STYLE SELECT SERIES INC, 485BPOS, 1998-06-15

STYLE SELECT SERIES INC
485BPOS, 1998-06-15

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<PAGE>

As filed with the Securities and Exchange Commission on June 15, 1998

File Nos. 333-11283; 811-07797

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

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 11 [x]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
Amendment No. 12
(Check appropriate box or boxes)

STYLE SELECT SERIES, INC.
(Exact Name of Registrant as Specified in Charter)

733 Third Avenue, The SunAmerica Center
New York, NY 10017
(Address of Principal Executive Office)(Zip Code)

Registrant's telephone number, including area code: (800) 858-8850

Robert M. Zakem, Esq.
Senior Vice President and General Counsel
SunAmerica Asset Management Corp.
The SunAmerica Center
733 Third Avenue
New York, NY 10017-3204
(Name and Address of Agent for Service)

Copies to:
Margery K. Neale, Esq.
Shereff, Friedman, Hoffman & Goodman LLP
919 Third Avenue
New York, NY 10022

It is proposed that this filing will become effective (check appropriate box)

X immediately upon filing pursuant to paragraph (b)
---
on (date) pursuant to paragraph (b)
---
60 days after filing pursuant to paragraph (a)
---
on (date) pursuant to paragraph (a) of Rule 485
---

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<PAGE>

STYLE SELECT SERIES, INC.

CROSS REFERENCE SHEET

Pursuant to Rule 481(b)

Under the Securities Act of 1933

<TABLE>
<CAPTION>
Part A

Item No. Registration Statement Caption Caption in Prospectus
<S> <C> <C>
1. Cover Page Cover Page

2. Synopsis - Fee Table *

3. Financial Highlights *

4. General description of Registrant Style Select Investing; Investment
Objectives and Policies;
General Information

5. Management of the Fund Management of the Fund

6. Capital Stock and Other Securities Dividends, Distributions and Taxes

7. Purchase of Securities Being Purchase of Shares
Offered

8. Redemption or Repurchase Redemption of Shares

9. Pending Legal Proceedings *

<CAPTION>
Part B
Item No. Registration Statement Caption Caption in Statement
<S> <C> <C>
10. Cover Page Cover Page

11. Table of Contents Table of Contents

12. General Information and History The Fund

13. Investment Objectives and Policies Investment Objectives and Policies;
Investment Restrictions

14. Management of the Fund Directors and Officers

15. Contact Persons and Principal The Fund
Holders of Securities
</TABLE>

<PAGE>

<TABLE>
<S> <C> <C>
16. Investment Advisory and Other Advisers, Distributor
Services and Administrator; Additional Information

17. Brokerage Allocation and Other Portfolio Transactions,
Practices Brokerage and Turnover

18. Capital Stock and Other Securities *

19. Purchase, Redemption and Pricing Additional Information
of Securities Being Offered Regarding Purchase of Shares; Additional
Information Regarding Redemption of Shares

20. Tax Status Determination of Net Asset Value
Dividends, Distributions and Taxes

21. Underwriters *

22. Calculation of Performance Data *

23. Financial Statements Financial Statements
</TABLE>

*Omitted from the Prospectus or Statement of Additional Information because the
item is not applicable.

Part C

The information required to be included in Part C is set forth under
the Appropriate item, so numbered in Part C of this Registration Statement.

<PAGE>
STYLE SELECT SERIES
Aggressive Growth Portfolio
Large-Cap Value Portfolio
Value Portfolio
Small-Cap Value Portfolio
International Equity Portfolio
(Class Z Shares)

Aggressive Growth Portfolio, Large-Cap Value Portfolio, Value Portfolio,
Small-Cap Value Portfolio and International Equity Portfolio (each, a
'Portfolio' and collectively, the 'Portfolios') are five of nine separate series
of Style Select Series, Inc., which is an open-end management investment company
organized as a Maryland Corporation (the 'Fund'). The Fund is managed by
SunAmerica Asset Management Corp. The assets of each Portfolio are normally
allocated among at least three investment advisers. More general information
about the Portfolios can be found in the attached Prospectus dated June 15, 1998
(the 'Retail Class Prospectus'), which is incorporated by reference into this
Prospectus.

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 Asset
Management Corp., and Warburg Pincus Asset Management, Inc. ('Warburg').

Large-Cap Value Portfolio seeks long-term growth of capital by investing in
equity securities of large-sized companies using a 'value' style of investing.
The Advisers for Large-Cap Value Portfolio are David L. Babson & Co., Inc.,
Davis Selected Advisers, L.P. ('Davis') and Wellington Management Company, LLP.

Value Portfolio seeks long-term growth of capital by investing in equity
securities (without regard to the size of the issuer), using a 'value' style of
investing. The Advisers for Value Portfolio are Davis, Neuberger&Berman, LLC and
Strong Capital Management, Inc.

Small-Cap Value Portfolio seeks long-term growth of capital by investing in
equity securities of small-sized companies using a 'value' style of investing.
The Advisers for Small-Cap Value Portfolio are Berger Associates, Inc., Lazard
Asset Management and The Glenmede Trust Company.

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., Bankers Trust Company and Warburg.

Class Z shares are offered exclusively for sale to participants in the
SunAmerica Profit Sharing and Retirement Plan, an employee benefit plan
sponsored by Fidelity Investments (the '401(k) Plan' or the 'Plan'). CLASS Z
SHARES ARE ONLY AVAILABLE IN THE FOLLOWING STATES: AK, AL, AZ, CA, CO, CT, DC,
FL, GA, IA, ID, IL, IN, KS, KY, LA, MA, MD, MI, MN, MO, MS, NC, NH, NJ, NM, NY,
OH, OK, OR, PA, SC, SD, TN, TX, UT, VA, WA AND WI. Only Class Z shares are
offered through this Prospectus. The Portfolios also offer Class A, Class B and
Class C shares through the Retail Class Prospectus. Further information
regarding Class A, Class B and Class C shares can be obtained by calling (800)
858-8850.

Shares of the Portfolios are not deposits or obligations of, or guaranteed
or endorsed by, any bank through which such shares may be sold, and are not
federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any other agency.

This Prospectus explains concisely what you should know before investing in
Class Z shares of the Portfolios. Please read it carefully before investing and
retain it for future reference. You can find more detailed information about the
Portfolios in the Statement of Additional Information dated June 15, 1998 which
is incorporated by reference into this Prospectus, and further information about
the performance of the Portfolios in the Fund's Annual Report to Shareholders,
which may be obtained without charge by contacting the Fund at The SunAmerica
Center, 733 Third Avenue, New York, NY 10017 or by calling (800) 858-8850.

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

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

Prospectus dated June 15, 1998

<PAGE>
SUMMARY OF FUND EXPENSES

<TABLE>
<CAPTION>
AGGRESSIVE LARGE-CAP SMALL-CAP INTERNATIONAL
GROWTH VALUE VALUE VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
CLASS Z CLASS Z CLASS Z CLASS Z CLASS Z
---------- --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Initial Sales Load......................... None None None None None
Maximum Sales Load on Reinvested Dividends......... None None None None None
Maximum Deferred Sales Load........................ None None None None None
Redemption Fees.................................... None None None None None
Exchange Fees...................................... None None None None None
Annual Fund Operating Expenses (as a percentage of
net assets)(1)
Management Fees.................................... 1.00% 1.00% 1.00% 1.00% 1.10%
12b-1 Fees......................................... None None None None None
Other Expenses (net of fee waivers/expense
reimbursements)(2)............................... 0.21% 0.21% 0.21% 0.21% 0.36%
Total Operating Expenses (net of fee waivers/ expense
reimbursements)(2)................................. 1.21% 1.21% 1.21% 1.21% 1.46%
Actual expenses may be greater or less than those shown.
</TABLE>

- ------------------
(1) Estimated based on expenses expected to have been incurred if Class Z shares
had been in existence throughout the fiscal year ended October 31, 1997.

(2) Absent fee waivers/expense reimbursements, estimated annual Other Expenses
and Total Operating Expenses would be: Aggressive Growth Portfolio 0.39% and
1.39%, Large-Cap Value Portfolio 0.56% and 1.56%, Value Portfolio 0.37% and
1.37%, Small-Cap Value Portfolio 0.58% and 1.58%, and International Equity
Portfolio 0.73% and 1.83%.

EXAMPLE:

You would pay the following expenses on a $1,000 investment over various time
periods assuming (1) a 5% annual rate of return and (2) redemption at the end of
each time period. The 5% return and the expenses used in this example should not
be considered indicative of actual or expected performance or expenses both of
which will vary:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Aggressive Growth Portfolio
(Class Z shares)........................................................... $ 70 $ 96 $ 124 $204
Large-Cap Value Portfolio
(Class Z shares)........................................................... $ 70 $ 96 $ 124 $204
Value Portfolio
(Class Z shares)........................................................... $ 70 $ 96 $ 124 $204
Small-Cap Value Portfolio
(Class Z shares)........................................................... $ 70 $ 96 $ 124 $204
International Equity Portfolio
(Class Z shares)........................................................... $ 72 $ 104 $ 137 $232
</TABLE>

The foregoing examples should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown.

<PAGE>
THE FOLLOWING INFORMATION SUPPLEMENTS 'MANAGEMENT OF THE FUND--THE DISTRIBUTOR'
IN THE RETAIL CLASS PROSPECTUS.

SunAmerica Capital Services, Inc. serves as the Distributor of Class Z
shares and incurs the expenses of distributing the Portfolios' Class Z shares
under a Distribution Agreement with respect to the Portfolios, none of which are
reimbursed by or paid for by the Portfolios. There is no distribution plan in
effect for the Class Z shares.

THE FOLLOWING INFORMATION SUPPLEMENTS 'MANAGEMENT OF THE FUND--ADMINISTRATOR' IN
THE RETAIL CLASS PROSPECTUS.

SunAmerica Fund Services, Inc. serves as the Administrator for Class Z
shares and may receive reimbursement from the Fund of its costs through a fee,
none of which is reimbursed by or paid for by the Class Z shares of the
Portfolios. The Class Z shares, however, pays all direct transfer agency fees
and out-of-pocket expenses.

THE FOLLOWING INFORMATION SUPPLEMENTS 'DIVIDENDS, DISTRIBUTIONS AND TAXES--
TAXES' IN THE RETAIL CLASS PROSPECTUS.

As a qualified plan, the 401(k) Plan generally pays no federal income tax.
Individual participants in the 401(k) Plan should consult Plan documents and
their own tax advisers for information on the tax consequences associated with
participating in the 401(k) Plan.

The per share dividends on Class Z shares will generally be higher than the
per share dividends on Class A, Class B or Class C shares as a result of the
fact that Class Z shares are not subject to any distribution or service fee.

THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION UNDER 'PURCHASE OF SHARES'
AND 'REDEMPTION OF SHARES' IN THE RETAIL CLASS PROSPECTUS.

Class Z shares of the Portfolios are offered exclusively for sale to
participants in the 401(k) Plan. Such shares may be purchased or redeemed only
by the 401(k) Plan on behalf of individual Plan participants at net asset value
without any sales or redemption charge. Class Z shares are not subject to any
minimum investment requirements. The Plan purchases and redeems shares to
implement the investment choices of individual Plan participants with respect to
their contributions in the Plan. All purchases of Portfolio shares through the
Plan will be of Class Z shares.

The net asset value per share at which shares of the Portfolios are
purchased or redeemed by the Plan for the accounts of individual Plan
participants might be more or less than the net asset value per share prevailing
at the time that such participants made their investment choices or made their
contributions to the Plan.

THE FOLLOWING INFORMATION SUPPLEMENTS 'EXCHANGE PRIVILEGE' IN THE RETAIL CLASS
PROSPECTUS.

Class Z shareholders of one Portfolio may exchange their shares for Class Z
shares of Aggressive Growth Portfolio, Large-Cap Value Portfolio, Value
Portfolio, Small-Cap Value Portfolio or International Equity Portfolio on the
basis of relative net asset value per share. Class Z shareholders may also
exchange their shares for shares of any other fund offered through the 401(k)
Plan. See 'Purchase of Shares' above.

THE FOLLOWING INFORMATION SUPPLEMENTS 'DETERMINATION OF NET ASSET VALUE' IN THE
RETAIL CLASS PROSPECTUS.

Because Class Z shares are not subject to any distribution or service fees,
the net asset value per share of the Class Z shares will generally be higher
than the net asset value per share of each of Class A, Class B and Class C
shares, except following the payment of dividends and distributions.

THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION UNDER 'GENERAL
INFORMATION--SHAREHOLDER INQUIRIES' IN THE RETAIL CLASS PROSPECTUS.

Inquiries regarding the purchase, redemption or exchange of Class Z shares
or the making or changing of investment choices in the 401(k) Plan should be
directed to the Fidelity Participant Center at (800) 835-5098.

3
<PAGE>

PROSPECTUS o JUNE 15, 1998
----------------------------------------------------------------------
Style Select Series(Registered)

The SunAmerica Center
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 nine separate investment portfolios (each, a
'Portfolio'). This Prospectus relates to eight of the nine Portfolios. 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 is 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:

THE GROWTH PORTFOLIOS

LARGE-CAP GROWTH PORTFOLIO seeks long-term growth of capital by investing
generally in equity securities of large-sized companies. The Advisers for
Large-Cap Growth Portfolio are JANUS CAPITAL CORPORATION ('Janus'), L. ROY PAPP
& ASSOCIATES ('Papp') and MONTAG & CALDWELL, INC. ('Montag & Caldwell').

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 ('MAS'), T. ROWE
PRICE ASSOCIATES, INC. ('T. Rowe Price') and WELLINGTON MANAGEMENT COMPANY, LLP
('Wellington Management').

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, SUNAMERICA and WARBURG PINCUS ASSET
MANAGEMENT, INC. ('Warburg').

THE BLEND PORTFOLIO

LARGE-CAP BLEND PORTFOLIO seeks long-term growth of capital and a reasonable
level of current income by investing generally in equity securities of
large-sized companies. The Advisers for Large-Cap Blend Portfolio are LAZARD
ASSET MANAGEMENT ('Lazard'), MORGAN STANLEY ASSET MANAGEMENT INC. ('MSAM') and
T. ROWE PRICE.

(Cover continued on next page)

Each Portfolio offered in this Prospectus 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.'

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.

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 June 15, 1998, which is incorporated
by reference into this Prospectus and further information about the performance
of the Portfolios in the Fund's Annual Report to Shareholders. The Statement of
Additional Information and Annual Report 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 NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<PAGE>

STYLE SELECT SERIES(Registered)

(Continued from previous page)

THE VALUE PORTFOLIOS

LARGE-CAP VALUE PORTFOLIO seeks long-term growth of capital by investing in
equity securities of large-sized companies using a 'value' style of investing.
The Advisers for Large-Cap Value Portfolio are DAVID L. BABSON & CO., INC.
('Babson'), DAVIS SELECTED ADVISERS, L.P. ('Davis') and WELLINGTON MANAGEMENT.

VALUE PORTFOLIO seeks long-term growth of capital by investing in equity
securities (without regard to the size of the issuer), using a 'value' style of
investing. The Advisers for Value Portfolio are DAVIS,
NEUBERGER&BERMAN, LLC ('Neuberger&Berman') and STRONG CAPITAL MANAGEMENT, INC.
('Strong'). Strong has subcontracted with Schafer Capital Management, Inc.
('Schafer,' and together with Strong, 'Strong/Schafer') to act as Adviser to its
portion of the Value Portfolio.

SMALL-CAP VALUE PORTFOLIO seeks long-term growth of capital by investing in
equity securities of small-sized companies using a 'value' style of investing.
The Advisers for Small-Cap Value Portfolio are BERGER ASSOCIATES, INC.
('Berger'), LAZARD and THE GLENMEDE TRUST COMPANY ('Glenmede'). Berger has
subcontracted with Perkins, Wolf, McDonnell & Company ('PWM,' and together with
Berger, 'Berger/PWM') to act as Adviser to its portion of the Small-Cap Value
Portfolio.

THE INTERNATIONAL PORTFOLIO

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 BANKERS TRUST COMPANY ('BT'),
ROWE PRICE-FLEMING INTERNATIONAL, INC. ('Rowe-Fleming') and WARBURG.

Information about the Fund (including the SAI) can be reviewed and copied at the
Securities and Exchange Commission's ('SEC') Public Reference Room in
Washington, D.C. Information on the operation of the public reference room may
be obtained by calling the SEC at (800) SEC-0330. Reports and other information
about the Fund are available on the SEC's Internet site at http://www.sec.gov.
Copies of this information may be obtained, upon payment of a duplicating fee,
by writing the Public Reference Section of the SEC, Washington, D.C. 20549-6009.

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

<TABLE>
<S> <C>
1 Prospectus

3 Summary of Expenses

6 Financial Highlights

8 Style-Based Investing

8 Investment Objectives and Policies

9 The Growth Portfolios

10 The Blend Portfolio

11 The Value Portfolios

12 The International Portfolio

13 Advisers' Historical Performance Data

38 Investment Techniques and Risk Factors

45 Management of the Fund

54 Purchase of Shares

57 Redemption of Shares

58 Exchange Privilege

59 Portfolio Transactions, Brokerage and Turnover

60 Determination of Net Asset Value

60 Performance Data

60 Dividends, Distributions and Taxes

62 General Information
</TABLE>

<PAGE>

STYLE SELECT SERIES(Registered)

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>
LARGE-CAP MID-CAP AGGRESSIVE
GROWTH PORTFOLIO GROWTH PORTFOLIO GROWTH 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 (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(4) 0.35% 1.00% 1.00% 0.35% 1.00% 1.00% 0.35% 1.00% 1.00%
Other Expenses (net of fee waivers/ expense
reimbursements)(5) 0.43% 0.43% 0.43% 0.43% 0.43% 0.43% 0.43% 0.43% 0.43%
TOTAL OPERATING EXPENSES (NET OF FEE WAIVERS/ EXPENSE
REIMBURSEMENTS)(5) 1.78% 2.43% 2.43% 1.78% 2.43% 2.43% 1.78% 2.43% 2.43%
----- ----- ----- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- ----- ----- -----
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
LARGE-CAP
BLEND 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 (AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Management Fees 1.00% 1.00% 1.00%
12b-1 Fees(4) 0.35% 1.00% 1.00%
Other Expenses (net of fee waivers/ expense
reimbursements)(5) 0.43% 0.43% 0.43%
TOTAL OPERATING EXPENSES (NET OF FEE WAIVERS/ EXPENSE
REIMBURSEMENTS)(5) 1.78% 2.43% 2.43%
----- ----- -----
----- ----- -----
- -------------------------------------------------------------------------------
</TABLE>

<TABLE>
<S> <C>
(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) 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 Conduct Rules of the
National Association of Securities Dealers, Inc.
(5) SunAmerica has voluntarily agreed to waive fees or reimburse expenses, if
necessary, to keep operating expenses at or below an annual rate set forth
above under Total Operating Expenses. The information provided in the table
represents estimated amounts for the current fiscal year net of current fee
waivers/expense reimbursements. For the fiscal year ended October 31, 1997,
the Other Expenses and Total Operating Expenses (on a gross basis) were:
Mid-Cap Growth Portfolio, Class A, 0.84% and 2.19%; Mid-Cap Growth
Portfolio, Class B, 0.89% and 2.89%; Mid-Cap Growth Portfolio, Class C,
1.41% and 3.41%; Aggressive Growth Portfolio, Class A, 0.75% and 2.10%;
Aggressive Growth Portfolio, Class B, 0.79% and 2.79%; Aggressive Growth
Portfolio, Class C, 1.18% and 3.18%. For the period October 15, 1997
(commencement of operations) through October 31, 1997, the Other Expenses
and Total Operating Expenses (on a gross basis) were: Large-Cap Growth
Portfolio, Class A, 1.02% and 2.37%; Large-Cap Growth Portfolio, Class B,
1.96% and 3.96%; Large-Cap Growth Portfolio, Class C, 3.72% and 5.72%;
Large-Cap Blend Portfolio, Class A, 1.01% and 2.36%; Large-Cap Blend
Portfolio, Class B, 1.69% and 3.69%; Large-Cap Blend Portfolio, Class C,
3.55% and 5.55%.
</TABLE>

<PAGE>

STYLE SELECT SERIES(Registered)

Summary of Expenses--(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LARGE-CAP SMALL-CAP
VALUE PORTFOLIO VALUE 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 (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(4) 0.35% 1.00% 1.00% 0.35% 1.00% 1.00% 0.35% 1.00% 1.00%
Other Expenses (net of fee waivers/ expense
reimbursements)(5) 0.43% 0.43% 0.43% 0.43% 0.43% 0.43% 0.43% 0.43% 0.43%
TOTAL OPERATING EXPENSES (NET OF FEE WAIVERS/ EXPENSE
REIMBURSEMENTS)(5) 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 (AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Management Fees 1.10% 1.10% 1.10%
12b-1 Fees(4) 0.35% 1.00% 1.00%
Other Expenses (net of fee waivers/ expense
reimbursements)(5) 0.58% 0.58% 0.58%
TOTAL OPERATING EXPENSES (NET OF FEE WAIVERS/ EXPENSE
REIMBURSEMENTS)(5) 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) 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 Conduct Rules of the
National Association of Securities Dealers, Inc.
(5) SunAmerica has voluntarily agreed to waive fees or reimburse expenses, if
necessary, to keep operating expenses at or below an annual rate set forth
above under Total Operating Expenses. The information provided in the table
represents estimated amounts for the current fiscal year net of the current
fee waivers/expense reimbursements. For the fiscal year ended October 31,
1997, the Other Expenses and Total Operating Expenses (on a gross basis)
were: Value Portfolio, Class A, 0.77% and 2.12%; Value Portfolio, Class B,
0.80% and 2.80%; Value Portfolio, Class C, 1.08% and 3.08%; International
Equity Portfolio, Class A, 1.02% and 2.47%; International Equity Portfolio,
Class B, 1.07% and 3.17%; International Equity Portfolio, Class C, 1.47% and
3.57%. For the period October 15, 1997 (commencement of operations) through
October 31, 1997, the Other Expenses and Total Operating Expenses (on a
gross basis) were: Large-Cap Value Portfolio, Class A, 1.01% and 2.36%;
Large-Cap Value Portfolio, Class B, 1.59% and 3.59%; Large-Cap Value
Portfolio, Class C, 3.65% and 5.65%; Small-Cap Value Portfolio, Class A,
1.00% and 2.35%; Small-Cap Value Portfolio, Class B, 1.17% and 3.17%;
Small-Cap Value Portfolio, Class C, 1.85% and 3.85%.

<PAGE>
5

STYLE SELECT SERIES(Registered)

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 5 YEARS 10 YEARS
------------------------------------
<S> <C> <C> <C> <C>
LARGE-CAP GROWTH
PORTFOLIO
(Class A shares) $ 75 $ 110 $ 148 $ 255
(Class B
shares)* $ 65 $ 106 $ 150 $ 253
(Class C shares) $ 35 $ 76 $ 130 $ 275
MID-CAP GROWTH
PORTFOLIO
(Class A shares) $ 75 $ 110 $ 148 $ 255
(Class B
shares)* $ 65 $ 106 $ 150 $ 253
(Class C shares) $ 35 $ 76 $ 130 $ 275
AGGRESSIVE GROWTH
PORTFOLIO
(Class A shares) $ 75 $ 110 $ 148 $ 255
(Class B
shares)* $ 65 $ 106 $ 150 $ 253
(Class C shares) $ 35 $ 76 $ 130 $ 275
LARGE-CAP BLEND
PORTFOLIO
(Class A shares) $ 75 $ 110 $ 148 $ 255
(Class B
shares)* $ 65 $ 106 $ 150 $ 253
(Class C shares) $ 35 $ 76 $ 130 $ 275
LARGE-CAP VALUE
PORTFOLIO
(Class A shares) $ 75 $ 110 $ 148 $ 255
(Class B
shares)* $ 65 $ 106 $ 150 $ 253
(Class C shares) $ 35 $ 76 $ 130 $ 275
VALUE PORTFOLIO
(Class A shares) $ 75 $ 110 $ 148 $ 255
(Class B
shares)* $ 65 $ 106 $ 150 $ 253
(Class C shares) $ 35 $ 76 $ 130 $ 275
SMALL-CAP VALUE
PORTFOLIO
(Class A shares) $ 75 $ 110 $ 148 $ 255
(Class B
shares)* $ 65 $ 106 $ 150 $ 253
(Class C shares) $ 35 $ 76 $ 130 $ 275
INTERNATIONAL EQUITY
PORTFOLIO
(Class A shares) $ 77 $ 118 $ 161 $ 280
(Class B
shares)* $ 67 $ 113 $ 162 $ 278
(Class C shares) $ 37 $ 83 $ 142 $ 301
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------------------------
<S> <C> <C> <C> <C>
LARGE-CAP GROWTH
PORTFOLIO
(Class A shares) $ 75 $ 110 $ 148 $ 255
(Class B
shares)* $ 25 $ 76 $ 130 $ 253
(Class C shares) $ 25 $ 76 $ 130 $ 275
MID-CAP GROWTH
PORTFOLIO
(Class A shares) $ 75 $ 110 $ 148 $ 255
(Class B
shares)* $ 25 $ 76 $ 130 $ 253
(Class C shares) $ 25 $ 76 $ 130 $ 275
AGGRESSIVE GROWTH
PORTFOLIO
(Class A shares) $ 75 $ 110 $ 148 $ 255
(Class B
shares)* $ 25 $ 76 $ 130 $ 253
(Class C shares) $ 25 $ 76 $ 130 $ 275
LARGE-CAP BLEND
PORTFOLIO
(Class A shares) $ 75 $ 110 $ 148 $ 255
(Class B
shares)* $ 25 $ 76 $ 130 $ 253
(Class C shares) $ 25 $ 76 $ 130 $ 275
LARGE-CAP VALUE
PORTFOLIO
(Class A shares) $ 75 $ 110 $ 148 $ 255
(Class B
shares)* $ 25 $ 76 $ 130 $ 253
(Class C shares) $ 25 $ 76 $ 130 $ 275
VALUE PORTFOLIO
(Class A shares) $ 75 $ 110 $ 148 $ 255
(Class B
shares)* $ 25 $ 76 $ 130 $ 253
(Class C shares) $ 25 $ 76 $ 130 $ 275
SMALL-CAP VALUE
PORTFOLIO
(Class A shares) $ 75 $ 110 $ 148 $ 255
(Class B
shares)* $ 25 $ 76 $ 130 $ 253
(Class C shares) $ 25 $ 76 $ 130 $ 275
INTERNATIONAL EQUITY
PORTFOLIO
(Class A shares) $ 77 $ 118 $ 161 $ 280
(Class B
shares)* $ 27 $ 83 $ 142 $ 278
(Class C shares) $ 27 $ 83 $ 142 $ 301
</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. Therefore, with respect to the 10-year expense information, years 8, 9
and 10 reflect the expenses attributable to ownership of Class A 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>

STYLE SELECT SERIES(Registered)

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

The following Financial Highlights are for the period November 19, 1996
(commencement of operations) through October 31, 1997 with respect to Class A
and Class B shares, and for the period March 6, 1997 (initial offering of Class
C shares) through October 31, 1997 with respect to Class C shares of the Mid-Cap
Growth Portfolio and Aggressive Growth Portfolio and for the period October 15,
1997 (commencement of operations) through October 31, 1997 with respect to Class
A, Class B and Class C shares of the Large-Cap Growth Portfolio and Large-Cap
Blend Portfolio, and have been audited by Price Waterhouse LLP, each Portfolio's
independent accountants, whose report on the financial statements containing
such information is included in the Annual Report to Shareholders. These
Financial Highlights should be read in conjunction with the audited 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
BEGINNING MENT AND MENT MENT CAPITAL DISTRI- END OF TOTAL PERIOD
PERIOD OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME GAINS BUTIONS PERIOD RETURN(2) (000'S)
- ------------------ ---------- ---------- ----------- ---------- --------- ------- ------- ------ --------- ----------

LARGE-CAP GROWTH PORTFOLIO
- --------------------------
CLASS A
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97 $12.50 $ -- $ (0.71) $(0.71) $-- $-- $-- $11.79 (5.68)% $ 23,609

<CAPTION>
CLASS B
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97 12.50 -- (0.71) (0.71) -- -- -- 11.79 (5.68) 773

<CAPTION>
CLASS C
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97 12.50 -- (0.72) (0.72) -- -- -- 11.78 (5.76) 166
- --------------------------------------------------------------------------------------------------------------------------------

MID-CAP GROWTH PORTFOLIO
- ------------------------

CLASS A
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/19/96-10/31/97 $12.50 $(0.16) $ 1.37 $ 1.21 $-- $-- $-- $13.71 9.68% $ 18,404

<CAPTION>
CLASS B
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/19/96-10/31/97 12.50 (0.25) 1.38 1.13 -- -- -- 13.63 9.04 35,739

<CAPTION>
CLASS C
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/06/97-10/31/97 11.93 (0.18) 1.89 1.71 -- -- -- 13.64 14.33 4,685
- -----------------------------------------------------------------------------------------------------------------

AGGRESSIVE GROWTH PORTFOLIO
- ---------------------------
CLASS A
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/19/96-10/31/97 $12.50 $(0.11) $ 3.51 $ 3.40 $-- $-- $-- $15.90 27.20% $ 38,537

<CAPTION>
CLASS B
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/19/96-10/31/97 12.50 (0.24) 3.54 3.30 -- -- -- 15.80 26.40 48,594

<CAPTION>
CLASS C
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/06/97-10/31/97 13.38 (0.17) 2.59 2.42 -- -- -- 15.80 18.09 5,939
- -----------------------------------------------------------------------------------------------------------------

LARGE-CAP BLEND PORTFOLIO
- -------------------------

CLASS A
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97 $12.50 $ 0.01 $ (0.53) $(0.52) $-- $-- $-- $11.98 (4.16)% $ 23,593

<CAPTION>
CLASS C
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97 12.50 -- (0.53) (0.53) -- -- -- 11.97 (4.24) 143
- --------------------------------------------------------------------------------------------------------------------------------

RATIO OF NET
RATIO OF INVESTMENT
EXPENSES INCOME AVERAGE
TO AVERAGE TO AVERAGE COMMISSION
NET NET PORTFOLIO PER
PERIOD ASSETS(3)(4) ASSETS(3)(4) TURNOVER SHARE(5)
- ------------------ ------------ ------------ -------- ----------
LARGE-CAP GROWTH PORTFOLIO
- --------------------------
CLASS A
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

10/15/97-10/31/97 1.78% 0.34% 1% $ 0.0414

<CAPTION>
CLASS B
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10/15/97-10/31/97 2.43 (0.84) 1 0.0414

<CAPTION>
CLASS C
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10/15/97-10/31/97 2.43 (0.42) 1 0.0414
- ------------------------------------------------------------------------------

MID-CAP GROWTH PORTFOLIO
- ------------------------
CLASS A
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11/19/96-10/31/97 1.85% (1.19)% 97% $ 0.0487

<CAPTION>
CLASS B
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11/19/96-10/31/97 2.47 (1.92) 97 0.0487

<CAPTION>
CLASS C
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
3/06/97-10/31/97 2.45 (1.97) 97 0.0487
- ------------------------------------------------------------------------------

AGGRESSIVE GROWTH PORTFOLIO
- ---------------------------
CLASS A
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11/19/96-10/31/97 1.84% (0.77)% 150% $ 0.0546

<CAPTION>
CLASS B
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11/19/96-10/31/97 2.47 (1.58) 150 0.0546

<CAPTION>
CLASS C
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
3/06/97-10/31/97 2.45 (1.68) 150 0.0546
- ------------------------------------------------------------------------------

LARGE-CAP BLEND PORTFOLIO
- -------------------------
CLASS A
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10/15/97-10/31/97 1.78% 1.35% 2% $ 0.0361

<CAPTION>
CLASS B
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10/15/97-10/31/97 2.43 0.29 2 0.0361

<CAPTION>
CLASS C
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10/15/97-10/31/97 2.43 0.54 2 0.0361
- ------------------------------------------------------------------------------
</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):
Large-Cap Growth, Class A, 0.59%; Large-Cap Growth, Class B, 1.53%;
Large-Cap Growth, Class C, 3.29%; Mid-Cap Growth, Class A, 0.34%; Mid-Cap
Growth, Class B, 0.42%; Mid-Cap Growth, Class C, 0.96%; Aggressive Growth,
Class A, 0.26%; Aggressive Growth, Class B, 0.32%; Aggressive Growth, Class
C, 0.73%; Large-Cap Blend, Class A, 0.58%; Large-Cap Blend, Class B, 1.26%;
and Large-Cap Blend, Class C, 3.12%.
(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>
7

STYLE SELECT SERIES(Registered)

Financial Highlights--(Continued)
- --------------------------------------------------------------------------------

The following Financial Highlights are for the period November 19, 1996
(commencement of operations) through October 31, 1997 with respect to Class A
and Class B shares, and for the period March 6, 1997 (initial offering of Class
C shares) through October 31, 1997 with respect to Class C shares of the Value
Portfolio and International Equity Portfolio, and for the period October 15,
1997 (commencement of operations) through October 31, 1997 with respect to Class
A, Class B and Class C shares of the Large-Cap Value Portfolio and Small-Cap
Value Portfolio, and have been audited by Price Waterhouse LLP, each Portfolio's
independent accountants, whose report on the financial statements containing
such information is included in the Annual Report to Shareholders. These
Financial Highlights should be read in conjunction with the audited financial
statements and notes thereto, which are included in the Statement of Additional
Information and are incorporated by reference herein.

LARGE-CAP VALUE PORTFOLIO
- -------------------------

CLASS A
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97 $12.50 $ 0.01 $ (0.65) $(0.64) $-- $-- $-- $11.86 (5.12)% $ 23,240

<CAPTION>
CLASS C
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97 12.50 -- (0.64) (0.64) -- -- -- 11.86 (5.12) 172
- --------------------------------------------------------------------------------------------------------------------------------

VALUE PORTFOLIO
- ---------------
CLASS A
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/19/96-10/31/97 $12.50 $ -- $ 3.59 $ 3.59 $-- $-- $-- $16.09 28.72% $ 48,377

<CAPTION>
CLASS B
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/19/96-10/31/97 12.50 (0.11) 3.61 3.50 -- -- -- 16.00 28.00 77,534

<CAPTION>
CLASS C
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/06/97-10/31/97 13.56 (0.08) 2.52 2.44 -- -- -- 16.00 17.99 9,384
- --------------------------------------------------------------------------------------------------------------------------------

SMALL-CAP VALUE PORTFOLIO
CLASS A
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97 $12.50 $ 0.01 $ (0.37) $(0.36) $-- $-- $-- $12.14 (2.88)% $ 21,346

<CAPTION>
CLASS C
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97 12.50 0.01 (0.37) (0.36) -- -- -- 12.14 (2.88) 525
- --------------------------------------------------------------------------------------------------------------------------------

INTERNATIONAL EQUITY PORTFOLIO
- ------------------------------
CLASS A
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/19/96-10/31/97 $12.50 $ 0.01 $ (0.05) $(0.04) $-- $-- $-- $12.46 (0.32)% $ 24,365

<CAPTION>
CLASS B
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/19/96-10/31/97 12.50 (0.09) (0.03) (0.12) -- -- -- 12.38 (0.96) 42,656

<CAPTION>
CLASS C
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/06/97-10/31/97 12.50 (0.07) (0.15) 0.22 -- -- -- 12.38 (1.75) 4,459
- --------------------------------------------------------------------------------------------------------------------------------

LARGE-CAP VALUE PORTFOLIO
- -------------------------
CLASS A
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10/15/97-10/31/97 1.78% 1.07% --% $ 0.0445

<CAPTION>
CLASS B
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10/15/97-10/31/97 2.43 .22 -- 0.0445

<CAPTION>
CLASS C
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10/15/97-10/31/97 2.43 .53 -- 0.0445
- ------------------------------------------------------------------------------

VALUE PORTFOLIO
- ---------------
CLASS A
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11/19/96-10/31/97 1.84% --% 48% $ 0.0596

<CAPTION>
CLASS B
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11/19/96-10/31/97 2.46 (0.74) 48 0.0596

<CAPTION>
CLASS C
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
3/06/97-10/31/97 2.45 (0.78) 48 0.0596
- ------------------------------------------------------------------------------

SMALL-CAP VALUE PORTFOLIO
- -------------------------
CLASS A
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10/15/97-10/31/97 1.78% 2.57% --% $ 0.0571

<CAPTION>
CLASS B
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10/15/97-10/31/97 2.43 1.75 -- 0.0571

<CAPTION>
CLASS C
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10/15/97-10/31/97 2.43 1.75 -- 0.0571
- ------------------------------------------------------------------------------

INTERNATIONAL EQUITY PORTFOLIO
- ------------------------------
<CAPTION>
CLASS A
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11/19/96-10/31/97 2.10% 0.07% 70% $ 0.0179

<CAPTION>
CLASS B
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11/19/96-10/31/97 2.72 (0.69) 70 0.0179

<CAPTION>
CLASS C
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
3/06/97-10/31/97 2.70 (0.75) 70 0.0179
- -------------------------------------------------------------------------------
</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):
Large-Cap Value, Class A, 0.58%; Large-Cap Value, Class B, 1.16%; Large-Cap
Value, Class C, 3.22%; Value, Class A, 0.28%; Value, Class B, 0.34%; Value,
Class C, 0.63%; Small-Cap Value, Class A, 0.57%; Small-Cap Value, Class B,
0.74%; Small-Cap Value, Class C, 1.42%; International Equity, Class A,
0.37%; International Equity, Class B, 0.45%; and International Equity, Class
C, 0.87%.
(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>

STYLE SELECT SERIES(Registered)

Style-Based 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 generally allocate investments in each Portfolio (and redemption
requests) equally among its three Advisers. 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. SunAmerica intends, on a quarterly basis, to
review the asset allocation in each Portfolio to ensure that no portion of
assets managed by an Adviser exceeds that portion managed by any other Adviser
to the Portfolio by more than 5%. If such a condition exists, SunAmerica will
then re-allocate cash flows among the three Advisers, differently from the
manner described above, in an effort to effect a re-balancing of the Portfolio's
asset allocation. SunAmerica does not intend, but reserves the right, to effect
such a re-balancing of asset allocation by re-allocating assets from one Adviser
to another. Re-balancing may involve re-directing cash flows from a better
performing Adviser to one with relatively lower returns.

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 invest 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 philosophy.

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>
9

STYLE SELECT SERIES(Registered)

The Growth Portfolios
- --------------------------------------------------------------------------------

The Growth Portfolios consist of the Large-Cap Growth Portfolio, Mid-Cap Growth
Portfolio and Aggressive Growth Portfolio. Under normal conditions, at least 65%
of each Growth 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 issuers of
such securities are companies considered by the respective Advisers to have a
historical record of above-average growth rate; to have significant growth
potential; above-average earnings growth or value or the ability to sustain
earnings growth; to offer proven or unusual products or services; or to operate
in industries experiencing increasing demand. The Advisers may select certain of
such securities because they consider them to be undervalued in the market. Each
of the Growth Portfolios may also invest in debt securities that the Advisers
expect have the potential for capital appreciation which are rated as low as
'BBB' by Standard & Poor's Corporation, a Division of the McGraw-Hill Companies
('S&P'), or 'Baa' by Moody's Investors Service, Inc. ('Moody's') or, if unrated,
determined by the Adviser to be of equivalent quality. The Large-Cap Growth
Portfolio and the Aggressive Growth Portfolio may also invest in debt securities
rated below 'BBB' or 'Baa' or unrated securities of comparable quality (junk
bonds). See 'Fixed Income Securities' in 'Investment Techniques and Risk
Factors' below for a discussion of the risks associated with investing in such
securities. The investment polices and strategies specific to each of the Growth
Portfolios are described below.

Large-Cap Growth Portfolio. The Large-Cap Growth Portfolio, advised by Janus,
Papp and Montag & Caldwell, will invest, under normal circumstances, at least
65% of the Portfolio's total assets in the securities of companies that have, at
the time of purchase, a market capitalization in excess of $5 billion
('Large-Cap Companies').

Large-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'), American Stock Exchange
('AMEX') or on another national or international stock exchange or, in some
cases, are traded over-the-counter.

The Portfolio may also invest up to 35% of its total assets in securities of
issuers other than Large-Cap Companies. These investments may include equity
securities of companies with market capitalizations below $5 billion, including
companies with market capitalizations of less than $1 billion, and debt
securities that the Advisers expect have the potential for capital appreciation.
See 'Investment in Small-Cap Companies' and '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 MAS, T. Rowe
Price and Wellington Management, will invest, under normal circumstances, at
least 65% of the Portfolio's total assets in the securities of medium-sized
companies that have, at the time of purchase, a market capitalization between $1
billion and $5 billion ('Mid-Cap Companies').

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 NYSE or another national or international stock exchange or, in
some cases, are traded over-the-counter. Such companies, however, may be less
seasoned than Large-Cap Companies, as defined in 'Large-Cap Growth Portfolio,'
above. In general, the securities of Mid-Cap Companies may be more volatile than
those of Large-Cap Companies.

The Portfolio may also invest up to 35% of its total assets in securities of
issuers other than Mid-Cap Companies. These investments may include equity
securities of Large-Cap Companies and companies with market capitalizations of
less than $1 billion, and debt securities that the Advisers expect have the
potential for capital appreciation. See 'Investment in Small-Cap Companies' and
'Fixed Income Securities' in 'Investment Techniques and Risk Factors' below for
a discussion of the risks associated with investing in such securities.

Aggressive Growth Portfolio. The Aggressive Growth Portfolio, advised by Janus,
SunAmerica and Warburg, will invest in equity securities to seek aggressively
and selectively long-term total return, without regard to the market
capitalization of an issuer. Generally, the Portfolio will invest in securities
of companies that have, at the time of purchase, a market capitalization of less
than $1 billion ('Small-Cap Companies') or Mid-Cap Companies, as defined in
'Mid-Cap Growth Portfolio,' above. The Advisers may also purchase securities of
Large-Cap Companies, as defined in 'Large-Cap Growth Portfolio,' above.

<PAGE>

STYLE SELECT SERIES(Registered)

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 or
Large-Cap Companies. Small-Cap Companies frequently will be in businesses or
industries involving new, recently developed products, services, or
technologies, or may be in businesses that are out of favor with or have not yet
been discovered by the broader investment community. 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.

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 may 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.'
In addition, the Portfolio may invest up to 35% of its total assets in debt
securities that the Advisers expect have the potential for capital appreciation.
See 'Fixed Income Securities' in 'Investment Techniques and Risk Factors' below
for a discussion of the risks associated with investing in such securities.

The Blend Portfolio
- --------------------------------------------------------------------------------

The Fund currently offers one Blend Portfolio, the Large-Cap Blend Portfolio,
the investment policies and strategies of which are described below.

Large-Cap Blend Portfolio. The Large-Cap Blend Portfolio, advised by Lazard,
MSAM and T. Rowe Price, will invest, under normal circumstances, at least 65% of
the Portfolio's total assets in equity securities (including common and
preferred stocks and other securities having equity features, such as
convertible securities, warrants and rights) of Large-Cap Companies. Large-Cap
Companies have, at the time of purchase, a market capitalization in excess of $5
billion. Large-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 NYSE, AMEX or on another national or international stock
exchange or, in some cases, are traded over-the-counter. In selecting equity
securities of Large-Cap Companies, an Adviser will seek to achieve a blend of
what it considers to be growth companies, value companies and companies that the
Adviser believes have elements of both growth and value. An Adviser will
normally select securities of companies whose earnings are expected by the
Adviser to grow and to be able to support a growing dividend payment, as well as
securities that do not pay dividends currently but offer prospects of
appreciation and future income. Investments will be identified based upon
factors including undervalued assets or earnings potential, favorable operating
or price to cash flow ratios, a below-average price to book value ratio, a
below-average price to earnings ratio and, although current income will not
always be a significant factor in selecting securities, an above-average
dividend yield. Investments will also be identified based upon other factors
including above-average earnings growth and cash flow sufficient to support
growing dividends, as well as the prospect for capital appreciation and future
dividend payments with respect to securities that do not currently pay
dividends.

The Large-Cap Blend Portfolio may invest up to 35% of its total assets in
securities of issuers other than Large-Cap Companies. These investments may
include equity securities of companies with market capitalizations below $5
billion, including companies with market capitalizations of less than $1
billion. These investments may also include debt securities that the Advisers
expect to have the potential for capital appreciation, including debt securities
rated below 'BBB' by S&P, or 'Baa' by Moody's, or, if unrated, determined by the
Advisers to be of equivalent quality (junk bonds). See 'Investment in Small-Cap
Companies' and 'Fixed Income Securities' in 'Investment Techniques and Risk
Factors' below for a discussion of the risks associated with investing in such
securities.

<PAGE>
11

STYLE SELECT SERIES(Registered)

The Value Portfolios
- --------------------------------------------------------------------------------

The Value Portfolios consist of the Large-Cap Value Portfolio, Value Portfolio
and Small-Cap Value Portfolio. Under normal circumstances, at least 65% of each
Value 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 Advisers will normally select
securities that they believe are selling at a price that is low relative to
their worth. Investments will be identified based upon factors including
undervalued assets or earnings potential, favorable operating or price to cash
flow ratios, a below-average price to book value ratio, a below-average price to
earnings ratio and, although current income will not always be a significant
factor in selecting securities, an above-average dividend yield. In addition,
the Advisers may take into account such other factors as an issuer's product
demand and development, resources for expansion, quality of management, overall
favorable business prospects and industry fundamentals. While the Advisers seek
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 Value Portfolios for a long period, if at all. In
addition, there is the risk that a security judged to be undervalued by the
Advisers is actually appropriately priced due to fundamental problems with the
issuer's business prospects that are not yet apparent. Each of the Value
Portfolios may invest in debt securities that the Advisers expect to have the
potential for capital appreciation, which are rated as low as 'BBB' by S&P, or
'Baa' by Moody's, or, if unrated, determined by the Advisers to be of equivalent
quality. The Value Portfolio and Small-Cap Value Portfolio may also invest in
debt securities rated below 'BBB' or 'Baa' or unrated securities of comparable
quality (junk bonds). See 'Fixed Income Securities' in 'Investment Techniques
and Risk Factors' below for a discussion of the risks associated with investing
in such securities. The investment policies and strategies specific to each of
the Value Portfolios are described below.

Large-Cap Value Portfolio. The Large-Cap Value Portfolio, advised by Babson,
Davis and Wellington Management, will invest, under normal circumstances, at
least 65% of the Portfolio's assets in securities of Large-Cap Companies that
the Advisers believe are selling at a price that is low relative to their worth.
Large-Cap Companies have, at the time of purchase, a market capitalization in
excess of $5 billion. Large-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 NYSE, AMEX or on another national or
international stock exchange or, in some cases, are traded over-the-counter.

The Portfolio may also invest up to 35% of its total assets in securities of
issuers other than Large-Cap Companies. These investments may include equity
companies with market capitalizations below $5 billion, including companies with
market capitalizations of less than $1 billion, and debt securities that the
Advisers expect to have the potential for capital appreciation. See 'Investment
in Small-Cap Companies' and '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, Neuberger&Berman, and
Strong/Schafer, will invest, under normal circumstances, in securities that the
Advisers believe are selling at a price that is low relative to their worth,
without regard to the market capitalization of the issuer. It is anticipated
that a significant portion of the Portfolio's assets as a whole will generally
be invested in securities of Mid-Cap Companies, which have, at the time of
purchase, a market capitalization between $1 billion and $5 billion; however,
any particular Adviser may not necessarily invest a significant portion of the
Portfolio's assets allocated to it in such companies. 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 NYSE,
AMEX or on another national or international stock exchange or, in some cases,
are traded over-the-counter. Investing in such companies may have greater risks
than investing in larger companies.

The Portfolio may also invest up to 35% of its total assets in debt securities
that the Advisers expect to have the potential for capital appreciation. See
'Fixed Income Securities' in 'Investment Techniques and Risk Factors.'

Small-Cap Value Portfolio. The Small-Cap Value Portfolio, advised by
Berger/PWM, Lazard and Glenmede, will invest, under normal circumstances, at
least 65% of the Portfolio's total assets in securities of Small-Cap Companies
that the Advisers believe are selling at a price that is low relative to their
worth. Small-Cap Companies have, at the time

<PAGE>

STYLE SELECT SERIES(Registered)

of purchase, a market capitalization of less than $1 billion. 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 or Large-Cap
Companies. Small-Cap Companies frequently will be in businesses or industries
involving new, recently developed products, services, or technologies, or may be
in businesses that are out of favor with or have not yet been discovered by the
broader investment community. 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. In general, to the extent that
the Portfolio's assets are invested in Small-Cap Companies, the Portfolio's net
asset value may 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.'

The Portfolio may also invest up to 35% of its total assets in equity securities
of issuers other than Small-Cap Companies and in debt securities that the
Advisers expect have the potential for capital appreciation. See 'Fixed Income
Securities' in 'Investment Techniques and Risk Factors' below for a discussion
of the risks associated with investing in such securities.

The International Portfolio
- --------------------------------------------------------------------------------

The Fund currently offers one International Portfolio, the International Equity
Portfolio, the investment policies and strategies of which are described below.

International Equity Portfolio. The International Equity Portfolio, advised by
BT, Rowe-Fleming and Warburg 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 from time to time in companies located in countries considered to be
emerging markets (i.e., those generally considered to be in emerging or
developing countries). 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 Advisers expect 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 Advisers to be of equivalent quality (junk
bonds). See 'Fixed Income Securities' in 'Investment Techniques and Risk
Factors' below for a discussion of the risks associated with investing in such
securities.

<PAGE>
13

STYLE SELECT SERIES(Registered)

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 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 FOR THE RESPECTIVE ADVISERS DOES NOT
REPRESENT THE PERFORMANCE OF THE FUND OR ANY PORTFOLIO. The Large-Cap Growth,
Large-Cap Blend, Large-Cap Value and Small-Cap Value Portfolios are recently
organized and have performance records of less than a year. 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 of the respective Advisers shown below.

All of the Advisers' 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 is based on data supplied by the Advisers or Morningstar, Inc.
('Morningstar') and believed by the Fund to be reliable. Where an Adviser's
performance is based on a single account, performance has been calculated in
accordance with prescribed Securities and Exchange Commission guidelines. Where
composite performance information is provided, the total return for each
Adviser's composite performance has been calculated in accordance with
Performance Presentation Standards of the Association for Investment Management
and Research ('AIMR'). Unless otherwise indicated, the performance, while having
been calculated in accordance with either Securities and Exchange Commission or
AIMR methodology, has not been independently verified or audited. AIMR's method
of calculating performance differs from that of the Securities and Exchange
Commission. 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.

Where the performance information of an Adviser in the following tables
constitutes a single account, it is presented net of actual fees charged by the
individual Advisers, except as otherwise noted, and reflects the imposition of
any sales loads or charges to such account, if applicable. Where an Adviser
provides composite performance, one of two types of composites may be used, a
'net composite' or a 'gross composite.' In a net composite, the performance
return of each account in the composite is reduced by the actual fees charged to
that particular account. In a gross composite, the gross composite performance
return is reduced by the highest annual expenses charged to any account included
in the particular composite.

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 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.

Finally, for each period presented, the investment performance for the Advisers
of each Portfolio is compared to the average performance of a group of similar
mutual funds tracked by Morningstar. Morningstar calculates its group averages
by taking a mathematical average of the returns of the funds included in the
group.

<PAGE>

STYLE SELECT SERIES(Registered)

Advisers for Large-Cap Growth Portfolio
- --------------------------------------------------------------------------------

The Advisers for the Large-Cap Growth Portfolio are:

JANUS CAPITAL CORPORATION (JANUS)
L. ROY PAPP & ASSOCIATES (PAPP)
MONTAG & CALDWELL, INC. (MONTAG & CALDWELL)

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

PORTFOLIO PERFORMANCE
- --------------------------------------------------------------------------------

The Portfolio's (Class A shares) total return since inception (October 15, 1997)
through March 31, 1998 was 9.28%.

ANNUALIZED TOTAL RETURNS
- --------------------------------------------------------------------------------

PERIODS ENDED MARCH 31, 1998

[CHART]

1 Year 3 Year 5 Year 10 Year
------ ------ ------ -------

Morningstar Large Growth 47.0% 28.7% 19.0% 17.1%

Janus 50.7% 35.3% 20.9% 21.3%

Papp 38.2% 31.9% 23.0% --

Montag & Caldwell 49.9% 37.0% 25.7% 21.2%

<PAGE>
15

STYLE SELECT SERIES(Registered)

NOTES (LARGE-CAP GROWTH PORTFOLIO)
- --------------------------------------------------------------------------------

INDIVIDUAL ADVISER PERFORMANCE

Except as otherwise noted below, an Adviser's performance is presented net of
actual fees and reflects the imposition of any sales loads or charges, if
applicable. The Portfolio's fees and expenses may be greater than those charged
by the individual Advisers. Accordingly, the Portfolio's actual performance
results may be less.

Janus

Janus' historical performance data covers 10 years and reflects the performance
of the Janus Earnings Growth Composite (which includes mutual funds). The
composite includes all accounts, including the Portfolio, over $5 million with
investment objectives, policies and strategies substantially similar to those to
be used by Janus in managing its portion of the Large-Cap Growth Portfolio. 15
such accounts, with net assets totaling $27 million (less than 1% of the total
assets in the 62 similar accounts), have been omitted from the composite. Such
omission, however, does not render the performance information presented
misleading. As of March 31, 1998, the composite included 47 accounts with
aggregate assets of $16.1 billion. The composite returns are presented net of
actual fees. None of the accounts included in the composite bears any sales
loads or charges.

Papp

Papp's historical performance data covers 6 1/4 years (the period since
inception) and reflects the performance of a single account, which is a no-load
mutual fund. The annualized return since inception of the account is 20.2% as of
March 31, 1998. Papp manages 2 accounts, including the Portfolio, with
investment objectives, policies and strategies substantially similar to those to
be used by Papp in managing its portion of the Large-Cap Growth Portfolio. The
omission of the Portfolio, with assets of approximately $10.1 million (less than
3% of the total assets in the 2 accounts), does not render the performance
information misleading. As of March 31, 1998, the account's net assets totaled
$361.5 million. The returns are presented net of actual fees.

Montag & Caldwell

Montag & Caldwell's historical performance data covers 10 years and reflects the
performance of the Montag & Caldwell Growth Composite. The composite includes
all accounts, including the Portfolio, with investment objectives, policies and
strategies substantially similar to those used by Montag & Caldwell in managing
its portion of the Large-Cap Growth Portfolio, except that 15 such accounts,
with net assets totaling $32 million (less than 1% of the total assets in the
168 similar accounts), have been omitted from the composite. Such omission,
however, does not render the performance information presented misleading. As of
March 31, 1998, the composite included 153 accounts with aggregate assets of
$7.8 billion. The composite returns are presented net of actual fees. None of
the accounts included in the composite bears any sales load or charges.

Morningstar Large Growth Category

Developed by Morningstar, the Morningstar Large Growth Category currently
reflects a group of 289 mutual funds which have portfolios with median market
capitalizations, price/earnings ratios, and price/book ratios similar to those
of the Large-Cap Growth Portfolio.

<PAGE>

STYLE SELECT SERIES(Registered)

GROWTH OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------

SIX YEARS ENDED MARCH 31, 1998

[GRAPH]

Dollars (Thousands)

Morningstar
Large Growth Janus Papp Montag & Caldwell

1992 $10,000 $10,000 $10,000 $10,000
1993 $10,000 $11,073 $10,913 $10,984
1994 $11,301.4 $11,131 $11,002.5 $11,801.8
1995 $12,333.3 $11,569 $13,424.1 $13,017.3
1996 $15,888.9 $16,473 $17,914.5 $18,211.3
1997 $17,857.9 $18,990 $22,267.7 $22,327
1998 $26,257.9 $28,626 $30,765.1 $17,857.6

NOTE (LARGE-CAP GROWTH PORTFOLIO)
- --------------------------------------------------------------------------------

GROWTH OF A $10,000 INVESTMENT

The 'Growth of $10,000' chart reflects six years of performance data for the
Janus Earnings Growth Composite, a single mutual fund of Papp and the Montag &
Caldwell Growth Composite. The returns for Janus, Papp and Montag & Caldwell are
net of actual expenses.

<PAGE>
17

STYLE SELECT SERIES(Registered)

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

The Advisers for the Mid-Cap Growth Portfolio are:

MILLER ANDERSON & SHERRERD, LLP (MAS)
T. ROWE PRICE ASSOCIATES, INC. (T. ROWE PRICE)
WELLINGTON MANAGEMENT COMPANY, LLP
(WELLINGTON MANAGEMENT)

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

PORTFOLIO PERFORMANCE
- --------------------------------------------------------------------------------

The Portfolio's (Class A shares) average annual total return since inception
(November 19, 1996) through March 31, 1998 was 28.96%.<F1>

ANNUALIZED TOTAL RETURNS
- --------------------------------------------------------------------------------

PERIODS ENDED MARCH 31, 1998

[CHART]

1 Year 3 Year 5 Year
------ ------ ------

Morningstar Mid-Cap Growth 42.2% 24.7% 18.4%

Mid-Cap Growth Portfolio 47.4%* -- --
(See Note)

MAS 77.2% 35.1% 24.3%

T. Rowe Price 47.0% 30.8% 24.0%

Wellington Management 50.6% 28.4% 21.3%

<F1> The Portfolio's performance includes the performance of the predecessor
Subadviser to Wellington Management, which was Pilgrim Baxter &
Associates, Ltd.
* The Portfolio's performance constitutes average annual total return and
reflects the deduction of actual operating expenses and the imposition of
a front-end sales load.

<PAGE>

STYLE SELECT SERIES(Registered)

NOTES (MID-CAP GROWTH PORTFOLIO)
- --------------------------------------------------------------------------------

INDIVIDUAL ADVISER PERFORMANCE

Except as otherwise noted below, an Adviser's performance is presented net of
actual fees and reflects the imposition of any sales load or charges, if
applicable. The Portfolio's fees and expenses may be greater than those charged
by the individual Advisers. Accordingly, the Portfolio's actual performance
results may be less.

MAS

MAS' historical performance data covers 8 years (the period since inception) and
reflects the performance of a single account, which is a no-load mutual fund.
The annualized return since inception of the account is 23.0% as of March 31,
1998. MAS manages 2 accounts, including the Portfolio, with investment
objectives, and investment policies and strategies substantially similar to
those to be used by MAS in managing its portion of the Mid-Cap Growth Portfolio.
The omission of the Portfolio, with assets of approximately $32 million (5.5% of
the total assets in the 2 accounts), does not render the performance information
misleading. As of March 31, 1998, the account's net assets totaled $550.8
million. The returns are presented net of actual fees.

T. Rowe Price

T. Rowe Price's historical performance data covers 6 years (the period since
inception) and reflects the performance of a single account, which is a no-load
mutual fund. The annualized return since inception of the account is 26.2% as of
March 31, 1998. T. Rowe Price manages a total of 9 accounts (5 of which are
institutional accounts and 4 of which are mutual funds) with investment
objectives, policies and strategies substantially similar to those used in
managing its portion of the Mid-Cap Growth Portfolio. T. Rowe Price does not
calculate composite performance for mutual fund accounts nor does it calculate a
combined composite of the institutional accounts' performance and the mutual
funds' performance. Three of the accounts do not have performance records as of
March 31, 1998. The omission of the other 5 accounts, with assets of
approximately $653.7 million (less than 22% of the total assets in the 9
accounts), does not render the performance information presented misleading. As
of March 31, 1998, the account's net assets totaled approximately $2.3 billion.
The returns are presented net of actual fees.

Wellington Management

Wellington Management's historical performance data covers 6 3/4 years and
reflects the performance of the Wellington Management Mid-Cap Growth Composite.
The annualized return since inception of the Composite is 21.3%. The Composite
includes all accounts with investment objectives, policies and strategies
substantially similar to those used by Wellington Management in managing its
portion of the Mid-Cap Growth Portfolio. As of March 31, 1998 the Composite
included 20 separately managed accounts totaling $1.2 billion of assets under
management. The returns for the Composite were supplied to the Portfolio by
Wellington Management, and are presented net of management--related fees for the
periods during which each account is included in the Composite.

Morningstar Mid-Cap Growth Category

Developed by Morningstar, the Morningstar Mid-Cap Growth Category currently
reflects a group of 344 mutual funds which have portfolios with similar median
market capitalizations, price/earnings ratios, and price/book ratios similar to
those of the Mid-Cap Growth Portfolio.

<PAGE>
19

STYLE SELECT SERIES(Registered)

GROWTH OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------

FIVE YEARS ENDED MARCH 31, 1998

Wellington Morningstar
T. Rowe Price Management MAS Mid-Cap Growth

1993 10000 10000 10000 10000
1994 11332 10725 11582 11108
1995 12024.4 12420.6 13122.4 12001.1
1996 17293.5 16175.4 18708.6 16224.3
1997 16712.4 17464.5 19952.7 16371.9
1998 29611 26299.9 29336.5 23277.6

NOTE (MID-CAP GROWTH PORTFOLIO)
- --------------------------------------------------------------------------------

GROWTH OF A $10,000 INVESTMENT

The 'Growth of $10,000' chart reflects five years of performance data for a
single mutual fund of MAS, a single mutual fund of T. Rowe Price and the
Wellington Management Mid-Cap Growth Composite. The returns for all time periods
are net of actual expenses.

<PAGE>

STYLE SELECT SERIES(Registered)

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

The Advisers for the Aggressive Growth Portfolio are:

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

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

PORTFOLIO PERFORMANCE
- --------------------------------------------------------------------------------

The Portfolio's (Class A Shares) average annual total return since inception
(November 19, 1996) through March 31, 1998 was 43.28%.

ANNUALIZED TOTAL RETURNS
- --------------------------------------------------------------------------------

PERIODS ENDED MARCH 31, 1998

[CHART]

1 Year 3 Year 5 Year
------ ------ ------

Morningstar Aggressive Growth 39.5% 23.7% 18.3%

Aggressive Growth Portfolio 44.7%* -- --
(See Note)

Janus 55.5% 39.1% 28.0%

SunAmerica 23.8%** 18.2%** 15.7%**
(See Note)

Warburg 45.4% 26.6% 19.7%

* The Portfolio's performance constitutes average annual total return and
reflects the deduction of actual operating expenses and the imposition of a
front-end sales load.
** The annualized total returns for SunAmerica are adjusted for a front-end
sales load. Without this adjustment, SunAmerica's 1 year return is 31.3%,
its 3 year return is 20.5% and its 5 year return is 17.1%.

<PAGE>
21

STYLE SELECT SERIES(Registered)

NOTES (AGGRESSIVE GROWTH PORTFOLIO)
- --------------------------------------------------------------------------------

INDIVIDUAL ADVISER PERFORMANCE

Janus

Janus' historical performance data covers 8 1/4 years (the period since
inception) and reflects the performance of the Janus Aggressive Growth Composite
(which includes mutual funds). The annualized return since inception of the
composite is 25.8% as of March 31, 1998. The composite includes all accounts,
including the Portfolio, over $5 million with investment objectives, policies
and strategies substantially similar to those used by Janus in managing its
portion of the Aggressive Growth Portfolio. 16 such accounts, with net assets
totaling $50 million (less than 5% of the total assets in the 30 similar
accounts), have been omitted from the composite. Such omission, however, does
not render the performance information presented misleading. As of March 31,
1998, the composite included 14 accounts with aggregate assets of $1.0 billion.
The composite returns are presented net of actual fees. None of the accounts
included in the composite bears any sales loads or charges.

SunAmerica

SunAmerica's historical performance data covers 10 years and reflects the
performance of a single account, which is a front-end load mutual fund. The
annualized ten-year return of the account is 15.0% as of March 31, 1998.
SunAmerica manages a total of 3 accounts, including the Portfolio, (all of which
are mutual funds) with investment objectives, policies and strategies
substantially similar to those used in managing its portion of the Aggressive
Growth Portfolio. SunAmerica does not calculate composite performance for mutual
fund accounts. The omission of 2 of the accounts, with assets totaling $156.0
million (less than 38% of the total assets in the 3 accounts), does not render
the performance information presented misleading. As of March 31, 1998, the
account's net assets totaled $259.0 million. The returns presented in the chart
are net of actual fees and reflect the imposition of a front-end sales charge.

Warburg

Warburg's historical performance data covers approximately 7 years and reflects
the performance of a single account, which is a no-load mutual fund. The
annualized return since inception of the account is 19.11% as of March 31, 1998.
Warburg manages a total of 3 accounts, including the Portfolio, (1 of which is
an institutional account and 2 of which are mutual funds) with investment
objectives, policies and strategies substantially similar to those to be used in
managing its portion of the Aggressive Growth Portfolio. Warburg does not
calculate a combined composite performance for its mutual fund accounts, nor
does it calculate a combined composite of the institutional account's
performance and the mutual funds' performance. However, the performance for the
other 2 accounts was, in the aggregate, better than that shown for the account
and, therefore, the omission of such accounts does not render the performance
information presented misleading. As of March 31, 1998, the account's net assets
totaled $432.1 million, which represented approximately 17.8% of the total
assets in the 3 similar accounts. The returns are presented net of actual fees.

Morningstar Aggressive Growth Objective

Developed by Morningstar, the Morningstar Aggressive Growth Objective currently
reflects a group of 141 mutual funds which seek rapid growth of capital. The
group typically employ strategies that involve greater risk than those used by
most equity funds.

<PAGE>

STYLE SELECT SERIES(Registered)

GROWTH OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------

SIX YEARS ENDED MARCH 31, 1998

[GRAPH]

Dollars (Thousands)

Morningstar
Janus SunAmerica Warburg Aggressive Growth

1992 10 10 10 10
1993 11.806 11.486 11.247 11.244
1994 12.924 12.263 12.353 12.657
1995 15.099 14.435 13.582 13.783
1996 24.989 20.297 19.359 18.801
1997 26.101 19.246 18.98 18.701
1998 40.592 25.27 27.593 26.092

NOTE (AGGRESSIVE GROWTH PORTFOLIO)
- --------------------------------------------------------------------------------

GROWTH OF A $10,000 INVESTMENT

The 'Growth of $10,000' chart reflects six years of performance data for the
Janus Aggressive Growth Composite, a single mutual fund of SunAmerica and a
single mutual fund of Warburg. The returns for Janus, SunAmerica and Warburg are
net of actual expenses.

<PAGE>
23

STYLE SELECT SERIES(Registered)

Advisers for Large-Cap Blend Portfolio
- --------------------------------------------------------------------------------

The Advisers for the Large-Cap Blend Portfolio are:

LAZARD ASSET MANAGEMENT (LAZARD)
MORGAN STANLEY ASSET
MANAGEMENT INC. (MSAM)
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.'

PORTFOLIO PERFORMANCE
- --------------------------------------------------------------------------------

The Portfolio's (Class A shares) total return since inception (October 15, 1997)
through March 31, 1998 was 12.85%.<F1>

ANNUALIZED TOTAL RETURNS
- --------------------------------------------------------------------------------

PERIODS ENDED MARCH 31, 1998

[CHART]

1 Year 3 Year 5 Year 10 Year
------ ------ ------ -------

Morningstar Large Blend 42.5% 28.5% 19.2% 16.6%

Lazard 38.9% 29.1% 21.6% 17.5%

MSAM 50.8% 38.4% 25.8% --

T. Rowe Price 36.1% 27.7% 18.4% 16.4%

<F1> The portfolio's performance includes the performance of SunAmerica, which
had managed the portion of the Portfolio now managed by MSAM.

<PAGE>

STYLE SELECT SERIES(Registered)

NOTES (LARGE-CAP BLEND PORTFOLIO)
- --------------------------------------------------------------------------------

INDIVIDUAL ADVISER PERFORMANCE

Except as otherwise noted below, an Adviser's performance is presented net of
actual fees, and reflects the imposition of any sales loads or charges, if
applicable. The Portfolio's fees and expenses may be greater than those charged
by the individual Advisers. Accordingly, the Portfolio's actual performance
results may be less.

Lazard

Lazard's historical performance data covers 10 years and reflects the
performance of Lazard's U.S. Equity Composite. The composite includes all
accounts, including the Portfolio, with investment objectives, policies and
strategies substantially similar to those to be used by Lazard in managing its
portion of the Large-Cap Blend Portfolio, except that 41 such accounts, with net
assets totaling $2.9 million (less than 1% of the total assets in the 96 similar
accounts), have been omitted from the composite. Such omission, however, does
not render the performance information presented misleading. As of March 31,
1998, the composite included 55 accounts totaling over $6.6 billion in assets
under management. The returns are presented net of actual fees. None of the
accounts included in the composite bears any sales loads or charges.

MSAM

MSAM's historical performance data covers 6 3/4 years (the period since
inception) and reflects the performance of a single account, which is a no-load
mutual fund. The annualized return since inception of the account is 21.0% as of
March 31, 1998. MSAM manages a total of 16 accounts (12 of which are
institutional accounts and 4 of which are mutual funds) with investment
objectives, policies and strategies substantially similar to those to be used in
managing its portion of the Large-Cap Blend Portfolio. MSAM does not calculate
composite performance for its mutual fund accounts nor does it calculate a
combined composite of the institutional accounts' performance and the mutual
funds' performance. However, the performance for the other 15 accounts was, in
the aggregate, better than that shown for the fund and, therefore, the omission
of such accounts does not render the performance information presented
misleading. As of March 31, 1998, the fund's net assets totaled $759.0 million,
which represented approximately 38.2% of the total assets in the 16 similar
accounts. The returns presented in the chart are net of actual fees.

T. Rowe Price

T. Rowe Price's historical performance data covers 10 years and reflects the
performance of a single account, which is a no-load mutual fund. T. Rowe Price
manages 2 accounts, including the Portfolio, with investment objectives,
policies and strategies substantially similar to those to be used by T. Rowe
Price in managing its portion of the Large-Cap Blend Portfolio. The omission of
the Portfolio, with assets of approximately $30.8 million (approximately 1% of
the total assets in the 2 accounts), does not render the performance information
misleading. As of March 31, 1998, the account's net assets totaled over $3.7
billion. The returns are presented net of actual fees.

Morningstar Large Blend Category

Developed by Morningstar, the Morningstar Large Blend Category currently
reflects a group of 754 mutual funds which have portfolios with median market
capitalizations, price/earnings ratios, and price/book ratios similar to those
of the Large-Cap Blend Portfolio.

<PAGE>
25

STYLE SELECT SERIES(Registered)

GROWTH OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------

SIX YEARS ENDED MARCH 31, 1998

[GRAPH]

Dollars (Thousands)

Morningstar
Lazard MSAM T. Rowe Price Large Blend

1992 10000 10000 10000 10000
1993 11322 10991 12333 11326
1994 12145.1 11348.2 12341.6 11643.1
1995 13986.3 13059.5 13812.8 12868
1996 18755.6 18800.5 17778.4 16556
1997 21659 22942.2 21119 19148
1998 30084.4 34601.5 28736.6 27292.1

NOTE (LARGE-CAP BLEND PORTFOLIO)
- --------------------------------------------------------------------------------

GROWTH OF A $10,000 INVESTMENT

The 'Growth of $10,000' chart reflects six years of performance data for the
Lazard U.S. Equity Composite, a single mutual fund of MSAM and a single mutual
fund of T. Rowe Price. The returns for Lazard, MSAM and T. Rowe Price are net of
actual expenses.

<PAGE>

STYLE SELECT SERIES(Registered)

ADVISERS FOR LARGE-CAP VALUE PORTFOLIO
- --------------------------------------------------------------------------------

The Advisers for the Large-Cap Value Portfolio are:

DAVID L. BABSON & CO., INC. (BABSON)
DAVIS SELECTED ADVISERS, L.P. (DAVIS)
WELLINGTON MANAGEMENT COMPANY, LLP
(WELLINGTON MANAGEMENT)

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

PORTFOLIO PERFORMANCE
- --------------------------------------------------------------------------------

The Portfolio's (Class A shares) total return since inception (October 15, 1997)
through March 31, 1998 was 8.0%.

ANNUALIZED TOTAL RETURNS
- --------------------------------------------------------------------------------

PERIODS ENDED MARCH 31, 1998

[CHART]

1 Year 3 Year 5 Year 10 Year
------ ------ ------ -------

Morningstar Large Value 38.6% 27.3% 19.1% 16.3%

Babson 41.6% 29.2% 23.5% 17.9%

Davis 35.0% 30.3% 20.7% 20.7%
(See Note)

Wellington Management 38.9% 30.3% 22.4% 18.7%

* The annualized total returns for Davis are adjusted for a front-end sales
load. Without this adjustment, Davis' 1 year return in 41.8%, its 3 year
return in 32.5%, its 5 year return is 21.9% and its 10 year return is 21.3%.

<PAGE>
27

STYLE SELECT SERIES(Registered)

NOTES (LARGE-CAP VALUE PORTFOLIO)
- --------------------------------------------------------------------------------

INDIVIDUAL ADVISER PERFORMANCE

Babson

Babson's historical performance data covers 10 years and reflects the
performance of the Babson Value Composite. According to Babson, the composite
includes all accounts, including the Portfolio, with investment objectives,
policies and strategies substantially similar to those used by Babson in
managing its portion of the Large-Cap Value Portfolio. Composite returns with
respect to the period prior to 1995 are based on results from a single account,
which is a no-load mutual fund, and, with respect to the period from 1995 to
present, are based on results from fully discretionary separate accounts and
no-load mutual funds advised by Babson. As of March 31, 1998, the composite
included 53 accounts with aggregate assets of $2.0 billion. The composite
returns are presented net of actual fees. None of the accounts included in
composite bears any sales loads or charges.

Davis

Davis' historical performance data covers 10 years and reflects the performance
of a single account, which is a front-end load mutual fund. Davis manages a
total of 14 accounts, including the Portfolio, (9 of which are institutional
accounts and 5 of which are mutual funds) with investment objectives, policies
and strategies substantially similar to those used in managing its portion of
the Large-Cap Value Portfolio. Davis does not calculate composite performance
for either its institutional accounts or its mutual fund accounts, nor does it
calculate a combined composite of the institutional accounts' performance and
the mutual funds' performance. However, the performance for the other 13
accounts was, in the aggregate, better than that shown for the account and,
therefore, the omission of such accounts does not render the performance
information presented misleading. As of March 31, 1998, the account's net assets
totaled $10.4 billion, which represented approximately 82% of the total assets
in the 14 similar accounts. The returns presented in the chart are net of actual
fees and reflect the imposition of a front-end sales charge.

Wellington Management

Wellington Management's historical performance data covers 10 years and reflects
the performance of the Wellington Management Value/Yield Composite. The
composite includes all accounts, including the Portfolio, with investment
objectives, policies and strategies substantially similar to those used by
Wellington Management in managing its portion of the Large-Cap Value Portfolio.
As of March 31, 1998, the composite included 12 discretionary separate accounts
and mutual funds totaling $3.4 billion of assets under management. The returns
for the composite were supplied by Wellington Management and are presented net
of management-related fees for the periods during which each account is included
in the Composite.

Morningstar Large Value Category

Developed by Morningstar, the Morningstar Large Value Category reflects a group
of 413 mutual funds which have portfolios with median market capitalizations,
price/earnings ratios, and price/book ratios similar to those expected for the
Large-Cap Value Portfolio.

<PAGE>

STYLE SELECT SERIES(Registered)

GROWTH OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------

TEN YEARS ENDED MARCH 31, 1998

[GRAPH]

Dollars (Thousands)

Morningstar
Davis Babson Large Value

1988 10 10 10
1989 12.513 11.446 11.556
1990 14.9806 12.8916 13.0236
1991 17.1872 14.2091 14.1359
1992 19.7378 16.1373 16.5361
1993 25.5506 19.1001 19.3803
1994 26.3069 20.2538 21.2156
1995 29.54 22.7308 22.6583
1996 39.5156 30.4298 28.9799
1997 48.4382 36.1871 34.8832
1998 68.666 51.2192 49.262

NOTE (LARGE-CAP VALUE PORTFOLIO)
- --------------------------------------------------------------------------------

GROWTH OF A $10,000 INVESTMENT

The 'Growth of $10,000' chart reflects ten years of performance data for the
Babson Value Composite, a single mutual fund of Davis, and the Wellington
Management Value/Yield Composite. The returns for the Babson Value Composite and
the Davis fund are net of actual expenses. The returns for the Wellington
Management Value/Yield Composite have been adjusted to give effect to the
account in the composite with the highest annualized expense for each 1, 3, 5,
and 10 year period.

<PAGE>
29

STYLE SELECT SERIES(Registered)

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 Capital Management,
Inc., together with Strong Capital Management, Inc. referred to as
'Strong/Schafer').

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

PORTFOLIO PERFORMANCE
- --------------------------------------------------------------------------------

The Portfolio's (Class A shares) average annual total return since inception
(November 19, 1996) through March 31, 1998 was 43.88%.

ANNUALIZED TOTAL RETURNS
- --------------------------------------------------------------------------------

PERIODS ENDED MARCH 31, 1998

[CHART]

1 Year 3 Year 5 Year 10 Year
------ ------ ------ -------

Morningstar Mid-Cap Value 39.3% 26.9% 18.4% 15.8%

Value Portfolio 38.8%* -- -- --
(See Note)

Davis 35.0%** 30.3%** 20.7%** 20.7%**
(See Note)

Neuberger & Berman 41.5% 31.1% 21.8% 17.8%

Strong/Schafer 41.2% 29.6% 20.5% 17.3%

<PAGE>

STYLE SELECT SERIES(Registered)

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. Davis manages a
total of 14 accounts, including the Portfolio, (9 of which are institutional
accounts and 5 of which are mutual funds) with investment objectives, policies
and strategies substantially similar to those used in managing its portion of
the Value Portfolio. Davis does not calculate composite performance for either
its institutional accounts or its mutual fund accounts, nor does it calculate a
combined composite of the institutional accounts' performance and the mutual
funds' performance. However, the performance for the other 13 accounts was, in
the aggregate, better than that shown for the account and, therefore, the
omission of such accounts does not render the performance information presented
misleading. As of March 31, 1998, the account's net assets totaled $10.4
billion, which represented approximately 82% of the total assets in the 14
similar accounts. The returns presented in the chart are net of actual fees and
reflect the imposition of a front-end sales charge.

Neuberger&Berman

Neuberger&Berman's historical performance data covers 10 years and reflects the
performance of a single account, which is a no-load mutual fund.
Neuberger&Berman manages 2 accounts, including the Portfolio, with investment
objectives, policies and strategies substantially similar to those to be used by
Neuberger&Berman in managing its portion of the Value Portfolio. The omission of
the Portfolio, with assets of approximately $72.0 million (less than 2% of the
total assets in the 2 accounts), does not render the performance information
misleading. As of March 31, 1998, the account's net assets totaled $4.62
billion. The returns are presented net of actual fees.

Strong/Schafer

Strong/Schafer's historical performance data covers 10 years and reflects the
performance of the Schafer Capital Equity Composite. The composite includes all
accounts, including the Portfolio, with investment objectives, policies and
strategies substantially similar to those used by Strong/Schafer in managing its
portion of the Value Portfolio. As of March 31, 1998, the composite included 3
separately managed accounts and 2 mutual funds totaling approximately $2.2
billion of assets under management. The returns are presented net of actual
fees. None of the accounts in the composite bears any sales loads or charges.
Prior to January 1, 1993, not all composite calculations complied with AIMR.
Accordingly, performance results prior to January 1, 1993 do not comply with
AIMR.

Morningstar Mid-Cap Value Category

Developed by Morningstar, the Morningstar Mid-Cap Value Category currently
reflects a group of 203 mutual funds which have portfolios with median market
capitalizations, price/earnings ratios, and price/book ratios similar to those
expected for the Value Portfolio.

<PAGE>
31

STYLE SELECT SERIES(Registered)

GROWTH OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------

TEN YEARS ENDED MARCH 31, 1998

[GRAPH]

Dollars (Thousands)

1988 10 10 10 10
1989 11.681 12.513 11.998 11.682
1990 12.536 14.9806 13.5289 13.0932
1991 13.4198 17.1872 14.5544 14.5203
1992 15.7079 19.7378 16.2951 16.485
1993 18.0296 25.5506 19.8198 19.0698
1994 21.1631 26.3069 21.9881 19.8535
1995 24.0095 29.54 24.4771 22.1367
1996 31.1836 39.5156 32.5717 28.4036
1997 36.5191 48.4382 38.7897 31.9169
1998 51.7183 68.666 53.7508 45.6229

NOTE (VALUE PORTFOLIO)
- --------------------------------------------------------------------------------

GROWTH OF A $10,000 INVESTMENT

The 'Growth of $10,000' chart reflects ten years of performance data for a
single mutual fund of Davis, a single mutual fund of Neuberger&Berman and the
Schafer Capital Equity Composite. The returns for Davis, Neuberger&Berman and
Schafer are net of actual expenses.

<PAGE>

STYLE SELECT SERIES(Registered)

Advisers for Small-Cap Value Portfolio
- --------------------------------------------------------------------------------

The Advisers for the Small-Cap Value Portfolio are:

BERGER ASSOCIATES, INC. (subcontracted to Perkins, Wolf, McDonnell & Company,
together with Berger Associates, Inc. referred to as 'Berger/PWM') LAZARD ASSET
MANAGEMENT (LAZARD)

THE GLENMEDE TRUST COMPANY (GLENMEDE)

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

PORTFOLIO PERFORMANCE
- --------------------------------------------------------------------------------

The Portfolio's (Class A shares) total return since inception (October 15, 1997)
through March 31, 1998 was 7.52%.

ANNUALIZED TOTAL RETURNS
- --------------------------------------------------------------------------------

PERIODS ENDED MARCH 31, 1998

[CHART]

1 Year 3 Year 5 Year 10 Year
------ ------ ------ -------

Morningstar Small Value 41.2% 25.9% 18.2% 15.3%

Berger 44.4%** 29.0%** 22.1%** 16.3%**

Lazard 43.7% 27.8% 22.0% 16.9%

Glenmede 38.5% 27.2% 20.9% --

<PAGE>
33

STYLE SELECT SERIES(Registered)

NOTES (SMALL-CAP VALUE PORTFOLIO)
- --------------------------------------------------------------------------------

INDIVIDUAL ADVISER PERFORMANCE

Berger/PWM

Berger/PWM's historical performance data covers 10 years and reflects the
performance of a single account, which is a no-load mutual fund. Berger/ PWM
manages 2 accounts, including the Portfolio, with investment objectives,
policies and strategies substantially similar to those used by Berger/PWM in
managing its portion of the Small-Cap Value Portfolio. The omission of the
Portfolio, with assets of approximately $13.4 million (approximately 7% of the
total assets in the 2 accounts), does not render the performance information
misleading. As of March 31, 1998, the account's net assets totaled $178.2
million. The returns are presented net of actual fees.

Lazard

Lazard's historical performance data covers 10 years and reflects the
performance of the Lazard U.S. Small Cap Equity Composite. The composite
includes all accounts with investment objectives, policies and strategies
substantially similar to those to be used by Lazard in managing its portion of
the Small-Cap Value Portfolio, except that 24 such accounts, with net assets
totaling $721.3 million (less than 30.5% of the total assets in the 49
accounts), have been omitted from the composite. Such omission, however, does
not render the performance information presented misleading. As of March 31,
1998, the composite included 25 accounts totaling $1.6 billion in assets under
management. The returns for the composite were supplied to the Fund by Lazard
gross of certain fees, but have been adjusted to reflect the highest fees
charged to any account included in the composite for the reporting period. None
of the accounts included in the composite bears any sales loads or charges.

Glenmede

Glenmede's historical performance data covers approximately 7 years (the period
since inception) and reflects the performance of a single account, which is a
no-load mutual fund. The annualized return since inception of the account is
18.4% as of March 31, 1998. Glenmede manages 2 accounts, including the
Portfolio, with investment objectives, policies and strategies substantially
similar to those used in managing its portion of the Small-Cap Value Portfolio.
The omission of the Portfolio, with assets of approximately $12.7 million (less
than 3% of the total assets in the 2 accounts), does not render the performance
information misleading. As of March 31, 1998, the account's net assets totaled
$488 million. The returns for the account were supplied to the Fund by Glenmede
gross of certain fees, but have been adjusted to reflect the highest fees
charged to the account for the reporting period.

Morningstar Small Value Category

Developed by Morningstar, the Morningstar Small Value Category currently
reflects a group of 248 mutual funds which have portfolios with median market
capitalizations, price/earnings ratios, and price/book ratios similar to those
expected for the Small-Cap Value Portfolio.

<PAGE>

STYLE SELECT SERIES(Registered)

GROWTH OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------

SEVEN YEARS ENDED MARCH 31, 1998

[GRAPH]

Dollars (Thousands)

Morningstar
Berger Lazard Glenmede Small Value

1991 10000 10000 10000 10000
1992 11027 12070 11063 12311
1993 13338.3 14222.1 13165 14279.5
1994 14708.1 16009.8 14905.4 15657.5
1995 16818.7 18401.7 16263.3 16510.8
1996 20044.5 22836.5 19886.7 20405.7
1997 25029.6 26739.2 24566.1 23325.8
1998 36135.3 38432.3 34011.7 32936

NOTE (SMALL-CAP VALUE PORTFOLIO)
- --------------------------------------------------------------------------------

GROWTH OF A $10,000 INVESTMENT

The 'Growth of $10,000' chart reflects seven years of performance data for a
single mutual fund of Berger/PWM, a single mutual fund of Glenmede and the
Lazard U.S. Small Cap Equity Composite. The performance for Berger, Glenmede and
Lazard reflect net-of-fee data.

<PAGE>
35

STYLE SELECT SERIES(Registered)

ADVISERS FOR INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------

The Advisers for the International Equity Portfolio are:
BANKERS TRUST COMPANY (BT)
ROWE PRICE-FLEMING INTERNATIONAL, INC.
(ROWE-FLEMING)
WARBURG PINCUS ASSET MANAGEMENT, INC. (WARBURG)

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

PORTFOLIO PERFORMANCE
- --------------------------------------------------------------------------------

The Portfolio's (Class A shares) average annual total return since inception
(November 19, 1996) through March 31, 1998 was 9.70%.<F1>

ANNUALIZED TOTAL RETURNS
- --------------------------------------------------------------------------------

PERIODS ENDED MARCH 31, 1998

[CHART]

1 Year 3 Year 5 Year 10 Year
------ ------ ------ -------

Morningstar Foreign Stock 18.2% 14.3% 12.7% 9.6%

International Equity Portfolio 9.5% -- -- --
(See Note)

BT 30.8% 17.9% 16.4% 9.3%

Rowe-Fleming 16.6% 15.1% 14.3% 11.4%

Warburg 8.2% 11.1% 12.1% --

<F1> The Portfolio's performance includes the performance of the predecessor
Subadviser to BT, which was Strong.
* The Portfolio's performance constitutes average annual total return and
reflects the deduction of actual operating expenses and the imposition of
a front-end sales load.

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NOTES (INTERNATIONAL EQUITY 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
results may be less.

BT's historical performance data covers 10 years and reflects the performance of
the BT International Equity Composite, which consists of 2 accounts, one of
which is a mutual fund and the other an institutional account. These accounts
represent all of those managed by BT with an investment objective, policies and
strategy substantially similar to those to be used in managing its portion of
the International Equity Portfolio. As of March 31, 1998, the net assets managed
under the 2 accounts totaled approximately $2.0 billion. The returns are
presented net of actual fees and sales charges.

Rowe-Fleming

Rowe-Fleming's historical performance data covers 10 years and reflects the
performance of a single account, which is a no-load mutual fund. Rowe-Fleming
manages a total of 36 accounts (13 of which are institutional accounts and 23 of
which are mutual funds) with investment objectives, policies and strategies
substantially similar to those to be used in managing its portfolio of the
International Equity Portfolio. Although Rowe-Fleming calculates composite
performance for its institutional accounts, it does not calculate composite
performance for mutual fund accounts, nor does it calculate a composite which
combines the institutional accounts' composite performance with the mutual
funds' performance. However, the performance for the other 35 accounts was, in
the aggregate, better than that shown for the account and, therefore, the
omission of such accounts does not render the performance information presented
misleading. As of March 31, 1998, the account's net assets totaled approximately
$10.6 billion, which represented approximately 49.5% of the total assets in the
36 similar accounts. The returns are presented net of actual fees.

Warburg

Warburg's historical performance data covers approximately 7 years and reflects
the performance of a single account, which is a no-load mutual fund. The
annualized return since inception of the account is 10.0% as of March 31, 1998.
Warburg manages a total of 9 accounts (1 of which is an institutional account
and 8 of which are mutual funds) with an investment objective, policies and
strategy substantially similar to those to be used in managing its portion of
the International Equity Portfolio. Warburg does not calculate a combined
composite performance for its mutual fund accounts, nor does it calculate a
combined composite of the institutional account's performance and the mutual
funds' performance. However, the performance for the other 8 accounts was, in
the aggregate, better than that shown for the account and, therefore, the
omission of such accounts does not render the performance information presented
misleading. As of March 31, 1998, the account's net assets totaled $406.5
million, which represented approximately 8.1% of the total assets in the 9
similar accounts. The returns are presented net of actual fees.

Morningstar Foreign Stock Category

Developed by Morningstar, the Morningstar Foreign Stock Category currently
reflects a group of 483 mutual funds which invest most of their assets in
foreign stocks.

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37

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GROWTH OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------

SIX YEARS ENDED MARCH 31, 1998

[GRAPH]

Dollars (Thousands)

Morningstar
Rowe-Fleming BT Warburg Foreign Stock

1992 10000 10000 10000 10000
1993 10637 10720 10786 10682
1994 13529.2 13657.3 14330.3 13241.4
1995 13609.2 13971.4 13910.4 12977.9
1996 16198.8 15689.9 16611.8 15089.4
1997 17771.3 17478.5 17631.8 16402.2
1998 20727.2 22861.9 19084.6 19390.7

NOTE (INTERNATIONAL EQUITY PORTFOLIO)
- --------------------------------------------------------------------------------

GROWTH OF A $10,000 INVESTMENT

The 'Growth of $10,000' chart reflects six years of performance data for the BT
International Equity Composite, a single mutual fund of Rowe-Fleming and a
single mutual fund of Warburg. The returns for BT, Rowe-Fleming and Warburg are
net of actual expenses.

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INVESTMENT TECHNIQUES AND RISK FACTORS
- --------------------------------------------------------------------------------

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 and less
market liquidity 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. In addition, certain smaller
issuers may have a higher probability of facing 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 invests 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, each Portfolio may invest in securities denominated in
other currency 'baskets.' Each Portfolio may also seek to gain exposure to
certain foreign markets, including developing countries or emerging markets,
where direct investment may be difficult or impracticable, through investment in
domestic closed-end mutual funds which invest predominately in such markets. See
the Statement of Additional Information for a further discussion of foreign
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

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39

STYLE SELECT SERIES(Registered)

and financial reporting standards and requirements comparable to those
applicable to U.S. companies.

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. See 'Foreign Investment
Companies' below for a discussion of investing in investment companies which
invest in emerging markets.

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 net 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

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STYLE SELECT SERIES(Registered)

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 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--Each Portfolio may invest in domestic closed-end
investment companies which invest in certain foreign markets, including
developing countries or emerging markets. The Large-Cap Growth, Aggressive
Growth and International Equity Portfolios may also invest in foreign investment
companies which invest in such markets. Some of the countries in which the
Portfolios invest may not permit direct investment by foreign investors such as
the Portfolios. 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 Portfolios to invest in investment companies 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 Portfolios do not
intend to invest in such investment companies unless, in the judgment of the
Advisers, the potential benefits of such investments justify the payment of any
associated fees and expenses. See 'Foreign Securities' and 'Emerging Markets'
above and the Statement of Additional Information.

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

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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.

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 and Large-Cap Value 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 Large-Cap Growth,
Aggressive Growth, Large-Cap Blend, Value, Small-Cap 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

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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 analysis, may decrease the values and liquidity of high-yield
bonds, especially in a thinly traded 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 Portfolio 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 for
a further discussion of these types of securities.

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 disad-vantageous circumstances to satisfy the
Portfolio's distribution obligations.

REITs--The Large-Cap Blend and each of the Value Portfolios may invest in Real
Estate Investment Trusts ('REITs'), which are trusts that invest primarily in
commercial real estate or real estate related loans. The value of an interest in
a REIT may be affected by the value and the cash flows of the properties owned
or the quality of the mortgages held by the trust.

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 appropriate
collateral with the Fund's custodian (or at an appropriate sub-custodian in the
case of tri- or quad-party repurchase agreements). 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

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STYLE SELECT SERIES(Registered)

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
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 segregation 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

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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 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 or sale 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
securities purchased in this manner 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

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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
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 generally will recognize gain (but not loss) upon a short sale against
the box for Federal income tax purposes. 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 March 31, 1998, held more than $55 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 and Large-Cap Blend 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 in excess
of $14.5 billion as of March 31, 1998 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

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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 Growth Portfolios, Large-Cap Blend Portfolio and Value
Portfolios 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, and
may be higher than those charged to other funds.

