/30/04 09/30/05 09/30/06 09/30/07 09/30/08 -------- -------- -------- -------- -------- Blue Chip Growth Class A................ -- % -- % 0.05% 0.01% -- % Blue Chip Growth Class B................ -- -- 0.05 0.02 -- Blue Chip Growth Class C+............... -- -- 0.05 0.02 -- Blue Chip Growth Class I................ 0.13 0.49 1.15 1.92 1.36
(4)Includes expense reimbursements, but excludes expense reductions. If the expense reductions had been applied the ratio of expenses to average net assets would have been lower and the ratio of net investment income to average net assets would have been higher by:
09/30/06 09/30/07 09/30/08 -------- -------- -------- Blue Chip Growth Class A................ 0.01% 0.01% 0.01% Blue Chip Growth Class B................ 0.01 0.01 0.01 Blue Chip Growth Class C+............... 0.01 0.01 0.01 Blue Chip Growth Class I................ 0.01 0.01 0.01
(5)The Fund's performance was increased by less than 0.01% from gains on disposal of investments in violation of investment restrictions. (See Note 4) + Effective February 23, 2004, Class II shares were redesignated to Class C shares. See Notes to Financial Statements 15 SunAmerica Equity Funds FINANCIAL HIGHLIGHTS -- (continued)
GROWTH OPPORTUNITIES 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 ------------ --------- ---------- ----------- ---------- ---------- ------- ------- ------ --------- ------- ---------- Class A - 09/30/04 $13.74 $(0.16) $ 0.07 $(0.09) $-- $-- $-- $13.65 (0.66)%(3) $49,918 1.58% 09/30/05 13.65 (0.17) 2.79 2.62 -- -- -- 16.27 19.19 44,641 1.65 09/30/06 16.27 (0.12) 0.89 0.77 -- -- -- 17.04 4.73 37,382 1.59(4)(5) 09/30/07 17.04 (0.14) 2.41 2.27 -- -- -- 19.31 13.32 39,646 1.62(4)(5) 09/30/08 19.31 (0.12) (6.37) (6.49) -- -- -- 12.82 (33.61) 21,705 1.82(4)(5) Class B - 09/30/04 $12.44 $(0.24) $ 0.07 $(0.17) $-- $-- $-- $12.27 (1.37)%(3) $31,429 2.27% 09/30/05 12.27 (0.25) 2.50 2.25 -- -- -- 14.52 18.34 27,673 2.32 09/30/06 14.52 (0.21) 0.79 0.58 -- -- -- 15.10 3.99 21,500 2.30(4)(5) 09/30/07 15.10 (0.25) 2.15 1.90 -- -- -- 17.00 12.58 15,229 2.31(4)(5) 09/30/08 17.00 (0.21) (5.59) (5.80) -- -- -- 11.20 (34.12) 6,405 2.53(4)(5) Class C+ - 09/30/04 $12.43 $(0.24) $ 0.06 $(0.18) $-- $-- $-- $12.25 (1.45)%(3) $14,599 2.29% 09/30/05 12.25 (0.26) 2.51 2.25 -- -- -- 14.50 18.37 12,089 2.39 09/30/06 14.50 (0.21) 0.79 0.58 -- -- -- 15.08 4.00 9,281 2.28(4)(5) 09/30/07 15.08 (0.26) 2.14 1.88 -- -- -- 16.96 12.47 8,230 2.38(4)(5) 09/30/08 16.96 (0.22) (5.57) (5.79) -- -- -- 11.17 (34.14) 3,977 2.62(4)(5) Class I - 09/30/04 $13.80 $(0.13) $ 0.08 $(0.05) $-- $-- $-- $13.75 (0.36)%(3) $ 3,493 1.33%(4) 09/30/05 13.75 (0.13) 2.82 2.69 -- -- -- 16.44 19.56 1,759 1.33(4) 09/30/06 16.44 (0.06) 0.88 0.82 -- -- -- 17.26 4.99 422 1.28(4)(5) 09/30/07 17.26 (0.06) 2.42 2.36 -- -- -- 19.62 13.67 145 1.32(4)(5) 09/30/08 19.62 (0.04) (6.48) (6.52) -- -- -- 13.10 (33.23) 82 1.33(4)(5)
Ratio of net investment income (loss) to average Portfolio net assets Turnover ------------- --------- (1.09)% 170% (1.15) 86 (0.76)(4)(5) 278 (0.79)(4)(5) 321 (0.93)(4)(5) 510 (1.78)% 170% (1.82) 86 (1.46)(4)(5) 278 (1.48)(4)(5) 321 (1.64)(4)(5) 510 (1.80)% 170% (1.89) 86 (1.44)(4)(5) 278 (1.56)(4)(5) 321 (1.73)(4)(5) 510 (0.85)%(4) 170% (0.85)(4) 86 (0.35)(4)(5) 278 (0.34)(4)(5) 321 (0.44)(4)(5) 510
-------- (1)Calculated based upon average shares outstanding. (2)Total return is not annualized and does not reflect sales load. Total return does include expense reimbursements and expense reductions. (3)The Fund's total return increased from a gain realized on the disposal of investments in violation of investment restrictions on Class A 0.07%, Class B 0.10%, Class C 0.10% and Class I 0.08%. (4)Net of the following expense reimbursements/fee waivers (based on average net assets):
09/30/04 09/30/05 09/30/06 09/30/07 09/30/08 -------- -------- -------- -------- -------- Growth Opportunities Class A............ -- % -- % 0.05% 0.00% 0.00% Growth Opportunities Class B............ -- -- 0.05 0.01 0.00 Growth Opportunities Class C+........... -- -- 0.05 0.01 0.00 Growth Opportunities Class I............ 0.18 0.49 1.59 5.77 8.62
(5)Includes expense reimbursements, but excludes expense reductions. If the expense reductions had been applied the ratio of expenses to average net assets would have been lower and the ratio of net investment income to average net assets would have been higher by:
09/30/06 09/30/07 09/30/08 -------- -------- -------- Growth Opportunities Class A............ 0.04% 0.05% 0.19% Growth Opportunities Class B............ 0.04 0.05 0.19 Growth Opportunities Class C+........... 0.04 0.05 0.19 Growth Opportunities Class I............ 0.03 0.05 0.19
+ Effective February 23, 2004, Class II shares were redesignated to Class C shares. See Notes to Financial Statements 16 SunAmerica Equity Funds FINANCIAL HIGHLIGHTS -- (continued)
NEW CENTURY 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 ------------ --------- ---------- ----------- ---------- ---------- ------- ------- ------ --------- ------- ---------- Class A - 09/30/04 $13.44 $(0.17) $ 1.50 $ 1.33 $-- $-- $-- $14.77 9.90% $80,872 1.57% 09/30/05 14.77 (0.15) 3.38 3.23 -- -- -- 18.00 21.87 87,314 1.58 09/30/06 18.00 (0.07) 0.67 0.60 -- -- -- 18.60 3.33 75,682 1.55(4) 09/30/07 18.60 (0.04) 3.53 3.49 -- -- -- 22.09 18.76 88,535 1.55(4) 09/30/08 22.09 (0.12) (9.60) (9.72) -- -- -- 12.37 (44.00) 41,425 1.62(3)(4) Class B - 09/30/04 $12.03 $(0.25) $ 1.35 $ 1.10 $-- $-- $-- $13.13 9.14% $11,415 2.29% 09/30/05 13.13 (0.25) 3.00 2.75 -- -- -- 15.88 20.94 10,344 2.32 09/30/06 15.88 (0.19) 0.60 0.41 -- -- -- 16.29 2.58 7,528 2.29(4) 09/30/07 16.29 (0.18) 3.09 2.91 -- -- -- 19.20 17.86 10,701 2.31(4) 09/30/08 19.20 (0.24) (8.30) (8.54) -- -- -- 10.66 (44.48) 3,907 2.45(3)(4) Class C+ - 09/30/04 $12.02 $(0.22) $ 1.34 $ 1.12 $-- $-- $-- $13.14 9.32% $ 2,180 2.10%(3) 09/30/05 13.14 (0.22) 3.02 2.80 -- -- -- 15.94 21.31 1,964 2.14(3) 09/30/06 15.94 (0.16) 0.59 0.43 -- -- -- 16.37 2.70 1,756 2.14(3)(4) 09/30/07 16.37 (0.16) 3.11 2.95 -- -- -- 19.32 18.02 5,798 2.14(3)(4) 09/30/08 19.32 (0.19) (8.37) (8.56) -- -- -- 10.76 (44.31) 2,483 2.14(3)(4)(5)
Ratio of net investment income (loss) to average Portfolio net assets Turnover ------------- --------- (1.20)% 110% (0.89) 80 (0.39)(4) 235 (0.20)(4) 315 (0.80)(3)(4) 659 (1.91)% 110% (1.64) 80 (1.14)(4) 235 (1.00)(4) 315 (1.61)(3)(4) 659 (1.73)%(3) 110% (1.45)(3) 80 (0.98)(3)(4) 235 (0.88)(3)(4) 315 (1.31)(3)(4)(5) 659
-------- (1)Calculated based upon average shares outstanding. (2)Total return is not annualized and does not reflect sales load. Total return does include expense reimbursements and expense reductions. (3)Net of the following expense reimbursements (based on average net assets):
09/30/04 09/30/05 09/30/06 09/30/07 09/30/08 -------- -------- -------- -------- -------- New Century Class A..................... -- % -- % -- % -- % 0.00% New Century Class B..................... -- -- -- -- 0.00 New Century Class C+.................... 0.48 0.66 0.44 0.35 0.40
(4)Includes expense reimbursements, but excludes expense reductions. If the expense reductions had been applied the ratio of expenses to average net assets would have been lower and the ratio of net investment income to average net assets would have been higher by:
09/30/06 09/30/07 09/30/08 -------- -------- -------- New Century Class A..................... 0.01% 0.02% 0.14% New Century Class B..................... 0.01 0.02 0.14 New Century Class C+.................... 0.01 0.03 0.14
(5)Net of custody credits of 0.01%. + Effective February 23, 2004, Class II shares were redesignated to Class C shares. See Notes to Financial Statements 17 SunAmerica Equity Funds FINANCIAL HIGHLIGHTS -- (continued)
GROWTH AND INCOME 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 ------------ --------- ---------- ----------- ---------- ---------- ------- ------- ------ --------- ------- ---------- Class A - 09/30/04 $10.19 $ 0.00 $ 1.19 $ 1.19 $ -- $-- $ -- $11.38 11.68% $69,069 1.50% 09/30/05 11.38 0.10 1.03 1.13 (0.11) -- (0.11) 12.40 9.89 65,666 1.55 09/30/06 12.40 0.04 1.01 1.05 (0.02) -- (0.02) 13.43 8.47 61,872 1.54(3)(4) 09/30/07 13.43 0.07 2.38 2.45 -- -- -- 15.88 18.24 66,963 1.52(3)(4) 09/30/08 15.88 0.14 (3.65) (3.51) (0.06) -- (0.06) 12.31 (22.19) 48,022 1.58(4) Class B - 09/30/04 $ 9.69 $(0.07) $ 1.13 $ 1.06 $ -- $-- $ -- $10.75 10.94% $54,199 2.17% 09/30/05 10.75 0.02 0.97 0.99 -- -- -- 11.74 9.21 41,120 2.20 09/30/06 11.74 (0.05) 0.96 0.91 -- -- -- 12.65 7.75 27,100 2.22(3)(4) 09/30/07 12.65 (0.03) 2.23 2.20 -- -- -- 14.85 17.39 19,562 2.21(3)(4) 09/30/08 14.85 0.04 (3.41) (3.37) -- -- -- 11.48 (22.69) 9,729 2.29(4) Class C+ - 09/30/04 $ 9.67 $(0.07) $ 1.13 $ 1.06 $ -- $-- $ -- $10.73 10.96% $43,993 2.14% 09/30/05 10.73 0.02 0.97 0.99 -- -- -- 11.72 9.23 37,448 2.18 09/30/06 11.72 (0.04) 0.95 0.91 -- -- -- 12.63 7.76 26,821 2.19(3)(4) 09/30/07 12.63 (0.02) 2.23 2.21 -- -- -- 14.84 17.50 23,851 2.19(3)(4) 09/30/08 14.84 0.04 (3.41) (3.37) -- -- -- 11.47 (22.71) 14,816 2.25(4) Class I - 09/30/04 $10.21 $ 0.02 $ 1.18 $ 1.20 $ -- $-- $ -- $11.41 11.75% $ 769 1.32%(3) 09/30/05 11.41 0.12 1.04 1.16 (0.14) -- (0.14) 12.43 10.18 758 1.31(3) 09/30/06 12.43 0.07 1.01 1.08 (0.04) -- (0.04) 13.47 8.69 288 1.32(3)(4) 09/30/07 13.47 0.11 2.38 2.49 -- -- -- 15.96 18.49 323 1.31(3)(4) 09/30/08 15.96 0.18 (3.68) (3.50) (0.07) -- (0.07) 12.39 (22.02) 259 1.32(3)(4)
Ratio of net investment income (loss) to average Portfolio net assets Turnover ------------- --------- 0.01% 139% 0.78 79 0.31(3)(4) 152 0.49(3)(4) 164 0.96(4) 251 (0.67)% 139% 0.16 79 (0.39)(3)(4) 152 (0.21)(3)(4) 164 0.26(4) 251 (0.64)% 139% 0.17 79 (0.36)(3)(4) 152 (0.18)(3)(4) 164 0.29(4) 251 0.19%(3) 139% 1.00(3) 79 0.48(3)(4) 152 0.70(3)(4) 164 1.22(3)(4) 251
-------- (1)Calculated based upon average shares outstanding. (2)Total return is not annualized and does not reflect sales load. Total return does include expense reimbursements and expense reductions. (3)Net of the following expense reimbursements/fee waivers (based on average net assets):
09/30/04 09/30/05 09/30/06 09/30/07 09/30/08 -------- -------- -------- -------- -------- Growth and Income Class A............... -- % -- % 0.00% 0.01% -- % Growth and Income Class B............... -- -- 0.00 0.01 -- Growth and Income Class C+.............. -- -- 0.00 0.01 -- Growth and Income Class I............... 0.14 0.96 2.23 3.72 3.36
(4)Includes expense reimbursements, but excludes expense reductions. If the expense reductions had been applied the ratio of expenses to average net assets would have been lower and the ratio of net investment income to average net assets would have been higher by:
09/30/06 09/30/07 09/30/08 -------- -------- -------- Growth and Income Class A............... 0.01% 0.02% 0.03% Growth and Income Class B............... 0.01 0.02 0.04 Growth and Income Class C+.............. 0.01 0.02 0.04 Growth and Income Class I............... 0.01 0.02 0.03
+ Effective February 23, 2004, Class II shares were redesignated to Class C shares. See Notes to Financial Statements 18 SunAmerica Equity Funds FINANCIAL HIGHLIGHTS -- (continued)
BALANCED ASSETS 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 ------------ --------- ---------- ----------- ---------- ---------- ------- ------- ------ --------- -------- ---------- Class A - 09/30/04 $12.45 $0.12 $ 0.78 $ 0.90 $(0.16) $-- $(0.16) $13.19 7.27% $160,269 1.50% 09/30/05 13.19 0.21 0.56 0.77 (0.24) -- (0.24) 13.72 5.84 142,573 1.62 09/30/06 13.72 0.22 0.58 0.80 (0.25) -- (0.25) 14.27 5.90 127,313 1.52(3)(4) 09/30/07 14.27 0.25 1.52 1.77 (0.24) -- (0.24) 15.80 12.50 124,257 1.55(3)(4) 09/30/08 15.80 0.25 (2.82) (2.57) (0.26) -- (0.26) 12.97 (16.37)(5) 91,316 1.59(3)(4) Class B - 09/30/04 $12.41 $0.03 $ 0.77 $ 0.80 $(0.07) $-- $(0.07) $13.14 6.45% $ 38,687 2.18% 09/30/05 13.14 0.13 0.55 0.68 (0.15) -- (0.15) 13.67 5.16 30,002 2.27 09/30/06 13.67 0.13 0.58 0.71 (0.15) -- (0.15) 14.23 5.23 20,464 2.20(3)(4) 09/30/07 14.23 0.14 1.52 1.66 (0.12) -- (0.12) 15.77 11.70 14,714 2.28(3)(4) 09/30/08 15.77 0.15 (2.81) (2.66) (0.16) -- (0.16) 12.95 (16.95)(5) 9,252 2.31(3)(4) Class C+ - 09/30/04 $12.42 $0.03 $ 0.78 $ 0.81 $(0.07) $-- $(0.07) $13.16 6.53% $ 22,781 2.18% 09/30/05 13.16 0.13 0.55 0.68 (0.15) -- (0.15) 13.69 5.15 19,298 2.26 09/30/06 13.69 0.13 0.58 0.71 (0.15) -- (0.15) 14.25 5.22 15,164 2.18(3)(4) 09/30/07 14.25 0.15 1.52 1.67 (0.12) -- (0.12) 15.80 11.75 13,891 2.26(3)(4) 09/30/08 15.80 0.15 (2.82) (2.67) (0.16) -- (0.16) 12.97 (16.98)(5) 9,552 2.28(3)(4) Class I - 09/30/04 $12.46 $0.16 $ 0.77 $ 0.93 $(0.18) $-- $(0.18) $13.21 7.44% $ 679 1.29%(3) 09/30/05 13.21 0.25 0.55 0.80 (0.28) -- (0.28) 13.73 6.10 746 1.32(3) 09/30/06 13.73 0.26 0.59 0.85 (0.29) -- (0.29) 14.29 6.24 754 1.28(3)(4) 09/30/07 14.29 0.29 1.53 1.82 (0.29) -- (0.29) 15.82 12.81 652 1.31(3)(4) 09/30/08 15.82 0.29 (2.83) (2.54) (0.30) -- (0.30) 12.98 (16.19)(5) 546 1.31(3)(4)
Ratio of net investment income (loss) to average Portfolio net assets Turnover ------------- --------- 0.89% 182%(6) 1.56 160(6) 1.59(3)(4) 156(6) 1.66(3)(4) 133(6) 1.71(3)(4) 122 0.20% 182%(6) 0.91 160(6) 0.91(3)(4) 156(6) 0.93(3)(4) 133(6) 0.99(3)(4) 122 0.21% 182%(6) 0.92 160(6) 0.93(3)(4) 156(6) 0.95(3)(4) 133(6) 1.02(3)(4) 122 1.10%(3) 182%(6) 1.84(3) 160(6) 1.84(3)(4) 156(6) 1.90(3)(4) 133(6) 1.99(3)(4) 122
-------- (1)Calculated based upon average shares outstanding. (2)Total return is not annualized and does not reflect sales load. Total return does include expense reimbursements and expense reductions. (3)Net of the following expense reimbursements/fee waivers (based on average net assets):
09/30/04 09/30/05 09/30/06 09/30/07 09/30/08 -------- -------- -------- -------- -------- Balanced Assets Class A................. -- % -- % 0.05% 0.02% 0.02% Balanced Assets Class B................. -- -- 0.05 0.02 0.02 Balanced Assets Class C+................ -- -- 0.05 0.02 0.02 Balanced Assets Class I................. 0.24 1.47 1.38 1.71 1.65
(4)Includes expense reimbursements, but excludes expense reductions. If the expense reductions had been applied the ratio of expenses to average net assets would have been lower and the ratio of net investment income to average net assets would have been higher by:
09/30/06 09/30/07 09/30/08 -------- -------- -------- Balanced Assets Class A................. 0.00% 0.01% 0.01% Balanced Assets Class B................. 0.00 0.01 0.01 Balanced Assets Class C+................ 0.00 0.01 0.01 Balanced Assets Class I................. 0.00 0.01 0.01
(5)The Fund's performance was increased by less than 0.01% from gains on the disposal of investments in violation of investment restrictions. (See Note 4) (6)Portfolio turnover includes "to be announced" ("TBA") transactions. Previously, portfolio turnover was calculated prior to including TBA transactions and was as follows:
09/30/04 09/30/05 09/30/06 09/30/07 -------- -------- -------- -------- 181% 160% 154% 123%
+ Effective February 23, 2004, Class II shares were redesignated to Class C shares. See Notes to Financial Statements 19 SunAmerica Equity Funds FINANCIAL HIGHLIGHTS -- (continued)
INTERNATIONAL EQUITY 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 ------------ --------- ---------- ----------- ---------- ---------- ------- ------- ------ --------- ------- ---------- Class A - 09/30/04 $ 8.73 $ 0.01 $ 1.46 $ 1.47 $ 0.00 $ -- $ 0.00 $10.20 16.88% $32,221 1.90%(3) 09/30/05 10.20 0.02 2.82 2.84 -- -- -- 13.04 27.84 43,527 1.90(3) 09/30/06 13.04 (0.01) 2.81 2.80 -- -- -- 15.84 21.47 62,190 1.90(3) 09/30/07 15.84 0.02 3.94 3.96 -- -- -- 19.80 25.00 75,408 1.90(3) 09/30/08 19.80 0.17 (5.85) (5.68) -- (1.68) (1.68) 12.44 (31.34) 46,384 1.90(4) Class B - 09/30/04 $ 8.34 $(0.06) $ 1.41 $ 1.35 $ -- $ -- $ -- $ 9.69 16.19% $20,673 2.55%(3) 09/30/05 9.69 (0.06) 2.68 2.62 -- -- -- 12.31 27.04 19,546 2.55(3) 09/30/06 12.31 (0.11) 2.65 2.54 -- -- -- 14.85 20.63 21,240 2.55(3) 09/30/07 14.85 (0.10) 3.69 3.59 -- -- -- 18.44 24.18 20,509 2.55(3) 09/30/08 18.44 0.04 (5.36) (5.32) -- (1.68) (1.68) 11.44 (31.72) 9,279 2.55(3)(4) Class C+ - 09/30/04 $ 8.33 $(0.06) $ 1.41 $ 1.35 $ -- $ -- $ -- $ 9.68 16.21% $15,798 2.55%(3) 09/30/05 9.68 (0.06) 2.67 2.61 -- -- -- 12.29 26.96 16,892 2.55(3) 09/30/06 12.29 (0.11) 2.66 2.55 -- -- -- 14.84 20.75 21,646 2.55(3) 09/30/07 14.84 (0.09) 3.67 3.58 -- -- -- 18.42 24.12 26,683 2.55(3) 09/30/08 18.42 0.05 (5.37) (5.32) -- (1.68) (1.68) 11.42 (31.77) 14,221 2.55(3)(4) Class I - 09/30/04 $ 8.77 $(0.04) $ 1.53 $ 1.49 $(0.01) $ -- $(0.01) $10.25 16.96% $ 4,233 1.80%(3) 09/30/05 10.25 0.05 2.82 2.87 -- -- -- 13.12 28.00 7,065 1.80(3) 09/30/06 13.12 0.00 2.84 2.84 -- -- -- 15.96 21.65 9,482 1.80(3) 09/30/07 15.96 0.04 3.96 4.00 -- -- -- 19.96 25.06 7,997 1.80(3) 09/30/08 19.96 0.17 (5.89) (5.72) -- (1.68) (1.68) 12.56 (31.29) 4,964 1.80(3)(4)
Ratio of net investment income (loss) to average Portfolio net assets Turnover ------------- --------- 0.06%(3) 202% 0.17(3) 126 (0.09)(3) 152 0.13(3) 132 0.98(4) 199 (0.62)%(3) 202% (0.51)(3) 126 (0.80)(3) 152 (0.59)(3) 132 0.25(3)(4) 199 (0.60)%(3) 202% (0.49)(3) 126 (0.76)(3) 152 (0.52)(3) 132 0.31(3)(4) 199 (0.34)%(3) 202% 0.43(3) 126 (0.01)(3) 152 0.24(3) 132 1.01(3)(4) 199
-------- (1)Calculated based upon average shares outstanding. (2)Total return is not annualized and does not reflect sales load. Total return does include expense reimbursements and expense reductions. (3)Net of the following expense reimbursements (recoupments) (based on average net assets):
09/30/04 09/30/05 09/30/06 09/30/07 09/30/08 -------- -------- -------- -------- -------- International Equity Class A............ 0.10% 0.09% (0.04)% (0.05)% -- % International Equity Class B............ 0.11 0.17 0.02 0.04 0.06 International Equity Class C+........... 0.06 0.14 (0.01) (0.00) 0.01 International Equity Class I............ 0.12 0.14 0.00 0.04 0.09
(4)Includes expense reimbursements, but excludes expense reductions. If the expense reductions had been applied the ratio of expenses to average net assets would have been lower and the ratio of net investment income to average net assets would have been higher by:
09/30/08 -------- International Equity Class A....... 0.00% International Equity Class B....... 0.00 International Equity Class C+...... 0.00 International Equity Class I....... 0.00
+ Effective February 23, 2004, Class II shares were redesignated to Class C shares. See Notes to Financial Statements 20 SunAmerica Equity Funds FINANCIAL HIGHLIGHTS -- (continued)
VALUE FUND ---------- Net gain (loss) on Net investments Distri- Net Net Asset Net (both Dividends butions Asset Assets Value investment realized Total from from net from 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 - 10/31/03 $14.63 $0.29 $ 2.05 $ 2.34 $(0.18) $(0.46) $(0.64) $16.33 16.59% $ 60,701 11/1/03-09/30/04(6) 16.33 0.32 1.86 2.18 (0.37) (0.45) (0.82) 17.69 13.79 91,769 09/30/05 17.69 0.17 2.22 2.39 (0.29) (1.78) (2.07) 18.01 14.06 130,754 09/30/06 18.01 0.15 1.89 2.04 (0.13) (1.17) (1.30) 18.75 12.02 121,729 09/30/07 18.75 0.18 2.59 2.77 (0.16) (2.04) (2.20) 19.32 15.80 126,788 09/30/08 19.32 0.19 (3.86) (3.67) (0.21) (2.70) (2.91) 12.74 (21.70) 77,903 Class B - 10/31/03 $14.06 $0.19 $ 1.98 $ 2.17 $(0.08) $(0.46) $(0.54) $15.69 15.94% $ 83,935 11/1/03-09/30/04(6) 15.69 0.24 1.75 1.99 (0.27) (0.45) (0.72) 16.96 13.09 68,492 09/30/05 16.96 0.07 2.11 2.18 (0.18) (1.78) (1.96) 17.18 13.34 57,704 09/30/06 17.18 0.04 1.80 1.84 (0.03) (1.17) (1.20) 17.82 11.29 47,100 09/30/07 17.82 0.05 2.46 2.51 (0.05) (2.04) (2.09) 18.24 15.07 39,355 09/30/08 18.24 0.09 (3.62) (3.53) (0.10) (2.70) (2.80) 11.91 (22.16) 21,304 Class C+ - 10/31/03 $14.06 $0.18 $ 1.99 $ 2.17 $(0.08) $(0.46) $(0.54) $15.69 15.94% $ 23,208 11/1/03-09/30/04(6) 15.69 0.22 1.77 1.99 (0.27) (0.45) (0.72) 16.96 13.09 30,985 09/30/05 16.96 0.06 2.12 2.18 (0.18) (1.78) (1.96) 17.18 13.34 41,095 09/30/06 17.18 0.04 1.80 1.84 (0.03) (1.17) (1.20) 17.82 11.30 33,849 09/30/07 17.82 0.06 2.45 2.51 (0.05) (2.04) (2.09) 18.24 15.07 26,071 09/30/08 18.24 0.09 (3.62) (3.53) (0.10) (2.70) (2.80) 11.91 (22.16) 14,194 Class I - 10/31/03 $14.63 $0.30 $ 2.05 $ 2.35 $(0.19) $(0.46) $(0.65) $16.33 16.72% $ 6,629 11/1/03-09/30/04(6) 16.33 0.37 1.83 2.20 (0.40) (0.45) (0.85) 17.68 13.91 4,746 09/30/05 17.68 0.20 2.20 2.40 (0.30) (1.78) (2.08) 18.00 14.12 3,106 09/30/06 18.00 0.16 1.91 2.07 (0.15) (1.17) (1.32) 18.75 12.20 174 09/30/07 18.75 0.21 2.57 2.78 (0.18) (2.04) (2.22) 19.31 15.89 34 09/30/08 19.31 0.20 (3.85) (3.65) (0.23) (2.70) (2.93) 12.73 (21.62) 25 Class Z - 10/31/03 $14.97 $0.36 $ 2.13 $ 2.49 $(0.25) $(0.46) $(0.71) $16.75 17.36% $ 4,532 11/1/03-09/30/04(6) 16.75 0.41 1.92 2.33 (0.45) (0.45) (0.90) 18.18 14.37 7,370 09/30/05 18.18 0.27 2.30 2.57 (0.39) (1.78) (2.17) 18.58 14.77 17,307 09/30/06 18.58 0.26 1.95 2.21 (0.19) (1.17) (1.36) 19.43 12.64 22,853 09/30/07 19.43 0.29 2.70 2.99 (0.22) (2.04) (2.26) 20.16 16.48 34,644 09/30/08 20.16 0.29 (4.05) (3.76) (0.28) (2.70) (2.98) 13.42 (21.28) 25,827
Ratio of net Ratio of investment expenses income (loss) to average to average Portfolio net assets(4) net assets(4) Turnover ------------- ------------- --------- 1.78%(5) 1.94%(5) 138% 1.73(3) 2.12(3) 204 1.63 1.00 82 1.63(5) 0.88(5) 140 1.63(5) 0.97(5) 143 1.63(5) 1.23(5) 207 2.41%(5) 1.32%(5) 138% 2.40(3) 1.58(3) 204 2.28 0.38 82 2.28(5) 0.23(5) 140 2.28(5) 0.31(5) 143 2.28(5) 0.58(5) 207 2.43%(5) 1.28%(5) 138% 2.41(3) 1.48(3) 204 2.28 0.36 82 2.28(5) 0.23(5) 140 2.28(5) 0.32(5) 143 2.28(5) 0.58(5) 207 1.68%(5) 2.02%(5) 138% 1.67(3) 2.31(3) 204 1.53 1.11 82 1.53(5) 0.90(5) 140 1.53(5) 1.05(5) 143 1.53(5) 1.33(5) 207 1.21%(5) 2.33%(5) 138% 1.19(3) 2.58(3) 204 1.06 1.54 82 1.06(5) 1.45(5) 140 1.06(5) 1.54(5) 143 1.06(5) 1.81(5) 207
-------- (1)Calculated based upon average shares outstanding. (2)Total return is not annualized and does not reflect sales load. Total return does include expense reimbursements and expense reductions. (3)Annualized (4)Net of the following expense reimbursements (recoupments) (based on average net assets):
10/31/03 09/30/04(3) 09/30/05 09/30/06 09/30/07 09/30/08 -------- ----------- -------- -------- -------- -------- Value Class A........................... (0.01)% 0.04% 0.08% 0.08% 0.07% 0.11% Value Class B........................... (0.01) 0.02 0.14 0.10 0.11 0.14 Value Class C+.......................... 0.02 0.06 0.08 0.08 0.09 0.14 Value Class I........................... -- 0.10 0.25 0.30 21.30 16.95 Value Class Z........................... 1.00 0.16 0.10 0.07 0.07 0.10
(5)Includes expense reimbursements, but excludes expense reductions. If the expense reductions had been applied the ratio of expenses to average net assets would have been lower and the ratio of net investment income to average net assets would have been higher by:
10/31/03 09/30/06 09/30/07 09/30/08 -------- -------- -------- -------- Value Class A........................... 0.01% 0.01% 0.01% 0.03% Value Class B........................... 0.01 0.01 0.01 0.03 Value Class C+.......................... 0.01 0.01 0.01 0.03 Value Class I........................... 0.01 0.01 0.01 0.03 Value Class Z........................... 0.00 0.01 0.01 0.03
(6)The Fund changed its fiscal year end from October 31 to September 30. + Effective February 23, 2004, Class II shares were redesignated to Class C shares. See Notes to Financial Statements 21 SunAmerica Equity Funds FINANCIAL HIGHLIGHTS -- (continued)
DISCIPLINED GROWTH 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 - 10/31/03 $ 9.00 $ 0.03 $ 1.46 $ 1.49 $ -- $-- $ -- $10.49 16.56% $14,877 11/01/03-09/30/04(3) 10.49 0.03 0.75 0.78 -- -- -- 11.27 7.44 13,562 09/30/05 11.27 0.09 0.53 0.62 (0.06) -- (0.06) 11.83 5.51 11,251 09/30/06 11.83 (0.01) 1.34 1.33 (0.06) -- (0.06) 13.10 11.25 22,554 09/30/07 13.10 (0.04) 4.38 4.34 -- -- -- 17.44 33.13(7) 25,774 09/30/08 17.44 (0.04) (6.33) (6.37) -- -- -- 11.07 (36.53) 19,949 Class B - 10/31/03 $ 8.79 $(0.03) $ 1.41 $ 1.38 $ -- $-- $ -- $10.17 15.70% $22,694 11/01/03-09/30/04(3) 10.17 (0.04) 0.73 0.69 -- -- -- 10.86 6.78 19,669 09/30/05 10.86 0.01 0.52 0.53 -- -- -- 11.39 4.88 15,117 09/30/06 11.39 (0.10) 1.29 1.19 0.00 -- 0.00 12.58 10.46 9,299 09/30/07 12.58 (0.13) 4.20 4.07 -- -- -- 16.65 32.35(7) 5,676 09/30/08 16.65 (0.13) (6.02) (6.15) -- -- -- 10.50 (36.94) 3,820 Class C+ - 10/31/03 $ 8.80 $(0.03) $ 1.42 $ 1.39 $ -- $-- $ -- $10.19 15.80% $23,036 11/01/03-09/30/04(3) 10.19 (0.04) 0.73 0.69 -- -- -- 10.88 6.77 18,295 09/30/05 10.88 0.01 0.51 0.52 -- -- -- 11.40 4.78 13,983 09/30/06 11.40 (0.09) 1.29 1.20 0.00 -- 0.00 12.60 10.54 26,927 09/30/07 12.60 (0.13) 4.19 4.06 -- -- -- 16.66 32.22(7) 28,927 09/30/08 16.66 (0.13) (6.02) (6.15) -- -- -- 10.51 (36.91) 16,419
Ratio of net Ratio of investment expenses income (loss) to average to average Portfolio net assets(5) net assets(5) Turnover ------------- ------------- --------- 1.45% 0.35% 13% 1.45(4) 0.25(4) 20 1.45 0.74 32 1.45(6) (0.02)(6) 999 1.45(6) (0.13)(6) 446 1.45(6)(8) (0.30)(6)(8) 706 2.10% (0.30)% 13% 2.10(4) (0.40)(4) 20 2.10 0.09 32 2.10(6) (0.77)(6) 999 2.10(6) (0.75)(6) 446 2.10(6)(8) (0.98)(6)(8) 706 2.10% (0.30)% 13% 2.10(4) (0.40)(4) 20 2.10 0.09 32 2.10(6) (0.68)(6) 999 2.10(6) (0.78)(6) 446 2.10(6)(8) (0.95)(6)(8) 706
-------- (1)Calculated based upon average shares outstanding. (2)Total return is not annualized and does not reflect sales load. Total return does include expense reimbursements and expense reductions. (3)The Fund changed its fiscal year end from October 31 to September 30. (4)Annualized (5)Net of the following expense reimbursements (based on average net assets):
10/31/03 09/30/04(4) 09/30/05 09/30/06 09/30/07 09/30/08 -------- ----------- -------- -------- -------- -------- Disciplined Growth Class A.............. 0.26% 0.24% 0.38% 0.31% 0.34% 0.25% Disciplined Growth Class B.............. 0.23 0.25 0.35 0.37 0.45 0.39 Disciplined Growth Class C+............. 0.23 0.24 0.33 0.30 0.30 0.24
(6)Includes expense reimbursements, but excludes expense reductions. If the expense reductions had been applied the ratio of expenses to average net assets would have been lower and the ratio of net investment income to average net assets would have been higher by:
09/30/06 09/30/07 09/30/08 -------- -------- -------- Disciplined Growth Class A.............. 0.04% 0.11% 0.07% Disciplined Growth Class B.............. 0.02 0.14 0.07 Disciplined Growth Class C+............. 0.03 0.12 0.07
(7)Total Return for each class was increased by 0.38%, 0.40% and 0.40% for Class A, Class B and Class C, respectively, from a reimbursement by an affiliate. (8)Net of custody credits of 0.01%. + Effective February 23, 2004, Class II shares were redesignated to Class C shares. See Notes to Financial Statements 22 SunAmerica Equity Funds FINANCIAL HIGHLIGHTS -- (continued)
INTERNATIONAL SMALL-CAP FUND ---------------------------- Net gain (loss) on Net investments Distri- Net Asset Net (both Dividends butions Asset Value investment realized Total from from net from Distributions Total Value beginning income and investment investment capital from return distri- end of Total Period Ended of period (loss)(1) unrealized) operations income gains of capital butions period Return(2) -------------------- --------- ---------- ----------- ---------- ---------- ------- ------------- ------- ------ --------- Class A 05/02/06-09/30/06(3) $12.50 $ 0.00 $(1.45) $(1.45) $-- $ -- $ -- $ -- $11.05 (11.60)% 09/30/07 11.05 (0.04) 2.99 2.95 -- -- -- -- 14.00 26.70 09/30/08 14.00 (0.00) (5.52) (5.52) -- (0.13) (0.01) (0.14) 8.34 (39.79) Class B 05/02/06-09/30/06(3) $12.50 $(0.04) $(1.44) $(1.48) $-- $ -- $ -- $ -- $11.02 (11.84)% 09/30/07 11.02 (0.11) 2.97 2.86 -- -- -- -- 13.88 25.95 09/30/08 13.88 (0.08) (5.45) (5.53) -- (0.13) (0.01) (0.14) 8.21 (40.21) Class C 05/02/06-09/30/06(3) $12.50 $(0.04) $(1.44) $(1.48) $-- $ -- $ -- $ -- $11.02 (11.84)% 09/30/07 11.02 (0.12) 2.98 2.86 -- -- -- -- 13.88 25.95 09/30/08 13.88 (0.09) (5.44) (5.53) -- (0.13) (0.01) (0.14) 8.21 (40.20)
Ratio Net of net Assets Ratio of investment end of expenses income (loss) period to average to average Portfolio (000's) net assets(5) net assets(5) Turnover ------- ------------- ------------- --------- $21,557 1.90%(4) 0.08%(4) 55% 30,845 1.90 (0.30) 70 16,830 1.90 (0.04) 93 $ 583 2.55%(4) (0.93)%(4) 55% 1,181 2.55 (0.89) 70 633 2.55 (0.68) 93 $ 3,363 2.55%(4) (1.07)%(4) 55% 5,357 2.55 (0.94) 70 2,199 2.55 (0.78) 93
-------- (1)Calculated based upon average shares outstanding. (2)Total return is not annualized and does not reflect sales load. Total return does include expense reimbursements and expense reductions. (3)Commencement of operations. (4)Annualized (5)Net of the following expense reimbursements (based on average net assets):
09/30/06(4) 09/30/07 09/30/08 ----------- -------- -------- International Small-Cap Class A......... 1.27% 0.45% 0.54% International Small-Cap Class B......... 12.63 2.10 1.53 International Small-Cap Class C......... 2.88 0.77 0.77
See Notes to Financial Statements 23 SunAmerica Blue Chip Growth Fund PORTFOLIO PROFILE -- September 30, 2008 -- (unaudited) Industry Allocation* Computers.............................. 6.8% Medical-Biomedical/Gene................ 6.1 Repurchase Agreement................... 4.7 Beverages-Non-alcoholic................ 4.1 Medical Products....................... 3.7 Diversified Manufacturing Operations... 3.5 Cosmetics & Toiletries................. 3.3 Electronic Components-Semiconductors... 3.3 Applications Software.................. 3.2 Oil-Field Services..................... 2.8 Oil Companies-Exploration & Production. 2.8 Aerospace/Defense...................... 2.8 Networking Products.................... 2.7 Retail-Drug Store...................... 2.7 Web Portals/ISP........................ 2.7 Finance-Investment Banker/Broker....... 2.5 Wireless Equipment..................... 2.4 Agricultural Chemicals................. 2.2 Electric Products-Misc................. 2.0 Retail-Discount........................ 1.9 Instruments-Scientific................. 1.9 Oil Companies-Integrated............... 1.8 Enterprise Software/Service............ 1.7 Medical Instruments.................... 1.7 Medical-Generic Drugs.................. 1.7 Commercial Services-Finance............ 1.3 Electronic Forms....................... 1.3 Oil & Gas Drilling..................... 1.2 Multimedia............................. 1.2 Retail-Office Supplies................. 1.2 Data Processing/Management............. 1.1 Aerospace/Defense-Equipment............ 1.1 Electronic Measurement Instruments..... 1.1 Medical-Drugs.......................... 1.1 Electronics-Military................... 1.0 Banks-Fiduciary........................ 1.0 Medical-HMO............................ 1.0 X-Ray Equipment........................ 1.0 Insurance-Multi-line................... 0.9 Cellular Telecom....................... 0.9 Telecom Equipment-Fiber Optics......... 0.9 Oil Field Machinery & Equipment........ 0.8 Retail-Apparel/Shoe.................... 0.7 Finance-Other Services................. 0.7 Retail-Consumer Electronics............ 0.6 E-Commerce/Services.................... 0.6 Diversified Minerals................... 0.6 Medical-Wholesale Drug Distribution.... 0.6 Investment Management/Advisor Services. 0.5 Metal-Diversified...................... 0.5 Computer Aided Design.................. 0.5 Retail-Regional Department Stores...... 0.5 Internet Infrastructure Software....... 0.5 Coal................................... 0.3 Diagnostic Kits........................ 0.2 ---- 99.9% ====
-------- * Calculated as a percentage of net assets 24 SunAmerica Blue Chip Growth Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008
Market Value Security Description Shares (Note 3) --------------------------------------------------------------- COMMON STOCK -- 95.2% Aerospace/Defense -- 2.8% Boeing Co.................................. 6,900 $ 395,715 Lockheed Martin Corp....................... 4,150 455,131 Raytheon Co................................ 10,000 535,100 ---------- 1,385,946 ---------- Aerospace/Defense-Equipment -- 1.1% United Technologies Corp................... 9,300 558,558 ---------- Agricultural Chemicals -- 2.2% Monsanto Co................................ 11,100 1,098,678 ---------- Applications Software -- 3.2% Microsoft Corp............................. 58,900 1,572,041 ---------- Banks-Fiduciary -- 1.0% The Bank of New York Mellon Corp........... 15,949 519,618 ---------- Beverages-Non-alcoholic -- 4.1% PepsiCo, Inc............................... 28,500 2,031,195 ---------- Cellular Telecom -- 0.9% NII Holdings, Inc.+........................ 12,000 455,040 ---------- Coal -- 0.3% Peabody Energy Corp........................ 3,200 144,000 ---------- Commercial Services-Finance -- 1.3% Visa, Inc., Class A........................ 10,650 653,804 ---------- Computer Aided Design -- 0.5% Autodesk, Inc.+............................ 7,928 265,984 ---------- Computers -- 6.8% Apple, Inc.+............................... 8,950 1,017,257 Hewlett-Packard Co......................... 29,500 1,364,080 International Business Machines Corp....... 5,100 596,496 Research In Motion, Ltd.+.................. 5,850 399,555 ---------- 3,377,388 ---------- Cosmetics & Toiletries -- 3.3% Procter & Gamble Co........................ 23,500 1,637,715 ---------- Data Processing/Management -- 1.1% Fiserv, Inc.+.............................. 12,000 567,840 ---------- Diagnostic Kits -- 0.2% Inverness Medical Innovations, Inc.+....... 3,468 104,040 ---------- Diversified Manufacturing Operations -- 3.5% Danaher Corp............................... 13,300 923,020 Dover Corp................................. 11,500 466,325 General Electric Co........................ 14,400 367,200 ---------- 1,756,545 ---------- Diversified Minerals -- 0.6% Cia Vale do Rio Doce ADR................... 14,900 285,335 ---------- E-Commerce/Services -- 0.6% eBay, Inc.+................................ 13,200 295,416 ---------- Electric Products-Misc. -- 2.0% AMETEK, Inc................................ 11,704 477,172 Emerson Electric Co........................ 13,000 530,270 ---------- 1,007,442 ----------
Market Value Security Description Shares (Note 3) ----------------------------------------------------------------- Electronic Components-Semiconductors -- 3.3% Broadcom Corp., Class A+..................... 6,300 $ 117,369 Intel Corp................................... 52,404 981,527 MEMC Electronic Materials, Inc.+............. 6,450 182,277 Texas Instruments, Inc....................... 15,900 341,850 ---------- 1,623,023 ---------- Electronic Forms -- 1.3% Adobe Systems, Inc.+......................... 15,900 627,573 ---------- Electronic Measurement Instruments -- 1.1% Agilent Technologies, Inc.+.................. 18,300 542,778 ---------- Electronics-Military -- 1.0% L-3 Communications Holdings, Inc............. 5,300 521,096 ---------- Enterprise Software/Service -- 1.7% Oracle Corp.+................................ 42,500 863,175 ---------- Finance-Investment Banker/Broker -- 2.5% The Charles Schwab Corp...................... 27,400 712,400 The Goldman Sachs Group, Inc................. 4,300 550,400 ---------- 1,262,800 ---------- Finance-Other Services -- 0.7% CME Group, Inc............................... 900 334,359 ---------- Instruments-Scientific -- 1.9% Thermo Fisher Scientific, Inc.+.............. 16,800 924,000 ---------- Insurance-Multi-line -- 0.9% Assurant, Inc................................ 8,500 467,500 ---------- Internet Infrastructure Software -- 0.5% Akamai Technologies, Inc.+................... 13,100 228,464 ---------- Investment Management/Advisor Services -- 0.5% Invesco, Ltd................................. 12,800 268,544 ---------- Medical Instruments -- 1.7% Medtronic, Inc............................... 16,900 846,690 ---------- Medical Products -- 3.7% Johnson & Johnson............................ 17,900 1,240,112 Zimmer Holdings, Inc.+....................... 9,050 584,268 ---------- 1,824,380 ---------- Medical-Biomedical/Gene -- 6.1% Amgen, Inc.+................................. 2,800 165,956 Celgene Corp.+............................... 9,200 582,176 Genentech, Inc.+............................. 7,000 620,760 Genzyme Corp.+............................... 9,700 784,633 Gilead Sciences, Inc.+....................... 19,200 875,136 ---------- 3,028,661 ---------- Medical-Drugs -- 1.1% Abbott Laboratories.......................... 9,200 529,736 ---------- Medical-Generic Drugs -- 1.7% Barr Pharmaceuticals, Inc.+.................. 6,500 424,450 Mylan, Inc.+................................. 36,000 411,120 ---------- 835,570 ----------
25 SunAmerica Blue Chip Growth Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008 -- (continued)
Market Value Security Description Shares (Note 3) -------------------------------------------------------------- COMMON STOCK (continued) Medical-HMO -- 1.0% UnitedHealth Group, Inc................... 19,600 $ 497,644 ---------- Medical-Wholesale Drug Distribution -- 0.6% Cardinal Health, Inc...................... 5,600 275,968 ---------- Metal-Diversified -- 0.5% Freeport-McMoRan Copper & Gold, Inc....... 4,700 267,195 ---------- Multimedia -- 1.2% News Corp., Class A....................... 21,279 255,135 Time Warner, Inc.......................... 26,500 347,415 ---------- 602,550 ---------- Networking Products -- 2.7% Cisco Systems, Inc.+...................... 60,700 1,369,392 ---------- Oil & Gas Drilling -- 1.2% Transocean, Inc.+......................... 5,592 614,225 ---------- Oil Companies-Exploration & Production -- 2.8% Apache Corp............................... 2,800 291,984 Devon Energy Corp......................... 2,600 237,120 Ultra Petroleum Corp.+.................... 3,300 182,622 XTO Energy, Inc........................... 14,700 683,844 ---------- 1,395,570 ---------- Oil Companies-Integrated -- 1.8% Exxon Mobil Corp.......................... 11,400 885,324 ---------- Oil Field Machinery & Equipment -- 0.8% Cameron International Corp.+.............. 5,900 227,386 National-Oilwell Varco, Inc.+............. 3,700 185,851 ---------- 413,237 ---------- Oil-Field Services -- 2.8% Halliburton Co............................ 9,700 314,183 Schlumberger, Ltd......................... 12,000 937,080 Weatherford International, Ltd.+.......... 6,700 168,438 ---------- 1,419,701 ---------- Retail-Apparel/Shoe -- 0.7% American Eagle Outfitters, Inc............ 22,300 340,075 ---------- Retail-Consumer Electronics -- 0.6% Best Buy Co., Inc......................... 8,600 322,500 ---------- Retail-Discount -- 1.9% Target Corp............................... 8,300 407,115 Wal-Mart Stores, Inc...................... 9,400 562,966 ---------- 970,081 ---------- Retail-Drug Store -- 2.7% CVS Caremark Corp......................... 40,602 1,366,663 ---------- Retail-Office Supplies -- 1.2% Staples, Inc.............................. 26,400 594,000 ---------- Retail-Regional Department Stores -- 0.5% Kohl's Corp.+............................. 5,700 262,656 ---------- Telecom Equipment-Fiber Optics -- 0.9% Corning, Inc.............................. 28,600 447,304 ----------
Shares/ Market Principal Value Security Description Amount (Note 3) -------------------------------------------------------------- Web Portals/ISP -- 2.7% Google, Inc., Class A+.............. 3,350 $ 1,341,742 ----------- Wireless Equipment -- 2.4% QUALCOMM, Inc....................... 28,150 1,209,606 ----------- X-Ray Equipment -- 1.0% Hologic, Inc.+...................... 25,600 494,848 ----------- Total Long-Term Investment Securities (cost $49,773,185)................. 47,535,215 ----------- REPURCHASE AGREEMENT -- 4.7% State Street Bank & Trust Co. Joint Repurchase Agreement(1) (cost $2,332,000).................. $2,332,000 2,332,000 ----------- TOTAL INVESTMENTS -- (cost $52,105,185)(2).............. 99.9% 49,867,215 Other assets less liabilities......... 0.1 46,937 ---------- ----------- NET ASSETS -- 100.0% $49,914,152 ========== ===========
-------- + Non-income producing security (1) See Note 3 for details of Joint Repurchase Agreement. (2) See Note 7 for cost of investments on a tax basis. ADR --American Depository Receipt See Notes to Financial Statements 26 SunAmerica Growth Opportunities Fund PORTFOLIO PROFILE -- September 30, 2008 -- (unaudited) Industry Allocation* Repurchase Agreements........................ 24.6% Commercial Services.......................... 9.5 Commercial Services-Finance.................. 6.4 Data Processing/Management................... 5.0 Food-Meat Products........................... 4.4 Telecommunication Equipment.................. 3.9 X-Ray Equipment.............................. 3.9 Food-Misc.................................... 3.7 Food-Wholesale/Distribution.................. 3.0 Computer Services............................ 2.9 Investment Management/Advisor Services....... 2.4 Medical-Generic Drugs........................ 2.4 Hospital Beds/Equipment...................... 2.3 Electronic Components-Semiconductors......... 2.0 Gas-Distribution............................. 2.0 Retail-Apparel/Shoe.......................... 1.9 Dental Supplies & Equipment.................. 1.7 Veterinary Diagnostics....................... 1.6 Beverages-Wine/Spirits....................... 1.6 Computer Aided Design........................ 1.5 Oil Companies-Exploration & Production....... 1.2 Telecom Services............................. 1.1 Semiconductor Components-Integrated Circuits. 1.1 Private Corrections.......................... 1.1 Medical-Wholesale Drug Distribution.......... 1.0 Poultry...................................... 0.9 Home Decoration Products..................... 0.9 Retail-Discount.............................. 0.9 Medical-Hospitals............................ 0.9 Retail-Petroleum Products.................... 0.8 Casino Services.............................. 0.8 Medical-Outpatient/Home Medical.............. 0.5 Racetracks................................... 0.5 Batteries/Battery Systems.................... 0.5 Enterprise Software/Service.................. 0.5 Applications Software........................ 0.4 Internet Infrastructure Software............. 0.4 Linen Supply & Related Items................. 0.3 ----- 100.5% =====
-------- * Calculated as a percentage of net assets 27 SunAmerica Growth Opportunities Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008
Market Value Security Description Shares (Note 3) --------------------------------------------------------- COMMON STOCK -- 75.9% Applications Software -- 0.4% Check Point Software Technologies+... 6,000 $ 136,440 ---------- Batteries/Battery Systems -- 0.5% Energizer Holdings, Inc.+............ 2,000 161,100 ---------- Beverages-Wine/Spirits -- 1.6% Central European Distribution Corp.+. 11,400 517,674 ---------- Casino Services -- 0.8% International Game Technology........ 4,300 73,874 Scientific Games Corp., Class A+..... 7,300 168,046 ---------- 241,920 ---------- Commercial Services -- 9.5% Iron Mountain, Inc.+................. 74,647 1,822,133 The Providence Service Corp.+........ 21,177 207,535 Ticketmaster+........................ 96,699 1,037,580 ---------- 3,067,248 ---------- Commercial Services-Finance -- 6.4% Equifax, Inc......................... 27,700 954,265 Euronet Worldwide, Inc.+............. 66,200 1,107,526 ---------- 2,061,791 ---------- Computer Aided Design -- 1.5% Aspen Technology, Inc.+.............. 39,300 499,110 ---------- Computer Services -- 2.9% DST Systems, Inc.+................... 16,600 929,434 ---------- Data Processing/Management -- 5.0% Fiserv, Inc.+........................ 33,800 1,599,416 ---------- Dental Supplies & Equipment -- 1.7% Sirona Dental Systems, Inc.+......... 23,900 556,392 ---------- Electronic Components-Semiconductors -- 2.0% Intersil Corp., Class A.............. 8,100 134,298 Macrovision Solutions Corp.+......... 9,921 152,585 Microchip Technology, Inc............ 12,000 353,160 ---------- 640,043 ---------- Enterprise Software/Service -- 0.5% Lawson Software, Inc.+............... 22,400 156,800 ---------- Food-Meat Products -- 4.4% Hormel Foods Corp.................... 18,300 663,924 Tyson Foods, Inc., Class A........... 62,200 742,668 ---------- 1,406,592 ---------- Food-Misc. -- 3.7% Smart Balance, Inc.+................. 93,100 610,736 Chiquita Brands International, Inc.+. 37,300 589,713 ---------- 1,200,449 ---------- Food-Wholesale/Distribution -- 3.0% Fresh Del Monte Produce, Inc.+....... 42,800 950,160 ---------- Gas-Distribution -- 2.0% AGL Resources, Inc................... 20,100 630,738 ---------- Home Decoration Products -- 0.9% Newell Rubbermaid, Inc............... 16,400 283,064 ----------
