<PAGE>
MARCH 31, 1998
SunAmerica
Equity Funds
[GRAPHIC]
Semiannual Report
BALANCED ASSETS . BLUE CHIP GROWTH . MID-CAP GROWTH
SMALL COMPANY GROWTH . GROWTH AND INCOME
LOGO SunAmerica
Asset Management
<PAGE>
SUNAMERICA EQUITY FUNDS
SHAREHOLDER LETTER
May 12, 1998
DEAR SHAREHOLDER:
The SunAmerica Balanced Assets, Blue Chip Growth, and Growth and Income
Funds each significantly outperformed its respective Lipper category average
for the six months ended March 31, 1998 on a cumulative basis. Given the
market volatility over the semi-annual period, the Funds' active yet
disciplined management--particularly through effective stock selection, sector
allocation, and focused investing within identified themes--was key to these
strong performance results. The small- and mid-cap growth arenas were
particularly hard hit by the effects of the Asian financial crises that began
to spread in the fourth quarter of 1997. Thus, as might be expected, both the
Small Company Growth and Mid-Cap Growth Funds' performance was hampered.
MARKET ACTIVITY
The six months ending March 31, 1998 marked the turbulent end to the third
consecutive year of better than 20% gains for the Dow Jones Industrial
Average. In the fall of 1997, the problems of Southeast Asia that emerged late
summer spread to Northern Asia and exacerbated the longstanding economic
problems in Japan. The reverberations were felt quite literally around the
world. The U.S. equity markets had to digest the uncertainty of Asia,
Washington D.C.'s public relations difficulties, and earnings expectations
that were still too high. Even with increased volatility, however, the basic
underpinnings of the markets remained in place.
The overall strength of the U.S. economy in spite of Asian economic
turbulence perhaps the most surprising aspect of the first quarter of 1998.
Wall Street's patience was rewarded, as the major equity indices produced
double-digit performance in the quarter even though expected growth in
corporate profits plunged to its lowest level since the 1990-91 recession.
Still, strong investor demand and heavy merger and acquisition activity
benefited the equity markets. Supported by sustained strong U.S. economic
conditions, few signs of inflation, and stable interest rates, all segments of
the stock market rallied robustly during the first calendar quarter.
LARGE CAPITALIZATION STOCKS. Overall, the S&P 500 Index advanced by a solid
17.22% for the semi-annual period, and the large-cap companies led the equity
market. Short-term volatility, however, plagued the bull market throughout.
Major contributors to this volatility were the rippling effects of weakening
currencies, failing economies, and uncertain markets in Southeast Asia, which,
in turn, led to the Dow Jones' largest single one day point loss on October
27, 1997. The Far East turmoil turned equity investors to more value-oriented
stocks. As the new year began and the limited effect that the Asian problems
might have on the U.S. became clear, investors grew more confident with the
co-existence of low inflation, reasonably good GDP growth, low unemployment,
and low interest rates. The intact sound fundamentals also supported the
market's rise to record levels and a return to favor of growth-oriented
stocks.
MID CAPITALIZATION STOCKS. Overall, the six months ended March 31, 1998 were
a period of significant volatility for the high growth mid-cap sector. As the
period began, mid-cap growth stocks had just experienced five months of 30%
plus performance, and stock were somewhat extended. At the same time, these
stocks came under pressure from the spreading effects of the Asian financial
crises. U.S. investors sought to lock in gains and to discount the expected
negative impact these crises would have on the earnings growth of companies
with significant exposure to Asia--especially the technology stocks. By the
1
<PAGE>
SUNAMERICA EQUITY FUNDS
SHAREHOLDER LETTER
start of the new year, expectations for fourth quarter earnings results and
first quarter earnings estimates were low. But as the quarter progressed,
investor sentiment toward mid-cap growth stock improved.
The impact of the Asian crisis was not as bad as many had feared. The
earnings growth of many companies with international exposure was sustained
despite the overseas scare and those companies that were more negatively
effected had managed lowered expectations. The result was rising prices and,
in turn, improved performance in February and March. Relative valuation levels
of these stocks had been dramatically reduced, reaching levels even cheaper
than they were in April 1997, at which point they were at seven year lows. For
the quarter as a whole, mid-cap growth stock participated with the other
segments of the stock market in a robust rally. For the six months ending
March 31, 1998, the S&P 400 MidCap Index, which often represents mid-cap
stocks, advanced by 11.94%.
SMALL CAPITALIZATION STOCKS. Market activity for the small-cap sector, and
the positive and negative factors affecting these stocks, were virtually
identical to that of the mid-cap sector for the semi-annual period. At the
start of the period, small cap growth stocks had just experienced five months
during which they had outperformed both the mid-cap and large cap segments of
the market, and growth had outperformed value within the small cap sector. The
effects of the Asian financial crises, including investors' search for
perceived "safe havens" and liquidity, hit the small cap sector hard. However,
like the mid-cap sector, the first quarter of 1998 was much improved. Fears of
the impact of the Asian crisis somewhat subsided; earnings growth continued to
be strong; relative valuations approached record lows; and stable to rising
overall levels for all equity markets helped settle investors' desire for
"safe havens" and more liquid names. Sentiment surrounding small cap stocks
was boosted, and the sector rallied robustly in February and March. The
Russell 2000 Index, which often represents small stocks, produced a return of
6.37% for the six months ending March 31, 1998.
INVESTMENT REVIEW
For the six months ending March 31, 1998, each of the SunAmerica Equity
Funds' portfolio managers focused on reducing the total number of names in
each portfolio--while staying broadly diversified--in order to enhance our
ability to monitor company activity. Each portfolio manager also continued to
use a top-down, long-term, thematic investment approach to seek high quality
growth stocks that produce consistent, double-digit earnings in any type of
economic environment. Some of these themes, or secular trends, are:
* Consolidation Synergy and Asset Gathering The stocks that fit these
themes are primarily financial services companies, including regional and
money center banks benefiting from industry restructuring as well as
brokerage firms benefiting from intra-industry consolidation and from the
strong liquidity coming into the equity markets. Although the movement of
interest rates generates risk with these stocks, these companies'
fundamentals are solid, growth is consistent, returns on earnings and
efficiency ratios are improving, and we believe the lines separating the
various financial services will continue to blur. The well-publicized
consolidations of recent months have served as icing on the cake, so to
speak.
* The Telecommunications Revolution In the larger cap Funds, our emphasis
is on equipment companies, such as Lucent Technology and Motorola. In the
small and mid cap Funds, our emphasis is on those companies that may
benefit from the deregulation trend in this sector, both in the U.S. and
internationally. For example, we see value and improving fundamentals in
the competitive local exchange carriers which are now able to compete with
the regional Bell operating companies.
2
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SUNAMERICA EQUITY FUNDS
SHAREHOLDER LETTER
* Demand for Technology and The Burgeoning Internet Technology stocks are
still comparatively volatile due to the softness in Asia, and thus the
Funds are taking a conservative position in this sector. In the larger cap
Funds, our emphasis is on market leaders, such as Intel, Microsoft, Dell,
and Compaq. In the smaller cap Funds, we are invested in select technology
stocks whose revenue streams are derived largely within the U.S. Those
companies providing ancillary services to the growing Internet community,
such as billing, outsourcing, and security, may also be attractive.
* Graying of America The larger cap Funds are focusing on the large drug
companies within the health care sector, where we continue to see
consistent double-digit earnings coming from new pharmaceutical products
and unit by volume. Health care device companies seem attractive in the
small cap sector.
* Shift to a Service-Based Economy Several consumer-oriented companies have
made great productivity enhancements, overcoming their overstorage
problems of the last several years. The result is better returns on
earnings and accelerating growth rates. Certain specialty vendors with
innovative strategies, such as Home Depot and the Gap, remain attractively
valued to the large cap Funds. Certain cruise lines, educational services
companies, and companies addressing the Year 2000 Problem may be
attractive within the small cap sector.
* Reliance on Natural Resources The larger cap Funds added to their energy
positions over the period, as we believe underlying fundamentals are
improving, demand for oil and gas has the potential to increase from
current low levels, and industry consolidation is resulting in better
management and generation of cash flow. The smaller cap Funds reduced
their holdings here, as the smaller oil service and equipment companies
were impacted by the crisis in Asia more than their larger brethren.
THE BALANCED ASSETS FUND ranked in the top decile of its Lipper category
average for the six months ending March 31, 1998. Equity securities comprised
68.6% of this portfolio's assets on March 31st; fixed income securities
comprised 30.2%, most of which was in U.S. Treasuries, which did particularly
well as a "flight to quality" following the Asian crisis benefited these
securities. Holding 104 names at the end of the period, the Fund's largest
allocations were to financial services, banks, pharmaceuticals and
telecommunications.
THE BLUE CHIP GROWTH FUND held 85 names as of March 31, 1998, with its
largest concentrations in financial services, banks, telecommunications, and
pharmaceuticals. It held 2.2% in cash at period end. The Fund outperformed its
Lipper category average for the six months ending March 31, 1998.
THE MID-CAP GROWTH FUND stayed true to its long-standing growth-oriented
investment style through both the difficult fourth quarter and the more
positive first quarter. The Fund outperformed its Lipper category average in
the rally month of March. However, for the six months ending March 31, 1998,
the Fund underperformed. As of March 31, the Fund held 102 names, with its
largest allocations to the software, telecommunications, energy services, and
broadcasting & media sectors. This Fund is currently undergoing a transition,
under new management by portfolio managers from both the large and small
capitalization teams.
THE SMALL COMPANY GROWTH FUND'S relative performance was hampered by its
growth-oriented investment style during the first half of the period and
likewise helped by it in the second half. Following the
3
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SUNAMERICA EQUITY FUNDS
SHAREHOLDER LETTER
jmarket correction in October, the Fund sold a number of its holdings with
Asian exposure and significantly increased its allocation to cash. Slowly, we
began re-allocating assets, primarily to domestically-oriented software,
telecommunications, broadcast & media, business services, and bank stocks.
However, the Fund did not participate fully in the market's first quarter
relief rally. As of March 1, 1998, the Fund is under the management of Donna
Calder. By the end of the period, she reduced the number of holdings to 125
and decreased the Fund's cash holding to 4.9% of portfolio assets.
THE GROWTH AND INCOME FUND is under new management within the large
capitalization team. The Fund's objective and strategy remains the same,
however, we intend to reduce the number of names, which at the end of the
period stood at 135. We also intend to lower the Fund's exposure to REITs and
increase its exposure to the financial services and energy sectors. For the
six months ending March 31, 1998, the Fund outperformed its Lipper category
average.
MANAGER OUTLOOK
Our outlook for the equity markets remains very positive for several
reasons. First, we remain in a moderate growth, low inflationary, low interest
rate environment. Second, increased competition from Asian imports will most
likely force corporate America to be cognizant of costs and margin erosion,
and thus we believe the earnings on an operating basis will be between 5%-7%
in 1998--still quite strong given that we are in the 8th year of expansion. We
may even see a return to double-digit profits in 1999, as corporations benefit
from the formation of EMU, a slightly most positive situation in Asia, and
forced Year 2000 technology spending. Third, liquidity, which is currently
driving the market, remains strong. It has, however, taken on new forms. Not
only is the individual investor continuing to put money into the market at a
rapid pace, but corporations also are flush with cash, which we see being put
to use in the form of stock repurchases and increased merger and acquisition
activity. International investors are also increasing their exposure to U.S.
markets.
On the other hand, a speculative fear of action by the Federal Reserve Board
is likely to hang over the markets; we expect volatility to increase; another
shoe dropping from the Asian situation may yet occur; and we would not be
surprised to see a 5%-7% market correction--though short-lived--in the near
future. Still a pause may be welcome, as longer-term fundamentals suggest that
the bull market is far from over. We believe that the equity markets will end
1998 above their current lofty levels.
We value your ongoing support of the SunAmerica Equity Funds and look
forward to serving your investment needs in the years ahead with pro-active
management and capital appreciation consistent with each Fund's objective.
