<PAGE>
As filed with the Securities and Exchange Commission on April 26, 1996
File Nos. 2-85370; 811-3807
________________________________________________________________________________
________________________________________________________________________________
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. 17 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [_]
AMENDMENT NO. 16 [X]
(Check appropriate box or boxes)
SUNAMERICA MONEY MARKET FUNDS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
The SunAmerica Center
733 Third Avenue - 3rd Floor
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
The SunAmerica Center
SunAmerica Asset Management Corp.
733 Third Avenue - 3rd Floor
New York, NY 10017
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY 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)
<TABLE>
<S> <C>
[_] immediately upon filing pursuant to paragraph (b) of Rule 485 [X] on April 30, 1996 pursuant to paragraph (b) of Rule 485
[_] 60 days after filing pursuant to paragraph (a) of Rule 485 [_] on (date) pursuant to paragraph (a) of Rule 485
</TABLE>
____________________
Registrant has elected to register an indefinite number of shares of common
stock, par value $.001 per share, under the Securities Act of 1933 pursuant to
Rule 24f-2 under the Investment Company Act of 1940. The Rule 24f-2 Notice for
Registrant's fiscal year ended December 31, 1995 was filed on February 26, 1996.
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
SUNAMERICA MONEY MARKET FUNDS, INC.
CROSS REFERENCE SHEET
Pursuant to Rule 481(a)
Under the Securities Act of 1933
--------------------------------
PART A
Item No. Registration Statement Caption Caption in Prospectus
- -------- ------------------------------ ---------------------
<TABLE>
<CAPTION>
<S> <C> <C>
1 Cover Page Cover Page
2 Synopsis Summary of Fund Expenses
3 Condensed Financial Information Financial Highlights;
Performance Data
4 General Description of Registrant Investment Objective and Policies;
Investment Restrictions; General
Information; Appendix
5 Management of the Fund Management of the Corporation; Portfolio
Transactions and Brokerage
5A Management's Discussion of Fund Performance *
6 Capital Stock and Other Dividends, Distributions and Taxes;
Securities General Information
7 Purchase of Securities Being Purchase of Shares; Determination
Offered of Net Asset Value
8 Redemption or Repurchase Redemption of Shares; Exchange Privilege
9 Pending Legal Proceedings Inapplicable
</TABLE>
PART B Caption in Statement
Item No. Registration Statement Caption of Additional Information
- -------- ------------------------------ -------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
10 Cover Page Cover Page
11 Table of Contents Table of Contents
12 General Information and History History of the Fund
13 Investment Objectives and Investment Objective and Policies;
Policies Investment Restrictions; Appendix
14 Management of the Fund Directors and Officers
15 Contact Persons and Principal Holders Directors and Officers
of Securities
16 Investment Advisory and Other Adviser, Personal Trading, Distributor and
Services Administrator; Additional Information
17 Brokerage Allocation Portfolio Transactions and Brokerage
18 Capital Stock and Other Securities Dividends, Distributions and Taxes;
Description of Shares; Additional Information
19 Purchase, Redemption and Pricing Additional Information Regarding
of Securities Being Offered Purchase of Shares; Additional
Information Regarding Redemption of
Shares; Determination of Net Asset Value;
Retirement Plans; Additional Information
20 Tax Status Dividends, Distributions and Taxes
21 Underwriters Adviser, Personal Trading, Distributor and Administrator
22 Calculation of Performance Data Performance Data
23 Financial Statements Financial Statements
</TABLE>
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
* Included in the Annual Report to Shareholders for fiscal year ended December
31, 1995.
- -----------------------------
<PAGE>
SUNAMERICA MONEY MARKET FUND
THE SUNAMERICA CENTER, 733 THIRD AVENUE, NEW YORK, NY 10017-3204
GENERAL MARKETING AND SHAREHOLDER INFORMATION
(800) 858-8850
SunAmerica Money Market Fund (the "Fund") seeks as high a level of current
income as is consistent with liquidity and stability of capital by investing
in a portfolio of high quality, short-term money market instruments. The Fund
is the only series of SunAmerica Money Market Funds, Inc., an open-end diver-
sified management investment company organized as a Maryland corporation (the
"Corporation"). The Fund is advised by SunAmerica Asset Management Corp. (the
"Adviser").
The Fund seeks to maintain a stable net asset value of $1.00 per share, al-
though no assurance can be given that the Fund will be able to do so. An in-
vestment in the Fund is neither insured nor guaranteed by the U.S. Government
or any other entity.
The Fund currently offers Class A shares and Class B shares. The offering
price is the next-determined net asset value per share, plus, for Class B
shares only, a declining contingent deferred sales charge ("CDSC") imposed on
certain redemptions made within six years. Each class makes account mainte-
nance and service fee payments, and Class B shares also make distribution fee
payments, under a plan pursuant to Rule 12b-1 under the Investment Company Act
of 1940, as amended (the "1940 Act"). Class B shares of the Fund will convert
automatically to Class A shares on the first business day of the month follow-
ing the seventh anniversary of the issuance of such Class B shares and at such
time will be subject to the lower distribution fee applicable to Class A
shares. Investors wishing to purchase shares of the Fund are generally re-
quired to purchase Class A shares. Class B shares will be typically issued
upon an exchange of Class B shares from another mutual fund in the SunAmerica
Family of Mutual Funds. See "Purchase of Shares."
Shares of the Fund are not deposits or obligations of, or guaranteed or en-
dorsed by, any bank through which such shares may be sold, and are not feder-
ally 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
the Fund. Please read it carefully and retain it for future reference. You can
find more detailed information about the Fund in the Statement of Additional
Information dated April 30, 1996, which is incorporated by reference into this
Prospectus and further information about the performance of the Fund in the
Corporation's Annual Report to Shareholders. The Statement of Additional In-
formation and Annual Report to Shareholders may be obtained without charge by
contacting the Corporation at the address or telephone number listed above.
- -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
PROSPECTUS DATED APRIL 30, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus........................ Cover
Summary of Fund Expenses.......... 1
Financial Highlights.............. 4
Investment Objective and Policies. 5
Investment Restrictions........... 5
Management of the Corporation..... 6
Purchase of Shares................ 7
Redemption of Shares.............. 9
Exchange Privilege................ 10
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Portfolio Transactions and
Brokerage........................ 11
Determination of Net Asset Value.. 11
Performance Data.................. 12
Dividends, Distributions and
Taxes............................ 12
General Information............... 12
Appendix.......................... 13
</TABLE>
SUMMARY OF FUND EXPENSES
A general comparison of the sales arrangements and other non-recurring
expenses applicable to Class A shares and Class B shares follows:
<TABLE>
<CAPTION>
CLASS A CLASS B(/1/)
------- ------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Initial Sales Load.............................. None None
Maximum Sales Load on Reinvested Dividends.............. None None
Deferred Sales Load(/2/)................................ None 4.00%
Redemption Fees(/3/).................................... None None
Exchange Fees........................................... $5.00 $5.00
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees......................................... 0.50% 0.50%
12b-1 Fees(/4/)......................................... 0.15% 0.90%
Other Expenses.......................................... 0.36% 0.38%
----- -----
Total Operating Expenses(/5/)........................... 1.01% 1.78%
===== =====
</TABLE>
--------
(1) Investors wishing to purchase shares of the Fund are generally
required to purchase Class A shares. Class B shares of the Fund will
typically be issued in exchange for Class B shares of other mutual funds
in the SunAmerica Family of Mutual Funds.
(2) The contingent deferred sales charge on Class B shares applies only if
a redemption occurs within six years from their purchase date.
(3) A $15.00 fee may be imposed for wire redemptions.
(4) 0.15% of the 12b-1 fee comprises an Account Maintenance and Service
Fee. A portion of the Account Maintenance and Service Fee is allocated
to member firms of the National Association of Securities Dealers, Inc.
for continuous personal service by such members to investors in the
Fund, such as responding to shareholder inquiries, providing current
marketing material and attending to other shareholder matters.
(5) For the fiscal year ended December 31, 1995, the total operating
expenses reflect the effect of a gross up of custody and transfer agent
expense credits of .05% and .13% for Class A and Class B shares,
respectively.
<PAGE>
EXAMPLE:
You would pay the following expenses on a $1,000 investment over various time
periods assuming (1) a 5% annual 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>
Class A shares.................................. $10 $32 $ 56 $124
Class B shares*................................. $58 $86 $116 $179
</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>
Class A shares.................................. $10 $32 $56 $124
Class B shares*................................. $18 $56 $96 $179
</TABLE>
The foregoing examples should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown.
- --------
* Class B shares convert to Class A shares seven years after purchase.
Therefore, years 8, 9 and 10 reflect the expenses attributable to ownership
of Class A shares.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The following Financial Highlights for each of the years in the period ended
December 31, 1995 have been audited by Price Waterhouse LLP, the Fund's
independent accountants, whose report on the financial statements containing
such information is included in the Fund's Annual Report to Shareholders. These
Financial Highlights should be read in conjunction with the Fund's financial
statements and notes thereto, which are included in the Statement of Additional
Information and are incorporated by reference herein.
<TABLE>
<CAPTION>
RATIO OF
DIVIDENDS NET NET NET
NET ASSET FROM ASSET ASSETS RATIO OF INVESTMENT
VALUE NET TOTAL FROM NET VALUE END OF EXPENSES INCOME TO
PERIOD BEGINNING INVESTMENT INVESTMENT INVESTMENT END OF TOTAL PERIOD TO AVERAGE AVERAGE
ENDED OF PERIOD INCOME OPERATIONS INCOME PERIOD RETURN(/3/) (000'S) NET ASSETS NET ASSETS
- ------ --------- ---------- ---------- ---------- ------ ----------- -------- ---------- ----------
CLASS A
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/86 $1.000 $0.060 $0.060 $(0.060) $1.000 6.00% $302,987 0.99% 5.82%
12/31/87 1.000 0.059 0.059 (0.059) 1.000 5.90 381,405 1.00 5.87
12/31/88 1.000 0.067 0.067 (0.067) 1.000 6.70 522,163 1.09 6.71
12/31/89 1.000 0.082 0.082 (0.082) 1.000 8.52 402,720 1.19 8.22
12/31/90 1.000 0.072 0.072 (0.072) 1.000 7.44 302,440 1.10 7.23
12/31/91 1.000 0.052 0.052 (0.052) 1.000 5.32 270,405 1.21 5.25
12/31/92 1.000 0.027 0.027 (0.027) 1.000 2.74 215,521 1.27 2.76
12/31/93 1.000 0.023 0.023 (0.023) 1.000 2.32 189,160 1.16 2.30
12/31/94 1.000 0.034 0.034 (0.034) 1.000 3.47 213,958 1.00 3.43
12/31/95 1.000 0.051 0.051 (0.051) 1.000 5.18 316,308 1.01(/4/) 5.04
<CAPTION>
CLASS B
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
09/24/93-
12/31/93 $1.000 $0.004 $0.004 $(0.004) $1.000 0.44%(/1/) $ 41,915 1.69%(/2/) 1.69%(/2/)
12/31/94 1.000 0.027 0.027 (0.027) 1.000 2.76 98,398 1.69 2.91
12/31/95 1.000 0.044 0.044 (0.044) 1.000 4.49 51,799 1.78(/4/) 4.37
</TABLE>
- --------
(1) Total Return is not annualized.
(2) Annualized.
(3) Does not reflect sales load or account maintenance fees.
(4) The expense ratio reflects the effect of a gross up of custody and transfer
agent expense credits of .05% and .13% for Class A and Class B shares,
respectively.
3
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to seek as high a level of current
income as is consistent with liquidity and stability of capital through
investment primarily in high quality money market instruments. There can be no
assurance that the investment objective of the Fund will be achieved.
Except as specifically indicated, the investment policies and strategies
described herein are not fundamental policies of the Fund and may be changed
by the Board of Directors ("Directors") without the approval of shareholders.
The Fund's investment objective and fundamental investment restrictions,
however, may not be changed without the approval of shareholders of the Fund.
See "Investment Restrictions."
The Fund will seek to achieve its investment objective by investing in a
diversified portfolio of money market instruments, including: (i) securities
issued or guaranteed as to principal and interest by the U.S. government or by
its agencies or instrumentalities; (ii) certificates of deposit, bankers'
acceptances and time deposits; (iii) commercial paper and other short-term
obligations of U.S. and foreign corporations; (iv) repurchase agreements; (v)
reverse repurchase agreements; and (vi) asset-backed securities. The Fund
seeks to maintain a constant net asset value of $1.00 per share pursuant to
regulations under the 1940 Act which permit the Fund to use the amortized cost
method of valuation in computing its current share price. See "Determination
of Net Asset Value." Under these regulations, the Fund is required to limit
its portfolio investments to those U.S. dollar denominated instruments
determined in accordance with procedures established by the Directors to
present minimal credit risks and which are at the time of acquisition
"eligible securities" as defined in the regulations. Under the regulations an
eligible security is an instrument that is rated (or that has been issued by
an issuer rated with respect to other short-term debt of comparable priority
and security) by at least two nationally recognized statistical rating
organizations (or if only one such organization has issued a rating, by that
organization) in one of the two highest rating categories for short-term debt
obligations, or an unrated security which is determined to be of comparable
quality under procedures established by the Directors. The amortized cost
regulations prohibit the Fund from investing more than 5% of its assets in the
securities of any one issuer. In addition, the Fund may not invest more than
5% of its assets in securities which have not been rated (or deemed comparable
to securities rated) in the highest rating category, with investment in such
second tier securities of any one issuer being limited to the greater of 1% of
the Fund's assets or $1 million. These issuer diversification restrictions do
not apply to U.S. government securities. The amortized cost regulations also
prohibit the Fund from purchasing any instrument with a remaining maturity of
greater than 397 calendar days, and require the Fund to maintain a dollar-
weighted average portfolio maturity of 90 days or less. For purposes of the
regulations, certain variable or floating rate instruments are deemed to have
a maturity equal to the period remaining until the next readjustment of their
interest rate or, in the case of an instrument that is subject to a demand
feature, the period remaining until the principal amount can be recovered
through demand.
See the Appendix and the Statement of Additional Information for more
information on the types of securities in which the Fund may invest.
INVESTMENT RESTRICTIONS
The Fund has adopted certain fundamental policies designed to maintain the
diversity of its portfolio and reduce investment risk. With respect to 75% of
the Fund's total assets, the Fund may not invest more than 5% of its assets in
the securities of any one issuer (other than obligations of the U.S.
government, its agencies and instrumentalities) or purchase more than 10% of
an issuer's voting securities or more than 10% of any class of an issuer's
outstanding securities. The Fund may not purchase securities if as a result of
such purchase more than 25% of the Fund's total assets would be invested in
any one industry, except that the Fund may invest without limit in obligations
issued or guaranteed by the U.S. government, its agencies and
instrumentalities. In addition, the Fund reserves freedom of action to invest
in obligations issued by domestic branches of U.S. banks. As a fundamental
policy, the Fund may borrow up to 10% of its total assets for temporary or
emergency purposes. The Fund may also pledge its assets to secure such
borrowings. See the Statement of Additional Information for information
concerning other fundamental policies.
4
<PAGE>
MANAGEMENT OF THE CORPORATION
DIRECTORS. The Directors of the Corporation are responsible for the overall
supervision of the operation of the Corporation and the Fund and perform
various duties imposed on directors of investment companies by the 1940 Act
and by the State of Maryland.
THE ADVISER. The Adviser selects and manages the investments of the Fund,
provides various administrative services and supervises the Fund's daily
business affairs, subject to general review by the Directors. The Adviser is
an indirect wholly owned subsidiary of SunAmerica Inc. ("SunAmerica"), an
investment grade financial services company which has over $29 billion in
assets. SunAmerica's principal executive offices are located at 1 SunAmerica
Center, Century City, Los Angeles, CA 90067-6022. In addition to serving as
adviser to the Fund, the Adviser and its affiliates serve as adviser, manager
and/or administrator for Anchor Pathway Fund, SunAmerica Equity Funds,
SunAmerica Income Funds, Anchor Series Trust and SunAmerica Series Trust. The
Adviser and its affiliates managed, advised and/or administered assets of
approximately $7.6 billion as of December 31, 1995 for investment companies,
individuals, pension accounts, and corporate and trust accounts.
Pursuant to the Investment Advisory and Management Agreement entered into
between the Adviser and the Corporation, on behalf of the Fund, the Fund pays
the Adviser a fee, payable monthly, computed daily at the annual rate of .50%
on the first $600 million of the Fund's average daily net assets, .45% on the
next $900 million of net assets and .40% on net assets over $1.5 billion for
the services performed on behalf of the Fund and the facilities furnished by
the Adviser. For the fiscal year ended December 31, 1995, the Fund paid the
Adviser a fee equal to .50% of the average daily net assets of the Fund.
PORTFOLIO MANAGEMENT. The following individual is primarily responsible for
the day-to-day management of the Fund.
P. Christopher Leary has served as portfolio manager of the Fund since
August 1995. Mr. Leary is a Senior Vice President of the Adviser and has been
a portfolio manager with the firm since 1990. Mr. Leary is assisted by John J.
DiVito who has been with the Adviser since November 1994.
THE DISTRIBUTOR. SunAmerica Capital Services, Inc. (the "Distributor"), an
indirect wholly owned subsidiary of SunAmerica, acts as distributor of the
shares of the Fund pursuant to the Distribution Agreement between the
Distributor and the Corporation on behalf of the Fund. 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
Fund shares.
The Distributor, at its expense, may from time to time, provide additional
compensation to broker-dealers (including in some instances, exclusively to
Royal Alliance Associates, Inc., SunAmerica Securities, Inc. and/or Advantage
Capital Corporation, affiliates of the Distributor) in connection with sales
of shares of the Fund. Such compensation may include (i) additional
compensation with respect to the sale of Class B shares; or (ii) 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 Funds, 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 and members of their families to locations
within or outside of the United States 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 Fund's 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
5
<PAGE>
incentives may be deemed to be underwriters under the Securities Act of 1933.
Certain laws and regulations limit the ability of banks and other depository
institutions to underwrite and distribute securities. However, in the opinion
of the Adviser 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 Fund, 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.
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 ("distribution expenses") 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 the Fund have adopted Distribution Plans hereinafter
referred to as the "Class A Plan" and the "Class B Plan." In adopting the
Class A Plan and the Class B 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 the Class B shares will not be used to subsidize the sale of Class A
shares.
Under the Class B Plan, the Distributor may receive payments from the Fund
at the annual rate of up to 0.75% of the average daily net assets of the
Fund's Class B shares to compensate the Distributor and certain securities
firms for providing sales and promotional activities for distributing that
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 Fund 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 B Plan may exceed the Distributor's
distribution costs as described above. The Class A Plan does not provide for a
distribution fee. Both the Class A and Class B Plans provide that each
respective class of shares of the Fund may also pay the Distributor an account
maintenance and service fee of up to 0.15% 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 0.15% per year of the assets maintained in the Fund by their
customers.
For the fiscal year ended December 31, 1995, under the Class A Plan, the
Fund paid the Distributor a fee equal to .15% of average daily net assets. For
the same period, under the Class B Plan, the Fund paid the Distributor a fee
equal to .90% of average daily net assets.
ADMINISTRATOR. The Corporation has entered into a Service Agreement under
the terms of which SunAmerica Fund Services, Inc. ("SAFS"), an indirect wholly
owned subsidiary of SunAmerica, assists the Transfer Agent in providing
shareholder services and may receive reimbursement from the Corporation of its
costs in providing such services through a fee approved annually by the
Directors.
PURCHASE OF SHARES
GENERAL. Shares of the Fund are sold at net asset value per share, plus for
Class B shares only, a deferred sales charge. The Fund seeks to maintain a
stable net asset value per share of $1.00, although no assurance can be given
that the Fund will be able to do so.
The minimum initial investment in the Fund is $1,000 and the minimum
subsequent investment is $100. However, for Individual Retirement Accounts
(IRAs), Keogh Plan accounts and accounts for other qualified plans, the
minimum initial investment is $250 and minimum subsequent investment is $25.
Investors purchasing shares of the Fund are generally required to purchase
Class A shares, since there is no sales charge or distribution fee. Class B
shares are typically intended to be purchased in connection with exchanges of
Class B shares from other funds in the SunAmerica Family of Mutual Funds.
Dealers may receive different levels of compensation depending on which class
of shares they sell.
6
<PAGE>
Upon making an investment in shares of the Fund, an open account will be
established under which shares of the Fund 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. 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. No sales
charge is imposed on purchases or redemptions of Class A shares; provided,
however, that shareholders who purchased their Class A shares of the Fund
through an exchange from another fund in the SunAmerica Family of Mutual Funds
without an initial sales charge on the original purchase because such purchase
was in excess of $1 million, will remain subject to the 1% CDSC applicable to
such redemptions. See "Exchange Privilege."
CLASS B SHARES. Class B shares are offered at net asset value. Certain
redemptions of Class B shares within the first six years of the date of
purchase are subject to a CDSC. The charge is assessed on an amount equal to
the lesser of the then-current market value or the purchase price of the
shares being redeemed. No charge is assessed on shares derived from
reinvestment of dividends or capital gains distributions. In determining
whether the CDSC is applicable to a redemption, the calculation is determined
in the manner that results in the lowest possible rate being charged.
Therefore, it is assumed that the redemption is first of any Class A shares,
second of any shares in the shareholder's Fund account that are not subject to
a CDSC (i.e., shares representing reinvested dividends and distributions),
third of shares held more than six years and fourth of shares held the longest
during the six-year period. The amount of the CDSC, if any, will vary
depending on the number of years from the time of payment for the purchase of
Fund 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 OF
DOLLARS INVESTED OR
YEAR SINCE PURCHASE PAYMENT WAS MADE REDEMPTION PROCEEDS
- ------------------------------------ -------------------------
<S> <C>
First................................................. 4%
Second................................................ 4%
Third................................................. 3%
Fourth................................................ 3%
Fifth................................................. 2%
Sixth................................................. 1%
Seventh and thereafter................................ 0%
</TABLE>
The CDSC will be waived in connection with redemptions which are (a)
requested within one year of the death or the initial determination of
disability of a shareholder; (b) taxable distributions or loans to
participants made by qualified retirement plans or retirement accounts (not
including rollovers) for which the Adviser serves as a fiduciary (e.g.,
prepares all necessary tax reporting documents); provided that, in the case of
a taxable distribution, the plan participant or accountholder has attained the
age of 59 1/2 at the time the redemption is made; (c) 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 Fund shares; and (d) made of shares in
accounts consisting of assets which were originally individually managed by
the Adviser and had paid an investment advisory fee to the Adviser. See the
Statement of Additional Information for further information concerning
conditions with respect to (a) above. 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 and waiver of the CDSC contact Shareholder/Dealer Services at (800)
858-8850.
Shareholders of the Fund that acquired their Class B shares pursuant to a
reorganization effected with another SunAmerica mutual fund will remain
subject to the terms of the CDSC in effect for the previous fund at the time
of such reorganization. For additional information, see "Additional
Information Regarding Purchase of Shares" in the Statement of Additional
Information.
7
<PAGE>
Conversion Feature. 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. Class B shares of the Fund issued upon an exchange of
Class B shares of another SunAmerica Mutual Fund will convert into Class A
shares of the Fund on the first business day of the month following the
seventh anniversary of the issuance of the original Class B shares. Subsequent
to the conversion of a Class B share to a Class A share, such share 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.
ADDITIONAL PURCHASE INFORMATION. All purchases are confirmed to each
shareholder. The Corporation and Distributor reserve the right to reject any
purchase order and may at any time discontinue the sale of any class of shares
of the Fund.
Shares of the Fund may be purchased through the Distributor or SAFS, by
check or federal funds wire and through a pre-authorized check investment
program. 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 received.
REDEMPTION OF SHARES
Shares of the Fund may be redeemed at any time at their net asset value
next-determined, less any applicable contingent deferred sales charge (Class B
shares only), after receipt by the Fund of a redemption request in proper
form. See "Dividends, Distributions and Taxes."
REGULAR REDEMPTION. Shareholders may redeem their shares by sending a
written request to SAFS, Mutual Fund Operations, The SunAmerica Center, 733
Third Avenue, New York, NY 10017-3204. All written requests for redemption
must be endorsed by the shareholder(s) with signature(s) guaranteed by an
"eligible guarantor institution" which includes: banks, brokers, dealers,
credit unions, securities and exchange associations, clearing agencies and
savings associations. Guarantees must be signed by an authorized signatory of
the eligible guarantor and the words "Signature Guaranteed" must appear with
the signature. Signature guarantees by notaries will not be accepted. SAFS may
request further documentation from corporations, executors, administrators,
trustees or guardians.
REPURCHASE THROUGH DISTRIBUTOR. The Distributor is authorized, as agent for
the Fund, 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 the Fund next-determined after the repurchase
order is received, less any applicable contingent deferred sales charge (Class
B shares only). Repurchase orders received by the Distributor after 4:00 P.M.,
Eastern time, 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 Fund nor the Distributor imposes any charge. The offer to repurchase may
be suspended at any time, as described below.
TELEPHONE REDEMPTION. The Corporation accepts telephone requests for
redemption of shares with a value of less than $100,000. The proceeds of a
telephone redemption may be sent by wire to the shareholder's bank account as
set forth in the New Account Application or in a subsequent written
authorization. Shareholders utilizing the redemption through the electronic
funds transfer method will incur a $15.00 transaction fee. The Corporation
will employ reasonable procedures to confirm that instructions communicated by
telephone are genuine. Failure to do so may result in liability to the
Corporation 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 amount to be redeemed, and (iv) the name of the person(s)
8
<PAGE>
requesting the redemption. The Corporation 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 the Fund 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. Further information may be obtained by calling
Shareholder/Dealer Services at (800) 858-8850.
CHECKS. An individual shareholder may request from SAFS a supply of checks
which may be used to effect the redemption of shares having a value of at
least $250. Such checks may not be used to purchase shares of the Fund. When a
check is presented for payment, the Transfer Agent redeems a sufficient number
of full and fractional shares in the shareholder's account to cover the amount
of the check. The use of a check to make a withdrawal enables a shareholder of
the Fund to receive dividends on the shares to be redeemed up to the time the
check clears the Fund. Checks provided by the Fund may not be certified. There
is no charge to shareholders for checks provided by the Fund.
GENERAL. Normally payment is made on the next business day for shares
redeemed, but in any event, payment is made by check within seven days after
receipt by the Transfer Agent of a redemption request in proper form. Under
unusual circumstances, the Fund may suspend repurchases or postpone payment
for up to seven days or longer, as permitted by the federal securities laws.
At various times, the Fund may be requested to redeem shares for which it
has not yet received good payment. The Fund 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
Fund may redeem on at least 60 days' written notice and without shareholder
consent, any account that, due to a shareholder redemption and not to market
fluctuation of the account's value, 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 Fund may
impose a $2.00 monthly charge on accounts below the minimum account size.
If a shareholder redeems shares of any class of the Fund and then within one
year from the date of redemption decides the shares should not have been
redeemed, the shareholder may use all or any part of the redemption proceeds
to reinstate, with the crediting of any CDSC paid with respect to such
reinstated shares at the time of redemption (Class B shares), all or any part
of the redemption proceeds in shares of the Fund at the then-current net asset
value. Reinstatement may affect the tax status of the prior redemption.
EXCHANGE PRIVILEGE
GENERAL. Shareholders in the Fund may exchange their shares for the same
class of shares of other funds in the SunAmerica Family of Mutual Funds that
offer such class at the respective net asset value per share; however,
exchanges of Class A shares may be subject to the applicable sales load
imposed by the acquired fund. Shareholders who wish to use the exchange
privilege to exchange their shares will incur a $5.00 exchange fee. Before
making an exchange, you should obtain and review the prospectus of the fund
whose shares are being acquired. All exchanges are subject to applicable
minimum initial investment requirements and can only be effected if the shares
to be acquired are qualified for sale in the state in which the shareholder
resides. Exchanges of shares generally will constitute a taxable transaction
except for IRAs, Keogh Plans and other qualified or tax-exempt accounts. The
exchange privilege may be terminated or modified upon 60 days' written notice.