Market Value Security Description Shares (Note 3) --------------------------------------------------------------- Hospital Beds/Equipment -- 2.3% Kinetic Concepts, Inc.+................... 25,900 $ 740,481 ----------- Internet Infrastructure Software -- 0.4% Akamai Technologies, Inc.+................ 7,300 127,312 ----------- Investment Management/Advisor Services -- 2.4% Affiliated Managers Group, Inc.+.......... 4,600 381,110 Invesco, Ltd.............................. 18,600 390,228 ----------- 771,338 ----------- Linen Supply & Related Items -- 0.3% G&K Services, Inc., Class A............... 2,992 98,886 ----------- Medical-Generic Drugs -- 2.4% Mylan, Inc.+.............................. 66,600 760,572 ----------- Medical-Hospitals -- 0.9% Community Health Systems, Inc.+........... 9,400 275,514 ----------- Medical-Outpatient/Home Medical -- 0.5% Air Methods Corp.+........................ 6,200 175,522 ----------- Medical-Wholesale Drug Distribution -- 1.0% AmerisourceBergen Corp.................... 8,900 335,085 ----------- Oil Companies-Exploration & Production -- 1.2% Plains Exploration & Production Co.+...... 11,000 386,760 ----------- Poultry -- 0.9% Sanderson Farms, Inc...................... 7,900 290,246 ----------- Private Corrections -- 1.1% Corrections Corp. of America+............. 14,300 355,355 ----------- Racetracks -- 0.5% International Speedway Corp., Class A..... 4,200 163,422 ----------- Retail-Apparel/Shoe -- 1.9% Abercrombie & Fitch Co., Class A.......... 8,300 327,435 Hanesbrands, Inc.+........................ 13,200 287,100 ----------- 614,535 ----------- Retail-Discount -- 0.9% HSN, Inc.+................................ 25,600 281,856 ----------- Retail-Petroleum Products -- 0.8% World Fuel Services Corp.................. 10,700 246,421 ----------- Semiconductor Components-Integrated Circuits -- 1.1% Linear Technology Corp..................... 11,700 358,722 ----------- Telecom Services -- 1.1% Amdocs, Ltd.+.............................. 13,400 366,892 ----------- Telecommunication Equipment -- 3.9% Harris Corp................................ 27,300 1,261,260 ----------- Veterinary Diagnostics -- 1.6% Animal Health International, Inc.+......... 15,489 127,629 VCA Antech, Inc.+.......................... 13,600 400,792 ----------- 528,421 ----------- X-Ray Equipment -- 3.9% Hologic, Inc.+............................. 64,400 1,244,852 ----------- Total Long-Term Investment Securities (cost $26,010,668)........................ 24,421,823 -----------
28 SunAmerica Growth Opportunities Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008 -- (continued)
Market Principal Value Security Description Amount (Note 3) --------------------------------------------------------------- REPURCHASE AGREEMENTS(1) -- 24.6% State Street Bank & Trust Co. Joint Repurchase Agreement......... $7,000,000 $ 7,000,000 UBS Securities, LLC Joint Repurchase Agreement......... 923,000 923,000 ----------- Total Repurchase Agreements (cost $7,923,000).................. 7,923,000 ----------- TOTAL INVESTMENTS -- (cost $33,933,668)(2).............. 100.5% 32,344,823 Liabilities in excess of other assets. (0.5) (175,733) ---------- ----------- NET ASSETS -- 100.0% $32,169,090 ========== ===========
-------- + Non-income producing security (1) See Note 3 for details of Joint Repurchase Agreements. (2) See Note 7 for cost of investment on a tax basis. See Notes to Financial Statements 29 SunAmerica New Century Fund PORTFOLIO PROFILE -- September 30, 2008 -- (unaudited) Industry Allocation* Repurchase Agreement....................... 11.8% Commercial Services-Finance................ 5.5 Building-Residential/Commercial............ 4.6 Finance-Investment Banker/Broker........... 3.9 Distribution/Wholesale..................... 3.8 Footwear & Related Apparel................. 3.3 Food-Misc.................................. 2.9 Banks-Super Regional....................... 2.7 Medical Instruments........................ 2.6 Retail-Apparel/Shoe........................ 2.6 Telecommunication Equipment................ 2.2 Networking Products........................ 2.2 Computers.................................. 2.2 Medical Products........................... 2.1 Commercial Services........................ 2.1 Diversified Operations/Commercial Services. 2.1 Health Care Cost Containment............... 2.1 Oil Companies-Exploration & Production..... 2.1 Data Processing/Management................. 2.0 Investment Management/Advisor Services..... 2.0 Mining..................................... 1.9 Applications Software...................... 1.9 Telecom Services........................... 1.5 Food-Canned................................ 1.3 Appliances................................. 1.3 X-Ray Equipment............................ 1.2 Computers-Periphery Equipment.............. 1.1 Beverages-Non-alcoholic.................... 1.1 Enterprise Software/Service................ 1.1 Retirement/Aged Care....................... 1.1 Computer Aided Design...................... 1.1 Medical-Generic Drugs...................... 1.1 Oil Field Machinery & Equipment............ 1.0 Medical-Drugs.............................. 1.0 Rental Auto/Equipment...................... 1.0 E-Marketing/Info........................... 1.0 Food-Meat Products......................... 0.9 Food-Wholesale/Distribution................ 0.8 Real Estate Operations & Development....... 0.5 Casino Services............................ 0.3 Dental Supplies & Equipment................ 0.2 ---- 87.2% ====
-------- * Calculated as a percentage of net assets 30 SunAmerica New Century Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008
Market Value Security Description Shares (Note 3) ------------------------------------------------------------ COMMON STOCK -- 75.4% Appliances -- 1.3% Whirlpool Corp......................... 8,000 $ 634,320 ---------- Applications Software -- 1.9% Check Point Software Technologies+..... 16,200 368,388 Microsoft Corp......................... 20,800 555,152 ---------- 923,540 ---------- Banks-Super Regional -- 2.7% Bank of America Corp................... 37,300 1,305,500 ---------- Beverages-Non-alcoholic -- 1.1% Hansen Natural Corp.+.................. 17,600 532,400 ---------- Building-Residential/Commercial -- 4.6% KB Home................................ 26,500 521,520 Ryland Group, Inc...................... 19,500 517,140 Standard-Pacific Corp.................. 233,232 1,145,169 ---------- 2,183,829 ---------- Casino Services -- 0.3% Scientific Games Corp., Class A+....... 6,900 158,838 ---------- Commercial Services -- 2.1% Iron Mountain, Inc.+................... 40,900 998,369 ---------- Commercial Services-Finance -- 5.5% Euronet Worldwide, Inc.+............... 94,600 1,582,658 Global Payments, Inc................... 11,300 506,918 Heartland Payment Systems, Inc......... 21,900 559,764 ---------- 2,649,340 ---------- Computer Aided Design -- 1.1% Aspen Technology, Inc.+................ 40,100 509,270 ---------- Computers -- 2.2% Hewlett-Packard Co..................... 22,300 1,031,152 ---------- Computers-Periphery Equipment -- 1.1% Synaptics, Inc......................... 17,650 533,383 ---------- Containers-Paper/Plastic -- 0.0% Temple-Inland, Inc..................... 79 1,205 ---------- Data Processing/Management -- 2.0% Fiserv, Inc.+.......................... 20,100 951,132 ---------- Dental Supplies & Equipment -- 0.2% Sirona Dental Systems, Inc.+........... 2,952 68,722 ---------- Distribution/Wholesale -- 3.8% Beacon Roofing Supply, Inc.+........... 50,100 782,562 Pool Corp.............................. 44,245 1,032,236 ---------- 1,814,798 ---------- Diversified Operations/Commercial Services -- 2.1% Chemed Corp............................. 24,300 997,758 ---------- E-Marketing/Info -- 1.0% Constant Contact, Inc.+................. 26,966 460,310 ---------- Enterprise Software/Service -- 1.1% Oracle Corp.+........................... 26,000 528,060 ---------- Finance-Investment Banker/Broker -- 3.9% Citigroup, Inc.......................... 45,300 929,103 Investment Technology Group, Inc.+...... 9,700 295,171
Market Value Security Description Shares (Note 3) ------------------------------------------------------------------ Finance-Investment Banker/Broker (continued) JPMorgan Chase & Co.......................... 14,100 $ 658,470 ---------- 1,882,744 ---------- Food-Canned -- 1.3% Treehouse Foods, Inc.+....................... 21,400 635,580 ---------- Food-Meat Products -- 0.9% Hormel Foods Corp............................ 12,350 448,058 ---------- Food-Misc. -- 2.9% Cal-Maine Foods, Inc......................... 30,207 828,880 Chiquita Brands International, Inc.+......... 35,500 561,255 ---------- 1,390,135 ---------- Food-Wholesale/Distribution -- 0.8% Fresh Del Monte Produce, Inc.+............... 16,278 361,372 ---------- Footwear & Related Apparel -- 3.3% Iconix Brand Group, Inc.+.................... 121,900 1,594,452 ---------- Health Care Cost Containment -- 2.1% McKesson Corp................................ 18,300 984,723 ---------- Investment Management/Advisor Services -- 2.0% Invesco, Ltd................................. 45,300 950,394 ---------- Medical Instruments -- 2.6% Beckman Coulter, Inc......................... 17,800 1,263,622 ---------- Medical Products -- 2.1% Becton Dickinson & Co........................ 12,700 1,019,302 ---------- Medical-Drugs -- 1.0% AstraZeneca PLC ADR.......................... 10,900 478,292 ---------- Medical-Generic Drugs -- 1.1% Mylan, Inc.+................................. 44,300 505,906 ---------- Mining -- 1.9% Agnico-Eagle Mines, Ltd...................... 16,800 925,176 ---------- Networking Products -- 2.2% Cisco Systems, Inc.+......................... 46,400 1,046,784 ---------- Oil Companies-Exploration & Production -- 2.1% McMoRan Exploration Co.+..................... 41,400 978,696 ---------- Oil Field Machinery & Equipment -- 1.0% FMC Technologies, Inc.+...................... 10,400 484,120 ---------- Real Estate Operations & Development -- 0.5% The St. Joe Co.+............................. 6,000 234,540 ---------- Rental Auto/Equipment -- 1.0% Rent-A-Center, Inc.+......................... 21,300 474,564 ---------- Retail-Apparel/Shoe -- 2.6% Tween Brands, Inc.+.......................... 127,700 1,250,183 ---------- Retirement/Aged Care -- 1.1% Brookdale Senior Living, Inc................. 23,500 516,765 ---------- Telecom Services -- 1.5% Amdocs, Ltd.+................................ 26,300 720,094 ---------- Telecommunication Equipment -- 2.2% Harris Corp.................................. 23,100 1,067,220 ----------
31 SunAmerica New Century Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008 -- (continued)
Shares/ Market Principal Value Security Description Amount (Note 3) -------------------------------------------------------------- COMMON STOCK (continued) X-Ray Equipment -- 1.2% Hologic, Inc.+...................... 28,800 $ 556,704 ----------- Total Long-Term Investment Securities (cost $37,615,971)................. 36,051,352 ----------- REPURCHASE AGREEMENT -- 11.8% State Street Bank & Trust Co. Joint Repurchase Agreement(1) (cost $5,662,000).................. $5,662,000 5,662,000 ----------- TOTAL INVESTMENTS -- (cost $43,277,971)(2).............. 87.2% 41,713,352 Other assets less liabilities......... 12.8 6,101,358 ---------- ----------- NET ASSETS -- 100.0% $47,814,710 ========== ===========
-------- + Non-income producing security (1) See Note 3 for details of Joint Repurchasement Agreement. (2) See Note 7 for cost of investments on a tax basis. ADR --American Depository Receipt See Notes to Financial Statements 32 SunAmerica Growth and Income Fund PORTFOLIO PROFILE -- September 30, 2008 -- (unaudited) Industry Allocation* Oil Companies-Integrated............... 10.1% Repurchase Agreement................... 5.9 Medical-Drugs.......................... 5.7 Diversified Manufacturing Operations... 5.5 Banks-Super Regional................... 4.8 Electric-Integrated.................... 4.5 Finance-Investment Banker/Broker....... 4.4 Telephone-Integrated................... 4.0 Multimedia............................. 3.1 Investment Management/Advisor Services. 3.0 Tobacco................................ 2.9 Retail-Apparel/Shoe.................... 2.8 Applications Software.................. 2.2 Electronic Components-Semiconductors... 2.1 Medical Products....................... 2.0 Medical-HMO............................ 1.9 Networking Products.................... 1.8 Cosmetics & Toiletries................. 1.8 Beverages-Non-alcoholic................ 1.7 Aerospace/Defense-Equipment............ 1.6 Paper & Related Products............... 1.6 Health Care Cost Containment........... 1.5 Vitamins & Nutrition Products.......... 1.5 Telecommunication Equipment............ 1.5 Non-Hazardous Waste Disposal........... 1.5 Retail-Drug Store...................... 1.5 Chemicals-Diversified.................. 1.5 Finance-Credit Card.................... 1.5 Food-Misc.............................. 1.4 Aerospace/Defense...................... 1.4 Oil-Field Services..................... 1.4 Retail-Discount........................ 1.3 Electronic Components-Misc............. 1.3 Wireless Equipment..................... 1.2 Enterprise Software/Service............ 1.2 Computers.............................. 1.1 Retail-Restaurants..................... 1.0 Oil Companies-Exploration & Production. 1.0 Metal-Diversified...................... 1.0 Medical Instruments.................... 1.0 Computer Services...................... 0.9 Web Portals/ISP........................ 0.9 Telecom Equipment-Fiber Optics......... 0.9 ----- 100.9% =====
-------- * Calculated as a percentage of net assets 33 SunAmerica Growth and Income Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008
Market Value Security Description Shares (Note 3) --------------------------------------------------------------- COMMON STOCK -- 95.0% Aerospace/Defense -- 1.4% General Dynamics Corp...................... 13,600 $1,001,232 ---------- Aerospace/Defense-Equipment -- 1.6% United Technologies Corp................... 19,200 1,153,152 ---------- Applications Software -- 2.2% Microsoft Corp............................. 60,300 1,609,407 ---------- Banks-Super Regional -- 4.8% Bank of America Corp....................... 66,100 2,313,500 US Bancorp................................. 32,900 1,185,058 ---------- 3,498,558 ---------- Beverages-Non-alcoholic -- 1.7% PepsiCo, Inc............................... 17,700 1,261,479 ---------- Chemicals-Diversified -- 1.5% E.I. du Pont de Nemours & Co............... 26,400 1,063,920 ---------- Computer Services -- 0.9% Computer Sciences Corp.+................... 16,600 667,154 ---------- Computers -- 1.1% Hewlett-Packard Co......................... 17,200 795,328 ---------- Cosmetics & Toiletries -- 1.8% Procter & Gamble Co........................ 18,400 1,282,296 ---------- Diversified Manufacturing Operations -- 5.5% General Electric Co........................ 83,500 2,129,250 Honeywell International, Inc............... 22,900 951,495 Textron, Inc............................... 31,400 919,392 ---------- 4,000,137 ---------- Electric-Integrated -- 4.5% FPL Group, Inc............................. 13,600 684,080 PG&E Corp.................................. 20,100 752,745 Southern Co................................ 25,300 953,557 Xcel Energy, Inc........................... 43,500 869,565 ---------- 3,259,947 ---------- Electronic Components-Misc. -- 1.3% Tyco Electronics, Ltd...................... 34,700 959,802 ---------- Electronic Components-Semiconductors -- 2.1% Intel Corp................................. 41,000 767,930 MEMC Electronic Materials, Inc.+........... 25,600 723,456 ---------- 1,491,386 ---------- Enterprise Software/Service -- 1.2% Oracle Corp.+.............................. 41,900 850,989 ---------- Finance-Credit Card -- 1.5% American Express Co........................ 30,000 1,062,900 ---------- Finance-Investment Banker/Broker -- 4.4% Citigroup, Inc............................. 57,500 1,179,325 JPMorgan Chase & Co........................ 43,500 2,031,450 ---------- 3,210,775 ---------- Food-Misc. -- 1.4% Kraft Foods, Inc., Class A................. 32,000 1,048,000 ----------
Market Value Security Description Shares (Note 3) ----------------------------------------------------------------- Health Care Cost Containment -- 1.5% McKesson Corp................................ 20,900 $1,124,629 ---------- Investment Management/Advisor Services -- 3.0% Ameriprise Financial, Inc.................... 29,700 1,134,540 Invesco, Ltd................................. 50,300 1,055,294 ---------- 2,189,834 ---------- Medical Instruments -- 1.0% Medtronic, Inc............................... 14,400 721,440 ---------- Medical Products -- 2.0% Johnson & Johnson............................ 21,100 1,461,808 ---------- Medical-Drugs -- 5.7% Abbott Laboratories.......................... 13,600 783,088 Eli Lilly & Co............................... 15,600 686,868 Merck & Co., Inc............................. 24,400 770,064 Pfizer, Inc.................................. 62,050 1,144,202 Wyeth........................................ 20,600 760,964 ---------- 4,145,186 ---------- Medical-HMO -- 1.9% Aetna, Inc................................... 20,200 729,422 UnitedHealth Group, Inc...................... 27,100 688,069 ---------- 1,417,491 ---------- Metal-Diversified -- 1.0% Freeport-McMoRan Copper & Gold, Inc.......... 12,700 721,995 ---------- Multimedia -- 3.1% The Walt Disney Co........................... 34,300 1,052,667 Time Warner, Inc............................. 92,700 1,215,297 ---------- 2,267,964 ---------- Networking Products -- 1.8% Cisco Systems, Inc.+......................... 57,500 1,297,200 ---------- Non-Hazardous Waste Disposal -- 1.5% Waste Management, Inc........................ 34,900 1,099,001 ---------- Oil Companies-Exploration & Production -- 1.0% XTO Energy, Inc.............................. 16,100 748,972 ---------- Oil Companies-Integrated -- 10.1% Chevron Corp................................. 21,800 1,798,064 ConocoPhillips............................... 24,800 1,816,600 Exxon Mobil Corp............................. 25,000 1,941,500 Marathon Oil Corp............................ 45,800 1,826,046 ---------- 7,382,210 ---------- Oil-Field Services -- 1.4% Schlumberger, Ltd............................ 12,800 999,552 ---------- Paper & Related Products -- 1.6% International Paper Co....................... 43,100 1,128,358 ---------- Retail-Apparel/Shoe -- 2.8% American Eagle Outfitters, Inc............... 70,300 1,072,075 Limited Brands, Inc.......................... 55,700 964,724 ---------- 2,036,799 ----------
34 SunAmerica Growth and Income Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008 -- (continued)
Shares/ Market Principal Value Security Description Amount (Note 3) ---------------------------------------------------------------- COMMON STOCK (continued) Retail-Discount -- 1.3% Target Corp.......................... 19,800 $ 971,190 ----------- Retail-Drug Store -- 1.5% CVS Caremark Corp.................... 32,600 1,097,316 ----------- Retail-Restaurants -- 1.0% McDonald's Corp...................... 12,300 758,910 ----------- Telecom Equipment-Fiber Optics -- 0.9% Corning, Inc......................... 40,300 630,292 ----------- Telecommunication Equipment -- 1.5% Harris Corp.......................... 24,000 1,108,800 ----------- Telephone-Integrated -- 4.0% AT&T, Inc............................ 64,000 1,786,880 Verizon Communications, Inc.......... 35,400 1,135,986 ----------- 2,922,866 ----------- Tobacco -- 2.9% Altria Group, Inc.................... 41,500 823,360 Philip Morris International, Inc..... 26,600 1,279,460 ----------- 2,102,820 ----------- Vitamins & Nutrition Products -- 1.5% NBTY, Inc.+.......................... 37,700 1,112,904 ----------- Web Portals/ISP -- 0.9% Google, Inc., Class A+............... 1,600 640,832 ----------- Wireless Equipment -- 1.2% QUALCOMM, Inc........................ 20,500 880,885 ----------- Total Long-Term Investment Securities (cost $76,599,281).................. 69,185,716 ----------- REPURCHASE AGREEMENT -- 5.9% State Street Bank & Trust Co. Joint Repurchase Agreement(1) (cost $4,283,000)................... $4,283,000 4,283,000 ----------- TOTAL INVESTMENTS -- (cost $80,882,281)(2)............... 100.9% 73,468,716 Liabilities in excess of other assets.. (0.9) (642,674) ---------- ----------- NET ASSETS -- 100.0% $72,826,042 ========== ===========
-------- + Non-income producing security (1)See Note 3 for details of Joint Repurchase Agreement. (2)See Note 7 for cost of investments on a tax basis. See Notes to Financial Statements 35 SunAmerica Balanced Assets Fund PORTFOLIO PROFILE -- September 30, 2008 -- (unaudited) Industry Allocation* Federal Home Loan Mtg. Corp............ 7.5% Oil Companies-Integrated............... 4.4 Federal National Mtg. Assoc............ 4.1 Electric-Integrated.................... 3.8 Finance-Investment Banker/Broker....... 3.8 Repurchase Agreements.................. 3.7 Diversified Financial Services......... 3.7 Banks-Super Regional................... 3.2 Diversified Manufacturing Operations... 3.0 Medical-Drugs.......................... 2.6 United States Treasury Notes........... 2.6 Telephone-Integrated................... 2.4 Oil Companies-Exploration & Production. 2.4 Computers.............................. 2.3 Medical Products....................... 2.1 Medical-Biomedical/Gene................ 2.0 Multimedia............................. 1.8 Cosmetics & Toiletries................. 1.6 Applications Software.................. 1.6 Retail-Drug Store...................... 1.4 Beverages-Non-alcoholic................ 1.4 Aerospace/Defense...................... 1.3 Electronic Components-Semiconductors... 1.2 Special Purpose Entities............... 1.1 Retail-Discount........................ 1.1 Medical-HMO............................ 1.1 Investment Management/Advisor Services. 1.1 Oil-Field Services..................... 1.0 Insurance-Multi-line................... 1.0 Aerospace/Defense-Equipment............ 1.0 Networking Products.................... 0.9 Web Portals/ISP........................ 0.9 Agricultural Chemicals................. 0.9 Wireless Equipment..................... 0.8 Government National Mtg. Assoc......... 0.8 Banks-Commercial....................... 0.7 Electric Products-Misc................. 0.7 Retail-Apparel/Shoe.................... 0.7 Insurance-Property/Casualty............ 0.6 Sovereign.............................. 0.6 Instruments-Scientific................. 0.6 Commercial Services-Finance............ 0.6 Enterprise Software/Service............ 0.6 Medical Instruments.................... 0.6 Medical-Generic Drugs.................. 0.6 Chemicals-Diversified.................. 0.6 Paper & Related Products............... 0.5 Consumer Products-Misc................. 0.5 Non-Hazardous Waste Disposal........... 0.5 Telecommunication Equipment............ 0.5 Cellular Telecom....................... 0.5 Pipelines.............................. 0.5 Agricultural Operations................ 0.5 Banks-Fiduciary........................ 0.4 Finance-Credit Card.................... 0.4 Electronic Measurement Instruments..... 0.4 Electronic Forms....................... 0.4 Metal-Diversified...................... 0.4 Telecom Services....................... 0.4 Oil & Gas Drilling..................... 0.4 Tobacco................................ 0.4 Retail-Office Supplies................. 0.4
Data Processing/Management............ 0.4% Electronics-Military.................. 0.4 Insurance-Life/Health................. 0.4 United States Treasury Bonds.......... 0.4 X-Ray Equipment....................... 0.3 Transport-Air Freight................. 0.3 Savings & Loans/Thrifts............... 0.3 Oil Field Machinery & Equipment....... 0.3 Telecom Equipment-Fiber Optics........ 0.3 Finance-Other Services................ 0.3 Steel-Producers....................... 0.2 Electric-Generation................... 0.2 Medical-Wholesale Drug Distribution... 0.2 Medical-Hospitals..................... 0.2 Office Automation & Equipment......... 0.2 Retail-Consumer Electronics........... 0.2 Transport-Rail........................ 0.2 E-Commerce/Services................... 0.2 Food-Misc............................. 0.2 Cable TV.............................. 0.2 Diversified Minerals.................. 0.2 Oil Refining & Marketing.............. 0.2 Computer Aided Design................. 0.2 Retail-Regional Department Stores..... 0.2 Banks-Money Center.................... 0.2 Broadcast Services/Program............ 0.2 Internet Infrastructure Software...... 0.2 Real Estate Operations & Development.. 0.1 Insurance-Reinsurance................. 0.1 Real Estate Investment Trusts......... 0.1 Finance-Commercial.................... 0.1 Diversified Operations................ 0.1 Beverages-Wine/Spirits................ 0.1 Containers-Paper/Plastic.............. 0.1 Insurance Brokers..................... 0.1 Casino Hotels......................... 0.1 Chemicals-Specialty................... 0.1 Computer Services..................... 0.1 Coal.................................. 0.1 Metal-Aluminum........................ 0.1 Metal Processors & Fabrication........ 0.1 Airlines.............................. 0.1 Transport-Marine...................... 0.1 Finance-Auto Loans.................... 0.1 Television............................ 0.1 Food-Retail........................... 0.1 Independent Power Producers........... 0.1 Diagnostic Kits....................... 0.1 Brewery............................... 0.1 Transport-Services.................... 0.1 Auto-Cars/Light Trucks................ 0.1 Finance-Mortgage Loan/Banker.......... 0.1 Cruise Lines.......................... 0.1 Water................................. 0.1 Satellite Telecom..................... 0.1 Physicians Practice Management........ 0.1 Auto/Truck Parts & Equipment-Original. 0.1 ---- 99.4% ====
-------- * Calculated as a percentage of net assets 36 SunAmerica Balanced Assets Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008
Market Value Security Description Shares (Note 3) ---------------------------------------------------------- COMMON STOCK -- 60.7% Aerospace/Defense -- 1.3% Boeing Co............................. 5,200 $ 298,220 General Dynamics Corp................. 6,200 456,444 Lockheed Martin Corp.................. 3,100 339,977 Raytheon Co........................... 7,400 395,974 ---------- 1,490,615 ---------- Aerospace/Defense-Equipment -- 0.9% United Technologies Corp.............. 15,900 954,954 ---------- Agricultural Chemicals -- 0.7% Monsanto Co........................... 8,300 821,534 ---------- Agricultural Operations -- 0.4% Archer-Daniels-Midland Co............. 22,800 499,548 ---------- Applications Software -- 1.5% Microsoft Corp........................ 64,478 1,720,918 ---------- Banks-Fiduciary -- 0.3% The Bank of New York Mellon Corp...... 11,847 385,975 ---------- Banks-Super Regional -- 2.9% Bank of America Corp.................. 41,488 1,452,080 US Bancorp............................ 21,700 781,634 Wells Fargo & Co...................... 24,900 934,497 ---------- 3,168,211 ---------- Beverages-Non-alcoholic -- 1.4% PepsiCo, Inc.......................... 21,300 1,518,051 ---------- Cellular Telecom -- 0.3% NII Holdings, Inc.+................... 8,900 337,488 ---------- Chemicals-Diversified -- 0.4% E.I. du Pont de Nemours & Co.......... 11,700 471,510 ---------- Coal -- 0.1% Peabody Energy Corp................... 2,400 108,000 ---------- Commercial Services-Finance -- 0.4% Visa, Inc., Class A................... 7,950 488,051 ---------- Computer Aided Design -- 0.2% Autodesk, Inc.+....................... 5,844 196,066 ---------- Computers -- 2.3% Apple, Inc.+.......................... 6,600 750,156 Hewlett-Packard Co.................... 22,000 1,017,280 International Business Machines Corp.. 3,800 444,448 Research In Motion, Ltd.+............. 4,300 293,690 ---------- 2,505,574 ---------- Consumer Products-Misc. -- 0.5% Kimberly-Clark Corp................... 9,100 590,044 ---------- Cosmetics & Toiletries -- 1.6% Procter & Gamble Co................... 25,400 1,770,126 ---------- Data Processing/Management -- 0.4% Fiserv, Inc.+......................... 9,000 425,880 ---------- Diagnostic Kits -- 0.1% Inverness Medical Innovations, Inc.+.. 2,601 78,030 ----------
Market Value Security Description Shares (Note 3) --------------------------------------------------------------- Diversified Manufacturing Operations -- 2.8% Danaher Corp............................... 9,900 $ 687,060 Dover Corp................................. 8,590 348,325 Eaton Corp................................. 6,000 337,080 General Electric Co........................ 51,300 1,308,150 Honeywell International, Inc............... 10,400 432,120 ---------- 3,112,735 ---------- Diversified Minerals -- 0.2% Cia Vale do Rio Doce ADR................... 11,100 212,565 ---------- E-Commerce/Services -- 0.2% eBay, Inc.+................................ 9,900 221,562 ---------- Electric Products-Misc. -- 0.7% AMETEK, Inc................................ 8,734 356,085 Emerson Electric Co........................ 9,700 395,663 ---------- 751,748 ---------- Electric-Integrated -- 2.0% FPL Group, Inc............................. 9,700 487,910 PG&E Corp.................................. 13,700 513,065 Southern Co................................ 17,300 652,037 Xcel Energy, Inc........................... 30,100 601,699 ---------- 2,254,711 ---------- Electronic Components-Semiconductors -- 1.1% Broadcom Corp., Class A+................... 4,700 87,561 Intel Corp................................. 39,100 732,343 MEMC Electronic Materials, Inc.+........... 4,800 135,648 Texas Instruments, Inc..................... 11,900 255,850 ---------- 1,211,402 ---------- Electronic Forms -- 0.4% Adobe Systems, Inc.+....................... 11,900 469,693 ---------- Electronic Measurement Instruments -- 0.4% Agilent Technologies, Inc.+................ 13,700 406,342 ---------- Electronics-Military -- 0.4% L-3 Communications Holdings, Inc........... 4,000 393,280 ---------- Enterprise Software/Service -- 0.6% Oracle Corp.+.............................. 31,700 643,827 ---------- Finance-Credit Card -- 0.4% American Express Co........................ 12,500 442,875 ---------- Finance-Investment Banker/Broker -- 3.2% Citigroup, Inc............................. 53,988 1,107,294 JPMorgan Chase & Co........................ 31,700 1,480,390 The Charles Schwab Corp.................... 20,400 530,400 The Goldman Sachs Group, Inc............... 3,200 409,600 ---------- 3,527,684 ---------- Finance-Other Services -- 0.2% CME Group, Inc............................. 675 250,769 ---------- Independent Power Producers -- 0.0% Mirant Corp.+.............................. 186 3,402 ---------- Instruments-Scientific -- 0.6% Thermo Fisher Scientific, Inc.+............ 12,600 693,000 ----------
37 SunAmerica Balanced Assets Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008 -- (continued)
Market Value Security Description Shares (Note 3) ----------------------------------------------------------------- COMMON STOCK (continued) Insurance-Multi-line -- 0.8% Assurant, Inc................................ 6,300 $ 346,500 MetLife, Inc................................. 9,500 532,000 ---------- 878,500 ---------- Insurance-Property/Casualty -- 0.6% Chubb Corp................................... 11,300 620,370 ---------- Internet Infrastructure Software -- 0.1% Akamai Technologies, Inc.+................... 9,800 170,912 ---------- Investment Management/Advisor Services -- 1.0% Ameriprise Financial, Inc.................... 12,000 458,400 Invesco, Ltd................................. 31,500 660,870 ---------- 1,119,270 ---------- Medical Instruments -- 0.6% Medtronic, Inc............................... 12,600 631,260 ---------- Medical Products -- 2.0% Johnson & Johnson............................ 25,500 1,766,640 Zimmer Holdings, Inc.+....................... 6,750 435,780 ---------- 2,202,420 ---------- Medical-Biomedical/Gene -- 2.0% Amgen, Inc.+................................. 2,100 124,467 Celgene Corp.+............................... 6,900 436,632 Genentech, Inc.+............................. 5,200 461,136 Genzyme Corp.+............................... 7,200 582,408 Gilead Sciences, Inc.+....................... 14,400 656,352 ---------- 2,260,995 ---------- Medical-Drugs -- 2.3% Abbott Laboratories.......................... 13,000 748,540 Eli Lilly & Co............................... 6,800 299,404 Merck & Co., Inc............................. 10,800 340,848 Pfizer, Inc.................................. 41,714 769,206 Wyeth........................................ 9,200 339,848 ---------- 2,497,846 ---------- Medical-Generic Drugs -- 0.6% Barr Pharmaceuticals, Inc.+.................. 4,800 313,440 Mylan, Inc.+................................. 26,900 307,198 ---------- 620,638 ---------- Medical-HMO -- 0.9% Aetna, Inc................................... 9,200 332,212 UnitedHealth Group, Inc...................... 27,200 690,608 ---------- 1,022,820 ---------- Medical-Wholesale Drug Distribution -- 0.2% Cardinal Health, Inc......................... 4,200 206,976 ---------- Metal-Diversified -- 0.4% Freeport-McMoRan Copper & Gold, Inc.......... 8,200 466,170 ---------- Multimedia -- 1.4% News Corp., Class A.......................... 15,914 190,809 The Walt Disney Co........................... 17,400 534,006 Time Warner, Inc............................. 61,700 808,887 ---------- 1,533,702 ----------
Market Value Security Description Shares (Note 3) ----------------------------------------------------------------- Networking Products -- 0.9% Cisco Systems, Inc.+......................... 45,300 $1,021,968 ---------- Non-Hazardous Waste Disposal -- 0.5% Waste Management, Inc........................ 16,000 503,840 ---------- Oil & Gas Drilling -- 0.4% Transocean, Inc.+............................ 4,183 459,461 ---------- Oil Companies-Exploration & Production -- 2.0% Apache Corp.................................. 6,150 641,322 Devon Energy Corp............................ 1,950 177,840 Occidental Petroleum Corp.................... 6,500 457,925 Ultra Petroleum Corp.+....................... 2,500 138,350 XTO Energy, Inc.............................. 18,400 855,968 ---------- 2,271,405 ---------- Oil Companies-Integrated -- 4.3% Chevron Corp................................. 13,328 1,099,293 ConocoPhillips............................... 13,300 974,225 Exxon Mobil Corp............................. 24,500 1,902,670 Marathon Oil Corp............................ 19,400 773,478 ---------- 4,749,666 ---------- Oil Field Machinery & Equipment -- 0.3% Cameron International Corp.+................. 4,400 169,576 National-Oilwell Varco, Inc.+................ 2,700 135,621 ---------- 305,197 ---------- Oil-Field Services -- 1.0% Halliburton Co............................... 7,300 236,447 Schlumberger, Ltd............................ 8,900 695,001 Weatherford International, Ltd.+............. 5,000 125,700 ---------- 1,057,148 ---------- Paper & Related Products -- 0.5% International Paper Co....................... 19,800 518,364 ---------- Retail-Apparel/Shoe -- 0.7% American Eagle Outfitters, Inc............... 48,300 736,575 ---------- Retail-Consumer Electronics -- 0.2% Best Buy Co., Inc............................ 6,400 240,000 ---------- Retail-Discount -- 1.1% Target Corp.................................. 15,500 760,275 Wal-Mart Stores, Inc......................... 7,000 419,230 ---------- 1,179,505 ---------- Retail-Drug Store -- 1.4% CVS Caremark Corp............................ 45,261 1,523,485 ---------- Retail-Office Supplies -- 0.4% Staples, Inc................................. 19,700 443,250 ---------- Retail-Regional Department Stores -- 0.2% Kohl's Corp.+................................ 4,200 193,536 ---------- Telecom Equipment-Fiber Optics -- 0.3% Corning, Inc................................. 21,400 334,696 ---------- Telecommunication Equipment -- 0.5% Harris Corp.................................. 11,300 522,060 ----------
38 SunAmerica Balanced Assets Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008 -- (continued)
Shares/ Market Principal Value Security Description Amount (Note 3) ---------------------------------------------------------------------- COMMON STOCK (continued) Telephone-Integrated -- 1.8% AT&T, Inc...................................... 42,135 $ 1,176,409 Verizon Communications, Inc.................... 26,100 837,549 ----------- 2,013,958 ----------- Tobacco -- 0.4% Philip Morris International, Inc............... 9,500 456,950 ----------- Web Portals/ISP -- 0.9% Google, Inc., Class A+......................... 2,500 1,001,300 ----------- Wireless Equipment -- 0.8% QUALCOMM, Inc.................................. 21,050 904,519 ----------- X-Ray Equipment -- 0.3% Hologic, Inc.+................................. 19,100 369,203 ----------- Total Common Stock (cost $70,957,386)............................ 67,164,135 ----------- PREFERRED STOCK -- 0.4% Banks-Money Center -- 0.1% Santander Finance Preferred SA 4.00%(1)........ 8,400 67,368 ----------- Banks-Super Regional -- 0.0% Wachovia Capital Trust IX 6.38%................ 3,100 34,441 ----------- Diversified Financial Services -- 0.2% General Electric Capital Corp. 8.00%(2)........ 14,000 266,700 ----------- Federal Home Loan Mtg. Corp. -- 0.0% Federal Home Loan Mtg. Corp. 8.38%(1).......... 1,300 2,119 ----------- Special Purpose Entity -- 0.1% Structured Repackaged Asset-Backed Trust Securities 3.00%(1)........................... 9,200 126,868 ----------- Total Preferred Stock (cost $874,066)............................... 497,496 ----------- ASSET BACKED SECURITIES -- 3.3% Diversified Financial Services -- 3.3% Banc of America Commercial Mtg., Inc. Series 2006-6, Class AM 5.39% due 10/10/45(4)......................... $ 80,000 63,590 Banc of America Funding Corp. Series 2007-C, Class 5A1 5.39% due 05/20/36(3)(5)...................... 318,146 254,015 Banc of America Funding Corp. Series 2006-J, Class 2A1 5.89% due 01/20/47(3)(5)...................... 303,878 213,660 Bear Stearns Commercial Mtg. Securities, Inc. Series 2007-PW15, Class A2 5.21% due 02/11/44(4)......................... 165,000 156,731 Chase Mtg. Finance Corp. Series 2007-A2, Class 1A1 5.02% due 07/25/37(3)(5)...................... 228,503 208,397 Citigroup Commercial Mtg. Trust Series 2008-C7, Class AM 6.10% due 12/01/49(3)(4)...................... 12,000 9,535 Commercial Mtg. Asset Trust Series 1999-C1, Class D 7.35% due 01/17/32(3)(4)...................... 15,000 15,380 Commercial Mtg. Pass Through Certs. Series 2004-LB2A, Class A3 4.22% due 03/10/39(4)......................... 674,000 652,145
Market Principal Value Security Description Amount (Note 3) ------------------------------------------------------------------------ Diversified Financial Services (continued) GE Capital Commercial Mtg. Corp. Series 2004-C2, Class A4 4.89% due 03/10/40(4)............................ $ 55,000 $ 50,439 GMAC Commercial Mtg. Securities, Inc. Series 2003-C2, Class A2 5.67% due 05/10/40(3)(4)......................... 3,000 2,859 JP Morgan Chase Commercial Mtg. Securities Corp. Series 2006-LDP9, Class AM 5.37% due 05/15/47(4)............................ 334,000 263,718 JP Morgan Chase Commercial Mtg. Securities Corp. Series 2008-C2, Class AM 6.80% due 02/12/51(3)(4)......................... 271,000 221,770 LB Commercial Conduit Mtg. Trust Series 1998-C1, Class E 7.00% due 02/18/30(4)............................ 14,000 14,163 Ocwen Advance Receivables Backed Notes Series 2006-1A 5.34% due 11/24/15*(11).......................... 350,000 280,000 Providian Master Note Trust Series 2006-C1A, Class C1 3.04% due 03/16/15*(1)........................... 550,000 330,000 Swift Master Auto Receivables Trust Series 2007-2, Class A 3.14% due 10/15/12(1)............................ 439,937 404,603 Wells Fargo Mtg. Backed Securities Trust Series 2006-AR17, Class A2 5.83% due 10/25/36(1)(5)......................... 369,516 297,734 Wells Fargo Mtg. Backed Securities Trust Series 2006-AR12, Class 2A1 6.10% due 09/25/36(3)(5)......................... 189,163 157,763 ---------- Total Asset Backed Securities (cost $4,344,112)................................ 3,596,502 ---------- CORPORATE BONDS & NOTES -- 12.3% Aerospace/Defense-Equipment -- 0.1% United Technologies Corp. Senior Notes 4.88% due 05/01/15............................... 82,000 80,762 United Technologies Corp. Notes 6.13% due 07/15/38............................... 36,000 34,782 ---------- 115,544 ---------- Agricultural Chemicals -- 0.1% Monsanto Co. Company Guar. Bonds 5.88% due 04/15/38............................... 40,000 36,250 Mosaic Global Holdings, Inc. Debentures 7.38% due 08/01/18............................... 10,000 9,930 Terra Capital, Inc. Company Guar. Notes 7.00% due 02/01/17............................... 25,000 23,750 The Mosaic Co. Senior Notes 7.38% due 12/01/14*.............................. 45,000 46,587 ---------- 116,517 ----------
39 SunAmerica Balanced Assets Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008 -- (continued)
Market Principal Value Security Description Amount (Note 3) ----------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Airlines -- 0.1% American Airlines, Inc. Pass Through Certs. Series 2001-1, Class A-2 6.82% due 05/23/11......................... $ 70,000 $ 54,600 Northwest Airlines, Inc. Pass Through Certs. Series 2002-1, Class G2 6.26% due 11/20/21......................... 41,330 36,474 -------- 91,074 -------- Auto-Cars/Light Trucks -- 0.1% Ford Motor Co. Debentures 6.38% due 02/01/29......................... 60,000 22,200 General Motors Corp. Debentures 7.13% due 07/15/13......................... 93,000 42,780 -------- 64,980 -------- Auto/Truck Parts & Equipment-Original -- 0.1% Johnson Controls, Inc. Senior Notes 5.25% due 01/15/11......................... 52,000 52,598 -------- Banks-Commercial -- 0.5% CoBank ACB Senior Sub. Notes 7.88% due 04/16/18*........................ 16,000 15,408 Colonial Bank NA Sub. Notes 6.38% due 12/01/15......................... 70,000 52,169 Credit Suisse New York Senior Notes 5.00% due 05/15/13......................... 49,000 45,408 First Maryland Capital II Company Guar. Notes 3.65% due 02/01/27(1)...................... 196,000 129,116 KeyBank NA Sub. Notes 5.45% due 03/03/16......................... 54,000 31,332 KeyBank NA Sub. Notes 7.41% due 10/15/27......................... 16,000 13,163 SouthTrust Bank Sub. Notes 4.75% due 03/01/13......................... 99,000 73,882 SouthTrust Corp. Sub. Notes 5.80% due 06/15/14......................... 55,000 33,749 Sovereign Bank Sub. Notes 8.75% due 05/30/18......................... 52,000 35,544 Union Bank of California NA Sub. Notes 5.95% due 05/11/16......................... 120,000 108,530 -------- 538,301 -------- Banks-Fiduciary -- 0.1% State Street Capital Trust IV Company Guar. Notes 3.82% due 06/15/37(1)...................... 80,000 52,767
Market Principal Value Security Description Amount (Note 3) ------------------------------------------------------------ Banks-Fiduciary (continued) The Bank of New York Mellon Corp. Senior Notes 5.13% due 08/27/13..................... $48,000 $ 45,760 -------- 98,527 -------- Banks-Super Regional -- 0.3% Bank of America Corp. Senior Notes 4.90% due 05/01/13..................... 54,000 48,851 Bank of America Corp. Sub. Notes 7.25% due 10/15/25..................... 85,000 70,984 Capital One Financial Corp. Sub. Notes 6.15% due 09/01/16..................... 65,000 48,781 Huntington Capital Trust I Company Guar. Bonds 3.50% due 02/01/27(1).................. 60,000 23,667 PNC Preferred Funding Trust I Senior Notes 6.11% due 03/15/12*(6)................. 45,000 30,973 Wells Fargo & Co. Senior Notes 4.38% due 01/31/13..................... 26,000 23,900 Wells Fargo & Co. Senior Notes 5.25% due 10/23/12..................... 89,000 85,427 -------- 332,583 -------- Broadcast Services/Program -- 0.0% Nexstar Broadcasting, Inc. Senior Sub. Notes 7.00% due 01/15/14..................... 35,000 26,250 -------- Building-Residential/Commercial -- 0.0% D.R. Horton, Inc. Company Guar. Notes 5.00% due 01/15/09..................... 41,000 39,975 -------- Cable TV -- 0.2% CCH I LLC/CCH I Holdings Capital Corp. Company Guar. Notes 11.00% due 10/01/15.................... 28,000 18,200 CCH II LLC/CCH II Capital Corp. Company Guar. Notes 10.25% due 09/15/10.................... 64,000 57,600 CCH II LLC/CCH II Capital Corp. Company Guar. Notes, Series B 10.25% due 09/15/10.................... 11,000 9,845 Comcast Corp. Company Guar. Notes 5.85% due 11/15/15..................... 87,000 80,153 Comcast Corp. Notes 6.95% due 08/15/37..................... 34,000 29,001 COX Communications, Inc. Senior Bonds 6.95% due 06/01/38*.................... 23,000 20,461 -------- 215,260 --------
40 SunAmerica Balanced Assets Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008 -- (continued)
