STYLE SELECT SERIES INC, 497, 1997-07-18

STYLE SELECT SERIES INC
497, 1997-07-18

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<PAGE>
Pursuant to Rule 497(e)
Registration No. 333-11283

Style Select Series(Servicemark)

CONTENTS
- ---------------------------------------------

1 Prospectus

2 Summary of Expenses

4 Financial Highlights

5 Style Select Investing

5 Investment Objectives and Policies

6 Aggressive Growth Portfolio

6 Mid-Cap Growth Portfolio

7 Value Portfolio

8 International Equity Portfolio

8 Advisers' Historical Performance Data

10 Advisers for Aggressive Growth Portfolio

13 Advisers for Mid-Cap Growth Portfolio

16 Advisers for Value Portfolio

19 Advisers for International Equity Portfolio

22 Investment Techniques and Risk Factors

29 Management of the Fund

35 Purchase of Shares

38 Redemption of Shares

39 Exchange Privilege

40 Portfolio Transactions, Brokerage and Turnover

40 Determination of Net Asset Value

41 Performance Data

41 Dividends, Distributions and Taxes

43 General Information

<PAGE>
PROSPECTUS o MAY 30, 1997
AS REVISED JULY 18, 1997
----------------------------------------------------------------------

Style Select Series

733 Third Avenue, New York, NY 10017-3204
General Marketing and Shareholder Information
(800) 858-8850

- --------------------------------------------------------------------------------

Style Select Series, Inc. (the 'Fund') is an open-end management investment
company. The Fund currently offers four separate investment portfolios (each, a
'Portfolio'). The Fund is managed by SunAmerica Asset Management Corp.
('SunAmerica'). The assets of each Portfolio are normally allocated among at
least three investment advisers (each, an 'Adviser'), each of which will be
independently responsible for advising its respective portion of the Portfolio's
assets. The Advisers may include SunAmerica, and otherwise will consist of
professional investment advisers selected by SunAmerica subject to the review
and approval of the Fund's Board of Directors. In choosing Advisers, SunAmerica
will seek to obtain, within each Portfolio's overall objective, a distinct
investment style.

An investor may invest in one or more of the following Portfolios:

AGGRESSIVE GROWTH PORTFOLIO seeks long-term growth of capital by investing
generally in equity securities of small and medium-sized companies. The Advisers
for Aggressive Growth Portfolio are JANUS CAPITAL CORPORATION, SUNAMERICA and
WARBURG, PINCUS COUNSELLORS, INC.

MID-CAP GROWTH PORTFOLIO seeks long-term growth of capital by investing
generally in equity securities of medium-sized companies. The Advisers for
Mid-Cap Growth Portfolio are MILLER ANDERSON & SHERRERD, LLP, PILGRIM BAXTER &
ASSOCIATES, LTD. and T. ROWE PRICE ASSOCIATES, INC.

VALUE PORTFOLIO seeks long-term growth of capital by investing in equity
securities using a 'value' style of investing. The Advisers for Value Portfolio
are DAVIS SELECTED ADVISERS, L.P., NEUBERGER&BERMAN, LLC and STRONG CAPITAL
MANAGEMENT, INC.

INTERNATIONAL EQUITY PORTFOLIO seeks long-term growth of capital by investing in
equity securities of issuers in countries other than the United States. The
Advisers for International Equity Portfolio are ROWE PRICE-FLEMING
INTERNATIONAL, INC., STRONG CAPITAL MANAGEMENT, INC. and WARBURG, PINCUS
COUNSELLORS, INC.

As a result of the market risk inherent in any investment, there is no assurance
that the investment objective of any of the Portfolios will be achieved.

Each Portfolio currently offers Class A, Class B and Class C 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 be (i) imposed at the
time of purchase (Class A shares) or (ii) deferred (purchases of Class B and
Class C shares, and purchases of Class A shares in excess of $1 million). Class
B shares may be subject to a declining contingent deferred sales charge ('CDSC')
imposed on redemptions made within six years of purchase. Class B shares of each
Portfolio will convert automatically to Class A shares on the first business day
of the month following the seventh anniversary of purchase. Class C shares may
be subject to a CDSC imposed on redemptions made within one year 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.'

Shares of the Portfolios are not obligations of or guaranteed by the United
States Government, are not deposits or obligations of, or guaranteed or endorsed
by, any bank, and are not insured by the Federal Deposit Insurance Corporation,
the Federal Reserve Board, or any other governmental agency.

This Prospectus explains concisely what you should know before investing in any
of the Portfolios. Please read it carefully before investing and retain it for
future reference. You can find more detailed information about the Fund in the
Statement of Additional Information dated May 30, 1997, which is incorporated by
reference into this Prospectus. The Statement of Additional Information may be
obtained without charge by contacting the Fund at the address or telephone
number listed above.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<PAGE>
2
Style Select Series(Servicemark)

Summary of Expenses
- --------------------------------------------------------------------------------

A general comparison of the sales arrangements and other expenses applicable to
Class A, Class B and Class C shares follows:

<TABLE>
<CAPTION>
AGGRESSIVE MID-CAP
GROWTH PORTFOLIO GROWTH PORTFOLIO VALUE PORTFOLIO
Class Class Class Class Class Class Class Class Class
A B C A B C A B C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Initial Sales Load(1) 5.75% None None 5.75% None None 5.75% None None
Maximum Sales Load on Reinvested Dividends None None None None None None None None None
Maximum Deferred Sales Load(2) None 4.00% 1.00% None 4.00% 1.00% None 4.00% 1.00%
Redemption Fees(3) None None None None None None None None None
Exchange Fees None None None None None None None None None
ANNUAL PORTFOLIO OPERATING EXPENSES (NET OF FEE
WAIVERS/EXPENSE REIMBURSEMENTS)(4) (AS A PERCENTAGE
OF AVERAGE NET ASSETS)
Management Fees 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
12b-1 Fees(5) 0.35% 1.00% 1.00% 0.35% 1.00% 1.00% 0.35% 1.00% 1.00%
Other Expenses .43% .43% .43% .43% .43% .43% .43% .43% .43%
TOTAL OPERATING EXPENSES 1.78% 2.43% 2.43% 1.78% 2.43% 2.43% 1.78% 2.43% 2.43%
----- ----- ----- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- ----- ----- -----

<CAPTION>
INTERNATIONAL
EQUITY PORTFOLIO
Class Class Class
A B C
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Initial Sales Load(1) 5.75% None None
Maximum Sales Load on Reinvested Dividends None None None
Maximum Deferred Sales Load(2) None 4.00% 1.00%
Redemption Fees(3) None None None
Exchange Fees None None None
ANNUAL PORTFOLIO OPERATING EXPENSES (NET OF FEE
WAIVERS/EXPENSE
REIMBURSEMENTS)(4) (AS A PERCENTAGE OF AVERAGE NET
ASSETS)
Management Fees 1.10% 1.10% 1.10%
12b-1 Fees(5) 0.35% 1.00% 1.00%
Other Expenses .58% .58% .58%
TOTAL OPERATING EXPENSES 2.03% 2.68% 2.68%
----- ----- -----
----- ----- -----
</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 C shares applies only on redemptions made
within one year of purchase.
(3) A $15.00 fee may be imposed for wire redemptions.
(4) The information provided represents estimated amounts for the current fiscal
year.
(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 paid for continuous
personal service to investors in the Portfolios, such as responding to
shareholder inquiries, quoting net asset values, providing current marketing
material and attending to other shareholder matters. Class B or Class C
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 Rules of Fair Practice of
the National Association of Securities Dealers, Inc.

<PAGE>
3
Style Select Series(Servicemark)

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:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
---------------------------
<S> <C> <C>
AGGRESSIVE GROWTH PORTFOLIO
(Class A shares) $ 75 $ 110
(Class B shares)* $ 65 $ 106
(Class C shares) $ 35 $ 76
MID-CAP GROWTH PORTFOLIO
(Class A shares) $ 75 $ 110
(Class B shares)* $ 65 $ 106
(Class C shares) $ 35 $ 76
VALUE PORTFOLIO
(Class A shares) $ 75 $ 110
(Class B shares)* $ 65 $ 106
(Class C shares) $ 35 $ 76
INTERNATIONAL EQUITY PORTFOLIO
(Class A shares) $ 77 $ 118
(Class B shares)* $ 67 $ 113
(Class C shares) $ 37 $ 83
</TABLE>

You would pay the following expenses on the same investment, assuming no
redemption:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
---------------------------
<S> <C> <C>
AGGRESSIVE GROWTH PORTFOLIO
(Class A shares) $ 75 $ 110
(Class B shares)* $ 25 $ 76
(Class C shares) $ 25 $ 76
MID-CAP GROWTH PORTFOLIO
(Class A shares) $ 75 $ 110
(Class B shares)* $ 25 $ 76
(Class C shares) $ 25 $ 76
VALUE PORTFOLIO
(Class A shares) $ 75 $ 110
(Class B shares)* $ 25 $ 76
(Class C shares) $ 25 $ 76
INTERNATIONAL EQUITY PORTFOLIO
(Class A shares) $ 77 $ 118
(Class B shares)* $ 27 $ 83
(Class C shares) $ 27 $ 83
</TABLE>

- --------------------------------------------------------------------------------

* 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.

The foregoing examples, including the 5% return and the expenses used, are
intended to assist investors in understanding the costs and expenses that a
shareholder in the Fund will bear directly or indirectly, and should not be
considered a representation of past or future performance or expenses. For more
complete descriptions of the various costs and expenses, see 'Purchase of
Shares.' Actual expenses may be greater or less than those shown.

<PAGE>
4
Style Select Series(Servicemark)

Financial Highlights
- --------------------------------------------------------------------------------

The following unaudited Financial Highlights are for the period November 19,
1996 (commencement of operations) through April 30, 1997 with respect to Class A
and Class B shares, and for the period March 6, 1997 (commencement of
operations) through April 30, 1997, with respect to Class C shares. These
Financial Highlights should be read in conjunction with the unaudited financial
statements and notes thereto, which are included in the Statement of Additional
Information and are incorporated by reference herein.

<TABLE>
<CAPTION>
NET
GAIN(LOSS) DIVIDENDS
ON INVEST- TOTAL FROM DISTRI- NET
NET ASSET NET MENTS(BOTH FROM NET BUTIONS 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)
- ------------------ ---------- ---------- ----------- ---------- --------- ------- ------- ------ --------- ----------
AGGRESSIVE GROWTH PORTFOLIO
- ---------------------------
CLASS A
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/19/96-4/30/97.. $12.50 $(0.02) $ 0.03 $ 0.01 $-- $-- $-- $12.51 0.08% $ 31,278

<CAPTION>
CLASS B
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/19/96-4/30/97.. 12.50 (0.06) 0.04 (0.02) -- -- -- 12.48 (0.16) 18,723

<CAPTION>
CLASS C
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/06/97-4/30/97... 13.38 (0.01) (0.88) (0.89) -- -- -- 12.49 (6.65) 1,161
- ------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
MID-CAP GROWTH PORTFOLIO
- ------------------------
CLASS A
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/19/96-4/30/97.. $12.50 $(0.06) $ (1.42) $(1.48) $-- $-- $-- $11.02 (11.84)% $ 21,055

<CAPTION>
CLASS B
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/19/96-4/30/97.. 12.50 (0.10) (1.41) (1.51) -- -- -- 10.99 (12.08) 15,551

<CAPTION>
CLASS C
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/06/97-4/30/97... 11.93 (0.03) (0.91) (0.94) -- -- -- 10.99 (7.88) 855
- ------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
VALUE PORTFOLIO
- ---------------
CLASS A
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/19/96-4/30/97.. $12.50 $ 0.01 $ 1.03 $ 1.04 $-- $-- $-- $13.54 8.32% $ 35,691

<CAPTION>
CLASS B
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/19/96-4/30/97.. 12.50 (0.04) 1.04 1.00 -- -- -- 13.50 8.00 25,641

<CAPTION>
CLASS C
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/06/97-4/30/97... 13.56 (0.02) (0.04) (0.06) -- -- -- 13.50 (0.44) 1,875
- ------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
INTERNATIONAL EQUITY PORTFOLIO
- ------------------------------
CLASS A
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/19/96-4/30/97.. $12.50 $ 0.02 $ (0.04) $(0.02) $-- $-- $-- $12.48 (0.16)% $ 22,995

<CAPTION>
CLASS B
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/19/96-4/30/97.. 12.50 0.02 (0.08) (0.06) -- -- -- 12.44 (0.48) 14,123

<CAPTION>
CLASS C
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/06/97-4/30/97... 12.60 0.03 (0.18) (0.15) -- -- -- 12.45 (1.19) 1,095
- ------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
EXPENSES INCOME AVERAGE
TO AVERAGE TO AVERAGE COMMISSION
PERIOD NET NET PORTFOLIO PER
ENDED ASSETS(3)(4) ASSETS(3)(4) TURNOVER SHARE(5)
- ------------------ ------------ ------------ -------- ----------
<S> <C> <C> <C> <C>
AGGRESSIVE GROWTH
- ------------------
CLASS A
-------
<S> <C> <C> <C> <C>
11/19/96-4/30/97.. 1.90% (0.27)% 95% $ 0.0544

<CAPTION>
CLASS B
-------
<S> <C> <C> <C> <C>
11/19/96-4/30/97.. 2.55 (0.91) 95 0.0544

<CAPTION>
CLASS C
-------
<S> <C> <C> <C> <C>
3/06/97-4/30/97... 2.55 (0.64) 95 0.0544
- ---------------------------------------------------------------------------------

<CAPTION>
MID-CAP GROWTH PORTFOLIO
- ------------------------
CLASS A
-------
<S> <C> <C> <C> <C>
11/19/96-4/30/97.. 1.90% (1.04)% 38% $ 0.0472

<CAPTION>
CLASS B
-------
<S> <C> <C> <C> <C>
11/19/96-4/30/97.. 2.55 (1.76) 38 0.0472

<CAPTION>
CLASS C
-------
<S> <C> <C> <C> <C>
3/06/97-4/30/97... 2.55 (1.80) 38 0.0472
- ---------------------------------------------------------------------------------

<CAPTION>
VALUE PORTFOLIO
- ---------------
CLASS A
-------
<S> <C> <C> <C> <C>
11/19/96-4/30/97.. 1.90% 0.16% 16% $ 0.0600

<CAPTION>
CLASS B
-------
<S> <C> <C> <C> <C>
11/19/96-4/30/97.. 2.55 (0.62) 16 0.0600

<CAPTION>
CLASS C
-------
<S> <C> <C> <C> <C>
3/06/97-4/30/97... 2.55 (0.83) 16 0.0600
- ---------------------------------------------------------------------------------

<CAPTION>
INTERNATIONAL EQUITY PORTFOLIO
- ------------------------------
CLASS A
-------
<S> <C> <C> <C> <C>
11/19/96-4/30/97.. 2.15% 0.32% 14% $ 0.0175

<CAPTION>
CLASS B
-------
<S> <C> <C> <C> <C>
11/19/96-4/30/97.. 2.80 0.31 14 0.0175

<CAPTION>
CLASS C
-------
<S> <C> <C> <C> <C>
3/06/97-4/30/97... 2.80 1.39 14 0.0175
</TABLE>

- ------------------------
(1) Calculated based upon average shares outstanding

(2) Total return is not annualized and does not reflect sales load

(3) Annualized

(4) Net of the following expense reimbursements (based on average net assets):

<TABLE>
<S> <C>
Aggressive Growth Portfolio, Class A.... .22%
Aggressive Growth Portfolio, Class B.... .35%
Aggressive Growth Portfolio, Class C.... 2.14%
Mid-Cap Growth Portfolio, Class A....... .28%
Mid-Cap Growth Portfolio, Class B....... .44%
Mid-Cap Growth Portfolio, Class C....... 3.16%
Value Portfolio, Class A................ .26%
Value Portfolio, Class B................ .36%
Value Portfolio, Class C................ 1.67%
International Equity Portfolio, Class A. .35%
International Equity Portfolio, Class B. .53%
International Equity Portfolio, Class C. 3.22%
</TABLE>

(5) The average commission per share is derived by taking the agency commissions
paid on equity securities trades and dividing by the number of shares
purchased and sold.

<PAGE>
5
Style Select Series(Servicemark)

Style Select Investing
- --------------------------------------------------------------------------------

Each Portfolio of the Fund is intended to provide investors with access to
several different professional investment advisers, each seeking the same
investment objective and utilizing a similar investment style with respect to a
separate portion of the Portfolio's assets. Normally, the investment decisions
for each Portfolio will be made by at least three Advisers, which may include
SunAmerica. SunAmerica will select Advisers that it believes will provide each
Portfolio with the highest quality investment services, while obtaining, within
each Portfolio's overall investment objective, a distinct investment style.