For the fiscal year ended October 31, 1997, each Portfolio paid SunAmerica a fee
equal to the following percentages of average daily net assets: Large-Cap Growth
Portfolio 1.00%; Mid-Cap Growth Portfolio 1.00%; Aggressive Growth Portfolio
1.00%; Large-Cap Blend Portfolio 1.00%; Large-Cap Value Portfolio 1.00%; Value
Portfolio 1.00%; Small-Cap Value Portfolio 1.00%; and International Equity
Portfolio 1.10%. SunAmerica has voluntarily agreed to waive fees or reimburse
expenses, if necessary, to keep operating expenses at or below an annual rate of
1.78% of the Assets of Class A shares and 2.43% of the Assets of Class B and
Class C shares for each Portfolio (other than the International Equity
Portfolio) and 2.03% of the Assets of Class A shares and 2.68% of the Assets of
Class B and Class C shares for the International Equity Portfolio. 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. The aggregate annual rates, as a percentage of daily net assets,
of the fees payable by SunAmerica to the Advisers for each Portfolio may vary
according to the level of Assets of each Portfolio. For the fiscal year ended
October 31, 1997, SunAmerica paid fees to the Advisers equal to the following
aggregate annual rates, expressed as a percentage of the Assets of each
Portfolio: Large-Cap Growth Portfolio, 0.48%; Mid-Cap Growth Portfolio, 0.50%;
Aggressive Growth Portfolio, 0.37%; Large-Cap Blend Portfolio, 0.32%; Large-Cap
Value Portfolio, 0.41%; Value Portfolio, 0.50%; Small-Cap Value Portfolio,
0.55%; and International Equity Portfolio, 0.65%.

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

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STYLE SELECT SERIES(Registered)

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.

LARGE-CAP GROWTH PORTFOLIO

The Advisers for the Large-Cap Growth Portfolio are Janus, Papp and Montag &
Caldwell.

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. KCSI is a publicly
traded holding company with principal operations in rail transportation, through
its subsidiary The Kansas City Southern Railway Company, and financial asset
management businesses. Thomas H. Bailey, President and 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 March 31, 1998, Janus had under
management approximately $80 billion.

Marc Pinto serves as the Portfolio Manager for Janus' portion of the Large-Cap
Growth Portfolio. Mr. Pinto has been the Vice President of Portfolio Management
of Janus since 1994. From 1993 to 1994, he was Co-President of Creative Retail
Technology, a producer of hardware for retail clients. From 1991 to 1993, Mr.
Pinto was an equity analyst at Priority Investments Ltd., a family owned
business.

L. Roy Papp & Associates. Papp is an Arizona partnership located at 4400 North
32nd Street, Suite 280, Phoenix, Arizona 85018. Papp serves as investment
adviser to individuals, trusts, retirement plans, endowments, and foundations.
As of March 31, 1998, assets under management exceeded $1.2 billion.

L. Roy Papp and Rosellen C. Papp, partners of Papp, serve as the Portfolio
Managers of Papp's portion of the Large-Cap Growth Portfolio. Except for two
years when he was United States director of, and ambassador to, the Asian
Development Bank, Manila, Philippines, Mr. Papp has been in the money management
field since 1955. He has served as managing general partner of Papp since 1989.
Rosellen C. Papp has been the Director of Research of Papp since 1981.

Montag & Caldwell, Inc. Montag & Caldwell is a Georgia corporation located at
3343 Peachtree Road, Suite 1100, Atlanta, Georgia 30326-1022. Montag & Caldwell
was founded in 1945 and is an indirect, wholly owned subsidiary of Alleghany
Corporation. Montag & Caldwell serves as investment adviser to employee benefit,
endowment, charitable and other institutional clients, as well as high net worth
individuals. As of March 31, 1998, Montag & Caldwell had in excess of $20
billion in assets under management.

Montag & Caldwell's portion of the Large-Cap Growth Portfolio is advised by an
investment management team headed by Ronald E. Canakaris. He has been in the
money management business since 1968 and has served as President and Chief
Investment Officer of Montag & Caldwell since 1984.

MID-CAP GROWTH PORTFOLIO

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

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 wholly
owned indirect subsidiary of Morgan Stanley Dean Witter & Co., a financial
services company with three major businesses: full service brokerage, credit
services and asset management. As of March 31, 1998, MAS had in excess of $67.1
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.

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STYLE SELECT SERIES(Registered)

Management: Robert W. Doran, Duncan M. McFarland and John R. Ryan. As of March
31, 1998, Wellington Management had investment management authority with respect
to approximately $193.9 billion of assets.

Wellington Management's portion of the Mid-Cap Growth Portfolio is managed by
Frank V. Wisneski. Mr. Wisneski is a Senior Vice President and has 29 years of
professional experience with Wellington Management.

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 $135
billion for over four and a half million individual and institutional investor
accounts as of March 31, 1998. 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 T. Rowe Price's portion of the investment program. Mr.
Berghuis has been managing investments since joining T. Rowe Price in 1985.

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. KCSI is a publicly
traded holding company with principal operations in rail transportation, through
its subsidiary The Kansas City Southern Railway Company, and financial asset
management businesses. Thomas H. Bailey, President and 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 March 31, 1998, Janus had under
management approximately $80 billion.

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's Domestic Equity Investment Team is responsible for the portfolio
management of its portion of the Aggressive Growth Portfolio. Donna Calder
serves as Portfolio Manager for such portion of the Aggressive Growth Portfolio.
Prior to joining SunAmerica in February 1998, Ms. Calder served as a General
Partner of Manhattan Capital Partners, L.P.

Warburg Pincus Asset Management, Inc. Warburg is a professional investment
advisory firm which provides investment services to investment companies,
employee benefit plans, endowment funds, foundations and other institutions and
individuals. As of April 30, 1998, Warburg managed approximately $21.8 billion
in assets. Incorporated in 1970, Warburg is indirectly controlled by Warburg,
Pincus & Co. which has no businesses other than being a holding company of
Warburg and its affiliates. Warburg is located at 466 Lexington Avenue, New
York, NY 10017-3147.

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

LARGE-CAP BLEND PORTFOLIO

Lazard Asset Management. The Advisers for the Large-Cap Blend Portfolio are
Lazard, MSAM and T. Rowe Price.

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STYLE SELECT SERIES(Registered)

Lazard is a division of Lazard Freres & Co. LLC, a New York limited liability
company. Located at 30 Rockefeller Plaza, New York, New York 10112, Lazard
provides investment management services to individual and institutional clients.
As of March 31, 1998, Lazard and its affiliated companies managed client
discretionary accounts with assets totaling approximately $67 billion.

Lazard manages assets on a team basis. Herbert W. Gullquist oversees the
investment team which is responsible for Lazard's portion of the Large-Cap Blend
Portfolio. Mr. Gullquist is Vice Chairman of Lazard and has been with Lazard
since 1982. Michael S. Rome is the member of the investment team who is
primarily responsible for the day-to-day management of Lazard's portion of the
Large-Cap Blend Portfolio. Mr. Rome is the Managing Director responsible for
U.S./global equity management of Lazard and for overseeing the day-to-day
operations of the U.S. core equity investment team. He has been with Lazard
since 1991.

Morgan Stanley Asset Management Inc. MSAM is a wholly owned subsidiary of
Morgan Stanley Dean Witter & Co., with principal offices at 1221 Avenue of the
Americas, New York, New York 10020. MSAM offers investment management and
fiduciary services to taxable and tax-exempt funds and institutions,
international organizations and individuals investing in U.S. and international
equity and fixed income securities. As of March 31, 1998, MSAM, together with
its institutional investment management affiliates, had approximately $166.0
billion of combined assets under management as investment managers or fiduciary
advisers.

The Portfolio Managers for MSAM's portion of the Large-Cap Blend Portfolio are
Kurt A. Feuerman and Margaret Kinsley Johnson, Managing Director and Principal,
respectively, of MSAM. Mr. Feuerman has been a Managing Director in MSAM's
Institutional Equity Group since 1993. From 1990 to
1993, he had been a Managing Director in Morgan Stanley & Co.'s Equity Research
Department. Ms. Johnson has been a portfolio manager at MSAM since 1989 and is a
Chartered Financial Analyst.

T. Rowe Price's portion of the Large-Cap Blend Portfolio is advised by an
Investment Advisory Committee composed of Stephen W. Boesel, Chairman, Andrew M.
Brooks, Arthur B. Cecil III, Gregory A. McCrickard, Mark J. Vaselkiv, and
Richard T. Whitney. The committee chairman has day-to-day responsibility for
managing T. Rowe Price's portion of the Large-Cap Blend Portfolio and works with
the committee in developing and executing the Portfolio's investment program.
Mr. Boesel has been the chairman of such committee since 1987. He has been
managing investments since joining T. Rowe Price in 1973.

LARGE-CAP VALUE PORTFOLIO

The Advisers for the Large-Cap Value Portfolio are Babson, Davis and Wellington
Management.

David L. Babson & Co., Inc. Babson is a Massachusetts corporation, located at
One Memorial Drive, Cambridge, Massachusetts 02142. Babson is a wholly owned
subsidiary of DLB Acquisition Corp., a holding company, which is controlled by
Mass Mutual Holding Company, a holding company and wholly owned subsidiary of
Massachusetts Mutual Life Insurance Company, a mutual life insurance company.
Babson provides investment advisory services to a substantial number of
institutional and other investors, including other registered investment
companies. As of March 31, 1998, Babson had over $20.3 billion in assets under
management.

Roland W. Whitridge is primarily responsible for the day-to-day management of
the portion of the Large-Cap Value Portfolio allocated to Babson. Mr. Whitridge
has been employed by Babson in portfolio management for over twenty years.

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 March 31, 1998, Davis had assets under management
of approximately $17.9 billion. In performing its investment advisory services,
Davis, while remaining ultimately responsible for its management of the portion
of the assets of the Large-Cap 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 is responsible for the day-to-day management of Davis'
portion of the Large-Cap Value Portfolio. He joined Davis in September 1989 as
an assistant portfolio manager and research analyst.

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STYLE SELECT SERIES(Registered)

Wellington Management Company, LLP. Wellington Management is a Massachusetts
limited liability partnership, located at 75 State Street, Boston Massachusetts
02109. Wellington Management is a professional investment counseling firm which
provides investment services to investment companies, employee benefit plans,
endowments, foundations, and other institutions and individuals. The following
persons are managing partners of Wellington Management: Robert W. Doran, Duncan
M. McFarland and John R. Ryan. As of March 31, 1998, Wellington Management had
investment management authority with respect to approximately $193.9 billion of
assets.

Wellington Management's Value/Yield Team manages the day-to-day operations of
the portion of the Large-Cap Value Portfolio allocated to it. The Value/Yield
Team, headed by John R. Ryan, is comprised of four specialized fundamental
analysts. The group is supported by Wellington Management's 31 industry
analysts, quantitative and technical analysts, macroanalysts and traders. Mr.
Ryan is a Senior Vice President and Managing Partner of Wellington Management,
and has been with the firm for 17 years.

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 the Value Portfolio.

Christopher C. Davis, formerly co-manager for the Davis portion of the Value
Portfolio, assumed full responsibility for the management of Davis' portion in
February 1997. Mr. Davis joined Davis in September 1989 as an assistant
portfolio manager and research analyst. Prior to February 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 March 31, 1998,
Neuberger&Berman and its affiliates had assets under management of approximately
$59 billion.

Michael M. Kassen and Robert I. Gendelman serve as Portfolio Managers to
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 and 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.

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 March 31, 1998, Schafer
had assets under management of approximately $2.2 billion.

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, and is the
President of Schafer and also a minority shareholder of Schafer Cullen Capital
Management, Inc.

SMALL-CAP VALUE PORTFOLIO

The Advisers for the Small-Cap Value Portfolio are Berger, Lazard and Glenmede.
PWM, pursuant to a subcontract with Berger, serves as Adviser to Berger's
portion of Small-Cap Value Portfolio.

Berger Associates, Inc. Berger is a Delaware corporation, located at 210
University Boulevard, Suite 900, Denver Colorado 80206, and serves as investment
adviser, sub-adviser, administrator, or sub-administrator to mutual funds, and
institutional and private investors. Kansas City Southern Industries, Inc.
('KCSI') owns 100% of the outstanding shares of Berger. KCSI is a publicly
traded holding company with principal operations in rail transportation, through
its subsidiary The Kansas City Southern Railway Company, and financial asset
management businesses. As of March 31, 1998, Berger had assets

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under management of more than $4.1 billion. Pursuant to an agreement between
Berger and PWM under which PWM manages Berger's portion of the Small-Cap Value
Portfolio, SunAmerica pays an advisory fee directly to Berger, and Berger pays
PWM's fee.

Perkins, Wolf, McDonnell & Company. PWM, located at 53 West Jackson Boulevard,
Suite 818, Chicago, Illinois 60604, was organized as a Delaware corporation in
1980 under the name Mac-Per-Wolf Co. to operate as a securities broker-dealer.
In September 1983, it changed its name to Perkins, Wolf, McDonnell & Company.
PWM is a member of the National Association of Securities Dealers, Inc. and, in
1984, registered with the Securities and Exchange Commission as an investment
adviser. As of March 31, 1998, PWM had assets under management of approximately
$325 million.

Robert H. Perkins is primarily responsible for the investment management of the
portion of the Small-Cap Value Portfolio allocated to Berger. Mr. Perkins owns
49% of PWM's outstanding common stock and serves as President and Chief
Investment Officer and as a director of PWM.

Lazard Asset Management. Lazard is a division of Lazard Freres & Co. LLC, a New
York limited liability company. Located at 30 Rockefeller Plaza, New York, New
York 10112, Lazard provides investment management services to individual and
institutional clients. As of March 31, 1998, Lazard and its affiliated companies
managed client discretionary accounts with assets totaling approximately $67
billion.

Lazard manages assets on a team basis. Herbert W. Gullquist oversees the
investment team which is responsible for Lazard's portion of the Small-Cap Value
Portfolio. Mr. Gullquist is Vice Chairman of Lazard and has been with Lazard
since 1982. Eileen D. Alexanderson is the member of the investment team who is
primarily responsible for the day-to-day management of Lazard's portion of the
Small-Cap Value Portfolio. Ms. Alexanderson is a Managing Director of Lazard and
Portfolio Manager for small and mid-cap equity management of Lazard, and has
been with Lazard since 1979.

The Glenmede Trust Company. Glenmede is a privately-owned, independent trust
company devoted exclusively to investment management and trust services.
Glenmede is a wholly-owned subsidiary of The Glenmede Corporation and is located
at One Liberty Place, 1650 Market Street, Suite 1200, Philadelphia, Pennsylvania
19103. As of March 31, 1998, Glenmede had approximately $14.0 billion in assets
under management.

Robert J. Mancuso, CFA, is the primary Portfolio Manager responsible for
Glenmede's portion of the Small-Cap Value Portfolio. Scott R. Abernethy, CFA,
Thomas R. Angers, CFA, Larry R. Bernstein, CFA, Barry D. Kohout, CFA, Robert T.
Niemeyer, Sr., CFA, and Anthony J. Albuquerque are Glenmede's equity research
analysts. Mr. Mancuso joined Glenmede in 1992 and has 18 years of experience in
equity research and portfolio management.

INTERNATIONAL EQUITY PORTFOLIO

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

BT. BT is a wholly-owned subsidiary of Bankers Trust New York Corporation, with
principal offices at 130 Liberty Street (One Bankers Trust Plaza), New York
10006. BT is a worldwide merchant bank that provides investment management
services for the nation's largest corporations and institutions. As of March 31,
1998, BT managed approximately $330 billion in assets globally.

The Co-Portfolio Managers for BT's portion of the International Equity Portfolio
are Michael Levy and Robert L. Reiner, Managing Directors of Bankers Trust Funds
Management. Mr. Levy heads BT's international equity team, which is responsible
for the day-to-day management of BT's portion of the Portfolio. Mr. Levy's
experience prior to joining BT includes investment banking and equity analysis
with Oppenheimer & Company, and he has more than twenty-six years of business
experience, of which sixteen years have been in the investment industry. Mr.
Reiner has 16 years of investment industry experience, previously at Scudder,
Stevens & Clark, where he was responsible for providing equity research and
macroeconomic/market coverage.

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 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

<PAGE>

STYLE SELECT SERIES(Registered)

remaining directors, one of whom will be nominated by Jardine Fleming. As of
March 31, 1998, Rowe-Fleming managed over $32 billion of foreign assets.

The Portfolio Managers for Rowe-Fleming's portion of the International Equity
Portfolio are Martin G. Wade, Peter B. Askew, Mark J.T. Edwards, John R. Ford,
James B.M. Seddon, and David J.L. Warren. Martin Wade joined Rowe-Fleming in
1979 and has 27 years of experience with the Fleming Group in research, client
service, and investment management. (Fleming Group includes Flemings and/or
Jardine Fleming.) Peter Askew joined Rowe-Fleming in 1988 and has 21 years of
experience managing multi-currency fixed income portfolios. Mark Edwards joined
Rowe-Fleming in 1986 and has 15 years of experience in financial analysis. John
Ford joined Rowe-Fleming in 1982 and has 16 years of experience with Fleming
Group in research and portfolio management. James Seddon joined Rowe-Fleming in
1987 and has 11 years of experience in portfolio management. David Warren joined
Price-Fleming in 1984 and has 16 years of experience in equity research, fixed
income research, and portfolio management.

Warburg Pincus Asset Management, Inc. Warburg is a professional investment
advisory firm which provides investment services to investment companies,
employee benefit plans, endowment funds, foundations and other institutions and
individuals. As of March 31, 1998, Warburg managed approximately $21.8 billion
in assets. Incorporated in 1970, Warburg is indirectly controlled by Warburg,
Pincus & Co. which has no businesses other than being a holding company of
Warburg and its affiliates. Warburg is located at 466 Lexington Avenue, New
York, NY 10017-3147.

Richard H. King, P. Nicholas Edwards, Harold W. Ehrlich and Vincent J. McBride
are Co-Portfolio Managers of Warburg's portion of the International Equity
Portfolio. Messrs. King, Edwards and Ehrlich are Managing Directors of Warburg
and have been with the firm since 1989, 1995 and 1995, respectively. Prior to
joining Warburg, Mr. Edwards was a Director at Jardine Fleming Investment
Advisers, Tokyo. Prior to joining Warburg, Mr. Ehrlich was a Senior Vice
President, Portfolio Manager and Analyst at Templeton Investment Counsel, Inc.
Mr. McBride, a Senior Vice President of Warburg has been with the firm since
1994. Prior to joining Warburg, Mr. McBride was an International Equity Analyst
at Smith Barney Inc.

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 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 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.

<PAGE>

STYLE SELECT SERIES(Registered)

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 compensa-tion to
wholesalers. It is possible that in any given year the amount paid to the
Distributor under one or more of the Distribution Plans 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.

For the fiscal year ended October 31, 1997, under the Class A Plan, each
Portfolio paid the Distributor a fee equal to the following percentages of
average daily net assets: Large-Cap Growth Portfolio 0.35%; Mid-Cap Growth
Portfolio 0.35%; Aggressive Growth Portfolio 0.35%; Large-Cap Blend Portfolio
0.35%; Large-Cap Value Portfolio 0.35%; Value Portfolio 0.35%; Small-Cap Value
Portfolio 0.35%; and International Equity Portfolio 0.35%. For the fiscal year
ended October 31, 1997, under the Class B and Class C Plans, each Portfolio paid
the Distributor a fee equal to the following percentages of average daily net
assets: Large-Cap Growth Portfolio, 1.00%; Mid-Cap Growth Portfolio 1.00%;
Aggressive Growth Portfolio 1.00%; Large-Cap Blend Portfolio 1.00%; Large-Cap
Value Portfolio 1.00%; Value Portfolio 1.00%; Small-Cap Value Portfolio 1.00%;
and International Equity Portfolio 1.00%.

The 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 (in addition to
out-of-pocket charges reimbursed by the Fund). See the Statement of Additional
Information for further information.

<PAGE>

STYLE SELECT SERIES(Registered)

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 (i) 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, and (ii) 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 OF
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, subject to the conditions listed below, 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, which consist of the SunAmerica Equity Funds, SunAmerica Income Funds and
SunAmerica Money Market 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 purchases and all such transactions for the
plan are executed through a single omnibus

<PAGE>

STYLE SELECT SERIES(Registered)

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 shares of a class other than Class B that are not themselves
subject to a CDSC, second of any shares in the shareholder's Portfolio 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.

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

<PAGE>

STYLE SELECT SERIES(Registered)

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, subject to certain conditions, 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 account becomes disabled; or the
initial determination of disability of a shareholder; (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 account holder 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.

Asset Protection Plan (Optional). Anchor National Life Insurance Company (the
'Life Company'), an affiliate of SunAmerica and the Distributor, offers an Asset
Protection Plan to certain investors in the Portfolio. The benefits of this
optional term life insurance (payable on the death of the insured) will relate
to the amounts paid to purchase Portfolio shares and to the value of the
Portfolio shares held for the benefit of the insured persons. However, to the
extent such purchased shares are redeemed prior to death, coverage with respect
to such shares will terminate.

Purchasers of the Asset Protection Plan are required to authorize periodic
redemptions of Portfolio shares to pay the premiums for such coverage. Such
redemptions will not be subject to CDSCs, but will have the same tax
consequences as any other Fund redemptions.

The Asset Protection Plan will be available to eligible persons who enroll for
the coverage within a limited time period after shares in the Portfolio are
initially purchased or transferred. In addition, coverage cannot be made
available unless the Life Company knows for whose benefit shares are purchased.
For instance, coverage cannot be made available for shares registered in the
name of your broker unless the broker provides the Life Company with information
regarding the beneficial owners of such shares. In addition, coverage is
available only to shares purchased on behalf of natural persons under the age of
75 years; coverage is not available with respect to shares purchased for a
retirement account. Other restrictions on the coverage apply. This coverage may
not be available in all states and may be subject to additional restrictions or
limitations. Purchasers of shares should also make themselves familiar with the
impact on the Asset Protection Plan coverage of purchasing additional shares,
reinvestment of dividends and capital gains distributions and redemptions.

Please call (800) 858-8850 for more information, including the cost of the Asset
Protection Plan option.

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.

<PAGE>

STYLE SELECT SERIES(Registered)

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 an 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.

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.'

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

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. Requests for redemption of shares with a value
of less than $100,000 will be made by check made payable to the shareholders(s)
and mailed to the address of record. All written requests for redemption of
shares with a value of $100,000 or more, or those mailed to an address other
than the address of record, 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

<PAGE>

STYLE SELECT SERIES(Registered)

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 check payable to the shareholder(s) and mailed to the
address of record 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.

Other Redemption Information. 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. Additionally,
Class C shareholders of a Portfolio may exchange their shares for Class II
shares of another fund in the SunAmerica Family of Mutual Funds. 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

<PAGE>
59

STYLE SELECT SERIES(Registered)

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 and of determining the timing of conversion of Class B shares to Class A.

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 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. In addition,
brokerage may be allocated to brokers that pay (or cause

<PAGE>

STYLE SELECT SERIES(Registered)

to be paid) expenses of the respective Portfolio, subject to best price and
execution. An Adviser 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 any 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 per share of each class separately by dividing the total value of
each class's net assets by the number of shares outstanding of each class.
Investments for which market quotations are readily available are valued at
market at their closing price. All other securities and assets are valued at
fair value following procedures approved by the Directors. For a complete
description of the procedures involved in valuing various Fund assets, see the
Statement of Additional Information.

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. For each Portfolio other than the Large-Cap Blend
Portfolio, dividends from net investment income, if any, are to be paid at least
annually. For the Large-Cap Blend Portfolio, dividends from net investment
income, if any, are to be paid quarterly. 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.

<PAGE>

STYLE SELECT SERIES(Registered)

Dividends and distributions are to be 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.

If a shareholder has elected to receive dividends and/or capital gain
distributions in cash, and the postal or other delivery service is unable to
deliver checks to the shareholder's address of record, no interest will accrue
on amounts represented by uncashed dividend or distribution checks.

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 capital gains from the sale of assets held for more
than 12 months over net capital losses ('net capital gains'), if any, with
respect to each Portfolio, 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 capital gains (including gains
from certain transactions in futures and options) are taxable to shareholders as
capital gains, regardless of the length of time the 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. Nonresident 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, subject to certain limitations, holding period requirements and
other provisions, 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,

<PAGE>

STYLE SELECT SERIES(Registered)

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 (i.e., generally, for
investment) generally will recognize a capital gain or loss upon the sale or
exchange of such shares. In the case of an individual, any such capital gain
will be treated as short-term capital gain if the shares were held for not more
than 12 months, capital gain taxable at the maximum rate of 28% if such shares
were held for more than 12, but not more than 18 months, and capital gain
taxable at the maximum rate of 20% if such shares were held for more than 18
months. In the case of a corporation, any such capital gain will be treated as
long-tem capital gain, taxable at the same rates as ordinary income, if such
shares were held for more than 12 months. Any such capital loss will be a long-
term capital 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 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
classified into nine separate Portfolios known as the Large-Cap Growth
Portfolio, the Mid-Cap Growth Portfolio, the Aggressive Growth Portfolio, the
Large-Cap Blend Portfolio, the Large-Cap Value Portfolio, the Value Portfolio,
the Small-Cap Value Portfolio, the International Equity Portfolio and the Focus
Portfolio. Except for the Focus 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 Focus Portfolio is offered through a
separate prospectus which can be obtained by contacting Shareholder/Dealer
Services at (800) 858-8850.

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

<PAGE>

STYLE SELECT SERIES(Registered)

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.

Year 2000 Readiness. Many services provided to the Fund and the shareholders by
SunAmerica, the Advisers, the Distributor and the Administrator rely on the
smooth functioning of their computer and computer-based systems as well as those
of their outside service providers. Many computer and computer-based systems
cannot distinguish the year 2000 from the year 1900 because of the way the
systems encode and calculate dates. This year 2000 issue could potentially have
an adverse impact on the handling of security trades, the payment of interest
and dividends, pricing and account services. SunAmerica, the Advisers, the
Distributor and the Administrator recognize the importance of the year 2000
issue and are taking the appropriate steps necessary in preparation of the year
2000. SunAmerica, the Advisers, the Distributor and the Administrator fully
anticipate that their systems and those of their outside service providers will
be adapted in time for the year 2000, and to further this goal have coordinated
a plan to repair, adapt or replace systems that are not year 2000 compliant, and
have obtained similar representations from their outside service providers.
SunAmerica, the Advisers, the Distributor and the Administrator expect to
significantly complete their plan by the end of the 1998 calendar year and
perform appropriate systems testing in the 1999 calendar year.

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.

<PAGE>

STYLE SELECT SERIES
Statement of Additional Information
dated June 15, 1998

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

Style Select Series, Inc. (the "Fund") is a mutual fund
consisting of nine different investment portfolios: the Large-Cap Growth
Portfolio, the Mid-Cap Growth Portfolio, the Aggressive Growth Portfolio,
the Large-Cap Blend Portfolio, the Large-Cap Value Portfolio, the Value
Portfolio, the Small-Cap Value Portfolio, the International Equity
Portfolio and the Focus Portfolio (each, a "Portfolio"). This Statement
of Additional Information relates to all Portfolios except the Focus
Portfolio. Each Portfolio 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 is
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.

This Statement of Additional Information is not a Prospectus,
but should be read in conjunction with the Fund's Prospectus dated June
15, 1998. To obtain a Prospectus, please call the Fund at (800) 858-8850.
Capitalized terms used herein but not defined have the meanings assigned
to them in the Prospectus.

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
The Fund ................................................................................................ B-2
Investment Objectives and Policies....................................................................... B-2
Portfolio Turnover....................................................................................... B-29
Investment Restrictions.................................................................................. B-30
Directors and Officers................................................................................... B-31
Advisers, Distributor and Administrator.................................................................. B-36
Portfolio Transactions and Brokerage..................................................................... B-43
Additional Information Regarding Purchase of Shares...................................................... B-44
Additional Information Regarding Redemption of Shares.................................................... B-50
Determination of Net Asset Value......................................................................... B-50
Performance Data......................................................................................... B-51
Dividends, Distributions and Taxes....................................................................... B-57
Retirement Plans......................................................................................... B-62
Description of Shares.................................................................................... B-63
Additional Information................................................................................... B-64
Financial Statements..................................................................................... B-66
Appendix................................................................................................. Appendix-1
</TABLE>

No dealer, salesman or other person has been authorized to give
any information or to make any representations, other than those
contained in this Statement of Additional Information or in the
Prospectus, 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 SunAmerica Capital Services (the
"Distributor"). This Statement of Additional Information and the
Prospectus do 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 an offer to sell or solicitation of an offer to buy may not
lawfully be made.

<PAGE>

THE FUND

The Fund, organized as a Maryland corporation on July 3, 1996,
is an open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"). The Fund
consists of nine Portfolios; except for the Focus Portfolio, each offers
Class A, Class B and Class C shares. The Aggressive Growth Portfolio,
Large-Cap Value Portfolio, Value Portfolio, Small-Cap Value Portfolio and
International Equity Portfolio each offers Class Z shares.

INVESTMENT OBJECTIVES AND POLICIES

The investment objective and policies of each of the Portfolios
are described in the Fund's Prospectus. Certain types of securities in
which the Portfolios may invest and certain investment practices which
the Portfolios may employ, which are described under "Investment
Techniques and Risk Factors" in the Prospectus, are discussed more fully
below.

Warrants. A Portfolio may invest in warrants which give the
holder of the warrant a right to purchase a given number of shares of a
particular issue at a specified price until expiration. Such investments
generally can provide a greater potential for profit or loss than
investments of equivalent amounts in the underlying common stock. The
prices of warrants do not necessarily move with the prices of the
underlying securities. If the holder does not sell the warrant, he risks
the loss of his entire investment if the market price of the underlying
stock does not, before the expiration date, exceed the exercise price of
the warrant plus the cost thereof. Investment in warrants is a
speculative activity. Warrants pay no dividends and confer no rights
(other than the right to purchase the underlying stock) with respect to
the assets of the issuer.

Investment in Small, Unseasoned Companies. As described in the
Prospectus, each Portfolio may invest in the securities of small
companies having market capitalizations under $1 billion. These
securities may have a limited trading market, which may adversely affect
their disposition and can result in their being priced lower than might
otherwise be the case. If other investment companies and investors who
invest in such issuers trade the same securities when a Portfolio
attempts to dispose of its holdings, the Portfolio may receive lower
prices than might otherwise be obtained.

Companies with a market capitalization of $1 billion to $5
billion ("Mid-Cap Companies") may also suffer more significant losses as
well as realize more substantial growth than larger, more established
issuers. Thus, investments in such companies tend to be more volatile and
somewhat speculative.

Foreign Securities. Investments in foreign securities offer
potential benefits not available from investments solely in securities of
domestic issuers by offering the opportunity to invest in foreign issuers
that appear to offer growth potential, or in foreign countries with
economic policies or business cycles different from those of the U.S., or
to reduce fluctuations in portfolio value by taking advantage of foreign
stock markets that do not move in a manner parallel to U.S. markets.

B-2

<PAGE>

Each Portfolio may invest in securities of foreign issuers in
the form of American Depositary Receipts (ADRs), European Depositary
Receipts (EDRs), Global Depositary Receipts (GDRs) or other similar
securities convertible into securities of foreign issuers. ADRs are
securities, typically issued by a U.S. financial institution, that
evidence ownership interests in a security or a pool of securities issued
by a foreign issuer and deposited with the depository. ADRs may be
sponsored or unsponsored. A sponsored ADR is issued by a depository which
has an exclusive relationship with the issuer of the underlying security.
An unsponsored ADR may be issued by any number of U.S. depositories.
Holders of unsponsored ADRs generally bear all the costs associated with
establishing the unsponsored ADR. The depository of an unsponsored ADR is
under no obligation to distribute shareholder communications received
from the underlying issuer or to pass through to the holders of the
unsponsored ADR voting rights with respect to the deposited securities or
pool of securities. A Portfolio may invest in either type of ADR.
Although the U.S. investor holds a substitute receipt of ownership rather
than direct stock certificates, the use of the depository receipts in the
United States can reduce costs and delays as well as potential currency
exchange and other difficulties. The Portfolio may purchase securities in
local markets and direct delivery of these ordinary shares to the local
depository of an ADR agent bank in the foreign country. Simultaneously,
the ADR agents create a certificate which settles at the Fund's custodian
in three days. The Portfolio may also execute trades on the U.S. markets
using existing ADRs. A foreign issuer of the security underlying an ADR
is generally not subject to the same reporting requirements in the United
States as a domestic issuer. Accordingly the information available to a
U.S. investor will be limited to the information the foreign issuer is
required to disclose in its own country and the market value of an ADR
may not reflect undisclosed material information concerning the issuer of
the underlying security. For purposes of a Portfolio's investment
policies, the Portfolio's investments in these types of securities will
be deemed to be investments in the underlying securities. Generally ADRs,
in registered form, are dollar denominated securities designed for use in
the U.S. securities markets, which represent and may be converted into
the underlying foreign security. EDRs, in bearer form, are designed for
use in the European securities markets.

Investments in foreign securities, including securities of
developing countries, present special additional investment risks and
considerations not typically associated with investments in domestic
securities, including reduction of income by foreign taxes; fluctuation
in value of foreign portfolio investments due to changes in currency
rates and control regulations (e.g., currency blockage); transaction
charges for currency exchange; lack of public information about foreign
issuers; lack of uniform accounting, auditing and financial reporting
standards comparable to those applicable to domestic issuers; less volume
on foreign exchanges than on U.S. exchanges; greater volatility and less
liquidity on foreign markets than in the U.S.; less regulation of foreign
issuers, stock exchanges and brokers than the U.S.; greater difficulties
in commencing lawsuits; higher brokerage commission rates than the U.S.;
increased possibilities in some countries of expropriation, confiscatory
taxation, political, financial or social instability or adverse
diplomatic developments; and differences (which may be favorable or
unfavorable) between the U.S. economy and foreign economies.

Passive Foreign Investment Companies ("PFICs"). The Large-Cap
Growth Portfolio, Aggressive Growth Portfolio and International Equity
Portfolio may invest in PFICs, which are any foreign corporations which
generate certain amounts of passive income or hold certain amounts of

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assets for the production of passive income. Passive income includes
dividends, interest, royalties, rents and annuities. To the extent that a
Portfolio invests in PFICs, income tax regulations may require the
Portfolio to elect to recognize income associated with the PFIC prior to
the actual receipt of any such income in order to avoid adverse tax
consequences.

U.S. Government Securities. A Portfolio may invest in U.S.
Treasury securities, including bills, notes, bonds and other debt
securities issued by the U.S. Treasury. These instruments are direct
obligations of the U.S. government and, as such, are backed by the "full
faith and credit" of the United States. They differ primarily in their
interest rates, the lengths of their maturities and the dates of their
issuances. A Portfolio may also invest in securities issued by agencies
of the U.S. government or instrumentalities of the U.S. government. These
obligations, including those which are guaranteed by federal agencies or
instrumentalities, may or may not be backed by the "full faith and
credit" of the United States. Obligations of the Government National
Mortgage Association ("GNMA"), the Farmers Home Administration and the
Export-Import Bank are backed by the full faith and credit of the United
States. In the case of securities not backed by the full faith and credit
of the United States, a Portfolio must look principally to the agency
issuing or guaranteeing the obligation for ultimate repayment and may not
be able to assert a claim against the United States if the agency or
instrumentality does not meet its commitments.

A Portfolio may, in addition to the U.S. government securities
noted above, invest in mortgage-backed securities (including private
mortgage-backed securities), such as GNMA, FNMA or FHLMC certificates (as
defined below), which represent an undivided ownership interest in a pool
of mortgages. The mortgages backing these securities include conventional
thirty-year fixed-rate mortgages, fifteen-year fixed-rate mortgages,
graduated payment mortgages and adjustable rate mortgages. These
certificates are in most cases pass-through instruments, through which
the holder receives a share of all interest and principal payments,
including prepayments, on the mortgages underlying the certificate, net
of certain fees.

The yield on mortgage-backed securities is based on the average
expected life of the underlying pool of mortgage loans. The actual life
of any particular pool will be shortened by any unscheduled or early
payments of principal and interest. Principal prepayments generally
result from the sale of the underlying property or the refinancing or
foreclosure of underlying mortgages. The occurrence of prepayments is
affected by a wide range of economic, demographic and social factors and,
accordingly, it is not possible to predict accurately the average life of
a particular pool. Yield on such pools is usually computed by using the
historical record of prepayments for that pool, or, in the case of
newly-issued mortgages, the prepayment history of similar pools. The
actual prepayment experience of a pool of mortgage loans may cause the
yield realized by the Portfolio to differ from the yield calculated on
the basis of the expected average life of the pool.

Prepayments tend to increase during periods of falling interest
rates, while during periods of rising interest rates prepayments will
most likely decline. When prevailing interest rates rise, the value of a
pass-through security may decrease as does the value of other debt
securities, but, when prevailing interest rates decline, the value of a
pass-through security is not likely to rise on a comparable basis with
other debt securities because of the prepayment feature of pass-through

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securities. The reinvestment of scheduled principal payments and
unscheduled prepayments that the Portfolio receives may occur at higher
or lower rates than the original investment, thus affecting the yield of
the Portfolio. Monthly interest payments received by the Portfolio have a
compounding effect which may increase the yield to shareholders more than
debt obligations that pay interest semi-annually. Because of those
factors, mortgage-backed securities may be less effective than U.S.
Treasury bonds of similar maturity at maintaining yields during periods
of declining interest rates. Accelerated prepayments adversely affect
yields for pass-through securities purchased at a premium (i.e., at a
price in excess of principal amount) and may involve additional risk of
loss of principal because the premium may not have been fully amortized
at the time the obligation is repaid. The opposite is true for
pass-through securities purchased at a discount. A Portfolio may purchase
mortgage-backed securities at a premium or at a discount.

The following is a description of GNMA, FNMA and FHLMC
certificates, the most widely available mortgage-backed securities:

GNMA Certificates. GNMA Certificates are mortgage-backed
securities which evidence an undivided interest in a pool or pools of
mortgages. GNMA Certificates that a Portfolio may purchase are the
modified pass-through type, which entitle the holder to receive timely
payment of all interest and principal payments due on the mortgage pool,
net of fees paid to the issuer and GNMA, regardless of whether or not the
mortgagor actually makes the payment.

GNMA guarantees the timely payment of principal and interest on
securities backed by a pool of mortgages insured by the Federal Housing
Administration or the Farmers' Home Administration, or guaranteed by the
Veterans Administration. The GNMA guarantee is authorized by the National
Housing Act and is backed by the full faith and credit of the United
States. The GNMA is also empowered to borrow without limitation from the
U.S. Treasury if necessary to make any payments required under its
guarantee.

The average life of a GNMA Certificate is likely to be
substantially shorter than the original maturity of the mortgages
underlying the securities. Prepayments of principal by mortgagors and
mortgage foreclosure will usually result in the return of the greater
part of principal investment long before the maturity of the mortgages in
the pool. Foreclosures impose no risk to principal investment because of
the GNMA guarantee, except to the extent that a Portfolio has purchased
the certificates at a premium in the secondary market.

FHLMC Certificates. The Federal Home Loan Mortgage Corporation
("FHLMC") issues two types of mortgage pass-through securities: mortgage
participation certificates ("PCS") and guaranteed mortgage certificates
("GMCs") (collectively, "FHLMC Certificates"). PCS resemble GNMA
Certificates in that each PC represents a pro rata share of all interest
and principal payments made and owed on the underlying pool. The FHLMC
guarantees timely monthly payment of interest (and, under certain
circumstances, principal) of PCS and the ultimate payment of principal.

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GMCs also represent a pro rata interest in a pool of mortgages.
However, these instruments pay interest semi-annually and return
principal once a year in guaranteed minimum payments. The expected
average life of these securities is approximately ten years. The FHLMC
guarantee is not backed by the full faith and credit of the U.S.
Government.

FNMA Certificates. The Federal National Mortgage Association
("FNMA") issues guaranteed mortgage pass-through certificates ("FNMA
Certificates"). FNMA Certificates represent a pro rata share of all
interest and principal payments made and owed on the underlying pool.
FNMA guarantees timely payment of interest and principal on FNMA
Certificates. The FNMA guarantee is not backed by the full faith and
credit of the U.S. Government.

Conventional mortgage pass-through securities ("Conventional
Mortgage Pass-Throughs") represent participation interests in pools of
mortgage loans that are issued by trusts formed by originators of the
institutional investors in mortgage loans (or represent custodial
arrangements administered by such institutions). These originators and
institutions include commercial banks, savings and loans associations,
credit unions, savings banks, insurance companies, investment banks or
special purpose subsidiaries of the foregoing. For federal income tax
purposes, such trusts are generally treated as grantor trusts or REMICs
and, in either case, are generally not subject to any significant amount
of federal income tax at the entity level.

The mortgage pools underlying Conventional Mortgage
Pass-Throughs consist of conventional mortgage loans evidenced by
promissory notes secured by first mortgages or first deeds of trust or
other similar security instruments creating a first lien on residential
or mixed residential and commercial properties. Conventional Mortgage
Pass-Throughs (whether fixed or adjustable rate) provide for monthly
payments that are a "pass-through" of the monthly interest and principal
payments (including any prepayments) made by the individual borrowers on
the pooled mortgage loans, net of any fees or other amount paid to any
guarantor, administrator and/or servicer of the underlying mortgage
loans. A trust fund with respect to which a REMIC election has been made
may include regular interests in other REMICs which in turn will
ultimately evidence interests in mortgage loans.

Conventional mortgage pools generally offer a higher rate of
interest than government and government-related pools because of the
absence of any direct or indirect government or agency payment
guarantees. However, timely payment of interest and principal of mortgage
loans in these pools may be supported by various forms of insurance or
guarantees, including individual loans, title, pool and hazard insurance
and letters of credit. The insurance and guarantees may be issued by
private insurers and mortgage poolers. Although the market for such
securities is becoming increasingly liquid, mortgage-related securities
issued by private organizations may not be readily marketable.

Another type of mortgage-backed security in which each Portfolio
may invest is a collateralized mortgage obligation ("CMO"). CMOs are
fully collateralized bonds which are the general obligations of the
issuer thereof (e.g., the U.S. government, a U.S. government
instrumentality, or a private issuer). Such bonds generally are secured
by an assignment to a trustee

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(under the indenture pursuant to which the bonds are issued) of
collateral consisting of a pool of mortgages. Payments with respect to
the underlying mortgages generally are made to the trustee under the
indenture. Payments of principal and interest on the underlying mortgages
are not passed through to the holders of the CMOs as such (i.e., the
character of payments of principal and interest is not passed through,
and therefore payments to holders of CMOs attributable to interest paid
and principal repaid on the underlying mortgages do not necessarily
constitute income and return of capital, respectively, to such holders),
but such payments are dedicated to payment of interest on and repayment
of principal of the CMOs.

Principal and interest on the underlying mortgage assets may be
allocated among the several classes of CMOs in various ways. In certain
structures (known as "sequential pay" CMOs), payments of principal,
including any principal prepayments, on the mortgage assets generally are
applied to the classes of CMOs in the order of their respective final
distribution dates. Thus, no payment of principal will be made on any
class of sequential pay CMOs until all other classes having an earlier
final distribution date have been paid in full. -

Additional structures of CMOs include, among others, "parallel
pay" CMOs. Parallel pay CMOs are those which are structured to apply
principal payments and prepayments of the mortgage assets to two or more
classes concurrently on a proportionate or disproportionate basis. These
simultaneous payments are taken into account in calculating the final
distribution date of each class.

A wide variety of CMOs may be issued in the parallel pay or
sequential pay structures. These securities include accrual certificates
(also known as "Z-Bonds"), which only accrue interest at a specified rate
until all other certificates having an earlier final distribution date
have been retired and are converted thereafter to an interest-paying
security, and planned amortization class ("PAC") certificates, which are
parallel pay CMOs which generally require that specified amounts of
principal be applied on each payment date to one or more classes of CMOs
(the "PAC Certificates"), even though all other principal payments and
prepayments of the mortgage assets are then required to be applied to one
or more other classes of the certificates. The scheduled principal
payments for the PAC Certificates generally have the highest priority on
each payment date after interest due has been paid to all classes
entitled to receive interest currently. Shortfalls, if any, are added to
the amount payable on the next payment date. The PAC Certificate payment
schedule is taken into account in calculating the final distribution date
of each class of PAC. In order to create PAC tranches, one or more
tranches generally must be created to absorb most of the volatility in
the underlying mortgage assets. These tranches tend to have market prices
and yields which are much more volatile than the PAC classes.

Each Portfolio may also invest in stripped mortgage-backed
securities. Stripped mortgage-backed securities are often structured with
two classes that receive different proportions of the interest and
principal distributions on a pool of mortgage assets. Stripped
mortgage-backed securities have greater market volatility than other
types of U.S. Government securities in which a Portfolio invests. A
common type of stripped mortgage-backed security has one class receiving
some of the interest and all or most of the principal (the "principal
only" class) from the mortgage pool, while the other class will receive
all or most of the interest (the "interest only" class). The yield to
maturity on

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an interest only class is extremely sensitive not only to changes in
prevailing interest rates, but also to the rate of principal payments,
including principal prepayments, on the underlying pool of mortgage
assets, and a rapid rate of principal payment may have a material adverse
effect on a Portfolio's yield. While interest-only and principal-only
securities are generally regarded as being illiquid, such securities may
be deemed to be liquid if they can be disposed of promptly in the
ordinary course of business at a value reasonably close to that used in
the calculation of a Portfolio's net asset value per share. Only
government interest only and principal only securities backed by
fixed-rate mortgages and determined to be liquid under guidelines and
standards established by the Directors may be considered liquid
securities not subject to a Portfolio's limitation on investments in
illiquid securities.

Certain Risk Factors Relating to High-Yield Bonds. These bonds
present certain risks which are discussed below:

Sensitivity to Interest Rate and Economic Changes -
High-yield 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 defaults on
its obligations to pay interest or principal or enters 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 of high-yield bonds and
the Portfolio's net asset value.

Payment Expectations - High-yield bonds may contain
redemption or call provisions. If an issuer exercises these
provisions in a declining interest rate market, a Portfolio
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. Adverse publicity and investor perceptions,
whether or not based on fundamental analysis, may decrease the
values and liquidity of high-yield bonds, especially in a thin
market.

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Asset-Backed Securities. Each Portfolio may invest in
asset-backed securities. These securities, issued by trusts and special
purpose corporations, are backed by a pool of assets, such as credit card
and automobile loan receivables, representing the obligations of a number
of different parties.

Asset-backed securities present certain risks. For instance, in
the case of credit card receivables, these securities may not have the
benefit of any security interest in the related collateral. Credit card
receivables are generally unsecured and the debtors are entitled to the
protection of a number of state and federal consumer credit laws, many of
which give such debtors the right to set off certain amounts owed on the
credit cards, thereby reducing the balance due. Most issuers of
automobile receivables permit the servicer to retain possession of the
underlying obligations. If the servicer were to sell these obligations to
another party, there is a risk that the purchaser would acquire an
interest superior to that of the holders of the related automobile
receivables. In addition, because of the large number of vehicles
involved in a typical issuance and technical requirements under state
laws, the trustee for the holders of the automobile receivables may not
have a proper security interest in all of the obligations backing such
receivables. Therefore, there is the possibility that recoveries on
repossessed collateral may not, in some cases, be available to support
payments on these securities.

Asset-backed securities are often backed by a pool of assets
representing the obligations of a number of different parties. To lessen
the effect of failures by obligors to make payments on underlying assets,
the securities may contain elements of credit support which fall into two
categories: (i) liquidity protection and (ii) protection against losses
resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by
the entity administering the pool of assets, to ensure that the receipt
of payments on the underlying pool occurs in a timely fashion. Protection
against losses resulting from ultimate default ensures payment through
insurance policies or letters of credit obtained by the issuer or sponsor
from third parties. A Portfolio will not pay any additional or separate
fees for credit support. The degree of credit support provided for each
issue is generally based on historical information respecting the level
of credit risk associated with the underlying assets. Delinquency or loss
in excess of that anticipated or failure of the credit support could
adversely affect the return on an investment in such a security.

Loan Participations. Each Portfolio may invest in loan
participations. Loan participations are loans sold by the lending bank to
an investor. The loan participant borrower may be a company with
highly-rated commercial paper that finds it can obtain cheaper funding
through a loan participation than with commercial paper and can also
increase the company's name recognition in the capital markets. Loan
participations often generate greater yield than commercial paper.

The borrower of the underlying loan will be deemed to be the
issuer except to the extent the Portfolio derives its rights from the
intermediary bank which sold the loan participations. Because loan
participations are undivided interests in a loan made by the issuing
bank, the Portfolio may not have the right to proceed against the loan
participations borrower without the consent of other holders of the loan
participations. In addition, loan participations will be treated as
illiquid if, in the judgment of the Adviser, they can not be sold within
seven days.

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Short-Term Debt Securities. As described in the Prospectus, in
addition to its primary investments, a Portfolio may also invest in the
following types of money market and short-term fixed-income securities:

Money Market Securities - Money Market securities may
include securities issued or guaranteed by the U.S. government,
its agencies or instrumentalities, repurchase agreements,
commercial paper, bankers' acceptances, time deposits and
certificates of deposit.

Commercial Bank Obligations - Certificates of deposit
(interest-bearing time deposits), including Eurodollar
certificates of deposit (certificates of deposit issued by
domestic or foreign banks located outside the U.S.) and Yankee
certificates of deposit (certificates of deposit issued by
branches of foreign banks located in the U.S.), domestic and
foreign bankers' acceptances (time drafts drawn on a commercial
bank where the bank accepts an irrevocable obligation to pay at
maturity) and documented discount notes (corporate promissory
discount notes accompanied by a commercial bank guarantee to pay
at maturity) representing direct or contingent obligations of
commercial banks with total assets in excess of $1 billion,
based on the latest published reports. A Portfolio may also
invest in obligations issued by U.S. commercial banks with total
assets of less than $1 billion if the principal amount of these
obligations owned by the Portfolio is fully insured by the
Federal Deposit Insurance Corporation ("FDIC"). A Portfolio may
also invest in notes and obligations issued by foreign branches
of U.S. and foreign commercial banks.

Savings Association Obligations - Certificates of
deposit (interest-bearing time deposits) issued by mutual
savings banks or savings and loan associations with assets in
excess of $1 billion and whose deposits are insured by the FDIC.
A Portfolio may also invest in obligations issued by mutual
savings banks or savings and loan associations with total assets
of less than $1 billion if the principal amount of these
obligations owned by the Portfolio is fully insured by the FDIC.

Commercial Paper - Short-term notes (up to 12 months)
issued by domestic and foreign corporations or governmental
bodies. A Portfolio may only purchase commercial paper judged by
the Adviser to be of suitable investment quality. This includes
commercial paper that is (a) rated in the two highest categories
by Standard & Poor's Corporation ("Standard & Poor's") and by
Moody's Investors Service, Inc. ("Moody's"), or (b) other
commercial paper deemed on the basis of the issuer's
creditworthiness to be of a quality appropriate for the
Portfolio. See "Description of Commercial Paper and Bond
Ratings" for a description of the ratings. A Portfolio will not
purchase commercial paper described in (b) above if such paper
would in the aggregate exceed 15% of its total assets after such
purchase. The commercial paper in which a Portfolio may invest
includes variable amount master demand notes. Variable amount
master demand notes permit a Portfolio to invest varying amounts
at fluctuating rates of interest pursuant to the agreement in
the master note. These

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are direct lending obligations between the lender and borrower,
they are generally not traded, and there is no secondary market.
Such instruments are payable with accrued interest in whole or
in part on demand. The amounts of the instruments are subject to
daily fluctuations as the participants increase or decrease the
extent of their participation. Investments in these instruments
are limited to those that have a demand feature enabling the
Portfolio unconditionally to receive the amount invested from
the issuer upon seven or fewer days' notice. In connection with
master demand note arrangements, the Adviser, subject to the
direction of the Directors, monitors on an ongoing basis, the
earning power, cash flow and other liquidity ratios of the
borrower, and its ability to pay principal and interest on
demand. The Adviser also considers the extent to which the
variable amount master demand notes are backed by bank letters
of credit. These notes generally are not rated by Moody's or
Standard & Poor's and a Portfolio may invest in them only if it
is determined that at the time of investment the notes are of
comparable quality to the other commercial paper in which the
Portfolio may invest. Master demand notes are considered to have
a maturity equal to the repayment notice period unless the
Adviser has reason to believe that the borrower could not make
timely repayment upon demand.

Corporate Bonds and Notes - A Portfolio may purchase
corporate obligations that mature or that may be redeemed in one
year or less. These obligations originally may have been issued
with maturities in excess of one year. A Portfolio may invest
only in corporate bonds or notes of issuers having outstanding
short-term securities rated in the top two rating categories by
Standard & Poor's and Moody's. See "Description of Commercial
Paper and Bond Ratings" for description of investment-grade
ratings by Standard & Poor's and Moody's.

Government Securities - Debt securities maturing within
one year of the date of purchase include adjustable-rate
mortgage securities backed by GNMA, FNMA, FHLMC and other
non-agency issuers. Although certain floating or variable rate
obligations (securities whose coupon rate changes at least
annually and generally more frequently) have maturities in
excess of one year, they are also considered short-term debt
securities. See "U.S. Government Securities" above. A Portfolio
may also purchase securities issued or guaranteed by a foreign
government, its agencies or instrumentalities. See "Foreign
Securities" above.

Repurchase Agreements. A Portfolio may enter into repurchase
agreements with banks, brokers or securities dealers. In such agreements,
the seller agrees to repurchase the security at a mutually agreed-upon
time and price. The period of maturity is usually quite short, either
overnight or a few days, although it may extend over a number of months.
The repurchase price is in excess of the purchase price by an amount
which reflects an agreed-upon rate of return effective for the period of
time a Portfolio's money is invested in the security. Whenever a
Portfolio enters into a repurchase agreement, it obtains collateral
having a value equal to at least 102% (100% if such collateral is in the
form of cash) of the repurchase price, including accrued interest. The
instruments held as collateral are valued daily and if the value of the
instruments declines, the Portfolio will

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require additional collateral. If the seller defaults and the value of
the collateral securing the repurchase agreements declines, the Portfolio
may incur a loss. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the security, realization of the collateral
by the Portfolio may be delayed or limited. The Directors have
established guidelines to be used by the Adviser in connection with
transactions in repurchase agreements and will regularly monitor each
Portfolio's use of repurchase agreements. A Portfolio will not invest in
repurchase agreements maturing in more than seven days if the aggregate
of such investments along with other illiquid securities exceeds 15% of
the value of its net assets. However, there is no limit on the amount of
a Portfolio's net assets that may be subject to repurchase agreements
having a maturity of seven days or less for temporary defensive purposes.

Hedging and Income Enhancement Strategies. Each Portfolio may
write (i.e., sell) call options ("calls") on securities that are traded
on U.S. and foreign securities exchanges and over-the-counter markets to
enhance income through the receipt of premiums from expired calls and any
net profits from closing purchase transactions. 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). Calls on Futures (defined below) used to enhance income
must be covered by deliverable securities or by liquid assets segregated
to satisfy the Futures contract. If a call written by the Portfolio is
exercised, the Portfolio forgoes any profit from any increase in the
market price above the call price of the underlying investment on which
the call was written.

Primarily for hedging purposes, and from time to time for income
enhancement, each Portfolio may use interest rate futures contracts,
foreign currency futures contracts and stock and bond index futures
contracts, including futures on U.S. government securities (together,
"Futures"); forward contracts on foreign currencies ("Forward
Contracts"); and call and put options on equity and debt securities,
Futures, stock and bond indices and foreign currencies (all the foregoing
referred to as "Hedging Instruments"). Hedging Instruments may be used to
attempt to: (i) protect against possible declines in the market value of
a Portfolio's portfolio resulting from downward trends in the equity and
debt securities markets (generally due to a rise in interest rates); (ii)
protect a Portfolio's unrealized gains in the value of its equity and
debt securities which have appreciated; (iii) facilitate selling
securities for investment reasons; (iv) establish a position in the
equity and debt securities markets as a temporary substitute for
purchasing particular equity and debt securities; or (v) reduce the risk
of adverse currency fluctuations.

A Portfolio's strategy of hedging with Futures and options on
Futures will be incidental to its activities in the underlying cash
market. When hedging to attempt to protect against declines in the market
value of the portfolio, to permit a Portfolio to retain unrealized gains
in the value of portfolio securities which have appreciated, or to
facilitate selling securities for investment reasons, a Portfolio could:
(i) sell Futures; (ii) purchase puts on such Futures or securities; or
(iii) write calls on securities held by it or on Futures. When hedging to
attempt to protect against the possibility that portfolio securities are
not fully included in a rise in value of the debt securities market, a
Portfolio could: (i) purchase Futures, or (ii) purchase calls on such
Futures or on securities. When hedging to protect

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against declines in the dollar value of a foreign currency-denominated
security, a Portfolio could: (i) purchase puts on that foreign currency
and on foreign currency Futures; (ii) write calls on that currency or on
such Futures; or (iii) enter into Forward Contracts at a lower rate than
the spot ("cash") rate. Additional information about the Hedging
Instruments the Portfolio may use is provided below.

Options

Options on Securities. As noted above, each Portfolio may write
and purchase call and put options on equity and debt securities.

When a Portfolio writes a call on a security, it receives a
premium and agrees to sell the underlying security to a purchaser of a
corresponding call on the same security during the call period (usually
not more than 9 months) at a fixed price (which may differ from the
market price of the underlying security), regardless of market price
changes during the call period. A Portfolio has retained the risk of loss
should the price of the underlying security decline during the call
period, which may be offset to some extent by the premium.

To terminate its obligation on a call it has written, a
Portfolio may purchase a corresponding call in a "closing purchase
transaction." A profit or loss will be realized, depending upon whether
the net of the amount of the option transaction costs and the premium
received on the call written was more or less than the price of the call
subsequently purchased. A profit may also be realized if the call expires
unexercised, because a Portfolio retains the underlying security and the
premium received. If a Portfolio could not effect a closing purchase
transaction due to lack of a market, it would hold the callable
securities until the call expired or was exercised.

When a Portfolio purchases a call (other than in a closing
purchase transaction), it pays a premium and has the right to buy the
underlying investment from a seller of a corresponding call on the same
investment during the call period at a fixed exercise price. A Portfolio
benefits only if the call is sold at a profit or if, during the call
period, the market price of the underlying investment is above the sum of
the call price plus the transaction costs and the premium paid and the
call is exercised. If the call is not exercised or sold (whether or not
at a profit), it will become worthless at its expiration date and a
Portfolio will lose its premium payment and the right to purchase the
underlying investment.

A put option on securities gives the purchaser the right to
sell, and the writer the obligation to buy, the underlying investment at
the exercise price during the option period. Writing a put covered by
segregated liquid assets equal to the exercise price of the put has the
same economic effect to a Portfolio as writing a covered call. The
premium a Portfolio receives from writing a put option represents a
profit as long as the price of the underlying investment remains above
the exercise price. However, a Portfolio has also assumed the obligation
during the option period to buy the underlying investment from the buyer
of the put at the exercise price, even though the value of the investment
may fall below the exercise price. If the put expires unexercised, a
Portfolio (as the writer of the put) realizes a gain in the amount of the
premium. If the put is exercised, a Portfolio must

B-13

<PAGE>

fulfill its obligation to purchase the underlying investment at the
exercise price, which will usually exceed the market value of the
investment at that time. In that case, a Portfolio may incur a loss,
equal to the sum of the sale price of the underlying investment and the
premium received minus the sum of the exercise price and any transaction
costs incurred.

A Portfolio may effect a closing purchase transaction to realize
a profit on an outstanding put option it has written or to prevent an
underlying security from being put. Furthermore, effecting such a closing
purchase transaction will permit a Portfolio to write another put option
to the extent that the exercise price thereof is secured by the deposited
assets, or to utilize the proceeds from the sale of such assets for other
investments by the Portfolio. A Portfolio will realize a profit or loss
from a closing purchase transaction if the cost of the transaction is
less or more than the premium received from writing the option.

When a Portfolio purchases a put, it pays a premium and has the
right to sell the underlying investment to a seller of a corresponding
put on the same investment during the put period at a fixed exercise
price. Buying a put on an investment a Portfolio owns enables the
Portfolio to protect itself during the put period against a decline in
the value of the underlying investment below the exercise price by
selling such underlying investment at the exercise price to a seller of a
corresponding put. If the market price of the underlying investment is
equal to or above the exercise price and as a result the put is not
exercised or resold, the put will become worthless at its expiration
date, and the Portfolio will lose its premium payment and the right to
sell the underlying investment pursuant to the put. The put may, however,
be sold prior to expiration (whether or not at a profit).

Buying a put on an investment a Portfolio does not own permits
the Portfolio either to resell the put or buy the underlying investment
and sell it at the exercise price. The resale price of the put will vary
inversely with the price of the underlying investment. If the market
price of the underlying investment is above the exercise price and as a
result the put is not exercised, the put will become worthless on its
expiration date. In the event of a decline in the stock market, a
Portfolio could exercise or sell the put at a profit to attempt to offset
some or all of its loss on its portfolio securities.

When writing put options on securities, to secure its obligation
to pay for the underlying security, a Portfolio will deposit in escrow
liquid assets with a value equal to or greater than the exercise price of
the underlying securities. A Portfolio therefore forgoes the opportunity
of investing the segregated assets or writing calls against those assets.
As long as the obligation of a Portfolio as the put writer continues, it
may be assigned an exercise notice by the broker-dealer through whom such
option was sold, requiring a Portfolio to take delivery of the underlying
security against payment of the exercise price. A Portfolio has no
control over when it may be required to purchase the underlying security,
since it may be assigned an exercise notice at any time prior to the
termination of its obligation as the writer of the put. This obligation
terminates upon expiration of the put, or such earlier time at which a
Portfolio effects a closing purchase transaction by purchasing a put of
the same series as that previously sold. Once a Portfolio has been
assigned an exercise notice, it is thereafter not allowed to effect a
closing purchase transaction.

B-14

<PAGE>

Options on Foreign Currencies. Each Portfolio may write and
purchase puts and calls on foreign currencies. A call written on a
foreign currency by a Portfolio is "covered" if the Portfolio owns the
underlying foreign currency covered by the call or has an absolute and
immediate right to acquire that foreign currency without additional cash
consideration (or for additional cash consideration held in a segregated
account by the Portfolio) upon conversion or exchange of other foreign
currency held in its portfolio. A put option is "covered" if the
Portfolio segregates cash or liquid securities with a value at least
equal to the exercise price of the put option. A call written by a
Portfolio on a foreign currency is for cross-hedging purposes if it is
not covered, but is designed to provide a hedge against a decline in the
U.S. dollar value of a security which the Portfolio owns or has the right
to acquire and which is denominated in the currency underlying the option
due to an adverse change in the exchange rate. In such circumstances, a
Portfolio collateralizes the option by segregating cash or liquid
securities in an amount not less than the value of the underlying foreign
currency in U.S. dollars marked-to-market daily.

Options on Securities Indices. As noted above, each Portfolio
may write and purchase call and put options on securities indices. Puts
and calls on broadly-based securities indices are similar to puts and
calls on securities except that all settlements are in cash and gain or
loss depends on changes in the index in question (and thus on price
movements in the securities market generally) rather than on price
movements in individual securities or Futures. When a Portfolio buys a
call on a securities index, it pays a premium. During the call period,
upon exercise of a call by a Portfolio, a seller of a corresponding call
on the same investment will pay the Portfolio an amount of cash to settle
the call if the closing level of the securities index upon which the call
is based is greater than the exercise price of the call. That cash
payment is equal to the difference between the closing price of the index
and the exercise price of the call times a specified multiple (the
"multiplier") which determines the total dollar value for each point of
difference. When a Portfolio buys a put on a securities index, it pays a
premium and has the right during the put period to require a seller of a
corresponding put, upon the Portfolio's exercise of its put, to deliver
to the Portfolio an amount of cash to settle the put if the closing level
of the securities index upon which the put is based is less than the
exercise price of the put. That cash payment is determined by the
multiplier, in the same manner as described above as to calls.

Futures and Options on Futures

Futures. Upon entering into a Futures transaction, a Portfolio
will be required to deposit an initial margin payment with the futures
commission merchant (the "futures broker"). The initial margin will be
deposited with the Fund's custodian in an account registered in the
futures broker's name; however the futures broker can gain access to that
account only under specified conditions. As the Future is
marked-to-market to reflect changes in its market value, subsequent
margin payments, called variation margin, will be paid to or by the
futures broker on a daily basis. Prior to expiration of the Future, if a
Portfolio elects to close out its position by taking an opposite
position, a final determination of variation margin is made, additional
cash is required to be paid by or released to the Portfolio, and any loss
or gain is realized for tax purposes. All Futures transactions are
effected through a clearinghouse associated with the exchange on which
the Futures are traded.

B-15

<PAGE>

Interest rate futures contracts are purchased or sold for
hedging purposes to attempt to protect against the effects of interest
rate changes on a Portfolio's current or intended investments in
fixed-income securities. For example, if a Portfolio owned long-term
bonds and interest rates were expected to increase, that Portfolio might
sell interest rate futures contracts. Such a sale would have much the
same effect as selling some of the long-term bonds in that Portfolio's
portfolio. However, since the Futures market is more liquid than the cash
market, the use of interest rate futures contracts as a hedging technique
allows a Portfolio to hedge its interest rate risk without having to sell
its portfolio securities. If interest rates did increase, the value of
the debt securities in the portfolio would decline, but the value of that
Portfolio's interest rate futures contracts would be expected to increase
at approximately the same rate, thereby keeping the net asset value of
that Portfolio from declining as much as it otherwise would have. On the
other hand, if interest rates were expected to decline, interest rate
futures contracts may be purchased to hedge in anticipation of subsequent
purchases of long-term bonds at higher prices. Since the fluctuations in
the value of the interest rate futures contracts should be similar to
that of long-term bonds, a Portfolio could protect itself against the
effects of the anticipated rise in the value of long-term bonds without
actually buying them until the necessary cash became available or the
market had stabilized. At that time, the interest rate futures contracts
could be liquidated and that Portfolio's cash reserves could then be used
to buy long-term bonds on the cash market.

Purchases or sales of stock or bond index futures contracts are
used for hedging purposes to attempt to protect a Portfolio's current or
intended investments from broad fluctuations in stock or bond prices. For
example, a Portfolio may sell stock or bond index futures contracts in
anticipation of or during a market decline to attempt to offset the
decrease in market value of the Portfolio's securities portfolio that
might otherwise result. If such decline occurs, the loss in value of
portfolio securities may be offset, in whole or part, by gains on the
Futures position. When a Portfolio is not fully invested in the
securities market and anticipates a significant market advance, it may
purchase stock or bond index futures contracts in order to gain rapid
market exposure that may, in part or entirely, offset increases in the
cost of securities that the Portfolio intends to purchase. As such
purchases are made, the corresponding positions in stock or bond index
futures contracts will be closed out.

As noted above, each Portfolio may purchase and sell foreign
currency futures contracts for hedging or income enhancement purposes to
attempt to protect its current or intended investments from fluctuations
in currency exchange rates. Such fluctuations could reduce the dollar
value of portfolio securities denominated in foreign currencies, or
increase the cost of foreign-denominated securities to be acquired, even
if the value of such securities in the currencies in which they are
denominated remains constant. Each Portfolio may sell futures contracts
on a foreign currency, for example, when it holds securities denominated
in such currency and it anticipates a decline in the value of such
currency relative to the dollar. In the event such decline occurs, the
resulting adverse effect on the value of foreign-denominated securities
may be offset, in whole or in part, by gains on the Futures contracts.
However, if the value of the foreign currency increases relative to the
dollar, the Portfolio's loss on the foreign currency futures contract may
or may not be offset by an increase in the value of the securities since
a decline in the price of the security stated in terms of the foreign
currency may be greater than the increase in value as a result of the
change in exchange rates.

B-16

<PAGE>

Conversely, each Portfolio could protect against a rise in the
dollar cost of foreign-denominated securities to be acquired by
purchasing Futures contracts on the relevant currency, which could
offset, in whole or in part, the increased cost of such securities
resulting from a rise in the dollar value of the underlying currencies.
When a Portfolio purchases futures contracts under such circumstances,
however, and the price of securities to be acquired instead declines as a
result of appreciation of the dollar, the Portfolio will sustain losses
on its futures position which could reduce or eliminate the benefits of
the reduced cost of portfolio securities to be acquired.

Options on Futures. As noted above, the Portfolio may purchase
and write options on interest rate futures contracts, stock and bond
index futures contracts, forward contracts and foreign currency futures
contracts. (Unless otherwise specified, options on interest rate futures
contracts, options on stock and bond index futures contracts and options
on foreign currency futures contracts are collectively referred to as
"Options on Futures.")

The writing of a call option on a Futures contract constitutes a
partial hedge against declining prices of the securities in the
portfolio. If the Futures price at expiration of the option is below the
exercise price, the Portfolio will retain the full amount of the option
premium, which provides a partial hedge against any decline that may have
occurred in the portfolio holdings. The writing of a put option on a
Futures contract constitutes a partial hedge against increasing prices of
the securities or other instruments required to be delivered under the
terms of the Futures contract. If the Futures price at expiration of the
put option is higher than the exercise price, a Portfolio will retain the
full amount of the option premium which provides a partial hedge against
any increase in the price of securities which the Portfolio intends to
purchase. If a put or call option a Portfolio has written is exercised,
the Portfolio will incur a loss which will be reduced by the amount of
the premium it receives. Depending on the degree of correlation between
changes in the value of its portfolio securities and changes in the value
of its Options on Futures positions, a Portfolio's losses from exercised
Options on Futures may to some extent be reduced or increased by changes
in the value of portfolio securities.

A Portfolio may purchase Options on Futures for hedging
purposes, instead of purchasing or selling the underlying Futures
contract. For example, where a decrease in the value of portfolio
securities is anticipated as a result of a projected market-wide decline
or changes in interest or exchange rates, a Portfolio could, in lieu of
selling a Futures contract, purchase put options thereon. In the event
that such decrease occurs, it may be offset, in whole or part, by a
profit on the option. If the market decline does not occur, the Portfolio
will suffer a loss equal to the price of the put. Where it is projected
that the value of securities to be acquired by a Portfolio will increase
prior to acquisition, due to a market advance or changes in interest or
exchange rates, a Portfolio could purchase call Options on Futures,
rather than purchasing the underlying Futures contract. If the market
advances, the increased cost of securities to be purchased may be offset
by a profit on the call. However, if the market declines, the Portfolio
will suffer a loss equal to the price of the call but the securities
which the Portfolio intends to purchase may be less expensive.

B-17

<PAGE>

Forward Contracts

A Forward Contract involves bilateral obligations of one party
to purchase, and another party to sell, a specific currency at a future
date (which may be any fixed number of days from the date of the contract
agreed upon by the parties), at a price set at the time the contract is
entered into. These contracts are traded in the interbank market
conducted directly between currency traders (usually large commercial
banks) and their customers. No price is paid or received upon the
purchase or sale of a Forward Contract.

A Portfolio may use Forward Contracts to protect against
uncertainty in the level of future exchange rates. The use of Forward
Contracts does not eliminate fluctuations in the prices of the underlying
securities a Portfolio owns or intends to acquire, but it does fix a rate
of exchange in advance. In addition, although Forward Contracts limit the
risk of loss due to a decline in the value of the hedged currencies, at
the same time they limit any potential gain that might result should the
value of the currencies increase.

A Portfolio may enter into Forward Contracts with respect to
specific transactions. For example, when a Portfolio enters into a
contract for the purchase or sale of a security denominated in a foreign
currency, or when a Portfolio anticipates receipt of dividend payments in
a foreign currency, the Portfolio may desire to "lock-in" the U.S. dollar
price of the security or the U.S. dollar equivalent of such payment by
entering into a Forward Contract, for a fixed amount of U.S. dollars per
unit of foreign currency, for the purchase or sale of the amount of
foreign currency involved in the underlying transaction. A Portfolio will
thereby be able to protect itself against a possible loss resulting from
an adverse change in the relationship between the currency exchange rates
during the period between the date on which the security is purchased or
sold, or on which the payment is declared, and the date on which such
payments are made or received.

A Portfolio may also use Forward Contracts to lock in the U.S.
dollar value of portfolio positions ("position hedge"). In a position
hedge, for example, when a Portfolio believes that foreign currency may
suffer a substantial decline against the U.S. dollar, it may enter into a
Forward Contract to sell an amount of that foreign currency approximating
the value of some or all of the portfolio securities denominated in such
foreign currency, or when a Portfolio believes that the U.S. dollar may
suffer a substantial decline against a foreign currency, it may enter
into a Forward Contract to buy that foreign currency for a fixed dollar
amount. In this situation a Portfolio may, in the alternative, enter into
a Forward Contract to sell a different foreign currency for a fixed U.S.
dollar amount where the Portfolio believes that the U.S. dollar value of
the currency to be sold pursuant to the forward contract will fall
whenever there is a decline in the U.S. dollar value of the currency in
which portfolio securities of the Portfolio are denominated
("cross-hedged"). A Portfolio may also hedge investments denominated in a
foreign currency by entering into forward currency contracts with respect
to a foreign currency that is expected to correlate to the currency in
which the investments are denominated ("proxy hedging").

B-18

<PAGE>

The Portfolio will cover outstanding forward currency contracts
by maintaining liquid portfolio securities denominated in the currency
underlying the forward contract or the currency being hedged. To the
extent that a Portfolio is not able to cover its forward currency
positions with underlying portfolio securities, the Portfolio will
segregate cash or liquid securities having a value equal to the aggregate
amount of the Portfolio's commitments under Forward Contracts entered
into with respect to position hedges and cross-hedges. If the value of
the segregated securities declines, additional cash or securities will be
segregated on a daily basis so that the value of the segregated assets
will equal the amount of the Portfolio's commitments with respect to such
contracts. As an alternative to segregating assets, a Portfolio may
purchase a call option permitting the Portfolio to purchase the amount of
foreign currency being hedged by a forward sale contract at a price no
higher than the Forward Contract price or the Portfolio may purchase a
put option permitting the Portfolio to sell the amount of foreign
currency subject to a forward purchase contract at a price as high or
higher than the Forward Contract price. Unanticipated changes in currency
prices may result in poorer overall performance for a Portfolio than if
it had not entered into such contracts.

The precise matching of the Forward Contract amounts and the
value of the securities involved will not generally be possible because
the future value of such securities in foreign currencies will change as
a consequence of market movements in the value of these securities
between the date the Forward Contract is entered into and the date it is
sold. Accordingly, it may be necessary for a Portfolio to purchase
additional foreign currency on the spot (i.e., cash) market (and bear the
expense of such purchase), if the market value of the security is less
than the amount of foreign currency a Portfolio is obligated to deliver
and if a decision is made to sell the security and make delivery of the
foreign currency. Conversely, it may be necessary to sell on the spot
market some of the foreign currency received upon the sale of the
portfolio security if its market value exceeds the amount of foreign
currency a Portfolio is obligated to deliver. The projection of
short-term currency market movements is extremely difficult, and the
successful execution of a short-term hedging strategy is highly
uncertain. Forward Contracts involve the risk that anticipated currency
movements will not be accurately predicted, causing a Portfolio to
sustain losses on these contracts and transactions costs.

At or before the maturity of a Forward Contract requiring a
Portfolio to sell a currency, the Portfolio may either sell a portfolio
security and use the sale proceeds to make delivery of the currency or
retain the security and offset its contractual obligation to deliver the
currency by purchasing a second contract pursuant to which the Portfolio
will obtain, on the same maturity date, the same amount of the currency
that it is obligated to deliver. Similarly, a Portfolio may close out a
Forward Contract requiring it to purchase a specified currency by
entering into a second contract entitling it to sell the same amount of
the same currency on the maturity date of the first contract. A Portfolio
would realize a gain or loss as a result of entering into such an
offsetting Forward Contract under either circumstance to the extent the
exchange rate or rates between the currencies involved moved between the
execution dates of the first contract and offsetting contract.

B-19

<PAGE>

The cost to a Portfolio of engaging in Forward Contracts varies
with factors such as the currencies involved, the length of the contract
period and the market conditions then prevailing. Because Forward
Contracts are usually entered into on a principal basis, no fees or
commissions are involved. Because such contracts are not traded on an
exchange, a Portfolio must evaluate the credit and performance risk of
each particular counterparty under a Forward Contract.

Although a Portfolio values its assets daily in terms of U.S.
dollars, it does not intend to convert its holdings of foreign currencies
into U.S. dollars on a daily basis. A Portfolio may convert foreign
currency from time to time, and investors should be aware of the costs of
currency conversion. Foreign exchange dealers do not charge a fee for
conversion, but they do seek to realize a profit based on the difference
between the prices at which they buy and sell various currencies. Thus, a
dealer may offer to sell a foreign currency to a Portfolio at one rate,
while offering a lesser rate of exchange should the Portfolio desire to
resell that currency to the dealer.

Additional Information About Hedging Instruments and Their Use

The Fund's custodian, or a securities depository acting for the
custodian, will act as the Portfolios' escrow agent, through the
facilities of the Options Clearing Corporation ("OCC"), as to the
securities on which the Portfolio has written options or as to other
acceptable escrow securities, so that no margin will be required for such
transaction. OCC will release the securities on the expiration of the
option or upon a Portfolio's entering into a closing transaction.

An option position may be closed out only on a market which
provides secondary trading for options of the same series and there is no
assurance that a liquid secondary market will exist for any particular
option. A Portfolio's option activities may affect its turnover rate and
brokerage commissions. The exercise by a Portfolio of puts on securities
will cause the sale of related investments, increasing portfolio
turnover. Although such exercise is within a Portfolio's control, holding
a put might cause the Portfolio to sell the related investments for
reasons which would not exist in the absence of the put. A Portfolio will
pay a brokerage commission each time it buys a put or call, sells a call,
or buys or sells an underlying investment in connection with the exercise
of a put or call. Such commissions may be higher than those which would
apply to direct purchases or sales of such underlying investments.
Premiums paid for options are small in relation to the market value of
the related investments, and consequently, put and call options offer
large amounts of leverage. The leverage offered by trading in options
could result in a Portfolio's net asset value being more sensitive to
changes in the value of the underlying investments.

In the future, each Portfolio may employ Hedging Instruments and
strategies that are not presently contemplated but which may be
developed, to the extent such investment methods are consistent with a
Portfolio's investment objectives, legally permissible and adequately
disclosed.

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<PAGE>

Regulatory Aspects of Hedging Instruments

Each Portfolio must operate within certain restrictions as to
its long and short positions in Futures and options thereon under a rule
(the "CFTC Rule") adopted by the Commodity Futures Trading Commission
(the "CFTC") under the Commodity Exchange Act (the "CEA"), which excludes
the Portfolio from registration with the CFTC as a "commodity pool
operator" (as defined in the CEA) if it complies with the CFTC Rule. In
particular, the Portfolio may (i) purchase and sell Futures and options
thereon for bona fide hedging purposes, as defined under CFTC
regulations, without regard to the percentage of the Portfolio's assets
committed to margin and option premiums, and (ii) enter into non-hedging
transactions, provided that the Portfolio may not enter into such
non-hedging transactions if, immediately thereafter, the sum of the
amount of initial margin deposits on the Portfolio's existing Futures
positions and option premiums would exceed 5% of the fair value of its
portfolio, after taking into account unrealized profits and unrealized
losses on any such transactions. Margin deposits may consist of cash or
securities acceptable to the broker and the relevant contract market.

Transactions in options by a Portfolio are subject to
limitations established by each of the exchanges governing the maximum
number of options which may be written or held by a single investor or
group of investors acting in concert, regardless of whether the options
were written or purchased on the same or different exchanges or are held
in one or more accounts or through one or more exchanges or brokers.
Thus, the number of options which a Portfolio may write or hold may be
affected by options written or held by other entities, including other
investment companies having the same or an affiliated investment adviser.
Position limits also apply to Futures. An exchange may order the
liquidation of positions found to be in violation of those limits and may
impose certain other sanctions. Due to requirements under the 1940 Act,
when a Portfolio purchases a Future, the Portfolio will segregate cash or
liquid securities in an amount equal to the market value of the
securities underlying such Future, less the margin deposit applicable to
it.

Possible Risk Factors in Hedging

In addition to the risks discussed in the Prospectus and above,
there is a risk in using short hedging by selling Futures to attempt to
protect against decline in value of the portfolio securities (due to an
increase in interest rates) that the prices of such Futures will
correlate imperfectly with the behavior of the cash (i.e., market value)
prices of the Portfolio's securities. The ordinary spreads between prices
in the cash and Futures markets are subject to distortions due to
differences in the natures of those markets. First, all participants in
the Futures markets are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit requirements,
investors may close Futures contracts through offsetting transactions
which could distort the normal relationship between the cash and Futures
markets. Second, the liquidity of the Futures markets depends on
participants entering into offsetting transactions rather than making or
taking delivery. To the extent participants decide to make or take
delivery, liquidity in the Futures markets could be reduced, thus
producing distortion. Third, from the point-of-view of speculators, the
deposit requirements in the Futures markets are less onerous than margin
requirements in the securities

B-21

<PAGE>

markets. Therefore, increased participation by speculators in the Futures
markets may cause temporary price distortions.

If a Portfolio uses Hedging Instruments to establish a position
in the debt securities markets as a temporary substitute for the purchase
of individual debt securities (long hedging) by buying Futures and/or
calls on such Futures or on debt securities, it is possible that the
market may decline; if the Adviser then determines not to invest in such
securities at that time because of concerns as to possible further market
decline or for other reasons, the Portfolio will realize a loss on the
Hedging Instruments that is not offset by a reduction in the price of the
debt securities purchased.

Illiquid and Restricted Securities. No more than 15% of the
value of a Portfolio's net assets, determined as of the date of purchase,
may be invested in illiquid securities including repurchase agreements
which have a maturity of longer than seven days, interest-rate swaps,
currency swaps, caps, floors and collars, or in other securities that are
illiquid by virtue of the absence of a readily available market or legal
or contractual restrictions on resale. Historically, illiquid securities
have included securities subject to contractual or legal restrictions on
resale because they have not been registered under the Securities Act of
1933, as amended (the "Securities Act"), securities which are otherwise
not readily marketable and repurchase agreements having a maturity of
longer than seven days. Repurchase agreements subject to demand are
deemed to have a maturity equal to the notice period. Securities which
have not been registered under the Securities Act are referred to as
private placements or restricted securities and are purchased directly
from the issuer or in the secondary market. Mutual funds do not typically
hold a significant amount of these restricted or other illiquid
securities because of the potential for delays on resale and uncertainty
in valuation. Limitations on resale may have an adverse effect on the
marketability of portfolio securities and a mutual fund might be unable
to dispose of restricted or other illiquid securities promptly or at
reasonable prices and might thereby experience difficulty satisfying
redemptions within seven days. A mutual fund might also have to register
such restricted securities in order to dispose of them, resulting in
additional expense and delay. There will generally be a lapse of time
between a mutual fund's decision to sell an unregistered security and the
registration of such security promoting sale. Adverse market conditions
could impede a public offering of such securities. When purchasing
unregistered securities, each of the Portfolios will seek to obtain the
right of registration at the expense of the issuer (except in the case of
Rule 144A securities).

In recent years, a large institutional market has developed for
certain securities that are not registered under the Securities Act,
including repurchase agreements, commercial paper, foreign securities,
municipal securities and corporate bonds and notes. Institutional
investors depend on an efficient institutional market in which the
unregistered security can be readily resold or on an issuer's ability to
honor a demand for repayment. The fact that there are contractual or
legal restrictions on resale to the general public or to certain
institutions may not be indicative of the liquidity of such investments.

B-22

<PAGE>

Restricted securities eligible for resale pursuant to Rule 144A
under the Securities Act for which there is a readily available market
may be deemed to be liquid. The Adviser will monitor the liquidity of
such restricted securities subject to the supervision of the Directors.
In reaching liquidity decisions the Adviser will consider, inter alia,
pursuant to guidelines and procedures established by the Directors, the
following factors: (1) the frequency of trades and quotes for the
security; (2) the number of dealers wishing to purchase or sell the
security and the number of other potential purchasers; (3) dealer
undertakings to make a market in the security; and (4) the nature of the
security and the nature of the marketplace trades (e.g., the time needed
to dispose of the security, the method of soliciting offers and the
mechanics of the transfer).

Commercial paper issues in which a Portfolio's net assets may be
invested include securities issued by major corporations without
registration under the Securities Act in reliance on the exemption from
such registration afforded by Section 3(a)(3) thereof, and commercial
paper issued in reliance on the so-called private placement exemption
from registration which is afforded by Section 4(2) of the Securities Act
("Section 4(2) paper"). Section 4(2) paper is restricted as to
disposition under the federal securities laws in that any resale must
similarly be made in an exempt transaction. Section 4(2) paper is
normally resold to other institutional investors through or with the
assistance of investment dealers who make a market in Section 4(2) paper,
thus providing liquidity. Section 4(2) paper that is issued by a company
that files reports under the Securities Exchange Act of 1934 is generally
eligible to be sold in reliance on the safe harbor of Rule 144A described
above. A Portfolio's 15% limitation on investments in illiquid securities
includes Section 4(2) paper other than Section 4(2) paper that the
Adviser has determined to be liquid pursuant to guidelines established by
the Directors. The Directors have delegated to the Advisers the function
of making day-to-day determinations of liquidity with respect to Section
4(2) paper, pursuant to guidelines approved by the Directors that require
the Advisers to take into account the same factors described above for
other restricted securities and require the Advisers to perform the same
monitoring and reporting functions.

Hybrid Instruments; Indexed/Structured Securities. Hybrid
Instruments, including indexed or structured securities, have been
developed and combine the elements of futures contracts or options with
those of debt, preferred equity or a depository instrument. Generally, a
Hybrid Instrument will be a debt security, preferred stock, depository
share, trust certificate, certificate of deposit or other evidence of
indebtedness on which a portion of or all interest payments, and/or the
principal or stated amount payable at maturity, redemption or retirement,
is determined by reference to prices, changes in prices, or differences
between prices, of securities, currencies, intangibles, goods, articles
or commodities (collectively "Underlying Assets") or by another objective
index, economic factor or other measure, such as interest rates, currency
exchange rates, commodity indices, and securities indices (collectively
"Benchmarks"). Thus, Hybrid Instruments may take a variety of forms,
including, but not limited to, debt instruments with interest or
principal payments or redemption terms determined by reference to the
value of a currency or commodity or securities index at a future point in
time, preferred stock with dividend rates determined by reference to the
value of a currency, or convertible securities with the conversion terms
related to a particular commodity.

B-23

<PAGE>

Hybrid Instruments can be an efficient means of creating
exposure to a particular market, or segment of a market, with the
objective of enhancing total return. For example, a Portfolio may wish to
take advantage of expected declines in interest rates in several European
countries, but avoid the transactions costs associated with buying and
currency-hedging the foreign bond positions. One solution would be to
purchase a U.S. dollar-denominated Hybrid Instrument whose redemption
price is linked to the average three year interest rate in a designated
group of countries. The redemption price formula would provide for
payoffs of greater than par if the average interest rate was lower than a
specified level, and payoffs of less than par if rates were above the
specified level. Furthermore, the Portfolio could limit the downside risk
of the security by establishing a minimum redemption price so that the
principal paid at maturity could not be below a predetermined minimum
level if interest rates were to rise significantly. The purpose of this
arrangement, known as a structured security with an embedded put option,
would be to give the Portfolio the desired European bond exposure while
avoiding currency risk, limiting downside market risk, and lowering
transactions costs. Of course, there is no guarantee that the strategy
will be successful and the Portfolio could lose money if, for example,
interest rates do not move as anticipated or credit problems develop with
the issuer of the Hybrid.

The risks of investing in Hybrid Instruments reflect a
combination of the risks of investing in securities, options, futures and
currencies. Thus, an investment in a Hybrid Instrument may entail
significant risks that are not associated with a similar investment in a
traditional debt instrument that has a fixed principal amount, is
denominated in U.S. dollars or bears interest either at a fixed rate or a
floating rate determined by reference to a common, nationally published
Benchmark. The risks of a particular Hybrid Instrument will, of course,
depend upon the terms of the instrument, but may include, without
limitation, the possibility of significant changes in the Benchmarks or
the prices of Underlying Assets to which the instrument is linked. Such
risks generally depend upon factors which are unrelated to the operations
or credit quality of the issuer of the Hybrid Instrument and which may
not be readily foreseen by the purchaser, such as economic and political
events, the supply and demand for the Underlying Assets and interest rate
movements. In recent years, various Benchmarks and prices for Underlying
Assets have been highly volatile, and such volatility may be expected in
the future. Reference is also made to the discussion of futures, options,
and forward contracts herein for a discussion of the risks associated
with such investments.

Hybrid Instruments are potentially more volatile and carry
greater market risks than traditional debt instruments. Depending on the
structure of the particular Hybrid Instrument, changes in a Benchmark may
be magnified by the terms of the Hybrid Instrument and have an even more
dramatic and substantial effect upon the value of the Hybrid Instrument.
Also, the prices of the Hybrid Instrument and the Benchmark or Underlying
Asset may not move in the same direction or at the same time.

Hybrid Instruments may bear interest or pay preferred dividends
at below market (or even relatively nominal) rates. Alternatively, Hybrid
Instruments may bear interest at above market rates but bear an increased
risk of principal loss (or gain). The latter scenario may result if
"leverage" is used to structure the Hybrid Instrument. Leverage risk
occurs when the Hybrid Instrument is

B-24

<PAGE>

structured so that a given change in a Benchmark or Underlying Asset is
multiplied to produce a greater value change in the Hybrid Instrument,
thereby magnifying the risk of loss as well as the potential for gain.

Hybrid Instruments may also carry liquidity risk since the
instruments are often "customized" to meet the portfolio needs of a
particular investor, and therefore, the number of investors that are
willing and able to buy such instruments in the secondary market may be
smaller than that for more traditional debt securities. In addition,
because the purchase and sale of Hybrid Instruments could take place in
an over-the-counter market without the guarantee of a central clearing
organization or in a transaction between the Portfolio and the issuer of
the Hybrid Instrument, the creditworthiness of the counter party or
issuer of the Hybrid Instrument would be an additional risk factor which
the Portfolio would have to consider and monitor. Hybrid Instruments also
may not be subject to regulation of the CFTC, which generally regulates
the trading of commodity futures by U.S. persons, the Securities and
Exchange Commission (the "SEC"), which regulates the offer and sale of
securities by and to U.S. persons, or any other governmental regulatory
authority.

The various risks discussed above, particularly the market risk
of such instruments, may in turn cause significant fluctuations in the
net asset value of the Portfolio. Accordingly, each Portfolio will limit
its investments in Hybrid Instruments to 10% of total assets at the time
of purchase. However, because of their volatility, it is possible that a
Portfolio's investment in Hybrid Instruments will account for more than
10% of the Portfolio's return (positive or negative).

When-Issued Securities and Firm Commitment Agreement. A
Portfolio may purchase or sell securities on a "when-issued" or "delayed
delivery" basis and may purchase securities on a firm commitment basis.
Although a Portfolio will enter into such transactions for the purpose of
acquiring securities for its portfolio or for delivery pursuant to
options contracts it has entered into, the Portfolio may dispose of a
commitment prior to settlement. "When-issued" or "delayed delivery"
refers to securities whose terms and indenture are available and for
which a market exists, but which are not available for immediate
delivery. When such transactions are negotiated, the price (which is
generally expressed in yield terms) is fixed at the time the commitment
is made, but delivery and payment for the securities take place at a
later date. During the period between commitment by a Portfolio and
settlement (generally within two months but not to exceed 120 days), no
payment is made for the securities purchased by the purchaser, and no
interest accrues to the purchaser from the transaction. Such securities
are subject to market fluctuation, and the value at delivery may be less
than the purchase price. A Portfolio will maintain a segregated account
with its Custodian, consisting of cash or liquid securities at least
equal to the value of purchase commitments until payment is made. A
Portfolio will likewise segregate liquid assets in respect of securities
sold on a delayed delivery basis.

A Portfolio will engage in when-issued transactions in order to
secure what is considered to be an advantageous price and yield at the
time of entering into the obligation. When a Portfolio engages in
when-issued or delayed delivery transactions, it relies on the buyer or
seller, as the case may be, to consummate the transaction. Failure to do
so may result in a Portfolio losing the

B-25

<PAGE>

opportunity to obtain a price and yield considered to be advantageous. If
a Portfolio chooses to (i) dispose of the right to acquire a when-issued
security prior to its acquisition or (ii) dispose of its right to deliver
or receive against a firm commitment, it may incur a gain or loss. (At
the time a Portfolio makes a commitment to purchase or sell a security on
a when-issued or firm commitment basis, it records the transaction and
reflects the value of the security purchased, or if a sale, the proceeds
to be received in determining its net asset value.)