Further information about the exchange privilege may be obtained by calling
Shareholder/Dealer Services at (800) 858-8850.
If a shareholder acquires Class A shares through an exchange from another
fund in the SunAmerica
9
<PAGE>
Family of Mutual Funds and 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 shares through an exchange from another
fund in the SunAmerica Family of Mutual Funds will retain liability for any
deferred sales charge which is 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" or combined with the holding period of the shares
acquired in the exchange for purposes of determining what, if any, CDSC is
applicable upon a redemption of any of such shares.
RESTRICTIONS ON EXCHANGES. Because excessive trading (including short-term
"market timing" trading) can hurt the Fund's performance, the Fund may refuse
any exchange sell order (i) if it appears to be a market timing transaction
involving a significant portion of the Fund's assets or (ii) 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 indicators, will be considered one account for this
purpose.
In addition, the Fund reserves the right to refuse any exchange purchase
order if, in the judgment of the Adviser, the Fund 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 Fund receives or anticipates simultaneous
orders affecting significant portions of the Fund's assets. In particular, a
pattern of exchanges that coincide with a "market timing" strategy may be
disruptive to the Fund 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 AND BROKERAGE
The Adviser is responsible for decisions to buy and sell securities for the
Fund, the selection of broker-dealers and negotiation of commission rates.
Since purchases and sales of portfolio securities by the Fund are usually
principal transactions, the Fund incurs little or no brokerage commissions.
Portfolio securities are normally purchased directly from the issuer or from a
market maker for the securities. The purchase price paid to dealers serving as
market makers may include a spread between the bid and asked price. The Fund
may also purchase securities from underwriters at prices which include a
concession paid by the issuer to the underwriter.
As a general matter, the Adviser selects broker-dealers which, in its best
judgment, provide prompt and reliable execution at favorable security prices
and reasonable commission rates. The Adviser may select broker-dealers which
provide it with research services and may cause the Fund to pay such broker-
dealers commissions which exceed those which other broker-dealers may have
charged, if in the Adviser's view the commissions are reasonable in relation
to the value of the brokerage and/or research services provided by the broker-
dealer. Brokerage arrangements may take into account the distribution of Fund
shares by broker-dealers, subject to best price and execution. The Adviser may
effect portfolio transactions through an affiliated broker-dealer, acting as
agent and not as principal, in accordance with the requirements of the 1940
Act and other applicable securities laws.
DETERMINATION OF NET ASSET VALUE
The Fund 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 of each class outstanding. Shares are valued each day the Fund is open
for business, with the exception of holidays on which the New York Stock
Exchange ("NYSE") is closed, at the close of regular trading on the NYSE
(currently, 4:00 P.M., Eastern time). It is the intention of the Fund to
maintain a net asset value per share of $1.00, although there can be no
assurance that the Fund will be able to do so. In accordance with the rules
and regulations of the Securities and Exchange Commission (the "SEC"), the
Fund intends to value
10
<PAGE>
its portfolio securities based upon their amortized cost. This entails
initially valuing a security at its cost and thereafter assuming a constant
amortization to maturity of any premium or discount regardless of the impact
of fluctuating interest rates on the market value of the instrument. While
this method provides certainty in valuation, it may result in periods during
which value, as determined by the amortized cost method, is higher or lower
than the price the Fund would receive if it sold the instrument.
PERFORMANCE DATA
The Fund may advertise performance data that reflects its yield and
effective yield. Yield is based on historical earnings and is not intended to
indicate future performance.
The Fund's yield is calculated by determining the net change in value of a
hypothetical account which had one share at the beginning of a seven day
period. The yield is compounded in order to determine the effective yield.
Yield is determined by a standard formula prescribed by the SEC to facilitate
comparison with yields quoted by other mutual funds. A detailed discussion of
the yield computation is contained in the Statement of Additional Information.
Since expenses for Class B shares are higher than those for Class A shares,
the performance of Class B shares will be lower than that for Class A shares.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS. Dividends from net investment income are
declared daily and paid monthly on or about the fifteenth day of the month.
Dividends and distributions generally are taxable in the year in which they
are paid, except any dividends paid in January which were declared in the
previous calendar quarter will be treated as paid in December of the previous
year. Dividends and distributions are paid in additional shares based on the
next-determined net asset value, unless the shareholder elects in writing, not
less than five business days prior to the payment date, to receive such
amounts in cash.
In addition to having the dividends and distributions of the Fund reinvested
in shares of the Fund, 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 at the then-current net
asset value of such Fund(s).
The excess of net realized long-term capital gains over net capital losses
("capital gain distributions"), if any, will be distributed to shareholders
annually. The Fund'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 capital loss carry-forward.
TAXES. The Fund is qualified and intends to continue to qualify as a
regulated investment company under the Internal Revenue Code of 1986, as
amended. While so qualified, the Fund 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.
For Federal income tax purposes, dividends of net ordinary income and
distributions of any net realized short-term capital gain, whether paid in
cash or reinvested in shares of the Fund, are taxable to shareholders as
ordinary income.
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
advisors regarding specific questions as to Federal, state or local taxes. See
"Dividends, Distributions and Taxes" in the Statement of Additional
Information.
GENERAL INFORMATION
REPORTS TO SHAREHOLDERS. The Corporation sends to its shareholders audited
annual and unaudited semi-annual reports for the Fund. 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 Corporation, organized under the laws of the State of
Maryland on July 20, 1983, is an open-end diversified management investment
company, commonly referred to as a mutual fund. The Fund is the only
investment series
11
<PAGE>
or fund of the Corporation. The Directors have the authority to issue up to an
aggregate of ten billion (10,000,000,000) shares of common stock of the
Corporation of separate series and classes, par value $.001 per share. The
Fund currently offers Class A shares and Class B shares.
The Corporation does not hold annual shareholder meetings. The Directors are
required to call a meeting of shareholders for the purpose of voting upon the
question of removal of any Director when so requested in writing by the
shareholders of record holding at least 25% of the Corporation's outstanding
shares. Each share of the Fund has equal voting rights on each matter
pertaining to the Fund or matters to be voted upon by the Corporation, except
as noted in the Statement of Additional Information. Each share of the Fund is
entitled to participate equally with the other shares of the Fund in dividends
and other distributions and the proceeds of any liquidation, except that, due
to the differing expenses borne by the two classes, such dividends and
proceeds are likely to be lower for Class B 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, 1177 Avenue
of the Americas, New York, NY 10036, has been selected to serve as the Fund's
independent accountants. The firm of Shereff, Friedman, Hoffman & Goodman,
LLP, 919 Third Avenue, New York, NY 10022, has been selected as legal counsel
to the Corporation.
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.
APPENDIX
U.S. GOVERNMENT OBLIGATIONS. Securities issued or guaranteed as to principal
and interest by the U.S. government or its agencies and instrumentalities
include U.S. Treasury obligations, consisting of bills, notes and bonds, which
principally differ in their interest rates, maturities and times of issuance,
and obligations issued or guaranteed by agencies and instrumentalities which
are supported by (i) the full faith and credit of the U.S. Treasury (such as
securities of the Small Business Administration), (ii) the limited authority
of the issuer to borrow from the U.S. Treasury (such as securities of the
Student Loan Marketing Association), or (iii) the authority of the U.S.
government to purchase certain obligations of the issuer (such as securities
of the Federal National Mortgage Association). No assurance can be given that
the U.S. government will provide financial support to its agencies and
instrumentalities as described in "(ii)" or "(iii)" above other than as set
forth, since it is not obligated to do so by law.
BANK OBLIGATIONS. These obligations include certificates of deposit and
bankers' acceptances issued by domestic banks and savings and loan
associations and other savings depositories, which have total assets in excess
of $2 billion. In addition, the Fund may invest in U.S. dollar denominated
obligations issued by foreign branches of the domestic banks described above
("Eurodollar CD's"), including non-negotiable fixed time deposits maturing in
seven days or less, and in U.S. dollar denominated certificates of deposit
issued through U.S. branches of foreign banks ("Yankee CD's") having total
assets in excess of $2 billion. These investments may involve risks which
differ from investments in domestic obligations, such as future unfavorable
political and economic developments, the possible imposition of exchange
controls or other governmental restrictions, the availability of public
information about issuers, and differing accounting and financial reporting
standards.
COMMERCIAL PAPER. Commercial paper is a promissory note issued by a
corporation to finance short-term credit needs. The Fund may invest in
commercial paper of domestic corporations and in U.S. dollar denominated
commercial paper issued by foreign corporations. Commercial paper may be
either unsecured or backed by a letter of credit. Commercial paper obligations
may include variable amount master demand notes. These notes permit the
investment of fluctuating amounts at varying rates of interest pursuant to
note arrangements between the Fund, acting as lender, and the borrower. The
Fund only invests in such notes if they are redeemable at face value, plus
accrued interest, on not more than seven days' notice at any time.
12
<PAGE>
CORPORATE OBLIGATIONS. These obligations include bonds, debentures and notes
issued by corporations to finance long-term credit needs. Although issued with
maturities in excess of one year, the Fund's investments in corporate
obligations are limited to obligations having remaining maturities of 397
calendar days or less at the time of purchase by the Fund.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements in
order to generate income while providing liquidity. When a Fund acquires a
security from a bank or securities dealer, it may simultaneously enter into a
repurchase agreement, wherein the seller agrees to repurchase the security at
a mutually agreed-upon time (generally within seven days) and price. The
repurchase price is in excess of the purchase price by an amount which
reflects an agreed-upon market rate of return, which is not tied to the coupon
rate or maturity of the underlying security. Repurchase agreements will be
fully collateralized. If, however, the seller defaults on its obligation to
repurchase the underlying security, the Fund may experience delay or
difficulty in exercising its rights to realize upon the security and might
incur a loss if the value of the security has declined. The Fund might also
incur disposition costs in liquidating the security. There is no limit on the
amount of the Fund's net assets that may be subject to repurchase agreements
having a maturity of seven days or less. Repurchase agreements with a maturity
of greater than seven days will be treated as illiquid securities and subject
to the 10% limitation described below.
REVERSE REPURCHASE AGREEMENTS. Subject to the Fund's restriction with
respect to borrowing, the Fund may enter into reverse repurchase agreements.
In a reverse repurchase agreement, the Fund sells a security subject to the
rights and obligations to repurchase such security. The Fund then invests the
proceeds from the transaction in another obligation in which the Fund is
authorized to invest. In order to minimize any risk involved, the Fund
maintains in a segregated account cash, cash equivalents or liquid high grade
debt securities equal in value to the repurchase price.
ILLIQUID SECURITIES. The Fund may invest up to 10% of its net assets,
determined as of the date of purchase, in illiquid securities including
repurchase agreements which have a maturity of longer than seven days,
securities with legal or contractual restrictions on resale (restricted
securities) and securities that are not readily marketable in securities
markets either within or without the United States. Restricted securities
eligible for resale pursuant to Rule 144A under the Securities Act of 1933, as
amended, or certain private placements of commercial paper issued in reliance
on an exemption from such an Act pursuant to Section 4(2) thereof, that have a
readily available market are not con-sidered illiquid for purposes of the
Fund's 10% limitation on purchases of illiquid securities. The Adviser will
monitor the liquidity of such restricted securities under the supervision of
the Directors. See "Illiquid Securities" in the Statement of Additional
Information for a further discussion of investments in such securities.
ASSET-BACKED SECURITIES. The Fund may invest up to 15% of its net assets in
asset-backed securities rated in conformance with the Fund's credit quality
restrictions. These securities, issued by trusts and special purpose
corporations, are backed by a pool of assets, such as credit card or
automobile loan receivables, representing the obligations of a number of
different parties. Corporate 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. See the
Statement of Additional Information for further information on these
securities.
LOANS OF PORTFOLIO SECURITIES. The Fund may lend portfolio securities to
brokers, dealers and other financial institutions, provided such loans are
callable at any time by the Fund and are at all times secured by cash or
equivalent collateral. By lending its portfolio securities, the Fund 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 only be made to firms deemed by the Adviser to be
creditworthy.
FUTURE DEVELOPMENTS. The Fund 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 Fund'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.
13
<PAGE>
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTA-
TIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR THE STATEMENT OF ADDI-
TIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESEN-
TATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND, THE AD-
VISER 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.
[LOGO] SUNAMERICA
CAPITAL SERVICES
Distributor
<PAGE>
SUNAMERICA MONEY MARKET FUND
Statement of Additional Information
DATED APRIL 30, 1996
The SunAmerica Center General Marketing and
733 Third Avenue Shareholder Information
New York, NY 10017-3204 (800) 858-8850
SunAmerica Money Market Fund (the "Fund") seeks as high a level of current
income as is consistent with liquidity and stability of capital by investing in
a portfolio of high quality, short-term money market instruments. The Fund is
the only series of SunAmerica Money Market Funds, Inc., which is registered as
an open-end diversified management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act") and organized as a Maryland
corporation (the "Corporation").
This Statement of Additional Information is not a Prospectus, but should be
read in conjunction with the Fund's Prospectus dated April 30, 1996. 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>
HISTORY OF THE FUND B-2
INVESTMENT OBJECTIVE AND POLICIES B-2
INVESTMENT RESTRICTIONS B-9
DIRECTORS AND OFFICERS B-13
ADVISER, PERSONAL TRADING, DISTRIBUTOR AND ADMINISTRATOR B-17
PORTFOLIO TRANSACTIONS AND BROKERAGE B-22
ADDITIONAL INFORMATION REGARDING PURCHASE OF SHARES B-23
ADDITIONAL INFORMATION REGARDING REDEMPTION OF SHARES B-27
DETERMINATION OF NET ASSET VALUE B-28
PERFORMANCE DATA B-29
DIVIDENDS, DISTRIBUTIONS AND TAXES B-31
RETIREMENT PLANS B-34
DESCRIPTION OF SHARES B-35
ADDITIONAL INFORMATION B-37
FINANCIAL STATEMENTS B-37
APPENDIX B-38
</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, the Adviser or 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>
HISTORY OF THE FUND
The Corporation was organized under the name Integrated Money Market
Securities, Inc. on July 20, 1983 and was subsequently renamed SunAmerica Money
Market Securities, Inc. in 1990. On September 23, 1993, the Articles of
Incorporation of the Corporation were amended to permit the creation of multiple
series and classes of shares, and on September 24, 1993, the Corporation
reorganized with the SunAmerica Cash Fund ("Cash Fund") and was renamed
SunAmerica Money Market Funds, Inc. (the "Reorganization"). All of the
outstanding shares of the Corporation were redesignated Class A shares of the
Fund in the Reorganization. In addition, in the Reorganization, the
shareholders of Cash Fund received Class B shares of the Fund.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of the Fund are described in the
Prospectus. Certain types of securities in which the Fund may invest and
certain investment practices which the Fund may employ, which are described in
the Prospectus and in the Appendix thereto, are discussed more fully below.
U.S. GOVERNMENT OBLIGATIONS. As discussed in the Prospectus, the Fund may
invest in a variety of short-term debt securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities. These securities include a
variety of Treasury securities which differ in their rates of interest,
maturities and dates of issuance. Treasury bills are obligations issued with
maturities of one year or less. Treasury notes are generally issued with
maturities of from one to ten years. Treasury bonds are generally issued with
maturities of more than ten years. Obligations issued by agencies and
instrumentalities, which may be purchased by the Fund, also vary in terms of
their maturities at the time of issuance. However, the Fund invests only in
obligations that, at their time of purchase by the Fund, have remaining
maturities of 397 calendar days or less.
BANK OBLIGATIONS. Certificates of deposit ("CD's") and bankers' acceptances may
be purchased by the Fund. CD's are securities which represent deposits in a
depository institution (e.g., a commercial bank or savings and loan association)
for a specified period at a specified rate of interest and normally are
negotiable. CD's issued by a foreign branch (usually London) of a U.S. domestic
bank, are known as Eurodollar CD's. Although certain risks may be associated
with Eurodollar CD's which are not associated with CD's issued in the U.S. by
domestic banks, the credit risks of these obligations are similar because U.S.
banks generally are liable for
B-2
<PAGE>
the obligations of their branches. CD's issued through U.S. branches of foreign
banks are known as Yankee CD's. These branches are subject to Federal or state
banking regulations. The secondary markets for Eurodollar and Yankee CD's may
be less liquid than the market for CD's issued by domestic branches of U.S.
banks.
Bankers' acceptances are short-term credit instruments that represent
the promise of a bank to pay a draft which has been drawn by one of its
customers at its maturity. These obligations are used to finance the import,
export, transfer or storage of goods and represent the obligation of both the
accepting bank and its customer.
COMMERCIAL PAPER. As discussed in the Prospectus, the commercial paper in which
the Fund may invest may be unsecured or may be backed by letters of credit.
Commercial paper that is backed by a letter of credit is, in effect, "two party"
paper with the issuer of the paper initially responsible for repayment and a
bank guaranteeing the repayment if not made by the issuer at maturity. The Fund
may also invest in variable amount master demand notes which represent a direct
lending arrangement between the Fund and a corporate borrower. These notes
permit daily changes in the amount borrowed. The Fund has the right to increase
the amount loaned under the note at any time up to the full amount provided in
the loan agreement or to decrease the amount loaned. The borrower generally has
the right to prepay up to the full amount of the loan without penalty. These
notes are generally not traded in a secondary market; however, the Fund will
only enter into such arrangements where it has the right to redeem the note on
not more than seven days notice.
CORPORATE OBLIGATIONS. These obligations include bonds, debentures and notes
issued by corporations to finance long-term credit needs. Although issued with
maturities in excess of one year, the Fund's investments in corporate
obligations are limited to obligations having remaining maturities of 397
calendar days or less at the time of purchase by the Fund.
ILLIQUID SECURITIES. The Fund may invest up to 10% of its net assets,
determined as of the date of purchase, in illiquid securities including
repurchase agreements which have a maturity of longer than seven days 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
B-3
<PAGE>
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 generally will 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, the Fund
will seek to obtain the right of registration at the expense of the issuer.
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.
Restricted securities eligible for resale pursuant to Rule 144A under
the Securities Act for which there is a readily available market will not be
deemed to be illiquid. The Fund's investment adviser, SunAmerica Asset
Management Corp. (the "Adviser"), will monitor the liquidity of such restricted
securities subject to the supervision of the Board of Directors of the
Corporation (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 the Fund may invest 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
B-4
<PAGE>
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. The Fund's 10%
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 delegated to
the Adviser 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 Adviser to take into account the same factors described above
for other restricted securities and require the Adviser to perform the same
monitoring and reporting functions.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
banks, brokers or securities dealers. In such agreements, the seller agrees to
repurchase a security from the Fund 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 resale price is in excess
of the purchase price, reflecting an agreed-upon rate of return effective for
the period of time the Fund's money is invested in the security. Whenever the
Fund enters into a repurchase agreement, it obtains collateral having a value at
least equal to the amount of the purchase price. The instruments held as
collateral are valued daily and if the value of the instruments declines, the
Fund will require additional collateral. If the seller defaults and the value
of the collateral securing the repurchase agreements declines, the Fund 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 Fund 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 the Fund's use of repurchase agreements. The Fund will not
invest in repurchase agreements maturing in more than seven days if the
aggregate of such investments along with other illiquid securities exceeds 10%
of the value of its net assets. However, there is no limit on the amount of the
Fund's net assets that may be subject to repurchase agreements having a maturity
of seven days or less for temporary defensive purposes.
REVERSE REPURCHASE AGREEMENTS. The Fund may enter into reverse repurchase
agreements, which is considered by the Fund to be a borrowing practice subject
to the Fund's borrowing limitations, with banks and broker-dealers. A reverse
repurchase agreement
B-5
<PAGE>
involves the sale of a security held by the Fund, subject to an agreement by the
Fund to repurchase that security at an agreed upon price, date and interest
payment. The Fund uses the proceeds of the reverse repurchase agreement to make
additional investments which mature on or prior to the repurchase date, and will
enter into a reverse repurchase agreement when it anticipates that the interest
income to be earned from investing the proceeds of the reverse repurchase
agreement will exceed the interest expense of the transaction. During the time
a reverse repurchase agreement is outstanding, the Fund will maintain a
segregated custodial account containing cash, U.S. Government or other liquid
high quality debt securities having a value at least equal to the repurchase
price under the agreement. In the event that the other party to the reverse
repurchase agreement defaults on its obligation to resell to the Fund the
underlying securities because of insolvency or otherwise, the Fund could
experience delays and costs in gaining access to the securities and could suffer
a loss to the extent that the value of the proceeds of the agreement fell below
the value of the underlying securities. Reverse repurchase agreements are
considered to be borrowings and are subject to the percentage limitations on
borrowings. See "Investment Restrictions."
ASSET-BACKED SECURITIES. The Fund may invest up to 15% of its net assets in
asset-backed securities rated in conformance with the Fund's credit quality
restrictions. 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.
The Fund may also invest in privately issued asset-backed securities.
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
B-6
<PAGE>
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. The
Fund 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.
LOANS OF PORTFOLIO SECURITIES. Consistent with applicable regulatory
requirements, the Fund may lend portfolio securities in amounts up to 20% of
total assets to brokers, dealers and other financial institutions, provided,
that such loans are callable at any time by the Fund and are at all times
secured by cash or equivalent collateral that is equal to at least 100% of the
market value, determined daily, of the loaned securities. In lending its
portfolio securities, a Fund receives income while retaining the securities'
potential for capital appreciation. The advantage of such loans is that a Fund
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. Where securities instead of cash are delivered to the
Fund as collateral, the Fund earns its return in the form of a loan premium paid
by the borrower. A loan may be terminated by the borrower on one business day's
notice or by the Fund at any time. If the borrower fails to maintain the
requisite amount of collateral, the loan automatically terminates, and the Fund
can 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 the Fund; and any gain or loss
in the market price of the loaned security during the loan would inure to the
Fund. The Fund 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.
Since voting or consent rights which accompany loaned securities pass
to the borrower, the Fund will follow the policy of
B-7
<PAGE>
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 Fund's investment in the securities which are the subject of the loan.
BORROWINGS. As noted in the Prospectus, the Fund may borrow from banks for
temporary or emergency purposes or to meet redemption requests. The consequence
of such borrowings might be to reduce the Fund's yield below that which would
have been realized in the absence of such borrowings.
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES. From time to time, in the ordinary
course of business, the Fund may purchase securities on a when-issued or
delayed-delivery basis - i.e., delivery and payment can take place a month or
more after the date of the transactions. Such agreements might be entered into,
for example, when the Fund anticipates a decline in the yield of securities of a
given issuer and is able to obtain a more advantageous yield by committing
currently to purchase securities to be issued later. The securities so purchased
are subject to market fluctuation and no interest accrues to the purchaser
during this period. At the time of delivery of the securities, the value may be
more or less than the purchase price. The Fund will establish and maintain
until the date of delivery of such when-issued securities, a segregated account
on the books with the Fund's Agent in which it will maintain cash or cash
equivalents or other high-grade portfolio securities equal in value to
commitments for such when-issued or delayed-delivery securities. The Fund will
make payment for such when-issued securities on the delivery date utilizing
then-available cash and, if cash is not available, or if it is not
disadvantageous to the Fund, utilizing the proceeds of the liquidation of
portfolio securities held in such segregated account.
SPECIAL RISK FACTORS. In the case of bank obligations not insured by the
Federal Deposit Insurance Corporation ("FDIC") or the Federal Savings and Loan
Insurance Corporation ("FSLIC"), the Fund will be dependent solely on the
financial resources of the issuing bank for payment of principal and interest.
The Fund's investments in commercial paper issued by foreign corporations and
securities of foreign branches of domestic banks and domestic branches of
foreign banks involve certain investment risks in addition to those affecting
obligations of U.S. domestic issuers. These risks include the possibility of
adverse political and economic developments, and the risk of: imposition of
foreign withholding taxes on the interest payable on such securities; seizure,
expropriation or nationalization of foreign deposits; and adoption of foreign
governmental restrictions, such as exchange controls, which might adversely
affect the payment of principal and interest on such securities. In addition,
certain reserve requirements and other regulations to which domestic banks are
subject may not apply to foreign branches or foreign banks, which also may use
accounting
B-8
<PAGE>
methods different from those used by U.S. domestic banks. Non-negotiable time
deposits, unlike negotiable certificates of deposit, cannot be sold in a
secondary market and may be subject to penalties for early withdrawal.
INVESTMENT RESTRICTIONS
The Fund is subject to a number of investment restrictions that are
fundamental policies and may not be changed without the approval of the holders
of a majority of the Fund's outstanding voting securities. As defined in the
1940 Act, a "majority of the outstanding voting securities" of the Fund means
the lesser of (i) 67% of the shares of the Fund represented at a meeting at
which more than 50% of the outstanding shares are present in person or
represented by proxy or (ii) more than 50% of the outstanding shares. Unless
otherwise indicated, all percentage limitations apply only at the time the
investment is made; any subsequent change in any applicable percentage resulting
from fluctuations in value will not be deemed an investment contrary to these
restrictions. Under these restrictions, the Fund may not:
1. Purchase securities other than those described under "Investment
Objective and Policies."
2. Enter into reverse repurchase agreements exceeding in the
aggregate 1/3 of the value of the Fund's total assets, less liabilities other
than obligations under such reverse repurchase agreements.
3. Purchase the securities of issuers conducting their principal
business activity in the same industry if immediately after such purchase the
value of its investments in such industry would exceed 25% of the value of the
Fund's total assets, provided that there is no limitation with respect to
investments in securities issued by domestic branches of U.S. banks or the U.S.
Government, its agencies or instrumentalities.
4. Invest more than 5% of its assets in the securities of any one
issuer (exclusive of securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities) except that up to 25% of the value of the Fund's
total assets may be invested without regard to such 5% limitation, subject to
applicable limitations imposed by Rule 2a-7 under the 1940 Act.
5. Make loans, except through the purchase or holding of debt
obligations in accordance with the Fund's investment objective and policies (see
"Investment Objective and Policies").
B-9
<PAGE>
6. Lend its portfolio securities in excess of 20% of its total assets
provided that such loans are made according to the guidelines of the Securities
and Exchange Commission and the Fund's Board of Directors, including maintaining
collateral from the borrower equal at all times to the current market value of
the securities loaned.
7. Borrow money except from banks for temporary or emergency purposes
to meet redemption requests which might otherwise require the untimely
disposition of securities (not for the purpose of increasing income), provided
that borrowings in the aggregate may not exceed 10% of the value of the Fund's
total assets, including the amount borrowed, at the time of such borrowing.
8. Purchase or sell puts, calls, straddles, spreads or any
combination thereof, real estate, commodities, commodity contracts or interests
in oil, gas and/or mineral exploration or development programs, provided that
the Fund may purchase bonds or commercial paper issued by companies, including
real estate investment trusts, which invest in real estate or interests therein.
9. 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 the Fund will not hold more than 3% of the
outstanding voting securities of any one investment company, will not have
invested more than 5% of its total assets in any one investment company and will
not have invested more than 10% of its total assets in such securities of one or
more investment companies (each of the above percentages to be determined at the
time of investment), or except as part of a merger, consolidation or other
acquisition.
10. Act as an underwriter of securities.
11. Make short sales of securities or maintain a short position,
provided that this restriction shall not be deemed to be applicable to the
purchase or sale of "when issued" securities or of securities for delivery at a
future date.
12. Invest in or hold securities of any issuer if those officers and
Directors of the Fund or the Adviser owning individually more than 1/2 of 1% of
the securities of such issuer together own more than 5% of the securities of
such issuer.
B-10
<PAGE>
In addition to the foregoing, the Fund has adopted a non-fundamental
policy (which may be changed by the Directors without shareholder approval) of
not investing more than 10% of its net assets in illiquid securities, including
repurchase agreements which have a maturity of longer than seven days, time
deposits with a maturity of longer than seven days, securities with legal or
contractual restrictions on resale and securities that are not readily
marketable in securities markets either within or without the United States.
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
the Securities 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 10% limitation on illiquid securities.