SunAmerica will allocate investments in each Portfolio (and of redemption
requests) equally among the Advisers of each Portfolio. The Fund expects that
differences in investment returns among the portions of a Portfolio managed by
different Advisers will cause the actual percentage of a Portfolio's assets
managed by each Adviser to vary over time. In general, a Portfolio's assets once
allocated to one Adviser will not be reallocated (or 'rebalanced') to another
Adviser for the Portfolio. However, SunAmerica reserves the right, subject to
the review of the Board, to reallocate assets from one Adviser to another when
deemed in the best interests of a Portfolio and its shareholders. Such
rebalancing may be effected by allocating cash flows differently among the
Advisers.

From time to time, SunAmerica, with the approval of the Board, may add a new
Adviser for a Portfolio, replace an Adviser or reduce the number of Advisers for
a Portfolio. See 'Management of the Fund.'

Investment Objectives and Policies
- --------------------------------------------------------------------------------

The investment objective of each Portfolio is long-term growth of capital, and
each Portfolio seeks to achieve its investment objective primarily through
investment in equity securities. There can be no assurance that any Portfolio's
investment objective will be met or that the net return on an investment in a
Portfolio will exceed that which could have been obtained through other
investment or savings vehicles. The section 'Investment Techniques and Risk
Factors' contains a discussion of certain types of other securities in which
each Portfolio may make a significant investment and certain investment
techniques that each Adviser for the Portfolios may use. In addition, that
section contains a discussion of certain of the principal risks attendant to an
investment in the Portfolios. Although each Adviser for a Portfolio is permitted
to invest in the various types of securities and use the investment techniques
indicated in that section, no Adviser is required to invest in any particular
type of permitted security or to use any particular investment technique.
Rather, each Adviser is given full discretion to manage its portion of the
assets of a Portfolio according to its own investment discretion.

Except as specifically indicated, each Portfolio's respective investment
objective and the investment policies and strategies described herein are not
fundamental policies of the Portfolio and may be changed by the Board without
the approval of shareholders. Certain investment restrictions may not be changed
without a majority vote of the outstanding voting securities of that Portfolio.
Each Portfolio's fundamental investment restrictions are described in the
Statement of Additional Information. For purposes of any investment policies or
restrictions discussed below, the percentage limitations of each Portfolio will
be applied by each Adviser to the portion of the Portfolio's assets managed by
that Adviser and will be determined at the time of an investment. SunAmerica,
however, is ultimately responsible for overseeing compliance by the Advisers,
and will in such capacity verify that in the aggregate the investments of each
Portfolio complies with applicable percentage limitations.

Each Portfolio is 'non-diversified' (as such term is defined under the 1940
Act), subject, however, to certain tax diversification requirements. See
'Dividends, Distributions and Taxes.'

<PAGE>
6
Style Select Series(Servicemark)

Aggressive Growth Portfolio
- --------------------------------------------------------------------------------

The Aggressive Growth Portfolio, advised by Janus Capital Corporation ('Janus'),
SunAmerica and Warburg, Pincus Counsellors, Inc. ('Warburg'), will invest, under
normal circumstances, in securities of companies believed by the Adviser to have
significant growth potential or to have above-average earnings growth or value.
Such companies will generally be companies that typically have a market
capitalization of less than $1 billion ('Small Cap Companies') or medium-sized
companies that typically have a market capitalization between $1 billion and $5
billion ('Mid-Cap Companies'). However, the Advisers may also purchase
securities of larger companies that typically have a market capitalization in
excess of $5 billion ('Large Cap Companies').

Small Cap Companies generally will be companies that, although not 'start-up'
companies, have been in business for a shorter period of time than Mid-Cap
Companies. Small Cap Companies frequently will be in businesses or industries
involving new, recently developed products, services, or technologies. While
some Small Cap Companies may be listed for trading on a securities exchange, it
is expected that a significant portion of such companies will be traded
over-the-counter.

Mid-Cap Companies generally will be companies that have a substantial record of
operations (i.e., in business for at least five years) and are listed for
trading on the New York Stock Exchange ('NYSE') or another national or
international stock exchange. Such companies, however, may be less seasoned than
Large Cap Companies. In general, the securities of Mid-Cap Companies may be more
volatile than those of Large Cap Companies.

There is no requirement that any minimum percentage of assets of the Portfolio
be maintained in securities of either Small Cap Companies or Mid-Cap Companies.
In general, to the extent that more of the Portfolio's assets are invested in
Small-Cap Companies, the Portfolio's net asset value will be subject to more
volatility than if such assets were invested in larger companies. See
'Investment in Small Cap Companies' in 'Investment Techniques and Risk Factors.'

Under normal conditions, at least 65% of the Portfolio's total assets will be
invested in equity securities (including common and preferred stocks and other
securities having equity features, such as convertible securities, warrants and
rights). In addition, the Portfolio may invest up to 35% of its total assets in
debt securities that the Adviser expects have the potential for capital
appreciation. The Portfolio may invest in such debt securities rated below
investment grade, that is, below 'BBB' by Standard & Poor's Corporation, a
Division of the McGraw-Hill Companies ('S&P'), or below 'Baa' by Moody's
Investors Service, Inc. ('Moody's'), or if unrated, determined by the Adviser to
be of equivalent quality. See 'Fixed Income Securities' in 'Investment
Techniques and Risk Factors' below for a discussion of the risks associated with
investing in such securities.

Mid-Cap Growth Portfolio
- --------------------------------------------------------------------------------

The Mid-Cap Growth Portfolio, advised by Miller Anderson & Sherrerd, LLP
('MAS'), Pilgrim Baxter & Associates, Ltd. ('Pilgrim Baxter') and T. Rowe Price
Associates, Inc. ('T. Rowe Price'), will invest, under normal circumstances, at
least 65% of the Portfolio's total assets in the securities of Mid-Cap
Companies, as defined in 'Aggressive Growth Portfolio,' above. Such companies
are considered by the Adviser to have a historical record of above-average
growth rate; to have the ability to sustain earnings growth; to offer proven
products or services; or to operate in industries experiencing increasing
demand. The Adviser may select certain of such securities because it considers
them to be undervalued in the market. Under normal circumstances, at least 65%
of the Portfolio's total assets will be invested in the securities of Mid-Cap
Companies.

Under normal market conditions, at least 65% of the Portfolio's total assets
will be invested in equity securities (including common and preferred stocks and
other securities having equity features, such as convertible securities,
warrants and rights). In addition, the Portfolio may invest up to 35% of its

<PAGE>
7
Style Select Series(Servicemark)

total assets in equity securities of issuers other than Mid-Cap Companies and in
debt securities that the Adviser expects have the potential for capital
appreciation. The Portfolio may invest in such debt securities rated as low as
'BBB' by S&P, or 'Baa' by Moody's or if unrated, determined by the Adviser to be
of equivalent quality. See 'Fixed Income Securities' in 'Investment Techniques
and Risk Factors' below for a discussion of the risks associated with investing
in such securities.

Value Portfolio
- --------------------------------------------------------------------------------

The Value Portfolio, advised by Davis Selected Advisers, L.P. ('Davis'),
Neuberger&Berman, LLC ('Neuberger&Berman') and Strong Capital Management, Inc.
('Strong') (which has subcontracted with Schafer Capital Management, Inc.
('Schafer') to act as Adviser to its portion of the Value Portfolio), will
invest, under normal circumstances, in securities that the Adviser believes are
selling at a price that is low relative to their worth. Investments will be
identified based upon factors such as undervalued assets or earnings potential,
favorable operating or price to cash flow ratios, a low price to earnings ratio
and, although current income will not always be a significant factor in
selecting securities, a high dividend yield. In addition, the Adviser may take
into account such other factors as an issuer's product demand and development,
resources for expansion, quality of management and overall favorable business
prospects.

While the Adviser seeks to identify investments with the potential for
above-average appreciation, there is a risk that other investors will not
recognize the intrinsic worth of a security owned by the Portfolio for a long
period, if at all. In addition, there is the risk that a security judged to be
undervalued by the Adviser is actually appropriately priced due to fundamental
problems with the issuer's business prospects that are not yet apparent.

Under normal conditions, at least 65% of the Portfolio's total assets will be
invested in equity securities (including common and preferred stocks and other
securities having equity features, such as convertible securities, warrants and
rights). The Portfolio will invest in securities of companies without regard to
their market capitalization. However, investing in smaller companies may have
greater risks than investing in larger companies. See 'Investment in Small
Companies' in 'Investment Techniques and Risk Factors.' In addition, the
Portfolio may invest up to 35% of its total assets in debt securities that the
Adviser expects to have the potential for capital appreciation. The Portfolio
may invest in such debt securities rated below investment grade, that is, below
'BBB' by S&P, or below 'Baa' by Moody's, or if unrated, determined by the
Adviser to be of equivalent quality. See 'Fixed Income Securities' in
'Investment Techniques and Risk Factors' below for a discussion of the risks
associated with investing in such securities.

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International Equity Portfolio
- --------------------------------------------------------------------------------

The International Equity Portfolio, advised by Warburg, Rowe Price-Fleming
International, Inc. ('Rowe-Fleming') and Strong, will invest, under normal
circumstances, in securities of non-U.S. issuers. Country selection is a
significant part of each Adviser's investment process. The Portfolio is
permitted to invest in any country where it is legal for U.S. investors to
invest.

The Portfolio will invest in securities of companies without regard to their
market capitalization. However, investing in smaller companies may have greater
risks than investing in larger companies. See 'Investment in Small Cap
Companies' in 'Investment Techniques and Risk Factors.' The Portfolio may also
invest in companies located in countries considered to be emerging markets. The
term 'emerging markets' applies to any country that is generally considered to
be an emerging or developing country by the international financial community.
Investment in foreign securities in general, and in emerging markets in
particular, involves certain risks not present when investing in United States
securities. See 'Foreign Securities' in 'Investment Techniques and Risk
Factors.'

Under normal conditions, at least 65% of the Portfolio's total assets will be
invested in equity securities (including common and preferred stocks and other
securities having equity features, such as convertible securities, warrants and
rights) of issuers in at least three countries other than the United States. The
Portfolio may purchase securities on foreign stock exchanges, on U.S. stock
exchanges, or in the over-the-counter market. In addition, the Portfolio may
invest in securities in the form of sponsored or unsponsored American Depositary
Receipts ('ADRs'), European Depositary Receipts ('EDRs'), Global Depositary
Receipts ('GDRs') or other similar securities representing a right to obtain
underlying securities of foreign issuers. The Portfolio may invest up to 35% of
its total assets in debt securities that the Adviser expects have the potential
for capital appreciation. The Portfolio may invest in such debt securities rated
below investment grade, that is below 'BBB' by S&P, or below 'Baa' by Moody's,
or if unrated, determined by the Adviser to be of equivalent quality. See 'Fixed
Income Securities' in 'Investment Techniques and Risk Factors' below for a
discussion of the risks associated with investing in such securities.

Advisers' Historical Performance Data
- --------------------------------------------------------------------------------

Set forth below is historical performance data relating to each of the Advisers
selected by SunAmerica for the Portfolios. The performance information presented
below is based on data provided by each Adviser relating to all of the accounts
managed by that Adviser that have investment objectives and policies similar
(although not necessarily identical) to the relevant Portfolio and are advised
by that Adviser using investment styles and strategies substantially similar to
those to be employed by that Adviser in advising its portion of the Portfolio.
THE PERFORMANCE INFORMATION SET FORTH BELOW DOES NOT REPRESENT THE PERFORMANCE
OF THE FUND OR ANY PORTFOLIO. The Fund is recently organized and has a
performance record of less than four months. The following performance should
not be considered a prediction of future performance of the Fund or any
Portfolio. The performance of a particular Portfolio may be higher or lower than
that shown below.

All of the historical performance information reflects annualized total return
over the stated period of time. Total return shows how much an investment has
increased (decreased) over a specified period of time and includes capital
appreciation and income. The term 'annualized total return' signifies that
cumulative total returns for a stated time period (i.e., 1, 3, 5 or 10 years)
have been annualized over such period. In order to present the total return
information in a consistent manner, all returns were calculated by geometrically
linking quarterly total return data for the relevant number of quarters and
annualizing the result over the equivalent number of years.

All information relies on data supplied by the Advisers or Lipper Analytical
Services, Inc. ('Lipper') and believed by the Fund to be reliable.

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However, such information has not been verified, and unless otherwise indicated
in the endnotes to the tables set forth below, has not been audited. In certain
cases as indicated, the total return for a particular Adviser's composite
performance has been calculated in accordance with Performance Presentation
Standards of the Association for Investment Management and Research ('AIMR'). If
not so stated, the performance, while having been calculated in accordance with
AIMR methodology, has not been independently verified or audited. Performance
figures for any particular Adviser do not necessarily reflect all of the
Adviser's assets under management and may not accurately reflect the performance
of all accounts managed by the Adviser.

The performance information in the following tables is presented net of actual
fees charged by the individual Advisers, except as otherwise noted, but do not
reflect the imposition of any sales loads or charges, if applicable. If sales
loads or charges were reflected, where applicable, performance would have been
lower. If the performance figures are net of actual fees, they do not reflect
the operating expenses of the Portfolio (such as Rule 12b-1 fees) or any
applicable sales charge. In the event that the performance figures are not net
of actual fees, they are instead presented net of annualized expenses projected
for the particular Portfolio for its initial fiscal period, but do not reflect
any sales charge. Such annualized expenses are higher than actual fees charged
to the accounts reflected in the data, so that the performance depicted below is
lower than the actual performance experienced by such accounts.

Certain of the client accounts that are included in an Adviser's past
performance record may not be registered investment companies. Such accounts
would not be subject to the same types of expenses to which the Fund is subject,
nor to the specific tax diversification and other restrictions and investment
limitations imposed on the Fund and its Portfolios by the 1940 Act or Subchapter
M of the Internal Revenue Code of 1986, as amended (the 'Code'). The performance
results that include accounts that are not registered investment companies might
have been less favorable had they been subject to regulation as investment
companies under the relevant federal laws.

In addition to the individual investment performance of each Adviser for the
periods indicated, the following tables reflect the combined performance of all
of the Advisers for each Portfolio. The combined information is presented only
with respect to periods during which all Advisers to a Portfolio were managing
accounts similar to the Portfolio, and reflects an equal one-third allocation to
each Adviser at all times during the period in question. All performance
information set forth below is premised on the assumption that, had the
Portfolio been in existence, each Adviser would have been selected by SunAmerica
to manage the particular Portfolio at all times during the period for which
performance information is presented and that each Portfolio would have in fact
been allocated in equal one-third portions to each of the Advisers for the
periods for which combined historical information is presented. Notwithstanding
these assumptions, SunAmerica may change Advisers and the allocation of assets
among the different Advisers within a single Porfolio. In addition, the
allocation of assets among the Advisers of a Portfolio is expected to vary
relative to the performance of each portion of the Portfolio. The combined
Adviser performance chart is hypothetical, and is not an actually managed
portfolio. The chart does not represent an estimate of what a Portfolio's
performance would have been had it operated during the relevant periods shown.

Finally, for each period presented, the investment performance for the
Advisers of each Portfolio, and, in certain cases, combined hypothetical
information for such Advisers, is compared to the average performance of a group
of similar mutual funds tracked by Lipper. Lipper calculates its group averages
by taking a mathematical average of the returns of the funds included in the
group, weighted by net assets.

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Advisers for Aggressive Growth Portfolio
- --------------------------------------------------------------------------------

The Advisers for the Aggressive Growth Portfolio are:

JANUS CAPITAL CORPORATION (JANUS)
SUNAMERICA ASSET MANAGEMENT CORP. (SUNAMERICA)
WARBURG, PINCUS COUNSELLORS, INC. (WARBURG)

The performance results supplied by each Adviser were prepared as set forth
below under 'Individual Adviser Performance.'

ANNUALIZED TOTAL RETURNS
- --------------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31, 1996

Advisers' Past Performance (Bar Chart)

1 Year

Lipper Small Company Growth Group 19.8%
Combined Adviser Performance 13.8%
Janus 16.4%
SunAmerica 14.9%
Warburg 9.9%

3 years

Lipper Small Company Growth Group 15.8%
Combined Adviser Performance 21.9%
Janus 27.2%
SunAmerica 21.8%
Warburg 16.6%

5 years

Lipper Small Company Growth Group 15.2%
Combined Adviser Performance 18.8%
Janus 20.3%
SunAmerica 19.8%
Warburg 16.0%

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NOTES (AGGRESSIVE GROWTH PORTFOLIO)

- --------------------------------------------------------------------------------

INDIVIDUAL ADVISER PERFORMANCE

Except as otherwise noted below, an Adviser's performance is presented net of
actual fees, but does not reflect the imposition of any sales loads or charges,
if applicable. If sales loads or charges were reflected, where applicable,
performance would have been lower. The Portfolio's fees and expenses may be
greater than those charged by the individual Advisers. Accordingly, the
Portfolio's actual performance may be lower.

