Class A: SASAX Class C: SASCX Class W: SASWX SunAmerica Small-Cap Fund Combining the Power of Active and Index Investing
SunAmerica Small-Cap Fund 3 Key Reasons to Invest in the Fund 1 2 3 A Complementary Blend of Active and Index Investing The Fund seeks long-term growth of capital by strategically allocating its assets between a small-cap index strategy and a micro-cap growth strategy. The index strategy provides broad exposure to small-cap stocks, which may increase portfolio diversification and potentially reduce market risk. 1 The micro-cap strategy is actively managed to seek emerging companies that have high growth potential and whose stocks are believed to be reasonably valued by the market. Growth Opportunities from Small-Cap Investing Small-cap stocks have historically generated strong returns in times of economic recovery or slowdown. For example, from 1979 through 2012, the U.S. economy experienced 17 years of slow growth. In 11 of those years, small-cap stocks outperformed larger companies by an annualized excess return of 8.18%. 2 Past performance is not a guarantee of future results. Enhanced Return Potential of Micro-Cap Stocks Micro-caps are among the smallest stocks in the equity universe with market capitalizations of approximately $30 million to $750 million. 3 According to a recent study, micro-cap stocks as represented by the Russell Microcap Index have outperformed the S&P 500 by more than 4.5% per year from 2000-2012. 4 Note: Indices are unmanaged and are not available for direct investment. 1 Diversification does not guarantee a profit, nor does it insure against market loss. 2 Source: Russell Investments, The Russell 2000 Index: Small cap opportunities in a slow-growth economic environment, June 2013. Slow growth is defined as annual Gross Domestic Product growth below 3%. The excess return of small-caps over large-cap stocks ranged from 1.17% to 17.36% during these years of slow growth. 3 Based on the market capitalization range of companies in the Russell Microcap Index, as of May 31, 2013. 4 Source: Opportunities for Alpha: Exploring Microcap Equity, RBC Global Asset Management, March 2013.
1 Combine Active and Index Strategies to Help Provide Long-Term Growth of Capital By investing in the SunAmerica Small-Cap Fund, you can benefit from the active management of micro-cap growth stocks, while also gaining exposure to a broadly diversified portfolio of small-cap stocks. A Two-Tiered Approach to Small-Cap Investing Start with a disciplined index methodology: The Fund s index strategy tracks the performance of the Russell 2000, a leading index of small-cap stocks. It uses a systematic, quantitative process to help reduce tracking error and to mitigate the emotions and subjectivity of investing. Add an active micro-cap strategy that offers the potential to outperform: The Fund s micro-cap strategy is actively managed to seek emerging companies with strong growth potential. Skilled micro-cap managers with stock-picking expertise can take advantage of informational inefficiencies and limited research coverage in the micro-cap market to find these potential winners. Gain Exposure to Stock Sectors That Led the Market in 2013 Russell Microcap Index Annualized Returns as of 12/31/13 Russell 2000 Index Annualized Returns as of 12/31/13 46% 21% 7% 1 year 5 year 10 year 39% 20% 9% 1 year 5 year 10 year Note: This chart does not reflect the performance of the SunAmerica Small-Cap Fund or any other specific investment. Past performance is not a guarantee of future results. Source: Russell Investments, 2014. Indices are unmanaged and are not available for direct investment. Please see back cover for index definitions and the risks of investing in small- and micro-cap stocks.
2 Benefit from the Growth Opportunities of Small-Cap Investing Small-cap stocks offer the potential for strong capital appreciation and have a history of outperforming the overall equity market, as well as other asset classes such as bonds and T-Bills, over the long term. The following hypothetical example compares the growth of $1 in small-cap stocks with other investments. Despite wars, recessions and financial crises over the last century, small-cap stocks grew to $24,564, more than 5 times higher than the S&P 500! Keep in mind that small-cap stocks are generally more volatile than the broader equity market. $100,000 Small-Cap Stocks Have Significantly Outperformed the Broader Equity Market, Bonds and T-Bills over the Long Term Hypothetical Growth of $1 for Small-Cap Stocks and Various Asset Classes (1925 2013) $10,000 Dot-Com Bubble 2008-2009 $24,564 Gulf War 9/11 $4,642 $1,000 1970 s Corporate Scandals $10 Vietnam War $120 $100 Korean War Watergate $24 Great Depression WWII $1 Small-Cap Stocks Stocks Bonds T-Bills $0 12/25 12/33 12/41 12/49 12/57 12/65 12/73 12/81 12/89 12/97 12/05 12/13 Note: This chart does not reflect the performance of the SunAmerica Small-Cap Fund or any other specific investment. Past performance is not a guarantee of future results. Source: Wilshire Compass, 2014. Small-cap stocks are represented by the Small-Cap Stock Index. Stocks are represented by the S&P 500 Index. Bonds are represented by the U.S. Core Bond Index. T-Bills are represented by 91-day T-Bills. The Small-Cap Stock Index, the U.S. Core Bond Index and the S&P 500 Index are a proxy of the small-cap equity, bond and equity markets. The indices have been constructed by Wilshire with data from various sources to provide a historical track record back to 12/31/1925. Stocks are often subject to significant price fluctuations and, therefore, you may have a gain or loss in principal when shares are sold. Stocks of small-cap companies are generally more volatile and not as readily marketable as those of larger companies. Small-cap companies may have less resources and a greater risk of business failure than do large companies. Government bonds and Treasury bills are subject to interest rate risk, but they are backed by the full faith and credit of the U.S. government if held to maturity. The repayment of principal and interest of a corporate bond is guaranteed by the issuing company, and subject to default and credit risks. Income from stocks and bonds may be taxed as either ordinary income or capital gains. Income from U.S. Treasuries is exempt from state and local income tax, but subject to federal income tax. Performance for any specific investment is available from your financial advisor. Indexes are unmanaged and not available for direct investment. The appropriateness of particular types of investments depends on your time horizon, risk tolerance and individual circumstances.
