<PAGE>
SUNAMERICA EQUITY FUNDS
SUPPLEMENT TO THE PROSPECTUS DATED APRIL 1, 1998
Effective December 1, 1998, Class C shares of the Small Company Growth Fund
and the Growth and Income Fund will convert to Class II shares and will become
subject to a 1% initial sales load in addition to a contingent deferred sales
charge of 1% on certain redemptions of Class II shares made within eighteen
months of the date of purchase. The imposition of the 1% front-end sales
charge and the lengthening of the time in which the contingent deferred sales
charge may be imposed are the only differences between the institution of the
new Class II shares and former Class C shares. All other fees and charges
remain the same. This change will have no impact on shareholders who purchased
Class C shares prior to December 1, 1998. All other provisions relating to
Class C shares will apply. PLEASE NOTE THAT ALL REFERENCES MADE TO "CLASS C
SHARES" IN THE PROSPECTUS NOT OTHERWISE INDICATED IN THIS SUPPLEMENT SHOULD BE
REPLACED WITH "CLASS II SHARES."
The second paragraph on page 1 of the Prospectus is replaced in its entirety
with the following:
Each Fund currently offers Class A and Class B shares. The Small Company
Growth Fund and the Growth and Income Fund also offer Class II shares. The
offering price is the next-determined net asset value per share, plus for
each class a sales charge which, at the investor's option, may (i) be
imposed at the time of purchase (Class A shares), (ii) be deferred (Class B
shares and purchases of Class A shares in excess of $1 million), or (iii)
contain elements of a sales charge that is both imposed at the time of
purchase and deferred (Class II shares). Class B shares may be subject to a
declining contingent deferred sales charge ("CDSC") that may be imposed on
redemptions made within six years of purchase. Class B shares of each Fund
will convert automatically to Class A shares on the first business day of
the month following the seventh anniversary of the issuance of such Class B
shares. Class II shares may be subject to a CDSC imposed on redemptions
made within eighteen months of purchase. Each class makes distribution and
account maintenance and service fee payments under a distribution plan
adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940, as
amended (the "1940 Act"). See "Purchase of Shares."
<PAGE>
The section entitled "SUMMARY OF FUND EXPENSES" on page 2 of the Prospectus
is replaced in its entirety with the following:
SUMMARY OF FUND EXPENSES
A general comparison of the sales arrangements and other non-recurring
expenses applicable to Class A, Class B and Class II shares follows:
<TABLE>
<CAPTION>
BALANCED BLUE CHIP MID-CAP SMALL COMPANY GROWTH AND
ASSETS FUND GROWTH FUND GROWTH FUND GROWTH FUND INCOME FUND
----------- ----------- ----------- ----------------- -----------------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B A B A B A B II A B II
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Initial Sales
Load(/1/)............. 5.75% None 5.75% None 5.75% None 5.75% None 1.00% 5.75% None 1.00%
Maximum Sales Load on
Reinvested Dividends.. None None None None None None None None None None None None
Maximum Deferred Sales
Load(/2/)............. None 4.00% None 4.00% None 4.00% None 4.00% 1.00% None 4.00% 1.00%
Redemption Fees(/3/)... None None None None None None None None None None None None
Exchange Fees.......... None None None None None None None None None None None None
Annual Fund Operating Expenses (net
of fee waivers/expense reimburse-
ments)(/4/)
(as a percentage of average net assets)
Management Fees........ 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75%
12b-1 Fees(/5/)........ 0.35% 1.00% 0.35% 1.00% 0.35% 1.00% 0.35% 1.00% 1.00% 0.35% 1.00% 1.00%
Other Expenses......... 0.40% 0.36% 0.44% 0.47% 0.54% 0.60% 0.62% 0.59% 0.59% 0.40% 0.40% 0.40%
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total Operating
Expenses(/6/).......... 1.50% 2.11% 1.54% 2.22% 1.64% 2.35% 1.72% 2.34% 2.34% 1.50% 2.15% 2.15%
===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
- -------
(1) The front-end sales charge on Class A shares decreases with the size of
the purchase to 0% for purchases of $1,000,000 or more. See "Purchase of
Shares."
(2) Purchases of Class A shares in excess of $1,000,000 will be subject to a
CDSC on redemptions made within one year of purchase. The CDSC on Class B
shares applies only if a redemption occurs within six years from their
purchase date. The CDSC on Class II shares applies only on redemptions made
within eighteen months of purchase.
(3) A $15.00 fee may be imposed for wire redemptions.
(4) The information provided is based on data for the fiscal year ended
September 30, 1997, with the exception of Growth and Income Fund Class A and
Class B, which represents estimated expenses for the current fiscal year.
The Growth and Income Fund's expenses for the year ended September 30, 1997
were 1.38% for Class A and 2.05% for Class B, net of expense waivers and
reimbursements.
(5) 0.25% of the 12b-1 fee comprises an Account Maintenance and Service Fee. A
portion of the Account Maintenance and Service Fee is allocated to member
firms of the National Association of Securities Dealers, Inc. for continuous
personal service by such members to investors in the Funds, such as
responding to shareholder inquiries, quoting net asset values, providing
current marketing material and attending to other shareholder matters. Class
B or Class II shareholders who own their shares for an extended period of
time may pay more in Rule 12b-1 distribution fees than the economic
equivalent of the maximum front-end sales charge permitted under the Conduct
Rules of Fair Practice of the National Association of Securities Dealers,
Inc.