Janus

Janus' historical performance data covers 7 years and reflects the performance
of the Janus Aggressive Growth composite. The annualized return since inception
of the composite is 23.8% as of December 31, 1996. The composite includes all
aggressive growth equity accounts with assets above $5 million for which Janus
has discretionary authority. As of December 31, 1996, the composite included 13
accounts with aggregate assets of $592 million, which represented 1.3% of total
assets under management. Accounts enter the composite upon their first full
quarter under management in which assets exceed $5 million. The composite
returns are presented net of actual fees. None of the accounts included in the
composite bears any sales loads or charges. The performance history is
calculated in accordance with the standards set forth by AIMR.

SunAmerica

SunAmerica's historical performance data covers 9 3/4 years and reflects the
performance of a single account, which is a front-end load mutual fund. The
average annual total return for the 1, 3 and 5 year periods and since inception
of the account as of December 31, 1996 are 8.31%, 19.43%, 18.44% and 14.84%,
respectively. These figures reflect the imposition of a 5.75% sales charge.
According to SunAmerica, this mutual fund reflects the only comparable vehicle
managed by SunAmerica in the small capitalization growth strategy with a
performance record over one year. As of December 31, 1996, the fund's net assets
totaled $163.2 million.

Warburg

Warburg's historical performance data covers 8 3/4 years and reflects the
performance of a single account. The annualized return since inception of the
account is 16.9% as of December 31, 1996. As of December 31, 1996, the account's
net assets totaled $1.2 billion. According to Warburg, this account is the only
U.S. retail vehicle managed by Warburg with a small capitalization growth
strategy.

COMBINED ADVISER PERFORMANCE

Performance for the 5-year, 3-year and 1-year composite bar charts reflects a
combined composite weighted equally among the Janus Aggressive Growth composite,
SunAmerica account, and Warburg account. The performance for each Adviser in the
table is presented net of actual fees paid by each account included in the
composite, but does not reflect the imposition of any sales loads or charges, if
applicable. If sales loads or charges were reflected, where applicable,
performance would have been lower.

LIPPER SMALL COMPANY GROWTH MUTUAL FUND GROUP

Developed by Lipper, the Lipper Small Company Growth Mutual Fund Group currently
reflects a group of 443 mutual funds which limit their investments to companies
on the basis of the size of the company. This group was selected because the
investment parameters of the Aggressive Growth Portfolio are consistent with the
criteria Lipper used to include funds in this group.

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GROWTH OF A $10,000 INVESTMENT

- --------------------------------------------------------------------------------
SEVEN YEARS ENDED DECEMBER 31, 1996

Growth of a $10,000 Investment (Mountain Chart)

Combined Lipper Small
Adviser Company Growth
Performance Group

1989 $10,000 $10,000
1990 $8,820 $9,100
1991 $14,227 $13,705
1992 $16,062 $15,390
1993 $18,600 $17,945
1994 $19,120 $17,766
1995 $29,579 $23,237
1996 $33,661 $27,838

NOTE (AGGRESSIVE GROWTH PORTFOLIO)

- --------------------------------------------------------------------------------

GROWTH OF A $10,000 INVESTMENT

The 'Growth of a $10,000 Investment' composite chart reflects seven years of
performance data and reflects a combined composite weighted equally among the
Janus Aggressive Growth composite, SunAmerica account and Warburg account.
Returns for all time periods are net of actual fees, but do not reflect the
imposition of any sales loads or charges, if applicable. If sales loads or
charges were reflected, where applicable, performance would have been lower.

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Advisers for Mid-Cap Growth Portfolio
- --------------------------------------------------------------------------------

The Advisers for the Mid-Cap Growth Portfolio are:

MILLER ANDERSON & SHERRERD, LLP (MAS)

PILGRIM BAXTER & ASSOCIATES, LTD. (PILGRIM BAXTER)

T. ROWE PRICE ASSOCIATES, INC. (T. ROWE PRICE)

The performance results supplied by each Adviser were prepared as set forth
below under 'Individual Adviser Performance.'

ANNUALIZED TOTAL RETURNS

- --------------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31, 1996

Advisers' Past Performance (Bar Chart)

1 Year

Lipper Mid-Cap Group 17.4%
Combined Adviser Performance 19.3%
MAS 18.8%
Pilgrim Baxter 13.7%
T. Rowe Price 24.8%

3 Years

Lipper Mid-Cap Group 14.9%
Combined Adviser Performance 18.1%
MAS 15.3%
Pilgrim Baxter 17.8%
T. Rowe Price 20.8%

5 Years

Lipper Mid-Cap Group 14.3%
MAS 13.3%
Pilgrim Baxter 15.2%

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NOTES (MID-CAP GROWTH PORTFOLIO)

- --------------------------------------------------------------------------------

INDIVIDUAL ADVISER PERFORMANCE

Except as otherwise noted below, an Adviser's performance is presented net of
actual fees. The Portfolio's fees and expenses may be greater than those charged
by the individual Advisers. Accordingly, the Portfolio's actual performance may
be lower.

MAS

MAS' historical performance data covers 6 3/4 years and reflects the performance
of a single account. The annualized return since inception of the account is
19.1% as of December 31, 1996. According to MAS, this is the only account
managed by MAS with a mid cap growth strategy. As of December 31, 1996, the
account's net assets totaled $407 million.

Pilgrim Baxter

Pilgrim Baxter's historical performance data covers 10 years and reflects the
performance of the Pilgrim Baxter Mid-Cap composite, which as of December 31,
1996, included eight unrestricted mid-cap equity accounts totaling $1.2 billion
or 8.3% of all equity assets under management, and 100% of all mid-cap equity
accounts under management, according to Pilgrim Baxter. The annualized ten-year
return of the composite is 15.8% as of December 31, 1996. The composite returns
are presented net of actual fees. None of the accounts included in the composite
bears any sales loads or charges.

T. Rowe Price

T. Rowe Price's historical performance data covers 4 1/2 years and reflects the
performance of a single account. The annualized return since inception of the
account is 25.5% as of December 31, 1996. According to T. Rowe Price, this is
the only account managed by T. Rowe Price with a mid-cap growth strategy and
assets of at least $100 million. As of December 31, 1996, the account's net
assets totaled $1 billion.

COMBINED ADVISER PERFORMANCE

Performance on the 3-year and 1-year composite bar charts reflects a combined
composite weighted equally among the MAS account, Pilgrim Baxter Mid-Cap
Composite and T. Rowe Price account. The performance for each Adviser is
presented net of actual fees paid by each account included in the composite.

LIPPER MID-CAP MUTUAL FUND GROUP

Developed by Lipper, the Lipper Mid-Cap Mutual Fund Group currently reflects a
group of 186 mutual funds which limit their investments to companies with
average market capitalizations and/or revenues between $800 million and the
average market capitalization of the Wilshire 4500 Index (as captured by the
Vanguard Index Extended Market Fund). This group was selected because the
investment parameters of the Mid-Cap Growth Portfolio are consistent with the
criteria Lipper used to include funds in this group.

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GROWTH OF A $10,000 INVESTMENT

- --------------------------------------------------------------------------------
FOUR YEARS ENDED DECEMBER 31, 1996

Growth of a $10,000 Investment (Mountain Chart)

Combined Lipper
Adviser Mid-Cap
Performance Group

1992 $10,000 $10,000
1993 $12,030 $11,640
1994 $11,705 $11,419
1995 $16,610 $15,016
1996 $19,815 $17,629

NOTE (MID-CAP GROWTH PORTFOLIO)

- --------------------------------------------------------------------------------

GROWTH OF A $10,000 INVESTMENT

The 'Growth of a $10,000 Investment' composite chart reflects four years of
performance data, and reflects a combined composite weighted equally among the
MAS account, Pilgrim Baxter Mid-Cap Composite and T. Rowe Price account. Returns
for all time periods are net of actual fees.

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Advisers for Value Portfolio
- --------------------------------------------------------------------------------

The Advisers for the Value Portfolio are:

DAVIS SELECTED ADVISERS, L.P. (DAVIS)
NEUBERGER&BERMAN, LLC (NEUBERGER&BERMAN)
STRONG CAPITAL MANAGEMENT, INC. (SUBCONTRACTED
TO SCHAFER AND REFERRED TO FOR THE PURPOSES OF THIS ENDNOTE AS
'STRONG/SCHAFER').

The performance results supplied by each Adviser were prepared as set forth
below under 'Individual Adviser Performance.'

ANNUALIZED TOTAL RETURNS

- --------------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31, 1996

Advisers' Past Performance (Bar Chart)

1 Year

Lipper Equity Income Group 18.6%
Combined Adviser Performance 24.9%
Davis 26.5%
Neuberger & Berman 26.5%
Strong/Schafer 21.7%

3 Years

Lipper Equity Income Group 14.5%
Combined Adviser Performance 18.2%
Davis 20.4%
Neuberger & Berman 18.8%
Strong/Schafer 15.3%

5 Years

Lipper Equity Income Group 13.3%
Combined Adviser Performance 17.3%
Davis 17.8%
Neuberger & Berman 18.1%
Strong/Schafer 15.8%

10 Years

Lipper Equity Income Group 11.9%
Combined Adviser Performance 15.3%
Davis 17.4%
Neuberger & Berman 14.7%
Strong/Schafer 13.3%

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NOTES (VALUE PORTFOLIO)

- --------------------------------------------------------------------------------

INDIVIDUAL ADVISER PERFORMANCE

Davis

Davis' historical performance data covers 10 years and reflects the performance
of a single account, which is a front-end load mutual fund. The average annual
total return for the 1,3,5 and 10 year periods ended December 31, 1996 are
20.56%, 18.41%, 16.68% and 16.85%, respectively. These figures reflect the
imposition of a 4.75% sales charge. According to Davis, this mutual fund
represents the only retail vehicle managed by Davis with the same particular
value strategy as the Value Portfolio. As of December 31, 1996, the account's
net assets totaled $3.47 billion.

Neuberger&Berman

Neuberger&Berman's historical performance data covers 10 years and reflects the
performance of a single account. According to Neuberger&Berman, although there
are other value-styled accounts managed by the firm, this account represents the
only vehicle managed by Neuberger&Berman in accordance with the same particular
value strategy as the Value Portfolio. As of December 31, 1996, the account's
net assets totaled $3.2 billion.

Strong/Schafer

Strong/Schafer's historical performance data covers 10 years and reflects the
performance of the Schafer Capital Equity composite. As of December 31, 1996,
the composite included 3 separately managed accounts totaling $595 million of
assets under management. The returns for the Schafer Capital Equity composite
were supplied to the Fund gross of fees, but have been adjusted to give effect
to the level of annualized expenses projected for the Value Portfolio during the
initial fiscal period, which is 1.78%. None of the accounts in the composite
bears any sales loads or charges.

COMBINED ADVISER PERFORMANCE

Performance on all of the composite bar charts reflects a combined composite
weighted equally among the Davis account, Neuberger&Berman account, and Schafer
Capital Equity composite. The returns in the tables for the Davis account and
Neuberger&Berman account are net of actual expenses, but do not reflect the
imposition of any sales loads or charges, if applicable. If sales loads or
charges were reflected, where applicable, performance would have been lower. The
gross returns for the Schafer Capital Equity Composite have been adjusted to
give effect to the level of annualized expenses projected for the Value
Portfolio during the initial fiscal period, which is 1.78%.

LIPPER EQUITY INCOME MUTUAL FUND GROUP--AVERAGE PERFORMANCE

Developed by Lipper, the Lipper Equity Income Mutual Fund Group currently
reflects a group of 180 mutual funds which seek relatively high current income
and growth of income through investing 60% or more of assets in equities. This
group was selected because the investment parameters of the Value Portfolio are
consistent with the criteria Lipper used to include funds in this group.

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GROWTH OF A $10,000 INVESTMENT

- --------------------------------------------------------------------------------
TEN YEARS ENDED DECEMBER 31, 1996

Growth of a $10,000 Investment (Mountain Chart)

Combined Lipper
Adviser Equity Income
Performance Group

1986 $10,000 $10,000
1987 $9,880 $10,200
1988 $11,629 $11,567
1989 $14,885 $13,799
1990 $13,962 $12,985
1991 $18,639 $16,426
1992 $21,305 $18,019
1993 $25,076 $20,434
1994 $24,373 $19,923
1995 $33,172 $25,860
1996 $41,432 $30,670

NOTE (VALUE PORTFOLIO)

- --------------------------------------------------------------------------------

GROWTH OF A $10,000 INVESTMENT

The 'Growth of a $10,000 Investment' composite chart reflects ten years of
performance data, weighted equally among the Davis account, Neuberger&Berman
account and Schafer Capital Equity composite. Returns for the Davis account and
Neuberger&Berman account are net of actual expenses, but do not reflect the
imposition of any sales loads or charges, if applicable. If sales loads or
charges were reflected, where applicable, performance would have been lower.
Gross returns for the Schafer Capital Equity Composite have been adjusted to
give effect to the level of annualized expenses projected for the Value
Portfolio during the initial fiscal period, which is 1.78%.

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Advisers for International Equity Portfolio
- --------------------------------------------------------------------------------

The Advisers for the International Equity Portfolio are:

ROWE PRICE-FLEMING INTERNATIONAL, INC.
(ROWE-FLEMING)
STRONG CAPITAL MANAGEMENT, INC. (STRONG)
WARBURG, PINCUS COUNSELLORS, INC. (WARBURG)

The performance results supplied by each Adviser were prepared as set forth
below under 'Individual Adviser Performance.'

ANNUALIZED TOTAL RETURNS

- --------------------------------------------------------------------------------
PERIODS ENDED DECEMBER 31, 1996

Advisers' Past Performance (Bar Chart)

1 Year

Lipper International Group 11.6%
Combined Adviser Performance 10.8%
Rowe-Fleming 13.6%
Strong 8.3%
Warburg 10.5%

3 Years

Lipper International Group 6.5%
Combined Adviser Performance 6.3%
Rowe-Fleming 7.3%
Strong 4.5%
Warburg 6.9%

5 Years

Lipper International Group 9.5%
Rowe-Fleming 10.6%
Warburg 12.1%

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NOTES (INTERNATIONAL PORTFOLIO)

- --------------------------------------------------------------------------------

INDIVIDUAL ADVISER PERFORMANCE

Rowe-Fleming

Rowe-Fleming's historical performance data covers 10 years and reflects the
performance of the Mainstream International Equities composite managed by
Rowe-Fleming. As of December 31, 1996, the composite included 19 accounts
totaling $4.4 billion in assets, or 39.4% of all assets under management. The
annualized ten-year return of the composite is 10.1% as of December 31, 1996.
The performance history provided by Rowe-Fleming's is calculated in accordance
with the standards set forth by AIMR. The returns for the Mainstream
International Equities composite were supplied to the Fund gross of fees but
have been adjusted to give effect to the level of annualized expense projected
for the International Equity Portfolio during the initial fiscal period, which
is 2.03%. None of the accounts included in the composite bears any sales loads
or charges.

Strong

Strong's historical performance data covers 4 3/4 years and reflects the
performance of the Strong International Equity composite which, as of December
31, 1996, included 5 separate accounts totaling $405 million, or 2% of the
firm's total assets under management. The annualized return since inception of
the composite is 11.6% as of December 31, 1996. According to Strong, the
composite reflects all accounts managed by the firm within their international
investment discipline. The returns for the Strong International Equity composite
were supplied to the Fund gross of fees, but have been adjusted to give effect
to the level of annualized expenses projected for the International Equity
Portfolio during the initial fiscal period, which is 2.03%. None of the accounts
included in the composite bears any sales loads or charges.

Warburg

Warburg's historical performance data covers 7 1/2 years and reflects the
performance of a single account. The annualized return since inception of the
account is 12.8% as of December 31, 1996. As of December 31, 1996, the account's
net assets totaled $3 billion. According to Warburg, the account is the only
proprietary retail vehicle managed by Warburg with an international strategy.

COMBINED ADVISER PERFORMANCE

Performance on the 3-year and one-year composite bar charts reflects a combined
composite weighted equally among the Rowe-Fleming Mainstream International
Equities composite, Strong International Equity composite and Warburg account.
The gross returns for the Rowe-Fleming Mainstream International Equities
composite and the Strong International Equity composite have been adjusted to
give effect to the level of annualized expenses projected for the International
Equity Portfolio during the initial fiscal period, which is 2.03%. The returns
for the Warburg account are net of actual fees.

LIPPER INTERNATIONAL MUTUAL FUND GROUP-- AVERAGE PERFORMANCE

Developed by Lipper, the Lipper International Mutual Fund Group currently
reflects a group of 369 mutual funds which invest in securities whose primary
trading markets are outside of the United States. This group was selected
because the investment parameters of the International Equity Portfolio are
consistent with the criteria Lipper used to include funds in this group.