To the extent a Portfolio engages in when-issued and delayed
delivery transactions, it will do so for the purpose of acquiring or
selling securities consistent with its investment objectives and policies
and not for the purposes of investment leverage. A Portfolio enters into
such transactions only with the intention of actually receiving or
delivering the securities, although (as noted above) when-issued
securities and firm commitments may be sold prior to the settlement date.
In addition, changes in interest rates in a direction other than that
expected by the Adviser before settlement of a purchase will affect the
value of such securities and may cause a loss to a Portfolio.

When-issued transactions and firm commitments may be used to
offset anticipated changes in interest rates and prices. For instance, in
periods of rising interest rates and falling prices, a Portfolio might
sell securities in its portfolio on a forward commitment basis to attempt
to limit its exposure to anticipated falling prices. In periods of
falling interest rates and rising prices, a Portfolio might sell
portfolio securities and purchase the same or similar securities on a
when-issued or forward commitment basis, thereby obtaining the benefit of
currently higher cash yields.

Loans of Portfolio Securities. Consistent with applicable
regulatory requirements, each Portfolio may lend portfolio securities in
amounts up to 331/3% of total assets to brokers, dealers and other
financial institutions, provided, that such loans are callable at any
time by the Portfolio and are at all times secured by cash or equivalent
collateral. In lending its portfolio securities, a Portfolio receives
income while retaining the securities' potential for capital
appreciation. The advantage of such loans is that a Portfolio continues
to receive the interest and dividends on the loaned securities while at
the same time earning interest on the collateral, which will be invested
in short-term obligations. A loan may be terminated by the borrower on
one business day's notice or by a Portfolio at any time. If the borrower
fails to maintain the requisite amount of collateral, the loan
automatically terminates, and the Portfolio could use the collateral to
replace the securities while holding the borrower liable for any excess
of replacement cost over collateral. 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 only be
made to firms deemed by the Adviser to be creditworthy. On termination of
the loan, the borrower is required to return the securities to a
Portfolio; and any gain or loss in the market price of the loaned
security during the loan would inure to the Portfolio. Each Portfolio
will pay reasonable finders', administrative and custodial fees in
connection with a loan of its securities or may share the interest earned
on collateral with the borrower.

B-26

<PAGE>

Since voting or consent rights which accompany loaned securities
pass to the borrower, each Portfolio will follow the policy of calling
the loan, in whole or in part as may be appropriate, to permit the
exercise of such rights if the matters involved would have a material
effect on the Portfolio's investment in the securities which are the
subject of the loan.

Reverse Repurchase Agreements. A Portfolio may enter into
reverse repurchase agreements with brokers, dealers, domestic and foreign
banks or other financial institutions that have been determined by the
Adviser to be creditworthy. In a reverse repurchase agreement, the
Portfolio sells a security and agrees to repurchase it at a mutually
agreed upon date and price, reflecting the interest rate effective for
the term of the agreement. It may also be viewed as the borrowing of
money by the Portfolio. The Portfolio's investment of the proceeds of a
reverse repurchase agreement is the speculative factor known as leverage.
A Portfolio will enter into a reverse repurchase agreement only if the
interest income from investment of the proceeds is expected to be greater
than the interest expense of the transaction and the proceeds are
invested for a period no longer than the term of the agreement. The
Portfolio will maintain with the Custodian a separate account with a
segregated portfolio of cash or liquid securities in an amount at least
equal to its purchase obligations under these agreements (including
accrued interest). In the event that the buyer of securities under a
reverse repurchase agreement files for bankruptcy or becomes insolvent,
the buyer or its trustee or receiver may receive an extension of time to
determine whether to enforce the Portfolio's repurchase obligation, and
the Portfolio's use of proceeds of the agreement may effectively be
restricted pending such decision. Reverse repurchase agreements are
considered to be borrowings and are subject to the percentage limitations
on borrowings. See "Investment Restrictions."

Dollar Rolls. Each Portfolio may enter into "dollar rolls" in
which a Portfolio sells mortgage or other asset-backed securities ("Roll
Securities") for delivery in the current month and simultaneously
contracts to repurchase substantially similar (same type, coupon and
maturity) securities on a specified future date. During the roll period,
the Portfolio foregoes principal and interest paid on the Roll
Securities. The Portfolio is compensated by the difference between the
current sales price and the lower forward price for the future purchase
(often referred to as the "drop") as well as by the interest earned on
the cash proceeds of the initial sale. The Portfolio also could be
compensated through the receipt of fee income equivalent to a lower
forward price. A "covered roll" is a specific type of dollar roll for
which there is an offsetting cash position or a cash equivalent security
position which matures on or before the forward settlement date of the
dollar roll transaction. A Portfolio will only enter into covered rolls.
Because "roll" transactions involve both the sale and purchase of a
security, they may cause the reported portfolio turnover rate to be
higher than that reflecting typical portfolio management activities.

Dollar rolls involve certain risks including the following: if
the broker-dealer to whom the Portfolio sells the security becomes
insolvent, the Portfolio's right to purchase or repurchase the security
subject to the dollar roll may be restricted and the instrument which the
Portfolio is required to repurchase may be worth less than an instrument
which the Portfolio originally held. Successful use of dollar rolls will
depend upon the Adviser's ability to predict correctly interest rates and
in the case of mortgage dollar rolls, mortgage prepayments. For these
reasons, there is no assurance that dollar rolls can be successfully
employed.

B-27

<PAGE>

Standby Commitments. Standby commitments are put options that
entitle holders to same day settlement at an exercise price equal to the
amortized cost of the underlying security plus accrued interest, if any,
at the time of exercise. A Portfolio may acquire standby commitments to
enhance the liquidity of portfolio securities, but only when the issuers
of the commitments present minimal risk of default. Ordinarily, the
Portfolio may not transfer a standby commitment to a third party,
although it could sell the underlying municipal security to a third party
at any time. A Portfolio may purchase standby commitments separate from
or in conjunction with the purchase of securities subject to such
commitments. In the latter case, the Portfolio would pay a higher price
for the securities acquired, thus reducing their yield to maturity.
Standby commitments will not affect the dollar-weighted average maturity
of the Portfolio, or the valuation of the securities underlying the
commitments. Issuers or financial intermediaries may obtain letters of
credit or other guarantees to support their ability to buy securities on
demand. The Adviser may rely upon its evaluation of a bank's credit in
determining whether to support an instrument supported by a letter of
credit. Standby commitments are subject to certain risks, including the
ability of issuers of standby commitments to pay for securities at the
time the commitments are exercised; the fact that standby commitments are
not marketable by the Portfolio; and the possibility that the maturities
of the underlying securities may be different from those of the
commitments.

Interest-Rate Swaps, Mortgage Swaps, Caps, Collars and Floors.
In order to protect the value of portfolios from interest rate
fluctuations and to hedge against fluctuations in the fixed income market
in which certain of the Portfolios' investments are traded, the Portfolio
may enter into interest-rate swaps and mortgage swaps or purchase or sell
interest-rate caps, floors or collars. The Portfolio will enter into
these hedging transactions primarily to preserve a return or spread on a
particular investment or portion of the portfolio and to protect against
any increase in the price of securities the Portfolio anticipates
purchasing at a later date. The Portfolio may also enter into
interest-rate swaps for non-hedging purposes. Interest-rate swaps are
individually negotiated, and the Portfolio expects to achieve an
acceptable degree of correlation between its portfolio investments and
interest-rate positions. A Portfolio will only enter into interest-rate
swaps on a net basis, which means that the two payment streams are netted
out, with the Portfolio receiving or paying, as the case may be, only the
net amount of the two payments. Interest-rate swaps do not involve the
delivery of securities, other underlying assets or principal.
Accordingly, the risk of loss with respect to interest-rate swaps is
limited to the net amount of interest payments that the Portfolio is
contractually obligated to make. If the other party to an interest-rate
swap defaults, the Portfolio's risk of loss consists of the net amount of
interest payments that the Portfolio is contractually entitled to
receive. The use of interest-rate swaps is a highly specialized activity
which involves investment techniques and risks different from those
associated with ordinary portfolio securities transactions. All of these
investments may be deemed to be illiquid for purposes of the Portfolio's
limitation on investment in such securities. Inasmuch as these
investments are entered into for good faith hedging purposes, and
inasmuch as segregated accounts will be established with respect to such
transactions, the Fund believes such obligations do not constitute senior
securities and accordingly, will not treat them as being subject to its
borrowing restrictions. The net amount of the excess, if any, of the
Portfolio's obligations over its entitlements with respect to each
interest-rate swap will be accrued on a daily basis and an amount of cash
or liquid securities having an aggregate net asset value at least equal
to the accrued excess will be maintained in a segregated account by a
custodian that satisfies the requirements of the 1940

B-28

<PAGE>

Act. The Portfolio will also establish and maintain such segregated
accounts with respect to its total obligations under any interest-rate
swaps that are not entered into on a net basis and with respect to any
interest-rate caps, collars and floors that are written by the Portfolio.

A Portfolio will enter into these transactions only with banks
and recognized securities dealers believed by the Adviser to present
minimal credit risk in accordance with guidelines established by the
Board of Directors. If there is a default by the other party to such a
transaction, the Portfolio will have to rely on its contractual remedies
(which may be limited by bankruptcy, insolvency or similar laws) pursuant
to the agreements related to the transaction.

The swap market has grown substantially in recent years with a
large number of banks and investment banking firms acting both as
principals and as agents utilizing standardized swap documentation. Caps,
collars and floors are more recent innovations for which documentation is
less standardized, and accordingly, they are less liquid than swaps.

Mortgage swaps are similar to interest-rate swaps in that they
represent commitments to pay and receive interest. The notional principal
amount, upon which the value of the interest payments is based, is tied
to reference pool or pools of mortgages.

The purchase of an interest-rate cap entitles the purchaser, to
the extent that a specified index exceeds a predetermined interest rate,
to receive payments of interest on a notional principal amount from the
party selling such interest-rate cap. The purchase of an interest-rate
floor entitles the purchaser, to the extent that a specified index falls
below a predetermined interest rate, to receive payments of interest on a
notional principal amount from the party selling such interest-rate
floor.

PORTFOLIO TURNOVER

The portfolio turnover rate is calculated for each Portfolio by
dividing (a) the lesser of purchases or sales of portfolio securities for
the fiscal year by (b) the monthly average of the value of portfolio
securities owned during the fiscal year. For purposes of this
calculation, securities which at the time of purchase had a remaining
maturity of one year or less are excluded from the numerator and the
denominator. Transactions in Futures or the exercise of calls written by
a Portfolio may cause the Portfolio to sell portfolio securities, thus
increasing its turnover rate. The exercise of puts also may cause a sale
of securities and increase turnover; although such exercise is within a
Portfolio's control, holding a protective put might cause the Portfolio
to sell the underlying securities for reasons which would not exist in
the absence of the put. A Portfolio will pay a brokerage commission each
time it buys or sells a security in connection with the exercise of a put
or call. Some commissions may be higher than those which would apply to
direct purchases or sales of portfolio securities. 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. It is not
anticipated that the annual rate of portfolio turnover will exceed 200%.

B-29

<PAGE>

High portfolio turnover involves correspondingly greater
brokerage commissions and other transaction costs which will be borne
directly by a Portfolio. High portfolio turnover may also involve a
possible increase in short-term capital gains or losses.

INVESTMENT RESTRICTIONS

The Fund has adopted for each Portfolio certain investment
restrictions that are fundamental policies and cannot be changed without
the approval of the holders of a majority of that Portfolio's outstanding
shares. Such majority is defined as the vote of the lesser of (i) 67% or
more of the outstanding shares present at a meeting, if the holders of
more than 50% of the outstanding shares are present in person or by proxy
or (ii) more than 50% of the outstanding shares. All percentage
limitations expressed in the following investment restrictions are
measured immediately after the relevant transaction is made. Each
Portfolio may not:

1. Invest more than 25% of the Portfolio's total assets in the
securities of issuers in the same industry. Obligations of the U.S.
Government, its agencies and instrumentalities are not subject to this
25% limitation on industry concentration.

2. Invest in real estate (including limited partnership
interests but excluding securities of companies, such as real estate
investment trusts, which deal in real estate or interests therein);
provided that a Portfolio may hold or sell real estate acquired as a
result of the ownership of securities.

3. Purchase or sell commodities or commodity contracts, except
to the extent that the Portfolio may do so in accordance with applicable
law and the Prospectus and Statement of Additional Information, as they
may be amended from time to time, and without registering as a commodity
pool operator under the Commodity Exchange Act. Any Portfolio may engage
in transactions in put and call options on securities, indices and
currencies, spread transactions, forward and futures contracts on
securities, indices and currencies, put and call options on such futures
contracts, forward commitment transactions, forward foreign currency
exchange contracts, interest rate, mortgage and currency swaps and
interest rate floors and caps and may purchase hybrid instruments.

4. Make loans to others except for (a) the purchase of debt
securities; (b) entering into repurchase agreements; and (c) the lending
of its portfolio securities.

5. Borrow money, except that (i) each Portfolio may borrow from
banks in amounts up to 331/3% of its total assets for temporary or
emergency purposes, (ii) each Portfolio may borrow for investment
purposes to the maximum extent permissible under the 1940 Act (i.e.,
presently 50% of net assets), and (iii) a Portfolio may obtain such
short-term credit as may be necessary for the clearance of purchases and
sales of portfolio securities. This policy shall not prohibit a
Portfolio's engaging in reverse repurchase agreements, dollar rolls and
similar investment strategies described in the Prospectus and Statement
of Additional Information, as they may be amended from time to time.

B-30

<PAGE>

6. Issue senior securities as defined in the 1940 Act, except
that each Portfolio may enter into repurchase agreements, reverse
repurchase agreements, dollar rolls, lend its portfolio securities and
borrow money from banks, as described above, and engage in similar
investment strategies described in the Prospectus and Statement of
Additional Information, as they may be amended from time to time.

7. Engage in underwriting of securities issued by others, except
to the extent that the Portfolio may be deemed to be an underwriter in
connection with the disposition of portfolio securities of the Portfolio.

The following additional restrictions are not fundamental
policies and may be changed by the Directors without a vote of
shareholders. Each Portfolio may not:

8. Purchase securities on margin, provided that margin deposits
in connection with futures contracts, options on futures contracts and
other derivative instruments shall not constitute purchasing securities
on margin.

9. Pledge, mortgage or hypothecate its assets, except to the
extent necessary to secure permitted borrowings and, to the extent
related to the segregation of assets in connection with the writing of
covered put and call options and the purchase of securities or currencies
on a forward commitment or delayed-delivery basis and collateral and
initial or variation margin arrangements with respect to forward
contracts, options, futures contracts and options on futures contracts.
In addition, a Portfolio may pledge assets in reverse repurchase
agreements, dollar rolls and similar investment strategies described in
the Prospectus and Statement of Additional Information, as they may be
amended from time to time.

10. Invest in securities of other registered investment
companies, except by purchases in the open market, involving only
customary brokerage commissions and as a result of which not more than
10% of its total assets (determined at the time of investment) would be
invested in such securities, or except as part of a merger, consolidation
or other acquisition.

11. Enter into any repurchase agreement maturing in more than
seven days or investing in any other illiquid security if, as a result,
more than 15% of a Portfolio's net assets would be so invested.
Restricted securities eligible for resale pursuant to Rule 144A under the
Securities Act that have a readily available market, and commercial paper
exempted from registration under the Securities Act pursuant to Section
4(2) of that Act that may be offered and sold to "qualified institutional
buyers" as defined in Rule 144A, which the Adviser has determined to be
liquid pursuant to guidelines established by the Directors, will not be
considered illiquid for purposes of this 15% limitation on illiquid
securities.

B-31

<PAGE>

DIRECTORS AND OFFICERS

The following table lists the Directors and executive officers
of the Fund, their ages, business addresses, and principal occupations
during the past five years. The SunAmerica Mutual Funds ("SAMF") consist
of SunAmerica Equity Funds, SunAmerica Income Funds and SunAmerica Money
Market Funds, Inc. An asterisk indicates those Directors who are
interested persons of the Fund within the meaning of the 1940 Act.

Position Principal Occupations
Name, Age and Address with the Fund During Past 5 Years
- --------------------- ------------- -------------------
<S> <C> <C>
S. James Coppersmith, 65 Director Director/Trustee of the Boston Stock
Emerson College Exchange, Uno Restaurant Corp., Waban
100 Beacon Street Corp., Kushner-Locke Co., Chayron Inc.;
Boston, MA 02116 Chairman of the Board of Emerson
College; formerly, President and General
Manager, WCVB-TV, a division of the
Hearst Corporation, from 1982 to 1994
(retired); Director/ Trustee of the SAMF
and Anchor Series Trust ("AST").

Samuel M. Eisenstat, 58 Chairman of the Attorney in private practice; President and
430 East 86th Street Board Chief Executive Officer, Abjac Energy
New York, NY 10028 Corporation; Director/Trustee of Atlantic
Realty Trust, UMB Bank and Trust (a
subsidiary of United Mizrachi Bank),
North European Royalty Trust, Volt
Information Sciences Funding, Inc. (a
subsidiary of Volt Information Sciences,
Inc.) and Venture Partners International
(an Israeli venture capital fund); Chairman
of the Boards of Directors/Trustees of
SAMF and AST.

Stephen J. Gutman, 55 Director Partner and Chief Operating Officer of
515 East 79th Street B.B. Associates LLC (menswear specialty
New York, NY 10021 retailing and other activities) since May
1989; Director/Trustee of SAMF and AST.
</TABLE>

B-32

<PAGE>

<TABLE>
<CAPTION>
Position Principal Occupations
Name, Age and Address with the Fund During Past 5 Years
- --------------------- ------------- -------------------
<S> <C> <C>
Peter A. Harbeck,*44 Director and Director and President, SunAmerica Asset
The SunAmerica Center President Management Corp. ("SunAmerica");
733 Third Avenue Director, SunAmerica Capital Services,
New York, NY 10017-3204 Inc. ("SACS"), since February 1993;
Director and President, SunAmerica
Fund Services, Inc. ("SAFS"),
since May 1988; President,
SAMF and AST; Executive Vice
President and Chief Operating
Officer, SunAmerica, from
May 1988 to August 1995;
Executive Vice President,
SACS, from November 1991
to August 1995; Director,
Resources Trust Company.

J. Steven Neamtz,* 39 Vice President Executive Vice President, SunAmerica,
The SunAmerica Center since April 1996; President, SACS, since
733 Third Avenue April 1996; formerly, Executive Vice
New York, NY 10017-3204 President, New England Funds, L.P. from
July 1990 to April 1996.
1990 to April 1996.
Peter McMillan III,* 40 Director Executive Vice President and Chief
1 SunAmerica Center Investment Officer, SunAmerica
Los Angeles, CA 90067 Investments, Inc., since August 1989;

Director/Trustee
of the SAMF; Director,
Resources Trust Company.

Sebastiano Sterpa, 68 Director Founder of Sterpa Realty, Inc., a full
Suite 200 service real estate firm, since 1962;
200 West Glenoaks Blvd. Chairman of the Sterpa Group, real
Glendale, CA 91202 estate investments and management
company, since 1962; Director/Trustee
of the SAMF.
</TABLE>

B-33

<PAGE>

Position Principal Occupations
Name, Age and Address with the Fund During Past 5 Years
- --------------------- ------------- -------------------
<S> <C> <C>
Robert M. Zakem, *40 Secretary Senior Vice President and General
The SunAmerica Center Counsel, SunAmerica, since April 1993;
733 Third Avenue Executive Vice President, General
New York, NY 10017-3204 Counsel and Director, SACS, since

February 1993; Vice President,
General Counsel and Assistant
Secretary, SAFS, since January
1994; Vice President, SunAmerica
Series Trust ("SAST"), Anchor
Pathway Fund ("APF"); Assistant
Secretary, SAST and APF, since
September 1993; Vice President,
Seasons Series Trust ("Seasons"),
since April 1997; Assistant
Secretary, Seasons, since
April 1997.

Peter C. Sutton, *33 Treasurer Senior Vice President, SunAmerica, since
The SunAmerica Center April 1997; Treasurer, SAMF and AST,
733 Third Avenue since February 1996; Vice President,
New York, NY 10017-3204 SAST and APF, since October 1994; Vice
President, Seasons, since April 1997;
formerly, Vice President, SunAmerica,
from 1994 to 1997; Controller, SAMF
and AST, from March 1993 to February
1996; Assistant Controller, SAMF and
AST, from 1990 to 1993.
</TABLE>

Directors and officers of the Fund are also Directors and
officers of some or all of the other investment companies managed,
administered or advised by SunAmerica, and distributed by SunAmerica
Capital Services ("SACS" or the "Distributor") and other affiliates of
SunAmerica Inc.

The Fund pays each Director who is not an interested person of
the Fund, SunAmerica or any Adviser, nor a party to any Management
Agreement or Subadvisory Agreement (collectively, the "Disinterested
Directors") annual compensation in addition to reimbursement of
out-of-pocket expenses in connection with attendance at meetings of the
Directors. Specifically, each Disinterested Director receives an
aggregate of up to $60,000 in annual compensation for acting as director
or trustee to the SAMF, AST and/or the Fund, a pro rata portion of which,
based on relative net assets, is borne by the Fund.

In addition, each Disinterested Director also serves on the
Audit Committee of the Board of Directors. Each member of the Audit
Committee receives an aggregate of up to $5,000 in annual compensation
for serving on the Audit Committees of the SAMF, AST and/or the Fund, a
pro rata

B-34

<PAGE>

portion of which, based on relative net assets, is borne by the Fund. The
Fund also has a Nominating Committee, comprised solely of Disinterested
Directors, which recommends to the Directors those persons to be
nominated for election as Directors by shareholders and selects and
proposes nominees for election by Directors between shareholders'
meetings. Members of the Nominating Committee serve without compensation.

The Directors (and Trustees) of the SAMF, AST and the Fund have
adopted the SunAmerica Disinterested Trustees' and Directors' Retirement
Plan (the "Retirement Plan") effective January 1, 1993 for the
unaffiliated Directors. The Retirement Plan provides generally that if a
Disinterested Director who has at least 10 years of consecutive service
as a Disinterested Director of any of the SAMF, AST or the Fund (an
"Eligible Director") retires after reaching age 60 but before age 70 or
dies while a Director, such person will be eligible to receive a
retirement or death benefit from each SunAmerica mutual fund with respect
to which he or she is an Eligible Director. As of each birthday, prior to
the 70th birthday, each Eligible Director will be credited with an amount
equal to (i) 50% of his or her regular fees (excluding committee fees)
for services as a Disinterested Director of each SunAmerica mutual fund
for the calendar year in which such birthday occurs, plus (ii) 8.5% of
any amounts credited under clause (i) during prior years. An Eligible
Director may receive any benefits payable under the Retirement Plan, at
his or her election, either in one lump sum or in up to fifteen annual
installments.

The following table sets forth information summarizing the
compensation that the Fund paid each Disinterested Director for his
services as Director for the fiscal year ended October 31, 1997. The
Directors who are interested persons of the Fund receive no compensation.

COMPENSATION TABLE

Pension or Total Compensation
Aggregate Retirement Benefits Estimated Annual from Registrant and
Compensation Accrued as Part of Benefits Upon Fund Complex Paid
Director from Fund Fund Expenses* Retirement*+ to Directors*
- -------- --------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
S. James Coppersmith $4,570 $37,812 $29,670 $65,000
Samuel M. Eisenstat** $4,782 $33,285 $46,089 $69,000
Stephen J. Gutman $4,570 $34,414 $60,912 $65,000
Sebastiano Sterpa*** $4,570 $23,173 $7,900 $43,333

</TABLE>

* Information is for the five investment companies in the complex
which pay fees to these directors/trustees. The complex consists
of the SAMF, AST and the Fund.

** Mr. Eisenstat receives additional compensation for serving as
Chairman of each of the boards in the complex, $300 of which is
payable by the Fund.

*** Mr. Sterpa is not a trustee of AST.

+ Assuming participant elects to receive benefits in 15 yearly
installments.

B-35

<PAGE>

As of June 1, 1998, the Directors and officers of the Fund owned in
the aggregate less than 1% of the Fund's total outstanding shares.

The following shareholders owned of record or beneficially 5% or
more of the indicated Portfolio Class' shares outstanding as of June 1,
1998: Large-Cap Growth Portfolio - Class A - SunAmerica Inc., Los
Angeles, CA 90067 - owned beneficially 12%; Class B - Merrill Lynch,
Pierce, Fenner & Smith, Inc. ("Merrill Lynch"), Jacksonville, FL 32246 -
owned of record 12%; Class C - Keith Dillard, Salt Lake City, UT 84165 -
owned beneficially 6%; Merrill Lynch, Jacksonville, FL 32246 - owned of
record 20%; Evereen Clearing Corp., Milwaukee, WI 53202 - owned of record
6%; Mid-Cap Growth Portfolio - Class B - Merrill Lynch, Jacksonville, FL
32246 - owned of record 9%; Class C - Merrill Lynch, Jacksonville, FL
32246 - owned of record 32%; Tramco Inc. Profit Sharing Plan Trust,
Wichita, KS 67214 - owned beneficially 6%; Aggressive Growth Portfolio -
Class B - Merrill Lynch, Jacksonville, FL 32246 - owned of record 9%;
Class C - Merrill Lynch, Jacksonville, FL 32246 - owned of record 35%;
Tramco Inc. Profit Sharing Plan Trust, Wichita, KS 67214 - owned
beneficially 5%; Class Z - Fidelity Investments Institutional Operations
Co. ("FIIOC")As Agent for Certain Employee Benefit Plans, Covington, KY
41015, owned of record 62%; FIIOC As Agent for Certain Non-Qualified
Employee Benefit Plans, Covington, KY 41015, owned of record 37%;
Large-Cap Blend Portfolio - Class A - SunAmerica Inc., Los Angeles, CA
90067 - owned beneficially 51%; Class B - Merrill Lynch, Jacksonville, FL
32246 owned of record 7%; Class C - Merrill Lynch, Jacksonville, FL 32246
- - owned of record 21%; SunAmerica Asset Management Corp., New York, NY
10017 - owned beneficially 6%; Large-Cap Value Portfolio - Class B -
Merrill Lynch, Jacksonville, FL 32246 - owned of record 7%; Class C -
Merrill Lynch, Jacksonville, FL 32246 - owned of record 19%; Donaldson
Lufkin Jenrette Securities Corporation, Inc., owned beneficially 6%;
Value Portfolio - Class B - Merrill Lynch, Jacksonville, FL 32246 - owned
of record 8%; Class C - Merrill Lynch, Jacksonville, FL 32246, owned of
record 22%; Small-Cap Value Portfolio - Class B - Merrill Lynch,
Jacksonville, FL 32246 - owned of record 9%; Class C - Merrill Lynch,
Jacksonville, FL 32246 - owned of record 23%; Keith Dillard, Salt Lake
City, UT 84165 - owned beneficially 5%; International Equity Portfolio -
Class A - SunAmerica Inc., Account B, Los Angeles, CA 90067; owned
beneficially 5%; Class B - Merrill Lynch, Jacksonville, FL 32246 owned of
record 6%; Class C - Merrill Lynch, Jacksonville, FL 32246 - owned of
record 31%. A shareholder who owns beneficially, directly or indirectly,
25% or more of a Portfolio's outstanding voting securities may be deemed
to "control" (as defined in the 1940 Act) that Portfolio.

ADVISERS, DISTRIBUTOR AND ADMINISTRATOR

SunAmerica Asset Management Corp. SunAmerica, organized as a Delaware
corporation in 1982, is located at The SunAmerica Center, 733 Third
Avenue, New York, NY 10017-3204, and acts as the investment manager to
each of the Portfolios pursuant to the Investment Advisory and Management
Agreement (the "Management Agreement") with the Fund, on behalf of each
Portfolio. SunAmerica is an indirect wholly owned subsidiary of
SunAmerica Inc. SunAmerica Inc. is incorporated in the State of Maryland
and maintains its principal executive offices at 1 SunAmerica Center, Los
Angeles, CA 90067-6022, telephone (310) 772-6000.

Under the Management Agreement, and except as delegated to the
Advisers under the Subadvisory Agreements (as defined below), SunAmerica
manages the investment of the assets of each Portfolio and obtains and
evaluates economic, statistical and financial information to formulate
and implement investment policies for each Portfolio. Any investment
program undertaken by SunAmerica

B-36

<PAGE>

will at all times be subject to the policies and control of the
Directors. SunAmerica also provides certain administrative services to
each Portfolio.

Except to the extent otherwise specified in the Management
Agreement, each Portfolio pays, or causes to be paid, all other expenses
of the Fund and each of the Portfolios, including, without limitation,
charges and expenses of any registrar, custodian, transfer and dividend
disbursing agent; brokerage commissions; taxes; engraving and printing of
share certificates; registration costs of the Portfolios and their shares
under Federal and state securities laws; the cost and expense of
printing, including typesetting, and distributing Prospectuses and
Statements of Additional Information respecting the Portfolios, and
supplements thereto, to the shareholders of the Portfolios; all expenses
of shareholders' and Directors' meetings and of preparing, printing and
mailing proxy statements and reports to shareholders; all expenses
incident to any dividend, withdrawal or redemption options; fees and
expenses of legal counsel and independent accountants; membership dues of
industry associations; interest on borrowings of the Portfolios; postage;
insurance premiums on property or personnel (including Officers and
Directors) of the Fund which inure to its benefit; extraordinary expenses
(including, but not limited to, legal claims and liabilities and
litigation costs and any indemnification relating thereto); and all other
costs of the Fund's operation.

The annual rate of the investment advisory fees that apply to
each Portfolio are set forth in the Prospectus.

Effective June 17, 1997, with respect to the Mid-Cap Growth
Portfolio, Aggressive Growth Portfolio, Value Portfolio and International
Equity Portfolio, and the date of commencement of operations with respect
to the Large-Cap Growth Portfolio, Large-Cap Blend Portfolio, Large-Cap
Value Portfolio and Small-Cap Value Portfolio; SunAmerica has voluntarily
agreed to waive fees or reimburse expenses, if necessary, to keep
operating expenses at or below an annual rate of 1.78% of the Assets of
Class A shares and 2.43% of the Assets of Class B and Class C shares for
each such Portfolio (other than the International Equity Portfolio) and
2.03% of the Assets of Class A shares and 2.68% of the Assets of Class B
and Class C shares for the International Equity Portfolio. Prior to June
17, 1997, with respect to the Mid-Cap Growth Portfolio, Aggressive Growth
Portfolio, Value Portfolio and International Equity Portfolio, SunAmerica
voluntarily agreed to waive fees or reimburse expenses to keep annual
operating expenses at or below an annual rate of 1.90% of the Assets of
Class A shares and 2.55% of the Assets of Class B and Class C shares for
each such Portfolio (other than the International Equity Portfolio) and
2.15% of the Assets of Class A shares and 2.80% of the Assets of Class B
and Class C shares for the International Equity Portfolio. 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 potential reimbursements are accounted for as possible
contingent liabilities that are not recordable on the balance sheet of a
Portfolio until collection is probable, but appear as footnote disclosure
to each Portfolio's financial statements. At such time as it appears
probable that a Portfolio is able to effect such reimbursement and that
SunAmerica intends to seek such reimbursement, the amount of the
reimbursement will be accrued as an expense of the Portfolio for that
current period.

B-37

<PAGE>

The Management Agreement will continue in effect with respect to
each Portfolio, for a period of two years from the date of execution
unless terminated sooner, and thereafter from year to year, if approved
at least annually by vote of a majority of the Directors or by the
holders of a majority of the respective Portfolio's outstanding voting
securities. Any such continuation also requires approval by a majority of
the Disinterested Directors by vote cast in person at a meeting called
for such purpose. The Management Agreement may be terminated with respect
to a Portfolio at any time, without penalty, on 60 days' written notice
by the Directors, by the holders of a majority of the respective
Portfolio's outstanding voting securities or by SunAmerica. The
Management Agreement automatically terminates with respect to each
Portfolio in the event of its assignment (as defined in the 1940 Act and
the rules thereunder).

Under the terms of the Management Agreement, SunAmerica is not
liable to the Portfolios, or their shareholders, for any act or omission
by it or for any losses sustained by the Portfolios or their
shareholders, except in the case of willful misfeasance, bad faith, gross
negligence or reckless disregard of duty.

The Advisers. The organizations identified in the Prospectus act as
Advisers to the Fund and its Portfolios pursuant to the Subadvisory
Agreements with SunAmerica.

As described in the Prospectus, SunAmerica will initially
allocate the assets of each Portfolio equally among the Advisers for that
Portfolio, and subsequently, allocations of new cash flow and of
redemption requests will be made equally among the Advisers of each
Portfolio unless SunAmerica determines, subject to the review of the
Directors, that a different allocation of assets would be in the best
interests of a Portfolio and its shareholders. 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. In some
instances, where a reallocation results in any rebalancing of the
Portfolio from a previous allocation, the effect of the reallocation will
be to shift assets from a better performing Adviser to a portion of the
Portfolio with a relatively lower total return.

Each Adviser is paid monthly by SunAmerica a fee equal to a
percentage of the average daily net assets of the Portfolio allocated to
the Adviser. The aggregate annual rates, as a percentage of daily net
assets, of the fees payable by SunAmerica to the Advisers for each
Portfolio may vary according to the level of Assets of each Portfolio.
For the fiscal year ended October 31, 1997, SunAmerica paid fees to the
Advisers equal to the following aggregate annual rates, expressed as a
percentage of the Assets of each Portfolio: Large-Cap Growth Portfolio,
0.48%; Mid-Cap Growth Portfolio, 0.50%; Aggressive Growth Portfolio,
0.37%; Large-Cap Blend Portfolio, 0.32%; Large-Cap Value Portfolio,
0.41%; Value Portfolio, 0.50%; Small-Cap Value Portfolio, 0.55%; and
International Equity Portfolio, 0.65%.

B-38

<PAGE>

The following table sets forth the total advisory fees incurred
by each Portfolio pursuant to the Management Agreement, or waived by the
Adviser, for the fiscal year ended October 31, 1997.

ADVISORY FEES

ADVISORY FEES
PORTFOLIO ADVISORY FEES WAIVED
- --------- ------------- ------
Large-Cap Growth Portfolio $ 11,611 $ 6,846
Mid-Cap Growth Portfolio $390,221 $132,696
Aggressive Growth Portfolio $533,055 $136,500
Large-Cap Blend Portfolio $ 11,730 $ 6,854
Large-Cap Value Portfolio $ 11,729 $ 6,854
Value Portfolio $671,560 $188,985
Small-Cap Value Portfolio $ 12,079 $ 6,891
International Equity Portfolio $440,671 $147,973

The Subadvisory Agreements will continue in effect for a period
of two years from the date of their execution, unless terminated sooner.
They may be renewed from year to year thereafter, so long as continuance
is specifically approved at least annually in accordance with the
requirements of the 1940 Act. The Subadvisory Agreements provide that
they will terminate in the event of an assignment (as defined in the 1940
Act) or upon termination of the Management Agreement. Under the terms of
the Subadvisory Agreements, no Adviser is liable to the Portfolios, or
their shareholders, for any act or omission by it or for any losses
sustained by the Portfolios or their shareholders, except in the case of
willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties.

B-39

<PAGE>

The following table sets forth the total subadvisory fees
incurred by each Portfolio pursuant to the Subadvisory Agreements, for
the fiscal year ended October 31, 1997.

SUBADVISORY FEES

PORTFOLIO SUBADVISORY FEES
Large-Cap Growth Portfolio $ 5,613
Mid-Cap Growth Portfolio $195,077
Aggressive Growth Portfolio $199,051
Large-Cap Blend Portfolio $ 3,714
Large-Cap Value Portfolio $ 4,769
Value Portfolio $333,308
Small-Cap Value Portfolio $ 6,649
International Equity Portfolio $259,404

Personal Trading. The Fund and SunAmerica have adopted a written Code of
Ethics (the "Code") which prescribes general rules of conduct and sets
forth guidelines with respect to personal securities trading by "Access
Persons" thereof. An Access Person as defined in the Code is an
individual who is a trustee, director, officer, general partner or
advisory person of the Fund or SunAmerica. The guidelines on personal
securities trading include: (i) securities being considered for purchase
or sale, or purchased or sold, by any investment company advised by
SunAmerica, (ii) Initial Public Offerings, (iii) private placements, (iv)
blackout periods, (v) short-term trading profits, (vi) gifts, and (vii)
services as a director. These guidelines are substantially similar to
those contained in the Report of the Advisory Group on Personal Investing
issued by the Investment Company Institute's Advisory Panel. SunAmerica
reports to the Board of Directors on a quarterly basis, as to whether
there were any violations of the Code by Access Persons of the Fund or
SunAmerica during the quarter.

The Advisers have each adopted a written Code of Ethics, and
have represented that the provisions of such Code of Ethics are
substantially similar to those in the Code. Further, the Advisers report
to SunAmerica on a quarterly basis, as to whether there were any Code of
Ethics violations by employees thereof who may be deemed Access Persons
of the Fund insofar as such violations related to the Fund. In turn,
SunAmerica reports to the Board of Directors as to whether there were any
violations of the Code by Access Persons of the Fund or SunAmerica.

The Distributor. The Fund, on behalf of each Portfolio, has entered into
a distribution agreement (the "Distribution Agreement") with the
Distributor, a registered broker-dealer and an indirect wholly owned
subsidiary of SunAmerica Inc., to act as the principal underwriter of the
shares of each Portfolio. The address of the Distributor is The
SunAmerica Center, 733 Third Avenue, New York, NY 10017-3204. The
Distribution Agreement provides that the Distributor has the exclusive
right to distribute shares of the Portfolios through its registered
representatives and authorized broker-dealers. The Distribution Agreement
also provides that the Distributor will pay the promotional expenses,
including the incremental cost of printing prospectuses, annual reports
and other periodic reports respecting each Portfolio, for

B-40

<PAGE>

distribution to persons who are not shareholders of such Portfolio and
the costs of preparing and distributing any other supplemental sales
literature. However, certain promotional expenses may be borne by the
Portfolio (see "Distribution Plans" below).

SACS serves as Distributor of Class Z shares, with respect to
the Aggressive Growth Portfolio, Large-Cap Value Portfolio, Value
Portfolio, Small-Cap Value Portfolio and International Equity Portfolio,
and incurs the expenses of distributing the Portfolio's Class Z shares
under the Distribution Agreement, none of which are reimbursed or paid by
the Fund.

The Distribution Agreement with respect to each Portfolio will
remain in effect for two years from the date of execution unless
terminated sooner, and thereafter from year to year if such continuance
is approved at least annually by the Directors, including a majority of
the Disinterested Directors. The Fund and the Distributor each has the
right to terminate the Distribution Agreement with respect to a Portfolio
on 60 days' written notice, without penalty. The Distribution Agreement
will terminate automatically in the event of its assignment as defined in
the 1940 Act and the rules thereunder.

The Distributor may, from time to time, pay additional
commissions or promotional incentives to brokers, dealers or other
financial services firms that sell shares of the Portfolios. In some
instances, such additional commissions, fees or other incentives may be
offered only to certain firms, including Royal Alliance Associates,
SunAmerica Securities, Inc., Koegler Morgan & Company, Financial Service
Corporation and Advantage Capital Corporation, affiliates of the
Distributor, that sell or are expected to sell during specified time
periods certain minimum amounts of shares of the Portfolios, or of other
funds underwritten by the Distributor. In addition, the terms and
conditions of any given promotional incentive may differ from firm to
firm. Such differences will, nevertheless, be fair and equitable, and
based on such factors as size, geographic location, or other reasonable
determinants, and will in no way affect the amount paid to any investor.

Distribution Plans. As indicated in the Prospectus, the Directors of the
Fund have adopted Distribution Plans (the "Class A Plan," the "Class B
Plan" and the "Class C Plan" and collectively, the "Distribution Plans")
pursuant to Rule 12b-1 under the 1940 Act. There is no Distribution Plan
in effect for Class Z shares. Reference is made to "Management of the
Fund - Distribution Plans" in the Prospectus for certain information with
respect to the Distribution Plans.

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 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 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, the Class B Plan or the Class C Plan will 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

B-41

<PAGE>

continuing account maintenance. In this regard, some payments are used to
compensate broker-dealers with trail commissions or account maintenance
and service fees in an amount up to 0.25% per year of the assets
maintained in a Portfolio by their customers.

DISTRIBUTION AND ACCOUNT MAINTENANCE AND SERVICE FEES

PORTFOLIO Class A Class B Class C
------- ------- -------
Large-Cap Growth Portfolio $3,983 $173 $59
Mid-Cap Growth Portfolio $73,691 $164,888 $14,787
Aggressive Growth Portfolio $106,377 $209,795 $19,327
Large-Cap Blend Portfolio $4,000 $239 $63
Large-Cap Value Portfolio $3,986 $281 $60
Value Portfolio $116,913 $309,027 $28,306
Small-Cap Value Portfolio $3,849 $900 $184
International Equity Portfolio $77,057 $162,796 $17,650

Continuance of the Distribution Plans with respect to each
Portfolio is subject to annual approval by vote of the Directors,
including a majority of the Independent Directors. A Distribution Plan
may not be amended to increase materially the amount authorized to be
spent thereunder with respect to a class of shares of a Portfolio,
without approval of the shareholders of the affected class of shares of
the Portfolio. In addition, all material amendments to the Distribution
Plans must be approved by the Directors in the manner described above. A
Distribution Plan may be terminated at any time with respect to a
Portfolio without payment of any penalty by vote of a majority of the
Independent Directors or by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the affected class of shares
of the Portfolio. So long as the Distribution Plans are in effect, the
election and nomination of the Independent Directors of the Fund shall be
committed to the discretion of the Independent Directors. In the
Directors' quarterly review of the Distribution Plans, they will consider
the continued appropriateness of, and the level of, compensation provided
in the Distribution Plans. In their consideration of the Distribution
Plans with respect to a Portfolio, the Directors must consider all
factors they deem relevant, including information as to the benefits of
the Portfolio and the shareholders of the relevant class of the
Portfolio.

The Administrator. The Fund has entered into a Service Agreement, under
the terms of which SunAmerica Fund Services ("SAFS"), an indirect wholly
owned subsidiary of SunAmerica Inc., acts as a servicing agent assisting
State Street Bank and Trust Company ("State Street") in connection with
certain services offered to the shareholders of each of the Portfolios.
Under the terms of the Service Agreement, SAFS may receive reimbursement
of its costs in providing such shareholder services. SAFS is located at
The SunAmerica Center, 733 Third Avenue, New York, NY 10017-3204.

B-42

<PAGE>

The Service Agreement will remain in effect for two years from
the date of approval with respect to each Portfolio and from year to year
thereafter provided its continuance is approved annually by vote of the
Directors including a majority of the Disinterested Directors.

Pursuant to the Service Agreement, as compensation for services
rendered, SAFS receives a fee from the Fund, computed and payable monthly
based upon an annual rate of 0.22% of average daily net assets. This fee
represents the full cost of providing shareholder and transfer agency
services to the Fund. From this fee, SAFS pays a fee to State Street, and
its affiliate, National Financial Data Services ("NFDS" and with State
Street, the "Transfer Agent") (other than out-of-pocket charges which
would be paid by the Fund). No portion of such fee is paid or reimbursed
by Class Z shares. For further information regarding the Transfer Agent
see the section entitled "Additional Information" below.

PORTFOLIO TRANSACTIONS AND BROKERAGE

As discussed in the Prospectus, the Advisers are responsible for
decisions to buy and sell securities for each respective Portfolio,
selection of broker-dealers and negotiation of commission rates.
Purchases and sales of securities on a securities exchange are effected
through broker-dealers who charge a negotiated commission for their
services. Orders may be directed to any broker-dealer including, to the
extent and in the manner permitted by applicable law, an affiliated
brokerage subsidiary of SunAmerica or another Adviser.

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 amount of compensation
to the underwriter, generally referred to as the underwriter's concession
or discount. On occasion, certain money market instruments may be
purchased directly from an issuer, in which case no commissions or
discounts are paid.

An Adviser's primary consideration in effecting a security
transaction is to obtain the best net price and the most favorable
execution of the order. However, the Adviser may select broker-dealers
that provide it with research services and may cause a Portfolio to pay
such broker-dealers commissions that exceed those that other
broker-dealers may have charged, if in its view the commissions are
reasonable in relation to the value of the brokerage and/or research
services provided by the broker-dealer. Certain research services
furnished by brokers may be useful to the Adviser with respect to clients
other than the Fund. No specific value can be determined for research
services furnished without cost to the Adviser by a broker. The Advisers
are of the opinion that because the material must be analyzed and
reviewed by its staff, its receipt does not tend to reduce expenses, but
may be beneficial in supplementing the Adviser's research and analysis.
Therefore, it may tend to benefit the Portfolio by improving the quality
of the Adviser's investment advice. The investment advisory fees paid by
the Portfolio are not reduced because the Adviser receives such services.
When making purchases of underwritten issues with fixed underwriting
fees, the Adviser may designate the use of broker-dealers who have agreed
to provide the Adviser with certain statistical, research and other
information.

Subject to applicable law and regulations, consideration may
also be given to the willingness of particular brokers to sell shares of
a Portfolio as a factor in the selection of brokers for transactions
effected on behalf of a Portfolio, subject to the requirement of best
price and execution.

B-43

<PAGE>

Although the objectives of other accounts or investment
companies that the Adviser manages may differ from those of the
Portfolio, it is possible that, at times, identical securities will be
acceptable for purchase by one or more of the Portfolios and one or more
other accounts or investment companies that the Adviser manages. However,
the position of each account or company in the securities of the same
issue may vary with the length of the time that each account or company
may choose to hold its investment in those securities. The timing and
amount of purchase by each account and company will also be determined by
its cash position. If the purchase or sale of a security is consistent
with the investment policies of one or more of the Portfolios and one or
more of these other accounts or companies is considered at or about the
same time, transactions in such securities will be allocated in a manner
deemed equitable by the Adviser. The Adviser may combine such
transactions, in accordance with applicable laws and regulations.
However, simultaneous transactions could adversely affect the ability of
a Portfolio to obtain or dispose of the full amount of a security, which
it seeks to purchase or sell, or the price at which such security can be
purchased or sold.

The following table sets forth the brokerage commissions paid by
the Portfolios and the amounts of the brokerage commissions which were
paid to affiliated broker-dealers by the Portfolios for the fiscal year
ended October 31, 1997.

BROKERAGE COMMISSIONS

<TABLE>
<CAPTION>
Percentage Paid
Aggregate Brokerage Amount Paid to to Affiliated
PORTFOLIO Commissions Affiliated Broker-Dealers Broker-Dealers
----------- ------------------------- --------------
<S> <C> <C> <C>
Large-Cap Growth Portfolio $14,945 -- --
Mid-Cap Growth Portfolio $86,452 -- --
Aggressive Growth Portfolio $128,678 -- --
Large-Cap Blend Portfolio $17,998 -- --
Large-Cap Value Portfolio $20,352 -- --
Value Portfolio $218,608 $47,675 21.80%
Small-Cap Value Portfolio $30,356 -- --
International Equity Portfolio $338,366 $61,259 18.10%
</TABLE>

ADDITIONAL INFORMATION REGARDING PURCHASE OF SHARES

Shares of each of the Portfolios are sold at the respective net
asset value next determined 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).
Reference is made to "Purchase of Shares" in the Prospectus for certain
information as to the purchase of Portfolio shares.

B-44

<PAGE>

The following table sets forth the front-end sales concessions
with respect to Class A shares of each Portfolio, the amount of the
front-end sales concessions which was reallowed to affiliated
broker-dealers, and the contingent deferred sales charges with respect to
Class B and Class C shares of each Portfolio, received by the Distributor
for the fiscal year ended October 31, 1997.

<TABLE>
<CAPTION>
Contingent
Front-End Sales Amount Reallowed Amount Reallowed Contingent Deferred Deferred
Concessions- to Affiliated to Non-Affiliated Sales Charge- Sales Charge-
Portfolio Class A Shares Broker-Dealers Broker-Dealers Class B Shares Class C Shares
- --------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Large-Cap Growth
Portfolio $15,599 $2,885 $10,059 -- --

Mid-Cap Growth Portfolio $802,237 $257,754 $440,666 $25,643 $268

Aggressive Growth
Portfolio $1,394,623 $545,170 $668,387 $26,249 $937

Large-Cap Blend Portfolio $22,528 $9,732 $9,440 -- --

Large-Cap Value Portfolio $38,564 $6,352 $25,006 -- --

Value Portfolio $1,925,092 $715,034 $949,290 $30,795 $945

Small-Cap Value Portfolio $59,419 $18,399 $32,100 -- --

International Equity
Portfolio $699,157 $225,890 $383,626 $18,872 $426
</TABLE>

Waiver of Contingent Deferred Sales Charges. As discussed under "Purchase
of Shares" in the Prospectus, the CDSC may be waived on redemptions of
Class B and Class C shares under certain

circumstances. The conditions set forth below are applicable with respect
to the following situations with the proper documentation:

Death. CDSCs may be waived on redemptions within one year
following the death (i) of the sole shareholder on an individual account,
(ii) of a joint tenant where the surviving joint tenant is the deceased's
spouse, or (iii) of the beneficiary of a Uniform Gifts to Minors Act,
Uniform Transfers to Minors Act or other custodial account. The CDSC
waiver is also applicable in the case where the shareholder account is
registered as community property. If, upon the occurrence of one of the
foregoing, the account is transferred to an account registered in the
name of the deceased's estate, the CDSC will be waived on any redemption
from the estate account occurring within one year of the death. If Class
B shares are not redeemed within one year of the death, they will remain
Class B shares and be subject to the applicable CDSC, when redeemed.

Disability. A CDSC may be waived on redemptions occurring within
one year after the sole shareholder on an individual account or a joint
tenant on a spousal joint tenant account becomes disabled (as defined in
Section 72(m)(7) of the Internal Revenue Code). To be eligible for such
waiver, (i) the disability must arise after the purchase of shares and
(ii) the disabled shareholder must have been under age 65 at the time of
the initial determination of disability. If the account is transferred to
a new registration and then a redemption is requested, the applicable
CDSC will be charged.

B-45

<PAGE>

Purchases through the Distributor. An investor may purchase shares of a
Portfolio through dealers which have entered into selected dealer
agreements with the Distributor. An investor's dealer who has entered
into a distribution arrangement with the Distributor is expected to
forward purchase orders and payment promptly to the Portfolio. Orders
received by the Distributor before the close of business will be executed
at the offering price determined at the close of regular trading on the
New York Stock Exchange (the "NYSE") that day. Orders received by the
Distributor after the close of business will be executed at the offering
price determined after the close of the NYSE on the next trading day. The
Distributor reserves the right to cancel any purchase order for which
payment has not been received by the fifth business day following the
investment. A Portfolio will not be responsible for delays caused by
dealers.

Purchase by Check. Checks should be made payable to the specific
Portfolio or to "SunAmerica Funds." If the payment is for a retirement
plan account for which SunAmerica serves as fiduciary, please note on the
check that payment is for such an account. In the case of a new account,
purchase orders by check must be submitted directly by mail to SunAmerica
Fund Services, Inc., Mutual Fund Operations, The SunAmerica Center, 733
Third Avenue, New York, New York 10017-3204, together with payment for
the purchase price of such shares and 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 Portfolio account number 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. Certified checks are not necessary but
checks are accepted subject to collection at full face value in United
States funds and must be drawn on a bank located in the United States.
Upon receipt of the completed New Account Application and payment check,
the Transfer Agent will purchase full and fractional shares of the
applicable Portfolio at the net asset value next computed after the check
is received, plus the applicable sales charge. Subsequent purchases of
shares of each Portfolio may be purchased directly through the Transfer
Agent. 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. There are restrictions
on the redemption of shares purchased by check for which funds are being
collected. (See "Redemption of Shares" in the Prospectus.)

Purchase through SAFS. SAFS will effect a purchase order on behalf of a
customer who has an investment account upon confirmation of a verified
credit balance at least equal to the amount of the purchase order
(subject to the minimum $500 investment requirement for wire orders). If
such order is received at or prior to the Fund's close of business, the
purchase of shares of a Fund will be effected on that day. If the order
is received after the Fund's close of business, the order will be
effected on the next business day.

Purchase by Federal Funds Wire. An investor may make purchases by having
his or her bank wire Federal funds to the Fund's Transfer Agent. Federal
funds purchase orders will be accepted only on a day on which the Fund
and the Transfer Agent are open for business. In order to insure prompt
receipt of a Federal funds wire, it is important that these steps be
followed:

B-46

<PAGE>

1. You must have an existing SunAmerica Fund Account before
wiring funds. To establish an account, complete the New
Account Application and send it via facsimile to SAFS at:
(212) 551-5343.

2. Call SunAmerica Fund Services' Shareholder/Dealer Services,
toll free at (800) 858-8850, extension 5125 to obtain your
new account number.

3. Instruct the bank to wire the specified amount to the
Transfer Agent: State Street Bank and Trust Company,
Boston, MA, ABA# 0110-00028; DDA# 99029712, SunAmerica
[name of Portfolio, Class __] (include shareholder name and
account number).

Waiver of Sales Charges with Respect to Certain Purchases of Class A
Shares. 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 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 certain qualified retirement
plans or employee benefit plans (other than IRAs), which are sponsored or
administered by SunAmerica or an affiliate thereof. Such plans may
include certain employee benefit plans qualified under Sections 401 or
457 of the Internal Revenue Code (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 Internal Revenue
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 SAMF) 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 purchases and all such transactions for the plan are
executed through a single omnibus account. Further, the sales charge is
waived with respect to shares purchased by "wrap accounts" for the
benefit of clients of broker-dealers, financial institutions, financial
planners or registered investment advisers adhering to the following
standards established by the Distributor: (i) the broker-dealer,
financial institution or financial planner charges its client(s) an
advisory fee based on the assets under management on an annual basis, and
(ii) such broker-dealer, financial institution or financial planner does
not advertise that shares of the Portfolio may be purchased by clients at
net asset value. Shares purchased under this waiver may not be resold
except to the Portfolio. Shares are offered at net asset value to the
foregoing persons because of anticipated economies in sales effort and
sales related expenses. Reductions in sales charges apply to purchases or
shares by a "single person" including an individual; members of a family
unit comprising husband, wife and minor children; or a trustee or other
fiduciary purchasing for a single fiduciary account. Complete details
concerning how an investor may purchase shares at reduced sales charges
may be obtained by contacting the Distributor.

Reduced Sales Charges (Class A Shares only). As discussed under "Purchase
of Shares" in the Prospectus, investors in Class A shares of a Portfolio
may be entitled to reduced sales charges pursuant to the following
special purchase plans made available by the Fund.

B-47

<PAGE>

Combined Purchase Privilege. The following persons may qualify
for the sales charge reductions or eliminations by combining purchases of
Portfolio shares into a single transaction:

(i) an individual, or a "company" as defined in Section 2(a)(8)
of the 1940 Act (which includes corporations which are corporate
affiliates of each other);

(ii) an individual, his or her spouse and their minor children,
purchasing for his, her or their own account;

(iii) a trustee or other fiduciary purchasing for a single trust
estate or single fiduciary account (including a pension, profit-sharing,
or other employee benefit trust created pursuant to a plan qualified
under Section 401 of the Code);

(iv) tax-exempt organizations qualifying under Section 501(c)(3)
of the Code (not including 403(b) plans);

(v) employee benefit plans of a single employer or of affiliated
employers, other than 403(b) plans; and

(vi) group purchases as described below.

A combined purchase currently may also include shares of other
funds in the SAMF (other than money market funds) purchased at the same
time through a single investment dealer, if the dealer places the order
for such shares directly with the Distributor.

Rights of Accumulation. A purchaser of Portfolio shares may
qualify for a reduced sales charge by combining a current purchase (or
combined purchases as described above) with shares previously purchased
and still owned; provided the cumulative value of such shares (valued at
cost or current net asset value, whichever is higher), amounts to $50,000
or more. In determining the shares previously purchased, the calculation
will include, in addition to other Class A shares of the particular
Portfolio that were previously purchased, shares of the other classes of
the same Portfolio, as well as shares of any class of any other Portfolio
or of any of the other Portfolios advised by SunAmerica, as long as such
shares were sold with a sales charge or acquired in exchange for shares
purchased with such a sales charge.

The shareholder's dealer, if any, or the shareholder, must
notify the Distributor at the time an order is placed of the
applicability of the reduced charge under the Right of Accumulation. Such
notification must be in writing by the dealer or shareholder when such an
order is placed by mail. The reduced sales charge will not be granted if:
(a) such information is not furnished at the time of the order; or (b) a
review of the Distributor's or the Transfer Agent's records fails to
confirm the investor's represented holdings.

Letter of Intent. A reduction of sales charges is also available
to an investor who, pursuant to a written Letter of Intent which is set
forth in the New Account Application in the Prospectus, establishes a
total investment goal in Class A shares of one or more Portfolios to be
achieved through any number of investments over a thirteen-month period,
of $50,000 or more. Each investment in such Portfolios made during the
period will be subject to a reduced sales charge applicable to the goal
amount. The initial purchase must be at least 5% of the stated investment
goal and shares totaling 5% of the dollar

B-48

<PAGE>

amount of the Letter of Intent will be held in escrow by the Transfer
Agent, in the name of the investor. Shares of any class of shares of any
Portfolio, or of other funds advised by SunAmerica which impose a sales
charge at the time of purchase, which the investor intends to purchase or
has previously purchased during a 30-day period prior to the date of
execution of the Letter of Intent and still owns, may also be included in
determining the applicable reduction; provided, the dealer or shareholder
notifies the Distributor of such prior purchase(s).

The Letter of Intent does not obligate the investor to purchase,
nor the Fund to sell, the indicated amounts of the investment goal. In
the event the investment goal is not achieved within the thirteen-month
period, the investor is required to pay the difference between the sales
charge otherwise applicable to the purchases made during this period and
sales charges actually paid. Such payment may be made directly to the
Distributor or, if not paid, the Distributor is authorized by the Letter
of Intent to liquidate a sufficient number of escrowed shares to obtain
such difference. If the goal is exceeded and purchases pass the next
sales charge break-point, the sales charge on the entire amount of the
purchase that results in passing that break-point, and on subsequent
purchases, will be subject to a further reduced sales charge in the same
manner as set forth above under "Rights of Accumulation," but there will
be no retroactive reduction of sales charges on previous purchases. At
any time while a Letter of Intent is in effect, a shareholder may, by
written notice to the Distributor, increase the amount of the stated
goal. In that event, shares of the applicable Portfolio purchased during
the previous 90-day period and still owned by the shareholder will be
included in determining the applicable sales charge. The 5% escrow and
the minimum purchase requirement will be applicable to the new stated
goal. Investors electing to purchase shares of one or more of the
Portfolios pursuant to this purchase plan should carefully read such
Letter of Intent.

Reduced Sales Charge for Group Purchases. Members of qualified
groups may purchase Class A shares of the Portfolios under the combined
purchase privilege as described above.

To receive a rate based on combined purchases, group members
must purchase Class A shares of a Portfolio through a single investment
dealer designated by the group. The designated dealer must transmit each
member's initial purchase to the Distributor, together with payment and
completed New Account Application. After the initial purchase, a member
may send funds for the purchase of Class A shares directly to the
Transfer Agent. Purchases of a Portfolio's shares are made at the public
offering price based on the net asset value next determined after the
Distributor or the Transfer Agent receives payment for the Class A
shares. The minimum investment requirements described above apply to
purchases by any group member.

Qualified groups include the employees of a corporation or a
sole proprietorship, members and employees of a partnership or
association, or other organized groups of persons (the members of which
may include other qualified groups) provided that: (i) the group has at
least 25 members of which at least ten members participate in the initial
purchase; (ii) the group has been in existence for at least six months;
(iii) the group has some purpose in addition to the purchase of
investment company shares at a reduced sales charge; (iv) the group's
sole organizational nexus or connection is not that the members are
credit card customers of a bank or broker-dealer, clients of an
investment adviser or security holders of a company; (v) the group agrees
to provide its designated investment dealer access to the group's
membership by means of written communication or direct presentation to
the membership at a meeting on not less frequently than an annual basis;
(vi) the group or its investment dealer will provide annual
certification, in form satisfactory to the Transfer Agent, that the group
then has at least 25 members and

B-49

<PAGE>

that at least ten members participated in group purchases during the
immediately preceding 12 calendar months; and (vii) the group or its
investment dealer will provide periodic certification, in form
satisfactory to the Transfer Agent, as to the eligibility of the
purchasing members of the group.

Members of a qualified group include: (i) any group which meets
the requirements stated above and which is a constituent member of a
qualified group; (ii) any individual purchasing for his or her own
account who is carried on the records of the group or on the records of
any constituent member of the group as being a good standing employee,
partner, member or person of like status of the group or constituent
member; or (iii) any fiduciary purchasing shares for the account of a
member of a qualified group or a member's beneficiary. For example, a
qualified group could consist of a trade association which would have as
its members individuals, sole proprietors, partnerships and corporations.
The members of the group would then consist of the individuals, the sole
proprietors and their employees, the members of the partnership and their
employees, and the corporations and their employees, as well as the
trustees of employee benefit trusts acquiring a Portfolio's shares for
the benefit of any of the foregoing.

Interested groups should contact their investment dealer or the
Distributor. The Fund reserves the right to revise the terms of or to
suspend or discontinue group sales with respect to shares of the
Portfolio at any time.

ADDITIONAL INFORMATION REGARDING REDEMPTION OF SHARES

Reference is made to "Redemption of Shares" in the Prospectus
for certain information as to the redemption of Portfolio shares.

If the Directors determine that it would be detrimental to the
best interests of the remaining shareholders of a Portfolio to make
payment wholly or partly in cash, the Fund, having filed with the SEC a
notification of election pursuant to Rule 18f-1 on behalf of each of the
Portfolios, may pay the redemption price in whole, or in part, by a
distribution in kind of securities from a Portfolio in lieu of cash. In
conformity with applicable rules of the SEC, the Portfolios are committed
to pay in cash all requests for redemption, by any shareholder of record,
limited in amount with respect to each shareholder during any 90-day
period to the lesser of (i) $250,000, or (ii) 1% of the net asset value
of the applicable Portfolio at the beginning of such period. If shares
are redeemed in kind, the redeeming shareholder would incur brokerage
costs in converting the assets into cash. The method of valuing portfolio
securities is described below in the section entitled "Determination of
Net Asset Value," and such valuation will be made as of the same time the
redemption price is determined.

DETERMINATION OF NET ASSET VALUE

The Fund 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 each class's net assets by the shares
outstanding of such class.

Stocks are valued based upon closing sales prices reported on
recognized securities exchanges or, for listed securities having no sales
reported and for unlisted securities, upon last reported bid prices.
Non-convertible bonds, debentures, other long-term debt securities and
short-term securities with original or remaining maturities in excess of
60 days, are normally valued at prices obtained for the day of

B-50

<PAGE>

valuation from a bond pricing service of a major dealer in bonds, when
such prices are available; however, in circumstances in which the
SunAmerica deems it appropriate to do so, an over-the-counter or exchange
quotation at the mean of representative bid or asked prices may be used.
Securities traded primarily on securities exchanges outside the United
States are valued at the last sale price on such exchanges on the day of
valuation, or if there is no sale on the day of valuation, at the
last-reported bid price. If a security's price is available from more
than one foreign exchange, a Portfolio uses the exchange that is the
primary market for the security. Short-term securities with 60 days or
less to maturity are amortized to maturity based on their cost to the
Fund if acquired within 60 days of maturity or, if already held by the
Fund on the 60th day, are amortized to maturity based on the value
determined on the 61st day. Options traded on national securities
exchanges are valued as of the close of the exchange on which they are
traded. Futures and options traded on commodities exchanges are valued at
their last sale price as of the close of such exchange. Other securities
are valued on the basis of last sale or bid price (if a last sale price
is not available) in what is, in the opinion of the SunAmerica, the
broadest and most representative market, that may be either a securities
exchange or the over-the-counter market. Where quotations are not readily
available, securities are valued at fair value as determined in good
faith in accordance with procedures adopted by the Board of Directors.
The fair value of all other assets is added to the value of securities to
arrive at the respective Portfolio's total assets.

A Portfolio's liabilities, including proper accruals of expense
items, are deducted from total assets.

PERFORMANCE DATA

Each Portfolio may advertise performance data that reflects
various measures of total return and each Portfolio may advertise data
that reflects yield. An explanation of the data presented and the methods
of computation that will be used are as follows.

A Portfolio's performance may be compared to the historical
returns of various investments, performance indices of those investments
or economic indicators, including, but not limited to, stocks, bonds,
certificates of deposit, money market funds and U.S. Treasury Bills.
Certain of these alternative investments may offer fixed rates of return
and guaranteed principal and may be insured.

Average annual total return is determined separately for Class
A, Class B, Class C and Class Z shares in accordance with a formula
specified by the SEC. Average annual total return is computed by finding
the average annual compounded rates of return for the 1-, 5-, and 10-year
periods or for the lesser included periods of effectiveness. The formula
used is as follows:
n
P(1 + T) = ERV

P = a hypothetical initial purchase payment of $1,000
T = average annual total return
N = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1-, 5-, or 10- year periods at the
end of the 1-, 5-, or 10-year periods (or fractional portion thereof).

B-51

<PAGE>

The above formula assumes that:

1. The maximum sales load (i.e., either the front-end sales
load in the case of the Class A shares or the deferred
sales load that would be applicable to a complete
redemption of the investment at the end of the specified
period in the case of the Class B or Class C shares) is
deducted from the initial $1,000 purchase payment;

2. All dividends and distributions are reinvested at net asset
value; and

3. Complete redemption occurs at the end of the 1-, 5-, or
10- year periods or fractional portion thereof with all
nonrecurring charges deducted accordingly.

Each Portfolios' average annual total return for the 1-, 5- and
10-year periods (or from date of inception, if sooner) ended October 31,
1997 is as follows:

<TABLE>
<CAPTION>
Since One Five Ten
Class A Shares Inception Year Years Years
- -------------- --------- ---- ----- -----
<S> <C> <C> <C> <C>
Large-Cap Growth Portfolio (5.68%)(1) N/A N/A N/A
Mid-Cap Growth Portfolio 9.68% N/A N/A N/A
Aggressive Growth Portfolio 27.20% N/A N/A N/A
Large-Cap Blend Portfolio (4.16%)(1) N/A N/A N/A
Large-Cap Value Portfolio (5.12%)(1) N/A N/A N/A
Value Portfolio 28.72% N/A N/A N/A
Small-Cap Value Portfolio (2.88%)(1) N/A N/A N/A
International Equity Portfolio (0.32%) N/A N/A N/A
</TABLE>

- ----------------
(1) From date of inception of October 15, 1997.

B-52

<PAGE>

<TABLE>
<CAPTION>
Since One Five Ten
Class B Shares Inception Year Years Years
- -------------- --------- ---- ----- -----
<S> <C> <C> <C> <C>
Large-Cap Growth Portfolio (5.68%)(1) N/A N/A N/A
Mid-Cap Growth Portfolio 9.04% N/A N/A N/A
Aggressive Growth Portfolio 26.40% N/A N/A N/A
Large-Cap Blend Portfolio (4.32%)(1) N/A N/A N/A
Large-Cap Value Portfolio (5.12%)(1) N/A N/A N/A
Value Portfolio 28.00% N/A N/A N/A
Small-Cap Value Portfolio (2.88%)(1) N/A N/A N/A
International Equity Portfolio (0.96%) N/A N/A N/A
</TABLE>

- ----------------
(1) From date of inception of October 15, 1997.

<TABLE>
<CAPTION>
Since One Five Ten
Class C Shares Inception Year Years Years
- -------------- --------- ---- ----- -----
<S> <C> <C> <C> <C>
Large-Cap Growth Portfolio (5.76%)(1) N/A N/A N/A
Mid-Cap Growth Portfolio 14.33% N/A N/A N/A
Aggressive Growth Portfolio 18.09% N/A N/A N/A
Large-Cap Blend Portfolio (4.24%)(1) N/A N/A N/A
Large-Cap Value Portfolio (5.12%)(1) N/A N/A N/A
Value Portfolio 17.99% N/A N/A N/A
Small-Cap Value Portfolio (2.88%)(1) N/A N/A N/A
International Equity Portfolio (1.75%) N/A N/A N/A
</TABLE>

- ----------------
(1) From date of inception of October 15, 1997.

Each Portfolio may advertise cumulative, rather than average
return, for each class of its shares for periods of time other than the
1-, 5-, and 10-year periods or fractions thereof, as discussed above.
Such return data will be computed in the same manner as that of average
annual total return, except that the actual cumulative return will be
computed.

B-53

<PAGE>

Comparisons

Each Portfolio may compare its total return or yield to similar
measures as calculated by various publications, services, indices, or
averages. Such comparisons are made to assist in evaluating an investment
in a Portfolio. The following references may be used:

a) Dow Jones Composite Average or its component averages -- an
unmanaged index composed of 30 blue-chip industrial corporation stocks
(Dow Jones Industrial Average), 15 utilities company stocks (Dow Jones
Utilities Average), and 20 transportation company stocks (Dow Jones
Transportation Average). Comparisons of performance assume reinvestment
of dividends.

b) Standard & Poor's 500 Stock Index or its component indices --
an unmanaged index composed of 400 industrial stocks, 40 financial
stocks, 40 utilities stocks, and 20 transportation stocks.
Comparisons of performance assume reinvestment of dividends.

Standard & Poor's 100 Stock Index -- an unmanaged index
based on the prices of 100 blue chip stocks, including 92 industrials,
one utility, two transportation companies, and five financial
institutions. The Standard & Poor's 100 Stock Index is a smaller, more
flexible index for options trading.

c) The New York Stock Exchange composite or component indices --
unmanaged indices of all industrial, utilities, transportation, and
finance stocks listed on the New York Stock Exchange.

d) Wilshire 5000 Equity Index or its component indices --
represents the return on the market value of all common equity securities
for which daily pricing is available. Comparisons of performance assume
reinvestment of dividends.

e) Lipper: Mutual Fund Performance Analysis, Fixed Income
Analysis, and Mutual Fund Indices -- measures total return and average
current yield for the mutual fund industry. Ranks individual mutual fund
performance over specified time periods assuming reinvestment of all
distributions, exclusive of sales charges.

f) CDA Mutual Fund Report, published by CDA Investment
Technologies, analyzes price, current yield, risk, total return, and
average rate of return (average annual compounded growth rate) over
specified time periods for the mutual fund industry.

g) Mutual Fund Source Book, Principia and other publications and
information services provided by Morningstar, Inc. -- analyzes price,
risk and total return for the mutual fund industry.

h) Financial publications: Wall Street Journal, Business Week,
Changing Times, Financial World, Forbes, Fortune, Money, Pension and
Investment Age, United Mutual Fund Selector, and Wiesenberger Investment
Companies Service, and other publications containing financial analyses
which rate mutual fund performance over specified time periods.

i) Consumer Price Index (or Cost of Living Index), published by
the U.S. Bureau of Labor Statistics -- a statistical measure of periodic
change in the price of goods and services in major expenditure groups.

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j) Stocks, Bonds, Bills, and Inflation, published by Ibbotson
Associates -- historical measure of yield, price, and total return for
common and small company stock, long-term government bonds, treasury
bills, and inflation.

k) Savings and Loan Historical Interest Rates as published in
the U.S. Savings & Loan League Fact Book.

l) Shearson-Lehman Municipal Bond Index and Government/Corporate
Bond Index --unmanaged indices that track a basket of intermediate and
long-term bonds. Reflect total return and yield and assume dividend
reinvestment.

m) Salomon GNMA Index published by Salomon Brothers Inc. --
Market value of all outstanding 30-year GNMA Mortgage Pass-Through
Securities that includes single family and graduated payment mortgages.

Salomon Mortgage Pass-Through Index published by Salomon
Brothers Inc. --Market value of all outstanding agency mortgage
pass-through securities that includes 15- and 30-year FNMA, FHLMC and
GNMA Securities.

n) Value Line Geometric Index -- broad based index made up of
approximately 1700 stocks each of which have an equal weighting.

o) Morgan Stanley Capital International EAFE Index -- an
arithmetic, market value-weighted average of the performance of over 900
securities on the stock exchanges of countries in Europe, Australia and
the Far East.

p) Goldman Sachs 100 Convertible Bond Index -- currently
includes 67 bonds and 33 preferred stocks. The original list of names was
generated by screening for convertible issues of $100 million or more in
market capitalization. The index is priced monthly.

q) Salomon Brothers High Grade Corporate Bond Index -- consists
of publicly issued, non-convertible corporate bonds rated "AA" or "AAA."
It is a value-weighted, total return index, including approximately 800
issues.

r) Salomon Brothers Broad Investment Grade Bond Index -- is a
market-weighted index that contains approximately 4700 individually
priced investment grade corporate bonds rated "BBB" or better, U.S.
Treasury/agency issues and mortgage pass-through securities.

s) Salomon Brothers World Bond Index -- measures the total
return performance of high-quality securities in major sectors of the
international bond market. The index covers approximately 600 bonds from
10 currencies:

Australian Dollars Netherlands Guilders
Canadian Dollars Swiss Francs
European Currency Units UK Pound Sterling
French Francs U.S. Dollars
Japanese Yen German Deutsche Marks

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t) J.P. Morgan Global Government Bond Index -- a total return,
market capitalization-weighted index, rebalanced monthly, consisting of
the following countries: Australia, Belgium, Canada, Denmark, France,
Germany, Italy, Japan, The Netherlands, Spain, Sweden, the United
Kingdom, and the United States.

u) Shearson Lehman Long-Term Treasury Bond Index -- is comprised
of all bonds covered by the Shearson Lehman Hutton Treasury Bond Index
with maturities of 10 years or greater.

v) NASDAQ Industrial Index -- is comprised of more than 3,000
industrial issues. It is a value-weighted index calculated on pure change
only and does not include income.

w) The MSCI Combined Far East Free ex Japan Index -- a market
capitalization weighted index comprised of stocks in Hong Kong,
Indonesia, Korea, Malaysia, Philippines, Singapore and Thailand.
Korea is included in this index at 20% of its market capitalization.

x) First Boston High Yield Index -- generally includes over 180
issues with an average maturity range of seven to ten years with a
minimum capitalization of $100 million. All issues are individually
trader-priced monthly.

y) Morgan Stanley Capital International World Index -- An
arithmetic, market value-weighted average of the performance of over
1,470 securities listed on the stock exchanges of countries in Europe,
Australia, the Far East, Canada and the United States.

z) Russell 2000 and 3000 Indices -- represents the top 2,000 and
the next 3,000 stocks traded on the New York Stock Exchange, American
Stock Exchange and National Association of Securities Dealers Automated
Quotations, by market capitalizations.

aa) Russell Midcap Growth Index -- contains those Russell Midcap
securities with a greater-than-average growth orientation. The stocks are
also members of the Russell 1000 Growth Index, the securities in which
tend to exhibit higher price-to-book and price earnings ratios, lower
dividend yields and higher forecasted growth values than the Value
universe.

In assessing such comparisons of performance, an investor should
keep in mind that the composition of the investments in the reported
indices and averages is not identical to a Portfolio's portfolio, that
the averages are generally unmanaged and that the items included in the
calculations of such averages may not be identical to the formula used by
a Portfolio to calculate its figures. Specifically, a Portfolio may
compare its performance to that of certain indices which include
securities with government guarantees. However, a Portfolio's shares do
not contain any such guarantees. In addition, there can be no assurance
that a Portfolio will continue its performance as compared to such other
standards.

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DIVIDENDS, DISTRIBUTIONS AND TAXES

Dividends and Distributions. Each Portfolio intends to distribute to the
registered holders of its shares substantially all of its net investment
income, which includes dividends, interest and net short-term capital
gains, if any, in excess of any net long-term capital losses. Each
Portfolio intends to distribute any net capital gains from the sale of
assets held for more than 12 months in excess of any net short-term
capital losses. The current policy of each Portfolio other than the
Large-Cap Blend Portfolio, is to pay investment income dividends, if any,
at least annually. Large-Cap Blend Portfolio's current policy is to pay
investment income dividends, if any, on a quarterly basis. Each Portfolio
intends to pay net capital gains, if any, annually. In determining
amounts of capital gains to be distributed, any capital loss
carry-forwards from prior years will be offset against capital gains.

Distributions will be paid in additional Portfolio shares based
on the net asset value at the close of business on the Ex or reinvestment
date, unless the dividends total in excess of $10.00 per distribution
period and the shareholder notifies the Portfolio at least five business
days prior to the payment date to receive such distributions in cash.

If a shareholder has elected to receive dividends and/or capital
gain distributions in cash, and the postal or other delivery service is
unable to deliver checks to the shareholder's address of record, no
interest will accrue on amounts represented by uncashed dividend or
distribution checks.

Taxes. Each Portfolio intends to qualify and elect to be taxed as a
regulated investment company under Subchapter M of the Code for each
taxable year. In order to be qualified as a regulated investment company,
each Portfolio generally must, among other things, (a) derive at least
90% of its gross income from the sales or other disposition of
securities, dividends, interest, proceeds from loans of stock or
securities and certain other related income; and (b) diversify its
holdings so that, at the end of each fiscal quarter, (i) 50% of the
market value of each Portfolio's assets is represented by cash,
government securities, securities of other regulated investment companies
and other securities limited, in respect of any one issuer, to an amount
no greater than 5% of each Portfolio's assets and not greater than 10% of
the outstanding voting securities of such issuer, and (ii) not more than
25% of the value of its assets is invested in the securities of any one
issuer (other than government securities or the securities of other
regulated investment companies).

As a regulated investment company, each Portfolio will not be
subject to U.S. Federal income tax on its income and capital gains which
it distributes as dividends or capital gains distributions to
shareholders provided that it distributes to shareholders at least 90% of
its investment company taxable income for the taxable year. Each
Portfolio intends to distribute sufficient income to meet this
qualification requirement.

Under the Code, amounts not distributed on a timely basis in
accordance with a calendar year distribution requirement are subject to a
nondeductible 4% excise tax. To avoid the tax, each Portfolio must
distribute during each calendar year (1) at least 98% of its ordinary
income (not taking into account any capital gains or losses) for the
calendar year, (2) at least 98% of its capital gains in excess of its
capital losses for the 12-month period ending on October 31 of the
calendar year, and (3) all ordinary income and net capital gains for the
previous years that were not distributed during such years. To avoid
application of the excise tax, each Portfolio intends to make
distributions in accordance with the calendar year distribution
requirement. A distribution will be treated as paid during the calendar
year if actually

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<PAGE>

paid during such year. Additionally, a distribution will be treated as
paid on December 31 of a calender year if it is declared by a Portfolio
in October, November or December of such year, payable to shareholders of
record on a date in such month and paid by such Portfolio during January
of the following year. Any such distributions paid during January of the
following year will be taxable to shareholders as of such December 31,
rather than the date on which the distributions are received.

Distributions of net investment income and short-term capital
gains are taxable to the shareholder as ordinary dividend income
regardless of whether the shareholder receives such distributions in
additional shares or in cash. The portion of such dividends received from
each Portfolio that will be eligible for the dividends received deduction
for corporations will be determined on the basis of the amount of each
Portfolio's gross income, exclusive of capital gains from sales of stock
or securities, which is derived as dividends from domestic corporations,
other than certain tax-exempt corporations and certain real estate
investment trusts, and will be designated as such in a written notice to
shareholders mailed not later than 60 days after the end of each fiscal
year. It is not anticipated that the dividends paid by the International
Equity Portfolio will be eligible for the dividends-received deduction.
Distributions of net capital gains, if any, are taxable as capital gains
regardless of whether the shareholder receives such distributions in
additional shares or in cash or how long the investor has held his or her
shares, and are not eligible for the dividends received deduction for
corporations.

Upon a sale or exchange of its shares, a shareholder will
realize a taxable gain or loss depending upon its basis in the shares.
Such gain or loss will be treated as capital gain or loss if the shares
are capital assets in the shareholder's hands. In the case of an
individual, any such capital gain will be treated as short-term capital
gain if the shares were held for not more than 12 months, capital gain
taxable at the maximum rate of 28% if such shares were held for more than
12, but not more than 18 months, and capital gain taxable at the maximum
rate of 20% if such shares were held for more than 18 months. In the case
of a corporation, any such capital gain will be treated as long-term
capital gain, taxable at the same rates as ordinary income, if such
shares were held for more than 12 months. Any such capital loss will be
long-term capital loss if the shares have been held for more than one
year. Generally, any loss realized on a sale or exchange will be
disallowed to the extent the shares disposed of are replaced within a
period of 61 days beginning 30 days before and ending 30 days after the
shares are disposed of. Any loss recognized by a shareholder on the sale
of shares of a Portfolio held by the shareholder for six months or less
will be treated for tax purposes 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.

Under certain circumstances (such as the exercise of an exchange
privilege), the tax effect of sales load charges imposed on the purchase
of shares in a regulated investment company is deferred if the
shareholder does not hold the shares for at least 90 days.

Income received by a Portfolio from sources within foreign
countries may be subject to withholding and other taxes imposed by such
countries. Income tax treaties between certain countries and the United
States may reduce or eliminate such taxes. It is impossible to determine
in advance the effective rate of foreign tax to which a Portfolio will be
subject, since the amount of that Portfolio's assets to be invested in
various countries is not known. It is not anticipated that any Portfolio
(other than the International Equity Portfolio) will qualify to pass
through to its shareholders the ability to claim as a foreign tax credit
their respective shares of foreign taxes paid by such Portfolio. 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 intends, to file an election with the
Internal Revenue

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<PAGE>

Service pursuant to which shareholders of the Portfolio will be required
to include their proportionate share of such foreign 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, subject to certain limitations,
and the Portfolio and the shareholders satisfying certain holding period
requirements, 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
Portfolio. 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.

Under the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time a Portfolio accrues interest
or other receivables or accrues expenses or other liabilities denominated
in a foreign currency and the time such Portfolio actually collects such
receivables or pays such liabilities are treated as ordinary income or
ordinary loss. Similarly, gains or losses on forward foreign currency
exchange contracts, foreign currency gains or losses from futures
contracts that are not "regulated futures contracts" and from unlisted
non-equity options, gains or losses from sale of currencies or
dispositions of debt securities denominated in a foreign currency
attributable to fluctuations in the value of the foreign currency between
the date of acquisition of the security and the date of disposition
generally also are treated as ordinary gain or loss. These gains,
referred to under the Code as "Section 988" gains or losses, increase or
decrease the amount of each Portfolio's investment company taxable income
available to be distributed to its shareholders as ordinary income.
Additionally, if Code Section 988 losses exceed other investment company
taxable income during a taxable year, a Portfolio would not be able to
make any ordinary dividend distributions, and any distributions made in
the same taxable year may be recharacterized as a return of capital to
shareholders, thereby reducing the basis of each shareholder's Portfolio
shares. In certain cases, a Portfolio may be entitled to elect to treat
foreign currency gains on forward or futures contracts, or options
thereon, as capital gains.

The Code includes special rules applicable to the listed
non-equity options, regulated futures contracts, and options on futures
contracts which a Portfolio may write, purchase or sell. Such options and
contracts are classified as Section 1256 contracts under the Code. The
character of gain or loss resulting from the sale, disposition, closing
out, expiration or other termination of Section 1256 contracts, except
forward foreign currency exchange contracts, is generally treated as
long-term capital gain or loss to the extent of 60% thereof and
short-term capital gain or loss to the extent of 40% thereof ("60/40 gain
or loss"). Such contracts, when held by a Portfolio at the end of a
fiscal year, generally are required to be treated as sold at market value
on the last day of such fiscal year for Federal income tax purposes
("marked-to-market"). Over-the-counter options are not classified as
Section 1256 contracts and are not subject to the marked-to-market rule
or to 60/40 gain or loss treatment. Any gains or losses recognized by a
Portfolio from transactions in over-the-counter options generally
constitute short-term capital gains or losses. When call options written,
or put options purchased, by a Portfolio are exercised, the gain or loss
realized on the sale of the underlying securities may be either
short-term or long-term, depending on the holding period of the
securities. In determining the amount of gain or loss, the sales proceeds
are reduced by the premium paid for the puts or increased by the premium
received for calls.

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<PAGE>

A substantial portion of each Portfolio's transactions in
options, futures contracts and options on futures contracts, particularly
its hedging transactions, may constitute "straddles" which are defined in
the Code as offsetting positions with respect to personal property. A
straddle consisting of a listed option, futures contract, or option on a
futures contract and of U.S. Government securities would constitute a
"mixed straddle" under the Code. The Code generally provides with respect
to straddles (i) "loss deferral" rules which may postpone recognition for
tax purposes of losses from certain closing purchase transactions or
other dispositions of a position in the straddle to the extent of
unrealized gains in the offsetting position, (ii) "wash sale" rules which
may postpone recognition for tax purposes of losses where a position is
sold and a new offsetting position is acquired within a prescribed
period, (iii) "short sale" rules which may terminate the holding period
of securities owned by a Portfolio when offsetting positions are
established and which may convert certain losses from short-term to
long-term, and (iv) "conversion transaction" rules which recharacterize
capital gains as ordinary income. The Code provides that certain
elections may be made for mixed straddles that can alter the character of
the capital gain or loss recognized upon disposition of positions which
form part of a straddle. Certain other elections also are provided in the
Code; no determination has been reached to make any of these elections.

Newly-enacted Code Section 1259 will require the recognition of
gain (but not loss) if a Portfolio makes a "constructive sale" of an
appreciated financial position (e.g., stock). A Portfolio generally will
be considered to make a constructive sale of an appreciated financial
position if it sells the same or substantially identical property short,
enters into a futures or forward contract to deliver the same or
substantially identical property, or enters into certain other similar
transactions.

Each Portfolio may purchase debt securities (such as zero-coupon
or pay-in-kind securities) that contain original issue discount. Original
issue discount that accrues in a taxable year is treated as earned by a
Portfolio and therefore is subject to the distribution requirements of
the Code. Because the original issue discount earned by the Portfolio in
a taxable year may not be represented by cash income, the Portfolio may
have to dispose of other securities and use the proceeds to make
distributions to shareholders.

A Portfolio may be required to backup withhold U.S. Federal
income tax at the rate of 31% of all taxable distributions payable to
shareholders who fail to provide their correct taxpayer identification
number or fail to make required certifications, or who have been notified
by the Internal Revenue Service that they are subject to backup
withholding. Backup withholding is not an additional tax. Any amounts
withheld may be credited against a shareholder's U.S. Federal income tax
liability. Any distributions of net investment income or short-term
capital gains made to a foreign shareholder will be subject to U.S.
withholding tax of 30% (or a lower treaty rate if applicable to such
shareholder).

Each of the Large-Cap Growth Portfolio, Aggressive Growth
Portfolio and International Equity Portfolio may, from time to time,
invest in "passive foreign investment companies" (PFICs). A PFIC is a
foreign corporation that, in general, meets either of the following
tests: (a) at least 75% of its gross income is passive or (b) an average
of at least 50% of its assets produce, or are held for the production of,
passive income. If any such Portfolio acquires and holds stock in a PFIC
beyond the end of the year of its acquisition, the Portfolio will be
subject to federal income tax on a portion of any "excess distribution"
received on the stock or of any gain from disposition of the stock
(collectively, PFIC income), plus interest thereon, even if the Portfolio
distributes the PFIC income as a taxable dividend to its shareholders.
The balance of the PFIC income will be included in the Portfolio's
investment company taxable income and, accordingly, will not be taxable
to it to the extent that income is distributed to its

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shareholders. If the election is in effect, at the end of the Fund's
taxable year, the Portfolio will recognize the amount of gains, if any,
with respect to PFIC stock. Recently enacted legislation codified this
"mark-to-market" election effective for tax years beginning after
December 31, 1997. Any gains resulting from such elections will be
treated as ordinary income. No loss will be recognized on PFIC stock.
Alternatively, the Portfolio may elect to treat any PFIC in which it
invests as a "qualified electing fund," in which case, in lieu of the
foregoing tax and interest obligation, the Portfolio will be required to
include in income each year its pro rata share of the qualified electing
fund's annual ordinary earnings and net capital gain, even if they are
not distributed to the Portfolio; those amounts would be subject to the
distribution requirements applicable to the Portfolio described above. It
may be very difficult, if not impossible, to make this election because
of certain requirements thereof.

Each of the Large-Cap Blend and Value Portfolios may invest in
real estate investment trusts ("REITs") that hold residual interests in
real estate mortgage investment conduits ("REMICs"). Under Treasury
regulations that have not yet been issued, but may apply retroactively, a
portion of the Portfolio's income from a REIT that is attributable to the
REIT's residual interest in a REMIC (referred to in the Code as an
"excess inclusion") will be subject to federal income tax. These
regulations are also expected to provide that excess inclusion income of
a regulated investment company, such as the Fund, will be allocated to
shareholders of the regulated investment company in proportion to the
dividends received by such shareholders, with the same consequences as if
the shareholders held the related REMIC residual interest directly. In
general, excess inclusion income allocated to shareholders (i) cannot be
offset by net operating losses (subject to a limited exception for
certain thrift institutions), (ii) will constitute unrelated business
taxable income to entities (including a qualified pension plan, an
individual retirement account, a 401(k) plan, a Keogh plan or other
tax-exempt entity) subject to tax on unrelated business income, thereby
potentially requiring such an entity that is allocated excess inclusion
income, and otherwise might not be required to file a tax return, to file
a tax return and pay tax on such income, and (iii) in the case of a
foreign shareholder, will not qualify for any reduction in U.S. federal
withholding tax. In addition, if at any time during any taxable year a
"disqualified organization" (as defined in the Code) is a record holder
of a share in a regulated investment company, then the regulated
investment company will be subject to a tax equal to that portion of its
excess inclusion income for the taxable year that is allocable to the
disqualified organization, multiplied by the highest federal income tax
rate imposed on corporations.

The foregoing is a general and abbreviated summary of the
applicable provisions of the Code and Treasury regulations currently in
effect. Shareholders are urged to consult their tax advisors regarding
specific questions as to Federal, state and local taxes. In addition,
foreign investors should consult with their own tax advisors regarding
the particular tax consequences to them of an investment in each
Portfolio. Qualification as a regulated investment company under the Code
for tax purposes does not entail government supervision of management and
investment policies.

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RETIREMENT PLANS

Shares of each Portfolio are eligible to be purchased in
conjunction with various types of qualified retirement plans. The summary
below is only a brief description of the Federal income tax laws for each
plan and does not purport to be complete. Further information or an
application to invest in shares of a Portfolio by establishing any of the
retirement plans described below may be obtained by calling Retirement
Plans at (800) 858-8850. However, it is recommended that a shareholder
considering any retirement plan consult a tax adviser before
participating.

Pension and Profit-Sharing Plans. Sections 401(a) and 401(k) of the Code
permit business employers and certain associations to establish pension
and profit sharing plans for employees. Shares of a Portfolio may be
purchased by those who would have been covered under the rules governing
old H.R. 10 (Keogh) Plans, as well as by corporate plans. Each business
retirement plan provides tax advantages for owners and participants.
Contributions made by the employer are tax-deductible, and participants
do not pay taxes on contributions or earnings until withdrawn.

Tax-Sheltered Custodial Accounts. Section 403(b)(7) of the Code permits
public school employees and employees of certain types of charitable,
educational and scientific organizations specified in Section 501(c)(3)
of the Code, to purchase shares of a Portfolio and, subject to certain
limitations, exclude the amount of purchase payments from gross income
for tax purposes.

Individual Retirement Accounts (IRA). Section 408 of the Code permits
eligible individuals to contribute to an individual retirement program,
including Simplified Employee Pension Plans, commonly referred to as
SEP-IRA. Section 408A of the Code treats Roth IRAs as IRAs subject to
certain special rules applicable thereto. IRAs are subject to limitations
with respect to the amount that may be contributed, the eligibility of
individuals to make contributions, the amount if any, entitled to be
contributed on a deductible basis, and the time in which distributions
would be allowed to commence. In addition, certain distributions from
some other types of retirement plans may be placed on a tax-deferred
basis in an IRA.

Salary Reduction Simplified Employee Pension (SARSEP). This plan was
introduced by a provision of the Tax Reform Act of 1986 as a unique way
for small employers to provide the benefit of retirement planning for
their employees. Contributions are deducted from the employee's paycheck
before tax deductions and are deposited into an IRA by the employer.
These contributions are not included in the employee's income and
therefore are not reported or deducted on his or her tax return.

Savings Incentive Match Plan for Employees ("SIMPLE IRA"). This plan was
introduced by a provision of the Small Business Job Protection Act of
1996 to provide small employers with a simplified tax-favored retirement
plan. Contributions are deducted from the employee's paycheck before
taxes and are deposited into a SIMPLE IRA by the employer, who must make
either matching contributions or nonelective contributions. Contributions
are tax-deductible for the employer and participants do not pay taxes on
contributions on earnings until they are withdrawn.