/s/ Donna Calder /s/ Brian P. Clifford /s/ Erik Franklin /s/ Francis D. Gannon
Donna Calder Brian P. Clifford Erik Franklin Francis D. Gannon
Portfolio Manager Portfolio Manager Portfolio Manager Portfolio Manager
4
<PAGE>
SUNAMERICA EQUITY FUNDS
STATEMENT OF ASSETS AND LIABILITIES--March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
BALANCED BLUE CHIP MID-CAP SMALL COMPANY GROWTH AND
ASSETS GROWTH GROWTH GROWTH INCOME
FUND FUND FUND FUND FUND
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments securities,
at value*.............. $365,986,254 $116,327,476 $56,675,399 $254,540,363 $138,217,242
Short-term securities*.. -- -- -- -- 51,500
Repurchase agreements
(cost equals market)... 1,890,000 2,624,000 1,037,000 12,775,000 3,892,000
Cash.................... 3,023 720 5,231 30,999 656
Receivable for
investments sold....... 4,761,199 1,978,111 2,206,852 3,588,739 2,169,952
Interest and dividends
receivable............. 1,366,049 90,757 36,858 64,752 157,133
Receivable for shares of
beneficial interest
sold................... 442,599 313,734 693,484 3,845,257 533,890
Prepaid expenses........ 13,797 33,019 6,493 27,512 18,203
Receivable from
investment adviser..... 1,465 -- -- 2,946 1,694
Deferred organizational
expenses............... -- -- -- -- 342
------------ ------------ ----------- ------------ ------------
Total assets.......... 374,464,386 121,367,817 60,661,317 274,875,568 145,042,612
------------ ------------ ----------- ------------ ------------
LIABILITIES:
Payable for investments
purchased.............. 2,924,880 1,818,796 1,119,682 11,328,320 1,397,510
Payable for shares of
beneficial interest
redeemed............... 368,581 118,050 28,674 488,587 161,564
Investment advisory and
management fees
payable................ 233,099 73,926 36,518 162,661 88,441
Accrued expenses........ 220,152 88,806 69,049 177,064 89,465
Distribution and service
maintenance fees
payable................ 208,995 56,574 23,822 130,786 83,926
Interest payable........ -- -- -- 33,049 --
------------ ------------ ----------- ------------ ------------
Total liabilities..... 3,955,707 2,156,152 1,277,745 12,320,467 1,820,906
------------ ------------ ----------- ------------ ------------
Net assets.......... $370,508,679 $119,211,665 $59,383,572 $262,555,101 $143,221,706
============ ============ =========== ============ ============
NET ASSETS WERE COMPOSED
OF:
Shares of beneficial
interest, $.01 par
value.................. $ 198,493 $ 59,676 $ 33,367 $ 110,337 $ 101,996
Paid-in capital......... 284,598,003 86,093,260 46,059,362 206,794,694 113,597,342
------------ ------------ ----------- ------------ ------------
284,796,496 86,152,936 46,092,729 206,905,031 113,699,338
Accumulated
undistributed net
investment income
(loss)................. 764,842 (262,575) (252,042) (1,542,449) (101,303)
Accumulated
undistributed net
realized gain on
investments, foreign
currency and other
assets and liabilities. 8,289,466 2,908,325 3,725,792 3,764,377 3,490,484
Net unrealized
appreciation of
investments............ 76,657,875 30,412,979 9,817,093 53,428,142 26,133,187
------------ ------------ ----------- ------------ ------------
Net assets.......... $370,508,679 $119,211,665 $59,383,572 $262,555,101 $143,221,706
============ ============ =========== ============ ============
</TABLE>
*Identified cost
<TABLE>
<S> <C> <C> <C> <C> <C>
Investment securities... $289,328,379 $85,914,497 $46,858,306 $201,112,221 $112,085,255
============ =========== =========== ============ ============
Short-term securities... -- -- -- -- $ 50,300
============ =========== =========== ============ ============
</TABLE>
See Notes to Financial Statements
5
<PAGE>
SUNAMERICA EQUITY FUNDS
STATEMENT OF ASSETS AND LIABILITIES -- March 31, 1998 (unaudited) --
(continued)
<TABLE>
<CAPTION>
BALANCED BLUE CHIP MID-CAP SMALL COMPANY GROWTH AND
ASSETS GROWTH GROWTH GROWTH INCOME
FUND FUND FUND FUND FUND
----------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A (UNLIMITED
SHARES AUTHORIZED):
Net assets.............. $188,136,620 $78,118,909 $47,095,898 $159,349,495 $63,409,103
Shares of beneficial
interest issued and
outstanding............ 10,073,490 3,857,899 2,623,921 6,599,947 4,488,646
Net asset value and
redemption price per
share.................. $ 18.68 $ 20.25 $ 17.95 $ 24.14 $ 14.13
Maximum sales charge
(5.75% of offering
price)................. 1.14 1.24 1.10 1.48 0.86
------------ ----------- ----------- ------------ -----------
Maximum offering price
to public.............. $ 19.82 $ 21.49 $ 19.05 $ 25.62 $ 14.99
============ =========== =========== ============ ===========
CLASS B (UNLIMITED
SHARES AUTHORIZED):
Net assets.............. $182,160,369 $41,092,756 $12,287,674 $101,975,716 $79,581,029
Shares of beneficial
interest issued and
outstanding............ 9,764,530 2,109,660 712,810 4,383,094 5,694,378
Net asset value,
offering and redemption
price per share
(excluding any
applicable contingent
deferred sales charge)
....................... $ 18.66 $ 19.48 $ 17.24 $ 23.27 $ 13.98
============ =========== =========== ============ ===========
CLASS C (UNLIMITED
SHARES AUTHORIZED):
Net assets.............. -- -- -- $ 112,502 $ 231,574
Shares of beneficial
interest issued and
outstanding............ -- -- -- 4,836 16,571
Net asset value,
offering and redemption
price per share
(excluding any
applicable contingent
deferred sales charge)
....................... -- -- -- $ 23.26 $ 13.97
============ =========== =========== ============ ===========
CLASS Z (UNLIMITED
SHARES AUTHORIZED):
Net assets.............. $ 211,690 $ 1,117,388
Shares of beneficial
interest issued and
outstanding............ 11,329 45,853
Net asset value,
offering and redemption
price per share........ $ 18.69 $ 24.37
============ ============
</TABLE>
See Notes to Financial Statements
6
<PAGE>
SUNAMERICA EQUITY FUNDS
STATEMENT OF OPERATIONS -- For the six months ended March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
BALANCED BLUE CHIP MID-CAP SMALL COMPANY GROWTH AND
ASSETS GROWTH GROWTH GROWTH INCOME
FUND FUND FUND FUND FUND
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Income:
Interest................. $ 3,920,133 $ 60,377 $ 54,136 $ 280,442 $ 92,700
Dividends (net of
withholding taxes of
$1,760 on Small Company
Growth Fund)............ 1,458,664 608,712 188,300 501,821 890,863
----------- ----------- ---------- ------------ -----------
Total investment income.. 5,378,797 669,089 242,436 782,263 983,563
----------- ----------- ---------- ------------ -----------
Expenses:
Investment advisory and
management fees......... 1,311,911 400,894 209,835 989,799 444,547
Distribution and service
maintenance fees--Class
A....................... 305,925 121,246 76,331 278,377 93,901
Distribution and service
maintenance fees--Class
B....................... 875,521 188,107 61,691 519,061 324,204
Distribution and service
maintenance fees--Class
C....................... -- -- -- 167 236
Transfer agent fees and
expenses--Class A....... 246,611 93,658 57,705 216,778 69,992
Transfer agent fees and
expenses--Class B....... 218,800 52,744 18,112 126,244 78,715
Transfer agent fees and
expenses--Class C....... -- -- -- 72 111
Transfer agent fees and
expenses--Class Z....... 6,850 -- -- 6,815 --
Custodian fees and
expenses................ 64,815 38,310 35,855 72,435 38,630
Trustees' fees and
expenses................ 18,436 5,548 2,967 15,082 5,525
Printing expense......... 12,775 5,870 2,900 14,845 3,505
Audit and tax consulting
fees.................... 8,575 12,555 12,555 10,465 12,555
Legal fees and expenses.. 3,400 1,050 945 2,595 910
Registration fees--Class
A....................... 2,804 1,148 2,358 8,252 4,112
Registration fees--Class
B....................... 2,731 603 2,971 9,460 4,926
Registration fees--Class
C....................... -- -- -- 2,502 2,509
Registration fees--Class
Z....................... 182 -- -- 182 --
Insurance expense........ 2,437 564 339 1,978 379
Interest expense......... 2,418 -- 4,603 37,853 41
Amortization of
organizational expenses. -- -- -- -- 139
Miscellaneous expenses... 2,406 834 500 1,940 335
----------- ----------- ---------- ------------ -----------
Total expenses........... 3,086,597 923,131 489,667 2,314,902 1,085,272
Less: expenses
reimbursed by
investment adviser...... (6,830) -- -- (8,489) (2,550)
----------- ----------- ---------- ------------ -----------
Net expenses............. 3,079,767 923,131 489,667 2,306,413 1,082,722
----------- ----------- ---------- ------------ -----------
Net investment income
(loss)................... 2,299,030 (254,042) (247,231) (1,524,150) (99,159)
----------- ----------- ---------- ------------ -----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on
investments.............. 9,271,139 3,265,806 5,342,933 10,796,052 4,628,783
Net realized gain on
foreign currency and
other assets and
liabilities.............. -- 5 -- -- --
Net change in unrealized
appreciation/depreciation
of investments........... 28,552,969 11,843,002 (1,775,853) (27,160,981) 14,731,264
----------- ----------- ---------- ------------ -----------
Net realized and
unrealized gain (loss) on
investments, foreign
currency and other assets
and liabilities.......... 37,824,108 15,108,813 3,567,080 (16,364,929) 19,360,047
----------- ----------- ---------- ------------ -----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS.......... $40,123,138 $14,854,771 $3,319,849 $(17,889,079) $19,260,888
=========== =========== ========== ============ ===========
</TABLE>
See Notes to Financial Statements
7
<PAGE>
SUNAMERICA EQUITY FUNDS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BALANCED ASSETS FUND BLUE CHIP GROWTH FUND MID-CAP GROWTH FUND
-------------------------------- -------------------------------- --------------------------------
FOR THE SIX MONTHS FOR THE YEAR FOR THE SIX MONTHS FOR THE YEAR FOR THE SIX MONTHS FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
MARCH 31, 1998 SEPTEMBER 30, MARCH 31, 1998 SEPTEMBER 30, MARCH 31, 1998 SEPTEMBER 30,
(UNAUDITED) 1997 (UNAUDITED) 1997 (UNAUDITED) 1997
------------------ ------------- ------------------ ------------- ------------------ -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investments income
(loss)............... $ 2,299,030 $ 5,015,077 $ (254,042) $ (335,991) $ (247,231) $ (562,601)
Net realized gain on
investments.......... 9,271,139 34,784,767 3,265,806 13,956,312 5,342,933 10,239,030
Net realized gain on
foreign currency,
other assets and
liabilities.......... -- -- 5 -- -- --
Net change in
unrealized
appreciation
(depreciation) of
investments.......... 28,552,969 31,289,347 11,843,002 12,669,963 (1,775,853) 984,447
------------ ------------ ------------ ------------ ----------- -----------
Net increase in net
assets resulting from
operations............ 40,123,138 71,089,191 14,854,771 26,290,284 3,319,849 10,660,876
------------ ------------ ------------ ------------ ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income (Class A)..... (1,052,505) (2,846,051) -- -- -- --
From net investment
income (Class B)..... (571,210) (2,063,991) -- -- -- --
From net investment
income (Class Z)..... (2,188) (641) -- -- -- --
From net realized
gains on investments
(Class A)............ (16,001,494) (14,835,171) (8,287,237) (7,108,685) (7,536,397) (1,856,886)
From net realized
gains on investments
(Class B)............ (16,263,710) (17,300,021) (4,747,751) (5,010,638) (2,258,592) (619,105)
From net realized
gains on investments
(Class Z)............ (35,253) (994) -- -- -- --
------------ ------------ ------------ ------------ ----------- -----------
Total dividends and
distributions to
shareholders.......... (33,926,360) (37,046,869) (13,034,988) (12,119,323) (9,794,989) (2,475,991)
------------ ------------ ------------ ------------ ----------- -----------
NET INCREASE (DECREASE)
IN NET ASSETS
RESULTING FROM CAPITAL
SHARE TRANSACTIONS
(NOTE 6).............. 21,622,836 (9,585,219) 11,946,494 3,081,521 6,028,681 (4,043,040)
------------ ------------ ------------ ------------ ----------- -----------
TOTAL INCREASE
(DECREASE) IN NET
ASSETS................ 27,819,614 24,457,103 13,766,277 17,252,482 (446,459) 4,141,845
NET ASSETS:
Beginning of period.... 342,689,065 318,231,962 105,445,388 88,192,906 59,830,031 55,688,186
------------ ------------ ------------ ------------ ----------- -----------
End of period
[including
undistributed net
investment income
(loss) for March 31,
1998 and September 30,
1997 of $764,842,
$91,715; ($262,575),
($8,538); ($252,042)
and ($4,811),
respectively]......... $370,508,679 $342,689,065 $119,211,665 $105,445,388 $59,383,572 $59,830,031
============ ============ ============ ============ =========== ===========
</TABLE>
See Notes to Financial Statements
8
<PAGE>
SUNAMERICA EQUITY FUNDS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH FUND GROWTH AND INCOME FUND
-------------------------------- --------------------------------
FOR THE SIX MONTHS FOR THE YEAR FOR THE SIX MONTHS FOR THE YEAR
ENDED ENDED ENDED ENDED
MARCH 31, 1998 SEPTEMBER 30, MARCH 31, 1998 SEPTEMBER 30,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------------ ------------- ------------------ -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
OPERATIONS:
Net investment income
(loss)................ $ (1,524,150) $ (3,953,450) $ (99,159) $ 73,082
Net realized gain on
investments........... 10,796,052 32,482,170 4,628,783 10,454,215
Net realized loss on
option contracts...... -- (72,208) -- --
Net realized loss on
foreign currency,
other assets and
liabilities........... -- -- -- (8)
Net change in
unrealized
appreciation
(depreciation) of
investments........... (27,160,981) 23,022,865 14,731,264 9,603,085
------------ ------------ ------------ ------------
Net increase (decrease)
in net assets resulting
from operations........ (17,889,079) 51,479,377 19,260,888 20,130,374
------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income (Class A)...... -- -- -- (72,848)
From net investment
income (Class B)...... -- -- -- (30,158)
From net investment
income (Class C)...... -- -- -- --
From net investment
income (Class Z)...... -- -- -- --
From net realized gains
on investments (Class
A).................... (15,001,692) (5,628,252) (5,129,666) (1,193,264)
From net realized gains
on investments (Class
B).................... (10,065,127) (3,985,469) (6,103,333) (917,178)
From net realized gains
on investments (Class
C).................... -- -- -- --
From net realized gains
on investments (Class
Z).................... (106,214) (7,070) -- --
------------ ------------ ------------ ------------
Total dividends and
distributions to
shareholders........... (25,173,033) (9,620,791) (11,232,999) (2,213,448)
------------ ------------ ------------ ------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM CAPITAL SHARE
TRANSACTIONS (NOTE 6).. (4,991,097) 2,343,256 32,444,897 49,829,973
------------ ------------ ------------ ------------
TOTAL INCREASE
(DECREASE) IN NET
ASSETS................. (48,053,209) 44,201,842 40,472,786 67,746,899
NET ASSETS:
Beginning of period..... 310,608,310 266,406,468 102,748,920 35,002,021
------------ ------------ ------------ ------------
End of period [including
undistributed net
investment income
(loss) for March 31,
1998 and September 30,
1997 of ($1,542,449),
($18,299); ($101,303)
and ($2,144),
respectively].......... $262,555,101 $310,608,310 $143,221,706 $102,748,920
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements
9
<PAGE>
SUNAMERICA EQUITY FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
BALANCED ASSETS FUND
- --------------------
NET
GAIN(LOSS)
ON INVEST- TOTAL DIVIDENDS DISTRI-
NET ASSET NET MENTS (BOTH FROM FROM NET BUTIONS NET ASSET NET ASSETS RATIO OF
VALUE, INVEST- REALIZED INVEST- INVEST- FROM TOTAL VALUE, END OF EXPENSES
PERIOD BEGINNING MENT AND MENT MENT CAPITAL DISTRI- END OF TOTAL PERIOD TO AVERAGE
ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME GAINS BUTIONS PERIOD RETURN(2) (000'S) NET ASSETS
- ---------------- --------- --------- ----------- ---------- --------- ------- ------- --------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
-------
9/24/93-
9/30/93(3)..... $15.07 $ -- $ 0.06 $ 0.06 $ -- $ -- $ -- $15.13 0.40% $ 33,381 1.54%(4)
9/30/94......... 15.13 0.30 (0.23) 0.07 (0.28) (0.30) (0.58) 14.62 0.50 52,098 1.58
9/30/95......... 14.62 0.32 2.51 2.83 (0.45) (0.58) (1.03) 16.42 20.68 119,916 1.50
9/30/96......... 16.42 0.27 1.39 1.66 (0.28) (0.99) (1.27) 16.81 10.65 147,035 1.52
9/30/97......... 16.81 0.31 3.43 3.74 (0.31) (1.75) (2.06) 18.49 24.81 169,201 1.50
3/31/98(7)...... 18.49 0.15 1.89 2.04 (0.11) (1.74) (1.85) 18.68 12.09 188,137 1.45(4)
CLASS B
-------