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GROWTH OF A $10,000 INVESTMENT

- --------------------------------------------------------------------------------
FOUR YEARS ENDED DECEMBER 31, 1996

Growth of a $10,000 Investment (Mountain Chart)

Combined Lipper
Adviser International
Performance Group

1992 $10,000 $10,000
1993 $14,620 $13,900
1994 $14,459 $13,761
1995 $15,833 $15,027
1996 $17,543 $16,770

NOTE (INTERNATIONAL PORTFOLIO)

- --------------------------------------------------------------------------------

GROWTH OF A $10,000 INVESTMENT

The 'Growth of a $10,000 Investment' composite chart reflects four years of
performance data, and reflects a combined composite weighted equally among the
Strong International Equity composite, Rowe-Fleming Mainstream International
Equities composite and Warburg account. The gross returns for the Strong
International Equity composite and the Rowe-Fleming Mainstream International
Equities composite have been adjusted to give effect to the level of annualized
expenses projected for the International Equities Portfolio during the initial
fiscal period, which is 2.03%. The returns for the Warburg account are net of
actual fees.

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Investment Techniques and Risk Factors
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Unless otherwise specified, each Portfolio may invest in the following
securities. As used herein, the term 'Adviser' shall mean either SunAmerica or
one of the Advisers chosen by SunAmerica. Also, the stated percentage
limitations are applied to an investment at the time of purchase unless
otherwise indicated.

Convertible Securities, Preferred Stocks, Warrants and Rights--Convertible
securities may be debt securities or preferred stock with a conversion feature.
Traditionally, convertible securities have paid dividends or interest at rates
higher than common stocks but lower than non-convertible securities. They
generally participate in the appreciation or depreciation of the underlying
stock into which they are convertible, but to a lesser degree. In recent years,
convertibles have been developed which combine higher or lower current income
with options and other features. Generally, preferred stock has a specified
dividend and ranks after bonds and before common stocks in its claim on income
for dividend payments and on assets should the company be liquidated. While most
preferred stocks pay a dividend, a Portfolio may purchase preferred stock where
the issuer has omitted, or is in danger of omitting, payment of its dividend.
Such investments would be made primarily for their capital appreciation
potential. Warrants are options to buy a stated number of shares of common stock
at a specified price any time during the life of the warrants (generally two or
more years). Rights represent a preemptive right of stockholders to purchase
additional shares of a stock at the time of a new issuance before the stock is
offered to the general public, allowing the stockholder to retain the same
ownership percentage after the new stock offering.

Investment in Small Cap Companies--Each Portfolio may invest in small companies
having market capitalizations of under $1 billion. It may be difficult to obtain
reliable information and financial data on such companies and the securities of
these small companies may not be readily marketable, making it difficult to
dispose of shares when desirable. Securities of small or emerging growth
companies may be subject to more abrupt or erratic market movements than larger,
more established companies or the market average in general. A risk of investing
in smaller, emerging companies is that they often are at an earlier stage of
development and therefore have limited product lines, market access for such
products, financial resources and depth in management than larger, more
established companies, and their securities may be subject to more abrupt or
erratic market movements than securities of larger, more established companies
or the market averages in general. In addition, certain smaller issuers may face
difficulties in obtaining the capital necessary to continue in operation and may
go into bankruptcy, which could result in a complete loss of an investment.
Smaller companies also may be less significant factors within their industries
and may have difficulty withstanding competition from larger companies. While
smaller companies may be subject to these additional risks, they may also
realize more substantial growth than larger, more established companies.

Foreign Securities--Each Portfolio (other than the International Equity
Portfolio) is authorized to invest up to 30% of its total assets, and the
International Equity Portfolio may invest without limitation, in foreign
securities. Each Portfolio may also invest in U.S. dollar denominated securities
of foreign issuers, including ADRs, as well as EDRs, GDRs or other similar
securities convertible into securities of foreign issuers. These securities may
not necessarily be denominated in the same currency as the securities into which
they may be converted. Each Portfolio also may invest in securities denominated
in European Currency Units (ECUs). An ECU is a 'basket' consisting of specified
amounts of currencies of certain of the twelve member states of the European
Community. In addition, the Portfolio may invest in securities denominated in
other currency 'baskets.' See the Statement of Additional Information for a
further discussion of these types of securities.

Risks of Foreign Securities. Foreign investments may be affected favorably or
unfavorably by changes in currency rates and exchange-control regulations and
costs will be incurred in connection with conversions between various
currencies. The value of a security may fluctuate as a result of currency
exchange rates in a manner unrelated to the underlying value of the security.
There may be less publicly available information about a foreign company than
about a U.S. company, and foreign companies may not be subject to uniform
accounting, auditing and financial reporting standards and requirements
comparable to those applicable to U.S. companies.

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Securities of some foreign companies may be less liquid or more volatile than
securities of U.S. companies, and foreign brokerage commissions and custodian
fees are generally higher than in the U.S. In addition, there is generally less
governmental regulation of stock exchanges, brokers and listed companies abroad
than in the U.S. Investments in foreign securities may also be subject to other
risks, different from those affecting U.S. investments, including local
political or economic developments, expropriation or nationalization of assets,
confiscatory taxation and imposition of withholding taxes on income from sources
within such countries.

Emerging Markets. Investments may be made from time to time in issuers
domiciled in, or government securities of, developing countries or emerging
markets. Although there is no universally accepted definition, a developing
country is generally considered to be a country in the initial stages of its
industrialization cycle with a low per capita gross national product. Historical
experience indicates that the markets of developing countries or emerging
markets have been more volatile than the markets of developed countries;
however, such markets can provide higher rates of return to investors.
Investment in an emerging market country may involve certain risks, including a
less diverse and mature economic structure, a less stable political system, an
economy based on only a few industries or dependent on international aid or
development assistance, the vulnerability to local or global trade conditions,
extreme debt burdens, or volatile inflation rates.

Foreign Currency Transactions. Each Portfolio has the ability to hold a portion
of its assets in foreign currencies and to enter into forward foreign currency
exchange contracts. It may also purchase and sell exchange-traded futures
contracts relating to foreign currency and purchase and sell put and call
options on currencies and futures contracts.

Each Portfolio may enter into forward foreign currency exchange contracts to
reduce the risks of fluctuations in exchange rates; however, these contracts
cannot eliminate all such risks and do not eliminate fluctuations in the prices
of the Portfolio's portfolio securities.

Each Portfolio may purchase and write put and call options on currencies for the
purpose of protecting against declines in the U.S. dollar value of foreign
portfolio securities and against increases in the U.S. dollar cost of foreign
securities to be acquired. The purchase of an option on currency may constitute
an effective hedge against exchange rate fluctuations; however, in the event of
exchange rate movements adverse to a Portfolio's position, the Portfolio may
forfeit the entire amount of the premium plus related transaction costs. As with
other kinds of option transactions, however, the writing of an option on
currency will constitute only a partial hedge, up to the amount of the premium
received, and a Portfolio could be required to purchase or sell currencies at
disadvantageous exchange rates, thereby incurring losses.

Each Portfolio may enter into forward foreign currency exchange contracts,
currency options and currency swaps for non-hedging purposes when an Adviser
anticipates that a foreign currency will appreciate or depreciate in value, but
securities denominated in that currency do not present attractive investment
opportunities or are not included in such portfolio. The Portfolio may use
currency contracts and options to cross-hedge, which involves selling or
purchasing instruments in one currency to hedge against changes in exchange
rates for a different currency with a pattern of correlation. To limit any
leverage in connection with currency contract transactions for hedging or
non-hedging purposes, a Portfolio will segregate cash or liquid securities in an
amount sufficient to meet its payment obligations in these transactions or
otherwise 'cover' the obligation. Initial margin deposits made in connection
with currency futures transactions or premiums paid for currency options traded
over-the-counter or on a commodities exchange may each not exceed 5% of a
Portfolio's total assets in the case of non-bona fide hedging transactions.

Each Portfolio may enter into currency swaps. Currency swaps involve the
exchange by a Portfolio with another party of their respective rights to make or
receive payments in specified currencies. Currency swaps usually involve the
delivery of the entire principal value of one designated currency in exchange
for the other designated currency. Therefore, the entire principal value of a
currency swap is subject to the risk that the other party to the swap will
default on its contractual delivery obligations. A Portfolio will maintain in a
segregated account with its custodian cash or liquid securities equal to the net
amount, if any, of the excess of the Portfolio's obligations over its
entitlements with respect to swap transactions. To the extent that the net
amount of a swap is held in a segregated account consisting of cash or liquid
securities, the Fund believes that swaps do not constitute senior securities
under the 1940 Act and, accordingly, they will not be treated

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as being subject to the Portfolio's borrowing restrictions. The use of currency
swaps is a highly specialized activity which involves investment techniques and
risks different from those associated with ordinary portfolio securities
transactions. If an Adviser is incorrect in its forecasts of market values and
currency exchange rates, the investment performance of a Portfolio would be less
favorable than it would have been if this investment technique were not used.

Foreign Investment Companies. The International Equity Portfolio may invest in
foreign investment companies to the extent set forth below. Some of the
countries in which the Portfolio invests may not permit direct investment by
foreign investors such as the Portfolio. Investments in such countries may only
be permitted through foreign government-approved or authorized investment
vehicles, which may include other investment companies. In addition, it may be
less expensive and more expedient for the Portfolio to invest in a foreign
investment company in a country that permits direct foreign investment.
Investing through such vehicles may involve frequent or layered fees or expenses
and may also be subject to limitation under the 1940 Act. Under the 1940 Act, a
fund may invest up to 10% of its assets in shares of other investment companies
and up to 5% of its assets in any one investment company as long as the
investment does not represent more than 3% of the voting stock of the acquired
investment company. The Portfolio does not intend to invest in such investment
companies unless, in the judgment of the Adviser, the potential benefits of such
investments justify the payment of any associated fees and expenses.

Fixed Income Securities--Fixed income securities are broadly characterized as
those that provide for periodic payments to the holder of the security at a
stated rate. Most fixed income securities, such as bonds, represent indebtedness
of the issuer and provide for repayment of principal at a stated time in the
future. Others do not provide for repayment of a principal amount, although they
may represent a priority over common stockholders in the event of the issuer's
liquidation. Many fixed income securities are subject to scheduled retirement,
or may be retired or 'called' by the issuer prior to their maturity dates. The
interest rate on certain fixed income securities, known as 'variable rate
obligations,' is determined by reference to or is a percentage of an objective
standard, such as a bank's prime rate, the 90-day Treasury bill rate, or the
rate of return on commercial paper or bank certificates of deposit, and is
periodically adjusted. Certain variable rate obligations may have a demand
feature entitling the holder to resell the securities at a predetermined amount.
The interest rate on certain fixed income securities, called 'floating rate
instruments,' changes whenever there is a change in a designated base rate.

The market values of fixed income securities tend to vary inversely with the
level of interest rates--when interest rates rise, their values will tend to
decline; when interest rates decline, their values generally will tend to rise.
The potential for capital appreciation with respect to variable rate obligations
or floating rate instruments will be less than with respect to fixed-rate
obligations. Long-term instruments are generally more sensitive to these changes
than short-term instruments. The market value of fixed income securities and
therefore their yield is also affected by the perceived ability of the issuer to
make timely payments of principal and interest.

U.S. Government Securities--Securities guaranteed by the U.S. government include
the following: (1) direct obligations of the U.S. Treasury (such as Treasury
bills, notes and bonds) and (2) federal agency obligations guaranteed as to
principal and interest by the U.S. Treasury (such as Government National
Mortgage Association certificates and Federal Housing Administration
debentures). For these securities, the payment of principal and interest is
unconditionally guaranteed by the U.S. government. They are of the highest
possible credit quality. These securities are subject to variations in market
value due to fluctuations in interest rates, but if held to maturity, are
guaranteed by the U.S. government to be paid in full.

Securities issued by U.S. government instrumentalities and certain federal
agencies are neither direct obligations of, nor are they guaranteed by, the U.S.
Treasury. However, they involve federal sponsorship in one way or another. For
example, some are backed by specific types of collateral; some are supported by
the issuer's right to borrow from the Treasury; some are supported by the
discretionary authority of the Treasury to purchase certain obligations of the
issuer; and others are supported only by the credit of the issuing government
agency or instrumentality. These agencies and instrumentalities include, but are
not limited to, the Federal National Mortgage Association, the Federal Home Loan
Mortgage Corporation, Federal Land Banks, Farmers Home Administration, Central
Bank for Cooperatives, Federal Intermediate Credit Banks and Federal Home Loan
Banks.

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Corporate Debt Instruments--These instruments, such as bonds, represent the
obligation of the issuer to repay a principal amount of indebtedness at a stated
time in the future and, in the usual case, to make periodic interim payments of
interest at a stated rate.

Investment Grade--A designation applied to intermediate and long-term corporate
debt securities rated within the highest four rating categories assigned by S&P
(AAA, AA, A or BBB) or by Moody's (Aaa, Aa, A or Baa), or, if unrated,
considered by the Adviser to be of comparable quality. The ability of the issuer
of an investment grade debt security to pay interest and to repay principal is
considered to vary from extremely strong (for the highest ratings) through
adequate (for the lowest ratings given above), although the lower-rated
investment grade securities may be viewed as having speculative elements as
well.

High-Yield, High Risk Bonds--A designation applied to intermediate and long-term
corporate debt securities that are not investment grade; commonly referred to as
'junk bonds'. These include bonds rated below BBB by S&P, or Baa by Moody's, or
which are unrated but considered by the Adviser to be of equivalent quality.
These securities are considered speculative. See the Statement of Additional
Information for a complete description of bond ratings.

The Mid-Cap Growth Portfolio may invest in debt securities rated as low as 'BBB'
by S&P, 'Baa' by Moody's, or unrated securities determined by the Adviser to be
of comparable quality. The Aggressive Growth, Value and International Equity
Portfolios may invest in debt securities rated below investment grade (i.e.,
below 'BBB' by S&P, or below 'Baa' by Moody's, or if unrated, determined by the
Adviser to be of equivalent quality).

Risk Factors Relating to High-Yield, High-Risk Bonds-- High-yield, high-risk
bonds are subject to greater fluctuations in value than are higher rated bonds
because the values of high-yield bonds tend to reflect short-term corporate,
economic and market developments and investor perceptions of the issuer's credit
quality to a greater extent. Although under normal market conditions longer-term
securities yield more than shorter-term securities, they are subject to greater
price fluctuations. Fluctuations in the value of a Portfolio's investments will
be reflected in its net asset value per share. The growth of the high-yield bond
market paralleled a long economic expansion, followed by an economic downturn
which severely disrupted the market for high-yield bonds and adversely affected
the value of outstanding bonds and the ability of the issuers to repay principal
and interest. The economy may affect the market for high-yield bonds in a
similar fashion in the future including an increased incidence of defaults on
such bonds. From time to time, legislation may be enacted which could have a
negative effect on the market for high-yield bonds.

High-yield bonds present the following risks:

Sensitivity to Interest Rate and Economic Changes-- High-yield, high-risk bonds
are very sensitive to adverse economic changes and corporate developments.
During an economic downturn or substantial period of rising interest rates,
highly leveraged issuers may experience financial stress that would adversely
affect their ability to service their principal and interest payment
obligations, to meet projected business goals and to obtain additional
financing. If the issuer of a bond defaulted on its obligations to pay interest
or principal or entered into bankruptcy proceedings, a Portfolio may incur
losses or expenses in seeking recovery of amounts owed to it. In addition,
periods of economic uncertainty and changes can be expected to result in
increased volatility of market prices (and therefore yields) of high-yield bonds
and the Portfolio's net asset value.

Payment Expectations--High-yield, high-risk bonds may contain redemption or call
provisions. If an issuer exercised these provisions in a declining interest-rate
market, an Adviser would have to replace the security with a lower-yielding
security, resulting in a decreased return for investors. Conversely, a
high-yield bond's value will decrease in a rising interest rate market, as will
the value of the Portfolio's assets. If the Portfolio experiences unexpected net
redemptions, this may force it to sell high-yield bonds without regard to their
investment merits, thereby decreasing the asset base upon which expenses can be
spread and possibly reducing the Portfolio's rate of return.

Liquidity and Valuation--There may be little trading in the secondary market for
particular bonds, which may affect adversely a Portfolio's ability to value
accurately or dispose of such bonds. Under such circumstances, the task of
accurate valuation becomes more difficult and judgment would play a greater role
due to the relative lack of reliable and objective data. Adverse publicity and
investor perceptions, whether or not based on fundamental

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analysis, may decrease the values and liquidity of high-yield bonds, especially
in a thin market.

Each Adviser attempts to reduce these risks through diversification of the
assets under its control and by credit analysis of each issuer, as well as by
monitoring broad economic trends and corporate and legislative developments. If
a high-yield bond previously acquired by a component is downgraded, the
Advisers, as appropriate, will evaluate the security and determine whether to
retain or dispose of it.