Further, pursuant to regulations under the 1940 Act, the Fund may not
purchase any security that matures more than 397 calendar days from the date of
purchase, or which has an implied maturity of more than 397 calendar days. For
the purpose of satisfying this requirement, the maturity of a portfolio security
shall be deemed to be the period remaining until the date on which the principal
amount must be paid or, in the case of a security called for redemption, the
date on which the redemption payment must be made, except that:
1. A variable rate instrument, the principal amount of which is
scheduled on the face of the instrument to be paid in 397 calendar days or less
shall be deemed to have a maturity equal to the period remaining until the next
readjustment of the interest rate.
2. A variable rate instrument that is subject to a demand feature
shall be deemed to have a maturity equal to the longer of the period remaining
until the next readjustment of the interest rate or the period remaining until
the principal amount can be recovered through demand.
3. A floating rate instrument that is subject to a demand feature
shall be deemed to have a maturity equal to the period remaining until the
principal amount can be recovered through demand.
4. A repurchase agreement shall be deemed to have a maturity equal to
the period remaining until the date on which the repurchase of the underlying
securities is scheduled to occur, or where no date is specified, but the
agreement
B-11
<PAGE>
is subject to demand, the notice period applicable to a demand for the
repurchase of securities.
5. A portfolio lending agreement shall be treated as having a
maturity equal to the period remaining until the date on which the loaned
securities is scheduled to be returned, or, where no date is specified, but the
agreement is subject to a demand, the notice period applicable to a demand for
the return of the loaned securities.
6. The maturity of an instrument subject to a stand-by commitment
will not be affected by the stand-by commitment.
7. An instrument that is issued or guaranteed by the U.S. Government,
or any agency thereof, which has a variable rate of interest readjusted no less
frequently than every 762 days shall be deemed to have a maturity equal to the
period remaining until the next readjustment of the interest rate.
[This area intentionally left blank.]
B-12
<PAGE>
DIRECTORS AND OFFICERS
The following table lists the Directors and executive officers of the
Corporation, their ages, business addresses, and principal occupations during
the past five years. The SunAmerica Mutual Funds 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. James Coppersmith, 62 Director Formerly, President and
7 Elmwood Road General Manager, WCVB-TV, a
Marblehead, MA 01945 division of the Hearst Corporation from
1982 to 1994 (retired); Trustee/Director
of the SunAmerica Mutual Funds and
Trustee of Anchor Series Trust.
Samuel M. Eisenstat, 55 Chairman of Attorney in private practice;
430 East 86 Street the Board Trustee of RPS Realty Trust
New York, NY 10028 since December 1988; Director
of Volt Information Sciences
Funding, Inc., a subsidiary of
Volt Information Sciences, Inc.
since October 1993; Chairman of
the Board of the SunAmerica
Mutual Funds and Anchor Series
Trust.
Stephen J. Gutman, 52 Director Chairman of the Board, Chief
340 East 79 Street Operating and Executive
New York, NY 10021 Officer of Beau Brummel Casuals Limited,
Inc., a menswear specialty retailer since
May 1989; Trustee/Director of the
SunAmerica Mutual Funds and Trustee of
Anchor Series Trust.
Sebastiano Sterpa, 66 Director Founder of Sterpa Realty
Suite 200 Inc., a full service real
200 West Glenoaks Blvd estate firm, since 1962;
Glendale, CA 91202 Chairman of the Sterpa Group,
real estate investments and
management company; Trustee/
Director of the SunAmerica
Mutual Funds.
B-13
<PAGE>
<TABLE>
<CAPTION>
Position Principal Occupations
Name, Age and Address with the Fund During Past 5 Years
- ----------------------------------- -------------------------------- --------------------------------
<S> <C> <C>
Peter A. Harbeck*, 42 Director and Director and President,
The SunAmerica Center President SunAmerica Asset Management
733 Third Avenue Corp. ("SAAMCo"); Director,
New York, NY 10017-3204 SunAmerica Capital Services,Inc.
("SACS") since February 1993;
Director of SAAMCo and President
of SunAmerica Fund Services, Inc.,
("SAFS") since May
1988; President, SunAmerica
Mutual Funds and Anchor Series
Trust; Executive Vice President
and Chief Operating Officer of
SAAMCo, from May 1988 to August
1995; Executive Vice President,
SACS, from November 1991 to
August 1995; and Director,
Resources Trust Company.
Peter McMillan III*, 38 Director Executive Vice President and
1 SunAmerica Center Chief Investment Officer of
Century City SunAmerica Investments, Inc.
Los Angeles, CA 90067 since August 1989; Director,
Resources Trust Company.
Stanton J. Feeley, 58 Executive Executive Vice President and
The SunAmerica Center Vice Chief Investment Officer, SAAMCo
733 Third Avenue President since February 1992; Formerly,
New York, NY 10017-3204 Senior Portfolio Manager,
Delaware Management Company,
Inc. from December 1987 to
February 1992.
P. Christopher Leary, 36 Vice Senior Vice President, SAAMCo,
The SunAmerica Center President since January 1994; Portfolio
733 Third Avenue Manager since 1990.
New York, NY 10017-3204
Peter C. Sutton, 31 Treasurer Vice President, SAAMCo, since
The SunAmerica Center September 1994,; Treasurer,
733 Third Avenue SunAmerica Mutual Funds since
New York, NY 10017-3204 February 1996; Vice President,
SunAmerica Series Trust and
Anchor Pathway Fund since
October 1994; Controller,
SunAmerica Mutual Funds (1993-1996);
Assistant Controller, SunAmerica
Mutual Funds (1990-1993).
</TABLE>
B-14
<PAGE>
<TABLE>
<CAPTION>
Principal Occupations
Name, Age and Address Position with the Fund During Past 5 Years
- ---------------------------------- -------------------------------------------------------- ---------------------------
<S> <C> <C> <C>
Robert M. Zakem, 38 Secretary and Senior Vice President and
The SunAmerica Center Chief Compli- General Counsel of SAAMCo,
733 Third Avenue ance Officer since April 1993; Executive
New York, NY 10017-3204 Vice President and Director,
SACS, since February 1993;
Vice President of SAFS, since
January 1994; Assistant
Secretary, SunAmerica Series
Trust and Anchor Pathway Fund
since September 1993; Formerly,
Vice President and Associate
General Counsel, SAAMCo, from
March 1992 to April 1993;
Associate, Piper & Marbury from
1989 to 1992.
</TABLE>
Directors and officers of the Corporation are also trustees and officers of
some or all of the other investment companies managed, administered or advised
by the Adviser, and distributed by SunAmerica Capital Services, Inc. ("SACS" or
the "Distributor") and other affiliates of SunAmerica Inc.
The Corporation pays each Director who is not an interested person of the
Corporation or the Adviser (each a "disinterested" Director) 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 a pro rata portion (based upon the Corporation's net assets)
of the $40,000 in annual compensation for acting as a director or trustee to all
the retail funds in the SunAmerica Mutual Funds. In addition, Mr. Eisenstat
receives an aggregate of $2,000 in annual compensation for serving as Chairman
of the Boards of the retail funds in the SunAmerica Mutual Funds. Officers of
the Corporation receive no direct remuneration in such capacity from the
Corporation or 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 $5,000 in annual compensation for serving on the Audit Committees
of all of the retail funds of the SunAmerica Mutual Funds as well as Anchor
Series Trust. With respect to the Corporation, each member of the committee
receives a pro rata portion of the $5,000 annual compensation, based on the
relative net assets of the Corporation. The Corporation also has a Nominating
Committee, composed 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.
B-15
<PAGE>
The Directors (and Trustees) of the SunAmerica Mutual Funds have adopted
the SunAmerica Disinterested Trustees' and Directors' Retirement Plan (the
"Retirement Plan") effective January 1, 1993 for the disinterested Directors of
the SunAmerica Mutual Funds. 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, 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 of
each disinterested Director as defined herein of the Corporation for his
services as Director for the fiscal year ended December 31, 1995.
COMPENSATION TABLE
<TABLE>
<CAPTION>
TOTAL
PENSION OR COMPENSATION
RETIREMENT ESTIMATED FROM
AGGREGATE BENEFITS ANNUAL REGISTRANT
COMPENSATION ACCRUED AS BENEFITS AND FUND
FROM PART OF FUND UPON COMPLEX PAID
DIRECTOR REGISTRANT EXPENSES* RETIREMENT TO DIRECTORS*
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
S. James
Coppersmith $6,546 $32,550 $445,053 $ 65,000
- -------------------------------------------------------------------------
Samuel M.
Eisenstat $6,851 $12,940 $691,328 $ 69,000
- -------------------------------------------------------------------------
Stephen J.
Gutman $6,546 $13,940 $913,682 $ 65,000
- -------------------------------------------------------------------------
Sebastiano
Sterpa $6,654 $20,000 $118,507 $43,333**
- -------------------------------------------------------------------------
</TABLE>
* Information is as of December 31, 1995 for the four investment companies in
the complex which pay fees to these directors/trustees. The complex consists
of the SunAmerica Mutual Funds and Anchor Series Trust.
** Mr. Sterpa is not a trustee of Anchor Series Trust.
B-16
<PAGE>
As of April 11, 1996, the Directors and officers of the Fund owned in the
aggregate, less than 1% of the Fund's total outstanding shares.
ADVISER, PERSONAL TRADING, DISTRIBUTOR AND ADMINISTRATOR
THE ADVISER. The Adviser, organized as a Delaware corporation in 1982, is
located at The SunAmerica Center, 733 Third Avenue, New York, NY 10017-3204, and
serves as adviser to the Fund pursuant to the Investment Advisory and Management
Agreement dated September 23, 1993 (the "Advisory Agreement") with the
Corporation, on behalf of the Fund. The Adviser 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,
Century City, Los Angeles, CA 90067-6022, telephone (310) 772-6000.
Under the Advisory Agreement, the Adviser selects and manages the
investments of the Fund, provides various administrative services and supervises
the Fund's daily business affairs, subject to general review by the Directors.
Except to the extent otherwise specified in the Advisory Agreement, the
Fund pays, or causes to be paid, all other expenses of the Corporation and the
Fund, 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 Fund and
its 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 Fund, and supplements thereto, to the
shareholders of the Fund; 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 Fund;
postage; insurance premiums on property or personnel (including Officers and
Directors) of the Corporation 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
Corporation's operation.
As compensation for its services to the Fund, the Adviser receives a fee
from the Fund, payable monthly, computed daily at the annual rate of .50% on the
first $600 million of the Fund's average daily net assets, .45% on the next $900
million of net assets and .40% on net assets over $1.5 billion.
B-17
<PAGE>
The following table sets forth the total advisory fees paid to the Adviser
by the Fund for the fiscal years ended December 31, 1995, 1994, and 1993,
pursuant to the Advisory Agreement.
ADVISORY FEES
1995 1994 1993
------------------------------------
$1,560,968 $1,420,692 $1,060,498
------------------------------------
Certain states in which the shares of the Fund are qualified for sale
impose limitations on the expenses of the Fund. The current annual expense
limitations require that the Adviser reimburse the Fund in any amount necessary
to prevent the Fund's aggregate ordinary operating expenses (excluding interest,
taxes, distribution and brokerage fees and commissions, and extraordinary
charges such as litigation costs) from exceeding, in any fiscal year, 2 1/2% of
the first $30 million of the average daily net assets of the Fund, 2% of the
next $70 million of such assets, plus 1 1/2% of such assets in excess of $100
million. In accordance with the terms of the Advisory Agreement, if the
expenses of the Fund exceed the amount of the fees paid by the Fund to the
Adviser, then the Adviser will reimburse the Fund the amount of such excess.
For the fiscal years ended December 31, 1995, 1994 and 1993, expense
reimbursements were not required.
The Advisory Agreement continues in effect with respect to the Fund 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 Fund's outstanding voting
securities. Any such continuation also requires approval by a majority of the
Directors who are not parties to the Advisory Agreement or "interested persons"
of any such party as defined in the 1940 Act by vote cast in person at a meeting
called for such purpose. The Advisory Agreement may be terminated with respect
to the Fund at any time, without penalty, on 60 days' written notice by the
Directors by the holders of a majority of the Fund's outstanding voting
securities or by the Adviser. The Advisory Agreement automatically terminates
with respect to the Fund in the event of its assignment (as defined in the 1940
Act and the rules thereunder).
Under the terms of the Advisory Agreement, the Adviser is not liable to the
Fund, or its shareholders, for any act or omission by it or for any losses
sustained by the Fund or its shareholders, except in the case of willful
misfeasance, bad faith, gross negligence or reckless disregard of duty.
B-18
<PAGE>
PERSONAL TRADING. The Fund and the Adviser have adopted a written Code of
Ethics 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 of Ethics is an individual who is a trustee,
director, officer, general partner or advisory person of the Fund or the
Adviser. 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 the Adviser, (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. The Adviser reports to
the Board of Directors on a quarterly basis, as to whether there were any
violations of the Code of Ethics by Access Persons of the Fund or the Adviser
during the quarter.
THE DISTRIBUTOR. The Corporation, on behalf of the Fund, 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 the Fund. 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 Fund 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 the Fund, for distribution to persons who are not
shareholders of the Fund and the costs of preparing and distributing any other
supplemental sales literature. However, certain promotional expenses may be
borne by the Fund (see "Distribution Plans" below).
The Distribution Agreement continues in effect from year to year with
respect to the Fund if such continuance is approved at least annually by the
Directors, including a majority of the Directors who are not "interested
persons" of the Corporation. The Corporation or the Distributor each has the
right to terminate the Distribution Agreement with respect to the Fund 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 Fund. In some instances, such additional commissions,
fees or other incentives may be offered only to certain firms, including Royal
Alliance Associates, Inc., SunAmerica Securities, Inc. and Advantage
Capital
B-19
<PAGE>
Corporation, affiliates of the Distributor, that sell or are expected to sell
during specified time periods certain minimum amounts of shares of the Fund, 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
Corporation and the shareholders of each class of shares of the Fund have
adopted Distribution Plans (the "Class A Plan" and the "Class B Plan," and
collectively, the "Distribution Plans"). Reference is made to "Management of the
Corporation - Distribution Plans" in the Prospectus for certain information with
respect to the Distribution Plans.
Under the Class B Plan, the Distributor may receive payments from the Fund
at the annual rate of up to 0.75% of the average daily net assets of the Fund's
Class B shares, to compensate the Distributor and certain securities firms for
sales and promotional activities for distributing that 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 Fund
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 B Plan will
exceed the Distributor's distribution costs as described above. The Class A
Plan does not provide for a distribution fee. Both Distribution Plans, however,
provide that each class of shares of the Fund may pay the Distributor an account
maintenance and service fee of up to 0.15% 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 0.15% per year of the assets maintained in the Fund by their customers.
The following table sets forth the distribution fees received by the
Distributor from each class of the Fund's shares for the fiscal years ended
December 31, 1995, 1994, and 1993.
B-20
<PAGE>
DISTRIBUTION FEES
1995 1994 1993
--------------------------------------------------------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
--------------------------------------------------------------
$373,008 $571,694 $307,701 $714,820 $303,272 $89,267*
--------------------------------------------------------------
* For the fiscal period 9/24/93 through 12/31/93
Continuance of the Distribution Plans with respect to the Fund 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 the Fund, without approval of the shareholders of the affected
class of shares of the Fund. 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 the
Fund 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 Fund. So long
as the Distribution Plans are in effect, the election and nomination of the
Independent Directors of the Corporation 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 the Fund, the Directors
must consider all factors they deem relevant, including information as to the
benefits of the Fund and the shareholders of the relevant class of the Fund.
THE ADMINISTRATOR. The Corporation has entered into a Service Agreement, under
the terms of which SunAmerica Fund Services, Inc., 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 the Fund. 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.
The Service Agreement continues in effect from year to year provided that
such 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 Corporation subject to review and approval by the
Directors. This fee represents the full
B-21
<PAGE>
cost of providing shareholder and transfer agency services to the Corporation.
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 of the Transfer Agent which are paid by
the Corporation). For further information regarding the Transfer Agent see the
section entitled "Additional Information" below.
PORTFOLIO TRANSACTIONS AND BROKERAGE
As discussed in the Prospectus, the Adviser is responsible for decisions to
buy and sell securities for the Fund, selection of broker-dealers and
negotiation of commission rates. Purchases and sales of securities on a
securities exchange are effected through brokers-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 Inc.
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.
The 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 which provide them with research
services and may cause the Fund to pay such broker-dealers commissions which
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 clients other than the
Corporation. No specific value can be determined for research services
furnished without cost to the Adviser by a broker. The Adviser is 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 Fund by improving the quality of the Adviser's investment advice.
The investment advisory fees paid by the Fund 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.
B-22
<PAGE>
Subject to applicable law and regulations, consideration may also be given
to the willingness of particular brokers to sell shares of the Fund as a factor
in the selection of brokers for transactions effected on behalf of the Fund,
subject to the requirement of best price and execution.
Although the objectives of other accounts or investment companies which the
Adviser manages may differ from those of the Fund, it is possible that, at
times, identical securities will be acceptable for purchase by the Fund and one
or more other accounts or investment companies which 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 the Fund 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, where the size of the transaction would enable it to negotiate a
better price or reduced commission. However, simultaneous transactions could
adversely affect the ability of the Fund 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.
For the fiscal years ended December 31, 1995, 1994 and 1993, no brokerage
commissions were paid by the Fund.
ADDITIONAL INFORMATION REGARDING PURCHASE OF SHARES
Shares of the Fund are sold at net asset value next-determined after
receipt of a purchase order, plus for Class B shares, a deferred sales charge.
Reference is made to "Purchase of Shares" in the Prospectus for certain
information as to the purchase of Fund shares.
The Distributor advised the Fund that it received the following contingent
deferred sales charges, with respect to Class B shares of the Fund, for the
fiscal years ended December 31, 1995, 1994, and 1993.
CONTINGENT DEFERRED SALES CHARGES - CLASS B
1995 1994 1993
--------------------------
372,779 546,660 64,877
--------------------------
B-23
<PAGE>
CONTINGENT DEFERRED SALES CHARGES ("CDSCS") APPLICABLE TO CERTAIN CLASS B
SHARES. Class B shares of the Fund issued to shareholders in exchange for
shares of the Cash Fund in the Reorganization, are subject to the CDSC schedule,
if any, that applied to such shares at the time of Reorganization. In the event
that the shares were originally acquired in an exchange from another SunAmerica
Mutual Fund which imposes a CDSC (a "CDSC Fund"), the CDSC schedule that was
applicable to such shares at the time of the exchange will continue to apply;
provided, that in determining the holding period for such shares, the holding
period prior to such exchange and the holding period following the date of the
Reorganization will be "tacked" or combined. No credit toward the holding
period is given for the time during which the Cash Fund shares were held. For
example, if shares of a CDSC Fund were held by a shareholder for two years prior
to an exchange for shares of Cash Fund, Cash Fund shares were held for one year
prior to the Reorganization, and the Class B shares of the Fund were held for
one year prior to redemption, when the Class B shares are redeemed by the
shareholder, they will be subject to a contingent deferred sales charge as
though they were redeemed from the CDSC Fund three years after the initial
investment in the CDSC Fund without regard to the length of time that the Cash
Fund shares were actually held.
The following CDSC schedule applies to shares originally acquired (prior to
the date of the Reorganization) in an exchange from one of the four series of
shares of the SunAmerica Fund Group (i.e., SunAmerica U.S. Government Securities
Fund, SunAmerica High Income Fund, SunAmerica Emerging Growth Fund and
SunAmerica Balanced Assets Fund) or from the SunAmerica Federal Securities Fund:
CONTINGENT DEFERRED SALES CHARGES
YEAR SINCE PURCHASE AS A PERCENTAGE OF DOLLARS
PAYMENT WAS MADE INVESTED OR REDEMPTION PROCEEDS
- ---------------------- ---------------------------------
First 5%
- ---------------------------------------------------------
Second 4%
- ---------------------------------------------------------
Third 3%
- ---------------------------------------------------------
Fourth 2%
- ---------------------------------------------------------
Fifth 1%
- ---------------------------------------------------------
Sixth and thereafter 0%
- ---------------------------------------------------------
The following table sets forth the rates of CDSC applicable to shares
originally acquired (prior to the date of the
B-24
<PAGE>
Reorganization) in an exchange from the SunAmerica Diversified Income Fund
series of SunAmerica Multi-Asset Portfolios, Inc.:
CONTINGENT DEFERRED SALES CHARGES
YEAR SINCE PURCHASE AS A PERCENTAGE OF DOLLARS
PAYMENT WAS MADE INVESTED OR REDEMPTION PROCEEDS
- ----------------------- ---------------------------------
- ----------------------------------------------------------
First 3%
- ----------------------------------------------------------
Second 2%
- ----------------------------------------------------------
Third 1%
- ----------------------------------------------------------
Fourth and thereafter 0%
- ----------------------------------------------------------
Any Class B shares purchased after the date of the Reorganization
(other than through the reinvestment of dividends and distributions, which are
not subject to the CDSC) will be subject to the CDSC schedule reflected in the
Prospectus. After the Reorganization, in calculating the contingent deferred
sales charge due upon redemption of Class B shares of the Fund acquired through
an exchange from a CDSC Fund or in the Reorganization, a shareholder will
receive credit toward the holding period for the period of time they held Class
B shares of the Fund.
CONVERSION FEATURE APPLICABLE TO CLASS B SHARES. Class B shares (including a
pro rata portion of the Class B shares purchased through 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 issuance of
such Class B shares or, in the case of Class B shares acquired pursuant to the
Reorganization, seven years after the issuance of a shareholder's original CDSC
Fund shares (which were subsequently exchanged for the Cash Fund shares which
were in turn exchanged for Class B shares of the Fund in the Reorganization),
provided, that in calculating such seven-year period, any time during which the
shareholder held the Cash Fund shares will be excluded. For example, if shares
of a CDSC Fund were held by a shareholder for four years and then exchanged for
shares of Cash Fund which were then held for two years as of the date of the
Reorganization, such shareholder's Class B shares of the Fund received in the
Reorganization will convert to Class A shares of the Fund at the end of the
third year following consummation of the Reorganization. The conversion to Class
A shares 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.
WAIVER OF CONTINGENT DEFERRED SALES CHARGES. As discussed under "Purchase of
Shares" in the Prospectus, CDSCs may be waived on redemptions of Class B shares
under certain circumstances. The
B-25
<PAGE>
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
the 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. CDSCs 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 of 1986, as amended (the "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.
PURCHASES THROUGH THE DISTRIBUTOR. An investor may purchase shares of the Fund
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 Fund. Orders received by the Distributor before the
close of business will be executed on that day. Orders received by the
Distributor after the close of business will be executed 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. The Fund will not be responsible for delays caused by dealers.
PURCHASE BY CHECK. 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, NY 10017-3204,
together with payment for the purchase price of such shares and a completed New
Account Application. Shares of the Fund may be purchased directly through the
Transfer Agent. Upon receipt of the completed New Account Application and
payment check, the Transfer Agent will purchase full and fractional shares of
the Fund at the net asset value next computed after the check is received.
Certified checks are not
B-26
<PAGE>
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.
Checks should be made payable to "SunAmerica Money Market Fund." There are
restrictions on the redemption of shares purchased by check for which funds are
being collected. (See "Redemption of Shares.")
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 investment requirements set forth in the Prospectus). If such order is
received at or prior to 4:00 P.M., Eastern time, on a day the New York Stock
Exchange ("NYSE") is open for business, the purchase of shares of the Fund will
be effected on that day. If the order is received after 4:00 P.M., Eastern
time, 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 Corporation's Transfer Agent. Federal funds
purchase orders will be accepted only on a day on which the Corporation 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:
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 SunAmerica Fund
Services, Inc. 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# 011-
00028; DDA# 99029712, SunAmerica [name of Fund, Class __]
(include shareholder name and account number).
ADDITIONAL INFORMATION REGARDING REDEMPTION OF SHARES
Reference is made to "Redemption of Shares" in the Prospectus for
certain information as to the redemption of Fund shares.
If the Directors determine that it would be detrimental to the best
interests of the remaining shareholders of the Fund to make payment wholly or
partly in cash, the Corporation, having filed with the Securities and Exchange
Commission ("SEC") a notification of election pursuant to Rule 18f-1 on behalf
of the Fund, may pay the redemption price in whole, or in part, by a
distribution in
B-27
<PAGE>
kind of securities from the Fund in lieu of cash. In conformity with applicable
rules of the SEC, the Fund is committed to pay in cash all requests for
redemption of Fund shares, 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 Fund 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 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
of such class outstanding. Shares are valued each day the Fund is open for
business, with the exception of holidays on which the New York Stock Exchange
("NYSE") is closed, at the close of regular trading on the NYSE (currently, 4:00
P.M., Eastern time). The net asset value may not be computed on a day in which
no orders to purchase, sell or redeem Fund shares have been received.
Under applicable rules of the SEC, the valuation of the Fund's
investments is based upon their amortized cost. This entails valuing an
instrument at its cost and thereafter assuming a constant amortization to
maturity of any premium or discount regardless of the impact of fluctuating
interest rates on the market value of the instrument. While this method
provides certainty in valuation, it may result in periods during which the value
of an instrument, as determined by the amortized cost method, is higher or lower
than the price the Fund would receive if it sold the instrument. During periods
of rising interest rates, the daily yield on shares of the Fund computed on an
amortized cost basis may tend to be higher than the like computation made by a
mutual fund with identical investments utilizing a method of valuation based
upon market prices. The converse would apply in a period of declining rates.
The purpose of this method of valuation is to facilitate the maintenance of a
constant net asset value per share of $1.00. There can be no assurance,
however, that the Fund will be able to maintain a stable net asset value of
$1.00 per share.
Certain conditions must be met in connection with the application of
valuation rules to the Fund. These conditions include maintaining a dollar-
weighted average portfolio maturity of 90 days or less, purchasing instruments
having remaining maturities of 397 calendar days or less, and investing only in
securities determined by the Adviser under procedures adopted by the Directors
to present minimal credit risks and which are of high quality as determined by
the requisite number of nationally recognized
B-28
<PAGE>
statistical rating organizations or, in the case of any instrument that is not
rated, determined to be of comparable quality by the Adviser under procedures
adopted by the Directors. In accordance with the applicable regulations, the
Directors have established procedures designed to stabilize at $1.00 the Fund's
net asset value per share to the extent reasonably possible. Such procedures
include review of the Fund's portfolio holdings at such intervals as appropriate
to determine whether the Fund's net asset value, calculated by using available
market quotations, deviates from $1.00 per share based on amortized cost. If
such deviation exceeds .5% of the Fund's $1.00 per share net asset value, the
Directors will promptly consider what action, if any, will be initiated. In the
event that the Directors determine that a deviation exists which may result in
material dilution or other unfair results to investors or existing shareholders,
they will take such corrective action as they deem necessary and appropriate,
which may include selling portfolio instruments, withholding dividends or
establishing a net asset value per share based upon available market quotations.
PERFORMANCE DATA
The Fund may advertise performance data that reflects various measures
of yield. An explanation of the data presented and the methods of computation
that will be used are as follows.
The Fund'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 deposit accounts, 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.
Yield is determined separately for Class A and Class B shares of the
Fund in accordance with a standardized formula prescribed by the SEC and is not
indicative of the amounts which were or will be paid to shareholders. The yield
quoted in the Fund's advertisements is computed by determining the net change,
exclusive of capital changes, in the value of a hypothetical pre-existing
account having a balance of one share at the beginning of the 7-day period. A
hypothetical charge reflecting deductions for shareholder accounts is subtracted
from the above net change and the difference is divided by the value of the
account at the beginning of the 7-day period. The resulting figure is
multiplied by 365 divided by seven and carried to the nearest one hundredth of
one percent.
Effective yield quoted in the Fund's advertisements is computed by
determining the net change, exclusive of capital changes, in the value of a
hypothetical pre-existing account having a balance of one share at the beginning
of the 7-day period. A
B-29
<PAGE>
hypothetical charge reflecting deductions from shareholder accounts is
subtracted from the above net change and the difference is divided by the value
of the account at the beginning of the 7-day period. The resulting figure is
then compounded by adding one, raising the sum to a power equal to 365 divided
by seven, and subtracting one. The following formula illustrates the effective
yield computation.
[(Base period return + 1) 365/7 ] - 1
The following table sets forth the Fund's yield and effective yield
for the Class A and Class B shares for the 7-day periods ended December 31,
1995, 1994, and 1993.