Roth IRA. This plan, introduced by Section 302 of the Taxpayer Relief Act
of 1997, generally permits individuals with adjusted gross income of up
to $95,000, and married couples with joint adjusted gross income of up to
$150,000, to contribute to a "Roth IRA." Contributions are not
tax-deductible, but

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<PAGE>

distribution of assets (contributions and earnings) held in the account
for at least five years may be distributed tax-free under certain
qualifying conditions.

Education IRA. Established by the Taxpayer Relief Act of 1997, under
Section 530 of the Code, this plan permits individuals to contribute to
an IRA on behalf of any child under the age of 18. Contributions are not
tax-deductible but distributions are tax-free if used for qualified
educational expenses.

DESCRIPTION OF SHARES

Ownership of the Fund is represented by shares of common stock.
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).

Currently, nine Portfolios of shares of the Fund have been
authorized pursuant to the Fund's Articles of Incorporation ("Articles"):
the Large-Cap Growth Portfolio, the Mid-Cap Growth Portfolio, the
Aggressive Growth Portfolio, the Large-Cap Blend Portfolio, the Large-Cap
Value Portfolio, the Value Portfolio, the Small-Cap Value Portfolio,
International Equity Portfolio and the Focus Portfolio. Except for the
Focus Portfolio, each Portfolio has been divided into four classes of
shares, designated as Class A, Class B, Class C and Class Z. The
Directors may authorize the creation of additional Portfolios of shares
so as to be able to offer to investors additional investment portfolios
within the Fund that would operate independently from the Fund's present
portfolios, or to distinguish among shareholders, as may be necessary, to
comply with future regulations or other unforeseen circumstances. Each
Portfolio of the Fund's shares represents the interests of the
shareholders of that Portfolio in a particular portfolio of Fund assets.
In addition, the Directors may authorize the creation of additional
classes of shares in the future, which may have fee structures different
from those of existing classes and/or may be offered only to certain
qualified investors.

Shareholders are entitled to a full vote for each full share
held. The Directors have terms of unlimited duration (subject to certain
removal procedures) and have the power to alter the number of Directors,
and appoint their own successors, provided that at all times at least a
majority of the Directors have been elected by shareholders. The voting
rights of shareholders are not cumulative, so that holders of more than
50% of the shares voting can, if they choose, elect all Directors being
elected, while the holders of the remaining shares would be unable to
elect any Directors. Although the Fund need not hold annual meetings of
shareholders, the Directors may call special meetings of shareholders for
action by shareholder vote as may be required by the 1940 Act or the
Articles. Also, a shareholders meeting must be called, if so requested in
writing by the holders of record of 10% or more of the outstanding shares
of the Fund. In addition, the Directors may be removed by the action of
the holders of record of two-thirds or more of the outstanding shares.
All Portfolios of shares will vote with respect to certain matters, such
as election of Directors. When all Portfolios are not affected by a
matter to be voted upon, such as approval of investment advisory
agreements or changes in a Portfolio's policies, only shareholders of the
Portfolios affected by the matter may be entitled to vote.

The classes of shares of a given Portfolio are identical in all
respects, except that (i) each class may bear differing amounts of
certain class-specific expenses, (ii) Class A shares are subject to an
initial sales charge, a distribution fee and an ongoing account
maintenance and service fee, (iii) Class B shares are subject to a CDSC,
a distribution fee and an ongoing account maintenance and service fee,
(iv) Class B shares convert automatically to Class A shares on the first
business day of the month seven years after

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the purchase of such Class B Shares, (v) Class C shares are subject to a
CDSC, and an ongoing account maintenance and service fee, (vi) each class
has voting rights on matters that pertain to the Rule 12b-1 plan adopted
with respect to such class, except that under certain circumstances, the
holders of Class B shares may be entitled to vote on material changes to
the Class A Rule 12b-1 plan, and (vii) each class of shares will be
exchangeable only into the same class of shares of any other Portfolio or
other SunAmerica Funds that offer that class. All shares of the Fund
issued and outstanding and all shares offered by the Prospectus when
issued, are fully paid and non-assessable. Shares have no preemptive or
other subscription rights and are freely transferable on the books of the
Fund. In addition, shares have no conversion rights, except as described
above.

The Articles provide that no Director, officer, employee or
agent of the Fund is liable to the Fund or to a shareholder, nor is any
Director, officer, employee or agent liable to any third persons in
connection with the affairs of the Fund, except as such liability may
arise from his or its own bad faith, willful misfeasance, gross
negligence or reckless disregard of his duties. It also provides that all
third persons shall look solely to the Fund's property for satisfaction
of claims arising in connection with the affairs of the Fund. With the
exceptions stated, the Articles provides that a Director, officer,
employee or agent is entitled to be indemnified against all liability in
connection with the affairs of the Fund. The Fund shall continue, without
limitation of time, subject to the provisions in the Articles concerning
termination by action of the shareholders.

ADDITIONAL INFORMATION

Computation of Offering Price per Share

The following is the offering price calculation for each Class
of shares of the Portfolios. The Class A, Class B and Class C
calculations are based on the value of each Portfolio's net assets and
number of shares outstanding on October 31, 1997.

<TABLE>
<CAPTION>
Large-Cap Growth Portfolio Mid-Cap Growth Portfolio
-------------------------------------------- ----------------------------------------
Class A Class B Class C Class A Class B Class C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>

Net Assets............... $23,609,458 $733,141 $165,960 $18,403,666 $35,739,146 $4,685,386
Number of Shares
Outstanding.............. $2,002,887 $65,591 $14,084 $1,342,354 $2,622,082 $343,493
Net Asset Value Per
Share (net assets
divided by number of
shares) ................. $ 11.79 $ 11.79 $ 11.78 $ 13.71 $ 13.63 $ 13.64
Sales charge for
Class A Shares:
5.75% of offering
price (6.10% of net
asset value per
share)*.................. $ 0.72 -- -- $ 0.84 -- --
Offering Price........... $ 12.51 -- -- $14.55 -- --
</TABLE>

- -----------------------
* Rounded to nearest one-hundredth percent; assumes maximum
sales charge is applicable.

B-64

<PAGE>

<TABLE>
<CAPTION>
Aggressive Growth Portfolio Large-Cap Blend Portfolio
-------------------------------------------- ---------------------------------
Class A Class B Class C Class A Class B Class C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net Assets............... $38,537,314 $48,593,950 $5,939,097 $23,592,872 $941,244 $142,864
Number of Shares
Outstanding ............. 2,424,338 3,075,503 375,792 1,969,995 78,691 11,932
Net Asset Value Per
Share (net assets
divided by number of
shares) ................. $ 15.90 $ 15.80 $15.80 $ 11.98 $ 11.96 $ 11.97
Sales charge for
Class A Shares:
5.75% of offering
price (6.10 of net
asset value per
share)* ................. $ 0.97 -- -- $ 0.73 -- --
Offering Price........... $ 16.87 -- -- $ 12.71 -- --
</TABLE>

- -----------------------
* Rounded to nearest one-hundredth percent; assumes maximum sales charge
is applicable.

<TABLE>
<CAPTION>
Large-Cap Value Portfolio Value Portfolio
Class A Class B Class C Class A Class B Class C
<S> <C> <C> <C> <C> <C> <C>
Net Assets............... $23,240,000 $1,324,918 $172,432 $48,377,302 $77,534,354 $9,383,790
Number of Shares
Outstanding ............. 1,959,444 111,740 14,544 3,007,062 4,846,859 586,579
Net Asset Value Per
Share (net assets
divided by number of
shares) ................. $ 11.86 $ 11.86 $ 11.86 $ 16.09 $ 16.00 $ 16.00
Sales charge for
Class A Shares:
5.75% of offering
price (6.10 of net
asset value per
share)* ................. $ 0.72 -- -- $ 0.98 -- --
Offering Price........... $ 12.58 -- -- $ 17.07 -- --
</TABLE>

- -----------------------
* Rounded to nearest one-hundredth percent; assumes maximum sales charge
is applicable.

B-65

<PAGE>

<TABLE>
<CAPTION>
Small-Cap Value Portfolio International Equity Portfolio
-------------------------------------------- ----------------------------------------
Class A Class B Class C Class A Class B Class C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net Assets............... $21,345,618 $3,112,115 $525,428 $24,365,250 $42,656,451 $4,458,695
Number of Shares
Outstanding ............. 1,758,084 256,483 43,289 1,955,691 3,446,902 360,269
Net Asset Value Per
Share (net assets
divided by number of
shares) ................. $ 12.14 $ 12.13 $ 12.14 $ 12.46 $ 12.38 $ 12.38
Sales charge for
Class A Shares:
5.75% of offering
price (6.10 of net
asset value per
share)* ................. $ 0.74 -- -- $ 0.76 -- --
Offering Price........... $ 12.88 -- -- $ 13.22 -- --
</TABLE>

- -----------------------
* Rounded to nearest one-hundredth percent; assumes maximum sales charge
is applicable.

Reports to Shareholders. The Fund sends audited annual and unaudited
semi-annual reports to shareholders of each of the Portfolios. In
addition, the Transfer Agent sends a statement to each shareholder having
an account directly with the Fund to confirm transactions in the account.

Custodian and Transfer Agency. State Street Bank and Trust Company, 1776
Heritage Drive, North Quincy, MA 02171, serves as Custodian and Transfer
Agent for the Portfolios and in those capacities maintains certain
financial and accounting books and records pursuant to agreements with
the Fund. Transfer agent functions are performed for State Street by
National Financial Data Services, P.O. Box 419572, Kansas City, MO
64141-6572, an affiliate of State Street.

Independent Accountants and Legal Counsel. Price Waterhouse LLP, 1177
Avenue of the Americas, New York, NY 10036, has been selected to serve as
the Fund's independent accountants and in that capacity examines the
annual financial statements of the Fund. The firm of Shereff, Friedman,
Hoffman & Goodman, LLP, 919 Third Avenue, New York, NY 10022, has been
selected as legal counsel to the Fund.

FINANCIAL STATEMENTS

Set forth following this Statement of Additional Information is
the financial statements of Style Select Series, Inc. with respect to the
Registrant's fiscal year ended October 31, 1997.

B-66

<PAGE>

5
STATEMENT OF ASSETS AND LIABILITIES -- October 31, 1997

ASSETS:

Investment securities, at value (identified cost
$25,063,825; $49,356,737; $70,323,902; and
$24,276,499, respectively)...................... $23,794,419 $56,153,029 $83,929,240 $23,234,499

Repurchase agreements (cost equals market)........ 380,000 -- 8,269,000 580,000

Short-term securities (cost equals market)........ 199,937 2,257,482 1,999,372 811,948

Cash.............................................. 78,326 18,320 74,005 2,755

Receivable for shares of beneficial interest
sold............................................ 483,181 634,568 1,078,124 386,291

Receivable for investments sold................... 93,497 588,107 183,491 141,619

Prepaid expenses and other assets................. 58,300 8,115 8,340 58,300

Receivable from investment adviser................ 7,167 26,477 35,677 7,175

Interest and dividends receivable................. 4,214 12,330 17,300 14,315

Deferred organizational expenses.................. 8,215 36,320 36,320 8,215
----------- ----------- ----------- -----------

Total assets.................................... 25,107,256 59,734,748 95,630,869 25,245,117
----------- ----------- ----------- -----------

LIABILITIES:

Payable for investments purchased................. 361,985 704,029 2,312,449 328,109

Payable for fund shares repurchased............... 161,000 27,879 12,843 204,000

Other accrued expenses............................ 19,886 81,184 95,030 19,996

Investment advisory and management fees payable... 11,611 52,375 80,893 11,730

Distribution and service maintenance fees
payable......................................... 4,215 41,083 59,293 4,302
----------- ----------- ----------- -----------

Total liabilities............................... 558,697 906,550 2,560,508 568,137
----------- ----------- ----------- -----------

Net assets.................................... $24,548,559 $58,828,198 $93,070,361 $24,676,980
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

<PAGE>

</TABLE>

6
STATEMENT OF ASSETS AND LIABILITIES -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>
LARGE-CAP MID-CAP AGGRESSIVE LARGE-CAP
GROWTH GROWTH GROWTH BLEND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSETS WERE COMPOSED OF:

Common Stock, $.0001 par value (1 billion shares
authorized)..................................... $ 208 $ 431 $ 588 $ 206

Paid-in capital................................... 25,994,433 52,176,682 78,876,692 25,747,077
----------- ----------- ----------- -----------

25,994,641 52,177,113 78,877,280 25,747,283

Accumulated undistributed net investment
income (loss)................................... 7,889 (643) (761) 20,057

Accumulated undistributed net realized gain (loss)
on investments, foreign currency, other assets
and liabilities................................. (184,565) (144,564) 588,504 (48,360)

Net unrealized appreciation (depreciation) of
investments..................................... (1,269,406) 6,796,292 13,605,338 (1,042,000)
----------- ----------- ----------- -----------

Net assets.................................... $24,548,559 $58,828,198 $93,070,361 $24,676,980
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

CLASS A:

Net assets........................................ $23,609,458 $18,403,666 $38,537,314 $23,592,872

Shares outstanding................................ 2,002,887 1,342,354 2,424,338 1,969,995

Net asset value and redemption price per share.... $ 11.79 $ 13.71 $ 15.90 $ 11.98

Maximum sales charge (5.75% of offering price).... 0.72 0.84 0.97 0.73
----------- ----------- ----------- -----------

Maximum offering price to public.................. $ 12.51 $ 14.55 $ 16.87 $ 12.71
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

CLASS B:

Net assets........................................ $ 773,141 $35,739,146 $48,593,950 $ 941,244

Shares outstanding................................ 65,591 2,622,082 3,075,503 78,691

Net asset value, offering and redemption price per
share (excluding any applicable contingent
deferred sales charge).......................... $ 11.79 $ 13.63 $ 15.80 $ 11.96
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

CLASS C:

Net assets........................................ $ 165,960 $ 4,685,386 $ 5,939,097 $ 142,864

Shares outstanding................................ 14,084 343,493 375,792 11,932

Net asset value, offering and redemption price per
share (excluding any applicable contingent
deferred sales charge).......................... $ 11.78 $ 13.64 $ 15.80 $ 11.97
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>

See Notes to Financial Statements

<PAGE>

7
STATEMENT OF ASSETS AND LIABILITIES -- October 31, 1997 -- (continued)

<TABLE>
<CAPTION>
LARGE-CAP SMALL-CAP INTERNATIONAL
VALUE VALUE VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-----------------------------------------------------------
<S> <C> <C> <C> <C>

ASSETS:

Investment securities, at value (identified cost
$24,049,833; $115,531,354; $20,506,477; and
$66,834,816, respectively)...................... $22,714,037 $126,261,475 $19,738,475 $ 63,894,899

Repurchase agreements (cost equals market)........ 130,000 5,678,000 3,378,000 6,679,000

Short-term securities (cost equals market)........ 1,250,485 5,353,968 1,695,611 835,000

Cash.............................................. 49,474 8,661 77,093 --

Foreign cash (cost $472,003)...................... -- -- -- 473,138

Receivable for shares of beneficial interest
sold............................................ 857,034 1,732,952 1,215,264 433,421

Prepaid expenses and other assets................. 58,300 8,634 58,300 8,999

Interest and dividends receivable................. 12,290 110,398 18,280 180,938

Deferred organizational expenses.................. 8,215 36,320 8,215 36,320

Receivable from investment adviser................ 7,175 49,699 7,200 33,065

Receivable for investments sold................... -- 14,525 -- 1,005,239

Foreign currency contracts........................ -- -- -- 2,361,542

Unrealized appreciation of foreign currency
contracts....................................... -- -- -- 124,603
----------- ------------ ----------- -------------

Total assets.................................... 25,087,010 139,254,632 26,196,438 76,066,164
----------- ------------ ----------- -------------

LIABILITIES:

Payable for fund shares repurchased............... 280,383 298,801 687,050 179,917

Payable for investments purchased................. 33,178 3,279,098 489,096 1,728,804

Other accrued expenses............................ 20,043 178,207 20,121 150,070

Investment advisory and management fees payable... 11,729 115,150 12,079 71,869

Distribution and service maintenance fees
payable......................................... 4,327 87,930 4,931 50,400

Foreign currency contracts........................ -- -- -- 2,364,584

Unrealized depreciation of foreign currency
contracts....................................... -- -- -- 39,360

Due to custodian bank............................. -- -- -- 764

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

Total liabilities............................... 349,660 3,959,186 1,213,277 4,585,768
----------- ------------ ----------- -------------

Net assets.................................... $24,737,350 $135,295,446 $24,983,161 $ 71,480,396
----------- ------------ ----------- -------------
----------- ------------ ----------- -------------

<PAGE>

</TABLE>

8
STATEMENT OF ASSETS AND LIABILITIES -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>
LARGE-CAP SMALL-CAP INTERNATIONAL
VALUE VALUE VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-----------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSETS WERE COMPOSED OF:

Common Stock, $.0001 par value (1 billion shares
authorized)..................................... $ 209 $ 844 $ 206 $ 576

Paid-in capital................................... 26,056,306 119,171,979 25,715,849 73,360,146
----------- ------------ ----------- -------------

26,056,515 119,172,823 25,716,055 73,360,722

Accumulated undistributed net investment income
(loss).......................................... 16,631 (680) 35,108 122,861

Accumulated undistributed net realized gain on
investments, foreign currency, other assets and
liabilities..................................... -- 5,393,253 -- 843,851

Net unrealized appreciation (depreciation) of
investments..................................... (1,335,796) 10,730,121 (768,002) (2,939,917)

Net unrealized appreciation (depreciation) of
foreign currency, other assets and
liabilities..................................... -- (71) -- 92,879
----------- ------------ ----------- -------------

Net assets.................................... $24,737,350 $135,295,446 $24,983,161 $ 71,480,396
----------- ------------ ----------- -------------
----------- ------------ ----------- -------------

CLASS A:

Net assets........................................ $23,240,000 $ 48,377,302 $21,345,618 $ 24,365,250

Shares outstanding................................ 1,959,444 3,007,062 1,758,084 1,955,961

Net asset value and redemption price per share.... $ 11.86 $ 16.09 $ 12.14 $ 12.46

Maximum sales charge (5.75% of offering price).... 0.72 0.98 0.74 0.76
----------- ------------ ----------- -------------

Maximum offering price to public.................. $ 12.58 $ 17.07 $ 12.88 $ 13.22
----------- ------------ ----------- -------------
----------- ------------ ----------- -------------

CLASS B:

Net assets........................................ $ 1,324,918 $ 77,534,354 $ 3,112,115 $ 42,656,451

Shares outstanding................................ 111,740 4,846,859 256,483 3,446,902

Net asset value, offering and redemption price per
share (excluding any applicable contingent
deferred sales charge).......................... $ 11.86 $ 16.00 $ 12.13 $ 12.38
----------- ------------ ----------- -------------
----------- ------------ ----------- -------------

CLASS C:

Net assets........................................ $ 172,432 $ 9,383,790 $ 525,428 $ 4,458,695

Shares outstanding................................ 14,544 586,579 43,289 360,269

Net asset value, offering and redemption price per
share (excluding any applicable contingent
deferred sales charge).......................... $ 11.86 $ 16.00 $ 12.14 $ 12.38
----------- ------------ ----------- -------------
----------- ------------ ----------- -------------
</TABLE>

See Notes to Financial Statements

<PAGE>

9
STATEMENT OF OPERATIONS -- For the year ended October 31, 1997

<TABLE>
<CAPTION>
LARGE-CAP MID-CAP AGGRESSIVE LARGE-CAP
GROWTH GROWTH GROWTH BLEND
PORTFOLIO@ PORTFOLIO# PORTFOLIO# PORTFOLIO@
-------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Income:
Interest........................................ $ 20,331 $ 158,291 $ 336,477 $ 22,465

Dividends*...................................... 4,162 78,175 189,639 14,175
----------- ---------- ----------- -----------
Total investment income....................... 24,493 236,466 526,116 36,640
----------- ---------- ----------- -----------
Expenses:
Investment advisory and management fees......... 11,611 390,221 533,055 11,730
Distribution and service maintenance fees
Class A....................................... 3,983 73,691 106,377 4,000
Class B....................................... 173 164,888 209,795 239
Class C....................................... 59 14,787 19,327 63
Transfer agent fees and expenses
Class A....................................... 3,186 59,267 85,695 3,200
Class B....................................... 49 47,325 60,341 67
Class C....................................... 16 4,293 5,602 17
Registration fees
Class A....................................... 734 46,990 48,528 737
Class B....................................... 174 47,988 42,038 177
Class C....................................... 162 12,101 11,523 162
Audit and tax consulting fees................... 2,805 26,025 30,795 2,805
Printing expense................................ 2,550 16,195 18,380 2,550
Custodian fees and expenses..................... 1,974 66,338 90,617 1,994
Legal fees and expenses......................... 340 6,945 8,000 340
Directors' fees and expenses.................... 85 3,323 4,641 85
Miscellaneous expenses.......................... 85 2,660 3,330 85
Amortization of organizational expenses......... -- 4,144 4,144 --
Insurance expense............................... -- 32 46 --
----------- ---------- ----------- -----------
Total expenses................................ 27,986 987,213 1,282,234 28,251
Less: expenses waived/reimbursed by investment
adviser..................................... (7,167) (155,055) (158,172) (7,175)
----------- ---------- ----------- -----------
Net expenses.................................. 20,819 832,158 1,124,062 21,076
----------- ---------- ----------- -----------
Net investment income (loss)...................... 3,674 (595,692) (597,946) 15,564
----------- ---------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on investments........... (184,565) 208,124 1,155,918 (48,360)
Net realized gain (loss) on foreign currency and
other assets and liabilities.................... -- (1,597) -- 191
Net unrealized appreciation/depreciation of
investments..................................... (1,269,406) 6,796,292 13,605,338 (1,042,000)
----------- ---------- ----------- -----------
Net realized and unrealized gain (loss) on
investments, foreign currency and other assets
and liabilities................................. (1,453,971) 7,002,819 14,761,256 (1,090,169)
----------- ---------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS: $(1,450,297) $6,407,127 $14,163,310 $(1,074,605)
----------- ---------- ----------- -----------
----------- ---------- ----------- -----------

*Net of foreign withholding taxes on dividends
of.............................................. $ -- $ 187 $ 628 $ 51

----------- ---------- ----------- -----------
----------- ---------- ----------- -----------
</TABLE>

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

@ Commenced operations October 15, 1997
# Commenced operations November 19, 1996
See Notes to Financial Statements

<PAGE>

10
STATEMENT OF OPERATIONS -- For the year ended October 31, 1997 -- (continued)

<TABLE>
<CAPTION>
LARGE-CAP SMALL-CAP INTERNATIONAL
VALUE VALUE VALUE EQUITY
PORTFOLIO@ PORTFOLIO# PORTFOLIO@ PORTFOLIO#
---------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Income:
Interest........................................ $ 21,267 $ 316,689 $ 34,643 $ 216,533
Dividends*...................................... 12,137 877,812 17,738 624,686
----------- ----------- ---------- -------------
Total investment income....................... 33,404 1,194,501 52,381 841,219
----------- ----------- ---------- -------------
Expenses:
Investment advisory and management fees......... 11,729 671,560 12,079 440,671
Distribution and service maintenance fees
Class A....................................... 3,986 116,913 3,849 77,057
Class B....................................... 281 309,027 900 162,796
Class C....................................... 60 28,306 184 17,650
Transfer agent fees and expenses
Class A....................................... 3,189 89,362 3,079 59,709
Class B....................................... 79 86,613 252 47,087
Class C....................................... 17 7,998 51 5,118
Registration fees
Class A....................................... 734 71,485 715 52,381
Class B....................................... 179 78,528 211 51,454
Class C....................................... 162 14,974 168 12,951
Audit and tax consulting fees................... 2,805 30,795 2,805 30,720
Printing expense................................ 2,550 18,370 2,550 16,050
Custodian fees and expenses..................... 1,994 113,843 2,053 130,328
Legal fees and expenses......................... 340 9,770 340 6,945
Directors' fees and expenses.................... 85 5,054 85 3,647
Miscellaneous expenses.......................... 85 4,330 85 2,491
Amortization of organizational expenses......... -- 4,144 -- 4,144
Insurance expense............................... -- 64 -- 19
----------- ----------- ---------- -------------
Total expenses................................ 28,275 1,661,136 29,406 1,121,218
Less: expenses waived/reimbursed by investment

adviser..................................... (7,175) (217,432) (7,200) (169,822)
----------- ----------- ---------- -------------
Net expenses.................................. 21,100 1,443,704 22,206 951,396
----------- ----------- ---------- -------------
Net investment income (loss)...................... 12,304 (249,203) 30,175 (110,177)
----------- ----------- ---------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on investments.................. -- 5,614,072 -- 843,851
Net realized gain (loss) on foreign currency and
other assets and liabilities.................... -- (19) -- 209,293
Net unrealized appreciation/depreciation of
investments..................................... (1,335,796) 10,730,121 (768,002) (4,158,649)
Net unrealized appreciation/depreciation of
foreign currency and other assets and
liabilities..................................... -- (71) -- 94,498
----------- ----------- ---------- -------------
Net realized and unrealized gain (loss) on
investments, foreign currency and other assets
and liabilities................................. (1,335,796) 16,344,103 (768,002) (3,011,007)
----------- ----------- ---------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS: $(1,323,492) $16,094,900 $ (737,827) $ (3,121,184)
----------- ----------- ---------- -------------
----------- ----------- ---------- -------------

*Net of foreign withholding taxes on dividends
of.............................................. $ 99 $ 9,190 $ -- $ 81,620
----------- ----------- ---------- -------------
----------- ----------- ---------- -------------
</TABLE>

- ------------------
@ Commenced operations October 15, 1997
# Commenced operations November 19, 1996

See Notes to Financial Statements

<PAGE>

11
STATEMENT OF CHANGES IN NET ASSETS -- For the year ended October 31, 1997

<TABLE>
<CAPTION>
LARGE-CAP MID-CAP AGGRESSIVE LARGE-CAP
GROWTH GROWTH GROWTH BLEND
PORTFOLIO@ PORTFOLIO# PORTFOLIO# PORTFOLIO@
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income (loss).................... $ 3,674 $ (595,692) $ (597,946) $ 15,564
Net realized gain (loss) on investments......... (184,565) 208,124 1,155,918 (48,360)

Net realized gain (loss) on foreign currency and
other assets and liabilities.................. -- (1,597) -- 191
Net unrealized appreciation/depreciation of
investments................................... (1,269,406) 6,796,292 13,605,338 (1,042,000)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting
from operations............................... (1,450,297) 6,407,127 14,163,310 (1,074,605)
-------------- -------------- -------------- --------------

NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL
SHARE TRANSACTIONS (NOTE 9)..................... 25,998,856 52,396,071 78,882,051 25,751,585
-------------- -------------- -------------- --------------

TOTAL INCREASE IN NET ASSETS...................... 24,548,559 58,803,198 93,045,361 24,676,980

NET ASSETS:
Beginning of period............................... -- 25,000 25,000 --
-------------- -------------- -------------- --------------
End of period [including undistributed net
investment income (loss) at October 31, 1997 of
$7,889, $(643), $(761) and $20,057,
respectively]................................... $ 24,548,559 $ 58,828,198 $ 93,070,361 $ 24,676,980
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>

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

@ Commenced operations October 15, 1997
# Commenced operations November 19, 1996

<PAGE>

STATEMENT OF CHANGES IN NET ASSETS -- For the year ended October 31,
1997 -- (continued)

<TABLE>
<CAPTION>
LARGE-CAP SMALL-CAP INTERNATIONAL
VALUE VALUE VALUE EQUITY
PORTFOLIO@ PORTFOLIO# PORTFOLIO@ PORTFOLIO#
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income (loss).................... $ 12,304 $ (249,203) $ 30,175 $ (110,177)
Net realized gain on investments................ -- 5,614,072 -- 843,851
Net realized gain (loss) on foreign currency and
other assets and liabilities.................. -- (19) -- 209,293
Net unrealized appreciation/depreciation of
investments................................... (1,335,796) 10,730,121 (768,002) (4,158,649)
Net unrealized appreciation/depreciation of

foreign currency and other assets and
liabilities................................... -- (71) -- 94,498
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting
from operations............................... (1,323,492) 16,094,900 (737,827) (3,121,184)
-------------- -------------- -------------- --------------

NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL
SHARE TRANSACTIONS (NOTE 9)..................... 26,060,842 119,175,546 25,720,988 74,576,580
-------------- -------------- -------------- --------------

TOTAL INCREASE IN NET ASSETS...................... 24,737,350 135,270,446 24,983,161 71,455,396

NET ASSETS:
Beginning of period............................... -- 25,000 -- 25,000
-------------- -------------- -------------- --------------
End of period [including undistributed net
investment income (loss) at October 31, 1997 of
$16,631, $(680), $35,108 and $122,861,
respectively]................................... $ 24,737,350 $ 135,295,446 $ 24,983,161 $ 71,480,396
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>

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

@ Commenced operations October 15, 1997
# Commenced operations November 19, 1996
See Notes to Financial Statements

<PAGE>

13
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NET
GAIN(LOSS) DIVIDENDS
ON INVEST- TOTAL FROM DISTRI-
NET ASSET NET MENTS(BOTH FROM NET BUTIONS
VALUE, INVEST- REALIZED INVEST- INVEST- FROM TOTAL
PERIOD BEGINNING MENT AND MENT MENT CAPITAL DISTRI-
ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME GAINS BUTIONS
- ------------------- ---------- ---------- ----------- ---------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
LARGE-CAP GROWTH PORTFOLIO
- --------------------------

<CAPTION>
CLASS A
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97... $12.50 $ -- $ (0.71) $(0.71) $-- $-- $--
<CAPTION>

CLASS B
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97... 12.50 -- (0.71) (0.71) -- -- --
<CAPTION>
CLASS C
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97... 12.50 -- (0.72) (0.72) -- -- --

RATIO OF NET
NET RATIO OF INVESTMENT
ASSET NET ASSETS EXPENSES INCOME AVERAGE
VALUE, END OF TO AVERAGE TO AVERAGE COMMISSION
PERIOD END OF TOTAL PERIOD NET NET PORTFOLIO PER
ENDED PERIOD RETURN(2) (000'S) ASSETS(3)(4) ASSETS(3)(4) TURNOVER SHARE(5)
- ------------------- ------ --------- ---------- ------------ ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
LARGE-CAP GROWTH PO
- -------------------
10/15/97-10/31/97.. $11.79 (5.68)% $ 23,609 1.78% 0.34% 1% $ 0.0414

<S> <C> <C> <C> <C>
- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97.. 11.79 (5.68) 773 2.43 (0.84) 1 0.0414

- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97.. 11.78 (5.76) 166 2.43 (0.42) 1 0.0414
</TABLE>

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MID-CAP GROWTH PORTFOLIO
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
- -------------------------------------------------------------------------------------------------------
11/19/96-10/31/97... $12.50 $(0.16) $ 1.37 $ 1.21 $-- $-- $--

<CAPTION>
CLASS B
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
11/19/96-10/31/97... 12.50 (0.25) 1.38 1.13 -- -- --
<CAPTION>
CLASS C
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3/06/97-10/31/97... 11.93 (0.18) 1.89 1.71 -- -- --

<CAPTION>
MID-CAP GROWTH PORT
- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>

- -------------------
11/19/96-10/31/97.. $13.71 9.68% $ 18,404 1.85% (1.19)% 97% $ 0.0487

- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
11/19/96-10/31/97.. 13.63 9.04 35,739 2.47 (1.92) 97 0.0487

- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3/06/97-10/31/97... 13.64 14.33 4,685 2.45 (1.97) 97 0.0487
</TABLE>

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

AGGRESSIVE GROWTH PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
11/19/96-10/31/97... $12.50 $(0.11) $ 3.51 $ 3.40 $-- $-- $--

<CAPTION>
CLASS B
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
11/19/96-10/31/97... 12.50 (0.24) 3.54 3.30 -- -- --
<CAPTION>
CLASS C
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3/06/97-10/31/97... 13.38 (0.17) 2.59 2.42 -- -- --

- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
11/19/96-10/31/97.. $15.90 27.20% $ 38,537 1.84% (0.77)% 150% $ 0.0546

- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
11/19/96-10/31/97.. 15.80 26.40 48,594 2.47 (1.58) 150 0.0546

- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3/06/97-10/31/97... 15.80 18.09 5,939 2.45 (1.68) 150 0.0546
</TABLE>

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

LARGE-CAP BLEND PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97... $12.50 $ 0.01 $ (0.53) $(0.52) $-- $-- $--

<CAPTION>
CLASS B
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97... 12.50 -- (0.54) (0.54) -- -- --
<CAPTION>
CLASS C
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97... 12.50 -- (0.53) (0.53) -- -- --

- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97.. $11.98 (4.16)% $ 23,593 1.78% 1.35% 2% $ 0.0361

- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97.. 11.96 (4.32) 941 2.43 0.29 2 0.0361

- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97.. 11.97 (4.24) 143 2.43 0.54 2 0.0361
</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>
Large-Cap Growth A....... .59%
Large-Cap Growth B....... 1.53%
Large-Cap Growth C....... 3.29%
Mid-Cap Growth A......... .34%
Mid-Cap Growth B......... .42%
Mid-Cap Growth C......... .96%
Aggressive Growth A...... .26%

Aggressive Growth B...... .32%
Aggressive Growth C...... .73%
Large-Cap Blend A........ .58%
Large-Cap Blend B........ 1.26%
Large-Cap Blend C........ 3.12%
</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.
See Notes to Financial Statements

<PAGE>

14
FINANCIAL HIGHLIGHTS -- (continued)
<TABLE>
<CAPTION>
NET
GAIN(LOSS) DIVIDENDS
ON INVEST- TOTAL FROM DISTRI-
NET ASSET NET MENTS(BOTH FROM NET BUTIONS
VALUE, INVEST- REALIZED INVEST- INVEST- FROM TOTAL
PERIOD BEGINNING MENT AND MENT MENT CAPITAL DISTRI-
ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME GAINS BUTIONS
- ------------------- ---------- --------- ----------- ---------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
LARGE-CAP VALUE PORTFOLIO
- -------------------------------------------

<CAPTION>
CLASS A
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97... $12.50 $ 0.01 $ (0.65) $(0.64) $-- $-- $--
<CAPTION>
CLASS B
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97... 12.50 -- (0.64) (0.64) -- -- --
<CAPTION>
CLASS C
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97... 12.50 -- (0.64) (0.64) -- -- --

- ------------------- ------ --------- ---------- ------------ ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
LARGE-CAP VALUE POR
- -------------------

- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97.. $11.86 (5.12)% $ 23,240 1.78% 1.07% --% $ 0.0445

- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97.. 11.86 (5.12) 1,325 2.43 .22 -- 0.0445

- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97.. 11.86 (5.12) 172 2.43 .53 -- 0.0445
</TABLE>

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
- ------------------------------------------------------------------------------------------------------
11/19/96-10/31/97... $12.50 $ -- $ 3.59 $ 3.59 $-- $-- $--

<CAPTION>
CLASS B
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
11/19/96-10/31/97... 12.50 (0.11) 3.61 3.50 -- -- --
<CAPTION>
CLASS C
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3/06/97-10/31/97... 13.56 (0.08) 2.52 2.44 -- -- --

<CAPTION>
VALUE PORTFOLIO
- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>

- -------------------
11/19/96-10/31/97.. $16.09 28.72% $ 48,377 1.84% --% 48% $ 0.0596

- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
11/19/96-10/31/97.. 16.00 28.00 77,534 2.46 (0.74) 48 0.0596

- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3/06/97-10/31/97... 16.00 17.99 9,384 2.45 (0.78) 48 0.0596

</TABLE>

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL-CAP VALUE PORTFOLIO
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
- ------------------------------------------------------------------------------------------------------
10/15/97-10/31/97... $12.50 $ 0.01 $ (0.37) $(0.36) $-- $-- $--

<CAPTION>
CLASS B
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97... 12.50 0.01 (0.38) (0.37) -- -- --
<CAPTION>
CLASS C
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97... 12.50 0.01 (0.37) (0.36) -- -- --

<CAPTION>
SMALL-CAP VALUE POR
<S> <C> <C> <C> <C> <C> <C> <C>

- -------------------
10/15/97-10/31/97.. $12.14 (2.88)% $ 21,346 1.78% 2.57% --% $ 0.0571

- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97.. 12.13 (2.88) 3,112 2.43 1.75 -- 0.0571

- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/15/97-10/31/97.. 12.14 (2.88) 525 2.43 1.75 -- 0.0571
</TABLE>

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

INTERNATIONAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
CLASS A
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
11/19/96-10/31/97... $12.50 $ 0.01 $ (0.05) $(0.04) $-- $-- $--

CLASS C
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3/06/97-10/31/97... 12.60 (0.07) (0.15) (0.22) -- -- --

- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
11/19/96-10/31/97.. $12.46 (0.32)% $ 24,365 2.10% 0.07% 70% $ 0.0179

- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
11/19/96-10/31/97.. 12.38 (0.96) 42,656 2.72 (0.69) 70 0.0179

- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3/06/97-10/31/97... 12.38 (1.75) 4,459 2.70 (0.75) 70 0.0179
</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>
Large-Cap Value A........ .58%
Large-Cap Value B........ 1.16%
Large-Cap Value C........ 3.22%
Value A.................. .28%
Value B.................. .34%
Value C.................. .63%
Small-Cap Value A........ .57%
Small-Cap Value B........ .74%
Small-Cap Value C........ 1.42%
International Equity A... .37%
International Equity B... .45%
International Equity C... .87%
</TABLE>

<PAGE>

Large-Cap Growth Portfolio
- --------------------------------------------------------------------------------

PORTFOLIO OF INVESTMENTS -- October 31, 1997
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK--96.9%
AUTOMOTIVE--1.2%
Harley-Davidson, Inc.(1)............................. 4,500 $ 124,875
Volkswagen AG ADR.................................... 1,525 179,950
-----------
304,825
-----------
BANKS--2.4%
BankAmerica Corp..................................... 1,400 100,100
Citicorp............................................. 900 112,556
State Street Corp.................................... 6,800 379,100
-----------
591,756
-----------
BROADCASTING & MEDIA--2.4%
Interpublic Group of Cos., Inc....................... 12,400 589,000
-----------
BUSINESS SERVICES--7.2%
Adaptec, Inc.+....................................... 3,500 169,531
America Online, Inc.+................................ 1,025 78,925
CUC International, Inc.+............................. 9,400 277,300
Manpower, Inc........................................ 16,800 644,700
Service Corp. International.......................... 11,400 346,988
TransCoastal Marine Services, Inc.+.................. 10,600 257,050
-----------
1,774,494
-----------
CHEMICALS--4.0%
du Pont (E.I.) de Nemours & Co....................... 5,725 325,609
Monsanto Co.......................................... 4,175 178,481
Sigma-Aldrich Corp................................... 7,800 272,025
Solutia, Inc......................................... 8,925 197,466
-----------
973,581
-----------
COMMUNICATION EQUIPMENT--0.8%
MMC Networks, Inc.+.................................. 9,000 196,875
-----------
COMPUTERS & BUSINESS EQUIPMENT--4.6%
3Com Corp.+.......................................... 5,800 240,338
Compaq Computer Corp................................. 3,300 210,375
Dell Computer Corp.+................................. 1,775 142,222
Hewlett-Packard Co................................... 6,200 382,462

Seagate Technology, Inc.+............................ 6,000 162,750
-----------
1,138,147
-----------
DRUGS--7.8%
Bristol-Myers Squibb Co.............................. 5,925 519,919
Lilly (Eli) & Co..................................... 4,000 267,500
Merck & Co., Inc..................................... 6,300 562,275
Omnicare, Inc........................................ 2,575 71,617
Pfizer, Inc.......................................... 6,875 486,406
-----------
1,907,717
-----------

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- --------------------------------------------------------------------------------
<S> <C> <C>
ELECTRONICS--12.0%
Arrow Electronics, Inc.+............................. 12,000 $ 340,500
ASM Lithography Holdings NV+......................... 2,500 183,125
Emerson Electric Co.................................. 5,500 288,406
Intel Corp........................................... 12,275 945,175
KLA-Tencor Corp.+.................................... 3,425 149,844
Motorola, Inc........................................ 5,400 333,450
Philips Electronics NV-
NY Shares.......................................... 3,075 241,003
Solectron Corp.+..................................... 4,500 176,625
Teradyne, Inc.+(1)................................... 2,400 89,850
Texas Instruments, Inc............................... 1,750 186,703
-----------
2,934,681
-----------
ENERGY SERVICES--2.6%
Diamond Offshore Drilling, Inc....................... 4,750 295,688
Schlumberger Ltd..................................... 3,950 345,625
-----------
641,313
-----------
ENERGY SOURCES--0.8%
Exxon Corp........................................... 3,300 202,744
-----------
ENTERTAINMENT PRODUCTS--2.5%
Mattel, Inc.......................................... 15,900 618,113
-----------
FINANCIAL SERVICES--6.2%
American Express Co.................................. 3,100 241,800
Charles Schwab Corp.................................. 6,000 204,750
Federal Home Loan Mortgage Corp...................... 4,650 176,119
Federal National Mortgage Association................ 4,350 210,703
First Data Corp...................................... 3,600 104,625
Merrill Lynch & Co., Inc............................. 1,675 113,272

Morgan Stanley, Dean Witter, Discover & Co........... 4,350 213,150
SLM Holding Corp..................................... 1,825 256,184
-----------
1,520,603
-----------
FOOD, BEVERAGE & TOBACCO--4.9%
Coca-Cola Co......................................... 7,900 446,350
Coca-Cola Enterprises, Inc........................... 4,375 123,047
Delta & Pine Land Co................................. 6,075 226,293
Pioneer Hi-Bred International, Inc................... 1,800 164,925
Sara Lee Corp........................................ 4,775 244,122
-----------
1,204,737
-----------
HEALTH SERVICES--0.6%
United Healthcare Corp............................... 3,275 151,673
-----------
</TABLE>

<PAGE>

Large-Cap Growth Portfolio
- --------------------------------------------------------------------------------

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- --------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
<S> <C> <C>
HOUSEHOLD PRODUCTS--3.7%
Gillette Co.......................................... 4,600 $ 409,688
Procter & Gamble Co.................................. 4,300 292,400
Warner-Lambert Co.................................... 1,500 214,781
-----------
916,869
-----------
HOUSING--1.2%
Home Depot, Inc...................................... 5,100 283,688
-----------
INSURANCE--2.1%
American International Group, Inc.................... 2,400 244,950
MGIC Investment Corp................................. 4,350 262,359
-----------
507,309
-----------
LEISURE & TOURISM--4.5%
Cracker Barrel Old Country Store, Inc................ 3,600 105,300

Delta Air Lines, Inc................................. 1,200 120,900
Disney (Walt) Co..................................... 2,200 180,950
Marriott International, Inc.......................... 3,000 209,250
McDonald's Corp...................................... 10,800 483,975
-----------
1,100,375
-----------
MEDICAL PRODUCTS--4.2%
Johnson & Johnson Co................................. 9,900 568,013
Medtronic, Inc....................................... 10,500 456,750
-----------
1,024,763
-----------
MULTI-INDUSTRY--4.6%
General Electric Co.................................. 15,700 1,013,631
Tyco International Ltd............................... 3,000 113,250
-----------
1,126,881
-----------
RETAIL--3.6%
CompUSA, Inc.+....................................... 2,300 75,325
Fred Meyer, Inc.+.................................... 3,200 91,400
Gap, Inc............................................. 4,000 212,750
Viking Office Products, Inc.+........................ 21,100 503,763
-----------
883,238
-----------
SOFTWARE--9.0%
American Power Conversion Corp.+..................... 11,000 295,625
Cadence Design Systems, Inc.+........................ 2,975 158,419
Cisco Systems, Inc.+................................. 4,600 377,200
Electronic Arts, Inc.+............................... 3,200 108,000
Microsoft Corp.+..................................... 6,650 863,668
Oracle Systems Corp.+................................ 7,200 257,400
Parametric Technology Corp.+......................... 3,500 154,000
-----------
2,214,312
<CAPTION>
SHARES/
PRINCIPAL
AMOUNT
(IN VALUE
SECURITY DESCRIPTION THOUSANDS) (NOTE 3)
- --------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS--2.7%
Ericsson (L.M.) Telecommu-
nications Co., Class B ADR......................... 9,600 $ 424,800
Hong Kong Telecommu-
nications Ltd. ADR................................. 12,400 237,925
-----------
662,725
-----------
TRANSPORTATION--1.3%

Air Express International Corp....................... 10,800 324,000
-----------
TOTAL INVESTMENT SECURITIES--96.9%
(cost $25,063,825)................................... 23,794,419
-----------
SHORT-TERM SECURITIES--0.8%
Federal Home Loan Mortgage Discount Notes
5.65% due 11/03/97
(cost: $199,937)................................... $ 200 199,937
-----------
REPURCHASE
AGREEMENT--1.6%
Agreement with State Street
Bank and Trust Co., bearing
5.00%, dated 10/31/97 to be
repurchased 11/03/97 in the
amount of $380,158
collaterized by $390,000
U.S. Treasury Note 5.875%,
due 2/28/99 approximate
aggregate value $394,927
(cost $380,000).................................... 380 380,000
-----------
TOTAL INVESTMENTS--
(cost $25,643,762)................................... 99.3% 24,374,356
Other assets less liabilities.......................... 0.7 174,203
------- -----------
NET ASSETS-- 100.0% $24,548,559
------- -----------
------- -----------
</TABLE>

- ------------------
+ Non-income producing security

ADR ('American Depositary Receipt')
(1) Security is traded with rights attached

See Notes to Financial Statements

<PAGE>

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

PORTFOLIO OF INVESTMENTS -- October 31, 1997
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -----------------------------------------------------------------------------

<S> <C> <C>
COMMON STOCK--95.5%
AEROSPACE & MILITARY TECHNOLOGY--0.3%
BE Aerospace, Inc.+................................ 7,200 $ 201,600
-----------
APPAREL & TEXTILES--3.1%
Danaher Corp....................................... 10,900 597,456
Jones Apparel Group, Inc.+......................... 5,400 274,725
Nautica Enterprises, Inc.+......................... 8,600 228,438
Polo Ralph Lauren Corp., Class A+.................. 4,400 114,400
Tommy Hilfiger Corp.+.............................. 6,500 257,156
Warnaco Group, Inc. Class A........................ 13,400 378,550
-----------
1,850,725
-----------
AUTOMOTIVE--0.8%
Harley-Davidson, Inc............................... 8,200 227,550
OEA, Inc........................................... 5,300 213,325
-----------
440,875
-----------
BANKS--0.6%
State Street Corp.................................. 6,800 379,100
-----------
BROADCASTING & MEDIA--8.1%
360 Communications Co.+............................ 13,900 293,638
At Home Corp., Series A+........................... 7,050 170,081
Cinar Films, Inc., Class B+........................ 7,200 279,900
Clear Channel Communications, Inc.+................ 6,800 448,800
Comcast Corp., Class A............................. 19,900 544,762
Heftel Broadcasting Corp., Class A+................ 3,100 202,275
Imax Corp.+........................................ 9,300 234,825
Jacor Communications, Inc.+........................ 11,600 482,850
Metro Networks, Inc.+.............................. 6,400 196,800
Outdoor Systems, Inc.+............................. 19,700 605,775
Tele-Communications Liberty Media Group, Inc.,
Series A......................................... 9,750 338,813
Tele-Communications TCI Group, Series A+........... 11,862 271,343
TV Azteca SA de CV ADR+............................ 8,800 168,300
Univision Communications, Inc., Class A+........... 3,800 235,600
Valassis Communications, Inc....................... 7,000 206,500
Vanguard Cellular Systems, Inc., Class A+.......... 5,100 69,806
-----------
4,750,068
-----------
BUSINESS SERVICES--11.3%
AccuStaff, Inc.+................................... 14,900 425,581
Adaptec, Inc.+..................................... 6,900 334,219
ADVO, Inc.+........................................ 3,000 67,313
Allied Waste Industries, Inc.+..................... 20,800 421,200

VALUE

SECURITY DESCRIPTION SHARES (NOTE 3)
- -----------------------------------------------------------------------------
<S> <C> <C>
BUSINESS SERVICES (CONTINUED)
American Disposal Services, Inc.+.................. 7,000 $ 243,250
Apollo Group, Inc., Class A+....................... 8,000 332,000
Catalina Marketing Corp.+.......................... 4,700 214,731
Cintas Corp........................................ 4,600 329,475
Coinstar, Inc...................................... 5,600 56,000
Complete Busines Solutions, Inc.................... 5,400 189,000
Concord EFS, Inc.+................................. 6,600 195,525
Corporate Express, Inc.+........................... 18,100 264,712
Corrections Corp. of America+...................... 6,800 207,400
CUC International, Inc.+........................... 7,500 221,250
Gartner Group, Inc., Class A+...................... 17,000 478,125
Interim Services, Inc.+............................ 12,100 316,869
McDermot International, Inc........................ 2,700 111,713
National Data Corp................................. 5,400 199,462
Paychex, Inc....................................... 9,050 343,900
Republic Industries, Inc.+......................... 10,300 303,850
Saville Systems PLC ADR+........................... 2,200 129,800
Solectron Corp.+................................... 4,200 164,850
Stewart Enterprises, Inc., Class A................. 4,800 199,200
Superior Services, Inc.+........................... 4,300 113,412
US Filter Corp.+................................... 5,800 232,725
USA Waste Services, Inc.+.......................... 14,575 539,275
-----------
6,634,837
-----------
CHEMICALS--0.6%
Great Lakes Chemical Corp.......................... 4,800 225,600
Zoltek Cos., Inc.+................................. 2,900 136,300
-----------
361,900
-----------
COMMUNICATION EQUIPMENT--6.9%
3Com Corp.+........................................ 8,875 367,758
ADC Telecommunications, Inc.+...................... 10,600 351,125
Advanced Fibre Communications, Inc.+............... 10,400 301,600
America Online, Inc.+.............................. 3,700 284,900
Anixter International, Inc.+....................... 6,900 130,238
CIENA Corp.+....................................... 3,800 209,000
Computer Horizons Corp.+........................... 9,600 290,400
Cox Communications, Inc., Class A+................. 7,700 236,775
Digital Microwave Corp.+........................... 4,100 146,575
Loral Space & Communications Corp.+................ 14,900 312,900
Metromedia Fiber Network, Inc., Class A............ 4,000 95,000
Newbridge Networks Corp. ADR+...................... 3,900 206,700
P-COM, Inc.+....................................... 4,600 91,425
PanAmSat Corp.+.................................... 5,300 220,612
Qwest Communications International, Inc.+.......... 2,400 148,200
</TABLE>

<PAGE>

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

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -----------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
<S> <C> <C>
COMMUNICATION EQUIPMENT (CONTINUED)
Tellabs, Inc.+..................................... 12,600 $ 679,612
-----------
4,072,820
-----------
COMPUTERS & BUSINESS EQUIPMENT--1.2%
BDM International, Inc.+........................... 10,600 233,200
Checkfree Corp.+................................... 5,700 153,900
Ikon Office Solutions, Inc......................... 3,700 104,756
Security Dynamics Technologies, Inc.+.............. 6,900 231,582
-----------
723,438
-----------
DRUGS--2.4%
BioChem Pharma, Inc.+.............................. 7,100 177,500
Biogen, Inc.+...................................... 10,600 352,450
Dura Pharmaceuticals, Inc.+........................ 7,600 367,650
Gilead Sciences, Inc.+............................. 6,400 216,800
Medicis Pharmaceutical Corp., Class A+............. 2,100 99,750
Omnicare, Inc...................................... 7,400 205,812
-----------
1,419,962
-----------
ELECTRICAL EQUIPMENT--1.0%
Creative Technology Ltd.+.......................... 10,900 277,269
Jabil Circuit, Inc.+............................... 3,400 153,000
Microchip Technology, Inc.+........................ 4,600 181,125
-----------
611,394
-----------
ELECTRONICS--4.0%
Analog Devices, Inc.+.............................. 5,800 177,262
Helix Technology Corp.............................. 3,000 135,000
Integrated Process Equipment Corp.................. 2,200 48,538
Lattice Semiconductor Corp.+....................... 4,000 199,000
Linear Technology Corp............................. 5,200 326,300
Maxim Integrated Products, Inc.+................... 3,000 198,562
Novellus Systems, Inc.+............................ 3,400 150,875

SpeedFam International, Inc.+...................... 1,300 48,100
Teleflex, Inc...................................... 7,700 286,825
Teradyne, Inc.+.................................... 4,200 157,238
Uniphase Corp.+.................................... 4,300 282,725
Vitesse Semiconductor Corp.+....................... 6,200 268,925
Xilinx, Inc.+...................................... 2,500 84,844
-----------
2,364,194
-----------
ENERGY SERVICES--6.1%
BJ Services Co.+................................... 3,300 279,675
Camco International, Inc........................... 7,200 520,200
Cliffs Drilling Co.+............................... 2,000 145,375
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -----------------------------------------------------------------------------
<S> <C> <C>
ENERGY SERVICES (CONTINUED)
Cooper Cameron Corp.+.............................. 6,700 484,075
Diamond Offshore Drilling, Inc..................... 3,100 $ 192,975
ENSCO International, Inc........................... 6,200 260,788
Global Marine, Inc.+............................... 16,100 501,112
Santa Fe International Corp.+...................... 9,000 442,687
Tidewater, Inc..................................... 7,300 479,519
Weatherford Enterra, Inc.+......................... 5,300 270,631
-----------
3,577,037
-----------
ENERGY SOURCES--0.4%
United Meridian Corp.+............................. 6,300 213,806
-----------
FINANCIAL SERVICES--3.5%
AMRESCO, Inc.+..................................... 600 18,750
Edwards (A.G.), Inc................................ 6,400 210,000
FINOVA Group, Inc.................................. 5,700 250,444
Franklin Resources, Inc............................ 7,050 633,619
Money Store, Inc................................... 11,200 317,800
Ocwen Financial Corp............................... 2,100 115,369
Sirrom Capital Corp................................ 7,200 362,700
Tele-Communications TCI Ventures Group, Series
A+............................................... 6,538 150,782
-----------
2,059,464
-----------
FOOD, BEVERAGE & TOBACCO--1.7%
Beringer Wine Estates Holdings, Inc., Class B+..... 1,800 55,575
Fresh Del Monte Produce, Inc.+..................... 4,000 64,500
JP Foodservice, Inc.+.............................. 9,000 287,438
Robert Mondavi Corp., Class A+..................... 4,600 233,450
Suiza Foods Corp.+................................. 6,500 327,437
-----------
968,400

-----------
FOREST PRODUCTS--0.4%
Sealed Air Corp.+.................................. 4,100 211,406
-----------
HEALTH SERVICES--7.3%
AmeriPath, Inc..................................... 4,300 70,950
Covance, Inc.+..................................... 12,900 228,169
HBO & Co........................................... 19,200 832,800
Health Management Associates, Inc., Class A+....... 27,150 661,782
HEALTHSOUTH Corp.+................................. 12,500 319,531
Lincare Holdings, Inc.+............................ 11,600 622,050
Orthodontic Centers of America, Inc.+.............. 12,400 214,675
Pediatrix Medical Group, Inc.+..................... 5,100 215,475
Quintiles Transnational Corp.+..................... 4,400 319,000
Quorum Health Group, Inc.+......................... 10,950 264,853
Total Renal Care Holdings, Inc.+................... 13,300 409,806
</TABLE>

<PAGE>

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

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -----------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
<S> <C> <C>
HEALTH SERVICES (CONTINUED)
Vencor, Inc.+...................................... 4,200 $ 113,400
-----------
4,272,491
-----------
HOUSEHOLD PRODUCTS--2.0%
Culligan Water Technologies, Inc.+................. 5,000 213,125
Estee Lauder Cos., Inc., Class A................... 5,400 239,963
Omnipoint Corp. +.................................. 5,600 129,500
Rexall Sundown, Inc.+.............................. 11,600 249,400
United States Office Products Co................... 4,500 139,500
Wesley Jessen Visioncare, Inc...................... 7,000 201,250
-----------
1,172,738
-----------
INSURANCE--1.8%
Ace Ltd............................................ 4,500 418,219
Fairfax Financial Holdings Ltd.+................... 800 196,970
Healthcare Recoveries, Inc.+....................... 7,800 141,375

PartnerRe Ltd...................................... 6,800 278,800
-----------
1,035,364
-----------
LEISURE & TOURISM--2.9%
Anchor Gaming+..................................... 1,100 85,800
Callaway Golf Co................................... 5,400 174,150
CapStar Hotel Co.+................................. 2,800 99,225
Galileo International, Inc......................... 10,000 251,250
HFS, Inc.+......................................... 2,300 162,150
La Quinta Inns, Inc................................ 10,300 184,112
Outback Steakhouse, Inc.+.......................... 6,800 184,025
Premier Parks, Inc.+............................... 5,500 217,250
Royal Caribbean Cruises Ltd........................ 6,500 301,844
Signature Resorts, Inc.+........................... 1,300 33,638
-----------
1,693,444
-----------
MACHINERY--1.3%
Flextronics International Ltd.+.................... 3,500 131,250
McDermott International, Inc....................... 3,100 112,569
MSC Industrial Direct Co., Inc., Class A+.......... 4,800 199,800
Smith International, Inc.+......................... 4,100 312,625
-----------
756,244
-----------
MEDICAL PRODUCTS--1.6%
Cardinal Health, Inc............................... 2,900 215,325
Cyberonics, Inc.+.................................. 7,800 104,325
St. Jude Medical, Inc.+............................ 6,100 184,906
Sybron International Corp.+........................ 5,200 208,650
US Surgical Corp................................... 8,400 226,275
-----------
939,481
-----------
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -----------------------------------------------------------------------------
<S> <C> <C>
METALS & MINERALS--1.3%
Battle Mountain Gold Co............................ 29,800 $ 182,525
Cambior, Inc....................................... 13,300 104,738
TriMas Corp........................................ 12,100 353,925
TVX Gold, Inc.+.................................... 30,900 131,325
-----------
772,513
-----------
REAL ESTATE COMPANIES--0.7%
Security Capital Group, Inc., Class B+............. 9,000 288,000
Security Capital US Realty+ ....................... 2,000 28,200
Security Capital US Realty+ ....................... 5,500 77,550
-----------

393,750
-----------
REAL ESTATE INVESTMENT TRUSTS--0.7%
INMC Mortgage Holdings, Inc........................ 8,000 190,000
Security Capital Industrial Trust ................. 9,072 222,831
-----------
412,831
-----------
RETAIL--8.3%
Bed Bath & Beyond, Inc.+........................... 13,100 415,925
BJ's Wholesale Club, Inc.+......................... 7,200 207,900
Borders Group, Inc.+............................... 14,600 378,687
Brylane, Inc....................................... 2,600 112,938
CDW Computer Centers, Inc.+........................ 4,400 270,600
Circuit City Stores, Inc.+......................... 7,500 299,062
CompUSA, Inc.+..................................... 6,400 209,600
Costco Cos., Inc.+................................. 6,000 229,500
CVS Corp........................................... 5,500 337,219
Dollar Tree Stores, Inc.+.......................... 5,500 222,750
Fastenal Co........................................ 2,300 112,700
General Nutrition Cos., Inc.+...................... 14,900 465,625
Gymboree Corp.+.................................... 9,700 234,012
Hibbett Sporting Goods, Inc.+...................... 3,000 81,750
Kohl's Corp.+...................................... 3,600 241,650
Office Depot, Inc.+................................ 4,700 96,938
Richfood Holdings, Inc............................. 8,000 193,000
ShopKo Stores, Inc.+............................... 6,300 157,894
Stage Stores, Inc.................................. 4,100 147,600
Staples, Inc.+..................................... 12,400 323,950
Tiffany & Co....................................... 3,500 138,250
-----------
4,877,550
-----------
SOFTWARE--11.0%
Affiliated Computer Services Inc., Class A+........ 13,600 341,700
BMC Software, Inc.+................................ 12,600 757,575
DST Systems, Inc.+................................. 6,700 236,594
Electronics For Imaging, Inc.+..................... 11,300 526,862
Fiserv, Inc.+...................................... 6,300 279,562
HNC Software, Inc.+................................ 4,490 163,885
</TABLE>

<PAGE>

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

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -----------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
<S> <C> <C>
SOFTWARE (CONTINUED)
Inter-Tel, Inc..................................... 8,600 $ 212,850
Intuit, Inc.+...................................... 2,800 90,650
J.D. Edwards & Co.+................................ 8,900 300,375
Keane, Inc.+....................................... 4,000 118,500
Mapics, Inc........................................ 16,900 188,012
McAfee Associates, Inc.+........................... 7,800 387,075
Micro Focus Group PLC ADR+......................... 6,000 201,000
Network General Corp.+............................. 9,300 187,163
PeopleSoft, Inc.+.................................. 12,200 765,550
Platinum Technology, Inc.+ ........................ 5,400 129,938
Sapient Corp.+..................................... 3,000 156,000
Sterling Commerce, Inc.+........................... 6,100 202,444
SunGard Data Systems, Inc.+........................ 10,100 238,612
Synopsys, Inc.+.................................... 4,700 182,125
Viasoft, Inc.+..................................... 4,500 182,813
Visio Corp.+....................................... 4,000 147,000
VocalTec Communications Ltd.+...................... 4,400 114,400
Wind River Systems+................................ 10,150 386,969
-----------
6,497,654
-----------

TELECOMMUNICATIONS--2.2%
DSC Communications Corp.+.......................... 7,300 177,937
Globalstar Telecommunications Ltd.+................ 13,108 606,245
Intermedia Communications, Inc.+................... 3,100 139,500
MRV Communications, Inc.+.......................... 2,500 72,500
Positron Fiber Systems Corp., Class A.............. 7,000 54,906
Tel-Save Holdings, Inc.+........................... 6,300 134,663
World Access, Inc.+................................ 3,900 101,888
-----------
1,287,639
-----------

TELEPHONE--2.0%
Cellular Communications International, Inc.+....... 3,800 150,575
Cincinnati Bell, Inc............................... 9,800 264,600
Ionica Group PLC ADR............................... 5,700 88,350
MCI Communications Corp............................ 5,900 209,081
NEXTLINK Communications, Inc., Class A+............ 6,400 144,000
WorldCom, Inc.+.................................... 10,180 341,666
-----------
1,198,272
-----------
TOTAL COMMON STOCK
(cost $49,352,989)................................. 56,150,997
-----------
</TABLE>

<TABLE>
<CAPTION>
WARRANTS/
PRINCIPAL
AMOUNT
(IN VALUE
SECURITY DESCRIPTION THOUSANDS) (NOTE 3)
- -----------------------------------------------------------------------------
<S> <C> <C>
WARRANTS--0.0%+
REAL ESTATE COMPANIES--0.0%
Security Capital Group, Inc., Class B 9/18/98
(cost $3,748).................................... 422 $ 2,032
-----------
TOTAL INVESTMENT SECURITIES--95.5%
(cost $49,356,737)................................. 56,153,029
-----------

SHORT-TERM SECURITIES--3.8%
Cayman Island Time Deposit with State Street Bank
and Trust Co. 3.00% due 11/03/97................. $ 373 373,000
Cayman Island Time Deposit with State Street Bank
and Trust Co. 4.50% due 11/03/97................. 1,258 1,258,000
Federal Home Loan Mortgage Discount Notes 5.415%
due 11/28/97..................................... 115 114,533
Federal Home Loan Mortgage Discount Notes 5.49% due
11/24/97......................................... 135 134,526
Federal Home Loan Mortgage Discount Notes 5.50% due
11/13/97......................................... 270 269,505
Federal National Mortgage Association Discount
Notes 5.47% due 11/06/97......................... 108 107,918
-----------
TOTAL SHORT-TERM SECURITIES
(cost $2,257,482).................................. 2,257,482
-----------
TOTAL INVESTMENTS--
(cost $51,614,219)................................. 99.3% 58,410,511
Other assets less liabilities........................ 0.7 417,687
------ -----------
NET ASSETS-- 100.0% $58,828,198
------ -----------
------ -----------
</TABLE>

- ------------------
+ Non-income producing security
ADR ('American Depositary Receipt')

See Notes to Financial Statements

<PAGE>

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

PORTFOLIO OF INVESTMENTS -- October 31, 1997
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK--90.2%
AEROSPACE & MILITARY TECHNOLOGY--1.6%
DONCASTERS PLC ADR+.................................. 10,100 $ 272,069
Gulfstream Aerospace Corp.+.......................... 10,400 301,600
REMEC, Inc.+......................................... 29,450 728,887
Tracor, Inc.+........................................ 8,400 221,550
-----------
1,524,106
-----------
APPAREL & TEXTILES--0.2%
Track 'n Trail, Inc.+................................ 24,000 234,000
-----------
AUTOMOTIVE--0.2%
Budget Group, Inc., Class A+......................... 5,300 185,500
-----------
BANKS--6.1%
Bank United Corp., Class A........................... 6,000 252,000
BankAmerica Corp..................................... 20,950 1,497,925
Citicorp............................................. 4,075 509,630
City National Corp................................... 9,300 279,581
Cullen/Frost Bankers, Inc.(1)........................ 5,500 277,750
First American Corp.................................. 11,200 530,600
Hamilton Bancorp, Inc.+.............................. 20,000 560,000
Hibernia Corp., Class A.............................. 10,000 178,125
PNC Bank Corp........................................ 5,000 237,500
Summit Bancorp....................................... 15,000 640,313
U.S. Bancorp......................................... 7,000 711,812
-----------
5,675,236
-----------
BROADCASTING & MEDIA--5.7%
At Home Corp., Series A+............................. 28,875 696,609
Central European Media Enterprises Ltd., Class A+.... 10,600 306,075
Central Newspapers, Inc., Class A.................... 4,900 321,869
Cinar Films, Inc., Class B+.......................... 13,000 505,375
DeVry, Inc.+......................................... 8,100 213,637
Heftel Broadcasting Corp., Class A+.................. 3,100 202,275
Houghton Mifflin Co.................................. 7,300 259,150
ITT Educational Services, Inc.+...................... 8,300 200,238
Outdoor Systems, Inc.+............................... 11,725 360,544
Paging Network, Inc.+................................ 23,800 291,550
Universal Outdoor Holdings, Inc.+ ................... 7,500 315,000

Univision Communications, Inc., Class A+............. 17,400 1,078,800
Valassis Communications, Inc. ....................... 9,000 265,500
Wiley (John) & Sons, Inc., Class A................... 6,000 263,250
-----------
5,279,872
-----------

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- --------------------------------------------------------------------------------
<S> <C> <C>
BUSINESS SERVICES--6.9%
Allied Waste Industries, Inc.+....................... 13,400 $ 271,350
America Online, Inc.+................................ 17,550 1,351,350
American Disposal Services, Inc.+ 20,000 695,000
Apollo Group, Inc., Class A+......................... 13,125 544,687
CHS Electronics, Inc.+............................... 12,150 294,638
Corporate Express, Inc.+............................. 13,800 201,825
Lason Holdings, Inc.................................. 10,000 253,750
Nabors Industries, Inc.+............................. 10,900 448,262
Norrell Corp......................................... 5,900 171,838
Pre-Paid Legal Services, Inc.+....................... 5,000 151,250
QuickResponse Services, Inc.+........................ 6,900 222,525
Robert Half International, Inc.+..................... 10,200 417,562
ScanSource, Inc.+.................................... 10,000 198,750
SITEL Corp.+......................................... 24,700 219,213
TransCoastal Marine Services, Inc.+ ................. 11,000 266,750
Transcrypt Internaional, Inc.+....................... 5,200 111,150
USA Waste Services, Inc.+............................ 9,700 358,900
Vestcom International, Inc.+......................... 15,000 268,125
-----------
6,446,925
-----------
COMMUNICATION EQUIPMENT--4.9%
Advanced Fibre Communications, Inc.+................. 30,000 870,000
CIENA Corp.+......................................... 5,000 275,000
Concord Communications, Inc.+ 1,500 27,000
Digital Microwave Corp.+............................. 10,000 357,500
EchoStar Communications Corp., Class A+.............. 20,000 380,000
Newbridge Networks Corp.+............................ 10,000 530,000
Qwest Communications International, Inc.+............ 15,850 978,737
Tekelec, Inc.+....................................... 10,000 417,500
Tellabs, Inc.+....................................... 8,000 431,500
Yurie System, Inc.+.................................. 10,000 302,500
-----------
4,569,737
-----------
COMPUTERS & BUSINESS EQUIPMENT--2.0%
Dell Computer Corp.+................................. 18,450 1,478,306
Miller (Herman), Inc................................. 7,900 386,113
-----------
1,864,419

-----------
</TABLE>

<PAGE>

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

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- --------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
<S> <C> <C>
DRUGS--3.8%
Gilead Sciences, Inc.+............................... 5,900 $ 199,863
IDEC Pharmaceuticals Corp.+.......................... 15,000 571,875
Lilly (Eli) & Co..................................... 7,950 531,656
Mylan Laboratories, Inc.............................. 5,000 109,688
Omnicare, Inc........................................ 18,875 524,961
Pfizer, Inc.......................................... 11,650 824,237
Sepracor, Inc.+...................................... 7,400 263,625
Teva Pharmaceutical Industries Ltd. ADR.............. 4,000 186,750
Watson Pharmaceuticals, Inc.+........................ 9,000 285,750
-----------
3,498,405
-----------
ELECTRIC UTILITIES--1.0%
AES Corp.+........................................... 23,525 932,178
-----------

ELECTRICAL EQUIPMENT--0.3%
Etec Systems, Inc.+.................................. 5,400 240,975
-----------

ELECTRONICS--7.9%
Aehr Test Systems+................................... 14,700 194,775
Alpha Industries, Inc.+(1)........................... 10,000 158,750
Altera Corp.+........................................ 5,100 225,994
ATMI, Inc.+.......................................... 17,100 453,150
Burr-Brown Corp.+.................................... 8,600 256,925
DII Group, Inc.+..................................... 20,000 487,500
GaSonics International Corp.+........................ 6,200 96,100
Intel Corp........................................... 5,900 454,300
KLA-Tencor Corp.+.................................... 7,600 332,500
Lam Research Corp.+.................................. 17,725 638,100
Maxim Integrated Products, Inc.+..................... 14,900 986,194
Microchip Technology, Inc.+.......................... 9,250 364,219

SIPEX Corp.+......................................... 24,500 805,437
SpeedFam International, Inc.+........................ 5,800 214,600
Teradyne, Inc.+(1)................................... 8,650 323,834
Uniphase Corp.+...................................... 2,500 164,375
Veeco Instruments, Inc.+............................. 8,700 343,650
Vitesse Semiconductor Corp.+......................... 14,600 633,275
Xilinx, Inc.+........................................ 7,800 264,713
-----------
7,398,391
-----------
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- --------------------------------------------------------------------------------
<S> <C> <C>
ENERGY SERVICES--6.6%
Diamond Offshore Drilling, Inc....................... 14,750 $ 918,187
EVI, Inc.+........................................... 5,425 348,217
Falcon Drilling Co., Inc.+........................... 9,050 329,194
Friede Goldman International, Inc.+.................. 20,000 792,500
Global Industries Ltd.+.............................. 13,600 272,000
Halliburton Co....................................... 15,100 900,338
National-Oilwell, Inc.+.............................. 4,150 317,734
Noble Drilling Corp.+................................ 10,225 363,627
Petroleum Geo-Services ADR+.......................... 7,100 491,675
Pride International, Inc.+........................... 15,400 508,200
Schlumberger Ltd..................................... 6,500 568,750
Transocean Offshore, Inc............................. 900 48,600
Trico Marine Services, Inc.+......................... 7,200 264,600
-----------
6,123,622
-----------
ENERGY SOURCES--0.9%
Brown (Tom), Inc.+................................... 9,200 225,400
Chieftain International, Inc.+....................... 11,300 276,850
KCS Energy, Inc...................................... 12,100 318,381
-----------
820,631
-----------
ENTERTAINMENT PRODUCTS--0.4%
Mattel, Inc.......................................... 10,000 388,750
-----------
FINANCIAL SERVICES--3.2%
American Express Co.................................. 6,450 503,100
Healthcare Financial Partners, Inc.+................. 13,600 459,000
Jackson Hewitt, Inc.+................................ 4,500 201,375
Legg Mason, Inc...................................... 4,667 228,958
Merrill Lynch & Co., Inc............................. 4,925 333,053
Morgan Stanley, Dean Witter, Discover & Co........... 11,750 575,750
Nationwide Financial Services, Inc., Class A......... 13,700 416,994
Price (T. Rowe) Associates, Inc...................... 4,100 271,625
-----------
2,989,855

-----------
FOOD, BEVERAGE & TOBACCO--1.7%
Coca-Cola Co......................................... 4,300 242,950
Consolidated Cigar Holdings, Inc., Class A+.......... 10,400 408,200
Fresh Del Monte Produce, Inc.+....................... 15,000 241,875
Sara Lee Corp........................................ 13,050 667,181
-----------
1,560,206
-----------
</TABLE>

<PAGE>

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

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- --------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
<S> <C> <C>
HEALTH SERVICES--1.1%
HBO & Co............................................. 10,000 $ 433,750
HEALTHSOUTH Corp.+................................... 5,000 127,812
Mid Atlantic Medical Services, Inc.+ ................ 18,400 267,950
PhyCor, Inc.+........................................ 10,000 229,375
-----------
1,058,887
-----------

HOUSEHOLD PRODUCTS--3.0%
Alberto-Culver Co., Class A.......................... 9,200 238,625
Central Garden & Pet Co.+............................ 12,500 321,875
Gillette Co.......................................... 4,225 376,289
Sunbeam Corp......................................... 10,000 453,125
Warner-Lambert Co.................................... 9,675 1,385,339
-----------
2,775,253
-----------

HOUSING--0.3%
Furniture Brands International, Inc.+ ............... 10,000 167,500
Toll Brothers, Inc.+................................. 5,000 110,625
-----------
278,125
-----------
INSURANCE--1.8%

Allmerica Financial Corp............................. 7,251 339,890
American International Group, Inc.................... 2,862 292,103
Frontier Insurance Group, Inc........................ 8,100 272,869
Penncorp Financial Group, Inc........................ 5,100 166,069
Protective Life Corp................................. 5,000 264,375
Provident Cos., Inc.................................. 10,000 333,750
-----------
1,669,056
-----------

LEISURE & TOURISM--1.1%
Doubletree Corp.+.................................... 5,100 211,012
Premier Parks, Inc.+................................. 7,200 284,400
Ryan's Family Steak Houses, Inc.+ 19,000 161,500
Vistana, Inc.+....................................... 16,100 362,250
-----------
1,019,162
-----------
MACHINERY--0.8%
Kennametal, Inc...................................... 10,000 485,000
Smith International, Inc.+........................... 3,950 301,188
-----------
786,188
-----------
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- --------------------------------------------------------------------------------
<S> <C> <C>
MEDICAL PRODUCTS--2.9%
Andrx Corp.+......................................... 5,000 $ 186,875
Arterial Vascular Engineering, Inc.+ ................ 15,000 795,000
Bergen Brunswig Corp., Class A....................... 5,175 207,323
Cardinal Health, Inc................................. 3,275 243,169
Conceptus, Inc.+..................................... 11,200 78,400
ESC Medical Systems Ltd.+............................ 7,900 306,125
Guidant Corp......................................... 2,500 143,750
Henry Schein, Inc.+.................................. 6,400 207,200
Nitinol Medical Technologies, Inc.+ ................. 13,500 187,313
SangStat Medical Corp.+.............................. 10,400 317,200
-----------
2,672,355
-----------
METALS & MINERALS--0.5%
NS Group, Inc.+...................................... 15,800 422,650
-----------
MULTI-INDUSTRY--0.4%
Corning, Inc......................................... 5,000 225,625
General Electric Co.................................. 2,850 184,003
-----------
409,628
-----------
REAL ESTATE COMPANIES--1.2%

LaSalle Partners, Inc.+.............................. 31,375 1,147,148
-----------
REAL ESTATE INVESTMENT TRUSTS--0.5%
CarrAmerica Realty Corp.............................. 7,400 220,613
Security Capital Pacific Trust....................... 9,600 214,800
-----------
435,413
-----------
RETAIL--4.5%
Borders Group, Inc.+................................. 18,800 487,625
Gap, Inc............................................. 5,000 265,938
Guitar Center, Inc.+................................. 5,000 107,500
Home Depot, Inc...................................... 30,625 1,703,516
Kohl's Corp.+........................................ 5,000 335,625
Payless ShoeSource, Inc.+............................ 4,700 262,025
Proffitt's, Inc.+.................................... 20,000 573,750
Staples, Inc.+....................................... 12,100 316,112
Sunglass Hut International, Inc.+ 20,000 157,500
-----------
4,209,591
-----------
SOFTWARE--12.5%
Acceler8 Technology Corp.+........................... 4,925 97,884
Adobe Systems, Inc................................... 5,500 261,938
Aspect Development, Inc.+............................ 10,000 462,500
</TABLE>

<PAGE>

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

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- --------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
<S> <C> <C>
SOFTWARE (CONTINUED)
Avant Corp.+......................................... 11,700 $ 304,200
BMC Software, Inc.+.................................. 9,400 565,175
Cambridge Technology Partners, Inc.+................. 6,900 251,850
CBT Group PLC ADR+................................... 14,150 1,086,012
Check Point Software Technologies, Ltd.+............. 10,000 425,000
Cisco Systems, Inc.+................................. 11,700 959,400
Compuware Corp.+..................................... 5,000 329,375
Dataworks Corp.+..................................... 8,100 160,481
Electronics For Imaging, Inc.+....................... 2,450 114,231

Harbinger Corp.+..................................... 6,050 176,206
Industri-Matematik International Corp.+.............. 10,000 212,500
JDA Software Group, Inc.............................. 5,000 155,625
Keane, Inc.+......................................... 6,000 177,750
Microsoft Corp.+..................................... 9,950 1,292,256
National Instruments Corp.+.......................... 7,100 315,950
Novell, Inc.+........................................ 7,000 58,625
PeopleSoft, Inc.+.................................... 8,000 502,000
PLATINUM Technology, Inc.+........................... 13,600 327,250
QuadraMed Corp.+..................................... 4,000 93,500
Sterling Commerce, Inc.+............................. 8,000 265,500
Structural Dynamics Research Corp.+(1) .............. 10,200 193,800
SunGard Data Systems, Inc.+.......................... 13,000 307,125
Technology Solutions Co.+............................ 9,350 292,188
Transaction Systems Architects, Inc., Class A+....... 10,500 406,875
VERITAS Software Corp.+.............................. 30,950 1,284,425
Visio Corp.+......................................... 8,000 294,000
Yahoo!, Inc.+........................................ 5,000 219,063
-----------
11,592,684
-----------
TELECOMMUNICATIONS--3.8%
Comdial Corp.+....................................... 10,000 113,750
ITC DeltaCom, Inc.+.................................. 5,000 96,250
Lucent Technologies, Inc............................. 22,750 1,875,453
MasTec, Inc.+........................................ 10,000 324,375
McLeodUSA, Inc., Class A+............................ 10,700 395,900
Teleport Communications Group Inc., Class A+......... 10,000 482,500
TTI Team Telecom International, Ltd.+................ 39,700 223,313
-----------
3,511,541
-----------
TRANSPORTATION--2.4%
Caliber System, Inc.................................. 15,000 781,875
CNF Transportation, Inc.............................. 5,000 223,125
<CAPTION>
SHARES/WARRANTS/
PRINCIPAL
AMOUNT
(IN VALUE
SECURITY DESCRIPTION THOUSANDS) (NOTE 3)
- --------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION (CONTINUED)
Coach USA, Inc.+..................................... 9,900 $ 294,525
Consolidated Freightways Corp.+...................... 4,000 56,500
Federal Express Corp.+............................... 325 21,694
Heartland Express, Inc.+............................. 9,200 243,800
M.S. Carriers, Inc.+................................. 11,200 280,000
Swift Transportation Co., Inc.+...................... 9,600 304,800
-----------
2,206,319
-----------
TOTAL COMMON STOCK

(cost $70,319,416)................................... 83,926,808
-----------
WARRANTS--0.0%+
REAL ESTATE COMPANIES--0.0%
Security Capital Group, Inc., Class B 9/18/98
(cost $4,486)...................................... 505 2,432
-----------
TOTAL INVESTMENT SECURITIES--90.2%
(cost $70,323,902)............................................. 83,929,240
-----------
SHORT-TERM SECURITIES--2.1%
Federal Home Loan Mortgage Discount Notes
5.65% due 11/03/97
(cost $1,999,372).................................. $ 2,000 1,999,372
-----------
REPURCHASE AGREEMENTS--8.9%
Agreement with State Street Bank and Trust Co.,
bearing 5.55% dated 10/31/97 to be repurchased
11/03/97 in the amount of $5,610,594,
collateralized by $5,670,000 U.S. Treasury Note
6.375%, due 4/30/99 approximate aggregate value
$5,731,234.
(cost $5,608,000) ................................. 5,608 5,608,000
Joint Repurchase Agreement Account (Note 3)
(cost $2,661,000).................................. 2,661 2,661,000
-----------
TOTAL REPURCHASE AGREEMENTS
(cost $8,269,000).................................... 8,269,000
-----------
TOTAL INVESTMENTS--
(cost $80,592,274) .................................. 101.2% 94,197,612
Liabilities in excess of other assets.................. (1.2) (1,127,251)
------- -----------
NET ASSETS-- 100.0% $93,070,361
------- -----------
------- -----------
</TABLE>

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

+ Non-income producing security
ADR ('American Depositary Receipt')
(1) Security is traded with rights attached
See Notes to Financial Statements

<PAGE>

Large-Cap Blend Portfolio
- --------------------------------------------------------------------------------

PORTFOLIO OF INVESTMENTS -- October 31, 1997
<TABLE>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK--94.2%
AEROSPACE & MILITARY TECHNOLOGY--1.7%
AlliedSignal, Inc.................................... 6,600 $ 237,600
Boeing Co............................................ 2,000 95,750
Lockheed Martin Corp................................. 800 76,050
-----------
409,400
-----------
AUTOMOTIVE--0.7%
Chrysler Corp........................................ 2,400 84,600
General Motors Corp.................................. 1,500 96,281
-----------
180,881
-----------
BANKS--9.2%
Banc One Corp........................................ 1,300 67,763
Bank of New York Cos., Inc........................... 1,700 80,006
BankAmerica Corp..................................... 2,500 178,750
Bankers Trust New York Corp.......................... 800 94,400
Chase Manhattan Corp................................. 3,500 403,812
Citicorp............................................. 1,700 212,606
First Union Corp..................................... 3,000 147,188
Firstar Corp.(1)..................................... 1,000 36,125
Fleet Financial Group, Inc........................... 1,600 102,900
KeyCorp.............................................. 3,300 201,919
Mellon Bank Corp..................................... 4,900 252,656
National City Corp................................... 700 41,825
Summit Bancorp....................................... 3,000 128,063
Wells Fargo & Co..................................... 1,100 320,512
-----------
2,268,525
-----------
BROADCASTING & MEDIA--3.7%
Eastman Kodak Co..................................... 900 53,888
Gannett Co., Inc..................................... 2,600 136,662
Knight-Ridder, Inc................................... 2,200 114,950
New York Times Co.,
Class A............................................ 5,400 295,650
Readers Digest Association, Inc., Class A............ 2,500 56,875
Readers Digest Association, Inc., Class B............ 2,100 48,825
Reuters Holdings PLC, Class B ADR.................... 2,000 131,000
Vodafone Group PLC ADR............................... 1,400 76,825
-----------
914,675
-----------
BUSINESS SERVICES--1.9%
Cognizant Corp....................................... 2,500 97,969
Gartner Group, Inc., Class A+........................ 4,000 112,500

Newell Co............................................ 1,600 61,400
Service Corp. International.......................... 4,000 121,750
Waste Management, Inc................................ 3,500 81,812
-----------
475,431
-----------

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- --------------------------------------------------------------------------------
<S> <C> <C>
CHEMICALS--2.5%
Dow Chemical Co...................................... 1,100 $ 99,825
du Pont (E.I.) de Nemours & Co....................... 6,500 369,687
IMC Global, Inc...................................... 3,000 101,063
Schulman (A), Inc.................................... 1,900 42,750
-----------
613,325
-----------
COMMUNICATION EQUIPMENT--0.6%
MMC Networks, Inc.+.................................. 3,500 76,562
SBC Communications, Inc.............................. 1,100 69,988
-----------
146,550
-----------
COMPUTERS & BUSINESS EQUIPMENT--3.4%
Compaq Computer Corp................................. 1,500 95,625
Computer Sciences Corp.+............................. 1,500 106,406
Hewlett-Packard Co................................... 2,900 178,894
International Business Machines Corp................. 3,700 362,831
NCR Corp.+........................................... 3,100 93,969
-----------
837,725
-----------
DRUGS--6.2%
Abbott Laboratories, Inc............................. 2,500 153,281
American Home Products
Corp............................................... 3,900 289,087
Amgen, Inc.+......................................... 1,200 59,025
Astra AB ADR......................................... 5,300 84,469
Bristol-Myers Squibb Co.............................. 3,100 272,025
IDEC Pharmaceuticals Corp.+.......................... 2,000 76,250
Merck & Co., Inc..................................... 1,500 133,875
Pfizer, Inc.......................................... 4,500 318,375
Pharmacia & Upjohn, Inc.............................. 2,000 63,500
SmithKline Beecham PLC ADR........................... 1,700 80,963
-----------
1,530,850
-----------
ELECTRIC UTILITIES--3.8%
Dominion Resources, Inc.............................. 800 29,750
DQE, Inc............................................. 1,600 49,500

Duke Energy Corp..................................... 4,200 202,650
Edison International................................. 9,000 230,625
Entergy Corp......................................... 2,200 53,763
GPU, Inc............................................. 3,000 108,562
National Power PLC ADR............................... 3,600 119,700
Niagara Mohawk Power Corp............................ 2,800 27,125
Unicom Corp.......................................... 3,900 109,200
-----------
930,875
-----------
ELECTRICAL EQUIPMENT--2.0%
Honeywell, Inc....................................... 4,500 306,281
</TABLE>

<PAGE>

Large-Cap Blend Portfolio
- --------------------------------------------------------------------------------

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- --------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
<S> <C> <C>
Hubbell, Inc., Class B............................... 4,400 $ 193,875
-----------
500,156
-----------
ELECTRONICS--2.0%
Advanced Micro Devices, Inc.+........................ 3,800 87,400
Emerson Electric Co.................................. 2,000 104,875
LSI Logic Corp.+..................................... 3,700 80,706
Micron Technology, Inc.+............................. 1,800 48,263
Millipore Corp....................................... 1,500 58,687
Motorola, Inc........................................ 2,000 123,500
-----------
503,431
-----------
ENERGY SERVICES--1.1%
ENSCO International, Inc............................. 3,000 126,188
Schlumberger Ltd..................................... 1,600 140,000
-----------
266,188
-----------
ENERGY SOURCES--7.3%
Atlantic Richfield Co................................ 2,700 222,244
British Petroleum Co.