Asset-Backed Securities--These securities represent an interest in a pool of
consumer or other types of loans. Payments of principal and interest on the
underlying loans are passed through to the holders of asset-backed securities
over the life of the securities. See the Statement of Additional Information.

Zero Coupon Bonds, Step-Coupon Bonds, Deferred Interest Bonds and PIK Bonds.
Fixed income securities in which a Portfolio may invest also include zero coupon
bonds, step-coupon bonds, deferred interest bonds and bonds on which the
interest is payable in kind ('PIK bonds'). Zero coupon and deferred interest
bonds are debt obligations issued or purchased at a significant discount from
face value. A step-coupon bond is one in which a change in interest rate is
fixed contractually in advance. PIK bonds are debt obligations which provide
that the issuer thereof may, at its option, pay interest on such bonds in cash
or in the form of additional debt obligations. Such investments may experience
greater volatility in market value due to changes in interest rates and other
factors than debt obligations which make regular payments of interest. A
Portfolio will accrue income on such investments for tax and accounting
purposes, as required, which is distributable to shareholders and which, because
no cash is received at the time of accrual, may require the liquidation of other
portfolio securities under disadvantageous circumstances to satisfy the
Portfolio's distribution obligations.

Short-Term and Temporary Defensive Investments--In addition to their primary
investments, each Portfolio may also invest up to 25% of its total assets in
both U.S. and non-U.S. dollar denominated money market instruments (a) for
liquidity purposes (to meet redemptions and expenses) or (b) to generate a
return on idle cash held in a Portfolio's portfolio during periods when an
Adviser is unable to locate favorable investment opportunities. For temporary
defensive purposes, each Portfolio may invest up to 100% of its total assets in
cash and short-term fixed income securities, including corporate debt
obligations and money market instruments rated in one of the two highest
categories by a nationally recognized statistical rating organization (or
determined by the Adviser to be of equivalent quality). In addition, Janus and
Neuberger&Berman may invest idle cash of the assets under their control in money
market mutual funds that they manage. Such an investment may entail additional
fees. See the Statement of Additional Information for a description of short-
term debt securities and the Appendix to the Statement of Additional Information
for a description of securities ratings.

Repurchase Agreements--Under these types of agreements, a Portfolio buys a
security and obtains a simultaneous commitment from the seller to repurchase the
security at a specified time and price. The seller must maintain collateral with
the Fund's custodian (or at an appropriate sub-custodian in the case of tri- or
quad-party repurchase agreements) equal to at least 102% of the repurchase
price, plus accrued interest. A Portfolio will only enter into repurchase
agreements involving securities in which it could otherwise invest and with
selected banks and securities dealers whose financial condition is monitored by
the Adviser, subject to the guidance of the Directors. If the seller under the
repurchase agreement defaults, the Portfolio may incur a loss if the value of
the collateral securing the repurchase agreement has declined, and may incur
disposition costs in connection with liquidating the collateral. If bankruptcy
proceedings are commenced with respect to the seller, realization of the
collateral by the Portfolio may be delayed or limited.

Hedging and Income Enhancement Strategies--Each Portfolio may write covered
calls to enhance income. After writing such a covered call up to 25% of a
Portfolio's total assets may be subject to calls. All such calls written by a
Portfolio must be 'covered' while the call is outstanding (i.e., the Portfolio
must own the securities subject to the call or other securities acceptable for
applicable escrow requirements). For hedging purposes or income enhancement,
each Portfolio may use interest rate futures, and stock and bond index futures,
including futures on U.S. government securities (together, 'Futures'); forward
contracts on foreign currencies; and call and put options on equity and debt
securities, Futures, stock and bond indices and foreign currencies (all of the
foregoing are referred to as 'Hedging Instruments'). All puts and calls on

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securities, interest rate futures or stock and bond index futures or options on
such Futures purchased or sold by a Portfolio will be listed on a national
securities or commodities exchange or on U.S. over-the-counter markets.

Each Portfolio may use spread transactions for any lawful purpose consistent
with the Portfolio's investment objective such as hedging or managing risk, but
not for speculation. A Portfolio may purchase covered spread options from
securities dealers. Such covered spread options are not presently
exchange-listed or exchange-traded. The purchase of a spread option gives a
Portfolio the right to put, or sell, a security that it owns at a fixed dollar
spread or fixed yield spread in relationship to another security that the
Portfolio does not own, but which is used as a benchmark. The risk to a
Portfolio in purchasing covered spread options is the cost of the premium paid
for the spread option and any transaction costs. In addition, there is no
assurance that closing transactions will be available. The purchase of spread
options will be used to protect a Portfolio against adverse changes in
prevailing credit quality spreads, i.e., the yield spread between high quality
and lower quality securities. Such protection is only provided during the life
of the spread option.

Special Risks of Hedging and Income Enhancement Strategies. Participation in
the options or Futures markets and in currency exchange transactions involves
investment risks and transaction costs to which a Portfolio would not be subject
absent the use of these strategies. If the Advisers' predictions of movements in
the direction of the securities, foreign currency and interest rate markets are
inaccurate, the adverse consequences to a Portfolio may leave the Portfolio in a
worse position than if such strategies were not used. Risks inherent in the use
of options, foreign currency and Futures contracts and options on Futures
contracts include (1) dependence on the Advisers' ability to predict correctly
movements in the direction of interest rates, securities prices and currency
markets; (2) imperfect correlation between the price of options and Futures
contracts and options thereon and movements in the prices of the securities or
currencies being hedged; (3) the fact that skills needed to use these strategies
are different from those needed to select portfolio securities; (4) the possible
absence of a liquid secondary market for any particular instrument at any time;
(5) the possible need to defer closing out certain hedged positions to avoid
adverse tax consequences; and (6) the possible inability of the Portfolio to
purchase or sell a portfolio security at a time that otherwise would be
favorable for it to do so, or the possible need for the Portfolio to sell a
portfolio security at a disadvantageous time, due to the need for the Portfolio
to maintain 'cover' or to segregate securities in connection with hedging
transactions. A transaction is 'covered' when the Portfolio owns the security
subject to the option on such security, or some other security acceptable for
applicable escrow requirements. See the Statement of Additional Information for
further information concerning income enhancement and hedging strategies and the
regulation requirements relating thereto.

Illiquid and Restricted Securities--No more than 15% of the value of a
Portfolio's net assets may be invested in securities which are illiquid,
including repurchase agreements that have a maturity of longer than seven days,
interest rate swaps, currency swaps, caps, floors and collars. For this purpose,
not all securities which are restricted are deemed to be illiquid. For example,
restricted securities which the Board of Directors, or the Adviser pursuant to
guidelines established by the Board of Directors, has determined to be
marketable, such as securities eligible for sale under Rule 144A promulgated
under the Securities Act of 1933, as amended, or certain private placements of
commercial paper issued in reliance on an exemption from such Act pursuant to
Section 4(2) thereof, may be deemed to be liquid for purposes of this
restriction. This investment practice could have the effect of increasing the
level of illiquidity in the Portfolio to the extent that qualified institutional
buyers (as defined in Rule 144A) become for a time uninterested in purchasing
these restricted securities. In addition, a repurchase agreement which by its
terms can be liquidated before its nominal fixed-term on seven days or less
notice is regarded as a liquid instrument. Subject to the applicable limitation
on illiquid securities investments, a Portfolio may acquire securities issued by
the U.S. government, its agencies or instrumentalities in a private placement.
See 'Illiquid Securities' in the Statement of Additional Information for a
further discussion of investments in such securities.

Hybrid Instruments--These instruments, including indexed or structured
securities, can combine the characteristics of securities, futures, and options.
For example, the principal amount, redemption, or

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conversion terms of a security could be related to the market price of some
commodity, currency, or securities index. Such securities may bear interest or
pay dividends at below market (or even relatively nominal) rates. Under certain
conditions, the redemption value of such an investment could be zero.

Borrowing--As a matter of fundamental policy each Portfolio is authorized to
borrow up to 33 1/3% of its total assets from banks for temporary or emergency
purposes. In seeking to enhance investment performance, each Portfolio may
borrow money for investment purposes and may pledge assets to secure such
borrowings. This is the speculative factor known as leverage. This practice may
help increase the net asset value of the assets of a Portfolio in an amount
greater than would otherwise be the case when the market values of the
securities purchased through borrowing increase. In the event the return on an
investment of borrowed monies does not fully recover the costs of such
borrowing, the value of the Portfolio's assets would be reduced by a greater
amount than would otherwise be the case. The effect of leverage will therefore
tend to magnify the gains or losses to the Portfolio as a result of investing
the borrowed monies. During periods of substantial borrowings, the value of the
Portfolio's assets would be reduced due to the added expense of interest on
borrowed monies. Each Portfolio is authorized to borrow, and to pledge assets to
secure such borrowings, up to the maximum extent permissible under the 1940 Act
(i.e., presently 50% of net assets). The time and extent to which a Portfolio
may employ leverage will be determined by the Adviser in light of changing facts
and circumstances, including general economic and market conditions, and will be
subject to applicable lending regulations of the Board of Governors of the
Federal Reserve Board.

Securities Lending--Each Portfolio may lend portfolio securities in amounts up
to 33 1/3% of its respective total assets to brokers, dealers and other
financial institutions, provided such loans are callable at any time by the
Portfolio and are at all times secured by cash or equivalent collateral. By
lending its portfolio securities, a Portfolio will receive income while
retaining the securities' potential for capital appreciation. As with any
extensions of credit, there are risks of delay in recovery and, in some cases,
even loss of rights in the collateral should the borrower of the securities fail
financially. However, these loans of portfolio securities will be made only
to firms deemed by the Adviser to be creditworthy. The proceeds of such loans
will be invested in high-quality short-term debt securities, including
repurchase agreements.

When-Issued, Delayed Delivery and Forward Transactions--These generally involve
the purchase of a security with payment and delivery at some time in the
future--i.e., beyond normal settlement. A Portfolio does not earn interest on
such securities until settlement and bears the risk of market value fluctuations
in between the purchase and settlement dates. New issues of stocks and bonds,
private placements and U.S. government securities may be sold in this manner.
One form of when-issued or delayed delivery security that each Portfolio may
purchase is a 'to be announced' or 'TBA' mortgage-backed security. A TBA
mortgage-backed security transaction arises when a mortgage- backed security is
purchased or sold with the specific pools to be announced on a future settlement
date.

Short Sales--Each Portfolio may sell a security it does not own in anticipation
of a decline in the market value of that security (short sales). To complete
such a transaction, a Portfolio must borrow the security to make delivery to the
buyer. The Portfolio then is obligated to replace the security borrowed by
purchasing it at market price at the time of replacement. The price at such time
may be more or less than the price at which the security was sold by the
Portfolio. Until the security is replaced, the Portfolio is required to pay to
the lender any dividends or interest which accrue during the period of the loan.
To borrow the security, the Portfolio also may be required to pay a premium,
which would increase the cost of the security sold. The proceeds of the short
sale will be retained by the broker, to the extent necessary to meet margin
requirements, until the short position is closed out. Until the Portfolio
replaces a borrowed security, the Portfolio will maintain daily a segregated
account, containing cash or liquid securities, at such a level that (i) the
amount deposited in the account plus the amount deposited with the broker as
collateral will equal the current value of the security sold short and (ii) the
amount deposited in the segregated account plus the amount deposited with the
broker as collateral will not be less than the market value of the security at
the time it was sold short. A Portfolio will incur a loss as a result of the
short sale if the price of the security increases between the date of the short
sale and the date on which the Portfolio

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replaces the borrowed security. A Portfolio will realize a gain if the security
declines in price between those dates. This result is the opposite of what one
would expect from a cash purchase of a long position in a security. The amount
of any gain will be decreased, and the amount of any loss increased, by the
amount of any premium, dividends or interest the Portfolio may be required to
pay in connection with a short sale.

Each Portfolio may make 'short sales against the box.' A short sale is against
the box to the extent that the Portfolio contemporaneously owns, or has the
right to obtain without payment, securities identical to those sold short. A
Portfolio may not enter into a short sale, including a short sale against the
box, if, as a result, more than 25% of its net assets would be subject to such
short sales.

Special Situations--A 'special situation' arises when, in the opinion of the
Adviser, the securities of a particular issuer will be recognized and appreciate
in value due to a specific development with respect to that issuer. Developments
creating a special situation might include, among others, a new product or
process, a technological breakthrough, a management change or other
extraordinary corporate event, or differences in market supply of and demand for
the security. Investment in special situations may carry an additional risk of
loss in the event that the anticipated development does not occur or does not
attract the expected attention.

Future Developments--Each Portfolio may invest in securities and other
instruments which do not presently exist but may be developed in the future,
provided that each such investment is consistent with the Portfolio's investment
objectives, policies and restrictions and is otherwise legally permissible under
federal and state laws. The Prospectus will be amended or supplemented as
appropriate to discuss any such new investments.

See the Statement of Additional Information for further information concerning
these and other types of securities and investment techniques in which the
Portfolio may from time to time invest, including dollar rolls, standby
commitments and reverse repurchase agreements.

Management of the Fund
- --------------------------------------------------------------------------------

Directors. The Directors of the Fund are responsible for the overall
supervision of the operations of the Fund and each Portfolio and perform various
duties imposed on directors of investment companies by the 1940 Act and by the
State of Maryland.

SunAmerica Asset Management Corp. SunAmerica is an indirect wholly owned
subsidiary of SunAmerica Inc., an investment-grade financial services company
which, as of June 30, 1997, held more than $46 billion in assets. SunAmerica
Inc.'s principal executive offices are located at 1 SunAmerica Center, Los
Angeles, CA 90067-6022. In addition to managing the Fund and serving as an
Adviser to the Aggressive Growth Portfolio, SunAmerica serves as adviser,
manager and/or administrator for Anchor Pathway Fund, Anchor Series Trust,
Seasons Series Trust, SunAmerica Equity Funds, SunAmerica Income Funds,
SunAmerica Money Market Funds, Inc., and SunAmerica Series Trust. SunAmerica
managed, advised and/or administered assets of approximately $10 billion as of
June 30, 1997 for investment companies, individuals, pension accounts, and
corporate and trust accounts.

SunAmerica selects the Advisers for and/or manages the investments of each
Portfolio, provides various administrative services and supervises the
Portfolio's daily business affairs, subject to general review by the Directors.
The Investment Advisory and Management Agreement entered into between SunAmerica
and the Fund, on behalf of each Portfolio (the 'Management Agreement')
authorizes SunAmerica to manage the assets of each Portfolio and/or to retain
the Advisers to do so. SunAmerica monitors the activities of the Advisers, and
from time to time will recommend the replacement of an Adviser on the basis of
investment performance, style drift, or other considerations.

The annual rate of the investment advisory fee payable to SunAmerica that
applies to each of the Aggressive Growth, Mid-Cap Growth and Value Portfolio is
1.00% of Assets. The annual rate of the investment advisory fee payable to
SunAmerica that applies to the International Equity Portfolio is 1.10% of
Assets. The term 'Assets' means the average daily net assets of the Portfolio.
The investment advisory fees are accrued daily and paid monthly,

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Style Select Series(Servicemark)

and may be higher than those charged to other funds.

SunAmerica has voluntarily agreed to waive fees or reimburse expenses, if
necessary, to keep annual operating expenses at or below the following
percentages of each Portfolio's average net assets: Aggressive Growth Portfolio
1.78% for Class A shares and 2.43% for Class B and Class C shares, Mid-Cap
Portfolio 1.78% for Class A shares and 2.43% for Class B and Class C shares,
Value Portfolio 1.78% for Class A shares and 2.43% for Class B and Class C
shares and International Equity Portfolio 2.03% for Class A shares and 2.68% for
Class B and Class C shares. SunAmerica also may voluntarily waive or reimburse
additional amounts to increase the investment return to a Portfolio's investors.
SunAmerica may terminate all such waivers and/or reimbursements at any time.
Further, any waivers or reimbursements made by SunAmerica with respect to a
Portfolio are subject to recoupment from that Portfolio within the following two
years, provided that the Portfolio is able to effect such payment to SunAmerica
and remain in compliance with the foregoing expense limitations.

The Advisers. The organizations described below act as Advisers to the
respective Portfolio pursuant to agreements with SunAmerica (each, a
'Subadvisory Agreement' and collectively, the 'Subadvisory Agreements'). The
duties of each Adviser include furnishing continuing advice and recommendations
to the relevant portion of the respective Portfolio regarding securities to be
purchased and sold. Each Adviser, therefore, generally formulates the continuing
program for management of the Assets under its control consistent with the
Portfolio's investment objectives and the investment policies established by the
Board. Because each Adviser manages its portion of its respective Portfolio
independently of the Portfolio's other Advisers, the same security may be held
in two different portions of the same Portfolio, or may be acquired for one
portion of the Portfolio at the time that the Adviser to another portion of the
Portfolio deems it appropriate to dispose of the security from that other
portion. Under some market conditions, one or more of the Advisers may believe
that temporary, defensive investments in short-term instruments or cash are
appropriate when another Adviser or Advisers believe continued exposure to the
equity markets is appropriate for their portions of the Portfolio.