6/30/93(5)...... $15.63 $ 0.30 $ 2.63 $ 2.93 $(0.30) $(2.40) $(2.70) $15.86 20.29% $113,871 1.91%(6)
7/01/93-
9/30/93(5)..... 15.86 0.05 0.49 0.54 (0.06) (1.21) (1.27) 15.13 3.44 137,456 2.10(4)(6)
9/30/94......... 15.13 0.20 (0.23) (0.03) (0.18) (0.30) (0.48) 14.62 (0.14) 180,655 2.21
9/30/95......... 14.62 0.23 2.51 2.74 (0.36) (0.58) (0.94) 16.42 19.96 162,115 2.12
9/30/96......... 16.42 0.17 1.38 1.55 (0.18) (0.99) (1.17) 16.80 9.93 171,197 2.12
9/30/97......... 16.80 0.21 3.43 3.64 (0.21) (1.75) (1.96) 18.48 24.09 173,435 2.11
3/31/98(7)...... 18.48 0.09 1.89 1.98 (0.06) (1.74) (1.80) 18.66 11.75 182,160 2.07(4)
CLASS Z
-------
10/07/96-
9/30/97(3)..... $17.07 $ 0.38 $ 3.19 $ 3.57 $(0.40) $(1.75) $(2.15) $18.49 23.56% $ 53 0.99%(4)(6)
3/31/98(7)...... 18.49 0.20 1.89 2.09 (0.15) (1.74) (1.89) 18.69 12.38 212 1.00(4)(6)
- ----------------------------------------------------------------------------------------------------------------------------------
BLUE CHIP GROWTH FUND
- ---------------------
<CAPTION>
NET
GAIN(LOSS)
ON INVEST- TOTAL DIVIDENDS DISTRI-
NET ASSET NET MENTS (BOTH FROM FROM NET BUTIONS NET ASSET NET ASSETS RATIO OF
VALUE, INVEST- REALIZED INVEST- INVEST- FROM TOTAL VALUE, END OF EXPENSES
PERIOD BEGINNING MENT AND MENT MENT CAPITAL DISTRI- END OF TOTAL PERIOD TO AVERAGE
ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME GAINS BUTIONS PERIOD RETURN(2) (000'S) NET ASSETS
- ---------------- --------- --------- ----------- ---------- --------- ------- ------- --------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
-------
10/08/93-
9/30/94(3)..... $16.24 $ 0.09 $(0.26) $(0.17) $ -- $(0.65) $(0.65) $15.42 (1.05)% $ 3,207 1.64%(4)(6)
9/30/95......... 15.42 0.02 2.99 3.01 -- (1.09) (1.09) 17.34 21.29 42,407 1.58(6)
9/30/96......... 17.34 (0.03) 2.22 2.19 -- (1.91) (1.91) 17.62 13.88 51,993 1.57
9/30/97......... 17.62 (0.02) 5.05 5.03 -- (2.43) (2.43) 20.22 32.96 67,812 1.54
3/31/98(7)...... 20.22 (0.02) 2.53 2.51 -- (2.48) (2.48) 20.25 14.35 78,119 1.49(4)
CLASS B
-------
1/01/93-
9/30/93(5)..... $13.59 $(0.02) $ 2.71 $ 2.69 $ -- $ -- $ -- $16.28 19.79% $ 79,774 2.46%(4)
9/30/94......... 16.28 (0.01) (0.28) (0.29) -- (0.65) (0.65) 15.34 (1.81) 71,749 2.28
9/30/95......... 15.34 (0.01) 2.89 2.88 -- (1.09) (1.09) 17.13 20.51 39,533 2.22
9/30/96......... 17.13 (0.14) 2.19 2.05 -- (1.91) (1.91) 17.27 13.17 36,199 2.23
9/30/97......... 17.27 (0.13) 4.90 4.77 -- (2.43) (2.43) 19.61 32.02 37,633 2.22
3/31/98(7)...... 19.61 (0.08) 2.43 2.35 -- (2.48) (2.48) 19.48 13.95 41,093 2.15(4)
<CAPTION>
BALANCED ASSETS FUND
- --------------------
RATIO OF NET
INVESTMENT
INCOME AVERAGE
PERIOD TO AVERAGE PORTFOLIO COMMISSION
ENDED NET ASSETS TURNOVER PER SHARE
- ---------------- --------------- --------- ----------
<S> <C> <C> <C>
9/24/93-
9/30/93(3)..... 0.46%(4) 25% $ NA
9/30/94......... 2.00 141 NA
9/30/95......... 2.13 130 NA
9/30/96......... 1.63 187 0.0611
9/30/97......... 1.86 149 0.0599
3/31/98(7)...... 1.62(4) 35 0.0600
6/30/93(5)...... 1.94%(6) 251% $ NA
7/01/93-
9/30/93(5)..... 1.36(4)(6) 25 NA
9/30/94......... 1.36 141 NA
9/30/95......... 1.59 130 NA
9/30/96......... 1.03 187 0.0611
9/30/97......... 1.26 149 0.0599
3/31/98(7)...... 1.01(4) 35 0.0600
10/07/96-
9/30/97(3)..... 2.30%(4)(6) 149% $0.0599
3/31/98(7)...... 2.06(4)(6) 35 0.0600
- ----------------------------------------------------------------------------------------------------------------------------------
BLUE CHIP GROWTH FUND
- ---------------------
<CAPTION>
RATIO OF NET
INVESTMENT
INCOME AVERAGE
PERIOD TO AVERAGE PORTFOLIO COMMISSION
ENDED NET ASSETS TURNOVER PER SHARE
- ---------------- --------------- --------- ----------
<S> <C> <C> <C>
10/08/93-
9/30/94(3)..... 0.65%(4)(6) 170% $ NA
9/30/95......... 0.11(6) 251 NA
9/30/96......... (0.18) 269 0.0600
9/30/97......... (0.11) 211 0.0600
3/31/98(7)...... (0.24)(4) 44 0.0600
1/01/93-
9/30/93(5)..... (0.14)%(4) 171% $ NA
9/30/94......... (0.05) 170 NA
9/30/95......... (0.09) 251 NA
9/30/96......... (0.83) 269 0.0600
9/30/97......... (0.77) 211 0.0600
3/31/98(7)...... (0.90)(4) 44 0.0600
</TABLE>
- ------------
(1) Calculated based upon average shares outstanding
(2) Total return is not annualized and does not reflect sales load
(3) Commencement of sale of respective class of shares
(4) Annualized
(5) Pursuant to a reorganization of the SunAmerica Mutual Funds, the Equity
Funds fiscal year ends were changed to September 30
(6) Net of the following expense reimbursements (based on average net assets):
<TABLE>
<CAPTION>
6/30/93 9/30/93 9/30/94 9/30/95 9/30/97 3/31/98
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Balanced Assets Class B...... .05% .04% -- -- -- --
Balanced Assets Class Z...... -- -- -- -- 39.42% 6.33%
Blue Chip Growth Class A..... -- -- 1.66% .11% -- --
</TABLE>
(7) Unaudited
See Notes to Financial Statements
10
<PAGE>
SUNAMERICA EQUITY FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MID-CAP GROWTH FUND
- -------------------
NET
GAIN (LOSS)
NET ON INVEST- TOTAL DIVIDENDS DISTRI-
NET ASSET INVEST- MENTS (BOTH FROM FROM NET BUTIONS NET ASSET NET ASSETS
VALUE, MENT REALIZED INVEST- INVEST- FROM TOTAL VALUE, END OF
PERIOD BEGINNING INCOME AND MENT MENT CAPITAL DISTRI- END OF TOTAL PERIOD
ENDED OF PERIOD (LOSS)(2) UNREALIZED) OPERATIONS INCOME GAINS BUTIONS PERIOD RETURN(1) (000'S)
- ---------------- --------- --------- ----------- ---------- --------- ------- ------- --------- --------- ----------
CLASS A
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/01/92-
9/30/93(4)..... $15.64 $(0.09) $ 3.17 $ 3.08 $ -- $(0.69) $(0.69) $18.03 20.42 % $ 34,918
9/30/94......... 18.03 0.04 (1.64) (1.60) -- (2.65) (2.65) 13.78 (9.60) 32,906
9/30/95......... 13.78 (0.08) 4.14 4.06 (0.04) -- (0.04) 17.80 29.51 37,714
9/30/96......... 17.80 (0.12) 2.21 2.09 -- (2.11) (2.11) 17.78 12.92 41,904
9/30/97......... 17.78 (0.15) 3.83 3.68 -- (0.80) (0.80) 20.66 21.54 46,051
3/31/98(8)...... 20.66 (0.06) 0.88 0.82 -- (3.53) (3.53) 17.95 6.02 47,096
<CAPTION>
CLASS B
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/04/93-
9/30/94(5)..... $18.12 $ 0.03 $(1.80) $(1.77) $ -- $(2.65) $(2.65) $13.70 (10.56)% $ 4,039
9/30/95......... 13.70 (0.18) 4.08 3.90 (0.02) -- (0.02) 17.58 28.55 9,544
9/30/96......... 17.58 (0.24) 2.18 1.94 -- (2.11) (2.11) 17.41 12.16 13,784
9/30/97......... 17.41 (0.28) 3.73 3.45 -- (0.80) (0.80) 20.06 20.65 13,779
3/31/98(8)...... 20.06 (0.12) 0.83 0.71 -- (3.53) (3.53) 17.24 5.61 12,288
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
SMALL COMPANY GROWTH FUND
- -------------------------
NET
GAIN (LOSS)
NET ON INVEST- TOTAL DIVIDENDS DISTRI-
NET ASSET INVEST- MENTS (BOTH FROM FROM NET BUTIONS NET ASSET NET ASSETS
VALUE, MENT REALIZED INVEST- INVEST- FROM TOTAL VALUE, END OF
PERIOD BEGINNING INCOME AND MENT MENT CAPITAL DISTRI- END OF TOTAL PERIOD
ENDED OF PERIOD (LOSS)(2) UNREALIZED) OPERATIONS INCOME GAINS BUTIONS PERIOD RETURN(1) (000'S)
- ---------------- --------- --------- ----------- ---------- --------- ------- ------- --------- --------- ----------
CLASS A
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/01/92-
9/30/93(4)(6).. $16.46 $(0.02) $ 4.07 $ 4.05 $ -- $(0.73) $(0.73) $19.78 25.68 % $ 39,238
9/30/94......... 19.78 (0.10) (1.40) (1.50) -- (1.46) (1.46) 16.82 (7.74) 38,570
9/30/95......... 16.82 (0.04) 8.28 8.24 -- (0.41) (0.41) 24.65 50.00 89,510
9/30/96......... 24.65 (0.16) 4.29 4.13 -- (4.53) (4.53) 24.25 19.35 158,567
9/30/97......... 24.25 (0.30) 5.18 4.88 -- (0.86) (0.86) 28.27 20.84 185,241
3/31/98(8)...... 28.27 (0.11) (1.62) (1.73) -- (2.40) (2.40) 24.14 (5.21) 159,349
<CAPTION>
CLASS B
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/24/93-
9/30/93(5)..... $19.66 $ -- $ 0.12 $ 0.12 $ -- $ -- $ -- $19.78 0.61 % $ 38,898
9/30/94......... 19.78 (0.20) (1.42) (1.62) -- (1.46) (1.46) 16.70 (8.40) 52,208
9/30/95......... 16.70 (0.16) 8.19 8.03 -- (0.41) (0.41) 24.32 49.08 68,313
9/30/96......... 24.32 (0.29) 4.20 3.91 -- (4.53) (4.53) 23.70 18.60 107,839
9/30/97......... 23.70 (0.44) 5.03 4.59 -- (0.86) (0.86) 27.43 20.08 124,450
3/31/98(8)...... 27.43 (0.18) (1.58) (1.76) -- (2.40) (2.40) 23.27 (5.50) 101,976
<CAPTION>
CLASS C
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2/2/98-
3/31/98(5)(8).. $21.11 $(0.06) $ 2.21 $ 2.15 $ -- $ -- $ -- $23.26 10.18 % $ 113
<CAPTION>
CLASS Z
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/07/96-
9/30/97(5)..... $24.61 $(0.15) $ 4.85 $ 4.70 $ -- $(0.86) $(0.86) $28.45 19.78 % $ 948
3/31/98(8)...... 28.45 (0.06) (1.62) (1.68) -- (2.40) (2.40) 24.37 (4.99) 1,117
<CAPTION>
MID-CAP GROWTH FUND
- -------------------
RATIO OF NET
INVESTMENT
RATIO OF INCOME
EXPENSES (LOSS) AVERAGE
PERIOD TO AVERAGE TO AVERAGE PORTFOLIO COMMISSION
ENDED NET ASSETS NET ASSETS TURNOVER PER SHARE
- ---------------- -------------- -------------- --------- ----------
<S> <C> <C> <C> <C>
12/01/92-
9/30/93(4)..... 1.81%(3) 1.18 %(3) 231% $ NA
9/30/94......... 1.76 0.28 555 NA
9/30/95......... 1.66 (0.51) 392 NA
9/30/96......... 1.62 (0.69) 307 0.0603
9/30/97......... 1.64 (0.84) 332 0.0600
3/31/98(8)...... 1.59(3) (0.73)(3) 176 0.0600
<CAPTION>
<S> <C> <C> <C> <C>
10/04/93-
9/30/94(5)..... 2.43%(3)(7) 0.20 %(3)(7) 555% $ NA
9/30/95......... 2.31(7) (0.17)(7) 392 NA
9/30/96......... 2.32 (1.43) 307 0.0603
9/30/97......... 2.35 (1.56) 332 0.0600
3/31/98(8)...... 2.31(3) (1.44)(3) 176 0.0600
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
SMALL COMPANY GROWTH FUND
- -------------------------
RATIO OF NET
INVESTMENT
RATIO OF INCOME
EXPENSES (LOSS) AVERAGE
PERIOD TO AVERAGE TO AVERAGE PORTFOLIO COMMISSION
ENDED NET ASSETS NET ASSETS TURNOVER PER SHARE
- ---------------- -------------- -------------- --------- ----------
<S> <C> <C> <C> <C>
12/01/92-
9/30/93(4)(6).. 1.83%(3) (0.15)%(3) 216% $ NA
9/30/94......... 1.67 (0.60) 411 NA
9/30/95......... 1.57 (0.22) 351 NA
9/30/96......... 1.53 (0.68) 240 0.0607
9/30/97......... 1.72 (1.27) 343 0.0598
3/31/98(8)...... 1.50(3) (0.91)(3) 177 0.0600
<CAPTION>
<S> <C> <C> <C> <C>
9/24/93-
9/30/93(5)..... 2.34%(3) (1.70)%(3) 216% $ NA
9/30/94......... 2.31 (1.23) 411 NA
9/30/95......... 2.22 (0.84) 351 NA
9/30/96......... 2.16 (1.30) 240 0.0607
9/30/97......... 2.34 (1.89) 343 0.0598
3/31/98(8)...... 2.13(3) (1.54) (3) 177 0.0600
<CAPTION>
<S> <C> <C> <C> <C>
2/2/98-
3/31/98(5)(8).. 2.15%(3)(7) (1.65)%(3)(7) 177% 0.0600
<CAPTION>
<S> <C> <C> <C> <C>
10/07/96-
9/30/97(5)..... 1.07%(3)(7) (0.67)%(3)(7) 343% $0.0598
3/31/98(8)...... 1.07(3)(7) (0.46)(3)(7) 177 0.0600
</TABLE>
- ------------
(1) Total return is not annualized and does not reflect sales load
(2) Calculated based upon average shares outstanding
(3) Annualized
(4) Pursuant to a reorganization of the SunAmerica Mutual Funds, the Equity
Funds fiscal year ends were changed to September 30
(5) Commencement of sale of respective class of shares
(6) Restated to reflect a 0.984460367 for 1.00 stock split effective September
24, 1993
(7) Net of the following expense reimbursements (based on average net assets):
<TABLE>
<CAPTION>
9/30/94 9/30/95 9/30/97 3/31/98
------- ------- ------- -------
<S> <C> <C> <C> <C>
Mid-Cap Growth Class B....................... .48% .17% -- --
Small Company Growth Class C................. -- -- -- 15.22%
Small Company Growth Class Z................. -- -- 2.19% 1.16
</TABLE>
(8)Unaudited
See Notes to Financial Statements
11
<PAGE>
SUNAMERICA EQUITY FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GROWTH AND INCOME FUND
- ----------------------
NET
GAIN(LOSS)
ON INVEST- TOTAL DIVIDENDS DISTRI-
NET ASSET NET MENTS (BOTH FROM FROM NET BUTIONS NET ASSET NET ASSETS
VALUE, INVEST- REALIZED INVEST- INVEST- FROM TOTAL VALUE, END OF
PERIOD BEGINNING MENT AND MENT MENT CAPITAL DISTRI- END OF TOTAL PERIOD
ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME GAINS BUTIONS PERIOD RETURN(2) (000'S)
- ---------------- --------- --------- ----------- ---------- --------- ------- ------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
-------
7/01/94-
9/30/94(3)..... $ 7.33 $0.07 $0.10 $0.17 $(0.06) $ -- $(0.06) $ 7.44 2.34% $ 3,098
9/30/95......... 7.44 0.32 1.08 1.40 (0.30) (0.15) (0.45) 8.39 19.53 3,532
9/30/96......... 8.39 0.14 2.50 2.64 (0.17) (0.39) (0.56) 10.47 32.59 21,099
9/30/97......... 10.47 0.05 3.40 3.45 (0.03) (0.44) (0.47) 13.45 34.18 47,219
3/31/98(6)...... 13.45 0.01 2.02 2.03 -- (1.35) (1.35) 14.13 16.50 63,409
CLASS B
-------
7/06/94-
9/30/94(3)..... $ 7.33 $0.05 $0.11 $0.16 $(0.05) $ -- $(0.05) $ 7.44 2.19% $ 229
9/30/95......... 7.44 0.35 1.03 1.38 (0.28) (0.15) (0.43) 8.39 19.19 2,538
9/30/96......... 8.39 0.08 2.50 2.58 (0.13) (0.39) (0.52) 10.45 31.75 13,903
9/30/97......... 10.45 (0.03) 3.39 3.36 (0.01) (0.44) (0.45) 13.36 33.30 55,530
3/31/98(6)...... 13.36 (0.03) 2.00 1.97 -- (1.35) (1.35) 13.98 16.14 79,581
CLASS C
-------
2/02/98-
3/31/98(3)(6).. $12.78 $(0.01) $1.20 $1.19 $ -- $ -- $ -- $13.97 9.31% $ 232
<CAPTION>
GROWTH AND INCOME FUND
- ----------------------
RATIO OF NET
RATIO OF INVESTMENT
EXPENSES INCOME AVERAGE
PERIOD TO AVERAGE TO AVERAGE PORTFOLIO COMMISSION
ENDED NET ASSETS NET ASSETS TURNOVER PER SHARE
- ---------------- ------------- ---------------- --------- ----------
<S> <C> <C> <C> <C>
7/01/94-
9/30/94(3)..... 1.50%(4)(5) 3.48%(4)(5) 8% $ NA
9/30/95......... 0.46(5) 4.16(5) 230 NA
9/30/96......... 0.96(5) 1.52(5) 161 0.0600
9/30/97......... 1.38(5) 0.45(5) 200 0.0600
3/31/98(6)...... 1.48(4) 0.18(4) 76 0.0600
7/06/94-
9/30/94(3)..... 2.15%(4)(5) 2.86% (4)(5) 8% $ NA
9/30/95......... 0.30(5) 4.48 (5) 230 NA
9/30/96......... 1.58(5) 0.73 (5) 161 0.0600
9/30/97......... 2.05(5) (0.27)(5) 200 0.0600
3/31/98(6)...... 2.11(4) (0.45)(4) 76 0.0600
2/02/98-
3/31/98(3)(6).. 2.15%(4)(5) (0.44)%(4)(5) 76% $0.0600
</TABLE>
- --------
(1) Calculated based upon average shares outstanding
(2) Total return is not annualized and does not reflect sales load
(3) Commencement of sale of respective class of shares
(4) Annualized
(5) Net of the following expense reimbursements (based on average net assets):
<TABLE>
<CAPTION>
9/30/94 9/30/95 9/30/96 9/30/97 3/31/98
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Growth and Income Class A............ 4.48% 2.96% 1.01% 0.22% --
Growth and Income Class B............ 20.35 5.07 1.14 0.21 --
Growth and Income Class C............ -- -- -- -- 10.81%
</TABLE>
(6) Unaudited
See Notes to Financial Statements
12
<PAGE>
SUNAMERICA BALANCED ASSETS FUND
PORTFOLIO OF INVESTMENTS -- March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
COMMON STOCK--68.6%
AEROSPACE & MILITARY TECHNOLOGY--
0.4%
Boeing Co................ 30,000 $ 1,563,750
-----------
APPAREL & TEXTILES--1.4%
Gap, Inc. ............... 80,000 3,600,000
Oakley, Inc.+............ 125,000 1,445,312
-----------
5,045,312
-----------
BANKS--8.8%
BankAmerica Corp......... 30,000 2,478,750
BankBoston Corp.......... 40,000 4,410,000
Chase Manhattan Corp..... 25,000 3,371,875
Citicorp................. 20,000 2,840,000
First Union Corp......... 60,000 3,405,000
Mellon Bank Corp. ....... 40,000 2,540,000
NationsBank Corp. ....... 60,000 4,376,250
Summit Bancorp........... 187,500 9,386,719
-----------
32,808,594
-----------
BROADCASTING & MEDIA--0.2%
CBS Corp.+............... 25,000 848,438
-----------
BUSINESS SERVICES--2.3%
American Express Co...... 50,000 4,590,625
Cendant Corp.+........... 97,124 3,848,538
-----------
8,439,163
-----------
CHEMICALS--0.7%
du Pont (E.I.) de Nemours
& Co.................... 40,000 2,720,000
-----------
COMMUNICATION EQUIPMENT--0.9%
Tellabs, Inc.+........... 50,000 3,356,250
-----------
COMPUTERS & BUSINESS EQUIPMENT--
3.4%
Cisco Systems, Inc.+..... 52,500 3,589,687
Dell Computer Corp.+..... 40,000 2,710,000
Hewlett-Packard Co....... 50,000 3,168,750
International Business
Machines Corp........... 30,000 3,116,250
-----------
12,584,687
-----------
CONGLOMERATE--3.4%
General Electric Co...... 60,000 5,171,250
Schlumberger Ltd......... 50,000 3,787,500
United Technologies
Corp.................... 40,000 3,692,500
-----------
12,651,250
-----------
DEPARTMENT STORES--1.1%
Wal-Mart Stores, Inc..... 80,000 4,065,000
-----------
ELECTRONICS--2.9%
Applied Materials, Inc.+. 60,000 2,118,750
Intel Corp............... 40,000 3,122,500
Motorola, Inc............ 30,000 1,818,750
Texas Instruments, Inc... 65,000 3,518,125
-----------
10,578,125
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
<S> <C> <C> <C> <C> <C>
ENERGY SERVICES--2.8%
Baker Hughes, Inc....... 70,000 $ 2,817,500
ENSCO International,
Inc.................... 60,000 1,665,000
EVI, Inc.+.............. 50,000 2,315,625
Halliburton Co.......... 70,000 3,513,125
-----------
10,311,250
-----------
ENERGY SOURCES--2.0%
Chevron Corp. .......... 30,000 2,409,375
Mobil Corp. ............ 20,000 1,532,500
