Class A: IEAAX Class C: IEACX Class W: IEAWX SunAmerica Income Explorer Fund Explore Your Future
Three Strategies. One Primary Goal High Current Income. Global Dividend Equities HIGH CURRENT INCOME Closed-End Funds Preferred Securities Open Up New Income Horizons with the SunAmerica Income Explorer Fund As you explore new adventures in life, it s important to find an investment solution that can help you realize these exciting experiences. With today s low yields on traditional fixed-income investments, it can be challenging to generate the income necessary to help you achieve your goals. The SunAmerica Income Explorer Fund combines three distinct investment strategies global dividend stocks, closed-end funds and preferred securities into a single fund that seeks high current income with a secondary objective of capital appreciation. By allocating assets across income-producing strategies that are less correlated with traditional bond markets, 1 the Fund offers the potential to provide attractive current income in changing interest rate environments. Please note that allocations across the three strategies are actively managed and subject to change at any time.
Global Dividend Equity Strategy Managed by Tim Pettee, SunAmerica Asset Management, LLC Global Dividend Stocks Can Help Deliver Income Plus Growth Opportunities Dividend-producing stocks from the U.S. and abroad can provide current income along with the potential for capital appreciation. Over the last 10 years, dividends accounted for 44% of the returns of the MSCI All Country World Index (ACWI), which represents the global equity market. 2 The Fund s Global Dividend Equity Strategy offers: The potential for income and capital appreciation. A disciplined, rules-based stock selection process that can help eliminate biases and emotions from key investment decisions. Opportunity for attractive dividend income in changing market conditions and interest rate environments. Global Dividend Stocks Provided Higher Yields than the S&P 500 Current yield as of December 31, 2014 Global Stocks 2.5% U.S. Stocks High-Yield Global Stocks 4.0 % 2.0% Note: This chart does not reflect the performance of the SunAmerica Income Explorer Fund, the Fund s Global Dividend Equity Strategy or any other specific investment. Past performance is not a guarantee of future results. Please see back cover for more information about the risks of investing in global dividend-paying stocks. Source: MSCI and Standard & Poor s, 2015. Yield is the annualized amount of income divided by price. It is calculated as of December 31, 2014. Indices are unmanaged and not available for direct investment, and do not include any management fees, transaction costs or expenses. U.S. Stocks are represented by the S&P 500 Index. Global Stocks are represented by the MSCI ACWI Index. High-Yield Global Stocks are represented by the MSCI ACWI High Dividend Yield Index. Please see back cover for index definitions. 1 Based on 10-year correlation of the Barclays U.S. Aggregate Bond Index versus global stocks (0.10), closed-end funds (0.29) and preferred securities (0.28) as of December 31, 2014. Global stocks are represented by the MSCI ACWI Index. Closed-end funds are represented by the Morningstar All Taxable Fixed Income Index. Preferred securities are represented by the BofA Merrill Lynch Fixed Rate Preferred Securities Index. Correlation is a statistical measure of how two securities move in relation to each other. Correlation will vary from -1.0 (perfect negative correlation) to 1.0 (perfect positive correlation). See index definitions on the back cover. 2 Source: MSCI, 2015. Based on the MSCI ACWI gross versus price return from December 31, 2004 through December 31, 2014.
Closed-End Fund Strategy Managed by Doug Bond, Cohen & Steers Closed-End Funds Offer the Potential for High Yields Closed-end funds offer current yields of 8.0%, significantly higher than those of U.S. Treasuries (2.2%) and other fixed-income investment categories. 3 Closed-end funds are different than traditional open-end mutual funds in that they issue a fixed number of shares and generally trade on the open market. Many also use leverage or borrowed money to help boost income. While leverage can enhance yield over time, it may result in increased volatility in net asset values and income. The Fund s Closed-End Fund Strategy offers: The potential for high current income. Broad exposure to a range of income-producing strategies, with a focus on fixed-income closed-end funds. A potential yield advantage in today s low rate environment. 20% 18% Closed-End Funds Have Generated Consistently Higher Yields Than U.S. Treasuries Over the Past 10 Years Daily Yield from December 2004 - December 2014 16% 14% 12% Morningstar All Taxable Fixed Income Index 10-Year U.S. Treasury Morningstar All Taxable Fixed Income Average Yield 10% 8% 6% 4% Closed-end funds delivered a 5.8% yield advantage as of December 31, 2014 2% 0% Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Note: This chart does not reflect the performance of the SunAmerica Income Explorer Fund, the Fund s Closed-End Fund Strategy or any other specific investment. Past performance is not a guarantee of future results. Please see back cover for more information about the risks of investing in closed-end funds and Treasuries. Source: Morningstar, Bloomberg and Cohen & Steers, 2015. Yield is the annualized amount of income divided by price. Indices are unmanaged and not available for direct investment, and do not include any management fees, transaction costs or expenses. Closed-End Funds are represented by the Morningstar All Taxable Fixed Income Index which tracks the performance of 172 taxable fixed-income closed-end funds. U.S. Treasuries are represented by the 10-Year U.S. Treasury Bond. Please note that distributions from closed-end funds may include amounts characterized for federal income tax purposes as ordinary dividends (including qualified dividends), capital gain distributions and non-dividend distributions, also known as return of capital distributions. Please see the back cover for more information. 3 Source: Cohen & Steers, 2015. Based on current yields of closed-end funds (8.0%) versus corporate bonds (3.2%), municipal bonds (3.3%) and U.S. Treasuries (2.2%) as of December 31, 2014. Asset classes are represented by the following indices: closed-end funds (Morningstar All Taxable Fixed Income Index), corporate bonds (BofA Merrill Lynch Corporate Master Index), municipal bonds (BofA Merrill Lynch Municipal Master Index), and Treasuries (10-Year U.S. Treasury Bond). Please see back cover for index definitions.