Market Principal Value Security Description Amount (Note 3) ------------------------------------------------------------ CORPORATE BONDS & NOTES (continued) Casino Hotels -- 0.1% MGM Mirage, Inc. Senior Notes 5.88% due 02/27/14..................... $ 95,000 $ 68,638 Turning Stone Resort Casino Enterprise Senior Notes 9.13% due 09/15/14*.................... 45,000 40,950 -------- 109,588 -------- Casino Services -- 0.0% Indianapolis Downs LLC & Capital Corp. Sec. Notes 11.00% due 11/01/12*................... 30,000 20,400 -------- Cellular Telecom -- 0.1% Centennial Communications Corp. Senior Notes 8.54% due 01/01/13(1).................. 50,000 45,500 Nextel Communications, Inc. Company Guar. Notes 5.95% due 03/15/14..................... 50,000 33,500 -------- 79,000 -------- Chemicals-Diversified -- 0.1% E.I. Du Pont de Nemours & Co. Senior Notes 4.88% due 04/30/14..................... 38,000 36,721 E.I. Du Pont de Nemours & Co. Senior Notes 6.00% due 07/15/18..................... 40,000 39,045 ICI Wilmington, Inc. Company Guar. Notes 5.63% due 12/01/13..................... 69,000 70,276 -------- 146,042 -------- Chemicals-Specialty -- 0.1% Huntsman International LLC Company Guar. Notes 7.88% due 11/15/14..................... 60,000 51,600 Momentive Performance Materials, Inc. Senior Sub. Notes 11.50% due 12/01/16.................... 85,000 57,800 -------- 109,400 -------- Commercial Services-Finance -- 0.2% The Western Union Co. Senior Notes 5.40% due 11/17/11..................... 161,000 162,425 -------- Computer Services -- 0.1% Compucom Systems, Inc. Senior Sub. Notes 12.50% due 10/01/15*................... 30,000 27,600 Electronic Data Systems Corp. Senior Notes 6.00% due 08/01/13..................... 80,000 81,567 -------- 109,167 --------
Market Principal Value Security Description Amount (Note 3) ------------------------------------------------------------------------ Computers -- 0.1% International Business Machines Corp. Senior Notes 5.70% due 09/14/17................................. $ 57,000 $ 55,215 -------- Containers-Paper/Plastic -- 0.1% Jefferson Smurfit Corp. Company Guar. Notes 8.25% due 10/01/12................................. 30,000 25,050 Smurfit-Stone Container Enterprises, Inc. Senior Notes 8.00% due 03/15/17................................. 125,000 97,500 -------- 122,550 -------- Cosmetics & Toiletries -- 0.0% Avon Products, Inc. Senior Notes 5.75% due 03/01/18................................. 19,000 18,097 -------- Direct Marketing -- 0.0% Affinity Group, Inc. Senior Sub. Notes 9.00% due 02/15/12................................. 45,000 33,300 -------- Diversified Financial Services -- 0.2% American Express Travel Related Services Co., Inc. Senior Notes 5.25% due 11/21/11*................................ 50,000 47,722 General Electric Capital Corp. Senior Notes 5.65% due 06/09/14................................. 80,000 75,560 General Electric Capital Corp. Senior Notes 5.88% due 01/14/38................................. 124,000 91,419 -------- 214,701 -------- Diversified Manufacturing Operations -- 0.1% Cooper U.S., Inc. Senior Notes 5.45% due 04/01/15................................. 41,000 41,435 General Electric Co. Senior Notes 5.25% due 12/06/17................................. 77,000 67,378 -------- 108,813 -------- Diversified Operations -- 0.0% Capmark Financial Group, Inc. Company Guar. Notes 5.88% due 05/10/12................................. 31,000 15,453 -------- Electric-Generation -- 0.2% Bruce Mansfield Unit 1 Pass Through Certs. 6.85% due 06/01/34................................. 110,000 114,417 The AES Corp. Senior Notes 8.00% due 10/15/17................................. 60,000 54,150 The AES Corp. Senior Notes 8.88% due 02/15/11................................. 85,000 83,725 -------- 252,292 --------
41 SunAmerica Balanced Assets Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008 -- (continued)
Market Principal Value Security Description Amount (Note 3) ------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Electric-Integrated -- 1.7% Baltimore Gas & Electric Co. Senior Notes 6.13% due 07/01/13................ $ 58,000 $ 57,289 Centerpoint Energy, Inc. Senior Notes 6.50% due 05/01/18................ 21,000 17,885 Consumers Energy Co. 1st Mtg. Bonds 6.13% due 03/15/19................ 73,000 68,704 Dominion Resources, Inc. Jr. Sub Notes 6.30% due 09/30/11(6)............. 109,000 95,942 DTE Energy Co. Senior Notes 6.38% due 04/15/33................ 53,000 44,306 DTE Energy Co. Senior Notes 7.05% due 06/01/11................ 24,000 24,428 Duke Energy Indiana, Inc. 1st Mtg. Bonds 6.35% due 08/15/38................ 70,000 65,834 Entergy Arkansas Inc 1st Mtg. Bonds 5.40% due 08/01/13................ 51,000 50,093 Entergy Gulf States Louisiana LLC 1st Mtg. Bonds 6.00% due 05/01/18*............... 70,000 64,315 Entergy Louisiana LLC 1st Mtg. Bonds 5.83% due 11/01/10................ 195,000 195,038 Exelon Corp. Senior Notes 6.75% due 05/01/11................ 52,000 52,391 Florida Power Corp. 1st. Mtg. Bonds 6.40% due 06/15/38................ 31,000 29,355 Mackinaw Power LLC Sec. Notes 6.30% due 10/31/23*............... 103,873 99,730 Mirant Americas Generation LLC Senior Notes 8.30% due 05/01/11................ 30,000 28,875 Mirant Mid-Atlantic LLC Pass Through Certs. Series B 9.13% due 06/30/17................ 40,254 41,461 Nisource Finance Corp. Company Guar. Notes 5.25% due 09/15/17................ 43,000 35,594 Oncor Electric Delivery Co. 1st Mtg. Bonds 7.50% due 09/01/38*............... 30,000 30,004 PacifiCorp 1st. Mortgage Bonds 6.35% due 07/15/38................ 74,000 67,592 Pepco Holdings, Inc. Senior Notes 6.13% due 06/01/17................ 82,000 76,257
Market Principal Value Security Description Amount (Note 3) ------------------------------------------------------------------- Electric-Integrated (continued) Pepco Holdings, Inc. Senior Notes 6.45% due 08/15/12.......................... $ 55,000 $ 54,761 PSEG Power LLC Company Guar. Notes 5.00% due 04/01/14.......................... 67,000 60,760 PSEG Power LLC Company Guar. Notes 7.75% due 04/15/11.......................... 65,000 67,440 Public Service Co. of Colorado 1st Mtg. Bonds 5.80% due 08/01/18.......................... 30,000 28,964 Puget Sound Energy, Inc. Senior Notes 5.20% due 10/01/15.......................... 212,000 186,588 Sierra Pacific Power Co. 1st Mtg. Bonds 5.45% due 09/01/13.......................... 60,000 58,175 Sierra Pacific Power Co. Senior Notes 6.75% due 07/01/37.......................... 90,000 80,640 Southern Energy, Inc. Notes 7.90% due 07/15/09+(10)(11)(14)............. 150,000 0 Southern Power Co. Senior Notes 4.88% due 07/15/15.......................... 47,000 42,679 Texas Competitive Electric Holdings Co. LLC Series A Senior Notes 10.25% due 11/01/15*........................ 35,000 31,587 Texas Competitive Electric Holdings Co. LLC Series B Senior Notes 10.25% due 11/01/15*........................ 25,000 22,563 Union Electric Co. 1st. Mtg. Bonds 6.70% due 02/01/19.......................... 60,000 57,938 ---------- 1,837,188 ---------- Electronic Components-Semiconductors -- 0.1% National Semiconductor Corp. Senior Notes 6.60% due 06/15/17.......................... 100,000 93,824 Spansion LLC Senior Sec. Notes 5.94% due 06/01/13*(1)...................... 60,000 36,000 ---------- 129,824 ---------- Electronic Measurement Instruments -- 0.1% Agilent Technologies, Inc. Senior Notes 6.50% due 11/01/17.......................... 77,000 70,195 ---------- Electronics-Military -- 0.0% L-3 Communications Corp. Company Guar. Notes 6.38% due 10/15/15.......................... 20,000 18,400 ----------
42 SunAmerica Balanced Assets Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008 -- (continued)
Market Principal Value Security Description Amount (Note 3) ---------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Finance-Auto Loans -- 0.1% GMAC LLC Senior Notes 6.88% due 09/15/11......................... $120,000 $ 53,543 GMAC LLC Senior Notes 6.88% due 08/28/12......................... 88,000 34,978 -------- 88,521 -------- Finance-Commercial -- 0.1% Caterpillar Financial Services Corp. Senior Notes 4.90% due 08/15/13......................... 70,000 66,281 Textron Financial Corp. Senior Notes 5.40% due 04/28/13......................... 80,000 80,556 -------- 146,837 -------- Finance-Credit Card -- 0.0% MBNA America Bank NA Senior Notes 7.13% due 11/15/12*........................ 41,000 40,210 -------- Finance-Investment Banker/Broker -- 0.6% Citigroup, Inc. Senior Notes 5.00% due 09/15/14......................... 84,000 64,404 Citigroup, Inc. Senior Notes 5.30% due 10/17/12......................... 42,000 37,389 Citigroup, Inc. Senior Notes 5.85% due 07/02/13......................... 52,000 45,614 Citigroup, Inc. Senior Sub. Notes 5.88% due 02/22/33......................... 43,000 28,178 Citigroup, Inc. Junior Sub. Notes 8.40% due 04/30/18(6)...................... 40,000 27,226 JP Morgan Chase & Co. Sub. Notes 4.89% due 09/01/10(6)...................... 56,000 55,272 JP Morgan Chase & Co. Senior Notes 5.38% due 01/15/14......................... 120,000 117,065 JP Morgan Chase & Co. Senior Notes 6.00% due 01/15/18......................... 50,000 45,594 Lehman Brothers Holdings Capital Trust VII Company Guar. Notes 5.86% due 05/31/12+(7)(9).................. 27,000 3 Lehman Brothers Holdings, Inc. Senior Notes 5.50% due 04/04/16+(7)(9).................. 26,000 3,250 Lehman Brothers Holdings, Inc. Sub. Notes 6.75% due 12/28/17+(7)(9).................. 30,000 37 Lehman Brothers Holdings, Inc. Sub. Notes 7.50% due 05/11/38+(7)(9).................. 38,000 47
Market Principal Value Security Description Amount (Note 3) ---------------------------------------------------------------- Finance-Investment Banker/Broker (continued) Lehman Brothers Holdings, Inc. Senior Notes 8.80% due 03/01/15+(7)(9)................. $31,000 $ 3,875 Merrill Lynch & Co., Inc. Sub. Notes 6.22% due 09/15/26........................ 40,000 29,986 Morgan Stanley Senior Notes 5.45% due 01/09/17........................ 42,000 26,053 Morgan Stanley Senior Notes 6.00% due 04/28/15........................ 40,000 27,209 Schwab Capital Trust I Company Guar. Bonds 7.50% due 11/15/17(6)..................... 19,000 15,684 The Bear Stearns Cos., Inc. Senior Notes 4.50% due 10/28/10........................ 47,000 45,644 The Bear Stearns Cos., Inc. Senior Notes 5.70% due 11/15/14........................ 55,000 51,419 The Goldman Sachs Group, Inc. Senior Notes 6.75% due 10/01/37........................ 51,000 34,047 -------- 657,996 -------- Finance-Mortgage Loan/Banker -- 0.1% Countrywide Financial Corp. Sub. Notes 6.25% due 05/15/16........................ 88,000 62,649 -------- Finance-Other Services -- 0.0% TIAA Global Markets, Inc. Notes 5.13% due 10/10/12*....................... 45,000 45,824 -------- Food-Misc. -- 0.2% Kraft Foods, Inc. Senior Bonds 5.63% due 11/01/11........................ 40,000 40,149 Kraft Foods, Inc. Senior Notes 6.50% due 08/11/17........................ 38,000 36,564 Kraft Foods, Inc. Sub. Notes 6.88% due 01/26/39........................ 68,000 61,937 McCormick & Co., Inc. Notes 5.25% due 09/01/13........................ 80,000 80,092 -------- 218,742 -------- Funeral Services & Related Items -- 0.0% Service Corp. International Senior Notes 6.75% due 04/01/16........................ 30,000 25,650 -------- Gambling (Non-Hotel) -- 0.0% Downstream Development Authority Senior Notes 12.00% due 10/15/15*...................... 25,000 18,125 --------
43 SunAmerica Balanced Assets Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008 -- (continued)
Market Principal Value Security Description Amount (Note 3) --------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Home Furnishings -- 0.0% Simmons Co. Company Guar. Notes 7.88% due 01/15/14........................ $ 25,000 $ 18,750 Simmons Co. Senior Disc. Notes 10.00% due 12/15/14(2).................... 11,000 6,160 -------- 24,910 -------- Hotel/Motels -- 0.0% Starwood Hotels & Resorts Worldwide, Inc. Senior Notes 6.75% due 05/15/18........................ 35,000 31,290 -------- Independent Power Producers -- 0.1% NRG Energy, Inc. Company Guar. Notes 7.38% due 02/01/16........................ 90,000 81,000 -------- Insurance Brokers -- 0.1% Marsh & McLennan Cos., Inc. Senior Notes 5.15% due 09/15/10........................ 60,000 58,509 Marsh & McLennan Cos., Inc. Senior Notes 7.13% due 06/15/09........................ 40,000 40,151 USI Holdings Corp. Senior Sub. Notes 9.75% due 05/15/15*....................... 25,000 19,000 -------- 117,660 -------- Insurance-Life/Health -- 0.4% Americo Life, Inc. Notes 7.88% due 05/01/13*....................... 134,000 132,737 Lincoln National Corp. Senior Notes 5.65% due 08/27/12........................ 58,000 57,021 Monumental Global Funding II Notes 5.65% due 07/14/11*....................... 66,000 68,288 Pricoa Global Funding I Notes 5.30% due 09/27/13*....................... 110,000 109,240 Prudential Financial, Inc. Junior Sub. Bonds 8.88% due 06/15/18(6)..................... 30,000 28,236 -------- 395,522 -------- Insurance-Multi-line -- 0.1% MetLife, Inc. Senior Notes 6.82% due 08/15/18........................ 61,000 57,718 -------- Insurance-Mutual -- 0.0% Liberty Mutual Group, Inc. Company Guar. Notes 10.75% due 06/15/38*(6)................... 45,000 32,400 --------
Market Principal Value Security Description Amount (Note 3) ------------------------------------------------------------------ Insurance-Property/Casualty -- 0.1% ACE INA Holdings, Inc. Company Guar. Notes 5.60% due 05/15/15.......................... $ 64,000 $ 60,560 Chubb Corp. Senior Notes 6.50% due 05/15/38.......................... 33,000 29,849 W.R. Berkley Corp. Senior Sub. Notes 6.25% due 02/15/37.......................... 3,000 2,418 -------- 92,827 -------- Insurance-Reinsurance -- 0.1% Berkshire Hathaway Finance Corp. Company Guar. Notes 5.00% due 08/15/13*......................... 74,000 73,805 PartnerRe Finance A LLC Company Guar. Notes 6.88% due 06/01/18.......................... 80,000 77,527 -------- 151,332 -------- Investment Management/Advisor Services -- 0.0% Ameriprise Financial, Inc. Senior Notes 5.35% due 11/15/10.......................... 51,000 50,104 -------- Medical Products -- 0.1% Johnson & Johnson Senior Notes 5.85% due 07/15/38.......................... 85,000 82,652 Johnson & Johnson Notes 5.95% due 08/15/37.......................... 29,000 28,682 LVB Acquisition Holding LLC Senior Notes 10.38% due 10/15/17......................... 40,000 39,600 -------- 150,934 -------- Medical-Drugs -- 0.3% American Home Products Corp. Senior Notes 6.95% due 03/15/11.......................... 123,000 129,781 GlaxoSmithKline Capital, Inc. Company Guar. Notes 6.38% due 05/15/38.......................... 41,000 38,490 Schering-Plough Corp. Senior Notes 6.55% due 09/15/37.......................... 57,000 52,207 Wyeth Bonds 5.50% due 02/01/14.......................... 126,000 124,900 -------- 345,378 -------- Medical-HMO -- 0.2% Aetna Inc. Senior Notes. 6.75% due 12/15/37.......................... 26,000 23,738 Humana, Inc. Senior Bonds 8.15% due 06/15/38.......................... 35,000 33,097
44 SunAmerica Balanced Assets Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008 -- (continued)
Market Principal Value Security Description Amount (Note 3) --------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Medical-HMO (continued) UnitedHealth Group, Inc. Senior Notes 5.25% due 03/15/11....................... $ 35,000 $ 34,797 UnitedHealth Group, Inc. Senior Notes 6.88% due 02/15/38....................... 37,000 32,574 WellPoint, Inc. Senior Notes 5.00% due 01/15/11....................... 21,000 20,878 WellPoint, Inc. Senior Notes 5.95% due 12/15/34....................... 35,000 29,124 -------- 174,208 -------- Medical-Hospitals -- 0.2% Community Health Systems, Inc. Company Guar. Notes 8.88% due 07/15/15....................... 55,000 52,250 HCA, Inc. Senior Notes 6.25% due 02/15/13....................... 55,000 45,925 HCA, Inc. Senior Notes 9.13% due 11/15/14....................... 25,000 24,313 HCA, Inc. Senior Notes 9.25% due 11/15/16....................... 140,000 136,150 -------- 258,638 -------- Medical-Wholesale Drug Distribution -- 0.1% Cardinal Health, Inc. Senior Notes 5.50% due 06/15/13....................... 56,000 53,581 -------- Metal Processors & Fabrication -- 0.1% Timken Co. Notes 5.75% due 02/15/10....................... 96,000 93,654 -------- Metal-Aluminum -- 0.1% Alcoa, Inc. Senior Notes 6.00% due 01/15/12....................... 41,000 41,197 Alcoa, Inc. Senior Notes 6.50% due 06/15/18....................... 65,000 61,507 -------- 102,704 -------- Mining -- 0.0% Noranda Aluminum Acquisition Corp. Company Guar. Notes 6.83% due 11/15/14(1).................... 25,000 19,000 -------- Multimedia -- 0.4% COX Enterprises, Inc. Notes 7.88% due 09/15/10*...................... 205,000 212,705 News America, Inc. Company Guar. Bonds 7.30% due 04/30/28....................... 80,000 73,828
Market Principal Value Security Description Amount (Note 3) ------------------------------------------------------------------ Multimedia (continued) Time Warner Cos., Inc. Company Guar. Notes 7.25% due 10/15/17.......................... $ 71,000 $ 65,164 Time Warner Entertainment Co. LP Senior Notes 8.38% due 07/15/33.......................... 99,000 94,115 -------- 445,812 -------- Non-Hazardous Waste Disposal -- 0.1% Waste Management, Inc. Company Guar. Notes 6.38% due 11/15/12.......................... 56,000 56,085 -------- Office Automation & Equipment -- 0.2% IKON Office Solutions, Inc. Senior Notes 7.75% due 09/15/15.......................... 30,000 31,350 Pitney Bowes, Inc. Senior Notes 5.25% due 01/15/37.......................... 194,000 178,557 Xerox Corp. Senior Notes 6.35% due 05/15/18.......................... 35,000 31,994 -------- 241,901 -------- Oil Companies-Exploration & Production -- 0.3% Chesapeake Energy Corp. Company Guar. Notes 7.50% due 09/15/13.......................... 175,000 169,313 Hilcorp Energy I LP Senior Notes 7.75% due 11/01/15*......................... 50,000 43,000 Sabine Pass LNG LP Sec. Notes 7.50% due 11/30/16.......................... 75,000 58,500 XTO Energy, Inc. Senior Notes 6.50% due 12/15/18.......................... 30,000 27,827 -------- 298,640 -------- Oil Companies-Integrated -- 0.1% Hess Corp. Notes 7.13% due 03/15/33.......................... 35,000 30,721 Hess Corp. Bonds 7.88% due 10/01/29.......................... 80,000 78,197 -------- 108,918 -------- Oil Field Machinery & Equipment -- 0.0% Cameron International Corp. Senior Notes 7.00% due 07/15/38.......................... 36,000 30,170 -------- Oil Refining & Marketing -- 0.2% The Premcor Refining Group, Inc. Company Guar. Notes 6.75% due 05/01/14.......................... 180,000 182,233 Valero Energy Corp. Senior Notes 6.63% due 06/15/37.......................... 24,000 20,710 -------- 202,943 --------
45 SunAmerica Balanced Assets Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008 -- (continued)
Market Principal Value Security Description Amount (Note 3) -------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Oil-Field Services -- 0.1% Allis-Chalmers Energy, Inc. Company Guar. Notes 9.00% due 01/15/14....................... $ 15,000 $ 13,500 Halliburton Co. Senior Notes 6.70% due 09/15/38....................... 70,000 67,377 -------- 80,877 -------- Paper & Related Products -- 0.1% Bowater, Inc. Senior Notes 6.50% due 06/15/13....................... 75,000 28,875 Georgia-Pacific LLC Company Guar. Notes 7.00% due 01/15/15*...................... 30,000 27,300 Georgia-Pacific LLC Company Guar. Notes 7.13% due 01/15/17*...................... 10,000 8,925 -------- 65,100 -------- Physicians Practice Management -- 0.1% US Oncology, Inc. Senior Sub. Notes 10.75% due 08/15/14...................... 55,000 55,275 -------- Pipelines -- 0.4% CenterPoint Energy Resources Corp. Senior Notes 7.75% due 02/15/11....................... 130,000 133,565 Copano Energy LLC Company Guar. Notes 8.13% due 03/01/16....................... 95,000 86,925 Duke Energy Field Services LLC Senior Notes 6.88% due 02/01/11....................... 60,000 60,310 Dynegy-Roseton Danskammer Pass Through Certs. Series B 7.67% due 11/08/16....................... 45,000 40,837 Panhandle Eastern Pipeline Co. Senior Notes 6.20% due 11/01/17....................... 56,000 50,496 Williams Cos., Inc. Senior Notes 7.88% due 09/01/21....................... 90,000 90,000 -------- 462,133 -------- Publishing-Periodicals -- 0.0% Dex Media West LLC/Dex Media Finance Co. Senior Notes 8.50% due 08/15/10....................... 2,000 1,765 R.H. Donnelley, Inc. Company Guar. Bonds 11.75% due 05/15/15*..................... 1,000 610 The Reader's Digest Association, Inc. Company Guar. Notes 9.00% due 02/15/17....................... 25,000 14,313 -------- 16,688 --------
Market Principal Value Security Description Amount (Note 3) --------------------------------------------------------------- Real Estate Investment Trusts -- 0.1% Health Care Property Investors, Inc. Senior Notes 5.65% due 12/15/13........................ $100,000 $ 88,049 PPF Funding, Inc. Bonds 5.35% due 04/15/12*....................... 60,000 59,149 -------- 147,198 -------- Recycling -- 0.0% Aleris International, Inc. Company Guar. Notes 9.00% due 12/15/14........................ 45,000 27,450 -------- Rental Auto/Equipment -- 0.0% ERAC USA Finance Co. Company Guar. Notes 7.00% due 10/15/37*....................... 26,000 18,312 United Rentals North America, Inc. Senior Sub. Notes 7.75% due 11/15/13........................ 40,000 30,500 -------- 48,812 -------- Research & Development -- 0.0% Alion Science and Technology Corp. Company Guar. Notes 10.25% due 02/01/15....................... 55,000 34,650 -------- Retail-Discount -- 0.0% Wal-Mart Stores, Inc. Senior Notes 6.20% due 04/15/38........................ 41,000 37,400 -------- Retail-Drug Store -- 0.1% CVS Caremark Corp. Senior Notes 6.13% due 08/15/16........................ 54,000 52,169 -------- Retail-Restaurants -- 0.0% NPC International, Inc. Company Guar. Notes 9.50% due 05/01/14........................ 45,000 36,900 -------- Savings & Loans/Thrifts -- 0.3% Independence Community Bank Corp. Sub. Notes 5.26% due 06/20/13(6)..................... 64,000 46,362 Sovereign Bancorp, Inc. Senior Notes 4.80% due 09/01/10........................ 206,000 162,627 Western Financial Bank Senior Debentures 9.63% due 05/15/12........................ 150,000 139,851 -------- 348,840 -------- Special Purpose Entities -- 0.4% BAE Systems Holdings, Inc. Company Guar. Notes 5.20% due 08/15/15*....................... 93,000 86,793 Chukchansi Economic Development Authority Senior Notes 8.00% due 11/15/13*....................... 45,000 36,000
46 SunAmerica Balanced Assets Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008 -- (continued)
Market Principal Value Security Description Amount (Note 3) -------------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Special Purpose Entities (continued) Goldman Sachs Capital III Company Guar. Notes 3.58% due 09/01/12(1)(8)....................... $121,000 $ 42,758 Hawker Beechcraft Acquisition Co. LLC / Hawker Beechcraft Notes Co. Company Guar. Notes 8.88% due 04/01/15............................. 5,000 4,525 Hawker Beechcraft Acquisition Co. LLC / Hawker Beechcraft Notes Co. Company Guar. Notes 9.75% due 04/01/17............................. 21,000 18,795 Hexion US Finance Corp. Company Guar. Notes 9.75% due 11/15/14............................. 20,000 15,800 KAR Holdings, Inc. Company Guar. Notes 6.80% due 05/01/14(1).......................... 25,000 19,625 Norbord Delaware GP I Company Guar. Notes 6.45% due 02/15/17*............................ 49,000 35,525 Principal Life Global Funding I Sec. Notes 5.25% due 01/15/13*............................ 100,000 98,031 Snoqualmie Entertainment Authority Senior Sec. Notes 9.13% due 02/01/15*............................ 45,000 32,513 -------- 390,365 -------- Steel-Producers -- 0.2% International Steel Group, Inc. Senior Notes 6.50% due 04/15/14............................. 130,000 132,028 Reliance Steel & Aluminum Co. Company Guar. Notes 6.85% due 11/15/36............................. 60,000 57,199 Ryerson, Inc. Senior Sec. Notes 10.18% due 11/01/14*(1)........................ 50,000 40,750 United States Steel Corp. Senior Notes 7.00% due 02/01/18............................. 45,000 40,624 -------- 270,601 -------- Telecom Services -- 0.2% Bellsouth Telecommunications, Inc. Debentures 7.00% due 12/01/95............................. 174,000 142,483 Fairpoint Communications, Inc. Senior Notes 13.13% due 04/01/18*........................... 13,000 11,830 Qwest Corp. Senior Notes 7.50% due 10/01/14............................. 65,000 56,225 -------- 210,538 -------- Telephone-Integrated -- 0.4% AT&T Corp. Senior Notes 7.30% due 11/15/11............................. 63,000 65,425
Market Principal Value Security Description Amount (Note 3) -------------------------------------------------------------- Telephone-Integrated (continued) BellSouth Corp. Senior Notes 6.00% due 10/15/11................... $200,000 $ 200,400 Cincinnati Bell, Inc. Company Guar. Notes 7.00% due 02/15/15................... 14,000 11,760 Pacific Bell Telephone Co. Company Guar. Notes 7.13% due 03/15/26................... 80,000 74,549 Verizon New York, Inc. Debentures 6.88% due 04/01/12................... 102,000 101,996 ----------- 454,130 ----------- Television -- 0.1% Belo Corp. Senior Notes 6.75% due 05/30/13................... 60,000 52,709 Paxson Communications Corp. Senior Sec. Notes 9.04% due 01/15/13*(8)............... 56,385 30,448 Young Broadcasting, Inc. Company Guar. Notes 10.00% due 03/01/11.................. 25,000 3,625 ----------- 86,782 ----------- Transport-Air Freight -- 0.3% Atlas Air, Inc. Pass Through Certs. Series 1991-1, Class B 7.63% due 01/02/15................... 366,911 359,573 ----------- Transport-Rail -- 0.1% CSX Corp. Senior Notes 6.25% due 04/01/15................... 40,000 38,106 CSX Corp. Senior Notes 6.25% due 03/15/18................... 59,000 53,400 ----------- 91,506 ----------- Transport-Services -- 0.1% PHI, Inc. Company Guar. Notes 7.13% due 04/15/13................... 75,000 66,375 ----------- Travel Services -- 0.0% Travelport LLC Company Guar. Notes 7.44% due 09/01/14(1)................ 21,000 16,170 ----------- Total Corporate Bonds & Notes (cost $15,125,652)................... 13,585,074 ----------- FOREIGN CORPORATE BONDS & NOTES -- 3.2% Banks-Commercial -- 0.2% Banco Continental de Panama SA Notes 6.63% due 12/01/10*.................. 35,000 35,000 Barclays Bank PLC Sub. Notes 5.93% due 12/15/16*(6)............... 80,000 55,633
47 SunAmerica Balanced Assets Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008 -- (continued)
Market Principal Value Security Description Amount (Note 3) ------------------------------------------------------------------ FOREIGN CORPORATE BONDS & NOTES (continued) Banks-Commercial (continued) Caisse Nationale des Caisses d'Epargne et de Prevoyance Notes 4.15% due 12/30/09(1)(8)..................... $109,000 $ 66,490 Credit Agricole SA Jr. Sub. Notes 6.64% due 05/31/17*(6)....................... 71,000 47,874 HBOS PLC Sub. Notes 5.92% due 10/01/15*(6)....................... 40,000 23,591 NIB Capital Bank Bonds 5.82% due 12/11/13*(6)....................... 71,000 37,381 -------- 265,969 -------- Banks-Money Center -- 0.1% Mizuho Financial Group Cayman, Ltd. Bank Guar. Bonds 8.38% due 04/27/09(8)........................ 145,000 124,448 -------- Beverages-Wine/Spirits -- 0.1% Diageo Finance BV Company Guar. Notes 3.88% due 04/01/11........................... 125,000 123,727 -------- Brewery -- 0.1% FBG Finance, Ltd. Senior Notes 5.13% due 06/15/15*.......................... 31,000 29,071 SABMiller PLC Senior Notes 6.50% due 07/15/18*.......................... 41,000 38,839 -------- 67,910 -------- Broadcast Services/Program -- 0.1% Grupo Televisa SA Senior Notes 6.00% due 05/15/18........................... 27,000 25,482 Grupo Televisa SA Senior Notes 6.63% due 03/18/25........................... 139,000 122,040 -------- 147,522 -------- Cellular Telecom -- 0.1% America Movil SAB de CV Company Guar. Bonds 5.63% due 11/15/17........................... 70,000 65,579 Vodafone Airtouch PLC Senior Notes 7.75% due 02/15/10........................... 35,000 36,074 -------- 101,653 -------- Containers-Metal/Glass -- 0.1% Rexam PLC Bonds 6.75% due 06/01/13*.......................... 51,000 50,949 --------
Market Principal Value Security Description Amount (Note 3) ---------------------------------------------------------------- Cruise Lines -- 0.1% Royal Caribbean Cruises, Ltd. Senior Notes 7.00% due 06/15/13........................ $ 70,000 $ 60,200 -------- Diversified Manufacturing Operations -- 0.1% Bombardier, Inc. Senior Notes 8.00% due 11/15/14*....................... 25,000 24,750 Tyco International Group SA Company Guar. Notes 6.00% due 11/15/13........................ 120,000 117,587 -------- 142,337 -------- Diversified Operations -- 0.1% Hutchison Whampoa Finance, Ltd. Company Guar. Notes 7.50% due 08/01/27*....................... 140,000 131,190 -------- Electric-Generation -- 0.0% Abu Dhabi National Energy Co. Senior Notes 7.25% due 08/01/18*....................... 11,000 10,710 -------- Electric-Integrated -- 0.1% Empresa Nacional de Electricidad SA Bonds 7.33% due 02/01/37........................ 84,000 83,264 TransAlta Corp. Senior Notes 6.65% due 05/15/18........................ 29,000 27,377 -------- 110,641 -------- Electronic Components-Misc. -- 0.0% NXP BV/NXP Funding LLC Company Guar. Notes 9.50% due 10/15/15........................ 9,000 4,635 -------- Food-Retail -- 0.1% Delhaize Group SA Senior Notes 6.50% due 06/15/17........................ 90,000 85,244 -------- Insurance-Multi-line -- 0.1% Aegon NV Sub. Bonds 4.63% due 07/15/14(1)(8).................. 156,000 59,280 XL Capital (Europe) PLC Company Guar. Notes 6.50% due 01/15/12........................ 32,000 30,729 XL Capital, Ltd. Senior Notes 5.25% due 09/15/14........................ 56,000 48,438 -------- 138,447 -------- Investment Companies -- 0.0% Xstrata Finance Canada, Ltd. Company Guar. Notes 6.90% due 11/15/37*....................... 40,000 34,002 --------
48 SunAmerica Balanced Assets Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008 -- (continued)
Market Principal Value Security Description Amount (Note 3) ------------------------------------------------------------------ FOREIGN CORPORATE BONDS & NOTES (continued) Medical-Drugs -- 0.1% Angiotech Pharmaceuticals, Inc. Company Guar. Notes 6.56% due 12/01/13(1)....................... $ 15,000 $ 10,800 Angiotech Pharmaceuticals, Inc. Company Guar. Notes 7.75% due 04/01/14.......................... 55,000 32,175 Elan Finance PLC Company Guar. Bonds 7.75% due 11/15/11.......................... 40,000 36,200 -------- 79,175 -------- Multimedia -- 0.0% Thomson Reuters Corp. Company Guar. Notes 5.95% due 07/15/13.......................... 40,000 39,953 -------- Oil Companies-Exploration & Production -- 0.0% OPTI Canada, Inc. Senior Sec. Notes 7.88% due 12/15/14.......................... 50,000 44,250 -------- Paper & Related Products -- 0.0% Abitibi-Consolidated, Inc. Notes 8.55% due 08/01/10.......................... 41,000 15,580 -------- Pipelines -- 0.0% Enbridge, Inc. Senior Notes 5.80% due 06/15/14.......................... 40,000 38,049 -------- Printing-Commercial -- 0.0% Quebecor World Capital Corp. Senior Notes 8.75% due 03/15/16*+(7)(15)................. 30,000 12,000 -------- Property Trust -- 0.1% Westfield Capital Corp., Ltd./ WT Finance Austrailia Property, Ltd. Company Guar. Notes 4.38% due 11/15/10*......................... 50,000 48,680 -------- Real Estate Operations & Development -- 0.2% Brascan Corp. Notes 8.13% due 12/15/08.......................... 157,000 157,724 -------- Satellite Telecom -- 0.1% Intelsat Subsidiary Holding Co., Ltd. Senior Notes 8.50% due 01/15/13*......................... 60,000 55,500 -------- Special Purpose Entities -- 0.6% Aries Vermoegensverwaltungs GmbH Bonds 9.60% due 10/25/14.......................... 250,000 311,250 Hybrid Capital Funding I LP Sub. Notes 8.00% due 06/30/11(8)....................... 286,000 171,600 SMFG Preferred Capital, Ltd. Sub. Bonds 6.08% due 01/25/17*(6)...................... 121,000 86,400
Market Principal Value Security Description Amount (Note 3) ----------------------------------------------------------- Special Purpose Entities (continued) SovRisc BV Notes 4.63% due 10/31/08*................ $133,000 $ 133,326 ---------- 702,576 ---------- Telecom Services -- 0.2% TELUS Corp. Notes 8.00% due 06/01/11................. 238,000 252,059 ---------- Telecommunication Equipment -- 0.0% Nortel Networks, Ltd. Company Guar. Notes 10.75% due 07/15/16*............... 50,000 30,625 ---------- Telephone-Integrated -- 0.2% Telecom Italia Capital SA Company Guar. Notes 4.95% due 09/30/14................. 60,000 50,596 Telecom Italia Capital SA Company Guar. Bonds 6.20% due 07/18/11................. 115,000 115,033 ---------- 165,629 ---------- Transport-Marine -- 0.1% DP World, Ltd. Bonds 6.85% due 07/02/37*................ 121,000 89,583 ---------- Transport-Rail -- 0.1% Canadian National Railway Co. Notes 6.38% due 10/15/11................. 130,000 134,394 ---------- Water -- 0.1% Veolia Environnement Notes 6.75% due 06/01/38................. 60,000 57,407 ---------- Total Foreign Corporate Bonds & Notes (cost $4,125,055).................. 3,522,768 ---------- FOREIGN GOVERNMENT AGENCIES -- 0.6% Sovereign -- 0.6% Federal Republic of Brazil Bonds 10.50% due 07/14/14................ 205,000 258,300 Republic of Argentina Bonds 3.13% due 08/03/12(1).............. 230,000 83,145 Republic of Argentina Bonds 8.28% due 12/31/33................. 36,346 20,763 Republic of Turkey Senior Bonds 11.88% due 01/15/30................ 180,000 258,534 Republic of Venezuela Notes 8.50% due 10/08/14................. 100,000 78,750 ---------- Total Foreign Government Agencies (cost $749,118).................... 699,492 ----------
49 SunAmerica Balanced Assets Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008 -- (continued)
Market Principal Value Security Description Amount (Note 3) ----------------------------------------------------------- U.S. GOVERNMENT AGENCIES -- 12.3% Federal Home Loan Mtg. Corp. -- 7.5% 5.00% due 05/01/34................ $748,872 $ 731,115 5.00% due 06/01/34................ 723,003 705,860 5.00% due 07/01/35................ 97,285 94,917 5.00% due 10/01/35................ 498,396 486,266 5.00% due 11/01/35................ 336,211 328,029 5.00% due 11/01/36................ 31,521 30,734 5.50% due 07/01/34................ 465,232 463,712 5.50% due 09/01/37................ 225,000 223,984 5.50% due 01/01/38................ 547,106 544,720 5.50% due October TBA............. 515,000 512,264 5.78% due 10/01/36(1)............. 507,400 518,277 5.78% due 01/01/37(1)............. 212,128 216,280 5.81% due 01/01/37(1)............. 381,793 386,108 6.00% due 12/01/33................ 81,559 82,996 6.00% due 10/01/37................ 331,600 335,994 6.50% due 03/01/36................ 235,393 241,669 6.50% due 05/01/36................ 7,455 7,654 6.50% due 11/01/37................ 134,865 138,440 7.00% due 04/01/32................ 119,632 125,743 REMIC Series 3026, Class PC 4.50% due 01/15/34................ 620,000 575,296 Series 3102, Class PG 5.00% due 11/15/28................ 304,000 305,789 Series 3317, Class PD 5.00% due 09/15/31................ 390,000 388,007 Series 3116, Class PD 5.00% due 10/15/34................ 615,000 593,430 Series 3349, Class HB 5.50% due 06/15/31................ 232,000 233,952 ----------- 8,271,236 ----------- Federal National Mtg. Assoc. -- 4.1% 5.00% due 08/01/18................ 145,254 145,732 5.00% due 07/01/37................ 122,828 119,774 5.50% due 11/01/22................ 254,987 257,286 5.50% due 12/01/33................ 831,896 832,038 5.50% due 02/01/36(1)............. 258,490 262,580 5.50% due 11/01/36................ 253,829 253,357 5.50% due 08/01/38................ 8,668 8,650 6.00% due 12/01/33................ 75,241 76,567 6.00% due 11/01/36................ 541,686 544,054 6.00% due 03/01/38................ 486,684 493,512 6.00% due 07/01/38................ 698,660 708,352 6.50% due 09/01/32................ 233,801 241,575 6.50% due 07/01/36................ 99,683 102,328 6.50% due 10/01/37................ 99,415 102,047 REMIC Series 2005-12, Class BE 5.00% due 11/25/30................ 385,000 383,328 ----------- 4,531,180 ----------- Government National Mtg. Assoc. -- 0.7% 5.50% due 05/15/33................ 428,610 430,235 5.50% due 12/15/33................ 294,753 295,871 7.50% due 01/15/32................ 107,593 115,944 ----------- 842,050 ----------- Total U.S. Government Agencies (cost $13,680,081)................ 13,644,466 -----------
Market Principal Value Security Description Amount (Note 3) ------------------------------------------------------------------------- U.S. GOVERNMENT TREASURIES -- 2.9% United States Treasury Bonds -- 0.4% 4.38% due 02/15/38........................... $ 94,000 $ 95,197 4.50% due 05/15/38........................... 31,000 32,002 4.75% due 02/15/37........................... 110,000 117,666 5.00% due 05/15/37........................... 132,000 146,840 ------------ 391,705 ------------ United States Treasury Notes -- 2.5% 2.75% due 02/28/13........................... 45,000 44,768 2.88% due 01/31/13........................... 496,000 497,279 3.38% due 07/31/13........................... 102,000 103,857 3.50% due 02/15/18........................... 97,000 95,121 3.63% due 06/15/10........................... 400,000 412,281 3.88% due 05/15/18........................... 31,000 31,203 4.00% due 08/15/18........................... 106,000 107,507 4.25% due 08/15/15........................... 24,000 25,371 4.25% due 11/15/17........................... 450,000 466,383 4.50% due 11/15/15........................... 200,000 213,812 4.50% due 02/15/16........................... 101,000 107,660 4.88% due 06/30/09........................... 700,000 715,804 ------------ 2,821,046 ------------ Total U.S. Government Treasuries (cost $3,231,442)............................ 3,212,751 ------------ Total Long-Term Investment Securities (cost $113,086,912).......................... 105,922,684 ------------ REPURCHASE AGREEMENTS -- 3.7% Agreement with State Street Bank & Trust Co., bearing interest at 0.35%, dated 09/30/08, to be repurchased 10/01/08 in the amount of $369,004 and collateralized by $380,000 of Federal Home Loan Mtg. Corp. Notes, bearing interest at 2.98% due 01/19/10 and having an approximate value of $379,605........................... 369,000 369,000 State Street Bank & Trust Co. Joint Repurchase Agreement(12).............. 3,730,000 3,730,000 ------------ Total Repurchase Agreements (cost $4,099,000)............................ 4,099,000 ------------ TOTAL INVESTMENTS -- (cost $117,185,912)(13)...................... 99.4% 110,021,684 Other assets less liabilities................... 0.6 645,121 ---------- ------------ NET ASSETS -- 100.0% $ 110,666,805 ========== ============
-------- + 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, 2008, the aggregate value of these securities was $3,400,924 representing 3.1% of net assets. Unless otherwise indicated these securities are not considered to be illiquid. (1) Floating rate security where the rate fluctuates. The rate moves up or down at each reset date. The rate reflected is as of September 30, 2008. 50 SunAmerica Balanced Assets Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008 -- (continued) (2) "Step-up" security where the rate increases ("steps-up") at a predetermined rate. Rate shown reflects the increased rate. (3) Variable Rate Security -- the rate reflected is as of September 30, 2008, maturity date reflects the stated maturity date. (4) Commercial Mortgage Backed Security (5) Collateralized Mortgage Obligation (6) Variable Rate Security -- the rate reflected is as of September 30, 2008, maturity date reflects next reset date. (7) Bond in default (8) Perpetual maturity -- maturity date reflects the next call date. (9) Company has filed Chapter 11 bankruptcy protection. (10) Illiquid security. At September 30, 2008, the aggregate value of these securities was $0 representing 0.0% of net assets. (11) Fair valued security; see Note 3 (12) See Note 3 for details on Joint Repurchase Agreement. (13) See Note 7 for cost of investments on a tax basis. (14) To the extent permitted by the Statement of Additional information, the Balanced Assets Fund may invest in restricted securities. The Fund has no right to demand registration of these securities. The securities are valued pursuant to Note 3. Restricted securities held by a fund may not be sold except in exempt transactions or in a public offering registered under the securities Act of 1933. The risk of investing in such securities is generally greater than the risk of investing in the securities of widely held, publicly traded companies. Lack of a secondary market and resale restrictions may result in the inability of a Fund to sell a security at a fair price and may substantially delay the sale of the security. In addition, these securities may exhibit greater price volatility than securities for which secondary markets exist. As of September 30, 2008, the Balanced Assets Fund held the following restricted securities:
Market Value % of Acquisition Principal Acquisition Market Per Par Net Name Date Amount Cost Value Amount Assets ---- ----------- --------- ----------- ------ ------- ------ Southern Energy 7.90% due 7/15/2009...... 01/10/2006 $150,000 $0 $0 $0 0.00%
(15) Company has filed bankruptcy in country of issuance. ADR --American Depository Receipt REMIC --Real Estate Mortgage Investment Conduit TBA --Securities purchased on a forward commitment basis with an approximate principal amount and no definitive maturity date. The actual principal and maturity date will be determined upon settlement date. See Notes to Financial Statements 51 SunAmerica International Equity Fund PORTFOLIO PROFILE -- September 30, 2008 -- (unaudited) Industry Allocation* Banks-Commercial..................... 12.6% Oil Companies-Integrated............. 7.3 Insurance-Multi-line................. 5.0 Food-Misc............................ 4.9 Rubber-Tires......................... 4.2 Cellular Telecom..................... 3.9 Repurchase Agreement................. 3.8 Medical Products..................... 3.5 Chemicals-Diversified................ 3.2 Gas-Distribution..................... 3.0 Index Fund........................... 2.6 Finance-Investment Banker/Broker..... 2.2 Food-Retail.......................... 2.2 Agricultural Chemicals............... 2.1 Chemicals-Specialty.................. 1.9 Medical-Generic Drugs................ 1.8 Oil-Field Services................... 1.6 Auto-Cars/Light Trucks............... 1.6 Non-Ferrous Metals................... 1.5 Diversified Manufacturing Operations. 1.5 Coal................................. 1.4 Cable TV............................. 1.3 Machinery-General Industrial......... 1.3 Computer Services.................... 1.3 Electric Products-Misc............... 1.3 Retail-Jewelry....................... 1.2 Diversified Financial Services....... 1.2 Enterprise Software/Service.......... 1.2 Medical-Biomedical/Gene.............. 1.2 Electronic Components-Misc........... 1.1 Diversified Minerals................. 1.1 Real Estate Operations & Development. 1.1 Medical-Wholesale Drug Distribution.. 1.1 Networking Products.................. 1.1 Computers............................ 1.1 Steel-Producers...................... 1.0 Building-Heavy Construction.......... 0.9 Telecom Services..................... 0.9 Import/Export........................ 0.9 Electric-Integrated.................. 0.8 Engineering/R&D Services............. 0.8 Electronic Components-Semiconductors. 0.7 Medical-Drugs........................ 0.7 Paper & Related Products............. 0.6 Transport-Rail....................... 0.6 Metal-Diversified.................... 0.6 Gas-Transportation................... 0.5 Toys................................. 0.4 Cosmetics & Toiletries............... 0.4 Miscellaneous Manufacturing.......... 0.2 ---- 98.4% ====
-------- * Calculated as a percentage of net assets Country Allocation* Japan.......... 14.9% United Kingdom. 14.6 France......... 9.4 Switzerland.... 9.1 United States.. 5.8 Germany........ 5.3 Canada......... 4.7 Brazil......... 4.3 Australia...... 4.1 South Korea.... 3.2 Israel......... 3.2 Italy.......... 3.2 Hong Kong...... 2.3 Taiwan......... 2.2 Spain.......... 2.2 Norway......... 1.9 Greece......... 1.8 Singapore...... 1.2 Russia......... 1.1 Luxembourg..... 1.0 Cayman Islands. 0.7 South Africa... 0.7 China.......... 0.7 Thailand....... 0.6 Bermuda........ 0.2 ---- 98.4% ====
52 SunAmerica International Equity Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008