Each of the Advisers (other than SunAmerica) is independent of SunAmerica and
discharges its responsibilities subject to the oversight and supervision of
SunAmerica, which pays the Advisers' fees. Each Adviser is paid monthly by
SunAmerica a fee equal to a percentage of the Assets of the Portfolio allocated
to the Adviser. Assuming a level of Assets of $100 million for each Portfolio,
it is estimated that the aggregate annual rates of the fees payable by
SunAmerica to the Advisers for each Portfolio the first year of operation will
be the following, expressed as a percentage of the Assets of each Portfolio:
Aggressive Growth Portfolio, .37%; Mid-Cap Growth Portfolio, .50%; Value
Portfolio, .50%; and International Equity Portfolio, .63%. There can be no
assurance that the Portfolio will achieve a level of Assets in the amount
estimated.

SunAmerica may terminate any Subadvisory Agreement without shareholder approval.
Moreover, SunAmerica has received an exemptive order from the Securities and
Exchange Commission which permits SunAmerica, subject to certain conditions, to
enter into Subadvisory Agreements relating to the Fund with Advisers approved by
the Board without obtaining shareholder approval. The exemptive order also
permits SunAmerica, subject to the approval of the Board but without shareholder
approval, to employ new Advisers for new or existing Portfolios, change the
terms of particular Subadvisory Agreements or continue the employment of
existing Advisers after events that would otherwise cause an automatic
termination of a Subadvisory Agreement. Shareholders of a Portfolio have the
right to terminate a Subadvisory Agreement for such Portfolio at any time by a
vote of the majority of the outstanding voting securities of such Portfolio.
Shareholders will be notified of any Adviser changes. The order also permits the
Fund to disclose to shareholders the Advisers' fees only in the aggregate for
each Portfolio.

AGGRESSIVE GROWTH PORTFOLIO

The Advisers for the Aggressive Growth Portfolio are Janus, SunAmerica and
Warburg.

Janus Capital Corporation. Janus is a Colorado corporation located at 100
Fillmore Street, Denver, Colorado 80206-4923, and serves as investment adviser
or subadviser to mutual funds and individual, corporate, charitable and
retirement accounts. Kansas City Southern Industries, Inc. ('KCSI') owns
approximately 83% of the outstanding voting stock of Janus. Thomas H. Bailey,
President and

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Chairman of the Board of Janus, owns approximately 12% of its voting stock and,
by agreement with KCSI, selects a majority of Janus' Board. As of December 31,
1996, Janus had under management more than $46 billion in assets.

Scott W. Schoelzel serves as Portfolio Manager for Janus' portion of the
Aggressive Growth Portfolio. Mr. Schoelzel joined Janus in January 1994. From
1991 to 1993, Mr. Schoelzel was a portfolio manager with Founders Asset
Management, Inc.

SunAmerica Asset Management Corp. SunAmerica is described above. Audrey L.
Snell serves as Portfolio Manager for SunAmerica's portion of the Aggressive
Growth Portfolio. Ms. Snell is a Senior Vice President of SunAmerica and has
been a portfolio manager with the firm since 1991.

Warburg, Pincus Counsellors, Inc. Warburg is a professional investment
counseling firm, incorporated in Delaware in 1970. Located at 466 Lexington
Avenue, New York, New York 10017-3147, Warburg provides investment services to
investment companies, employee benefit plans, endowment funds, foundations and
other institutions and individuals. As of January 31, 1997, Warburg managed
approximately $17.9 billion in assets. Warburg is a wholly owned subsidiary of
Warburg, Pincus Counsellors G.P., a New York general partnership.

The Portfolio Managers of Warburg's portion of the Aggressive Growth Portfolio
are Elizabeth B. Dater and Stephen J. Lurito. Ms. Dater is a senior managing
director of Warburg and has been a Portfolio Manager of Warburg since 1978. Mr.
Lurito is a managing director of Warburg and has been a Portfolio Manager of
Warburg since 1987.

MID-CAP GROWTH PORTFOLIO

The Advisers for the Mid-Cap Growth Portfolio are MAS, Pilgrim Baxter and T.
Rowe Price.

Miller Anderson & Sherrerd, LLP. MAS, a Pennsylvania limited liability
partnership founded in 1969, is located at One Tower Bridge, West Conshohocken,
Pennsylvania 19428. MAS provides investment services to employee benefit plans,
endowment funds, foundations and other institutional investors. MAS is a
subsidiary of Morgan Stanley, Dean Witter, Discover & Co., a financial services
company with three major businesses: full service brokerage, credit services and
asset management. As of December 31, 1996, MAS had in excess of $42 billion in
assets under management.

Arden C. Armstrong serves as Portfolio Manager for MAS's portion of the Mid-Cap
Growth Portfolio. Ms. Armstrong joined MAS as a Portfolio Manager in 1986.

Pilgrim Baxter & Associates, Ltd. Pilgrim Baxter, a Delaware corporation, is
located at 1255 Drummers Lane, Suite 300, Wayne, Pennsylvania 19087, and is a
professional investment management firm and registered investment adviser that,
along with its predecessors, has been in business since 1982. Pilgrim Baxter
provides advisory services to pension and profit-sharing plans, charitable
institutions, corporations, individual investors, trusts and estates, and other
investment companies. The controlling shareholder of Pilgrim Baxter is United
Asset Management Corporation ('UAM'), an NYSE listed holding company principally
engaged, through affiliated firms, in providing institutional investment
management services and acquiring institutional investment management firms.
UAM's corporate headquarters are located at One International Place, Boston,
Massachusetts 02110. As of December 31, 1996, Pilgrim Baxter had assets under
management of approximately $14.7 billion.

Bruce J. Muzina serves as primary manager and Gary L. Pilgrim serves as
co-manager for Pilgrim Baxter's portion of the Mid-Cap Growth Portfolio. Mr.
Muzina joined Pilgrim Baxter in 1985 from Citibank, where he was Vice
President/Portfolio Manager of U.S. equity portfolios for international
institutional accounts. Mr. Pilgrim has served as the Chief Investment Officer
for Pilgrim Baxter for the past six years, and has been its President since
1993. In addition, he is a chartered financial analyst.

T. Rowe Price Associates, Inc. T. Rowe Price is a Maryland corporation located
at 100 East Pratt Street, Baltimore, Maryland 21202. Founded in 1937 by the late
Thomas Rowe Price, Jr., T. Rowe Price and its affiliates managed over $95
billion for over four and a half million individual and institutional investor
accounts as of December 31, 1996. T. Rowe Price is a publicly traded company.

T. Rowe Price's portion of the Mid-Cap Growth Portfolio is advised by an
Investment Advisory Committee composed of Brian W.H. Berghuis, Chairman, Marc L.
Baylin, James A.C. Kennedy and John F. Wakeman. Mr. Berghuis has day-to-day
responsibility for managing the assets and works with the committee in
developing and executing the investment program. Mr. Berghuis has been managing
investments since 1988, and joined T. Rowe Price in 1985.

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VALUE PORTFOLIO

The Advisers for the Value Portfolio are Davis, Neuberger&Berman and Strong.
Schafer, pursuant to a subcontract with Strong, serves as Adviser to Strong's
portion of Value Portfolio.

Davis Selected Advisers, L.P. Davis is a Colorado limited partnership, located
at 124 East Marcy Street, Santa Fe, New Mexico 87501, and Venture Advisers, Inc.
is Davis' sole general partner. Shelby M.C. Davis is the controlling shareholder
of the general partner. As of December 31, 1996, Davis had assets under
management of approximately $6.9 billion. In performing its investment advisory
services, Davis, while remaining ultimately responsible for its management of
the portion of the assets of the Value Portfolio allocated to it, is able to
draw on the portfolio management, research and market expertise of its
affiliates (including Davis Selected Advisers--NY, Inc.) in performing such
services.

Christopher C. Davis, formerly co-manager for the Davis portion of the Value
Portfolio, assumed full responsibility for the management of Davis' portion
effective February 19, 1997. He joined Davis in September 1989 as an assistant
portfolio manager and research analyst. Prior to February 19, 1997, Shelby M.C.
Davis served as co-manager of the Davis portion of the Value Portfolio. He will
continue to consult with Christopher Davis in his capacity of Chief Investment
Officer of Davis.

Neuberger&Berman, LLC Neuberger&Berman is a Delaware limited liability company
located at 605 Third Avenue, New York, New York 10158-0180.
Neuberger&Berman has been in the investment advisory business since 1939. As of
December 31, 1996, Neuberger&Berman and its affiliates had assets under
management of approximately $44.7 billion.

Michael M. Kassen and Robert I. Gendelman serve as Portfolio Managers of
Neuberger&Berman's portion of the Value Portfolio. Mr. Kassen has been Managing
Director since January 1994 and a Vice President and Portfolio Manager since
June 1990, of Neuberger&Berman Management, Inc. and a principal of
Neuberger&Berman since January 1993. Mr. Gendelman is a senior portfolio manager
for Neuberger&Berman, an Assistant Vice President of Neuberger&Berman
Management, Inc. and a principal of Neuberger&Berman since December 1996. He was
a portfolio manager for another mutual fund manager from 1992 to 1993 and was
managing partner of an investment partnership from 1988 to 1992.

Strong Capital Management, Inc. Strong is a Wisconsin corporation, with a
principal mailing address at P.O. Box 2936, Milwaukee, Wisconsin 53201, and
since it began conducting business in 1974, Strong's principal business has been
providing continuous investment supervision for individuals and institutional
accounts, such as pension funds and profit-sharing plans, as well as mutual
funds, several of which are funding vehicles for variable insurance products.
Mr. Richard S. Strong is the controlling shareholder of Strong. As of December
31, 1996, Strong had over $23 billion under management. Pursuant to an agreement
between Strong and Schafer, under which Schafer manages Strong's portion of the
Value Portfolio, SunAmerica pays an advisory fee directly to Strong, and Strong
pays Schafer's fee.

Schafer Capital Management, Inc. Schafer is a Delaware corporation, located at
645 Fifth Avenue, New York, New York 10022, and serves as investment adviser to
a number of equity accounts. An affiliate of Schafer, Schafer Cullen Capital
Management, Inc., serves as investment adviser to equity accounts for
individuals, tax-exempt equity accounts, charitable foundation accounts and
other equity accounts. David K. Schafer is Schafer's controlling person (within
the meaning of the 1940 Act) and sole shareholder. As of December 31, 1996,
Schafer had assets under management of approximately $600 million.

David K. Schafer serves as the Portfolio Manager of Strong's portion of the
Value Portfolio. Mr. Schafer has been in the investment management business for
more than twenty-five years. Mr. Schafer founded Schafer in 1984, is the
President of Schafer and also a minority shareholder of Schafer Cullen Capital
Management, Inc.

INTERNATIONAL EQUITY PORTFOLIO

The Advisers for the International Equity Portfolio are Rowe-Fleming, Strong and
Warburg.

Rowe Price-Fleming International, Inc. Rowe-Fleming is a Maryland corporation,
incorporated in 1979 as a joint venture between T. Rowe Price and Robert
Flemings Holding Limited ('Flemings'). It is located at 100 East Pratt Street,
Baltimore, Maryland 21202. T. Rowe Price, Flemings and Jardine Fleming Group
Limited ('Jardine Fleming') are the owners

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of Rowe-Fleming. The common stock of Rowe-Fleming is 50% owned by a wholly owned
subsidiary of T. Rowe Price, 25% by a subsidiary of Flemings, and 25% by Jardine
Fleming. (Half of Jardine Fleming is owned by Flemings and half by Jardine
Matheson Holdings Limited.) T. Rowe Price has the right to elect a majority of
the Board of Directors of Rowe-Fleming, and Flemings has the right to elect the
remaining directors, one of whom will be nominated by Jardine Fleming. As of
December 31, 1996, Rowe-Fleming managed over $25 billion of foreign assets.

The Portfolio Managers for Rowe-Fleming's portion of the International Equity
Portfolio are Martin G. Wade, Christopher D. Alderson, Peter B. Askew, Mark J.T.
Edwards, John R. Ford, James B.M. Seddon, Benedict R.F. Thomas, and David J.L.
Warren. Martin Wade joined Rowe-Fleming in 1979 and has 26 years of experience
with the Fleming Group in research, client service, and investment management.
(Fleming Group includes Flemings and/or Jardine Fleming.) Christopher Alderson
joined Rowe-Fleming in 1988 and has nine years of experience with the Fleming
Group in research and portfolio management. Peter Askew joined Rowe-Fleming in
1988 and has 20 years of experience managing multi-currency fixed income
portfolios. Mark Edwards joined Rowe-Fleming in 1986 and has 14 years of
experience in financial analysis. John Ford joined Rowe-Fleming in 1982 and has
15 years of experience with Fleming Group in research and portfolio management.
James Seddon joined Rowe-Fleming in 1987 and has 10 years of experience in
portfolio management. Benedict Thomas joined Price-Fleming in 1988 and has seven
years of portfolio management experience. David Warren joined Price-Fleming in
1984 and has 16 years of experience in equity research, fixed income research,
and portfolio management.

Strong Capital Management, Inc. For a description of Strong, see 'Value
Portfolio' above. Anthony L.T. Cragg serves as Portfolio Manager for Strong's
portion of the International Equity Portfolio. Mr. Cragg joined Strong in April
1993 to develop Strong's international investment activities. During the prior
seven years, he helped establish Dillon, Read International Asset Management,
where he was in charge of Japanese, Asian, and Australian investments.

Warburg, Pincus Counsellors, Inc. For a description of Warburg, see 'Aggressive
Growth Portfolio' above. Richard H. King is Portfolio Manager of Warburg's
portion of the International Equity Portfolio, and Nicholas P.W. Horsley, P.
Nicholas Edwards, Harold W. Ehrlich and Vincent J. McBride are associate
portfolio managers. From 1984 until 1988, Mr. King was chief investment officer
and a director at Fiduciary Trust Company International S.A. in London, with
responsibility for all international equity management and investment strategy.
From 1982 to 1984 he was a director in charge of Far East Equity Investments at
N.M. Rothschild International Asset Management, a London merchant bank. Mr.
King, a senior managing director of Warburg, has been with Warburg since 1989.

The Distributor. SunAmerica Capital Services, Inc. (the 'Distributor'), an
indirect wholly owned subsidiary of SunAmerica Inc., acts as distributor of the
shares of each Portfolio pursuant to the Distribution Agreement between the
Distributor and the Fund on behalf of each Portfolio. The Distributor receives
all initial and deferred sales charges in connection with the sale of Fund
shares, all or a portion of which it may reallow to other broker-dealers. The
Distributor and other broker-dealers pay commissions to salespersons, as well as
the cost of printing and mailing prospectuses to potential investors and of any
advertising expenses incurred by them in connection with their distribution of
Portfolio shares.

The Distributor, at its expense, may from time to time provide additional
compensation to broker-dealers (including in some instances, exclusively to
Royal Alliance Associates, Inc., SunAmerica Securities, Inc., Keogler, Morgan &
Company and/or Advantage Capital Management Corporation, affiliates of the
Distributor) in connection with sales of shares of the Fund. Such compensation
may include (i) full re-allowance of the front-end sales charge on Class A
shares; (ii) additional compensation with respect to the sale of Class A, Class
B or Class C shares; or (iii) financial assistance to broker-dealers in
connection with conferences, sales or training programs for their employees,
seminars for the public, advertising campaigns regarding one or more of the
Portfolios, and/or other broker-dealer sponsored special events. In some
instances, this compensation will be made available only to certain
broker-dealers whose representatives have sold a significant amount of shares of
the Fund. Compensation may also include payment for travel expenses, including
lodging, incurred in connection with trips taken by invited registered
representatives for meetings or seminars of a business nature. In addition, the
following types of non-cash compensation may be

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offered through sales contests: (i) travel mileage on major air carriers; (ii)
tickets for entertainment events (such as concerts or sporting events); or (iii)
merchandise (such as clothing, trophies, clocks, pens or other electronic
equipment). Broker-dealers may not use sales of the Funds' shares to qualify for
this compensation to the extent receipt of such compensation may be prohibited
by the laws of any state or any self-regulatory agency, such as, for example,
the National Association of Securities Dealers, Inc. Dealers who receive bonuses
or other incentives may be deemed to be underwriters under the Securities Act of
1933.