<TABLE>
<CAPTION>
1995 1994 1993
- ------------------------------------------------------------------
CLASS
- ------------------------------------------------------------------
Effective Effective Effective
Yield Yield Yield Yield Yield Yield
- ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
A 4.96% 5.08% 4.89% 5.01% 2.39% 2.42%
- ------------------------------------------------------------------
B 4.29% 4.38% 4.19% 4.28% 1.83% 1.85%
- ------------------------------------------------------------------
</TABLE>
COMPARISONS
- -----------
The Fund may compare its yield to similar measures as calculated by
various publications, services, indices, or averages. Such comparisons are made
to assist in evaluating an investment in the Fund. The following references may
be used:
a) 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.
b) CDA Mutual Fund Report, published by CDA Investment Technologies,
Inc., 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.
c) 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.
B-30
<PAGE>
d) IBC/Donoghue's Inc. Money Fund Report -- comprehensive evaluation
of money market funds which monitors portfolio characteristics on a weekly
basis. The Report provides the information with respect to yield, average
maturity, security selection (asset allocation) and credit quality.
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 the Fund'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 the Fund to calculate its
figures. Specifically, the Fund may compare its performance to that of certain
indices which include securities with government guarantees. However, the
Fund's shares do not contain any such guarantees. In addition, there can be no
assurance that the Fund will continue its performance as compared to such other
standards.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS. The Fund intends to distribute to the registered
holders of its shares all or 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. The Fund intends to distribute any
net long-term capital gains in excess of any net short-term capital losses.
Dividends from net investment income are declared daily and paid monthly.
Dividends are paid on or about the fifteenth day of the month. Net capital
gains, if any, will be paid annually. In determining amounts of capital gains
to be distributed, any capital loss carry-forwards from prior years will be
offset against capital gains.
Dividends and distributions are paid in additional Fund shares based
on the net asset value at the close of business on the record date, unless the
dividends total in excess of $10 per distribution period and the shareholder
notifies the Fund at least five business days prior to the payment date to
receive such distributions in cash.
TAXES. The Fund is qualified and intends to remain qualified and elects to be
treated as a regulated investment company under Subchapter M of the Code for
each taxable year. In order to remain qualified as a regulated investment
company, the Fund generally must, among other things, (a) derive at least 90% of
its gross income from dividends, interest, proceeds from loans of stock or
securities and certain other related income; (b) derive less than 30% of its
gross income from the sale or other disposition of stock or securities held less
than 3 months; and (c) diversify its
B-31
<PAGE>
holdings so that, at the end of each fiscal quarter, (i) 50% of the market value
of the Fund'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 not greater than 5% of the Fund'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, the Fund will not be subject to
U.S. Federal income tax on its income and 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. The Fund 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, the Fund 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 net capital gains, i.e., 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 previous years that were not
distributed during such years. To avoid application of the excise tax, the Fund
intends to make distributions in accordance with the calendar year distribution
requirement. A distribution will be treated as paid on December 31 of the
calendar year if it is paid during the calendar year or if declared by the Fund
in October, November or December of such year, payable to shareholders of record
on a date in such month and paid by the Fund during January of the following
year. Any such distributions paid during January of the following year will be
taxable to shareholders as of December 31, rather than the date on which the
distributions are received.
Distributions of net investment income and short-term capital gains
("ordinary income dividends") are taxable to a shareholder as ordinary dividend
income regardless of whether the shareholder receives such distributions in
additional shares or in cash. Distributions of net long-term capital gains, if
any, are taxable as long-term 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. Dividends and distributions paid
by the Fund will not be eligible for the dividends received deduction for
corporations.
B-32
<PAGE>
Upon a sale or exchange of its shares, a shareholder may 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 and will be long-term capital gain or loss if the shares
have been held for more than one year. The amount of any CDSC will reduce the
amount realized on the sale or exchange of shares for purposes of determining
gain or loss. 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 realized by a shareholder on the sale of shares of the
Fund 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 in certain cases), 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 the Fund 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 the Fund will be subject, since the amount of the Fund's
assets to be invested in various countries is not known. It is not anticipated
that the Fund will qualify to pass through to shareholders the ability to claim
as a foreign tax credit their respective shares of foreign taxes paid by the
Fund.
The Fund 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.
Foreign shareholders generally will be subject to a withholding tax at
the rate of 30% (or lower treaty rate) on any ordinary income dividends pay by
the Fund.
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 advisers regarding specific
questions as to Federal, state and local taxes. In addition, foreign investors
should consult with
B-33
<PAGE>
their own tax advisers regarding the particular tax consequences, including
foreign tax consequences, to them of an investment in the Fund. Qualification
as a regulated investment company under the Code for tax purposes does not
entail government supervision of management or investment policies.
RETIREMENT PLANS
Shares of the Fund 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 the
Fund 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 the Fund 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 the Fund 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. These IRA's
are subject to limitations with respect to the amount that may be contributed,
the eligibility of individuals, 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
B-34
<PAGE>
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.
DESCRIPTION OF SHARES
Ownership of the Corporation is represented by transferable shares of
common stock, having a par value of $.001 per share. The Articles of
Incorporation, as amended to date (the "Articles of Incorporation"), authorize
the Corporation to issue 10 billion shares of common stock and to divide or
combine the shares into a greater or lesser number of shares without thereby
changing the proportionate interests of shareholders of the Corporation.
Currently, one series of shares of the Corporation, the Fund, has been
authorized pursuant to the Articles of Incorporation. This series has been
divided into two classes of shares, designated as Class A and Class B shares.
The Directors may authorize the creation of additional series of shares so as to
be able to offer to investors additional investment portfolios within the
Corporation that would operate independently from the Corporation's present
portfolio, or to distinguish among shareholders, as may be necessary, to comply
with future regulations or other unforeseen circumstances. Each series of the
Corporation's shares, in the event that more than one series is authorized, will
represent the interests of the shareholders of that series in a particular
portfolio of the Corporation's assets. In addition, the Directors may authorize
the creation of additional classes of shares in the future.
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
Corporation 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, Maryland law, the Articles of Incorporation or the By-
Laws of the Corporation (the "By-Laws"). 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 Corporation. In addition, the Directors may be
removed only for cause by the action of the holders of record of at least a
majority of all outstanding shares entitled to vote for election of Directors.
All series of shares will vote with respect to certain matters, such as election
of Directors. When all series of shares,
B-35
<PAGE>
to the extent that more than one series is authorized, are not affected by a
matter to be voted upon, such as approval of investment advisory agreements or
changes in a series' policies, only shareholders of the series affected by the
matter may be entitled to vote.
Both classes of shares of the Fund 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 ongoing account maintenance and
service fee, (iii) Class B shares are subject to a contingent deferred sales
charge, 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 the purchase of such Class B shares,
(v) 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 (vi) each class of shares will be exchangeable only
into the same class of shares of other funds in the SunAmerica Mutual Funds that
offers that class. All shares of the Corporation issued and outstanding and all
shares offered by the Prospectus when issued, are and will be fully paid and
non-assessable. Shares have no preemptive or other subscription rights and are
freely transferable on the books of the Corporation. In addition, shares have
no conversion rights, except as described above.
The By-Laws provide that the Corporation shall indemnify any person
who was or is a Director, officer or employee of the Corporation to the maximum
extent permitted by Maryland law and the 1940 Act upon a determination, made in
accordance with the terms of the By-Laws, that indemnification is proper in the
circumstances. In addition, the By-Laws provide that the Corporation may
maintain insurance on behalf of any person who is or was a director or officer,
employee or agent of the Corporation or who is or was serving at the request of
the Corporation as director, officer, agent or employee of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted or incurred in connection with serving in such capacity. However, no
Director or officer of the Corporation will be protected by indemnification,
insurance or otherwise from any liability to the Corporation or its shareholders
to which he or she would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in his
or her office.
B-36
<PAGE>
ADDITIONAL INFORMATION
REPORTS TO SHAREHOLDERS. The Fund sends audited annual and unaudited semi-
annual reports to shareholders of the Fund. 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 AGENT. State Street Bank and Trust Company, 1776
Heritage Drive, North Quincy, MA 02171, serves as Custodian and Transfer Agent
for the Fund and in those capacities maintains certain financial and accounting
books and records pursuant to agreements with the Corporation. 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
Corporation.
FINANCIAL STATEMENTS
Set forth following this Statement of Additional Information are the
financial statements of SunAmerica Money Market Funds, Inc. with respect to its
SunAmerica Money Market Fund series for the fiscal year ended December 31,
1995.
B-37
<PAGE>
- --------------------------------------------------------------------------------
SUNAMERICA MONEY MARKET FUND
SHAREHOLDER LETTER
February 1, 1996
Dear Shareholder:
As the Federal Reserve orchestrated a picture perfect soft landing for the
economy, 1995 finished as a very good year for investors. When the Department
of Commerce releases its data it will show an economy which grew 2% based on
the Gross Domestic Product, with inflation around 2.5%. This soft landing
differs from other cycles in two ways, unemployment declined and short-term
rates remained high while long-term rates declined. This phenomenon is called a
flattening of the yield curve and occurs when investors believe that inflation
is not going to rise and reduce the value of future investments. The flattening
of the yield curve benefited the shareholders of the Fund in 1995 because it
resulted in higher yields throughout the year, which is atypical in a slowing
economy.
We start 1996 with some important issues facing us: will we get a balanced
budget resolution and how resilient is the economy? It appears that the
politicians have not practiced the art of compromise thus far; however, we
believe the process will inevitably lead to a resolution that will be
beneficial to all Americans. Another issue of importance is the future
direction of the economy. Consumers are concerned about their long-term
employment prospects and generally have too much debt. Some of the reasons why
there is concern includes the continuation of consolidations (e.g., Chase and
Chemical Bank), downsizings (e.g., AT&T) and bankruptcies (e.g., retail sector)
in corporate America, all of which give consumers reasons not to spend more
than in the past. Inventories of unsold goods are high, and the harsh winter
has magnified this problem as we begin the new spring selling season. Lastly,
the export picture is not quite as optimistic as many economists thought. Many
countries in Europe are, surprisingly, economically weak, and the recent rise
in the U.S. Dollar will make our products more expensive and therefore less
desirable abroad.
The SunAmerica Money Market Fund performed well in 1995 because of the longer
average maturity maintained throughout most of the year. Currently the average
maturity stands at approximately 45 days. As always, we are focusing on credit
quality and liquidity as we continue to provide you with a very competitive
yield.
/s/ P. Christopher Leary
P. Christopher Leary
Portfolio Manager
<PAGE>
- --------------------------------------------------------------------------------
SUNAMERICA MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SECURITY DESCRIPTION (IN THOUSANDS) RATE* MATURITY (NOTE 2)
- --------------------------------------------------------------------------------------------------
COMMERCIAL PAPER--62.7%
<S> <C> <C> <C> <C>
Abbey National North America $ 5,000 5.71% 1/05/96 $ 4,996,828
Accor S.A. 7,961 5.62 3/01/96 7,886,432
AT&T Capital Corp. 5,000 5.70 1/10/96 4,992,875
Banque Internationale a Luxembourg, Inc. 8,000 5.70 1/09/96 7,989,867
Cemex S.A. 5,000 5.69 2/22/96 4,958,906
Chemical Banking Corp. 5,000 5.72 1/31/96 4,976,167
Corporacion Andina de Fomento 8,000 5.74 1/31/96 7,961,733
Cosco Co. Ltd. 10,000 5.72 2/13/96 9,931,678
CPC International, Inc.# 5,000 5.71 1/12/96 4,991,276
Fayette Funding L.P. 10,000 5.73 2/14/96 9,929,967
General Electric Capital Corp. 7,000 5.58 3/08/96 6,927,305
Golden Peanut Co. 3,000 5.65 2/21/96 2,975,988
Goldman Sachs Group L.P. 10,000 5.60 4/09/96-4/17/96 9,839,778
Hanson Finance PLC 7,000 5.58 3/07/96 6,928,390
Indosuez N.A., Inc. 7,000 5.71 1/04/96 6,996,669
International Securitization Corp. 16,130 5.75-6.00 1/04/96-3/07/96 16,070,421
Island Finance Puerto Rico, Inc. 4,487 5.67 2/23/96 4,449,545
JMG Funding L.P. 9,000 5.73 1/17/96 8,977,080
Mayne Nickless Ltd. 5,000 5.75 2/07/96 4,970,451
Merrill Lynch & Co., Inc. 16,000 5.68-5.70 1/16/96-3/06/96 15,889,334
Morgan (J.P.) & Co., Inc. 7,000 5.58 1/03/96 6,997,830
Morgan Stanley Group, Inc. 8,000 5.75 1/30/96 7,962,944
Orix America, Inc.# 11,500 5.77-6.00 2/01/96-3/15/96 11,387,033
Petroleos de Venezuela S.A. 7,000 5.60 3/08/96 6,927,044
Quebec (Province of) 8,000 5.70 1/30/96 7,963,267
Southland Corp. 7,000 5.70 3/05/96 6,929,067
SRD Finance, Inc. 5,000 6.05 1/18/96 4,985,715
Telefonica N.A., Inc. 8,000 5.65 4/01/96 7,885,744
TMI-1 Fuel Corp. 10,000 5.78 1/11/96 9,983,944
Windmill Funding Corp.# 6,000 5.80 1/25/96 5,976,800
Working Capital Management Co. L.P. 1,114 6.10 2/09/96 1,106,638
------------
TOTAL COMMERCIAL PAPER 230,746,716
(amortized cost $230,746,716) ------------
GOVERNMENT AGENCIES--5.5%
Agency for International Development India+ 4,000 5.50 1/03/96 4,011,699
Agency for International Development Isra-
el+ 3,975 5.50 1/03/96 3,974,755
Agency for International Development Pana-
ma+ 5,365 6.40 1/03/96 5,400,379
Federal Farm Credit Bank+ 7,000 5.93 3/17/96 7,000,318
------------
TOTAL GOVERNMENT AGENCIES 20,387,151
(amortized cost $20,387,151) ------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
SUNAMERICA MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1995--(CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SECURITY DESCRIPTION (IN THOUSANDS) RATE* MATURITY (NOTE 2)
- -------------------------------------------------------------------------------------------------------
MEDIUM TERM NOTES--18.9%
<S> <C> <C> <C> <C> <C>
Bear Stearns & Co., Inc.+ $15,000 5.94-6.16% 1/25/96-3/18/96 $ 15,013,741
Carolina Power & Light Co. 2,500 5.13 4/01/96 2,495,150
Citicorp 1,000 9.35 6/03/96 1,012,249
Ford Motor Credit Co. 3,500 8.25 5/15/96 3,525,304
Goldman Sachs & Co.#+ 6,000 6.11 1/15/96 6,001,267
Gulf Coast Texas, I.D.A.+ 10,000 6.15 1/02/96 10,000,000
Liberty Mutual Capital Corp. 6,000 8.50 7/08/96 6,070,144
NBD Bank 8,000 6.40 4/25/96-4/29/96 7,999,812
Norwest Corp., Series D+ 2,000 5.93 1/17/96 2,000,162
PNC Bank, N.A.+ 13,000 5.58-5.87 1/03/96-1/16/96 12,993,263
World Saving and Loan Association 2,500 4.85 4/01/96 2,493,192
------------
TOTAL MEDIUM TERM NOTES 69,604,284
(amortized cost $69,604,284) ------------
TAXABLE MUNICIPAL MEDIUM TERM
NOTES--9.6%
Illinois Student Assistance Corp.+ 14,300 5.83-6.16 1/03/96 14,300,000
New Hampshire State Industrial
Development Authority 13,000 5.85 2/13/96 13,000,000
State of Texas Veteran's Housing Assis- 7,900,000
tance+ 7,900 5.86 1/03/96 ------------
TOTAL TAXABLE MUNICIPAL MEDIUM TERM
NOTES 35,200,000
(amortized cost $35,200,000) ------------
TOTAL INVESTMENT SECURITIES 355,938,151
(amortized cost $355,938,151) ------------
REPURCHASE AGREEMENT--3.1%
Joint Repurchase Agreement Account (Note
3) 11,284,000
(cost $11,284,000) 11,284 5.82 1/02/96 ------------
TOTAL INVESTMENTS--
(amortized cost $367,222,151**) 99.8% 367,222,151
Other assets less liabilities-- 0.2 884,521
----- ------------
NET ASSETS 100.0% $368,106,672
===== ============
</TABLE>
- --------
*Rates shown are rates in effect as of December 31, 1995
** At December 31, 1995 the cost of securities for Federal income tax purposes
was the same as for book purposes
# Resale restricted to qualified institutional buyers
+ Variable rate security; maturity date reflects next reset date
<TABLE>
<CAPTION>
PORTFOLIO BREAKDOWN AS A PERCENTAGE OF NET ASSETS (EXCLUDING REPURCHASE AGREEMENT) BY INDUSTRY
<S> <C> <C> <C> <C> <C>
Finance 23.0% Telecommunication 3.5% Electronics 1.9%
Securities Holding Electric 3.4 Retail 1.9
Company 14.9 Food & Beverages 2.2 Oil & Gas 1.9
Municipalities 12.3 Foreign Government 2.2 Insurance 1.7
Banking 11.9 Lodging 2.1 Materials 1.3
Government Savings & Loan 2.0 Automotive 1.0
Agencies 5.5 ----
Transportation 4.0 96.7%
====
</TABLE>
@ As grouped by Moody's Investors Service Global Short Term Market Record
See Notes to Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
SUNAMERICA MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES AT DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment securities, at value (amortized cost $367,222,151)....... $367,222,151
Cash................................................................ 54,972
Interest receivable................................................. 1,529,704
Receivable for fund shares sold..................................... 968,111
Prepaid expenses.................................................... 80,716
------------
Total assets....................................................... 369,855,654
------------
LIABILITIES:
Payable for fund shares repurchased................................. 1,273,748
Accrued expenses.................................................... 237,047
Investment advisory and management fees payable..................... 154,763
Distribution and service maintenance fees payable................... 78,013
Dividends payable................................................... 5,411
------------
Total liabilities.................................................. 1,748,982
------------
Net assets....................................................... $368,106,672
============
NET ASSETS WERE COMPOSED OF:
Common Stock, $.001 par value....................................... $ 368,103
Additional paid-in capital.......................................... 367,639,951
------------
368,008,054
Accumulated undistributed net investment income..................... 98,618
------------
Net assets....................................................... $368,106,672
============
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net asset value ($316,307,871/316,304,820 shares outstanding)...... $1.00
=====
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net asset value ($51,798,801/51,797,995 shares outstanding)........ $1.00
=====
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest.............................................. $18,765,665
-----------
EXPENSES:
Investment advisory and management fees............... $1,560,968
Service maintenance fees--Class A..................... 373,008
Distribution and service maintenance fees--Class B.... 571,694
Transfer agent and shareholder servicing fees and
expenses--Class A.................................... 653,088
Transfer agent and shareholder servicing fees and
expenses--Class B.................................... 176,054
Custodian fees and expenses........................... 127,419
Registration fees--Class A............................ 59,457
Registration fees--Class B............................ 14,175
Directors' fees and expenses.......................... 40,061
Audit and tax consulting fees......................... 30,715
Printing expense...................................... 11,315
Legal fees and expenses............................... 10,985
Insurance expense..................................... 7,209
Miscellaneous expenses................................ 17,005 3,653,153
----------
Less: expense offset.................................. (195,627)
-----------
Net expenses.......................................... 3,457,526
-----------
Net investment income................................. 15,308,139
-----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...... $15,308,139
===========
</TABLE>
See Notes to Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
SUNAMERICA MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
<S> <C> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income..................... $ 15,308,139 $ 9,362,232
------------ ------------
Net increase in net assets resulting from
operations............................... 15,308,139 9,362,232
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment income (Class A)...... (12,540,465) (7,019,390)
From net investment income (Class B)...... (2,793,748) (2,312,911)
------------ ------------
Total dividends and distributions to
shareholders............................. (15,334,213) (9,332,301)
INCREASE IN NET ASSETS FROM FUND SHARE
TRANSACTIONS (NOTE 5)..................... 55,776,169 81,252,104
------------ ------------
Total increase in net assets.............. 55,750,095 81,282,035
NET ASSETS:
Beginning of year......................... 312,356,577 231,074,542
------------ ------------
End of year (including undistributed net
investment income of $98,618 and $124,692
at December 31, 1995 and December 31,
1994, respectively)...................... $368,106,672 $312,356,577
============ ============
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
RATIO OF RATIO OF
NET NET NET EXPENSES NET
ASSET TOTAL DIVIDENDS ASSET ASSETS TO INVESTMENT
VALUE NET FROM FROM NET VALUE END OF AVERAGE INCOME TO
PERIOD BEGINNING INVESTMENT INVESTMENT INVESTMENT END OF TOTAL PERIOD NET AVERAGE
ENDED OF PERIOD INCOME OPERATIONS INCOME PERIOD RETURN(1) (000'S) ASSETS NET ASSETS
- ----------------------------------------------------------------------------------------------------------
CLASS A
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/91 $1.000 $0.052 $0.052 $(0.052) $1.000 5.32% $270,405 1.21% 5.25%
12/31/92 1.000 0.027 0.027 (0.027) 1.000 2.74 215,521 1.27 2.76
12/31/93 1.000 0.023 0.023 (0.023) 1.000 2.32 189,160 1.16 2.30
12/31/94 1.000 0.034 0.034 (0.034) 1.000 3.47 213,958 1.00 3.43
12/31/95 1.000 0.051 0.051 (0.051) 1.000 5.18 316,308 1.01(2) 5.04
<CAPTION>
CLASS B
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
09/24/93-
12/31/93 $1.000 $0.004 $0.004 $(0.004) $1.000 0.44%(3) $41,915 1.69%(4) 1.69%(4)
12/31/94 1.000 0.027 0.027 (0.027) 1.000 2.76 98,398 1.69 2.91
12/31/95 1.000 0.044 0.044 (0.044) 1.000 4.49 51,799 1.78(2) 4.37
</TABLE>
- --------
(1) Total return does not reflect sales load
(2) The expense ratio reflects the effect of a gross up of custody and transfer
agent expense credits of .05% and .13% for Class A and Class B,
respectively
(3) Total return is not annualized
(4) Annualized
See Notes to Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
SUNAMERICA MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS--DECEMBER 31, 1995
NOTE 1. ORGANIZATION
SunAmerica Money Market Fund (the "Fund") is an open-end diversified
management investment company organized as a Maryland Corporation.
Effective September 24, 1993, the Fund offered Class A shares and Class B
shares. The offering price is the next determined net asset value per share.
For Class B shares only, a declining contingent deferred sales charge
("CDSC") is imposed on certain redemptions made within six years. Class B
shares of the Fund convert automatically to Class A shares on the first
business day of the month seven years after the issuance of such Class B
shares and at such time are no longer subject to a distribution fee. Each
class of shares bears the same voting, dividend, liquidation and other
rights and conditions and each makes account maintenance and service fee
payments under a distribution plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "1940 Act") except that Class B shares
are subject to distribution fees.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies followed
by the Fund in the preparation of its financial statements:
SECURITY VALUATIONS: Portfolio securities are valued at amortized cost,
which approximates market value. The amortized cost method involves valuing
a security at its cost on the date of purchase and thereafter assuming a
constant amortization to maturity of any discount or premium.
REPURCHASE AGREEMENTS: The Fund, 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 Fund's custodian takes possession of the collateral pledged
for investments in repurchase agreements. The underlying collateral is
valued daily on a mark to market basis to ensure that the value, including
accrued interest, is at least equal to the repurchase price. In the event of
default of the obligation to repurchase, the Fund 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 Fund may be delayed or
limited.
SECURITIES TRANSACTIONS, INVESTMENT INCOME AND DISTRIBUTIONS TO
SHAREHOLDERS: Securities transactions are recorded as of the trade date.
Interest income, including the accretion of discount and amortization of
premium, is accrued daily. Realized gains and losses on sales of investments
are calculated on the identified cost basis.
Net investment income other than class specific expenses, and realized and
unrealized gains and losses are 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).
Dividends from net investment income are declared daily and paid monthly.
USE OF ESTIMATES IN FINANCIAL STATEMENT PREPARATION: 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.
<PAGE>
- --------------------------------------------------------------------------------
SUNAMERICA MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS--DECEMBER 31, 1995--(CONTINUED)
STATEMENT OF POSITION 93-2: As required by Statement of Position 93-2
Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies,
permanent book-tax differences relating to shareholder distributions have
been reclassified to paid in capital. Net investment income/loss, net
realized gain/loss, and net assets were not affected. For the year ended
December 31, 1995, no such reclassifications were required.
FEDERAL INCOME TAXES: It is the Fund's policy to meet the requirements of
the Internal Revenue Code of 1986, as amended, applicable to regulated
investment companies and to distribute all of its taxable net income to its
shareholders. Therefore, no federal income or excise tax provisions are
required.
NOTE 3. JOINT REPURCHASE AGREEMENT ACCOUNT
As of December 31, 1995, the Fund had a 6.8% undivided interest, which
represented $11,284,000 in principal amount, in a repurchase agreement in
the joint account. As of such date, the repurchase agreement in the joint
account and the collateral therefore was as follows:
Yamaichi International (America), Inc., Repurchase Agreement, 5.82% dated
12/29/95, in the principal amount of $164,950,000 repurchase price
$165,056,668 due 1/2/96 collateralized by $17,455,000 U.S. Treasury Notes
5.75% due 8/15/03, $50,000,000 U.S. Treasury Notes 4.75% due 8/31/98,
$18,735,000 U.S. Treasury Notes 5.125% due 3/31/98, $5,000,000 U.S. Treasury
Notes 5.50% due 9/30/97, $50,000,000 U.S. Treasury Notes 5.50% due 9/30/97,
$18,955,000 U.S. Treasury Notes 7.50% due 12/31/96 and $4,885,000 U.S.
Treasury Notes 5.625% due 6/30/97, approximate aggregate value $168,257,239.
NOTE 4. INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT, DISTRIBUTION AGREEMENT
AND SERVICE AGREEMENT
The Fund has an Investment Advisory and Management Agreement (the
"Agreement") with SunAmerica Asset Management Corp. ("SAAMCo"), an indirect
wholly owned subsidiary of SunAmerica Inc. Under the Agreement, SAAMCo
provides continuous supervision of the Fund's portfolio and administers its
corporate affairs, subject to general review by the Directors. In connection
therewith, SAAMCo furnishes the Fund with office facilities, maintains
certain of the Fund's books and records, and pays the salaries and expenses
of all personnel, including officers of the Fund who are employees of SAAMCo
and its affiliates. The investment advisory and management fee to SAAMCo is
computed daily and payable monthly, at an annual rate of .50% on the first
$600 million of the Fund's daily net assets, .45% on the next $900 million
of net assets and .40% on net assets over $1.5 billion.
SAAMCo has agreed that, in any fiscal year, it will refund or rebate its
management fee to the Fund to the extent that the Fund's expenses (including
the fees of SAAMCo and amortization of organizational expenses, but
excluding interest, taxes, brokerage commissions, distribution fees and
other extraordinary expenses) exceed the most restrictive expense limitation
imposed by states where the Fund's shares are sold. The most restrictive
expense limitation is presently believed to be 2 1/2% of the first $30
million of the Fund's daily net assets, 2% of the next $70 million of net
assets and 1 1/2% of such net assets in excess of $100 million. For the year
ended December 31, 1995, no such reimbursement was required.
The Fund has a Distribution Agreement with SunAmerica Capital Services, Inc.
("SACS"), an indirect wholly owned subsidiary of SunAmerica Inc. The Fund
has adopted a Distribution Plan (the "Plan") in accordance with the
provisions of Rule 12b-1 under the 1940 Act. Rule 12b-1 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 and approved
<PAGE>
- --------------------------------------------------------------------------------
SUNAMERICA MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS--DECEMBER 31, 1995--(CONTINUED)
by its shareholders. Pursuant to such rule, the Directors and the
shareholders of each class of shares of the Fund have adopted Distribution
Plans hereinafter referred to as the "Class A Plan" and the "Class B Plan."
In adopting the Class A Plan and the Class B 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 the Class B shares will not be used to subsidize the
sale of Class A shares.