Market Value Security Description Shares (Note 3)(1) ------------------------------------------------------------------- COMMON STOCK -- 90.6% Australia -- 4.1% BHP Billiton, Ltd............................ 32,500 $ 835,055 Boart Longyear Group......................... 637,500 581,023 CSL, Ltd..................................... 28,600 861,572 Woolworths, Ltd.............................. 38,280 827,805 ---------- 3,105,455 ---------- Bermuda -- 0.2% Peace Mark Holdings, Ltd..................... 800,000 154,543 ---------- Brazil -- 2.9% Companhia Brasileira de Distribuicao Grupo Pao de Acuca ADR...................... 22,500 786,600 Petroleo Brasileiro SA ADR................... 31,300 1,375,635 ---------- 2,162,235 ---------- Canada -- 4.7% Barrick Gold Corp............................ 30,100 1,102,182 Shaw Communications, Inc., Class B........... 49,200 995,788 Suncor Energy, Inc........................... 33,500 1,385,013 ---------- 3,482,983 ---------- Cayman Islands -- 0.7% Hengan International Group Co., Ltd.......... 184,000 525,200 ---------- China -- 0.7% China Coal Energy Co......................... 498,200 518,052 ---------- France -- 8.8% Alstom....................................... 13,200 995,411 AXA SA....................................... 23,300 763,842 Compagnie Generale des Etablissements Michelin, Class B............ 23,390 1,534,603 GDF Suez..................................... 26,412 1,382,023 Total SA..................................... 19,660 1,186,105 Vinci SA..................................... 14,910 704,447 ---------- 6,566,431 ---------- Germany -- 5.3% Allianz SE................................... 10,750 1,478,475 Bayer AG..................................... 18,990 1,386,135 Siemens AG................................... 11,620 1,090,588 ---------- 3,955,198 ---------- Greece -- 1.8% Alapis Holding Industrial and Commercial SA+. 382,420 810,728 Piraeus Bank SA.............................. 26,541 557,500 ---------- 1,368,228 ---------- Hong Kong -- 2.3% China Mobile, Ltd. ADR....................... 17,400 871,392 Hong Kong & China Gas Co., Ltd............... 365,150 832,005 Peregrine Investments Holdings, Ltd.+(2)(3).. 91,000 0 ---------- 1,703,397 ---------- Israel -- 3.2% Israel Chemicals, Ltd........................ 67,800 1,027,936 Teva Pharmaceutical Industries, Ltd. ADR..... 29,700 1,359,963 ---------- 2,387,899 ----------
Market Value Security Description Shares (Note 3)(1) -------------------------------------------------------------- Italy -- 3.2% Eni SpA................................. 29,010 $ 765,722 Saipem SpA.............................. 40,410 1,195,561 Snam Rete Gas SpA....................... 66,300 399,098 ----------- 2,360,381 ----------- Japan -- 14.9% Bridgestone Corp........................ 54,100 1,014,551 Central Japan Railway Co................ 50 471,897 Kyushu Electric Power Co., Inc.......... 29,900 625,896 Megachips Corp.......................... 45,800 538,253 Mitsubishi UFJ Financial Group, Inc..... 135,200 1,172,000 Nintendo Co., Ltd....................... 800 333,028 Nippon Paper Group, Inc................. 162 473,022 Nomura Holdings, Inc.................... 52,200 673,670 NTT Data Corp........................... 206 805,819 Pigeon Corp............................. 11,800 329,549 Sojitz Corp............................. 281,700 650,426 Sumitomo Mitsui Financial Group, Inc.... 132 826,963 Sumitomo Realty & Development Co., Ltd.. 24,000 522,515 Terumo Corp............................. 17,800 916,685 Toyota Motor Corp....................... 27,500 1,167,572 Unicharm Petcare Corp................... 21,800 650,818 ----------- 11,172,664 ----------- Luxembourg -- 1.0% ArcelorMittal........................... 15,630 781,801 ----------- Norway -- 1.9% Telenor ASA............................. 56,716 697,293 Yara International ASA.................. 20,660 725,262 ----------- 1,422,555 ----------- Russia -- 1.1% Uralkali GDR............................ 25,900 813,606 ----------- Singapore -- 1.2% CapitaLand, Ltd......................... 137,000 298,568 DBS Group Holdings, Ltd................. 47,500 561,594 ----------- 860,162 ----------- South Africa -- 0.7% Exxaro Resources, Ltd................... 47,800 520,136 ----------- South Korea -- 3.2% Hankook Tire Co., Ltd................... 40,000 564,271 LG Electronics, Inc..................... 10,400 969,179 Shinhan Financial Group Co., Ltd........ 24,400 879,732 ----------- 2,413,182 ----------- Spain -- 2.2% Banco Santander SA...................... 44,110 667,718 Indra Sistemas SA....................... 40,970 976,965 ----------- 1,644,683 ----------- Switzerland -- 9.1% Compagnie Financiere Richemont SA....... 20,430 907,383 Lonza Group AG.......................... 11,520 1,432,723 Nestle SA............................... 69,810 3,019,426 Zurich Financial Services AG............ 5,340 1,480,213 ----------- 6,839,745 -----------
53 SunAmerica International Equity Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008 -- (continued)
Market Value Security Description Shares (Note 3)(1) --------------------------------------------------------------- COMMON STOCK (continued) Taiwan -- 2.2% Compal Electronics, Inc. GDR............. 255,270 $ 804,100 Hon Hai Precision Industry Co., Ltd. GDR. 124,200 859,464 ----------- 1,663,564 ----------- Thailand -- 0.6% Bangkok Bank PCL......................... 150,300 461,565 ----------- United Kingdom -- 14.6% Autonomy Corp PLC+....................... 47,617 875,455 BG Group PLC............................. 39,600 717,512 GlaxoSmithKline PLC...................... 23,900 516,345 HSBC Holdings PLC........................ 118,380 1,917,146 ICAP PLC................................. 151,450 978,904 Lloyds TSB Group PLC..................... 303,670 1,263,198 Rio Tinto PLC............................ 7,300 454,212 Royal Bank of Scotland Group PLC......... 295,400 978,523 Smith & Nephew PLC....................... 112,390 1,184,640 Vodafone Group PLC....................... 938,290 2,072,868 ----------- 10,958,803 ----------- United States -- 0.0% SoftBrands, Inc.+........................ 40 38 ----------- Total Common Stock (cost $81,449,271)...................... 67,842,506 ----------- PREFERRED STOCK -- 1.4% Brazil -- 1.4% Banco Bradesco SA (cost $1,393,886)....................... 64,300 1,045,479 ----------- EXCHANGE-TRADED FUNDS -- 2.6% France -- 0.6% streetTRACKS MSCI Europe+................ 3,100 455,000 ----------- United States -- 2.0% iShares MSCI Canada Index Fund........... 46,700 1,230,078 Vanguard International Equity Index European ETF...................... 4,443 237,123 ----------- 1,467,201 ----------- Total Exchange-Traded Funds (cost $2,201,374)....................... 1,922,201 ----------- Total Long-Term Investment Securities (cost $85,044,531)...................... 70,810,186 -----------
Market Principal Value Security Description Amount (Note 3)(1) ------------------------------------------------------------------------- REPURCHASE AGREEMENT -- 3.8% Agreement with State Street Bank & Trust Co., bearing interest at 0.35%, dated 09/30/08, to be repurchased 10/01/08 in the amount of $2,809,027 and collateralized by Federal Home Loan Mtg. Notes, bearing interest at 2.98% due 01/19/10 and having an approximate value of $2,867,015 (cost $2,809,000).............................. $2,809,000 $ 2,809,000 ----------- TOTAL INVESTMENTS -- (cost $87,853,531)(4).......................... 98.4% 73,619,186 Other assets less liabilities..................... 1.6 1,228,332 ---------- ----------- NET ASSETS -- 100.0% $74,847,518 ========== ===========
-------- + Non-income producing security (1) A substantial number of the Fund's holdings were valued using the fair value procedures at September 30, 2008. At September 30, 2008, the aggregate value of these securities was $58,602,788 representing 78.3% of net assets. See Note 3 regarding fair value pricing procedures for foreign equity securities. (2) Fair valued security; see Note 3 (3) Illiquid security. At September 30, 2008, the aggregate value of these securities was $0 representing 0.0% of net assets. (4) See Note 7 for cost of investment on a tax basis. ADR --American Depository Receipt ETF --Exchange-Traded Fund GDR --Global Depository Receipt See Notes to Financial Statements 54 SunAmerica Value Fund PORTFOLIO PROFILE -- September 30, 2008 -- (unaudited) Industry Allocation* Oil Companies-Integrated............... 12.3% Banks-Super Regional................... 9.4 Finance-Investment Banker/Broker....... 7.7 Electric-Integrated.................... 6.9 Medical-Drugs.......................... 6.3 Telephone-Integrated................... 6.0 Diversified Manufacturing Operations... 5.4 Oil Companies-Exploration & Production. 3.7 Multimedia............................. 3.2 Repurchase Agreement................... 3.1 Investment Management/Advisor Services. 2.8 Medical Products....................... 2.6 Medical-HMO............................ 1.9 Insurance-Property/Casualty............ 1.9 Consumer Products-Misc................. 1.8 Cosmetics & Toiletries................. 1.6 Insurance-Multi-line................... 1.6 Applications Software.................. 1.6 Aerospace/Defense-Equipment............ 1.6 Telecommunication Equipment............ 1.5 Paper & Related Products............... 1.5 Agricultural Operations................ 1.5 Retail-Drug Store...................... 1.5 Non-Hazardous Waste Disposal........... 1.5 Retail-Apparel/Shoe.................... 1.5 Chemicals-Diversified.................. 1.4 Retail-Discount........................ 1.4 Tobacco................................ 1.4 Aerospace/Defense...................... 1.3 Finance-Credit Card.................... 1.3 Metal-Diversified...................... 0.8 ---- 98.0% ====
-------- * Calculated as a percentage of net assets 55 SunAmerica Value Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008
Market Value Security Description Shares (Note 3) ------------------------------------------------------------------- COMMON STOCK -- 94.9% Aerospace/Defense -- 1.3% General Dynamics Corp........................ 25,300 $ 1,862,586 ----------- Aerospace/Defense-Equipment -- 1.6% United Technologies Corp..................... 36,700 2,204,202 ----------- Agricultural Operations -- 1.5% Archer-Daniels-Midland Co.................... 95,700 2,096,787 ----------- Applications Software -- 1.6% Microsoft Corp............................... 83,600 2,231,284 ----------- Banks-Super Regional -- 9.4% Bank of America Corp......................... 168,400 5,894,000 US Bancorp................................... 91,000 3,277,820 Wells Fargo & Co............................. 104,100 3,906,873 ----------- 13,078,693 ----------- Chemicals-Diversified -- 1.4% E.I. du Pont de Nemours & Co................. 49,300 1,986,790 ----------- Consumer Products-Misc. -- 1.8% Kimberly-Clark Corp.......................... 38,200 2,476,888 ----------- Cosmetics & Toiletries -- 1.6% Procter & Gamble Co.......................... 32,300 2,250,987 ----------- Diversified Manufacturing Operations -- 5.4% Eaton Corp................................... 24,500 1,376,410 General Electric Co.......................... 168,000 4,284,000 Honeywell International, Inc................. 43,700 1,815,735 ----------- 7,476,145 ----------- Electric-Integrated -- 6.9% FPL Group, Inc............................... 41,500 2,087,450 PG&E Corp.................................... 57,800 2,164,610 Southern Co.................................. 73,700 2,777,753 Xcel Energy, Inc............................. 128,200 2,562,718 ----------- 9,592,531 ----------- Finance-Credit Card -- 1.3% American Express Co.......................... 52,500 1,860,075 ----------- Finance-Investment Banker/Broker -- 7.7% Citigroup, Inc............................... 217,200 4,454,772 JPMorgan Chase & Co.......................... 133,200 6,220,440 ----------- 10,675,212 ----------- Insurance-Multi-line -- 1.6% MetLife, Inc................................. 40,000 2,240,000 ----------- Insurance-Property/Casualty -- 1.9% Chubb Corp................................... 48,000 2,635,200 ----------- Investment Management/Advisor Services -- 2.8% Ameriprise Financial, Inc.................... 50,800 1,940,560 Invesco, Ltd................................. 92,900 1,949,042 ----------- 3,889,602 ----------- Medical Products -- 2.6% Johnson & Johnson............................ 51,400 3,560,992 ----------- Medical-Drugs -- 6.3% Abbott Laboratories.......................... 25,200 1,451,016 Eli Lilly & Co............................... 28,700 1,263,661
Market Value Security Description Shares (Note 3) -------------------------------------------------------------------- Medical-Drugs (continued) Merck & Co., Inc............................. 45,100 $ 1,423,356 Pfizer, Inc.................................. 178,100 3,284,164 Wyeth........................................ 38,000 1,403,720 ------------ 8,825,917 ------------ Medical-HMO -- 1.9% Aetna, Inc................................... 37,800 1,364,958 UnitedHealth Group, Inc...................... 51,600 1,310,124 ------------ 2,675,082 ------------ Metal-Diversified -- 0.8% Freeport-McMoRan Copper & Gold, Inc.......... 19,800 1,125,630 ------------ Multimedia -- 3.2% The Walt Disney Co........................... 71,400 2,191,266 Time Warner, Inc............................. 175,700 2,303,427 ------------ 4,494,693 ------------ Non-Hazardous Waste Disposal -- 1.5% Waste Management, Inc........................ 65,600 2,065,744 ------------ Oil Companies-Exploration & Production -- 3.7% Apache Corp.................................. 17,300 1,804,044 Occidental Petroleum Corp.................... 27,200 1,916,240 XTO Energy, Inc.............................. 30,100 1,400,252 ------------ 5,120,536 ------------ Oil Companies-Integrated -- 12.3% Chevron Corp................................. 55,700 4,594,136 ConocoPhillips............................... 56,300 4,123,975 Exxon Mobil Corp............................. 67,000 5,203,220 Marathon Oil Corp............................ 81,400 3,245,418 ------------ 17,166,749 ------------ Paper & Related Products -- 1.5% International Paper Co....................... 81,200 2,125,816 ------------ Retail-Apparel/Shoe -- 1.5% American Eagle Outfitters, Inc............... 132,700 2,023,675 ------------ Retail-Discount -- 1.4% Target Corp.................................. 40,100 1,966,905 ------------ Retail-Drug Store -- 1.5% CVS Caremark Corp............................ 61,400 2,066,724 ------------ Telecommunication Equipment -- 1.5% Harris Corp.................................. 46,400 2,143,680 ------------ Telephone-Integrated -- 6.0% AT&T, Inc.................................... 171,050 4,775,716 Verizon Communications, Inc.................. 109,400 3,510,646 ------------ 8,286,362 ------------ Tobacco -- 1.4% Philip Morris International, Inc............. 39,900 1,919,190 ------------ Total Long-Term Investment Securities (cost $141,279,841)......................... 132,124,677 ------------
56 SunAmerica Value Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008 -- (continued)
Market Principal Value Security Description Amount (Note 3) ---------------------------------------------------------- REPURCHASE AGREEMENT -- 3.1% State Street Bank & Trust Co. Joint Repurchase Agreement(1) (cost $4,305,000).............. $4,305,000 $ 4,305,000 ------------ TOTAL INVESTMENTS -- (cost $145,584,841)(2)......... 98.0% 136,429,677 Other assets less liabilities..... 2.0 2,822,864 ---------- ------------ NET ASSETS -- 100.0% $139,252,541 ========== ============
-------- (1)See Note 3 for details of Joint Repurchase Agreement. (2)See Note 7 for cost of investments on a tax basis. See Notes to Financial Statements 57 SunAmerica Disciplined Growth Fund PORTFOLIO PROFILE -- September 30, 2008 -- (unaudited) Industry Allocation* Finance-Investment Banker/Broker....... 5.8% Computers.............................. 5.3 Building-Residential/Commercial........ 3.5 Applications Software.................. 3.4 Footwear & Related Apparel............. 3.4 Retail-Drug Store...................... 3.2 Medical-Biomedical/Gene................ 3.1 Cosmetics & Toiletries................. 3.0 Distribution/Wholesale................. 3.0 Banks-Super Regional................... 2.8 Medical-Generic Drugs.................. 2.6 Medical-Drugs.......................... 2.6 Telecommunication Equipment............ 2.6 Repurchase Agreement................... 2.5 Transport-Rail......................... 2.5 Mining................................. 2.4 Aerospace/Defense...................... 2.3 Networking Products.................... 2.2 Enterprise Software/Service............ 2.2 Medical Products....................... 2.2 Retail-Apparel/Shoe.................... 2.1 Commercial Services.................... 2.1 Health Care Cost Containment........... 2.1 Oil & Gas Drilling..................... 2.0 Oil Companies-Exploration & Production. 2.0 X-Ray Equipment........................ 1.2 Electronics-Military................... 1.2 Food-Misc.............................. 1.2 Commodity Funds........................ 1.1 Computers-Periphery Equipment.......... 1.1 Beverages-Non-alcoholic................ 1.1 Data Processing/Management............. 1.1 Diversified Manufacturing Operations... 1.1 Retail-Building Products............... 1.1 Telephone-Integrated................... 1.1 Commercial Services-Finance............ 1.0 Real Estate Operations & Development... 1.0 Finance-Other Services................. 1.0 Rental Auto/Equipment.................. 1.0 Food-Wholesale/Distribution............ 0.8 Electronic Components-Semiconductors... 0.6 Casino Services........................ 0.3 E-Marketing/Info....................... 0.3 ---- 88.2% ====
-------- * Calculated as a percentage of net assets 58 SunAmerica Disciplined Growth Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008
Market Value Security Description Shares (Note 3) --------------------------------------------- COMMON STOCK -- 84.6% Aerospace/Defense -- 2.3% Lockheed Martin Corp....................... 4,100 $ 449,647 Raytheon Co................................ 9,100 486,941 ---------- 936,588 ---------- Applications Software -- 3.4% Intuit, Inc.+.............................. 28,900 913,529 Microsoft Corp............................. 17,700 472,413 ---------- 1,385,942 ---------- Banks-Super Regional -- 2.8% Bank of America Corp....................... 31,800 1,113,000 ---------- Beverages-Non-alcoholic -- 1.1% Hansen Natural Corp.+...................... 14,600 441,650 ---------- Building-Residential/Commercial -- 3.5% KB Home.................................... 22,600 444,768 Standard-Pacific Corp.+.................... 199,590 979,987 ---------- 1,424,755 ---------- Casino Services -- 0.3% Scientific Games Corp., Class A+........... 5,893 135,657 ---------- Commercial Services -- 2.1% Iron Mountain, Inc.+....................... 35,000 854,350 ---------- Commercial Services-Finance -- 1.0% Euronet Worldwide, Inc.+................... 24,700 413,231 ---------- Computers -- 5.3% Apple, Inc.+............................... 3,400 386,444 Hewlett-Packard Co......................... 37,900 1,752,496 ---------- 2,138,940 ---------- Computers-Periphery Equipment -- 1.1% Synaptics, Inc.+........................... 15,200 459,344 ---------- Cosmetics & Toiletries -- 3.0% Colgate-Palmolive Co....................... 5,400 406,890 Procter & Gamble Co........................ 11,600 808,404 ---------- 1,215,294 ---------- Data Processing/Management -- 1.1% Fiserv, Inc.+.............................. 9,200 435,344 ---------- Distribution/Wholesale -- 3.0% Beacon Roofing Supply, Inc.+............... 42,800 668,536 Pool Corp.................................. 22,541 525,881 ---------- 1,194,417 ---------- Diversified Manufacturing Operations -- 1.1% Danaher Corp............................... 6,200 430,280 ---------- E-Marketing/Info -- 0.3% Constant Contact, Inc.+.................... 7,911 135,041 ---------- Electronic Components-Semiconductors -- 0.6% Macrovision Solutions Corp.+............... 16,800 258,384 ---------- Electronics-Military -- 1.2% L-3 Communications Holdings, Inc........... 4,900 481,768 ---------- Enterprise Software/Service -- 2.2% Oracle Corp.+.............................. 43,500 883,485 ----------
Market Value Security Description Shares (Note 3) ------------------------------------------------------------------ Finance-Investment Banker/Broker -- 5.8% Citigroup, Inc............................... 57,900 $1,187,529 Investment Technology Group, Inc.+........... 8,300 252,569 JPMorgan Chase & Co.......................... 19,000 887,300 ---------- 2,327,398 ---------- Finance-Other Services -- 1.0% CME Group, Inc............................... 1,100 408,661 ---------- Food-Misc. -- 1.2% General Mills, Inc........................... 6,800 467,296 ---------- Food-Wholesale/Distribution -- 0.8% Fresh Del Monte Produce, Inc.+............... 13,819 306,782 ---------- Footwear & Related Apparel -- 3.4% Iconix Brand Group, Inc.+.................... 103,800 1,357,704 ---------- Health Care Cost Containment -- 2.1% McKesson Corp................................ 15,700 844,817 ---------- Medical Products -- 2.2% Becton Dickinson & Co........................ 11,000 882,860 ---------- Medical-Biomedical/Gene -- 3.1% Genzyme Corp.+............................... 15,200 1,229,528 ---------- Medical-Drugs -- 2.6% Abbott Laboratories.......................... 8,200 472,156 AstraZeneca PLC ADR.......................... 13,000 570,440 ---------- 1,042,596 ---------- Medical-Generic Drugs -- 2.6% Mylan, Inc.+................................. 32,800 374,576 Teva Pharmaceutical Industries, Ltd. ADR..... 14,800 677,692 ---------- 1,052,268 ---------- Mining -- 2.4% Agnico-Eagle Mines, Ltd...................... 7,200 396,504 Goldcorp, Inc................................ 17,700 559,851 ---------- 956,355 ---------- Networking Products -- 2.2% Cisco Systems, Inc.+......................... 39,600 893,376 ---------- Oil & Gas Drilling -- 2.0% Transocean, Inc.+............................ 7,300 801,832 ---------- Oil Companies-Exploration & Production -- 2.0% Devon Energy Corp............................ 8,600 784,320 ---------- Printing-Commercial -- 0.0% VistaPrint, Ltd.+............................ 98 3,218 ---------- Real Estate Operations & Development -- 1.0% The St. Joe Co.+............................. 10,500 410,445 ---------- Rental Auto/Equipment -- 1.0% Rent-A-Center, Inc.+......................... 18,100 403,268 ---------- Retail-Apparel/Shoe -- 2.1% Tween Brands, Inc.+.......................... 87,900 860,541 ---------- Retail-Building Products -- 1.1% Home Depot, Inc.............................. 16,400 424,596 ----------
59 SunAmerica Disciplined Growth Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008 -- (continued)
Shares/ Market Principal Value Security Description Amount (Note 3) ------------------------------------------------------------ COMMON STOCK (continued) Retail-Drug Store -- 3.2% CVS Caremark Corp................... 37,700 $ 1,268,982 ----------- Telecommunication Equipment -- 2.6% Harris Corp......................... 22,400 1,034,880 ----------- Telephone-Integrated -- 1.1% AT&T, Inc........................... 15,100 421,592 ----------- Transport-Rail -- 2.5% Burlington Northern Santa Fe Corp... 5,000 462,150 Union Pacific Corp.................. 7,400 526,584 ----------- 988,734 ----------- X-Ray Equipment -- 1.2% Hologic, Inc.+...................... 25,100 485,183 ----------- Total Common Stock (cost $35,803,824)................. 33,994,702 ----------- EXCHANGE-TRADED FUNDS -- 1.1% Commodity Funds -- 1.1% SPDR Gold Trust+ (cost $484,978).................... 5,500 467,885 ----------- Total Long-Term Investment Securities (cost $36,288,802)................. 34,462,587 ----------- REPURCHASE AGREEMENT -- 2.5% State Street Bank & Trust Co. Joint Repurchase Agreement(1) (cost $998,000).................... $998,000 998,000 ----------- TOTAL INVESTMENTS -- (cost $37,286,802)(2).............. 88.2% 35,460,587 Other assets less liabilities......... 11.8 4,727,908 -------- ----------- NET ASSETS -- 100.0% $40,188,495 ======== ===========
-------- + Non-income producing security (1) See Note 3 for details of Joint Repurchase Agreement. (2) See Note 7 for cost of investments on a tax basis. ADR --American Depository Receipt See Notes to Financial Statements 60 SunAmerica International Small-Cap Fund PORTFOLIO PROFILE -- September 30, 2008 -- (unaudited) Industry Allocation* Medical-Drugs.......................... 3.8% Chemicals-Diversified.................. 3.0 Consulting Services.................... 2.7 Computers-Integrated Systems........... 2.6 Electronic Components-Misc............. 2.5 Building-Maintance & Services.......... 2.4 Electric Products-Misc................. 2.3 Gambling (Non-Hotel)................... 2.0 Machinery-General Industrial........... 1.9 Medical Instruments.................... 1.9 Retail-Misc./Diversified............... 1.8 Cosmetics & Toiletries................. 1.8 Power Converter/Supply Equipment....... 1.8 Transport-Marine....................... 1.8 Shipbuilding........................... 1.8 Food-Misc.............................. 1.7 Time Deposits.......................... 1.7 Machinery-Construction & Mining........ 1.7 Energy-Alternate Sources............... 1.7 Finance-Other Services................. 1.7 Advanced Materials..................... 1.6 Containers-Paper/Plastic............... 1.5 Electronics-Military................... 1.5 Research & Development................. 1.4 Medical-Biomedical/Gene................ 1.4 Retail-Apparel/Shoe.................... 1.4 E-Commerce/Services.................... 1.4 Electronic Components-Semiconductors... 1.4 Security Services...................... 1.3 Electronic Measurement Instruments..... 1.3 Internet Infrastructure Software....... 1.3 Miscellaneous Manufacturing............ 1.3 Appliances............................. 1.2 Retail-Automobile...................... 1.2 Agricultural Operations................ 1.2 Transport-Rail......................... 1.1 Auto/Truck Parts & Equipment-Original.. 1.0 Transport-Services..................... 1.0 Applications Software.................. 1.0 Machinery-Electrical................... 1.0 Medical-Wholesale Drug Distribution.... 1.0 Retail-Bookstores...................... 1.0 Direct Marketing....................... 0.9 Oil-Field Services..................... 0.9 Retail-Petroleum Products.............. 0.9 Commercial Services.................... 0.8 Water.................................. 0.8 Veterinary Products.................... 0.8 Computers-Periphery Equipment.......... 0.8 Enterprise Software/Service............ 0.7 Electronic Connectors.................. 0.7 Industrial Audio & Video Products...... 0.7 Diversified Financial Services......... 0.7 Medical-Hospitals...................... 0.7 Extended Service Contracts............. 0.7 Building-Residential/Commercial........ 0.7 Tools-Hand Held........................ 0.7 Building & Construction-Misc........... 0.7 Oil Companies-Exploration & Production. 0.7 Medical Products....................... 0.7
Instruments-Controls................... 0.6% Medical Imaging Systems................ 0.6 Finance-Investment Banker/Broker....... 0.6 Chemicals-Specialty.................... 0.6 Building & Construction Products-Misc.. 0.6 Oil Field Machinery & Equipment........ 0.6 Medical Labs & Testing Services........ 0.6 Retail-Regional Department Stores...... 0.5 Retail-Discount........................ 0.5 Coatings/Paint......................... 0.5 Funeral Services & Related Items....... 0.5 Insurance-Reinsurance.................. 0.5 Oil Refining & Marketing............... 0.5 Rubber-Tires........................... 0.5 Auto-Cars/Light Trucks................. 0.4 Footwear & Related Apparel............. 0.4 Communications Software................ 0.4 Steel-Specialty........................ 0.4 Banks-Commercial....................... 0.4 Retail-Restaurants..................... 0.4 Electric-Generation.................... 0.4 Steel Pipe & Tube...................... 0.4 Coal................................... 0.4 Fisheries.............................. 0.3 Motion Pictures & Services............. 0.3 Casino Services........................ 0.3 Building-Heavy Construction............ 0.3 Internet Content-Information/News...... 0.3 Human Resources........................ 0.3 Audio/Video Products................... 0.2 Diversified Manufacturing Operations... 0.2 Aerospace/Defense...................... 0.2 Medical Information Systems............ 0.2 Beverages-Non-alcoholic................ 0.2 Rubber/Plastic Products................ 0.1 Diversified Minerals................... 0.1 Retail-Major Department Stores......... 0.1 ---- 98.1% ====
-------- * Calculated as a percentage of net assets 61 SunAmerica International Small-Cap Fund PORTFOLIO PROFILE -- September 30, 2008 -- (unaudited) (continued) Country Allocation* Japan.......... 28.5% United Kingdom. 26.6 Germany........ 6.3 France......... 5.1 South Korea.... 2.7 Spain.......... 2.6 Sweden......... 2.5 Bermuda........ 2.2 Denmark........ 1.9 Switzerland.... 1.8 Greece......... 1.8 United States.. 1.7 Finland........ 1.6 Norway......... 1.3 Taiwan......... 1.3 China.......... 1.3 Italy.......... 1.1 Cayman Islands. 0.8 Ireland........ 0.8 Malaysia....... 0.8 Netherlands.... 0.8 Indonesia...... 0.7 Belgium........ 0.7 Singapore...... 0.7 Austria........ 0.6 Australia...... 0.5 Hong Kong...... 0.4 New Zealand.... 0.4 Thailand....... 0.4 Philippines.... 0.2 ---- 98.1% ====
-------- * Calculated as a percentage of net assets 62 SunAmerica International Small-Cap Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008
Market Value Security Description Shares (Note 3)(1) ---------------------------------------------------------------------- COMMON STOCK -- 95.9% Australia -- 0.5% Tassal Group, Ltd............................... 36,863 $ 65,397 Western Areas NL+............................... 4,164 25,391 -------- 90,788 -------- Austria -- 0.6% Andritz AG...................................... 2,550 109,578 -------- Belgium -- 0.7% EVS Broadcast Equipment SA...................... 1,952 139,631 -------- Bermuda -- 2.2% China Yurun Food Group, Ltd..................... 57,000 73,660 CNPC Hong Kong, Ltd............................. 170,000 72,286 Global Sources, Ltd............................. 6,930 69,785 Huabao International Holdings, Ltd.............. 145,000 111,173 IT, Ltd......................................... 388,000 47,523 Pacific Basin Shipping, Ltd..................... 59,000 49,081 Peace Mark Holdings, Ltd........................ 8,000 1,545 -------- 425,053 -------- Cayman Islands -- 0.8% Anta Sports Products, Ltd....................... 134,000 77,465 Hidili Industry International Development, Ltd.. 145,000 69,522 New World Department Store China, Ltd.+......... 31,000 17,003 -------- 163,990 -------- China -- 1.3% AsiaInfo Holdings, Inc .+....................... 27,600 253,368 -------- Denmark -- 1.9% Auriga Industries A/S Series B.................. 5,645 142,885 East Asiatic Co., Ltd. A/S...................... 2,063 87,064 Genmab A/S+..................................... 1,204 68,815 NeuroSearch A/S+................................ 1,562 68,776 -------- 367,540 -------- Finland -- 1.6% Nokian Renkaat Oyj.............................. 3,647 88,641 Oriola-KD Oyj Series A.......................... 9,738 27,704 Oriola-KD Oyj Series B.......................... 2,816 7,934 Poyry Oyj....................................... 10,442 201,046 -------- 325,325 -------- France -- 5.1% Faiveley SA..................................... 1,235 73,816 Guerbet SA...................................... 721 122,070 Ingenico SA..................................... 5,997 151,123 Rubis SA........................................ 2,440 172,923 Sechilienne SA.................................. 3,399 194,454 Sperian Protection SA........................... 1,300 132,802 Virbac SA....................................... 1,979 151,911 -------- 999,099 -------- Germany -- 5.8% Bauer AG........................................ 2,170 110,220 ElringKlinger AG................................ 2,347 44,607 Fielmann AG..................................... 5,182 361,947 Rational AG..................................... 853 134,614
Market Value Security Description Shares (Note 3)(1) ---------------------------------------------------------- Germany (continued) SMA Solar Technology AG+............ 1,699 $ 132,900 Vossloh AG.......................... 3,547 365,031 ---------- 1,149,319 ---------- Greece -- 1.8% Fourlis Holdings SA................. 5,654 108,153 Sarantis SA......................... 21,350 239,191 ---------- 347,344 ---------- Hong Kong -- 0.4% China Green Holdings, Ltd........... 104,000 83,703 ---------- Indonesia -- 0.7% PT United Tractors Tbk.............. 144,666 144,495 ---------- Ireland -- 0.8% Origin Enterprises PLC+............. 36,270 153,183 ---------- Italy -- 1.1% Ansaldo STS SpA..................... 15,881 225,721 ---------- Japan -- 28.5% Acrodea, Inc.+...................... 26 60,412 Ain Pharmaciez, Inc................. 6,000 108,868 Alpha Systems, Inc.................. 3,700 75,349 Axell Corp.......................... 61 190,120 Benefit One Inc..................... 72 67,783 Chugoku Marine Paints, Ltd.......... 17,000 100,499 CMIC Co., Ltd....................... 110 28,633 Dai-ichi Seiko Co., Ltd............. 3,900 62,009 Daiseki Co., Ltd.................... 3,700 98,459 Dena Co., Ltd....................... 32 128,819 Disco Corp.......................... 3,100 90,713 Don Quijote Co., Ltd................ 5,900 105,722 en-japan, Inc....................... 79 73,983 EPS Co., Ltd........................ 30 95,203 Foster Electric Co., Ltd............ 3,600 44,934 FP Corp............................. 9,500 295,164 Funai Electric Co., Ltd............. 4,300 79,801 Harmonic Drive Systems, Inc......... 28 81,067 Hisamitsu Pharmaceutical Co., Inc... 6,300 273,484 Hitachi Koki Co., Ltd............... 13,200 134,525 Intage, Inc......................... 5,500 81,007 Iriso Electronics Co., Ltd.......... 8,500 83,345 Koito Manufacturing Co., Ltd........ 17,000 158,808 Kokusai Co., Ltd.................... 5,900 45,886 Kura Corp........................... 45 71,802 Mani, Inc........................... 2,300 129,701 Mars Engineering Corporation........ 2,900 62,941 Miraial Co., Ltd.................... 3,500 52,690 Modec, Inc.......................... 5,700 135,628 Moshi Moshi Hotline, Inc............ 7,100 184,782 Nichi-iko Pharmaceutical Co., Ltd... 4,300 104,356 Nishimatsuya Chain Co., Ltd......... 23,900 228,946 Obara Corp.......................... 2,800 24,185 OPTEX Co., Ltd...................... 5,800 53,757 Osaka Securities Exchange Co., Ltd.. 25 70,843 Otsuka Corp......................... 3,600 235,095
63 SunAmerica International Small-Cap Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008 -- (continued)
Market Value Security Description Shares (Note 3)(1) ------------------------------------------------------------- COMMON STOCK (continued) Japan (continued) Produce Co., Ltd.+..................... 11 $ 10,040 Proto Corp............................. 2,600 60,840 Roland DG Corp......................... 8,200 150,805 Sintokogio, Ltd........................ 19,300 121,064 Software Service, Inc.................. 4,500 35,688 Sysmex Corp............................ 3,800 168,075 Toho Pharmaceutical Co., Ltd........... 14,100 198,539 Token Corp............................. 4,170 135,289 Union Tool Co.......................... 4,700 110,673 USS Co., Ltd........................... 3,710 238,269 Village Vanguard Co., Ltd.+............ 41 197,968 VSN, Inc............................... 5,000 51,819 Works Applications Co., Ltd............ 167 141,194 Yamaguchi Financial Group, Inc......... 6,000 72,118 ---------- 5,611,700 ---------- Malaysia -- 0.8% IJM Corp. Bhd+......................... 57,400 78,662 Sarawak Energy Bhd..................... 101,800 70,648 ---------- 149,310 ---------- Netherlands -- 0.8% Smit Internationale NV................. 1,720 148,553 ---------- New Zealand -- 0.4% Nufarm, Ltd............................ 6,493 78,840 ---------- Norway -- 1.3% Sevan Marine ASA+...................... 26,368 109,318 Songa Offshore ASA+.................... 15,480 146,827 ---------- 256,145 ---------- Philippines -- 0.2% Pepsi-Cola Products Philippines, Inc.+. 712,000 30,402 ---------- Singapore -- 0.7% Raffles Medical Group, Ltd............. 206,800 137,715 ---------- South Korea -- 2.7% Cheil Industries, Inc.................. 990 43,525 CJ Internet Corp....................... 5,940 63,715 Hyundai DSF Co., Ltd................... 6,970 66,239 Jinsung T.E.C. Co., Ltd................ 5,548 56,658 JVM Co., Ltd........................... 2,683 38,809 Korea Kumho Petrochemical Co., Ltd..... 870 28,982 Korean Reinsurance Co.................. 12,530 98,321 SODIFF Advanced Materials Co., Ltd..... 1,104 75,425 Taeyoung Engineering & Construction.... 13,800 61,898 ---------- 533,572 ---------- Spain -- 2.6% Prosegur Cia de Seguridad SA........... 7,606 265,403 Tubacex, SA............................ 11,089 70,279 Viscofan SA............................ 11,059 182,218 ---------- 517,900 ---------- Sweden -- 2.5% Elekta AB, Series B.................... 12,121 207,189 Intrum Justitia AB..................... 23,926 256,686
Market Value Security Description Shares (Note 3)(1) -------------------------------------------------------------------- Sweden (continued) Saab AB, Series B........................... 2,406 $ 36,990 ----------- 500,865 ----------- Switzerland -- 1.8% Basilea Pharmaceutica AG+................... 1,433 210,638 Bucher Industries AG........................ 255 33,745 Compagne Financiere Tradition............... 961 111,490 ----------- 355,873 ----------- Taiwan -- 1.3% Everlight Electronics Co., Ltd.............. 37,818 78,782 Far Eastern Department Stores, Ltd.......... 63,000 41,819 L&K Engineering Co., Ltd.................... 58,000 54,325 Sanyang Industrial Co., Ltd................. 317,167 80,409 ----------- 255,335 ----------- Thailand -- 0.4% Tata Steel Thailand PCL (Foreign Shares)(2). 1,666,600 72,846 ----------- United Kingdom -- 26.6% Afren PLC+.................................. 51,441 60,307 Arriva PLC.................................. 10,665 131,647 Aveva Group PLC............................. 5,649 115,629 Chemring Group PLC.......................... 10,403 384,472 Chloride Group PLC.......................... 60,932 212,196 Connaught PLC............................... 49,925 334,224 Croda International PLC..................... 34,301 375,569 Dignity PLC................................. 8,002 100,076 eaga PLC.................................... 57,183 135,848 Go-Ahead Group PLC.......................... 2,399 71,532 Halma PLC................................... 59,622 211,218 Hikma Pharmaceuticals PLC................... 20,775 148,009 Homeserve PLC............................... 5,250 137,337 IG Group Holdings PLC....................... 70,162 399,917 Lamprell PLC................................ 31,447 180,613 Mears Group PLC............................. 27,300 138,187 Micro Focus International PLC............... 29,006 147,213 Northumbrian Water Group PLC................ 29,948 152,723 PayPoint PLC................................ 14,753 139,361 PV Crystalox Solar PLC+..................... 89,370 245,111 PZ Cussons PLC.............................. 38,305 122,496 QinetiQ PLC................................. 76,280 282,053 Rotork PLC.................................. 7,344 122,776 RPS Group PLC............................... 56,603 248,682 Ultra Electronics Holdings PLC.............. 12,510 285,141 VT Group PLC................................ 36,595 344,213 ----------- 5,226,550 ----------- Total Common Stock (cost $24,313,704)......................... 18,853,743 ----------- PREFERRED STOCK -- 0.5% Germany -- 0.5% Fuchs Petrolub AG (cost $153,611)............................ 1,673 92,371 -----------
64 SunAmerica International Small-Cap Fund PORTFOLIO OF INVESTMENTS -- September 30, 2008 -- (continued)
Shares/ Market Principal Value Security Description Amount (Note 3)(1) ------------------------------------------------------------------- WARRANTS -- 0.0% Malaysia -- 0.0% IJM Land Bhd Expires 09/13/2011+ (cost $0).................................. 5,740 $ 375 ----------- Total Long-Term Investment Securities (cost $24,467,315)......................... 18,946,489 ----------- SHORT-TERM INVESTMENT SECURITIES -- 1.7% Time Deposits -- 1.7% Euro Time Deposit with State Street Bank & Trust Co. 0.50% due 10/01/08 (cost $340,000)............................ $340,000 340,000 ----------- TOTAL INVESTMENTS -- (cost $24,807,315)(3) 98.1% 19,286,489 Other assets less liabilities................. 1.9 375,082 -------- ----------- NET ASSETS -- 100.0% $19,661,571 ======== ===========
-------- + Non-income producing security (1)A substantial number of the Fund's holdings were valued using the fair value procedures at September 30, 2008. At September 30, 2008, the aggregate value of these securities was $18,395,387 representing 93.6% of net assets. See Note 3 regarding fair value pricing procedures for foreign equity securities. (2)Fair valued security; See Note 2 (3)See Note 7 for cost of investment on a tax basis. See Notes to Financial Statements 65 SunAmerica Equity Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2008 Note 1. Organization SunAmerica Equity Funds is registered under the Investment Company Act of 1940, as amended, (the "1940 Act") as an open-end management investment company and was organized as a Massachusetts business trust (the "Trust" or "Equity Funds") on June 16, 1986. It currently consists of nine 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 AIG SunAmerica Asset Management Corp. (the "Adviser" or "AIG SunAmerica"), an indirect wholly-owned subsidiary of American International Group, Inc. ("AIG"). An investor may invest in one or more of the following Funds: SunAmerica Blue Chip Growth Fund ("Blue Chip Growth Fund"), SunAmerica Growth Opportunities Fund ("Growth Opportunities Fund"), SunAmerica New Century Fund ("New Century Fund"), SunAmerica Growth and Income Fund ("Growth and Income Fund"), SunAmerica Balanced Assets Fund ("Balanced Assets Fund"), SunAmerica International Equity Fund ("International Equity Fund"), SunAmerica Value Fund ("Value Fund"), SunAmerica Disciplined Growth Fund ("Disciplined Growth Fund") and SunAmerica International Small-Cap Fund ("International Small-Cap 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: Blue Chip Growth Fund seeks capital appreciation by active trading of equity securities of Blue Chip companies that demonstrate the potential for capital appreciation. At least 80% of the Fund's net assets plus any borrowing for investment purposes will be invested in Blue Chip companies. Growth Opportunities Fund seeks capital appreciation by active trading of equity securities that demonstrate the potential for capital appreciation, issued generally by small-cap companies. New Century Fund seeks capital appreciation by active trading of equity securities that demonstrate the potential for capital appreciation, without regard to market capitalization. Growth and Income Fund seeks capital appreciation and current income by active trading of equity securities issued by companies of any size, that pay dividends, demonstrate the potential for capital appreciation and/or are believed to be undervalued in the market. Balanced Assets Fund seeks capital appreciation and conservation of principal by active trading partly in equity securities that demonstrate the potential for capital appreciation issued by companies with market capitalization of over $1.5 billion and partly in investment-grade fixed income securities. International Equity Fund seeks capital appreciation by active trading of equity securities and other securities with equity characteristics of non-U.S. issuers located in a number of different countries other than the U.S. and selected without regard to market capitalization. At least 80% of the Fund's net assets plus, any borrowing for investment purposes, will be invested in equity securities. Value Fund seeks long-term growth of capital by active trading of equity securities selected on the basis of value criteria, issued by companies of any market capitalization, that offer the potential for long-term growth of capital. Disciplined Growth Fund seeks capital appreciation by active trading of equity securities that demonstrate the potential for capital appreciation, without regard to market capitalization. International Small-Cap Fund seeks long-term capital appreciation by active trading of equity and equity-related securities of non-U.S. small-cap companies throughout the world, including emerging market countries. Under normal circumstances, at least 80% of the Fund's net assets, plus any borrowings for investment purposes, will be invested in such securities. The Blue Chip Growth Fund, Growth Opportunities Fund, New Century Fund, Growth and Income Fund, Balanced Assets Fund, Disciplined Growth Fund and International Small-Cap Fund are organized as "diversified" funds within the meaning of the 1940 Act. The International Equity Fund and Value Fund are organized as "non-diversified" funds. 66 SunAmerica Equity Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2008 -- (continued) Each Fund offers multiple classes of shares. The classes within each Fund are presented in the Statement of Assets and Liabilities. The cost structure for each class is as follows: Class A shares are offered at net asset value per share plus an initial sales charge. Additionally, purchases of Class A shares in amounts $1,000,000 or more will be purchased at net asset value but will be subject to a contingent deferred sales charge on redemptions made within two years of purchase. With respect to Class A shares of the International Equity Fund and International Small-Cap Fund, a redemption fee of 2% will be assessed on the proceeds of any redemption of shares that were purchased within ninety (90) calendar days prior to the date of such redemption. An exchange fee of 2% will be assessed on the amount of any exchange of Class A shares of the International Equity Fund and International Small-Cap Fund that were purchased within ninety (90) calendar days prior to the date of such exchange. Class B shares are offered without an initial sales charge, although a declining contingent sales charge may be imposed on redemptions made within six years of purchase. Class B shares of each Fund convert automatically to Class A shares approximately eight years after purchase of such Class B shares and at such time will be subject to the lower distribution fee applicable to Class A shares. Class C shares are offered at net asset value per share without an initial sales charge, although may be subject to a contingent deferred sales charge on redemptions made within 12 months of purchase. Certain Class C shares of particular Funds issued in connection with particular reorganizations or mergers will convert automatically to Class A shares approximately ten years after purchase and at such time will be subject to the lower distribution fee applicable to Class A shares. Class I and Class Z shares are offered at net asset value per share. These classes are offered exclusively to certain institutions and to participants in certain employee benefit plans 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, Class B and Class C shares each make distribution and account maintenance fee payments under the distribution plans pursuant to Rule 12b-1 under the 1940 Act, except that Class B and Class C shares are subject to higher distribution fee rates. Class I shares and Class Z shares have not adopted 12b-1 plans and make no payments thereunder, however, Class I shares pay a service fee to the Funds' distributor for providing administrative and shareholder services. Indemnifications: Under the Trust's organizational documents, its officers and trustees are indemnified against certain liability arising out of the performance of their duties to the Trust. In addition, in the normal course of business the Trust enters into contracts that contain the obligation to indemnify others. The Trust's maximum exposure under these arrangements is unknown. Currently, however, the Trust expects the risk of loss to be remote. Note 2. Fund Merger Pursuant to a plan of reorganization, all the assets and liabilities of SunAmerica Biotech/Health Fund ("Biotech/Health Fund") were transferred in a tax-free exchange to the New Century Fund, in exchange for shares of New Century Fund. The details of the reorganization, which was consummated on March 19, 2007, are set forth below. Class A, Class B, and Class C shares of Biotech/Health Fund were exchanged tax-free for Class A, Class B, and Class C shares of New Century Fund at an exchange ratio of 2.24 to 1, 2.04 to 1 and 2.05 to 1, respectively. Net assets and unrealized appreciation (depreciation) as of the merger date were as follows: Net assets of the Biotech/Health Fund prior to merger............................................... $ 21,294,588 Net assets of the New Century Fund prior to merger.................................................. $ 88,216,005 ------------ Aggregate net assets of the New Century Fund following acquisition.................................. $109,510,593 ------------ Shares of the New Century Fund issued in connection with the acquisition of the Biotech/Health Fund. 1,098,850 Unrealized appreciation (depreciation) in the Biotech/Health Fund................................... $ 397,826