Royal Dutch Petroleum
Co..................... 30,000 1,704,375
Texaco, Inc............. 30,000 1,807,500
-----------
7,453,750
-----------
FINANCIAL SERVICES--10.7%
American General Corp... 55,000 3,557,812
Associates First Capital
Corp., Class A......... 25,000 1,975,000
Beneficial Corp......... 25,000 3,107,813
Capital One Financial
Corp. ................. 40,000 3,155,000
CIT Group, Inc., Class
A...................... 45,000 1,468,125
Donaldson, Lufkin &
Jenrette, Inc.......... 30,000 2,546,250
Fleet Financial Group,
Inc.................... 30,000 2,551,875
Lehman Brothers
Holdings, Inc.......... 35,000 2,620,625
Morgan Stanley, Dean
Witter, Discover & Co.. 50,000 3,643,750
Paine Webber Group,
Inc.................... 50,000 2,006,250
Providian Financial
Corp................... 50,000 2,871,875
ReliaStar Financial
Corp................... 60,300 2,777,569
Travelers Group, Inc.... 67,500 4,050,000
Wells Fargo & Co........ 10,000 3,312,500
-----------
39,644,444
-----------
FOOD, BEVERAGE & TOBACCO--1.1%
Philip Morris Cos.,
Inc.................... 100,000 4,168,750
-----------
FOREST PRODUCTS--0.5%
Bowater, Inc............ 30,000 1,693,125
-----------
HOUSEHOLD PRODUCTS--1.8%
Procter & Gamble Co..... 20,000 1,687,500
Warner-Lambert Co....... 30,000 5,109,375
-----------
6,796,875
-----------
INSURANCE--4.1%
Allstate Corp........... 35,000 3,217,812
Conseco, Inc. .......... 70,000 3,963,750
Equitable Cos., Inc. ... 35,000 1,975,313
Hartford Financial
Services Group, Inc. .. 30,000 3,255,000
St. Paul Cos., Inc. .... 30,000 2,673,750
-----------
15,085,625
-----------
</TABLE>
13
<PAGE>
SUNAMERICA BALANCED ASSETS FUND
PORTFOLIO OF INVESTMENTS -- March 31, 1998 (unaudited) -- (continued)
<TABLE>
<CAPTION>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
LEISURE & TOURISM--0.7%
Carnival Corp., Class A.................................... 40,000 $ 2,790,000
-----------
MEDICAL PRODUCTS--1.8%
Amgen, Inc.+............................................... 25,000 1,521,875
Beckman Instruments, Inc. ................................. 49,900 2,859,894
Johnson & Johnson.......................................... 30,000 2,199,375
-----------
6,581,144
-----------
PHARMACEUTICALS--6.0%
Biogen, Inc.+.............................................. 30,000 1,445,625
Bristol-Myers Squibb Co.................................... 30,000 3,129,375
Chiron Corp.+.............................................. 40,000 837,500
IDEC Pharmaceuticals Corp.+................................ 65,500 2,898,375
Lilly (Eli) & Co........................................... 25,000 1,490,625
Merck & Co., Inc........................................... 25,000 3,209,375
Neurex Corp.+.............................................. 85,000 2,029,375
Pfizer, Inc................................................ 40,000 3,987,500
Schering-Plough Corp. ..................................... 40,000 3,267,500
-----------
22,295,250
-----------
SOFTWARE--1.0%
Microsoft Corp.+........................................... 40,000 3,580,000
-----------
SPECIALTY RETAIL--2.6%
CVS Corp. ................................................. 35,000 2,642,500
Dayton Hudson Corp......................................... 35,000 3,080,000
Home Depot, Inc............................................ 57,500 3,877,656
-----------
9,600,156
-----------
TELECOMMUNICATIONS--6.1%
AirTouch Communications, Inc.+............................. 30,000 1,468,125
AT&T Corp. ................................................ 130,000 8,531,250
Bell Atlantic Corp......................................... 35,000 3,587,500
Lucent Technologies, Inc................................... 40,000 5,115,000
WorldCom, Inc.+............................................ 90,000 3,875,625
-----------
22,577,500
-----------
TRANSPORTATION--0.6%
Burlington Northern Santa Fe Corp.......................... 20,000 2,080,000
-----------
UTILITIES--1.3%
Duke Energy Corp........................................... 50,000 2,978,125
Enron Corp................................................. 40,000 1,855,000
-----------
4,833,125
-----------
TOTAL COMMON STOCK
(COST $181,030,826)........................................ 254,151,563
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 2)
<S> <C> <C>
BONDS & NOTES--11.2%
AEROSPACE & MILITARY TECHNOLOGY--1.1%
Lockheed Martin Corp. 7.25% due 5/15/06.......... $4,000 $ 4,195,760
-----------
AUTOMOTIVE--1.5%
Chrysler Corp. 7.45% due 3/01/27................. 5,000 5,367,200
-----------
BANKS--0.6%
Chase Manhattan Corp. 7.88% due 8/01/04.......... 2,000 2,033,700
-----------
ELECTRONICS--0.8%
Texas Instruments, Inc. 6.13% due 2/01/06........ 3,000 2,963,280
-----------
FINANCIAL SERVICES--5.8%
Bear Stearns Cos., Inc. 6.63% due 1/15/04........ 5,000 5,066,350
Donaldson, Lufkin & Jenrette, Inc. 6.88% due
11/01/05........................................ 2,000 2,030,340
Ford Motor Credit Co. 8.00% due 6/15/02.......... 5,000 5,318,850
Goldman Sachs Group-L.P.* 6.60% due 7/15/02...... 5,000 5,053,600
Morgan Stanley, Dean Witter, Discover & Co.
6.88% due 3/01/07............................... 4,000 4,114,640
-----------
21,583,780
-----------
FOOD, BEVERAGE & TOBACCO--1.4%
Hershey Foods Corp. 7.20% due 8/15/27............ 5,000 5,345,200
-----------
TOTAL BONDS & NOTES
(COST $39,789,170)............................... 41,488,920
-----------
U.S. GOVERNMENT AND AGENCIES--19.0%
FEDERAL NATIONAL MORTGAGE ASSOCIATION--1.1%
5.75% due 2/15/08................................ 1,000 983,280
6.50% due 9/01/10................................ 2,920 2,942,049
-----------
3,925,329
-----------
U.S. TREASURY BONDS--4.8%
6.38% due 8/15/27................................ 5,000 5,281,250
11.25% due 2/15/15............................... 8,000 12,510,000
-----------
17,791,250
-----------
</TABLE>
14
<PAGE>
SUNAMERICA BALANCED ASSETS FUND
PORTFOLIO OF INVESTMENTS -- March 31, 1998 (unaudited) -- (continued)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT AND AGENCIES (CONTINUED)
U.S. TREASURY NOTES--13.1%
Strip zero coupon due 2/15/05................... $ 8,050 $ 5,446,067
5.50% due 1/31/03............................... 7,500 7,451,925
5.88% due 8/31/99............................... 5,000 5,017,950
6.25% due 3/31/99............................... 15,000 15,100,800
6.50% due 10/15/06.............................. 10,000 10,493,700
6.88% due 3/31/00............................... 5,000 5,118,750
------------
48,629,192
------------
TOTAL U.S. GOVERNMENT AND AGENCIES
(COST $68,508,383).............................. 70,345,771
------------
TOTAL INVESTMENT SECURITIES--98.8%
(COST $289,328,379)............................. 365,986,254
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 2)
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENTS--
0.5%
Agreement with State
Street Bank & Trust Co.,
bearing interest of 5.0%
dated 3/31/98 to be
repurchased 4/01/98 in
the amount of $1,000,139
and collateralized by
$1,020,000 U.S. Treasury
Notes 6.00% due 2/15/26
approximate aggregate
value $1,028,183........ $1,000 $ 1,000,000
Joint Repurchase
Agreement Account (Note
2)...................... 890 890,000
------------
TOTAL REPURCHASE
AGREEMENTS
(COST $1,890,000)........ 1,890,000
------------
TOTAL INVESTMENTS--
(COST $291,218,379)...... 99.3% 367,876,254
Other assets less
liabilities.............. 0.7 2,632,425
------ ------------
NET ASSETS-- ............. 100.0% $370,508,679
====== ============
</TABLE>
- --------
+ Non-income producing security
* Resale restricted to qualified institutional buyers
See Notes to Financial Statements
15
<PAGE>
SUNAMERICA BLUE CHIP GROWTH FUND
PORTFOLIO OF INVESTMENTS -- March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
COMMON STOCK--97.6%
AEROSPACE & MILITARY TECHNOLOGY--
0.7%
Boeing Co................ 15,000 $ 781,875
-----------
APPAREL & TEXTILES--2.6%
Gap, Inc................. 45,000 2,025,000
Oakley, Inc.+............ 90,000 1,040,625
-----------
3,065,625
-----------
BANKS--10.4%
BankAmerica Corp......... 10,000 826,250
BankBoston Corp.......... 15,000 1,653,750
Chase Manhattan Corp..... 15,000 2,023,125
Citicorp................. 12,000 1,704,000
First Union Corp......... 25,000 1,418,750
Mellon Bank Corp......... 20,000 1,270,000
NationsBank Corp......... 17,000 1,239,938
Summit Bancorp........... 45,000 2,252,812
-----------
12,388,625
-----------
BROADCASTING & MEDIA--0.5%
CBS Corp.+............... 20,000 678,750
-----------
BUSINESS SERVICES--3.6%
American Express Co...... 25,000 2,295,312
Cendant Corp.+........... 49,062 1,944,082
-----------
4,239,394
-----------
CHEMICALS--0.6%
du Pont (E.I.) de Nemours
& Co.................... 10,000 680,000
-----------
COMMUNICATION EQUIPMENT--1.4%
Tellabs, Inc.+........... 25,000 1,678,125
-----------
COMPUTERS & BUSINESS EQUIPMENT--
5.2%
Cisco Systems, Inc.+..... 30,000 2,051,250
Dell Computer Corp.+..... 20,000 1,355,000
Hewlett-Packard Co....... 20,000 1,267,500
International Business
Machines Corp........... 15,000 1,558,125
-----------
6,231,875
-----------
CONGLOMERATE--3.9%
General Electric Co...... 20,000 1,723,750
Schlumberger Ltd......... 20,000 1,515,000
United Technologies
Corp.................... 15,000 1,384,688
-----------
4,623,438
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
<S> <C> <C> <C> <C> <C>
DEPARTMENT STORES--1.3%
Wal-Mart Stores, Inc.... 30,000 $ 1,524,375
-----------
ELECTRONICS--4.6%
Applied Materials,
Inc.+.................. 30,000 1,059,375
Intel Corp.............. 20,000 1,561,250
Motorola, Inc........... 20,000 1,212,500
Texas Instruments,
Inc.................... 30,000 1,623,750
-----------
5,456,875
-----------
ENERGY SERVICES--3.8%
Baker Hughes, Inc....... 25,000 1,006,250
ENSCO International,
Inc.................... 30,000 832,500
EVI, Inc.+.............. 25,000 1,157,813
Halliburton Co.......... 30,000 1,505,625
-----------
4,502,188
-----------
ENERGY SOURCES--2.3%
Chevron Corp............ 10,000 803,125
Mobil Corp.............. 10,000 766,250
Royal Dutch Petroleum
Co..................... 10,000 568,125
Texaco, Inc............. 10,000 602,500
-----------
2,740,000
-----------
FINANCIAL SERVICES--15.3%
American General Corp... 25,000 1,617,188
Associates First Capital
Corp., Class A......... 15,000 1,185,000
Beneficial Corp......... 10,000 1,243,125
Capital One Financial
Corp................... 25,000 1,971,875
CIT Group, Inc., Class
A...................... 25,000 815,625
Donaldson, Lufkin &
Jenrette, Inc.......... 15,000 1,273,125
Fleet Financial Group,
Inc.................... 10,000 850,625
Lehman Brothers
Holdings, Inc.......... 15,000 1,123,125
Morgan Stanley, Dean
Witter,
Discover & Co.......... 20,000 1,457,500
Paine Webber Group,
Inc.................... 30,000 1,203,750
ReliaStar Financial
Corp................... 45,400 2,091,237
Travelers Group, Inc.... 30,000 1,800,000
Wells Fargo & Co........ 5,000 1,656,250
-----------
18,288,425
-----------
FOOD, BEVERAGE & TOBACCO--1.0%
Philip Morris Cos.,
Inc.................... 30,000 1,250,625
-----------
FOREST PRODUCTS--0.5%
Bowater, Inc............ 10,000 564,375
-----------
HOUSEHOLD PRODUCTS--2.1%
Warner-Lambert Co....... 15,000 2,554,688
-----------
</TABLE>
16
<PAGE>
SUNAMERICA BLUE CHIP GROWTH FUND
PORTFOLIO OF INVESTMENTS -- March 31, 1998 (unaudited) -- (continued)
<TABLE>
<CAPTION>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
- ---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
INSURANCE--6.1%
Allstate Corp........... 15,000 $ 1,379,062
Conseco, Inc............ 30,000 1,698,750
Equitable Cos., Inc..... 15,000 846,563
Hartford Financial
Services Group, Inc.... 15,000 1,627,500
St. Paul Cos., Inc...... 20,000 1,782,500
------------
7,334,375
------------
LEISURE & TOURISM--1.2%
Carnival Corp., Class
A...................... 20,000 1,395,000
------------
MEDICAL PRODUCTS--2.6%
Amgen, Inc.+............ 13,000 791,375
Beckman Instruments,
Inc.................... 15,000 859,688
Johnson & Johnson....... 20,000 1,466,250
------------
3,117,313
------------
PHARMACEUTICALS--8.9%
Biogen, Inc.+........... 20,000 963,750
Bristol-Myers Squibb
Co. ................... 10,000 1,043,125
Chiron Corp.+........... 30,000 628,125
IDEC Pharmaceuticals
Corp.+................. 45,000 1,991,250
Lilly (Eli) & Co........ 10,000 596,250
Merck & Co., Inc........ 10,000 1,283,750
Neurex Corp.+........... 30,000 716,250
Pfizer, Inc............. 22,000 2,193,125
Schering-Plough Corp.... 15,000 1,225,312
------------
10,640,937
------------
POLLUTION CONTROL--1.2%
US Filter Corp.+........ 40,000 1,405,000
------------
SOFTWARE--2.1%
HBO & Co................ 20,000 1,207,500
Microsoft Corp.+........ 15,000 1,342,500
------------
2,550,000
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES/
PRINCIPAL AMOUNT VALUE
SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 2)
<S> <C> <C> <C> <C> <C>
SPECIALTY RETAIL--3.5%
CVS Corp........................... 15,000 $ 1,132,500
Dayton Hudson Corp................. 15,000 1,320,000
Home Depot, Inc.................... 25,500 1,719,656
------------
4,172,156
------------
TELECOMMUNICATIONS--10.5%
AirTouch Communications, Inc.+..... 20,000 978,750
AT&T Corp.......................... 60,000 3,937,500
Bell Atlantic Corp................. 15,000 1,537,500
Frontier Corp...................... 40,000 1,302,500
Lucent Technologies, Inc........... 20,000 2,557,500
Nextel Communications, Inc.,
Class A+.......................... 20,000 675,000
WorldCom, Inc.+.................... 35,000 1,507,187
------------
12,495,937
------------
TRANSPORTATION--0.9%
Burlington Northern Santa Fe
Corp.............................. 10,000 1,040,000
------------
UTILITIES--0.8%
Enron Corp......................... 20,000 927,500
------------
TOTAL INVESTMENT SECURITIES--97.6%
(COST $85,914,497)................. 116,327,476
------------
REPURCHASE AGREEMENT--2.2%
Joint Repurchase Agreement Account
(Note 2)
(COST $2,624,000)................. $2,624 2,624,000
------------
TOTAL INVESTMENTS--
(cost $88,538,497)................. 99.8% 118,951,476
Other assets less liabilities....... 0.2 260,189
------ ------------
NET ASSETS-- 100.0% $119,211,665
====== ============
</TABLE>
- --------
+Non-income producing security
See Notes to Financial Statements
17
<PAGE>
SUNAMERICA MID-CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS -- March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
- -----------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK--95.4%
APPAREL & TEXTILES--3.4%
Cutter & Buck, Inc.+..................................... 10,000 $ 258,750
Gap, Inc................................................. 7,500 337,500
Oakley, Inc.+............................................ 50,000 578,125
Tefron Ltd.+............................................. 10,000 243,750
TJX Cos., Inc............................................ 13,200 597,300
-----------
2,015,425
-----------
AUTOMOTIVE--0.5%
Avis Rent A Car Inc...................................... 10,000 324,375
-----------
BANKS--3.8%
Hibernia Corp., Class A.................................. 20,000 411,250
PNC Bank Corp............................................ 20,000 1,198,750
Summit Bancorp........................................... 12,500 625,781
-----------
2,235,781
-----------
BROADCASTING & MEDIA--6.3%
Chancellor Media Corp.+.................................. 10,000 458,750
Cinar Films, Inc., Class B+.............................. 13,600 579,700
Clear Channel Communications, Inc.+...................... 3,900 382,200
Comcast Corp., Class A................................... 15,000 529,687
DoubleClick, Inc.+....................................... 16,000 562,000
Jacor Communications, Inc.+.............................. 12,000 708,000
Univision Communications, Inc.+.......................... 14,400 536,400
-----------
3,756,737
-----------
BUSINESS SERVICES--4.2%
Cendant Corp.+........................................... 11,000 435,875
CMG Information Services Inc. ........................... 10,000 579,375
H&R Block, Inc........................................... 10,000 475,625
Hypercom Corp............................................ 50,000 665,625
Unicom Corp.............................................. 10,000 350,000
-----------
2,506,500
-----------
CHEMICALS--0.3%
Solutia, Inc............................................. 7,000 208,250
-----------
COMMUNICATION EQUIPMENT--0.6%
Positron Fiber Systems Corp., Class A+................... 50,000 384,375
-----------
COMPUTERS & BUSINESS EQUIPMENT--1.8%
Storage Technology Corp.+................................ 5,000 380,313
Sun Microsystems, Inc. +................................. 16,000 667,500
-----------
1,047,813
-----------
CONTAINERS & STORAGE--0.7%
Owens-Illinois, Inc.+.................................... 10,000 432,500