PLC ADS............................................ 2,300 201,825
Burlington Resources, Inc............................ 2,400 117,450
Elf Aquitaine SA ADR................................. 2,000 123,500
Exxon Corp........................................... 2,000 122,875
Halliburton Co....................................... 3,800 226,575
Mobil Corp........................................... 2,600 189,312
Noble Affiliates, Inc................................ 2,200 90,337
Royal Dutch Petroleum Co.--
NY Registry Shares GDR............................. 2,000 105,250
Texaco, Inc.......................................... 4,100 233,444
Unocal Corp.......................................... 1,400 57,750
USX-Marathon Group, Inc.............................. 2,900 103,675
-----------
1,794,237
-----------
ENTERTAINMENT PRODUCTS--1.1%
EMI Group PLC ADR.................................... 6,500 106,438
Mattel, Inc.......................................... 4,000 155,500
-----------
261,938
-----------
FINANCIAL SERVICES--4.7%
American Express Co.................................. 3,100 241,800
Bear Stearns Cos., Inc............................... 1,700 67,469
Beneficial Corp.(1).................................. 700 53,681
ContiFinancial Corp.+................................ 2,000 56,875
Federal National Mortgage Association................ 5,100 247,031
First Data Corp...................................... 1,500 43,594
H&R Block, Inc....................................... 3,200 118,400
Household International, Inc......................... 2,000 226,500
Salomon, Inc......................................... 1,500 116,531
-----------
1,171,881
-----------
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- --------------------------------------------------------------------------------
<S> <C> <C>
FOOD, BEVERAGE & TOBACCO--6.6%
Anheuser-Busch Cos., Inc............................. 1,000 $ 39,938
Brown-Forman Corp., Class B.......................... 700 34,431
Cadbury Schweppes PLC ADR............................ 3,200 130,000
General Mills, Inc................................... 900 59,400
Heineken NV ADR...................................... 600 96,450
Heinz (H.J.) Co...................................... 2,900 134,669
McCormick & Co., Inc................................. 1,300 32,500
Nabisco Holdings Corp.,
Class A............................................ 1,100 45,238
PepsiCo, Inc......................................... 5,500 202,469
Philip Morris Cos., Inc.............................. 10,900 431,912
Ralston-Purina Group................................. 1,000 89,750
RJR Nabisco Holdings Corp............................ 1,800 57,037

Sara Lee Corp........................................ 2,200 112,475
Sysco Corp........................................... 2,000 80,000
UST, Inc............................................. 3,000 89,812
-----------
1,636,081
-----------
FOREST PRODUCTS--2.0%
Bowater, Inc......................................... 2,500 104,531
Champion International Corp.......................... 1,500 82,781
Fort James Corp...................................... 2,900 115,094
Georgia-Pacific Corp................................. 1,200 101,775
Owens-Illinois, Inc.+................................ 3,000 103,500
-----------
507,681
-----------
GAS & PIPELINE UTILITIES--0.5%
Enron Corp........................................... 3,000 114,000
-----------
HOUSEHOLD PRODUCTS--3.3%
Gillette Co.......................................... 1,500 133,594
International Flavors & Fragrances, Inc.............. 500 24,187
Kimberly-Clark Corp.................................. 3,300 171,394
Procter & Gamble Co.................................. 3,200 217,600
Sola International, Inc.+............................ 3,000 102,375
Tupperware Corp...................................... 1,100 27,569
Warner-Lambert Co.................................... 900 128,869
-----------
805,588
-----------
HOUSING--0.7%
American Standard Cos., Inc.+........................ 1,700 60,775
Home Depot, Inc...................................... 2,000 111,250
-----------
172,025
-----------
INSURANCE--5.4%
Aetna, Inc........................................... 1,500 106,594
Allstate Corp........................................ 2,800 232,225
American General Corp................................ 1,700 86,700
Chubb Corp........................................... 2,000 132,500
EXEL Ltd............................................. 900 54,394
Hartford Financial Services, Inc..................... 1,800 145,800
</TABLE>

<PAGE>

Large-Cap Blend Portfolio
- --------------------------------------------------------------------------------

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- --------------------------------------------------------------------------------
INSURANCE (CONTINUED)
<S> <C> <C>
St. Paul Co., Inc.................................... 1,700 $ 135,894
Travelers Group, Inc................................. 3,100 217,000
Travelers Property Casualty Corp., Class A........... 2,100 75,862
UNUM Corp............................................ 1,300 63,375
Willis Corroon Group
PLC ADR............................................ 7,100 76,769
-----------
1,327,113
-----------
LEISURE & TOURISM--2.0%
Brunswick Corp....................................... 3,500 118,125
Host Marriott Corp.+................................. 2,300 48,013
McDonald's Corp...................................... 5,300 237,506
UAL Corp.+........................................... 1,100 96,387
-----------
500,031
-----------
MACHINERY--0.6%
Deere & Co........................................... 2,700 142,088
-----------
MEDICAL PRODUCTS--2.0%
Baxter International, Inc............................ 2,000 92,500
Johnson & Johnson Co................................. 3,700 212,288
Pall Corp............................................ 4,100 84,819
Smith & Nephew PLC................................... 17,000 49,485
St. Jude Medical, Inc.+.............................. 1,900 57,594
-----------
496,686
-----------
METALS & MINERALS--1.6%
Aluminum Co. of America.............................. 1,000 73,000
Great Lakes Chemical Corp............................ 2,800 131,600
Newmont Mining Corp.................................. 2,400 84,000
Nucor Corp........................................... 600 31,350
Reynolds Metals Co................................... 1,100 67,031
-----------
386,981
-----------
MULTI-INDUSTRY--2.7%
Cooper Industries, Inc............................... 1,400 72,975
Corning, Inc......................................... 5,100 230,137
FMC Corp............................................. 600 48,488
General Electric Co.................................. 4,600 296,987
Tomkins PLC.......................................... 5,000 25,670
-----------
674,257
-----------

REAL ESTATE COMPANIES--0.2%
Rouse Co............................................. 1,600 44,400
-----------
REAL ESTATE INVESTMENT TRUSTS--1.6%
Federal Realty Investment Trust...................... 1,600 40,500
Imperial Credit Commercial Mortgage Investment
Corp............................................... 5,500 90,062
Patriot American Hospitality, Inc.................... 2,300 75,900
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- --------------------------------------------------------------------------------
<S> <C> <C>
REAL ESTATE INVESTMENT TRUSTS (CONTINUED)
Reckson Associates Realty Corp....................... 1,400 $ 36,663
Security Capital Industrial Trust.................... 900 22,106
Simon De Bartolo Group, Inc.......................... 2,400 74,250
Spieker Properties, Inc.............................. 200 7,825
United Dominion Realty Trust, Inc.................... 2,800 38,850
-----------
386,156
-----------
RETAIL--5.8%
American Stores Co................................... 7,000 179,813
CVS Corp............................................. 2,000 122,625
Dayton Hudson Corp................................... 1,900 119,344
Federated Department Stores, Inc.+................... 3,200 140,800
Limited, Inc......................................... 1,500 35,344
Lowe's Co., Inc...................................... 2,200 91,575
Office Depot, Inc.+.................................. 2,000 41,250
Penney (J.C.), Inc................................... 3,800 223,012
Safeway, Inc.+....................................... 1,800 104,625
Sears, Roebuck & Co.................................. 2,700 113,063
Wal-Mart Stores, Inc................................. 7,500 263,437
-----------
1,434,888
-----------
SOFTWARE--1.8%
Cisco Systems, Inc.+................................. 1,500 123,000
Electronic Data Systems Corp.+....................... 2,900 112,194
Microsoft Corp.+..................................... 1,000 129,875
Novell, Inc.+........................................ 8,000 67,000
TJX Cos., Inc........................................ 200 5,925
-----------
437,994
-----------
TELECOMMUNICATIONS--0.5%
Lucent Technologies, Inc............................. 1,500 123,656
-----------
TELEPHONE--3.9%
Ameritech Corp....................................... 2,400 156,000
AT&T Corp............................................ 5,100 249,581
Bell Atlantic Corp................................... 3,800 303,525

BellSouth Corp....................................... 400 18,925
Frontier Corp........................................ 4,600 99,475
GTE Corp............................................. 3,200 135,800
-----------
963,306
-----------
TRANSPORTATION--1.1%
Burlington Northern Santa Fe......................... 2,900 275,500
-----------
TOTAL INVESTMENT SECURITIES (cost $24,276,499)......... 23,234,499
-----------
</TABLE>

<PAGE>

Large-Cap Blend Portfolio
- --------------------------------------------------------------------------------

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

PRINCIPAL
AMOUNT
(IN VALUE
SECURITY DESCRIPTION THOUSANDS) (NOTE 3)
- --------------------------------------------------------------------------------
SHORT-TERM SECURITIES--3.3%
<S> <C> <C>
Schering Corp. 5.52% due 11/4/97..................... $ 255 $ 254,883
Student Loan Marketing Association Discount Note
5.48% due 11/12/97................................. 558 557,065
-----------
TOTAL SHORT-TERM SECURITIES (cost $811,948)............ 811,948
-----------
<CAPTION>

PRINCIPAL
AMOUNT
(IN VALUE
SECURITY DESCRIPTION THOUSANDS) (NOTE 3)
- --------------------------------------------------------------------------------
<S> <C> <C>

REPURCHASE AGREEMENTS--2.3%
Agreement with State Street Bank and Trust Co.,
bearing 5.55%, dated 10/31/97 to be repurchased
11/03/97 in the amount of $307,142, collateralized
by $290,000 U.S. Treasury Note 7.50%, due 11/15/01
approximate aggregate value $318,105 (cost
$307,000).......................................... $ 307 $ 307,000

Joint Repurchase Agreement Account (Note 3) (cost
$273,000).......................................... 273 273,000
-----------
TOTAL REPURCHASE AGREEMENTS (cost $580,000)............ 580,000
-----------
TOTAL INVESTMENTS-- (cost $25,668,447)................. 99.8% 24,626,447
Other assets less liabilities.......................... 0.2 50,533
------- -----------
NET ASSETS-- 100.0% $24,676,980
------- -----------
------- -----------
</TABLE>

- ------------------
+ Non-income producing security
ADR ('American Depositary Receipt')
ADS ('American Depositary Shares')
GDR ('Global Depositary Receipt')
(1) Security is traded with rights attached

See Notes to Financial Statements

<PAGE>

Large-Cap Value Portfolio
- --------------------------------------------------------------------------------

PORTFOLIO OF INVESTMENTS -- October 31, 1997
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK--91.7%
AEROSPACE & MILITARY TECHNOLOGY--3.7%
Boeing Co.......................................... 7,500 $ 359,062
Goodrich (B.F.) Co................................. 1,800 80,212
Gulfstream Aerospace Corp.+........................ 1,500 43,500
Lockheed Martin Corp............................... 1,500 142,594
Northrop Grumman Corp.............................. 1,500 163,875
Precision Castparts Corp.(1)....................... 2,000 117,625
-----------
906,868
-----------
APPAREL & TEXTILES--1.4%
Nike, Inc., Class B................................ 2,200 103,400
Reebok International Ltd.+......................... 4,400 162,250
Tommy Hilfiger Corp.+.............................. 1,900 75,169
-----------
340,819

-----------
AUTOMOTIVE--1.7%
Dana Corp.......................................... 3,800 177,888
Goodyear Tire & Rubber Co.......................... 3,800 237,975
-----------
415,863
-----------
BANKS--9.5%
Banc One Corp...................................... 2,000 104,250
BankAmerica Corp................................... 4,300 307,450
Chase Manhattan Corp............................... 2,300 265,362
Citicorp........................................... 2,300 287,644
Coast Savings Financial, Inc.+..................... 1,400 82,162
First Union Corp................................... 2,000 98,125
Golden West Financial Corp......................... 500 43,375
National City Corp................................. 5,300 316,675
State Street Corp.................................. 1,200 66,900
TCF Financial Corp................................. 300 17,063
U.S. Bancorp....................................... 2,900 294,894
Wells Fargo & Co................................... 1,600 466,200
-----------
2,350,100
-----------
BROADCASTING & MEDIA--1.4%
360 Communications Co.+............................ 2,200 46,475
Eastman Kodak Co................................... 2,300 137,712
Gannett Co., Inc................................... 1,400 73,588
News Corp., Ltd. ADR............................... 3,300 58,575
Tribune Co.(1)..................................... 700 38,588
-----------
354,938
-----------
BUSINESS SERVICES--0.8%
Crescent Operating, Inc.+.......................... 300 6,975
Safety-Kleen Corp.................................. 8,800 194,700
-----------
201,675
-----------
CHEMICALS--2.7%
Air Products & Chemicals, Inc...................... 2,300 174,800
du Pont (E.I.) de Nemours & Co..................... 3,500 199,063

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- --------------------------------------------------------------------------------
<S> <C> <C>
CHEMICALS (CONTINUED)
Ferro Corp......................................... 1,500 $ 56,156
Millenium Chemicals, Inc........................... 4,300 101,050
Nalco Chemical Co.................................. 3,200 128,000
-----------
659,069

-----------
COMMUNICATION EQUIPMENT--1.4%
AirTouch Communications, Inc.+..................... 3,000 115,875
Loral Space & Communications Corp.+................ 600 12,600
Qwest Communications International, Inc.+.......... 1,000 61,750
SBC Communications, Inc............................ 2,300 146,338
-----------
336,563
-----------
COMPUTERS & BUSINESS EQUIPMENT--6.2%
Apple Computer, Inc.+.............................. 9,000 153,000
Harris Corp........................................ 1,200 52,350
Hewlett-Packard Co................................. 4,400 271,425
International Business Machines Corp............... 6,600 647,212
Wallace Computer Services, Inc..................... 5,600 215,250
Xerox Corp......................................... 2,400 190,350
-----------
1,529,587
-----------
DRUGS--2.1%
Bristol-Myers Squibb Co............................ 400 35,100
Lilly (Eli) & Co................................... 400 26,750
Merck & Co., Inc................................... 200 17,850
Novartis AG ADR.................................... 900 70,200
Pfizer, Inc........................................ 1,400 99,050
Pharmacia & Upjohn, Inc............................ 3,600 114,300
SmithKline Beecham PLC ADR......................... 3,300 157,163
-----------
520,413
-----------
ELECTRIC UTILITIES--3.2%
Central & South West Corp.......................... 3,000 64,687
Duke Energy Corp................................... 1,700 82,025
GPU, Inc........................................... 2,500 90,469
Illinova Corp...................................... 9,700 215,825
New England Electric Systems....................... 1,700 66,619
Southern Co........................................ 3,600 82,575
Texas Utilities Co................................. 5,600 200,900
-----------
803,100
-----------
ELECTRICAL EQUIPMENT--0.1%
Molex, Inc......................................... 500 18,750
-----------
ELECTRONICS--1.7%
Intel Corp......................................... 1,400 107,800
</TABLE>

<PAGE>

Large-Cap Value Portfolio

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

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- --------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
<S> <C> <C>
ELECTRONICS (CONTINUED)
Motorola, Inc...................................... 1,500 $ 92,625
Novellus Systems, Inc.+............................ 1,400 62,125
Texas Instruments, Inc............................. 1,500 160,031
-----------
422,581
-----------
ENERGY SERVICES--2.8%
Cooper Cameron Corp.+.............................. 1,400 101,150
EVI, Inc.+......................................... 1,200 77,025
Halliburton Co..................................... 3,700 220,612
Nabors Industries, Inc.+........................... 300 12,338
Noble Drilling Corp.+.............................. 5,000 177,812
Schlumberger Ltd................................... 1,100 96,250
-----------
685,187
-----------
ENERGY SOURCES--5.2%
Amoco Corp......................................... 900 82,519
Atlantic Richfield Co.............................. 2,400 197,550
British Petroleum Co. PLC ADS...................... 600 52,650
Burlington Resources, Inc.......................... 2,100 102,769
Chevron Corp....................................... 1,000 82,937
Enron Oil & Gas Co................................. 3,400 71,613
Exxon Corp......................................... 200 12,288
Noble Affiliates, Inc.............................. 1,600 65,700
Royal Dutch Petroleum Co. NY-Registry Shares GDR... 3,600 189,450
Texaco, Inc........................................ 1,500 85,406
Tosco Corp......................................... 900 29,700
Union Texas Petroleum Holdings, Inc................ 5,000 113,750
USX-Marathon Group, Inc............................ 5,800 207,350
-----------
1,293,682
-----------
FINANCIAL SERVICES--6.7%
American Express Co................................ 5,500 429,000
Donaldson, Lufkin & Jenrette, Inc.................. 800 56,200
Federal Home Loan Mortgage Corp.................... 2,500 94,687
Federal National Mortgage Association.............. 1,800 87,188
Morgan (J.P.) & Co., Inc........................... 600 65,850
Morgan Stanley, Dean Witter, Discover & Co......... 5,400 264,600
Ryder System, Inc.................................. 2,300 80,500
Salomon, Inc....................................... 2,700 209,756

SLM Holding Corp................................... 1,200 168,450
Student Loan Corp.................................. 4,000 196,750
-----------
1,652,981
-----------
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- --------------------------------------------------------------------------------
<S> <C> <C>
FOOD, BEVERAGE & TOBACCO--3.8%
Archer-Daniels-Midland Co.......................... 9,800 $ 218,050
Coca-Cola Co....................................... 100 5,650
Flowers Industries, Inc............................ 5,900 112,100
Grand Metropolitan PLC ADR......................... 5,000 186,875
Nestle SA ADR...................................... 2,200 154,000
Philip Morris Cos., Inc............................ 4,200 166,425
Tyson Foods, Inc., Class A......................... 2,000 37,750
Universal Corp..................................... 1,500 57,656
-----------
938,506
-----------
FOREST PRODUCTS--2.9%
Mead Corp.......................................... 2,200 133,100
Potlatch Corp...................................... 4,000 199,500
Sonoco Products Co................................. 1,500 48,281
Weyerhaeuser Co.................................... 3,500 167,125
Willamette Industries, Inc.(1)..................... 5,200 171,925
-----------
719,931
-----------
GAS & PIPELINE UTILITIES--0.7%
Equitable Resources, Inc........................... 2,400 76,350
MCN Corp........................................... 2,800 96,950
-----------
173,300
-----------
HEALTH SERVICES--2.3%
Columbia/HCA Healthcare Corp....................... 4,300 121,475
Tenet Healthcare Corp.+............................ 6,600 201,712
United Healthcare Corp............................. 3,900 180,619
Wellpoint Health Networks, Inc., Class A+.......... 1,500 68,625
-----------
572,431
-----------
HOUSEHOLD PRODUCTS--0.4%
Kimberly-Clark Corp................................ 1,700 88,294
-----------
HOUSING--0.7%
Masco Corp......................................... 3,800 166,725
-----------
INSURANCE--10.0%
20th Century Industries............................ 1,100 27,500

Aetna, Inc......................................... 3,600 255,825
Allstate Corp...................................... 7,400 613,737
American International Group, Inc.................. 500 51,031
Berkley (W.R.) Corp................................ 1,500 60,938
Chubb Corp......................................... 3,600 238,500
Frontier Insurance Group, Inc...................... 500 16,844
General Re Corp.................................... 2,300 453,531
Progressive Corp................................... 700 72,975
Transamerica Corp.................................. 2,000 201,875
Transatlantic Holdings, Inc........................ 1,100 76,106
Travelers Group, Inc............................... 5,500 385,000
</TABLE>

<PAGE>

Large-Cap Value Portfolio
- --------------------------------------------------------------------------------

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- --------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
<S> <C> <C>
INSURANCE (CONTINUED)
UNUM Corp.......................................... 400 $ 19,500
-----------
2,473,362
-----------
INVESTMENT COMPANIES--0.1%
Morgan Stanley Asia-Pacific Fund................... 3,500 28,219
-----------
LEISURE & TOURISM--2.5%
Brunswick Corp..................................... 4,000 135,000
Delta Air Lines, Inc............................... 900 90,675
KLM Royal Dutch Air Lines NV....................... 5,400 184,275
McDonald's Corp.................................... 4,900 219,581
-----------
629,531
-----------
MACHINERY--1.8%
Cincinnati Milacron, Inc........................... 1,800 49,950
Deere & Co......................................... 3,800 199,975
Kennametal, Inc.................................... 800 38,800
New Holland N.V.................................... 2,200 62,563
Smith International, Inc.+......................... 1,400 106,750
-----------
458,038

-----------
MEDICAL PRODUCTS--0.8%
Baxter International, Inc.......................... 2,000 92,500
Johnson & Johnson Co............................... 400 22,950
Mallinckrodt, Inc.................................. 2,300 86,250
-----------
201,700
-----------
METALS & MINERALS--2.5%
Alcan Aluminium Ltd. .............................. 3,300 94,256
Aluminum Co. of America............................ 4,100 299,300
Hanson PLC ADR..................................... 4,000 102,000
Martin Marietta Materials, Inc..................... 3,400 118,575
-----------
614,131
-----------
MULTI-INDUSTRY--0.3%
Cooper Industries, Inc............................. 1,500 78,188
General Electric Co................................ 100 6,456
-----------
84,644
-----------
REAL ESTATE COMPANIES--0.2%
Rouse Co........................................... 1,700 47,175
-----------
REAL ESTATE INVESTMENT TRUSTS--1.0%
Crescent Real Estate Equities Co................... 3,300 118,800
Federal Realty Investment Trust.................... 400 10,125
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- --------------------------------------------------------------------------------
<S> <C> <C>
REAL ESTATE INVESTMENT TRUSTS (CONTINUED)
General Growth Properties, Inc..................... 1,500 $ 51,750
Kimco Realty Corp.................................. 100 3,200
Saul Centers, Inc.................................. 200 3,525
United Dominion Realty Trust, Inc.................. 400 5,550
Vornado Realty Trust............................... 1,200 53,550
Weingarten Realty Investors........................ 100 3,981
-----------
250,481
-----------
RETAIL--6.2%
Harcourt General, Inc.............................. 5,000 250,312
Kmart Corp.+....................................... 14,600 192,538
Limited, Inc....................................... 8,600 202,637
May Department Stores Co........................... 2,200 118,525
Penney (J.C.), Inc................................. 5,500 322,781
Sears, Roebuck & Co................................ 3,800 159,125
The Sports Authority, Inc.+........................ 4,200 79,538
Toys 'R' Us, Inc.+................................. 3,700 126,031
Wal-Mart Stores, Inc............................... 2,400 84,300

-----------
1,535,787
-----------
SOFTWARE--0.2%
Sun Microsystems, Inc.+............................ 1,100 37,606
-----------
TELECOMMUNICATIONS--0.0%
Globalstar Telecommunications Ltd.+................ 200 9,250
-----------
TELEPHONE--1.3%
AT&T Corp.......................................... 4,600 225,112
Bell Atlantic Corp................................. 1,300 103,838
-----------
328,950
-----------
TRANSPORTATION--3.4%
Burlington Northern Santa Fe....................... 2,000 190,000
Canadian National Railway Co....................... 1,100 59,331
CSX Corp........................................... 2,200 120,313
Illinois Central Corp.............................. 1,600 57,000
Overseas Shipholding Group, Inc.................... 8,000 198,000
Union Pacific Corp................................. 3,400 208,250
-----------
832,894
-----------
TOTAL COMMON STOCK
(cost $24,017,971)............................................. 22,683,131
-----------
</TABLE>

<PAGE>

Large-Cap Value Portfolio
- --------------------------------------------------------------------------------

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>
SHARES/
PRINCIPAL
AMOUNT
(IN VALUE
SECURITY DESCRIPTION THOUSANDS) (NOTE 3)
- --------------------------------------------------------------------------------
PREFERRED STOCK--0.1%
<S> <C> <C>
COMMUNICATION EQUIPMENT--0.0%
AirTouch Communications, Inc. Series C 4.25%......... 200 $ 12,000
-----------
FINANCIAL SERVICES--0.1%
Devon Financing Trust 6.50%........................ 200 16,362

-----------
TOTAL PREFERRED STOCK
(cost $28,987)..................................... 28,362
-----------
BONDS & NOTES--0.0%
COMPUTERS & BUSINESS EQUIPMENT--0.0%
Hewlett-Packard Co.
zero coupon due 10/14/17 (cost $2,875)........... 5,000 2,544
-----------
TOTAL INVESTMENT SECURITIES--91.8%
(cost $24,049,833)................................. 22,714,037
-----------
SHORT-TERM SECURITIES--5.1%
Cayman Island Time Deposit with State Street Bank
and Trust Co.
3.00% due 11/03/97............................... $ 406 406,000
Federal National Mortgage Association Discount
Notes
5.48% due 11/05/97............................... 845 844,485
-----------
TOTAL SHORT-TERM SECURITIES
(cost $1,250,485).................................. 1,250,485
-----------
<CAPTION>

PRINCIPAL
AMOUNT
(IN VALUE
SECURITY DESCRIPTION THOUSANDS) (NOTE 3)
- --------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT--0.5%
Joint Repurchase Agreement Account (Note 3)
(cost $130,000).................................. $ 130 $ 130,000
-----------
TOTAL INVESTMENTS-- (cost $25,430,318)............... 97.4% 24,094,522
Other assets less liabilities........................ 2.6 642,828
--------- -----------
NET ASSETS-- 100.0% $24,737,350
--------- -----------
--------- -----------
</TABLE>

See Notes to Financial Statements

<PAGE>

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

PORTFOLIO OF INVESTMENTS -- October 31, 1997
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK--93.2%
AEROSPACE & MILITARY TECHNOLOGY--0.8%
Boeing Co.......................................... 22,000 $ 1,053,250
------------
APPAREL & TEXTILES--1.6%
Burlington Industries, Inc.+....................... 53,300 796,169
Gucci Group NV-NY Registry Shares.................. 13,800 501,975
Nike, Inc., Class B................................ 17,800 836,600
------------
2,134,744
------------
AUTOMOTIVE--5.6%
Borg-Warner Automotive, Inc........................ 13,200 719,400
Chrysler Corp...................................... 30,500 1,075,125
Cummins Engine Co., Inc............................ 25,300 1,553,906
Ford Motor Co...................................... 16,250 709,922
General Motors Corp................................ 11,550 741,366
Goodyear Tire & Rubber Co.......................... 23,700 1,484,212
Lear Corp.+........................................ 10,100 485,431
PACCAR, Inc........................................ 19,800 891,000
------------
7,660,362
------------
BANKS--8.1%
Banc One Corp...................................... 11,100 578,588
BankAmerica Corp................................... 15,900 1,136,850
Barnett Banks, Inc................................. 100 6,900
Chase Manhattan Corp............................... 6,400 738,400
Citicorp........................................... 19,800 2,476,237
First Union Corp................................... 1,300 63,781
Golden West Financial Corp......................... 2,800 242,900
KeyCorp............................................ 13,400 819,913
Mellon Bank Corp................................... 17,300 892,031
National Bank of Canada............................ 50,400 715,223
Northern Trust Corp................................ 13,100 763,894
State Street Corp.................................. 6,400 356,800
TCF Financial Corp................................. 1,600 91,000
U.S. Bancorp....................................... 5,100 518,606
Wells Fargo & Co................................... 5,200 1,515,150
------------
10,916,273

------------
BROADCASTING & MEDIA--2.3%
360 Communications Co.+............................ 11,400 240,825
Comcast Corp., Class A............................. 32,500 889,687
Donnelley(RR) & Sons Co............................ 13,300 433,912
Gannett Co., Inc................................... 7,400 388,963
Knight-Ridder, Inc................................. 6,100 318,725
Scripps (E.W) Co., Class A......................... 16,700 700,356
Tribune Co.(1)..................................... 3,300 181,913
------------
3,154,381
------------
BUSINESS SERVICES--2.1%
ACNielson Corp.+................................... 16,500 377,438
Crescent Operating, Inc.+.......................... 1,470 34,178

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -------------------------------------------------------------------------------
<S> <C> <C>
BUSINESS SERVICES (CONTINUED)
Federal Express Corp.+............................. 13,350 $ 891,112
Owens Corning Co................................... 20,050 686,712
Philip Services Corp.+............................. 51,900 908,250
Waste Management, Inc.............................. 100 2,338
------------
2,900,028
------------
CHEMICALS--3.9%
Cabot Corp......................................... 36,500 896,531
Cyprus Amax Minerals Co............................ 35,800 749,563
du Pont (E.I.) de Nemours & Co..................... 16,000 910,000
Morton International, Inc.......................... 15,700 518,100
Praxair, Inc....................................... 21,000 914,812
Raychem Corp....................................... 7,500 679,219
W.R. Grace & Co.................................... 8,500 578,000
------------
5,246,225
------------
COMMUNICATION EQUIPMENT--2.0%
AirTouch Communications, Inc.+..................... 32,400 1,251,450
Loral Space & Communications Corp.+................ 2,400 50,400
Qwest Communications International, Inc.+.......... 5,200 321,100
SBC Communications, Inc............................ 11,750 747,594
Seagate Technology, Inc.+.......................... 11,800 320,075
------------
2,690,619
------------
COMPUTERS & BUSINESS EQUIPMENT--3.2%
Cabletron Systems, Inc.+........................... 12,100 350,900
Hewlett-Packard Co................................. 24,100 1,486,669
International Business Machines Corp............... 16,500 1,618,031

Komag, Inc.+....................................... 22,800 391,875
Western Digital Corp.+(1).......................... 17,200 514,925
------------
4,362,400
------------
DRUGS--3.2%
Alza Corp.+........................................ 15,400 401,362
American Home Products Corp........................ 100 7,413
Amgen, Inc.+....................................... 14,200 698,462
Biogen, Inc.+...................................... 17,800 591,850
Bristol-Myers Squibb Co............................ 2,000 175,500
Crescendo Pharmaceuticals Corp.+................... 770 8,663
Lilly (Eli) & Co................................... 2,200 147,125
Merck & Co., Inc................................... 800 71,400
Novartis AG ADR.................................... 10,859 842,299
Pfizer, Inc........................................ 7,400 523,550
SmithKline Beecham PLC ADR......................... 17,800 847,725
------------
4,315,349
------------
</TABLE>

<PAGE>

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

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
<S> <C> <C>
ELECTRIC UTILITIES--1.4%
Duke Energy Corp................................... 100 $ 4,825
Edison International............................... 100 2,562
Northeast Utilities+............................... 88,900 1,022,350
Southern Co........................................ 100 2,294
Western Resources, Inc............................. 22,400 834,400
------------
1,866,431
------------
ELECTRICAL EQUIPMENT--0.8%
Harman International Industries, Inc.+............. 18,400 993,600
Molex, Inc......................................... 2,250 84,375
------------
1,077,975
------------

ELECTRONICS--5.6%
Arrow Electronics, Inc.+........................... 29,800 845,575
Avnet, Inc......................................... 11,750 739,516
Intel Corp......................................... 7,800 600,600
Lam Research Corp.+................................ 11,800 424,800
LSI Logic Corp.+................................... 24,300 530,044
Micron Technology, Inc.+........................... 17,300 463,856
Millipore Corp..................................... 12,700 496,888
Motorola, Inc...................................... 9,400 580,450
Novellus Systems, Inc.+............................ 7,200 319,500
Philips Electronics NV-
NY Shares........................................ 9,350 732,806
Tektronix, Inc..................................... 16,200 638,550
Texas Instruments, Inc............................. 11,400 1,216,237
------------
7,588,822
------------
ENERGY SERVICES--3.7%
Amerada Hess Corp.+................................ 100 6,144
Cooper Cameron Corp.+.............................. 7,400 534,650
EVI, Inc.+......................................... 6,600 423,638
Gulf Canada Resources Ltd.+........................ 55,600 465,650
Halliburton Co..................................... 20,100 1,198,462
Nabors Industries, Inc.+........................... 1,500 61,688
Reading & Bates Corp.+............................. 24,900 1,055,137
Schlumberger Ltd................................... 5,800 507,500
YPF Sociedad Anonima, Class D ADR.................. 21,950 702,400
------------
4,955,269
------------
ENERGY SOURCES--4.6%
Atlantic Richfield Co.............................. 11,400 938,362
British Petroleum Co. PLC ADS...................... 3,100 272,025
Burlington Resources, Inc.......................... 13,000 636,188
Chevron Corp....................................... 200 16,588
Exxon Corp......................................... 700 43,006
Noble Affiliates, Inc.............................. 19,800 813,037
Phillips Petroleum Co.............................. 14,400 696,600
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -------------------------------------------------------------------------------
<S> <C> <C>
ENERGY SOURCES (CONTINUED)
Repsol SA ADR...................................... 19,900 $ 845,750
Sonat, Inc......................................... 100 4,594
Tosco Corp......................................... 4,700 155,100
Triton Energy Ltd.+................................ 6,500 254,313
Ultramar Diamond Shamrock Corp..................... 26,700 824,362
Union Pacific Resources Group, Inc................. 28,200 694,425
------------
6,194,350
------------

FINANCIAL SERVICES--4.8%
American Express Co................................ 17,100 1,333,800
Capital One Financial Corp......................... 11,400 520,125
Countrywide Credit Industries, Inc................. 16,400 562,725
Donaldson, Lufkin & Jenrette, Inc.................. 4,100 288,025
Federal Home Loan Mortgage Corp.................... 13,300 503,737
Kansas City Southern
Industries, Inc.................................. 12,300 375,150
Morgan (J.P.) & Co., Inc........................... 3,200 351,200
Morgan Stanley, Dean Witter, Discover & Co......... 34,502 1,690,598
Paine Webber Group, Inc............................ 18,100 799,794
Salomon, Inc....................................... 1,400 108,762
------------
6,533,916
------------
FOOD, BEVERAGE & TOBACCO--4.5%
Anheuser-Busch Cos., Inc........................... 15,100 603,056
Archer-Daniels-Midland Co.......................... 24,055 535,224
Coca-Cola Co....................................... 500 28,250
Gallaher Group PLC................................. 200 3,837
IBP, Inc........................................... 55,850 1,295,022
Nestle SA ADR...................................... 11,800 833,630
Philip Morris Cos., Inc............................ 43,700 1,731,612
Tyson Foods, Inc., Class A......................... 10,800 203,850
UST, Inc........................................... 28,900 865,194
------------
6,099,675
------------
FOREST PRODUCTS--2.8%
Asia Pulp & Paper Ltd. ADR+........................ 49,500 563,063
International Paper Co............................. 100 4,500
Mead Corp.......................................... 7,900 477,950
Owens Illinois, Inc.+.............................. 20,200 696,900
Temple-Inland, Inc................................. 7,400 424,575
Union Camp Corp.................................... 13,800 747,787
Weyerhaeuser Co.................................... 17,400 830,850
------------
3,745,625
------------
</TABLE>

<PAGE>

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

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

VALUE

SECURITY DESCRIPTION SHARES (NOTE 3)
- -------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
<S> <C> <C>
HEALTH SERVICES--0.7%
Columbia/HCA Healthcare Corp....................... 33,100 $ 935,075
------------
HOUSEHOLD PRODUCTS--0.4%
Singer Co., Inc.+.................................. 40,100 543,856
------------
HOUSING--1.9%
Armstrong World Industries, Inc. 13,300 885,281
Champion Enterprises, Inc.+........................ 43,500 763,969
Masco Corp......................................... 21,100 925,763
Maytag Corp........................................ 200 6,675
------------
2,581,688
------------
INSURANCE--8.3%
20th Century Industries............................ 5,900 147,500
Allstate Corp...................................... 13,300 1,103,069
American International Group, Inc.................. 2,450 250,053
Berkley (W.R.) Corp................................ 25,700 1,044,062
Chubb Corp......................................... 7,000 463,750
EXEL Ltd........................................... 11,500 695,031
General Re Corp.................................... 7,200 1,419,750
LaSalle Re Holdings Ltd............................ 20,900 700,150
Old Republic International Corp.................... 21,400 765,050
PartnerRe Ltd...................................... 34,400 1,410,400
Progressive Corp................................... 15,800 1,647,150
Transatlantic Holdings, Inc........................ 5,700 394,369
Travelers Group, Inc............................... 15,600 1,092,000
UNUM Corp.......................................... 2,400 117,000
------------
11,249,334
------------
INVESTMENT COMPANIES--0.1%
Morgan Stanley Asia-Pacific Fund 16,700 134,644
------------
LEISURE & TOURISM--4.2%
Continental Airlines, Inc., Class B+............... 13,400 579,550
Delta Air Lines, Inc............................... 8,200 826,150
Host Marriott Corp.+............................... 37,300 778,638
La Quinta Inns, Inc................................ 18,000 321,750
McDonald's Corp.................................... 42,200 1,891,087
Mirage Resorts, Inc.+.............................. 19,900 497,500
Southwest Airlines Co.............................. 25,500 831,937
------------
5,726,612
------------
MACHINERY--1.7%
Harnischfeger Industries, Inc...................... 20,700 815,062
New Holland N.V.................................... 31,350 891,516
Smith International, Inc.+......................... 7,700 587,125

------------
2,293,703
------------
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -------------------------------------------------------------------------------
<S> <C> <C>
MEDICAL PRODUCTS--0.1%
Johnson & Johnson Co............................... 1,900 $ 109,013
------------
METALS & MINERALS--4.6%
AK Steel Holding Corp.............................. 14,900 627,663
Carpenter Technology Corp.......................... 14,950 723,206
Cleveland-Cliffs, Inc.............................. 18,600 807,937
Crown, Cork & Seal Co., Inc........................ 23,700 1,067,981
Lafarge Corp....................................... 25,900 786,713
Martin Marietta Materials, Inc..................... 12,400 432,450
Southdown, Inc..................................... 15,150 838,931
UCAR International, Inc.+.......................... 23,700 888,750
------------
6,173,631
------------
MULTI-INDUSTRY--0.7%
Corning, Inc....................................... 9,200 415,150
Fortune Brands, Inc................................ 200 6,612
General Electric Co................................ 400 25,825
Tenneco, Inc....................................... 10,100 453,869
------------
901,456
------------
REAL ESTATE COMPANIES--0.2%
Rouse Co........................................... 10,200 283,050
------------
REAL ESTATE INVESTMENT TRUSTS--1.0%
Crescent Real Estate Equities Co................... 18,000 648,000
Federal Realty Investment
Trust............................................ 1,400 35,438
General Growth Properties, Inc..................... 8,800 303,600
Kimco Realty Corp.................................. 300 9,600
Saul Centers, Inc.................................. 800 14,100
United Dominion Realty Trust, Inc.................. 1,500 20,813
Vornado Realty Trust............................... 6,500 290,062
Weingarten Realty Investors........................ 500 19,906
------------
1,341,519
------------
RETAIL--3.1%
Costco Cos., Inc.+................................. 21,100 807,075
Harcourt General, Inc.............................. 23,900 1,196,494
May Department Stores Co........................... 16,250 875,469
TJX Cos., Inc...................................... 20,500 607,312
Wal-Mart Stores, Inc............................... 19,400 681,425

------------
4,167,775
------------
SOFTWARE--2.0%
Adobe Systems, Inc................................. 10,500 500,062
Autodesk, Inc...................................... 8,100 298,688
Electronic Data Systems Corp.+ . 23,400 905,287
Siebel Systems, Inc.+.............................. 35 1,400
Storage Technology Corp.+.......................... 16,500 968,344
------------
2,673,781
------------
</TABLE>

<PAGE>

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

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
<S> <C> <C>
TELECOMMUNICATIONS--0.0%
Globalstar Telecommunications Ltd.+................ 622 $ 28,768
------------
TELEPHONE--0.6%
GTE Corp........................................... 20,000 848,750
------------
TRANSPORTATION--2.6%
Burlington Northern Santa Fe....................... 28,050 2,664,750
Illinois Central Corp.............................. 8,300 295,688
Union Pacific Corp................................. 10,100 618,625
------------
3,579,063
------------
TOTAL COMMON STOCK
(cost $115,364,588)................................ 126,067,412
------------
PREFERRED STOCK--0.1%
BANKS--0.0%
Banc One Corp. Series C 3.50%...................... 200 19,875
------------
COMMUNICATION EQUIPMENT--0.0%
AirTouch Communications, Inc. Series C 4.25%....... 900 54,000
------------

FINANCIAL SERVICES--0.1%
Devon Financing Trust 6.50%........................ 1,000 81,813
------------
REAL ESTATE COMPANIES--0.0%
Rouse Co. Series B 3.00%........................... 400 18,800
------------
REAL ESTATE INVESTMENT TRUSTS--0.0%
Vornado Realty Trust Series A 6.50%................ 300 19,575
------------
TOTAL PREFERRED STOCK
(cost $166,766).................................... 194,063
------------
TOTAL INVESTMENT SECURITIES--93.3%
(cost $115,531,354)................................ 126,261,475
------------
</TABLE>

PRINCIPAL
AMOUNT (IN VALUE
SECURITY DESCRIPTION THOUSANDS) (NOTE 3)
- -----------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM SECURITIES--4.0%
Cayman Island Time Deposit
with State Street Bank and Trust Co.
4.50% due 11/03/97............................... $2,696 $ 2,696,000
Federal Home Loan
Mortgage Discount Notes
5.50% due 11/06/97............................... 2,660 2,657,968
------------
TOTAL SHORT-TERM SECURITIES
(cost $5,353,968).................................. 5,353,968
------------
REPURCHASE AGREEMENTS--4.2%
Agreement with State Street Bank and Trust Co.,
bearing 5.00%, dated 10/31/97 to be repurchased
11/03/97 in the amount of $2,368,987
collateralized by $2,385,000 U.S. Treasury Note
6.25%, due 3/31/99 approximate aggregate value
$2,411,768 (cost $2,368,000)..................... 2,368 2,368,000
Agreement with State Street Bank and Trust Co.,
bearing 5.57%, dated 10/31/97 to be repurchased
11/03/97 in the amount of $3,311,536
collateralized by $3,275,000 Federal National
Mortgage Association 6.25%, due 11/10/99
approximate aggregate value $3,377,003 (cost
$3,310,000)...................................... 3,310 3,310,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $5,678,000).................................. 5,678,000
------------

TOTAL INVESTMENTS--
(cost $126,563,322)................................ 101.5% 137,293,443
Liabilities in excess of other assets.............. (1.5) (1,997,997)
------- ------------
NET ASSETS-- 100.0% $135,295,446
------- ------------
------- ------------
</TABLE>

- ------------------
+ Non-income producing security
ADR ('American Depositary Receipt')
ADS ('American Depositary Shares')
(1) Security is traded with rights attached
See Notes to Financial Statements

<PAGE>

Small-Cap Value Portfolio
- --------------------------------------------------------------------------------

PORTFOLIO OF INVESTMENTS -- October 31, 1997
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -----------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK--79.0%
AEROSPACE & MILITARY TECHNOLOGY--0.6%
AAR Corp.(1)....................................... 3,200 $ 114,600
Moog, Inc., Class A................................ 1,100 41,250
-----------
155,850
-----------
APPAREL & TEXTILES--1.6%
Footstar, Inc.+.................................... 3,500 95,156
Just For Feet, Inc.+............................... 14,000 206,500
Kellwood Co........................................ 2,200 76,037
Tarrant Apparel Group, Inc.+....................... 2,700 32,063
-----------
409,756
-----------
AUTOMOTIVE--4.4%
Borg-Warner Automotive, Inc........................ 3,500 190,750
Breed Technologies, Inc............................ 2,600 57,362
Excel Industries, Inc.............................. 2,200 39,188
Polaris Industries, Inc............................ 4,800 146,100
Rollins Truck Leasing Corp......................... 7,800 129,675
Simpson Industries, Inc............................ 22,000 255,750
Titan International, Inc........................... 3,200 66,400

Tower Automotive, Inc.+............................ 3,000 125,625
Walbro Corp........................................ 4,000 83,000
-----------
1,093,850
-----------
BANKS--12.7%
Bank United Corp., Class A......................... 1,500 63,000
BankAtlantic Bancorp., Inc., Class A............... 1,700 23,375
Banknorth Group, Inc............................... 1,200 71,700
CCB Financial Corp.(1)............................. 4,000 364,000
CFX Corp........................................... 14,000 344,750
First Hawaiian, Inc................................ 1,500 58,500
First Republic Bank+............................... 11,300 319,225
HUBCO, Inc......................................... 3,300 114,675
Long Island Bancorp, Inc........................... 2,100 93,450
PonceBank.......................................... 14,000 279,125
Riverview Bancorp, Inc.+........................... 29,000 384,250
Trans Financial, Inc............................... 2,000 64,000
UST Corp........................................... 16,000 410,000
Vermont Financial Services......................... 14,000 353,500
Warren Bancorp, Inc................................ 12,000 231,000
-----------
3,174,550
-----------
BROADCASTING & MEDIA--2.5%
Carmike Cinemas, Inc., Class A+.................... 1,700 55,250
Jones Intercable, Inc., Class A+ .................. 31,000 395,250
Pulitzer Publishing Co............................. 1,700 91,587
Regal Cinemas, Inc.+............................... 3,800 87,163
-----------
629,250
-----------

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -----------------------------------------------------------------------------
<S> <C> <C>
BUSINESS SERVICES--2.7%
Banta Corp......................................... 8,000 $ 208,000
Bowne & Co., Inc................................... 3,400 118,575
CDI Corp.+......................................... 200 7,850
Flowserve Corp..................................... 3,300 98,175
Granite Construction, Inc.......................... 4,200 88,725
Pittston Brink's Group............................. 3,300 119,212
York Group, Inc.................................... 1,900 42,750
-----------
683,287
-----------
CHEMICALS--0.9%
ChemFirst, Inc..................................... 2,300 58,075
Mississippi Chemical Corp.......................... 3,800 69,825
Schulman (A), Inc.................................. 3,900 87,750

-----------
215,650
-----------
COMMUNICATION EQUIPMENT--1.9%
Anixter International, Inc.+....................... 5,700 107,587
Belden, Inc........................................ 4,200 143,850
Dynatech Corp.+.................................... 4,100 139,912
Glenayre Technologies, Inc.+....................... 3,300 42,488
Network Equipment Technologies, Inc.+(1)........... 2,000 34,000
-----------
467,837
-----------
COMPUTERS & BUSINESS EQUIPMENT--1.8%
Bell & Howell Co.+................................. 4,200 115,763
Data General Corp.+................................ 2,900 55,825
In Focus System, Inc.+............................. 2,400 78,600
Stratus Computer, Inc.+............................ 5,300 187,487
-----------
437,675
-----------
DRUGS--0.4%
Perrigo Co.+....................................... 6,800 102,850
-----------
ELECTRIC UTILITIES--0.8%
Calpine Corp.+..................................... 5,500 87,313
Eastern Enterprises................................ 800 31,350
Eastern Utilities Associates....................... 2,000 42,250
Public Service Co. of New Mexico................... 2,300 44,706
-----------
205,619
-----------
ELECTRICAL EQUIPMENT--2.1%
Helix Technology Corp.............................. 500 22,438
Juno Lighting, Inc.(1)............................. 12,000 210,000
Scotsman Industries, Inc........................... 2,500 66,094
Silicon Valley Group, Inc.+........................ 2,100 59,850
Watts Industries, Inc.,
Class A.......................................... 6,900 175,087
-----------
533,469
-----------
</TABLE>

<PAGE>

Small-Cap Value Portfolio
- --------------------------------------------------------------------------------

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -----------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
<S> <C> <C>
ELECTRONICS--1.8%
Allen Telecom, Inc.+............................... 5,300 $ 100,369
Benchmark Electronics,
Inc.+............................................ 1,100 27,431
Fluke Corp......................................... 3,000 72,188
International Rectifier
Corp.+........................................... 10,600 145,087
S3, Inc.+.......................................... 3,200 28,200
Watkins-Johnson Co................................. 1,900 58,900
Xicor, Inc.+....................................... 3,200 17,600
-----------
449,775
-----------
ENERGY SOURCES--1.8%
Barrett Resources Corp.+........................... 2,700 95,006
Belco Oil & Gas Corp.+............................. 2,800 60,550
Chieftain International, Inc.+..................... 5,000 122,500
Comstock Resources,
Inc.+............................................ 3,300 55,275
Tesoro Petroleum Corp.+............................ 2,500 40,625
Zeigler Coal Holding Co............................ 3,700 66,138
-----------
440,094
-----------
ENTERTAINMENT PRODUCTS--1.0%
Harman International Industries, Inc.+............. 4,600 248,400
-----------
FINANCIAL SERVICES--1.1%
AMRESCO, Inc.+..................................... 4,400 137,500
Pioneer Group, Inc................................. 5,000 148,125
-----------
285,625
-----------
FOOD, BEVERAGE & TOBACCO--1.5%
Canandaigua Brands, Inc., Class A+................. 1,900 94,287
Consolidated Cigar Holdings, Inc., Class A+........ 2,600 102,050
Swisher International Group, Inc., Class A+........ 4,100 81,231
Universal Corp..................................... 2,200 84,563
-----------
362,131
-----------
FOREST PRODUCTS--1.4%
Albany International Corp., Class A................ 3,300 80,437
Caraustar Industries, Inc.......................... 2,300 79,063
First Brands Corp.................................. 7,900 201,450
-----------
360,950
-----------

GAS & PIPELINE UTILITIES--0.7%
New Jersey Resources
Corp............................................. 1,700 55,037
Northwest Natural Gas Co........................... 1,100 27,088
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -----------------------------------------------------------------------------
<S> <C> <C>
GAS & PIPELINE UTILITIES (CONTINUED)
Piedmont Natural Gas,
Inc.............................................. 1,100 $ 30,800
Washington Gas Light Co............................ 1,100 28,256
WICOR, Inc......................................... 900 38,813
-----------
179,994
-----------
HEALTH SERVICES--3.9%
Apria Healthcare Group, Inc.+...................... 7,700 116,944
Integrated Health Services, Inc.................... 7,100 225,425
Magellan Health Services, Inc.+.................... 5,000 144,062
Mariner Health Group,
Inc.+............................................ 7,000 102,375
Sierra Health Services,
Inc.+............................................ 6,500 240,094
Sun Healthcare Group,
Inc.+............................................ 7,100 141,112
-----------
970,012
-----------
HOUSEHOLD PRODUCTS--0.8%
Libbey, Inc........................................ 2,900 108,387
Oakley, Inc.+...................................... 8,700 85,913
-----------
194,300
-----------
HOUSING--2.9%
American Buildings Co.............................. 2,300 62,100
Bassett Furniture Industries, Inc.................. 1,200 32,700
Cavalier Homes, Inc................................ 16,000 157,000
Furniture Brands International, Inc.+.............. 9,000 150,750
Homebase, Inc.+.................................... 3,500 32,156
Kaufman & Broad Home Corp.......................... 4,200 89,512
Kimball International, Inc., Class B............... 1,200 48,900
La-Z-Boy, Inc...................................... 900 33,638
Mohawk Industries, Inc.+........................... 3,800 115,900
-----------
722,656
-----------
INSURANCE--3.3%
American Bankers Insurance Group, Inc.............. 2,100 78,487
Amerin Corp.+...................................... 3,300 74,869
AmerUs Life Holdings, Inc., Class A................ 1,100 33,550

Enhance Financial Services Group, Inc.............. 2,000 105,625
Harleysville Group, Inc............................ 2,400 60,300
Lawyers Title Corp................................. 1,000 31,750
Liberty Corp....................................... 2,400 102,750
Orion Capital Corp................................. 2,800 126,000
Presidential Life Corp............................. 2,000 39,250
</TABLE>

<PAGE>

Small-Cap Value Portfolio
- --------------------------------------------------------------------------------

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -----------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
<S> <C> <C>
INSURANCE (CONTINUED)
Reliance Group Holdings, Inc....................... 7,800 $ 98,475
Selective Insurance Group, Inc..................... 1,300 69,388
-----------
820,444
-----------
INVESTMENT COMPANIES--1.9%
Emerging Markets
Telecommunications Fund, Inc..................... 9,000 143,438
G.T. Global Eastern European Fund.................. 8,000 131,000
Morgan Stanley Asia-Pacific Fund................... 25,000 201,562
-----------
476,000
-----------
LEISURE & TOURISM--0.9%
Applebee's International, Inc...................... 1,700 37,400
Bob Evans Farms, Inc............................... 3,000 56,438
Lone Star Steakhouse & Saloon, Inc.+............... 2,000 46,250
Sbarro, Inc........................................ 2,700 71,381
-----------
211,469
-----------
MACHINERY--3.2%
Briggs & Stratton Corp............................. 2,500 124,375
Cincinnati Milacron, Inc........................... 2,400 66,600
JLG Industries, Inc................................ 12,000 152,250
Kaydon Corp........................................ 3,400 103,275
McDermott International, Inc....................... 2,200 79,887
Regal-Beloit Corp.................................. 1,900 51,063

Stewart & Stevenson Services, Inc.................. 4,800 104,400
United Dominion Industries Ltd..................... 4,600 120,175
-----------
802,025
-----------
MEDICAL PRODUCTS--1.2%
CONMED Corp.+...................................... 2,000 41,000
Hologic, Inc.+..................................... 2,200 55,275
Sunrise Medical, Inc.+............................. 5,000 77,188
West Co., Inc...................................... 3,700 124,412
-----------
297,875
-----------
METALS & MINERALS--2.1%
Carpenter Technology
Corp............................................. 1,700 82,238
Cleveland-Cliffs, Inc.............................. 1,500 65,156
Intermet Corp...................................... 3,300 61,875
Lukens, Inc........................................ 6,100 109,800
Martin Marietta Materials, Inc..................... 2,400 83,700
Texas Industries, Inc.............................. 1,500 71,156
Titanium Metals Corp.+............................. 1,700 52,275
-----------
526,200
-----------
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -----------------------------------------------------------------------------
<S> <C> <C>
MULTI-INDUSTRY--2.7%
Carlisle Cos, Inc.................................. 1,700 $ 73,525
Crane Co........................................... 2,500 103,906
Dexter Corp........................................ 2,300 90,275
Eltron International, Inc.+........................ 4,000 114,500
Mark IV Industries, Inc............................ 4,300 104,275
Roper Industries, Inc.............................. 3,400 90,738
Standex International Corp.(1)..................... 1,500 52,500
Zurn Industries, Inc............................... 1,300 43,631
-----------
673,350
-----------
REAL ESTATE COMPANIES--0.2%
Insignia Financial Group, Inc., Class A+........... 2,500 54,063
-----------
REAL ESTATE INVESTMENT TRUSTS--4.5%
Amli Residential Properties Trust.................. 1,900 44,175
Apartment Investment &
Management Co., Class A.......................... 1,300 46,069
Arden Realty Group, Inc............................ 1,500 45,750
Bedford Property Investors, Inc.................... 2,900 59,450
Bradley Real Estate, Inc........................... 2,000 39,250
CBL & Associates Properties, Inc................... 1,900 45,837

Chateau Communities, Inc........................... 3,300 98,175
Chelsea GCA Realty, Inc............................ 1,300 53,137
FelCor Suite Hotels, Inc........................... 1,100 40,288
Glenborough Realty Trust, Inc...................... 7,800 199,875
Kilroy Realty Corp................................. 2,000 53,000
Koger Equity, Inc.................................. 2,000 43,250
Liberty Property Trust............................. 1,500 42,000
MGI Properties, Inc................................ 1,100 25,300
Pacific Gulf Properties, Inc....................... 1,500 33,938
Summit Properties, Inc............................. 6,000 124,125
TriNet Corporate Realty Trust, Inc................. 3,400 123,037
-----------
1,116,656
-----------
RETAIL--4.6%
AnnTaylor Stores Corp.+............................ 5,400 77,288
BJ's Wholesale Club, Inc.+......................... 1,900 54,863
Fingerhut Co., Inc................................. 4,000 88,500
Gibson Greetings, Inc.+............................ 3,400 82,025
Global DirectMail Corp.+........................... 5,600 102,900
Haverty Furniture Co., Inc......................... 2,400 30,600
Jostens, Inc.(1)................................... 17,000 396,312
K2, Inc............................................ 3,300 83,531
ShopKo Stores, Inc.+............................... 4,400 110,275
Toro Co............................................ 2,000 85,500
Wet Seal, Inc. Class A+............................ 1,800 41,175
-----------
1,152,969
-----------
</TABLE>

<PAGE>

Small-Cap Value Portfolio
- --------------------------------------------------------------------------------

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -----------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
<S> <C> <C>
SOFTWARE--1.2%
BancTec, Inc.+(1).................................. 2,900 $ 66,338
Policy Management Systems Corp.+................... 1,500 91,875
Sterling Software, Inc.+........................... 2,200 75,075
Symantec Corp.+.................................... 3,300 71,775
-----------

305,063
-----------
TELECOMMUNICATIONS--0.9%
General Communication, Inc., Class A+.............. 31,000 232,500
-----------
TELEPHONE--0.3%
Vanguard Cellular Systems, Inc., Class A+.......... 5,300 72,544
-----------
TRANSPORTATION--2.7%
Knightsbridge Tankers Ltd.......................... 13,000 385,125
Pittston Burlington Co............................. 5,000 135,937
Teekay Shipping Corp............................... 1,900 60,800
Trico Marine Services, Inc.+....................... 2,500 91,875
-----------
673,737
-----------
TOTAL INVESTMENT SECURITIES--79.0%
(cost $20,506,477)................................. 19,738,475
-----------
</TABLE>

PRINCIPAL
AMOUNT (IN VALUE
SECURITY DESCRIPTION THOUSANDS) (NOTE 3)
- ----------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM SECURITIES--6.8%
Cayman Island Time Deposit with State Street Bank
and Trust Co.
3.00% due 11/03/97............................... $ 701 $ 701,000
United States Treasury Bills 4.85% due 12/11/97.... 1,000 994,611
-----------
TOTAL SHORT-TERM SECURITIES
(cost $1,695,611).................................. 1,695,611
-----------
REPURCHASE
AGREEMENTS--13.5%
Agreement with State Street Bank and Trust Co.,
bearing 5.00%, dated 10/31/97 to be repurchased
11/03/97 in the amount of $2,438,015
collateralized by $2,090,000 U.S. Treasury Note
7.625% due 2/15/25 approximate aggregate value
$2,502,431 (cost $2,437,000)..................... 2,437 2,437,000
Agreement with State Street Bank and Trust Co.,
bearing 5.55%, dated 10/31/97 to be repurchased
11/03/97 in the amount of $941,435 collateralized
by $880,000 U.S. Treasury Note 7.50% due 11/15/01
approximate aggregate value $965,284 (cost
$941,000)........................................ 941 941,000
-----------
TOTAL REPURCHASE AGREEMENTS

(cost $3,378,000).................................. 3,378,000
-----------
TOTAL INVESTMENTS--
(cost $25,580,088)................................. 99.3% 24,812,086
Other assets less liabilities...................... 0.7 171,075
------- -----------
NET ASSETS-- 100.0% $24,983,161
------- -----------
------- -----------
</TABLE>

- ------------------
+ Non-income producing security

(1) Security is traded with rights attached

See Notes to Financial Statements

<PAGE>

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

PORTFOLIO OF INVESTMENTS -- October 31, 1997
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- ------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK--88.5%
ARGENTINA--1.2%
Banco Frances del Rio de la Plata SA, Class B ADR
(Finance).............................................. 560 $ 13,790
Banco de Galicia y Buenos Aires SA de CV, Class B ADR
(Finance).............................................. 710 17,218
Banco Rio de La Plata SA, Class B ADR+ (Finance)......... 7,800 81,900
Freeport-McMoran Copper & Gold, Inc., Class B
(Materials)............................................ 6,000 143,250
Perez Cos. SA (Multi-industry) .......................... 5,053 31,651
Telefonica de Argentina SA, Class B ADR+ (Utilities)..... 5,120 144,000
TV Azteca SA de CV ADR+
(Information & Entertainment) 1,100 21,037
YPF Sociedad Anonima, Class D ADR (Energy)............... 11,766 376,512
-----------
829,358
-----------
AUSTRALIA--2.1%
AAPC Ltd.
(Information & Entertainment) 557,100 195,890
Australia & New Zealand Banking Group Ltd. (Finance)..... 2,000 13,952

Australian Gas Light Co., Ltd. (Utilities)............... 5,000 33,404
Boral Ltd. (Materials)................................... 4,000 10,521
Brambles Industries Ltd. (Multi-industry)................ 1,000 19,227
Broken Hill Proprietary Co., Ltd. (Materials)............ 4,400 43,630
Commonwealth Bank of Australia (Finance)................. 117 1,345
Commonwealth Installment Receipt Trustee Ltd. (Finance).. 3,000 22,174
Fairfax (John) Holdings Ltd.
(Information & Entertainment) 8,000 17,666
Fosters Brewing Group Ltd.
(Consumer Staples) .................................... 8,000 15,190
Lend Lease Corp., Ltd. (Finance)......................... 1,016 20,806
National Australia Bank Ltd. (Finance)................... 11,100 151,828
News Corp., Ltd.
(Information & Entertainment) 12,333 59,064
Normandy Mining Ltd.
(Energy)............................................... 324,366 353,571
Publishing & Broadcasting Ltd.
(Information & Entertainment) 4,000 23,207

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- ------------------------------------------------------------------------------------
<S> <C> <C>
AUSTRALIA (CONTINUED)
Ramsey Health Care, Inc. (Healthcare).................... 131,000 $ 177,803
Simeon Wines
(Consumer Staples) .................................... 3,000 7,384
St. George Bank Ltd. (Finance)........................... 2,068 12,528
TABCORP Holdings Ltd.
(Information & Entertainment) 3,000 13,756
Western Mining Corp. Holdings Ltd. (Materials)........... 3,000 10,654
Westpac Banking Corp., Ltd. (Finance).................... 4,000 23,292
Woodside Petroleum Ltd. (Energy)......................... 3,000 25,338
Woolworths Ltd.+
(Consumer Discretionary)............................... 82,300 265,658
-----------
1,517,888
-----------
AUSTRIA--0.9%
Austria Tabakwerke AG*
(Consumer Staples) .................................... 6,000 249,722
Boehler-Uddeholm AG (Materials).......................... 544 39,006
VA Technologie AG
(Industrial & Commercial) ............................. 930 165,022
VAE Eisenbahnsysteme AG (Industrial & Commercial) ...... 1,776 174,182
-----------
627,932
-----------
BELGIUM--0.4%
Credit Dexia/Communal Holding+ (Finance)................. 104 11,364
Generale de Banque Belge Pour l'Etranger SA (Finance).... 130 53,175
Kredietbank NV (Finance)................................. 430 180,428

UCB SA (Healthcare)...................................... 4 13,821
-----------
258,788
-----------
BRAZIL--0.7%
Centrais Eletricas Brasileiras SA ADR+ (Utilities)....... 2,000 42,179
Companhia de Saneamento Basico do Estado de Sao Paulo
(Utilities)............................................ 295,000 54,587
Compania Brasileira de Distribuidora GDR
(Industrial & Commercial) ............................. 1,000 19,048
Compania Energetica de Minas ADR (Materials) ............ 1,543 61,597
</TABLE>

<PAGE>

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

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- ------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
<S> <C> <C>
BRAZIL (CONTINUED)
Telecomunicacoes
Brasileras SA ADR
(Information Technology) .............................. 2,700 $ 274,050
Usinas Siderurgicas de Minas Gerais SA ADR
(Materials) ........................................... 6,000 44,900
-----------
496,361
-----------
CANADA--0.9%
Abitibi Consolidated, Inc.
(Consumer Discretionary) .............................. 1,460 20,719
Alcan Aluminium Ltd. (Materials)......................... 970 27,565
BCE, Inc. (Utilities).................................... 989 27,526
Bell Canada International, Inc.+ (Utilities)............. 11,000 184,250
Bombardier, Inc., Class B (Industrial & Commercial) ..... 1,284 24,598
CAE, Inc.
(Industrial & Commercial) ............................. 23,000 194,203
Inco Ltd. (Materials).................................... 1,015 20,813
Royal Bank of Canada (Finance)........................... 310 16,585
Seagram Co., Ltd.
(Consumer Staples) .................................... 755 25,500
Suncor Energy, Inc. (Energy) ............................ 1,087 39,142
Toronto Dominion Bank (Finance).......................... 933 34,193

TransCanada Pipelines Ltd. (Utilities)................... 1,550 28,760
Trizec Hahn Corp.
(Real Estate) ......................................... 1,373 34,438
-----------
678,292
-----------
CHILE--1.1%
Banco Santander-Chile, Class A ADR (Finance)............. 2,500 32,500
Chilectra SA ADR (Utilities)............................. 422 11,400
Chilgener SA ADR (Utilities) ............................ 589 16,050
Compania de Telecomunicaciones
de Chile SA ADR (Utilities)............................ 480 13,320
Distribucion y Servicio D&S SA+
(Consumer Discretionary) .............................. 14,500 254,656
Empresa Nacional de Electricidad
SA ADR (Utilities)..................................... 765 15,396
Enersis SA ADR (Energy).................................. 369 12,177
Maderas y Sinteticos SA ADR
(Consumer Discretionary) .............................. 1,267 15,521
Quinenco Sa (Multi-industry) ............................ 9,000 131,625
Santa Isabel SA ADR
(Consumer Discretionary) .............................. 11,175 206,737
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- ------------------------------------------------------------------------------------
<S> <C> <C>
CHILE (CONTINUED)
Sociedad Quimica Minera ADR (Materials).................. 2,100 $ 108,938
-----------
818,320
-----------
CHINA--0.3%
China Southern Airlines Ltd. ADR+
(Information & Entertainment) . 12,000 249,000
-----------
DENMARK--0.3%
Den Danske Bank+
(Finance).............................................. 280 31,614
Falck A/S
(Industrial & Commercial) ............................. 800 37,034
ISS International Service Systems A/S, Class B
(Industrial & Commercial) ............................. 1,900 57,690
Ostasiatiske Kompagnis Holdings+(Multi-industry) ........ 1,800 20,873
SAS Danmark A/S
(Industrial & Commercial) ............................. 4,700 81,035
Unidanmark A/S (Finance)................................. 200 13,518
-----------
241,764
-----------
FINLAND--1.2%
Huhtamaki Oy
(Consumer Staples) .................................... 6,541 269,315

Nokia Corp. AB, Class A ADR
(Information Technology) .............................. 770 67,277
Rauma Oy
(Industrial & Commercial) ............................. 6,137 115,070
UPM-Kymmene Oy (Materials) .............................. 7,134 158,725
Valmet Oyj
(Industrial & Commercial) ............................. 14,500 227,033
-----------
837,420
-----------
FRANCE--9.6%
Accor SA
(Information & Entertainment) 580 107,991
Alcatel Alsthom Compagnie Generael D' Electricite
(Information Technology) .............................. 770 92,909
Assurance General de France+ (Finance)................... 570 29,991
AXA SA de CV+
(Information Technology) .............................. 6,470 443,055
Banque Nationale de Paris (Finance)...................... 1,500 66,311
Bertrand Faure SA
(Consumer Discretionary) .............................. 1,700 102,561
Canal Plus
(Information & Entertainment) 220 38,292
</TABLE>

<PAGE>

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

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- ------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
<S> <C> <C>
FRANCE (CONTINUED)
Carrefour SA
(Consumer Discretionary) .............................. 133 $ 69,402
Castorama Dubois Investisse
(Consumer Discretionary) .............................. 2,300 239,639
Club Mediterranee SA
(Information & Entertainment) 500 36,406
Compagnie de St. Gobain (Materials)...................... 2,220 318,669
Compagnie Generale des Eaux (Industrial & Commercial) ... 3,387 395,172
Credit Commerce France (Finance)......................... 530 30,027
Credit Local de France+ (Finance)........................ 95 9,536
EDAP TMS SA ADR+ (Healthcare)............................ 25,000 175,000

Elf Aquitaine SA (Energy)................................ 760 94,074
France Telecom SA+ (Utilities) .......................... 40,000 1,513,804
Genset ADR+ (Healthcare)................................. 16,000 294,000
Groupe Danone
(Consumer Staples) .................................... 1,720 262,998
Guilbert SA
(Information Technology) .............................. 120 15,665
L' Oreal (Consumer Staples) ............................. 60 21,261
L'Air Liquide SA (Materials) ............................ 467 72,460
Lapeyre (Materials)...................................... 340 19,864
Legrand SA
(Information Technology) .............................. 130 24,205
Louis Dreyfus Citrus+
(Consumer Staples) .................................... 4,000 119,274
Louis Vuitton
(Consumer Staples) .................................... 316 53,687
Pathe SA
(Information & Entertainment) 50 8,972
Pernod-Ricard
(Consumer Staples) .................................... 1,400 64,876
Pinault Printemps Redoute
(Consumer Discretionary) .............................. 370 169,212
Primagaz Cie (Utilities)................................. 120 8,945
Rhone-Poulenc Ltd. (Healthcare).......................... 8,059 351,378
Sanofi SA (Healthcare)................................... 916 87,023
Schneider SA+
(Industrial & Commercial) ............................. 4,431 236,597
Societe Francaise d'Investissements Immobiliers et de
Gestion+ (Real Estate) ................................ 4,000 242,708
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- ------------------------------------------------------------------------------------
<S> <C> <C>
FRANCE (CONTINUED)
Societe Generale d'Enterprises SA+
(Industrial & Commercial) ............................. 10,500 $ 269,042
Societe Generale+ (Finance).............................. 2,539 347,733
Sodexho SA
(Information & Entertainment) 97 48,380
Television Francais (Utilities) ......................... 625 58,185
Total SA, Class B (Energy)............................... 2,990 331,747
-----------
6,871,051
-----------
GERMANY--4.7%
Adidas AG
(Information & Entertainment) 2,634 381,241
Allianz AG (Finance)..................................... 430 95,788
Ashanti Goldfields Co., Ltd. GDR (Materials)............. 10,158 100,310
Ava Allgemeneine Handelsgesellschaft
der Verbraucher AG
(Consumer Discretionary) .............................. 600 153,150

Bayer AG (Materials)..................................... 1,983 69,597
Bayerische Hypotheken Und Bank AG (Finance).............. 1,426 59,148
Bayerische Motoren Werke AG
(Consumer Discretionary) .............................. 118 85,361
Bayerische Vereinsbank AG (Finance)...................... 348 20,188
Bilfinger & Berger Bau AG (Industrial & Commercial) ..... 410 14,723
Commerzbank AG (Finance) ................................ 440 14,932
Deutsche Bank AG (Finance) .............................. 3,944 258,083
Deutsche Telekom AG
(Information Technology) .............................. 1,346 25,221
Fresenius Medical Care AG (Healthcare)................... 5,600 394,709
Gehe AG
(Consumer Discretionary) .............................. 1,930 100,766
Hoechst AG (Healthcare).................................. 10,530 400,724
Holsten Brauerei AG
(Consumer Staples) .................................... 900 180,125
Leica Camera AG+
(Information & Entertainment) 10,000 232,045
Mannesmann AG
(Industrial & Commercial) ............................. 61 25,762
Rhon-Klinikum AG
(Consumer Discretionary) .............................. 400 38,288
SAP AG
(Information Technology) .............................. 300 86,060
Siemens AG (Multi-industry).............................. 1,259 77,492
VEBA AG (Utilities)...................................... 7,670 427,594
</TABLE>

<PAGE>

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

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- ------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
<S> <C> <C>
GERMANY (CONTINUED)
Volkswagen AG
(Consumer Discretionary) .............................. 170 $ 100,493
-----------
3,341,800
-----------
HONG KONG--1.8%
CDL Hotels International Ltd.
(Information & Entertainment) 122,062 35,127

Cheung Kong (Holdings) Ltd.
(Real Estate) ......................................... 12,333 85,740
China Hong Kong Photo Products Holdings Ltd.
(Information & Entertainment) 110,000 27,744
China Light & Power Co., Ltd. (Utilities)................ 2,000 10,528
Dao Heng Bank Group Ltd. (Finance)....................... 11,000 25,325
First Pacific Co., Ltd.
(Industrial & Commercial) ............................. 190,000 119,802
Guoco Group Ltd. (Finance) .............................. 30,000 65,576
Henderson Land Development
Co., Ltd. (Real Estate) ............................... 3,000 16,607
Hong Kong Land Holdings Ltd. ADR (Finance)............... 42,946 97,917
HSBC Holdings PLC+ (Finance)............................. 2,133 48,280
Hutchison Whampoa Ltd. (Multi-industry).................. 27,000 186,833
Jardine Matheson Holdings Ltd. ADR (Industrial &
Commercial) 18,501 118,406
New World Development Co.,
Ltd. (Real Estate) .................................... 29,165 102,605
New World Infrastructure Ltd.+ (Industrial &
Commercial) ........................................... 62,000 122,693
Sun Hung Kai Properties Ltd.+
(Real Estate) ......................................... 1,000 7,372
Swire Pacific Ltd., Class A (Multi-industry)............. 11,000 58,760
Wharf Holdings Ltd.
(Real Estate) ......................................... 19,000 38,828
Wing Hang Bank Ltd (Finance)............................. 37,500 96,521
-----------
1,264,664
-----------
INDIA--1.2%
Hindalco Industries Ltd. GDR+* (Materials)............... 5,900 170,510
State Bank of India GDR+ (Finance)....................... 9,400 172,960
Tata Engineering & Locomotive Co., Ltd. GDR
(Consumer Discretionary) .............................. 21,650 189,619
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- ------------------------------------------------------------------------------------
<S> <C> <C>
INDIA (CONTINUED)
The Indian Smaller Companies Fund Ltd.
(Investment Companies)................................. 44,749 $ 364,253
-----------
897,342
-----------
INDONESIA--0.5%
Gulf Indonesia Resources Ltd. (Energy)................... 7,000 147,000
PT Indosat
(Information Technology) .............................. 31,500 70,995
PT Semen Cibinong TBK (Materials)........................ 280,000 36,893
Sampoerna International Finance Co. (Finance)............ 67,000 116,623
-----------
371,511

-----------
IRELAND--0.8%
Fyffes PLC
(Consumer Staples) .................................... 126,000 186,029
Kerry Group, Class A+
(Consumer Staples) .................................... 33,000 399,511
-----------
585,540
-----------
ISRAEL--0.9%
Blue Square Israel Ltd. ADR
(Consumer Staples) .................................... 4,100 47,662
ECI Telecommunications Ltd.
(Information Technology) .............................. 20,800 569,400
-----------
617,062
-----------
ITALY--3.6%
Assicurazione Generali SpA (Finance)..................... 13,900 310,759
Banca Commerciale Italiana+ (Finance).................... 3,000 8,186
Banca Popolar di Milano (Finance)........................ 10,000 55,227
BCA Fideuram SpA (Finance)............................... 3,198 12,184
Brembo SpA
(Consumer Discretionary) .............................. 20,000 199,055
Credito Italiano SpA (Finance) .......................... 32,408 86,428
CSP International Industria Calze SpA+
(Consumer Discretionary) .............................. 23,000 253,367
ENI SpA (Energy)......................................... 81,371 457,562
Industrie Natuzzi SpA ADR
(Consumer Discretionary) .............................. 11,700 261,787
Istituto Mobiliare Italiano (Finance).................... 4,000 35,771
Mediolanum SpA (Finance)................................. 1,756 29,457
</TABLE>

<PAGE>

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

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

Telecom Italia SpA
(Information Technology) .............................. 41,000 152,085
Telecom Italia SpA
(Information Technology) .............................. 20,000 80,803
Telecom Italia SpA
(Information Technology) .............................. 54,777 343,287
Zucchini SpA
(Information Technology) .............................. 29,600 208,931
-----------
2,572,065
-----------
JAPAN--17.8%
Advantest Corp.
(Information Technology) .............................. 5,380 444,794
Aiwa Co., Ltd.
(Information Technology) .............................. 3,000 67,054
Alps Electric Co., Ltd.
(Information Technology) .............................. 4,000 44,869
Amada Co., Ltd.
(Industrial & Commercial) ............................. 4,000 21,271
Bank of Tokyo-Mitsubishi Ltd. (Finance).................. 23,000 300,042
Canon, Inc.
(Information Technology) .............................. 23,000 558,039
Citizen Watch Co.
(Consumer Discretionary) .............................. 3,000 19,144
Daiichi Pharmaceutical (Healthcare)...................... 6,000 85,251
Dainippon Screen MFG Co., Ltd.
(Information Technology) .............................. 5,000 40,548
Daiwa House Industry Co., Ltd.
(Consumer Discretionary) .............................. 8,000 77,108
DDI Corp. (Utilities).................................... 36 120,249
East Japan Railway Co. (Industrial & Commercial) ........ 19 92,356
Fanuc Ltd.
(Information Technology) .............................. 1,400 56,535
Fontaine Co., Ltd.
(Consumer Staples) .................................... 13,200 265,426
Fuji Bank Ltd. (Finance)................................. 22,000 190,112
Fujikura Ltd.
(Information Technology) .............................. 35,000 239,925
Fujitsu Denso
(Industrial & Commercial) ............................. 2,000 31,242
Fujitsu Ltd.
(Information Technology) .............................. 22,000 241,296
Hankyu Realty Co.
(Real Estate) ......................................... 17,000 110,320
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- ------------------------------------------------------------------------------------
<S> <C> <C>
JAPAN (CONTINUED)
Hitachi Ltd.+
(Information Technology) .............................. 9,000 $ 69,173

Hitachi Zosen Corp.
(Industrial & Commercial) ............................. 4,000 8,808
Honda Motor Co., Ltd.
(Consumer Discretionary) .............................. 13,000 437,474
Imagineer Co., Ltd.+
(Information & Entertainment) 3,600 40,382
Inax Corp.
(Consumer Staples) .................................... 2,000 8,708
Industrial Bank of Japan Ltd. (Finance).................. 21,000 207,644
Ito-Yokado Co., Ltd.
(Consumer Discretionary) .............................. 3,000 149,065
Japan Associate Finance EDR+ (Finance)................... 2,000 94,724
Jusco Co., Ltd.
(Consumer Discretionary) .............................. 2,000 44,703
KAO Corp.
(Consumer Staples) .................................... 22,000 307,104
Kokuyo Co., Ltd. (Materials) ............................ 3,000 70,794
Komatsu Ltd.
(Industrial & Commercial) ............................. 6,000 32,057
Komori Co., Ltd.
(Industrial & Commercial) ............................. 2,000 36,560
Kuraray Co., Ltd. (Healthcare) .......................... 7,000 62,817
Kyocera Corp.
(Information Technology) .............................. 8,000 457,998
Long-Term Credit Bank of
Japan Ltd. (Finance)................................... 6,000 20,291
Makita Corp.
(Industrial & Commercial) ............................. 4,000 56,170
Marui Co., Ltd.
(Consumer Discretionary) .............................. 6,000 101,205
Matsushita Electric
Industrial Co., Ltd.+
(Information Technology) .............................. 10,000 167,844
Matsushita Electric Works Ltd. (Industrial & Commercial)
...................................................... 24,000 217,366
Meiwa Estate Co.+ (Real Estate) ........................ 2,600 30,677
Mitsubishi Corp.
(Consumer Discretionary) .............................. 4,000 34,234
Mitsubishi Estate Co., Ltd.
(Real Estate) ......................................... 5,000 63,149
Mitsubishi Heavy Industries Ltd.
(Industrial & Commercial) ............................. 80,900 397,274
Mitsubishi Motor Corp.+
(Consumer Discretionary) .............................. 30,000 131,616
</TABLE>

<PAGE>

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

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- ------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
<S> <C> <C>
JAPAN (CONTINUED)
Mitsui Fudosan Co., Ltd.
(Real Estate) ......................................... 30,000 $ 339,011
Miyota Co.
(Information Technology) .............................. 13,000 140,424
Murata Manufacturing Co. Ltd.
(Information Technology) .............................. 3,000 121,645
Mycal Corp.
(Consumer Discretionary) .............................. 4,000 38,222
NEC Corp.
(Information Technology) .............................. 58,900 646,016
Nichiei Co., Ltd.
(Industrial & Commercial) ............................. 700 76,776
Nippon Denso Co., Ltd. (Industrial & Commercial) ........ 9,000 194,433
Nippon Steel Corp. (Materials) .......................... 41,000 84,487
Nippon Telegraph & Telephone Corp. (Utilities)........... 74 627,171
Nippon Television Network
(Information & Entertainment) 900 320,066
Nomura Securities Co., Ltd. (Finance).................... 10,000 116,327
Orix Corp. (Finance)..................................... 4,000 273,203
Pioneer Electronic Corp. (Industrial & Commercial) ...... 9,000 148,068
Rohm Co.
(Information Technology) .............................. 3,000 296,635
Sankyo Co., Ltd. (Healthcare) ........................... 12,000 395,845
Sega Enterprises Ltd.
(Information Technology) .............................. 900 22,135
Sekisui Chemical Co., Ltd. (Materials)................... 8,000 62,950
Sekisui House Ltd.
(Consumer Discretionary) .............................. 6,000 51,350
Seven-Eleven Japan Co., Ltd.
(Consumer Discretionary) .............................. 1,000 74,782
Sharp Corp.
(Information Technology) .............................. 8,000 62,152
Shin-Etsu Chemical Co. Ltd. (Materials).................. 5,000 122,144
Shiseido Co., Ltd.
(Consumer Staples) .................................... 1,000 13,627
Shohkoh Fund & Co., Ltd. (Investment Companies).......... 600 194,433
Sony Corp.
(Information Technology) .............................. 6,300 522,950
Sumitomo Corp.
(Industrial & Commercial) ............................. 11,000 78,604
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)

- ------------------------------------------------------------------------------------
<S> <C> <C>
JAPAN (CONTINUED)
Sumitomo Electric Industries Ltd.
(Industrial & Commercial) ............................. 19,000 $ 251,018
Sumitomo Forestry Co., Ltd. (Materials).................. 2,000 14,458
Sumitomo Trust & Banking
Co., Ltd. (Finance).................................... 20,000 212,713
TDK Corp.
(Information Technology) .............................. 2,000 165,850
Teijin Ltd.
(Consumer Discretionary) .............................. 13,000 42,667
Tokio Marine & Fire Insurance Co., Ltd. (Finance)........ 14,000 139,593
Tokyo Electron Ltd.
(Information Technology) .............................. 5,000 249,273
Tokyo Steel Manufacturing Co. (Materials)................ 2,000 14,125
Toppan Printing Co., Ltd.
(Information & Entertainment) 5,000 62,734
Toray Industries, Inc. (Materials)....................... 9,000 50,104
UNY Co., Ltd.
(Consumer Staples) .................................... 2,000 32,406
Yamanouchi Pharmaceutical
Co., Ltd. (Healthcare)................................. 8,000 196,759
-----------
12,708,574
-----------
KAZAKHSTAN--0.3%
Firebird Republics Fund Ltd. (1)
(Investment Companies)................................. 975 189,534
-----------
KOREA--0.4%
Housing & Commercial Bank, Korea GDR* (Finance).......... 25,400 219,075
Kookmin Bank GDR* (Finance).............................. 1 4
Korea Electric Power Corp. ADR (Utilities)............... 6,500 53,219
Korea Fund, Inc. (Investment Companies).................. 2,800 22,925
-----------
295,223
-----------
LUXEMBOURG--0.1%
Millicom International Cellular SA+
(Information & Entertainment) 1,000 41,750
-----------
MALAYSIA--0.1%
Berjaya Sports Toto Bhd
(Information & Entertainment) 11,000 30,029
Commerce Asset Holding Bhd (Finance)..................... 13,200 10,295
Resorts World Bhd
(Information & Entertainment) 5,000 8,925
</TABLE>

<PAGE>

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

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- ------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
<S> <C> <C>
MALAYSIA (CONTINUED)
Time Engineering Bhd+
(Information Technology) .............................. 6,000 $ 2,592
United Engineers Bhd
(Industrial & Commercial) ............................. 6,000 14,219
-----------
66,060
-----------
MEXICO--1.4%
Alfa SA de CV, Class A+ (Multi-industry)................. 22,240 162,324
Cemex SA de CV ADR (Materials)........................... 3,000 23,409
Cemex SA de CV, Class B ADR (Materials).................. 17,667 77,537
Cifra SA de CV ADR
(Consumer Staples) .................................... 1,455 2,834
Fomento Economico Mexicano SA de CV, Class B +
(Consumer Staples) .................................... 4,000 28,146
Grupo Mexico SA de CV,
Series L (Materials)................................... 46,100 136,348
Gruma SA ADR*
(Consumer Staples) .................................... 622 9,692
Gruma SA+
(Consumer Staples) .................................... 5,040 19,715
Grupo Financiero Banamex-Accival SA de CV., Class B
(Finance).............................................. 69,000 136,601
Grupo Industrial Maseca SA de CV, Class B
(Industrial & Commercial) ............................. 9,000 8,694
Grupo Modelo SA de CV, Class C (Consumer Staples) ...... 2,000 14,788
Kimberly-Clark de Mexico SA de CV ADR (Materials)........ 6,526 28,641
Panamerican Beverages, Inc., Class A ADR
(Consumer Staples) .................................... 7,400 229,400
Telefonos de Mexico SA ADR (Utilities)................... 3,100 134,075
-----------
1,012,204
-----------
NETHERLANDS--5.0%
ABN Amro Holdings NV (Finance)........................... 5,698 114,752
Ahrend NV
(Information Technology) .............................. 2,267 75,547
Akzo Nobel NV + (Multi-industry)......................... 180 31,717
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- ------------------------------------------------------------------------------------
<S> <C> <C>
NETHERLANDS (CONTINUED)
ASM Lithography Holdings NV+
(Information Technology) .............................. 2,200 $ 161,150
Baan Co NV+
(Information Technology) .............................. 583 41,289
Baan Co. NV+
(Information Technology) .............................. 250 17,531
CSM NV
(Consumer Staples) .................................... 1,700 77,579
Elsevier NV
(Consumer Discretionary) .............................. 19,520 306,650
Fortis Amev NV (Finance)................................. 2,120 83,315
Gucci Group NV-NY Registry Shares
(Consumer Discretionary) .............................. 532 19,352
Heineken NV
(Consumer Staples) .................................... 1,000 162,658
ING Groep NV (Finance)................................... 6,310 264,880
Koninkijke Nutricia Verenigde Bedrijuen NV
(Consumer Staples) .................................... 1,580 45,166
Koninklijke Ahold NV
(Consumer Discretionary) .............................. 2,054 52,580
Koninlijke PTT Nederland NV (Utilities).................. 290 11,083
Philips Electronics NV
(Information Technology) .............................. 5,300 414,937
PolyGram NV
(Information & Entertainment) 2,330 132,491
Royal Dutch Petroleum Co. (Energy)....................... 16,640 880,210
Unilever NV & PLC (Multi-industry)....................... 2,960 157,338
Volker Wessels Stevin NV+ (Industrial & Commercial) ..... 2,667 81,047
Wolters Kluwer NV+
(Information & Entertainment) 3,480 427,315
-----------
3,558,587
-----------
NEW ZEALAND--2.2%
Air New Zealand Ltd.+
(Information & Entertainment) 74,000 156,659
Brierley Investments Ltd. (Finance)...................... 314,900 243,130
Carter Holt Harvey Ltd.
(Consumer Staples) .................................... 4,000 6,974
CDL Hotels New Zealand Ltd.+
(Information & Entertainment) 575,000 150,370
Fletcher Challenge Ltd.
building shares+ (Multi-industry)...................... 4,000 12,079
</TABLE>

<PAGE>

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

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- ------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
<S> <C> <C>
NEW ZEALAND (CONTINUED)
Fletcher Challenge Ltd.
energy shares+ (Multi-industry)........................ 3,000 $ 13,449
Fletcher Challenge Ltd.
forest shares+ (Multi-industry)........................ 221,460 213,733
Fletcher Challenge Ltd.
paper shares+ (Multi-industry)......................... 5,900 9,698
Kiwi Income Property Trust
(Real Estate) ......................................... 275,000 196,913
Pacific Capital Assets Ltd.
(Real Estate) ......................................... 560,000 108,092
Restaurant Brands
New Zealand Ltd.
(Information & Entertainment) 330,000 427,387
Telecommunications Corp. of New Zealand Ltd.
(Information Technology) .............................. 3,000 14,533
Wrightson Ltd. (Multi-industry).......................... 112,000 59,973
-----------
1,612,990
-----------
NORWAY--1.6%
Alvern Norway ASA+
(Information & Entertainment) 9,000 56,755
Fred Olsen Energy ASA+ (Energy).......................... 13,000 327,916
Norsk Hydro ASA (Energy)................................. 3,760 207,739
Orkla ASA
(Consumer Discretionary) .............................. 2,260 208,270
Saga Petroleum ASA, Class B (Energy)..................... 770 13,684
SAS Norge ASA
(Information & Entertainment) 3,900 65,956
Smedvig ASA ADR (Energy)................................. 1,850 53,419
Smedvig ASA, Class B (Energy)............................ 6,300 186,000
-----------
1,119,739
-----------
PERU--0.3%
Cerveceria Per Backus Jo
(Consumer Staples) .................................... 218,872 199,927
Telefonica del Peru SA ADR (Industrial & Commercial) .... 346 6,834
-----------
206,761

-----------
PHILIPPINES--0.5%
Cosmos Bottling
(Consumer Staples) .................................... 1,400,000 229,055
San Miguel
(Consumer Staples) .................................... 98,000 109,196
-----------
338,251
-----------
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- ------------------------------------------------------------------------------------
<S> <C> <C>
PORTUGAL--0.6%
Cimpor-Cimentos de Portugal SA (Materials)............... 7,100 $ 179,670
Establecimentos Jeronimo Martins & Filho SA
(Consumer Discretionary) .............................. 519 33,941
Mota & Companhia SA (Industrial & Commercial) ........... 7,900 132,528
Portugal Telecom SA ADR (Utilities)...................... 2,500 103,125
-----------
449,264
-----------
SINGAPORE--2.2%
City Developments Ltd.
(Real Estate) ......................................... 3,333 13,967
Cycle & Carriage Ltd.
(Consumer Discretionary) .............................. 12,000 52,571
DBS Land Ltd.
(Real Estate) ......................................... 51,000 86,781
Development Bank of Singapore Ltd. alien shares
(Finance) ............................................. 67,500 630,000
FJ Benjamin Holdings Ltd.+
(Consumer Discretionary) .............................. 230,000 59,143
Fraser & Neave Ltd.
(Consumer Staples) .................................... 3,000 15,047
Keppel Bank (Finance).................................... 106,000 172,965
Overseas Chinese Banking Corp., Ltd. alien shares
(Finance).............................................. 1,200 6,667
Overseas Union Bank Ltd.
alien shares (Finance)................................. 6,000 20,000
Sembawang Shipyard Ltd. (Industrial & Commercial) ....... 61,000 187,454
Singapore Land Ltd.
(Real Estate) ......................................... 6,000 17,067
Singapore Press Holdings Ltd. alien shares
(Information & Entertainment) 4,667 64,301
United Overseas Bank Ltd.
alien shares (Finance)................................. 40,000 220,952
Want Want Holding, Class A
(Consumer Staples) .................................... 1,600 3,104
Want Want Holding+
(Consumer Staples) .................................... 8,000 16,000
-----------

1,566,019
-----------
SOUTH AFRICA--0.7%
De Beers Centenary AG (Industrial & Commercial) ......... 12,000 286,255
</TABLE>

<PAGE>

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

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- ------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
<S> <C> <C>
SOUTH AFRICA (CONTINUED)
Dimension Data Holdings Ltd.+
(Information Technology) .............................. 45,000 $ 187,013
-----------
473,268
-----------
SPAIN--0.9%
Banco Bilbao Vizcaya SA (Finance)........................ 540 14,440
Banco Popular Espanol SA (Finance)....................... 880 51,964
Banco Santander SA (Finance) ............................ 2,897 81,153
Baron de Ley
(Consumer Staples) .................................... 12,500 236,303
Centros Com Pryca
(Consumer Discretionary) .............................. 800 12,704
Corporation Bancaria de Espana SA (Finance).............. 540 29,994
Empresa Nacional de Electricidad SA (Utilities).......... 3,240 61,027
Gas Natural SDG SA (Utilities) .......................... 640 29,653
Iberdrola SA (Utilities)................................. 3,190 38,156
Repsol SA (Energy)....................................... 1,084 45,455
Telefonica de Espana SA (Utilities)...................... 2,517 68,691
-----------
669,540
-----------
SWEDEN--2.1%
ABB AB, Class A (Utilities).............................. 3,710 43,342
ABB AB + (Utilities)..................................... 120 156,401
Astra AB, Class A (Healthcare) .......................... 2,844 45,945
Astra AB, Class B (Healthcare) .......................... 13,330 206,449
Atlas Copco AB, Class B (Industrial & Commercial) ....... 2,280 67,731
Electrolux AB, Series B
(Consumer Discretionary) .............................. 7,520 622,491

Granges AB+ (Materials).................................. 380 6,215
Hennes & Mauritz AB, Class B
(Consumer Discretionary) .............................. 2,850 116,627
Nordbanken AB (Finance).................................. 1,330 41,729
Sandvik AB, Class B
(Industrial & Commercial) ............................. 2,240 68,188
Scania AB, Class A
(Consumer Discretionary) .............................. 2,133 51,546
Volvo AB, Class A
(Consumer Discretionary) .............................. 2,217 57,572
-----------
1,484,236
-----------
SWITZERLAND--5.0%
Adia SA+
(Industrial & Commercial) ............................. 290 92,162
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- ------------------------------------------------------------------------------------
<S> <C> <C>
SWITZERLAND (CONTINUED)
Alusuisse-Lonza Holdings AG (Materials).................. 67 $ 60,050
CS Holding AG+ (Finance)................................. 3,310 466,272
Julius Baer Holdings AG (Finance)........................ 339 505,988
Munters AB
(Industrial & Commercial) ............................. 10,000 101,470
Nestle SA+
(Consumer Staples) .................................... 180 253,626
Novartis AG (Healthcare)................................. 290 454,183
Oerlikon Buhrle Holding AG+ (Multi-industry)............. 2,100 268,452
Roche Holdings AG (Healthcare)........................... 63 553,626
SGS Societe Generale de Surance Holding SA (Finance)..... 100 192,823
SMH AG
(Consumer Discretionary) .............................. 730 407,163
Swiss Bank Corp.+ (Finance) ............................. 270 72,598
TAG Heuer International SA+
(Consumer Discretionary) .............................. 1,049 119,865
-----------
3,548,278
-----------
THAILAND--0.6%
Advanced Information Services PCL alien shares
(Information & Entertainment) 1,000 5,216
Industrial Finance Corp. of Thailand alien shares
(Finance).............................................. 303,200 251,281
Royal Garden Resort PLC
alien shares
(Information & Entertainment) 500,000 140,159
Siam City Cement PCL
alien shares (Materials)............................... 4,700 39,181
-----------
435,837

-----------
UNITED KINGDOM--14.5%
Abbey National PLC (Finance)............................. 5,000 79,525
Airtours PLC
(Information & Entertainment) 13,333 265,078
Argos PLC
(Consumer Staples) .................................... 9,000 95,883
Argyll Group PLC+
(Consumer Staples) .................................... 14,000 91,194
ASDA Group PLC
(Consumer Staples) .................................... 17,000 44,209
BG PLC (Utilities)....................................... 6,000 26,374
Biocompatibles International PLC (Healthcare)............ 3,400 32,515
</TABLE>

<PAGE>

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

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- ------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
Bluebird Toys PLC
(Information & Entertainment) 125,000 $ 224,399
British Petroleum Co. PLC (Energy)....................... 7,000 102,880
Burton Group PLC
(Consumer Discretionary) .............................. 116,000 245,220
Cable & Wireless PLC
(Information Technology) .............................. 41,667 332,757
Cadbury Schweppes PLC
(Consumer Staples) .................................... 11,000 110,732
Caradon PLC (Materials).................................. 10,800 34,427
Centrica PLC+ (Utilities)................................ 6,000 8,431
Compass Group PLC
(Industrial & Commercial) ............................. 3,000 31,710
Cookson Group PLC (Multi-industry)....................... 58,400 235,154
Eidos
(Information Technology) .............................. 15,000 173,647
Electrocomponents PLC
(Information Technology) .............................. 6,000 46,809
General Electric Co. PLC (Industrial & Commercial) ...... 38,000 242,745
GKN PLC
(Consumer Discretionary) .............................. 1,000 22,432

Glaxo Wellcome PLC (Healthcare).......................... 26,333 564,623
Grand Metropolitan PLC
(Information & Entertainment) 21,000 189,552
Guinness PLC (Consumer Staples).......................... 18,000 160,963
Hanson PLC
(Industrial & Commercial) ............................. 22,125 113,217
Imperial Chemical Industries PLC
(Materials)............................................ 20,100 296,761
Inchcape PLC (Multi-industry) ........................... 66,000 241,395
Kingfisher PLC
(Consumer Staples) .................................... 19,000 273,507
Ladbroke Group PLC
(Information & Entertainment) 11,000 49,276
Laporte PLC (Materials).................................. 20,000 220,792
Legal & General PLC (Finance)............................ 36,667 304,515
Lonrho PLC (Multi-industry) ............................. 38,000 62,479
LucasVarity PLC
(Consumer Discretionary) .............................. 60,000 205,860
Medeva PLC (Healthcare).................................. 33,700 117,038
Morgan Stanley Emerging Market Fund, Inc.
(Investment Companies) ................................ 3,600 48,375
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- ------------------------------------------------------------------------------------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
National Westminster Bank PLC (Finance).................. 52,000 $ 747,673
Orange PLC+
(Information & Entertainment) 114,000 435,603
Pearson PLC
(Information & Entertainment) 34,000 444,940
Pilkington PLC
(Consumer Staples) .................................... 85,900 216,178
Randgold Resources Ltd. GDR (Materials).................. 10,000 95,000
Rank Group PLC
(Information & Entertainment) 12,000 67,043
Reed International PLC
(Information & Entertainment) 30,000 296,710
Rio Tinto PLC (Materials)................................ 8,000 103,081
Rolls Royce PLC
(Industrial & Commercial) ............................. 41,400 148,642
Sainsbury (J.) PLC+
(Consumer Staples) .................................... 35,000 292,138
Shell Transport & Trading Co. PLC (Energy)............... 44,000 312,078
Smith (David S) Holdings PLC (Materials)................. 5,000 19,126
Smith (W.H.) Group PLC
(Consumer Discretionary) .............................. 45,000 285,242
Smithkline Beecham PLC (Healthcare)...................... 42,800 405,714
T & N PLC
(Consumer Discretionary) .............................. 7,000 29,551
Tanjong PLC
(Information & Entertainment) 14,000 24,779

Tarmac PLC (Materials)................................... 133,333 261,729
Tesco PLC (Consumer Staples) ............................ 12,000 96,085
Thistle Hotels PLC
(Information & Entertainment).......................... 58,300 148,676
Tomkins PLC (Consumer Staples)........................... 33,000 169,419
United News & Media PLC (Information & Entertainment).... 13,000 163,581
Vickers PLC (Multi-industry)............................. 43,000 164,847
Williams Holdings PLC
(Industrial & Commercial) ............................. 28,724 172,526
-----------
10,394,835
-----------
VENEZUELA--0.0%
Compania Anon Nacional Tele de Venezuela ADR
(Utilities)............................................ 230 10,063
-----------
TOTAL COMMON STOCK
(cost $66,167,044)....................................... 63,257,171
-----------
</TABLE>

<PAGE>

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

PORTFOLIO OF INVESTMENTS -- October 31, 1997 -- (continued)

<TABLE>
<CAPTION>
SHARES/WARRANTS/
PRINCIPAL
AMOUNT
(IN VALUE
SECURITY DESCRIPTION THOUSANDS) (NOTE 3)
- ---------------------------------------------------------------------------
<S> <C> <C>
PREFERRED STOCK--0.6%
AUSTRALIA--0.0%
News Corp., Ltd.
(Information & Entertainment) ................... 2,116 $ 9,390
Sydney Harbour Casualty (Finance).................. 12,600 12,848
-----------
22,238
-----------
GERMANY--0.1%
Fresenius AG (Healthcare).......................... 100 16,882
Hornbach Holding AG
(Consumer Discretionary) ........................ 250 16,823

SAP AG
(Information Technology) ........................ 90 26,810
-----------
60,515
-----------
ITALY--0.3%
Istituto Finanziario (Finance) ...................... 18,600 234,560
-----------
UNITED KINGDOM--0.2%
Simba Fund Ltd.
(Investment Companies)........................... 14,000 136,500
-----------
TOTAL PREFERRED STOCK
(cost $462,453).................................... 453,813
-----------
OPTIONS--0.0%+
SINGAPORE--0.0%
DBS 50 Index, Jan 1998/403 Call(1)................. 83 0
DBS 50 Index, Jan 1998/404 Call(1)................. 23 0
DBS 50 Index, Jan 1998/407 Call(1)................. 80 0
DBS 50 Index, Jan 1998/407 Call(1)................. 79 0
-----------
TOTAL OPTIONS (cost $11,500)......................... 0
-----------
WARRANTS--0.0%+
FRANCE--0.0%
Compagnie Generale des Eaux
5/02/01
(Industrial & Commercial)........................ 1,760 930
Rhone-Poulenc Ltd. 11/05/01
(Healthcare)..................................... 2,026 6,410
-----------
TOTAL WARRANTS (cost $338)........................... 7,340
-----------
CONVERTIBLE BONDS--0.3%
CHINA--0.2%
Qingling Motors Co., Ltd.
3.50% 2002....................................... $ 156 156,780
-----------
THAILAND--0.1%
Bangkok Bank PCL alien shares 3.25% 2004........... 37 19,795
-----------
TOTAL CONVERTIBLE BONDS
(cost $193,481).................................... 176,575
-----------
TOTAL INVESTMENT SECURITIES
(cost $66,834,816)................................. 63,894,899
-----------

PRINCIPAL
AMOUNT
(IN VALUE

SECURITY DESCRIPTION THOUSANDS) (NOTE 3)
- ---------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM SECURITIES--1.2%
Cayman Island Time Deposit with State Street Bank and
Trust Co. 3.00% due 11/03/97 (cost $835,000)....... $ 835 $ 835,000
-----------
REPURCHASE AGREEMENTS--9.3%
Agreement with State Street Bank and Trust Co.,
bearing 5.00%, dated 10/31/97 to be repurchased
11/03/97 in the amount of $5,256,189
collateralized by $5,310,000 U.S. Treasury Note
6.375%, due 4/30/99 approximate aggregate value
$5,366,419
(cost $5,254,000)................................ 5,254 5,254,000
Agreement with State Street Bank and Trust Co.,
bearing 5.55%, dated 10/31/97 to be repurchased
11/03/97 in the amount of $1,425,659
collateralized by $1,225,000 U.S. Treasury Note
7.625%, due 2/15/25 approximate aggregate value
$1,466,736
(cost $1,425,000)................................ 1,425 1,425,000
-----------
TOTAL REPURCHASE AGREEMENTS
(cost $6,679,000).................................. 6,679,000
-----------
TOTAL INVESTMENTS--
(cost $74,348,816)................................. 99.9% 71,408,899
Other assets less liabilities--.................... 0.1 71,497
------- -----------
NET ASSETS-- 100.0% $71,480,396
------- -----------
------- -----------
</TABLE>

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

+ Non-income producing security
* Resale restricted to qualified institutional buyers
ADR ('American Depositary Receipt')
EDR ('European Depositary Receipt')
GDR ('Global Depositary Receipt')
(1) Fair valued security, see Note 3

See Notes to Financial Statements

<PAGE>

52
NOTES TO FINANCIAL STATEMENTS -- October 31, 1997

Note 1. Organization

Style Select Series, Inc. (the 'Fund') is an open-end diversified management
investment company organized as a Maryland corporation on July 3, 1996. The Fund
is managed by SunAmerica Asset Management Corp. ('SunAmerica'), an indirect
wholly-owned subsidiary of SunAmerica Inc. The Fund currently offers eight
separate investment portfolios (each, a 'Portfolio'). 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 investment objectives for each
of the Portfolios are as follows:

Large-Cap Growth Portfolio seeks long-term growth of capital by investing
generally in equity securities of large-sized companies.