67 SunAmerica Equity Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2008 -- (continued) Note 3. Significant Accounting Policies The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates. The following is a summary of the significant accounting policies followed by the Trust in the preparation of their financial statements: Security Valuations: Stocks are generally valued based upon closing sales prices reported on recognized securities exchanges. 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, a portfolio uses the exchange that is the primary market for the security. However, depending on the foreign market, closing prices may be up to 15 hours old when they are used to price a Fund's shares, and the Fund may determine that certain closing prices are unreliable. This determination will be based on review of a number of factors, including developments in foreign markets, the performance of U.S. securities markets, and the performance of instruments trading in U.S. markets that represent foreign securities and baskets of foreign securities. If a Fund determines that closing prices do not reflect the fair value of the securities, the Fund will adjust the previous closing prices in accordance with pricing procedures approved by the Board of Trustees (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, the Funds use an outside pricing service to provide it with closing market prices and information used for adjusting those prices. Non-convertible bonds and debentures, other long-term debt securities, and short term debt securities with maturities in excess of 60 days, are valued at bid prices obtained for the day of valuation from a bond pricing service, when such prices are available. If a vendor quote is unavailable the securities may be priced at the mean of two independent quotes obtained from brokers. Short-term securities with 60 days or less to maturity are amortized to maturity based on their cost to the Fund if acquired within 60 days of maturity or, if already held by the Fund on the 60th day, are amortized to maturity based on the value determined on the 61st day. Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end 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. Securities for which market quotations are not readily available or if a development/significant event occurs that may significantly impact the value of the security, then these securities are valued, as determined pursuant to procedures adopted in good faith by the Board. There is no single standard for making fair value determinations, which may result in prices that vary from those of other funds. New Accounting Pronouncements: In March 2008, the Financial Accounting Standards (FASB) issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities. The standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position and financial performance. It is effective for financial statements issued for fiscal years beginning after November 15, 2008. Management is currently in the process of determining the impact of the standard on the Fund's disclosures in the financial statements. On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected 68 SunAmerica Equity Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2008 -- (continued) to be taken in the course of preparing the Fund's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. However, Registered Investment Companies are not required to implement FIN 48 until their last net asset value calculation in the first required financial statement reporting period for fiscal years beginning after December 15, 2006. Management had evaluated the implications of FIN 48 and determined there is no impact to the financial statements. In September 2006, the FASB issued Statement on Financial Accounting Standards No. 157, "Fair Value Measurements" ("FAS 157"). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. As of September 30, 2008, the management of the Funds does not believe the adoption of FAS 157 will impact the amounts reported in the financial statements, however, additional disclosures will be required about the inputs used to develop the measurements of fair value. Repurchase Agreements: The Funds, along with other affiliated registered investment companies, pursuant to exemptive relief granted by the Securities and Exchange Commission ("SEC"), may transfer uninvested cash balances into a single joint account, the daily aggregate balance of which is invested in one or more repurchase agreements collateralized by U.S. Treasury or federal agency obligations. For repurchase agreements and joint repurchase agreements, the Funds' custodian takes possession of the collateral pledged for investments in repurchase agreements ("repo" or collectively "repos"). The underlying collateral is valued daily on a mark to market basis 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 the Fund may be delayed or limited. As of September 30, 2008, the following Funds held an undivided interest in a joint repurchase agreement with State Street Bank & Trust Co.:
Percentage Principal Fund Interest Amount ---- ---------- ---------- Blue Chip Growth..... 0.65% $2,332,000 Growth Opportunities. 1.94 7,000,000 New Century.......... 1.57 5,662,000 Growth and Income.... 1.18 4,283,000 Balanced Assets...... 1.03 3,730,000 Value................ 1.19 4,305,000 Disciplined Growth... 0.28 998,000
As of such date, the repurchase agreement in that joint account and the collateral therefore were as follows: State Street Bank & Trust Co., dated September 30, 2008, bearing interest at a rate of 0.05% per annum, with a principal amount of $361,501,000, a repurchase price of $361,501,502, and a maturity date of October 1, 2008. The repurchase agreement is collateralized by the following:
Maturity Principal Type of Collateral Interest Rate Date Amount Market Value ------------------ ------------- -------- ------------ ------------ U.S. Treasury Bills. 0.33% 12/04/08 $124,090,000 $124,015,546 U.S. Treasury Bills. 0.25 12/11/08 244,840,000 244,717,580
As of September 30, 2008, the following Fund held an undivided interest in a joint repurchase agreement with UBS Securities, LLC.:
Percentage Principal Fund Interest Amount ---- ---------- --------- Growth Opportunities. 0.46% $923,000
69 SunAmerica Equity Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2008 -- (continued) As of such date, the repurchase agreement in that joint account and the collateral therefore were as follows: UBS Securities, LLC, dated September 30, 2008, bearing interest at a rate of 0.07% per annum, with a principal amount of $200,000,000, a repurchase price of $200,000,389, and a maturity date of October 1, 2008. The repurchase agreement is collateralized by the following:
Maturity Principal Type of Collateral Interest Rate Date Amount Market Value ------------------ ------------- -------- ----------- ------------ U.S. Treasury Inflation Index Notes. 3.00% 07/15/12 $62,928,000 $64,187,500 U.S. Treasury Inflation Index Notes. 1.88 07/15/13 59,007,000 60,187,500 U.S. Treasury Inflation Index Notes. 2.00 07/15/14 78,065,000 79,626,343
Securities Transactions, Investment Income, Expenses, Dividends and Distributions to Shareholders: Security transactions are recorded on a trade date basis. Realized gains and losses on sales of investments are calculated on the identified cost basis. Interest income is accrued daily 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 Fund 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 at various rates. For financial statements purposes, the Funds amortize all premiums and accrete all discounts on fixed income securities. Net investment income, 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 the current capital shares activity of the respective class). Expenses common to all Funds, not directly related to individual Funds, are allocated among the Funds based upon their relative net asset value or other appropriate methods. In all other respects, expenses are charged to each Fund as incurred on a specific identification basis. Interest earned on cash balances held at the custodian are shown as custody credits on the Statement of Operations. Dividends from net investment income, if any, are paid annually, except for the Balanced Assets Fund and Growth and Income Fund, which pay quarterly. Capital gain distributions, if any, are paid at least annually. The Balanced Assets Fund and Growth and Income Fund reserve the right to declare and pay dividends less frequently than disclosed above, provided that net realized capital gains and net investment income, if any, are paid annually. The Funds record dividends and distributions to their shareholders on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains are determined and presented in accordance with federal income tax regulations, which may differ from U.S. generally accepted accounting principles. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts at fiscal year end based on their federal tax-basis treatment; temporary differences do not require reclassification. Net investment income (loss), net realized gain (loss) and net assets are not affected by these reclassifications. Each Fund 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 realized gain on investments to its shareholders. Therefore, no federal tax provisions are required. Each Fund is considered a separate entity for tax purposes. The Funds file U.S. federal and certain state income tax returns. With few exceptions, the Funds are no longer subject to U.S. federal and state tax examination by tax authorities for tax years ending before 2004. Foreign Currency Translation: The books and records of the Funds are maintained in U.S. dollars. Assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Funds do not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of securities held at the end of the period. Similarly, the Funds do not isolate the effect of changes in foreign exchange rates from the changes in the market prices of portfolio securities sold 70 SunAmerica Equity Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2008 -- (continued) during the period. Realized foreign exchange gains and losses on other assets and liabilities and change in unrealized foreign exchange gains and losses on other assets and liabilities include foreign exchange gains and losses from currency gains or losses between the trade and 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 other assets and liabilities arising as a result of changes in the exchange rate. Forward Foreign Currency Contracts: Certain funds may enter into forward foreign currency contracts ("forward contracts") to attempt to protect securities and related receivables and payables against changes in future foreign exchange rates or to enhance return. A forward contract is an agreement between two parties to buy or sell currency at a set price on a future date. The market value of the contract will fluctuate with changes in currency exchange rates. The contract is marked to market daily using the forward rate and the change in market value is recorded by the Fund as unrealized gain or loss. On settlement date, the Fund records realized foreign exchange gains or losses when the contract is closed equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Forward contracts involve elements of risk in excess of the amounts reflected in the Statement of Assets and Liabilities. The Fund bears the risk of an unfavorable change in the foreign exchange rate underlying the forward contract. Futures Contracts: A futures contract is an agreement between two parties to buy and sell a financial instrument at a set price on a future date. Upon entering into a futures transaction, a Fund will be required to segregate an initial margin payment of cash or other liquid securities with the Futures Commission Merchant ("the broker"). The Funds' activities in futures contracts are used primarily for hedging purposes and from time to time for income enhancement. Futures contracts are conducted through regulated exchanges that minimize counter-party credit risks. A Funds' participation in the futures markets involves certain risks, including imperfect correlation between movements in the price of futures contracts and movements in the price of the securities hedged or used for cover. Pursuant to a contract, the Funds agree to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as "variation margin" and are recorded by the Funds as unrealized appreciation or depreciation. Futures contracts involve elements of risk in excess of the amount reflected in the Statement of Assets and Liabilities. When a contract is closed, the Funds record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Options: An option is a contract conveying a right to buy or sell a financial instrument at a specified price during a stipulated period. The premium paid by a Fund for the purchase of a call or a put option is included in the Fund's Statement of Assets and Liabilities as an investment and subsequently marked to market to reflect the current market value of the option. When a Fund writes a call or a put option, an amount equal to the premium received by the Fund is included in the Fund's Statement of Assets and Liabilities as a liability and is subsequently marked to market to reflect the current market value of the option written. If an option which the Fund has written either expires on its stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or loss if the cost of a closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such options is extinguished. If a call option which the Fund has written is exercised, the Fund realizes a capital gain or loss from the sale of the underlying security and the proceeds from such sale are increased by the premium originally received. If a put option which the Fund has written is exercised, the amount of the premium originally received reduces the cost of the security which the Fund purchased upon exercise of the option. There were no transactions in call and put options written during the year ended September 30, 2008. Mortgage-Backed Dollar Rolls: The Balanced Assets Fund may enter into dollar rolls using "to be announced" ("TBA") mortgage-backed securities ("TBA Rolls"). The Fund's policy is to record the components of TBA Rolls as purchase/sale transactions. Any difference between the purchase and sale price is recorded as a realized gain or loss on the date the transaction is entered into. Dollar roll transactions involve the risk that the market value of the securities held by the Fund may decline below the price of the securities that the Fund has sold but is obligated to repurchase under the agreement. In the event that the buyer of securities in a dollar roll transaction files bankruptcy or becomes insolvent, the Fund's use of the proceeds from the sale of the securities may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the Fund's obligation to repurchase the securities. The return earned by the Fund with the proceeds of the dollar roll transaction may not exceed transaction costs. 71 SunAmerica Equity Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2008 -- (continued) Short Sales: All funds may engage in "short sales against the box". A short sale is against the box to the extent that the Fund contemporaneously owns, or has the right to obtain without payment, securities identical to those sold short. In addition, the Disciplined Growth Fund, Value Fund, International Equity Fund and International Small-Cap Fund may sell a security it does not own in anticipation of a decline in the market value of that security ("short sales"). To complete such a transaction, the Fund must borrow the security to make delivery to the buyer. The Fund then is obligated to replace the security borrowed by purchasing it at market price at the time of replacement. The price at such time may be more or less than the price at which the security was sold by the Fund. Until the security is replaced, the Fund is required to pay to the lender any dividends or interest that accrues during the period of the loan. To borrow the security, the Fund may be required to pay a premium, which would increase the cost of the security sold. The proceeds of the short sale will be retained by the broker, to the extent necessary to meet margin requirements, until the short position is closed out. Until the Fund replaces a borrowed security, the Fund will maintain daily a segregated account, containing cash or liquid securities, at such a level that (i) the amount deposited in the account plus the amount deposited with the broker as collateral will equal the current value of the security sold short and (ii) the amount deposited in the segregated account plus the amount deposited with the broker as collateral will not be less than the market value of the security at the time it was sold short. Liabilities for securities sold short are reported at market value in the financial statements. Such liabilities are subject to off balance sheet risk to the extent of any future increases in market value of the securities sold short. The ultimate liability for securities sold short could exceed the liabilities recorded in the Statement of Assets and Liabilities. The Fund bears the risk of potential inability of the broker to meet their obligation to perform. Note 4. 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 AIG SunAmerica. Under the Agreement, AIG SunAmerica provides continuous supervision of a Fund's portfolio and administers its corporate affairs, subject to general review by the Trustees. In connection therewith, AIG 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 AIG SunAmerica and its affiliates. The Funds pay AIG SunAmerica a monthly investment advisory and management fee calculated daily at the following annual percentages of each Fund's average daily net assets:
Management Assets Fees ---------------------------- ---------- Blue Chip Growth Fund........ $0 - $350 million 0.75% (greater than) $350 million 0.70 (greater than) $700 million 0.65 Growth Opportunities Fund+... $0 - $350 million 0.75 (greater than) $350 million 0.70 (greater than) $700 million 0.65 New Century Fund+............ $0 - $350 million 0.75 (greater than) $350 million 0.70 (greater than) $700 million 0.65 Growth and Income Fund....... $0 - $350 million 0.75 (greater than) $350 million 0.70 (greater than) $700 million 0.65 Balanced Assets Fund*........ $0 - $350 million 0.75 (greater than) $350 million 0.70 (greater than) $700 million 0.65 International Equity Fund.... (greater than) $0 1.00 Value Fund................... $0 - $750 million 1.00 (greater than) $750 million 0.95 (greater than) $1.5 billion 0.90 Disciplined Growth Fund...... (greater than) $0 0.85 International Small-Cap Fund. (greater than) $0 1.15
-------- * On August 29, 2006, AIG SunAmerica agreed to the continuation of a 0.05% voluntary waiver of the investment advisory fees for the Balanced Assets Fund. Effective September 1, 2006, AIG SunAmerica agreed to an additional 0.02% waiver of the investment advisory fee for the Fund. Effective October 1, 2006, AIG SunAmerica agreed to reduce the waiver of the investment advisory fee for the Fund to 0.02%. Effective August 27, 2008, AIG SunAmerica removed the 0.02% waiver from the Balanced Assets Fund. For the year ended September 30, 2008, the amount of investment advisory fees waived for the Balanced Assets Fund was $24,443. This amount is reflected in the Statement of Operations. + Effective September 1, 2008, AIG SunAmerica agreed to a voluntary waiver of 0.02% of the investment advisory fees for the Growth Opportunities Fund and the New Century Fund. The voluntary waiver may be terminated at any time at the option of AIG SunAmerica. For the period ended September 30, 2008, the amount of investment advisory fees waived were $572 and $880 respectively. These amounts are reflected in the Statement of Operations. 72 SunAmerica Equity Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2008 -- (continued) For the year ended September 30, 2008, AIG SunAmerica earned fees in the amounts stated in the Statement of Operations. The International Equity Fund and International Small-Cap Fund are subadvised by AIG Global Investment Corp. ("AIGGIC") pursuant to a subadvisory agreement with AIG SunAmerica. AIGGIC is an indirect wholly-owned subsidiary of AIG and an affiliate of AIG SunAmerica. AIGGIC receives an annual fee of 0.47% of average daily net assets for the International Equity Fund and 0.60% of average daily net assets for the International Small-Cap Fund, which is paid by AIG SunAmerica. For the year ended September 30, 2008, AIGGIC waived 0.05% of the fee paid by AIG SunAmerica for the International Small-Cap Fund. AIG 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 Fund's average net assets. Annual Fund operating expenses shall not include extraordinary expenses, as determined under generally accepted accounting principals, or acquired fund fees and expenses. The contractual expense waivers and fee reimbursements will continue indefinitely subject to termination by the Trustees, including a majority of the trustees who are not deemed to be "interested persons" of the Trust, as defined by Section 2(a)(19) of the 1940 Act ("Disinterested Trustees").
Fund Percentage ---- ---------- Blue Chip Growth Class I........ 1.33% Growth Opportunities Class I.... 1.33 Growth and Income Class I....... 1.32 Balanced Assets Class I......... 1.33 International Equity Class A.... 1.90 International Equity Class B.... 2.55 International Equity Class C.... 2.55 International Equity Class I.... 1.80 Value Class A................... 1.63 Value Class B................... 2.28 Value Class C................... 2.28 Value Class I................... 1.53 Value Class Z................... 1.06 Disciplined Growth Class A...... 1.45 Disciplined Growth Class B...... 2.10 Disciplined Growth Class C...... 2.10 International Small-Cap Class A. 1.90 International Small-Cap Class B. 2.55 International Small-Cap Class C. 2.55
Further, AIG SunAmerica is voluntarily waiving fees and/or reimbursing expenses, if necessary, so that the total net expense ratio for the following classes do not exceed the amounts set forth below. The voluntary fee waivers and/or expense reimbursements may be terminated at any time at the option of AIG SunAmerica.
Fund Percentage ---- ---------- New Century Class C. 2.14%
For the International Equity Fund, Value Fund, Disciplined Growth Fund, and International Small-Cap Fund, any voluntary or contractual waivers and/or reimbursements made by AIG SunAmerica are subject to recoupment from the Funds within the following two years of making such waivers or reimbursements, provided that the Funds are able to effect such payment to AIG SunAmerica and remain in compliance with the foregoing expense limitations. 73 SunAmerica Equity Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2008 -- (continued) For the period ending September 30, 2008, pursuant to the contractual and voluntary expense limitations in the above tables AIG SunAmerica has waived or reimbursed expenses as follows: Blue Chip Growth Class I........ $ 8,443 Growth Opportunities Class I.... 9,680 New Century Fund Class C........ 16,759 Growth & Income Class I......... 10,198 Balanced Assets Class I......... 9,941 International Equity Class A.... -- International Equity Class B.... 10,239 International Equity Class C.... 10,479 International Equity Class I.... 6,383 Value Fund Class A.............. 108,777 Value Fund Class B.............. 42,127 Value Fund Class C.............. 26,424 Value Fund Class I.............. 4,981 Value Fund Class Z.............. 29,354 Disciplined Growth Class A...... 74,410 Disciplined Growth Class B...... 20,188 Disciplined Growth Class C...... 67,867 International Small-Cap Class A. 136,554 International Small-Cap Class B. 15,787 International Small-Cap Class C. 30,952
For the period ended September 30, 2008, the amounts recouped by the Adviser are as follows: International Equity Class A. $ -- International Equity Class B. 927 International Equity Class C. 8,671 International Equity Class I. 405
At September 30, 2008, the amount of expenses previously waived and/or reimbursed by AIG SunAmerica during the prior two years that remain subject to recoupment are as follows:
Class Other Specific Expenses Expenses Reimbursed Reimbursed ---------- ---------- International Equity Class A......... $ -- $ -- International Equity Class B......... -- 21,411 International Equity Class C......... -- 8,613 International Equity Class I......... -- 10,889 Value Fund Class A................... 104,894 108,178 Value Fund Class B................... 34,275 60,923 Value Fund Class C................... 22,241 37,715 Value Fund Class I................... 43 17,097 Value Fund Class Z................... 27,309 32,411 Disciplined Growth Class A........... 7,930 145,014 Disciplined Growth Class B........... 2,435 54,866 Disciplined Growth Class C........... 9,283 144,480 International Small-Cap Fund Class A. 124,291 134,827 International Small-Cap Fund Class B. 4,052 34,256 International Small-Cap Fund Class C. 17,935 46,362
74 SunAmerica Equity Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2008 -- (continued) The Trust, on behalf of each Fund, has entered into a Distribution Agreement with SunAmerica Capital Services, Inc. ("SACS" or the "Distributor")+, an affiliate of the Adviser. Each Fund has adopted a Distribution Plan on behalf of each class of shares (other than Class I and Class Z shares) (each a "Plan" and collectively, the "Plans") in accordance with the provisions of Rule 12b-1 under the 1940 Act, hereinafter referred to as the "Class A Plan," "Class B Plan" and "Class C Plan." In adopting the Plans, the Trustees determined that there was a reasonable likelihood that each such Plan would benefit the Fund and the shareholders of the respective class. The sales charge and distribution fees of a particular class will not be used to subsidize the sale of shares of any other class. Under the Class A Plan, Class B Plan and Class C Plan, the Distributor receives a distribution fee from a Fund at an annual rate of 0.10%, 0.75% and 0.75%, respectively, of the average daily net assets of the Fund's Class A, Class B and Class C shares to compensate the Distributor and certain securities firms for providing sales and promotional activities for distributing that class of shares. The distribution costs for which the Distributor may be compensated include fees paid to broker-dealers that have sold Fund shares, commissions and other expenses such as those incurred for sales literature, prospectus printing and distribution and compensation to wholesalers. It is possible that in any given year the amount paid to the Distributor under each Class' Plan may exceed the Distributor's distribution costs as described above. The Plans provide that the Class A, Class B and Class C shares of each Fund will pay the Distributor an account maintenance fee up to an annual rate of 0.25% of the aggregate average daily net assets of such class of shares for payments to compensate the Distributor and certain securities firms for account maintenance activities. Accordingly, for the year ended September 30, 2008, SACS received fees (see Statement of Operations) based upon the aforementioned rates. In addition, SACS is paid a fee of 0.25% of average daily net assets of Class I shares in connection with providing administrative and shareholder services to Class I shareholders. For the year ended September 30, 2008, SACS earned fees (see Statement of Operations) based upon the aforementioned rates. SACS receives sales charges on each Fund's Class A shares, portions of which are reallocated to affiliated broker-dealers and non-affiliated broker-dealers. SACS also receives the proceeds of contingent deferred sales charges paid by investors in connection with certain redemptions of each Fund's Class A, Class B and Class C shares. SACS has advised the Funds that for the year ended September 30, 2008, the proceeds received from sales (and paid out to affiliated and non-affiliated broker-dealers) and redemptions are as follows:
Class A Class B Class C --------------------------------------------- ---------- ---------- Contingent Contingent Contingent Affiliated Deferred Deferred Deferred Sales Broker- Non-affiliated Sales Sales Sales Fund Charges dealers Broker-dealers Charges Charges Charges ---- -------- ---------- -------------- ---------- ---------- ---------- Blue Chip Growth........ $ 47,814 $10,881 $ 30,334 $2,644 $12,445 $ 205 Growth Opportunities.... 26,178 13,802 8,324 329 10,553 301 New Century............. 38,548 17,112 14,821 1 10,779 305 Growth and Income....... 55,064 21,212 25,920 402 21,421 276 Balanced Assets......... 130,898 82,973 29,975 113 14,164 262 International Equity.... 104,417 25,015 64,111 1,138 16,512 2,618 Value................... 61,163 25,910 26,723 -- 39,306 1,080 Disciplined Growth...... 152,959 18,042 112,661 79 9,756 5,272 International Small-Cap. 33,011 12,047 15,807 6 2,195 102
The Trust has entered into a Service Agreement with AIG SunAmerica Fund Services, Inc. ("SAFS"), an affiliate of the Adviser. Under the Service Agreement, SAFS performs certain shareholder account functions by assisting the Funds' transfer agent in connection with the services that it offers to the shareholders of the Funds. Pursuant to the Service Agreement, the Funds (except for Class Z shares of the Funds) pay a fee to SAFS for services rendered based upon an annual rate of 0.22% of average daily net assets. No portion of this fee is paid or reimbursed by the Class Z shares, however, Class Z shares pay all direct transfer agency fees and out-of-pocket expenses relating to Class Z shares. For the year ended September 30, 2008, the Funds incurred the following expenses which are included in transfer agent fees payable in the Statement of Asset and Liabilities and in transfer agent fees and expenses in the Statement of Operations to compensate SAFS pursuant to the terms of the Service Agreement. -------- + Effective November 15, 2008, AIG SunAmerica Capital Services, Inc. changed its name to SunAmerica Capital Services, Inc. 75 SunAmerica Equity Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2008 -- (continued)
Expense Payable At September 30, 2008 -------------------------------- ------------------------------- Fund Class A Class B Class C Class I Class A Class B Class C Class I ---- -------- ------- ------- ------- ------- ------- ------- ------- Blue Chip Growth........ $103,505 $24,910 $ 8,546 $ 1,368 $ 7,541 $1,473 $ 565 $100 Growth Opportunities.... 65,302 22,013 12,214 247 4,260 1,262 750 16 New Century............. 146,607 15,931 9,265 -- 8,386 792 505 -- Growth and Income....... 127,455 31,783 42,330 668 9,168 1,891 2,852 50 Balanced Assets......... 240,010 26,369 25,880 1,340 17,351 1,775 1,821 103 International Equity.... 147,043 36,246 51,655 15,387 9,238 1,872 2,931 964 Value................... 219,643 64,217 41,930 65 14,860 4,083 2,714 5 Disciplined Growth...... 64,984 11,338 62,881 -- 4,197 773 3,345 -- International Small-Cap. 55,482 2,265 8,816 -- 3,331 125 454 --
At September 30, 2008, AIG SunAmerica, Inc. an affiliated company of the Adviser, owned 5.1% of the total outstanding shares of New Century, 17.5% of International Equity, and 23.5% of Value Fund, respectively. On February 8, 2008, the Blue Chip Growth Fund and Balanced Assets Fund sold 900 shares and 600 shares, respectively of Allergan, Inc. common stock that the Funds did not own. Both Funds have an investment restriction that prohibits them from selling securities they do not own ("short selling"). The short positions were closed on February 8, 2008, resulting in a gain of $19 and $12, respectively, for the Blue Chip Growth Fund and Balanced Assets Fund. On September 22, 2008, American International Group, Inc. ("AIG") the ultimate parent of AIG SunAmerica, SACS, SAFS and AIGGIC, entered into a revolving credit facility (the "Credit Facility") and a Guarantee and Pledge Agreement with the Federal Reserve Bank of New York under the terms of which AIG will issue a new series of perpetual, non-redeemable Convertible Participating Serial Preferred Stock (the "Preferred Stock") to a trust that will hold the Preferred Stock for the benefit of the United States Treasury. On October 3, 2008, AIG announced that it plans to retain its U.S. property and casualty and foreign general insurance businesses, and to retain a continuing ownership interest in its foreign life insurance operations, and that it is exploring divestiture opportunities for its remaining high-quality businesses and assets. Note 5. Expense Reductions Through expense offset arrangements resulting from broker commission recapture, a portion of the expenses of the Funds set forth below have been reduced. For the year ended September 30, 2008, the amount of expense reductions received by each Fund, used to offset the Fund's non-affiliated expenses were as follows:
Total Expense Fund Reductions ---- ------------- Blue Chip Growth..... $ 5,629 Growth Opportunities. 85,021 New Century.......... 106,303 Growth and Income.... 32,244 Balanced Assets...... 16,487 International Equity. 1,910 Value................ 57,737 Disciplined Growth... 44,763
Note 6. 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, 2008, were as follows:
Blue Chip Growth New Growth and Growth Opportunities Century Income Balanced Fund Fund Fund Fund Assets Fund ----------- ------------- ------------ ------------ ------------ Purchases (excluding U.S. government securities)............ $29,841,412 $197,778,161 $455,481,224 $222,514,092 $143,664,054 Sales and maturities (excluding U.S. government securities). 38,384,064 203,330,803 464,636,219 234,098,087 163,471,832 Purchases of U.S. government securities..................... -- -- -- -- 13,613,123 Sales and maturities of U.S. government securities.......... -- -- -- -- 9,807,775
76 SunAmerica Equity Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2008 -- (continued)
International Disciplined International Equity Value Growth Small-Cap Fund Fund Fund Fund ------------- ------------ ------------ ------------- Purchases (excluding U.S. government securities)............ $221,385,774 $351,849,772 $418,575,506 $27,323,160 Sales and maturities (excluding U.S. government securities). 239,283,972 388,290,339 418,604,891 29,924,614 Purchases of U.S. government securities..................... -- -- -- -- Sales and maturities of U.S. government securities.......... -- -- -- --
Note 7. Federal Income Taxes 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, 2008:
Blue Chip Growth New Growth and Balanced Growth Opportunities Century Income Assets Fund Fund Fund Fund Fund ------------- ------------- ----------- ------------- ------------ Cost (tax basis)........................... $ 52,663,794 $ 35,105,564 $44,689,376 $ 82,484,278 $119,055,616 ============ ============ =========== ============ ============ Appreciation............................... 3,917,063 326,897 619,543 1,326,895 4,315,437 Depreciation............................... (6,713,642) (3,087,638) (3,595,567) (10,342,457) (13,349,369) ------------ ------------ ----------- ------------ ------------ Net unrealized appreciation (depreciation). $ (2,796,579) $ (2,760,741) $(2,976,024) $ (9,015,562) $ (9,033,932) ============ ============ =========== ============ ============ International Disciplined International Equity Value Growth Small-Cap Fund Fund Fund Fund ------------- ------------- ----------- ------------- Cost (tax basis)........................... $ 88,555,925 $151,386,586 $39,015,734 $ 24,913,583 ============ ============ =========== ============ Appreciation............................... 1,933,270 4,660,123 367,315 279,789 Depreciation............................... (16,870,009) (19,617,032) (3,922,462) (5,906,883) ------------ ------------ ----------- ------------ Net unrealized appreciation (depreciation). $(14,936,739) $(14,956,909) $(3,555,147) $ (5,627,094) ============ ============ =========== ============
The following details the tax basis of distributions as well as the components of distributable earnings. The tax character of distributions paid may differ from the character of distributions shown on the Statement of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax basis components of distributable earnings differ from the amounts reflected in the Statement of Assets and Liabilities due to temporary book/tax differences primarily arising from wash sales, post October losses and derivative transactions.
For the year ended September 30, 2008 --------------------------------------------------------------------------- Distributable Earnings Tax Distributions ---------------------------------------- --------------------------------- Long-term Gains/Capital Unrealized Long-Term Ordinary Loss Appreciation Ordinary Capital Return of Fund Income Carryover (Depreciation)* Income Gains Capital ---- ---------- ------------- --------------- ----------- ----------- --------- Blue Chip Growth........ $ -- $ (52,435,231) $ (2,796,579) $ -- $ -- $ -- Growth Opportunities.... -- (186,645,011) (2,760,741) -- -- -- New Century............. -- (92,245,942) (2,976,024) -- -- -- Growth and Income....... 687,448 (31,657,902) (9,015,562) 242,422 -- -- Balanced Assets......... 368,475 (66,959,266) (9,033,932) 2,211,571 -- -- International Equity.... -- -- (14,940,219) 1,052,826 10,274,358 -- Value................... 1,575,013 -- (14,956,909) 19,180,606 13,697,035 -- Disciplined Growth...... -- (15,651,807) (3,554,231) -- -- -- International Small-Cap. -- -- (5,634,308) 86,582 247,600 39,211
-------- * Unrealized appreciation (depreciation) includes amounts for derivatives and other assets and liabilities denominated in foreign currency 77 SunAmerica Equity Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2008 -- (continued)
Tax Distributions For year ended September 30, 2007 ---------------------- Long-Term Ordinary Capital Fund Income Gains ---- ---------- ----------- Blue Chip Growth........ $ -- $ -- Growth Opportunities.... -- -- New Century............. -- -- Growth and Income....... -- -- Balanced Assets......... 2,250,950 -- International Equity.... -- -- Value................... 9,883,623 16,743,650 Disciplined Growth...... -- -- International Small-Cap. -- --
For the year ended September 30, 2008, the reclassifications arising from book/tax differences resulted in increases (decreases) that were primarily due to net investment losses, treatment of foreign currency, tax treatments of certain debt obligations, and principal paydown adjustments to the components of net assets as follows:
Accumulated Accumulated Undistributed Undistributed Net Investment Net Realized Capital Fund Income (Loss) Gain (Loss) Paid-in ---- -------------- ------------- ------------ Blue Chip Growth........ $ 527,763 $14,353,880 $(14,881,643) Growth Opportunities.... 451,595 5,291,580 (5,743,175) New Century............. 597,975 11,356,943 (11,954,918) Growth and Income....... -- -- -- Balanced Assets......... 77,785 (71,510) (6,275) International Equity.... (747,883) 13,154,462 (12,406,579) Value................... (21,013) 21,013 -- Disciplined Growth...... 365,368 (26) (365,342) International Small-Cap. 45,756 (6,545) (39,211)
For Federal income tax purposes, the Funds indicated below have capital loss carryforwards, which expire in the year indicated, as of September 30, 2008, which are available to offset future capital gains, if any:
Capital Loss Carryforward -------------------------------------------------------- Fund 2009 2010 2011 2012 2013 ---- ----------- ------------ ----------- ---------- -------- Blue Chip Growth........ $ -- $ 10,374,287 $42,060,944 $ -- $ -- Growth Opportunities*... 151,316 121,180,893 65,312,802 -- -- New Century*............ 17,583,650 38,311,136 36,351,156 -- -- Growth and Income....... -- -- 25,935,512 5,722,390 -- Balanced Assets......... -- 7,399,151 55,685,563 3,874,552 -- International Equity.... -- -- -- -- -- Value................... -- -- -- -- -- Disciplined Growth...... -- 10,618,952 4,260,050 594,906 177,899 International Small-Cap. -- -- -- -- --
-------- * The capital loss carryforwards include realized capital losses from the acquisition of other funds. These losses may be subject to annual limitation imposed by the Internal Revenue Code. Therefore, it is possible that not all of these capital losses will be available for use. 78 SunAmerica Equity Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2008 -- (continued) The Funds indicated below utilized capital loss carryforwards, which offset net taxable gains realized in the year ended September 30, 2008.