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
<S> <C> <C>
ELECTRONICS--1.0%
Aavid Thermal Technologies, Inc.+.......................... 15,000 $ 463,125
Lam Research Corp.+........................................ 3,700 104,063
-----------
567,188
-----------
ENERGY SERVICES--7.6%
Cabot Corp................................................. 15,000 553,125
EVI, Inc.+................................................. 12,000 555,750
Friede Goldman International, Inc.+........................ 19,000 548,625
Global Marine, Inc.+....................................... 24,000 594,000
Nabors Industries, Inc.+................................... 25,000 592,187
R & B Falcon Corp.+........................................ 21,000 622,125
Unitrode Corp.+............................................ 23,000 428,375
Varco International, Inc.+................................. 23,000 592,250
-----------
4,486,437
-----------
ENERGY SOURCES--1.0%
Amerada Hess Corp.......................................... 10,000 583,125
-----------
FINANCIAL SERVICES--4.4%
Crestar Financial Corp..................................... 7,000 413,875
Fleet Financial Group, Inc................................. 10,780 916,974
Lehman Brothers Holdings, Inc.............................. 17,000 1,272,875
-----------
2,603,724
-----------
FOOD, BEVERAGE & TOBACCO--3.1%
American Home Products Corp................................ 3,000 286,125
Beringer Wine Estates Holdings, Inc., Class B+............. 10,200 526,575
Sysco Corp................................................. 40,000 1,025,000
-----------
1,837,700
-----------
FOREST PRODUCTS--0.9%
Sealed Air Corp.+.......................................... 8,500 556,750
-----------
HEALTH SERVICES--1.6%
Healthcare Financial Partners, Inc.+....................... 20,400 966,450
-----------
HOUSEHOLD PRODUCTS--3.0%
Dial Corp. New............................................. 10,000 239,375
Scotts Co., Class A+....................................... 20,000 692,500
Warner-Lambert Co.......................................... 5,000 851,563
-----------
1,783,438
-----------
INSURANCE--2.7%
Conseco, Inc............................................... 10,000 566,250
Reliance Group Holdings, Inc............................... 55,000 1,051,875
-----------
1,618,125
-----------
LEISURE & TOURISM--3.1%
Carnival Corp., Class A.................................... 15,000 1,046,250
Outback Steakhouse, Inc.+.................................. 20,000 782,500
-----------
1,828,750
-----------
</TABLE>
18
<PAGE>
SUNAMERICA MID-CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS -- March 31, 1998 (unaudited) -- (continued)
<TABLE>
<CAPTION>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
MACHINERY--1.9%
Black & Decker Corp........................................ 10,000 $ 530,625
Cooper Industries, Inc..................................... 10,000 594,375
-----------
1,125,000
-----------
MEDICAL PRODUCTS--2.3%
Arterial Vascular Engineering, Inc.+....................... 20,000 732,500
Symphonix Devices Inc...................................... 20,000 337,500
Transgene SA, ADR+(1)...................................... 21,000 318,938
-----------
1,388,938
-----------
METALS & MINING--1.1%
EASCO, Inc. ............................................... 42,000 640,500
-----------
PHARMACEUTICALS--3.0%
ICN Pharmaceuticals, Inc. ................................. 20,000 985,000
Schering-Plough Corp....................................... 10,000 816,875
-----------
1,801,875
-----------
POLLUTION CONTROL--2.0%
American Disposal Services, Inc.+.......................... 20,000 755,000
USA Waste Services, Inc. .................................. 10,000 445,625
-----------
1,200,625
-----------
RETAIL--0.3%
Dollar Tree Stores, Inc.+.................................. 3,000 159,375
-----------
SOFTWARE--15.0%
America Online, Inc.+...................................... 10,000 683,125
Applied Voice Technology, Inc.+............................ 7,500 292,500
Cadence Design Systems, Inc.+.............................. 15,000 519,375
Crystal Systems Solutions Ltd.+............................ 30,000 553,125
HBO & Co................................................... 22,000 1,328,250
Keane, Inc.+............................................... 10,000 565,000
Legato Systems, Inc.+...................................... 9,000 534,375
Logility Inc.+............................................. 50,000 559,375
Lycos Inc.+................................................ 12,500 553,125
MetaCreations Software Inc.+............................... 50,000 365,625
Microsoft Corp.+........................................... 6,000 537,000
Peregrine Systems, Inc.+................................... 30,000 573,750
PSINet, Inc.+.............................................. 40,000 445,000
Segue Software, Inc.+...................................... 6,600 85,800
Vantive Corp.+............................................. 20,000 731,250
Veritas Software Co.+...................................... 7,500 443,437
VocalTec Communications Ltd.+.............................. 6,000 123,000
-----------
8,893,112
-----------
SPECIALTY RETAIL--1.3%
Dayton Hudson Corp......................................... 5,000 440,000
Movado Group Inc........................................... 11,800 340,725
-----------
780,725
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES/
PRINCIPAL AMOUNT VALUE
SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 2)
<S> <C> <C>
TELECOMMUNICATIONS--13.9%
Electric Lightwave Inc........................... 30,000 $ 600,000
Frontier Corp.................................... 20,000 651,250
GST Telecommunications Inc.+..................... 30,000 451,875
ICG Communications Inc. ......................... 9,000 335,250
IXC Communications Inc. ......................... 10,000 570,625
Lucent Technologies, Inc......................... 5,000 639,375
Mobile Telecommunication Technologies Corp.+..... 20,000 447,500
Primus Telecommunications Group Inc.+............ 10,000 290,000
Qwest Communications International, Inc.+........ 20,000 777,500
Saville Systems PLC ADR+(1)...................... 10,000 512,500
Star Telecommunications Inc.+.................... 10,000 556,250
STARTEC Global Communications Corp.+............. 13,000 325,000
Tele-Communications, Inc.,
Series A+....................................... 20,000 621,875
Tele-Communications, Liberty Media Group, Inc.,
Series A+....................................... 20,000 687,500
Winstar Communications, Inc.+.................... 18,000 769,500
-----------
8,236,000
-----------
TELEPHONE--1.2%
Cincinnati Bell, Inc............................. 20,000 712,500
-----------
UTILITIES--3.4%
CMS Energy Corp. ................................ 10,000 469,375
Duke Energy Corp................................. 2,300 136,994
Montana Power Co. ............................... 8,000 288,500
Niagara Mohawk Power Corp........................ 25,000 325,000
SCANA Corp....................................... 25,000 773,437
-----------
1,993,306
-----------
TOTAL INVESTMENT SECURITIES--95.4%
(COST $46,858,306).............................. 56,675,399
-----------
REPURCHASE AGREEMENT--1.8%
Joint Repurchase Agreement
Account (Note 2)
(cost $1,037,000)............................... $1,037 1,037,000
-----------
TOTAL INVESTMENTS--
(COST $47,895,306).............................. 97.2% 57,712,399
Other assets less liabilities..................... 2.8 1,671,173
------ -----------
NET ASSETS--...................................... 100.0% $59,383,572
====== ===========
</TABLE>
- --------
+ Non-income producing security
(1) ADR ("American Depositary Receipt")
19
<PAGE>
SUNAMERICA SMALL COMPANY GROWTH FUND
PORTFOLIO OF INVESTMENTS -- March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
- -----------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK--96.9%
AEROSPACE & MILITARY TECHNOLOGY--0.7%
Aeroflex Inc.+......................................... 136,000 $ 1,802,000
------------
APPAREL & TEXTILES--0.9%
Oakley, Inc.+.......................................... 205,000 2,370,313
------------
BANKS--6.7%
First American Corp. (Tennessee)....................... 61,000 2,989,000
Hamilton Bancorp, Inc.+................................ 50,000 1,650,000
Hibernia Corp., Class A................................ 78,000 1,603,875
PNC Bank Corp.......................................... 61,900 3,710,131
Republic First Bancorp, Inc.+.......................... 42,000 538,125
Summit Bancorp......................................... 87,250 4,367,953
U.S. Bancorp........................................... 21,425 2,672,769
------------
17,531,853
------------
BROADCASTING & MEDIA--6.8%
Chancellor Media Corp.+................................ 105,000 4,816,875
Clear Channel Communications, Inc.+.................... 19,300 1,891,400
DoubleClick, Inc.+..................................... 80,300 2,820,537
Ha-Lo Industries, Inc.+................................ 88,000 3,074,500
Jacor Communications, Inc.+............................ 53,000 3,127,000
Univision Communications, Inc.+........................ 59,000 2,197,750
------------
17,928,062
------------
BUSINESS SERVICES--6.6%
Boron, LePore & Associates, Inc.+...................... 76,200 2,524,125
H&R Block, Inc......................................... 30,000 1,426,875
Icon CMT Corp.+........................................ 65,000 1,007,500
IDT Corp.+............................................. 50,000 1,875,000
JLK Direct Distribution, Inc.+......................... 50,000 1,909,375
NCO Group, Inc.+....................................... 52,900 1,322,500
Pre-Paid Legal Services, Inc.+......................... 30,000 1,065,000
ProSoft Development, Inc.+............................. 64,300 413,931
ProSoft Development, Inc.+(2)(3)....................... 100,000 597,375
Snyder Communications, Inc.+........................... 20,000 937,500
Sterling Commerce, Inc.+............................... 65,000 3,014,375
Vision Twenty One, Inc.+............................... 102,000 1,198,500
------------
17,292,056
------------
COMMUNICATION EQUIPMENT--0.7%
Tellabs, Inc.+......................................... 8,700 583,988
Visual Networks, Inc.+................................. 48,000 1,248,000
------------
1,831,988
------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
<S> <C> <C>
COMPUTERS & BUSINESS EQUIPMENT--1.9%
Computer Task Group, Inc. ............................... 52,700 $ 2,170,581
Henry (Jack) & Associates, Inc........................... 7,500 270,000
Office Depot, Inc.+...................................... 70,600 2,197,425
Whittman-Hart, Inc.+..................................... 4,500 203,625
------------
4,841,631
------------
CONSTRUCTION & HOUSING--0.9%
Engle Homes, Inc. ....................................... 55,000 921,250
Toll Brothers, Inc.+..................................... 50,000 1,406,250
------------
2,327,500
------------
ELECTRONICS--1.8%
ATMI, Inc.+.............................................. 83,500 2,525,875
Lam Research Corp.+...................................... 16,100 452,813
Uniphase Corp.+.......................................... 40,000 1,682,500
------------
4,661,188
------------
ENERGY SERVICES--3.0%
EVI, Inc.+............................................... 54,400 2,519,400
Friede Goldman International, Inc.+...................... 32,200 929,775
Global Marine, Inc.+..................................... 40,500 1,002,375
Nabors Industries, Inc.+................................. 40,500 959,344
Transocean Offshore, Inc. ............................... 28,000 1,440,250
Varco International, Inc.+............................... 40,500 1,042,875
------------
7,894,019
------------
FINANCIAL SERVICES--4.2%
Fleet Financial Group, Inc. ............................. 23,120 1,966,645
Legg Mason, Inc. ........................................ 37,233 2,208,402
Lehman Brothers Holdings, Inc............................ 30,000 2,246,250
Raymond James Financial, Inc............................. 80,000 3,485,000
Waddell & Reed Financial, Inc.+.......................... 39,400 1,024,400
------------
10,930,697
------------
FOOD, BEVERAGE & TOBACCO--2.5%
American Italian Pasta Co., Class A+..................... 50,000 1,806,250
Beringer Wine Estates Holdings, Inc., Class B+........... 34,900 1,801,712
Keebler Foods Co.+....................................... 50,000 1,500,000
Sysco Corp. ............................................. 60,000 1,537,500
------------
6,645,462
------------
HEALTH SERVICES--2.3%
Healthcare Financial Partners, Inc.+..................... 70,600 3,344,675
Medaphis Corp.+.......................................... 259,800 2,711,663
------------
6,056,338
------------
HOUSEHOLD PRODUCTS--0.7%
Dial Corp. New........................................... 80,000 1,915,000
------------
</TABLE>
20
<PAGE>
SUNAMERICA SMALL COMPANY GROWTH FUND
PORTFOLIO OF INVESTMENTS -- March 31, 1998 (unaudited) -- (continued)
<TABLE>
<CAPTION>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
HOUSING--1.2%
D.R.Horton, Inc. ........................................ 120,000 $ 2,550,000
Furniture Brands International, Inc.+.................... 20,000 643,750
------------
3,193,750
------------
INSURANCE--2.6%
Reliance Group Holdings, Inc. ........................... 209,000 3,997,125
Stirling Cooke Brown Holdings Ltd.+...................... 109,000 2,888,500
------------
6,885,625
------------
LEISURE & TOURISM--3.5%
Comair Holdings, Inc. ................................... 50,000 1,325,000
Midway Airlines Corp.+................................... 105,000 1,981,875
Outback Steakhouse, Inc.+................................ 90,000 3,521,250
Pegasus Systems, Inc.+................................... 30,000 772,500
Trans World Airlines, Inc. +............................. 122,700 1,510,744
------------
9,111,369
------------
MEDICAL PRODUCTS--5.9%
Arterial Vascular Engineering, Inc.+..................... 80,000 2,930,000
Cytyc Corp.+............................................. 110,000 2,750,000
Endocardial Solutions, Inc.+............................. 40,000 560,000
Guidant Corp............................................. 36,500 2,678,187
Inhale Therapeutic Systems............................... 43,000 1,166,375
MedImmune, Inc.+......................................... 30,000 1,653,750
Novoste Corp.+........................................... 45,000 1,167,188
Rexall Sundown, Inc.+.................................... 22,100 752,781
Symphonix Devices, Inc.+................................. 40,000 675,000
U.S. Vision, Inc.+....................................... 124,000 1,271,000
------------
15,604,281
------------
PHARMACEUTICALS--2.1%
Advance Paradigm, Inc.+.................................. 48,500 1,921,813
Forest Labs, Inc......................................... 36,000 1,350,000
IDEC Pharmaceuticals Corp.+.............................. 50,000 2,212,500
Sepracor, Inc.+.......................................... 3,000 127,875
------------
5,612,188
------------
POLLUTION CONTROL--3.1%
American Disposal Services, Inc.+........................ 110,000 4,152,500
North American Scientific, Inc.+......................... 108,000 3,888,000
------------
8,040,500
------------
RETAIL--2.4%
CD Now, Inc.+............................................ 40,000 960,000
Columbia Sportswear Co................................... 10,000 211,250
Cybershop International, Inc.+........................... 35,800 335,625
Duane Reade, Inc.+....................................... 25,000 639,062
Krause's Furniture, Inc.+................................ 163,500 613,125
Sunglass Hut International, Inc.+........................ 341,500 3,585,750
------------
6,344,812
------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
<S> <C> <C>
SOFTWARE--16.9%
America Online, Inc.+..................................... 40,000 $ 2,732,500
Applied Voice Technology, Inc.+........................... 40,000 1,560,000
Cadence Design Systems, Inc.+............................. 20,000 692,500
Compuware Corp.+.......................................... 105,000 5,184,375
DSET Corp.+............................................... 135,400 2,530,287
Excite, Inc.+............................................. 30,000 1,528,125
HBO & Co.................................................. 70,000 4,226,250
Information Management Resources, Inc.+................... 30,000 1,766,250
J.D. Edwards & Co.+....................................... 83,000 2,713,062
JDA Software Group, Inc.+................................. 50,000 2,656,250
Keane, Inc.+.............................................. 22,000 1,243,000
Legato Systems, Inc.+..................................... 50,000 2,968,750