Mid-Cap Growth Portfolio seeks long-term growth of capital by investing
primarily in equity securities which have a market capitalization of $1 billion
to $5 billion.

Aggressive Growth Portfolio seeks long-term growth of capital by investing
primarily in equity securities which have a market capitalization of less than
$1 billion.

Large-Cap Blend Portfolio seeks long-term growth of capital and a reasonable
level of current income by investing generally in equity securities of
large-sized companies.

Large-Cap Value Portfolio seeks long-term growth of capital by investing in
equity securities of large-sized companies using a 'value' style of investing.

Value Portfolio seeks long-term growth of capital by investing primarily in
equity securities using a 'value' style of investing.

Small-Cap Value Portfolio seeks long-term growth of capital by investing in
equity securities of small-sized companies using a 'value' style of investing.

International Equity Portfolio seeks long-term growth of capital by investing in
equity securities of issuers in countries other than the United States.

Each Portfolio currently offers three classes of shares. Class A shares are
offered at net asset value per share plus an initial sales charge. Class B
shares are offered without an initial sales charge, although a declining
contingent sales charge may be imposed on redemptions made within six years of
purchase. Any purchases of Class A shares in excess of $1,000,000 will be
subject to a contingent deferred sales charge on redemptions made within one
year of purchase. Class B shares of each Portfolio will convert automatically to
Class A shares on the first business day of the month after seven years from the
issuance of such Class B shares and at such time will be subject to the lower
distribution fee applicable to Class A shares. Class C shares are offered at net
asset value, although they may be subject to a contingent deferred sales charge
on redemptions made within one year of purchase. Each class of shares bears the
same voting, dividend, liquidation and other rights and conditions and each
makes distribution and account maintenance and service fee payments under the
distribution plans pursuant to Rule 12b-1 under the Investment Company Act of

1940 (the '1940 Act'), except that Class B shares and Class C shares are subject
to higher distribution fee rates.

Note 2. Reorganization

On September 29, 1997, International Equity Portfolio acquired all of the assets
and liabilities of SunAmerica Global Balanced Fund ('Global Balanced Fund'), a
regulated investment company registered under the 1940 Act. The agreement was
adopted as a tax-free reorganization of Global Balanced Fund. In exchange for
all of the assets of Global Balanced Fund, International Equity Portfolio issued
495,830 Class A shares and 1,063,431 Class B shares at net asset values of
$13.50 and $13.42, respectively, to Class A shareholders and Class B

<PAGE>

53
NOTES TO FINANCIAL STATEMENTS -- October 31, 1997 -- (continued)
shareholders of Global Balanced Fund. As of the close of business on September
29, 1997, the total net assets of Global Balanced were $20,964,949 (including
$1,218,731 of unrealized appreciation on investments and $1,619 of unrealized
depreciation of foreign currency). The net assets of International Equity
Portfolio were $56,392,003 on September 29, 1997.

Note 3. Significant Accounting Policies

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from these estimates. The following is a summary of the
significant accounting policies followed by the Portfolios in the preparation of
their financial statements:

SECURITY VALUATIONS: Securities that are actively traded in the over-the-counter
market, including listed securities for which the primary market is believed by
the Adviser to be over-the-counter, are valued at the quoted bid price provided
by principal market makers. Securities listed on the New York Stock Exchange
('NYSE') or other national securities exchanges, are valued on the basis of the
last sale price on the exchange on which they are primarily traded. If there is
no sale on that day, then securities are valued at the closing bid price on the
NYSE or other primary exchange for that day. However, if the last sale price on
the NYSE is different than the last sale price on any other exchange, the NYSE
price is used. Securities that are traded on foreign exchanges are ordinarily
valued at the last quoted sales price available before the time when the assets
are valued. If a security's price is available from more than one foreign
exchange, a Portfolio uses the exchange that is the primary market for the
security. Values of portfolio securities primarily traded on foreign exchanges
are already translated into U.S. dollars when received from a quotation service.
Options traded on national securities exchanges are valued as of the close of
the exchange on which they are traded. Futures and options traded on commodities
exchanges are valued at their last sale price as of the close of such exchange.
The Portfolios may make use of a pricing service in the determination of their
net asset values. Securities for which market quotations are not readily
available and other assets are valued at fair value as determined pursuant to
procedures adopted in good faith by the Directors. Short-term investments which

mature in less than 60 days are valued at amortized cost, if their original
maturity was 60 days or less, or by amortizing their value on the 61st day prior
to maturity, if their original term to maturity exceeded 60 days.

REPURCHASE AGREEMENTS: The Portfolios, along with other affiliated registered
investment companies, may transfer uninvested cash balances into a single joint
account, the daily aggregate balance of which is invested in one or more
repurchase agreements collateralized by U.S. Treasury or federal agency
obligations. The Portfolios' custodian takes possession of the collateral
pledged for investments in such repurchase agreements. The underlying collateral
is valued daily on a mark to market basis to ensure that the value, at the time
the agreement is entered into, is equal to at least 102% of the repurchase
price, including accrued interest. In the event of default of the obligation to
repurchase, a Portfolio has the right to liquidate the collateral and apply the
proceeds in satisfaction of the obligation. If the seller defaults and the value
of the collateral declines or if bankruptcy proceedings are commenced with
respect to the seller of the security, realization of the collateral by the
Portfolio may be delayed or limited.

Pursuant to exemptive relief granted by the Securities and Exchange Commission,
the Portfolios are permitted to participate in joint repurchase agreement
transactions with other affiliated mutual funds.

As of October 31, 1997, the Aggressive Growth Portfolio and the Large-Cap Blend
Portfolio had a 2.9% and 0.3% undivided interest, respectively, which
represented $2,661,000 and $273,000, respectively, in principal

<PAGE>

54
NOTES TO FINANCIAL STATEMENTS -- October 31, 1997 -- (continued)
amount in a joint repurchase agreement with PaineWebber, Inc. As of such date,
the repurchase agreement in the joint account and the collateral therefore were
as follows:

PaineWebber, Inc. Repurchase Agreement, 5.60% dated 10/31/97, in the principal
amount of $91,372,000 repurchase price $91,414,640 due 11/03/97, collateralized
by $93,235,000 U.S. Treasury Notes 5.625% due 10/31/99, approximate aggregate
value $93,249,918.

As of October 31, 1997, the Large Cap Value Portfolio had a 0.2% undivided
interest which represented $130,000 in principal amount in a joint repurchase
agreement with PaineWebber, Inc. As of such date, the repurchase agreement in
the joint account and the collateral therefore were as follows:

PaineWebber, Inc. Repurchase Agreement 5.67% dated 10/31/97, in the principal
amount of $65,665,000 repurchase price $65,696,027 due 11/03/97 collateralized
by $15,710,000 U.S. Treasury Notes 5.625% due 1/31/98 and $50,000,000 U.S.
Treasury Note 5.375% due 5/31/98, approximate aggregate value $67,016,362.

SECURITIES TRANSACTIONS, INVESTMENT INCOME, EXPENSES, DIVIDENDS AND
DISTRIBUTIONS TO SHAREHOLDERS: Securities transactions are recorded on a trade
date basis. Realized gains and losses on sales of investments are calculated on
the identified cost basis. Interest income is recorded on the accrual basis;

dividend income is recorded on the ex-dividend date. Portfolios investing in
foreign securities may be subject to taxes imposed by countries in which they
invest. Such taxes are generally based on either income or gains earned or
repatriated. The Portfolios accrue such taxes when the related income is earned.
The Portfolios amortize premiums and accrue discounts including original issue
discounts as required for federal income tax purposes.

Net investment income, other than class specific expenses and realized and
unrealized gains and losses, is allocated daily to each class of shares based
upon the relative net asset value of outstanding shares of each class of shares
at the beginning of the day (after adjusting for the current capital shares
activity of the respective class).

Expenses common to all Portfolios, not directly related to individual
Portfolios, are allocated among the Portfolios based upon their relative net
asset value or other appropriate methods.

Dividends from net investment income and capital gain distributions, if any, are
paid annually. The Portfolios record dividends and distributions to their
shareholders on the ex-dividend date. The amount of dividends and distributions
from net investment income and net realized capital gains are determined and
presented in accordance with federal income tax regulations, which may differ
from generally accepted accounting principles. These 'book/tax' differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification. Net investment income/loss, net
realized gain/loss, and net assets were not affected.

For the period ended October 31, 1997, the following reclassifications arising
from book/tax differences were primarily the result of reclassifications due to
net operating losses.

<TABLE>
<CAPTION>
ACCUMULATED ACCUMULATED
UNDISTRIBUTED UNDISTRIBUTED PAID
NET REALIZED NET INVESTMENT IN
GAIN/LOSS INCOME/LOSS CAPITAL
------------- -------------- ---------
<S> <C> <C> <C>
Large-Cap Growth Portfolio................................................ $ -- $ 4,215 $ (4,215)
Mid-Cap Growth Portfolio.................................................. (351,091) 595,049 (243,958)
Aggressive Growth Portfolio............................................... (567,414) 597,185 (29,771)
Large-Cap Blend Portfolio................................................. (191) 4,493 (4,302)
Large-Cap Value Portfolio................................................. -- 4,327 (4,327)
Value Portfolio........................................................... (220,800) 248,523 (27,723)
Small-Cap Value Portfolio................................................. -- 4,933 (4,933)
International Equity Portfolio............................................ (209,293) 233,038 (23,745)
</TABLE>

<PAGE>

55
NOTES TO FINANCIAL STATEMENTS -- October 31, 1997 -- (continued)

FOREIGN CURRENCY TRANSACTION: The books and records of the Fund are maintained
in U.S. dollars. Assets and liabilities denominated in foreign currencies and
commitments under forward foreign currency contracts are translated into U.S.
dollars at the mean of the quoted bid and asked prices of such currencies
against the U.S. dollar.

The Fund does not isolate that portion of the results of operations arising as a
result of changes in the foreign exchange rates from the changes in the market
prices of securities held at fiscal year-end. Similarly, the Fund does not
isolate the effect of changes in foreign exchange rates from the changes in the
market prices of portfolio securities sold during the year.

Realized foreign exchange gains and losses on other assets and liabilities and
change in unrealized foreign exchange gains and losses on other assets and
liabilities include foreign exchange gains and losses from currency gains or
losses between the trade and settlement dates of securities transactions, the
difference between the amounts of interest, dividends and foreign withholding
taxes recorded on a Portfolio's books and the U.S. dollar equivalent amounts
actually received or paid and changes in the unrealized foreign exchange gains
and losses relating to other assets and liabilities arising as a result of
changes in the exchange rate.

FORWARD FOREIGN CURRENCY CONTRACTS: Certain portfolios may enter into forward
foreign currency contracts ('forward contracts') to attempt to protect
securities and related receivables and payables against changes in future
foreign exchange rates or to enhance return. A forward contract is an agreement
between two parties to buy or sell currency at a set price on a future date. The
market value of the contract will fluctuate with changes in currency exchange
rates. The contract is marked to market daily using the forward rate and the
change in market value is recorded by the Portfolio as unrealized gain or loss.
On settlement date, the Portfolio records realized foreign exchange gains or
losses when the contract is closed equal to the difference between the value of
the contract at the time it was opened and the value at the time it was closed.
Risks may arise upon entering into these contracts from the potential inability
of counterparties to meet the terms of their contracts and from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar.
Forward contracts involve elements of risk in excess of the amounts reflected in
the Statement of Assets and Liabilities. The Trust bears the risk of an
unfavorable change in the foreign exchange rate underlying the forward contract.

OPTIONS: The premium paid by a Portfolio for the purchase of a call or a put
option is included in the Portfolio's Statement of Assets and Liabilities as an
investment and subsequently marked to market to reflect the current market value
of the option. When a Portfolio writes a call or a put option, an amount equal
to the premium received by the Portfolio is included in the Portfolio's
Statement of Assets and Liabilities as a liability and is subsequently marked to
market to reflect the current market value of the option written. If an option
which the Portfolio has written either expires on its stipulated expiration
date, or if the Portfolio enters into a closing purchase transaction, the
Portfolio realizes a gain (or loss if the cost of a closing purchase transaction
exceeds the premium received when the option was written) without regard to any

unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a call option which the Portfolio has written is
exercised, the Portfolio realizes a capital gain or loss from the sale of the
underlying security and the proceeds from such sale are increased by the premium
originally received. If a put option which the Portfolio has written is
exercised, the amount of the premium originally received reduces the cost basis
of the security which the Portfolio purchased upon exercise of the option.

ORGANIZATIONAL EXPENSES: Costs incurred by SAAMCo in connection with the
organization of each Portfolio are being amortized on a straight line basis by
the Portfolios over a period not to exceed 60 months from the date the
Portfolios commenced operations.

<PAGE>

56
NOTES TO FINANCIAL STATEMENTS -- October 31, 1997 -- (continued)

Note 4. Investment Advisory and Management Agreement, Distribution Agreement and
Service Agreement

The Fund, on behalf of each Portfolio, has entered into an Investment Advisory
and Management Agreement (the 'Agreement') with SunAmerica. Under the Agreement,
SunAmerica provides continuous supervision of the respective Portfolios and
administers their corporate affairs, subject to general review by the Board of
Directors (the 'Directors'). In connection therewith, SunAmerica furnishes the
Fund with office facilities, maintains certain of the Fund's books and records,
and pays for the salaries and expenses of all personnel, including officers of
the Fund who are employees of SunAmerica and its affiliates. The annual rate of
the investment advisory and management fee payable by each Portfolio to
SunAmerica as full compensation for services and facilities furnished to the
Fund is as follows: 1.00% of the average daily net assets of the Large-Cap
Growth, Mid-Cap Growth, Aggressive Growth, Large-Cap Blend, Large-Cap Value,
Value and Small-Cap Value Portfolios, respectively, and 1.10% of the average
daily net assets of the International Equity Portfolio.

The organizations described below act as Advisers to the Fund pursuant to
Subadvisory Agreements with SunAmerica. Under the Subadvisory Agreements, the
Advisers manage the investment and reinvestment of the assets of the respective
Portfolios for which they are responsible. Each of the following Advisers is
independent of SunAmerica (with the exception of the Aggressive Growth and
Large-Cap Blend Portfolios, for which SunAmerica acts as an Adviser) and
discharges its responsibilities subject to the policies of the Directors and the
oversight and supervision of SunAmerica, which pays the Advisers' fees. The
Advisers for the Large-Cap Growth Portfolio are Janus Capital Corporation; L.
Roy Papp & Associates; and Montag & Caldwell, Inc. The Advisers for the Mid-Cap
Growth Portfolio are Miller Anderson & Sherrerd, LLP; Pilgrim Baxter &
Associates, Ltd.; and T. Rowe Price Associates, Inc. The Advisers for the
Aggressive Growth Portfolio are Janus Capital Corporation; SunAmerica; and
Warburg, Pincus Asset Management, Inc. The Advisers for the Large-Cap Blend
Portfolio are Lazard Asset Management; SunAmerica; and T. Rowe Price Associates,
Inc. The Advisers for the Large-Cap Value Portfolio are David L. Babson & Co.,
Inc.; Davis Selected Advisers, L.P; and Wellington Management. The Advisers for
the Value Portfolio are Davis Selected Advisers, L.P.; Neuberger & Berman, LLC.;

and Strong Capital Management, Inc. The Advisers for the Small-Cap Value are
Berger Associates, Inc.; Lazard Asset Management; and The Glenmede Trust
Company. The Advisers for the International Equity Portfolio are Rowe
Price-Fleming International, Inc.; Strong Capital Management, Inc.; and Warburg,
Pincus Counsellors, Inc. Each Adviser is paid monthly by SunAmerica a fee equal
to a percentage of the average daily net assets of the Portfolio allocated to
the Adviser. Through October 31, 1997, SunAmerica paid the Advisers for each
Portfolio the following, expressed as an annual percentage of the average daily
net assets of each Portfolio: Large-Cap Growth Portfolio, .48%; Mid-Cap Growth
Portfolio, .50%; Aggressive Growth Portfolio, .37%; Large-Cap Blend Portfolio,
.32%; Large-Cap Value Portfolio, .41%; Value Portfolio, .50%; Small-Cap Value
Portfolio, .55% and International Equity Portfolio, .65%.

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: Large-Cap Growth Portfolio,
Mid-Cap Growth Portfolio, Aggressive Growth Portfolio, Large-Cap Blend
Portfolio, Large-Cap Value Portfolio, Value Portfolio and Small-Cap Value
Portfolio 1.78% for Class A shares and 2.43% for Class B shares and Class C
shares, respectively. International Equity Portfolio 2.03% for Class A shares
and 2.68% for Class B and Class C shares. Prior to June 17, 1997, SunAmerica
voluntarily agreed to waive fees or reimburse expenses, if necessary, to keep
annual operating expenses at or below an annual rate of 1.90% of the average
daily net assets of Class A and 2.55% of the average daily net assets of Class B
and Class C shares for the Mid-Cap Growth Portfolio, Aggressive Growth Portfolio
and Value Portfolio, and 2.15% of the average daily net assets of Class A shares
and 2.80% of the average daily net asets of Class B and Class C shares for the
International Equity Portfolio. SunAmerica also may voluntarily waive or
reimburse additional amounts to increase the investment return to a Portfolio's
investors. Further, any waivers or reimbursements made by SunAmerica with
respect to a Portfolio are subject to recoupment from that Portfolio within the
following two

<PAGE>

57
NOTES TO FINANCIAL STATEMENTS -- October 31, 1997 -- (continued)
years, provided that the Portfolio is able to effect such payment to SunAmerica
and remain in compliance with the foregoing expense limitations.

At October 31, 1997, expenses previously waived or reimbursed by SAAMCO that are
subject to recoupment are as follows:
<TABLE>
<CAPTION>
MANAGEMENT OTHER
FEES EXPENSES
REIMBURSED REIMBURSED
---------- ----------
<S> <C> <C>
Large-Cap Growth A............. $ 6,709 --
Large-Cap Growth B............. 102 $ 163
Large-Cap Growth C............. 35 158
Mid-Cap Growth A............... 71,761 --
Mid-Cap Growth B............... 55,863 13,191

Mid-Cap Growth C............... 5,072 9,168
Aggressive Growth A............ 78,040 --
Aggressive Growth B............ 53,505 12,588
Aggressive Growth C............ 4,955 9,084
Large-Cap Blend A.............. 6,679 --
Large-Cap Blend B.............. 139 163
Large-Cap Blend C.............. 36 158

<CAPTION>
MANAGEMENT OTHER
FEES EXPENSES
REIMBURSED REIMBURSED
---------- ----------
<S> <C> <C>

Large-Cap Value A.............. $ 6,656 --
Large-Cap Value B.............. 163 $ 163
Large-Cap Value C.............. 35 158
Value A........................ 95,010 --
Value B........................ 86,174 18,541
Value C........................ 7,801 9,906
Small-Cap Value A.............. 6,269 --
Small-Cap Value B.............. 516 153
Small-Cap Value C.............. 106 156
International Equity A......... 80,880 --
International Equity B......... 60,595 13,024
International Equity C......... 6,498 8,825
</TABLE>

The Fund, on behalf of each Portfolio, has entered into a Distribution Agreement
with SunAmerica Capital Services, Inc. ('SACS' or the 'Distributor'), an
indirect wholly-owned subsidiary of SunAmerica Inc. Each Portfolio has adopted a
Distribution Plan (the 'Plan') in accordance with the provisions of Rule 12b-1
under the Act. Rule 12b-1 under the Act permits an investment company directly
or indirectly to pay expenses associated with the distribution of its shares
('distribution expenses') in accordance with a plan adopted by the investment
company's Board of Directors. 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.' In adopting the Class A Plan, the Class B Plan and the Class C
Plan, the Directors determined that there was a reasonable likelihood that each
such Plan would benefit the Fund and the shareholders of the respective class.
The sales charge and distribution fees of a particular class will not be used to
subsidize the sale of shares of any other class.

Under the Class A Plan, the Distributor receives 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 also
provide that each class of shares of each Portfolio may also pay the Distributor
an account maintenance and service fee up to an annual rate of 0.25% of the
average daily net assets of such class of shares for payments to broker-dealers
for providing continuing account maintenance. Accordingly, through October 31,
1997, SACS received fees (see Statement of Operations) based upon the
aforementioned rates.

<PAGE>

58
NOTES TO FINANCIAL STATEMENTS -- October 31, 1997 -- (continued)

SACS receives sales charges on each Portfolio's Class A shares, portions of
which are reallowed to affiliated broker-dealers and non-affiliated
broker-dealers. SACS also receives the proceeds of contingent deferred sales
charges paid by investors in connection with certain redemptions of each
Portfolio's Class B and Class C shares. SACS has advised the Portfolios that for
the period ended October 31, 1997, the proceeds received from Class A sales (and
paid out to affiliated and non-affiliated broker-dealers), Class B and Class C
redemptions are as follows:

<TABLE>
<CAPTION>
CLASS B
CLASS A ----------- CLASS C
------------------------------------------ CONTINGENT -------------
AFFILIATED NON-AFFILIATED DEFERRED CONTINGENT
SALES BROKER- BROKER- SALES DEFERRED
CHARGES DEALERS DEALERS CHARGES SALES CHARGES
---------- ---------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Large-Cap Growth Portfolio....... $ 15,599 $ 2,885 $ 10,059 $ -- $ --
Mid-Cap Growth Portfolio......... 802,237 257,754 440,666 25,643 268
Aggressive Growth Portfolio...... 1,394,623 545,170 668,387 26,249 937
Large-Cap Blend Portfolio........ 22,528 9,732 9,440 -- --
Large-Cap Value Portfolio........ 38,564 6,352 25,006 -- --
Value Portfolio.................. 1,925,092 715,034 949,290 30,795 945
Small-Cap Value Portfolio........ 59,419 18,399 32,100 -- --
International Equity Portfolio... 699,157 225,890 383,626 18,872 426
</TABLE>

The Fund, on behalf of each Portfolio, has entered into a Service Agreement with
SunAmerica Fund Services, Inc. ('SAFS'), an indirect wholly-owned subsidiary of
SunAmerica Inc. Under the Service Agreement, SAFS performs certain shareholder
account functions by assisting the Portfolios' transfer agent in connection with
the services that it offers to the shareholders of the Portfolios. The Service
Agreement, which permits the Portfolios to compensate SAFS for services rendered

based upon an annual rate of 0.22% of average daily net assets, is approved
annually by the Directors. For the period ended October 31, 1997, the Portfolios
incurred the following expenses, which are included in transfer agent fees in
the Statement of Operations, to compensate SAFS pursuant to the terms of the
Service Agreement.

<TABLE>
<CAPTION>
PAYABLE
EXPENSE OCTOBER 31, 1997
----------------------------- -----------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Large-Cap Growth Portfolio....... $ 2,503 $ 38 $ 13 $ 2,503 $ 38 $ 13
Mid-Cap Growth Portfolio......... 46,320 36,275 3,253 3,822 6,805 895
Aggressive Growth Portfolio...... 66,865 46,155 4,252 7,311 9,373 1,113
Large-Cap Blend Portfolio........ 2,514 53 14 2,514 53 14
Large-Cap Value Portfolio........ 2,506 62 13 2,506 62 13
Value Portfolio.................. 73,489 67,984 6,227 9,217 14,451 1,665
Small-Cap Value Portfolio........ 2,419 198 40 2,419 198 40
International Equity Portfolio... 48,437 35,815 3,883 4,983 8,495 897
</TABLE>

Note 5. Purchases and Sales of Investment Securities

The aggregate cost of purchase and proceeds from sales and maturities of
investments (excluding U.S. Government securities and short-term investments)
through October 31, 1997 were as follows:

<TABLE>
<CAPTION>
LARGE-CAP MID-CAP AGGRESSIVE LARGE-CAP
GROWTH GROWTH GROWTH BLEND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
Aggregate purchases... $25,441,617 $ 82,570,008 $138,188,608 $24,729,190
----------- ------------ ------------ -----------
----------- ------------ ------------ -----------
Aggregate sales....... $ 193,228 $ 33,441,496 $ 68,985,566 $ 404,332
----------- ------------ ------------ -----------
----------- ------------ ------------ -----------
</TABLE>

<PAGE>

59
NOTES TO FINANCIAL STATEMENTS -- October 31, 1997 -- (continued)

<TABLE>
<CAPTION>
LARGE-CAP SMALL-CAP INTERNATIONAL

VALUE VALUE VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
Aggregate purchases... $24,049,833 $138,953,561 $ 20,506,477 $79,766,373
----------- ------------ ------------ -----------
----------- ------------ ------------ -----------
Aggregate sales....... $ -- $ 29,039,505 $ -- $24,762,382
----------- ------------ ------------ -----------
----------- ------------ ------------ -----------
</TABLE>

Note 6. Transactions with Affiliates

The following Portfolios incurred brokerage commissions with an affiliated
broker:

<TABLE>
<CAPTION>
ROWE-PRICE FLEMING
NEUBERGER & WARBURG, PINCUS INTERNATIONAL,
BERMAN LLC COUNSELLORS, INC. INC.
----------- ----------------- ------------------
<S> <C> <C> <C>
Value Portfolio...................................................... $47,675 $ -- $ --
International Equity Portfolio....................................... -- 29,176 32,083
</TABLE>

Note 7. Federal Income Taxes

The Portfolios intend to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and distribute all of their
taxable income, including any net realized gain on investments, to their
shareholders. Therefore, no federal tax provision is required.

The amounts of aggregate unrealized gain (loss) and the cost of investment
securities, including short-term securities, for federal income tax purposes
were as follows:

<TABLE>
<CAPTION>
LARGE-CAP MID-CAP AGGRESSIVE LARGE-CAP
GROWTH GROWTH GROWTH BLEND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Cost.................... $25,668,948 $ 51,758,783 $80,701,326 $25,703,119
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
Appreciation............ $ 340,711 $ 8,133,111 $15,848,328 $ 155,425
Depreciation............ (1,635,303) (1,481,383) (2,352,042) (1,232,097)
----------- ------------ ----------- -----------
Net unrealized
appreciation

(depreciation)........ $(1,294,592) $ 6,651,728 $13,496,286 $(1,076,672)
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
</TABLE>

<TABLE>
<CAPTION>
LARGE-CAP SMALL-CAP INTERNATIONAL
VALUE VALUE VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Cost.................... $25,430,318 $126,615,682 $25,580,088 $74,567,051
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
Appreciation............ $ 88,336 $ 14,096,438 $ 155,011 $ 4,195,553
Depreciation............ (1,424,132) (3,418,677) (923,013) (7,353,705)
----------- ------------ ----------- -----------
Net unrealized
appreciation
(depreciation)........ $(1,335,796) $ 10,677,761 $ (768,002) $(3,158,152)
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
</TABLE>

At October 31, 1997, Large-Cap Growth and Large-Cap Blend had capital loss
carryforwards of $159,379 and $13,688, respectively, which are available to the
extent provided in the regulations and which will expire 2005.

<PAGE>

60
NOTES TO FINANCIAL STATEMENTS -- October 31, 1997 -- (continued)

Note 8. Open Forward Currency Contracts

At October 31, 1997, the International Equity Portfolio held forward foreign
currency exchange contracts ('forward contracts') in order to hedge against
changes in future foreign exchange rates and enhance return. Forward contracts
involve elements of market risk in excess of the amount reflected in the
Statement of Assets and Liabilities. The Portfolio bears the risk of an
unfavorable change in the foreign exchange rate underlying the forward
contracts. International Equity Portfolio held the following forward currency
contracts at October 31, 1997.
<TABLE>
<CAPTION>
GROSS
CONTRACT IN DELIVERY UNREALIZED
TO DELIVER EXCHANGE FOR DATE APPRECIATION
- --------------- -------------- -------- -----------
<S> <C> <C> <C>
JPY 359,766,450 USD 3,106,791 11/28/97 $ 105,458
*JPY 25,102,350 USD 216,773 11/28/97 7,358
*JPY 19,161,200 USD 165,468 11/28/97 5,617

*USD 566,866 FRF 3,300,000 12/12/97 6,170
-----------
124,603
-----------

GROSS
CONTRACT IN DELIVERY UNREALIZED
TO DELIVER EXCHANGE FOR DATE DEPRECIATION
- --------------- -------------- -------- -----------
<S> <C> <C> <C>
JPY 161,114,900 USD 1,340,000 11/28/97 $ (4,093)
*USD 210,000 JPY 25,102,350 11/28/97 (585)
*USD 160,000 JPY 19,161,200 11/28/97 (149)
*FRF 3,300,000 USD 538,503 12/12/97 (34,533)
-----------
(39,360)
-----------
Net Appreciation........................... $ 85,243
-----------
-----------
</TABLE>

* Represents open forward foreign currency contracts and offsetting open forward
foreign currency contracts that do not have additional market risk but have
continued counterparty settlement risk.

<TABLE>
<S> <C>
FRF --French Franc
JPY --Japanese Yen
USD --United States Dollar
</TABLE>

Note 9. Capital Share Transactions

At October 31, 1997, SunAmerica Inc. owned shares in each class as follows:
<TABLE>
<CAPTION>

SHARES PERCENTAGE OF NET ASSETS
------------------------------------ --------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Large-Cap Growth Portfolio 1,946,082 8,000 8,000 93.46% .38% .38%
Mid-Cap Growth Portfolio 1,000 1,000 838 .02 .02 .02
Aggressive Growth Portfolio 1,000 1,000 747 .02 .02 .01
Large-Cap Blend Portfolio 1,919,330 8,000 8,000 93.18 .39 .39
Large-Cap Value Portfolio 1,859,065 8,000 8,000 89.13 .38 .38
Value Portfolio 1,000 1,000 737 .01 .01 .01
Small-Cap Value Portfolio 1,601,147 8,000 8,000 77.80 .39 .39
International Equity Portfolio 282,513 1,000 794 4.92 .02 .01
</TABLE>

<PAGE>

61
NOTES TO FINANCIAL STATEMENTS -- October 31, 1997 -- (continued)

Transactions in shares of each class of each series were as follows:
<TABLE>
<CAPTION>
LARGE-CAP GROWTH PORTFOLIO
-------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------------- ------------------------ ----------------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
OCTOBER 15, 1997* OCTOBER 15, 1997 OCTOBER 15, 1997
THROUGH THROUGH THROUGH
OCTOBER 31, 1997 OCTOBER 31, 1997 OCTOBER 31, 1997
------------------------- ------------------------ ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold............ 2,056,806 $25,693,489 65,591 $ 793,598 14,084 $ 172,781
Reinvested dividends... -- -- -- -- -- --
Shares redeemed........ (53,919) (661,012) -- -- -- --
---------- ----------- --------- ----------- -------- ----------
Net increase........... 2,002,887 $25,032,477 65,591 $ 793,598 14,084 $ 172,781
---------- ----------- --------- ----------- -------- ----------
---------- ----------- --------- ----------- -------- ----------

MID-CAP GROWTH PORTFOLIO
-------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------------- ------------------------ ----------------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
NOVEMBER 19, 1996* NOVEMBER 19, 1996 MARCH 6, 1997
THROUGH THROUGH THROUGH
OCTOBER 31, 1997 OCTOBER 31, 1997 OCTOBER 31, 1997
------------------------- ------------------------ ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold............ 3,264,892 $40,663,001 2,969,116 $37,170,139 458,934 $5,975,048
Reinvested dividends... -- -- -- -- -- --
Shares redeemed........ (1,923,538) (25,255,844) (348,034) (4,559,436) (115,441) (1,596,837)
---------- ----------- --------- ----------- -------- ----------
Net increase........... 1,341,354 $15,407,157 2,621,082 $32,610,703 343,493 $4,378,211
---------- ----------- --------- ----------- -------- ----------
---------- ----------- --------- ----------- -------- ----------
<CAPTION>

AGGRESSIVE GROWTH PORTFOLIO
-------------------------------------------------------------------------------

CLASS A CLASS B CLASS C
------------------------- ------------------------ ----------------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
NOVEMBER 19, 1996* NOVEMBER 19, 1996 MARCH 6, 1997
THROUGH THROUGH THROUGH
OCTOBER 31, 1997 OCTOBER 31, 1997 OCTOBER 31, 1997
------------------------- ------------------------ ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold............ 3,856,767 $52,508,769 3,420,491 $48,609,878 411,297 $5,980,151
Reinvested dividends... -- -- -- -- -- --
Shares redeemed........ (1,433,429) (22,546,557) (345,988) (5,157,472) (35,505) (512,718)
---------- ----------- --------- ----------- -------- ----------
Net increase........... 2,423,338 $29,962,212 3,074,503 $43,452,406 375,792 $5,467,433
---------- ----------- --------- ----------- -------- ----------
---------- ----------- --------- ----------- -------- ----------
<CAPTION>

LARGE-CAP BLEND PORTFOLIO
-------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------------- ------------------------ ----------------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
OCTOBER 15, 1997* OCTOBER 15, 1997 OCTOBER 15, 1997
THROUGH THROUGH THROUGH
OCTOBER 31, 1997 OCTOBER 31, 1997 OCTOBER 31, 1997
------------------------- ------------------------ ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold............ 2,050,665 $25,623,294 78,691 $ 969,619 11,932 $ 148,672
Reinvested dividends... -- -- -- -- -- --
Shares redeemed........ (80,670) (990,000) -- -- -- --
---------- ----------- --------- ----------- -------- ----------
Net increase........... 1,969,995 $24,633,294 78,691 $ 969,619 11,932 $ 148,672
---------- ----------- --------- ----------- -------- ----------
---------- ----------- --------- ----------- -------- ----------

<PAGE>

</TABLE>

62
NOTES TO FINANCIAL STATEMENTS -- October 31, 1997 -- (continued)
<TABLE>
<CAPTION>
LARGE-CAP VALUE PORTFOLIO
-------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------------- ------------------------ ----------------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
OCTOBER 15, 1997* OCTOBER 15, 1997 OCTOBER 15, 1997
THROUGH THROUGH THROUGH

OCTOBER 31, 1997 OCTOBER 31, 1997 OCTOBER 31, 1997
------------------------- ------------------------ ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- ----------- -------- ----------
Shares sold............ 2,100,495 $26,218,938 111,740 $ 1,361,527 14,544 $ 178,760
<S> <C> <C> <C> <C> <C> <C>
Reinvested dividends... -- -- -- -- -- --
Shares redeemed........ (141,051) (1,698,383) -- -- -- --
---------- ----------- --------- ----------- -------- ----------
Net increase........... 1,959,444 $24,520,555 111,740 $ 1,361,527 14,544 $ 178,760
---------- ----------- --------- ----------- -------- ----------
---------- ----------- --------- ----------- -------- ----------
<CAPTION>

VALUE PORTFOLIO
-------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------------- ------------------------ ----------------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
NOVEMBER 19, 1996* NOVEMBER 19, 1996 MARCH 6, 1997
THROUGH THROUGH THROUGH
OCTOBER 31, 1997 OCTOBER 31, 1997 OCTOBER 31, 1997
------------------------- ------------------------ ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold............ 4,671,463 $65,290,119 5,001,111 $73,400,374 633,085 $9,591,079
Reinvested dividends... -- -- -- -- -- --
Shares redeemed........ (1,665,401) (26,013,487) (155,252) (2,394,393) (46,506) (698,146)
---------- ----------- --------- ----------- -------- ----------
Net increase........... 3,006,062 $39,276,632 4,845,859 $71,005,981 586,579 $8,892,933
---------- ----------- --------- ----------- -------- ----------
---------- ----------- --------- ----------- -------- ----------
<CAPTION>

SMALL-CAP VALUE PORTFOLIO
-------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------------- ------------------------ ----------------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
OCTOBER 15, 1997* OCTOBER 15, 1997 OCTOBER 15, 1997
THROUGH THROUGH THROUGH
OCTOBER 31, 1997 OCTOBER 31, 1997 OCTOBER 31, 1997
------------------------- ------------------------ ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold............ 2,177,614 $27,190,002 256,511 $ 3,168,460 43,289 $ 536,921
Reinvested dividends... -- -- -- -- -- --
Shares redeemed........ (419,530) (5,174,050) (28) (345) -- --
---------- ----------- --------- ----------- -------- ----------
Net increase........... 1,758,084 $22,015,952 256,483 $ 3,168,115 43,289 $ 536,921
---------- ----------- --------- ----------- -------- ----------
---------- ----------- --------- ----------- -------- ----------

INTERNATIONAL EQUITY PORTFOLIO
-------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------------- ------------------------ ----------------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
NOVEMBER 19, 1996* NOVEMBER 19, 1996 MARCH 6, 1997
THROUGH THROUGH THROUGH
OCTOBER 31, 1997 OCTOBER 31, 1997 OCTOBER 31, 1997
------------------------- ------------------------ ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold............ 3,085,642 $39,324,047 2,566,019 $33,369,226 404,951 $5,319,147
Shares issued in
acquisition of the
Global Balanced Fund
(Note 2)............. 495,830 6,693,711 1,063,431 14,271,238 -- --
Reinvested dividends... -- -- -- -- -- --
Shares redeemed........ (1,626,511) (21,418,365) (183,548) (2,395,962) (44,682) (586,462)
---------- ----------- --------- ----------- -------- ----------
Net increase........... 1,954,961 $24,599,393 3,445,902 $45,244,502 360,269 $4,732,685
---------- ----------- --------- ----------- -------- ----------
---------- ----------- --------- ----------- -------- ----------
</TABLE>

*Date of commencement of operations

<PAGE>

63
NOTES TO FINANCIAL STATEMENTS -- October 31, 1997 -- (continued)

Note 10. Directors' Retirement Plan

The Directors (and Trustees) of the SunAmerica Family of Mutual Funds have
adopted the SunAmerica Disinterested Trustees' and Directors' Retirement Plan
(the 'Retirement Plan') effective January 1, 1993 for the unafilliated
Directors. The Retirement Plan provides generally that if a disinterested
Director who has at least 10 years of consecutive service as a Disinterested
Director of any of the SunAmerica mutual funds (an 'Eligible Director') retires
after reaching age 60 but before age 70 or dies while a Director, such person
will be eligible to receive a retirement or death benefit from each SunAmerica
mutual fund with respect to which he or she is an Eligible Director. As of each
birthday, prior to the 70th birthday, but in no event for a period greater than
10 years, each Eligible Director will be credited with an amount equal to 50% of
his or her regular fees (excluding committee fees) for services as a
Disinterested Director of each SunAmerica mutual fund for the calendar year in
which such birthday occurs. In addition, an amount equal to 8.5% of any amounts
credited under the preceding clause during prior years, is added to each
Eligible Director's account until such Eligible Trustee reaches his or her 70th
birthday. An Eligible Director may receive any benefits payable under the
Retirement Plan, at his or her election, either in one lump sum or in up to

fifteen annual installments. As of October 31, 1997, Mid-Cap Growth Portfolio,
Aggressive Growth Portfolio, Value Portfolio and International Equity Portfolio
had accrued $643, $761, $680 and $637, respectively, for the Retirement Plan,
which is included in accrued expenses on the Statement of Assets and
Liabilities, and as of October 31, 1997 expensed $643, $761, $680 and $637,
respectively, for the Retirement Plan, which is included in Directors' fees and
expenses on the Statement of Operations.

<PAGE>

64
REPORT OF INDEPENDENT ACCOUNTANTS

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF STYLE SELECT SERIES, INC.

In our opinion, the accompanying statement of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Large-Cap Growth Portfolio, Mid-Cap
Growth Portfolio, Aggressive Growth Portfolio, Large-Cap Blend Portfolio,
Large-Cap Value Portfolio, Value Portfolio, Small-Cap Value Portfolio and
International Equity Portfolio (constituting the eight portfolios of Style
Select Series, Inc., hereafter referred to as the 'Fund') at October 31, 1997,
and the results of each of their operations, the changes in each of their net
assets and the financial highlights for each of the periods indicated, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as 'financial
statements') are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audit. We
conducted our audit of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of securities at October 31, 1997 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where confirmations from brokers were not received, provides
a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP

1177 Avenue of the Americas
New York, New York
December 4, 1997

<PAGE>

APPENDIX

CORPORATE BOND AND COMMERCIAL PAPER RATINGS

Description of Moody's Investors Service's Corporate Ratings

Aaa Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment
risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure.
While the various protective elements are likely to
change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of
such issues.

Aa Bonds which are rated Aa are judged to be of high
quality by all standards. Together with the Aaa group
they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be
of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat
larger than in Aaa securities.

A Bonds which are rated A possess many favorable
investment attributes and are to be considered as upper
medium grade obligations. Factors giving security to
principal and interest are considered adequate, but
elements may be present which suggest a susceptibility
to impairment sometime in the future.

Baa Bonds which are rated Baa are considered as medium
grade obligations; i.e., they are neither highly
protected nor poorly secured. Interest payments and
principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of
time. Such bonds lack outstanding investment
characteristics and in fact have speculative
characteristics as well.

Ba Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well
assured. Often the protection of interest and principal
payments may be very moderate, and therefore not well
safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in
this class.

B Bonds which are rated B generally lack characteristics
of desirable investments. Assurance of interest and
principal payments or of maintenance of other terms of
the contract over any long period of time may be small.

Caa Bonds which are rated Caa are of poor standing. Such
issues may be in default or there may be present
elements of danger with respect to principal or
interest.

Appendix-1

<PAGE>

Ca Bonds which are rated Ca represent obligations which
are speculative in a high degree. Such issues are often
in default or have other marked shortcomings.

C Bonds which are rated C are the lowest rated class of
bonds, and issues so rated can be regarded as having
extremely poor prospects of ever attaining any real
investment standing.

Note: Moody's may apply numerical modifiers 1, 2 and 3 in each
generic rating classification from Aa through B in its corporate bond
rating system. The modifier 1 indicates that the security ranks in the
higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks in
the lower end of the generic rating category.

Description of Moody's Commercial Paper Ratings

The term "commercial paper" as used by Moody's means promissory
obligations not having an original maturity in excess of nine months.
Moody's makes no representations as to whether such commercial paper is
by any other definition "commercial paper" or is exempt from registration
under the Securities Act.

Moody's commercial paper ratings are opinions of the ability of
issuers to repay punctually promissory obligations not having an original
maturity in excess of nine months. Moody's makes no representation that
such obligations are exempt from registration under the Securities Act,
nor does it represent that any specific note is a valid obligation of a
rated issuer or issued in conformity with any applicable law. Moody's
employs the following three designations, all judged to be investment
grade, to indicate the relative repayment capacity of rated issuers:

Issuers rated Prime-1 (or related supporting institutions) have
a superior capacity for repayment of short-term promissory obligations.
Prime-1 repayment capacity will normally be evidenced by the following
characteristics:

-- Leading market positions in well established industries
-- High rates of return on funds employed
-- Conservative capitalization structures with moderate reliance
on debt and ample asset protection
-- Broad margins in earnings coverage of fixed financial charges
and high internal cash generation
-- Well established access to a range of financial markets and
assured sources of alternate liquidity.

Issuers rated Prime-2 (or related supporting institutions) have
a strong capacity for repayment of short-term promissory obligations.
This will normally be evidenced by many of the characteristics cited
above but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to

Appendix-2

<PAGE>

variation. Capitalization characteristics, while still appropriate, may
be more affected by external conditions. Ample alternate liquidity is
maintained.

Issuers rated Prime-3 (or related supporting institutions) have
an acceptable capacity for repayment of short-term promissory
obligations. The effect of industry characteristics and market
composition may be more pronounced. Variability in earnings and
profitability may result in changes in level of debt protection
measurements and the requirement for relatively high financial leverage.
Adequate alternate liquidity is maintained.

Issuers rated Not Prime do not fall within any of the Prime
rating categories.

If an issuer represents to Moody's that its commercial paper
obligations are supported by the credit of another entity or entities,
then the name or names of such supporting entity or entities are listed
within parentheses beneath the name of the issuer, or there is a footnote
referring the reader to another page for the name or names of the
supporting entity or entities. In assigning ratings to such issuers,
Moody's evaluates the financial strength of the indicated affiliated
corporations, commercial banks, insurance companies, foreign governments
or other entities, but only as one factor in the total rating assessment.
Moody's makes no representation and gives no opinion on the legal
validity or enforceability of any support arrangement. You are cautioned
to review with your counsel any questions regarding particular support
arrangements.

Among the factors considered by Moody's in assigning ratings are
the following: (1) evaluation of the management of the issuer; (2)
economic evaluation of the issuer's industry or industries and an
appraisal of speculative type risks which may be inherent in certain
areas; (3) evaluation of the issuer's products in relation to competition
and customer acceptance; (4) liquidity; (5) amount and quality of
long-term debt; (6) trend of earnings over a period of ten years; (7)
financial strength of a parent company and the relationships which exist
with the issuer; and (8) recognition by management of obligations which
may be present or may arise as a result of public interest questions and
preparations to meet such obligations.

Description of Standard & Poor's Corporate Debt Ratings

A Standards & Poor's corporate or municipal rating is a current
assessment of the creditworthiness of an obligor with respect to a
specific obligation. This assessment may take into consideration obligers
such as guarantors, insurers, or lessees.

The debt rating is not a recommendation to purchase, sell or
hold a security, inasmuch as it does not comment as to market price or
suitability for a particular investor.

The ratings are based on current information furnished by the
issuer or obtained by Standard & Poor's from other sources it considers
reliable. Standard & Poor's does not perform an audit in connection with
any rating and may, on occasion, rely on unaudited financial information.
The ratings

Appendix-3

<PAGE>

may be changed, suspended or withdrawn as a result of changes in, or
unavailability of, such information, or for other reasons.

The ratings are based, in varying degrees, on the following
considerations: (1) likelihood of default capacity and willingness of the
obligor as to the timely payment of interest and repayment of principal
in accordance with the terms of the obligation; (2) nature of and
provisions of the obligation; and (3) protection afforded by, and
relative position of, the obligation in the event of bankruptcy,
reorganization or other arrangement under the laws of bankruptcy and
other laws affecting creditors' rights.

AAA Debt rated AAA has the highest rating assigned by
Standard & Poor's. Capacity to pay interest and repay
principal is extremely strong.

AA Debt rated AA has a very strong capacity to pay
interest and repay principal and differs from the
highest-rated issues only in small degree.

A Debt rated A has a strong capacity to pay interest and
repay principal although it is somewhat more
susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in
higher-rated categories.

BBB Debt rated BBB is regarded as having an adequate
capacity to pay interest and repay principal. Whereas
it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category
than for debt in higher-rated categories.

Debt rated BB, B, CCC, CC and C are regarded as having
predominantly speculative characteristics with respect
to capacity to pay interest and repay principal. BB
indicates the least degree of speculation and C the
highest degree of speculation. While such debt will
likely have some quality and protective
characteristics, these are outweighed by large
uncertainties or major risk exposure to adverse
conditions.

BB Debt rated BB has less near-term vulnerability to
default than other speculative grade debt. However, it
faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions
which could lead to inadequate capacity to meet timely
interest and principal payment. The BB rating category
is also used for debt subordinated to senior debt that
is assigned an actual or implied BBB- rating.

B Debt rated B has a greater vulnerability to default but
presently has the capacity to meet interest payments
and principal repayments. Adverse business, financial
or economic conditions would likely impair capacity or
willingness to pay interest and repay principal. The B
rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied BB or
BB- rating.

Appendix-4

<PAGE>

CCC Debt rated CCC has a current identifiable vulnerability
to default, and is dependent upon favorable business,
financial and economic conditions to meet timely
payments of interest and repayments of principal. In
the event of adverse business, financial or economic
conditions, it is not likely to have the capacity to
pay interest and repay principal. The CCC rating
category is also used for debt subordinated to senior
debt that is assigned an actual or implied B or B-
rating.

CC The rating CC is typically applied to debt subordinated
to senior debt which is assigned an actual or implied
CCC rating.

C The rating C is typically applied to debt subordinated
to senior debt which is assigned an actual or implied
CCC- debt rating. The C rating may be used to cover a
situation where a bankruptcy petition has been filed
but debt service payments are continued.

CI The rating CI is reserved for income bonds on which no
interest is being paid.

D Debt rated D is in default. The D rating is assigned on
the day an interest or principal payment is missed. The
D rating also will be used upon the filing of a
bankruptcy petition if debt service payments are
jeopardized.

Plus (+) or minus (-): The ratings of AA to CCC may be modified
by the addition of a plus or minus sign to show relative
standing within these ratings categories.

Provisional ratings: The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful completion of
the project being financed by the debt being rated and indicates that
payment of debt service requirements is largely or entirely dependent
upon the successful and timely completion of the project. This rating,
however, while addressing credit quality subsequent to completion of the
project, makes no comment on the likelihood or risk of default upon
failure of such completion. The investor should exercise judgment with
respect to such likelihood and risk.

L The letter "L" indicates that the rating pertains to
the principal amount of those bonds to the extent that
the underlying deposit collateral is insured by the
Federal Savings & Loan Insurance Corp. or the Federal
Deposit Insurance Corp. and interest is adequately
collateralized.

* Continuance of the rating is contingent upon Standard &
Poor's receipt of an executed copy of the escrow
agreement or closing documentation confirming
investments and cash flows.

NR Indicates that no rating has been requested, that there
is insufficient information on which to base a rating
or that Standard & Poor's does not rate a particular
type of obligation as a matter of policy.

Appendix-5

<PAGE>

Debt Obligations of Issuers outside the United States and its
territories are rated on the same basis as domestic corporate and
municipal issues. The ratings measure the credit-worthiness of the
obligor but do not take into account currency exchange and related
uncertainties.

Bond Investment Quality Standards: Under present commercial bank
regulations issued by the Comptroller of the Currency, bonds rated in the
top four categories ("AAA", "AA", "A", "BBB", commonly known as
"investment grade" ratings) are generally regarded as eligible for bank
investment. In addition, the laws of various states governing legal
investments impose certain rating or other standards for obligations
eligible for investment by savings banks, trust companies, insurance
companies and fiduciaries generally.

Description of Standard & Poor's Commercial Paper Ratings.

A Standard & Poor's commercial paper rating is a current
assessment of the likelihood of timely payment of debt having an original
maturity of not more than 365 days. Ratings are graded into four
categories, ranging from "A" for the highest quality obligations to "D"
for the lowest.

A Issues assigned this highest rating are regarded as
having the greatest capacity for timely payment. Issues
in this category are delineated with the numbers 1, 2
and 3 to indicate the relative degree of safety.

A-1 This designation indicates that the degree of safety
regarding timely payment is either overwhelming or very
strong. Those issues determined to possess overwhelming
safety characteristics are denoted with a plus (+) sign
designation.

A-2 Capacity for timely payment on issues with this
designation is strong. However, the relative degree of
safety is not as high as for issues designated "A-1".

A-3 Issues carrying this designation have a satisfactory
capacity for timely payment. They are, however,
somewhat more vulnerable to the adverse effect of
changes in circumstances than obligations carrying the
higher designations.

B Issues rated "B" are regarded as having only adequate
capacity for timely payment. However, such capacity may
be damaged by changing conditions or short-term
adversities.

C This rating is assigned to short-term debt obligations
with a doubtful capacity for payment.

D This rating indicates that the issue is either in
default or is expected to be in default upon maturity.

Appendix-6

<PAGE>

The commercial paper rating is not a recommendation to purchase
or sell a security. The ratings are based on current information
furnished to Standard & Poor's by the issuer or obtained from other
sources it considers reliable. The ratings may be changed, suspended, or
withdrawn as a result of changes in or unavailability of such
information.

Appendix-7
<PAGE>

PART C
OTHER INFORMATION

Item 24. Financial Statements and Exhibits.

(a) Financial Statements.

Set forth in the Statement of Additional Information are
the audited financial statements of Style Select Series,
Inc. with respect to Registrant's fiscal year ended
October 31, 1997. The Financial Highlights are set forth
in of the Prospectus under the caption "Financial
Highlights."

(b) Exhibit Number

(l)(a) Articles of Incorporation of Registrant, as amended, are
incorporated by reference to Exhibit 1(A) of Pre-Effective
Amendment No. 1 on form N-1A, filed with the Securities
and Exchange Commission on November 14, 1996.

(l)(b) Articles Supplementary are incorporated by reference to
Exhibit 1(B) of Pre-Effective Amendment No. 1 on form
N-1A, filed with the Securities and Exchange Commission on
November 14, 1996.

(l)(c) Articles of Amendment are incorporated by reference to
Exhibit 1(C) of Pre-Effective Amendment No. 1 on form
N-1A, filed with the Securities and Exchange Commission on
November 14, 1996.

(l)(d) Articles of Amendment dated November 13, 1996 are
incorporated by reference to Exhibit 1(D) of Pre-Effective
Amendment No. 1 on form N-1A, filed with the Securities
and Exchange Commission on November 14, 1996.

(2) By-Laws of Registrant are incorporated by reference to
Exhibit 2 of Pre-Effective Amendment No. 1 on form N-1A,
filed with the Securities and Exchange Commission on
November 14, 1996.

(3) Voting Trust Agreement. Inapplicable.

(4) Instruments Defining Rights of Shareholders are
incorporated by reference to Exhibits 1 and 2 above and
incorporated by reference to Exhibit 4 of Pre-Effective
Amendment No. 1 on form N-1A, filed with the Securities
and Exchange Commission on November 14, 1996.

<PAGE>

(5)(a) Investment Advisory and Management Agreement between
Registrant and SunAmerica Asset Management Corp.

(5)(b)(1) Subadvisory Agreement between SunAmerica and Miller,
Anderson & Sherrerd, LLP is incorporated by reference to
the same numbered Exhibit of Post-Effective Amendment No.
4 on form N-1A, filed with the Securities and Exchange
Commission on August 5, 1997.

(5)(b)(2) Subadvisory Agreement between SunAmerica and Warburg,
Pincus Counsellors, Inc. is incorporated by reference to
the same numbered Exhibit of Post-Effective Amendment No.
4 on form N1-A, filed with the Securities and Exchange
Commission on August 5, 1997.

(5)(b)(3) Subadvisory Agreement between SunAmerica and
Neuberger&Berman, L.P. is incorporated by reference to the
same numbered Exhibit of Post-Effective Amendment No. 4 on
form N-1A, filed with the Securities and Exchange
Commission on August 5, 1997.

(5)(b)(4) Subadvisory Agreement between SunAmerica and Strong
Capital Management, Inc. is incorporated by reference to
the same numbered Exhibit of Post-Effective Amendment No.
4 on form N1-A, filed with the Securities and Exchange
Commission on August 5, 1997.

(5)(b)(5) Subadvisory Agreement between SunAmerica and Rowe
Price-Fleming International, Inc. is incorporated by
reference to the same numbered Exhibit of Post-Effective
Amendment No. 4 on form N1-A, filed with the Securities
and Exchange Commission on August 5, 1997.

(5)(b)(6) Subadvisory Agreement between SunAmerica and Bankers Trust
Company.

(5)(b)(7) Subadvisory Agreement between SunAmerica and Berger
Associates, Inc.

(5)(b)(8) Subadvisory Agreement between SunAmerica and David L.
Babson & Co., Inc.

(5)(b)(9) Subadvisory Agreement between SunAmerica and Davis
Selected Advisers, LP.

(5)(b)(10) Subadvisory Agreement between The Glenmede Trust Company.

(5)(b)(11) Subadvisory Agreement between SunAmerica and Janus Capital
Corporation.

(5)(b)(12) Subadvisory Agreement between SunAmerica and L. Roy Papp.

<PAGE>

(5)(b)(13) Subadvisory Agreement between SunAmerica and Lazard Asset
Management A Division of Lazard Freres & Co. LLC.

(5)(b)(14) Subadvisory Agreement between SunAmerica and Montag &
Caldwell, Inc.

(5)(b)(15) Subadvisory Agreement between SunAmerica and Morgan
Stanley Asset Management Inc.

(5)(b)(16) Subadvisory Agreement between SunAmerica and T. Rowe Price
Associates, Inc.

(5)(b)(17) Subadvisory Agreement between SunAmerica and Wellington
Management Company, LLP.

(6) Distribution Agreement is incorporated by reference to
Exhibit 6 of Pre-Effective Amendment No. 1 on form N1-A,
filed with the Securities and Exchange Commission on
November 14, 1996.

(7) Disinterested Trustees and Directors' Retirement Plan is
incorporated by reference to Exhibit 7 of Pre-Effective
Amendment No. 1 on form N1-A, filed with the Securities
and Exchange Commission on November 14, 1996.

(8) Custodian Agreement is incorporated by reference to
Exhibit 8 of Pre-Effective Amendment No. 1 on form N1-A,
filed with the Securities and Exchange Commission on
November 14, 1996.

(9)(a) Service Agreement between Registrant and SunAmerica Fund
Services Inc. is incorporated by reference to Exhibit 9(a)
of Pre-Effective Amendment No. 1 on form N1-A, filed with
the Securities and Exchange Commission on November 14,
1996.

(9)(b) Transfer Agency Agreement is incorporated by reference to
Exhibit 9(b) of Pre-Effective Amendment No. 1 on form
N1-A, filed with the Securities and Exchange Commission on
November 14, 1996.

(10) Opinion and Consent of Counsel is/are incorporated by
reference to Exhibit 10 of Pre-Effective Amendment No. 1
on form N1-A, filed with the Securities and Exchange
Commission on November 14, 1996.

(11) Consent of Independent Accountants.

(12) Financial Statements Omitted from Item 23. Inapplicable.

(13) Initial Capitalization Agreement. Inapplicable.

<PAGE>

(4) Model Retirement Plan. Inapplicable.

(15) Rule 12b-1 Plan for Class C Shares is incorporated by
reference to Exhibit 15 of Post-Effective Amendment No. 2
on form N-1A, filed with the Securities and Exchange
Commission on March 3, 1997.

Rule 12b-1 Plans for Class A Shares and Class B Shares are
incorporated by reference to Exhibit 15 of Pre-Effective
Amendment No. 1 on form N1-A, filed with the Securities
and Exchange Commission on November 14, 1996.

(16) Performance Computations. Inapplicable.

(17)(a) Other Exhibits.

Powers of Attorney of Trustees and Officers are
incorporated by reference to Exhibit 5(a) of Pre-Effective
Amendment No. 1 on form N1-A, filed with the Securities
and Exchange Commission on November 14, 1996.

(17)(b) Financial Data Schedules.

(18) 18f-3 Plan.

Item 25. Persons Controlled by or Under Common Control with Registrant.

SunAmerica Life Insurance Company; Anchor National Life
Insurance Company; Saamsun Holdings Corp.; SAM Holdings Corp.
and SunAmerica Asset Management Corp.

Item 26. Number of Holders of Securities.

As of March 31, 1998, the number of record holders of Style
Select Series was as follows:

Number of
Portfolio Title of Class Record Holders
--------- --------------- --------------
Aggressive Growth Class A 6,568
Portfolio Class B 6,983
Class C 692

Mid-Cap Growth Class A 2,719
Portfolio Class B 4,639
Class C 536

<PAGE>

Value Portfolio Class A 7,294
Class B 8,520
Class C 954

International Equity Class A 3,154
Portfolio Class B 5,391
Class C 530

Large-Cap Growth Class A 780
Portfolio Class B 1,171
Class C 226

Large-Cap Value Class A 890
Portfolio Class B 1,555
Class C 285

Large-Cap Blend Class A 605
Portfolio Class B 874
Class C 114

Small-Cap Value Class A 1,416
Portfolio Class B 2,245
Class C 329

Item 27. Indemnification.

Article V of the Registrant's By-Laws relating to the
indemnification of officers and directors is quoted below.

ARTICLE V
INDEMNIFICATION

5.01 Indemnification of Directors and Officers. The Corporation
shall indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative
(other than a proceeding by or in the right of the Corporation in which
such person shall have been adjudged to be liable to the Corporation), by
reason of being or having been a director or officer of the Corporation,
or serving or having served at the request of the Corporation as a
director, officer, partner, trustee, employee or agent of another entity
in which the Corporation has an interest as a shareholder, creditor or
otherwise (a "Covered Person"), against all liabilities, including but
not limited to amounts paid in satisfaction of judgments, in compromise
or as fines and penalties, and reasonable expenses (including attorney's
fees) actually incurred by the Covered Person in connection with any such
action, suit or proceeding, except (i) liability in connection with any
proceeding in

<PAGE>

which it is determined that (A) the act or omission of the Covered Person
was material to the matter giving rise to the proceeding, and was
committed in bad faith or was the result of active and deliberate
dishonesty, or (B) the Covered Person actually received an improper
personal benefit in money, property or services, or (C) in the case of
any criminal proceeding, the Covered Person had reasonable cause to
believe that the act or omission was unlawful, and (ii) liability to the
Corporation or its security holders to which the Covered Person would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
his office (any or all of the conduct referred to in clauses (i) and (ii)
being hereinafter referred to as "Disabling Conduct").

5.02 Procedure for Indemnification. Any indemnification under
Section 5.01 shall (unless ordered by a court) be made by the Corporation
only as authorized for a specific proceeding by (i) a final decision on
the merits by a court or other body before whom the proceeding was
brought that the Covered Person to be indemnified was not liable by
reason of Disabling Conduct, (ii) dismissal of the proceeding against the
Covered Person for insufficiency of evidence of any Disabling Conduct, or
(iii) a reasonable determination, based upon a review of the facts, by a
majority of a quorum of the directors who are neither "interested
persons" of the Corporation as defined in the Investment Company Act of
1940 nor parties to the proceeding ("Disinterested Non-Party Directors"),
or an independent legal counsel in a written opinion, that the Covered
Person was not liable by reason of Disabling Conduct. The termination of
any proceeding by judgment, order or settlement shall not create a
presumption that the Covered Person did not meet the required standard of
conduct; the termination of any proceeding by conviction, or a plea of
nolo contendere or its equivalent, or an entry of an order of probation
prior to judgment, shall create a rebuttable presumption that the Covered
Person did not meet the required standard of conduct. Any determination
pursuant to this Section 5.02 shall not prevent recovery from any Covered
Person of any amount paid to him in accordance with this By-Law as
indemnification if such Covered Person is subsequently adjudicated by a
court of competent jurisdiction to be liable by reason of Disabling
Conduct.

5.03 Advance Payment of Expenses. Reasonable expenses (including
attorneys' fees) incurred by a Covered Person may be paid or reimbursed
by the Corporation in advance of the final disposition of an action, suit
or proceeding upon receipt by the Corporation of (i) a written
affirmation by the Covered Person of his good faith belief that the
standard of conduct necessary for indemnification under this By-Law has
been met and (ii) a written undertaking by or on behalf of the Covered
Person to repay the amount if it is ultimately determined that such
standard of conduct has not been met, so long as either (A) the Covered
Person has provided a security for his undertaking, (B) the Corporation
is insured against losses arising by reason of any lawful advances, or
(C) a majority of a quorum of the Disinterested Non-Party Directors, or
an independent legal counsel in a written opinion, has determined, based
on a review of readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the Covered Person
ultimately will be found entitled to indemnification.

5.04 Exclusivity, Etc. The indemnification and advance of expenses
provided by this By-Law shall not be deemed exclusive of any other
rights to which a Covered Person seeking

<PAGE>

indemnification or advance or expenses may be entitled under any law
(common or statutory), or any agreement, vote of stockholders or
disinterested directors, or other provision that is consistent with law,
both as to action in an official capacity and as to action in another
capacity while holding office or while employed by or acting as agent for
the Corporation, shall continue in respect of all events occurring while
the Covered Person was a director or officer after such Covered Person
has ceased to be a director or officer, and shall inure to the benefit of
the estate, heirs, executors and administrators of such Covered Person.
The Corporation shall not be liable for any payment under this By-Law in
connection with a claim made by a director or officer to the extent such
director or officer has otherwise actually received payment, under an
insurance policy, agreement, vote or otherwise, of the amounts otherwise
indemnifiable hereunder. All rights to indemnification and advance of
expenses under the Charter and hereunder shall be deemed to be a contract
between the Corporation and each director or officer of the Corporation
who serves or served in such capacity at any time while this By-Law is in
effect. Nothing herein shall prevent the amendment of this ByLaw,
provided that no such amendment shall diminish the rights of any Covered
Person hereunder with respect to events occurring or claims made before
its adoption or as to claims made after its adoption in respect of events
occurring before its adoption. Any repeal or modification of this ByLaw
shall not in any way diminish any rights to indemnification or advance of
expenses of a Covered Person or the obligations of the Corporation
arising hereunder with respect to events occurring, or claims made, while
this By-Law or any provision hereof is in force.

5.05 Insurance. The Corporation may purchase and maintain
insurance on behalf of any Covered Person against any liability asserted
against him and incurred by him in any such capacity, or arising out of
his status as such; provided, however, that the Corporation shall not
purchase insurance to indemnify any Covered Person against liability for
Disabling Conduct.

5.06 Severability: Definitions. The invalidity or
unenforceability of any provision of this Article V shall not affect the
validity or enforceability of any other provision hereof. The phrase
"this By-Law" in this Article V means this Article V in its entirety.

Section 8 of the Article of Incorporation provides as
follows:

(5) The Corporation shall indemnify (i) its directors
and officers, whether serving the Corporation or at its request any other
entity, to the full extent required or permitted by the General Laws of
the State of Maryland now or hereafter in force, including the advance of
expenses under the procedures and to the full extent permitted by law,
and (ii) other employees and agents to such extent as shall be authorized
by the Board of Directors or the By-Laws of the Corporation and as
permitted by law. The foregoing rights of indemnification shall not be
exclusive of any other rights to which those seeking indemnification may
be entitled. The Board of Directors may take such action as is necessary
to carry out these indemnification provisions and is expressly empowered
to adopt, approve and amend from time to time such By-Laws, resolutions
or contracts implementing such provisions or such further indemnification
arrangements as may be permitted by law. The right of indemnification
provided hereunder shall not be construed to protect any director or
officer of the Corporation against any liability to the Corporation or
its security holders to which he would

<PAGE>

otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
his office.

(6) To the fullest extent permitted by Maryland
statutory or decisional law, as amended or interpreted, no director or
officer of the Corporation shall be personally liable to the Corporation
or its stockholders for money damages; provided, however, that this
provision shall not be construed to protect any director or officer
against any liability to the Corporation or its security holders to which
he would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in
the conduct of his office. No amendment, modification or repeal of this
provision shall adversely affect any right or protection provided
hereunder that exists at the time of such amendment, modification or
repeal.

Item 28. Business and other Connections of Investment Adviser.

SunAmerica Asset Management Corp. ("SunAmerica"), the Investment
Adviser of the Registrant, is primarily in the business of
providing investment management, advisory and administrative
services. Reference is made to the most recent Form ADV and
schedules thereto of SunAmerica on file with the Commission
(File No. 801-19813) for a description of the names and
employment of the directors and officers of SunAmerica and other
required information.

Bankers Trust Company; Berger Associates, Inc.; David L. Babson
& Co., Inc.; Davis Selected Advisers, L.P.; The Glenmede Trust
Company; Janus Capital Corporation; L. Roy Papp & Associates;
Lazard Asset Management; Miller Anderson & Sherrerd, LLP; Montag
& Caldwell, Inc.; Morgan Stanley Asset Management, Inc.;
Neuberger&Berman, L.P.; Perkins, Wolf, McDonnell & Company;
Rowe-Price Fleming International, Inc.; Schafer Capital
Management, Inc.; Strong Capital Management, Inc.; T. Rowe Price
Associates, Inc.; Warburg, Pincus Counsellors, Inc.; and
Wellington Management, LLP; the Advisers of certain of the
Portfolios of the Registrant, are primarily engaged in the
business of rendering investment advisory services. Reference is
made to the recent Form ADV and schedules thereto on file with
the Commission for a description of the names and employment of
the directors and officers of the following Advisers, and other
required information:

File No.
--------
Berger Associates, Inc. 801-9451
David L. Babson & Co., Inc. 801-241
Davis Selected Advisers, L.P. 801-31648
Janus Capital Corporation 801-13991
L. Roy Papp & Associates 801-35594
Lazard Asset Management 801-6568
Miller Anderson & Sherrerd, LLP 801-10437
Montag & Caldwell, Inc. 801-15398
Morgan Stanley Asset Management, Inc. 801-15757

<PAGE>

Neuberger&Berman, L.P. 801-3908
Perkins, Wolf, McDonnell & Company 801-19974
Rowe-Price Fleming International 801-14713
Strong Capital Management 801-10724
Schafer Capital Management 801-25825
T. Rowe Price Associates, Inc. 801-856
Warburg, Pincus Counsellors, Inc. 801-07321
Wellington Management, LLP 801-15908

Item 29. Principal Underwriters.

(a) The principal underwriter of the Registrant also acts as
principal underwriter for:

SunAmerica Income Funds
SunAmerica Money Market Funds, Inc.
SunAmerica Equity Funds

(b) The following persons are the officers and directors of
SunAmerica Capital Services, Inc., the principal
underwriter of Registrant's Shares:

<TABLE>
<CAPTION>
Name and Principal Position Position with the
Business Address With Underwriter Registrant
- ---------------- ---------------- ----------
<S> <C> <C>

Peter A. Harbeck Director President &
The SunAmerica Center Director
733 Third Avenue
New York, NY 10017-3204

J. Steven Neamtz President and None
The SunAmerica Center Director
733 Third Avenue
New York, NY 10017-3204

Robert M. Zakem Executive Vice Secretary and Chief
The SunAmerica Center President Compliance Officer
733 Third Avenue and Director
New York, NY 10017-3204

Susan L. Harris Secretary None
SunAmerica Inc.
1 SunAmerica Center
Los Angeles, CA 90067-6022
</TABLE>

<PAGE>

Debbie E. Potash-Turner Treasurer None
The SunAmerica Center
733 Third Avenue
New York, NY 10017-3204
</TABLE>

Item 30. Location of Accounts and Records.

State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02110, and its affiliate, National
Financial Data Services, collectively act as custodian, transfer
agent and dividend paying agent. They maintain books, records
and accounts pursuant to the instructions of the Fund.

SunAmerica Asset Management Corp., ("SunAmerica") is located at
The SunAmerica Center, 733 Third Avenue, New York, New York
10017-3204. SunAmerica has contracted with Callan Associates,
Inc. ("Callan") to compile historical performance data relating
to the Advisers, both individually and on a composite basis.
Registrant's records relating thereto are maintained by Callan.
Callan is located at 71 Stevenson Street, Suite 1300, San
Francisco, CA 94105.

Janus Capital Corporation is located at 100 Fillmore Street,
Denver, Colorado 80206-4923.

L. Roy Papp & Associates is located at 4400 North 32nd Street,
Suite 280, Phoenix, Arizona 85018.

Montag & Caldwell, Inc. is located at 3343 Peachtree Road, NE,
Suite 1100, Atlanta, Georgia 30326-1022.

Miller Anderson & Sherrerd, LLP is located at One Tower Bridge,
West Conshohocken, Pennsylvania 19428.

T. Rowe Price Associates, Inc. is located at 100 East Pratt Street,
Baltimore, Maryland 21202.

Warburg, Pincus Counsellors, Inc. is located at 466 Lexington
Avenue, New York, New York, 10017-3147

Lazard Asset Management is located at 30 Rockefeller Plaza, New
York, New York 10020.

David L. Babson & Co. Inc. is located at one Memorial Drive,
Cambridge, Massachusetts 02142-1300.

<PAGE>

Davis Selected Advisers, L.P. is located at 124 East March
Street, Santa Fe, New Mexico, 87501.

Wellington Management Company, LLP is located at 75 State
Street, Boston, Massachusetts 02109.

Neuberger&Berman, L.P. is located at 605 Third Avenue, New
York, New York 10158-0180.

Strong Capital Management, Inc. has a principal mailing address
at P.O. Box 2936, Milwaukee, Wisconsin 53201.

Schafer Capital Management is located at 645 Fifth Avenue, New
York, New York 10022.

Berger Associates Investment Management Services is located at
210 University Boulevard, Suite 900, Denver, Colorado 80206.

Perkins, Wolf, McDonnell & Company is located at 53 West Jackson
Boulevard, Suite 818, Chicago, Illinois 60604.

The Glenmede Trust Co. is located at One Liberty Place, 1650
Market Street, Suite 1200, Philadelphia, Pennsylvania
19103-7391.

Rowe Price-Fleming International, Inc. is located at 100 East
Pratt Street, Baltimore, Maryland 21202.

Morgan Stanley Asset Management, Inc. is located at 1221 Avenue
of the Americas, New York, NY 10020.

Each of the Advisers maintains the books, accounts and records required
to be maintained pursuant to Section 31(a) of the Investment Company Act
of 1940 and the rules promulgated thereunder.

Item 31. Management Services.

None.

Item 32. Undertakings.

Registrant hereby undertakes to furnish each investor to whom a
Prospectus is delivered with a copy of Registrant's latest
annual report to shareholders, upon request and without charge.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant has duly caused to be
signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, and the State of New York, on the 15th day of June,
1998.

STYLE SELECT SERIES, INC.

By: /s/Peter A. Harbeck
--------------------------------
Peter A. Harbeck
President

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 11 to the Registration Statement has been
signed below by the following persons in the capacities and on the date
indicated.

<TABLE>

/s/Peter A. Harbeck President and Director June 15, 1998
- --------------------------------- (Principal Executive Officer)
Peter A. Harbeck

* Treasurer June 15, 1998
- ------------------------------------------- (Principal Accounting and
Peter C. Sutton Financial Officer)

* Trustee June 15, 1998
- -------------------------------------------
S. James Coppersmith

* Trustee June 15, 1998
- -------------------------------------------
Samuel M. Eisenstat

* Trustee June 15, 1998
- -------------------------------------------
Stephen J. Gutman

* Trustee June 15, 1998
- ------------------------------------
Peter McMillan III

* Trustee June 15, 1998
- -------------------------------------------
Sebastiano Sterpa
</TABLE>

* By: /s/ Robert M. Zakem
----------------------------------------------
Robert M. Zakem, Attorney-in-Fact

<PAGE>
STYLE SELECT SERIES, INC.

EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Name
<S> <C>

(5)(a) Investment Advisory and Management Agreement between Registrant and
SunAmerica Asset Management Corp.

(5)(b)(6) Subadvisory Agreement between SunAmerica and Bankers Trust Company.

(5)(b)(7) Subadvisory Agreement between SunAmerica and Berger Associates, Inc.

(5)(b)(8) Subadvisory Agreement between SunAmerica and David L. Babson & Co.,
Inc.

(5)(b)(9) Subadvisory Agreement between SunAmerica and Davis Selected Advisers,
LP.

(5)(b)(10) Subadvisory Agreement between The Glenmede Trust Company.

(5)(b)(11) Subadvisory Agreement between SunAmerica and Janus Capital Corporation.

(5)(b)(12) Subadvisory Agreement between SunAmerica and L. Roy Papp.

(5)(b)(13) Subadvisory Agreement between SunAmerica and Lazard Asset Management
A Division of Lazard Freres & Co. LLC.

(5)(b)(14) Subadvisory Agreement between SunAmerica and Montag & Caldwell, Inc.

(5)(b)(15) Subadvisory Agreement between SunAmerica and Morgan Stanley Asset
Management Inc.

(5)(b)(16) Subadvisory Agreement between SunAmerica and T. Rowe Price Associates,
Inc.

(5)(b)(17) Subadvisory Agreement between SunAmerica and Wellington Management
Company, LLP.

11 Consent of Accountants

18 Plan Pursuant to Rule 18f-3

27 Financial Data Schedules

</TABLE>

<PAGE>

STYLE SELECT SERIES, INC.

INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT

This INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT is dated as of
September 17, 1996, as amended on August 20, 1997, by and between Style
Select Series, Inc., a Maryland corporation (the "Corporation"), and
SUNAMERICA ASSET MANAGEMENT CORP., a Delaware corporation (the
"Adviser").

W I T N E S S E T H:

WHEREAS, the Corporation is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end management
investment company and may issue shares of common stock, par value $.0001
per share, in separately designated Portfolio representing separate funds
with their own investment objectives, policies and purposes (each, a
"Fund" and collectively, the "Funds"); and

WHEREAS, the Adviser is engaged in the business of rendering
investment management, advisory and administrative services and is
registered as an investment adviser under the Investment Advisers Act of
1940; and

WHEREAS, the Corporation desires to retain the Adviser to
furnish investment management, advisory and administrative services to
the Corporation and the Funds and the Adviser is willing to furnish such
services;

NOW, THEREFORE, it is hereby agreed between the parties hereto
as follows:

1. Duties of the Adviser. The Adviser shall manage the affairs
of the Funds including, but not limited to, continuously providing the
Funds with investment management, including investment research, advice
and supervision, determining which securities shall be purchased or sold
by the Funds, making purchases and sales of securities on behalf of the
Funds and determining how voting and other rights with respect to
securities owned by the Funds shall be exercised, subject in each case to
the control of the Board of Directors of the Corporation (the
"Directors") and in accordance with the objectives, policies and
principles set forth in Corporation's Registration Statement and the
Funds' current Prospectus and Statement of Additional Information, as
amended from time to time, the requirements of the Act and other
applicable law. In performing such duties, the Adviser (i) shall provide
such office space, such bookkeeping, accounting, clerical, secretarial
and administrative services (exclusive of, and in addition to, any such
service provided by any others retained by the Funds or Corporation on
behalf of the Funds) and such executive and other personnel as shall be
necessary for the operations of the Funds, (ii) shall be responsible for
the financial and accounting records required to be maintained by the
Funds (including those maintained by Corporation's custodian) and (iii)
shall oversee the performance of services provided to the Funds by
others, including the custodian, transfer and shareholder servicing
agent. The Corporation understands that the Adviser also acts as the
manager of other investment companies.

<PAGE>

Subject to Section 36 of the Act, the Adviser shall not be
liable to the Funds or Corporation for any error of judgment or mistake
of law or for any loss arising out of any investment or for any act or
omission in the management of the Funds and the performance of its duties
under this Agreement except for willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of reckless
disregard of its obligations and duties under this Agreement.

2. Retention by Adviser of Sub-Advisers, etc. In carrying out
its responsibilities hereunder, the Adviser may employ, retain or
otherwise avail itself of the services of other persons or entities
including, without limitation, affiliates of the Adviser, on such terms
as the Adviser shall determine to be necessary, desirable or appropriate.
Without limiting the generality of the foregoing, and subject to the
requirements of Section 15 of the Act, the Adviser may retain one or more
sub-advisers to manage all or a portion of the investment portfolio of a
Fund, at the Adviser's own cost and expense. Retention of one or more
sub-advisers, or the employment or retention of other persons or entities
to perform services, shall in no way reduce the responsibilities or
obligations of the Adviser under this Agreement and the Adviser shall be
responsible for all acts and omissions of such sub-advisers, or other
persons or entities, in connection with the performance of the Adviser's
duties hereunder.

3. Expenses. The Adviser shall pay all of its expenses arising
from the performance of its obligations under Section 1 and shall pay any
salaries, fees and expenses of the Corporation's Directors and Officers
who are employees of the Adviser. The Adviser shall not be required to
pay any other expenses of the Funds, including, but not limited to,
direct charges relating to the purchase and sale of portfolio securities,
interest charges, fees and expenses of independent attorneys and
auditors, taxes and governmental fees, cost of share certificates and any
other expenses (including clerical expenses) of issue, sale, repurchase
or redemption of shares, expenses of registering and qualifying shares
for sale, expenses of printing and distributing reports, notices and
proxy materials to shareholders, expenses of data processing and related
services, shareholder recordkeeping and shareholder account service,
expenses of printing and filing reports and other documents filed with
governmental agencies, expenses of printing and distributing
prospectuses, expenses of annual and special shareholders meetings, fees
and disbursements of transfer agents and custodians, expenses of
disbursing dividends and distributions, fees and expenses of Directors
who are not employees of the Adviser or its affiliates, membership dues
in the Investment Company Institute, insurance premiums and extraordinary
expenses such as litigation expenses.

4. Compensation of the Adviser. (a) As full compensation for the
services rendered, facilities furnished and expenses paid by the Adviser
under this Agreement, the Corporation agrees to pay to the Adviser a fee
at the annual rates set forth in Schedule A hereto with respect to each
Fund indicated thereon. Such fee shall be accrued daily and paid monthly
as soon as practicable after the end of each month (i.e., the applicable
annual fee rate divided by 365 is applied to each prior days' net assets
in order to calculate the daily accrual). For purposes of calculating the
Adviser's fee with respect to any Fund, the average daily net asset value
of a Fund shall be determined by taking an average of all determinations
of such net asset value during the month. If the Adviser shall serve for
less than the whole of any month the foregoing compensation shall be
prorated.

(b) Upon any termination of this Agreement on a day
other than the last day of the month, the fee for the period from the
beginning of the month in which termination occurs to the

-2-

<PAGE>

date of termination shall be prorated according to the proportion which
such period bears to the full month.

5. Portfolio Transactions. The Adviser is responsible for
decisions to buy or sell securities and other investments for a portion
of the assets of each Portfolio, broker-dealers and futures commission
merchants' selection, and negotiation of brokerage commission and futures
commission merchants' rates. As a general matter, in executing Portfolio
transactions, the Adviser may employ or deal with such broker-dealers or
futures commission merchants as may, in the Adviser's best judgement,
provide prompt and reliable execution of the transactions at favorable
prices and reasonable commission rates. In selecting such broker-dealers
or futures commission merchants, the Adviser shall consider all relevant
factors including price (including the applicable brokerage commission,
dealer spread or futures commission merchant rate), the size of the
order, the nature of the market for the security or other investment, the
timing of the transaction, the reputation, experience and financial
stability of the broker-dealer or futures commission merchant involved,
the quality of the service, the difficulty of execution, the execution
capabilities and operational facilities of the firm involved, and, in the
case of securities, the firm's risk in positioning a block of securities.
Subject to such policies as the Directors may determine and consistent
with Section 28(e) of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), the Adviser shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of the Adviser's having caused a Portfolio to
pay a member of an exchange, broker or dealer an amount of commission for
effecting a securities transaction in excess of the amount of commission
another member of an exchange, broker or dealer would have charged for
effecting that transaction, if the Adviser determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such member of an exchange,
broker or dealer viewed in terms of either that particular transaction or
the Adviser's overall responsibilities with respect to such Portfolio and
to other clients as to which the Adviser exercises investment discretion.
In accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T)
thereunder, and subject to any other applicable laws and regulations
including Section 17(e) of the Act and Rule 17e-1 thereunder, the Adviser
may engage its affiliates or any other subadviser to the Corporation and
its respective affiliates, as broker-dealers or futures commission
merchants to effect Portfolio transactions in securities and other
investments for a Portfolio. The Adviser will promptly communicate to the
officers and the Directors of the Corporation such information relating
to Portfolio transactions as they may reasonably request. To the extent
consistent with applicable law, the Adviser may aggregate purchase or
sell orders for the Portfolio with contemporaneous purchase or sell
orders of other clients of the Adviser or its affiliated persons. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the
manner the Adviser determines to be equitable and consistent with its and
its affiliates' fiduciary obligations to the Portfolio and to such other
clients. The Adviser hereby acknowledges that such aggregation of orders
may not result in more favorable pricing or lower brokerage commissions
in all instances.

6. Term of Agreement. This agreement shall continue in full
force and effect for two years from the date hereof, and shall continue
in full force and effect from year to year thereafter if such continuance
is approved in the manner required by the Act and the Adviser has not
notified the Corporation in writing at least 60 days prior to the
anniversary date of the previous continuance that it does not desire such
continuance. With respect to each Fund, this Agreement may be terminated
at any time, without payment of penalty by the Fund or the Corporation,
on 60

-3-
<PAGE>

days written notice to the Adviser, by vote of the Directors, or by vote
of a majority of the outstanding voting securities (as defined by the
Act) of the Fund, voting separately from any other Portfolio of the
Corporation. The termination of this Agreement with respect to any Fund
or the addition of any Fund to Schedule A hereto (in the manner required
by the Act) shall not affect the continued effectiveness of this
Agreement with respect to each other Fund subject hereto. This Agreement
shall automatically terminate in the event of its assignment (as defined
by the Act).

The Corporation hereby agrees that if (i) the Adviser
ceases to act as investment manager and adviser to the Corporation and
(ii) the continued use of the Corporation's present name would create
confusion in the context of the Adviser's business, then the Corporation
will use its best efforts to change its name in order to delete the word
"SunAmerica" from its name.

7. Liability of the Adviser. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties ("disabling conduct") hereunder on the part of the
Adviser (and its officers, directors, agents, employees, controlling
persons, shareholders and any other person or entity affiliated with the
Adviser) the Adviser shall not be subject to liability to the Corporation
or to any shareholder of the Corporation for any act or omission in the
course of, or connected with, rendering services hereunder, including
without limitation, any error of judgment or mistake of law or for any
loss suffered by any of them in connection with the matters to which this
Agreement relates, except to the extent specified in Section 36(b) of the
Act concerning loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services. Except for such
disabling conduct, the Corporation shall indemnify the Adviser (and its
officers, directors, partners, agents, employees, controlling persons,
shareholders and any other person or entity affiliated with the Adviser)
(collectively, the "Indemnified Parties") from any liability arising from
the Adviser's conduct under this Agreement.

Indemnification to the Adviser or any of its personnel or
affiliates shall be made when (i) a final decision on the merits
rendered, by a court or other body before whom the proceeding was
brought, that the person to be indemnified was not liable by reason of
disabling conduct or, (ii) in the absence of such a decision, a
reasonable determination, based upon a review of the facts, that the
person to be indemnified was not liable by reason of disabling conduct,
by (a) the vote of a majority of a quorum of the Directors who are
neither "interested persons" of the Corporation as defined in section
2(a)(19) of the Act nor parties to the proceeding ("disinterested,
non-party Directors") or (b) an independent legal counsel in a written
opinion. The Corporation may, by vote of a majority of the disinterested,
non-party Directors advance attorneys' fees or other expenses incurred by
an Indemnified Party in defending a proceeding upon the undertaking by or
on behalf of the Indemnified Party to repay the advance unless it is
ultimately determined that he is entitled to indemnification. Such
advance shall be subject to at least one of the following: (1) the person
to be indemnified shall provide a security for his undertaking, (2) the
Corporation shall be insured against losses arising by reason of any
lawful advances, or (3) a majority of a quorum of the disinterested,
non-party Directors or an independent legal counsel in a written opinion,
shall determine, based on a review of readily available facts, that there
is reason to believe that the person to be indemnified ultimately will be
found entitled to indemnification.

8. Non-Exclusivity. Nothing in this Agreement shall limit or
restrict the right of any director, officer or employee of the Adviser
who may also be a Director, officer or employee of the Corporation to
engage in any other business or devote his or her time and attention in
part to the

-4-

<PAGE>

management or other aspects of any business, whether of a similar or
dissimilar nature, nor limit or restrict the right of the Adviser to
engage in any other business or to render services of any kind to any
other corporation, firm, individual or association.

9. Amendments. This Agreement may be amended by mutual consent
in writing, but the consent of the Corporation must be obtained in
conformity with the requirements of the Act.

10. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York and the applicable
provisions of the Act. To the extent the applicable laws of the State of
New York, or any of the provisions herein, conflict with the applicable
provisions of the Act, the latter shall apply.

11. Separate Portfolio. Pursuant to the provisions of the
Declaration, each Fund is a separate Portfolio of the Corporation, and
all debts, liabilities, obligations and expenses of a particular Fund
shall be enforceable only against the assets of that Fund and not against
the assets of any other Fund or of the Corporation as a whole.

IN WITNESS WHEREOF, the Corporation and the Adviser have caused
this Agreement to be executed by their duly authorized officers as of the
date first above written.

STYLE SELECT SERIES, INC.

By: /s/ Peter A. Harbeck
------------------------------
Name: Peter A. Harbeck
Title: President

SUNAMERICA ASSET MANAGEMENT CORP.

By: /s/ Robert M. Zakem
------------------------------
Name: Robert M. Zakem
Title: Senior Vice President

- 5 -

<PAGE>

SUBADVISORY AGREEMENT

This SUBADVISORY AGREEMENT is dated as of February 18, 1998 by
and between SUNAMERICA ASSET MANAGEMENT CORP., a Delaware corporation (the
"Adviser"), and BANKERS TRUST COMPANY (the "Subadviser"), a wholly owned
subsidiary of Bankers Trust New York Corporation.