Under the Class B Plan the Distributor receives payments from the Fund at
the annual rate of up to 0.75% of the average daily net assets of the Fund's
Class B shares, to compensate the Distributor and certain securities firms
for providing sales and promotional activities for distributing that 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 Fund 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 B Plan may exceed the
Distributor's distribution costs as described above. The Class A Plan does
not provide for a distribution fee. The Distribution Plans provide that each
class of shares of the Fund may also pay the Distributor an account
maintenance and service fee of up to an annual rate of 0.15% 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 0.15% per year of the assets maintained
in the Fund by their customers. For the year ended December 31, 1995, SACS
earned fees of $944,702 from the Fund.
SACS also receives the proceeds of contingent deferred sales charges paid by
investors in connection with certain redemptions of the Fund's Class B
shares. For the year ended December 31, 1995, SACS informed the Fund that it
received approximately $372,779 in contingent deferred sales charges.
The Fund 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 Fund's transfer agent in connection with the services that
it offers to the shareholders of the Fund. The Service Agreement permits the
Fund to reimburse SAFS for costs incurred in providing such services which
is approved annually by the Directors. For the year ended December 31, 1995
the Fund (Class A, Class B) incurred expenses of $686,826 to reimburse SAFS
pursuant to the terms of the Service Agreement. Of this amount, $68,096 was
payable to SAFS at December 31, 1995.
NOTE 5. CAPITAL SHARE TRANSACTIONS
Transactions in shares of each class, all at $1.00 per share, for the year
ended December 31, 1995 and for the prior year were as follows:
<TABLE>
<CAPTION>
MONEY MARKET FUND
--------------------------------------------------------
CLASS A CLASS B
---------------------------- --------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994
-------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Shares sold............. 1,100,031,147 904,696,309 445,571,488 504,544,389
Reinvested dividends.... 12,194,638 6,720,048 2,179,516 1,759,780
Shares redeemed......... (1,009,865,935) (886,631,162) (494,334,685) (449,837,260)
-------------- ------------ ------------ ------------
Net increase (decrease). 102,359,850 24,785,195 (46,583,681) 56,466,909
============== ============ ============ ============
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
SUNAMERICA MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS--DECEMBER 31, 1995--(CONTINUED)
NOTE 6. 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 unaffiliated
Directors. The Retirement Plan provides generally that if an unaffiliated
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 Director reaches his or her 70th birthday. An Eligible Director may
receive 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
December 31, 1995, the Fund had accrued $16,064 for the Retirement Plan,
which is included in accrued expenses on the Statement of Assets and
Liabilities and for the year ended December 31, 1995, expensed $12,175 for
the Retirement Plan, which is included in Directors' fees and expenses on
the Statement of Operations.
<PAGE>
- --------------------------------------------------------------------------------
SUNAMERICA MONEY MARKET FUND
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
SunAmerica Money Market Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio 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 SunAmerica Money Market Fund (the
"Fund") at December 31, 1995, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the five years in the
period then ended, 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 audits. We conducted our audits 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 audits, which included confirmation of
securities at December 31, 1995 by correspondence with the custodian, provide a
reasonable basis for the opinion expressed above.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York
February 13, 1996
<PAGE>
- -------------------------------------------------------------------------------
SUNAMERICA MONEY MARKET FUND
TRUSTEES INVESTMENT MANAGER AND ADMINISTRATOR
S. James Coppersmith SunAmerica Asset Management Corp.
Samuel M. Eisenstat The SunAmerica Center
Stephen J. Gutman 733 Third Avenue
Peter A. Harbeck New York, NY 10017-3204
Peter McMillan III
Sebastiano Sterpa DISTRIBUTOR
SunAmerica Capital Services, Inc.
The SunAmerica Center
OFFICERS 733 Third Avenue
Peter A. Harbeck, President New York, NY 10017-3204
Nancy Kelly, Vice President
P. Christopher Leary, Vice President
Robert M. Zakem, Secretary SHAREHOLDER SERVICING AGENT
Peter C. Sutton, Treasurer SunAmerica Fund Services, Inc.
John T. Genoy, Assistant Treasurer The SunAmerica Center
Donna M. Handel, Assistant Treasurer 733 Third Avenue
Hilary R. Kastleman, Assistant Secretary New York, NY 10017-3204
Abbe P. Stein, Assistant Secretary
CUSTODIAN AND TRANSFER AGENT
State Street Bank & Trust Company
P.O. Box 419572
Kansas City, MO 64141-6572
- -------------------------------------------------------------------------------
FASTFACTS . . . AVAILABLE FOR YOUR CONVENIENCE
The easy and convenient way to obtain the most current information on your
mutual funds. By calling our toll free number, 1-800-654-4760, you can receive
mutual fund information 24 hours a day. If you require any additional
information, please call us at 1-800-858-8850 Monday-Friday 9:00 a.m.-6:00
p.m. (Eastern time).
HERE'S HOW IT WORKS
All you need is:
* A Touch-Tone Telephone
* Your account number
* Your Personal Identification number "PIN"
(the last four digits of your Social Security number, a tax identification
number or a number chosen by you)
* Your Fund Code
<TABLE>
<CAPTION>
CLASS
-------
A B
EQUITY FUNDS --- ---
<S> <C> <C>
Balanced Assets 51 551
Global Balanced 23 523
Blue Chip Growth 522 22
Mid-Cap Growth 71 571
Small Company Growth 36 536
Growth and Income 24 524
</TABLE>
<TABLE>
<CAPTION>
CLASS
-------
A B
INCOME FUNDS --- ---
<S> <C> <C>
U.S. Government
Securities 70 570
Federal Securities 534 34
Diversified Income 580 80
High Income 28 228
Tax Exempt Insured 33 533
Money Market 35 535
</TABLE>
FUNCTIONS
1 Price 12 Duplicate Statement
2 Account Balance 13 Year-End Tax
4 Last Transaction Information/Duplicate Tax
5 Help Forms
10 Check Reorder (Money Market Only) 16 Change "PIN"
17 Last Dividend Transaction
<PAGE>
- -------------------------------
BULK RATE
SUNAMERICA MONEY MARKET FUND
U.S.
THE SUNAMERICA CENTER POSTAGE
733 THIRD AVENUE PAID
NEW YORK, NY 10017-3204 Kansas
City, MO
PERMIT NO.
1-800-858-8850 3657
This report is submitted
solely for the general
information of shareholders
of the Fund. Distribution of
this report to persons other
than shareholders of the Fund
is authorized only in
connection with a currently
effective prospectus, setting
forth details of the Fund,
which must precede or
accompany this report.
SPONSORED BY:
[LOGO] SunAmerica
Asset Management
MMANN
December 31, 1995
SunAmerica
Money Market
Fund
Annual
Report
[LOGO] SunAmerica
Asset Management
<PAGE>
APPENDIX
BOND, NOTE AND COMMERCIAL PAPER RATINGS
DESCRIPTION OF APPLICABLE MOODY'S INVESTORS SERVICE, INC.'S ("MOODY'S")
CORPORATE BOND 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.
Note: Moody's may apply numerical modifiers 1, 2 and 3 to issues
rated Aa to denote relative strength within such classification. The modifier 1
indicates that the security ranks in the higher end of the Aa 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 Aa rating category.
DESCRIPTION OF APPLICABLE MOODY'S NOTE RATINGS
MIG 1 Notes bearing the designation MIG 1 are judged to be of the
best quality, enjoying strong protection from established cash
flows of funds for their servicing or from established and
broad-based access to the market for refinancing, or both.
MIG 2 Notes bearing the designation MIG 2 are judged to be of high
quality, with margins of protection ample although not so large
as in the preceding group.
DESCRIPTION OF APPLICABLE MOODY'S COMMERCIAL PAPER RATINGS
B-38
<PAGE>
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.
Issuers rated P-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. P-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 P-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
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
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.
B-39
<PAGE>
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 APPLICABLE STANDARD & POOR'S RATINGS SERVICES, A DIVISION OF THE
MCGRAW-HILL COMPANIES, INC. ("S&P") BOND RATINGS
An S&P corporate 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 S&P from other sources it considers reliable. S&P does not
perform an audit in connection with any rating and may, on occasion, rely on
unaudited financial information. The ratings 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 S&P.
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.
B-40
<PAGE>
Plus (+) or minus (-): The rating of "AA" may be modified by the
addition of a plus or minus sign to show relative standing within these ratings
categories.
PROVISIONAL RATINGS:
P 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 S&P 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 S&P
does not rate a particular type of obligation as a matter of
policy.
Debt Obligations of Issuers outside the United States and its
territories are rated on the same basis as domestic corporate issues. The
ratings measure the credit worthiness of the obligor but do not take into
account currency exchange and related uncertainties.
APPLICABLE BOND INVESTMENT QUALITY STANDARDS: Under present commercial bank
regulations issued by the Comptroller of the Currency, bonds rated "AAA" or "AA"
(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 APPLICABLE S&P NOTE RATINGS
B-41
<PAGE>
SP-1 The designation "SP-1" indicates a very strong capacity to pay
principal and interest. A "+" is added for those issues
determined to possess overwhelming safety characteristics.
SP-2 An "SP-2" designation indicates a satisfactory capacity to pay
principal and interest.
DESCRIPTION OF APPLICABLE S&P COMMERCIAL PAPER RATINGS.
A S&P 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.
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.
The commercial paper rating is not a recommendation to purchase or
sell a security. The ratings are based on current information furnished to S&P
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.
B-42
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements:
Set forth in Part B of Registrant's Statement of Additional Information are the
financial statements of the SunAmerica Money Market Funds, Inc. with respect to
its SunAmerica Money Market Fund series for the fiscal year ended December 31,
1995. Selected per share data and ratios are set forth in Part A of the
Prospectus under the caption "Financial Highlights". No financial statements
are included in Part C.
All other financial statements, schedules and historical financial information
are omitted because the conditions requiring their filing do not exist.
(b) Exhibits:
(1)(a) Articles of Incorporation.
(1)(b) Articles of Amendment.
(2) By-Laws, as amended.
(3) Inapplicable.
(4) Inapplicable.
(5) Investment Advisory and Management Agreement between
Registrant and SunAmerica Asset Management Corp.
("SunAmerica").
(6)(a) Distribution Agreement between Registrant and SunAmerica
Capital Services, Inc.
(6)(b) Dealer Agreement.
(7) Directors'/Trustees' Retirement Plan.
(8) Custodian Agreement between Registrant and State Street Bank
and Trust Company. Incorporated herein by reference to Post-
Effective Amendment No. 16 to Registrant's Registration
Statement on Form N-1A (File No. 2-85370) filed on April 27,
1995.
(9)(a) Transfer Agency and Service Agreement between Registrant and
State Street Bank and Trust Company. Incorporated herein by
reference to Post-Effective Amendment No. 16 to
<PAGE>
Registrant's Registration Statement on Form N-1A (File
No. 2-85370) filed on April 27, 1995.
(9)(b) Service Agreement between Registrant and SunAmerica Fund
Services, Inc.
(10) Inapplicable.
(11) Consent of Independent Accountants.
(12) Inapplicable.
(13) Inapplicable.
(14) Model Retirement Plans.
(15) Distribution Plans pursuant to Rule 12b-1 (Class A Shares
and Class B Shares).
(16) Schedule of Computation of Performance Quotations.
(17) Powers of Attorney.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
There are no persons controlled by or under common control with
Registrant.
<TABLE>
<CAPTION>
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
Number of Record
Holders as of
Title of Class March 31, 1996
- ------------------------------------- --------------------------------
<S> <C>
Money Market Fund Class A 23,989
Common Stock
($.001 par value)
Money Market Fund Class B 2,372
Common Stock
($.001 par value)
</TABLE>
ITEM 27. INDEMNIFICATION.
Registrant's policy with respect to indemnification is as follows:
C-2
<PAGE>
To the maximum extent permitted by the laws of the State of Maryland
as from time to time amended, Registrant shall indemnify its currently acting
and its former directors and officers and those persons who, at the request of
the Registrant, serve or have served another corporation, partnership, joint
venture, trust or other enterprise in one or more of such capacities.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
Registrant has been advised, that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted against the Registrant by such director, officer or
controlling person in connection with the securities being registered,
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER.
Information concerning the business and other connections of SunAmerica is
incorporated herein by reference to SunAmerica's Form ADV (File No. 801-19813)
and is currently on file with the Securities and Exchange Commission.
Reference is also made to the caption "Management of the Corporation" in the
Prospectus constituting Part A of the Registration Statement and "Adviser,
Personal Trading, Distributor and Administrator" and "Directors and Officers"
constituting Part B of the Registration Statement.
C-3
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) The principal underwriter of the Registrant also acts as principal
underwriter for:
SunAmerica Equity Funds
SunAmerica Income 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 With Position with the
Business Address Underwriter Registrant
- -------------------- -------------- -----------------
<S> <C> <C>
J. Steven Neamtz President None
The SunAmerica Center
733 Third Avenue
New York, NY 10017
Peter A. Harbeck Director President
The SunAmerica Center
733 Third Avenue
New York, NY 10017
Gary W. Krat Director None
The SunAmerica Center
733 Third Avenue
New York, NY 10017
Robert M. Zakem Executive Vice Secretary &
The SunAmerica Center President and Chief
733 Third Avenue Director Compliance
New York, NY 10017 Officer
Joseph M. Tumbler Director None
SunAmerica Inc.
1 Sun America Center
Century City
Los Angeles, CA 90067-6022
Enrique Lopez-Balboa Vice None
The SunAmerica Center President
733 Third Avenue
New York, NY 10017
Susan L. Harris Secretary None
SunAmerica Inc.
1 Sun America Center
Century City
Los Angeles, CA 90067-6022
</TABLE>
C-4
<PAGE>
Steven E. Rothstein Treasurer None
The SunAmerica Center
733 Third Avenue
New York, NY 10017
(c) Inapplicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
SunAmerica Asset Management Corp., The SunAmerica Center, 733 Third
Avenue, New York, NY 10017-3204, or an affiliate thereof, will
maintain physical possession of each such accounts, books or other
documents of Registrant, except for those maintained by Registrant's
custodian, State Street Bank and Trust Company, 1776 Heritage Drive,
North Quincy, MA 02171, and its affiliate, National Financial Data
Services, P.O. Box 419572, Kansas City, MO 64141-6572.
ITEM 31. MANAGEMENT SERVICES.
Inapplicable.
ITEM 32. UNDERTAKINGS.
Registrant hereby undertakes to furnish an investor to whom a
prospectus is delivered with a copy of Registrant's latest annual
report to shareholders, upon request and without charge.
C-5
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, as amended and
the Investment Company Act of 1940, as amended, Registrant certifies that it
meets all of the requirements for effectiveness of the Post-Effective Amendment
No. 17 to the Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933, as amended and that Registrant has duly caused the Post-
Effective Amendment No. 17 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
and State of New York, on the 25th day of April, 1996.
SUNAMERICA MONEY MARKET FUNDS, INC.
By: /s/Peter A. Harbeck
---------------------------
Peter A. Harbeck
President and Director
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Post-Effective Amendment No. 17 to the Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated:
/s/Peter A. Harbeck President and Director April 25, 1996
- --------------------------- (Principal Executive Officer)
Peter A. Harbeck
* Treasurer April 25, 1996
- --------------------------- (Principal Accounting
Peter C. Sutton and Financial Officer)
* Director April 25, 1996
- --------------------------
Peter McMillan III
* Director April 25, 1996
- --------------------------
S. James Coppersmith
* Director April 25, 1996
- --------------------------
Samuel M. Eisenstat
* Director April 25, 1996
- --------------------------
Stephen J. Gutman
*
- ---------------------------
Sebastiano Sterpa Director April 25, 1996
*By: /s/Robert M. Zakem
-----------------------------------
Robert M. Zakem, Attorney-in-fact
<PAGE>
SUNAMERICA MONEY MARKET FUNDS, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. NAME PAGE NO.
- ----------------------------------- --------------------------- --------
<S> <C> <C>
1a Articles of Incorporation ______
1b Articles of Amendment ______
2 By-Laws, as amended ______
5 Investment Advisory and
Management Agreement ______
6a Distribution Agreement ______
6b Dealer Agreement ______
7 Directors'/Trustees'
Retirement Plan ______
9b Service Agreement ______
11 Consent of Price Waterhouse ______
14 Model Retirement Plans ______
15 Distribution Plans
(Class A Shares & Class
B Shares) ______
16 Schedule of Computation of ______
Performance Quotations
17 Powers of Attorney ______
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000724129
<NAME> SUNAMERICA MONEY MARKET FUND
<SERIES>
<NUMBER> 001
<NAME> SUNAMERICA MONEY MARKET FUND CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 367,222,151<F1>
<INVESTMENTS-AT-VALUE> 367,222,151<F1>
<RECEIVABLES> 2,497,815<F1>
<ASSETS-OTHER> 80,716<F1>
<OTHER-ITEMS-ASSETS> 54,972<F1>
<TOTAL-ASSETS> 369,855,654<F1>
<PAYABLE-FOR-SECURITIES> 0<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 1,748,982<F1>
<TOTAL-LIABILITIES> 1,748,982<F1>
<SENIOR-EQUITY> 0<F1>
<PAID-IN-CAPITAL-COMMON> 368,008,054<F1>
<SHARES-COMMON-STOCK> 316,304,820<F2>
<SHARES-COMMON-PRIOR> 213,944,970<F2>
<ACCUMULATED-NII-CURRENT> 98,618<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 0<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 0<F1>
<NET-ASSETS> 368,106,672<F1>
<DIVIDEND-INCOME> 0<F1>
<INTEREST-INCOME> 18,765,665<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (3,457,526)<F1>
<NET-INVESTMENT-INCOME> 15,308,139<F1>
<REALIZED-GAINS-CURRENT> 0<F1>
<APPREC-INCREASE-CURRENT> 0<F1>
<NET-CHANGE-FROM-OPS> 15,308,139<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (15,334,213)<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0<F1>
<NUMBER-OF-SHARES-SOLD> 1,100,031,147<F2>
<NUMBER-OF-SHARES-REDEEMED> (1,009,865,935)<F2>
<SHARES-REINVESTED> 12,194,638<F2>
<NET-CHANGE-IN-ASSETS> 55,750,095<F1>
<ACCUMULATED-NII-PRIOR> 124,692<F1>
<ACCUMULATED-GAINS-PRIOR> 0<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 1,560,968<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 3,653,153<F1>
<AVERAGE-NET-ASSETS> 248,671,902<F2>
<PER-SHARE-NAV-BEGIN> 1.00<F2>
<PER-SHARE-NII> .051<F2>
<PER-SHARE-GAIN-APPREC> 0<F2>
<PER-SHARE-DIVIDEND> (.051)<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 1.00<F2>
<EXPENSE-RATIO> 1.01<F2>
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>Information given pertains to the SunAmerica Money Market Fund as a whole.
<F2>Information given pertains to SunAmerica Money Market Fund Class A.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000724129
<NAME> SUNAMERICA MONEY MARKET FUND
<SERIES>
<NUMBER> 002
<NAME> SUNAMERICA MONEY MARKET FUND CLASS B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 367,222,151<F1>
<INVESTMENTS-AT-VALUE> 367,222,151<F1>
<RECEIVABLES> 2,497,815<F1>
<ASSETS-OTHER> 80,716<F1>
<OTHER-ITEMS-ASSETS> 54,972<F1>
<TOTAL-ASSETS> 369,855,654<F1>
<PAYABLE-FOR-SECURITIES> 0<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 1,748,982<F1>
<TOTAL-LIABILITIES> 1,748,982<F1>
<SENIOR-EQUITY> 0<F1>
<PAID-IN-CAPITAL-COMMON> 368,008,054<F1>
<SHARES-COMMON-STOCK> 51,797,995<F2>
<SHARES-COMMON-PRIOR> 98,381,676<F2>
<ACCUMULATED-NII-CURRENT> 98,618<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 0<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 0<F1>
<NET-ASSETS> 368,106,672<F1>
<DIVIDEND-INCOME> 0<F1>
<INTEREST-INCOME> 18,765,665<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (3,457,526)<F1>
<NET-INVESTMENT-INCOME> 15,308,139<F1>
<REALIZED-GAINS-CURRENT> 0<F1>
<APPREC-INCREASE-CURRENT> 0<F1>
<NET-CHANGE-FROM-OPS> 15,308,139<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> (15,334,213)<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0<F1>
<NUMBER-OF-SHARES-SOLD> 445,571,488<F2>
<NUMBER-OF-SHARES-REDEEMED> (494,334,685)<F2>
<SHARES-REINVESTED> 2,179,516<F2>
<NET-CHANGE-IN-ASSETS> 55,750,095<F1>
<ACCUMULATED-NII-PRIOR> 124,692<F1>
<ACCUMULATED-GAINS-PRIOR> 0<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 1,560,968<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 3,653,153<F1>
<AVERAGE-NET-ASSETS> 63,521,596<F2>
<PER-SHARE-NAV-BEGIN> 1.00<F2>
<PER-SHARE-NII> .044<F2>
<PER-SHARE-GAIN-APPREC> 0<F2>
<PER-SHARE-DIVIDEND> (.044)<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 1.00<F2>
<EXPENSE-RATIO> 1.78<F2>
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>information given pertains to the SunAmerica Money Market Fund as a whole.
<F2>information given pertains to SunAmerica Money Market Fund Class B.
</FN>
</TABLE>
<PAGE>
EXHIBIT 1(a)
ARTICLES OF INCORPORATION
OF
INTEGRATED MONEY MARKET SECURITIES, INC.
THIS IS TO CERTIFY:
FIRST: THAT I, THE UNDERSIGNED, SUSAN PENRY-WILLIAMS whose post office
address is 280 Park Avenue, New York, New York, being at least eighteen years of
age, does, under and by virtue of the Maryland General Corporation Law
authorizing the formation of corporations, act as incorporator with the
intention of forming a corporation.
SECOND: That the name of the corporation is:
INTEGRATED MONEY MARKET SECURITIES, INC. (the "Corporation").
THIRD: That the purpose for which the Corporation is formed and the
business or objects to be transacted, carried on and promoted by it, are as
follows:
To hold, invest, and reinvest its funds, and in connection therewith to
hold part or all of its funds in cash, and to purchase or otherwise sell,
assign, negotiate, transfer, exchange or otherwise dispose of or turn to
account or realize upon securities and other negotiable or non-negotiable
instruments, obligations and evidences of indebtedness created or issued by
any persons, firms, associations, corporations, syndicates, combinations,
organizations, governments or subdivisions thereof, and generally deal in
any such securities and other negotiable or non-negotiable instruments,
obligations and evidences of indebtedness; and to exercise, as owner or
holder of any securities or other instruments, all rights, powers, and
privileges in respect there of; and to do any and all acts and things for
the preservation, protection, improvement, and enhancement in value of any
and all such securities or other instruments and, in general, to act as an
open-end investment company as that term is defined in the Investment
Company Act of 1940, as amended; and
To issue, sell, purchase and redeem shares of its own capital stock
from time to time on such terms and conditions, for such purposes and for
such amount or kind of consideration (including, without limitation
thereto, securities) now or hereafter permitted by the laws of the State of
Maryland and by these Articles of Incorporation, as the Board of Directors
of the Corporation (the "Board of Directors") may determine.
The enumeration herein of the objects and purposes
<PAGE>
of the Corporation shall be construed as powers as well as objects and
purposes and shall not be deemed to exclude by inference any powers,
objects or purposes which the Corporation is empowered to exercise, whether
expressly by force of the laws of the State of Maryland now or hereafter in
effect or implied by the reasonable construction of such laws.
FOURTH: That the post office address of the principal office of the
Corporation in the State of Maryland is c/o The Corporation Trust Incorporated,
32 South Street, Baltimore, Maryland 21202.
FIFTH: That the name of the resident agent of the Corporation in the State
of Maryland is The Corporation Trust Incorporated, 32 South Street, Baltimore,
Maryland 21202.
SIXTH: That the total number of shares of capital stock which the
Corporation shall have authority to issue is Ten Billion (10,000,000,000) shares
of Common Stock', of the par value of $.001 per share (the "Common Stock"), and
having an aggregate par value for all such shares of Ten Million Dollars
($10,000,000), all of which shall be of the same class and have equal voting
rights. The Common Stock shall be subject to the following-restrictions and
conditions and provisions:
(a) The holders of Common Stock shall not, as such holders, have any
right to acquire, purchase or subscribe for any shares of the Common Stock
of the Corporation or any other class of capital stock or any securities
convertible into, exchangeable for, or carrying any rights to subscribe to,
shares of Common Stock or any such other class of capital stock of the
Corporation, which it may hereafter issue or sell (whether out of the
number of shares authorized by these Articles of Incorporation, or out of
any shares of the Common or other stock of the Corporation acquired by it
after the issuance thereof, or otherwise), other than such right, if any,
as the Board of Directors, in its discretion, may determine.
(b) Dividends, when, as and if declared by the Board of Directors,
shall be shared equally by the holders of Common Stock on a share for share
basis.
(c) Holders of Common Stock shall have the right, when the Corporation
has funds or property legally available therefor, upon proper written
request to the Corporation, to require the Corporation to redeem all or any
number of the shares of the Common Stock standing in the name of such
holder on the books of the Corporation at the net asset value thereof
determined in the manner set forth in Article NINTH hereof and pursuant to
such procedures as the Board of Directors may determine. Payment of the
redemption price by the Corporation may be made either in cash or in
securities or other assets at the time owned by the Corporation or partly
in cash and partly
<PAGE>
in securities or other assets at the time owned by the Corporation. The
value of any part of such payment to be made in securities or other assets
of the Corporation shall be the value employed in determining the
redemption price.
Notwithstanding the foregoing, the Board of Directors may suspend the
right of the holders of Common Stock to require the Corporation to redeem
such shares when permitted or required to do so by the Investment Company
Act of 1940 or any rule or regulation of the Securities and Exchange
Commission promulgated thereunder.
When the Board of Directors of the Corporation, including a majority
of the Directors who are not interested persons as defined in Section
2(a)(19) of the Investment Company Act of 1940, determines in its sole
discretion, that the action is necessary for the business success and
general welfare of the Corporation in order to reduce disproportionate and
unduly burdensome expenses in the operation of the Corporation's affairs,
to achieve efficiencies in the administration of its activities, or to
reduce or eliminate excessive expenditures and undue difficulties in
servicing, accounting and reporting requirements with respect to the
accounts of stockholders, it may by resolution redeem the interest of any
stockholder whose investment in shares of Common Stock is less than the
Minimum Amount then in effect upon the giving of not less than 60 days'
written notice to such stockholder; provided that if such minimum total
investment is greater than the investment of any stockholder at the time
the minimum total investment becomes effective, the interest of such
stockholder shall not be redeemed without his consent, unless the minimum
shall have been approved by a majority vote of the directors and
stockholders of the Corporation; and provided, further, that such
stockholder shall, following such written notice or approval of directors
and stockholders, be allowed 60 days in which to purchase sufficient
additional shares of Common Stock in order that his total investment in
shares of Common Stock will be equal to or greater than the minimum total
investment and therefore no longer subject to redemption hereunder. Upon
the sixty-first day following the giving of written notice to a stockholder
of a redemption of shares hereunder or approval thereof by the directors
and stockholders of the Corporation, or upon the stockholder's consent
thereto, as the case may be, if the stockholder's investment in shares of
Common Stock is less than the minimum total investment, the stockholder
shall cease to have the status and rights of a stockholder, except the
right to receive the redemption price of such shares and any dividends or
distributions on such shares to which such stockholder had previously
become entitled as the record holder of such shares on the record date for
such dividend or distribution. The Minimum Amount shall be $500 or such
other sum less than $1,000 as may be determined by the Board of Directors.
<PAGE>
When the Board of Directors of the Corporation determines in its sole
discretion that concentration in the ownership of the Corporation's shares
might cause the Corporation to be deemed a personal holding company within
the meaning of the Internal Revenue Code, it may by resolution order the
redemption of the shares of any shareholder at the net asset value of such
shares or refuse to give effect on the Corporation's books to the transfer
of the Corporation's shares in an effort to prevent personal holding
company status, subject to such reasonable terms and conditions as the
Board of Directors may deem appropriate and desirable and to any
requirements of applicable statutes or regulations. The Corporation shall
give to each affected holder prompt written notice, personally delivered or
mailed postage prepaid to the holder's address set forth in the books and
records of the Corporation or its transfer agent, of its intention to
redeem shares and the date the redemption will be made or of its refusal to
permit transfer.