Lycos, Inc.+.............................................. 59,000 2,610,750
Mastech Corp.+............................................ 30,000 1,529,063
Network Appliance, Inc.+.................................. 86,600 3,074,300
Segue Software, Inc. +.................................... 30,100 391,300
VeriSign, Inc.+........................................... 55,500 2,442,000
Veritas Software Corp.+................................... 42,500 2,512,813
VocalTec Communications Ltd.+............................. 27,000 553,500
Yahoo!, Inc.+............................................. 16,500 1,525,219
------------
44,440,294
------------
SPECIALTY RETAIL--0.7%
Coldwater Creek, Inc.+.................................... 35,000 848,750
Movado Group, Inc......................................... 37,400 1,079,925
------------
1,928,675
------------
TELECOMMUNICATIONS--15.7%
Alltel Corp............................................... 50,000 2,184,375
Clearnet Communications, Inc.+............................ 180,600 2,562,263
Frontier Corp............................................. 87,000 2,832,937
Intermedia Communications, Inc............................ 40,000 3,185,000
Metro One Telecommunications, Inc.+....................... 16,000 190,000
Mobile Telecommunication Technologies Corp.+.............. 50,000 1,118,750
Pacific Gateway Exchange, Inc.+........................... 54,100 3,097,225
Primus Telecommunications Group, Inc.+.................... 89,000 2,581,000
Qwest Communications International, Inc.+................. 100,000 3,887,500
Reltec Corp.+............................................. 14,000 496,125
Saville Systems PLC ADR+(1)............................... 60,000 3,075,000
Smartalk Teleservices, Inc.+.............................. 50,000 1,596,875
Star Telecommunications, Inc.+............................ 50,000 2,781,250
STARTEC Global Communications Corp.+...................... 60,000 1,500,000
Tekelec, Inc.+............................................ 85,000 3,856,875
Winstar Communications, Inc.+............................. 147,000 6,284,250
------------
41,229,425
------------
</TABLE>
21
<PAGE>
SUNAMERICA SMALL COMPANY GROWTH FUND
PORTFOLIO OF INVESTMENTS -- March 31, 1998 (unaudited) -- (continued)
<TABLE>
<CAPTION>
SHARES/
PRINCIPAL AMOUNT VALUE
SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 2)
- --------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
TELEPHONE--2.0%
Century Telephone Enterprises,
Inc. .............................. 41,300 $ 2,524,462
Cincinnati Bell, Inc................ 75,000 2,671,875
------------
5,196,337
------------
UTILITIES--1.1%
Niagara Mohawk Power Corp........... 225,000 2,925,000
------------
TOTAL INVESTMENT SECURITIES--96.9%
(COST $201,112,221)................ 254,540,363
------------
REPURCHASE AGREEMENT--4.9%
Joint Repurchase Agreement Account
(Note 2)
(cost $12,775,000)................. $12,775 12,775,000
------------
TOTAL INVESTMENTS--
(COST $213,887,221)................ 101.8% 267,315,363
Liabilities in excess of other assets (1.8) (4,760,262)
------ ------------
NET ASSETS-- 100.0% $262,555,101
===== ============
</TABLE>
- --------
+ Non-income producing security
(1) ADR ("American Depositary Receipt")
(2) At March 31, 1998 the Fund held restricted securities amounting to 0.2% of
net assets. The Fund will not bear any costs, including those involved in
registration under the Securities Act of 1933, in the connection with the
disposition of the securities.
<TABLE>
<CAPTION>
VALUATION
AS OF
DATE OF UNIT MARCH 31,
DESCRIPTION ACQUISITION COST 1998
----------- ----------- ------ ---------
<S> <C> <C> <C>
ProSoft Development, Inc. 3/12/97 $10.50 $5.97375
</TABLE>
(3) Fair valued security, see Note 2
See Notes to Financial Statements
22
<PAGE>
SUNAMERICA GROWTH AND INCOME FUND
PORTFOLIO OF INVESTMENTS -- March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
- -----------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK--96.5%
AEROSPACE & MILITARY TECHNOLOGY--1.2%
AlliedSignal, Inc......................................... 18,000 $ 756,000
Boeing Co................................................. 18,224 949,926
----------
1,705,926
----------
APPAREL & TEXTILES--0.5%
Warnaco Group, Inc., Class A.............................. 20,000 785,000
----------
AUTOMOTIVE--1.4%
Avis Rent A Car, Inc.+.................................... 10,000 324,375
Ford Motor Co............................................. 20,000 1,296,250
General Motors Corp....................................... 5,000 337,188
----------
1,957,813
----------
BANKS--6.4%
BankAmerica Corp.......................................... 10,000 826,250
Chase Manhattan Corp...................................... 10,000 1,348,750
Citicorp.................................................. 8,000 1,136,000
First Union Corp.......................................... 23,400 1,327,950
Mellon Bank Corp.......................................... 25,000 1,587,500
NationsBank Corp.......................................... 20,000 1,458,750
Summit Bancorp............................................ 30,000 1,501,875
----------
9,187,075
----------
BUSINESS SERVICES--2.5%
American Express Co....................................... 13,000 1,193,562
Cendant Corp.+............................................ 35,000 1,386,875
Gartner Group, Inc., Class A+............................. 26,000 971,750
----------
3,552,187
----------
CHEMICALS--1.5%
du Pont (E.I.) de Nemours & Co............................ 15,000 1,020,000
IMC Global, Inc........................................... 11,500 437,719
RPM, Inc. Ohio............................................ 38,500 685,781
----------
2,143,500
----------
COMMUNICATION EQUIPMENT--0.4%
Tellabs, Inc.+............................................ 9,400 630,975
----------
COMPUTERS & BUSINESS EQUIPMENT--5.3%
Cisco Systems, Inc.+...................................... 14,500 991,438
Computer Associates International, Inc.................... 15,000 866,250
Computer Sciences Corp.+.................................. 12,000 660,000
Hewlett-Packard Co........................................ 25,000 1,584,375
Honeywell, Inc............................................ 17,000 1,405,687
International Business Machines Corp...................... 15,000 1,558,125
Office Depot, Inc.+....................................... 19,200 597,600
----------
7,663,475
----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
<S> <C> <C>
CONGLOMERATE--4.2%
Corning, Inc................................................ 18,000 $ 796,500
General Electric Co......................................... 30,000 2,585,625
Schlumberger Ltd............................................ 14,000 1,060,500
Tyco International Ltd...................................... 30,000 1,638,750
----------
6,081,375
----------
CONSUMER SERVICES--0.9%
Service Corporation International........................... 30,000 1,273,125
----------
CONTAINERS & STORAGE--1.2%
Owens-Illinois, Inc.+....................................... 15,000 648,750
Sonoco Products Co.......................................... 25,000 1,001,562
----------
1,650,312
----------
DEPARTMENT STORES--2.0%
Federated Department Stores, Inc.+.......................... 23,000 1,191,687
Wal-Mart Stores, Inc........................................ 34,000 1,727,625
----------
2,919,312
----------
ELECTRONICS--4.2%
Applied Materials, Inc.+.................................... 27,000 953,438
Emerson Electric Co......................................... 21,000 1,368,937
Hubbell, Inc., Class B...................................... 17,000 856,375
Intel Corp.................................................. 20,000 1,561,250
Motorola, Inc............................................... 21,000 1,273,125
----------
6,013,125
----------
ENERGY SERVICES--1.4%
Baker Hughes, Inc........................................... 25,000 1,006,250
Halliburton Co.............................................. 11,000 552,063
Seagull Energy Corp.+....................................... 20,000 383,750
----------
1,942,063
----------
ENERGY SOURCES--6.4%
Amoco Corp.................................................. 9,000 777,375
Chevron Corp................................................ 15,000 1,204,687
Duke Energy Corp............................................ 20,666 1,230,919
Exxon Corp.................................................. 27,000 1,825,875
Mobil Corp.................................................. 12,000 919,500
Noble Affiliates, Inc....................................... 26,600 1,107,225
Royal Dutch Petroleum Co.................................... 22,000 1,249,875
Texaco, Inc................................................. 15,000 903,750
----------
9,219,206
----------
</TABLE>
23
<PAGE>
SUNAMERICA GROWTH AND INCOME FUND
PORTFOLIO OF INVESTMENTS -- March 31, 1998 (unaudited) -- (continued)
<TABLE>
<CAPTION>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
ENTERTAINMENT PRODUCTS--1.0%
Hasbro, Inc................................................. 40,000 $1,412,500
----------
FINANCIAL SERVICES--5.4%
Associates First Capital Corp., Class A..................... 15,000 1,185,000
CIT Group, Inc. Class A+.................................... 12,500 407,813
ContiFinancial Corp.+....................................... 23,700 722,850
Federal National Mortgage Association....................... 14,000 885,500
Household International, Inc................................ 11,000 1,515,250
Travelers Group, Inc........................................ 14,000 840,000
Washington Mutual, Inc...................................... 11,000 788,906
Wells Fargo & Co............................................ 4,000 1,325,000
----------
7,670,319
----------
FOOD, BEVERAGE & TOBACCO--5.4%
Coca-Cola Co................................................ 20,000 1,548,750
ConAgra, Inc................................................ 15,000 481,875
Flowers Industries, Inc..................................... 15,500 363,281
Heinz (H.J.) Co............................................. 13,000 758,875
Philip Morris Cos., Inc..................................... 55,000 2,292,812
RJR Nabisco Holdings Corp................................... 11,000 344,438
Sysco Corp.................................................. 30,000 768,750
UST, Inc.................................................... 22,200 715,950
Wrigley, (Wm) Jr. Co........................................ 5,000 408,750
----------
7,683,481
----------
FOREST PRODUCTS--1.9%
Boise Cascade Corp.......................................... 23,000 829,437
Champion International Corp................................. 8,000 434,500
Georgia Pacific Corp........................................ 25,000 642,188
Weyerhaeuser Co............................................. 15,000 847,500
----------
2,753,625
----------
HEALTH SERVICES--1.5%
Columbia/HCA Healthcare Corp................................ 24,000 774,000
Tenet Healthcare Corp.+..................................... 36,000 1,307,250
----------
2,081,250
----------
HOTELS & CASINOS--0.3%
Hilton Hotels Corp.......................................... 15,000 478,125
----------
HOUSEHOLD PRODUCTS--4.0%
Avon Products, Inc.......................................... 6,000 468,000
Colgate-Palmolive Co........................................ 14,000 1,212,750
Gillette Co................................................. 8,000 949,500
Procter & Gamble Co......................................... 11,000 928,125
Ralston-Purina Group........................................ 6,000 636,000
Warner-Lambert Co........................................... 9,000 1,532,812
----------
5,727,187
----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
<S> <C> <C>
INSURANCE--6.2%
Aetna, Inc.................................................. 14,000 $1,168,125
Allstate Corp............................................... 13,000 1,195,187
Berkley (W.R.) Corp......................................... 15,000 710,625
Chubb Corp.................................................. 6,000 470,250
Conseco, Inc................................................ 20,000 1,132,500
General Reinsurance Group Corp.............................. 7,000 1,544,375
Pennsylvania Manufacturers Corp., Class A................... 5,000 90,000
St. Paul Co., Inc........................................... 10,000 891,250
The Hartford Financial Services Group, Inc.................. 15,000 1,627,500
----------
8,829,812
----------
LEISURE & TOURISM--0.9%
Carnival Corp., Class A..................................... 18,000 1,255,500
----------
MEDICAL PRODUCTS--2.7%
Baxter International, Inc................................... 14,500 799,312
Johnson & Johnson........................................... 16,000 1,173,000
Sola International, Inc.+................................... 44,400 1,839,825
----------
3,812,137
----------
METALS & MINING--0.9%
EASCO, Inc.................................................. 32,500 495,625
Martin Marietta Materials, Inc.............................. 17,000 734,188
----------
1,229,813
----------
PHARMACEUTICALS--5.9%
Abbott Laboratories, Inc.................................... 15,000 1,129,688
Bristol-Myers Squibb Co..................................... 15,000 1,564,687
Lilly (Eli) & Co............................................ 13,000 775,125
IDEC Pharmaceuticals Corp.+................................. 30,000 1,327,500
Merck & Co., Inc............................................ 15,000 1,925,625
Pfizer, Inc................................................. 18,000 1,794,375
----------
8,517,000
----------
POLLUTION CONTROL--1.7%
United States Filter Corp.+................................. 25,000 878,125
USA Waste Services, Inc..................................... 35,000 1,559,688
----------
2,437,813
----------
REAL ESTATE INVESTMENT TRUSTS--2.5%
Crescent Real Estate Equities Co............................ 23,500 846,000
Equity Office Properties Trust.............................. 17,000 520,625
Koger Equity, Inc........................................... 25,000 562,500
Patriot American Hospitality, Inc........................... 15,000 405,000
Security Capital Industrial Trust........................... 30,000 768,750
Westfield America, Inc...................................... 25,000 440,625
----------
3,543,500
----------
</TABLE>
24
<PAGE>
SUNAMERICA GROWTH AND INCOME FUND
PORTFOLIO OF INVESTMENTS -- March 31, 1998 (unaudited) -- (continued)
<TABLE>
<CAPTION>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (CONTINUED)
RESTAURANTS--1.0%
McDonald's Corp........................................... 25,000 $ 1,500,000
------------
SOFTWARE--2.7%
Microsoft Corp.+.......................................... 26,000 2,327,000
Oracle Corp.+............................................. 20,300 640,719
Reynolds & Reynolds Co., Class A.......................... 40,500 885,937
------------
3,853,656
------------
SPECIALTY RETAIL--1.5%
CVS Corp.................................................. 10,000 755,000
Home Depot, Inc........................................... 21,000 1,416,188
------------
2,171,188
------------
TELECOMMUNICATIONS--7.6%
Ameritech Corp............................................ 16,000 791,000
AT&T Corp................................................. 32,500 2,132,812
Bell Atlantic Corp........................................ 15,216 1,559,640
Frontier Corp............................................. 30,000 976,875
GTE Corp.................................................. 11,000 658,625
Lucent Technologies, Inc.................................. 14,296 1,828,101
MCI Communications Corp................................... 10,000 495,000
SBC Communications, Inc................................... 30,000 1,308,750
WorldCom, Inc.+........................................... 25,000 1,076,564
------------
10,827,367
------------
TRANSPORTATION--0.9%
Burlington Northern, Inc.................................. 13,000 1,352,000
------------
UTILITIES--3.0%
Baltimore Gas & Electric Co............................... 10,000 326,875
Consolidated Natural Gas Co............................... 16,000 923,000
Enron Corp................................................ 25,000 1,159,375
GPU, Inc.................................................. 9,000 398,250
New York State Electric & Gas Corp........................ 25,000 996,875
UtiliCorp United, Inc..................................... 14,000 552,125
------------
4,356,500
------------
TOTAL INVESTMENT SECURITIES--96.5%
(COST $112,085,255)...................................... 138,217,242
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 2)
<S> <C> <C>
SHORT-TERM SECURITIES--0.1%
FOREST PRODUCTS--0.1%
Stone Container Corp.