Preferred Securities Strategy Managed by William Scapell, Cohen & Steers Preferred Securities Can Provide a Balance of Income and Capital Appreciation Preferred securities have characteristics of both stocks and bonds. Like bonds, they can provide a regular income stream. They also offer some of the ownership rights and capital appreciation potential of stocks. Preferred securities have historically generated higher yields than many traditional fixed-income investments, including corporate bonds, municipals and Treasuries. 4 They have also exhibited low correlation to these investments, which makes them potentially valuable diversifiers to a bond portfolio. 5 The Fund s Preferred Securities Strategy offers: High yield potential from a non-traditional source of income. Opportunity for capital appreciation through a broad range of preferred securities. Exposure to over-the-counter (OTC) preferred securities that have provided stronger performance with less interest rate risk than exchange-traded preferred securities. OTC preferred securities may not be readily accessible to non-institutional investors and may involve additional risks. 6 8.0% 6.0% Preferred Securities Have Produced a Yield Advantage Over Many Fixed Income Investments 7.1% 5.6% Yield as of December 31, 2014 10-Year Average Yield Current Yield 4.7% 4.0% 3.2% 4.0% 3.3% 3.3% 2.0% 2.2% 0% Preferred Securities Corporate Bonds Municipal Bonds 10-Year Treasury Note: This chart does not reflect the performance of the SunAmerica Income Explorer Fund, the Fund s Preferred Securities Strategy or any other specific investment. Past performance is not a guarantee of future results. Please see back cover for more information about the risks of investing in these asset classes. Source: Cohen & Steers, BofA Merrill Lynch, 2015. Yields shown are on a yield-to-maturity basis. 10-Year Average Yield is based on the average of the annual income rate using month-end information from 12/31/2004-12/31/2014. Indices are unmanaged and not available for direct investment, and do not include any management fees, transaction costs or expenses. Preferred Securities are represented by the BofA Merrill Lynch Fixed Rate Preferred Securities Index. Corporate Bonds are represented by the BofA Merrill Lynch Corporate Master Index. Municipal Bonds are represented by the BofA Merrill Lynch Municipal Master Index. Please see back cover for index definitions. 4 Source: Cohen & Steers, 2015. See the above chart for details. 5 Source: Cohen & Steers, 2015. Based on 10-year correlation of preferred securities versus corporate bonds (0.49), municipal bonds (0.31) and Treasuries (0.05) as of December 31, 2014. Correlation is a statistical measure of how two securities move in relation to each other. Correlation will vary from -1.0 (perfect negative correlation) to 1.0 (perfect positive correlation). Indices used are the same as those of the above chart. 6 Source: Cohen & Steers, 2015. Performance is based on an annualized return of 5.6% for OTC preferred securities (BofA Merrill Lynch U.S. Capital Securities Index) and 2.7% for exchange-traded preferred securities (BofA Merrill Lynch Fixed Rate Preferred Securities Index) from December 31, 2004 through December 31, 2014. Interest rate risk is based on average duration of 6.7 years for exchange-traded preferred securities and 5.5 years for OTC preferred securities as of December 31, 2014. Duration is a measure of interest rate risk, generally expressed in years. The longer the duration, the more sensitive an investment is to changes in interest rates. An investment in the OTC market may involve less liquidity and additional risk of default, since there is no exchange providing supervision and transparency of transactions. See back cover for index definitions and details on the risks of investing in preferred securities.