(6) For the fiscal year ended September 30, 1997, the total operating expenses
(on a gross basis) for Growth and Income Fund Class A and Class B were:
1.60% and 2.26%, respectively. For the current fiscal year, the total
operating expenses (on a gross basis) for Small Company Growth Fund and
Growth and Income Fund Class II (formerly, Class C shares) are estimated to
be: 3.34% and 3.15%, respectively.
S-2
<PAGE>
The "EXAMPLE" set forth on page 3 of the Prospectus is replaced in its
entirety with the following:
EXAMPLE:
You would pay the following expenses on a $1,000 investment over various
time periods assuming (1) a 5% annual rate of return and (2) redemption at the
end of each time period. The 5% return and the expenses used in this example
should not be considered indicative of actual or expected performance or
expenses both of which will vary:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
BALANCED ASSETS FUND
(Class A shares).............................. $72 $102 $135 $226
(Class B shares)*............................. $61 $ 96 $133 $221
BLUE CHIP GROWTH FUND
(Class A shares).............................. $72 $103 $137 $230
(Class B shares)*............................. $63 $ 99 $139 $230
MID-CAP GROWTH FUND
(Class A shares).............................. $73 $106 $142 $241
(Class B shares)*............................. $64 $103 $146 $242
SMALL COMPANY GROWTH FUND
(Class A shares).............................. $74 $109 $145 $249
(Class B shares)*............................. $64 $103 $145 $244
(Class II shares)............................. $44 $ 82 $134 $275
GROWTH AND INCOME FUND
(Class A shares).............................. $72 $102 $135 $226
(Class B shares)*............................. $62 $ 97 $135 $224
(Class II shares)............................. $42 $ 77 $124 $256
</TABLE>
You would pay the following expenses on the same investment, assuming no
redemption:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
BALANCED ASSETS FUND
(Class A shares).............................. $72 $102 $135 $226
(Class B shares)*............................. $21 $ 66 $113 $221
BLUE CHIP GROWTH FUND
(Class A shares).............................. $72 $103 $137 $230
(Class B shares)*............................. $23 $ 69 $119 $230
MID-CAP GROWTH FUND
(Class A shares).............................. $73 $106 $142 $241
(Class B shares)*............................. $24 $ 73 $126 $242
SMALL COMPANY GROWTH FUND
(Class A shares).............................. $74 $109 $145 $249
(Class B shares)*............................. $24 $ 73 $125 $244
(Class II shares)............................. $34 $ 82 $134 $275
GROWTH AND INCOME FUND
(Class A shares).............................. $72 $102 $135 $226
(Class B shares)*............................. $22 $ 67 $115 $224
(Class II shares)............................. $32 $77 $124 $256
</TABLE>
The foregoing examples should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown.
- --------
* Class B shares convert to Class A shares on the first business day of the
month following the seventh anniversary of the purchase of such Class B
shares. Therefore, with respect to the 10-year expense information, years 8,
9 and 10 reflect the expenses attributable to ownership of Class A shares.
S-3
<PAGE>
The first paragraph in the section entitled "PURCHASE OF SHARES--General" on
page 16 of the Prospectus is replaced in its entirety with the following:
Shares of each of the Funds are sold at the respective net asset value
next calculated after receipt of a purchase order, plus a sales charge,
which, at the election of the investor, either may (i) be imposed at the
time of purchase (Class A shares), (ii) be imposed on a deferred basis
(Class B shares and certain Class A shares), or (iii) contain certain
elements of a sales charge that is imposed at the time of purchase and that
is deferred (Class II shares).
The third paragraph in the second column on page 18 of the Prospectus is
replaced in its entirety with the following:
CLASS II SHARES. Class II shares are offered at net asset value plus an
initial sales charge as follows:
<TABLE>
<CAPTION>
CONCESSION OF
SALES CHARGE DEALERS
---------------------------------------- -------------
% OF
% OF NET AMOUNT % OF
OFFERING PRICE INVESTED OFFERING PRICE
-------------- ---------- --------------
<S> <C> <C>
1.00% 1.01% 1.00%
</TABLE>
Certain redemptions of Class II shares made within eighteen months of the
date of purchase (within one year of purchase for Class C shares purchased
prior to December 1, 1998) are subject to a CDSC of 1%. The method for
calculating any such CDSC will be the same method used for calculating the
CDSC for Class B shares. See "Class B Shares" above.
The last paragraph under the subheading "Other Redemption Information" on
page 21 of the Prospectus is replaced in its entirety with the following:
If a shareholder redeems shares of any class of a Fund and then within
one year from the date of redemption decides the shares should not have
been redeemed, the shareholder may use all or any part of the redemption
proceeds to reinstate, free of sales charges (Class A and Class II shares)
and with the crediting of any CDSC paid with respect to such reinstated
shares at the time of redemption (Class B and Class II shares), all or any
part of the redemption proceeds in shares of the Fund at the then-current
net asset value. Reinstatement may affect the tax status of the prior
redemption.
Dated: December 1, 1998
S-4