11.88% due 12/01/98
(cost $50,300)................................... $ 50 $ 51,500
------------
REPURCHASE AGREEMENT--2.7%
Joint Repurchase Agreement
Account (Note 2)
(cost $3,892,000)................................ 3,892 3,892,000
------------
TOTAL INVESTMENTS--(COST $116,027,555)............. 99.3% 142,160,742
Other assets less liabilities...................... 0.7 1,060,964
------ ------------
NET ASSETS-- 100.0% $143,221,706
====== ============
</TABLE>
- --------
+ Non-income producing security
See Notes to Financial Statements
25
<PAGE>
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 1998 (unaudited)
Note 1. Organization
SunAmerica Equity Funds is an open-end diversified management investment
company organized as a Massachusetts business trust (the "Trust" or "Equity
Funds") on June 16, 1986. It currently consists of five different
investment funds (each, a "Fund" and collectively, the "Funds"). Each Fund
is a separate series of the Trust with a distinct investment objective
and/or strategy. Each Fund is advised and/or managed by SunAmerica Asset
Management Corp. (the "Adviser" or "SAAMCo"), an indirect wholly-owned
subsidiary of SunAmerica Inc. ("SunAmerica"). An investor may invest in one
or more of the following Funds: SunAmerica Balanced Assets Fund ("Balanced
Assets Fund"), SunAmerica Blue Chip Growth Fund ("Blue Chip Growth Fund"),
SunAmerica Mid-Cap Growth Fund ("Mid-Cap Growth Fund"), SunAmerica Small
Company Growth Fund ("Small Company Growth Fund"), and SunAmerica Growth
and Income Fund ("Growth and Income Fund"). The Funds are considered to be
separate entities for financial and tax reporting purposes. The investment
objective for each of the Funds is as follows:
Balanced Assets seeks to conserve principal by maintaining at all times a
balanced portfolio of stocks and bonds.
Blue Chip Growth seeks capital appreciation by investing primarily in
equity securities of companies with large market capitalizations.
Mid-Cap Growth seeks capital appreciation by investing primarily in equity
securities of medium-sized companies.
Small Company Growth seeks capital appreciation by investing primarily in
equity securities of small capitalization growth companies.
Growth and Income seeks capital appreciation and current income by
investing primarily in common stocks.
Each Fund currently offers Class A and Class B shares. Small Company Growth
Fund and Growth and Income Fund also offer Class C shares and Balanced
Assets Fund and Small Company Growth Fund offer Class Z shares, exclusively
for sale to employees participating in the SunAmerica profit sharing and
retirement plan. Class A shares are offered at net asset value per share
plus an initial sales charge. Class B and Class C shares are offered
without an initial sales charge, although a declining contingent deferred
sales charge may be imposed on redemptions made within six years of
purchase of Class B shares and within one year of purchase of Class C
shares. Class Z shares are offered at net asset value. Any purchases of
Class A shares in excess of $1,000,000 will be subject to a contingent
deferred sales charge on redemptions made within one year of purchase.
Class B shares of each Fund will convert automatically to Class A shares on
the first business day of the month after seven years from the issuance of
such Class B shares and at such time will be subject to the lower
distribution fee applicable to Class A shares. Each class of shares bears
the same voting, dividend, liquidation and other rights and conditions.
Class A, Class B and Class C shares each make distribution and account
maintenance and service fee payments under the distribution plans pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act"),
except that Class B and Class C shares are subject to higher distribution
fee rates. There are no distribution or service fee payments applicable to
Class Z.
26
<PAGE>
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 1998 (unaudited) -- (continued)
Note 2. Significant Accounting Policies
The preparation of financial statements in accordance with 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 Funds in the preparation of their financial statements:
SECURITY VALUATIONS: Securities that are actively traded in the over-the-
counter market, including listed securities for which the primary market is
believed by the Adviser to be over-the-counter, are valued at the quoted
bid price provided by principal market makers. Securities listed on the New
York Stock Exchange ("NYSE") or other national securities exchanges, are
valued on the basis of the last sale price on the exchange on which they
are primarily traded. If there is no sale on that day, then securities are
valued at the closing bid price on the NYSE or other primary exchange for
that day. However, if the last sale price on the NYSE is different than the
last sale price on any other exchange, the NYSE price is used. Securities
that are traded on foreign exchanges are ordinarily valued at the last
quoted sales price available before the time when the assets are valued. If
a security's price is available from more than one foreign exchange, a Fund
uses the exchange that is the primary market for the security. Options
traded on national securities exchanges are valued as of the close of the
exchange on which they are traded. Futures and options traded on
commodities exchanges are valued at their last sale price as of the close
of such exchange. The Funds may make use of a pricing service in the
determination of their net asset values. Securities for which market
quotations are not readily available and other assets are valued at fair
value as determined pursuant to procedures adopted in good faith by the
Trustees. Short-term investments which mature in less than 60 days are
valued at amortized cost, if their original maturity was 60 days or less,
or by amortizing their value on the 61st day prior to maturity, if their
original term to maturity exceeded 60 days.
REPURCHASE AGREEMENTS: The Funds, along with other affiliated registered
investment companies, 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. The Funds' custodian takes possession of the collateral
pledged for investments in repurchase agreements. The underlying collateral
is valued daily on a mark to market basis to ensure that the value,
including accrued interest, is at least equal to the repurchase price. 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 March 31, 1998, Balanced Assets Fund, Blue Chip Growth Fund, Mid-Cap
Growth Fund, Small Company Growth Fund and Growth and Income Fund had a
0.9%, 2.7%, 1.1%, 13.1%, and 4.0% undivided interest, respectively, which
represented $890,000, $2,624,000, $1,037,000, $12,775,000, and $3,892,000,
respectively, in principal amount in a joint repurchase agreement with
PaineWebber Group, Inc. As of such date, the repurchase agreement in the
joint account and the collateral therefor were as follows:
27
<PAGE>
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 1998 (unaudited) -- (continued)
PaineWebber Group, Inc. Repurchase Agreement 5.75% dated 3/31/98, in the
principal amount of $97,641,000 repurchase price $97,656,595 due 4/01/98
collateralized by $50,000,000 U.S. Treasury Note 6.375% due 1/15/99, and
$47,885,000 U.S. Treasury Note 6.25% due 6/30/98; approximate aggregate
value $99,682,537.
SECURITIES TRANSACTIONS, INVESTMENT INCOME, EXPENSES, DIVIDENDS AND
DISTRIBUTIONS TO SHAREHOLDERS: As customary in the mutual fund industry,
securities 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 recorded on the accrual basis; dividend income is
recorded on the ex-dividend date. Funds investing in foreign securities may
be subject to taxes imposed by countries in which they invest. Such taxes
are generally based on either income or gains earned or repatriated. The
Equity Funds, except for the Growth and Income Fund, do not amortize
premiums or accrete discounts except for original issue discounts and on
interest only securities for which amortization is required for federal
income tax purposes.
Net investment income, other than class specific expenses and realized and
unrealized gains and losses, is allocated daily to each class of shares
based upon the relative net asset value of outstanding shares (or the value
of the dividend-eligible shares, as appropriate) 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 Equity Funds based upon their relative net asset value
or other appropriate methods.
The Funds issue and redeem their shares, invest in securities and
distribute dividends from net investment income and net realized gains
which are paid in cash or are reinvested at the discretion of shareholders.
These activities are reported in the Statement of Changes in Net Assets.
Dividends from net investment income, if any, are paid semiannually, except
for Balanced Assets Fund and Growth and Income Fund, which pay quarterly.
Capital gain distributions, if any, are paid at least annually.
The Funds record dividends and distributions to their shareholders on the
ex-dividend date. The amount of dividends and distributions from net
investment income and net realized capital gains are determined and
presented in accordance with federal income tax regulations, which may
differ from 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 based on their federal tax-basis
treatment; temporary differences do not require reclassification. Net
investment income/loss, net realized gain/loss, and net assets were not
affected.
28
<PAGE>
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 1998 (unaudited) -- (continued)
For the year ended September 30, 1997, the following reclassifications
arising from book/tax differences were primarily the result of
reclassifications due to net operating losses.
<TABLE>
<CAPTION>
ACCUMULATED ACCUMULATED
UNDISTRIBUTED UNDISTRIBUTED PAID
NET REALIZED NET INVESTMENT IN
GAIN/LOSS INCOME/LOSS CAPITAL
------------- -------------- -------
<S> <C> <C> <C>
Balanced Assets Fund.................... $ (5,898) $ 5,898 $ --
Blue Chip Growth Fund................... (327,453) 327,453 --
Mid-Cap Growth Fund..................... (586,288) 557,790 28,498
Small Company Growth Fund............... (3,941,943) 3,935,151 6,792
Growth and Income Fund.................. (39,291) 30,296 8,995
</TABLE>
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 at the mean of the quoted bid
and asked prices of such currencies against the U.S. dollar.
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 fiscal year-end. Similarly, the
Funds do not isolate the effect of changes in foreign exchange rates from
the changes in the market prices of portfolio securities sold during the
year.
Realized foreign exchange gains and losses on other assets and liabilities
and change in unrealized foreign exchange gains and losses on other assets
and liabilities 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 Fund's 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.
ORGANIZATIONAL EXPENSES: Costs incurred by SAAMCo in connection with the
organization of Growth and Income Fund amounted to $1,383. These costs are
being amortized on a straight line basis by the Fund over a period not to
exceed 60 months from the date the Fund commenced operations.
Note 3. Investment Advisory and Management Agreement, Distribution Agreement
and Service Agreement
The Trust, on behalf of each Fund, has an Investment Advisory and
Management Agreement (the "Agreement") with SAAMCo. Under the Agreement,
SAAMCo provides continuous supervision of a Fund's portfolio and
administers its corporate affairs, subject to general review by the
Trustees. In connection therewith, SAAMCo 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 SAAMCo and its affiliates. The investment advisory and
management fee to SAAMCo with respect to each Fund is computed daily and
payable monthly, at an annual rate of .75% of a Fund's average daily net
assets up to $350 million, .70% of the next $350 million, and .65%
thereafter. For the six months ended March 31, 1998, SAAMCo earned fees in
the amounts stated on the Statement of Operations.