(d) If any shares of Common Stock shall have been purchased, redeemed
or otherwise reacquired by the Corporation in accordance with law, all
shares so purchased, redeemed or otherwise reacquired shall be retired
automatically, and such retired shares shall have the status of authorized
but unissued shares of Common Stock and the number of authorized shares of
Common Stock of the Corporation shall not be reduced by the number of any
shares retired.
(e) All persons who shall acquire stock or securities of the
Corporation shall acquire the same subject to the provisions of these
Articles of Incorporation.
SEVENTH: That the number of directors of the Corporation shall be two and
the names of those who will serve as such directors until the first annual
meeting and until their successors are duly chosen and qualified are as follows:
Arthur Goldberg
Harvey Eisen
The By-Laws of the Corporation may fix the number of directors at a number
greater or less than that named in these Articles of Incorporation and may
authorize the Board of Directors, by the vote of a majority of the entire Board
of Directors, to increase or decrease the number of directors fixed by these
Articles of Incorporation or by the By-Laws within the limits specified from
time to time in the By-Laws. Unless otherwise provided by the By-Laws of the
Corporation, the directors of the Corporation need not be stockholders therein.
EIGHTH: In furtherance and not in limitation of the powers conferred by the
laws of the State of Maryland, the following provisions are hereby adopted for
the purpose of defining and regulating the powers of the Corporation and of the
directors and
<PAGE>
stockholders:
(a) The Board of Directors may designate one or more committees, each
committee to consist of two or more of the directors of the Corporation,
which, to the extent provided in said resolution or resolutions or in the
By-Laws of the Corporation, shall have and may exercise the powers of the
Board of Directors in the management of the business and affairs of the
Corporation, and may have power to authorize the seal of the Corporation to
be affixed to all papers which may require it.
(b) The Board of Directors of this Corporation is hereby empowered to
authorize the issuance from time to time of shares of stock of this
Corporation and/or securities convertible into shares of stock of this
Corporation, in each case upon such terms and conditions and for such
consideration as such Board of Directors shall from time to time determine.
(c) The Board of Directors of this Corporation is hereby empowered to
authorize the issuance from time to time of fractional shares of stock of
this Corporation, whether now or hereafter authorized, and any fractional
shares so issued shall entitle the holders thereof to exercise voting
rights, receive dividends and participate in the distribution of assets of
the Corporation in the event of liquidation or dissolution to the extent of
their proportionate interest represented by such fractional shares but
shall not entitle the holders thereof to receive stock certificates
evidencing such fractional shares.
(d) The Corporation reserves the right to make from time to time any
amendment to its Articles of Incorporation, now or hereafter authorized by
law, including, but without limitation, any amendment which alters the
contract rights as expressly set forth in such Articles of Incorporation of
any outstanding stock.
(e) The Board of Directors shall have the power to make, alter, amend
or repeal the By-Laws of the Corporation, and to adopt any new By-Laws.
(f) The Board of Directors of the Corporation shall be authorized,
from time to time, to classify or to reclassify any unissued shares of
stock of the Corporation by setting or changing the preference, conversion
or other rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms and conditions of redemption of the stock and
pursuant to such classification or reclassification to increase or decrease
the number of authorized shares of any class, but the number of shares of
any class shall not be reduced by the Board of Directors below the number
of shares thereof then outstanding and the total number of authorized
shares shall not be increased above ten billion
<PAGE>
(10,000,000,000) shares except by amendment to these Articles of
Incorporation. Without limiting the generality of the foregoing, the
dividends and distributions of investment income and capital gains with
respect to the stock of the Corporation and with respect to each class that
may hereafter be created shall be in such amount as may be declared from
time to time by the Board of Directors, and such dividends and
distributions may vary from class to class to such extent and for such
purposes as the Board of Directors may deem appropriate, including but not
limited to, the purpose of complying with requirements of regulatory or
legislative authorities.
(g) Except to the extent otherwise prohibited by applicable law, the
Corporation may enter into any management or investment advisory contract
or under writing contract or any other type of contract with, and may
otherwise engage in any transaction or do business with, any person, firm
or corporation or any subsidiary or other affiliate of any such person,
firm or corporation and may authorize such person, firm or corporation or
such subsidiary or other affiliate to enter into any other contracts or
arrangements with any other person, firm or corporation which relate to the
Corporation or the conduct of its business, notwithstanding that any
directors or officers of the Corporation are or may subsequently become
partners, directors, officers, stockholders or employees of such person,
firm or corporation or of such subsidiary or other affiliate or may have a
material financial interest in any such contract, transaction or business;
and except to the extent otherwise provided by applicable law, no such
contract or transaction or business shall be invalidated or voidable or in
any way affected thereby nor shall any of such directors or officers of the
Corporation be liable to the Corporation or to any stockholder or creditor
thereof or to any other person for any loss incurred solely because of the
entering into and performance of such contract or the engaging in such
transaction or business or the existence of such material financial
interest therein, provided that (i) such relationship to such person, firm
or corporation or said subsidiary or affiliate or such material financial
interest was disclosed or otherwise known, prior to the Corporation's
entering into such contract or engaging in such transaction or business,
(A) to the Board of Directors or committee authorizing, approving or
ratifying the Corporation's entry into such contract or engaging in such
transaction or business, and the Board or committee authorizes, approves or
ratifies the contract or transaction by a majority vote of disinterested
directors, even if disinterested directors constitute less than a quorum,
and that any requirements of the Maryland General Corporation Law governing
the duties of directors have been satisfied or (B) to the stockholders
entitled to vote, and the contract is authorized, approved or ratified by a
majority of the votes cast by the stockholders entitled to vote, other than
the
<PAGE>
entitled to vote, other than the votes of shares owned of record or
beneficially by the interested director or corporation or other entity or
(ii) the contract or transaction is fair and reasonable to the Corporation;
and provided further that nothing herein shall protect any director or
officer of the Corporation from liability to the Corporation or its
security holders to which he would be otherwise subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office.
(h) Any determination made by or pursuant to the direction of the
Board of Directors in good faith and consistent with the provisions of
these Articles of Incorporation as to any of the following matters shall be
final and conclusive and shall be binding upon the Corporation and every
holder at any time of shares of its Common Stock, namely--the amount of the
assets, obligations, liabilities and expenses of the Corporation; the
amount of the net income of the Corporation from dividends and interest for
any period and the amount of assets at any time legally available for the
payment of dividends or distributions'; the amount, purpose, time of
creation, increase or decrease, alteration or cancellation of any reserves
or charges and the propriety thereof (whether or not any obligation or
liability for which such reserves or charges were created shall have been
paid or discharged); the market value, the method to be used to determine
the value of any securities or any quoted price to be applied in
determining the market value, of any security owned or held by the
Corporation; the fair value of any security for which quoted prices are not
readily available, or of any other asset owned or held by the Corporation;
the number of shares of the Corporation issued or issuable; the net asset
value per share; the existence of conditions permitting suspension of the
right of redemption or the postponement of payment or the deposit of the
redemption price of shares of Common Stock as hereinabove provided; any
matter relating to the acquisition, holding and depositing of securities
and other assets by the Corporation; any question as to whether any
transaction constitutes a purchase of securities on margin, a short sale of
securities, or an underwriting of the sale of, or participation in any
underwriting or selling group in connection with the public distribution
of, any securities, and any matter relating to the issue, sale, redemption,
repurchase, and/or other acquisition or disposition of shares of Common
Stock of the Corporation. No provision of these Articles of Incorporation
shall be effective to (i) require a waiver of compliance with any provision
of the Securities Act of 1933, as amended, or the Investment Company Act of
1940, as amended, or of any valid rule, regulation or order of the
Securities and Exchange Commission thereunder, or (ii) protect or purport
to protect any director or officer of the Corporation against any liability
to the Corporation or to its security holders to
<PAGE>
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.
(i) The stockholders of the Corporation may remove any director of the
Corporation prior to the expiration of his term of office for cause, and
not otherwise, by the affirmative vote of a majority of all votes entitled
to be cast for the election of directors.
(j) Except to the extent otherwise specifically provided in the
Articles of Incorporation or By-Laws of the Corporation, the Corporation
may authorize or take any corporate action (including, but without
limitation, any amendment to its Articles of Incorporation) upon the
affirmative vote of the holders of a majority of the outstanding shares of
stock entitled to vote thereon, notwithstanding any provision of the
Maryland General Corporation Law which would otherwise require more than a
majority vote of the outstanding shares of stock to authorize or take such
action.
(k) To the maximum extent permitted by the Maryland General
Corporation Law as from time to time amended, but subject to any
limitations which may be imposed pursuant to the Investment Company Act of
1940 or any rule or regulation thereunder, the Corporation shall indemnify
its currently acting and its former directors and officers and those
persons who, at the request of the Corporation, serve or have served
another corporation, partnership, joint venture, trust or other enterprise
in one or more of such capacities.
NINTH: That for the purpose of the computation of net asset value referred
to in these Articles of Incorporation, the following rules shall apply:
(a) The net asset value of each share of Common Stock of the
Corporation issued or sold at its net asset value shall be the net asset
value per share of the Corporation's Common Stock when next determined as
provided in Paragraph (d) of this Article NINTH following acceptance by the
Corporation of the subscription or other agreement with respect to the
issue or sale of such share.
(b) The net asset value of each share of Common Stock of the
Corporation redeemed by the Corporation at the request of its holder shall
be the net asset value per share of the Corporation's Common Stock when
next determined as provided in Paragraph (d) of this Article NINTH
following the time the Corporation receives a request for redemption of
such share, in good order with all appropriate documentation including
stock certificates, if any, duly endorsed for transfer.
(c) The net asset value of each share of Common Stock of
<PAGE>
the Corporation purchased or redeemed by it otherwise than upon request for
redemption by its holder shall be the net asset value per share of the
Corporation's Common Stock when next determined as provided in Paragraph
(d) of this Article NINTH, following the Corporation's determination or
agreement to purchase or redeem such share and the expiration of any notice
period and fulfillment of any other conditions precedent to such purchase
or redemption, or such lower price per share as may be specified in the
agreement, if any, with the stockholder for the purchase or redemption of
his shares.
(d) The net asset value of a share of Common Stock of the Corporation
issued, sold, repurchased or redeemed at net asset value at any time shall
be equal to the quotient obtained by dividing the value at such time of the
net assets of the Corporation (i.e., the value of the assets of the
Corporation less its liabilities, exclusive of capital stock and surplus)
by the total number of shares of Common Stock outstanding at such time, all
determined and computed as provided in the Corporation's By-Laws or in
procedures adopted by the Board of Directors. The procedures adopted by the
Board of Directors for determination of the net asset value of shares of
the Common Stock shall be consistent with the requirements of applicable
statutes or regulations and, so far as accounting matters are involved, in
accordance with generally accepted accounting principles and may include,
without limitation, procedures for valuation of the Corporation's portfolio
securities and other assets, for accrual of expenses or creation of
reserves and for the determination of the number of shares issued and
outstanding at any given time.
(e) The Corporation shall determine the net asset value per share of
its Common Stock on such days and at such times as shall be set by the
Board of Directors, consistent with the rules and regulations of the
Securities and Exchange Commission or any successor thereto. The
Corporation may suspend the determination of net asset value during any
period when it may suspend the right of its stockholders to require the
Corporation to redeem their shares.
(f) The Board of Directors may adopt procedures for maintaining the
net asset value of shares of each class of the Corporation's stock constant
at the same dollar amount. These policies may include declaration of the
entire net income of each class of the Corporation's stock as a dividend to
holders of shares of that class at each time that the net asset value of
shares of the Corporation's stock is determined, the reduction or
suspension of dividends if any unusual expense, loss or depreciation
adversely affects net asset value and any other policies or procedures not
inconsistent with the requirements of applicable statutes and regulations.
If such net asset value so determined for any day is negative, the
Corporation shall be entitled, without the payment of monetary compensation
but in consideration of the interest of the
<PAGE>
Corporation and its shareholders in maintaining a constant net asset value
per share, to redeem pro rata from all the shareholders of record at the
time of such redemption (in proportion to their respective holdings of
shares) such number of the Corporation's outstanding shares of Common
Stock, or fractions thereof, as shall be required to permit the net asset
value per share to remain constant.
TENTH: The presence in person or by proxy of the holders of one-third of
the shares of stock of the Corporation entitled to vote (without regard to
class) shall constitute a quorum at any meeting of the stockholders, except with
respect to any matter which, under applicable statutes or regulatory
requirements, requires approval by a separate vote of one or more classes of
stock, in which case the presence in person or by proxy of the holders of one-
third of the shares of stock of each class required to vote as a class on the
matter shall constitute a quorum.
IN WITNESS WHEREOF, the undersigned incorporator of INTEGRATED MONEY MARKET
SECURITIES, INC. who executed the foregoing Articles of Incorporation hereby
acknowledges the same to be her act.
Dated the 19th day of July, 1983
/s/ Susan Penry-Williams
- -------------------------
Susan Penry-Williams
Sole Incorporator
<PAGE>
STATE OF MARYLAND
STATE DEPARTMENT OF ASSESSMENT AND TAXATION
301 West Preston Street, Baltimore, Maryland 21201
THIS IS TO CERTIFY THAT the within instrument is a true copy of the
ARTICLES OF INCORPORATION
OF
INTEGRATED MONEY MARKET SECURITIES, INC.
as approved and received for record by the State Department of Assessments and
Taxation of Maryland, July 20, 1983 at 1:58 o'clock P.M.
AS WITNESS my hand and official seal of the said
Department at Baltimore this 27th day of July, 1983
/s/ Paula Cary McLean
---------------------------
Paula Cary McLean
Legal Officer
<PAGE>
State Department of Assessments & Taxation
301 WEST PRESTON STREET, BALTIMORE, MARYLAND 21201
NOTICE
As a Maryland corporation you are responsible for filing an annual business tax
report with this office on or before April 15 of each year, after the year of
incorporation. This report is due annually whether or not the corporation has
been organized for business and whether or not the corporation owns any
property. If your charter authorizes the issuance of capital stock, the report
must be accompanied by a filing fee in amount of $40.00 and this fee must be
paid whether or not any stock has been issued. Non-stock corporations must file
the report but are exempt from payment of the filing fee.
Failure to timely file this report by April 15 of each year will result in the
imposition of penalties in accordance with Maryland low and continued failure to
file will result in the forfeiture of your corporate charter.
While the Department makes an annual mailing of appropriate forms to the latest
available address of each corporation, it is the responsibility of the
corporation to obtain proper forms if such are not received by mail. In this
regard the Department suggests that if forms have not been received by April 1
of any year, the taxpayer should make request of the Department and forms will
then be mailed.
The filing of this return does not relieve the corporation of the responsibility
of filing reports due other State agencies.
383-2530/31
<PAGE>
SUNAMERICA MONEY MARKET FUNDS, INC.
(formerly SunAmerica Money Market Securities, Inc.)
ARTICLES SUPPLEMENTARY
SUNAMERICA MONEY MARKET FUNDS, INC., a Maryland corporation having its
principal office in Baltimore City, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: (a) Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Article SIXTH, Paragraph (1) of the Charter of
the Corporation, the Board of Directors has duly divided and classified Two
Billion Five Hundred Million (2,500,000,000) authorized shares of capital stock,
par value $.001 per share, of the Corporation as a series of Common Stock
designated as the "SunAmerica Money Market Fund" and has redesignated all of the
currently outstanding shares of the Corporation as shares of the SunAmerica
Money Market Fund. The SunAmerica Money Market Fund and any other series of
Common Stock which is preferred over all other series in respect of assets
specifically allocated to that series as hereinafter provided are hereinafter
referred to individually as a "Fund" and collectively as the "Funds".
(b) Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Article SIXTH, Paragraph (1) of the Charter of the
Corporation, the Board of Directors has further divided and classified the
shares of the SunAmerica Money Market Fund as three classes of shares, which are
designated Class A, Class B and Class C shares and shall consist, until further
changed, of One Billion (1,000,000,000) Class A shares, One Billion
(1,000,000,000) Class B shares, and Five Hundred Million (500,000,000) Class C
shares, and further has redesignated all of the currently outstanding shares of
the Corporation as Class A shares. Unless provided otherwise by the Board of
Directors at the time the shares of any additional Fund are classified, any such
additional Fund shall also initially have three classes of shares designated
Class A, Class B and Class C.
SECOND: (a) The following is a description of the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption of the Common
Stock classified as the SunAmerica Money Market Fund and any additional Fund
(unless provided otherwise by the Board of Directors at the time the shares of
such additional Fund are classified):
(1) Assets Belonging to Fund. All consideration received by the
------------------------
Corporation from the issue or sale of shares of a particular Fund, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any
<PAGE>
funds or payments derived from any investment or reinvestment of such
proceeds in whatever form the same may be, shall irrevocably belong to that
Fund for all purposes and shall be so recorded upon the books of account of
the Corporation. Such consideration, assets, income, earnings, profits and
proceeds, together with any general items allocated to the Fund as provided
in the following sentence, are hereinafter referred to collectively as
"assets belonging to" that Fund. In the event that there are any assets,
income, earnings, profits or proceeds which are not readily identifiable as
belonging to any particular Fund, such general items shall be allocated by
or under the supervision of the Board of Directors to and among any one or
more of the Funds established from time to time in such manner and on such
basis as the Board of Directors, in its sole discretion, deems fair and
equitable; and any general items so allocated to a particular Fund shall
belong to that Fund. Each such allocation by or under the supervision of
the Board of Directors shall be conclusive and binding for all purposes.
The holders of shares of a particular Fund shall not have, and shall be
conclusively deemed to have waived, any claims to the assets belonging to
any other Fund of which they are not shareholders.
(2) Liabilities of Fund. The assets belonging to each particular
-------------------
Fund shall be charged with the liabilities of the Corporation in respect of
that Fund and all expenses, costs, charges and reserves attributable to
that Fund; and any general liabilities, expenses, costs, charges or
reserves of the Corporation which are not readily identifiable as
pertaining to any particular Fund shall be allocated and charged by or
under the supervision of the Board of Directors to and among any one or
more of the Funds established from time to time in such manner and on such
basis as the Board of Directors, in its sole discretion, deems fair and
equitable. The liabilities, expenses, costs, charges and reserves allocated
and so charged to a particular Fund are hereinafter referred to
collectively as "liabilities of" that Fund. Each such allocation by or
under the supervision of the Board of Directors shall be conclusive and
binding for all purposes. All persons who have extended credit, or who have
a claim or contract, which has been allocated to a particular Fund shall
look only to the assets belonging to that Fund for payment of such credit,
claim or contract.
(3) Dividends and Distributions. The dividend and distribution
---------------------------
rights of the shares of each particular Fund are set forth in the Charter
of the Corporation.
(4) Voting. The voting powers of the shares of each particular
------
Fund are set forth in the Charter of the Corporation.
(5) Redemption. The terms and conditions of
----------
<PAGE>
redemption of the shares of each particular Fund are set forth in the
Charter of the Corporation.
(6) Liquidation. In the event of the liquidation of a particular
-----------
Fund, the holders of shares of the Fund that is being liquidated shall be
entitled to receive, as a class, when and as declared by the Board of
Directors, the excess of the assets belonging to that Fund over the
liabilities of that Fund. The holders of shares of any particular Fund
shall not be entitled thereby to any distribution upon liquidation of any
other Fund. The assets so distributable to the shareholders of any
articular Fund shall be distributed among such shareholders in proportion
to the number of shares of that Fund held by them and recorded on the books
of the Corporation. The liquidation of any particular Fund in which there
are shares then outstanding may be authorized by vote of a majority of the
Board of Directors, subject to the approval of a majority of the
outstanding voting securities (as defined in the Investment Company Act of
1940, as amended (the "1940 Act")) of that Fund, and without the vote of
the holders of shares of any other Fund.
(7) Net Asset Value Per Share. The net asset per share of each
-------------------------
particular Fund shall be determined as provided in the Charter of the
Corporation.
(8) Equality. All shares of each particular Fund shall represent
--------
an equal proportionate interest in the assets belonging to that Fund
(subject to the liabilities of that Fund) and each share of any particular
Fund shall be equal to each other share of that Fund, except to the extent
provided otherwise by the Charter of the Corporation.
(b) The Class A, Class B and Class C shares of each particular
Fund shall represent the same interest in that Fund and have identical voting,
dividend, liquidation and other rights; provided, however, that notwithstanding
-------- -------
anything in the Charter of the Corporation to the contrary:
(1) the Class A, Class B and Class C shares may be issued and
sold subject to such different front-end sales loads, contingent deferred
sales charges, or front-end sales loads and contingent deferred sales
charges as the Board of Directors shall from time to time establish with
respect to each such class in accordance with the 1940 Act, the terms of
any exemptive order granted by the Securities and Exchange Commission
pursuant to the 1940 Act, and applicable rules and regulations of the
National Association of Securities Dealers, Inc.;
(2) expenses related solely to a particular class (including,
without limitation, distribution expenses under a Rule 12b-1 plan and
administrative expenses under an administration or service agreement, plan
or other
<PAGE>
arrangement, however designated) shall be borne by that class and
shall be appropriately reflected (in the manner determined by the Board of
Directors) in the net asset value of, or the dividends and distributions
on, the shares of that class;
(3) except as otherwise provided hereinafter, on the first
business day of the month following the seventh anniversary of the issuance
of Class B shares to a holder thereof, such Class B shares (as well as a
pro rata portion of any Class B shares purchased through the reinvestment
of dividends and other distributions paid in respect of all Class B shares
held by such holder) shall automatically convert to Class A shares of the
same Fund on the basis of the respective current net asset values per share
of the Class B shares and the Class A shares of that Fund on the conversion
date; provided, however, that any conversion of Class B shares shall be
-------- -------
subject to the continuing availability of an opinion of counsel to the
effect that (i) the assessment of higher distribution fees or transfer
agency costs with respect to Class B shares does not result in the
Corporation's dividends or distributions constituting "preferred dividends"
under the Internal Revenue Code of 1986, as amended, and (ii) such
conversion does not constitute a taxable event under federal income tax
law, and the Board of Directors, in its sole discretion, may suspend the
conversion of Class B shares if such opinion is no longer available;
(4) as to any matter with respect to which a separate vote of the
holders of a particular class of shares of any Fund is required by the 1940
Act, the terms of any exemptive order granted by the Securities and
Exchange Commission pursuant to the 1940 Act, or the Maryland General
Corporation Law (including, without limitation, approval of any plan,
agreement or other arrangement referred to in sub-paragraph (2) above),
such requirement as to a separate vote by that class shall apply in lieu of
a general vote of all classes; in the event that the separate vote
requirement referred to in the preceding clause applies with respect to one
or more classes, then, subject to the following clause, the shares of all
other classes not entitled to a separate class vote shall vote as a single
class; and, except as required otherwise by the 1940 Act, the terms of any
exemptive order granted by the Securities and Exchange Commission pursuant
to the 1940 Act, or the Maryland General Corporation Law, the holders of a
particular class of Fund shares shall not be entitled to vote as to any
matter which does not affect the interest of that class; and
(5) the Class A, Class B and Class C shares may have such
different exchange privileges as may be provided by the Board of Directors.
THIRD: The foregoing amendment to the Charter of the Corporation
does not increase the authorized capital stock of
<PAGE>
the Corporation.
FOURTH: The aforesaid shares have been duly classified by the
Board of Directors pursuant to authority and power contained in the Charter of
the Corporation.
IN WITNESS WHEREOF, SunAmerica Money Market Funds, Inc. has
caused these presents to be signed in its name and on its behalf by its
Executive Vice President and attested by its Secretary on this 23rd day of
September, 1993.
SUNAMERICA MONEY MARKET FUNDS, INC.
By: /s/ Peter A. Harbeck
-------------------------
Peter A. Harbeck,
Executive Vice President
Attest:
/s/ Robert M. Zakem
- ----------------------
Robert M. Zakem
Secretary
<PAGE>
THE UNDERSIGNED, Executive Vice President of SunAmerica Money Market
Funds, Inc. , who executed on behalf of said Corporation the foregoing Articles
Supplementary of which this certificate is made a part, hereby acknowledges, in
the name and on behalf of said Corporation, the foregoing Articles Supplementary
to be the corporate act of said Corporation and further certifies that, to the
best of his knowledge, information and belief, the matters and facts set forth
therein with respect to the authorization and approval thereof are true in all
material respects, under the penalties of perjury
/s/ Peter A. Harbeck
------------------------
Peter A. Harbeck
Executive Vice President
<PAGE>
SUNAMERICA MONEY MARKET SECURITIES, INC.
ARTICLES OF AMENDMENT
SUNAMERICA MONEY MARKET SECURITIES, INC., a Maryland corporation having its
principal office in Baltimore City, Maryland (which is hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The Charter of the Corporation is hereby amended in the following
-----
respects:
(a) By striking out Article FIRST in its entirety and inserting in lieu
thereof the following:
FIRST: The name of the corporation (which is hereinafter called the
"Corporation")is SUNAMERICA MONEY MARKET FUNDS, INC.
(b) By striking out Article SIXTH in its entirety and inserting in lieu
thereof the following:
SIXTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is Ten Billion (10,000,000,000)
shares, of the par value of $.001 per share (the "Common Stock") and of the
aggregate par value of Ten Million Dollars ($10,000,000).
(1) The Board of Directors may classify and reclassify any
unissued shares of capital stock into one or more additional or other
classes or series as may be established from time to time by setting
or changing in any one or more respects the designations, preferences,
conversion or other rights, voting powers, restrictions, limitations
as to dividends, qualifications or terms or conditions of redemption
of such shares of stock and pursuant to such classification or
reclassification to increase or decrease the number of authorized
shares of any existing class or series.
(2) Unless otherwise expressly provided in the charter of the
Corporation, including any Articles Supplementary creating any class
or series of capital stock, the holders of each class or series of
capital stock shall be entitled to dividends and distributions in such
amounts and at such time as may be determined by the Board of
Directors, and the dividends and distributions paid with respect to
the various classes or series of capital stock may vary among such
classes and series. Expenses related to the distribution of, and other
19
<PAGE>
identified expenses that should properly be allocated to, the shares
of a particular class or series of capital stock may be charged to and
borne solely by such class or series and the bearing of expenses
solely by a class or series of capital stock may be appropriately
reflected (in a manner determined by the Board of Directors) and cause
differences in the net asset value attributable to, and the dividend,
redemption and liquidation rights of, the shares of each class or
series of capital stock.
(3) Unless otherwise expressly provided in the charter of the
Corporation, including any Articles Supplementary creating any class
or series of capital stock, on each matter submitted to a vote of
stockholders, each holder of a share of capital stock of the
Corporation shall be entitled to one vote for each share standing in
such holder's name on the books of the Corporation, irrespective of
the class or series thereof, and all shares of all classes and series
shall vote together as a single class; provided, however, that (a) as
to any matter with respect to which a separate vote of any class or
series is required by the Investment Company Act of 1940, as amended,
and in effect from time to time, or any rules, regulations or orders
issued thereunder, or by the Maryland General Corporation Law, such
requirement as to a separate vote by that class or series shall apply
in lieu of a general vote of all classes and series as described
above, (b) in the event that the separate vote requirements referred
to in (a) above apply with respect to one or more classes or series,
then, subject to paragraph (c) below, the shares of all other classes
and series not entitled to a separate class vote shall vote as a
single class, and (c) as to any matter which does not affect the
interest of a particular class or series, such class or series shall
not be entitled to any vote and only the holders of shares of the one
or more affected classes and series shall be entitled to vote.
(4) Notwithstanding any provisions of the Maryland General
Corporation Law requiring a greater proportion than a majority of the
votes of all classes or series of capital stock of the Corporation (or
of any class or series entitled to vote thereon as a separate class or
series) to take or authorize any action, the Corporation is hereby
authorized (subject to the requirements of the Investment Company Act
of 1940, as amended, and in effect from time to time, and any rules,
regulations and orders issued thereunder) to take such action upon the
concurrence of a majority of the aggregate number of shares of capital
stock of the Corporation entitled to vote thereon (or a majority of
the aggregate number of shares of a class or series entitled to vote
thereon as a separate class or series).