Certain laws and regulations limit the ability of banks and other depository
institutions to underwrite and distribute securities. However, in the opinion of
SunAmerica based upon the advice of counsel, these laws and regulations do not
prohibit such depository institutions from providing other services to
investment companies of the type contemplated by the Distribution Plans (as
described below). The Directors will consider appropriate modifications to the
operations of the Portfolios, including discontinuance of payments under the
Distribution Plans to banks and other depository institutions, in the event such
institutions can no longer provide the services called for under their
agreements. Banks and other financial services firms may be subject to various
state laws regarding services described, and may be required to register as
dealers pursuant to state law.

Distribution Plans. Rule 12b-1 under the 1940 Act permits an investment company
directly or indirectly to pay expenses associated with the distribution of its
shares in accordance with a plan adopted by the investment company's board of
directors and approved by its shareholders. Pursuant to such rule, the Directors
and the shareholders of each class of shares of each Portfolio have adopted
distribution plans hereinafter referred to as the 'Class A Plan,' the 'Class B
Plan' and the 'Class C Plan,' and collectively as the 'Distribution Plans.' In
adopting each Distribution Plan, the Directors determined that there was a
reasonable likelihood that each such Plan would benefit the Portfolios and the
shareholders of each 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, the Distributor may receive payments from a Portfolio at
an annual rate of up to 0.10% of average daily net assets of such Portfolio's
Class A shares to compensate the Distributor and certain securities firms for
providing sales and promotional activities for distributing that class of
shares. Under the Class B and Class C Plans, the Distributor may receive
payments from a Portfolio at the annual rate of up to 0.75% of the average daily
net assets of such Portfolio's Class B and Class C shares, respectively, to
compensate the Distributor and certain securities firms for providing sales and
promotional activities for distributing each such 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 Portfolio
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 the Class A Plan, Class B Plan or Class C Plan may exceed the
Distributor's distribution costs as described above. The Distribution Plans
provide that each class of shares of each Portfolio may also pay the Distributor
an account maintenance and service fee of up to 0.25% of the aggregate average
daily net assets of such class of shares for payments to broker-dealers for
providing continuing account maintenance. In this regard, some payments are used
to compensate broker-dealers with account maintenance and service fees in an
amount up to 0.25% per year of the assets maintained in a Portfolio by their
customers.

Administrator. The Fund has entered into a Service Agreement under the terms of
which SunAmerica Fund Services, Inc. ('SAFS'), an indirect wholly owned
subsidiary of SunAmerica, Inc., assists the transfer agent in providing
shareholder services. Pursuant to the Service Agreement, as compensation for
services rendered, SAFS receives a fee from the Fund, calculated and payable
monthly, at an annual rate of 0.22% of average daily net assets. See the
Statement of Additional Information for further information.

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Purchase of Shares
- --------------------------------------------------------------------------------

General. Shares of each of the Portfolios 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, may be imposed either (i) at the time of
purchase (Class A shares), or (ii) on a deferred basis (Class B and Class C
shares and certain Class A shares).

The minimum initial investment in each Portfolio is $500 and the minimum
subsequent investment is $100. However, for Individual Retirement Accounts
('IRAs'), Keogh Plan accounts and accounts for other qualified plans, the
minimum initial investment is $250 and the minimum subsequent investment is $25.
The decision as to which class is most beneficial to an investor depends on the
amount and intended length of the investment. Investors should consult their
investment adviser for help in determining which class of shares is most
appropriate for them. Generally, investors making large investments, qualifying
for a reduced initial sales charge, might consider Class A shares because there
is a lower distribution fee than Class B and Class C shares. Shareholders who
purchase $1,000,000 or more of shares of the Portfolios should purchase only
Class A shares. Investors making small investments might consider Class B or
Class C shares because 100% of the purchase price is invested immediately.
Investors should consider the CDSC period and any conversion rights in the
context of their investment time frame. For example, while Class C shares have a
shorter CDSC period than Class B shares, Class C shares do not have a conversion
feature and, therefore, are subject to an ongoing distribution fee. Accordingly,
Class B shares may be more appropriate than Class C shares for investors with a
longer term investment time frame. Dealers may receive different levels of
compensation depending on which class of shares they sell.

Upon making an investment in shares of a Portfolio, an open account will be
established under which shares of the applicable Portfolio and additional shares
acquired through reinvestment of dividends and distributions will be held for
each shareholder's account by State Street Bank and Trust Company ('State
Street') and its affiliate, National Financial Data Services ('NFDS')
(collectively, the 'Transfer Agent'). Shareholders will not be issued
certificates for their shares unless they specifically so request in writing,
but no certificate is issued for fractional shares. Shareholders receive regular
statements from the Transfer Agent that report each transaction affecting their
accounts. Further information may be obtained by calling Shareholder/Dealer
Services at (800) 858-8850.

Class A Shares. Class A shares are offered at net asset value plus an initial
sales charge, which varies with the size of the purchase as follows:

<TABLE>
<CAPTION>
CONCESSION TO
SALES CHARGE DEALERS
---------------------- -------------
% OF % OF % OF
OFFERING NET AMOUNT OFFERING
SIZE OF PURCHASE PRICE INVESTED PRICE
- --------------------------------------- -------- ---------- -------------
<S> <C> <C> <C>
Less than $50,000...................... 5.75% 6.10% 5.00%
$50,000 but less than $100,000......... 4.75% 4.99% 4.00%
$100,000 but less than $250,000........ 3.75% 3.90% 3.00%
$250,000 but less than $500,000........ 3.00% 3.09% 2.25%
$500,000 but less than $1,000,000...... 2.10% 2.15% 1.35%
$1,000,000 or more..................... None None see below
</TABLE>

No sales charge is payable at the time of purchase on investments of $1 million
or more. In addition, shares may be purchased at net asset value, without
payment of a sales charge, by employee benefit plans qualified under Sections
401 or 457 of the Code, or employee benefit plans created pursuant to Section
403(b) of the Code and sponsored by nonprofit organizations defined under
Section 501(c)(3) of the Code (collectively, 'Plans'). A Plan will qualify for
purchases at net asset value provided that (a) the initial amount invested in
one or more of the Portfolios (or in combination with the shares of other funds
in the SunAmerica Mutual Funds) is at least $1,000,000, (b) the sponsor signs a
$1,000,000 Letter of Intent, (c) such shares are purchased by an
employer-sponsored plan with at least 100 eligible employees, or (d) the
purchases are by trustees or other fiduciaries for certain employer-sponsored
plans, the trustee, fiduciary or administrator for which has an agreement with
the Distributor with respect to such

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purchases and all such transactions for the plan are executed through a single
omnibus account. Nevertheless, the Distributor will pay a commission to any
dealer who initiates or is responsible for such an investment, in the amount of
1.00% of the amount invested. Redemptions of such shares within the twelve
months following their purchase will be subject to a CDSC at the rate of 1.00%
of the lesser of the net asset value of the shares being redeemed (exclusive of
reinvested dividends and distributions) or the total cost of such shares. This
CDSC is paid to the Distributor. Redemptions of such shares held longer than
twelve months would not be subject to a CDSC. However, one-half of the
commission paid with respect to such a purchase is subject to forfeiture by the
dealer in the event the redemption occurs during the second year from the date
of purchase. In determining whether a deferred sales charge is payable, it is
assumed that shares purchased with reinvested dividends and distributions and
then other shares held the longest are redeemed first.

To the extent that sales are made for personal investment purposes, the sales
charge is waived as to Class A shares purchased by current or retired officers,
directors, and other full-time employees of SunAmerica Inc. and its affiliates,
as well as members of the selling group and family members of the foregoing. In
addition, the sales charge is waived with respect to shares purchased by wrap or
certain other advisory accounts for the benefit of clients of broker-dealers,
financial institutions, registered investment advisers or financial planners
adhering to certain standards established by the Distributor. Shares purchased
under this waiver are subject to certain limitations described in the Statement
of Additional Information. Complete details concerning how an investor may
purchase shares at reduced sales charges may be obtained by contacting
Shareholder/Dealer Services at (800) 858-8850.

There are certain special purchase plans for Class A shares which can reduce the
amount of the initial sales charge to investors in the Portfolios. For more
information about 'Rights of Accumulation,' the 'Letter of Intent,' 'Combined
Purchase Privilege' and 'Reduced Sales Charges for Group Purchases,' see the
Statement of Additional Information.

Class B Shares. Class B shares are offered at net asset value. Certain
redemptions of Class B shares within the first six years of the date of purchase
are subject to a CDSC. The charge is assessed on an amount equal to the lesser
of the then-current market value or the purchase price of the shares being
redeemed. No charge is assessed on shares derived from reinvestment of dividends
or capital gains distributions. In determining whether the CDSC is applicable to
a redemption, the calculation is determined in the manner that results in the
lowest possible rate being charged. Therefore, it is assumed that the redemption
is first of any Class A shares in the shareholder's Portfolio account, second of
any Class B shares in such account that are not subject to a CDSC (i.e., shares
representing reinvested dividends and distributions), third of Class B shares
held for more than six years and fourth of such shares held the longest during
the six-year period. The CDSC will not be applied to dollar amounts representing
an increase in the net asset value of the shares being redeemed since the time
of purchase of such redeemed shares. The amount of the CDSC, if any, will vary
depending on the number of years from the time of payment for the purchase of
Class B shares until the time of redemption of such shares. Solely for purposes
of determining the number of years from the time of any payment for the purchase
of shares, all payments during a month are aggregated and deemed to have been
made on the first day of the month. The following table sets forth the rates of
the CDSC.

<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS A PERCENTAGE
YEAR SINCE PURCHASE OF DOLLARS INVESTED OR
PAYMENT WAS MADE REDEMPTION PROCEEDS
- -------------------------- -------------------------
<S> <C>
First..................... 4%
Second.................... 4%
Third..................... 3%
Fourth.................... 3%
Fifth..................... 2%
Sixth..................... 1%
Seventh and thereafter.... 0%
</TABLE>

Conversion Feature--Class B Shares. Class B shares (including a pro-rata
portion of the Class B shares purchased through the reinvestment of dividends
and distributions) 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. Subsequent to the conversion of a Class B share to a Class
A share, such shares will no longer be subject to the higher distribution fee of
Class B shares. Such conversion will be on the basis of the relative net asset
values of Class B shares and Class A shares, without the imposition of any sales
load, fee or charge.

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Class C Shares. Class C shares are offered at net asset value. Certain
redemptions of Class C shares within the first year of the date of purchase 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.

Waiver of CDSC. The CDSC applicable to Class B and Class C shares will be
waived in connection with redemptions that are (a) requested within one year of
the death of the shareholder of an individual account or of a joint tenant where
the surviving joint tenant is the deceased's spouse; (b)requested within one
year after the shareholder of an individual account or a joint tenant on a
spousal joint tenant account becomes disabled; (c) taxable distributions or
loans to participants made by qualified retirement plans or retirement accounts
(not including rollovers) for which SunAmerica serves as fiduciary (e.g.,
prepares all necessary tax reporting documents); provided that, in the case of a
taxable distribution, the plan participant or accountholder has attained the age
of 59 1/2 at the time the redemption is made; and (d) made pursuant to a
Systematic Withdrawal Plan, up to a maximum amount of 12% per year from a
shareholder account based on the value of the account at the time the Plan is
established, provided, however, that all dividends and capital gains
distributions are reinvested in Portfolio shares. See the Statement of
Additional Information for further information concerning conditions with
respect to (a) and (b) above. For information on the waiver of the CDSC contact
Shareholder/Dealer services at (800) 858-8850.

Other CDSC Information. For Federal income tax purposes, the amount of the CDSC
will reduce the amount realized on the redemption of shares, concomitantly
reducing gain or increasing loss. For information on the imposition of the CDSC
contact Shareholder/Dealer Services at (800) 858-8850.

Additional Purchase Information. All purchases are confirmed to each
shareholder. The Fund reserves the right to reject any purchase order and may at
any time discontinue the sale of any class of shares of any Portfolio.

Shares of the Portfolios may be purchased through the Distributor or SAFS, by
check or federal funds wire and through a dollar cost averaging program. Checks
should be made payable to the specific Portfolio of the Fund. If the payment is
for a retirement plan account for which the Adviser serves as fiduciary, please
indicate on the check that payment is for such account. Payments to open new
accounts should be mailed to SunAmerica Fund Services, Inc., Mutual Fund
Operations, The SunAmerica Center, 733 Third Avenue, New York, New York
10017-3204, together with a completed New Account Application. Payment for
subsequent purchases should be mailed to SunAmerica Fund Services, Inc., c/o
NFDS, P.O. Box 419373, Kansas City, Missouri 64141-6373 and the shareholder's
account number for the Portfolio should appear on the check. For fiduciary
retirement plan accounts, both initial and subsequent purchases should be mailed
to SunAmerica Fund Services, Inc., Mutual Fund Operations, The SunAmerica
Center, 733 Third Avenue, New York, New York 10017-3204. SAFS reserves the right
to reject any check made payable other than in the manner indicated above. Under
certain circumstances, the Fund will accept a multi-party check (e.g., a check
made payable to the shareholder by another party and then endorsed by the
shareholder to the Fund in payment for the purchase of shares); however, the
processing of such a check may be subject to a delay. The Fund does not verify
the authenticity of the endorsement of such multi-party check, and acceptance of
the check by the Fund should not be considered verification thereof. Neither the
Fund nor its affiliates will be held liable for any losses incurred as a result
of a fraudulent endorsement. Shares will be priced at the net asset value next
determined after the order is placed with the Distributor or SAFS. See
'Additional Information Regarding Purchase of Shares' in the Statement of
Additional Information for more information regarding these services and the
procedures involved and when orders are deemed to be placed.

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Redemption of Shares
- --------------------------------------------------------------------------------

Shares of any Portfolio may be redeemed at any time at their net asset value
next determined, less any applicable CDSC, after receipt by the Fund of a
redemption request in proper form. Any capital gain or loss realized by a
shareholder upon any redemption of shares will be recognized for federal income
tax purposes, subject to certain loss deferral rules. See 'Dividends,
Distributions and Taxes.'

Regular Redemption. Shareholders may redeem their shares by sending a written
request to SAFS, Mutual Fund Operations, The SunAmerica Center, 733 Third
Avenue, New York, NY 10017-3204. All written requests for redemption must be
endorsed by the shareholder(s) with signature(s) guaranteed by an 'eligible
guarantor institution' which includes: banks, brokers, dealers, credit unions,
securities and exchange associations, clearing agencies and savings
associations. Guarantees must be signed by an authorized signatory of the
eligible guarantor and the words 'Signature Guaranteed' must appear with the
signature. Signature guarantees by notaries will not be accepted. SAFS may
request further documentation from corporations, executors, administrators,
trustees or guardians.

Repurchase Through The Distributor. The Distributor is authorized, as agent for
the Portfolios, to offer to repurchase shares which are presented by telephone
to the Distributor by investment dealers. Orders received by dealers must be at
least $500. The repurchase price is the net asset value per share of the
applicable class of shares of a Portfolio next-determined after the repurchase
order is received, less any applicable CDSC. Repurchase orders received by the
Distributor after the Fund's close of business, will be priced based on the next
business day's close. Dealers may charge for their services in connection with
the repurchase, but neither the Portfolios nor the Distributor imposes any such
service charge. The offer to repurchase may be suspended at any time, as
described below.

Telephone Redemption. The Fund accepts telephone requests for redemption of
shares with a value of less than $100,000. The proceeds of a telephone
redemption may be sent by wire to the shareholder's bank account as set forth in
the New Account Application Form or in a subsequent written authorization.
Shareholders utilizing the redemption through the electronic funds transfer
method will incur a $15.00 transaction fee. The Fund will employ reasonable
procedures to confirm that instructions communicated by telephone are genuine.
Failure to do so may result in liability to the Fund for losses incurred due to
unauthorized or fraudulent telephone instructions. Such procedures include, but
are not limited to, requiring some form of personal identification prior to
acting upon instructions received by telephone and/or tape recording of
telephone instructions.

A shareholder making a telephone redemption should call Shareholder/Dealer
Services at (800) 858-8850, and state (i) the name of the shareholder(s)
appearing on the Fund's records, (ii) his or her account number with the Fund,
(iii) the name of the Portfolio, (iv) the amount to be redeemed, and (v) the
name of the person(s) requesting the redemption. The Fund reserves the right to
terminate or modify the telephone redemption service at any time.

Systematic Withdrawal Plan. Shareholders who have invested at least $5,000 in
any of the Portfolios may provide for the periodic payment from the account
pursuant to the Systematic Withdrawal Plan. At the shareholder's election, such
payment may be made directly to the shareholder or to a third party on a
monthly, quarterly, semi-annual or annual basis. The minimum periodic payment is
$50. Maintenance of a withdrawal plan concurrently with purchases of additional
shares may be disadvantageous to a shareholder because of the sales charge
applicable to such purchases. Shareholders who have been issued share
certificates will not be eligible to participate in the Systematic Withdrawal
Plan and will have to comply with certain additional
procedures in order to redeem shares. Further information may be obtained by
calling Shareholder/Dealer Services at (800) 858-8850.