29
<PAGE>
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 1998 (unaudited) -- (continued)
For the six months ended March 31, 1998, SAAMCo has agreed to voluntarily
reimburse expenses as follows:
<TABLE>
<S> <C>
Balanced Assets Class Z......................................... $6,830
Small Company Growth Class C.................................... $2,533
Small Company Growth Class Z.................................... $5,956
Growth and Income Class C....................................... $2,550
</TABLE>
The Trust, on behalf of each Fund, has a Distribution Agreement with
SunAmerica Capital Services, Inc. ("SACS"), an indirect wholly-owned
subsidiary of SunAmerica Inc. Each Fund has adopted a Distribution Plan
(the "Plan") in accordance with the provisions of Rule 12b-1 under the 1940
Act. Rule 12b-1 permits an investment company directly or indirectly to pay
expenses associated with the distribution of its shares ("distribution
expenses") in accordance with a plan adopted by the investment company's
board of trustees and approved by its shareholders. Pursuant to such rule,
the Trustees and the shareholders of each class of shares of each Fund have
adopted Distribution Plans hereinafter referred to as the "Class A Plan",
"Class B Plan" and "Class C Plan". In adopting the Distribution Plans, the
Trustees determined that there was a reasonable likelihood that each such
Plan would benefit the Trust 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 payments from a Fund at an annual rate of up to 0.10%, 0.75% and
0.75%, respectively, of average daily net assets of such Fund's Class 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 reimbursed out of such
distribution fees 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 Distribution Plans provide that
each class of shares of each Fund may also pay the Distributor an account
maintenance and service fee up to an annual rate of 0.25% of the aggregate
average daily net assets of such class of shares for payments to broker-
dealers for providing continuing account maintenance. Accordingly, for the
six months ended March 31, 1998, SACS received 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 reallowed 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 B and Class C shares. SACS has advised the Funds that for the
six months ended March 31, 1998 the proceeds received from sales (and paid
out to affiliated and non-affiliated broker-dealers) and redemptions are as
follows:
30
<PAGE>
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 1998 (unaudited) -- (continued)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
-------------------------------------- ------------- -------------
CONTINGENT CONTINGENT
SALES AFFILIATED NON-AFFILIATED DEFERRED DEFERRED
CHARGES BROKER-DEALERS BROKER-DEALERS SALES CHARGES SALES CHARGES
-------- -------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Balanced Assets Fund.... $416,105 $309,228 $49,113 $97,712 $--
Blue Chip Growth Fund... 52,963 17,371 28,327 20,273 --
Mid-Cap Growth Fund..... 24,919 15,768 5,807 15,943 --
Small Company Growth
Fund................... 292,279 147,453 107,064 146,638 --
Growth and Income Fund.. 385,614 168,047 164,126 76,413 --
</TABLE>
The Trust has entered into a Service Agreement with SunAmerica Fund
Services, Inc. ("SAFS"), an indirect wholly-owned subsidiary of SunAmerica
Inc. 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. The Service
Agreement, which permits the Funds to compensate SAFS for services rendered
based upon an annual rate of 0.22% of average daily net assets, is approved
annually by the Trustees. For the six months ended March 31, 1998, the
Funds incurred the following expenses which are included in transfer agent
fees in the Statement of Operations to compensate SAFS pursuant to the
terms of the Service Agreement.
<TABLE>
<CAPTION>
PAYABLE AT
EXPENSE MARCH 31, 1998
------------------------- -----------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
-------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Balanced Assets Fund.... $192,296 $192,615 $-- $34,725 $33,825 $--
Blue Chip Growth Fund... 76,212 41,384 -- 14,213 7,472 --
Mid-Cap Growth Fund..... 47,980 13,572 -- 8,417 2,925 --
Small Company Growth
Fund................... 174,980 114,193 37 28,832 18,661 20
Growth and Income Fund.. 59,024 71,325 52 11,506 14,403 34
</TABLE>
Note 4. Purchases and Sales of Investment Securities
The aggregate cost of purchases and proceeds from sales and maturities of
investments (excluding U.S. Government securities and short-term
investments) during the six months ended March 31, 1998 were as follows:
<TABLE>
<CAPTION>
BALANCED BLUE CHIP MID-CAP SMALL COMPANY GROWTH AND
ASSETS GROWTH GROWTH GROWTH INCOME
FUND FUND FUND FUND FUND
------------ ----------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Aggregate purchases..... $118,014,025 $46,955,735 $ 96,237,640 $451,592,109 $105,333,978
============ =========== ============ ============ ============
Aggregate sales......... $123,016,849 $48,924,983 $103,457,041 $489,291,046 $ 88,326,470
============ =========== ============ ============ ============
</TABLE>
Note 5. Portfolio Securities
Each Fund intends to comply with the requirements of the Internal Revenue
Code 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 provision is required.
31
<PAGE>
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 1998 (unaudited) -- (continued)
The amounts of aggregate unrealized gain (loss) and the cost of investment
securities for book purposes, including short-term securities, were as
follows:
<TABLE>
<CAPTION>
BALANCED BLUE CHIP MID-CAP SMALL COMPANY GROWTH AND
ASSETS GROWTH GROWTH GROWTH INCOME
FUND FUND FUND FUND FUND
------------ ----------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Cost.................... $291,218,379 $88,538,497 $47,895,306 $213,887,221 $116,027,555
============ =========== =========== ============ ============
Appreciation............ $ 78,145,995 $31,280,499 $10,132,369 $ 56,372,072 $ 26,761,660
Depreciation............ (1,488,120) (867,520) (315,276) (2,943,930) (628,473)
------------ ----------- ----------- ------------ ------------
Net unrealized
appreciation........... $ 76,657,875 $30,412,979 $ 9,817,093 $ 53,428,142 $ 26,133,187
============ =========== =========== ============ ============
</TABLE>
Note 6. Capital Share Transactions
Transactions in capital shares of each class of each series were as
follows:
<TABLE>
<CAPTION>
BALANCED ASSETS FUND
-------------------------------------------------------------------------------------------------------
CLASS A CLASS B
-------------------------------------------------- ---------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
MARCH 31,1998 YEAR ENDED MARCH 31,1998 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 1997 (UNAUDITED) SEPTEMBER 30, 1997
---------------------- -------------------------- ------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- ------------ ------------ ------------- ----------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold..... 902,687 $ 16,184,892 2,014,610 $ 33,670,422 733,989 $ 13,268,084 1,601,187 $ 26,977,385
Reinvested
dividends...... 973,832 16,524,145 1,098,904 17,076,435 957,476 16,214,056 1,191,203 18,422,134
Shares redeemed. (952,279) (17,222,566) (2,712,729) (45,625,149) (1,310,500) (23,516,545) (3,596,433) (60,154,848)
-------- ------------ ----------- ------------- ----------- ------------ ---------- ------------
Net increase
(decrease)..... 924,240 $ 15,486,471 400,785 $ 5,121,708 380,965 $ 5,965,595 (804,043) $(14,755,329)
======== ============ =========== ============= =========== ============ ========== ============
<CAPTION>
BALANCED ASSETS FUND
--------------------------------------------------
CLASS Z
--------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE PERIOD
MARCH 31, 1998 OCTOBER 7, 1996* THROUGH
(UNAUDITED) SEPTEMBER 30, 1997
---------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold..... 20,607 $ 379,157 3,052 $ 51,485
Reinvested
dividends...... 2,209 37,435 102 1,635
Shares redeemed. (14,358) (245,822) (283) (4,718)
-------- ------------ ----------- -------------
Net increase.... 8,458 $ 170,770 2,871 $ 48,402
======== ============ =========== =============
</TABLE>
* Inception of the class
32
<PAGE>
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 1998 (unaudited) -- (continued)
<TABLE>
<CAPTION>
BLUE CHIP GROWTH FUND
--------------------------------------------------------------------------------------------------------
CLASS A CLASS B
---------------------------------------------------- --------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
MARCH 31, 1998 YEAR ENDED MARCH 31, 1998 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 1997 (UNAUDITED) SEPTEMBER 30, 1997
------------------------- ------------------------- ------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- ------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold..... 333,752 $ 6,324,492 623,963 $ 10,925,394 348,347 $ 6,498,913 1,259,797 $ 21,456,617
Reinvested
dividends...... 464,861 8,130,414 455,714 6,972,433 270,094 4,553,792 319,329 4,764,382
Shares redeemed. (294,400) (5,658,660) (676,748) (11,828,552) (427,841) (7,902,457) (1,756,723) (29,208,753)
---------- ------------- ---------- ------------- ---------- ------------ ---------- ------------
Net increase
(decrease)..... 504,213 $ 8,796,246 402,929 $ 6,069,275 190,600 $ 3,150,248 (177,597) $ (2,987,754)
========== ============= ========== ============= ========== ============ ========== ============
<CAPTION>
MID-CAP GROWTH FUND
--------------------------------------------------------------------------------------------------------
CLASS A CLASS B
---------------------------------------------------- --------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
MARCH 31, 1998 YEAR ENDED MARCH 31, 1998 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 1997 (UNAUDITED) SEPTEMBER 30, 1997
------------------------- ------------------------- ------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- ------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold..... 1,027,015 $ 17,922,224 1,195,858 $ 22,039,862 47,421 $ 822,330 361,032 $ 6,440,002
Reinvested
dividends...... 463,048 7,413,406 105,242 1,820,690 141,001 2,172,821 35,395 598,248
Shares redeemed. (1,094,775) (19,454,990) (1,428,977) (26,234,993) (162,408) (2,847,110) (501,401) (8,706,849)
---------- ------------- ---------- ------------- ---------- ------------ ---------- ------------
Net increase
(decrease)..... 395,288 $ 5,880,640 (127,877) $ (2,374,441) 26,014 $ 148,041 (104,974) $ (1,668,599)
========== ============= ========== ============= ========== ============ ========== ============
<CAPTION>
SMALL COMPANY GROWTH FUND
--------------------------------------------------------------------------------------------------------
CLASS A CLASS B
---------------------------------------------------- --------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
MARCH 31, 1998 YEAR ENDED MARCH 31, 1998 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 1997 (UNAUDITED) SEPTEMBER 30, 1997
------------------------- ------------------------- ------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- ------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold..... 3,663,268 $ 86,585,564 4,356,568 $ 104,158,132 1,121,528 $ 25,775,390 2,294,947 $ 52,824,439
Reinvested
dividends...... 666,965 14,559,851 231,823 5,468,761 458,050 9,656,702 165,485 3,806,222
Shares redeemed. (4,282,950) (101,781,782) (4,573,784) (108,631,540) (1,733,761) (40,211,891) (2,474,107) (56,073,072)
---------- ------------- ---------- ------------- ---------- ------------ ---------- ------------
Net increase
(decrease)..... 47,283 $ (636,367) 14,607 $ 995,353 (154,183) $ (4,779,799) (13,675) $ 557,589
========== ============= ========== ============= ========== ============ ========== ============
<CAPTION>
SMALL COMPANY GROWTH FUND
------------------------------------------------------------------------------
CLASS C CLASS Z
------------------------- ---------------------------------------------------
FOR THE PERIOD
FEBRUARY 2, 1998* FOR THE FOR THE PERIOD
THROUGH SIX MONTHS ENDED OCTOBER 7, 1996*
MARCH 31, 1998 MARCH 31, 1998 THROUGH
(UNAUDITED) (UNAUDITED) SEPTEMBER 30, 1997
------------------------- ------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold..... 4,836 $ 102,143 20,016 $ 497,101 3,052 $ 51,485
Reinvested
dividends...... -- -- 4,828 106,220 102 1,635
Shares redeemed. -- -- (12,339) (280,395) (283) (4,718)
---------- ------------- ---------- ------------- ---------- ------------
Net increase.... 4,836 $ 102,143 12,505 $ 322,926 2,871 $ 48,402
========== ============= ========== ============= ========== ============
</TABLE>
* Inception of the class
33
<PAGE>
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 1998 (unaudited) -- (continued)
<TABLE>
<CAPTION>
GROWTH AND INCOME FUND
-----------------------------------------------------------------------------------------------
CLASS A CLASS B
----------------------------------------------- ----------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
MARCH 31, 1998 YEAR ENDED MARCH 31, 1998 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 1997 (UNAUDITED) SEPTEMBER 30, 1997
---------------------- ----------------------- ---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- ------------ --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold............. 1,050,638 $13,896,463 2,346,608 $ 27,325,734 1,692,707 $21,938,542 3,556,104 $41,322,565
Reinvested dividends.... 403,557 5,004,107 118,133 1,248,669 459,332 5,645,188 86,070 908,039
Shares redeemed......... (476,850) (6,331,074) (969,421) (11,704,696) (614,908) (7,927,448) (815,041) (9,270,338)
--------- ----------- --------- ------------ --------- ----------- --------- -----------
Net increase............ 977,345 $12,569,496 1,495,320 $ 16,869,707 1,537,131 $19,656,282 2,827,133 $32,960,266
========= =========== ========= ============ ========= =========== ========= ===========
<CAPTION>
GROWTH AND
INCOME FUND
----------------------
CLASS C
----------------------
FOR THE PERIOD
FEBRUARY 2, 1998*
THROUGH
MARCH 31, 1998
(UNAUDITED)
----------------------
SHARES AMOUNT
--------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold............. 16,571 $ 219,119
Reinvested dividends.... -- --
Shares redeemed......... -- --
--------- -----------
Net increase............ 16,571 $ 219,119
========= ===========
</TABLE>
* Inception of the class
Note 7. Commitments and Contingencies
The SunAmerica family of mutual funds may borrow up to $75,000,000 under an
uncommitted line of credit with State Street Bank and Trust Company, the
Funds' custodian, with interest payable at the Federal Funds rate plus 100
basis points. Borrowings under the line of credit will commence when the
respective Fund's cash shortfall exceeds $100,000.
Note 8. Trustees Retirement Plan
The Trustees (and Directors) of the SunAmerica Family of Mutual Funds have
adopted the SunAmerica Disinterested Trustees' and Directors' Retirement
Plan (the "Retirement Plan") effective January 1, 1993 for the unaffiliated
Trustees. The Retirement Plan provides generally that if an unaffiliated
Trustee who has at least 10 years of consecutive service as a Disinterested
Trustee of any of the SunAmerica mutual funds (an "Eligible Trustee")
retires after reaching age 60 but before age 70 or dies while a Trustee,
such person will be eligible to receive a retirement or death benefit from
each SunAmerica mutual fund with respect to which he or she is an Eligible
Trustee. As of each birthday, prior to the 70th birthday, but in no event
for a period greater than 10 years, 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 SunAmerica mutual
fund for the calendar year in which such birthday
34
<PAGE>
SUNAMERICA EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- March 31, 1998 (unaudited) -- (continued)
occurs. In addition, an amount equal to 8.5% of any amounts credited under
the preceding clause during prior years, is added to each Eligible
Trustee's account until such Eligible Trustee reaches his or her 70th
birthday. 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
fifteen annual installments. As of March 31, 1998, Balanced Assets Fund,
Blue Chip Growth Fund, Mid-Cap Growth Fund, Small Company Growth Fund and
Growth and Income Fund had accrued $34,509, $10,446, $5,923, $23,575 and
$3,789, respectively, for the Retirement Plan, which is included in accrued
expenses on the Statement of Assets and Liabilities, and for the six months
ended March 31, 1998 expensed $6,596, $1,908, $1,112, $5,277 and $1,645,
respectively, for the Retirement Plan, which is included in Trustees' fees
and expenses on the Statement of Operations.
Note 9. Subsequent Event
On April 1, 1998, Growth and Income Fund offered Class Z shares exclusively
for sale to employees participating in the SunAmerica profit sharing and
retirement plan.
35
<PAGE>
TRUSTEES INVESTMENT ADVISER
S. James Coppersmith SunAmerica Asset Management Corp.
Samuel M. Eisenstat The SunAmerica Center
Stephen J. Gutman 733 Third Avenue
Peter A. Harbeck New York, NY 10017-3204
Peter McMillan III
Sebastiano Sterpa DISTRIBUTOR
SunAmerica Capital Services, Inc.
OFFICERS The SunAmerica Center
Peter A. Harbeck, President 733 Third Avenue
Francis D. Gannon, Vice President New York, NY 10017-3204
Nancy Kelly, Vice President
P. Christopher Leary, Vice President SHAREHOLDER SERVICING AGENT
Robert M. Zakem, Secretary SunAmerica Fund Services, Inc.
Peter C. Sutton, Treasurer The SunAmerica Center
John T. Genoy, Assistant Treasurer 733 Third Avenue
Donna M. Handel, Assistant Treasurer New York, NY 10017-3204
Cheryl L. Hawthorne, Assistant Treasurer
Abbe P. Stein, Assistant Secretary
CUSTODIAN AND TRANSFER AGENT
State Street Bank & Trust Company
P.O. Box 419572
Kansas City, MO 64141-6572
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BULK RATE
SUNAMERICA EQUITY FUNDS U.S. POSTAGE
THE SUNAMERICA CENTER PAID
733 THIRD AVENUE Kansas City, MO
NEW YORK, NY 10017-3204 PERMIT NO. 3657
1-800-858-8850
This report is submitted solely for
the general information of
shareholders of the Fund.
Distribution of this report to
persons other than shareholders of
the Fund is authorized only in
connection with a currently effective
prospectus, setting forth details of
the Fund, which must precede or
accompany this report.
The accompanying report has not been
examined by independent accountants
and accordingly no opinion has been
expressed thereon.
SPONSORED BY:
LOGO
SunAmerica
Asset Management