Capital Loss Capital Loss Carryforward Carryforward Fund Utilized Expired ---- ------------ ------------ Blue Chip Growth........ $ 780,142 $14,353,880 Growth Opportunities.... 1,106,447 5,291,580 New Century............. 1,891,228 11,356,943 Growth and Income....... 1,899,895 -- Balanced Assets......... 1,497,461 -- International Equity.... 1,385,288 12,370,431 Value................... -- -- Disciplined Growth...... 2,959,198 -- International Small-Cap. -- --
Under the current law, capital losses related to securities and foreign currency realized after October 31 and prior to the Fund's fiscal year end may be deferred as occurring the first day of the following year. For the fiscal year ended September 30, 2008, the Funds elected to defer capital losses as follows:
Deferred Deferred Post-October Post-October Currency Fund Capital Loss Loss ---- ------------ ------------ Blue Chip Growth........ $ 441,323 $ -- Growth Opportunities.... 16,533,061 -- New Century............. 39,136,700 -- Growth and Income....... 7,227,294 -- Balanced Assets......... 5,557,234 278 International Equity.... 4,571,658 -- Value................... 13,543,593 -- Disciplined Growth...... 16,433,085 -- International Small-Cap. 4,371,173 --
79 SunAmerica Equity Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2008 -- (continued) Note 8. Capital Share Transactions Transactions in capital shares of each class of each fund were as follows:
Blue Chip Growth Fund -------------------------------------------------------------------------------------------- Class A Class B --------------------------------------------- --------------------------------------------- For the For the For the For the year ended year ended year ended year ended September 30, 2008 September 30, 2007 September 30, 2008 September 30, 2007 --------------------- ---------------------- --------------------- ---------------------- Shares Amount Shares Amount Shares Amount Shares Amount -------- ----------- -------- ------------ -------- ----------- -------- ------------ Shares sold (1)(2)(3)(4). 289,921 $ 5,070,645 272,319 $ 4,717,820 54,301 $ 830,023 61,910 $ 927,860 Reinvested dividends..... -- -- -- -- -- -- -- -- Shares redeemed (1)(2)... (451,336) (7,730,963) (656,693) (11,104,067) (343,906) (5,217,068) (449,635) (6,803,173) -------- ----------- -------- ------------ -------- ----------- -------- ------------ Net increase (decrease).. (161,415) $(2,660,318) (384,374) $ (6,386,247) (289,605) $(4,387,045) (387,725) $ (5,875,313) ======== =========== ======== ============ ======== =========== ======== ============ Blue Chip Growth Fund -------------------------------------------------------------------------------------------- Class C Class I --------------------------------------------- --------------------------------------------- For the For the For the For the year ended year ended year ended year ended September 30, 2008 September 30, 2007 September 30, 2008 September 30, 2007 --------------------- ---------------------- --------------------- ---------------------- Shares Amount Shares Amount Shares Amount Shares Amount -------- ----------- -------- ------------ -------- ----------- -------- ------------ Shares sold.............. 68,319 $ 1,087,552 18,808 $ 279,270 14,650 $ 270,801 6,566 $ 112,457 Reinvested dividends..... -- -- -- -- -- -- -- -- Shares redeemed (3)(4)... (82,476) (1,252,219) (104,067) (1,557,478) (15,507) (285,207) (11,604) (197,959) -------- ----------- -------- ------------ -------- ----------- -------- ------------ Net increase (decrease).. (14,157) $ (164,667) (85,259) $ (1,278,208) (857) $ (14,406) (5,038) $ (85,502) ======== =========== ======== ============ ======== =========== ======== ============ Growth Opportunities Fund - -------------------------------------------------------------------------------------------- Class A Class B --------------------------------------------- --------------------------------------------- For the For the For the For the year ended year ended year ended year ended September 30, 2008 September 30, 2007 September 30, 2008 September 30, 2007 --------------------- ---------------------- --------------------- ---------------------- Shares Amount Shares Amount Shares Amount Shares Amount -------- ----------- -------- ------------ -------- ----------- -------- ------------ Shares sold (5)(6)(7)(8). 253,312 $ 4,189,533 467,598 $ 9,161,091 39,899 $ 553,585 57,020 $ 971,620 Reinvested dividends..... -- -- -- -- -- -- -- -- Shares redeemed (5)(6)... (613,549) (9,921,188) (607,841) (11,673,643) (364,166) (5,248,108) (584,520) (10,064,774) -------- ----------- -------- ------------ -------- ----------- -------- ------------ Net increase (decrease).. (360,237) $(5,731,655) (140,243) $ (2,512,552) (324,267) $(4,694,523) (527,500) $ (9,093,154) ======== =========== ======== ============ ======== =========== ======== ============
-------- (1)For the year ended September 30, 2008, includes automatic conversion of 213,034 shares of Class B shares in the amount of $3,232,933 to 186,968 shares of Class A shares in the amount of $3,232,933. (2)For the year ended September 30, 2007, includes automatic conversion of 205,245 shares of Class B shares in the amount of $3,153,549 to 181,415 shares of Class A shares in the amount of $3,153,549. (3)For the year ended September 30, 2008, includes automatic conversion of 5,104 shares of Class C shares in the amount of $78,117 to 4,448 shares of Class A shares in the amount of $78,117. (4)For the year ended September 30, 2007, includes automatic conversion of 17,217 shares of Class C shares in the amount of $262,954 to 15,124 shares of Class A shares in the amount of $262,954. (5)For the year ended September 30, 2008, includes automatic conversion of 146,917 shares of Class B shares in the amount of $2,166,396 to 128,971 shares of Class A shares in the amount of $2,166,396. (6)For the year ended September 30, 2007, includes automatic conversion of 277,289 shares of Class B shares in the amount of $4,814,621 to 244,697 shares of Class A shares in the amount of $4,814,621. (7)For the year ended September 30, 2008, includes automatic conversion of 9,445 shares of Class C shares in the amount of $129,260 to 8,257 shares of Class A shares in the amount of $129,260. (8)For the year ended September 30, 2007, includes automatic conversion of 15,202 shares of Class C shares in the amount of $266,305 to 13,404 shares of Class A shares in the amount of $266,305. 80 SunAmerica Equity Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2008 -- (continued)
Growth Opportunities Fund -------------------------------------------------------------------------------------------- Class C Class I ---------------------------------------------- -------------------------------------------- For the For the For the For the year ended year ended year ended year ended September 30, 2008 September 30, 2007 September 30, 2008 September 30, 2007 ---------------------- ---------------------- --------------------- --------------------- Shares Amount Shares Amount Shares Amount Shares Amount -------- ------------ -------- ------------ -------- ----------- -------- ----------- Shares sold................... 59,452 $ 756,646 73,251 $ 1,243,056 1,876 $ 30,513 900 $ 17,303 Reinvested dividends.......... -- -- -- -- -- -- -- -- Shares redeemed (1)(2)........ (188,701) (2,713,246) (203,387) (3,485,346) (3,002) (48,708) (17,924) (341,263) -------- ------------ -------- ------------ -------- ----------- -------- ----------- Net increase (decrease)....... (129,249) $ (1,956,600) (130,136) $ (2,242,290) (1,126) $ (18,195) (17,024) $ (323,960) ======== ============ ======== ============ ======== =========== ======== =========== New Century Fund -------------------------------------------------------------------------------------------- Class A Class B ---------------------------------------------- -------------------------------------------- For the For the For the For the year ended year ended year ended year ended September 30, 2008 September 30, 2007 September 30, 2008 September 30, 2007 ---------------------- ---------------------- --------------------- --------------------- Shares Amount Shares Amount Shares Amount Shares Amount -------- ------------ -------- ------------ -------- ----------- -------- ----------- Shares sold (3)(4)(5)......... 177,557 $ 3,209,325 349,824 $ 7,584,889 28,304 $ 451,311 41,725 $ 1,374,288 Shares issued in merger +..... -- -- 456,997 9,556,448 -- -- 378,511 6,906,165 Reinvested dividends.......... -- -- -- -- -- -- -- -- Shares redeemed (3)(4)........ (836,501) (15,340,030) (867,696) (20,403,970) (219,367) (3,484,631) (324,871) (6,113,256) -------- ------------ -------- ------------ -------- ----------- -------- ----------- Net increase (decrease)....... (658,944) $(12,130,705) (60,875) $ (3,262,633) (191,063) $(3,033,320) 95,365 $ 2,167,197 ======== ============ ======== ============ ======== =========== ======== =========== New Century Fund ---------------------------------------------- Class C ---------------------------------------------- For the For the year ended year ended September 30, 2008 September 30, 2007 ---------------------- ---------------------- Shares Amount Shares Amount -------- ------------ -------- ------------ Shares sold................... 33,282 $ 569,190 30,355 $ 1,513,139 Shares issued in merger +..... -- -- 263,342 4,832,027 Reinvested dividends.......... -- -- -- -- Shares redeemed (5)........... (102,735) (1,656,044) (100,822) (1,920,423) -------- ------------ -------- ------------ Net increase (decrease)....... (69,453) $ (1,086,854) 192,875 $ 4,424,743 ======== ============ ======== ============
-------- (1)For the year ended September 30, 2008, includes automatic conversion of 9,445 shares of Class C shares in the amount of $129,260 to 8,257 shares of Class A shares in the amount of $129,260. (2)For the year ended September 30, 2007, includes automatic conversion of 15,202 shares of Class C shares in the amount of $266,305 to 13,404 shares of Class A shares in the amount of $266,305. (3)For the year ended September 30, 2008, includes automatic conversion of 77,721 shares of Class B shares in the amount of $1,225,115 to 67,258 shares of Class A shares in the amount of $1,225,115. (4)For the year ended September 30, 2007, includes automatic conversion of 165,359 shares of Class B shares in the amount of $3,144,259 to 144,044 shares of Class A shares in the amount of $3,144,259. (5)For the year ended September 30, 2007, includes automatic conversion of 79 shares of Class C shares in the amount of $1,590 to 69 shares of Class A shares in the amount of $1,590. + See Note 2. 81 SunAmerica Equity Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2008 -- (continued)
Growth and Income Fund ------------------------------------------------------------------------------------------------- Class A Class B -------------------------------------------------- --------------------------------------------- For the For the For the For the year ended year ended year ended year ended September 30, 2008 September 30, 2007 September 30, 2008 September 30, 2007 ------------------------ ------------------------ --------------------- ---------------------- Shares Amount Shares Amount Shares Amount Shares Amount ---------- ------------ ---------- ------------ -------- ----------- -------- ------------ Shares sold (1)(2)(3)(4). 630,796 $ 9,133,076 1,024,726 $ 15,049,599 89,678 $ 1,199,212 88,044 $ 1,200,393 Reinvested dividends..... 14,377 220,109 -- -- -- -- -- -- Shares redeemed (1)(2)... (958,387) (13,836,029) (1,415,515) (20,646,675) (558,857) (7,455,853) (913,913) (12,582,078) ---------- ------------ ---------- ------------ -------- ----------- -------- ------------ Net increase (decrease).. (313,214) $ (4,482,844) (390,789) $ (5,597,076) (469,179) $(6,256,641) (825,869) $(11,381,685) ========== ============ ========== ============ ======== =========== ======== ============ Growth and Income Fund ------------------------------------------------------------------------------------------------- Class C Class I -------------------------------------------------- --------------------------------------------- For the For the For the For the year ended year ended year ended year ended September 30, 2008 September 30, 2007 September 30, 2008 September 30, 2007 ------------------------ ------------------------ --------------------- ---------------------- Shares Amount Shares Amount Shares Amount Shares Amount ---------- ------------ ---------- ------------ -------- ----------- -------- ------------ Shares sold.............. 71,480 $ 957,187 69,560 $ 943,742 5,275 $ 76,070 3,981 $ 57,853 Reinvested dividends..... -- -- -- -- 95 1,451 -- -- Shares redeemed (3)(4)... (386,530) (5,155,170) (585,816) (8,047,218) (4,673) (68,432) (5,169) (76,734) ---------- ------------ ---------- ------------ -------- ----------- -------- ------------ Net increase (decrease).. (315,050) $ (4,197,983) (516,256) $ (7,103,476) 697 $ 9,089 (1,188) $ (18,881) ========== ============ ========== ============ ======== =========== ======== ============ Balanced Assets Fund ------------------------------------------------------------------------------------------------- Class A Class B -------------------------------------------------- --------------------------------------------- For the For the For the For the year ended year ended year ended year ended September 30, 2008 September 30, 2007 September 30, 2008 September 30, 2007 ------------------------ ------------------------ --------------------- ---------------------- Shares Amount Shares Amount Shares Amount Shares Amount ---------- ------------ ---------- ------------ -------- ----------- -------- ------------ Shares sold (5)(6)(7)(8). 492,914 $ 7,199,045 659,237 $ 9,995,580 95,382 $ 1,386,363 82,301 $ 1,239,592 Reinvested dividends..... 128,624 1,834,569 122,714 1,865,233 8,240 117,639 7,877 119,339 Shares redeemed (5)(6)... (1,444,312) (21,111,948) (1,840,180) (27,750,445) (322,360) (4,705,433) (595,400) (8,989,165) ---------- ------------ ---------- ------------ -------- ----------- -------- ------------ Net increase (decrease).. (822,774) $(12,078,334) (1,058,229) $(15,889,632) (218,738) $(3,201,431) (505,222) $ (7,630,234) ========== ============ ========== ============ ======== =========== ======== ============ Balanced Assets Fund ------------------------------------------------------------------------------------------------- Class C Class I -------------------------------------------------- --------------------------------------------- For the For the For the For the year ended year ended year ended year ended September 30, 2008 September 30, 2007 September 30, 2008 September 30, 2007 ------------------------ ------------------------ --------------------- ---------------------- Shares Amount Shares Amount Shares Amount Shares Amount ---------- ------------ ---------- ------------ -------- ----------- -------- ------------ Shares sold.............. 42,482 $ 629,344 37,806 $ 565,546 1,809 $ 26,801 2,467 $ 37,069 Reinvested dividends..... 7,970 114,014 6,854 104,202 887 12,606 886 13,500 Shares redeemed (7)(8)... (193,356) (2,838,735) (229,341) (3,460,624) (1,818) (27,036) (14,882) (226,730) ---------- ------------ ---------- ------------ -------- ----------- -------- ------------ Net increase (decrease).. (142,904) $ (2,095,377) (184,681) $ (2,790,876) 878 $ 12,371 (11,529) $ (176,161) ========== ============ ========== ============ ======== =========== ======== ============
-------- (1)For the year ended September 30, 2008, includes automatic conversion of 227,070 shares of Class B shares in the amount of $3,426,719 to 239,301 shares of Class A shares in the amount of $3,426,719. (2)For the year ended September 30, 2007, includes automatic conversion of 465,198 shares of Class B shares in the amount of $6,461,560 to 436,352 shares of Class A shares in the amount of $6,461,560. (3)For the year ended September 30, 2008, includes automatic conversion of 79,802 shares of Class C shares in the amount of $1,070,754 to 74,653 shares of Class A shares in the amount of $1,070,754. (4)For the year ended September 30, 2007, includes automatic conversion of 102,570 shares of Class C shares in the amount of $1,439,849 to 96,087 shares of Class A shares in the amount of $1,439,849. (5)For the year ended September 30, 2008, includes automatic conversion of 110,956 shares of Class B shares in the amount of $1,639,736 to 110,614 shares of Class A shares in the amount of $1,639,736. (6)For the year ended September 30, 2007, includes automatic conversion of 312,489 shares of Class B shares in the amount of $4,744,038 to 311,322 shares of Class A shares in the amount of $4,744,038. (7)For the year ended September 30, 2008, includes automatic conversion of 6,528 shares of Class C shares in the amount of $94,078 to 6,522 shares of Class A shares in the amount of $94,078. (8)For the year ended September 30, 2007, includes automatic conversion of 9,120 shares of Class C shares in the amount of $137,980 to 9,106 shares of Class A shares in the amount of $137,980. 82 SunAmerica Equity Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2008 -- (continued)
International Equity Fund ---------------------------------------------------------------------------------------------------- Class A Class B -------------------------------------------------- ------------------------------------------------ For the For the For the For the year ended year ended year ended year ended September 30, 2008 September 30, 2007 September 30, 2008 September 30, 2007 ------------------------ ------------------------ ---------------------- ------------------------ Shares Amount Shares Amount Shares Amount Shares Amount ---------- ------------ ---------- ------------ -------- ------------ ---------- ------------ Shares sold (1)(2)(3)(4).. 873,082 $ 15,209,058 1,360,169 $ 24,122,022 180,778 $ 2,906,684 234,766 $ 3,887,709 Reinvested dividends...... 337,952 6,106,795 -- -- 101,318 1,689,981 -- -- Shares redeemed (1)(2)(5)(6)............. (1,289,845) (21,458,586) (1,476,609) (26,115,354) (582,664) (8,831,689) (552,783) (9,228,788) ---------- ------------ ---------- ------------ -------- ------------ ---------- ------------ Net increase (decrease)... (78,811) $ (142,733) (116,440) $ (1,993,332) (300,568) $ (4,235,024) (318,017) $ (5,341,079) ========== ============ ========== ============ ======== ============ ========== ============ International Equity Fund ---------------------------------------------------------------------------------------------------- Class C Class I -------------------------------------------------- ------------------------------------------------ For the For the For the For the year ended year ended year ended year ended September 30, 2008 September 30, 2007 September 30, 2008 September 30, 2007 ------------------------ ------------------------ ---------------------- ------------------------ Shares Amount Shares Amount Shares Amount Shares Amount ---------- ------------ ---------- ------------ -------- ------------ ---------- ------------ Shares sold............... 339,109 $ 5,508,728 340,641 $ 5,685,742 115,757 $ 2,027,150 140,027 $ 2,462,907 Reinvested dividends...... 130,196 2,170,365 -- -- 38,744 706,298 -- -- Shares redeemed (3)(4)(5)(6)............. (672,025) (9,700,348) (351,299) (5,862,416) (159,912) (2,644,211) (333,525) (5,907,477) ---------- ------------ ---------- ------------ -------- ------------ ---------- ------------ Net increase (decrease)... (202,720) $ (2,021,255) (10,658) $ (176,674) (5,411) $ 89,237 (193,498) $ (3,444,570) ========== ============ ========== ============ ======== ============ ========== ============ Value Fund ---------------------------------------------------------------------------------------------------- Class A Class B -------------------------------------------------- ------------------------------------------------ For the For the For the For the year ended year ended year ended year ended September 30, 2008 September 30, 2007 September 30, 2008 September 30, 2007 ------------------------ ------------------------ ---------------------- ------------------------ Shares Amount Shares Amount Shares Amount Shares Amount ---------- ------------ ---------- ------------ -------- ------------ ---------- ------------ Shares sold (7)(8)(9)(10). 647,141 $ 9,924,293 1,330,412 $ 24,650,750 146,756 $ 2,188,231 305,011 $ 5,377,534 Reinvested dividends...... 1,063,818 16,563,642 704,045 12,539,044 351,095 5,133,009 284,619 4,810,045 Shares redeemed (7)(8).... (2,160,593) (32,186,863) (1,963,578) (36,336,366) (866,926) (12,306,794) (1,074,442) (18,893,815) ---------- ------------ ---------- ------------ -------- ------------ ---------- ------------ Net increase (decrease)... (449,634) $ (5,698,928) 70,879 $ 853,428 (369,075) $ (4,985,554) (484,812) $ (8,706,236) ========== ============ ========== ============ ======== ============ ========== ============ Value Fund ---------------------------------------------------------------------------------------------------- Class C Class I -------------------------------------------------- ------------------------------------------------ For the For the For the For the year ended year ended year ended year ended September 30, 2008 September 30, 2007 September 30, 2008 September 30, 2007 ------------------------ ------------------------ ---------------------- ------------------------ Shares Amount Shares Amount Shares Amount Shares Amount ---------- ------------ ---------- ------------ -------- ------------ ---------- ------------ Shares sold............... 126,100 $ 1,696,181 234,527 $ 4,126,128 86 $ 1,562 654 $ 12,289 Reinvested dividends...... 203,721 2,978,405 198,577 3,355,958 348 5,401 199 3,531 Shares redeemed (9)(10)... (567,231) (8,063,054) (902,862) (15,771,477) (265) (3,842) (8,370) (162,102) ---------- ------------ ---------- ------------ -------- ------------ ---------- ------------ Net increase (decrease)... (237,410) $ (3,388,468) (469,758) $ (8,289,391) 169 $ 3,121 (7,517) $ (146,282) ========== ============ ========== ============ ======== ============ ========== ============
-------- (1)For the year ended September 30, 2008, includes automatic conversion of 201,566 shares of Class B shares in the amount of $3,107,494 to 185,992 shares of Class A shares in the amount of $3,107,494. (2)For the year ended September 30, 2007, includes automatic conversion of 276,480 shares of Class B shares in the amount of $4,654,844 to 258,279 shares of Class A shares in the amount of $4,654,844. (3)For the year ended September 30, 2008, includes automatic conversion of 16,006 shares of Class C shares in the amount of $250,119 to 14,757 shares of Class A shares in the amount of $250,119. (4)For the year ended September 30, 2007, includes automatic conversion of 35,187 shares of Class C shares in the amount of $594,960 to 32,839 shares of Class A shares in the amount of $594,960. (5)For the year ended September 30, 2008, net of redemption fees of $10,729, $2,743, $3,748, and $1,179 for Class A, Class B, Class C and Class I shares, respectively. (6)For the year ended September 30, 2007, net of redemption fees of $2,583, $771, $904, and $320 for Class A, Class B, Class C and Class I shares, respectively. (7)For the year ended September 30, 2008, includes automatic conversion of 204,341 shares of Class B shares in the amount of $3,088,508 to 192,052 shares of Class A shares in the amount of $3,088,508. (8)For the year ended September 30, 2007, includes automatic conversion of 559,465 shares of Class B shares in the amount of $9,849,109 to 529,830 shares of Class A shares in the amount of $9,849,109. (9)For the year ended September 30, 2008, includes automatic conversion of 5,802 shares of Class C shares in the amount of $80,487 to 5,438 shares of Class A shares in the amount of $80,487. (10)For the year ended September 30, 2007, includes automatic conversion of 7,899 shares of Class C shares in the amount of $138,746 to 7,473 shares of Class A shares in the amount of $138,746. 83 SunAmerica Equity Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2008 -- (continued)
Value Fund ----------------------------------------------- Class Z ----------------------------------------------- For the For the year ended year ended September 30, 2008 September 30, 2007 ----------------------- ---------------------- Shares Amount Shares Amount --------- ------------ -------- ------------ Shares sold............. 357,717 $ 5,554,158 509,315 $ 9,851,572 Reinvested dividends.... 309,158 5,048,549 161,535 2,988,389 Shares redeemed......... (461,438) (7,142,198) (128,127) (2,450,744) --------- ------------ -------- ------------ Net increase (decrease). 205,437 $ 3,460,509 542,723 $ 10,389,217 ========= ============ ======== ============ Disciplined Growth Fund --------------------------------------------------------------------------------------------- Class A Class B ----------------------------------------------- -------------------------------------------- For the For the For the For the year ended year ended year ended year ended September 30, 2008 September 30, 2007 September 30, 2008 September 30, 2007 ----------------------- ---------------------- --------------------- --------------------- Shares Amount Shares Amount Shares Amount Shares Amount --------- ------------ -------- ------------ -------- ----------- -------- ----------- Shares sold (1)(2)...... 1,241,974 $ 20,161,048 532,983 $ 7,889,774 124,724 $ 1,851,127 24,300 $ 356,197 Reinvested dividends.... -- -- -- -- -- -- -- -- Shares redeemed (1)(2).. (918,848) (13,537,356) (776,777) (11,139,424) (102,038) (1,489,966) (422,344) (5,886,295) --------- ------------ -------- ------------ -------- ----------- -------- ----------- Net increase (decrease). 323,126 $ 6,623,692 (243,794) $ (3,249,650) 22,686 $ 361,161 (398,044) $(5,530,098) ========= ============ ======== ============ ======== =========== ======== =========== Disciplined Growth Fund ----------------------------------------------- Class C ----------------------------------------------- For the For the year ended year ended September 30, 2008 September 30, 2007 ----------------------- ---------------------- Shares Amount Shares Amount --------- ------------ -------- ------------ Shares sold............. 672,443 $ 10,787,226 158,305 $ 2,312,884 Reinvested dividends.... -- -- -- -- Shares redeemed......... (847,217) (12,061,646) (559,493) (7,777,003) --------- ------------ -------- ------------ Net increase (decrease). (174,774) $ (1,274,420) (401,188) $ (5,464,119) ========= ============ ======== ============
-------- (1)For the year ended September 30, 2008, includes automatic conversion of 27,497 shares of Class B shares in the amount of $437,155 to 26,202 shares of Class A shares in the amount of $437,155. (2)For the year ended September 30, 2007, includes automatic conversion of 285,157 shares of Class B shares in the amount of $3,980,961 to 273,229 shares of Class A shares in the amount of $3,980,961. 84 SunAmerica Equity Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2008 -- (continued)
International Small-Cap Fund ----------------------------------------------------------------------------------- Class A Class B ------------------------------------------- -------------------------------------- For the For the For the For the year ended year ended year ended year ended September 30, 2008 September 30, 2007 September 30, 2008 September 30, 2007 --------------------- -------------------- ------------------ ------------------ Shares Amount Shares Amount Shares Amount Shares Amount -------- ----------- ------- ----------- ------- --------- ------- --------- Shares sold (3)(4)........... 90,461 $ 1,142,820 335,947 $ 4,376,150 26,818 $ 324,786 43,182 $ 571,843 Reinvested dividends......... 21,169 275,413 -- -- 949 12,228 -- -- Shares redeemed (3)(4)(5)(6). (296,407) (3,416,464) (83,528) (1,082,480) (35,785) (405,992) (11,022) (145,437) -------- ----------- ------- ----------- ------- --------- ------- --------- Net increase (decrease)...... (184,777) $(1,998,231) 252,419 $ 3,293,670 (8,018) $ (68,978) 32,160 $ 426,406 ======== =========== ======= =========== ======= ========= ======= ========= International Small-Cap Fund ------------------------------------------- Class C ------------------------------------------- For the For the year ended year ended September 30, 2008 September 30, 2007 --------------------- -------------------- Shares Amount Shares Amount -------- ----------- ------- ----------- Shares sold.................. 50,457 $ 605,472 152,986 $ 2,062,450 Reinvested dividends......... 4,084 52,562 -- -- Shares redeemed (5)(6)....... (172,747) (1,865,760) (72,183) (878,788) -------- ----------- ------- ----------- Net increase (decrease)...... (118,206) $(1,207,726) 80,803 $ 1,183,662 ======== =========== ======= ===========
-------- (3)For the year ended September 30, 2008, includes automatic conversion of 3,459 shares of Class B shares in the amount of $40,920 to 3,421 shares of Class A shares in the amount of $40,920. (4)For the year ended September 30, 2007, includes automatic conversion of 6,170 shares of Class B shares in the amount of $82,165 to 6,131 shares of Class A shares in the amount of $82,165. (5)For the year ended September 30, 2008, net of redemption fees of $1,750, $71, and $290 for Class A, Class B, and Class C shares, respectively. (6)For the year ended September 30, 2007, net of redemption fees of $1,504, $47, and $218 for Class A, Class B, and Class C shares, respectively. 85 SunAmerica Equity Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2008 -- (continued) Note 9. Line of Credit The AIG SunAmerica Family of Mutual Funds has established a $75 million committed and $50 million uncommitted line of credit with State Street Bank and Trust Company, the Funds' custodian. Interest is currently payable at the Federal Funds Rate plus 50 basis points on the committed line and State Street Bank and Trust Company's discretionary bid rate on the uncommitted line of credit. There is also a commitment fee of 10 basis points per annum on the daily unused portion of the committed line of credit which is included in other expenses on the Statement of Operations. Borrowings under the line of credit will commence when the respective Fund's cash shortfall exceeds $100,000. For the year ended September 30, 2008, the following Funds had borrowings:
Days Interest Average Weighted Portfolio Outstanding Charges Debt Average Growth and Income..... 1 $ 130 $1,287,383 3.63% Balanced Assets....... 6 427 480,844 5.32 International Equity.. 8 719 636,517 4.84 Disciplined Growth.... 62 7,443 1,524,394 2.99 International Small-Cap............ 31 1,155 393,974 3.68
At September 30, 2008, there were no borrowings outstanding. Note 10. Interfund Lending Agreement Pursuant to exemptive relief granted by the SEC, the Funds are permitted to participate in an interfund lending program among investment companies advised by AIG SunAmerica or an affiliate. The interfund lending program allows the participating Funds to borrow money from and loan 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, 2008, none of the Funds participated in this program. Note 11. Trustees Retirement Plan The Trustees of the Trust have adopted the AIG SunAmerica Disinterested Trustees' and Directors' Retirement Plan (the "Retirement Plan") effective January 1, 1993, as amended December 9, 2006, for the unaffiliated Trustees. The Retirement Plan provides generally that an unaffiliated Trustee may become a participant ("Participant") in the Retirement Plan if he or she has at least 10 years of consecutive service as a Disinterested Trustee of any of the adopting AIG SunAmerica mutual funds (the "Adopting Funds") or has attained the age of 60 while a Trustee and completed five (5) consecutive years of service as a Trustee of any Adopting Fund (an "Eligible Trustee"). Pursuant to the Retirement Plan, an Eligible Trustee may receive benefits upon (i) his or her death or disability while a Trustee or (ii) the termination of his or her tenure as a Trustee, other than removal for cause from each of the Adopting Funds with respect to which he or she is an Eligible Trustee. As of each of the first 10 birthdays after becoming a Participant and on which he or she is both a Trustee and Participant, each Eligible Trustee will be credited with an amount equal to 50% of his or her regular fees (excluding committee fees) for services as a Disinterested Trustee of each Adopting Fund for the calendar year in which such birthday occurs. In addition, an amount equal to 8.50% of any amounts credited under the preceding statement during prior years is added to each Eligible Trustee's account. The rights of any Participant to benefits under the Retirement Plan shall be an unsecured claim against the assets of the Adopting Funds. An Eligible Trustee may receive any benefits payable under the Retirement Plan, at his or her election, either in one lump sum or in up to 15 annual installments. Any undistributed amounts shall continue to accrue interest at 8.50%. 86 SunAmerica Equity Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2008 -- (continued) The following amounts for the Retirement Plan Liabilities are included in the Trustee fees and expenses payable line on the Statement of Assets and Liabilities and the amounts for the Retirement Plan Expenses are included in the Trustees' fees and expenses line on the Statement of Operations.
Retirement Plan Retirement Plan Retirement Plan Liability Expense Payments --------------- --------------- --------------- Fund As of September 30, 2008 ---- ----------------------------------------------- Blue Chip Growth............... $27,691 $1,458 $2,055 Growth Opportunities........... 23,985 1,188 1,525 New Century.................... 47,350 1,868 3,777 Growth and Income.............. 38,061 2,182 2,172 Balanced Assets................ 74,220 3,098 5,942 International Equity........... 19,762 2,653 1,139 Value.......................... 34,774 4,352 1,838 Disciplined Growth............. 11,685 1,477 543 International Small-Cap Equity. 858 608 --
Note 12. Investment Concentration Some of the Funds may invest internationally, including in "emerging market" countries. These securities may be denominated in currencies other than U.S. dollars. While investing internationally may reduce your risk by increasing the diversification of your investment, the value of your investment may be affected by fluctuating currency values, changing local and regional economic, political and social conditions, and greater market volatility. In addition, foreign securities may not be as liquid as domestic securities. These risks are primary risks of the International Equity Fund and International Small-Cap Fund. At September 30, 2008, the International Equity Fund had approximately 15% and the International Small-Cap Fund had approximately 29% and 27% of its net assets invested in equity securities of companies domiciled in Japan and United Kingdom, respectively. Note 13. Other Matters On December 31, 2007 Ernst & Young, LLP ("E&Y") resigned as the independent registered public accounting firm of the Equity Funds. On March 5, 2008, the Board of Trustees of the Equity Funds selected PricewaterhouseCoopers, LLP as the new independent registered public accounting firm for the Equity Funds. E&Y's reports on the Equity Fund's financial statements for the two most recent fiscal years contained no adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the period E&Y was engaged, there were no disagreements with E&Y on any matter of accounting principles, financial statement disclosure or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of E&Y, would have caused it to make reference to the subject matter of the disagreements in connection with its reports on the Equity Fund's financial statements. 87 SunAmerica Equity Funds REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees and Shareholders of SunAmerica Equity Funds: In our opinion, the accompanying statements of assets and liabilities, including the portfolios of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of each of the nine funds constituting SunAmerica Equity Funds, (hereafter referred to as the "Trust") at September 30, 2008, the results of each of their operations, the changes in each of their net assets and the financial highlights for the year then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Trust's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation of securities at September 30, 2008 by correspondence with the custodian and brokers, provides a reasonable basis for our opinion. The statements of changes in net assets for each of the funds of the Trust for the year ended September 30, 2007 and the financial highlights for each of the periods ended on or before September 30, 2007 were audited by another independent registered public accounting firm whose report, dated November 21, 2007, expressed an unqualified opinion on those statements and financial highlights. PricewaterhouseCoopers LLP Houston, Texas November 25, 2008 88 SunAmerica Equity Funds APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2008 -- (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 the Trust, including the Disinterested Trustees of the Trust or its Funds, AIG SunAmerica or "AIGGIC", approved the continuation of the Agreement between the Trust, on behalf of the Funds, and AIG SunAmerica for a one-year period ending August 31, 2009 at an in-person meeting held on August 26-27, 2008. The Trust currently consists of nine separate Funds, including the Balanced Assets Fund, Blue Chip Growth Fund, Disciplined Growth Fund, Growth and Income Fund, Growth Opportunities Fund, International Equity Fund, International Small-Cap Fund, New Century Fund and Value Fund. At this same meeting, the Board also approved the continuation of the Subadvisory Agreement between AIG SunAmerica and AIGGIC (the "Subadvisory Agreement") with respect to the International Equity Fund and the International Small-Cap Fund for a one-year period ending August 31, 2009. In accordance with Section 15(c) of the 1940 Act, the Board requested and AIG SunAmerica and AIGGIC, where applicable, provided materials relating to the Board's consideration of whether to approve the continuation of the Advisory Agreement and Subadvisory Agreement. These materials included (a) a summary of the services provided by AIG SunAmerica and its affiliates to the Funds; (b) information independently compiled and prepared by Lipper, Inc. ("Lipper") on Fund fees and expenses, and the investment performance of the Fund as compared with a peer group of funds; (c) information on the profitability of AIG SunAmerica, AIGGIC and their affiliates, a discussion of any indirect benefits; (d) a report on economies of scale; (e) a discussion on general compliance policies and procedures; (f) a summary of brokerage and soft dollar practices; (g) a discussion of the key personnel of AIG SunAmerica, AIGGIC and their affiliates; and (h) an internal comparison of management fees received for other mutual funds and accounts with similar investment objectives and strategies for which AIG SunAmerica and AIGGIC serve as adviser or subadviser, as applicable. In determining whether to approve the continuation of the Advisory Agreement and Subadvisory Agreement, the Board, including Disinterested Trustees, considered the following information: Nature, Extent and Quality of Services Provided by AIG SunAmerica and AIGGIC. The Board, including the Disinterested Trustees, considered the nature, quality and extent of services to be provided by AIG SunAmerica and AIGGIC. 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 AIG SunAmerica would provide office space, accounting, legal, and compliance, clerical and administrative services and has authorized any of its officers and employees, if elected, to serve as officers or trustees of the Funds without compensation. Finally, the Board noted that AIG SunAmerica is responsible for monitoring and reviewing the activities of affiliated and unaffiliated third-party service providers, including AIGGIC. In addition to the quality of the advisory services, the Board considered the quality of the administrative and non-investment advisory services provided to the Funds pursuant to the Advisory Agreement and noted that such services include (i) preparing disclosure documents, such as the prospectus, the statement of additional information and shareholder reports; (ii) assisting with daily accounting and pricing; (iii) organizing Board meetings and preparing the materials for such Board meetings; (iv) providing legal and compliance support; and (v) performing other administrative functions necessary for the operation of the Funds, such as tax reporting and fulfilling regulatory filing requirements. In connection with the services provided by AIG SunAmerica, the Board analyzed the structure and duties of AIG SunAmerica's fund administration, accounting, 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 AIG SunAmerica and concluded, based on their experience and interaction with AIG SunAmerica, that: (i) AIG SunAmerica is able to retain quality portfolio managers, analysts and other personnel; (ii) AIG SunAmerica exhibited a high level of diligence and attention to detail in carrying out its advisory and other responsibilities under the Advisory Agreement; (iii) AIG SunAmerica had been responsive to requests of the Board; and (iv) AIG SunAmerica had kept the Board apprised of developments relating to the Funds and 89 SunAmerica Equity Funds APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2008 -- (unaudited) (continued) 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 AIG 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 AIG SunAmerica's experience in providing management and investment advisory and administrative services to advisory clients and noted that as of June 30, 2008, AIG SunAmerica managed, advised an/or administered approximately $49.7 billion in assets. The Board also considered AIG SunAmerica's code of ethics, and that it has developed internal procedures, adopted by the Board, for monitoring compliance with the investment objectives, policies and restrictions of the Funds as set forth in the Fund's prospectus. Additionally, the Board considered AIG SunAmerica's compliance and regulatory history. With respect to the International Equity Fund and the International Small-Cap Fund, for which AIG SunAmerica has delegated daily investment management responsibilities to AIGGIC, the Board considered the nature, quality and extent of subadvisory services provided by AIGGIC. The Board observed that AIGGIC is responsible for providing investment management services, including investment research, advice and supervision, and determining which securities will be purchased or sold by each of the International Equity Fund and International Small-Cap Fund, subject to the oversight and review of AIG SunAmerica. The Board reviewed AIGGIC'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 International Equity Fund and International Small-Cap Fund and concluded, based on their experience with AIGGIC, that: (i) AIGGIC is able to retain high quality portfolio managers and other investment personnel; (ii) AIGGIC exhibited a high level of diligence and attention to detail in carrying out its responsibilities under the Subadvisory Agreement; and (iii) AIGGIC had been responsive to requests of the Board and of AIG SunAmerica. The Board considered that AIGGIC has developed internal policies and procedures for monitoring compliance with the investment objectives, policies and restrictions of the International Equity Fund and the International Small-Cap Fund as set forth in the Prospectus. The Board also considered AIGGIC's code of ethics, compliance and regulatory history. The Board concluded that the nature and extent of services to be provided by AIGGIC under the Subadvisory Agreement were reasonable and appropriate in relation to the subadvisory fees and that the quality of services continues to be high. Investment Performance. The Board, including the Disinterested Trustees, also considered the investment performance of AIG SunAmerica and AIGGIC with respect to the Funds. In connection with its review, the Board received and reviewed information regarding the investment performance of the Funds as compared to each Fund's peer group ("Peer Group") and/or peer universe ("Peer Universe") as independently determined by Lipper and to an appropriate index or combination of indices, including the Funds' benchmarks. The Board was provided with a description of the methodology used by Lipper to select the funds in the Peer Groups and Universes. The Board also noted that it regularly reviews the performance of the Funds throughout the year. The Board 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. In preparation for the August 26-27, 2008 meeting, the Board was provided with reports independently prepared by Lipper. Based on the Lipper reports, the Board reviewed each Fund's annualized total returns for the prior one-, two-, three-, four-, five- and ten-year periods ended May 31, 2008. The Board noted that it was also provided with a supplemental Lipper performance report for the periods ended June 30, 2008. In addition, the Board received a report prepared by AIG SunAmerica that detailed the Funds' performance for the three- and six-month periods ended June 30, 2008. Specifically, the Board considered that the Disciplined Growth Fund ranked in the first quintile of its Peer Group for the one- and three-year periods ended May 31, 2008 and ranked in the second quintile for the five-year period. The Board noted that it was pleased with the Fund's strong performance results for the periods ended May 31, 2008 as the changes to the Fund's investment objective, principal investment strategy and principal investment techniques that were implemented in 2007 continue to be realized. The Board noted, however, that the Fund's performance during June 2008 declined somewhat. The Board then considered that the Value Fund ranked in the third quintile of its Peer Group for the one-, three- and five-year periods ended May 31, 2008. The Board noted that the Fund outperformed its benchmark index for the three month-, one-, three-, five and ten-year periods ended June 30, 2008. The Board also noted that the Fund was the top-ranked Fund in its Peer Group for the ten-year period ended May 31, 2008. The Board further considered that the Growth and Income Fund ranked in the fourth and third quintiles of its Peer Group during the three- and five-year periods ended May 31, 2008, respectively; however, the Board noted the Fund's strong short- and long-term 90 SunAmerica Equity Funds APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2008 -- (unaudited) (continued) performance. The Board noted, however, that the Fund's performance during June 2008 declined somewhat. Specifically, the Board noted that the Fund ranked in the second and first quintiles for the one- and ten-year periods. The Board then considered that the Blue Chip Growth Fund ranked in the third quintile of its Peer Group during the one- and five-year periods ended May 31, 2008 and in the fourth quintile during the three-year period. The Board noted that the Fund outperformed its benchmark index for the three month-, one year- and three-year periods ended June 30, 2008. The Board considered that the Balanced Assets Fund ranked in the fifth quintile of its Peer Group during the one-, three-, five- and ten-year periods ended May 31, 2008. The Board noted that the Fund's performance does not meet the Board's expectations, but that results for the three months ended June 30, 2008 were encouraging. The Board then considered that the Growth Opportunities Funds ranked in the fifth quintile of its Peer Group for the one-, three and five-year periods and ranked in the third quintile for the three-year period ended May 31, 2008. The Board considered that the New Century Fund ranked in the fifth quintile of its Peer Group for the one-, three- and five-year periods ended May 31, 2008. The Board noted that the Balanced Assets, Growth Opportunities and New Century Fund's performance does not meet the Board's expectations. AIG SunAmerica noted that it was working with each Fund's portfolio manager and analysts in an effort to improve performance. The Board noted that it will continue to carefully monitor and discuss the Funds' performance with AIG SunAmerica. The Board then considered the performance of the Funds subadvised by AIGGIC, the International Equity and International Small-Cap Funds. The Board considered that the International Equity Fund ranked in the first, second and first quintiles of its Peer Group for the one-, three- and five-year periods ended May 31, 2008, respectively. The Board noted that it was pleased with the Fund's short-term and long-term performance. The Board also noted that the Fund demonstrated strong results for the three months ended June 30, 2008. Additionally, the Board considered the performance of the International Small-Cap Fund, noting that it has only completed two full years ended May 31, 2008. The Board noted that the Fund had a relatively small Peer Group; however, the Fund ranked in the fourth quintile of its Peer Universe for the one- and two-year periods ended May 31, 2008. The Board noted that certain Funds continued to underperform and that the Board would continue to monitor performance on an ongoing basis in connection with its general oversight of the Funds and in connection with its consideration of the Funds' advisory and subadvisory agreements. The Board discussed its concerns regarding the performance of certain Funds with management of AIG SunAmerica and noted that the underperformance of the Growth Opportunities Fund and New Century Fund were of particular concern. In light of these performance concerns, AIG SunAmerica agreed to a voluntary waiver of its management fee in the amount of 0.02% of average daily net assets with respect to these two Funds. The Board noted that the waivers may be discontinued at any time at the option of AIG SunAmerica although AIG SunAmerica anticipated removing the voluntary waivers only in the event of improved performance and after consulting with the Board. Consideration of the Management Fees and Subadvisory Fees and the Cost of the Services and Profits to be Realized by AIG SunAmerica and AIGGIC and their Affiliates from the Relationship with the Funds. The Board, including the Disinterested Trustees, received and reviewed information regarding the fees to be paid by the Funds to AIG SunAmerica pursuant to the Advisory Agreement and the fees paid by AIG SunAmerica to AIGGIC 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 AIG SunAmerica, AIGGIC or their affiliates in connection with providing such services to the Funds. To assist in analyzing the reasonableness of the management fee for each of the Funds, the Board received reports independently prepared by Lipper. The reports showed comparative fee information for each Fund's Peer Group and/or Peer Universe. In considering the reasonableness of the management fee to be paid by each Fund to AIG 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 AIG SunAmerica with respect to each class of the International Equity Fund, Value Fund, Disciplined Growth Fund and International Small-Cap Fund, as well as the Class I shares of the Blue Chip Growth Fund, Growth Opportunities Fund, Growth and Income Fund and Balanced Assets Fund. The Board compared each Fund's net expense ratio 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 for certain Funds. 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, 91 SunAmerica Equity Funds APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2008 -- (unaudited) (continued) however, that the comparative fee information provided by Lipper as a whole was useful in assessing whether AIG SunAmerica was providing services at a cost that was competitive with other, similar funds. The Board also considered advisory fees received by AIG SunAmerica with respect to other mutual funds and accounts with similar investment strategies to the Funds. The Board noted the management fee paid by the Funds were reasonable as compared to the fees AIG 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 AIG SunAmerica to AIGGIC pursuant to the Subadvisory Agreement. To assist in analyzing the reasonableness of the subadvisory fees, the Board received a report independently prepared by Lipper. The report showed comparative fee information of each Fund's Peer Group that the Trustees used as a guide to help assess the reasonableness of the subadvisory fees. The Trustees noted that Peer Group information as a whole was useful in assessing whether AIGGIC was providing services at a cost that was competitive with other similar funds. The Trustees also considered that the subadvisory fees are paid by AIG SunAmerica out of its management fee and not by the Funds, and that subadvisory fees may vary widely within a Peer Group for various reasons, including market pricing demands, existing relationships, experience and success, and individual client needs. The Board further considered the amount of subadvisory fees paid out by AIG SunAmerica and the amount of the management fees which it retained. The Board also considered advisory fees received by AIGGIC with respect to other mutual funds and accounts with similar investment strategies to the International Equity Fund and International Small-Cap Fund. The Board noted that the subadvisory fees paid by AIG SunAmerica to AIGGIC were reasonable as compared to fees AIGGIC receives for other mutual funds and accounts for which it serves as adviser or subadviser. The Board also considered AIG SunAmerica's profitability and the benefits AIG SunAmerica and its affiliates received from its relationship with the Funds. The Board received and reviewed financial statements relating to AIG SunAmerica's financial condition and profitability with respect to the services it provided the Funds and considered how profit margins could affect AIG 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 AIG SunAmerica and its affiliates that provide services to the Funds on a Fund by Fund basis. The Board considered the profitability of AIG SunAmerica under the Advisory Agreement, and considered the profitability of AIG SunAmerica's affiliates under the Rule 12b-1 Plans, Service Agreements, and Administrative and Shareholder Agreements. Additionally, the Board considered whether AIG SunAmerica, AIGGIC and its affiliates received any indirect benefits from the relationship with the Funds. Specifically, the Board observed that AIG Federal Savings Bank, an affiliate of AIG SunAmerica and AIGGIC, serves as custodian with respect to certain shareholder retirement accounts that are administered by AIG SunAmerica and receives a fee payable by the qualifying shareholders. The Board further considered whether there were any collateral or "fall-out" benefits that AIG SunAmerica and its affiliates may derive as a result of their relationship with the Funds. The Board noted that AIG SunAmerica believes that any such benefits are de minimis and do not impact the reasonableness of the management fees. The Board also reviewed AIGGIC's financial statements and considered whether AIGGIC had the financial resources necessary to attract and retain high quality investment management personnel and to continue to provide the high quality of services that it had provided to the International Equity Fund and International Small-Cap Fund to date. The Board concluded that AIG SunAmerica and AIGGIC had the financial resources necessary to perform their obligations under the Advisory Agreement and Subadvisory Agreement 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 fee and subadvisory fees were reasonable in light of the factors discussed above. Economies of Scale. The Board, including the Disinterested Trustees, considered whether the shareholders would benefit from economies of scale and whether there was potential for future realization of economies with respect to the Funds. The Board considered that as a result of being part of the AIG SunAmerica fund complex, the Funds share common resources and may share certain expenses, and if the size of the complex increases, each Fund could incur lower expenses than they otherwise would achieve as stand-alone entities. The Board also considered the anticipated efficiencies in the processes of AIG SunAmerica as it adds labor and capital to expand the scale of operations. The Board also took into account that the Blue Chip Growth Fund, Growth Opportunities Fund, New Century Fund, Balanced Assets Fund, Growth and Income Fund, and Value Fund had management fee arrangements that included breakpoints that will adjust the fee downward as the size of the Fund increases, thereby allowing the shareholders to 92 SunAmerica Equity Funds APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2008 -- (unaudited) (continued) potentially participate in any economies of scale. The Board further noted that, with the exception of the New Century Fund, AIG SunAmerica has agreed to contractually cap the total annual operating expenses of one or more classes of the Funds, at certain levels. The Board observed that those expense caps benefited shareholders by keeping total fees down even in the absence of breakpoints or economies of scale. The Board concluded that the Funds' management fee structure was reasonable and that it would continue to review fees in connection with the renewal of the Advisory Agreement, including whether the implementation of additional 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 AIGGIC's management of the Funds 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 Advisory Agreement and Subadvisory Agreement, the Board also received information regarding AIG SunAmerica's and AIGGIC's brokerage and soft dollar practices. The Board considered that AIG SunAmerica and AIGGIC are responsible for decisions to buy and sell securities for the portfolios they manage, selection of broker-dealers and negotiation of commission rates. The Board noted that they receive reports from AIG SunAmerica and from an independent third party that included information on brokerage commissions and execution throughout the year and that commissions paid had generally been reasonable and the quality of brokerage execution had generally been high. The Board also considered the benefits AIG SunAmerica and AIGGIC derive from their soft dollar arrangements, including arrangement under which brokers provide brokerage and/or research services to AIG SunAmerica and/or AIGGIC in return for allocating brokerage. Conclusion. After a full and complete discussion, the Board approved the Advisory Agreement and the Subadvisory Agreement with respect to the International Equity Fund and International Small-Cap Fund, each for a one-year period ending August 31, 2009. Based upon their evaluation of all these factors in their totality, the Board, including the Disinterested Trustees, was satisfied that the terms of the Advisory Agreement and Subadvisory Agreement were fair and reasonable and in the best interests of the Funds and the Funds' shareholders. In arriving at a decision to approve the Advisory Agreement and Subadvisory Agreement, the Board did not identify any single factor or group of factors as all-important or controlling, but considered all factors together. The Disinterested Trustees were also assisted by the advice of independent counsel in making this determination. 93 SunAmerica Equity Funds TRUSTEE AND OFFICER INFORMATION -- September 30, 2008 -- (unaudited) The following table contains basic information regarding the Trustees and Officers that oversee operations of the Funds and other investment companies within the Fund complex.
Number of Position Term of Portfolios in Name, Held With Office and Fund Complex Address and SunAmerica Length of Principal Occupations Overseen by Other Directorships Date of Birth* Complex Time Served(4) During Past 5 Years Trustee(1) Held by Trustee(2) ----------------------- ---------- -------------- ------------------------------ ------------- ------------------------------ Disinterested Trustees Jeffrey S. Burum Trustee 2004-Present Founder and Chairman of 38 None DOB: February 27, 1963 National Community Renaissance (1993 to present); Founder, Owner and Partner of Colonies Crossroads, Inc. (2000 to present); Owner and Managing Member of Diversified Pacific Development Group LLC (1998 to present). Dr. Judith L. Craven Trustee 2001-Present Retired. 87 Director, Belo Corp. (1992 to DOB: October 6, 1945 present); Director, Sysco Corp. (1996 to present); Director, Luby's, Inc. (1998 to present). William F. Devin Trustee 2001-Present Retired. 88 Director, Boston Options DOB: December 30, 1938 Exchange (2001-present). Samuel M. Eisenstat Chairman 1986-Present Attorney, solo practitioner. 48 Director, North European Oil DOB: March 7, 1940 of the Royal Trust. Board Stephen J. Gutman Trustee 1986-Present Senior Associate, Corcoran 48 None DOB: May 10, 1943 Group (Real Estate) (2003 to present); President and Member of Managing Directors, Beau Brummell Soho LLC (licensing of menswear specialty retailing and other activities) (1988 to present). William J. Shea Trustee 2004-Present Managing Partner, DLB 48 Chairman of the Board, Royal DOB: February 9, 1948 Capital, LLC (Private Equity) and SunAlliance U.S.A., Inc. (2006 to present) President (2005 to present); Director, and CEO, Conseco, Inc. Boston Private Financial (Financial Services) (2001 to Holdings (2004 to present). 2004); Chairman of the Board of Centennial Technologies, Inc. (1998 to 2001). Interested Trustee Peter A. Harbeck(3) Trustee 1995-Present President, CEO and Director, 98 None DOB: January 23, 1954 AIG SunAmerica. (1995 to present); Director, SunAmerica Capital Services, Inc. ("SACS") (1993 to present) President and CEO, AIG Advisor Group, Inc. (2004 to present).
94 SunAmerica Equity Funds TRUSTEE AND OFFICER INFORMATION -- September 30, 2008 -- (unaudited) (continued)
Number of Position Term of Portfolios in Name, Held With Office and Fund Complex Address and SunAmerica Length of Principal Occupations Overseen by Other Directorships Date of Birth* Complex Time Served(4) During Past 5 Years Trustee(1) Held by Trustee(2) ----------------------- ----------- -------------- ------------------------------ ------------- ------------------- Officers John T. Genoy** President 2007-Present Chief Financial Officer, AIG N/A N/A DOB: November 8, 1968 SunAmerica (2002 to present); Senior Vice President, AIG SunAmerica (2003 to present); Chief Operating Officer, AIG SunAmerica (2006 to present). Donna M. Handel Treasurer 2002-Present Senior Vice President, AIG N/A N/A DOB: June 25, 1966 SunAmerica (2004 to present); Vice President, AIG SunAmerica (1997 to December 2004). Gregory N. Bressler Secretary 2005-Present Senior Vice President and N/A N/A DOB: November 17, 1966 and Chief General Counsel, AIG Legal SunAmerica (2005 to Officer present); Vice President and Director of U.S. Asset Management Compliance, Goldman Sachs Asset Management L.P. (2004 to 2005); Deputy General Counsel, Credit Suisse Asset Management LLC (2002 to 2004). James Nichols Vice 2006-present Director, President and CEO, N/A N/A DOB: April 7, 1966 President SACS (2006 to present); Senior Vice President, SACS (2002 to 2006). Cynthia A. Skrehot Chief 2005-present Vice President, AIG N/A N/A DOB: December 6, 1967 Compliance SunAmerica (2002 to Officer present); Chief Compliance Officer, AIG SunAmerica (2003 to 2007). Nori L. Gabert Vice 2002-present Vice President and Deputy N/A N/A DOB: August 15, 1953 President General Counsel, AIG and SunAmerica (2001 to Assistant present); Vice President and Secretary Secretary, AIG Retirement Company I and AIG Retirement Company II (2000 to present). Timothy Pettee Vice 2004-present Chief Investment Officer, N/A N/A DOB: April 7, 1958 President AIG SunAmerica (2003 to present).