General. Normally payment is made on the next business day for shares redeemed,
but in any event, payment is made by check within seven days after receipt by
the Transfer Agent of share certificates or of a redemption request, or both, in
proper form.

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Under unusual circumstances, the Portfolio may suspend repurchases or postpone
payment for up to seven days or longer, as permitted by the federal securities
laws.

At various times, a Portfolio may be requested to redeem shares for which it has
not yet received good payment. A Portfolio may delay or cause to be delayed the
mailing of a redemption check until such time as good payment (e.g., cash or
certified check drawn on a United States bank) has been collected for the
purchase of such shares, which will not exceed 15 days.

Because of the high cost of maintaining smaller shareholder accounts, the
Portfolio may redeem, on at least 60 days' written notice and without
shareholder consent, any account that has a net asset value of less than $500
($250 for retirement plan accounts), as of the close of business on the day
preceding such notice, unless such shareholder increases the account balance to
at least $500 during such 60-day period. In the alternative, the applicable
Portfolio may impose a $2.00 monthly charge on accounts below the minimum
account size.

If a shareholder redeems shares of any class of a Portfolio 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 shares) and with the crediting of any
CDSC paid with respect to such reinstated shares at the time of redemption
(Class B and Class C shares), all or any part of the redemption proceeds in
shares of the Portfolio at the then-current net asset value. Reinstatement may
affect the tax status of the prior redemption.

Exchange Privilege
- --------------------------------------------------------------------------------

General. Shareholders in any of the Portfolios may exchange their shares for
the same class of shares of any other Portfolio or other SunAmerica Fund that
offers such class at the respective net asset value per share. Before making an
exchange, a shareholder should obtain and review the prospectus of the fund
whose shares are being acquired. All exchanges are subject to applicable minimum
initial investment requirements and can only be effected if the shares to be
acquired are qualified for sale in the state in which the shareholder resides.
Exchanges of shares generally will constitute a taxable transaction except for
IRAs, Keogh Plans and other qualified or tax-exempt accounts. The exchange
privilege may be terminated or modified upon 60 days' written notice. Further
information about the exchange privilege may be obtained by calling
Shareholder/Dealer Services at (800) 858-8850.

If a shareholder acquires Class A shares through an exchange from another fund
in the SunAmerica Family of Mutual Funds where the original purchase of such
fund's Class A shares was not subject to an initial sales charge because the
purchase was in excess of $1 million, such shareholder will remain subject to
the 1% CDSC, if any, applicable to such redemptions. In such event, the period
for which the original shares were held prior to the exchange will be 'tacked'
with the holding period of the shares acquired in the exchange for purposes of
determining whether the 1% CDSC is applicable upon a redemption of any of such
shares.

A shareholder who acquires Class B or Class C shares through an exchange from
another fund in the SunAmerica Family of Mutual Funds will retain liability for
any CDSC outstanding on the date of the exchange. In such event, the period for
which the original shares were held prior to the exchange will be 'tacked' with
the holding period of the shares acquired in the exchange for purposes of
determining what, if any, CDSC is applicable upon a redemption of any of such
shares.

Restrictions on Exchanges. Because excessive trading (including short-term
'market timing' trading) can hurt a Portfolio's performance, each Portfolio may
refuse any exchange sell order (1) if it appears to be a market timing
transaction involving a significant portion of a Portfolio's assets or (2) from
any shareholder account if previous use of the exchange privilege is considered
excessive. Accounts under common ownership or control, including, but not
limited to, those with the same taxpayer identification number and those
administered so as to

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Style Select Series(Servicemark)

redeem or purchase shares based upon certain predetermined market indications,
will be considered one account for this purpose.

In addition, a Portfolio reserves the right to refuse any exchange purchase
order if, in the judgment of SunAmerica, the Portfolio would be unable to invest
effectively in accordance with its investment objective and policies, or would
otherwise potentially be adversely affected. A shareholder's purchase exchange
may be restricted or refused if the Portfolio receives or anticipates
simultaneous orders affecting significant portions of the Portfolio's assets. In
particular, a pattern of exchanges that coincide with a 'market timing' strategy
may be disruptive to the Portfolio and may therefore be refused.

Finally, as indicated under 'Purchase of Shares,' the Fund and Distributor
reserve the right to refuse any order for the purchase of shares.

Portfolio Transactions, Brokerage and Turnover
- --------------------------------------------------------------------------------

The Advisers are responsible for decisions to buy and sell securities for the
Portfolios, selection of broker-dealers and negotiation of commission rates for
their respective portion of the relevant Portfolio. In the over-the-counter
market, securities are generally traded on a 'net' basis with dealers acting as
principal for their own accounts without a stated commission (although the price
of the security usually includes a profit to the dealer). In underwritten
offerings, securities are purchased at a fixed price which includes an
underwriter's concession or discount. On occasion, certain money market
securities may be purchased directly from an issuer, in which case no
commissions or discounts are paid.

As a general matter, the Advisers select broker-dealers which, in their best
judgment, provide prompt and reliable execution at favorable security prices and
reasonable commission rates. The Advisers may select broker-dealers which
provide them with research services and may cause a Portfolio to pay such
broker-dealers commissions which exceed those which other broker-dealers may
have charged, if in the Adviser's view the commissions are reasonable in
relation to the value of the brokerage and/or research services provided by the
broker-dealer. Brokerage arrangements may take into account the distribution of
Fund shares by broker-dealers, subject to best price and execution. The Advisers
may effect portfolio transactions through an affiliated broker-dealer, acting as
agent and not as principal, in accordance with Rule 17e-1 under the 1940 Act and
other applicable securities laws.

Each Portfolio has no limitation regarding its policy with respect to portfolio
turnover. The portfolio turnover rate is calculated by dividing the lesser of
sales or purchases of portfolio securities, excluding short-term securities, by
the average monthly value of the Portfolio's long-term portfolio securities.
Under certain market conditions, the investment policies of the Portfolios may
result in high portfolio turnover. Because each of the Advisers to each
Portfolio manages its portion of the Portfolio's assets independently, it is
possible that the same security may be purchased and sold on the same day by two
or more Advisers to the same Portfolio, resulting in higher brokerage
commissions for the Portfolio. Notwithstanding the foregoing, however, the
portfolio turnover rates for the Portfolio are not expected to exceed 200%. High
portfolio turnover involves correspondingly greater brokerage commissions and
other transaction costs which will be borne directly by the Portfolio. In
addition, high portfolio turnover may result in increased short-term capital
gains, which, when distributed to shareholders, are currently treated as
ordinary income.

Determination of Net Asset Value
- --------------------------------------------------------------------------------

Each Portfolio is open for business on any day the NYSE is open for regular
trading. Shares are valued each day as of the close of regular trading on the
NYSE (generally, 4:00 p.m., Eastern time). Each Portfolio calculates the net
asset value of each class of its shares separately by dividing the total value
of

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Style Select Series(Servicemark)

each class's net assets by the shares of each class outstanding. Investments for
which market quotations are readily available are valued at market. All other
securities and assets are valued at fair value following procedures approved by
the Directors.

Performance Data
- --------------------------------------------------------------------------------

Each Portfolio may advertise performance data that reflect its total investment
return. A brief summary of the computations is provided below and a detailed
discussion is in the Statement of Additional Information. Total return is based
on historical earnings and is not intended to indicate future performance.

Total return performance data may be advertised by each Portfolio. The average
annual total return may be calculated for one-, five- and ten-year periods or
for the lesser period since inception. These performance data represent the
average annual percentage changes of a hypothetical $1,000 investment and
assumes the reinvestment of all dividends and distributions and includes sales
charges and recurring fees that are charged to shareholder accounts. A
Portfolio's advertisements may also reflect total return performance data
calculated by means of cumulative, aggregate, average, year-to-date, or other
total return figures. Further, the Portfolio may advertise total return
performance for periods of time in addition to those noted above.

Although expenses for Class B and Class C shares may be higher than those for
Class A shares, the performance of Class B and Class C shares may be higher than
the performance of Class A shares after giving effect to the impact of the sales
charges and 12b-1 fees applicable to each class of shares.

Dividends, Distributions and Taxes
- --------------------------------------------------------------------------------

Dividends and Distributions. Dividends from net investment income, if any, are
paid at least annually. Dividends and distributions generally are taxable in the
year in which they are paid, except any dividends paid in January which were
declared in the previous calendar quarter will be treated as paid in December of
the previous year. Dividends and distributions are paid in additional shares
based on the next determined net asset value, unless the shareholder elects in
writing, not less than five business days prior to the payment date, to receive
amounts in excess of $10 in cash.

In addition to having the dividends and distributions of a Portfolio reinvested
in shares of such Portfolio, a shareholder may, if he or she so elects on the
New Account Application, have dividends and distributions invested in the same
class of shares of any other SunAmerica Mutual Fund or any other Portfolio of
the Fund at the then-current net asset value of such fund(s).

The excess of net realized long-term capital gains over net capital losses ('net
capital gains'), if any, will be distributed to the shareholders at least
annually. Each Portfolio's policy is to offset any prior year capital loss carry
forward against any realized capital gains, and accordingly, no distribution of
capital gains will be made until gains have been realized in excess of any such
loss carry forward.

Taxes. Each Portfolio intends to qualify and elect to be taxed as a regulated
investment company under the Code. While so qualified, the Fund and each of the
Portfolios will not be subject to U.S. Federal income tax on the portion of its
investment company taxable income and net capital gains distributed to its
shareholders.

Dividends of net investment income and distributions of any net realized
short-term capital gain ('ordinary income dividends'), whether paid in cash or
reinvested in shares of the Portfolios, are taxable to shareholders as ordinary
income. Distributions made from the Fund's net realized long-term capital gains
(including long-term gains from certain transactions in futures and options) are
taxable to shareholders as long-term capital gains, regardless of the length of
time the

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shareholder has owned Fund shares. To the extent a Portfolio's income is derived
from certain dividends received from domestic corporations, a portion of the
dividends paid to corporate shareholders of such Portfolios will be eligible for
the 70% dividends-received deduction. It generally is not anticipated that
dividends paid by the International Equity Portfolio will qualify for the
dividends-received deduction.

Ordinary income dividends paid by the Fund to shareholders who are non-resident
aliens or foreign entities generally will be subject to a 30% United States
withholding tax under existing provisions of the Code applicable to foreign
individuals and entities unless a reduced rate of withholding or a withholding
exemption is provided under applicable treaty law. Non-resident shareholders are
urged to consult their own tax advisers concerning the applicability of the
United States withholding tax.

Income and capital gains received by each Portfolio with respect to foreign
investments may give rise to withholding and other taxes imposed by foreign
countries. Tax conventions between certain countries and the U.S. may reduce or
eliminate such taxes. Shareholders may be able to claim U.S. foreign tax credits
with respect to such taxes, subject to certain provisions and limitations
contained in the Code. If more than 50% in value of the Portfolio's total assets
at the close of its taxable year consists of securities of foreign corporations,
the Portfolio will be eligible and may choose to file an election with the
Internal Revenue Service pursuant to which shareholders of the Portfolio may
include their proportionate share of such withholding taxes in their U.S. income
tax returns as gross income, treat such proportionate share as taxes paid by
them, and deduct such proportionate share in computing their taxable incomes or,
alternatively, use them as foreign tax credits against their U.S. income taxes.
No deductions for foreign taxes, however, may be claimed by non-corporate
shareholders who do not itemize deductions. Of course, certain retirement
accounts which are not subject to tax cannot claim foreign tax credits on
investments in foreign securities held in the Fund. A shareholder that is a
nonresident alien individual or a foreign corporation may be subject to U.S.
withholding tax on the income resulting from the Portfolio's election described
in this paragraph but may not be able to claim a credit or deduction against
such U.S. tax for the foreign taxes treated as having been paid by such
shareholder. The Portfolio will report annually to its shareholders the amount
per share of such withholding taxes. It is not anticipated that the Portfolios,
other than the International Equity Portfolio, will qualify to elect to pass
foreign taxes through to their shareholders.

No gain or loss will be recognized by Class B shareholders on the conversion of
their Class B shares into Class A shares. A shareholder's basis in the Class A
shares acquired will be the same as such shareholder's basis in the Class B
shares converted, and the holding period of the acquired Class A shares will
include the holding period for the converted Class B shares.

A shareholder who holds shares as a capital asset generally will recognize a
capital gain or loss upon the sale or exchange of such shares, which will be a
long-term capital gain or loss if such shares were held for more than one year.
However, any loss realized by a shareholder who held shares for six months or
less will be treated as a long-term capital loss to the extent of any
distributions of net capital gains received by the shareholder with respect to
such shares.

If a shareholder exercises the exchange privilege within 90 days of acquiring
such shares, then the loss the shareholder can recognize on the exchange will be
reduced (or the gain increased) to the extent the sales charge paid to the Fund
reduces any charges the shareholder would have owed upon the purchase of the new
shares in the absence of the exchange privilege. Instead, such sales charge will
be treated as an amount paid for the new shares. See 'Exchange Privilege'.

A loss realized on a sale or exchange of shares of the Fund will be disallowed
if other Fund shares are acquired (whether through the automatic reinvestment of
dividends or otherwise) within a 61-day period beginning 30 days before and
ending 30 days after the date that the shares are disposed of. In such a case,
the basis of the shares acquired will be adjusted to reflect the disallowed
loss.

Under certain provisions of the Code, some shareholders may be subject to a 31%
withholding tax on ordinary income dividends, capital gains distributions and
redemption payments ('backup withholding'). Generally, shareholders subject to
backup withholding will be those for whom no certified taxpayer identification
number is on file

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43
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with the Fund or who, to the Fund's knowledge, have furnished an incorrect
number. When establishing an account, an investor must certify under penalty of
perjury that such number is correct and that the investor is not otherwise
subject to backup withholding.

Statements as to the tax status of distributions to
shareholders of the Fund will be mailed annually. Shareholders are urged to
consult their own tax advisers regarding specific questions as to federal, state
or local taxes. Foreign shareholders are also urged to consult their own tax
advisers regarding the foreign tax consequences of ownership of interests in a
Portfolio. See 'Dividends, Distributions and Taxes' in the Statement of
Additional Information.

General Information
- --------------------------------------------------------------------------------

Reports to Shareholders. The Fund sends to its shareholders audited annual and
unaudited semi-annual reports for the Portfolios. The financial statements
appearing in annual reports are audited by independent accountants. In addition,
the Transfer Agent sends to each shareholder having an account directly with the
Fund a statement confirming transactions in the account.

Organization. The Fund, a corporation organized under the laws of the state of
Maryland on July 3, 1996, is an open-end management investment company, commonly
referred to as a mutual fund. The total number of shares which the Fund has
authority to issue is one billion (1,000,000,000) shares of common stock (par
value $0.0001 per share), amounting in aggregate par value to one hundred
thousand dollars ($100,000.00). All of such shares of common stock are initially
classified into four separate Portfolios known as the Aggressive Growth
Portfolio, the Mid-Cap Growth Portfolio, the Value Portfolio and the
International Equity Portfolio. All of the shares of each such Portfolio are
initially classified into four classes: Class A, Class B, Class C or Class Z.
Each such Portfolio initially consists of twenty-five million (25,000,000)
shares of each class. Only Class A, Class B and Class C shares are currently
being offered to the public.

The Fund does not hold annual shareholder meetings. The Directors are required
to call a meeting of shareholders for the purpose of voting upon the question of
removal of any Director when so requested in writing by the shareholders of
record holding at least 10% of the Fund's outstanding shares. Each share of each
Portfolio has equal voting rights on each matter pertaining to that Portfolio or
matters to be voted upon by the Fund. Each share of each Portfolio is entitled
to participate equally with the other shares of that Portfolio in dividends and
other distributions and the proceeds of any liquidation, except that, due to the
differing expenses borne by the classes, such dividends and proceeds are likely
to be lower for Class B and Class C shares than for Class A shares. See the
Statement of Additional Information for more information with respect to the
distinctions among classes.

Independent Accountants and Legal Counsel. Price Waterhouse LLP has been
selected as independent accountants for the Fund. The firm of Shereff, Friedman,
Hoffman & Goodman, LLP has been selected as legal counsel for the Fund.

Shareholder Inquiries. All inquiries regarding the Fund should be directed to
the Fund at the telephone number or address on the cover page of this
Prospectus. For questions concerning share ownership, dividends, transfer of
ownership or share redemption, contact SAFS, Mutual Fund Operations, The
SunAmerica Center, 733 Third Avenue, New York, NY 10017-3204, or call
Shareholder/Dealer Services at (800) 858-8850.

NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS,
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR THE STATEMENT OF ADDITIONAL
INFORMATION AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND, SUNAMERICA, ANY
ADVISER OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION IN WHICH SUCH OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY MAY
NOT LAWFULLY BE MADE.