WITNESSETH:

WHEREAS, the Adviser and Style Select Series Inc., a Maryland
corporation (the "Corporation"), have entered into an Investment Advisory and
Management Agreement dated as of September 17, 1996, as amended August 20, 1997
(the "Advisory Agreement"), pursuant to which the Adviser has agreed to provide
investment management, advisory and administrative services to the Corporation;
and

WHEREAS, the Corporation is registered under the Investment Company Act
of 1940, as amended (the "Act"), as an open-end management investment company
and may issue shares of common stock, par value $.0001 per share, in separately
designated series representing separate funds with their own investment
objectives, policies and purposes; and

WHEREAS, the Subadviser is engaged in the business of rendering
investment advisory services and is a "bank" as defined under the Investment
Advisers Act of 1940, as amended; and

WHEREAS, the Adviser desires to retain the Subadviser to furnish
investment advisory services to the investment series of the Corporation listed
on Schedule A attached hereto (the "Portfolio"), and the Subadviser is willing
to furnish such services;

NOW, THEREFORE, it is hereby agreed between the parties hereto as
follows:

1. Duties of the Subadviser. (a) The Adviser hereby engages the
services of the Subadviser in furtherance of its Investment Advisory and
Management Agreement with the Corporation. Pursuant to this Subadvisory
Agreement and subject to the oversight and review of the Adviser, the Subadviser
will manage the investment and reinvestment of a portion of the assets of each
Portfolio listed on Schedule A attached hereto. The Subadviser will determine,
in its discretion and subject to the oversight and review of the Adviser, the
securities to be purchased or sold, will provide the Adviser with records
concerning its activities which the Adviser of the Corporation is required to
maintain, and will render regular reports to the Adviser and to officers and
Directors of the Corporation concerning its discharge of the foregoing
responsibilities. The Subadviser shall discharge the foregoing responsibilities
subject to the control of the officers and the Directors of the Corporation and
in compliance with such policies as the Directors of the Corporation may from
time to time establish, and in compliance with (a) the objectives, policies, and
limitations for the Portfolio set forth in the Corporation's current prospectus
and statement of additional information, and (b) applicable laws and
regulations.

<PAGE>

maintenance of such election by each Portfolio to be treated as a "regulated
investment company" under Subchapter M, chapter 1 of the Internal Revenue Code
of 1986, as amended (the "Code"), and (2) compliance with (a) the provisions of
the Act and rules adopted thereunder; (b) applicable federal and state
securities, commodities and banking laws; and (c) the distribution requirements
necessary to avoid payment of any excise tax pursuant to Section 4982 of the
Code. The Subadviser further represents and warrants that to the extent any
statements or omissions made in any Registration Statement for shares of the
corporation, or any amendment or supplement thereto, are made in reliance upon
and in conformity with information furnished by the Subadviser expressly for
use therein, such Registration Statement and any amendments or supplements
thereto will, when they become effective, conform in all material respects to
the requirements of the Securities Act of 1933 and the rules and regulations of
the Commission thereunder (the "1933 Act") and the Act and will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading.

(b) The Subadviser agrees: (i) to maintain a level of errors
and omissions or professional liability insurance coverage that, at all times
during the course of this Agreement, is appropriate given the nature of its
business, and (ii) from time to time and upon reasonable request, to supply
evidence of such coverage to the Adviser.

2. Portfolio Transactions. The Subadviser is responsible for decisions
to buy or sell securities and other investments for a portion of the assets of
each Portfolio, broker-dealers and futures commission merchants' selection, and
negotiation of brokerage commission and futures commission merchants' rates. As
a general matter, in executing Portfolio transactions, the Subadviser may employ
or deal with such broker-dealers or futures commission merchants as may, in the
Subadviser's best judgment, provide prompt and reliable execution of the
transactions at favorable prices and reasonable commission rates. In selecting
such broker-dealers or futures commission merchants, the Subadviser shall
consider all relevant factors including price (including the applicable
brokerage commission, dealer spread or futures commission merchant rate), the
size of the order, the nature of the market for the security or other
investment, the timing of the transaction, the reputation, experience and
financial stability of the broker-dealer or futures commission merchant
involved, the quality of the service, the difficulty of execution, the execution
capabilities and operational facilities of the firm involved, and, in the case
of securities, the firm's risk in positioning a block of securities. Subject to
such policies as the Directors may determine and, consistent with Section 28(e)
of the Securities Exchange Act of 1934, as amended (the "1934 Act"), the
Subadviser shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement or otherwise solely by reason of the Subadviser's
having caused a Portfolio to pay a member of an exchange, broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another member of an exchange, broker or dealer would have
charged for effecting that transaction, if the Subadviser determines in good
faith that such amount of commission was reasonable in relation to the value of
the brokerage and research services provided by such member of an exchange,
broker or dealer viewed in terms of either that particular transaction or the
Subadviser's overall responsibilities with respect to such Portfolio and to
other clients as to which the

-2-

<PAGE>

Subadviser exercises investment discretion. In accordance with Section 11(a) of
the 1934 Act and Rule 11a2-2(T) thereunder, and subject to any other applicable
laws and regulations including Section 17(e) of the Act and Rule 17e-1
thereunder, the Subadviser may engage its affilates, the Adviser and its
affiliates or any other subadviser to the corporation and its respective
affilates, as broker-dealers or futures commission merchants to effect
Portfolio transactions in securities and other investments for a Portfolio. The
Subadviser will promptly communicate to the Adviser and to the officers and the
Directors of the Corporation such information relating to Portfolio
transactions as they may reasonably request. To the extent consistent with
applicable law, the Subadviser may aggregate purchase or sell orders for the
Portfolio with contemporaneous purchase or sell orders of other clients of the
Subadviser or its affilated persons. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Subadviser in the manner the Subadviser
determines to be equitable and consistent with its and its affilates' fiduciary
obligations to the Portfolio and to such other clients. The Adviser hereby
acknowledges that such aggregation of orders may not result in more favorable
pricing or lower brokerage commissions in all instances.

3. Compensation of the Subadviser. The Subadviser shall not be entitled
to receive any payment from the Corporation and shall look solely and
exclusively to the Adviser for payment of all fees for the services rendered,
facilities furnished and expenses paid by it hereunder. As full compensation for
the Subadviser under this Agreement, the Adviser agrees to pay to the Subadviser
a fee at the annual rate set forth in Schedule A hereto with respect to the
portion of the assets managed by the Subadviser for the Portfolio listed
thereon. Such fee shall be accrued daily and paid monthly as soon as practicable
after the end of each month (i.e., the applicable annual fee rate divided by 365
applied to each prior days' net assets in order to calculate the daily accrual).
If the Subadviser shall provide its services under this Agreement for less than
the whole of any month, the foregoing compensation shall be prorated.

4. Other Services. At the request of the Corporation or the Adviser,
the Subadviser in its discretion may make available to the Corporation office
facilities, equipment, personnel and other services in order to facilitate
meetings or other similar functions. Such office facilities, equipment,
personnel and services shall be provided for or rendered by the Subadviser and
billed to the Corporation or the Adviser at the Subadviser's cost.

5. Reports. The Corporation, the Adviser and the Subadviser agree to
furnish to each other, if applicable, current prospectuses, statements of
additional information, proxy statements, reports of shareholders, certified
copies of their financial statement, and such other information with regard to
their affairs and that of the Corporation as each may reasonably request.

6. Status of the Subadviser. The services of the Subadviser to the
Adviser and the corporation are not be deemed exclusive, and the Subadviser
shall be free to render similar services to others so long as its services to
the Corporation are not impaired thereby. The Subadviser shall be deemed to be
an independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Corporation in any way
or otherwise be deemed an agent of the Corporation.

-3-

<PAGE>

of Rule 31a-1 of that Act. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated under the
Act which are prepared or maintained by the Subadviser on behalf of the
Corporation are the property of the Corporation and will be surrendered
promptly to the Corporation or the Adviser on request.

The Subadviser agrees that all accounts, books and other
records maintained and preserved by it as required hereby shall be subject at
any time, and from time to time, to such reasonable periodic, special and other
examinations by the Securities and Exchange Commission, the Corporation's
auditors, the Corporation or any representative of the Corporation, the Adviser,
or any governmental agency or other instrumentality having regulatory authority
over the Corporation.

8. Reference to the Subadviser. Neither the Corporation nor the Adviser
or any affiliate or agent thereof shall make reference to or use the name of the
Subadviser or any of its affiliates in any advertising or promotional materials
without the prior approval of the Subadviser, which approval shall not be
unreasonably withheld.

9. Liability of the Subadviser. (a) In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations or
duties ("disabling conduct") hereunder on the part of the Subadviser (and its
officers, directors, agents, employees, controlling persons, shareholders and
any other person or entity affiliated with the Subadviser) the Subadviser shall
not be subject to liability to the Corporation or to any shareholder of the
Corporation for any act or omission in the course of, or connected with,
rendering services hereunder, including without limitation, any error of
judgment or mistake of law or for any loss suffered by any of them in connection
with the matters to which this Agreement relates, except to the extent specified
in Section 36(b) of the Act concerning loss resulting from a beach of fiduciary
duty with respect to the receipt of compensation for services. Except for such
disabling conduct, the Adviser shall indemnify the Subadviser (and its officers,
directors, partners, agents, employees, controlling persons, shareholders and
any other person or entity affiliated with the Subadviser) (collectively, the
"Indemnified Parties") from any liability arising from the Subadviser's conduct
under this Agreement.

(b) The Subadviser agrees to indemnify and hold harmless the
Adviser and its affiliates and each of its directors and officers and each
person, if any, who controls the Adviser within the meaning of Section 15 of the
1933 Act against any an all losses, claims, damages, liabilities or litigation
(including legal and other expenses), to which the Adviser or its affiliates or
such directors, officers or controlling person may become subject under the 1933
Act, under other statutes, at common law or otherwise, which may be based upon
(i) any wrongful act or breach of this Agreement by the Subadviser, or (ii) any
failure by the Subadviser to comply with the representations and warranties set
forth in Section 1 of this Agreement; provided, however, that in no case is the
Subadviser's indemnity in favor of any person deemed to protect such other
persons against any liability to which such person would otherwise be subject by
reasons of willful misfeasance, bad faith, or gross negligence in the
performance of his, her or its duties or by reason of his, her or its reckless
disregard of obligation and duties under this Agreement.

-4-

<PAGE>

with respect to any records maintained by Adviser or any other subadviser to a
Portfolio, which records are not also maintained by or otherwise available to
the Subadviser upon reasonable request; and (B) acts of the Subadviser that
were made in reasonable reliance upon information provided to it by the
Adviser. The Adviser agrees that Subadviser shall manage the portion of the
assets of a Portfolio allocated to it as if it was a separate operating
Portfolio and shall comply with subsections (a) and (b) of Section 1 of this
Subadvisory Agreement (including, but not limited to, the investment
objectives, policies and restrictions applicable to a Portfolio and
qualifications of a Portfolio as a regulated investment company under the Code)
with respect to the portion of assets of a Portfolio allocated to Subadviser.
The Adviser shall indemnify the Indemnified Parties from any liability arising
from the conduct of the Adviser and any other subadviser with respect to the
portion of a Portfolio's assets not allocated to Subadviser.

10. Permissible Interests. Directors and agents of the Corporation are
or may be interested in the Subadviser (or any successor thereof) as directors,
partners, officers, or shareholders, or otherwise; directors, partners,
officers, agents, and shareholders of the Subadviser are or may be interested in
the Corporation as Directors, or otherwise; and the Subadviser (or any
successor) is or may be interested in the Corporation in some manner.

11. Term of the Agreement. This Agreement shall continue in full force
and effect with respect to each Portfolio until two years from the date hereof,
and from year to year thereafter so long as such continuance is specifically
approved at least annually (i) by the vote of a majority of those Directors of
the Corporation who are not parties to this Agreement or interested persons of
any such party, cast in person at a meeting called for the purpose of voting on
such approval, and (ii) by the Directors of the Corporation or by vote of a
majority of the outstanding voting securities of the Portfolio voting separately
from any other series of the Corporation.

With respect to the Portfolio, this Agreement may be
terminated at any time, without payment of a penalty by the Portfolio or the
Corporation, by vote of a majority of the Directors, or by vote of a majority of
the outstanding voting securities (as defined in the Act) of the Portfolio,
voting separately from any other series of the Corporation, or by the Adviser,
on not less than 30 nor more than 60 days' written notice to the Subadviser.
With respect to each Portfolio, this Agreement may be terminated by the
Subadviser at any time, without the payment of any penalty, on 90 days' written
notice to the Adviser and the Corporation; provided, however, that this
Agreement may not be terminated by the Subadviser unless another subadvisory
agreement has been approved by the Corporation in accordance with the Act, or
after six months' written notice, whichever is earlier. The termination of this
Agreement with respect to any Portfolio or the addition of any Portfolio to
Schedule A hereto (in the manner required by the Act) shall not affect the
continue effectiveness of this Agreement with respect to each other Portfolio
subject hereto. This Agreement shall automatically terminate in the event of its
assignment (as defined by the Act).

This Agreement will also terminate in the event that the
Advisory Agreement by and between the Corporation and the Adviser is terminated.

12. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.

-5-

<PAGE>

13. Amendments. This Agreement may be amended by mutual consent in
writing, but the consent of the Corporation must be obtained in conformity with
the requirements of the Act.

14. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of New York and the applicable provisions of the Act. To
the extent the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Act, the
latter shall control.

15. Separate Series. Pursuant to the provisions of the Articles of
Incorporation and the General Laws of the State of Maryland, each Portfolio is a
separate series of the Corporation, and all debts, liabilities, obligations and
expenses of a particular Portfolio shall be enforceable only against the assets
of that Portfolio and not against the assets of any other Portfolio or of the
Corporation as a whole.

16. Notices. All notices shall be in writing and deemed properly given
when delivered or mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed as follows:

Subadviser: Bankers Trust Company
130 Liberty Street, 26th Floor, Mail Stop 2265
New York, New York 10006
Attention: Lawrence S. Lafer
Vice President
U.S. Investment Management Documentation

Adviser: SunAmerica Asset Management Corp.
The SunAmerica Center
733 Third Avenue, Third Floor
New York, NY 10017-3204
Attention: Robert M. Zakem
Senior Vice President and General Counsel

IN WITNESS WHEREOF, the parties have caused their respective duly
authorized officers to execute this Agreement as of the date first above
written.

SUNAMERICA ASSET MANAGEMENT CORP.

By: /s/ Peter A. Harbeck
-------------------------
Name: Peter A. Harbeck
Title: President

BANKERS TRUST COMPANY

By: /s/ Irene S. Greenberg
---------------------------
Name: Irene S. Greenberg
Title: Vice President

-6-

<PAGE>

SUBADVISORY AGREEMENT

This SUBADVISORY AGREEMENT is dated as of August 20, 1997 by
and between SUNAMERICA ASSET MANAGEMENT CORP., a Delaware corporation (the
"Adviser"), and BERGER ASSOCIATES, INC., a Delaware corporation (the
"Subadviser").

WITNESSETH:

WHEREAS, the Corporation is registered under the Investment Company
Act of 1940, as amended (the "Act"), as an open-end management investment
company and may issue shares of common stock, par value $.0001 per share, in
separately designated series representing separate funds with their own
investment objectives, policies and purposes; and

WHEREAS, the Subadviser is engaged in the business of rendering
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended; and

WHEREAS, the Adviser desires to retain the Subadviser to furnish
investment advisory services to the investment series of the Corporation listed
on Schedule A attached hereto (the "Series"), and the Subadviser is willing to
furnish such services;

NOW, THEREFORE, it is hereby agreed between the parties hereto as
follows:

1. Duties of the Subadviser. The Adviser hereby engages the services
of the Subadviser in furtherance of its Advisory Agreement with the
Corporation. Pursuant to this Subadvisory Agreement and subject to the
oversight and review of the Adviser, the Subadviser will manage the investment
and reinvestment of a portion of the assets of each Series listed on Schedule A
attached hereto. The Subadviser will determine in its discretion and subject to
the oversight and review of the Adviser, the securities to be purchased or
sold, will provide the Adviser with records concerning its activities which the
Adviser of the Corporation is required to maintain, and will render such
regular reports to the Adviser and to officers and Directors of the Corporation
as they may reasonably request concerning the Subadviser's discharge of the
foregoing responsibilities. The Subadviser shall discharge the foregoing
responsibilities subject to the control of the officers and the Directors of
the Corporation.

The Subadviser represents and warrants to the Adviser that
the portion of the assets which it manages of the Series set forth in Schedule
A will at all times be managed in compliance with (a) the objectives, policies,
and limitations for the applicable Series set forth in the Corporation's
current prospectus and statement of additional information, (b) such policies
as the Directors of the Corporation may from time to time establish and which
have

<PAGE>

been furnished to the Subadviser in writing, (c) the provisions of the Internal
Revenue Code of 1986, as amended (the "Code") applicable to "regulated
investment companies" (as defined in Section 851 of the Code), all as from time
to time in effect, and (d) all applicable federal and state laws governing such
Series' operations and investments, including, without limitation, the
provisions of the Act and rules adopted thereunder and applicable federal and
state securities, tax and banking laws. For purposes of compliance with the
foregoing, the Subadviser shall be entitled to treat each such portion of the
assets of each such Series set forth in Schedule A managed by the Subadviser as
though such portion of the assets constituted the entire Series, and the
Subadviser shall not be responsible in any way for the compliance of any assets
of the Series, other than such portion of the assets of such Series managed by
the Subadviser, with any of the foregoing or for the compliance of the Series,
taken as a whole, with any of the foregoing. The Subadviser further represents
and warrants that to the extent that any statements or omissions made in any
Registration Statement for shares of the Corporation, or any amendment or
supplement thereto, are made in reliance upon and in conformity with
information furnished in writing by the Subadviser expressly for use therein,
such parts of such Registration Statement and any amendments or supplements
thereto consisting of such statements or omissions will, when they become
effective, conform in all material respects to the requirements of the
Securities Act of 1933 and the rules and regulation thereunder (the "1933 Act")
and the Act and will not contain any untrue statement of a material fact or
fail to state any material fact required to be stated therein or necessary to
make the statements therein not misleading.

The Subadviser accepts such employment and agrees, at its own
expense, to render the services set forth herein and to provide the office
space, furnishings, equipment and personnel required by it to perform such
services on the terms and for the compensation provided in this Agreement.
Except for expenses specifically assumed or agreed to be paid by the Subadviser
pursuant hereto, the Subadviser shall not be liable for any organizational,
operational or business expenses of the Adviser or the Corporation, including
without limitation, brokerage commissions and other costs in connection with
the purchase or sale of securities or other investment instruments with respect
to the Series.

2. Series Transactions. The Subadviser is responsible for decisions to
buy or sell securities and other investments for that portion of the assets of
each Series set forth on Schedule A managed by the Subadviser, broker-dealers
and futures commission merchants' selection, and negotiation of brokerage
commission and futures commission merchants' rates. As a general matter, in
executing Series transactions, the Subadviser may employ or deal with such
broker-dealers or futures commission merchants as may, in the Subadviser's best
judgment, provide prompt and reliable execution of the transactions at
favorable prices and reasonable commission rates. In selecting such
broker-dealers or futures commission merchants, the Subadviser shall consider
all relevant factors including price (including the applicable brokerage
commission, dealer spread or futures commission merchant rate), the size of the
order, the nature of the market for the security or other investment, the
timing of the transaction, the reputation, experience and financial stability
of the broker-dealer or futures commission merchant involved, the quality of
the service, the difficulty of execution, the execution capabilities and
operational facilities of the firm involved, and, in the case of securities,
the firm's risk in positioning a block of securities. Subject to such policies
as the Directors may determine and which have been furnished in writing to the
Subadviser, and consistent with Section 28(e) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), the Subadviser shall not be deemed to have
acted unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of the Subadviser's having

<PAGE>

caused a Series to pay a member of an exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, if the Subadviser determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such member of an exchange, broker
or dealer viewed in terms of either that particular transaction or the
Subadviser's overall responsibilities with respect to such Series and to other
clients as to which the Subadviser exercises investment discretion. In
accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T) thereunder,
and subject to any other applicable laws and regulations including Section
17(e) of the Act and Rule 17e-1 thereunder, the Subadviser may engage its
affiliates, the Adviser and its affiliates or any other subadviser to the
Corporation and its respective affiliates, as broker-dealers or futures
commission merchants to effect Series transactions in securities and other
investments for a Series. The Subadviser will promptly communicate to the
Adviser and to the officers and the Directors of the Corporation such
information relating to transactions for that portion of the assets of the
Series set forth on Schedule A managed by the Subadviser as they may reasonably
request. To the extent consistent with applicable law, the Subadviser may
aggregate purchase or sell orders for the Series with contemporaneous purchase
or sell orders of other clients of the Subadviser or its affiliated persons. In
such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Subadviser at a price
and in the manner the Subadviser determines to be equitable and consistent with
its and its affiliates' fiduciary obligations to the Series and to such other
clients. The Adviser hereby acknowledges that such aggregation of orders may
not result in more favorable pricing or lower brokerage commissions in all
instances.

3. Compensation of the Subadviser. The Subadviser shall not be
entitled to receive any payment from the Corporation and shall look solely and
exclusively to the Adviser for payment of all fees for the services rendered,
facilities furnished and expenses paid by it hereunder. As full compensation to
the Subadviser under this Agreement, the Adviser agrees to pay to the
Subadviser a fee at the annual rates set forth in Schedule A hereto with
respect to the portion of the assets managed by the Subadviser for each Series
listed thereon. Such fee shall be accrued daily and paid monthly as soon as
practicable after the end of each month (i.e., the applicable annual fee rate
divided by 365 applied to each prior days' net assets in order to calculate the
daily accrual). For purposes of calculating the Subadviser's fee, the average
daily net asset value of a Series shall mean the average daily net assets for
which the Subadviser actually provides advisory services, and shall be
determined by taking an average of all determinations of such net asset value
during the month. If the Subadviser shall provide its services under this
Agreement for less than the whole of any month, the foregoing compensation
shall be prorated.

4. Other Services. At the request of the Corporation or the Adviser,
the Subadviser in its discretion may make available to the Corporation office
facilities, equipment, personnel and other services. Such office facilities,
equipment, personnel and services shall be provided for or rendered by the
Subadviser and billed to the Corporation or the Adviser at the Subadviser's
cost.

5. Reports. The Corporation, the Adviser and the Subadviser agree to
furnish to each other, if applicable, current prospectuses, statements of
additional information, proxy statements, reports to shareholders, certified
copies of their financial statements, and such other information with regard to
their affairs and that of the Corporation as each may

<PAGE>

reasonably request; provided, however, that the Subadviser shall not be
obligated to follow any amendment to any of the foregoing documents or
information relating to the Adviser or the Corporation until the Subadviser has
received such amendments in writing from the Adviser or Corporation.

6. Status of the Subadviser. The services of the Subadviser to the
Adviser and the Corporation are not to be deemed exclusive, and the Subadviser
shall be free to render similar services to others so long as its services to
the Corporation are not impaired thereby. The Subadviser shall be deemed to be
an independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Corporation in any
way or otherwise be deemed an agent of the Corporation. Notwithstanding
anything herein to the contrary, the Subadviser may delegate any or all of its
investment advisory services, duties and responsibilities under this Agreement
to Perkins, Wolf, McDonnell & Company. No delegation pursuant to this provision
shall relieve the Subadviser of its duties or responsibilities hereunder, and
the Subadviser shall appropriately oversee, monitor and evaluate the activities
of any party appointed hereunder.

7. Certain Records. The Subadviser hereby undertakes and agrees to
maintain, in the form and for the period required by Rule 31a-2 under the Act,
all records relating to the investments for that portion of the assets of each
Series set forth on Schedule A managed by the Subadviser that are required to
be maintained by the Corporation pursuant to the requirements of Rule 31a-1 of
the Act. Any records required to be maintained and preserved pursuant to the
provisions of Rule 31a-1 and Rule 31a-2 promulgated under the Act which are
prepared or maintained by the Subadviser on behalf of the Corporation are the
property of the Corporation and will be surrendered promptly to the Corporation
or the Adviser on request.

The Subadviser agrees that all accounts, books and other
records maintained and preserved by it as required hereby shall be subject at
any time, and from time to time, to such reasonable periodic, special and other
examinations by the Securities and Exchange Commission, the Corporation's
auditors, the Corporation or any representative of the Corporation, the
Adviser, or any governmental agency or other instrumentality having regulatory
authority over the Corporation.

8. Reference to the Subadviser. Neither the Corporation nor the
Adviser or any affiliate or agent thereof shall make reference to or use the
name of the Subadviser or any of its affiliates in any advertising or
promotional materials without the prior approval of the Subadviser, which
approval shall not be unreasonably withheld.

9. Liability of the Subadviser. (a) In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations
or duties ("Disabling Conduct") hereunder on the part of the Subadviser (and
its officers, directors, agents, employees, controlling persons, shareholders
and any other person or entity affiliated with the Subadviser), the Subadviser
shall not be subject to liability to the Adviser, the Corporation, any such
Series, or any shareholder of the Corporation or any such Series for any act or
omission in the course of, or connected with, rendering services hereunder,
including without limitation, any error of judgment or mistake of law or for
any loss suffered by any of them in connection with the matters to which this
Agreement relates, except to the extent specified in Section 36(b) of the Act
concerning loss resulting from a breach of fiduciary duty with

<PAGE>

respect to the receipt of compensation for services. Except for such Disabling
Conduct, the Adviser shall indemnify and hold harmless the Subadviser (and its
officers, directors, partners, agents, employees, controlling persons,
shareholders and any other person or entity affiliated with the Subadviser)
(collectively, the "Indemnified Parties") from and against any and all losses,
claims, damages, liabilities or litigation (including reasonable legal and
other expenses) arising from the Subadviser's conduct under this Agreement.

(b) The Subadviser agrees to indemnify and hold harmless the
Adviser and its affiliates and each of its directors and officers and each
person, if any, who controls the Adviser within the meaning of Section 15 of
the 1933 Act against any and all losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses), to which the
Adviser or its affiliates or such directors, officers or controlling person may
become subject under the 1933 Act, under other statutes, at common law or
otherwise, which may be based upon (i) such Disabling Conduct or any material
breach of this Agreement by the Subadviser, or (ii) any willful and material
failure by the Subadviser to comply with the representations and warranties set
forth in Section 1 of this Agreement; provided, however, that in no case is the
Subadviser's indemnity in favor of any person deemed to protect or apply to
such person against any liability to which such person would otherwise be
subject by reasons of willful misfeasance, bad faith, or gross negligence in
the performance of his, her or its duties or by reason of his, her or its
reckless disregard of such person's obligations and duties under this
Agreement.

(c) The Subadviser shall not be liable to the Adviser, the
Corporation or any such Series for (i) any acts or omissions of the Adviser,
the Corporation, the Series Administrator, or any other subadviser to the
Series with respect to the portion of the assets of a Series not managed by the
Subadviser and (ii) acts of the Subadviser which result from acts or omissions
of the Adviser, the Corporation or the Series Administrator, including, but not
limited to, a failure of the Adviser, the Corporation or the Series
Administrator to provide accurate and current information with respect to any
records maintained by the Adviser, the Corporation or the Series Administrator
or any other subadviser to a Series, which records are not also maintained by
the Subadviser and, with respect to any records maintained only by the Series
Administrator, are not otherwise available to the Subadviser from the Series
Administrator upon reasonable request. The Adviser agrees that the Subadviser
shall manage the portion of the assets of a Series allocated to it as if it was
a separate operating series and shall comply with Section 1 of this Subadvisory
Agreement (including, but not limited to, the investment objectives, policies
and restrictions applicable to a Series and qualifications of a Series as a
regulated investment company under the Code) with respect to the portion of
assets of a Series allocated to the Subadviser. The Adviser shall indemnify and
hold harmless the Indemnified Parties from and against any and all losses,
claims, damages, liabilities or litigation (including reasonable legal and
other expenses) arising from the conduct of the Adviser, the Corporation, the
Series Administrator or any other subadviser with respect to the portion of a
Series's assets not allocated to the Subadviser.

10. Permissible Interests. Directors and agents of the Corporation are
or may be interested in the Subadviser (or any successor thereof) as directors,
partners, officers or shareholders, or otherwise; directors, partners,
officers, agents and shareholders of the Subadviser are or may be interested in
the Corporation as Directors, or otherwise; and the Subadviser (or any
successor) is or may be interested in the Corporation in some manner.

<PAGE>

11. Term of the Agreement. This Agreement shall continue in full force
and effect with respect to each Series until two years from the date hereof,
and from year to year thereafter so long as such continuance is specifically
approved at least annually (i) by the vote of a majority of those Directors of
the Corporation who are not parties to this Agreement or interested persons of
any such party, cast in person at a meeting called for the purpose of voting on
such approval, and (ii) by the Directors of the Corporation or by vote of a
majority of the outstanding voting securities of the Series voting separately
from any other series of the Corporation.

With respect to each Series, this Agreement may be terminated
at any time, without payment of a penalty by the Series or the Corporation, by
vote of a majority of the Directors, or by vote of a majority of the
outstanding voting securities (as defined in the Act) of the Series, voting
separately from any other series of the Corporation, or by the Adviser, on not
less than 30 nor more than 60 days' written notice to the Subadviser. With
respect to each Series, this Agreement may be terminated by the Subadviser at
any time, without the payment of any penalty, on 90 days' written notice to the
Adviser and the Corporation; provided, however, that this Agreement may not be
terminated by the Subadviser unless another subadvisory agreement has been
approved by the Corporation in accordance with the Act, or after six months'
written notice, whichever is earlier. In the event of such a termination by the
Subadviser, the Adviser will use its best efforts, and cause the Corporation to
use its best efforts, to engage another subadviser for the Series as soon as
possible. Notwithstanding the foregoing, the Subadviser may terminate the
Agreement on 60 days' written notice to the Adviser and the Corporation, in the
event of a breach of this Agreement by the Adviser. The termination of this
Agreement with respect to any Series or the addition of any Series to Schedule
A hereto (in the manner required by the Act) shall not affect the continued
effectiveness of this Agreement with respect to each other Series subject
hereto. This Agreement shall automatically terminate in the event of its
assignment (as defined by the Act).

This Agreement will also terminate in the event that the
Advisory Agreement by and between the Corporation and the Adviser is
terminated.

12. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.

13. Amendments. This Agreement may be amended by mutual consent in
writing, but the consent of the Corporation must be obtained in conformity with
the requirements of the Act.

14. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of New York and the applicable provisions of the
Act. To the extent the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Act, the
latter shall control.

15. Separate Series. Pursuant to the provisions of the Articles of
Incorporation and the General Laws of the State of Maryland, each Series is a
separate series of the Corporation, and all debts, liabilities, obligations and
expenses of a particular Series shall be enforceable only against the assets of
that Series and not against the assets of any other Series or of the
Corporation as a whole.

<PAGE>

Subadviser: Berger Associates, Inc.
210 University Blvd., Suite 900
Denver, CO 80206-4626
Attention: Kevin R. Fay

Adviser: SunAmerica Asset Management Corp.
The SunAmerica Center
733 Third Avenue, Third Floor
New York, NY 10017-3204
Attention: Robert M. Zakem
Senior Vice President and General Counsel

<PAGE>

IN WITNESS WHEREOF, the parties have caused their respective duly
authorized officers to execute this Agreement as of the date first above
written.

SUNAMERICA ASSET MANAGEMENT CORP.

By: /s/ Peter A. Harbeck
Name: Peter A. Harbeck
Title: President

BERGER ASSOCIATES, INC.

By: /s/ Gerard M. Lavin
Name: Gerard M. Lavin
Title: President

<PAGE>

SUBADVISORY AGREEMENT

This SUBADVISORY AGREEMENT is dated as of August 20, 1997 by
and between SUNAMERICA ASSET MANAGEMENT CORP., a Delaware corporation (the
"Adviser"), and DAVID L. BABSON & CO., INC., a Massachusetts corporation (the
"Subadviser").

WITNESSETH:

WHEREAS, the Adviser and Style Select Series, Inc., a Maryland
corporation (the "Corporation"), have entered into an Investment Advisory and
Management Agreement dated as of September 17, 1996, as amended August 20, 1997
(the "Advisory Agreement"), pursuant to which the Adviser has agreed to provide
investment management, advisory and administrative services to the Corporation;
and

WHEREAS, the Corporation is registered under the Investment Company
Act of 1940, as amended (the "Act"), as an open-end management investment
company and may issue shares of common stock, par value $.0001 per share, in
separately designated series representing separate funds with their own
investment objectives, policies and purposes; and

WHEREAS, the Subadviser is engaged in the business of rendering
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended; and

NOW, THEREFORE, it is hereby agreed between the parties hereto as
follows:

1. Duties of the Subadviser. (a) The Adviser hereby engages the
services of the Subadviser in furtherance of its Advisory Agreement with the
Corporation. Pursuant to this Subadvisory Agreement and subject to the
oversight and review of the Adviser, the Subadviser will manage the investment
and reinvestment of a portion of the assets of each Portfolio listed on
Schedule A attached hereto. The Subadviser will determine in its discretion and
subject to the oversight and review of the Adviser, the securities to be
purchased or sold, will provide the Adviser with records concerning its
activities which the Adviser of the Corporation is required to maintain, and
will render regular reports to the Adviser and to officers and Directors of the
Corporation concerning its discharge of the foregoing responsibilities. The
Subadviser shall discharge the foregoing responsibilities subject to the
control of the officers and the Directors of the Corporation and in compliance
with such policies as the Directors of the Corporation may from time to time
establish, and in compliance with (a) the objectives, policies and limitations
for the Portfolio set forth in the Corporation's current prospectus and
statement of additional information, and (b) applicable laws and regulations.

<PAGE>

The Subadviser represents and warrants to the Adviser that
the portion of the assets which it manages of the Portfolio set forth in
Schedule A will at all times be operated and managed in compliance with all
applicable federal and state laws governing its operations and investments.
Without limiting the foregoing, the Subadviser agrees to manage that portion of
the assets of the Portfolio allocated to it (1) so that it qualifies to be
treated as a "regulated investment company" under Subchapter M, Chapter 1 of
the Internal Revenue Code of 1986, as amended (the "Code"), and (2) in
compliance with (a) the provisions of the Act and rules adopted thereunder; and
(b) applicable federal and state securities, commodities and banking laws. The
Subadviser further represents and warrants that to the extent that any
statements or omissions made in any Registration Statement for shares of the
Corporation, or any amendment or supplement thereto, are made in reliance upon
and in conformity with information furnished by the Subadviser expressly for
use therein, such parts of such Registration Statement and any amendments or
supplements thereto consisting of such statements or omissions will, when they
become effective, conform in all material respects to the requirements of the
Securities Act of 1933 and the rules and regulations of the Commission
thereunder (the "1933 Act") and the Act and will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.

(b) The Subadviser agrees to maintain a reasonable level of
errors and omissions or professional liability insurance coverage.

2. Portfolio Transactions. The Subadviser is responsible for decisions
to buy or sell securities and other investments for a portion of the assets of
each Portfolio, broker-dealers and futures commission merchants' selection, and
negotiation of brokerage commission and futures commission merchants' rates. As
a general matter, in executing Portfolio transactions, the Subadviser may
employ or deal with such broker-dealers or futures commission merchants as may,
in the Subadviser's best judgment, provide prompt and reliable execution of the
transactions at favorable prices and reasonable commission rates. In selecting
such broker-dealers or futures commission merchants, the Subadviser shall
consider all relevant factors including price (including the applicable
brokerage commission, dealer spread or futures commission merchant rate), the
size of the order, the nature of the market for the security or other
investment, the timing of the transaction, the reputation, experience and
financial stability of the broker-dealer or futures commission merchant
involved, the quality of the service, the difficulty of execution, the
execution capabilities and operational facilities of the firm involved, and, in
the case of securities, the firm's risk in positioning a block of securities.
Subject to such policies as the Directors may determine and consistent with
Section 28(e) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), the Subadviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of
the Subadviser's having caused a Portfolio to pay a member of an exchange,
broker or dealer an amount of commission for effecting a securities transaction
in excess of the amount of commission another member of an exchange, broker or
dealer would have charged for effecting that transaction, if the Subadviser
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
member of an exchange, broker or dealer viewed in terms of either that
particular transaction or the

-2-

<PAGE>

Subadviser's overall responsibilities with respect to such Portfolio and to
other clients as to which the Subadviser exercises investment discretion. In
accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T) thereunder,
and subject to any other applicable laws and regulations including Section
17(e) of the Act and Rule 17e-1 thereunder, the Subadviser may engage its
affiliates, the Adviser and its affiliates or any other subadviser to the
Corporation and its respective affiliates, as broker-dealers or futures
commission merchants to effect Portfolio transactions in securities and other
investments for a Portfolio. The Subadviser will promptly communicate to the
Adviser and to the officers and the Directors of the Corporation such
information relating to Portfolio transactions as they may reasonably request.
To the extent consistent with applicable law, the Subadviser may aggregate
purchase or sell orders for the Portfolio with contemporaneous purchase or sell
orders of other clients of the Subadviser or its affiliated persons. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Subadviser in the
manner the Subadviser determines to be equitable and consistent with its and
its affilates' fiduciary obligations to the Portfolio and to such other
clients. The Adviser hereby acknowledges that such aggregation of orders may
not result in more favorable pricing or lower brokerage commissions in all
instances.

3. Compensation of the Subadviser. The Subadviser shall not be
entitled to receive any payment from the Corporation and shall look solely and
exclusively to the Adviser for payment of all fees for the services rendered,
facilities furnished and expenses paid by it hereunder. As full compensation
for the Subadviser under this Agreement, the Adviser agrees to pay to the
Subadviser a fee at the annual rates set forth in Schedule A hereto with
respect to the portion of the assets managed by the Subadviser for each
Portfolio listed thereon. Such fee shall be accrued daily and paid monthly as
soon as practicable after the end of each month (i.e., the applicable annual
fee rate divided by 365 applied to each prior days' net assets in order to
calculate the daily accrual). If the Subadviser shall provide its services
under this Agreement for less than the whole of any month, the foregoing
compensation shall be prorated.

4. Other Services. At the request of the Corporation or the Adviser,
the Subadviser in its discretion may make available to the Corporation, office
facilities, equipment, personnel and other services. Such office facilities,
equipment, personnel and services shall be provided for or rendered by the
Subadviser and billed to the Corporation or the Adviser at the Subadviser's
cost.

5. Reports. The Corporation, the Adviser and the Subadviser agree to
furnish to each other, if applicable, current prospectuses, statements of
additional information, proxy statements, reports of shareholders, certified
copies of their financial statements, and such other information with regard to
their affairs and that of the Corporation as each may reasonably request.

7. Certain Records. The Subadviser hereby undertakes and agrees to
maintain, in the form and for the period required by Rule 31a-2 under the Act,
all records relating to the investments of the Portfolio that are required to
be maintained by the Corporation pursuant to the requirements of Rule 31a-1 of
the Act. Any records required to be maintained and preserved pursuant to the

-3-

<PAGE>

provisions of Rule 31a-1 and Rule 31a-2 promulgated under the Act which are
prepared or maintained by the Subadviser on behalf of the Corporation are the
property of the Corporation and will be surrendered promptly to the Corporation
or the Adviser on request.

The Subadviser agrees that all accounts, books and other
records maintained and preserved by it as required hereby shall be subject at
any time, and from time to time, to such reasonable periodic, special and other
examinations by the Securities and Exchange Commission, the Corporation's
auditors, the Corporation or any representative of the Corporation, the
Adviser, or any governmental agency or other instrumentality having regulatory
authority over the Corporation.

8. Reference to the Subadviser. Neither the Corporation nor the
Adviser or any affiliate or agent thereof shall make reference to or use the
name of the Subadviser or any of its affiliates in any advertising or
promotional materials without the prior approval of the Subadviser, which
approval shall not be unreasonably withheld.

9. Liability of the Subadviser. (a) In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations
or duties ("disabling conduct") hereunder on the part of the Subadviser (and
its officers, directors, partners, agents, employees, controlling persons,
shareholders and any other person or entity affiliated with the Subadviser),
the Subadviser shall not be subject to liability to the Corporation or to any
shareholder of the Corporation for any act or omission in the course of, or
connected with, rendering services hereunder, including without limitation, any
error of judgment or mistake of law or for any loss suffered by any of them in
connection with the matters to which this Agreement relates, except to the
extent specified in Section 36(b) of the Act concerning loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services. Except for such disabling conduct, the Adviser shall indemnify the
Subadviser (and its officers, directors, partners, agents, employees,
controlling persons, shareholders and any other person or entity affiliated
with the Subadviser) (collectively, the "Indemnified Parties") from any
liability arising from the Subadviser's conduct under this Agreement.

(b) The Subadviser agrees to indemnify and hold harmless the
Adviser and its affiliates and each of its directors and officers and each
person, if any, who controls the Adviser within the meaning of Section 15 of
the 1933 Act against any and all losses, claims, damages, liabilities or
litigation (including legal and other expenses), to which the Adviser or its
affiliates or such directors, officers or controlling person may become subject
under the 1933 Act, under other statutes, at common law or otherwise, which may
be based upon (i) any breach of this Agreement by the Subadviser, or (ii) any
failure by the Subadviser to comply with the representations and warranties set
forth in Section 1 of this Agreement; provided, however, that in no case is the
Subadviser's indemnity in favor of any person deemed to protect such other
persons against any liability to which such person would otherwise be subject
by reasons of willful misfeasance, bad faith, or gross negligence in the
performance of his, her or its duties or by reason of his, her or its reckless
disregard of obligation and duties under this Agreement.

-4-

<PAGE>

The Adviser agrees that the Subadviser shall manage the portion of the assets
of a Portfolio allocated to it as if it was a separate operating Portfolio and
shall comply with subsections (a) and (b) of Section 1 of this Subadvisory
Agreement (including, but not limited to, the investment objectives, policies
and restrictions applicable to a Portfolio and qualifications of a Portfolio as
a regulated investment company under the Code) with respect to the portion of
assets of a Portfolio allocated to the Subadviser. The Adviser shall indemnify
the Indemnified Parties from any liability arising from the conduct of the
Adviser and any other subadviser with respect to the portion of a Portfolio's
assets not allocated to the Subadviser.

11. Term of the Agreement. This Agreement shall continue in full force
and effect with respect to each Portfolio until two years from the date hereof,
and from year to year thereafter so long as such continuance is specifically
approved at least annually (i) by the vote of a majority of those Directors of
the Corporation who are not parties to this Agreement or interested persons of
any such party, cast in person at a meeting called for the purpose of voting on
such approval, and (ii) by the Directors of the Corporation or by vote of a
majority of the outstanding voting securities of the Portfolio voting
separately from any other series of the Corporation.

With respect to each Portfolio, this Agreement may be
terminated at any time, without payment of a penalty by the Portfolio or the
Corporation, by vote of a majority of the Directors, or by vote of a majority
of the outstanding voting securities (as defined in the Act) of the Portfolio,
voting separately from any other series of the Corporation, or by the Adviser,
on not less than 30 nor more than 60 days' written notice to the Subadviser.
With respect to each Portfolio, this Agreement may be terminated by the
Subadviser at any time, without the payment of any penalty, on 90 days' written
notice to the Adviser and the Corporation; provided, however, that this
Agreement may not be terminated by the Subadviser unless another subadvisory
agreement has been approved by the Corporation in accordance with the Act, or
after six months' written notice, whichever is earlier. The termination of this
Agreement with respect to any Portfolio or the addition of any Portfolio to
Schedule A hereto (in the manner required by the Act), shall not affect the
continued effectiveness of this Agreement with respect to each other Portfolio
subject hereto. This Agreement shall automatically terminate in the event of
its assignment (as defined by the Act).

This Agreement will also terminate in the event that the
Advisory Agreement by and between the Corporation and the Adviser is
terminated.

12. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.

13. Amendments. This Agreement may be amended by mutual consent in
writing, but the consent of the Corporation must be obtained in conformity with
the requirements of the Act.

-5-

<PAGE>

14. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of New York and the applicable provisions of the
Act. To the extent the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Act, the
latter shall control.

15. Separate Series. Pursuant to the provisions of the Articles of
Incorporation and the General Laws of the State of Maryland, each Portfolio is
a separate series of the Corporation, and all debts, liabilities, obligations
and expenses of a particular Portfolio shall be enforceable only against the
assets of that Portfolio and not against the assets of any other Portfolio or
of the Corporation as a whole.

Subadviser: David L. Babson & Co. Inc
One Memorial Drive
Cambridge, MA 02142-1300
Attention: Ronald E. Gwozdz
Executive Vice President

Adviser: SunAmerica Asset Management Corp.
The SunAmerica Center
733 Third Avenue, Third Floor
New York, NY 10017-3204
Attention: Robert M. Zakem
Senior Vice President and General Counsel

IN WITNESS WHEREOF, the parties have caused their respective duly
authorized officers to execute this Agreement as of the date first above
written.

SUNAMERICA ASSET MANAGEMENT CORP.

By: /s/ Peter A. Harbeck
----------------------------------
Name: Peter A. Harbeck
Title: President

DAVID L. BABSON & CO., INC.

By: /s/ Ronald E. Gwozdz
----------------------------------
Name: Ronald E. Gwozdz
Title: Executive Vice President

-6-

<PAGE>

SUBADVISORY AGREEMENT

This SUBADVISORY AGREEMENT is dated as of September 17,
1996, as amended August 20, 1997, by and between SUNAMERICA ASSET
MANAGEMENT CORP., a Delaware corporation (the "Adviser"), and DAVIS
SELECTED ADVISERS, L.P., a Colorado limited partnership (the
"Subadviser").

WITNESSETH:

WHEREAS, the Adviser and Style Select Series, Inc., a Maryland
corporation (the "Corporation"), have entered into an Investment Advisory
and Management Agreement dated as of September 17, 1996, as amended
August 20, 1997 (the "Advisory Agreement"), pursuant to which the Adviser
has agreed to provide investment management, advisory and administrative
services to the Corporation; and

WHEREAS, the Corporation is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end management
investment company and may issue shares of common stock, par value $.0001
per share, in separately designated series representing separate funds
with their own investment objectives, policies and purposes; and

WHEREAS, the Subadviser is engaged in the business of rendering
investment advisory services and is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended; and

WHEREAS, the Adviser desires to retain the Subadviser to furnish
investment advisory services to the investment series of the Corporation
listed on Schedule A attached hereto (the "Portfolio"), and the
Subadviser is willing to furnish such services;

NOW, THEREFORE, it is hereby agreed between the parties hereto
as follows:

1. Duties of the Subadviser. (a) The Adviser hereby engages the
services of the Subadviser in furtherance of its Investment Advisory and
Management Agreement with the Corporation. Pursuant to this Subadvisory
Agreement and subject to the oversight and review of the Adviser, the
Subadviser will manage the investment and reinvestment of a portion of
the assets of each Portfolio listed on Schedule A attached hereto. The
Subadviser will determine in its discretion and subject to the oversight
and review of the Adviser, the securities to be purchased or sold, will
provide the Adviser with records concerning its activities which the
Adviser or the Corporation is required to maintain, and will render
regular reports to the Adviser and to officers and Directors of the
Corporation concerning its discharge of the foregoing responsibilities.
The Subadviser shall discharge the foregoing responsibilities subject to
the control of the officers and the Directors of the Corporation and in
compliance with such policies as the Directors of the Corporation may
from time to time establish, and in compliance with (a) the objectives,
policies, and limitations for the Portfolio set forth in the
Corporation's current prospectus and statement of additional information,
and (b) applicable laws and regulations.

<PAGE>

The Subadviser represents and warrants to the Adviser
that the portion of the assets which it manages of the Portfolio set
forth in Schedule A will at all times be operated and managed in
compliance with the current prospectus and statement of additional
information. The Subadviser further represents and warrants that to the
extent that any statements or omissions made in any Registration
Statement for shares of the Corporation, or any amendment or supplement
thereto, are made in reliance upon and in conformity with information
furnished by the Subadviser expressly for use therein, such Registration
Statement and any amendments or supplements thereto will, when they
become effective, conform in all material respects to the requirements of
the Securities Act of 1933 and the rules and regulations of the
Commission thereunder (the "1933 Act") and the Act and will not contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading.

(b) In performing its investment advisory services,
Subadviser, while remaining ultimately responsible for management of the
portion of the assets of the Portfolio allocated to it, may draw on the
research and market expertise of its affiliate offices, including Davis
Selected Advisers - NY, Inc., its New York affiliate, for portfolio
decisions and management.

(c) The Subadviser agrees to maintain a level of errors
and omissions or professional liability insurance coverage that is from
time to time satisfactory to the Adviser.

2. Portfolio Transactions. The Subadviser is responsible for
decisions to buy or sell securities and other investments for a portion
of the assets of each Portfolio, broker-dealers and futures commission
merchants' selection, and negotiation of brokerage commission and futures
commission merchants' rates. As a general matter, in executing Portfolio
transactions, the Subadviser may employ or deal with such broker-dealers
or futures commission merchants as may, in the Subadviser's best
judgement, provide prompt and reliable execution of the transactions at
favorable prices and reasonable commission rates. In selecting such
broker-dealers or futures commission merchants, the Subadviser shall
consider all relevant factors including price (including the applicable
brokerage commission, dealer spread or futures commission merchant rate),
the size of the order, the nature of the market for the security or other
investment, the timing of the transaction, the reputation, experience and
financial stability of the broker-dealer or futures commission merchant
involved, the quality of the service, the difficulty of execution, the
execution capabilities and operational facilities of the firm involved,
and, in the case of securities, the firm's risk in positioning a block of
securities. Subject to such policies as the Directors may determine and
consistent with Section 28(e) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), the Subadviser shall not be deemed to have
acted unlawfully or to have breached any duty created by this Agreement
or otherwise solely by reason of the Subadviser's having caused a
Portfolio to pay a member of an exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount
of commission another member of an exchange, broker or dealer would have
charged for effecting that transaction, if the Subadviser determines in
good faith that such amount of commission was

-2-

<PAGE>

reasonable in relation to the value of the brokerage and research
services provided by such member of an exchange, broker or dealer viewed
in terms of either that particular transaction or the Subadviser's
overall responsibilities with respect to such Portfolio and to other
clients as to which the Subadviser exercises investment discretion. In
accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T)
thereunder, and subject to any other applicable laws and regulations
including Section 17(e) of the Act and Rule 17e-1 thereunder, the
Subadviser may engage its affiliates, the Adviser and its affiliates or
any other subadviser to the Corporation and its respective affiliates, as
broker-dealers or futures commission merchants to effect Portfolio
transactions in securities and other investments for a Portfolio. The
Subadviser will promptly communicate to the Adviser and to the officers
and the Directors of the Corporation such information relating to
Portfolio transactions as they may reasonably request. To the extent
consistent with applicable law, the Subadviser may aggregate purchase or
sell orders for the Portfolio with contemporaneous purchase or sell
orders of other clients of the Subadviser or its affiliated persons. In
such event, allocation of the securities so purchased or sold, as well as
the expenses incurred in the transaction, will be made by the Subadviser
in the manner the Subadviser determines to be equitable and consistent
with its and its affiliates' fiduciary obligations to the Portfolio and
to such other clients. The Adviser hereby acknowledges that such
aggregation of orders may not result in more favorable pricing or lower
brokerage commissions in all instances.

3. Compensation of the Subadviser. The Subadviser shall not be
entitled to receive any payment from the Corporation and shall look
solely and exclusively to the Adviser for payment of all fees for the
services rendered, facilities furnished and expenses paid by it
hereunder. As full compensation for the Subadviser under this Agreement,
the Adviser agrees to pay to the Subadviser a fee at the annual rates set
forth in Schedule A hereto with respect to the portion of the assets
managed by the Subadviser for each Portfolio listed thereon. Such fee
shall be accrued daily and paid monthly as soon as practicable after the
end of each month (i.e., the applicable annual fee rate divided by 365
applied to each prior days' net assets in order to calculate the daily
accrual). If the Subadviser shall provide its services under this
Agreement for less than the whole of any month, the foregoing
compensation shall be prorated.

4. Other Services. At the request of the Corporation or the
Adviser, the Subadviser in its discretion may make available to the
Corporation, office facilities, equipment, personnel and other services.
Such office facilities, equipment, personnel and services shall be
provided for or rendered by the Subadviser and billed to the Corporation
or the Adviser at a mutually agreed-upon fee.

5. Reports. The Corporation, the Adviser and the Subadviser
agree to furnish to each other, if applicable, current prospectuses,
statements of additional information, proxy statements, reports of
shareholders, certified copies of their financial statements, and such
other information with regard to their affairs and that of the
Corporation as each may reasonably request.

-3-

<PAGE>

7. Certain Records. The Subadviser hereby undertakes and agrees
to maintain, in the form and for the period required by Rule 31a-2 under
the Act, all records relating to the investments of the Portfolio that
are required to be maintained by the Corporation pursuant to the
requirements of Rule 31a-1 of that Act. Any records required to be
maintained and preserved pursuant to the provisions of Rule 31a-1 and
Rule 31a-2 promulgated under the Act which are prepared or maintained by
the Subadviser on behalf of the Corporation, which are not otherwise
available to the Corporation, are the property of the Corporation and
will be surrendered promptly to the Corporation or the Adviser on
request.

The Subadviser agrees that all accounts, books and other records
relating to the Corporation, or any Portfolio thereof, maintained and
preserved by it as required hereby shall be subject at any time, and from
time to time, to such reasonable periodic, special and other examinations
by the Securities and Exchange Commission, the Corporation's auditors,
the Corporation or any representative of the Corporation, the Adviser, or
any governmental agency or other instrumentality having regulatory
authority over the Corporation.

8. Reference to the Subadviser. Neither the Corporation nor the
Adviser or any affiliate or agent thereof shall make reference to or use
the name of the Subadviser or any of its affiliates in any advertising or
promotional materials without the prior approval of the Subadviser, which
approval shall not be unreasonably withheld.

9. Liability of the Subadviser. (a) In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties ("disabling conduct") hereunder on the part of the
Subadviser (and its officers, directors, agents, employees, controlling
persons, shareholders and any other person or entity affiliated with the
Subadviser) the Subadviser shall not be subject to liability to the
Corporation or to any shareholder of the Corporation for any act or
omission in the course of, or connected with, rendering services
hereunder, including without limitation, any error of judgment or mistake
of law or for any loss suffered by any of them in connection with the
matters to which this Agreement relates, except to the extent specified
in Section 36(b) of the Act concerning loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services.
Except for such disabling conduct, the Adviser shall indemnify the
Subadviser (and its officers, directors, partners, agents, employees,
controlling persons, shareholders and any other person or entity
affiliated with the Subadviser) (collectively, the "Indemnified Parties")
from any liability arising from the Subadviser's conduct under this
Agreement.

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<PAGE>

misfeasance, bad faith, or gross negligence in the performance of his,
her or its duties or by reason of his, her or its reckless disregard of
obligation and duties under this Agreement.

(c) The Subadviser shall not be liable to the Adviser
for (i) any acts of the Adviser or any other subadviser to the Portfolio
with respect to the portion of the assets of a Portfolio not managed by
Subadviser and (ii) acts of the Subadviser which result from acts of the
Adviser, including, but not limited to, a failure of the Adviser to
provide accurate and current information with respect to any records
maintained by Adviser or any other subadviser to a Portfolio, which
records are not also maintained by or otherwise available to the
Subadviser upon reasonable request. The Adviser agrees that Subadviser
shall manage the portion of the assets of a Portfolio allocated to it as
if it was a separate operating Portfolio and shall comply with
subsections (a) and (b) of Section I of this Subadvisory Agreement
(including, but not limited to, the investment objectives, policies and
restrictions applicable to a Portfolio and qualifications of a Portfolio
as a regulated investment company under the Code) with respect to the
portion of assets of a Portfolio allocated to Subadviser. The Adviser
shall indemnify the Indemnified Parties from any liability arising from
the conduct of the Adviser and any other subadviser with respect to the
portion of a Portfolio's assets not allocated to Subadviser.

10. Permissible Interests. Directors and agents of the
Corporation are or may be interested in the Subadviser (or any successor
thereof) as directors, partners, officers, or shareholders, or otherwise;
directors, partners, officers, agents, and shareholders of the Subadviser
are or may be interested in the Corporation as Directors, or otherwise;
and the Subadviser (or any successor) is or may be interested in the
Corporation in some manner.

11. Term of the Agreement. This Agreement shall continue in full
force and effect with respect to each Portfolio until two years from the
date hereof, and from year to year thereafter so long as such continuance
is specifically approved at least annually (i) by the vote of a majority
of those Directors of the Corporation who are not parties to this
Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval, and (ii) by
the Directors of the Corporation or by vote of a majority of the
outstanding voting securities of the Portfolio voting separately from any
other series of the Corporation.

With respect to each Portfolio, this Agreement may be
terminated at any time, without payment of a penalty by the Portfolio or
the Corporation, by vote of a majority of the Directors, or by vote of a
majority of the outstanding voting securities (as defined in the Act) of
the Portfolio, voting separately from any other series of the
Corporation, or by the Adviser, on not less than 30 nor more than 60
days' written notice to the Subadviser. With respect to each Portfolio,
this Agreement may be terminated by the Subadviser at any time, without
the payment of any penalty, on 90 days' written notice to the Adviser and
the Corporation; provided, however, that this Agreement may not be
terminated by the Subadviser unless another subadvisory agreement has
been approved by the Corporation in accordance with the Act, or after six
months' written notice, whichever is earlier. The termination of this
Agreement with respect to any Portfolio or the addition of any Portfolio
to Schedule A hereto (in the manner required by the Act) shall not affect
the continued effectiveness of this Agreement with respect to each other
Portfolio subject hereto. This Agreement shall automatically terminate in
the event of its assignment (as defined by the Act).

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<PAGE>

This Agreement will also terminate in the event that
the Advisory Agreement by and between the Corporation and the Adviser is
terminated.

12. Severability. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.

13. Amendments. This Agreement may be amended by mutual consent
in writing, but the consent of the Corporation must be obtained in
conformity with the requirements of the Act.

14. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York and the applicable
provisions of the Act. To the extent the applicable laws of the State of
New York, or any of the provisions herein, conflict with the applicable
provisions of the Act, the latter shall control.

15. Separate Series. Pursuant to the provisions of the Articles
of Incorporation and the General Laws of the State of Maryland, each
Portfolio is a separate series of the Corporation, and all debts,
liabilities, obligations and expenses of a particular Portfolio shall be
enforceable only against the assets of that Portfolio and not against the
assets of any other Portfolio or of the Corporation as a whole.

16. Notices. All notices shall be in writing and deemed properly
given when delivered or mailed by United States certified or registered
mail, return receipt requested, postage prepaid, addressed as follows:

Subadviser: Davis Selected Advisers, L.P.
124 E. Marcy Street
P.O. Box 1688
Sante Fe, NM 87501-1688
Attention: Kenneth C. Eich
Chief Operating Officer

Adviser: SunAmerica Asset Management Corp.
The SunAmerica Center
733 Third Avenue, Third Floor
New York, NY 10017-3204
Attention: Robert M. Zakem
Senior Vice President and
General Counsel

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<PAGE>

IN WITNESS WHEREOF, the parties have caused their respective
duly authorized officers to execute this Agreement as of the date first
above written.

SUNAMERICA ASSET MANAGEMENT CORP.

By: /s/ Peter A. Harbeck
Name: Peter A. Harbeck
Title: President

DAVIS SELECTED ADVISERS, L.P.

By: /s/ Kenneth C. Eich
Name: Kenneth C. Eich
Title: Chief Operating Officer

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<PAGE>

SUBADVISORY AGREEMENT

This SUBADVISORY AGREEMENT is dated as of August 20, 1997 by
and between SUNAMERICA ASSET MANAGEMENT CORP., a Delaware corporation (the
"Adviser"), and THE GLENMEDE TRUST COMPANY, a Pennsylvania Trust Company (the
"Subadviser").

WITNESSETH:

WHEREAS, the Corporation is registered under the Investment Company
Act of 1940, as amended (the "Act"), as an open-end management investment
company and may issue shares of common stock, par value $.0001 per share, in
separately designated series representing separate funds with their own
investment objectives, policies and purposes; and

WHEREAS, the Subadviser is engaged in the business of rendering
investment advisory services and is a bank, qualified to act, and exempt from
registration as an investment adviser under the Investment Advisers Act of
1940, as amended; and

NOW, THEREFORE, it is hereby agreed between the parties hereto as
follows:

<PAGE>

The Subadviser represents and warrants to the Adviser that
the portion of the assets which it manages of the Portfolio set forth in
Schedule A will at all times be managed in compliance with all applicable
federal and state laws governing its operations and investments. Without
limiting the foregoing, the Subadviser agrees to manage that portion of the
assets of the Portfolio allocated to it (1) so that it qualifies to be treated
as a "regulated investment company" under Subchapter M, chapter 1 of the
Internal Revenue Code of 1986, as amended (the "Code"), and (2) in compliance
with (a) the provisions of the Act and rules adopted thereunder; (b) and
applicable federal and state securities, commodities and banking laws. The
Subadviser further represents and warrants that to the extent that any
statements or omissions made in any Registration Statement for shares of the
Corporation, or any amendment or supplement thereto, are made in reliance upon
and in conformity with written information furnished by the Subadviser
expressly for use therein, such parts of such Registration Statement and any
amendments or supplements thereto consisting of such statements or omissions
will, when they become effective, conform in all material respects to the
requirements of the Securities Act of 1933 and the rules and regulations of the
Commission thereunder (the "1933 Act") and the Act and will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading.

(b) The Subadviser agrees to maintain a reasonable level of
errors and omissions or professional liability insurance coverage.

2. Portfolio Transactions. The Subadviser is responsible for decisions
to buy or sell securities and other investments for a portion of the assets of
each Portfolio, broker-dealers and futures commission merchants' selection, and
negotiation of brokerage commission and futures commission merchants' rates. As
a general matter, in executing Portfolio transactions, the Subadviser may
employ or deal with such broker-dealers or futures commission merchants as may,
in the Subadviser's best judgment, provide prompt and reliable execution of the
transactions at favorable prices and reasonable commission rates. In selecting
such broker-dealers or futures commission merchants, the Subadviser shall
consider all relevant factors including price (including the applicable
brokerage commission, dealer spread or futures commission merchant rate), the
size of the order, the nature of the market for the security or other
investment, the timing of the transaction, the reputation, experience and
financial stability of the broker-dealer or futures commission merchant
involved, the quality of the service, the difficulty of execution, the
execution capabilities and operational facilities of the firm involved, and, in
the case of securities, the firm's risk in positioning a block of securities.
Subject to such policies as the Directors may determine and, consistent with
Section 28(e) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), the Subadviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of
the Subadviser's having caused a Portfolio to pay a member of an exchange,
broker or dealer an amount of commission for effecting a securities transaction
in excess of the amount of commission another member of an exchange, broker or
dealer would have charged for effecting that transaction, if the Subadviser
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
member of an exchange, broker or dealer viewed in terms of either that
particular transaction or the

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<PAGE>

Subadviser's overall responsibilities with respect to such Portfolio and to
other clients as to which the Subadviser exercises investment discretion. In
accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T) thereunder,
and subject to any other applicable laws and regulations including Section
17(e) of the Act and Rule 17e-1 thereunder, the Subadviser may engage its
affiliates, the Adviser and its affiliates or any other subadviser to the
Corporation and its respective affiliates, as broker-dealers or futures
commission merchants to effect Portfolio transactions in securities and other
investments for a Portfolio. The Adviser will provide to the Subadviser a list
of its affiliated broker/dealers and the affiliated broker/dealers of the other
subadvisers to the Portfolio. The Subadviser will promptly communicate to the
Adviser and to the officers and the Directors of the Corporation such
information relating to Portfolio transactions as they may reasonably request.
To the extent consistent with applicable law, the Subadviser may aggregate
purchase or sell orders for the Portfolio with contemporaneous purchase or sell
orders of other clients of the Subadviser or its affiliated persons. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Subadviser in the
manner the Subadviser determines to be equitable and consistent with its and
its affiliates' fiduciary obligations to the Portfolio and to such other
clients. The Adviser hereby acknowledges that such aggregation of orders may
not result in more favorable pricing or lower brokerage commissions in all
instances.

3. Compensation of the Subadviser. The Subadviser shall not be
entitled to receive any payment from the Corporation and shall look solely and
exclusively to the Adviser for payment of all fees for the services rendered,
facilities furnished and expenses paid by it hereunder. As full compensation
for the Subadviser under this Agreement, the Adviser agrees to pay to the
Subadviser a fee at the annual rates set forth in Schedule A hereto with
respect to the portion of the assets managed by the Subadviser for each
Portfolio listed thereon. Such fee shall be accrued daily and paid monthly as
soon as practicable after the end of each month (i.e., the applicable annual
fee rate divided by 365 applied to each prior days' net assets in order to
calculate the daily accrual). If the Subadviser shall provide its services
under this Agreement for less than the whole of any month, the foregoing
compensation shall be prorated.

4. Other Services. At the request of the Corporation or the Adviser,
the Subadviser in its discretion may make available to the Corporation or the
Adviser, office facilities, equipment, personnel and other services. Such
office facilities, equipment, personnel and services shall be provided for or
rendered by the Subadviser and billed to the Corporation or the Adviser at the
Subadviser's cost.

5. Reports. The Corporation, the Adviser and the Subadviser agree to
furnish to each other, if applicable, current prospectuses, statements of
additional information, proxy statements, reports of shareholders, certified
copies of their financial statements, and such other information with regard to
their affairs and that of the Corporation as each may reasonably request.

6. Status of the Subadviser. The services of the Subadviser to the
Adviser and the Corporation are not be deemed exclusive, and the Subadviser
shall be free to render similar services to others so long as its services to
the Corporation are not impaired thereby. The Subadviser shall be deemed to be
an independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Corporation in any
way or otherwise be deemed an agent of the Corporation.

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<PAGE>

7. Certain Records. The Subadviser hereby undertakes and agrees to
maintain, in the form and for the period required by Rule 31a-2 under the Act,
all records relating to the investments of the Portfolio that are required to
be maintained by the Corporation pursuant to the requirements of Rule 31a-1 of
the Act. Any records required to be maintained and preserved pursuant to the
provisions of Rule 31a-1 and Rule 31a-2 promulgated under the Act which are
prepared or maintained by the Subadviser on behalf of the Corporation are the
property of the Corporation and will be surrendered promptly to the Corporation
or the Adviser on request.

The Subadviser agrees that all accounts, books and other
records maintained and preserved by it as required hereby shall be subject at
any time, and from time to time, to such reasonable periodic, special and other
examinations by the Securities and Exchange Commission, the Corporation's
auditors, the Corporation or any representative of the Corporation, the
Adviser, or any governmental agency or other instrumentality having regulatory
authority over the Corporation.

8. Reference to the Subadviser. Neither the Corporation nor the
Adviser or any affiliate or agent thereof shall make reference to or use the
name of the Subadviser or any of its affiliates in any advertising or
promotional materials without the prior approval of the Subadviser, which
approval shall not be unreasonably withheld.

9. Liability of the Subadviser. (a) In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations
or duties ("disabling conduct") hereunder on the part of the Subadviser (and
its officers, directors, partners, agents, employees, controlling persons,
shareholders and any other person or entity affiliated with the Subadviser),
the Subadviser shall not be subject to liability to the Corporation, the
Adviser, to any shareholder of the Corporation or to any shareholder of the
Adviser for any act or omission in the course of, or connected with, rendering
services hereunder, including without limitation, any error of judgment or
mistake of law or for any loss suffered by any of them in connection with the
matters to which this Agreement relates, except to the extent specified in
Section 36(b) of the Act concerning loss resulting from a breach of fiduciary
duty with respect to the receipt of compensation for services. Except for such
disabling conduct, the Adviser shall indemnify the Subadviser (and its
officers, directors, partners, agents, employees, controlling persons,
shareholders and any other person or entity affiliated with the Subadviser)
(collectively, the "Indemnified Parties") from any and all losses, claims,
damages, liabilities or litigation (including legal and other expenses) arising
from the Subadviser's conduct under this Agreement.

(b) The Subadviser agrees to indemnify and hold harmless the
Adviser and its affiliates and each of its directors and officers and each
person, if any, who controls the Adviser within the meaning of Section 15 of
the 1933 Act against any and all losses, claims, damages, liabilities or
litigation (including legal and other expenses), to which the Adviser or its
affiliates or such directors, officers or controlling person may become subject
under the 1933 Act, under other statutes, at common law or otherwise, which may
be based upon (i) any wrongful act or breach of this Agreement by the
Subadviser, or (ii) any failure by the Subadviser to comply with the
representations and warranties set forth in Section 1 of this Agreement;
provided, however, that in no case is the Subadviser's indemnity in favor of
the Adviser, its affiliates or of any person deemed to protect the Adviser, its
affiliates or of any such other person against any liability to which such
entity or person would otherwise be subject by reasons of willful misfeasance,
bad faith, or gross negligence in the performance of his, her or its duties or
by reason of his, her or its reckless disregard of obligation and duties under
this Agreement.

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<PAGE>

(c) The Subadviser shall not be liable to the Adviser for (i)
any acts of the Adviser or any other subadviser to the Portfolio with respect
to the portion of the assets of a Portfolio not managed by Subadviser and (ii)
liability arising from or in connection with acts of the Adviser, including,
but not limited to, a failure of the Adviser to provide accurate and current
information with respect to any records maintained by Adviser or any other
subadviser to a Portfolio, which records are not also maintained by or
otherwise available to the Subadviser upon reasonable request. The Adviser
agrees that the Subadviser shall manage the portion of the assets of a
Portfolio allocated to it as if it was a separate operating Portfolio and shall
comply with Section 1 of this Subadvisory Agreement with respect to the portion
of assets of a Portfolio allocated to the Subadviser. The Adviser shall
indemnify the Indemnified Parties from any and all losses, claims, damages,
liabilities or litigation (including legal and other expenses) arising from the
conduct of the Adviser and any other subadviser with respect to the portion of
a Portfolio's assets not allocated to the Subadviser.

11. Term of the Agreement. This Agreement shall continue in full force
and effect with respect to each Portfolio until two years from the date hereof,
and from year to year thereafter so long as such continuance is specifically
approved at least annually (i) by the vote of a majority of those Directors of
the Corporation who are not parties to this Agreement or interested persons of
any such party, cast in person at a meeting called for the purpose of voting on
such approval, and (ii) by the Directors of the Corporation or by vote of a
majority of the outstanding voting securities of the Portfolio voting
separately from any other series of the Corporation.

With respect to each Portfolio, this Agreement may be
terminated at any time, without payment of a penalty by the Portfolio or the
Corporation, by vote of a majority of the Directors, or by vote of a majority
of the outstanding voting securities (as defined in the Act) of the Portfolio,
voting separately from any other series of the Corporation, or by the Adviser,
on not less than 30 nor more than 60 days' written notice to the Subadviser.
With respect to each Portfolio, this Agreement may be terminated by the
Subadviser at any time, without the payment of any penalty, on 90 days' written
notice to the Adviser and the corporation; provided, however, that this
Agreement may not be terminated by the Subadviser unless another subadvisory
agreement has been approved by the Corporation in accordance with the Act, or
after six months' written notice, whichever is earlier. In the event of such a
termination, the Adviser will use its best efforts, and will cause the
Corporation to use its best efforts, to engage another subadviser for the
Portfolio as soon as possible. The termination of this Agreement with respect
to any Portfolio or the addition of any Portfolio to Schedule A hereto (in the
manner required by the Act) shall not affect the continued effectiveness of
this Agreement with respect to each other Portfolio subject hereto. This
Agreement shall automatically terminate in the event of its assignment (as
defined by the Act).

This Agreement will also terminate in the event that the
Advisory Agreement by and between the Corporation and the Adviser is
terminated.

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<PAGE>

12. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.

13. Amendments. This Agreement may be amended by mutual consent in
writing, but the consent of the Corporation must be obtained in conformity with
the requirements of the Act.

14. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of New York and the applicable provisions of the
Act. To the extent the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Act, the
latter shall control.

15. Separate Series. Pursuant to the provisions of the Articles of
Incorporation and the General Laws of the State of Maryland, each Portfolio is
a separate series of the Corporation, and all debts, liabilities, obligations
and expenses of a particular Portfolio shall be enforceable only against the
assets of that Portfolio and not against the assets of any other Portfolio or
of the Corporation as a whole.

Subadviser: The Glenmede Trust Company
1 Liberty Place
1650 Market Street
Suite 1200
Philadelphia, PA 19103-7391
Attention: James S. Lobb
First Vice President

Adviser: SunAmerica Asset Management Corp.
The SunAmerica Center
733 Third Avenue, Third Floor
New York, NY 10017-3204
Attention: Robert M. Zakem
Senior Vice President and General Counsel

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<PAGE>

IN WITNESS WHEREOF, the parties have caused their respective duly
authorized officers to execute this Agreement as of the date first above
written.

SUNAMERICA ASSET MANAGEMENT CORP.

By: /s/Peter A. Harbeck
Name: Peter A. Harbeck
Title: President

THE GLENMEDE TRUST COMPANY

By: /s/James S. Lobb
Name: James S. Lobb
Title: First Vice President

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<PAGE>

SUBADVISORY AGREEMENT

This SUBADVISORY AGREEMENT is dated as of September 17, 1996,
as amended August 20, 1997, by and between SUNAMERICA ASSET MANAGEMENT CORP., a
Delaware corporation (the "Adviser"), and JANUS CAPITAL CORPORATION, a Colorado
corporation (the "Subadviser").

WITNESSETH:

WHEREAS, the Corporation is registered under the Investment Company
Act of 1940, as amended (the "Act"), as an open-end management investment
company and may issue shares of common stock, par value $.0001 per share, in
separately designated series representing separate funds with their own
investment objectives, policies and purposes; and

WHEREAS, the Subadviser is engaged in the business of rendering
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended (the "Advisers Act"); and

NOW, THEREFORE, it is hereby agreed between the parties hereto as
follows:

1. Duties of the Subadviser. (a) The Adviser hereby engages the
services of the Subadviser in furtherance of its Advisory Agreement with the
Corporation. Pursuant to this Subadvisory Agreement and subject to the
oversight and review of the Adviser, the Subadviser will manage the investment
and reinvestment of a portion of the assets of each Portfolio listed on
Schedule A attached hereto. The Subadviser will determine in its discretion and
subject to the oversight and review of the Adviser, the securities to be
purchased or sold, and shall furnish the Adviser with such monthly, quarterly,
and annual reports concerning transactions and performance of each Portfolio in
the form as reasonably requested by the Adviser. The Subadviser shall also
provide the Adviser with such other information and reports as may reasonably
be requested by the Adviser from time to time, other than proprietary
information, and provided the Subadviser shall not be responsible for portfolio
accounting, nor shall it be required to generate information derived from
portfolio accounting data. The Subadviser shall discharge the foregoing
responsibilities subject to the control of the officers and the Directors of
the Corporation and in compliance with such policies as the Directors of the
Corporation may from time to time establish, and in compliance with (a) the
objectives, policies and limitations for the Portfolio set forth in the
Corporation's current prospectus and statement of additional information, and
(b) applicable laws and regulations.

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<PAGE>

The Subadviser agrees to manage the portion of the assets
allocated to it of each of the Portfolios set forth in Schedule A in compliance
with all applicable federal and state laws governing its operations and
investments. Without limiting the foregoing, the Subadviser agrees to manage
each Portfolio (1) so that it qualifies to be treated as a "regulated
investment company" under subchapter M, chapter 1 of the Internal Revenue Code
of 1986, as amended (the "Code"), and (2) in compliance with (a) the provisions
of the Act and rules adopted thereunder; (b) applicable federal and state
securities, commodities and banking laws; and (c) the distribution requirements
necessary to avoid payment of any excise tax pursuant to Section 4982 of the
Code. For purposes of compliance with this paragraph, the Subadviser shall be
entitled to treat the portion of the assets of each Portfolio that it manages
as though such portion constituted the entire Portfolio, and the Subadviser
shall not be responsible in any way for the compliance of other portions of the
Portfolio or for compliance of the Portfolio as a whole with this paragraph.

(b) The Subadviser shall be responsible for the preparation
and filing of Schedule 13G and Form 13F on behalf of the Portfolio. The
Subadviser shall not be responsible for the preparation or filing of any
reports required of the Portfolio by any governmental or regulatory agency,
except as expressly agreed to in writing. The Subadviser shall vote proxies
received in connection with securities held by the Portfolio.

(c) The Subadviser accepts such employment and agrees, at its
own expense, to render the services set forth herein and to provide the office
space, furnishings, equipment and personnel required by it to perform such
services on the terms and for the compensation provided in this Agreement.

(d) The Adviser shall timely furnish the Subadviser with such
information as may be reasonably necessary for or requested by the Subadviser
to perform its responsibilities under this Agreement. The Subadviser shall
establish and maintain brokerage accounts or other accounts necessary for the
purchase or sale of various forms of securities and the Adviser shall take such
actions as the Subadviser deems advisable or necessary to enable the Subadviser
to establish such account on behalf of the Corporation.

(e) The Subadviser agrees to maintain a reasonable level of
errors and omissions or professional liability insurance coverage.

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<PAGE>

created by this Agreement or otherwise solely by reason of the Subadviser's
having caused a Portfolio to pay a member of an exchange, broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another member of an exchange, broker or dealer would have
charged for effecting that transaction, if the Subadviser determines in good
faith that such amount of commission was reasonable in relation to the value of
the brokerage and research services provided by such member of an exchange,
broker or dealer viewed in terms of either that particular transaction or the
Subadviser's overall responsibilities with respect to such Portfolio and to
other clients as to which the Subadviser exercises investment discretion. In
accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T) thereunder,
and subject to any other applicable laws and regulations including Section
17(e) of the Act and Rule 17e-1 thereunder, the Subadviser may engage its
affiliates, the Adviser and its affiliates or any other subadviser to the
Corporation and its respective affiliates, as broker-dealers or futures
commission merchants to effect Portfolio transactions in securities and other
investments for a Portfolio. The Subadviser will promptly communicate to the
Adviser and to the officers and the Directors of the Corporation such
information relating to portfolio transactions as they may reasonably request.

3. (a) Compensation of the Subadviser. The Subadviser shall not be
entitled to receive any payment from the Corporation and shall look solely and
exclusively to the Adviser for payment of all fees for the services rendered,
facilities furnished and expenses paid by it hereunder. As full compensation
for the Subadviser under this Agreement, the Adviser agrees to pay to the
Subadviser a fee at the annual rates set forth in Schedule A hereto with
respect to the portion of the assets managed by the Subadviser for each
Portfolio listed thereon. Such fee shall be accrued daily and paid monthly as
soon as practicable after the end of each month (i.e., the applicable annual
fee rate divided by 365 applied to each prior days' net assets in order to
calculate the daily accrual). If the Subadviser shall provide its services
under this Agreement for less than the whole of any month, the foregoing
compensation shall be prorated.

(b) Expenses. The Adviser, the Corporation and the Portfolio
shall assume and pay their respective organizational, operational, and business
expenses not specifically assumed or agreed to be paid by Subadviser pursuant
to this Agreement. The Subadviser shall pay its own organizational, operational
and business expenses but shall not be obligated to pay any expenses of the
Adviser, the Corporation, or the Portfolio, including without limitation, (a)
interest and taxes; (b) brokerage commissions and other costs in connection
with the purchase or sale of securities or other investment instruments for the
Portfolio; and (c) custodian fees and expenses.

5. Reports. The Corporation, the Adviser and the Subadviser agree to
furnish to each other, if applicable, current prospectuses, statements of
additional information, proxy statements, reports of shareholders, certified
copies of their financial statements, and such other information with regard to
their affairs and that of the Corporation as each may reasonably request.

-3-

<PAGE>

expressly provided or authorized, have no authority to act for or represent the
Corporation in any way or otherwise be deemed an agent of the Corporation. The
Subadviser may provide advice to or take action with respect to other clients,
which advice or action, including the timing and nature of such action, may
differ from or be identical to advice given or action taken with respect to the
Portfolio. In the event of such activities, the transactions and associated
costs will be allocated among such clients (including the Portfolio) in a
manner that the Subadviser believes to be equitable to the accounts involved
and consistent with such accounts' objectives, policies and limitations.

7. Certain Records. While the Subadviser is not being engaged to serve
as the Corporation's official record keeper, the Subadviser nevertheless hereby
undertakes and agrees to maintain, in the form and for the period required by
Section 204 of the Advisers Act and Rule 204-2 thereunder, all records relating
to the investments of the Portfolio that are required to be maintained by the
Subadviser pursuant to the requirements of Rule 204-2 under the Advisers Act.
The Subadviser will also, in connection with the purchase and sale of
securities for each Portfolio, arrange for the transmission to the custodian
for the Corporation on a daily basis, such confirmation, trade tickets, and
other documents and information, that identify securities to be purchased or
sold on behalf of the Portfolio, as may be reasonably necessary to enable the
custodian to perform its administrative and recordkeeping responsibilities with
respect to the Portfolio.

The Subadviser agrees that all accounts, books and other
records maintained and preserved by it with respect to the Portfolio as
required hereby shall be subject at any time, and from time to time, to such
reasonable periodic, special and other examinations by the Securities and
Exchange Commission, the Corporation's auditors, the Corporation or any
representative of the Corporation, the Adviser, or any governmental agency or
other instrumentality having regulatory authority over the Corporation.

8. Confidentiality and Proprietary Rights. The Adviser will not,
directly or indirectly, and will not permit its affiliates, employees,
officers, directors, agents, contractors, or the Corporation to, in any form or
by any means, use, disclose, or furnish, to any person or entity, records or
information concerning the business of the Subadviser, except as necessary for
the performance of its duties under this Agreement or the Advisory Agreement,
or as required by law upon prior written notice to the Subadviser. The
Subadviser is the sole owner of the name and mark "Janus." The Adviser shall
not, and shall not permit the Corporation to, without prior written consent of
the Subadviser, use the name or mark "Janus" or make representations regarding
the Subadviser or its affiliates. Upon termination of this Agreement for any
reasons, the Adviser shall immediately cease, and the Adviser shall cause the
Corporation to immediately cease, all use of the Janus name or any Janus mark.

-4-

<PAGE>

compensation for services. Except for such disabling conduct, the Adviser shall
indemnify the Subadviser (and its officers, directors, partners, agents,
employees, controlling persons, shareholders and any other person or entity
affiliated with the Subadviser) (collectively, the "Indemnified Parties") from
any liability arising from (1) the Subadviser's conduct under this Agreement,
or (2) any untrue statement of a material fact in the Corporation's
registration statement or omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, if
such statement or omission was made in reliance on information furnished by the
Adviser.

(b) The Subadviser agrees to indemnify and hold harmless the
Adviser and its affiliates and each of its directors and officers and each
person, if any, who controls the Adviser within the meaning of Section 15 of
the 1933 Act against any and all losses, claims, damages, liabilities or
litigation (including legal and other expenses), to which the Adviser or its
affiliates or such directors, officers or controlling person may become subject
under the 1933 Act, under other statutes, at common law or otherwise, which may
be based upon (i) any wrongful act or material breach of this Agreement by the
Subadviser resulting from Subadviser's disabling conduct , or (ii) any untrue
statement of a material fact in the Corporation's registration statement or
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, if such statement or omission was
made in reliance on information furnished by the Subadviser; provided, however,
that in no case is the Subadviser's indemnity in favor of any person deemed to
protect such other persons against any liability to which such person would
otherwise be subject by reasons of willful misfeasance, bad faith, or gross
negligence in the performance of his, her or its duties or by reason of his,
her or its reckless disregard of obligation and duties under this Agreement.

(c) The Subadviser shall not be liable for (i) any acts of
the Adviser or any other subadviser to the Portfolio with respect to the
portion of the assets of a Portfolio not managed by the Subadviser and (ii)
acts of the Subadviser which result from acts of the Adviser, including, but
not limited to, a failure of the Adviser to provide accurate and current
information with respect to any records maintained by the Adviser or any other
subadviser to a Portfolio, which records are not also maintained by the
Subadviser. The Adviser agrees that the Subadviser shall manage the portion of
the assets of a Portfolio allocated to it as if it was a separate operating
portfolio and shall comply with subsections (a) and (b) of Section I of this
Subadvisory Agreement (including, but not limited to, the investment
objectives, policies and restrictions applicable to a Portfolio and
qualifications of a Portfolio as a regulated investment company under the Code)
with respect to the portion of assets of a Portfolio allocated to the
Subadviser. The Adviser shall indemnify the Indemnified Parties from any
liability arising from the conduct of the Adviser and any other subadviser with
respect to the portion of a Portfolio's assets not allocated to the Subadviser.

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<PAGE>

(ii) by the Directors of the Corporation or by vote of a majority of the
outstanding voting securities of the Portfolio voting separately from any other
Portfolio of the Corporation.

With respect to each Portfolio, this Agreement may be
terminated at any time, without payment of a penalty by the Portfolio or the
Corporation, by vote of a majority of the Directors, or by vote of a majority
of the outstanding voting securities (as defined in the Act) of the Portfolio,
voting separately from any other series of the Corporation, or by the Adviser,
on not less than 30 nor more than 60 days' written notice to the Subadviser.
With respect to each Portfolio, this Agreement may be terminated by the
Subadviser at any time, without the payment of any penalty, on 90 days' written
notice to the Adviser and the Corporation. Notwithstanding the foregoing, the
Subadviser may terminate the Agreement upon 60 days' written notice in the
event of a breach of the Agreement by the Adviser. The termination of this
Agreement with respect to any Portfolio or the addition of any Portfolio to
Schedule A hereto (in the manner required by the Act) shall not affect the
continued effectiveness of this Agreement with respect to each other Portfolio
subject hereto. This Agreement shall automatically terminate in the event of
its assignment (as defined by the Act).

This Agreement will also terminate in the event that the
Advisory Agreement by and between the Corporation and the Adviser is
terminated. The obligations contained in Section 9 shall survive termination of
this Agreement.

12. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.

13. Amendments. This Agreement may be amended by mutual consent in
writing, but the consent of the Corporation must be obtained in conformity with
the requirements of the Act.

14. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of New York and the applicable provisions of the
Act. To the extent the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Act, the
latter shall control.

15. Separate Series. Pursuant to the provisions of the Articles of
Incorporation, each Portfolio is a separate Portfolio of the Corporation, and
all debts, liabilities, obligations and expenses of a particular Portfolio
shall be enforceable only against the assets of that Portfolio and not against
the assets of any other Portfolio or of the Corporation as a whole.

Subadviser: Janus Capital Corporation
100 Fillmore Street
Denver, CO 80206-4923
Attention: ____________
General Counsel

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<PAGE>

Adviser: SunAmerica Asset Management Corp.
The SunAmerica Center
733 Third Avenue, Third Floor
New York, NY 10017-3204
Attention: Robert M. Zakem
Senior Vice President and
General Counsel

IN WITNESS WHEREOF, the parties have caused their respective duly
authorized officers to execute this Agreement as of the date first above
written.

SUNAMERICA ASSET MANAGEMENT CORP.

By: /s/Peter A. Harbeck
Name: Peter A. Harbeck
Title: President

JANUS CAPITAL CORPORATION

By: /s/ Stephen Stieneker
Name: Stephen Stieneker
Title: Vice President

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<PAGE>

SUBADVISORY AGREEMENT

This SUBADVISORY AGREEMENT is dated as of August 20, 1997 by
and between SUNAMERICA ASSET MANAGEMENT CORP., a Delaware corporation (the
"Adviser"), and L. ROY PAPP & ASSOCIATES, an Arizona Partnership (the
"Subadviser").

WITNESSETH:

WHEREAS, the Corporation is registered under the Investment Company
Act of 1940, as amended (the "Act"), as an open-end management investment
company and may issue shares of common stock, par value $.0001 per share, in
separately designated series representing separate funds with their own
investment objectives, policies and purposes; and

WHEREAS, the Subadviser is engaged in the business of rendering
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended; and

NOW, THEREFORE, it is hereby agreed between the parties hereto as
follows:

<PAGE>

The Subadviser represents and warrants to the Adviser that
the portion of the assets which it manages of the Portfolio set forth in
Schedule A will at all times be operated and managed in compliance with all
applicable federal and state laws governing its operations and investments.
Without limiting the foregoing, the Subadviser represents and warrants (1)
qualification, election and maintenance of such election by each Portfolio to
be treated as a "regulated investment company" under Subchapter M, Chapter 1 of
the Internal Revenue Code of 1986, as amended (the "Code"), and (2) compliance
with (a) the provisions of the Act and rules adopted thereunder; (b) applicable
federal and state securities, commodities and banking laws; and (c) the
distribution requirements necessary to avoid payment of any excise tax pursuant
to Section 4982 of the Code. The Subadviser further represents and warrants
that to the extent that any statements or omissions made in any Registration
Statement for shares of the Corporation, or any amendment or supplement
thereto, are made in reliance upon and in conformity with information furnished
by the Subadviser expressly for use therein, such Registration Statement and
any amendments or supplements thereto will, when they become effective, conform
in all material respects to the requirements of the Securities Act of 1933 and
the rules and regulations of the Commission thereunder (the "1933 Act") and the
Act and will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading.

(b) The Subadviser agrees that it will maintain adequate
professional liability insurance coverage.

2. Portfolio Transactions. The Subadviser is responsible for decisions
to buy or sell securities and other investments for a portion of the assets of
each Portfolio, broker-dealers and futures commission merchants' selection, and
negotiation of brokerage commission and futures commission merchants' rates. As
a general matter, in executing Portfolio transactions, the Subadviser may
employ or deal with such broker-dealers or futures commission merchants as may,
in the Subadviser's best judgment, provide prompt and reliable execution of the
transactions at favorable prices and reasonable commission rates. In selecting
such broker-dealers or futures commission merchants, the Subadviser shall
consider all relevant factors including price (including the applicable
brokerage commission, dealer spread or futures commission merchant rate), the
size of the order, the nature of the market for the security or other
investment, the timing of the transaction, the reputation, experience and
financial stability of the broker-dealer or futures commission merchant
involved, the quality of the service, the difficulty of execution, the
execution capabilities and operational facilities of the firm involved, and, in
the case of securities, the firm's risk in positioning a block of securities.
Subject to such policies as the Directors may determine and, consistent with
Section 28(e) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), the Subadviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of
the Subadviser's having caused a Portfolio to pay a member of an exchange,
broker or dealer an amount of commission for effecting a securities transaction
in excess of the amount of commission another member of an exchange, broker or
dealer would have charged for effecting that transaction, if the Subadviser
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
member of an exchange, broker or dealer viewed in terms of either that
particular transaction or the

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<PAGE>

Subadviser's overall responsibilities with respect to such Portfolio and to
other clients as to which the Subadviser exercises investment discretion. In
accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T) thereunder,
and subject to any other applicable laws and regulations including Section
17(e) of the Act and Rule 17e-1 thereunder, the Subadviser may engage its
affiliates, the Adviser and its affiliates or any other subadviser to the
Corporation and its respective affiliates, as broker-dealers or futures
commission merchants to effect Portfolio transactions in securities and other
investments for a Portfolio. The Subadviser will promptly communicate to the
Adviser and to the officers and the Directors of the Corporation such
information relating to Portfolio transactions as they may reasonably request.
To the extent consistent with applicable law, the Subadviser may aggregate
purchase or sell orders for the Portfolio with contemporaneous purchase or sell
orders of other clients of the Subadviser or its affiliated persons. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Subadviser in the
manner the Subadviser determines to be equitable and consistent with its and
its affiliates' fiduciary obligations to the Portfolio and to such other
clients. The Adviser hereby acknowledges that such aggregation of orders may
not result in more favorable pricing or lower brokerage commissions in all
instances.

3. Compensation of the Subadviser. The Subadviser shall not be
entitled to receive any payment from the Corporation and shall look solely and
exclusively to the Adviser for payment of all fees for the services rendered,
facilities furnished and expenses paid by it hereunder. As full compensation
for the Subadviser under this Agreement, the Adviser agrees to pay to the
Subadviser a fee at the annual rates set forth in Schedule A hereto with
respect to the portion of the assets managed by the Subadviser for each
Portfolio listed thereon. Such fee shall be accrued daily and paid monthly as
soon as practicable after the end of each month (i.e., the applicable annual
fee rate divided by 365 applied to each prior days' net assets in order to
calculate the daily accrual). If the Subadviser shall provide its services
under this Agreement for less than the whole of any month, the foregoing
compensation shall be prorated.

5. Reports. The Corporation, the Adviser and the Subadviser agree to
furnish to each other, if applicable, current prospectuses, statements of
additional information, proxy statements, reports of shareholders, certified
copies of their financial statements and such other information with regard to
their affairs and that of the Corporation as each may reasonably request.

-3-

<PAGE>

of Rule 31a-1 of the Act. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated under the
Act which are prepared or maintained by the Subadviser on behalf of the
Corporation are the property of the Corporation and will be surrendered
promptly to the Corporation or the Adviser on request.