95 SunAmerica Equity Funds TRUSTEE AND OFFICER INFORMATION -- September 30, 2008 -- (unaudited) (continued)
Number of Position Term of Portfolios in Name, Held With Office and Fund Complex Address and SunAmerica Length of Principal Occupations Overseen by Other Directorships Date of Birth* Complex Time Served(4) During Past 5 Years Trustee(1) Held by Trustee(2) ---------------------- ----------- -------------- ------------------------------- ------------- ------------------- Gregory R. Kingston Vice 2002-present Vice President, AIG N/A N/A DOB: January 18, 1966 President SunAmerica (2001 to and present). Assistant Treasurer Matthew J. Hackethal Anti- 2006-present CCO, AIG SunAmerica (2006 N/A N/A DOB: December 31, Money to present); Vice President, 1971 Laundering Credit Suisse Asset Compliance Management (2001 to 2006); Officer CCO, Credit Suisse Alternative Funds (2005 to 2006); CCO, Credit Suisse Asset Management Securities, Inc. (2004 to 2005)
-------- * The business address for each Trustee is the Harborside Financial Center, 3200 Plaza 5, Jersey City, NJ 07311-4992. ** On December 10, 2007, John T. Genoy was elected as President and Chief Executive Officer of the Fund. (1) The "Fund Complex" means two or more registered investment companies that hold themselves out to investors as related companies for purposes of investment services or have a common investment adviser or an investment adviser that is an affiliated person of the Adviser. The "Fund Complex" includes the Trust (9 funds), the SunAmerica Money Market Funds Inc. (2 funds), SunAmerica Income Funds (5 funds), SunAmerica Focused Series, Inc. (18 portfolios), SunAmerica Focused Alpha Growth Fund, Inc. (1 fund), SunAmerica Focused Alpha Large-Cap Fund, Inc. (1 fund), Anchor Series Trust (9 portfolios), SunAmerica Senior Floating Rate Fund, Inc. (1 fund), SunAmerica Series Trust (35 portfolios), AIG Retirement Company I (33 portfolios), AIG Retirement Company II (15 funds), Seasons Series Trust (24 portfolios) and AIG Series Trust (3 portfolios), AIG Strategic Hedge Fund of Funds (1 fund) and Brazos Mutual Funds (4 funds). (2) Directorships of companies required to report to the SEC under the Securities Exchange Act of 1934 (i.e. "public companies") or other investment companies registered under the 1940 Act. (3) Interested Trustee, as defined within the 1940 Act, because he is an officer and a director of the Adviser and a director of the principal underwriter of the Trust. (4) Trustees serve until their successors are duly elected and qualified, subject to the Trustee's Retirement Plan as discussed in Note 11 of the financial statements. Each officer will hold office for an indefinite term, until the date he or she resigns or retires or until his/her successor is duly elected and qualifies. Additional information concerning the Trustees is contained in the Statement of Additional Information which is available, without charge, by calling (800) 858-8850. 96 SunAmerica Equity Funds SHAREHOLDER TAX INFORMATION -- (unaudited) Certain tax information regarding the SunAmerica Equity Funds is required to be provided to the shareholders based upon each Fund's income and distributions for the taxable year ended September 30, 2008. The information and distributions reported herein may differ from the information and distributions taxable to the shareholders for the calendar year ending December 31, 2008. The information necessary to complete your tax returns will be included with your Form 1099-DIV to be received under separate cover in January 2009. During the year ended September 30, 2008, the Portfolios paid the following long-term capital gains dividends along with the percentage of ordinary income dividends that qualified for the 70% dividends received deduction for corporations:
Net Long- Qualifying % for the Term 70% Dividends Fund Capital Gains Received Deductions ---- ------------- -------------------- Blue Chip Growth Class A........ $ -- -- % Blue Chip Growth Class B........ -- -- Blue Chip Growth Class C........ -- -- Blue Chip Growth Class I........ -- -- Growth Opportunities Class A.... -- -- Growth Opportunities Class B.... -- -- Growth Opportunities Class C.... -- -- Growth Opportunities Class I.... -- -- New Century Class A............. -- -- New Century Class B............. -- -- New Century Class C............. -- -- Growth and Income Class A....... -- 100.00 Growth and Income Class B....... -- 100.00 Growth and Income Class C....... -- 100.00 Growth and Income Class I....... -- 100.00 Balanced Assets Class A......... -- 70.33 Balanced Assets Class B......... -- 70.33 Balanced Assets Class C......... -- 70.33 Balanced Assets Class I......... -- 70.33 International Equity Class A.... 1.52 -- International Equity Class B.... 1.52 -- International Equity Class C.... 1.52 -- International Equity Class I.... 1.52 -- Value Class A................... 1.21 34.83 Value Class B................... 1.21 34.83 Value Class C................... 1.21 34.83 Value Class I................... 1.21 34.83 Value Class Z................... 1.21 34.83 Disciplined Growth Class A...... -- -- Disciplined Growth Class B...... -- -- Disciplined Growth Class C...... -- -- International Small-Cap Class A. 0.09 -- International Small-Cap Class B. 0.09 -- International Small-Cap Class C. 0.09 --
The International Equity Fund and International Small-Cap 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, 2008 was $232,207 and $44,125, respectively. The gross foreign source income for the information reporting is $2,877,885 and $462,968, respectively 97 SunAmerica Equity Funds SHAREHOLDER TAX INFORMATION -- (unaudited) (continued) For the year ended September 30, 2008, 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 ---- ----------- Growth and Income. $ 242,422 Balanced Assets... 2,211,571 Value............. 19,180,606
98 SunAmerica Equity Funds COMPARISONS: FUNDS vs. INDEXES -- (unaudited) As required by the Securities and Exchange Commission, the following graphs compare the performance of a $10,000 investment in the SunAmerica Equity Funds' portfolios to a similar investment in an index. Please note that "inception", as used herein, reflects the date on which a specific class of shares commenced operations. It is important to note that the SunAmerica Equity Funds are professionally managed mutual funds, while the indices are not available for investment and are unmanaged. The comparison is shown for illustrative purposes only. The graphs present the performance of the largest class of that particular Fund. The performance of the other classes will vary based upon the difference in sales charges and fees assessed to shareholders of that class. 99 SunAmerica Equity Funds COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued) SunAmerica Blue Chip Growth Fund For the annual period ended September 30, 2008, the SunAmerica Blue Chip Growth Fund Class A returned -20.44% (before maximum sales charge), outperforming its Russell 1000 Growth Index* benchmark, which returned -20.88% during the period. It was a challenging period for the equity markets. Every major equity index registered double-digit declines during the past 12 months as tighter credit conditions, slowing consumer spending trends, and deteriorating corporate profits weighed heavily on investor sentiment. In terms of industry groups, Consumer Staples (9.45% weight) and Healthcare (14.99% weight) were the top-performers in the Russell 1000 Growth Index, returning -3.61% and -11.26%, respectively. Conversely, Telecommunication Services (0.66% weight) and Financials (6.36% weight) were the principal laggards, returning -32.79% and -29.12%, respectively. Information Technology, the index's largest component (25.57% weight), returned -22.41% during the annual period. With respect to sector weighting versus the portfolio's benchmark, the combination of stock selection and a Healthcare overweight enhanced performance. No exposure to the Utilities sector and security selection in the Industrials and Materials sectors were also beneficial. Factors that hindered results included security selection in the Energy, Financials, and Information Technology groups, and underweight exposure to the Consumer Staples and Consumer Discretionary sectors. Top-performing investments for the year included Wal-Mart Stores Inc., Charles Schwab Corp., Genzyme Corp., Alliance Data Systems Corp., and Barr Pharmaceuticals Inc. Several technology companies headed the list of portfolio detractors including Google Inc., Apple Inc., and Cisco Systems Inc. NII Holdings, a Latin American wireless service provider and UnitedHealth Group Inc., a healthcare benefit services company, also underperformed. -------- Past performance is no guarantee of future results. * The Russell 1000 Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 1000 Index is a comprehensive large-cap index measuring the performance of the largest 1,000 U.S. incorporated companies. Indices are not managed and an investor cannot invest directly into an index. Securities listed may or may not be a part of current Portfolio construction. 100 SunAmerica Equity Funds COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued) Over the past ten years, $10,000 invested in Blue Chip Growth Fund Class A shares would have increased to $10,381. The same amount invested in securities mirroring the performance of the S&P 500 Index and the Russell 1000 Growth Index would be valued at $13,516 and $10,607, respectively. [CHART] Blue Chip Growth Russel 1000 Class A/#/ S&P 500 Index Growth Index --------------- ------------- ------------ 9/30/1998 $ 9,423 $10,000.00 $10,000.00 10/31/1998 9,995 10,812.69 10,803.72 11/30/1998 10,653 11,467.76 11,625.50 12/31/1998 11,575 12,128.16 12,673.77 1/31/1999 12,456 12,635.13 13,417.95 2/28/1999 11,940 12,242.68 12,805.01 3/31/1999 12,597 12,732.37 13,479.40 4/30/1999 12,842 13,225.44 13,496.61 5/31/1999 12,380 12,913.58 13,081.70 6/30/1999 13,250 13,629.68 13,998.11 7/31/1999 12,891 13,205.12 13,553.28 8/31/1999 12,962 13,139.34 13,774.63 9/30/1999 12,842 12,779.59 13,485.23 10/31/1999 13,788 13,587.96 14,503.84 11/30/1999 14,625 13,864.70 15,286.26 12/31/1999 16,751 14,680.78 16,876.26 1/31/2000 16,131 13,943.22 16,084.83 2/29/2000 17,162 13,679.27 16,871.23 3/31/2000 17,943 15,017.52 18,078.63 4/30/2000 16,602 14,565.64 17,218.36 5/31/2000 15,613 14,266.75 16,351.47 6/30/2000 16,769 14,618.43 17,590.64 7/31/2000 16,489 14,390.09 16,857.20 8/31/2000 18,419 15,283.86 18,383.65 9/30/2000 17,293 14,477.02 16,644.58 10/31/2000 15,964 14,415.78 15,857.12 11/30/2000 14,081 13,279.24 13,519.65 12/31/2000 14,329 13,344.18 13,091.77 1/31/2001 14,516 13,817.63 13,996.25 2/28/2001 12,887 12,557.74 11,620.12 3/31/2001 11,982 11,762.21 10,355.64 4/30/2001 12,922 12,676.25 11,665.37 5/31/2001 12,887 12,761.18 11,493.56 6/30/2001 12,483 12,450.57 11,227.45 7/31/2001 12,184 12,328.06 10,946.79 8/31/2001 11,286 11,556.32 10,051.72 9/30/2001 9,991 10,623.15 9,048.13 10/31/2001 10,318 10,825.73 9,522.85 11/30/2001 11,383 11,656.17 10,437.67 12/31/2001 11,349 11,758.28 10,418.05 1/31/2002 10,903 11,586.73 10,234.00 2/28/2002 10,541 11,363.34 9,809.29 3/31/2002 10,966 11,790.71 10,148.58 4/30/2002 10,269 11,075.84 9,320.30 5/31/2002 10,026 10,994.21 9,094.81 6/30/2002 9,225 10,210.98 8,253.51 7/31/2002 8,543 9,415.04 7,799.77 8/31/2002 8,515 9,476.89 7,823.07 9/30/2002 7,763 8,446.95 7,011.60 10/31/2002 8,299 9,190.45 7,654.78 11/30/2002 8,717 9,731.40 8,070.56 12/31/2002 8,028 9,159.68 7,513.07 1/31/2003 7,860 8,920.19 7,330.77 2/28/2003 7,826 8,786.15 7,297.12 3/31/2003 7,895 8,871.22 7,432.92 4/30/2003 8,466 9,601.60 7,982.47 5/31/2003 8,849 10,107.00 8,380.94 6/30/2003 8,919 10,236.11 8,496.33 7/31/2003 9,149 10,416.67 8,707.76 8/31/2003 9,350 10,619.42 8,924.32 9/30/2003 9,135 10,506.98 8,828.78 10/31/2003 9,817 11,101.04 9,324.67 11/30/2003 9,866 11,198.60 9,422.29 12/31/2003 10,116 11,785.50 9,748.15 1/31/2004 10,249 12,001.78 9,947.22 2/29/2004 10,325 12,168.55 10,010.42 3/31/2004 10,130 11,984.92 9,824.73 4/30/2004 9,963 11,797.12 9,710.50 5/31/2004 10,081 11,958.98 9,891.51 6/30/2004 10,249 12,191.46 10,015.11 7/31/2004 9,699 11,787.92 9,448.93 8/31/2004 9,636 11,835.55 9,402.27 9/30/2004 9,810 11,963.72 9,491.69 10/31/2004 9,942 12,146.49 9,639.73 11/30/2004 10,263 12,637.80 9,971.31 12/31/2004 10,604 13,067.86 10,362.28 1/31/2005 10,263 12,749.40 10,016.72 2/28/2005 10,304 13,017.64 10,123.32 3/31/2005 10,123 12,787.23 9,938.88 4/30/2005 9,845 12,544.66 9,749.61 5/31/2005 10,332 12,943.45 10,221.32 6/30/2005 10,242 12,962.00 10,183.64 7/31/2005 10,722 13,443.84 10,681.37 8/31/2005 10,569 13,321.09 10,543.79 9/30/2005 10,590 13,428.93 10,592.35 10/31/2005 10,450 13,205.07 10,489.40 11/30/2005 10,882 13,704.48 10,941.96 12/31/2005 10,778 13,709.14 10,907.66 1/31/2006 10,987 14,072.13 11,099.16 2/28/2006 10,882 14,110.20 11,081.52 3/31/2006 11,007 14,285.87 11,245.14 4/30/2006 10,959 14,477.73 11,229.85 5/31/2006 10,597 14,061.05 10,849.21 6/30/2006 10,492 14,080.11 10,806.40 7/31/2006 10,360 14,166.96 10,600.58 8/31/2006 10,659 14,504.04 10,931.31 9/30/2006 10,924 14,877.81 11,231.69 10/31/2006 11,230 15,362.61 11,626.52 11/30/2006 11,370 15,654.75 11,857.24 12/31/2006 11,411 15,874.35 11,897.39 1/31/2007 11,704 16,114.42 12,203.23 2/28/2007 11,453 15,799.24 11,973.85 3/31/2007 11,544 15,975.95 12,038.79 4/30/2007 12,114 16,683.61 12,605.58 5/31/2007 12,539 17,265.78 13,059.06 6/30/2007 12,400 16,978.94 12,864.13 7/31/2007 12,170 16,452.51 12,664.69 8/31/2007 12,400 16,699.13 12,866.50 9/30/2007 13,047 17,323.67 13,405.48 10/31/2007 13,409 17,599.28 13,861.72 11/30/2007 13,061 16,863.46 13,351.10 12/31/2007 12,950 16,746.43 13,302.82 1/31/2008 11,892 15,741.98 12,265.51 2/29/2008 11,613 15,230.52 12,021.90 3/31/2008 11,537 15,164.72 11,948.71 4/30/2008 12,156 15,903.24 12,576.02 5/31/2008 12,497 16,109.19 13,036.97 6/30/2008 11,655 14,751.19 12,098.02 7/31/2008 11,509 14,627.13 11,868.01 8/31/2008 11,683 14,838.64 11,995.80 9/30/2008 10,381 13,516.37 10,606.63
Class A Class B Class C++ Class I ------------------ ------------------ ------------------ ------------------ Blue Average Average Average Average Chip Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative Growth Fund Return Return+ Return Return+ Return Return+ Return Return+ ----------------- ------- ---------- ------- ---------- ------- ---------- ------- ---------- 1 Year Return -25.00% -20.44% -24.16% -21.00% -21.90% -21.11% -20.25% -20.25% --------------------------------------------------------------------------------------------- 5 Year Return 1.38% 13.64% 1.49% 9.66% 1.73% 8.93% 2.87% 15.20% --------------------------------------------------------------------------------------------- 10 Year Return 0.37% 10.17% 0.35% 3.55% N/A N/A N/A N/A --------------------------------------------------------------------------------------------- Since Inception* 4.68% 110.38% 7.06% 398.07% -2.63% -22.72% -1.05% -6.99% ---------------------------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been included, the return would have been lower. * Inception date: Class A: 10/08/93; Class B: 03/13/85; Class C: 02/02/99; Class I: 11/16/01. # For the purposes of the graph, it has been assumed that the maximum sales charge, of 5.75% of offering price, was deducted from the initial $10,000 investment in the Fund. For purposes of the table, it has been assumed that the maximum sales charge with respect to the Class A shares, was deducted from the initial investment in the Fund and that the CDSCs with respect to the Class B and Class C shares have been deducted, as applicable. ++ Effective February 23, 2004, Class II shares were redesignated as Class C shares. For the 12 month period ended September 30, 2008, the SunAmerica Blue Chip Growth Class A returned -25.00% compared to -20.88% for the Russell 1000 Growth Index and -21.98% for the S&P 500 Index. (The performance table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.) -------- Performance data quoted represents past performance and is no guarantee of future results. Maximum Sales Charge: Class A: 5.75%, Class B: 4.00% Contingent Deferred Sales Charge (CDSC), Class C 1.00% CDSC. The fund's daily net asset 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.sunamericafunds.com. 101 SunAmerica Equity Funds COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued) SunAmerica Growth Opportunities Fund For the annual period ended September 30, 2008, the SunAmerica Growth Opportunities Fund Class A returned -33.61% (before maximum sales charge), underperforming its Russell 2000 Growth Index* benchmark, which returned -17.07% during the period. The market and the economy have been greatly affected by the cascading impact of falling home prices, the resulting seizure in the credit markets, and de-leveraging throughout the global financial system. These macro trends had a volatile impact on the U.S. stock market and markets around the globe. The sell-off was broad-based, as no industry group or asset category was left unscathed. Consumer Staples (2.57% weight) was the top-performing group in the Russell 2000 Growth Index, returning -1.46%, while Telecommunication Services (1.52% weight) was the worst performing sector, returning -39.82%. Three of the largest constituents, Industrials (23.19% weight), Healthcare (21.14% weight) and Information Technology (18.14% weight) returned -16.53%, -9.12%, and -29.08%, respectively. The primary cause of the Fund's underperformance during the annual period was security selection in the Financials, Industrials, and Healthcare groups. These losses were offset, however, by security selection in the Consumer Staples and Telecommunications Services groups. Successful trading within the volatile Energy sector also assisted performance as did a Consumer Staples overweight and underweight exposure to the Information Technology group. The following holdings contributed to performance: Alliance Data Systems Corp., Pantry Inc., Scientific Games Corp., Bally Technologies Inc., and Global Payments Inc. Individual portfolio holdings which detracted from performance included Pilgrim's Pride Corp., Integrated Device Technology Inc., NutriSystem Inc., Jackson Hewitt Tax Service Inc., and E*TRADE Financial Corp. -------- Past performance is no guarantee of future results. * The Russell 2000 Growth Index measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. Indices are not managed and an investor cannot invest directly into an index. Securities listed may or may not be a part of current Portfolio construction. 102 SunAmerica Equity Funds COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued) Over the past ten years, $10,000 invested in Growth Opportunities Fund Class A shares would have increased to $10,079. The same amount invested in securities mirroring the performance of the Russell 2000 Growth Index would be valued at $15,790. [CHART] Growth Opportunities Class A/#/ Russell 2000 Growth Index -------------------------------- -------------------------- 9/30/1998 $ 9,425 $10,000 10/31/1998 9,465 10,522 11/30/1998 10,657 11,338 12/31/1998 11,793 12,364 1/31/1999 13,054 12,920 2/28/1999 11,961 11,738 3/31/1999 13,303 12,156 4/30/1999 13,533 13,230 5/31/1999 13,085 13,251 6/30/1999 13,943 13,949 7/31/1999 14,036 13,517 8/31/1999 14,117 13,012 9/30/1999 14,365 13,263 10/31/1999 15,794 13,602 11/30/1999 17,609 15,041 12/31/1999 22,293 17,692 1/31/2000 22,243 17,527 2/29/2000 30,098 21,605 3/31/2000 27,843 19,334 4/30/2000 25,189 17,382 5/31/2000 23,011 15,860 6/30/2000 27,352 17,909 7/31/2000 25,324 16,374 8/31/2000 29,728 18,096 9/30/2000 29,024 17,197 10/31/2000 26,669 15,801 11/30/2000 20,108 12,932 12/31/2000 21,723 13,723 1/31/2001 21,747 14,834 2/28/2001 17,831 12,801 3/31/2001 15,999 11,637 4/30/2001 17,548 13,062 5/31/2001 17,155 13,364 6/30/2001 16,345 13,729 7/31/2001 14,938 12,557 8/31/2001 13,625 11,773 9/30/2001 12,123 9,874 10/31/2001 12,902 10,823 11/30/2001 14,175 11,727 12/31/2001 14,537 12,457 1/31/2002 14,270 12,014 2/28/2002 12,737 11,236 3/31/2002 14,089 12,213 4/30/2002 12,689 11,949 5/31/2002 11,777 11,250 6/30/2002 10,276 10,296 7/31/2002 8,735 8,714 8/31/2002 8,334 8,710 9/30/2002 7,846 8,081 10/31/2002 8,578 8,489 11/30/2002 9,340 9,331 12/31/2002 8,420 8,687 1/31/2003 8,342 8,451 2/28/2003 8,405 8,226 3/31/2003 8,625 8,350 4/30/2003 9,199 9,141 5/31/2003 10,181 10,171 6/30/2003 10,181 10,367 7/31/2003 10,370 11,151 8/31/2003 11,023 11,749 9/30/2003 10,803 11,452 10/31/2003 11,369 12,441 11/30/2003 11,636 12,847 12/31/2003 11,762 12,904 1/31/2004 12,115 13,582 2/29/2004 12,226 13,561 3/31/2004 12,194 13,625 4/30/2004 11,479 12,941 5/31/2004 11,565 13,198 6/30/2004 11,887 13,637 7/31/2004 10,779 12,413 8/31/2004 10,378 12,146 9/30/2004 10,740 12,818 10/31/2004 10,936 13,129 11/30/2004 11,707 14,239 12/31/2004 12,060 14,751 1/31/2005 11,825 14,086 2/28/2005 12,123 14,279 3/31/2005 11,793 13,744 4/30/2005 11,196 12,869 5/31/2005 11,691 13,776 6/30/2005 11,950 14,222 7/31/2005 12,469 15,216 8/31/2005 12,619 15,002 9/30/2005 12,792 15,120 10/31/2005 12,359 14,562 11/30/2005 12,784 15,386 12/31/2005 12,792 15,363 1/31/2006 13,476 16,845 2/28/2006 13,389 16,755 3/31/2006 13,932 17,570 4/30/2006 14,034 17,519 5/31/2006 13,444 16,286 6/30/2006 13,035 16,296 7/31/2006 12,571 15,449 8/31/2006 13,067 15,902 9/30/2006 13,397 16,010 10/31/2006 14,057 17,047 11/30/2006 14,679 17,455 12/31/2006 14,765 17,413 1/31/2007 15,111 17,737 2/28/2007 15,363 17,681 3/31/2007 15,441 17,845 4/30/2007 15,748 18,312 5/31/2007 16,605 19,146 6/30/2007 16,400 19,038 7/31/2007 15,127 18,050 8/31/2007 15,072 18,504 9/30/2007 15,182 19,041 10/31/2007 15,315 19,898 11/30/2007 14,026 18,524 12/31/2007 13,774 18,640 1/31/2008 12,556 16,930 2/29/2008 12,147 16,344 3/31/2008 11,715 16,249 4/30/2008 11,998 17,084 5/31/2008 12,697 18,052 6/30/2008 11,329 16,976 7/31/2008 11,070 17,371 8/31/2008 11,369 17,802 9/30/2008 10,079 15,790
Class A Class B Class C++ Class I ------------------ ------------------ ------------------ ------------------ Growth Average Average Average Average Opportunities Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative Fund Return Return+ Return Return+ Return Return+ Return Return+ ----------------- ------- ---------- ------- ---------- ------- ---------- ------- ---------- 1 Year Return -37.43% -33.61% -36.75% -34.12% -34.80% -34.14% -33.23% -33.23% --------------------------------------------------------------------------------------------- 5 Year Return -2.54% -6.70% -2.46% -9.89% -2.11% -10.14% -1.04% -5.07% --------------------------------------------------------------------------------------------- 10 Year Return 0.08% 6.94% 0.10% 1.02% N/A N/A N/A N/A --------------------------------------------------------------------------------------------- Since Inception* 6.29% 298.04% 2.95% 54.72% -3.30% -27.65% -4.59% -27.58% ---------------------------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been included, the return would have been lower. * Inception date: Class A: 01/28/87; Class B: 10/04/93; Class C: 02/02/99; Class I: 11/16/01 # For the purposes of the graph, it has been assumed that the maximum sales charge, of 5.75% of offering price, was deducted from the initial $10,000 investment in the Fund. For purposes of the table, it has been assumed that the maximum sales charge with respect to the Class A shares, was deducted from the initial investment in the Fund and that the CDSCs with respect to the Class B and Class C shares have been deducted, as applicable. ++ Effective February 23, 2004, Class II shares were redesignated as Class C shares. For the 12 month period ended September 30, 2008, the SunAmerica Growth Opportunities Class A returned -37.43% compared to -17.07% for the Russell 2000 Growth Index. (The performance table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.) -------- Performance data quoted represents past performance and is no guarantee of future results. Maximum Sales Charge: Class A: 5.75%, Class B: 4.00% Contingent Deferred Sales Charge (CDSC), Class C 1.00% CDSC. The fund's daily net asset 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.sunamericafunds.com. 103 SunAmerica Equity Funds COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued) SunAmerica New Century Fund For the annual period ended September 30, 2008, the SunAmerica New Century Fund Class A returned -44.00% (before maximum sales charge), underperforming its Russell Midcap Growth Index* benchmark, which returned -24.65% during the period. All of the major equity indices registered double-digit declines for the annual period, as tighter credit conditions, slowing consumer spending trends, and deteriorating corporate profits impaired the domestic economy and weighed heavily on investor sentiment. In terms of industry groups, no sector was unscathed during these challenging economic conditions. Although it returned -3.34%, Consumer Staples (4.23% weight) was the top-performing group in the Russell Midcap Growth Index, followed by Healthcare (12.62% weight) and Financials (7.90% weight) which returned -11.23% and -15.95%, respectively. At the other end of the spectrum, two of the larger constituents in the Russell Midcap Growth Index--Information Technology (15.69% weight) and Industrials (19.51% weight)--returned -33.39% and -28.14%, respectively, during the annual period. With respect to sector weighting versus the portfolio's benchmark, the combination of an underweight exposure to the Consumer Staples and Utility groups, a Healthcare overweight and stock selection in the Energy sector each benefited performance. Conversely, factors that hindered results included security selection in the Financials, Materials and Industrials sectors, as well as an underweight exposure to the Materials group. Top-contributing investments for the year included Aspen Technology Inc., Temple-Inland Inc., ATP Oil & Gas Corp., Global Payments Inc., and Lifepoint Hospitals Inc. Portfolio detractors included Cal-Maine Foods Inc., Freeport-McMoRan Copper & Gold Inc., NutriSystem Inc., Integrated Device Technology Inc., and Jackson Hewitt Tax Service Inc. -------- Past performance is no guarantee of future results. * The Russell Midcap Growth Index measures the performance of those Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values. The stocks are also members of the Russell 1000 Growth Index. Indices are not managed and an investor cannot invest directly into an index. Securities listed may or may not be a part of current Portfolio construction. 104 SunAmerica Equity Funds COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued) Over the past ten years, $10,000 invested in New Century Fund Class A shares would have increased to $10,523. The same amount invested in securities mirroring the performance of the Russell Midcap Growth Index would be valued at $17,090. [CHART] New Century Class A/#/ Russell Midcap Growth Index ---------------------- --------------------------- 9/30/1998 $ 9,423 $10,000 10/31/1998 9,813 10,736 11/30/1998 10,952 11,460 12/31/1998 12,516 12,647 1/31/1999 13,970 13,027 2/28/1999 12,727 12,389 3/31/1999 14,549 13,079 4/30/1999 15,054 13,676 5/31/1999 14,154 13,499 6/30/1999 15,012 14,442 7/31/1999 14,196 13,982 8/31/1999 14,286 13,837 9/30/1999 14,417 13,719 10/31/1999 15,244 14,780 11/30/1999 17,840 16,310 12/31/1999 23,101 19,135 1/31/2000 22,308 19,131 2/29/2000 28,489 23,152 3/31/2000 24,838 23,176 4/30/2000 22,320 20,927 5/31/2000 20,655 19,401 6/30/2000 24,838 21,460 7/31/2000 22,374 20,101 8/31/2000 25,728 23,132 9/30/2000 24,905 22,001 10/31/2000 21,969 20,496 11/30/2000 18,149 16,042 12/31/2000 18,809 16,886 1/31/2001 18,307 17,851 2/28/2001 15,831 14,763 3/31/2001 14,564 12,651 4/30/2001 15,925 14,759 5/31/2001 15,882 14,690 6/30/2001 15,551 14,698 7/31/2001 14,496 13,706 8/31/2001 13,296 12,713 9/30/2001 11,238 10,612 10/31/2001 11,748 11,727 11/30/2001 12,548 12,990 12/31/2001 12,803 13,484 1/31/2002 12,488 13,046 2/28/2002 11,867 12,306 3/31/2002 12,556 13,245 4/30/2002 12,216 12,544 5/31/2002 11,876 12,170 6/30/2002 11,084 10,827 7/31/2002 9,970 9,775 8/31/2002 9,987 9,741 9/30/2002 9,545 8,967 10/31/2002 9,732 9,662 11/30/2002 10,098 10,418 12/31/2002 9,655 9,788 1/31/2003 9,477 9,692 2/28/2003 9,307 9,608 3/31/2003 9,383 9,787 4/30/2003 10,013 10,453 5/31/2003 10,761 11,459 6/30/2003 10,931 11,623 7/31/2003 11,280 12,038 8/31/2003 11,867 12,701 9/30/2003 11,433 12,455 10/31/2003 12,301 13,458 11/30/2003 12,326 13,818 12/31/2003 12,344 13,969 1/31/2004 12,522 14,430 2/29/2004 12,556 14,673 3/31/2004 12,573 14,645 4/30/2004 12,139 14,231 5/31/2004 12,454 14,567 6/30/2004 12,922 14,799 7/31/2004 12,190 13,819 8/31/2004 11,910 13,648 9/30/2004 12,565 14,158 10/31/2004 12,982 14,638 11/30/2004 13,824 15,394 12/31/2004 14,258 16,132 1/31/2005 14,113 15,700 2/28/2005 14,538 16,097 3/31/2005 14,241 15,862 4/30/2005 13,586 15,234 5/31/2005 14,504 16,107 6/30/2005 14,751 16,406 7/31/2005 15,534 17,364 8/31/2005 15,329 17,258 9/30/2005 15,312 17,481 10/31/2005 14,819 16,967 11/30/2005 15,423 17,887 12/31/2005 15,355 18,083 1/31/2006 16,104 19,166 2/28/2006 16,095 18,930 3/31/2006 16,546 19,459 4/30/2006 16,682 19,542 5/31/2006 15,916 18,622 6/30/2006 15,525 18,546 7/31/2006 14,964 17,881 8/31/2006 15,440 18,293 9/30/2006 15,823 18,711 10/31/2006 16,478 19,429 11/30/2006 17,039 20,191 12/31/2006 17,320 20,010 1/31/2007 17,916 20,739 2/28/2007 18,086 20,694 3/31/2007 18,179 20,802 4/30/2007 18,868 21,716 5/31/2007 19,881 22,597 6/30/2007 19,540 22,205 7/31/2007 18,162 21,708 8/31/2007 18,409 21,825 9/30/2007 18,792 22,682 10/31/2007 18,962 23,260 11/30/2007 17,414 22,236 12/31/2007 17,056 22,297 1/31/2008 15,831 20,525 2/29/2008 15,346 20,212 3/31/2008 14,725 19,855 4/30/2008 15,338 21,296 5/31/2008 16,214 22,418 6/30/2008 14,691 20,778 7/31/2008 13,296 19,989 8/31/2008 12,913 20,172 9/30/2008 10,523 17,090
Class A Class B Class C++ ------------------ ------------------ ------------------ New Average Average Average Century Annual Cumulative Annual Cumulative Annual Cumulative Fund Return Return+ Return Return+ Return Return+ ----------------- ------- ---------- ------- ---------- ------- ---------- 1 Year Return -47.23% -44.00% -46.70% -44.48% -44.86% -44.31% -------------------------------------------------------------------------- 5 Year Return -2.80% -7.96% -2.78% -11.39% -2.19% -10.48% -------------------------------------------------------------------------- 10 Year Return 0.51% 11.68% 0.57% 5.80% 0.51% 5.17% -------------------------------------------------------------------------- Since Inception* 6.44% 310.14% 3.17% 59.80% -0.84% -8.63% --------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been included, the return would have been lower. * Inception date: Class A: 01/28/87; Class B: 09/24/93; Class C: 02/02/98. # 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 table, it has been assumed that the maximum sales charge with respect to the Class A shares, was deducted from the initial investment in the Fund and that the CDSCs with respect to the Class B and Class C shares have been deducted, as applicable. ++ Effective February 23, 2004, Class II shares were redesignated as Class C shares. For the 12 month period ended September 30, 2008, the SunAmerica New Century Class A returned -47.23% compared to -24.65% for the Russell Midcap Growth Index. (The performance table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.) -------- Performance data quoted represents past performance and is no guarantee of future results. Maximum Sales Charge: Class A: 5.75%, Class B: 4.00% Contingent Deferred Sales Charge (CDSC), Class C 1.00% CDSC. The fund's daily net asset 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.sunamericafunds.com. 105 SunAmerica Equity Funds COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued) SunAmerica Growth and Income Fund For the annual period ended September 30, 2008, the SunAmerica Growth and Income Fund Class A returned -22.19%, (before maximum sales charge), underperforming its benchmark, the S&P 500 Index*, which returned -21.98%. Overall, it was a challenging year for U.S. equities, as deteriorating corporate profits, tighter credit conditions and slowing consumer spending trends impaired the domestic economy. Losses were widespread, as every S&P 500 sector posted negative returns, most notably the Financials (16.86% weight) and Telecommunication Services (3.39% weight) groups, which returned -38.53% and -33.14%, respectively. Sectors that performed relatively better included the more defensive Consumer Staples (9.44% weight) and Healthcare (12.12% weight) groups, which returned -2.99% and -12.16%, respectively. During the annual period, performance benefited from stock selection in the Information Technology, Materials and Utilities sectors. A Consumer Staples overweight also proved beneficial. Alternatively, stock selection in Consumer Discretionary, Energy, and Industrials companies negatively impacted performance, as did underweight exposure to the Financials sector. The Fund focuses its investment selection on larger cap companies that demonstrate potential for capital appreciation and are believed to be undervalued by the market. In terms of individual stock holdings, Anheuser-Busch Cos. Inc., U.S. Bancorp, Genzyme Corp., General Mills Inc., and JPMorgan Chase & Co. headed the list of top-performing holdings during the annual period. On the other hand, investments in Fannie Mae, Citigroup Inc., Morgan Stanley, General Electric Co., and Global Industries Ltd. hindered results. -------- Past performance is no guarantee of future results. * The S&P 500 Index is Standard & Poor's 500 Composite Stock Price Index, a widely recognized, unmanaged index of common stock prices. Indices are not managed and an investor cannot invest directly into an index. Securities listed may or may not be a part of current Portfolio construction. 106 SunAmerica Equity Funds COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued) Over the past ten years, $10,000 invested in Growth and Income Fund Class A shares would have increased to $10,726. The same amount invested in securities mirroring the performance of the S&P 500 Index would be valued at $13,516. [CHART] Growth & Income Class A/#/ S&P 500 Index --------------- ------------- 9/30/1998 $ 9,426 $10,000 10/31/1998 9,985 10,813 11/30/1998 10,582 11,468 12/31/1998 11,464 12,128 1/31/1999 12,164 12,635 2/28/1999 11,723 12,243 3/31/1999 12,324 12,732 4/30/1999 12,583 13,225 5/31/1999 12,134 12,914 6/30/1999 12,895 13,630 7/31/1999 12,613 13,205 8/31/1999 12,507 13,139 9/30/1999 12,354 12,780 10/31/1999 13,168 13,588 11/30/1999 13,709 13,865 12/31/1999 15,281 14,681 1/31/2000 14,729 13,943 2/29/2000 15,265 13,679 3/31/2000 16,140 15,018 4/30/2000 15,005 14,566 5/31/2000 14,287 14,267 6/30/2000 15,194 14,618 7/31/2000 14,934 14,390 8/31/2000 16,645 15,284 9/30/2000 15,769 14,477 10/31/2000 14,863 14,416 11/30/2000 13,238 13,279 12/31/2000 13,621 13,344 1/31/2001 13,699 13,818 2/28/2001 12,427 12,558 3/31/2001 11,602 11,762 4/30/2001 12,444 12,676 5/31/2001 12,384 12,761 6/30/2001 11,877 12,451 7/31/2001 11,619 12,328 8/31/2001 10,760 11,556 9/30/2001 9,548 10,623 10/31/2001 9,694 10,826 11/30/2001 10,614 11,656 12/31/2001 10,682 11,758 1/31/2002 10,175 11,587 2/28/2002 10,021 11,363 3/31/2002 10,467 11,791 4/30/2002 9,943 11,076 5/31/2002 9,823 10,994 6/30/2002 9,144 10,211 7/31/2002 8,371 9,415 8/31/2002 8,491 9,477 9/30/2002 7,623 8,447 10/31/2002 8,130 9,190 11/30/2002 8,534 9,731 12/31/2002 7,958 9,160 1/31/2003 7,700 8,920 2/28/2003 7,623 8,786 3/31/2003 7,666 8,871 4/30/2003 8,164 9,602 5/31/2003 8,517 10,107 6/30/2003 8,568 10,236 7/31/2003 8,766 10,417 8/31/2003 8,921 10,619 9/30/2003 8,757 10,507 10/31/2003 9,367 11,101 11/30/2003 9,453 11,199 12/31/2003 9,763 11,786 1/31/2004 9,857 12,002 2/29/2004 10,003 12,169 3/31/2004 9,823 11,985 4/30/2004 9,625 11,797 5/31/2004 9,685 11,959 6/30/2004 9,840 12,191 7/31/2004 9,608 11,788 8/31/2004 9,617 11,836 9/30/2004 9,780 11,964 10/31/2004 9,960 12,146 11/30/2004 10,364 12,638 12/31/2004 10,726 13,068 1/31/2005 10,519 12,749 2/28/2005 10,717 13,018 3/31/2005 10,553 12,787 4/30/2005 10,346 12,545 5/31/2005 10,631 12,943 6/30/2005 10,562 12,962 7/31/2005 10,803 13,444 8/31/2005 10,717 13,321 9/30/2005 10,748 13,429 10/31/2005 10,540 13,205 11/30/2005 10,843 13,704 12/31/2005 10,799 13,709 1/31/2006 10,972 14,072 2/28/2006 11,076 14,110 3/31/2006 11,181 14,286 4/30/2006 11,398 14,478 5/31/2006 11,120 14,061 6/30/2006 11,085 14,080 7/31/2006 11,146 14,167 8/31/2006 11,389 14,504 9/30/2006 11,658 14,878 10/31/2006 12,031 15,363 11/30/2006 12,196 15,655 12/31/2006 12,387 15,874 1/31/2007 12,570 16,114 2/28/2007 12,257 15,799 3/31/2007 12,396 15,976 4/30/2007 12,969 16,684 5/31/2007 13,420 17,266 6/30/2007 13,264 16,979 7/31/2007 12,986 16,453 8/31/2007 13,359 16,699 9/30/2007 13,794 17,324 10/31/2007 13,828 17,599 11/30/2007 13,281 16,863 12/31/2007 13,175 16,746 1/31/2008 12,565 15,742 2/29/2008 12,129 15,231 3/31/2008 12,155 15,165 4/30/2008 12,574 15,903 5/31/2008 12,844 16,109 6/30/2008 11,711 14,751 7/31/2008 11,589 14,627 8/31/2008 11,816 14,839 9/30/2008 10,726 13,516
Class A Class B Class C++ Class I ------------------ ------------------ ------------------ ------------------ Growth Average Average Average Average and Income Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative Fund Return Return+ Return Return+ Return Return+ Return Return+ ----------------- ------- ---------- ------- ---------- ------- ---------- ------- ---------- 1 Year Return -26.67% -22.19% -25.79% -22.69% -23.48% -22.71% -22.02% -22.02% --------------------------------------------------------------------------------------------- 5 Year Return 2.92% 22.49% 3.10% 18.47% 3.47% 18.61% 4.34% 23.66% --------------------------------------------------------------------------------------------- 10 Year Return 0.70% 13.80% 0.78% 8.04% 0.64% 6.61% N/A N/A --------------------------------------------------------------------------------------------- Since Inception* 6.53% 161.36% 6.62% 149.12% 0.48% 5.19% 0.39% 2.73% ---------------------------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been included, the return would have been lower. * Inception date: Class A: 07/01/94; Class B: 07/06/94; Class C: 02/02/98; Class I: 11/16/01. # For the purposes of the graph, it has been assumed that the maximum sales charge, of 5.75% of offering price, was deducted from the initial $10,000 investment in the Fund. For purposes of the table, it has been assumed that the maximum sales charge with respect to the Class A shares, was deducted from the initial investment in the Fund and that the CDSCs with respect to the Class B and Class C shares have been deducted, as applicable. ++ Effective February 23, 2004, Class II shares were redesignated as Class C shares. For the 12 month period ended September 30, 2008, the SunAmerica Growth and Income Class A returned -26.67% compared to -21.98% for the S&P 500 Index. (The performance table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.) -------- Performance data quoted represents past performance and is no guarantee of future results. Maximum Sales Charge: Class A: 5.75%, Class B: 4.00% Contingent Deferred Sales Charge (CDSC), Class C 1.00% CDSC. The fund's daily net asset 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.sunamericafunds.com. 107 SunAmerica Equity Funds COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued) SunAmerica Balanced Assets Fund For the annual period ended September 30, 2008, the SunAmerica Balanced Assets Fund Class A returned -16.37% (before maximum sales charge). At the end of the fiscal period, the Fund held 64% of its total portfolio in equities and 36% in fixed income securities. The Fund's equity benchmark, the S&P 500 Index*, returned -21.98%, whereas its fixed income benchmark, the Lehman Brothers Aggregate Bond Index**, returned 3.65% for the same period. A balanced fund is designed to cushion risk and provide a return somewhere between that of its fixed income and equity benchmarks. Overall, it was a challenging year for U.S. equities, as fears of recession, rising inflationary concerns, weakness in the housing market, chaos in the credit markets, and declining corporate earnings growth dampened investor sentiment. The sell-off was widespread, as every S&P 500 sector posted negative returns, most notably the Financials (16.86% weight) and Telecommunication Services (3.39% weight) groups, which returned -38.53% and -33.14%, respectively, during the annual period. Sectors that performed relatively better included the more defensive Consumer Staples (9.44% weight) and Healthcare (12.12% weight) groups, which returned -2.99% and -12.16%, respectively. The Fund's equity holdings were aided by positive security selection in eight of the ten S&P 500 group, particularly Healthcare, Financials, and Utilities companies. Overweight exposure to the Healthcare group also proved beneficial. On the other hand, stock selection in the Consumer Discretionary and Energy sectors detracted from relative performance. U.S. Bancorp, JPMorgan Chase & Co., Anheuser-Busch Cos. Inc., Wells Fargo & Co., and Wal-Mart Stores Inc. led the list of top equity contributors. The positions which detracted most significantly from the Fund's performance included General Electric Co., Fannie Mae, Morgan Stanley, Citigroup Inc., and Google Inc. Market conditions had a pronounced impact on the performance of the fixed income portion of the Fund versus that of its benchmark. A deteriorating credit environment coupled with a slowing economy created a strong headwind for the Fund. Liquidity diminished drastically in the second half of the annual period as providers remained extremely risk averse. New issue activity came to a standstill as credit market conditions tightened. The Fund's exposure to securities with credit ratings of BBB and below contributed to underperformance during the period. Security selection has always been the primary driver of returns in the Fund. Each asset class is managed from a bottom-up perspective and emphasizes the manager's ability to select the best-performing securities available. The massive de-leveraging that roiled the credit markets over the past year left few sectors unscathed and highlighted the importance of individual security selection. The top-performing securities for the year included U.S. Treasury and mortgage-backed securities issued by Fannie Mae and Freddie Mac. Laggards included asset-backed securities issued by Countrywide Financial and notes issued by Washington Mutual and Lehman Brothers. -------- Past performance is no guarantee of future results. * The S&P 500 Index is Standard & Poor's 500 Composite Stock Price Index, a widely recognized, unmanaged index of common stock prices. Indices are not managed and an investor cannot invest directly into an index. ** The Lehman Brothers Aggregate Bond Index (Effective November 14, 2008 the Index is named Barclays Capital Aggregate Bond Index.) represents securities that are U.S. domestic, taxable and dollar denominated. The index covers components for government and corporate securities, mortgage pass-through securities and asset-backed securities. Indices are not managed and an investor cannot invest directly into an index. Securities listed may or may not be a part of current Portfolio construction. 108 SunAmerica Equity Funds COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued) Over the past ten years, $10,000 invested in Balanced Assets Fund Class A shares would have increased to $10,398. The same amount invested in securities mirroring the performance of the Lehman Brothers Aggregate Bond Index and the S&P 500 Index would be valued at $16,592 and $13,516, respectively. [CHART] Balanced Assets Lehman Brothers Class A/#/ Aggregate Bond Index S&P 500 Index ------------------- --------------- ------------- 9/30/1998 $ 9,425 $10,000 $10,000 10/31/1998 9,780 9,947 10,813 11/30/1998 10,272 10,004 11,468 12/31/1998 10,893 10,034 12,128 1/31/1999 11,409 10,105 12,635 2/28/1999 11,018 9,928 12,243 3/31/1999 11,489 9,983 12,732 4/30/1999 11,676 10,015 13,225 5/31/1999 11,290 9,927 12,914 6/30/1999 11,834 9,895 13,630 7/31/1999 11,588 9,853 13,205 8/31/1999 11,617 9,848 13,139 9/30/1999 11,509 9,963 12,780 10/31/1999 12,035 9,999 13,588 11/30/1999 12,292 9,998 13,865 12/31/1999 13,254 9,950 14,681 1/31/2000 12,869 9,918 13,943 2/29/2000 13,147 10,038 13,679 3/31/2000 13,829 10,170 15,018 4/30/2000 13,070 10,141 14,566 5/31/2000 12,615 10,135 14,267 6/30/2000 13,221 10,346 14,618 7/31/2000 13,164 10,440 14,390 8/31/2000 14,102 10,592 15,284 9/30/2000 13,315 10,659 14,477 10/31/2000 12,654 10,729 14,416 11/30/2000 11,746 10,905 13,279 12/31/2000 11,974 11,108 13,344 1/31/2001 12,117 11,289 13,818 2/28/2001 11,254 11,387 12,558 3/31/2001 10,710 11,444 11,762 4/30/2001 11,146 11,396 12,676 5/31/2001 11,118 11,464 12,761 6/30/2001 10,900 11,508 12,451 7/31/2001 10,778 11,766 12,328 8/31/2001 10,240 11,901 11,556 9/30/2001 9,540 12,039 10,623 10/31/2001 9,850 12,291 10,826 11/30/2001 10,347 12,121 11,656 12/31/2001 10,263 12,044 11,758 1/31/2002 10,039 12,141 11,587 2/28/2002 9,894 12,259 11,363 3/31/2002 10,000 12,055 11,791 4/30/2002 9,732 12,289 11,076 5/31/2002 9,608 12,393 10,994 6/30/2002 9,257 12,501 10,211 7/31/2002 8,929 12,651 9,415 8/31/2002 9,031 12,865 9,477 9/30/2002 8,620 13,073 8,447 10/31/2002 8,744 13,014 9,190 11/30/2002 8,927 13,010 9,731 12/31/2002 8,620 13,279 9,160 1/31/2003 8,444 13,290 8,920 2/28/2003 8,437 13,474 8,786 3/31/2003 8,445 13,464 8,871 4/30/2003 8,828 13,575 9,602 5/31/2003 9,107 13,828 10,107 6/30/2003 9,123 13,801 10,236 7/31/2003 9,086 13,337 10,417 8/31/2003 9,204 13,425 10,619 9/30/2003 9,193 13,781 10,507 10/31/2003 9,569 13,652 11,101 11/30/2003 9,613 13,685 11,199 12/31/2003 9,841 13,824 11,786 1/31/2004 9,929 13,935 12,002 2/29/2004 10,040 14,086 12,169 3/31/2004 9,939 14,192 11,985 4/30/2004 9,731 13,822 11,797 5/31/2004 9,761 13,767 11,959 6/30/2004 9,915 13,845 12,191 7/31/2004 9,692 13,982 11,788 8/31/2004 9,744 14,249 11,836 9/30/2004 9,861 14,287 11,964 10/31/2004 9,965 14,407 12,146 11/30/2004 10,152 14,292 12,638 12/31/2004 10,416 14,424 13,068 1/31/2005 10,280 14,514 12,749 2/28/2005 10,363 14,429 13,018 3/31/2005 10,174 14,355 12,787 4/30/2005 10,068 14,549 12,545 5/31/2005 10,264 14,706 12,943 6/30/2005 10,257 14,786 12,962 7/31/2005 10,461 14,652 13,444 8/31/2005 10,431 14,840 13,321 9/30/2005 10,436 14,687 13,429 10/31/2005 10,284 14,571 13,205 11/30/2005 10,528 14,635 13,704 12/31/2005 10,521 14,774 13,709 1/31/2006 10,666 14,775 14,072 2/28/2006 10,682 14,824 14,110 3/31/2006 10,715 14,679 14,286 4/30/2006 10,761 14,652 14,478 5/31/2006 10,561 14,636 14,061 6/30/2006 10,546 14,667 14,080 7/31/2006 10,639 14,866 14,167 8/31/2006 10,847 15,093 14,504 9/30/2006 11,052 15,226 14,878 10/31/2006 11,292 15,327 15,363 11/30/2006 11,432 15,504 15,655 12/31/2006 11,519 15,414 15,874 1/31/2007 11,651 15,408 16,114 2/28/2007 11,534 15,646 15,799 3/31/2007 11,613 15,646 15,976 4/30/2007 11,972 15,731 16,684 5/31/2007 12,230 15,611 17,266 6/30/2007 12,087 15,565 16,979 7/31/2007 11,875 15,695 16,453 8/31/2007 12,048 15,887 16,699 9/30/2007 12,442 16,008 17,324 10/31/2007 12,576 16,152 17,599 11/30/2007 12,245 16,442 16,863 12/31/2007 12,188 16,488 16,746 1/31/2008 11,674 16,765 15,742 2/29/2008 11,413 16,788 15,231 3/31/2008 11,305 16,846 15,165 4/30/2008 11,631 16,811 15,903 5/31/2008 11,774 16,687 16,109 6/30/2008 11,119 16,674 14,751 7/31/2008 11,023 16,660 14,627 8/31/2008 11,191 16,818 14,839 9/30/2008 10,398 16,592 13,516