Explore New Ways to Generate Potentially More Income with the SunAmerica Income Explorer Fund Class A: IEAAX Class C: IEACX Class W: IEAWX Contact your financial advisor or visit www.safunds.com for more information. Important Notes Investments have different objectives and are subject to different tax treatments. Treasury securities are guaranteed by the U.S. government as to the timely payment of principal and interest, and if held to maturity, offer a fixed rate of return and fixed principal value. Income from the U.S. government is exempt from state and local income tax, but subject to federal income tax. Interest is taxed as ordinary income. Bonds are sensitive to interest rate changes and credit and default risk. Their value may fluctuate depending on changes and trends in the market. Municipal bonds are bonds issued by states, cities and other municipalities. They offer interest income that is exempt from federal income tax. State and local taxes, as well as the Alternative Minimum Tax, may still apply. Corporate bonds are bonds issued by corporations. Income from corporate bonds may be taxed as ordinary income or capital gains. The investment return and principal value of a mutual fund will fluctuate so that an investor s shares, when redeemed, may be higher or lower than the original cost. Stock investments involve risk, including the possible loss of principal. Dividend-paying stocks offer income and the potential for capital appreciation. Dividend income may vary depending on market performance, and may be taxed as either ordinary income or capital gains. Non-dividend-paying stocks offer only the potential for capital appreciation. When stocks are sold, investors may pay tax at either the ordinary income tax rate or the long-term capital gains tax rate. Notes on the Risks of Investing in the SunAmerica Income Explorer Fund Preferred securities are subject to bond market volatility risk, credit risk and interest rate fluctuation risk. In addition, preferred securities are subordinated to other securities in the issuer s capital structure and are subject to the risk that the issuer will fail to make dividends or other distributions because other claims on the issuer s assets take priority. Preferred securities may be less liquid than many other types of securities and may be subject to the risk of being redeemed prior to their scheduled date. The Fund may invest in high-yield securities and senior loan securities, which are considered speculative. High-yield securities carry a high risk of default or may already be in default. The market price of such securities may fluctuate more than higher-quality securities and may decline significantly. The Fund s investments in closed-end funds generally reflect the risks of the underlying securities they hold. The Fund will indirectly bear its proportionate share of the management and other expenses that are charged by the closed-end funds, in addition to the expenses paid by the Fund. Shares of closed-end funds are subject to other risks related to their structure, including the possibility that shares may trade at a discount from their net asset value and the use of leverage in their capital structure. The presence of leverage in the closed-end fund structure introduces both increased volatility of net asset value, and the potential for greater variability in the dividends paid by the closed-end funds. A portion of the distributions received by the Fund from preferred securities issued by real estate investment trusts and from closed-end funds may consist of return of capital return and/or capital gains, and the character of these distributions cannot be determined until after the end of the year. The Global Dividend Stocks sleeve employs a disciplined strategy and will not deviate from this strategy (except to the extent necessary to comply with federal tax laws or other applicable laws). If the Global Dividend Stocks sleeve is committed to a strategy that is unsuccessful, the Fund will not meet its investment goal. Because the Global Dividend Stocks sleeve generally will not use certain hedging techniques available to the Preferred Securities and Closed-End Fund sleeves to reduce stock market exposure, this portion of the Fund may be more susceptible to general market declines than the other sleeves. International investing involves special risks, such as currency fluctuations, economic and political instability, greater market volatility and limited liquidity. These risks can be greater in the case of emerging country securities. Securities of small- and medium-sized companies are usually more volatile and entail greater risks than securities of large companies Index Definitions Barclays U.S. Aggregate Bond Index is comprised of government securities, mortgage-backed securities, asset-backed securities and corporate securities to simulate the universe of bonds in the market. The maturity of the bonds in the index is over one year. BofA Merrill Lynch Fixed Rate Preferred Securities Index tracks the performance of fixed-rate U.S. dollar-denominated preferred securities issued in the U.S. domestic market. BofA Merrill Lynch Corporate Master Index tracks the performance of U.S. dollar-denominated investment-grade corporate debt publicly issued in the U.S. domestic market. BofA Merrill Lynch Municipal Master Index tracks the performance of U.S. dollar-denominated investment-grade tax-exempt debt publicly issued by U.S. states and territories, and their political subdivisions, in the U.S. domestic market. BofA Merrill Lynch U.S. Capital Securities Index is a subset of the BofA Merrill Lynch U.S. Corporate Index including all fixed-to-floating rate, perpetual callable and capital preferred securities. MSCI ACWI Index is a global equity index that captures large and mid cap representation across 23 developed markets and 23 emerging markets countries. The index covers approximately 85% of the global investable equity opportunity set. MSCI ACWI High Dividend Yield Index is based on the MSCI ACWI, its parent index. The index is designed to reflect the performance of equities in the parent index (excluding REITs) with higher than average dividend yields. Morningstar All Taxable Fixed Income Index measures the market cap weighted total return of 172 taxable fixed income closed-end funds; it excludes national and singlestate municipal closed-end funds. S&P 500 Index is an unmanaged, broad-based, market-cap weighted index of 500 U.S. stocks. It is generally considered representative of the U.S. stock market. Cohen and Steers is an independent and unaffiliated investment sub-adviser to SunAmerica. 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 are distributed by AIG Capital Services, Inc., member FINRA. Harborside Financial Center, 3200 Plaza 5, Jersey City, NJ 07311-4992, 800-858-8850 S5320CBR.3 (3/15) www.safunds.com