20
<PAGE>
(5) Unless otherwise expressly provided in the charter of the
Corporation, including any Articles Supplementary creating any class
or series of capital stock, in the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, the holders of all classes and series of capital stock of
the Corporation shall be entitled, after payment or provision for
payment of the debts and other liabilities of the Corporation, to
share ratably in the remaining net assets of the Corporation;
provided, however, that in the event the capital stock of the
Corporation shall be classified or reclassified into series, holders
of any shares of capital stock within such series shall be entitled to
share ratably out of the assets belonging to such series.
(6) The Common Stock shall be subject to the following
restrictions, and conditions and provisions:
(a) The holders of Common Stock (or of such class or
series, in the event the capital stock of the Corporation shall
be classified or reclassified into classes or series) shall not,
as such holders, have any right to acquire, purchase or subscribe
for any shares of the Common Stock of the Corporation or any
other class of capital stock or any securities convertible into,
exchangeable for, or carrying any rights to subscribe to, shares
of Common Stock or any such other class of capital stock of the
Corporation, which it may hereafter issue or sell (whether out of
the number of shares authorized by these Articles of
Incorporation, or out of any shares of the Common or other stock
of the Corporation acquired by it after the issuance thereof, or
otherwise), other than such right, if any, as the Board of
Directors, in its discretion, may determine.
(b) Dividends, when, as and if declared by the Board of
Directors, shall be shared equally by the holders of Common Stock
(or of such class or series, in the event the capital stock of
the Corporation shall be classified or reclassified into classes
or series) on a share for share basis.
(c) Holders of Common Stock (or of such class or series, in
the event the capital stock of the Corporation shall be
classified or reclassified into classes or series) shall have the
right, when the Corporation has funds or property legally
available therefor, upon proper written request to the
Corporation, to require the Corporation to redeem all or any
number of the shares of the Common Stock (or of such class or
series, in the
21
<PAGE>
event the capital stock of the Corporation shall be classified or
reclassified into classes or series) standing in the name of such
holder on the books of the Corporation at the net asset value
thereof determined in the manner set forth in Article NINTH
hereof and pursuant to such procedures as the Board of Directors
may determine. Payment of the redemption price by the Corporation
may be made either in cash or in securities or other assets at
the time owned by the Corporation (or of such class or series, in
the event the capital stock of the Corporation shall be
classified or reclassified into classes or series) or partly in
cash and partly in securities or other assets at the time owned
by the Corporation (or series). The value of any part of such
payment to be made in securities or other assets of the
Corporation shall be the value employed in determining the
redemption price.
Notwithstanding the foregoing, the Board of Directors may
suspend the right of the holders of Common Stock to require the
Corporation to redeem such shares when permitted or required to
do so by the Investment Company Act of 1940 or any rule or
regulation of the Securities and Exchange Commission promulgated
thereunder.
When the Board of Directors of the Corporation, including a
majority of the Directors who are not interested persons as
defined in Section 2(a)(19) of the Investment Company Act of
1940, determines in its sole discretion, that the action is
necessary for the business success and general welfare of the
Corporation in order to reduce disproportionate and unduly
burdensome expenses in the operation of the Corporation's
affairs, to achieve efficiencies in the administration of its
activities, or to reduce or eliminate excessive expenditures and
undue difficulties in servicing, accounting and reporting
requirements with respect to the accounts of stockholders, it may
by resolution redeem the interest of any stockholder whose
investment in shares of Common Stock (or of such class or series,
in the event the capital stock of the Corporation shall be
classified or reclassified into classes or series) is less than
the Minimum Amount then in effect upon the giving of not less
than 60 days' written notice to such stockholder; provided that
if such minimum total investment is greater than the investment
of any stockholder at the time the minimum total investment
becomes effective, the interest of such stockholder shall not be
redeemed without his consent, unless the minimum shall have
22
<PAGE>
been approved by a majority vote of the directors and
stockholders of the Corporation; and provided, further, that such
stockholder shall, following such written notice or approval of
directors and stockholders, be allowed 60 days in which to
purchase sufficient additional shares of Common Stock in order
that his total investment in shares of Common Stock (or of such
class or series, in the event the capital stock of the
Corporation shall be classified or reclassified into classes or
series) will be equal to or greater than the minimum total
investment and therefore no longer subject to redemption
hereunder. Upon the sixty-first day following the giving of
written notice to a stockholder of a redemption of shares
hereunder or approval thereof by the directors and stockholders
of the Corporation, or upon the stockholder's consent thereto, as
the case may be, if the stockholder's investment in shares of
Common Stock (or of such class or series, in the event the
capital stock of the Corporation shall be classified or
reclassified into classes or series) is less than the minimum
total investment, the stockholder shall cease to have the status
and rights of a stockholder, except the right to receive the
redemption price of such shares and any dividends or
distributions on such shares to which such stockholder had
previously become entitled as the record holder of such shares on
the record date for such dividend or distribution. The Minimum
Amount shall be $500 or such other sum less than $1,000 as may be
determined by the Board of Directors.
When the Board of Directors of the Corporation determines in
its sole discretion that concentration in the ownership of the
Corporation's shares might cause the Corporation to be deemed a
personal holding company within the meaning of the Internal
Revenue Code, it may by resolution order the redemption of the
shares of any stockholder at the net asset value of such shares
or refuse to give effect on the Corporation's books to the
transfer of the Corporation's shares in an effort to prevent
personal holding company status, subject to such reasonable terms
and conditions as the Board of Directors may deem appropriate and
desirable and to any requirements of applicable statutes or
regulations. The Corporation shall give to each affected holder
prompt written notice, personally delivered or mailed postage
prepaid to the holder's address set forth in the books and
records of the Corporation or its transfer agent,
23
<PAGE>
of its intention to redeem shares and the date the redemption
will be made or of its refusal to permit transfer.
(d) If any shares of Common Stock shall have been purchased,
redeemed or otherwise reacquired by the Corporation in accordance
with law, all shares so purchased, redeemed or otherwise
reacquired shall be retired automatically, and such retired
shares shall have the status of authorized but unissued shares of
Common Stock and the number of authorized shares of Common Stock
of the Corporation shall not be reduced by the number of any
shares retired.
(e) All persons who shall acquire stock or securities of
the Corporation shall acquire the same subject to the provisions
of these Articles of Incorporation.
(c) By striking out paragraph (h) of Article EIGHTH in its entirety and
inserting in lieu thereof the following:
(h) Any determination made by or pursuant to the direction
of the Board of Directors in good faith and consistent with the
provisions of these Articles of Incorporation as to any of the
following matters shall be final and conclusive and shall be
binding upon the Corporation and every holder at any time of
shares of its Common Stock (or of such class or series, in the
event the capital stock of the Corporation shall be classified or
reclassified into classes or series), namely--the amount of the
assets, obligations, liabilities and expenses of the Corporation
(or of such class or series, in the event the capital stock of
the Corporation shall be classified or reclassified into classes
or series); the amount of the net income of the Corporation (or
of such class or series, in the event the capital stock of the
Corporation shall be classified or reclassified into classes or
series) from dividends and interest for any period and the amount
of assets at any time legally available for the payment of
dividends or distributions; the amount, purpose, time of
creation, increase or decrease, alteration or cancellation of any
reserves or charges and the propriety thereof (whether or not any
obligation or liability for which such reserves or charges were
created shall have been paid or discharged); the market value,
the method to be used to determine the value of any securities or
any quoted price to be applied in determining the market value,
of any
24
<PAGE>
security owned or held by the Corporation (or of such class or
series, in the event the capital stock of the Corporation shall
be classified or reclassified into classes or series); the fair
value of any security for which quoted prices are not readily
available, or of any other asset owned or held by the Corporation
(or of such class or series, in the event the capital stock of
the Corporation shall be classified or reclassified into classes
or series); the number of shares of the Corporation (or of such
class or series, in the event the capital stock of the
Corporation shall be classified or reclassified into classes or
series) issued or issuable; the net asset value per share; the
existence of conditions permitting suspension of the right of
redemption or the postponement of payment or the deposit of the
redemption price of shares of Common Stock (or of such class or
series, in the event the capital stock of the Corporation shall
be classified or reclassified into classes or series) as
hereinabove provided; any matter relating to the acquisition,
holding and depositing of securities and other assets by the
Corporation; any question as to whether any transaction
constitutes a purchase of securities on margin, a short sale of
securities, or an underwriting of the sale of, or participation
in any underwriting or selling group in connection with the
public distribution of, any securities, and any matter relating
to the issue, sale, redemption, repurchase, and/or other
acquisition or disposition of shares of Common Stock (or of such
class or series, in the event the capital stock of the
Corporation shall be classified or reclassified into classes or
series) of the Corporation. No provision of these Articles of
Incorporation shall be effective to (i) require a waiver of
compliance with any provision of the Securities Act of 1933, as
amended, or the Investment Company Act of 1940, as amended, or of
any valid rule, regulation or order of the Securities and
Exchange Commission thereunder, or (ii) protect or purport to
protect any director or officer of the Corporation against any
liability to the Corporation or to 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.
(d) By striking out Article NINTH in its entirety and inserting in lieu
thereof the following:
NINTH: That for the purpose of the computation of
25
<PAGE>
net asset value referred to in these Articles of Incorporation, the
following rules shall apply:
(a) The net asset value of each share of Common Stock of the
Corporation (or of such class or series, in the event the capital
stock of the Corporation shall be classified or reclassified into
classes or series) issued or sold at its net asset value shall be
the net asset value per share of the Common Stock of the
Corporation (or of such class or series, in the event the capital
stock of the Corporation shall be classified or reclassified into
classes or series) when next determined as provided in Paragraph
(d) of this Article NINTH following acceptance by the Corporation
of the subscription or other agreement with respect to the issue
or sale of such share.
(b) The net asset value of each share of Common Stock of
the Corporation (or of such class or series, in the event the
capital stock of the Corporation shall be classified or
reclassified into classes or series) redeemed by the Corporation
at the request of its holder shall be the net asset value per
share of the Common Stock of the Corporation (or of such class or
series, in the event the capital stock of the Corporation shall
be classified or reclassified into classes or series) when next
determined as provided in Paragraph (d) of this Article NINTH
following the time the Corporation receives a request for
redemption of such share, in good order with all appropriate
documentation including stock certificates, if any, duly endorsed
for transfer.
(c) The net asset value of each share of Common Stock of the
Corporation (or of such class or series, in the event the capital
stock of the Corporation shall be classified or reclassified into
classes or series) purchased or redeemed by it otherwise than
upon request for redemption by its holder shall be the net asset
value per share of the Common Stock of the Corporation (or of
such class or series, in the event the capital stock of the
Corporation shall be classified or reclassified into classes or
series) when next determined as provided in Paragraph (d) of this
Article NINTH, following the Corporation's determination or
agreement to purchase or redeem such share and the expiration of
any notice period and fulfillment of any other conditions
precedent to such purchase or redemption, or such lower price per
share as may be specified in the agreement, if any, with the
stockholder for the purchase or redemption of his
26
<PAGE>
shares.
(d) The net asset value of a share of Common Stock of the
Corporation (or of such class or series, in the event the capital
stock of the Corporation shall be classified or reclassified into
classes or series) issued, sold, repurchased or redeemed at net
asset value at any time shall be equal to the quotient obtained
by dividing the value at such time of the net assets of the
Corporation (or of such class or series, in the event the capital
stock of the Corporation shall be classified or reclassified into
classes or series) (i.e., the value of the assets of the
Corporation (or of such class or series, in the event the capital
stock of the Corporation shall be classified or reclassified into
classes or series) less its liabilities, exclusive of capital
stock and surplus) by the total number of shares of Common Stock
of the Corporation (or, of such class or series, in the event the
capital stock of the Corporation shall be classified or
reclassified into classes or series) outstanding at such time,
all determined and computed as provided in the Corporation's By-
Laws or in procedures adopted by the Board of Directors. The
procedures adopted by the Board of Directors for determination of
the net asset value of shares of the Common Stock of the
Corporation (or of such class or series, in the event the capital
stock of the Corporation shall be classified or reclassified into
classes or series) shall be consistent with the requirements of
applicable statutes or regulations and, so far as accounting
matters are involved, in accordance with generally accepted
accounting principles and may include, without limitation,
procedures for valuation of the portfolio securities of the
Corporation (or of such class or series, in the event the capital
stock of the Corporation shall be classified or reclassified into
classes or series) and other assets, for accrual of expenses or
creation of reserves and for the determination of the number of
shares issued and outstanding at any given time.
(e) The Corporation shall determine the net asset value per
share of Common Stock of the Corporation (or of such class or
series, in the event the capital stock of the Corporation shall
be classified or reclassified into classes or series) on such
days and at such times as shall be set by the Board of Directors,
consistent with the rules and regulations of the Securities and
Exchange Commission or any successor thereto. The
27
<PAGE>
Corporation may suspend the determination of net asset value
during any period when it may suspend the right of its
stockholders to require the Corporation to redeem their shares.
(f) The Board of Directors may adopt procedures for
maintaining the net asset value of shares of each series and
class of the Corporation's stock constant at the same dollar
amount. These policies may include declaration of the entire net
income of each series of the Corporation's stock as a dividend to
holders of shares of that series at each time that the net asset
value of shares of the Common Stock of the Corporation (or of
such class or series, in the event the capital stock of the
Corporation shall be classified or reclassified into classes or
series) is determined, the reduction or suspension of dividends
if any unusual expense, loss or depreciation adversely affects
net asset value and any other policies or procedures not
inconsistent with the requirements of applicable statutes and
regulations. If such net asset value so determined for any day is
negative, the Corporation shall be entitled, without the payment
of monetary compensation but in consideration of the interest of
the Corporation and its stockholders in maintaining a constant
net asset value per share, to redeem pro rata from all the
stockholders of record at the time of such redemption (in
proportion to their respective holdings of shares) such number of
outstanding shares of Common Stock of the Corporation (or of such
class or series, in the event the capital stock of the
Corporation shall be classified or reclassified into classes or
series), or fractions thereof, as shall be required to permit the
net asset value per share to remain constant.
(e) By striking out Article TENTH in its entirety and inserting in lieu
thereof the following:
TENTH: The presence in person or by proxy of the holders of one-
third of the shares of stock of the Corporation entitled to vote
(without regard to series or class) shall constitute a quorum at any
meeting of the stockholders, except with respect to any matter which,
under applicable statutes or regulatory requirements, requires
approval by a separate vote of one or more series or classes of stock,
in which case the presence in person or by proxy of the holders of
one-third of the shares of stock of each series or class required to
vote as a series or class on the matter shall constitute a quorum.
28
<PAGE>
SECOND: The foregoing amendments to the Charter of the Corporation do not
increase the authorized capital stock of the Corporation.
THIRD: The foregoing amendments to the Charter of the Corporation have been
advised by the Board of Directors and approved by the stockholders of the
Corporation in the manner required by law and the Charter of the Corporation.
IN WITNESS WHEREOF, SUNAMERICA MONEY MARKET SECURITIES, INC. has caused
these presents to be signed in its name and on its behalf by its Executive Vice
President, and attested by its Secretary on this 23rd day of September 1993.
SUNAMERICA MONEY MARKET SECURITIES, INC.
By: /s/ Peter A. Harbeck
--------------------------------------
Peter A. Harbeck
Executive Vice President
ATTEST:
/s/ Robert M. Zakem
- --------------------------
Robert M. Zakem
Secretary
[SEAL]
THE UNDERSIGNED, Executive Vice President of SunAmerica Money Market
Securities, Inc., who executed on behalf of said Corporation the foregoing
Articles of Amendment of which this certificate is made a part, hereby
acknowledges, in the name and on behalf of said Corporation, the foregoing
Articles of Amendment to be the corporate act of said Corporation and further
certifies that, to the best of his knowledge, information and belief, the
matters and facts set forth therein with respect to the authorization and
approval thereof are true in all material respects, under the penalties of
perjury.
/s/ Peter A. Harbeck
----------------------------
Peter A. Harbeck
Executive Vice President
g:\agreemen\samms\artamd.doc
29
<PAGE>
EXHIBIT 2
SUNAMERICA MONEY MARKET FUNDS, INC.
AMENDMENT NO. 3 TO THE BY-LAWS
The By-Laws of SunAmerica Money Market Funds, Inc., formerly SunAmerica
Money Market Securities, Inc. (the "Corporation") shall be amended in the
following respects:
1. The name of the Corporation shall be SunAmerica Money Market Funds, Inc.
2. The following supplements the provisions of Article III, Section 4 of
the Corporation's By-Laws:
If the elected Chairman is deemed to be an independent director, as
defined in the Investment Company Act of 1940, as amended, then such Chairman
shall not be an officer of the Corporation under the provisions of this Article
III. The duties of such Chairman shall be limited to presiding over all meetings
of the Board of Directors, and may include such other duties that may be
prescribed by the Directors which shall not otherwise be in conflict with his or
her role as an independent director.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of February, 1994.
By: /A/ Robert M. Zakem
------------------------------
Robert M. Zakem, Secretary
SunAmerica Money Market Funds, Inc.
<PAGE>
INTEGRATED MONEY MARKET SECURITIES, INC.
Maryland
BY-LAWS
ARTICLE I
STOCKHOLDERS
Section 1. Place of Meeting. All meetings of the stockholders shall be
----------------
held at the principal office of the Corporation in the State of Maryland or at
such other place within or without the State of Maryland as may from time to
time be designated by the Board of Directors and stated in the notice of
meeting.
Section 2. Annual Meetings. The Corporation may not be required to
---------------
hold an annual meeting in any year in which none or the following is required to
be acted on by stockholders under the Investment Company Act of 1940:
(a) election of directors; (b) approval of the investment advisory agreement;
(c) ratification of the selection of independent public accountants; and
(d) approval of a distribution agreement. When a meeting of the stockholders of
the Corporation is required to be held under any of the circumstance described
above, such meeting shall be held at such hour and on such date within 31 days
after the lst day of April in each year as may be fixed by the Board of
Directors for the purpose of voting on any matter described above and for the
transaction of such other business as may properly be brought before the
meeting.
Section 3. Special of Extraordinary Meetings. Special or extraordinary
---------------------------------
meetings of the stockholders for any purpose or purposes may be called by the
Chairman of the Board of Directors, if any, or by the President or by the Board
of Directors and shall be called by the Secretary upon receipt of the request in
writing signed by stockholders entitled to cast at least 25% of all the votes
entitled to be cast at the meeting stating the purpose of the meeting and the
matters proposed to be acted on and upon payment by such stockholders of the
estimated costs of preparing and mailing a notice of the meeting.
Section 4. Notice of Meeting of Stockholders. Not less than ten days'
---------------------------------
and not more than ninety days' written or printed notice of every meeting of
stockholders, stating the time and place thereof (and the purpose of any special
or extraordinary meeting), shall be give to each stockholder entitled to vote
thereat and each other stockholder entitled to notice, by leaving the same with
him or at his residence or usual and addressed to him at his address as it
appears upon the books of the Corporation.
Each person who is entitled to notice of any meeting waives notice if
he is present at the meeting, attends in person or
<PAGE>
by proxy or who either before or after the meeting signs a waiver of notice
which is filed with the records of stockholders meetings.
Section 5. Closing of Transfer Books, Record Dates. The Board of
---------------------------------------
Directors may direct that the stock transfer books of the Corporation be closed
for a stated period not exceeding twenty days for the purpose of making any
proper determination with respect to stockholders, including which stockholders
are entitled to notice of and to vote at the meeting, receive a dividend or be
allotted other rights. If such books are closed for the purpose of determining
stockholders entitled to notice of or to vote at a meeting of stockholders, such
books shall be closed for at least ten days immediately preceding such meeting.
In lieu of providing for the closing of the stock transfer books, the Board of
Directors may set a date, not exceeding ninety days and not less than ten days
preceding the date of any meeting of stockholders, and not exceeding ninety days
preceding any dividend payment date or any date for the allotment of rights, as
a record date for the determination of the stockholders entitled to notice of
and to vote at such meeting, or entitled to receive such dividends or rights, as
the case may be; and only stockholders of record on such date shall be entitled
to notice of and to vote at such meeting or to receive such dividends or rights,
as the case may be.
Section 6. Quorum, Adjournment of Meetings. The presence in person or
-------------------------------
by proxy of the holders of one-third of the shares of stock of the Corporation
entitled to vote (without regard to class) shall constitute a quorum at any
meeting of the stockholders, except with respect to any matter which, under
applicable statutes or regulatory requirements, requires approval by a separate
vote of one or more classes of stock, in which case the presence in person or by
proxy of the holders of one-third of the shares of stock of each class required
to vote as a class on the matter shall constitute a quorum. If at any meeting of
the stockholders there shall be less than a quorum present, the stockholders
present at such meeting may, without further notice, adjourn the same from time
to time (but not more than 120 days after the original record date for such
meeting) until a quorum shall attend, but no business shall be transacted at any
such adjourned meeting except such as might have been lawfully transacted had
the meeting not been adjourned.
Section 7. Voting and Inspectors. At all meetings of stockholders
---------------------
every stockholder of record entitled to vote thereat shall be entitled to vote
at such meeting either in person or by proxy appointed by instrument in writing
subscribed by such stockholder or his duly authorized attorney. Unless a proxy
provides otherwise, such proxy is not valid more than eleven months after its
dates.
At any election of Directors, the Board of Directors prior thereto
may, or, if they have not so acted, the Chairman of the meeting may, and upon
the request of the holders of ten percent (10%) of the stock entitled to vote at
such election shall, appoint
<PAGE>
two inspectors of election who shall first subscribe an oath or affirmation to
execute faithfully the duties of inspectors at such election with strict
impartiality and according to the best of their ability, and shall after the
election make a certificate of the result of the vote taken. No candidate for
the office of Director shall be appointed an Inspector.
The Chairman of the meeting may cause a vote by ballot to be taken
upon any election or matter, and such vote shall be taken upon the request of
the holders of ten percent (10%) of the stock entitled to vote on such election
or matter.
Section 8. Conduct of Stockholders Meetings. The meetings of the
--------------------------------
Stockholders shall be presided over by the Chairman of the Board, or if he shall
not be present or if there is no Chairman, by the President, or if he shall not
be present, by a Vice-President, or if neither the President nor any Vice
President is present, by a chairman to be elected at the meeting. The Secretary
of the Corporation, if present, shall act as Secretary of such meetings, or if
he is not present, an Assistant Secretary shall so act, or if neither the
Secretary nor an Assistant Secretary is present, then the meeting shall elect a
secretary.
Section 9. Concerning Validity of Proxies, Ballots, Etc. At every
--------------------------------------------
meeting of the stockholders, all proxies shall be received and taken in charge
of and all ballots shall be received and canvassed by the secretary of the
meeting, who shall decide all questions touching the qualification of voters,
the validity of the proxies, and the acceptance or rejection of votes, unless
inspectors of election shall have been appointed as provided in Section 7, in
which event such inspectors of election shall decide all such questions.
ARTICLE II
BOARD OF DIRECTORS
Section 1. Number and Term of Office. The business and property of the
-------------------------
Corporation shall be conducted and managed under the direction of a Board of
Directors consisting of two directors, which number may be increased and
decreased as provided in Section 2 of this Article. Each director shall hold
office until such time as less than a majority of the directors then holding
office have been elected by the stockholders or upon the occurrence of any of
the conditions described under Section 16 of the Investment Company Act of 1940.
At such time, a meeting of the stockholders shall be called for the purpose of
electing the Board of Directors and the terms of office of the directors then in
office shall terminate upon the election and qualification of such Board of
Directors. Directors need not be stockholders.
Section 2. Increase or Decrease in Number of Directors.
-------------------------------------------
<PAGE>
The Board of Directors, by the vote of a majority of the entire Board, may
increase the number of Directors to a number not exceeding fifteen, and may
elect Directors to fill the vacancies created by any such increase in the number
of directors until the next meeting as required by Article III, Section I
hereof. The Board of Directors, by the vote of a majority of the entire Board,
may decrease the number of Directors to a number to less than two but any such
decrease shall not affect the term of office of any Director. Vacancies
occurring other than by reason of any such increase shall be filled as provided
by the Maryland General Corporation Law.
Section 3. Place of Meeting. The Directors may hold their meetings,
----------------
have one or more offices, and keep the books of the Corporation outside the
State of Maryland, at any office or offices of the Corporation or at any other
place as they may from time to time determine, and in the case of meetings, as
they may from time to time determine or as shall be specified in the respective
notices of such meetings or waivers of notice thereof.
Section 4. Regular Meetings. Regular meetings of the Board of
----------------
Directors shall be held at such time and on such notice, if any, as the
Directors may from time to time determine.
Section 5. Special Meetings. Special meetings of the Board of
----------------
Directors may be held from time to time upon call of the Chairman of the Board
of Directors, if any, the President or two or more of the Directors, by oral,
telegraphic or written notice duly served on each Director not less than one
business day before such meeting or if sent or mailed to each Director not less
than three business days before such meeting. Each Director who is entitled to
notice waives such notice if he either before or after the meeting signs a
waiver of the notice which is filed with the minutes of the meeting or is
present at the meeting. Such notice or waiver of notice need not state the
purpose or purposes of such meeting.
Section 6. Quorum. One third of the Directors then in office (but in
------
no event less than two Directors), shall constitute a quorum for the transaction
of business. If at any meeting of the Board there shall be less than a quorum
present, a majority of those present may adjourn the meeting from time to time
until a quorum shall have been obtained. The act of the majority of the
Directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors, except as may be otherwise specifically provided by
applicable law, by the Articles of Incorporation or by these By-Laws.
Section 7. Telephonic Meeting, Etc. The members of the Board of
-----------------------
Directors or any committee of the Board of Directors may participate in a
meeting by means of a conference telephone or similar communications equipment
if all persons participating in such meeting can hear each other at the same
time, and participation in a meeting by these means constitutes presence in
<PAGE>
person at such meeting.
Section 8. Executive Committee. The Board of Directors may elect from
-------------------
the Directors an Executive Committee to consist of such number of Directors (but
not less than two) as the Board may from time to time determine. The Board of
Directors shall have power at any time to change the members of such committee
and may fill vacancies in the Committee by election from the Directors. When the
Board of Directors is not in session, the Executive Committee shall have and may
exercise any or all of the powers of the Board of Directors in the management of
the business and affairs of the Corporation (including the power to authorize
the seal of the Corporation to be affixed to all papers which may require it)
except as provided by law and except the power to increase or decrease the size
of, or fill vacancies on, the Board. The Executive Committee may fix its own
rules of procedure, and may meet, when and as provided by such rules or by
resolution of the Board of Directors, but in every case the presence of a
majority shall be necessary to constitute a quorum. In the absence of any member
of the Executive Committee the members thereof present at any meeting, whether
or not they constitute a quorum, may appoint a member of the Board of Directors
to act in the place of such absent member.
Section 9. Other Committees. The Board of Directors may appoint other
----------------
committees which shall in each case consist of such number of members (not less
than two) and shall have and may exercise such powers as the Board may determine
in the resolution appointing them. A majority of all members of any such
committee may determine its action, and fix the time and place of its meetings,
unless the Board of Directors shall otherwise provide. The board of Directors
shall have power at any time to change the members and powers of any such
committee, to fill vacancies, and to discharge any such committee.
Section 10. Informal Action by Directors. Except to the extent
----------------------------
otherwise specifically provided by applicable law, any action required or
permitted to be taken at any meeting of the Board of Directors or any Committee
thereof may be taken without a meeting, if a written consent to such action is
signed by all members of the Board or Committee and is filed with the minutes of
proceedings of the Board or Committee.
Section 11. Compensation of Directors. Directors shall be entitled to
-------------------------
receive such compensation from the Corporation for their services as Directors
as may from time to time be voted by the Board of Directors.