The Subadviser agrees that all accounts, books and other
records maintained and preserved by it as required hereby shall be subject at
any time, and from time to time, to such reasonable periodic, special and other
examinations by the Securities and Exchange Commission, the Corporation's
auditors, the Corporation or any representative of the Corporation, the
Adviser, or any governmental agency or other instrumentality having regulatory
authority over the Corporation.

8. Reference to the Subadviser. Neither the Corporation nor the
Adviser or any affiliate or agent thereof shall make reference to or use the
name of the Subadviser or any of its affiliates in any advertising or
promotional materials without the prior approval of the Subadviser, which
approval shall not be unreasonably withheld.

9. Liability of the Subadviser. (a) In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations
or duties ("disabling conduct") hereunder on the part of the Subadviser (and
its officers, directors, agents, employees, controlling persons, shareholders
and any other person or entity affiliated with the Subadviser), the Subadviser
shall not be subject to liability to the Corporation or to any shareholder of
the Corporation for any act or omission in the course of, or connected with,
rendering services hereunder, including without limitation, any error of
judgment or mistake of law or for any loss suffered by any of them in
connection with the matters to which this Agreement relates, except to the
extent specified in Section 36(b) of the Act concerning loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services. Except for such disabling conduct, the Adviser shall indemnify the
Subadviser (and its officers, directors, partners, agents, employees,
controlling persons, shareholders and any other person or entity affiliated
with the Subadviser) (collectively, the "Indemnified Parties") from any
liability arising from the Subadviser's conduct under this Agreement.

(b) The Subadviser agrees to indemnify and hold harmless the
Adviser and its affiliates and each of its directors and officers and each
person, if any, who controls the Adviser within the meaning of Section 15 of
the 1933 Act against any and all losses, claims, damages, liabilities or
litigation (including legal and other expenses), to which the Adviser or its
affiliates or such directors, officers or controlling person may become subject
under the 1933 Act, under other statutes, at common law or otherwise, which may
be based upon (i) any wrongful act or breach of this Agreement by the
Subadviser, or (ii) any failure by the Subadviser to comply with the
representations and warranties set forth in Section 1 of this Agreement;
provided, however, that in no case is the Subadviser's indemnity in favor of
any person deemed to protect such other persons against any liability to which
such person would otherwise be subject by reasons of willful misfeasance, bad
faith, or gross negligence in the performance of his, her or its duties or by
reason of his, her or its reckless disregard of obligation and duties under
this Agreement.

-4-

<PAGE>

are not also maintained by or otherwise available to the Subadviser upon
reasonable request. The Adviser agrees that the Subadviser shall manage the
portion of the assets of a Portfolio allocated to it as if it was a separate
operating Portfolio and shall comply with subsections (a) and (b) of Section 1
of this Subadvisory Agreement (including, but not limited to, the investment
objectives, policies and restrictions applicable to a Portfolio and
qualifications of a Portfolio as a regulated investment company under the Code)
with respect to the portion of assets of a Portfolio allocated to the
Subadviser. The Adviser shall indemnify the Indemnified Parties from any
liability arising from the conduct of the Adviser and any other subadviser with
respect to the portion of a Portfolio's assets not allocated to the Subadviser.

11. Term of the Agreement. This Agreement shall continue in full force
and effect with respect to each Portfolio until two years from the date hereof,
and from year to year thereafter so long as such continuance is specifically
approved at least annually (i) by the vote of a majority of those Directors of
the Corporation who are not parties to this Agreement or interested persons of
any such party, cast in person at a meeting called for the purpose of voting on
such approval, and (ii) by the Directors of the Corporation or by vote of a
majority of the outstanding voting securities of the Portfolio voting
separately from any other series of the Corporation.

With respect to each Portfolio, this Agreement may be
terminated at any time, without payment of a penalty by the Portfolio or the
Corporation, by vote of a majority of the Directors, or by vote of a majority
of the outstanding voting securities (as defined in the Act) of the Portfolio,
voting separately from any other series of the Corporation, or by the Adviser,
on not less than 30 nor more than 60 days' written notice to the Subadviser.
With respect to each Portfolio, this Agreement may be terminated by the
Subadviser at any time, without the payment of any penalty, on 90 days' written
notice to the Adviser and the Corporation; provided, however, that this
Agreement may not be terminated by the Subadviser unless another subadvisory
agreement has been approved by the Corporation in accordance with the Act, or
after six months' written notice, whichever is earlier. The termination of this
Agreement with respect to any Portfolio or the addition of any Portfolio to
Schedule A hereto (in the manner required by the Act) shall not affect the
continued effectiveness of this Agreement with respect to each other Portfolio
subject hereto. This Agreement shall automatically terminate in the event of
its assignment (as defined by the Act).

This Agreement will also terminate in the event that the
Advisory Agreement by and between the Corporation and the Adviser is
terminated.

12. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.

13. Amendments. This Agreement may be amended by mutual consent in
writing, but the consent of the Corporation must be obtained in conformity with
the requirements of the Act.

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<PAGE>

14. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of New York and the applicable provisions of the
Act. To the extent the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Act, the
latter shall control.

15. Separate Series. Pursuant to the provisions of the Articles of
Incorporation and the General Laws of the State of Maryland, each Portfolio is
a separate series of the Corporation, and all debts, liabilities, obligations
and expenses of a particular Portfolio shall be enforceable only against the
assets of that Portfolio and not against the assets of any other Portfolio or
of the Corporation as a whole.

Subadviser: L. Roy Papp & Associates
4400 North 32nd Street - Suite 280
Phoenix, AZ 85018
Attention: Mr. Robert L. Mueller

Adviser: SunAmerica Asset Management Corp.
The SunAmerica Center
733 Third Avenue, Third Floor
New York, NY 10017-3204
Attention: Robert M. Zakem
Senior Vice President and General Counsel

IN WITNESS WHEREOF, the parties have caused their respective duly
authorized officers to execute this Agreement as of the date first above
written.

SUNAMERICA ASSET MANAGEMENT CORP.

By: /s/Peter A. Harbeck
Name: Peter A. Harbeck
Title: President

L. ROY PAPP & ASSOCIATES

By: /s/Robert L. Mueller
Name: Robert L. Mueller
Title: General Partner

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<PAGE>

SUBADVISORY AGREEMENT

This SUBADVISORY AGREEMENT is dated as of August 20, 1997 by
and between SUNAMERICA ASSET MANAGEMENT CORP., a Delaware corporation (the
"Adviser"), and LAZARD ASSET MANAGEMENT A DIVISION OF LAZARD FRERES & CO. LLC
(the "Subadviser").

WITNESSETH:

WHEREAS, the Corporation is registered under the Investment Company
Act of 1940, as amended (the "Act"), as an open-end management investment
company and may issue shares of common stock, par value $.0001 per share, in
separately designated series representing separate funds with their own
investment objectives, policies and purposes; and

WHEREAS, the Subadviser is engaged in the business of rendering
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended; and

NOW, THEREFORE, it is hereby agreed between the parties hereto as
follows:

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<PAGE>

The Subadviser represents and warrants to the Adviser that
the portion of the assets which it manages of the Portfolio set forth in
Schedule A will at all times be operated and managed in compliance with all
applicable federal and state laws governing its operations and investments.
Without limiting the foregoing, the Subadviser represents and warrants (1)
qualification, election and maintenance of such election by each Portfolio to
be treated as a "regulated investment company" under Subchapter M, chapter 1 of
the Internal Revenue Code of 1986, as amended (the "Code"), and (2) compliance
with (a) the provisions of the Act and rules adopted thereunder; (b) applicable
federal and state securities, commodities and banking laws; and (c) the
distribution requirements necessary to avoid payment of any excise tax pursuant
to Section 4982 of the Code. The Subadviser further represents and warrants
that to the extent that any statements or omissions made in any Registration
Statement for shares of the Corporation, or any amendment or supplement
thereto, are made in reliance upon and in conformity with information furnished
by the Subadviser expressly for use therein, such Registration Statement and
any amendments or supplements thereto will, when they become effective, conform
in all material respects to the requirements of the Securities Act of 1933 and
the rules and regulations of the Commission thereunder (the "1933 Act") and the
Act and will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading.

(b) The Subadviser agrees to maintain a level of errors and
omissions or professional liability insurance coverage that is from time to
time satisfactory to the Adviser.

2. Portfolio Transactions. The Subadviser is responsible for decisions
to buy or sell securities and other investments for a portion of the assets of
each Portfolio, broker-dealers and futures commission merchants' selection, and
negotiation of brokerage commission and futures commission merchants' rates. As
a general matter, in executing Portfolio transactions, the Subadviser may
employ or deal with such broker-dealers or futures commission merchants as may,
in the Subadviser's best judgment, provide prompt and reliable execution of the
transactions at favorable prices and reasonable commission rates. In selecting
such broker-dealers or futures commission merchants, the Subadviser shall
consider all relevant factors including price (including the applicable
brokerage commission, dealer spread or futures commission merchant rate), the
size of the order, the nature of the market for the security or other
investment, the timing of the transaction, the reputation, experience and
financial stability of the broker-dealer or futures commission merchant
involved, the quality of the service, the difficulty of execution, the
execution capabilities and operational facilities of the firm involved, and, in
the case of securities, the firm's risk in positioning a block of securities.
Subject to such policies as the Directors may determine and, consistent with
Section 28(e) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), the Subadviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of
the Subadviser's having caused a Portfolio to pay a member of an exchange,
broker or dealer an amount of commission for effecting a securities transaction
in excess of the amount of commission another member of an exchange, broker or
dealer would have charged for effecting that transaction, if the Subadviser
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
member of an exchange, broker or dealer viewed in terms of either that
particular transaction or the

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<PAGE>

Subadviser's overall responsibilities with respect to such Portfolio and to
other clients as to which the Subadviser exercises investment discretion. In
accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T) thereunder,
and subject to any other applicable laws and regulations including Section
17(e) of the Act and Rule 17e-1 thereunder, the Subadviser may engage its
affiliates, the Adviser and its affiliates or any other subadviser to the
Corporation and its respective affiliates, as broker-dealers or futures
commission merchants to effect Portfolio transactions in securities and other
investments for a Portfolio. The Subadviser will promptly communicate to the
Adviser and to the officers and the Directors of the Corporation such
information relating to Portfolio transactions as they may reasonably request.
To the extent consistent with applicable law, the Subadviser may aggregate
purchase or sell orders for the Portfolio with contemporaneous purchase or sell
orders of other clients of the Subadviser or its affiliated persons. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Subadviser in the
manner the Subadviser determines to be equitable and consistent with its and
its affiliates' fiduciary obligations to the Portfolio and to such other
clients. The Adviser hereby acknowledges that such aggregation of orders may
not result in more favorable pricing or lower brokerage commissions in all
instances.

3. Compensation of the Subadviser. The Subadviser shall not be
entitled to receive any payment from the Corporation and shall look solely and
exclusively to the Adviser for payment of all fees for the services rendered,
facilities furnished and expenses paid by it hereunder. As full compensation
for the Subadviser under this Agreement, the Adviser agrees to pay to the
Subadviser a fee at the annual rates set forth in Schedule A hereto with
respect to the portion of the assets managed by the Subadviser for each
Portfolio listed thereon. Such fee shall be accrued daily and paid monthly as
soon as practicable after the end of each month (i.e., the applicable annual
fee rate divided by 365 applied to each prior days' net assets in order to
calculate the daily accrual). If the Subadviser shall provide its services
under this Agreement for less than the whole of any month, the foregoing
compensation shall be prorated.

5. Reports. The Corporation, the Adviser and the Subadviser agree to
furnish to each other, if applicable, current prospectuses, statements of
additional information, proxy statements, reports of shareholders, certified
copies of their financial statements, and such other information with regard to
their affairs and that of the Corporation as each may reasonably request.

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<PAGE>

The Subadviser agrees that all accounts, books and other
records maintained and preserved by it as required hereby shall be subject at
any time, and from time to time, to such reasonable periodic, special and other
examinations by the Securities and Exchange Commission, the Corporation's
auditors, the Corporation or any representative of the Corporation, the
Adviser, or any governmental agency or other instrumentality having regulatory
authority over the Corporation.

8. Reference to the Subadviser. Neither the Corporation nor the
Adviser or any affiliate or agent thereof shall make reference to or use the
name of the Subadviser or any of its affiliates in any advertising or
promotional materials without the prior approval of the Subadviser, which
approval shall not be unreasonably withheld.

9. Liability of the Subadviser. (a) In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations
or duties ("disabling conduct") hereunder on the part of the Subadviser (and
its officers, directors, agents, employees, controlling persons, shareholders
and any other person or entity affiliated with the Subadviser), the Subadviser
shall not be subject to liability to the Corporation or to any shareholder of
the Corporation for any act or omission in the course of, or connected with,
rendering services hereunder, including without limitation, any error of
judgment or mistake of law or for any loss suffered by any of them in
connection with the matters to which this Agreement relates, except to the
extent specified in Section 36(b) of the Act concerning loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services. Except for such disabling conduct, the Adviser shall indemnify the
Subadviser (and its officers, directors, partners, agents, employees,
controlling persons, shareholders and any other person or entity affiliated
with the Subadviser) (collectively, the "Indemnified Parties") from any
liability arising from the Subadviser's conduct under this Agreement.

(b) The Subadviser agrees to indemnify and hold harmless the
Adviser and its affiliates and each of its directors and officers and each
person, if any, who controls the Adviser within the meaning of Section 15 of
the 1933 Act against any and all losses, claims, damages, liabilities or
litigation (including legal and other expenses), to which the Adviser or its
affiliates or such directors, officers or controlling person may become subject
under the 1933 Act, under other statutes, at common law or otherwise, which may
be based upon (i) any wrongful act or breach of this Agreement by the
Subadviser, or (ii) any failure by the Subadviser to comply with the
representations and warranties set forth in Section 1 of this Agreement;
provided, however, that in no case is the Subadviser's indemnity in favor of
any person deemed to protect such other persons against any liability to which
such person would otherwise be subject by reasons of willful misfeasance, bad
faith, or gross negligence in the performance of his, her or its duties or by
reason of his, her or its reckless disregard of obligation and duties under
this Agreement.

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<PAGE>

records are not also maintained by or otherwise available to the Subadviser
upon reasonable request. The Adviser agrees that the Subadviser shall manage
the portion of the assets of a Portfolio allocated to it as if it was a
separate operating Portfolio and shall comply with subsections (a) and (b) of
Section 1 of this Subadvisory Agreement (including, but not limited to, the
investment objectives, policies and restrictions applicable to a Portfolio and
qualifications of a Portfolio as a regulated investment company under the Code)
with respect to the portion of assets of a Portfolio allocated to the
Subadviser. The Adviser shall indemnify the Indemnified Parties from any
liability arising from the conduct of the Adviser and any other subadviser with
respect to the portion of a Portfolio's assets not allocated to the Subadviser.
Nothing stated herein shall be deemed to waive any rights the Adviser or the
Corporation may have against the Subadviser under federal or state securities
laws.

11. Term of the Agreement. This Agreement shall continue in full force
and effect with respect to each Portfolio until two years from the date hereof,
and from year to year thereafter so long as such continuance is specifically
approved at least annually (i) by the vote of a majority of those Directors of
the Corporation who are not parties to this Agreement or interested persons of
any such party, cast in person at a meeting called for the purpose of voting on
such approval, and (ii) by the Directors of the Corporation or by vote of a
majority of the outstanding voting securities of the Portfolio voting
separately from any other series of the Corporation.

With respect to each Portfolio, this Agreement may be
terminated at any time, without payment of a penalty by the Portfolio or the
Corporation, by vote of a majority of the Directors, or by vote of a majority
of the outstanding voting securities (as defined in the Act) of the Portfolio,
voting separately from any other series of the Corporation, or by the Adviser,
on not less than 30 nor more than 60 days' written notice to the Subadviser.
With respect to each Portfolio, this Agreement may be terminated by the
Subadviser at any time, without the payment of any penalty, on 90 days' written
notice to the Adviser and the Corporation; provided, however, that this
Agreement may not be terminated by the Subadviser unless another subadvisory
agreement has been approved by the Corporation in accordance with the Act, or
after six months' written notice, whichever is earlier. The termination of this
Agreement with respect to any Portfolio or the addition of any Portfolio to
Schedule A hereto (in the manner required by the Act) shall not affect the
continued effectiveness of this Agreement with respect to each other Portfolio
subject hereto. This Agreement shall automatically terminate in the event of
its assignment (as defined by the Act).

This Agreement will also terminate in the event that the
Advisory Agreement by and between the Corporation and the Adviser is
terminated.

12. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.

13. Amendments. This Agreement may be amended by mutual consent in
writing, but the consent of the Corporation must be obtained in conformity with
the requirements of the Act.

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<PAGE>

14. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of New York and the applicable provisions of the
Act. To the extent the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Act, the
latter shall control.

15. Separate Series. Pursuant to the provisions of the Articles of
Incorporation and the General Laws of the State of Maryland, each Portfolio is
a separate series of the Corporation, and all debts, liabilities, obligations
and expenses of a particular Portfolio shall be enforceable only against the
assets of that Portfolio and not against the assets of any other Portfolio or
of the Corporation as a whole.

Subadviser: Lazard Asset Management
a division of Lazard Freres & Co. LLC
30 Rockefeller Plaza - 58th floor
New York, NY 10020
Attn: Amy M. Fleming
Senior Vice President

Adviser: SunAmerica Asset Management Corp.
The SunAmerica Center
733 Third Avenue, Third Floor
New York, NY 10017-3204
Attention: Robert M. Zakem
Senior Vice President and General Counsel

IN WITNESS WHEREOF, the parties have caused their respective duly
authorized officers to execute this Agreement as of the date first above
written.

SUNAMERICA ASSET MANAGEMENT CORP.

By: /s/Peter A. Harbeck
Name: Peter A. Harbeck
Title: President

LAZARD ASSET MANAGEMENT,
A DIVISION OF LAZARD FRERES & CO. LLC

By: /s/Robert L. Mueller
Name: Robert L. Mueller
Title: General Partner

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<PAGE>

SUBADVISORY AGREEMENT

This SUBADVISORY AGREEMENT is dated as of August 20, 1997 by
and between SUNAMERICA ASSET MANAGEMENT CORP., a Delaware corporation (the
"Adviser"), and MONTAG & CALDWELL, INC., a Georgia corporation (the
"Subadviser").

WITNESSETH:

WHEREAS, the Corporation is registered under the Investment Company
Act of 1940, as amended (the "Act"), as an open-end management investment
company and may issue shares of common stock, par value $.0001 per share, in
separately designated series representing separate funds with their own
investment objectives, policies and purposes; and

WHEREAS, the Subadviser is engaged in the business of rendering
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended; and

NOW, THEREFORE, it is hereby agreed between the parties hereto as
follows:

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<PAGE>

The Subadviser represents and warrants to the Adviser that
the portion of the assets which it manages of the Portfolio set forth in
Schedule A will at all times be operated and managed in compliance with all
applicable federal and state laws governing its operations and investments.
Without limiting the foregoing, the Subadviser represents and warrants (1)
qualification, election and maintenance of such election by each Portfolio to
be treated as a "regulated investment company" under Subchapter M, chapter 1 of
the Internal Revenue Code of 1986, as amended (the "Code"), and (2) compliance
with (a) the provisions of the Act and rules adopted thereunder; (b) applicable
federal and state securities, commodities and banking laws; and (c) the
distribution requirements necessary to avoid payment of any excise tax pursuant
to Section 4982 of the Code. The Subadviser further represents and warrants
that to the extent that any statements or omissions made in any Registration
Statement for shares of the Corporation, or any amendment or supplement
thereto, are made in reliance upon and in conformity with information furnished
by the Subadviser expressly for use therein, such Registration Statement and
any amendments or supplements thereto will, when they become effective, conform
in all material respects to the requirements of the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder (the "1933
Act") and the Act and will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading.

(b) The Subadviser agrees to maintain a level of errors and
omissions or professional liability insurance coverage that is from time to
time satisfactory to the Adviser.

2. Portfolio Transactions. The Subadviser is responsible for decisions
to buy or sell securities and other investments for a portion of the assets of
each Portfolio, broker-dealers and futures commission merchants' selection, and
negotiation of brokerage commission and futures commission merchants' rates. As
a general matter, in executing Portfolio transactions, the Subadviser may
employ or deal with such broker-dealers or futures commission merchants as may,
in the Subadviser's best judgment, provide prompt and reliable execution of the
transactions at favorable prices and reasonable commission rates. In selecting
such broker-dealers or futures commission merchants, the Subadviser shall
consider all relevant factors including price (including the applicable
brokerage commission, dealer spread or futures commission merchant rate), the
size of the order, the nature of the market for the security or other
investment, the timing of the transaction, the reputation, experience and
financial stability of the broker-dealer or futures commission merchant
involved, the quality of the service, the difficulty of execution, the
execution capabilities and operational facilities of the firm involved, and, in
the case of securities, the firm's risk in positioning a block of securities.
Subject to such policies as the Directors may determine and, consistent with
Section 28(e) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), the Subadviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of
the Subadviser's having caused a Portfolio to pay a member of an exchange,
broker or dealer an amount of commission for effecting a securities transaction
in excess of the amount of commission another member of an exchange, broker or
dealer would have charged for effecting that transaction, if the Subadviser
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
member of an exchange, broker or dealer viewed in terms of either that
particular transaction or the

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<PAGE>

Subadviser's overall responsibilities with respect to such Portfolio and to
other clients as to which the Subadviser exercises investment discretion. In
accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T) thereunder,
and subject to any other applicable laws and regulations including Section
17(e) of the Act and Rule 17e-1 thereunder, the Subadviser may engage its
affiliates, the Adviser and its affiliates or any other subadviser to the
Corporation and its respective affiliates, as broker-dealers or futures
commission merchants to effect Portfolio transactions in securities and other
investments for a Portfolio. The Subadviser will promptly communicate to the
Adviser and to the officers and the Directors of the Corporation such
information relating to Portfolio transactions as they may reasonably request.
To the extent consistent with applicable law, the Subadviser may aggregate
purchase or sell orders for the Portfolio with contemporaneous purchase or sell
orders of other clients of the Subadviser or its affiliated persons. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Subadviser in the
manner the Subadviser determines to be equitable and consistent with its and
its affiliates' fiduciary obligations to the Portfolio and to such other
clients. The Adviser hereby acknowledges that such aggregation of orders may
not result in more favorable pricing or lower brokerage commissions in all
instances.

3. Compensation of the Subadviser. The Subadviser shall not be
entitled to receive any payment from the Corporation and shall look solely and
exclusively to the Adviser for payment of all fees for the services rendered,
facilities furnished and expenses paid by it hereunder. As full compensation
for the Subadviser under this Agreement, the Adviser agrees to pay to the
Subadviser a fee at the annual rates set forth in Schedule A hereto with
respect to the portion of the assets managed by the Subadviser for each
Portfolio listed thereon. Such fee shall be accrued daily and paid monthly as
soon as practicable after the end of each month (i.e., the applicable annual
fee rate divided by 365 applied to each prior days' net assets in order to
calculate the daily accrual). If the Subadviser shall provide its services
under this Agreement for less than the whole of any month, the foregoing
compensation shall be prorated.

5. Reports. The Corporation, the Adviser and the Subadviser agree to
furnish to each other, if applicable, current prospectuses, statements of
additional information, proxy statements, reports of shareholders, certified
copies of their financial statements, and such other information with regard to
their affairs and that of the Corporation as each may reasonably request.

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<PAGE>

The Subadviser agrees that all accounts, books and other
records maintained and preserved by it as required hereby shall be subject at
any time, and from time to time, to such reasonable periodic, special and other
examinations by the Securities and Exchange Commission, the Corporation's
auditors, the Corporation or any representative of the Corporation, the
Adviser, or any governmental agency or other instrumentality having regulatory
authority over the Corporation.

8. Reference to the Subadviser. Neither the Corporation nor the
Adviser or any affiliate or agent thereof shall make reference to or use the
name of the Subadviser or any of its affiliates in any advertising or
promotional materials without the prior approval of the Subadviser, which
approval shall not be unreasonably withheld.

9. Liability of the Subadviser. (a) In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations
or duties ("disabling conduct") hereunder on the part of the Subadviser (and
its officers, directors, agents, employees, controlling persons, shareholders
and any other person or entity affiliated with the Subadviser), the Subadviser
shall not be subject to liability to the Corporation or to any shareholder of
the Corporation for any act or omission in the course of, or connected with,
rendering services hereunder, including without limitation, any error of
judgment or mistake of law or for any loss suffered by any of them in
connection with the matters to which this Agreement relates, except to the
extent specified in Section 36(b) of the Act concerning loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services. Except for such disabling conduct, the Adviser shall indemnify the
Subadviser (and its officers, directors, partners, agents, employees,
controlling persons, shareholders and any other person or entity affiliated
with the Subadviser) (collectively, the "Indemnified Parties") from any
liability arising from the Subadviser's conduct under this Agreement.

(b) The Subadviser agrees to indemnify and hold harmless the
Adviser and its affiliates and each of its directors and officers and each
person, if any, who controls the Adviser within the meaning of Section 15 of
the 1933 Act against any and all losses, claims, damages, liabilities or
litigation (including legal and other expenses), to which the Adviser or its
affiliates or such directors, officers or controlling person may become subject
under the 1933 Act, under other statutes, at common law or otherwise, which may
be based upon (i) any wrongful act or breach of this Agreement by the
Subadviser, or (ii) any failure by the Subadviser to comply with the
representations and warranties set forth in Section 1 of this Agreement;
provided, however, that in no case is the Subadviser's indemnity in favor of
any person deemed to protect such other persons against any liability to which
such person would otherwise be subject by reasons of willful misfeasance, bad
faith, or gross negligence in the performance of his, her or its duties or by
reason of his, her or its reckless disregard of obligation and duties under
this Agreement.

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<PAGE>

11. Term of the Agreement. This Agreement shall continue in full force
and effect with respect to each Portfolio until two years from the date hereof,
and from year to year thereafter so long as such continuance is specifically
approved at least annually (i) by the vote of a majority of those Directors of
the Corporation who are not parties to this Agreement or interested persons of
any such party, cast in person at a meeting called for the purpose of voting on
such approval, and (ii) by the Directors of the Corporation or by vote of a
majority of the outstanding voting securities of the Portfolio voting
separately from any other series of the Corporation.

With respect to each Portfolio, this Agreement may be
terminated at any time, without payment of a penalty by the Portfolio or the
Corporation, by vote of a majority of the Directors, or by vote of a majority
of the outstanding voting securities (as defined in the Act) of the Portfolio,
voting separately from any other series of the Corporation, or by the Adviser,
on not less than 30 nor more than 60 days' written notice to the Subadviser.
With respect to each Portfolio, this Agreement may be terminated by the
Subadviser at any time, without the payment of any penalty, on 90 days' written
notice to the Adviser and the Corporation; provided, however, that this
Agreement may not be terminated by the Subadviser unless another subadvisory
agreement has been approved by the Corporation in accordance with the Act, or
after six months' written notice, whichever is earlier. The termination of this
Agreement with respect to any Portfolio or the addition of any Portfolio to
Schedule A hereto (in the manner required by the Act) shall not affect the
continued effectiveness of this Agreement with respect to each other Portfolio
subject hereto. This Agreement shall automatically terminate in the event of
its assignment (as defined by the Act).

This Agreement will also terminate in the event that the
Advisory Agreement by and between the Corporation and the Adviser is
terminated.

12. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.

13. Amendments. This Agreement may be amended by mutual consent in
writing, but the consent of the Corporation must be obtained in conformity with
the requirements of the Act.

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<PAGE>

14. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of New York and the applicable provisions of the
Act. To the extent the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Act, the
latter shall control.

15. Separate Series. Pursuant to the provisions of the Articles of
Incorporation and the General Laws of the State of Maryland, each Portfolio is
a separate series of the Corporation, and all debts, liabilities, obligations
and expenses of a particular Portfolio shall be enforceable only against the
assets of that Portfolio and not against the assets of any other Portfolio or
of the Corporation as a whole.

Subadviser: Montag & Caldwell, Inc.
3343 Peachtree Road, Suite 1100
Atlanta, GA 30326-1022
Attention: Debra Bunde Comsudes
Vice President

Adviser: SunAmerica Asset Management Corp.
The SunAmerica Center
733 Third Avenue, Third Floor
New York, NY 10017-3204
Attention: Robert M. Zakem
Senior Vice President and General Counsel

IN WITNESS WHEREOF, the parties have caused their respective duly
authorized officers to execute this Agreement as of the date first above
written.

SUNAMERICA ASSET MANAGEMENT CORP.

By: /s/ Peter A. Harbeck
Name: Peter A. Harbeck
Title: President

MONTAG & CALDWELL, INC.

By: /s/ David F. Seng
Name: David F. Seng
Title: Executive Vice President

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<PAGE>

SUBADVISORY AGREEMENT

This SUBADVISORY AGREEMENT is dated as of April 1, 1998 by
and between SUNAMERICA ASSET MANAGEMENT CORP., a Delaware corporation (the
"Adviser"), and MORGAN STANLEY ASSET MANAGEMENT INC., a Delaware corporation
(the "Subadviser").

WITNESSETH:

WHEREAS, the Adviser and Style Select Series, Inc., a Maryland
corporation (the "Corporation"), have entered into an Investment Advisory and
Management Agreement dated as of September 17, 1996, as amended August 20,
1997 (the "Advisory Agreement") pursuant to which the Adviser has agreed to
provide investment management, advisory and administrative services to the
Corporation; and

WHEREAS, the Corporation is registered under the Investment Company
Act of 1940, as amended (the "Act"), as an open-end management investment
company and may issue shares of common stock, par value $.0001 per share, in
separately designated series representing separate funds with their own
investment objectives, policies and purposes; and

WHEREAS, the Subadviser is engaged in the business of rendering
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended; and

WHEREAS, the Adviser desires to retain the Subadviser to furnish
investment advisory services to the investment series of the Corporation
listed on Schedule A attached hereto (the "Portfolio"), and the Subadviser is
willing to furnish such services;

NOW, THEREFORE, it is hereby agreed between the parties hereto as
follows:

1. Duties of the Subadviser. The Adviser hereby engages the services
of the Subadviser in furtherance of its Investment Advisory and Management
Agreement with the Corporation. Pursuant to this Subadvisory Agreement and
subject to the oversight and review of the Adviser, the Subadviser will manage
the investment and reinvestment of a portion of the assets of each Portfolio
listed on Schedule A attached hereto. The Subadviser will determine in its
discretion and subject to the oversight and review of the Adviser, the
securities to be purchased or sold, will provide the Adviser with records
concerning its activities which the Adviser or the Corporation is required to
maintain, and will render regular reports to the Adviser and to officers and
Directors of the Corporation concerning its discharge of the foregoing
responsibilities. The Subadviser shall discharge the foregoing
responsibilities subject to the control of the officers and the Directors of
the Corporation and in compliance with such policies as the Directors of the
Corporation may from time to time establish, and in compliance with (a) the
objectives, policies, and limitations for the Portfolio set forth in the
Corporation's current prospectus and statement of additional information, and
(b) applicable laws and regulations.

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<PAGE>

"regulated investment company" under subchapter M, chapter 1 of the Internal
Revenue Code of 1986, as amended (the "Code"), and (2) compliance with (a) the
provisions of the Act and rules adopted thereunder; (b) applicable federal and
state securities, commodities and banking laws; and (c) the distribution
requirements necessary to avoid payment of any excise tax pursuant to Section
4982 of the Code. The Subadviser further represents and warrants that to the
extent that any statements or omissions made in any Registration Statement for
shares of the Corporation, or any amendment or supplement thereto, are made in
reliance upon and in conformity with information furnished by the Subadviser
expressly for use therein, such Registration Statement and any amendments or
supplements thereto will, when they become effective, conform in all material
respects to the requirements of the Securities Act of 1933 and the rules and
regulations of the Commission thereunder (the "1933 Act") and the Act and will
not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstance under which they were made not misleading.

2. Portfolio Transactions. The Subadviser is responsible for
decisions to buy or sell securities and other investments for a portion of the
assets of each Portfolio, the selection of broker-dealers and futures
commission merchants', and negotiation of brokerage commission and futures
commission merchants' rates. As a general matter, in executing Portfolio
transactions, the Subadviser may employ or deal with such broker-dealers or
futures commission merchants as may, in the Subadviser's best judgement,
provide prompt and reliable execution of the transactions at favorable prices
and reasonable commission rates. In selecting such broker-dealers or futures
commission merchants, the Subadviser shall consider all relevant factors
including price (including the applicable brokerage commission, dealer spread
or futures commission merchant rate), the size of the order, the nature of the
market for the security or other investment, the timing of the transaction,
the reputation, experience and financial stability of the broker-dealer or
futures commission merchant involved, the quality of the service, the
difficulty of execution, the execution capabilities and operational facilities
of the firm involved, and, in the case of securities, the firm's risk in
positioning a block of securities. Subject to such policies as the Directors
may determine and consistent with Section 28(e) of the Securities Exchange Act
of 1934, as amended (the "1934 Act"), the Subadviser shall not be deemed to
have acted unlawfully or to have breached any duty created by this Agreement
or otherwise solely by reason of the Subadviser's having caused a Portfolio to
pay a member of an exchange, broker or dealer an amount of commission for
effecting a securities transaction in excess of the amount of commission
another member of an exchange, broker or dealer would have charged for
effecting that transaction, if the Subadviser determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such member of an exchange, broker
or dealer viewed in terms of either that particular transaction or the
Subadviser's overall responsibilities with respect to such Portfolio and to
other clients as to which the Subadviser exercises investment discretion. In
accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T) thereunder,
and subject to any other applicable laws and regulations including Section
17(e) of the Act and Rule 17e-1 thereunder, the Subadviser may engage its
affiliates, the Adviser and its affiliates or any other subadviser to the
Corporation and its respective affiliates, as broker-dealers or futures
commission merchants to effect Portfolio transactions in

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<PAGE>

securities and other investments for a Portfolio. The Subadviser will promptly
communicate to the Adviser and to the officers and the Directors of the
Corporation such information relating to Portfolio transactions as they may
reasonably request. To the extent consistent with applicable law, the
Subadviser may aggregate purchase or sell orders for the Portfolio with
contemporaneous purchase or sell orders of other clients of the Subadviser or
its affiliated persons. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction, will
be made by the Subadviser in the manner the Subadviser determines to be
equitable and consistent with its and its affiliates' fiduciary obligations to
the Portfolio and to such other clients. The Adviser hereby acknowledges that
such aggregation of orders may not result in more favorable pricing or lower
brokerage commissions in all instances.

3. Compensation of the Subadviser. The Subadviser shall not be
entitled to receive any payment from the Corporation and shall look solely and
exclusively to the Adviser for payment of all fees for the services rendered,
facilities furnished and expenses paid by it hereunder. As full compensation
for the Subadviser under this Agreement, the Adviser agrees to pay to the
Subadviser a fee at the annual rates set forth in Schedule A hereto with
respect to the portion of the assets managed by the Subadviser for each
Portfolio listed thereon. Such fee shall be accrued daily and paid monthly as
soon as practicable after the end of each month (i.e., the applicable annual
fee rate divided by 365 applied to each prior days' net assets in order to
calculate the daily accrual). If the Subadviser shall provide its services
under this Agreement for less than the whole of any month, the foregoing
compensation shall be prorated.

5. Reports. The Corporation, the Adviser and the Subadviser agree to
furnish to each other, if applicable, current prospectuses, statements of
additional information, proxy statements, reports of shareholders, certified
copies of their financial statements, and such other information with regard
to their affairs and that of the Corporation as each may reasonably request.

7. Certain Records. The Subadviser hereby undertakes and agrees to
maintain, in the form and for the period required by Rule 31a-2 under the Act,
all records relating to the investments of the Portfolio that are required to
be maintained by the Corporation pursuant to the requirements of Rule 31a-1 of
that Act. Any records required to be maintained and preserved pursuant to the
provisions of Rule 31a-1 and Rule 31a-2 promulgated under the Act which are
prepared or maintained by the Subadviser on behalf of the Corporation are the
property of the Corporation and will be surrendered promptly to the
Corporation or the Adviser on request.

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The Subadviser agrees that all accounts, books and other
records maintained and preserved by it as required hereby shall be subject at
any time, and from time to time, to such reasonable periodic, special and
other examinations by the Securities and Exchange Commission, the
Corporation's auditors, the Corporation or any representative of the
Corporation, the Adviser, or any governmental agency or other instrumentality
having regulatory authority over the Corporation.

8. Reference to the Subadviser. Neither the Corporation nor the
Adviser or any affiliate or agent thereof shall make reference to or use the
name of the Subadviser or any of its affiliates in any advertising or
promotional materials without the prior approval of the Subadviser, which
approval shall not be unreasonably withheld.

9. Liability of the Subadviser. (a) In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations
or duties hereunder on the part of the Subadviser (and its officers,
directors, employees, controlling persons, shareholders and any other person
or entity affiliated with the Subadviser) the Subadviser shall not be subject
to liability to the Corporation or to any shareholder of the Corporation for
any act or omission in the course of, or connected with, rendering services
hereunder, including without limitation, any error of judgment or mistake of
law or for any loss suffered by any of them in connection with the matters to
which this Agreement relates, except to the extent specified in Section 36(b)
of the Act concerning loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services.

(b) The Adviser agrees to indemnify and hold harmless the
Subadviser and its affiliates and each of their directors and officers and
each persons, if any, who controls the Subadviser within the meaning of
Section 15 of the 1933 Act against any and all losses, claims, damages,
liabilities or litigation (including reasonable legal and other expenses), to
which the Subadviser or its affiliates or such directors, officers or
controlling person may become subject under the 1933 Act, under an other
statute, at common law or otherwise, which may be based upon any breach of
this Agreement by the Adviser; provided, however, that in no case is the
Adviser's indemnity in favor of any persons deemed to protect such person
against any liability to which such person would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the
performance of his, here or its duties or by reasons of his, her or its
reckless disregard of obligations and duties under this Agreement.

(c) The Subadviser agrees to indemnify and hold harmless the
Adviser and its affiliates and each of its directors and officers and each
person, if any, who controls the Adviser within the meaning of Section 15 of
the 1933 Act against any and all losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses), to which the
Adviser or its affiliates or such directors, officers or controlling person
may become subject under the 1933 Act, under other statutes, at common law or
otherwise, which may be based upon (i) breach of this Agreement by the
Subadviser, or (ii) any failure by the Subadviser to comply with the
representations and warranties set forth in Section 1 of this Agreement;
provided, however, that in no case is the Subadviser's indemnity in favor of
any person deemed to protect such other persons against any liability to which
such person would otherwise be subject by reasons of willful misfeasance, bad
faith, or gross negligence in the performance of his, her or its duties or by
reason of his, her or its reckless disregard of obligation and duties under
this Agreement.

-4-

<PAGE>

(d) The Subadviser shall not be liable to the Adviser for
(i) any acts of the Adviser or any other subadviser to the Portfolio with
respect to the portion of the assets of a Portfolio not managed by Subadviser
or (ii) acts of the Subadviser which result from acts of the Adviser,
including, but not limited to, a failure of the Adviser to provide accurate
and current information with respect to any records maintained by Adviser or
any other subadviser to a Portfolio, which records are not also maintained by
or otherwise available to the Subadviser upon reasonable request. The Adviser
agrees that Subadviser shall manage the portion of the assets of a Portfolio
allocated to it as if it was a separate operating Portfolio and shall comply
with subsections (a) and (b) of Section I of this Subadvisory Agreement
(including, but not limited to, the investment objectives, policies and
restrictions applicable to a Portfolio and qualifications of a Portfolio as a
regulated investment company under the Code) with respect to the portion of
assets of a Portfolio allocated to Subadviser. The Adviser shall indemnify the
Indemnified Parties from any liability arising from the conduct of the Adviser
and any other subadviser with respect to the portion of a Portfolio's assets
not allocated to Subadviser.

10. Permissible Interests. Directors and agents of the Corporation
are or may be interested in the Subadviser (or any successor thereof) as
directors, partners, officers, or shareholders, or otherwise; directors,
partners, officers, agents, and shareholders of the Subadviser are or may be
interested in the Corporation as Directors, or otherwise; and the Subadviser
(or any successor) is or may be interested in the Corporation in some manner.

11. Term of the Agreement. This Agreement shall continue in full
force and effect with respect to each Portfolio until two years from the date
hereof, and from year to year thereafter so long as such continuance is
specifically approved at least annually (i) by the vote of a majority of those
Directors of the Corporation who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval, and (ii) by the Directors of the
Corporation or by vote of a majority of the outstanding voting securities of
the Portfolio voting separately from any other series of the Corporation.

With respect to each Portfolio, this Agreement may be
terminated at any time, without payment of a penalty by the Portfolio or the
Corporation, by vote of a majority of the Directors, or by vote of a majority
of the outstanding voting securities (as defined in the Act) of the Portfolio,
voting separately from any other series of the Corporation, or by the Adviser,
on not less than 30 nor more than 60 days' written notice to the Subadviser.
With respect to each Portfolio, this Agreement may be terminated by the
Subadviser at any time, without the payment of any penalty, on 90 days'
written notice to the Adviser and the Corporation; provided, however, that
this Agreement may not be terminated by the Subadviser unless another
subadvisory agreement has been approved by the Corporation in accordance with
the Act, or after six months' written notice, whichever is earlier. The
termination of this Agreement with respect to any Portfolio or the addition of
any Portfolio to Schedule A hereto (in the manner required by the Act) shall
not affect the continued effectiveness of this Agreement with respect to each
other Portfolio subject hereto. This Agreement shall automatically terminate
in the event of its assignment (as defined by the Act).

This Agreement will also terminate in the event that the
Advisory Agreement by and between the Corporation and the Adviser is
terminated.

-5-

<PAGE>

12. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.

13. Amendments. This Agreement may be amended by mutual consent in
writing, but the consent of the Corporation must be obtained in conformity
with the requirements of the Act.

14. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of New York and the applicable provisions of the
Act. To the extent the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Act, the
latter shall control.

15. Separate Series. Pursuant to the provisions of the Articles of
Incorporation and the General Laws of the State of Maryland, each Portfolio is
a separate series of the Corporation, and all debts, liabilities, obligations
and expenses of a particular Portfolio shall be enforceable only against the
assets of that Portfolio and not against the assets of any other Portfolio or
of the Corporation as a whole.

16. Notices. All notices shall be in writing and deemed properly
given when delivered or mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:

Subadviser: Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
Attention: Harold J. Schaff, Jr.
General Counsel

Adviser: SunAmerica Asset Management Corp.
The SunAmerica Center
733 Third Avenue, Third Floor
New York, NY 10017-3204
Attention: Robert M. Zakem
Senior Vice President and General Counsel

IN WITNESS WHEREOF, the parties have caused their respective duly
authorized officers to execute this Agreement as of the date first above
written.

SUNAMERICA ASSET MANAGEMENT CORP.

By: /s/Peter A. Harbeck
------------------------------
Name: Peter A. Harbeck
Title: President

MORGAN STANLEY ASSET MANAGEMENT INC.

By: /s/Harold J. Schaff, Jr.
------------------------------
Name: Harold J. Schaff, Jr.
Title: General Counsel

-6-

<PAGE>

SUBADVISORY AGREEMENT

This SUBADVISORY AGREEMENT is dated as of September 17,
1996, as amended August 20, 1997, by and between SUNAMERICA ASSET MANAGEMENT
CORP., a Delaware corporation (the "Adviser"), and T. ROWE PRICE ASSOCIATES,
INC., a Maryland corporation (the "Subadviser").

WITNESSETH:

WHEREAS, the Adviser and Style Select Series, Inc., a Maryland
corporation (the "Corporation"), have entered into an Investment Advisory and
Management Agreement dated as of September 17, 1996, as amended August 20,
1997 (the "Advisory Agreement") pursuant to which the Adviser has agreed to
provide investment management, advisory and administrative services to the
Corporation; and

WHEREAS, the Corporation is registered under the Investment Company
Act of 1940, as amended (the "Act"), as an open-end management investment
company and may issue shares of common stock, par value $.0001 per share, in
separately designated series representing separate funds with their own
investment objectives, policies and purposes; and

WHEREAS, the Subadviser is engaged in the business of rendering
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended;

WHEREAS, the Adviser desires to retain the Subadviser to furnish
investment advisory services to the investment series of the Corporation
listed on Schedule A attached hereto (the "Portfolio"), and the Subadviser is
willing to furnish such services; and

WHEREAS, one-third of all purchases into the Portfolios listed on
Schedule A attached hereto and one-third of all redemptions from such
Portfolio will be allocated to the Subadviser;

NOW, THEREFORE, it is hereby agreed between the parties hereto as
follows:

1. Duties of the Subadviser. (a) The Adviser hereby appoints the
Subadviser, in furtherance of its Investment Advisory and Management Agreement
with the Corporation, to manage the investment and reinvestment of a portion
of the assets of each Portfolio listed on Schedule A attached hereto. The
Subadviser will determine in its discretion and subject to the oversight and
review of the Adviser, the securities to be purchased or sold, will provide
the Adviser with records concerning the Portfolio's investment activity which
the Subadviser is required to maintain in connection therewith, and will
render regular reports to the Adviser and to officers and Directors of the
Corporation concerning its discharge of the foregoing responsibilities. The
Subadviser shall discharge the foregoing responsibilities subject to the
control of the officers and the Directors of the Corporation and in compliance
with such policies as the Directors of the Corporation may from time to time
establish, and in compliance with (a) the objectives, policies, and
limitations for the Portfolio set forth in the Corporation's current
prospectus and statement of additional information, and (b) applicable laws
and regulations.

<PAGE>

The Subadviser agrees that it will operate and manage the
portion of the assets allocated to it of each of the Portfolio set forth in
Schedule A at all times in compliance with applicable federal and state laws
governing its operations and investments. The Subadviser agrees to manage such
allocated assets in the Portfolio in compliance with (a) the provisions of the
Act and rules adopted thereunder; (b) the diversification requirements
specified in Subchapter M, Chapter 1 of the Code; and (c) applicable federal
and state securities, commodities and banking laws, provided that the Adviser
shall provide the Subadviser with written direction as to the requirements of
applicable federal and state banking laws. For purposes of the preceding
sentence, disclosure in the Corporation's prospectus and/or statement of
additional information of applicable state insurance laws and regulations and
applicable federal and state banking laws and regulations shall constitute
"written direction" thereof. The Subadviser represents and warrants that to
the extent that any statements or omissions regarding the Subadviser made in
any Registration Statement for the shares of the Corporation, or any amendment
or supplement thereto, are made in reliance upon and in conformity with
written information furnished by the Subadviser expressly for use therein,
such Registration Statement and any amendments or supplements thereto will,
when they become effective, conform in all material respects to the
requirements of the Securities Act of 1933 and the rules and regulations of
the Commission thereunder (the "1933 Act") and the Act and will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading. In addition, the Adviser represents and warrants that the
Registration Statement for the shares of the Corporation, or any amendment or
supplement thereto, other than statements or omissions regarding the
Subadviser provided in writing by the Subadviser expressly for use therein,
will, when they become effective, conform in all material respects to the
requirements of the 1933 Act and the Act and will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.

The Subadviser accepts such appointment and agrees, at its
own expense, to render the services set forth herein and to provide the office
space, furnishings, equipment and personnel required by it to perform such
services on the terms and for the compensation provided in this Agreement.

(b) The Subadviser agrees to maintain a level of errors and
omissions or professional liability insurance coverage that is from time to
time satisfactory to the Adviser.

<PAGE>

Directors may determine and consistent with Section 28(e) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), the Subadviser shall not be
deemed to have acted unlawfully or to have breached any duty created by this
Agreement or otherwise solely by reason of the Subadviser's having caused a
Portfolio to pay a member of an exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, if the Subadviser determines in good faith
that such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such member of an exchange, broker
or dealer viewed in terms of either that particular transaction or the
Subadviser's overall responsibilities with respect to such Portfolio and to
other clients as to which the Subadviser exercises investment discretion. In
accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T) thereunder,
and subject to any other applicable laws and regulations including Section
17(e) of the Act and Rule 17e-1 thereunder, the Subadviser may engage its
affiliates, the Adviser and its affiliates or any other subadviser to the
Corporation and its respective affiliates, as broker-dealers or futures
commission merchants to effect Portfolio transactions in securities and other
investments for a Portfolio. The Subadviser will promptly communicate to the
Adviser and to the officers and the Directors of the Corporation such
information relating to Portfolio transactions as may be mutually agreed with
the Subadviser.

3. Compensation of the Subadviser. The Subadviser shall not be
entitled to receive any payment from the Corporation and shall look solely and
exclusively to the Adviser for payment of all fees for the services rendered,
facilities furnished and expenses paid by it hereunder. As full compensation
for the Subadviser under this Agreement, the Adviser agrees to pay the
Subadviser a fee at the annual rates set forth in Schedule A hereto with
respect to the portion of the assets managed by the Subadviser for each
Portfolio listed thereon. Such fee shall be accrued daily and paid monthly as
soon as practicable after the end of each month (i.e., the applicable annual
fee rate divided by 365 applied to each prior days' net assets in order to
calculate the daily accrual), but in no event later than the 15th day of the
following month. If the Subadviser shall provide its services under this
Agreement for less than the whole of any month, the foregoing compensation
shall be prorated.

5. Reports. The Corporation, the Adviser and the Subadviser agree to
furnish to each other, if applicable, current prospectuses, statements of
additional information, proxy statements, reports of shareholders, certified
copies of their financial statements, and such other information with regard
to their affairs and that of the Corporation as each may reasonably request.

<PAGE>

7. Services to Other Clients. Nothing contained in this Agreement
shall limit or restrict (i) the freedom of the Subadviser, or any affiliated
persons thereof, to render investment management and corporate administrative
services to other investment companies, to act as investment manager or
investment counselor to other persons, firms, or corporations, or to engage in
any other business activities, or (ii) the right of any director, officer, or
employee of the Subadviser, who may also be a director, officer, or employee
of the Company, to engage in any other business or to devote his or her time
and attention in part to the management or other aspects of any other
business, whether of a similar nature or a dissimilar nature.

8. Certain Records. The Subadviser hereby undertakes and agrees to
maintain, in the form and for the period required by Rule 31a-2 under the Act,
all records relating to the investments of the Portfolio that are required to
be maintained by the Corporation pursuant to the requirements of Rule 31a-1 of
the Act. Any records required to be maintained and preserved pursuant to the
provisions of Rule 31a-1 and Rule 31a-2 promulgated under the Act which are
prepared or maintained by the Subadviser on behalf of the Corporation are the
property of the Corporation and will be surrendered promptly to the
Corporation or the Adviser on request.

The Subadviser agrees that all accounts, books and other
records maintained and preserved by it as required hereby shall be subject at
any time, and from time to time, to such reasonable periodic, special and
other examinations by the Securities and Exchange Commission, or any
governmental agency or other instrumentality having regulatory authority over
the Corporation, and upon reasonable request and during normal business hours
the Corporation's auditors, the Corporation or any representative of the
Corporation, the Adviser.

9. Reference to the Subadviser. Subject to the terms of a separate
Logo Licensing Agreement, neither the Corporation nor the Adviser or any
affiliate or agent thereof shall make reference to or use the name of the
Subadviser or any of its affiliates in any advertising or promotional
materials without the prior approval of the Subadviser, which approval shall
not be unreasonably withheld.

10. Liability of the Subadviser. (a) In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations
or duties ("disabling conduct") hereunder on the part of the Subadviser (and
its officers, directors, agents, employees, controlling persons, shareholders
and any other person or entity affiliated with the Subadviser) the Subadviser
shall not be subject to liability to the Corporation or to any shareholder of
the Corporation for any act or omission in the course of, or connected with,
rendering services hereunder, including without limitation, any error of
judgment or mistake of law or for any loss suffered by any of them in
connection with the matters to which this Agreement relates, except to the
extent specified in Section 36(b) of the Act concerning loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services. Except for such disabling conduct, the Adviser shall indemnify the
Subadviser (and its officers, directors, partners, agents, employees,
controlling persons, shareholders and any other person or entity affiliated
with the Subadviser) (collectively, the "Indemnified Parties") from any
liability arising from the Subadviser's conduct under this Agreement.
Subadviser hereby indemnifies, defends and protects Adviser and holds Adviser
harmless, from and against any and all liability arising out of Subadviser's
disabling conduct.

<PAGE>

liabilities or litigation (including legal and other expenses), to which the
Adviser or its affiliates or such directors, officers or controlling person
may become subject under the 1933 Act, under other statutes, at common law or
otherwise, which may be based upon (i) any wrongful act or material breach of
this Agreement by the Subadviser arising from the Subadviser's disabling
conduct, or (ii) any failure by the Subadviser to comply with the
representations and warranties set forth in Section 1 of this Agreement;
provided, however, that in no case is the Subadviser's indemnity in favor of
any person deemed to protect such other persons against any liability to which
such person would otherwise be subject by reasons of willful misfeasance, bad
faith, or gross negligence in the performance of his, her or its duties or by
reason of his, her or its reckless disregard of obligation and duties under
this Agreement.

(c) The Subadviser shall not be liable to the Adviser for
(i) any acts of the Adviser or any other subadviser to the Portfolio with
respect to the portion of the assets of a Portfolio not managed by the
Subadviser and (ii) acts of the Subadviser which result from acts of the
Adviser, including, but not limited to, a failure of the Adviser to provide
accurate and current information with respect to any records maintained by the
Adviser or any other subadviser to a Portfolio, which records are not also
maintained by the Subadviser. The Adviser agrees that the Subadviser shall
manage the portion of the assets of a Portfolio allocated to it as if it was a
separate operating Portfolio and shall comply with subsections (a) and (b) of
Section I of this Subadvisory Agreement (including, but not limited to, the
investment objectives, policies and restrictions applicable to a Portfolio and
qualifications of a Portfolio as a regulated investment company under the
Code) with respect to the portion of assets of a Portfolio allocated to the
Subadviser as if it was a separate operating Portfolio. The Adviser shall
defend, indemnify and hold harmless the Indemnified Parties from any liability
arising from the conduct of the Adviser or other subadviser with respect to
the portion of a Portfolio' assets not allocated to the Subadviser.

11. Permissible Interests. Directors and agents of the Corporation
are or may be interested in the Subadviser (or any successor thereof) as
directors, partners, officers, or shareholders, or otherwise; directors,
partners, officers, agents, and shareholders of the Subadviser are or may be
interested in the Corporation as directors, or otherwise; and the Subadviser
(or any successor) is or may be interested in the Corporation in some manner.

12. Term of the Agreement. This Agreement shall continue in full
force and effect with respect to each Portfolio until two years from the date
hereof, and from year to year thereafter so long as such continuance is
specifically approved at least annually (i) by the vote of a majority of those
Directors of the Corporation who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval, and (ii) by the Directors of the
Corporation or by vote of a majority of the outstanding voting securities of
the Portfolio voting separately from any other series of the Corporation.

<PAGE>

whichever is earlier. In the event of such a termination, the Adviser will use
its best efforts, and cause the Corporation to use its best efforts, to engage
another subadviser for the Portfolio as soon as possible. Notwithstanding the
foregoing, the Subadviser may terminate the Agreement on 60 days' written
notice to the Adviser and the Corporation, in the event of a breach of this
Agreement by the Adviser. The termination of this Agreement with respect to
any Portfolio or the addition of any Portfolio to Schedule A hereto (in the
manner required by the Act) shall not affect the continued effectiveness of
this Agreement with respect to each other Portfolio subject hereto. This
Agreement shall automatically terminate in the event of its assignment (as
defined by the Act).

This Agreement will also terminate in the event that the
Advisory Agreement by and between the Corporation and the Adviser is
terminated.

13. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.

14. Amendments. This Agreement may be amended by mutual consent in
writing, but the consent of the Corporation must be obtained in conformity
with the requirements of the Act.

15. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of New York and the applicable provisions of the
Act. To the extent the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Act, the
latter shall control.

16. Separate Series. Pursuant to the provisions of the Articles of
Incorporation, each Portfolio is a separate series of the Corporation, and all
debts, liabilities, obligations and expenses of a particular Portfolio shall
be enforceable only against the assets of that Portfolio and not against the
assets of any other Portfolio or of the Corporation as a whole.

18. Notices. All notices shall be in writing and deemed properly
given when delivered or express delivery service by United States certified or
registered mail, return receipt requested, postage prepaid, addressed as
follows:

<PAGE>

Subadviser: T. Rowe Price Associates, Inc.
100 E. Pratt Street
Baltimore, MD 20202
Attention: John H. Cammack
Vice President

with a copy to: T. Rowe Price Associates, Inc.
100 E. Pratt Street
Baltimore, MD 20202
Attention: Henry H. Hopkins
Legal Counsel

Adviser: SunAmerica Asset Management Corp.
The SunAmerica Center
733 Third Avenue, Third Floor
New York, NY 10017-3204
Attention: Robert M. Zakem
Senior Vice President and
General Counsel

<PAGE>

IN WITNESS WHEREOF, the parties have caused their respective duly
authorized officers to execute this Agreement as of the date first above
written.

SUNAMERICA ASSET MANAGEMENT CORP.

By: /s/Peter A. Harbeck
Name: Peter A. Harbeck
Title: President

T. ROWE PRICE ASSOCIATES, INC.

By: /s/Lucy B. Robins
Name: Lucy B. Robins
Title: Vice President

<PAGE>

SUBADVISORY AGREEMENT

This SUBADVISORY AGREEMENT is dated as of August 20, 1997,
as amended May 21, 1998 by and between SUNAMERICA ASSET MANAGEMENT CORP., a
Delaware corporation (the "Adviser"), and WELLINGTON MANAGEMENT COMPANY, LLP,
a Massachusetts general partnership (the "Subadviser").

WITNESSETH:

WHEREAS, the Adviser and Style Select Series, Inc., a Maryland
corporation (the "Corporation"), have entered into an Investment Advisory and
Management Agreement dated as of September 17, 1996, as amended from time to
time (the "Advisory Agreement"), pursuant to which the Adviser has agreed to
provide investment management, advisory and administrative services to the
Corporation; and

WHEREAS, the Corporation is registered under the Investment Company
Act of 1940, as amended (the "Act"), as an open-end management investment
company and may issue shares of common stock, par value $.0001 per share, in
separately designated series representing separate funds with their own
investment objectives, policies and purposes; and

WHEREAS, the Subadviser is engaged in the business of rendering
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended; and

WHEREAS, the Adviser desires to retain the Subadviser to furnish
investment advisory services to the investment series of the Corporation
listed on Schedule A attached hereto (the "Portfolio"), and the Subadviser is
willing to furnish such services;

NOW, THEREFORE, it is hereby agreed between the parties hereto as
follows:

1. Duties of the Subadviser. (a) The Adviser hereby engages the
services of the Subadviser in furtherance of its Advisory Agreement with the
Corporation. Pursuant to this Subadvisory Agreement and subject to the
oversight and review of the Adviser, the Subadviser will manage the investment
and reinvestment of a portion of the assets of each Portfolio listed on
Schedule A attached hereto. The Subadviser will determine in its discretion
and subject to the oversight and review of the Adviser, the securities to be
purchased or sold, will provide the Adviser with records concerning its
activities which the Adviser of the Corporation is required to maintain, and
will render regular reports to the Adviser and to officers and Directors of
the Corporation concerning its discharge of the foregoing responsibilities.
The Subadviser shall discharge the foregoing responsibilities subject to the
control of the officers and the Directors of the Corporation and in compliance
with such policies as the Directors of the Corporation may from time to time
establish, and in compliance with (a) the objectives, policies and limitations
for the Portfolio set forth in the Corporation's current prospectus and
statement of additional information, and (b) applicable laws and regulations.

-1-

<PAGE>

The Subadviser represents and warrants to the Adviser that
the portion of the assets which it manages of the Portfolio set forth in
Schedule A will at all times be operated and managed in compliance with all
applicable federal and state laws governing its operations and investments.
Without limiting the foregoing, the Subadviser represents and warrants (1)
qualification, election and maintenance of such election by each Portfolio to
be treated as a "regulated investment company" under Subchapter M, chapter 1
of the Internal Revenue Code of 1986, as amended (the "Code"), and (2)
compliance with (a) the provisions of the Act and rules adopted thereunder;
(b) applicable federal and state securities, commodities and banking laws; and
(c) the distribution requirements necessary to avoid payment of any excise tax
pursuant to Section 4982 of the Code. The Subadviser further represents and
warrants that to the extent that any statements or omissions made in any
Registration Statement for shares of the Corporation, or any amendment or
supplement thereto, are made in reliance upon and in conformity with
information furnished by the Subadviser expressly for use therein, such
Registration Statement and any amendments or supplements thereto will, when
they become effective, conform in all material respects to the requirements of
the Securities Act of 1933 and the rules and regulations of the Commission
thereunder (the "1933 Act") and the Act and will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.

(b) The Subadviser agrees to maintain a level of errors and
omissions or professional liability insurance coverage that is from time to
time satisfactory to the Adviser.

2. Portfolio Transactions. The Subadviser is responsible for
decisions to buy or sell securities and other investments for a portion of the
assets of each Portfolio, broker-dealers and futures commission merchants'
selection, and negotiation of brokerage commission and futures commission
merchants' rates. As a general matter, in executing Portfolio transactions,
the Subadviser may employ or deal with such broker-dealers or futures
commission merchants as may, in the Subadviser's best judgment, provide prompt
and reliable execution of the transactions at favorable prices and reasonable
commission rates. In selecting such broker-dealers or futures commission
merchants, the Subadviser shall consider all relevant factors including price
(including the applicable brokerage commission, dealer spread or futures
commission merchant rate), the size of the order, the nature of the market for
the security or other investment, the timing of the transaction, the
reputation, experience and financial stability of the broker-dealer or futures
commission merchant involved, the quality of the service, the difficulty of
execution, the execution capabilities and operational facilities of the firm
involved, and, in the case of securities, the firm's risk in positioning a
block of securities. Subject to such policies as the Directors may determine
and, consistent with Section 28(e) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), the Subadviser shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or otherwise
solely by reason of the Subadviser's having caused a Portfolio to pay a member
of an exchange, broker or dealer an amount of commission for effecting a
securities transaction in excess of the amount of commission another member of
an exchange, broker or dealer would have charged for effecting that
transaction, if the Subadviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and
research services provided by such member of an exchange, broker or dealer
viewed in terms of either that particular transaction or the

-2-

<PAGE>

Subadviser's overall responsibilities with respect to such Portfolio and to
other clients as to which the Subadviser exercises investment discretion. In
accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T) thereunder,
and subject to any other applicable laws and regulations including Section
17(e) of the Act and Rule 17e-1 thereunder, the Subadviser may engage its
affiliates, the Adviser and its affiliates or any other subadviser to the
Corporation and its respective affiliates, as broker-dealers or futures
commission merchants to effect Portfolio transactions in securities and other
investments for a Portfolio. The Subadviser will promptly communicate to the
Adviser and to the officers and the Directors of the Corporation such
information relating to Portfolio transactions as they may reasonably request.
To the extent consistent with applicable law, the Subadviser may aggregate
purchase or sell orders for the Portfolio with contemporaneous purchase or
sell orders of other clients of the Subadviser or its affiliated persons. In
such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Subadviser in the
manner the Subadviser determines to be equitable and consistent with its and
its affiliates' fiduciary obligations to the Portfolio and to such other
clients. The Adviser hereby acknowledges that such aggregation of orders may
not result in more favorable pricing or lower brokerage commissions in all
instances.

3. Compensation of the Subadviser. The Subadviser shall not be
entitled to receive any payment from the Corporation and shall look solely and
exclusively to the Adviser for payment of all fees for the services rendered,
facilities furnished and expenses paid by it hereunder. As full compensation
for the Subadviser under this Agreement, the Adviser agrees to pay to the
Subadviser a fee at the annual rates set forth in Schedule A hereto with
respect to the portion of the assets managed by the Subadviser for each
Portfolio listed thereon. Such fee shall be accrued daily and paid monthly as
soon as practicable after the end of each month (i.e., the applicable annual
fee rate divided by 365 applied to each prior days' net assets in order to
calculate the daily accrual). If the Subadviser shall provide its services
under this Agreement for less than the whole of any month, the foregoing
compensation shall be prorated.

5. Reports. The Corporation, the Adviser and the Subadviser agree to
furnish to each other, if applicable, current prospectuses, statements of
additional information, proxy statements, reports of shareholders, certified
copies of their financial statements, and such other information with regard
to their affairs and that of the Corporation as each may reasonably request.

-3-

<PAGE>

The Subadviser agrees that all accounts, books and other
records maintained and preserved by it as required hereby shall be subject at
any time, and from time to time, to such reasonable periodic, special and
other examinations by the Securities and Exchange Commission, the
Corporation's auditors, the Corporation or any representative of the
Corporation, the Adviser, or any governmental agency or other instrumentality
having regulatory authority over the Corporation.

8. Reference to the Subadviser. Neither the Corporation nor the
Adviser or any affiliate or agent thereof shall make reference to or use the
name of the Subadviser or any of its affiliates in any advertising or
promotional materials without the prior approval of the Subadviser, which
approval shall not be unreasonably withheld.

9. Liability of the Subadviser. (a) In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations
or duties ("disabling conduct") hereunder on the part of the Subadviser (and
its officers, directors, agents, employees, controlling persons, shareholders
and any other person or entity affiliated with the Subadviser), the Subadviser
shall not be subject to liability to the Corporation or to any shareholder of
the Corporation for any act or omission in the course of, or connected with,
rendering services hereunder, including without limitation, any error of
judgment or mistake of law or for any loss suffered by any of them in
connection with the matters to which this Agreement relates, except to the
extent specified in Section 36(b) of the Act concerning loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services. Except for such disabling conduct, the Adviser shall indemnify the
Subadviser (and its officers, directors, partners, agents, employees,
controlling persons, shareholders and any other person or entity affiliated
with the Subadviser) (collectively, the "Indemnified Parties") from any
liability arising from the Subadviser's conduct under this Agreement.

(b) The Subadviser agrees to indemnify and hold harmless the
Adviser and its affiliates and each of its directors and officers and each
person, if any, who controls the Adviser within the meaning of Section 15 of
the 1933 Act against any and all losses, claims, damages, liabilities or
litigation (including legal and other expenses), to which the Adviser or its
affiliates or such directors, officers or controlling person may become
subject under the 1933 Act, under other statutes, at common law or otherwise,
which may be based upon (i) any wrongful act or breach of this Agreement by
the Subadviser, or (ii) any failure by the Subadviser to comply with the
representations and warranties set forth in Section 1 of this Agreement;
provided, however, that in no case is the Subadviser's indemnity in favor of
any person deemed to protect such other persons against any liability to which
such person would otherwise be subject by reasons of willful misfeasance, bad
faith, or gross negligence in the performance of his, her or its duties or by
reason of his, her or its reckless disregard of obligation and duties under
this Agreement.

-4-

<PAGE>

are not also maintained by or otherwise available to the Subadviser upon
reasonable request. The Adviser agrees that the Subadviser shall manage the
portion of the assets of a Portfolio allocated to it as if it was a separate
operating Portfolio and shall comply with subsections (a) and (b) of Section 1
of this Subadvisory Agreement (including, but not limited to, the investment
objectives, policies and restrictions applicable to a Portfolio and
qualifications of a Portfolio as a regulated investment company under the
Code) with respect to the portion of assets of a Portfolio allocated to the
Subadviser. The Adviser shall indemnify the Indemnified Parties from any
liability arising from the conduct of the Adviser and any other subadviser
with respect to the portion of a Portfolio's assets not allocated to the
Subadviser.

10. Permissible Interests. Directors and agents of the Corporation
are or may be interested in the Subadviser (or any successor thereof) as
directors, partners, officers or shareholders, or otherwise; directors,
partners, officers, agents and shareholders of the Subadviser are or may be
interested in the Corporation as Directors, or otherwise; and the Subadviser
(or any successor) is or may be interested in the Corporation in some manner.

11. Term of the Agreement. This Agreement shall continue in full
force and effect with respect to each Portfolio until two years from the date
hereof, and from year to year thereafter so long as such continuance is
specifically approved at least annually (i) by the vote of a majority of those
Directors of the Corporation who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval, and (ii) by the Directors of the
Corporation or by vote of a majority of the outstanding voting securities of
the Portfolio voting separately from any other series of the Corporation.

With respect to each Portfolio, this Agreement may be
terminated at any time, without payment of a penalty by the Portfolio or the
Corporation, by vote of a majority of the Directors, or by vote of a majority
of the outstanding voting securities (as defined in the Act) of the Portfolio,
voting separately from any other series of the Corporation, or by the Adviser,
on not less than 30 nor more than 60 days' written notice to the Subadviser.
With respect to each Portfolio, this Agreement may be terminated by the
Subadviser at any time, without the payment of any penalty, on 90 days'
written notice to the Adviser and the Corporation; provided, however, that
this Agreement may not be terminated by the Subadviser unless another
subadvisory agreement has been approved by the Corporation in accordance with
the Act, or after six months' written notice, whichever is earlier. The
termination of this Agreement with respect to any Portfolio or the addition of
any Portfolio to Schedule A hereto (in the manner required by the Act) shall
not affect the continued effectiveness of this Agreement with respect to each
other Portfolio subject hereto. This Agreement shall automatically terminate
in the event of its assignment (as defined by the Act).

This Agreement will also terminate in the event that the
Advisory Agreement by and between the Corporation and the Adviser is
terminated.

12. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.

13. Amendments. This Agreement may be amended by mutual consent in
writing, but the consent of the Corporation must be obtained in conformity
with the requirements of the Act.

-5-

<PAGE>

14. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of New York and the applicable provisions of the
Act. To the extent the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Act, the
latter shall control.

15. Separate Series. Pursuant to the provisions of the Articles of
Incorporation and the General Laws of the State of Maryland, each Portfolio is
a separate series of the Corporation, and all debts, liabilities, obligations
and expenses of a particular Portfolio shall be enforceable only against the
assets of that Portfolio and not against the assets of any other Portfolio or
of the Corporation as a whole.

16. Notices. All notices shall be in writing and deemed properly
given when delivered or mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:

Subadviser: Wellington Management Company, LLP
75 State Street
Boston, MA 02109
Attn: Mary Ann Tynan

Adviser: SunAmerica Asset Management Corp.
The SunAmerica Center
733 Third Avenue, Third Floor
New York, NY 10017-3204
Attention: Robert M. Zakem
Senior Vice President and General Counsel

IN WITNESS WHEREOF, the parties have caused their respective duly
authorized officers to execute this Agreement as of the date first above
written.

SUNAMERICA ASSET MANAGEMENT CORP.

By: /s/Peter A. Harbeck
-----------------------------
Name: Peter A. Harbeck
Title: President

WELLINGTON MANAGEMENT COMPANY, LLP

By:
-------------------------------
Name:
Title:

-6-

<PAGE>

EXHIBIT 11

Consent of Independent Accountants

We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 11 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
December 4, 1997, relating to the financial statements and financial highlights
of Style Select Series, Inc., which appears in such Statement of Additional
Information, and to the incorporation by reference of our report into the
Prospectus which constitutes part of this Registration Statement. We also
consent to the reference to us under the heading "Additional Information -
Independent Accountants and Legal Counsel" in such Statement of Additional
Information and to the reference to us under the heading "General Information -
Independent Accountants and Legal Counsel" in such Prospectus.

/s/Price Waterhouse LLP
PRICE WATERHOUSE LLP

1177 Avenue of the Americas
New York, New York
June 10, 1998

<PAGE>

STYLE SELECT SERIES, INC.

PLAN PURSUANT TO RULE 18F-3

Style Select Series, Inc. (the "Corporation") hereby adopts this plan
pursuant to Rule 18f-3 under the Investment Company Act of 1940, as amended
(the "1940 Act"), setting forth the separate arrangement and expense
allocation of each class of shares. Any material amendment to this plan is
subject to prior approval of the Board of Directors, including a majority of
the disinterested Directors.

CLASS CHARACTERISTICS

CLASS A SHARES: Class A shares are subject to an initial sales
charge, a distribution fee pursuant to Rule 12b-1
under the 1940 Act ("Rule 12b-1 fee") payable at
the annual rate of 0.10% of the average daily net
assets of the class, and an account maintenance fee
under the Rule 12b-1 Plan payable at the annual
rate of up to 0.25% of the average daily net assets
of the class. The initial sales charge is waived
or reduced for certain eligible investors. In
certain cases, as disclosed in the Prospectus and
the Statement of Additional Information from
time to time, Class A shares may be subject to a
contingent deferred sales charge ("CDSC") imposed
at the time of redemption if the initial sales
charge with respect to such shares was waived.

CLASS B SHARES: Class B shares are not subject to an initial
sales charge but are subject to a CDSC which will
be imposed on certain redemptions, a Rule 12b-1
fee payable at the annual rate of up to 0.75% of
the average daily net assets of the class, and an
account maintenance fee under the Rule 12b-1
Plan payable at the annual rate of up to 0.25% of
the average daily net assets of the class. The
CDSC is waived for certain eligible investors.
Class B shares automatically convert to Class A
shares on the first business day of the month
following the seventh anniversary of the issuance of
such Class B shares.

CLASS C SHARES: Class C shares are not subject to an initial
sales charge but are subject to a CDSC which will
be imposed on certain redemptions, a Rule 12b-1
fee payable at the annual rate of up to 0.75% of the
average annual net assets of the class, and an
account maintenance fee under the Rule 12b-1
Plan payable at the annual rate of up to 0.25% of
the average daily net assets of the class. The
CDSC is waived for certain eligible investors.

<PAGE>

CLASS II SHARES: Class II shares are subject to an initial sales
charge and a CDSC which will be imposed on
certain redemptions, a Rule 12b-1 fee payable at
the annual rate of up to 0.75% of the average
annual net assets of the class, and an account
maintenance fee under the Rule 12b-1 Plan payable
at the annual rate of up to 0.25% of the average
daily net assets of the class. The CDSC is waived
for certain eligible investors.

CLASS Z SHARES: Class Z shares are not subject to either an
initial or CDSC nor are they subject to any Rule
12b-1 fee.

INCOME AND EXPENSE ALLOCATIONS

Income, any realized and unrealized capital gains and losses, and
expenses not allocated to a particular class, will be allocated to
each class on the basis of the total value of each class of shares in
relation to the total value of each class of shares of each series of
the Corporation (each a "Portfolio" and collectively, the
"Portfolios").

DIVIDENDS AND DISTRIBUTIONS

Dividends and other distributions paid by each Portfolio to each
class of shares, to the extent paid, will be paid on the same day and
at the same time, and will be determined in the same manner and will
be in the same amount, except that the amount of the dividends and
other distributions declared and paid by a particular class may be
different from that paid by another class because of Rule 12b-1 fees
and other expenses borne exclusively by that class.

EXCHANGE PRIVILEGE

Each class of shares is generally exchangeable for the same class of
shares of any other Portfolio or other SunAmerica Mutual Fund
(subject to certain minimum investment requirements) at the relative
net asset value per share. Class II shares of a Portfolio may be
exchanged for Class C shares of any other Portfolio or other
SunAmerica Mutual Fund which does not also offer Class II shares.

CONVERSION FEATURES

Class B shares 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. Conversions will be effected at
the relative net asset values of Class B and Class A shares, without
the imposition of any sales load, fee or charge. Class C, Class II
and Class Z shares will have no conversion rights.

<PAGE>

GENERAL

A. Each class of shares shall have exclusive voting rights on any matter
submitted to shareholders that relates solely to its arrangement and
shall have separate voting rights on any matter submitted to
shareholders in which the interests of one class differ from the
interests of any other class.

B. On an ongoing basis, the Directors, pursuant to their fiduciary
responsibilities under the 1940 Act and otherwise, will monitor the
Corporation for the existence of any material conflicts among the
interests of its several classes. The Directors, including a majority
of the disinterested Directors, shall take such action as is
reasonably necessary to eliminate any such conflicts that may
develop. SunAmerica Asset Management Corp., the Corporation's
investment manager and adviser, will be responsible for reporting any
potential or existing conflicts to the Directors.

C. For purposes of expressing an opinion on the financial statements of
the Corporation, the methodology and procedures for calculating the
net asset value and dividends/distributions of the classes and the
proper allocation of income and expenses among such classes will be
examined annually by the Corporation's independent auditors who, in
performing such examination, shall consider the factors set forth in
the relevant auditing standards adopted, from time to time, by the
American Institute of Certified Public Accountants and Financial
Accounting Standards Board.

Dated: May 21, 1998

<ARTICLE> 6
<CIK> 0001020861
<NAME> STYLE SELECT SERIES, INC.
<SERIES>
<NUMBER> 011
<NAME> STYLE SELECT SERIES AGGRESSIVE GROWTH CLASS A

<GROSS-EXPENSE> 1,282,234<F1>
<AVERAGE-NET-ASSETS> 31,969,874<F2>
<PER-SHARE-NAV-BEGIN> 12.50<F2>
<PER-SHARE-NII> (0.11)<F2>
<PER-SHARE-GAIN-APPREC> 3.51<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 15.90<F2>
<EXPENSE-RATIO> 1.84<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F1>Information given pertains to Style Select Aggressive Growth Fund as a whole
<F2>Information give pertains to Style Select Aggressive Growth Fund Class A
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0001020861
<NAME> STYLE SELECT SERIES, INC.
<SERIES>
<NUMBER> 012
<NAME> STYLE SELECT SERIES AGGRESSIVE GROWTH CLASS B

<GROSS-EXPENSE> 1,282,234<F1>
<AVERAGE-NET-ASSETS> 22,067,786<F2>
<PER-SHARE-NAV-BEGIN> 12.50<F2>
<PER-SHARE-NII> (0.24)<F2>
<PER-SHARE-GAIN-APPREC> 3.54<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 15.80<F2>
<EXPENSE-RATIO> 2.47<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F1>Information given pertains to Style Select Aggressive Growth Fund as a whole
<F2>Information give pertains to Style Select Aggressive Growth Fund Class B
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0001020861
<NAME> STYLE SELECT SERIES, INC.
<SERIES>
<NUMBER> 013
<NAME> STYLE SELECT SERIES AGGRESSIVE GROWTH CLASS C

<GROSS-EXPENSE> 1,282,234<F1>
<AVERAGE-NET-ASSETS> 2,939,381<F2>
<PER-SHARE-NAV-BEGIN> 13.38<F2>
<PER-SHARE-NII> (0.17)<F2>
<PER-SHARE-GAIN-APPREC> 2.59<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 15.80<F2>
<EXPENSE-RATIO> 2.45<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F1>Information given pertains to Style Select Aggressive Growth Fund as a whole
<F2>Information give pertains to Style Select Aggressive Growth Fund Class C
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0001020861
<NAME> STYLE SELECT SERIES, INC.
<SERIES>
<NUMBER> 021
<NAME> STYLE SELECT SERIES INTERNATIONAL CLASS A

<GROSS-EXPENSE> 1,121,218<F1>
<AVERAGE-NET-ASSETS> 23,158,468<F2>
<PER-SHARE-NAV-BEGIN> 12.50<F2>
<PER-SHARE-NII> 0.01<F2>
<PER-SHARE-GAIN-APPREC> (0.05)<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 12.46<F2>
<EXPENSE-RATIO> 2.10<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F1>Information given pertains to Style Select International Fund as a whole
<F2>Information given pertains to Style Select International Fund Class A
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0001020861
<NAME> STYLE SELECT SERIES, INC.
<SERIES>
<NUMBER> 022
<NAME> STYLE SELECT SERIES INTERNATIONAL CLASS B

<GROSS-EXPENSE> 1,121,218<F1>
<AVERAGE-NET-ASSETS> 17,124,033<F2>
<PER-SHARE-NAV-BEGIN> 12.50<F2>
<PER-SHARE-NII> (0.09)<F2>
<PER-SHARE-GAIN-APPREC> (0.03)<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 12.38<F2>
<EXPENSE-RATIO> 2.72<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F1>Information given pertains to Style Select International Fund as a whole
<F2>Information given pertains to Style Select International Fund Class B
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0001020861
<NAME> STYLE SELECT SERIES, INC.
<SERIES>
<NUMBER> 023
<NAME> STYLE SELECT SERIES INTERNATIONAL CLASS C

<GROSS-EXPENSE> 1,121,218<F1>
<AVERAGE-NET-ASSETS> 2,684,330<F2>
<PER-SHARE-NAV-BEGIN> 12.60<F2>
<PER-SHARE-NII> (.07)<F2>
<PER-SHARE-GAIN-APPREC> (0.15)<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 12.38<F2>
<EXPENSE-RATIO> 2.70<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F1>Information given pertains to Style Select International Fund as a whole
<F2>Information given pertains to Style Select International Fund Class C
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0001020861
<NAME> STYLE SELECT SERIES, INC.
<SERIES>
<NUMBER> 031
<NAME> STYLE SELECT SERIES SMALL CAP VALUE CLASS A

<GROSS-EXPENSE> 29,406<F1>
<AVERAGE-NET-ASSETS> 23,610,462<F2>
<PER-SHARE-NAV-BEGIN> 12.50<F2>
<PER-SHARE-NII> 0.01<F2>
<PER-SHARE-GAIN-APPREC> (0.37)<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 12.14<F2>
<EXPENSE-RATIO> 1.78<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F1>Information given pertains to Style Select Small Cap Value Fund as a whole
<F2>Information given pertains to Style Select Small Cap Value Fund Class A
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0001020861
<NAME> STYLE SELECT SERIES, INC.
<SERIES>
<NUMBER> 032
<NAME> STYLE SELECT SERIES SMALL CAP VALUE CLASS B

<GROSS-EXPENSE> 29,406<F1>
<AVERAGE-NET-ASSETS> 1,929,698<F2>
<PER-SHARE-NAV-BEGIN> 12.50<F2>
<PER-SHARE-NII> 0.01<F2>
<PER-SHARE-GAIN-APPREC> (0.38)<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 12.13<F2>
<EXPENSE-RATIO> 2.43<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F1>Information given pertains to Style Select Small Cap Value Fund as a whole
<F2>Information given pertains to Style Select Small Cap Value Fund Class B
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0001020861
<NAME> STYLE SELECT SERIES, INC.
<SERIES>
<NUMBER> 033
<NAME> STYLE SELECT SERIES SMALL CAP VALUE CLASS C

<GROSS-EXPENSE> 29,406<F1>
<AVERAGE-NET-ASSETS> 394,551<F2>
<PER-SHARE-NAV-BEGIN> 12.50<F2>
<PER-SHARE-NII> 0.01<F2>
<PER-SHARE-GAIN-APPREC> (0.37)<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 12.14<F2>
<EXPENSE-RATIO> 2.43<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F1>Information given pertains to Style Select Small Cap Value Fund as a whole
<F2>Information given pertains to Style Select Small Cap Value Fund Class C
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0001020861
<NAME> STYLE SELECT SERIES INC.
<SERIES>
<NUMBER> 041
<NAME> STYLE SELECT SERIES VALUE CLASS A

<GROSS-EXPENSE> 1,661,136<F1>
<AVERAGE-NET-ASSETS> 35,136,740<F2>
<PER-SHARE-NAV-BEGIN> 12.50<F2>
<PER-SHARE-NII> 0<F2>
<PER-SHARE-GAIN-APPREC> 3.59<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 16.09<F2>
<EXPENSE-RATIO> 1.84<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F1>Information given pertains to Style Select Series Value Fund as a whole
<F2>Information given pertains to Style Select Value Fund Class A
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0001020861
<NAME> STYLE SELECT SERIES INC.
<SERIES>
<NUMBER> 042
<NAME> STYLE SELECT SERIES VALUE CLASS B

<GROSS-EXPENSE> 1,661,136<F1>
<AVERAGE-NET-ASSETS> 32,504,889<F2>
<PER-SHARE-NAV-BEGIN> 12.50<F2>
<PER-SHARE-NII> (0.11)<F2>
<PER-SHARE-GAIN-APPREC> 3.61<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 16.00<F2>
<EXPENSE-RATIO> 2.46<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F1>Information given pertains to Style Select Series Value Fund as a whole
<F2>Information given pertains to Style Select Value Fund Class B
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0001020861
<NAME> STYLE SELECT SERIES INC.
<SERIES>
<NUMBER> 043
<NAME> STYLE SELECT SERIES VALUE CLASS C

<GROSS-EXPENSE> 1,661,136<F1>
<AVERAGE-NET-ASSETS> 4,304,677<F2>
<PER-SHARE-NAV-BEGIN> 13.56<F2>
<PER-SHARE-NII> (0.08)<F2>
<PER-SHARE-GAIN-APPREC> 2.52<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 16.00<F2>
<EXPENSE-RATIO> 2.45<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F1>Information given pertains to Style Select Series Value Fund as a whole
<F2>Information given pertains to Style Select Value Fund Class C
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0001020861
<NAME> STYLE SELECT SERIES INC
<SERIES>
<NUMBER> 051
<NAME> STYLE SELECT SERIES LARGE CAP VALUE CLASS A

<GROSS-EXPENSE> 28,275<F1>
<AVERAGE-NET-ASSETS> 24,452,958<F2>
<PER-SHARE-NAV-BEGIN> 12.50<F2>
<PER-SHARE-NII> 0.01<F2>
<PER-SHARE-GAIN-APPREC> (0.65)<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 11.86<F2>
<EXPENSE-RATIO> 1.78<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F1>Information given pertains to Style Select Large Cap Value as a whole
<F2>Infoprmation given pertains to Style Select Large Cap Value Class A
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0001020861
<NAME> STYLE SELECT SERIES INC
<SERIES>
<NUMBER> 052
<NAME> STYLE SELECT SERIES LARGE CAP VALUE CLASS B

<GROSS-EXPENSE> 28,275<F1>
<AVERAGE-NET-ASSETS> 602,209<F2>
<PER-SHARE-NAV-BEGIN> 12.50<F2>
<PER-SHARE-NII> 0<F2>
<PER-SHARE-GAIN-APPREC> (0.64)<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 11.86<F2>
<EXPENSE-RATIO> 2.43<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F1>Information given pertains to Style Select Large Cap Value as a whole
<F2>Infoprmation given pertains to Style Select Large Cap Value Class B
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0001020861
<NAME> STYLE SELECT SERIES INC
<SERIES>
<NUMBER> 053
<NAME> STYLE SELECT SERIES LARGE CAP VALUE CLASS C

<GROSS-EXPENSE> 28,275<F1>
<AVERAGE-NET-ASSETS> 128,757<F2>
<PER-SHARE-NAV-BEGIN> 12.50<F2>
<PER-SHARE-NII> 0<F2>
<PER-SHARE-GAIN-APPREC> (0.64)<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 11.86<F2>
<EXPENSE-RATIO> 2.43<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F1>Information given pertains to Style Select Large Cap Value as a whole
<F2>Infoprmation given pertains to Style Select Large Cap Value Class C
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0001020861
<NAME> STYLE SELECT SERIES INC
<SERIES>
<NUMBER> 061
<NAME> STYLE SELECT SERIES LARGE CAP BLEND CLASS A

<GROSS-EXPENSE> 28,251<F1>
<AVERAGE-NET-ASSETS> 24,538,268<F2>
<PER-SHARE-NAV-BEGIN> 12.50<F2><F1>
<PER-SHARE-NII> 0.01<F2>
<PER-SHARE-GAIN-APPREC> (0.53)<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 11.98<F2>
<EXPENSE-RATIO> 1.78<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F1>Information given pertains to Style Select Large Cap Blend as a whole
<F2>Information given pertains to Style Select Large Cap Blend Class A
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0001020861
<NAME> STYLE SELECT SERIES INC
<SERIES>
<NUMBER> 062
<NAME> STYLE SELECT SERIES LARGE CAP BLEND CLASS B

<GROSS-EXPENSE> 28,251<F1>
<AVERAGE-NET-ASSETS> 513,871<F2>
<PER-SHARE-NAV-BEGIN> 12.50<F2><F1>
<PER-SHARE-NII> 0<F2>
<PER-SHARE-GAIN-APPREC> (0.54)<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 11.96<F2>
<EXPENSE-RATIO> 2.43<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F1>Information given pertains to Style Select Large Cap Blend as a whole
<F2>Information given pertains to Style Select Large Cap Blend Class B
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0001020861
<NAME> STYLE SELECT SERIES INC
<SERIES>
<NUMBER> 063
<NAME> STYLE SELECT SERIES LARGE CAP BLEND CLASS C

<GROSS-EXPENSE> 28,251<F1>
<AVERAGE-NET-ASSETS> 133665<F2>
<PER-SHARE-NAV-BEGIN> 12.50<F2><F1>
<PER-SHARE-NII> 0<F2>
<PER-SHARE-GAIN-APPREC> (0.53)<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 11.97<F2>
<EXPENSE-RATIO> 2.43<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F1>Information given pertains to Style Select Large Cap Blend as a whole
<F2>Information given pertains to Style Select Large Cap Blend Class C
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0001020861
<NAME> STYLE SELECT SERIES INC.
<SERIES>
<NUMBER> 071
<NAME> STYLE SELECT LARGE CAP GROWTH CLASS A

<GROSS-EXPENSE> 27986<F1>
<AVERAGE-NET-ASSETS> 24431872<F1>
<PER-SHARE-NAV-BEGIN> 12.50<F2>
<PER-SHARE-NII> 0<F2>
<PER-SHARE-GAIN-APPREC> (.71)<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 11.79<F2>
<EXPENSE-RATIO> 1.78<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F1>Information given pertains to Style Select Large Cap Growth as a whole
<F2>Information given pertains to Style Select Large Cap Growth Class A
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0001020861
<NAME> STYLE SELECT SERIES INC.
<SERIES>
<NUMBER> 072
<NAME> STYLE SELECT LARGE CAP GROWTH CLASS B

<GROSS-EXPENSE> 27986<F1>
<AVERAGE-NET-ASSETS> 372020<F2>
<PER-SHARE-NAV-BEGIN> 12.50<F2>
<PER-SHARE-NII> 0<F2>
<PER-SHARE-GAIN-APPREC> (.71)<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 11.79<F2>
<EXPENSE-RATIO> 2.43<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F1>Information given pertains to Style Select Large Cap Growth as a whole
<F2>Information given pertains to Style Select Large Cap Growth Class B
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0001020861
<NAME> STYLE SELECT SERIES INC.
<SERIES>
<NUMBER> 073
<NAME> STYLE SELECT LARGE CAP GROWTH CLASS C

<GROSS-EXPENSE> 27986<F1>
<AVERAGE-NET-ASSETS> 125765<F2>
<PER-SHARE-NAV-BEGIN> 12.50<F2>
<PER-SHARE-NII> 0<F2>
<PER-SHARE-GAIN-APPREC> (.72)<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 11.78<F2>
<EXPENSE-RATIO> 2.43<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F1>Information given pertains to Style Select Large Cap Growth as a whole
<F2>Information given pertains to Style Select Large Cap Growth Class C
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0001020861
<NAME> STYLE SELECT SERIES INC
<SERIES>
<NUMBER> 081
<NAME> STYLE SELECT SERIES MID-CAP GROWTH CLASS A

<GROSS-EXPENSE> 987213<F1>
<AVERAGE-NET-ASSETS> 22146845<F2>
<PER-SHARE-NAV-BEGIN> 12.50<F2>
<PER-SHARE-NII> (.16)<F2>
<PER-SHARE-GAIN-APPREC> 1.37<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 13.71<F2>
<EXPENSE-RATIO> 1.85<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F1>Information given pertains to Style Select Mid Cap Growth as a whole
<F2>Information given pertains to Style Select Mid Cap Growth Class A
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0001020861
<NAME> STYLE SELECT SERIES INC
<SERIES>
<NUMBER> 082
<NAME> STYLE SELECT SERIES MID-CAP GROWTH CLASS B

<GROSS-EXPENSE> 987213<F1>
<AVERAGE-NET-ASSETS> 17344067<F2>
<PER-SHARE-NAV-BEGIN> 12.50<F2>
<PER-SHARE-NII> (.25)<F2>
<PER-SHARE-GAIN-APPREC> 1.38<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 13.63<F2>
<EXPENSE-RATIO> 2.47<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F1>Information given pertains to Style Select Mid Cap Growth as a whole
<F2>Information given pertains to Style Select Mid Cap Growth Class B
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0001020861
<NAME> STYLE SELECT SERIES INC
<SERIES>
<NUMBER> 083
<NAME> STYLE SELECT SERIES MID-CAP GROWTH CLASS C

<GROSS-EXPENSE> 987213<F1>
<AVERAGE-NET-ASSETS> 2248793<F2>
<PER-SHARE-NAV-BEGIN> 12.50<F2>
<PER-SHARE-NII> (.18)<F2>
<PER-SHARE-GAIN-APPREC> 1.89<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 13.64<F2>
<EXPENSE-RATIO> 2.45<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F1>Information given pertains to Style Select Mid Cap Growth as a whole
<F2>Information given pertains to Style Select Mid Cap Growth Class C
</FN>

</TABLE>