3 Add the Enhanced Return Potential of Micro-Cap Stocks Micro-cap stocks may provide additional opportunities for growth. Here are three reasons why some of the smallest names in the U.S. equity universe may help increase a portfolio s returns. Micro-cap stocks tend to exhibit greater volatility than small-cap stocks in general. Hidden Potential: Micro-caps generally receive less research coverage and media attention than larger, better-known companies. In this type of market, skilled stock-pickers have greater opportunities to find undiscovered, emerging companies with above-average growth potential. More Flexibility: Micro-caps tend to have small management teams, allowing them to make quicker, more efficient decisions than larger companies. As a result, they may be better positioned to take advantage of changing market conditions and growth opportunities. Growth Momentum: Micro-cap stocks have a history of strong performance during boom or recovery periods. From June 2000 through December 2013, micro-cap stocks as represented by the Russell Microcap Index generated cumulative returns of over 180%, leading the market after the last two recessions and significantly outpacing the returns of the S&P 500 Index. Past performance is not a guarantee of future results. Micro-Caps Have Led the Market after the Last Two s Hypothetical Growth of $100,000 (June 2000 December 2013) $300,000 $250,000 $200,000 Period of $280,339 cumulative return with Micro-Cap Stocks $150,000 Period of $164,722 cumulative return with Stocks $100,000 $50,000 6/00 6/02 6/04 6/06 6/08 6/10 6/12 12/13 Micro-Cap Stocks Stocks Note: This chart does not reflect the performance of the SunAmerica Small-Cap Fund or any other specific investment. Past performance is not a guarantee of future results. Micro-cap stocks are represented by the Russell Microcap Index. Stocks are represented by the S&P 500 Index. Indices are unmanaged and not available for direct investment. Please see back cover for index definitions and the risks of investing in small- and micro-cap stocks. Micro-cap companies may have less resources and a greater risk of business failure than larger companies. Stocks of micro-cap companies are generally not as readily marketable and tend to exhibit greater volatility than those of larger companies including small caps.
SunAmerica Small-Cap Fund Class A: SASAX Class C: SASCX Class W: SASWX Contact your financial advisor for more information. Notes on the Risks of Investing in the Fund Investments in stocks are subject to risk, including the possible loss of principal. Stocks of small-cap and micro-cap companies are subject to additional risks. Companies with smaller market capitalizations tend to be at early stages of development with limited product lines, market access for products, financial resources, access to new capital, or depth in management. It may be difficult to obtain reliable information and financial data about these companies. Consequently, the securities of smaller companies may not be as readily marketable and may be subject to more abrupt or erratic market movements. In attempting to track the performance of the Russell 2000 Index, the Fund may be more susceptible to adverse developments concerning a particular security, company or industry because the Fund s index component generally will not use any defensive strategies to mitigate its risk exposure. Please see the prospectus for additional risks. Index Definitions Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. It is a subset of the Russell 3000 Index, representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership. Russell Microcap Index measures the performance of the micro-cap segment of the U.S. equity market. Micro-cap stocks make up less than 3% of the U.S. equity market (by market cap) and consist of the smallest 1,000 securities in the small-cap Russell 2000 Index, plus the next smallest eligible securities by market cap. S&P 500 Index is a broad-based, market-cap weighted index of 500 U.S. stocks. It is generally considered representative of the U.S. stock market. Investors should carefully consider a Fund s investment objectives, risks, charges and expenses before investing. The prospectus, containing this and other important information, can be obtained from your financial advisor, the SunAmerica Sales Desk at 800-858-8850, ext. 6003, or at www.safunds.com. Read the prospectus carefully before investing. Funds distributed by SunAmerica Capital Services, Inc. Harborside Financial Center, 3200 Plaza 5, Jersey City, NJ 07311 800-858-8850, ext. 6003 S5373BR1 (3/14) www.safunds.com