Class A Class B Class C++ Class I ------------------ ------------------ ------------------ ------------------ Balanced Average Average Average Average Assets Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative Fund Return Return+ Return Return+ Return Return+ Return Return+ ----------------- ------- ---------- ------- ---------- ------- ---------- ------- ---------- 1 Year Return -21.16% -16.37% -20.23% -16.95% -17.80% -16.98% -16.19% -16.19% --------------------------------------------------------------------------------------------- 5 Year Return 1.29% 13.11% 1.43% 9.36% 1.82% 9.43% 2.76% 14.58% --------------------------------------------------------------------------------------------- 10 Year Return 0.39% 10.33% 0.42% 4.27% N/A N/A N/A N/A --------------------------------------------------------------------------------------------- Since Inception* 4.41% 102.83% 7.50% 453.45% -1.55% -13.99% 0.38% 2.66% ---------------------------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been included, the return would have been lower. * Inception date: Class A: 09/24/93; Class B: 01/29/85; Class C: 02/02/99; Class I: 11/16/01. # For the purposes of the graph, it has been assumed that the maximum sales charge, of 5.75% of offering price, was deducted from the initial $10,000 investment in the Fund. For purposes of the table, it has been assumed that the maximum sales charge with respect to the Class A shares, was deducted from the initial investment in the Fund and that the CDSCs with respect to the Class B and Class C shares have been deducted, as applicable. ++ Effective February 23, 2004, Class II shares were redesignated as Class C shares. For the 12 month period ended September 30, 2008, the SunAmerica Balanced Assets Class A returned -21.16% compared to -21.98% for the S&P 500 Index and 3.65% for the Lehman Bros. Aggregate Bond Index. (Effective November 14, 2008, the Index is named Barclays Capital Aggregate Bond Index,) (The performance table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.) -------- Performance data quoted represents past performance and is no guarantee of future results. Maximum Sales Charge: Class A: 5.75%, Class B: 4.00% Contingent Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. The fund's daily net asset 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.sunamericafunds.com. 109 SunAmerica Equity Funds COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued) SunAmerica International Equity Fund For the annual period ended September 30, 2008, the SunAmerica International Equity Fund Class A returned -31.34% (before maximum sales charge), underperforming its MSCI All Country World ex-US Index (Gross)* benchmark, which returned -29.97% during the period. Fiscal year 2008 was a roller coaster ride in international equity markets. The boom in commodity prices and resource-linked equities capitulated to the subprime credit crisis, which originated in and emanated from the financial system and housing markets of the United States. Investors that were long energy and materials-related stocks chalked up robust gains in the first three quarters (through mid-July) as crude oil hit an historic peak of $147 per barrel (+58% from 9/28/2007) and other materials, from corn and soybeans to gold and copper, touched historic levels. Driving this firm price environment was a widely-shared belief, with ample supporting evidence, of booming secular growth in emerging markets; most notably, the strong growth of China. The stocks of the companies that fed China's seemingly endless appetite for resources did very well indeed. The other side of this resource boom was, of course, a rising fear of inflation, and the pressure that rising costs put on consumers and businesses alike. The airline and auto industries have been particularly hard hit because of their reliance on cheap oil to maintain sales and/or margins. Meanwhile, the financial sector was experiencing great difficulties throughout the year as the extent of damage from the subprime credit fiasco became more and more apparent. Structured credit products, which had, in effect, overleveraged the global financial system, began to unwind, and as they unwound, a vicious cycle of distress, panic and failure was unleashed. The global system of finance and credit froze, leading to a simultaneous liquidity and solvency crisis as firms and investors came to grips with a lack of credit to finance operations and diminishing equity. The failures of a variety of banks and non-bank financial companies such as hedge funds and insurance companies ensued. This massive de-leveraging has, of course, affected equity markets profoundly, and has significantly pressured the secular growth trend in emerging markets as well as the commodity and energy boom. In the end "the tortoise did indeed overtake the hare" as defensive-oriented sectors such as Healthcare, Utilities and Consumer Staples, as well as equities with low-leverage and with quality, predictable earnings profiles, outperformed everything else on a relative basis. Our sector selection added to performance throughout the annual period. Our underweight position in Financials and our overweight in Consumer Staples were our best performing allocation decisions while our allocations to energy and industrials were the biggest detractors. Although country selection did contribute positively to performance, it was a much smaller percentage of performance contribution. That is a predictable result given our focus on individual stock selection and regional allocation. Stock selection was the primary driver of performance. Our selection in materials was our biggest contributor to performance, while our selection in energy stocks was the biggest detractor to performance. On an individual security basis, Mechel Steel Group, Orascom Construction and Bayer were the top three contributors while Vodafone, Allianz and Hon Hai Precisions were the biggest individual detractors. -------- Past performance is no guarantee of future results. Investing internationally involves special risks, such as currency fluctuations, and economic and political instability. Diversification does not insure against market loss. * The Morgan Stanley Capital International (MSCI) All Country (AC) World ex-U.S. Index (Gross) is a free float-adjusted market capitalization-weighted index designed to measure the equity market performance of 47 global developed and emerging markets, excluding the U.S. Indices are not managed and an investor cannot invest directly into an index. Securities listed may or may not be a part of current Portfolio construction. 110 SunAmerica Equity Funds COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued) Over the past ten years, $10,000 invested in International Equity Fund Class A shares would have increased to $12,212. The same amount invested in securities mirroring the performance of the MSCI All Country World ex-U.S. Index (Gross) would be valued at $19,394. [CHART] MSCI All Country World International Equity ex-U.S. Daily Total Class A/#/ Return Index (Gross) -------------------- ---------------------- 9/30/1998 $ 9,424 $10,000.00 10/31/1998 10,058 11,047.51 11/30/1998 10,551 11,641.17 12/31/1998 10,882 12,038.64 1/31/1999 10,907 12,015.79 2/28/1999 10,527 11,737.38 3/31/1999 10,799 12,324.30 4/30/1999 11,155 12,944.11 5/31/1999 10,642 12,356.55 6/30/1999 11,122 12,934.92 7/31/1999 11,336 13,231.40 8/31/1999 11,328 13,281.09 9/30/1999 11,328 13,370.06 10/31/1999 11,783 13,856.24 11/30/1999 12,692 14,403.34 12/31/1999 14,534 15,768.66 1/31/2000 13,691 14,900.25 2/29/2000 14,732 15,298.00 3/31/2000 14,518 15,890.06 4/30/2000 13,501 15,010.77 5/31/2000 13,113 14,645.69 6/30/2000 13,650 15,272.33 7/31/2000 13,253 14,662.79 8/31/2000 13,543 14,846.38 9/30/2000 12,601 14,021.95 10/31/2000 11,931 13,567.05 11/30/2000 11,270 12,951.40 12/31/2000 11,620 13,385.94 1/31/2001 11,575 13,586.74 2/28/2001 10,614 12,511.07 3/31/2001 9,680 11,626.72 4/30/2001 10,273 12,417.48 5/31/2001 9,878 12,074.58 6/30/2001 9,500 11,611.48 7/31/2001 9,222 11,353.13 8/31/2001 8,926 11,071.17 9/30/2001 7,839 9,896.64 10/31/2001 7,974 10,173.92 11/30/2001 8,028 10,639.25 12/31/2001 8,145 10,776.31 1/31/2002 7,938 10,314.79 2/28/2002 8,064 10,389.07 3/31/2002 8,396 10,953.43 4/30/2002 8,405 11,024.60 5/31/2002 8,504 11,144.68 6/30/2002 8,180 10,663.46 7/31/2002 7,309 9,624.25 8/31/2002 7,166 9,624.85 9/30/2002 6,286 8,604.90 10/31/2002 6,618 9,066.53 11/30/2002 6,896 9,502.53 12/31/2002 6,672 9,195.54 1/31/2003 6,483 8,872.72 2/28/2003 6,402 8,692.94 3/31/2003 6,277 8,524.32 4/30/2003 6,780 9,345.72 5/31/2003 7,148 9,941.09 6/30/2003 7,327 10,216.25 7/31/2003 7,552 10,488.48 8/31/2003 7,767 10,801.02 9/30/2003 7,839 11,103.44 10/31/2003 8,351 11,823.20 11/30/2003 8,477 12,081.00 12/31/2003 9,153 13,003.34 1/31/2004 9,198 13,212.17 2/29/2004 9,234 13,548.11 3/31/2004 9,333 13,631.47 4/30/2004 9,037 13,207.82 5/31/2004 9,010 13,249.60 6/30/2004 9,234 13,536.79 7/31/2004 8,875 13,142.30 8/31/2004 8,956 13,247.54 9/30/2004 9,162 13,673.47 10/31/2004 9,513 14,149.03 11/30/2004 10,106 15,131.11 12/31/2004 10,582 15,780.79 1/31/2005 10,411 15,509.00 2/28/2005 10,905 16,273.98 3/31/2005 10,591 15,832.53 4/30/2005 10,438 15,442.07 5/31/2005 10,447 15,538.82 6/30/2005 10,591 15,831.28 7/31/2005 10,977 16,415.39 8/31/2005 11,417 16,835.51 9/30/2005 11,714 17,703.92 10/31/2005 11,426 17,059.41 11/30/2005 11,776 17,632.97 12/31/2005 12,666 18,481.35 1/31/2006 13,600 19,769.94 2/28/2006 13,375 19,712.86 3/31/2006 13,833 20,285.43 4/30/2006 14,669 21,331.39 5/31/2006 14,103 20,347.95 6/30/2006 13,896 20,327.66 7/31/2006 13,995 20,535.62 8/31/2006 14,301 21,117.66 9/30/2006 14,238 21,131.37 10/31/2006 14,642 21,991.84 11/30/2006 15,046 22,790.28 12/31/2006 15,441 23,500.52 1/31/2007 15,558 23,588.28 2/28/2007 15,513 23,732.42 3/31/2007 15,909 24,401.09 4/30/2007 16,421 25,532.64 5/31/2007 16,762 26,232.48 6/30/2007 16,977 26,455.90 7/31/2007 16,753 26,380.48 8/31/2007 16,564 25,975.44 9/30/2007 17,786 27,695.56 10/31/2007 18,927 29,241.51 11/30/2007 17,867 27,927.57 12/31/2007 17,768 27,523.89 1/31/2008 15,795 24,860.71 2/29/2008 16,138 25,581.17 3/31/2008 16,011 25,029.55 4/30/2008 17,120 26,569.89 5/31/2008 17,444 27,030.32 6/30/2008 16,158 24,814.78 7/31/2008 15,353 23,927.32 8/31/2008 14,430 22,814.49 9/30/2008 12,212 19,394.49
Class A Class B Class C ++ Class I ------------------ ------------------ ------------------ ------------------ International Average Average Average Average Equity Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative Fund Return Return+ Return Return+ Return Return+ Return Return+ ----------------- ------- ---------- ------- ---------- ------- ---------- ------- ---------- 1 Year Return -35.30% -31.34% -34.21% -31.72% -32.39% -31.77% -31.29% -31.29% --------------------------------------------------------------------------------------------- 5 Year Return 7.99% 55.78% 8.30% 50.96% 8.57% 50.89% 9.37% 56.51% --------------------------------------------------------------------------------------------- 10 Year Return 2.02% 29.58% 2.12% 23.29% 1.72% 18.61% N/A N/A --------------------------------------------------------------------------------------------- Since Inception* 1.11% 20.92% 1.18% 14.95% 0.92% 11.16% 6.19% 51.00% ---------------------------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been included, the return would have been lower. * Inception date Class A and Class B: 11/19/96; Class C: 03/06/97; Class I: 11/16/01. # For the purposes of the graph, it has been assumed that the maximum sales charge, of 5.75% of offering price, was deducted from the initial $10,000 investment in the Fund. For purposes of the table, it has been assumed that the maximum sales charge with respect to the Class A shares, was deducted from the initial investment in the Fund and that the CDSCs with respect to the Class B and Class C shares have been deducted, as applicable. ++ Effective February 23, 2004, Class II shares were redesignated as Class C shares. For the 12 month period ended September 30, 2008, the SunAmerica International Equity Class A returned -35.30% compared to -29.97% for the MSCI All Country World ex U.S. Index (Gross). (The performance table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.) -------- Performance data quoted represents past performance and is no guarantee of future results. Maximum Sales Charge: Class A: 5.75%, Class B: 4.00% Contingent Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. The fund's daily net asset 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.sunamericafunds.com. 111 SunAmerica Equity Funds COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued) SunAmerica Value Fund For the annual period ended September 30, 2008, the SunAmerica Value Fund Class A returned -21.70%, (before maximum sales charge), outperforming its benchmark the Russell 1000 Value Index*, which returned -23.56%. Overall, U.S. equities finished the period on a precarious note due to the weakening U.S. economy. The combination of tighter credit and slower consumer spending trends had a negative impact on the outlook for corporate profits. In terms of industry groups, all ten Russell 1000 Value sectors had negative returns, the worst of which were Financials (28.37% weight) and Information Technology (2.93% weight), which returned -37.09% and -36.56%, respectively. Sectors that did relatively better included the Consumer Staples (8.07% weight) and Energy (15.78% weight) groups which returned -5.13% and -9.70%, respectively. The Fund focuses its investment selection on larger capitalized companies that demonstrate potential for capital appreciation and are believed to be undervalued by the marketplace. During the annual period, performance benefited from stock selection in Financials, Information Technology, and Consumer Staples sectors. Alternatively, security selection in the Consumer Discretionary and Energy groups hindered results. Three financial institutions, U.S. Bancorp, JPMorgan Chase & Co., and Wells Fargo & Co. were among the top-performing holdings during the annual period. General Mills Inc. and Anheuser-Busch Cos. Inc., both Consumer Staples companies, also delivered strong results. Investments in Fannie Mae, Morgan Stanley, Citigroup Inc., General Electric Co., and AT&T Inc. were a drag on performance in the period. -------- Past performance is no guarantee of future results. * The Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. The Russell 1000 Index is a comprehensive large-cap index measuring the performance of the largest 1,000 U.S. incorporated companies. Indices are not managed and an investor cannot invest directly into an index. Securities listed may or may not be a part of current Portfolio construction. 112 SunAmerica Equity Funds COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued) Over the past ten years, $10,000 invested in Value Fund Class A shares would have increased to $19,171. The same amount invested in securities mirroring the performance of the Russell 1000 Value Index would be valued at $17,156. [CHART] Russell 1000 Value Class A/#/ Value Index -------------- ----------- 9/30/1998 $ 9,428 $10,000.00 10/31/1998 10,338 10,774.60 11/30/1998 10,759 11,276.58 12/31/1998 11,000 11,660.39 1/31/1999 10,986 11,753.51 2/28/1999 10,731 11,587.68 3/31/1999 11,034 11,827.54 4/30/1999 11,883 12,932.05 5/31/1999 11,897 12,789.93 6/30/1999 12,386 13,161.35 7/31/1999 11,979 12,775.85 8/31/1999 11,607 12,301.83 9/30/1999 11,166 11,871.93 10/31/1999 11,586 12,555.22 11/30/1999 11,676 12,456.95 12/31/1999 11,999 12,517.05 1/31/2000 11,645 12,108.81 2/29/2000 11,385 11,209.22 3/31/2000 12,469 12,576.88 4/30/2000 12,339 12,430.42 5/31/2000 12,469 12,561.45 6/30/2000 12,288 11,987.53 7/31/2000 12,151 12,137.51 8/31/2000 12,997 12,812.94 9/30/2000 12,657 12,930.16 10/31/2000 12,845 13,247.98 11/30/2000 12,397 12,756.09 12/31/2000 13,229 13,395.25 1/31/2001 13,530 13,446.68 2/28/2001 12,961 13,072.80 3/31/2001 12,457 12,610.85 4/30/2001 13,066 13,229.30 5/31/2001 13,408 13,526.54 6/30/2001 13,335 13,226.05 7/31/2001 13,408 13,198.44 8/31/2001 13,107 12,669.70 9/30/2001 12,270 11,778.00 10/31/2001 12,278 11,676.61 11/30/2001 13,058 12,355.46 12/31/2001 13,536 12,646.45 1/31/2002 13,391 12,549.02 2/28/2002 13,519 12,569.16 3/31/2002 13,996 13,163.81 4/30/2002 13,689 12,712.37 5/31/2002 13,825 12,776.10 6/30/2002 13,297 12,042.51 7/31/2002 12,565 10,923.05 8/31/2002 12,676 11,005.54 9/30/2002 11,816 9,781.85 10/31/2002 12,455 10,506.56 11/30/2002 13,025 11,168.43 12/31/2002 12,725 10,683.33 1/31/2003 12,387 10,424.69 2/28/2003 12,102 10,146.78 3/31/2003 12,173 10,163.64 4/30/2003 13,027 11,058.27 5/31/2003 13,818 11,772.09 6/30/2003 13,809 11,919.28 7/31/2003 13,881 12,096.76 8/31/2003 14,147 12,285.26 9/30/2003 14,085 12,165.39 10/31/2003 14,521 12,909.91 11/30/2003 14,725 13,085.04 12/31/2003 15,673 13,891.60 1/31/2004 15,692 14,135.87 2/29/2004 16,009 14,438.83 3/31/2004 15,869 14,312.46 4/30/2004 15,869 13,962.67 5/31/2004 15,860 14,105.06 6/30/2004 16,271 14,438.34 7/31/2004 16,056 14,234.95 8/31/2004 16,224 14,437.39 9/30/2004 16,523 14,661.19 10/31/2004 16,822 14,904.92 11/30/2004 17,560 15,658.48 12/31/2004 18,135 16,182.83 1/31/2005 17,915 15,895.57 2/28/2005 18,365 16,422.38 3/31/2005 18,250 16,197.04 4/30/2005 17,946 15,906.95 5/31/2005 18,271 16,289.87 6/30/2005 18,344 16,468.22 7/31/2005 18,721 16,944.67 8/31/2005 18,637 16,870.98 9/30/2005 18,846 17,107.86 10/31/2005 18,438 16,673.36 11/30/2005 18,982 17,218.58 12/31/2005 18,904 17,324.33 1/31/2006 19,298 17,997.19 2/28/2006 19,456 18,107.03 3/31/2006 19,625 18,352.34 4/30/2006 20,086 18,818.71 5/31/2006 19,636 18,343.34 6/30/2006 19,782 18,460.68 7/31/2006 20,300 18,909.34 8/31/2006 20,582 19,225.84 9/30/2006 21,111 19,609.08 10/31/2006 21,730 20,250.95 11/30/2006 22,023 20,713.25 12/31/2006 22,561 21,178.21 1/31/2007 22,700 21,449.05 2/28/2007 22,207 21,114.66 3/31/2007 22,511 21,441.10 4/30/2007 23,434 22,233.42 5/31/2007 24,307 23,035.36 6/30/2007 23,903 22,497.11 7/31/2007 23,169 21,456.76 8/31/2007 23,725 21,697.19 9/30/2007 24,447 22,442.44 10/31/2007 24,383 22,444.92 11/30/2007 23,257 21,347.95 12/31/2007 23,092 21,141.51 1/31/2008 22,206 20,294.73 2/29/2008 21,199 19,444.42 3/31/2008 21,139 19,298.22 4/30/2008 21,800 20,238.93 5/31/2008 22,056 20,206.80 6/30/2008 19,997 18,272.58 7/31/2008 19,997 18,206.62 8/31/2008 20,478 18,515.91 9/30/2008 19,171 17,155.52
Class A Class B Class C++ Class I Class Z ------------------ ------------------ ------------------ ------------------ ------------------ Average Average Average Average Average Value Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative Fund Return Return+ Return Return+ Return Return+ Return Return+ Return Return+ ----------------- ------- ---------- ------- ---------- ------- ---------- ------- ---------- ------- ---------- 1 Year Return -26.21% -21.70% -24.77% -22.16% -22.81% -22.16% -21.62% -21.62% -21.28% -21.28% ---------------------------------------------------------------------------------------------------------------- 5 Year Return 5.10% 36.11% 5.43% 31.86% 5.67% 31.75% 6.45% 36.68% 6.97% 40.04% ---------------------------------------------------------------------------------------------------------------- 10 Year Return 6.72% 103.35% 6.81% 93.16% 6.66% 90.62% N/A N/A 7.97% 115.28% ---------------------------------------------------------------------------------------------------------------- Since Inception* 6.77% 130.77% 6.84% 119.25% 6.04% 97.13% 5.96% 48.82% 5.03% 67.39% ----------------------------------------------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been included, the return would have been lower. * Inception date: Class A and Class B: 11/19/96; Class C: 03/06/97; Class I: 11/16/01; Class Z: 04/03/98. # 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 table, it has been assumed that the maximum sales charge with respect to the Class A shares, was deducted from the initial investment in the Fund and that the CDSCs with respect to the Class B and Class C shares have been deducted, as applicable. ++ Effective February 23, 2004, Class II shares were redesignated as Class C shares. For the 12 month period ended September 30, 2008, the SunAmerica Value Class A returned -26.21% compared to -23.56% for the Russell 1000 Value Index. (The performance table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.) -------- Performance data quoted represents past performance and is no guarantee of future results. Maximum Sales Charge: Class A: 5.75%, Class B: 4.00% Contingent Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. The fund's daily net asset 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.sunamericafunds.com. 113 SunAmerica Equity Funds COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued) SunAmerica Disciplined Growth Fund For the annual period ended September 30, 2008, the SunAmerica Disciplined Growth Fund Class A returned -36.53% (before maximum sales charge), underperforming its Russell 3000 Growth Index* benchmark, which returned -20.60% during the period. The Fund also underperformed its previous benchmark, the S&P 500 Index**, which returned -21.98%. Weakness in the housing market, chaos in the credit markets, fear of recession, inflationary concerns, a weakening U.S. dollar and declining corporate earnings growth are but some of the themes that defined the annual period. The sell-off was broad-based, as all ten Russell 3000 Growth industry groups posted negative returns. Consumer Staples and Healthcare were the best performing industries during the annual period, while Utilities and Telecom Services companies were the most disappointing. The Fund's equity holdings were aided by an underweight position in the Utilities sector. On the other hand, stock selection in the Information Technology, Healthcare, Consumer Discretionary, and Consumer Staples groups, as well as overweight exposure to the Materials sector were detractors from relative performance. Top-performing investments for the year included DryShips Inc., Excel Maritime Carriers Ltd., Apache Corp., Genco Shipping & Trading Ltd., and General Mills Inc. The positions which detracted most significantly from the Fund's performance included Cal-Maine Foods Inc., Google Inc., EMCORE Corp., Medivation Inc., and Sangamo BioSciences Inc. -------- Past performance is no guarantee of future results. * The Russell 3000 Growth Index measures the performance of those Russell 3000 Index companies with higher price-to-book ratios and higher forecasted growth values. Russell 3000 Index consists of the 3,000 largest U.S. companies based on total market capitalization. Indices are not managed and an investor cannot invest directly into an index. ** The S&P 500 Index is Standard & Poor's 500 Composite Stock Price Index, a widely recognized, unmanaged index of common stock prices. Indices are not managed and an investor cannot invest directly into an index. The Fund has replaced the benchmark used for the prior fiscal year (the S&P 500 Index) with the Russell 3000 Growth Index, which management believes represents a better comparison of performance given the Fund's strategy of investing in growth-oriented companies without regard to market capitalization. Securities listed may or may not be a part of current Portfolio construction. 114 SunAmerica Equity Funds COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued) Since the Fund's inception on March 1, 1999, $10,000 invested in Disciplined Growth Fund Class A shares would be valued at $8,438. The same amount invested in securities mirroring the performance of the Russell 3000 Growth Index and the S&P 500 Index would be valued at $8,589 and $11,040, respectively. [CHART] Disciplined Growth Russell 3000 Class A/#/ Growth Index S&P 500 Index ------------------ --------------- --------------- 3/1/1999 $ 9,427 $10,000.00 10,000.00 3/31/1999 9,842 10,514.64 10,399.98 4/30/1999 10,324 10,591.29 10,802.73 5/31/1999 10,091 10,291.16 10,548.00 6/30/1999 10,581 10,998.44 11,132.92 7/31/1999 10,204 10,649.40 10,786.13 8/31/1999 10,068 10,781.82 10,732.40 9/30/1999 9,759 10,584.65 10,438.55 10/31/1999 10,294 11,347.07 11,098.84 11/30/1999 10,535 11,998.28 11,324.89 12/31/1999 10,950 13,305.18 11,991.47 1/31/2000 10,716 12,717.13 11,389.02 2/29/2000 10,626 13,511.61 11,173.43 3/31/2000 11,561 14,275.76 12,266.52 4/30/2000 10,943 13,541.40 11,897.42 5/31/2000 10,596 12,825.11 11,653.29 6/30/2000 10,837 13,842.60 11,940.54 7/31/2000 10,837 13,223.06 11,754.03 8/31/2000 11,471 14,433.04 12,484.07 9/30/2000 10,965 13,111.16 11,825.04 10/31/2000 10,965 12,459.74 11,775.02 11/30/2000 10,113 10,594.62 10,846.68 12/31/2000 10,128 10,322.62 10,899.72 1/31/2001 10,475 11,044.27 11,286.44 2/28/2001 9,472 9,194.80 10,257.34 3/31/2001 8,824 8,206.21 9,607.54 4/30/2001 9,517 9,241.56 10,354.14 5/31/2001 9,608 9,131.41 10,423.51 6/30/2001 9,382 8,955.37 10,169.81 7/31/2001 9,306 8,693.87 10,069.74 8/31/2001 8,786 7,993.85 9,439.37 9/30/2001 8,183 7,162.90 8,677.14 10/31/2001 8,326 7,558.27 8,842.61 11/30/2001 8,974 8,278.13 9,520.93 12/31/2001 9,035 8,296.72 9,604.33 1/31/2002 8,733 8,140.00 9,464.21 2/28/2002 8,529 7,789.48 9,281.74 3/31/2002 8,876 8,085.71 9,630.82 4/30/2002 8,198 7,459.23 9,046.91 5/31/2002 8,190 7,260.00 8,980.23 6/30/2002 7,609 6,592.38 8,340.48 7/31/2002 7,006 6,185.12 7,690.34 8/31/2002 7,081 6,202.31 7,740.86 9/30/2002 6,282 5,571.05 6,899.59 10/31/2002 6,787 6,067.44 7,506.89 11/30/2002 7,142 6,413.76 7,948.74 12/31/2002 6,742 5,970.77 7,481.76 1/31/2003 6,531 5,824.76 7,286.14 2/28/2003 6,440 5,789.75 7,176.66 3/31/2003 6,478 5,896.23 7,246.14 4/30/2003 7,014 6,339.84 7,842.72 5/31/2003 7,315 6,681.71 8,255.54 6/30/2003 7,376 6,776.11 8,361.00 7/31/2003 7,481 6,968.55 8,508.48 8/31/2003 7,579 7,156.34 8,674.09 9/30/2003 7,489 7,071.96 8,582.25 10/31/2003 7,911 7,484.84 9,067.49 11/30/2003 7,979 7,575.61 9,147.18 12/31/2003 8,416 7,820.09 9,626.56 1/31/2004 8,514 7,998.55 9,803.23 2/29/2004 8,620 8,044.52 9,939.45 3/31/2004 8,499 7,909.54 9,789.46 4/30/2004 8,371 7,793.74 9,636.06 5/31/2004 8,439 7,939.73 9,768.27 6/30/2004 8,590 8,051.35 9,958.16 7/31/2004 8,348 7,574.10 9,628.55 8/31/2004 8,424 7,526.65 9,667.44 9/30/2004 8,499 7,625.29 9,772.14 10/31/2004 8,567 7,749.66 9,921.43 11/30/2004 8,846 8,048.47 10,322.73 12/31/2004 9,112 8,361.75 10,674.02 1/31/2005 8,877 8,074.34 10,413.89 2/28/2005 9,013 8,162.39 10,633.00 3/31/2005 8,854 8,000.16 10,444.80 4/30/2005 8,657 7,817.42 10,246.66 5/31/2005 8,861 8,209.76 10,572.40 6/30/2005 8,824 8,204.21 10,587.55 7/31/2005 9,036 8,620.15 10,981.12 8/31/2005 8,907 8,508.21 10,880.86 9/30/2005 8,968 8,549.87 10,968.94 10/31/2005 8,778 8,446.27 10,786.09 11/30/2005 9,043 8,820.42 11,194.02 12/31/2005 9,260 8,794.04 11,197.83 1/31/2006 10,799 9,008.84 11,494.32 2/28/2006 10,273 8,991.37 11,525.41 3/31/2006 10,662 9,152.23 11,668.91 4/30/2006 11,073 9,138.41 11,825.62 5/31/2006 10,372 8,796.65 11,485.27 6/30/2006 10,342 8,765.59 11,500.84 7/31/2006 9,946 8,573.54 11,571.78 8/31/2006 10,060 8,839.68 11,847.11 9/30/2006 9,976 9,067.22 12,152.41 10/31/2006 10,220 9,408.11 12,548.41 11/30/2006 10,700 9,598.05 12,787.03 12/31/2006 10,722 9,625.85 12,966.40 1/31/2007 10,913 9,867.44 13,162.49 2/28/2007 10,738 9,694.63 12,905.04 3/31/2007 10,898 9,750.24 13,049.39 4/30/2007 11,141 10,192.35 13,627.41 5/31/2007 11,614 10,566.94 14,102.94 6/30/2007 11,614 10,417.37 13,868.65 7/31/2007 11,614 10,223.07 13,438.65 8/31/2007 12,375 10,393.78 13,640.09 9/30/2007 13,274 10,818.04 14,150.22 10/31/2007 14,089 11,196.00 14,375.35 11/30/2007 13,106 10,753.41 13,774.32 12/31/2007 13,159 10,723.03 13,678.72 1/31/2008 11,652 9,874.81 12,858.27 2/29/2008 11,667 9,667.18 12,440.51 3/31/2008 11,065 9,608.49 12,386.76 4/30/2008 11,903 10,112.10 12,990.00 5/31/2008 12,604 10,498.53 13,158.22 6/30/2008 11,652 9,753.15 12,048.98 7/31/2008 10,623 9,598.09 11,947.65 8/31/2008 10,311 9,711.78 12,120.41 9/30/2008 8,438 8,589.15 11,040.36
Class A Class B Class C++ ------------------ ------------------ ------------------ Disciplined Average Average Average Growth Annual Cumulative Annual Cumulative Annual Cumulative Fund Return Return+ Return Return+ Return Return+ ----------------- ------- ---------- ------- ---------- ------- ---------- 1 Year Return -40.16% -36.53% -39.46% -36.94% -37.55% -36.91% -------------------------------------------------------------------------- 5 Year Return 1.20% 12.67% 1.39% 9.15% 1.74% 9.03% -------------------------------------------------------------------------- Since Inception* -1.76% -10.49% -1.70% -15.12% -1.78% -15.83% --------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been included, the return would have been lower. * Inception date: Class A, Class B and Class C: 03/01/99 # 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 table, it has been assumed that the maximum sales charge with respect to the Class A shares, was deducted from the initial investment in the Fund and that the CDSCs with respect to the Class B and Class C shares have been deducted, as applicable. ++ Effective February 23, 2004, Class II shares were redesignated as Class C shares. For the 12 month period ended September 30, 2008, the SunAmerica Disciplined Growth Fund Class A returned -40.16% compared to -20.60% for the Russell 3000 Growth Index and -21.98% for the S&P 500 Index. (The performance table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.) Performance information that includes a period prior to May 15, 2007 reflects management of the Fund for such period in accordance with the investment goals and principal investment strategies and techniques ("policies") of the Fund as a tax managed fund. Accordingly, any such performance information may not reflect (or may only partially reflect) the management of the Fund in accordance with its current investment goals and policies, depending on the period shown. The Fund has replaced the benchmark used in the Line Graph for the prior fiscal year (the S&P 500 Index) with the Russell 3000 Growth Index, which management believes represents a better approximation of performance given the Fund's current investment goals and policies. -------- Performance data quoted represents past performance and is no guarantee of future results. Maximum Sales Charge: Class A: 5.75%, Class B: 4.00% Contingent Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. The fund's daily net asset 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.sunamericafunds.com. 115 SunAmerica Equity Funds COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued) SunAmerica International Small-Cap Fund For the annual period ended September 30, 2008, the SunAmerica International Small-Cap Fund Class A returned -39.79% (before maximum sales charge), underperforming its MSCI EAFE Small Cap Index (Net)* benchmark, which returned -35.24% during the period. The events of the past 12 months have rendered an almost unprecedented shock to the global financial system whereby the "credit crunch", or withdrawal of liquidity from the financial system, has resulted in the demise of a number of counterparties in the financial sector. This phenomenon led many economies into recession, principally the U.S., United Kingdom, Ireland and Spain, where buoyant real estate markets produced the most consumer leverage. Consequently, risk premiums have risen rapidly, eroding valuations in all asset classes, including equities which have declined in an environment of constrained liquidity, high volatility, and a worsening economic outlook. Although smaller companies have fared worse than their large-cap counterparts, their valuations have become increasingly attractive. At the end of the annual period, the world was waiting for the U.S. Congress to pass the Troubled Assets Relief Program (TARP), a $700 billion package designed to provide liquidity and confidence to the market by removing "toxic" assets from financial institutions' balance sheets. It is hoped that TARP, combined with local rescue plans for domestic banks and interest rate cuts, will bring greater stability to the financial system and improve liquidity conditions for businesses and households. With respect to sector weighting versus the benchmark, portfolio performance benefited from the combination of an overweight in Healthcare, an underweight in Financials and stock selection in Utilities. Conversely, factors that hindered results included security selection in the Information Technology, Industrials and Consumer Discretionary sectors. The top five individual security contributors to performance were Kakaku.com Inc. (Japan, Information Technology), Hisamitsu Pharm Co. (Japan, Healthcare), Chloride Group (Europe, Industrials), ASM Spa (Europe, Utilities) and Asahi Soft Drinks (Japan, Consumer Staples). The top five security detractors were Tanfield Group Plc (Europe, Industrials), Hellenic Exchanges S.A. (Europe, Financials), Cookson Group (Europe, Industrials), Kloeckner & Co. SE (Europe, Industrials), and KSB AG (Europe, Industrials). -------- Past performance is no guarantee of future results. Investing internationally involves special risks, such as currency fluctuations, and economic and political instability. Diversification does not insure against market loss. * The Morgan Stanley Capital International Europe, Australasia, and the Far East Index ("MSCI EAFE") Small Cap Index (Net) is comprised of 40% of the full market capitalization of the eligible small cap universe with each industry group and each country in the MSCI EAFE Index. Securities listed may or may not be a part of current Portfolio construction. 116 SunAmerica Equity Funds COMPARISONS: FUNDS vs. INDEXES -- (unaudited) (continued) Since inception, $10,000 invested in International Small-Cap Class A shares would be valued at $6,357. The same amount invested in securities mirroring the performance of the MSCI EAFE Small-Cap Index (Net) would be valued at $7,051. [CHART] International Small-Cap MSCI EAFE Small-Cap Class A/#/ Index (Net) ----------------------- ------------------ 5/1/2006 $ 9,427 $10,000.00 5/31/2006 8,650 9,308.67 6/30/2006 8,431 9,104.43 7/31/2006 8,213 8,858.49 8/31/2006 8,311 9,106.42 9/30/2006 8,333 9,141.29 10/31/2006 8,673 9,476.29 11/30/2006 8,959 9,883.31 12/31/2006 9,336 10,211.42 1/31/2007 9,578 10,425.07 2/28/2007 9,608 10,599.39 3/31/2007 9,970 10,936.70 4/30/2007 10,294 11,342.32 5/31/2007 10,558 11,424.10 6/30/2007 10,596 11,398.72 7/31/2007 10,603 11,354.40 8/31/2007 10,181 10,768.44 9/30/2007 10,558 10,886.89 10/31/2007 10,988 11,565.22 11/30/2007 10,113 10,733.05 12/31/2007 9,712 10,359.07 1/31/2008 8,675 9,348.05 2/29/2008 8,896 9,744.98 3/31/2008 8,980 9,712.98 4/30/2008 9,163 9,938.55 5/31/2008 9,422 10,105.13 6/30/2008 8,743 9,273.88 7/31/2008 8,195 8,849.97 8/31/2008 7,569 8,510.06 9/30/2008 6,357 7,050.53
Class A Class B Class C ------------------ ------------------ ------------------ International Average Average Average Small-Cap Annual Cumulative Annual Cumulative Annual Cumulative Fund Return Return+ Return Return+ Return Return+ ----------------- ------- ---------- ------- ---------- ------- ---------- 1 Year Return -43.23% -39.79% -42.57% -40.21% -40.80% -40.20% -------------------------------------------------------------------------- Since Inception* -17.09% -32.56% -16.64% -33.60% -15.59% -33.60% --------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been included, the return would have been lower. * Inception date: Class A, Class B and Class C: 05/02/06. # For the purposes of the graph, it has been assumed that the maximum sales charge, of 5.75% of offering price, was deducted from the initial $10,000 investment in the Fund. For purposes of the table, it has been assumed that the maximum sales charge with respect to the Class A shares, was deducted from the initial investment in the Fund and that the CDSCs with respect to the Class B and Class C shares have been deducted, as applicable. For the 12 month period ended September 30, 2008, the SunAmerica International Small-Cap Fund Class A returned -43.23% compared to -35.24% for the MSCI EAFE Small-Cap Index (Net). (The performance table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.) -------- Performance data quoted represents past performance and is no guarantee of future results. Maximum Sales Charge: Class A: 5.75%, Class B: 4.00% Contingent Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. The fund's daily net asset 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.sunamericafunds.com. 117 [LOGO] Harborside Financial Center 3200 Plaza 5 Jersey City, NJ 07311-4992 Trustees Shareholder Servicing This report is submitted Samuel M. Eisenstat Agent solely for the general Peter A. Harbeck AIG SunAmerica Fund information of Dr. Judith L. Craven Services, Inc. shareholders of the William F. Devin Harborside Financial Funds. Distribution of Stephen J. Gutman Center this report to persons Jeffrey S. Burum 3200 Plaza 5 other than shareholders William J. Shea Jersey City, NJ of the Funds is 07311-4992 authorized only in Officers con-nection with a John T. Genoy, President Custodian and Transfer currently effective and Chief Executive Agent pro-spectus, setting Officer State Street Bank and forth details of the Donna M. Handel, Trust Company Funds, which must precede Treasurer P.O. Box 5607 or accom-pany this report. Timothy P. Pettee, Vice Boston, MA 02110 President DELIVERY OF SHAREHOLDER James Nichols, Vice VOTING PROXIES ON TRUST DOCUMENTS President PORTFOLIO SECURITIES The Funds have adopted a Cynthia A. Skrehot, Vice A description of the policy that allows them President and Chief policies and procedures to send only one copy of Compliance Officer that the Trust uses to a Fund's prospectus, Gregory N. Bressler, determine how to vote proxy material, annual Chief Legal Officer proxies relating to report and semi-annual and Secretary securities held in a report (the "shareholder Gregory R. Kingston, Fund's portfolio which is documents") to Vice President and available in the Trust's shareholders with Assistant Treasurer Statement of Additional multiple accounts Kathleen Fuentes, Information, may be residing at the same Assistant Secretary obtained without charge "household." This John E. McLean, upon request, by calling practice is called Assistant Secretary (800) 858-8850. This householding and reduces Nori L. Gabert, Vice in-formation is also Fund expenses, which President and available from the EDGAR benefits you and other Assistant Secretary database on the U.S. shareholders. Unless the Matthew Hackethal, Securities and Ex-change Funds receive Anti-Money Laundering Commission's website at instructions to the Compliance Officer http://www.sec.gov. con-trary, you will only John E. Smith Jr., receive one copy of the Assistant Treasurer PROXY VOTING RECORD ON shareholder documents. SUNAMERICA EQUITY FUNDS The Funds will continue Investment Adviser Information regarding how to household the AIG SunAmerica Asset SunAmerica Equity Funds share-holder documents Management Corp. voted proxies relating to indefinitely, until we Harborside Financial securities held in are instructed otherwise. Center SunAmerica Equity Funds If you do not wish to 3200 Plaza 5 during the most recent participate in Jersey City, NJ twelve month period ended householding, please 07311-4992 June 30 is available, contact Shareholder once filed with the U.S. Services at (800) Distributor Securities and Exchange 858-8850 ext. 6010 or SunAmerica Capital Commission, without send a written request Services, Inc. charge, upon request, by with your name, the name Harborside Financial calling (800) 858-8850 or of your fund(s) and your Center on the U.S. Securities account number(s) to AIG 3200 Plaza 5 and Exchange Commission's SunAmerica Mutual Funds Jersey City, NJ website at c/o BFDS, P.O. Box 07311-4992 http://www.sec.gov. 219186, Kansas City MO, 64121-9186. We will DISCLOSURE OF QUARTERLY resume individual PORTFOLIO HOLDINGS mailings for your account The Trust is required to within thirty (30) days file its complete of receipt of your schedule of portfolio request. holdings with the U.S. Securities and Exchange Commission for its first and third fiscal quarters on Form N-Q. The Trust's Forms N-Q are available on the U.S. Securities and Exchange Commission's website at http://www.sec.gov. You can also review and obtain copies of the Forms N-Q at the U.S. Securities and Exchange Com-mission's Public Reference Room in Wash-ington, DC (information on the operation of Public Reference Room may be obtained by calling 1-800-SEC-0330).
118 Funds distributed by SunAmerica Capital Services, Inc., an affiliate of AIG SunAmerica Asset Management Corp. Investors should carefully consider a Fund's investment objectives, risks, charges and expenses before investing. The prospectus, containing this and other important information, can be obtained from your financial adviser, the SunAmerica Sales Desk at 800-858-8850, ext. 6003, or at www.sunamericafunds.com. Read the prospectus carefully before investing. www.sunamericafunds.com EQANN - 9/08 Item 2. Code of Ethics The SunAmerica Equity Funds (the "registrant") has adopted a Code of Ethics applicable to its Principal Executive and Principal Accounting Officers pursuant to Section 406 of the Sarbanes-Oxley Act of 2002. During the fiscal year ended 2008, there were no reportable amendments, waivers or implicit waivers to a provision of the code of ethics that applies to the registrant's Principal Executive and Principal Accounting Officers. Item 3. Audit Committee Financial Expert. The registrant's Board of Trustees has determined that William J. Shea, the Chairman of the registrant's Audit Committee, qualifies as an audit committee financial expert, as defined in the instructions to Item 3(a) of Form N-CSR. Mr. Shea is considered to be "independent" for purposes of Item 3(a)(2) of Form N-CSR. Item 4. Principal Accountant Fees and Services. (a)--(d) Aggregate fees billed to the registrant for the last two fiscal years for professional services rendered by the registrant's principal accountant were as follows: 2007 2008 (a) Audit Fees ....................$ 234,410 $ 236,700 (b) Audit-Related Fees ............$ 0 $ 0 (c) Tax Fees ......................$ 81,000 $ 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. Tax Fees principally include tax compliance, tax advice, tax planning and preparation of tax returns. 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: 2007 2008 (b) Audit-Related Fees ............$ 0 $ 0 (c) Tax Fees ......................$ 0 $ 0 (d) All Other Fees ................$ 1,927,000 $ 0 On December 31, 2007 Ernst & Young, LLP ("E&Y") resigned as principal accountant for the SunAmerica Equity Funds. On March 5, 2008, the Board of Trustees of the SunAmerica Equity Funds selected PricewaterhouseCoopers, LLP as principal accountant. In addition, E&Y is performing tax services for the registrant. For the fiscal year ended 2008, the fees for these tax services were $116,075. All Other Fees include amounts related to a SAS 70 Report on the Processing of Transactions by Service Organizations. (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 2008 and 2007 were $485,370 and $1,927,000, respectively. (h) Non-audit services rendered to the registrant's investment adviser and any Adviser Affiliate that provides ongoing services to the registrant that were not pre-approved pursuant to Paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X were considered by the registrant's audit committee as to whether they were compatible with maintaining the principal accountant's independence. Item 5. Audit Committee of Listed Registrants. Not applicable. Item 6. Investments. Included in Item 1 to the Form. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not applicable. Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not applicable. Item 10. Submission of Matters to a Vote of Security Holders. There were no material changes to the procedures by which shareholders may recommend nominees to the registrant's Board of Trustees that were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by 22(b)(15)) of Schedule 14A (17 CFR 240.14a- 101), or this Item 10. Item 11. Controls and Procedures. (a) An evaluation was performed within 90 days of the filing of this report, under the supervision and with the participation of the registrant's management, including the President and Treasurer, of the effectiveness of the design and operation of the registrant's disclosure controls and procedures as defined under Rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR 270.30a-3(c)). Based on that evaluation, the registrant's management, including the President and Treasurer, concluded that the registrant's disclosure controls and procedures are effective. (b) There was no change in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940 (17 CFR 270.30a-3(d))) that occurred during the registrant's last fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal contro1 over financial reporting. Item 12. Exhibits. (a) (1) Code of Ethics applicable to its Principal Executive and Principle Accounting Officers pursuant to Section 406 of the Sarbanes-Oxley Act of 2002 attached hereto as Exhibit 99.406. Code of Ethics. (2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT. (3) Not applicable. (b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the Sarbanes- Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SunAmerica Equity Funds By: /s/ John T. Genoy ------------------ John T. Genoy President Date: December 8, 2008 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 8, 2008 By: /s/ Donna M. Handel ------------------- Donna M. Handel Treasurer Date: December 8, 2008