ARTICLE III
OFFICERS
Section 1. Executive Officers. The executive officers of the
------------------
Corporation shall be chosen by the Board of Directors. These
<PAGE>
may include a Chairman of the Board, and shall include a President, one or more
Vice Presidents (the number thereof to be determined by the Board of Directors),
a Secretary and a Treasurer. The Chairman of the Board, if any, shall be
selected from among the Directors. The Board of Directors may also in its
discretion appoint Assistant Secretaries, Assistant Treasurers, and other
officers, agents and employees, who shall have such authority and perform such
duties as the Board may determine. The Board of Directors may fill any vacancy
which may occur in any office. Any two offices, except those of President and
Vice President, may be held by the same person, but no officer shall execute,
acknowledge or verify any instrument in more than one capacity, if such
instrument is required by law or these By-Laws to be executed, acknowledged, or
verified by two or more officers.
Section 2. Term of Office. Unless otherwise specifically determined by
--------------
the Board of Directors, the term of office of all officers shall be until their
respective successors are chosen and qualify, provided, however, that said term
of office shall not create any contract rights in the officer. If the Board of
Directors in its judgment finds that the best interests of the Corporation will
be served, the board of Directors may remove any officer of the Corporation at
any time with or without cause.
Section 3. The President. The President shall be the chief executive
-------------
officer of the Corporation and, subject to the Board of Directors, shall be
responsible for the general control and management of the business and affairs
of the Corporation. If no Chairman of the Board be appointed, or, if appointed,
said Chairman is absent, the President shall, if present, preside at all
meetings of the stockholders and the Board of Directors.
Section 4. The Chairman of the Board. The Chairman of the Board shall
-------------------------
preside at all meetings of the stockholders and the Board of Directors at which
he shall be present. Subject to the provisions of Section 2, he shall have such
other powers and duties as shall be prescribed by the Board of Directors, and
shall undertake such other assignments as may be requested by the President.
Section 5. Absence of the President. The chairman or one or more Vice
------------------------
Presidents shall have and exercise such powers and duties of the President in
the absence or inability of the President as may be assigned to them,
respectively, by resolution of the Board of Directors or, to the extent not so
assigned, as the President may assign to them, respectively. In the absence or
inability of the President, the powers and duties of the President not assigned
by the Board of Directors or the President shall evolve upon the Chairman or in
his absence the Vice Chairman or in his absence the senior Vice President.
Section 6. The Secretary. The Secretary shall have custody of the seal
-------------
of the Corporation. He shall keep the minutes of the meetings of the
stockholders, Board of Directors and any
<PAGE>
committees thereof, and he shall attend to the giving and serving of all notices
of the Corporation. He shall have charge of the stock certificate book and such
other books and papers as the Board may direct; and he shall perform such other
duties as may be incidental to his office or as may be assigned to him by the
Board of Directors. He shall also keep or cause to be kept a stock book,
containing the names, alphabetically arranged, of all persons who are
stockholders of the corporation showing their places of residence, the number
and class or series of any class of shares of stock held by them respectively,
and the dates when they respectively became the owners of record thereof, and
such book shall be open for inspection as prescribed by the laws of the State of
Maryland.
Section 7. The Treasurer. The Treasurer shall have the care and
-------------
custody of the funds and securities of the Corporation and shall deposit the
same in the name of the Corporation in such bank or banks or other depositories
and subject to withdrawal in such manner as these By-Laws or the Board of
Directors may determine; he shall, if required by the Board of Directors, give
such bond for the faithful discharge of his duties in such form as the Board of
Directors may require.
ARTICLE IV
CAPITAL STOCK
Section 1. Certificates of Shares. Each stockholder of the Corporation
----------------------
shall be entitled to a certificate or certificates for the full number of shares
of each class of stock of the Corporation owned by him in such form as the Board
of Directors may from time to time prescribe.
Section 2. Transfer of Shares. Shares of the Corporation shall be
------------------
transferable on the books of the Corporation by the holder thereof in person or
by his duly authorized attorney or legal representative, upon surrender and
cancellation of certificates, if any, for the same number of shares, duly
endorsed or accompanied by proper instruments of assignment and transfer, with
such proof of the authenticity of the signature as the Corporation or its agents
may reasonably require. In the case of shares not represented by certificates,
the same or similar requirements may be imposed by the Board of Directors.
Section 3. Stock Ledgers. The stock ledgers of the Corporation,
-------------
containing the names and addresses of the stockholders and the number of shares
held by them respectively, shall be kept at the principal offices of the
Corporation, or if the Corporation employs a transfer agent, at the offices of
the transfer agent of the Corporation.
Section 4. Lost, Stolen or Destroyed Certificates. The Board of
--------------------------------------
Directors may determine the conditions upon which a new certificate of stock of
the Corporation of any class may be issued
<PAGE>
in place of a certificate which is alleged to have been lost, stolen or
destroyed; and may, in their discretion, require the owner of such certificate
or his legal representative to give bond, with sufficient surety to the
Corporation and the transfer agent, if any, to indemnify it and such transfer
agent against any and all loss or claims which may arise by reason of the issue
of a new certificate in the place of the one so lost, stolen or destroyed.
ARTICLE V
CORPORATE SEAL
The Board of Directors shall provide a suitable corporate seal, in
such form and bearing such inscriptions as it may determine.
ARTICLE VI
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board of
Directors.
ARTICLE VII
INDEMNIFICATION
Section 1. The Corporation shall indemnify any person who was or is a
director, officer, or employee of the Corporation to the maximum extent
permitted by the Maryland General Corporation law; provided, however, that any
indemnification hereunder (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of such persons is proper in the circumstances. Such
determination shall be made (i) by the Board of Directors, by a majority vote of
a quorum which consists of Directors who are neither "interested persons" of the
Corporation as defined in Section 2(a)(19) of the Investment Company Act of
1940, as amended, nor parties to the proceeding, or (ii) if the required quorum
is not obtainable, or if a quorum of such Directors so directs, by independent
legal counsel in a written opinion.
Section 2. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director or officer, employee or agent of
the Corporation or who is or was serving at the request of the Corporation as
director, officer, agent or employee of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity or arising out of his position, whether
or not the Corporation would have power to indemnify him.
Section 3. Notwithstanding anything in this Article VII to the
contrary, nothing herein contained shall protect or purport
<PAGE>
to protect any director or officer of the Corporation 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; and in the
absence of a court determination that such director or officer is not liable or
that such director or officer was not guilty of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office, no indemnification will be permitted to such director or officer
(either directly or through insurance provided by the Corporation) unless an
independent legal counsel determines, based on a review of the facts, that such
person was not guilty of such willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his office.
ARTICLE VIII
AMENDMENT OF BY-LAWS
The By-Laws of the Corporation may be altered, amended, added to or
repealed by the Board of Directors.
ARTICLE IX
CONFLICT WITH INVESTMENT COMPANY ACT
Any provision contained in these By-Laws or in the Articles of
Incorporation of the Corporation notwithstanding, the Corporation shall be
governed by, and conduct its business in accordance with, the Investment Company
Act of 1940, as amended from time to time, and the rules and regulations
promulgated thereunder from time to time. In the event that any provision of the
Corporation's Articles of Incorporation or By-Laws conflicts with such Act,
rules or regulations, the provisions of such Act, rules or regulations, as the
case may be, shall be controlling.
<PAGE>
SUNAMERICA MONEY MARKET FUNDS, INC.
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
This INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT is dated as
of September 23, 1993 by and between SunAmerica Money Market Funds,
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 $.001 per share, of a separately designated series with
its own investment objectives, policies and purposes (the "Fund");
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 Fund 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 Fund including, but not limited to, continuously
providing the Fund with investment management, including investment
research, advice and supervision, determining which securities
shall be purchased or sold by the Fund, making purchases and sales
of securities on behalf of the Fund and determining how voting and
other rights with respect to securities owned by the Fund 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 Fund's 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 Fund or
Corporation on behalf of the Fund) and such executive and other
<PAGE>
personnel as shall be necessary for the operations of the Fund, (ii) shall be
responsible for the financial and accounting records required to be maintained
by the Fund (including those maintained by Corporation's custodian) and (iii)
shall oversee the performance of services provided to the Fund 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.
Subject to Section 36 of the Act, the Adviser shall not be liable to the
Fund 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 Fund 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
Fund, 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 stock 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,
2
<PAGE>
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) The Adviser agrees that if total expenses of a Fund for any fiscal
year of the Corporation exceed the permissible limits applicable to that Fund in
any state in which shares of that Fund are then qualified for sale, the
compensation due the Adviser for such fiscal year shall be reduced by the amount
of such excess by a reduction or refund thereof at the time such compensation is
payable after the end of each calendar month, subject to readjustment during
such fiscal year. In no event shall the amount of such reduction or refund
exceed the amount of the fee payable to the Adviser with respect to such Fund.
5. Purchase and Sale of Securities; Broker-Dealer Selection. The Adviser is
--------------------------------------------------------
responsible for decisions to buy or sell securities and other investments for
each Fund, broker-dealer 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 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 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
3
<PAGE>
difficulty of execution, and 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 Fund 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 Fund and to the 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 sub-adviser 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 Fund.
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 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 series 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
4
<PAGE>
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.
5
<PAGE>
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 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 Series. Pursuant to the provisions of the Declaration, each
---------------
Fund is a separate series 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.
SUNAMERICA MONEY MARKET FUNDS, INC.
By: /s/ Peter A. Harbeck
--------------------
Name: Peter A. Harbeck
Title: Executive Vice President
SUNAMERICA ASSET MANAGEMENT CORP.
By: /s/ Robert M. Zakem
-------------------
Name: Robert M. Zakem
Title: Senior Vice President
6
<PAGE>
SCHEDULE A
FEE RATE
(as a % of average
FUND daily net asset value)
---------------------
SunAmerica Money Market Fund .50% to $600MM
.45% next $900MM
.40% over $1.5B
<PAGE>
SUNAMERICA MONEY MARKET FUNDS, INC.
DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT is dated as of September 23,
1993 by and between SunAmerica Money Market Funds, Inc., a Maryland
Corporation (the "Corporation") and SUNAMERICA CAPITAL SERVICES,
INC., a Delaware corporation (the "Distributor").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Corporation is engaged in business as an
open-end management investment company and is registered as such
under the Investment Company Act of 1940, as amended (the "Act");
and
WHEREAS, the Corporation is authorized to issue shares of
common stock, par value $.001 per share (the "Shares"), in
separately designated series representing separate funds with their
own investment objectives, policies and restrictions (the "Funds")
and has registered the Shares of the Funds under the Securities Act
of 1933, as amended (the "Securities Act"), pursuant to a
registration statement on Form N-1A (the "Registration Statement"),
including a prospectus (the "Prospectus") and a statement of
additional information (the "Statement of Additional Information");
and
WHEREAS, the Corporation has adopted a Plan of
Distribution pursuant to Rule 12b-1 under the Investment Company
Act on behalf of each Fund (the "Distribution Plans") and may enter
into related agreements providing for the distribution of the
Shares of the Funds; and
WHEREAS, the Distributor is registered as a broker-dealer
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); and
WHEREAS, the Corporation wishes to engage the services of
the Distributor as distributor of the Shares of the Funds and the
Distributor is willing to serve in that capacity;
NOW, THEREFORE, it is hereby agreed between the parties
hereto as follows:
1. EXCLUSIVE DISTRIBUTOR. The Funds hereby agree that
---------------------
the Distributor shall and for the period of this Agreement be
exclusive agent for distribution within the United States and its
territories, and the Distributor agrees to use its best efforts
during such period to effect such distribution of the Shares ;
provided, however, that nothing herein shall prevent a Fund, if it
- -------- -------
so elects, from selling or otherwise distributing its Shares
directly to any persons other than dealers. In connection
<PAGE>
therewith, it is contemplated that the Distributor will enter into agreements
with selected securities dealers. The Funds understand that the Distributor also
acts as agent for distribution of shares of capital stock or beneficial
interest, as the case may be, of other open-end investment companies which have
entered into management and advisory agreements with the Funds' current
investment adviser.
2. SALE OF THE SHARES. The Distributor is authorized as agent for
------------------
the Funds and not as principal, to sell the Shares to other purchasers on such
terms as may be provided in the then current Prospectus of the Funds; provided,
--------
however, that no sales shall be confirmed by the Distributor at any time when,
- -------
according to advice received by the Distributor from a Fund, the officers of the
Corporation have for any reason sufficient to them temporarily or permanently
suspended or discontinued the sale and issuance of such Fund's Shares. Each sale
shall be effected by the Distributor only at the applicable price, plus the
applicable sales charge, if any, determined by a Fund in the manner prescribed
in its then current Prospectus. The Distributor shall, insofar as they concern
it, comply with all applicable laws, rules and regulations including, without
limiting the generality of the foregoing, all rules or regulations made or
adopted pursuant to Section 22 of the Act by the Securities and Exchange
Commission or any securities association registered under the Exchange Act.
The Funds agree, as long as the Shares may legally be issued, to
fill all orders confirmed by the Distributor in accordance with the provisions
of this Agreement.
3. EXPENSES; COMPENSATION. The Distributor agrees promptly to pay or
----------------------
reimburse the Funds for all expenses (except expenses incurred by the Funds in
connection with the preparation, printing and distribution of any prospectus or
report or other communication to shareholders, to the extent that such expenses
are incurred to effect compliance with the Federal or state laws or to enable
such distribution to shareholders) (a) of printing and distributing copies of
any prospectus and of preparing, printing and distributing any other material
used by the Distributor in connection with offering the Shares for sale, and (b)
of advertising in connection with such offering. The Funds agree to pay all
expenses in connection with the registration of the Shares under the Securities
Act, all fees and related expenses which may be incurred in connection with the
qualification of the Shares for sale in such states (as well as the District of
Columbia, Puerto Rico and other territories) as the Distributor may designate,
and all expenses in connection with maintaining facilities for the issue and
transfer of the Shares, of supplying information, prices and other data to be
furnished by it hereunder and through its agents of all data processing and
related services related to the share distribution activity contemplated hereby.
2
<PAGE>
As compensation for its services hereunder, the
Funds agree to pay to the Distributor all amounts received as sales
charges as described in the Funds' most current Prospectus. Out
of such sales charges, the Distributor may allow such concessions
or reallowances to dealers as it may from time to time determine.
The Corporation agrees to execute such documents and
to furnish such information as may be reasonably necessary, in the
discretion of the Board of Directors ("Directors") of the
Corporation, in connection with the qualification of the Shares for
sale in such states (as well as the District of Columbia, Puerto
Rico and other territories) as the Distributor may designate. The
Distributor also agrees to pay all fees and related expenses
connected with its own qualification as a broker or dealer under
Federal or state laws and, except as otherwise specifically
provided in this Agreement or agreed to by the Corporation, all
other expenses incurred by the Distributor in connection with the
sale of the Shares as contemplated in this Agreement (including the
expenses of qualifying the Corporation as a dealer or broker under
the laws of such states as may be designated by the Distributor, if
deemed necessary or advisable by the Corporation).
4. PROSPECTUS AND OTHER INFORMATION. The Corporation
--------------------------------
represents and warrants to and agrees with the Distributor that:
(a) The Registration Statement, including the
Prospectus and Statement of Additional Information, relating to the
Shares has been filed under both the Act and the Securities Act and
has become effective.
(b) At all times during the term of this Agreement,
except when the officers of the Corporation have suspended or
discontinued the sale and issuance of the Shares of a Fund as
contemplated by Section 2 hereof, the Registration Statement,
Prospectus and Statement of Additional Information will conform in
all material respects to the requirements of the Act and the rules
and regulations of the Securities and Exchange Commission, and none
of such documents will include 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,
except that the foregoing does not apply to any statements or
omissions in any of such documents based upon written information
furnished to the Corporation by the Distributor specifically for
use therein.
(c) The Corporation agrees to prepare and furnish
to the Distributor from time to time, a copy of the Prospectus, and
authorizes the Distributor to use such Prospectus, in the form
furnished to the Distributor from time to time, in connection with
the sale of the Shares. The Corporation also agrees to furnish
the Distributor from time to time, for use in connection with the
3
<PAGE>
sale of such Shares, such information (including the Statement of Additional
Information) with respect to the Funds and the Shares as the Distributor may
reasonably request.
5. INDEMNIFICATION.
---------------
(a) The Corporation will indemnify and hold harmless the
Distributor and each person, if any, who controls the Distributor within the
meaning of the Act against any losses, claims, damages or liabilities to which
the Distributor or such controlling person may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement,
Prospectus or Statement of Additional Information or any other written sales
material prepared by the Corporation or the Funds which is utilized by the
Distributor in connection with the sale of Shares of the Fund or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or (in the case of the Registration Statement,
Prospectus and Statement of Additional Information) necessary to make the
statement therein not misleading or (in the case of such other sales material)
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made; and will reimburse the Distributor and
each such controlling person for any legal or other expenses reasonably incurred
by the Distributor or such controlling person in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
--------
however, that the Corporation or the Funds will not be liable in any such case
- -------
to the extent that any such loss, claim, damage or liability arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement, Prospectus or Statement of
Additional Information in conformity with written information furnished to the
Corporation by the Distributor specifically for use therein; and provided,
--------
further, that nothing herein shall be so construed as to protect the Distributor
- -------
against any liability to the Corporation or the Funds, or the security holders
of the Funds to which the Distributor would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence, in the performance of its
duties, or by reason of the reckless disregard by the Distributor of its
obligations and duties under this Agreement. This indemnity provision will be in
addition to any liability which the Corporation may otherwise have.
(b) The Distributor will indemnify and hold
harmless the Corporation, each of its Directors and officers and
each person, if any, who controls the Corporation within the
meaning of the Act, against any losses, claims, damages or
liabilities to which the Corporation or any such Director,
4
<PAGE>
officer or controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, Prospectus or Statement of
Additional Information or any sales material not prepared by the
Corporation or the Funds which is utilized in connection with the
sale of the Shares or arise out of or are based upon the omissions
or the alleged omission to state therein a material fact required
to be stated therein or (in the case of the Registration Statement,
Prospectus and Statement) necessary to make the statements therein
not misleading or (in the case of such other sales material)
necessary to make the statements therein not misleading in the
light of the circumstances under which they were made, in the case
of the Registration Statement, Prospectus and Statement of
Additional Information to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or
alleged omission was made in conformity with written information
furnished to the Corporation by the Distributor specifically for
use therein; and the Distributor will reimburse any legal or other
expenses reasonably incurred by the Corporation or any such
Director, officer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability
or action. This indemnity provision will be in addition to any
liability which the Distributor may otherwise have.
(c) Promptly after receipt by an indemnified party
under this Section of notice of the commencement of any action,
such indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under this Section, notify the
indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not relieve it from liability
which it may have to any indemnified party otherwise than under
this Section. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, to assume
the defense thereof, with counsel satisfactory to such indemnified
party, and after notice from the indemnifying party to such
indemnified party of its election to assume the defense thereof,
the indemnifying party will not be liable to such indemnified party
under this Section for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
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 Distributor has not have notified the Corporation in writing at
least 60 days prior to the anniversary date of the previous
5
<PAGE>
continuance that it does not desire such continuance. This
Agreement may be terminated at any time, without payment of penalty
by the Corporation on 60 days' written notice to the Distributor by
vote of the Directors of the Corporation or by vote of a majority
of the outstanding voting securities of the Corporation (as defined
by the Act). This Agreement shall automatically terminate in the
event of its assignment (as defined by the Act).
7. MISCELLANEOUS. This Agreement shall be governed by
-------------
and construed in accordance with the laws of the State of New York.
Anything herein to the contrary notwithstanding, this Agreement
shall not be construed to require or to impose any duty upon either
of the parties to do anything in violation of any applicable laws
or regulations.
IN WITNESS WHEREOF, the Corporation and the Distributor
have caused this Agreement to be executed by their duly authorized
officers as of the date above written.
SUNAMERICA MONEY MARKET FUNDS, INC.
By: /s/ Peter A. Harbeck
--------------------
Peter A. Harbeck
Executive Vice President
SUNAMERICA CAPITAL SERVICES, INC.
By: /s/ Peter A. Harbeck
--------------------
Peter A. Harbeck
Executive Vice President
6
<PAGE>
INTEGRATED RESOURCES CAPITAL SERVICES INC.
- ----------------------------------
Name of Firm
- ----------------------------------
Address of Principal Office
- ----------------------------------
City State Zip Code
RE: DEALER AGREEMENT
Gentlemen:
We are the national distributor and principal underwriter of the shares of
mutual funds sponsored or advised by affiliates of Integrated Resources, Inc.
(hereinafter referred to as a "Fund", or the "Funds"). The Funds and each
portfoLio of the Funds are identified on Schedule A, as amended. We understand
that you are a member of the National Association of Securities Dealers, Inc. On
the basis of such understanding, we invite you to participate in distributing
the shares of the Funds on the following terms:
1. You and we agree to abide by the Rules of Fair Practice, the Constitution
and By-Laws of the National Association of Securities Dealers, Inc. and to all
other rules and regulations that are now or may become applicable to
transactions hereunder.
2. Orders for shares received from you and accepted by the Funds will be at
the net asset value, plus the applicable sales charge, if any, at the time of
such acceptance as established pursuant to the then effective Prospectus of the
applicable Fund. The procedure relating to the handling of orders shall be
subject to instructions which we shall forward from time to time to all firms
(the "Participants") participating in the distribution of shares of the Funds.
All orders are subject to acceptance by the applicable Fund, which reserves the
right in its sole discretion to reject any order in whole or in part.
3. As a Participant, you agree to purchase shares of the Funds only through us
or from your customers. Purchases through us shall be made only for the purpose
of covering purchase orders already received from your customers or for your own
bona fide investment.
4. You agree to sell shares of the Funds only (a) to your customers at the net
asset value plus applicable sales charge, if any, then in effect as established
by the then effective Prospectus of the applicable Fund or (b) to us as agent
for the Fund or the Fund itself at the redemption price as described in the
Prospectus.
5. we reserve the right in our discretion without notice to you to suspend
sales or withdraw the offering of shares entirely, or to modify or cancel this
Agreement, which shall be construed in accordance with the laws of New York. All
sales shall be subject to the terms and provisions set forth in the Fund's
then effective Prospectus
6. No person is authorized to make any representations concerning the Fund or
its shares except those contained in the Prospectus and any such information
(including any applicable "Statement of Additional Information") as may be
approved by a Fund as information supplemental to the Prospectus. In purchasing
shares through us you shall rely solely on the representations contained in the
then effective Prospectus and supplemental information above-mentioned. You
agree to hold us harmless
<PAGE>
and indemnify the Funds and us in the event that you, or any of your sales
representatives, should violate any law, rule or regulation, or any provisions
of this Agreement, which may result in liability to the Funds or us.
7. Additional copies of any Prospectus and information issued as supplemental
to such Prospectus (including any applicable "Statement of Additional
Information") will be supplied by us to you in reasonable quantities upon
request.
8. In no transaction shall you have any authority whatever to act as agent of
the Funds or of us or any other Participant, and nothing in this Agreement shall
constitute you or the Funds the agent of the other. In all transactions in these
shares between you and us, we are acting as agent for the Funds and not as
principal.
9. All communication to us shall be sent to 733 Third Avenue, New York, New
York 10017 Any notice to you shall be duly given if mailed or telegraphed to you
at your address as registered from time to time with the National Association of
Securities Dealers. Inc.
lO. This Agreement may be terminated without penalty upon written notice by
either party at any time, and shall automatically terminate upon its assignment,
or upon any event that terminates a Fund's Distributing Aqreement with us.
11. By accepting this Agreement, you represent that you are registered as a
broker-dealer under the Securities Exchange Act of 1934, are qualified to act as
a dealer in the states or other jurisdictions where you transact business and
are a member in good standing of the National Association of Securities Dealers
Inc. You agree that you will maintain such registrations, qualifications, and
membership in good standing and in full force and effect throughout the terms of
this Agreement. You further agree to comply with all applicable federal laws,
the laws of the states or other jurisdictions concerned and the rules and
regulation, promulgated thereunder and with the Constitution, By-laws and Rules
of Fair Practice of the National Association of Securities Dealers, Inc. and
that you will not offer or sell the shares of the Funds in any state or
jurisdiction where they may not lawfully be offered or sold.
12. We expect you to provide distribution and marketing services in the
promotion of the Funds shares, including services and assistance to your
customers who own Fund shares. For such services you will be entitled to
compensation as set forth in Schedule A, as amended from time to time and in the
Fund's current prospectus.
13. This Agreement shall become effective upon receipt by us of a signed copy
hereof, and shall continue in effect until and unless terminated (i) pursuant to
Section l0, above, or (ii) on account or your violation of any representation
contained herein. This Agreement shall supersede all prior Selling Agreements
with you relating to the shares of the Funds. This agreement may be amended in
writing signed by each of the parties hereto, except that we may amend Schedule
A in our sole discretion upon notice to you. Any such amendment shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors.
Integrated Resources Capital Services, Inc.
By _____________________________________
Date ___________________________________
<PAGE>
The undersigned accepts your invitation to participate in distributing the
shares of the Funds and agrees to abide by the foregoing terms and conditions.
The undersigned acknowledges receipt of Prospectuses of the Funds for use in
connection with this offering.
__________________________________
Firm Name
__________________________________
Address
By _______________________________
Date _____________________________
<PAGE>
SCHEDULE A
INTEGRATED RESOURCES MUTUAL FUNDS
LOAD COMPLEX (4 3/4% WITH BREAKPOINTS FRONT END SALES CHARGE)
Integrated Equity Portfolios
Growth Portfolio (Growth)
Aggressive Growth Portfolio (Aggressive Growth)
Integrated Income Portfolio
Government Securities Plus Portfolio (Government Plus)
Convertible Securities Portfolio (Convertible)
High Yield Portfolio (High Yield)
Integrated Tax Free Portfolios
California Municipal Bond Portfolio (Ca. Municipal)
Integrated U.S. Tax-Free Income Portfolio (US Tax-Free Income)
Select Tax-exempt Real Estate Income Pooled Shares Porttolio (Stripes)
Integrated Multi-Asset Portfolios, Inc.
lntegrated Total Return Portfolio (Total Return)
NO SALES CHARGE
Integrated Tax-Free Money Market Portfolio
Integrated Money Market Securities, Inc.
COMPENSATION
Integrated Equity Portfolios
Growth-concession to selling dealer is based upon purchase size.
Aggressive Growth-concession to selling dealer is based upon purchase size.
Integrated Income Portfolios
Government Plus-concession to selling dealer is based upon purchase size.
Convertible-concession to selling dealer is based upon purchase size.
High Yield-concession to selling dealer is based upon purchase size.
Integrated Tax Free Portfolios
Ca. Municipal-concession to selling dealer is based upon purchase size.
U.S. Tax-Free Income-concession to selling dealer is Dased upon purchase
size.
Stripes-concession to selling dealer is based upon purchase size
Integrated Multi-Asset Portfolio, Inc.
Total Return-concession to selling dealer is based upon purchase size.
PURCHASE PRICE CONCESSION
-------------- ----------
$l,000 to $l00,000 4.00%
$100,000 to $250,000 3.00%
$250,000 to $500,000 2.25%
$500,000 to $l,000,000 l.35%
$l,000,000 or more 0.80%
In addition to the above, the selling dealer will receive a payment of .25% of
the customers average daily net assets in the above listed portfolios.
Integrated Tax-Free Money Market Portfolio
Integrated Money Market Securities Inc.
<PAGE>
A distribution fee of .20% of the customers average daily net assets will be
paid to the selling dealer.
NO LOAD COMPLEX (CONTINGENT DEFERRED SALES CHARGE)
Home Investors Government Guaranteed Income Fund, Inc. (HIGF
Integrated Capital Appreciation Fund, Inc. (ICAF)
Integrated Income Plus Fund, Inc. (IIPP)
Integrated Cash Fund(ICF)-No Contingent Deferred Sales Charge
COMPENSATION
HIGF-3% Commission to dealer from fund underwriter
ICAF-4% Commission to dealer from fund underwriter
IIPF-4% Commission to dealer from fund underwriter
The Integrated Cash Fund is available for exchanges without the contingent
deferred sales charge being applied. A distribution fee of 20% of the customers
average daily net assets in Integrated Cash Fund will be paid to the selling
dealer.
Integrated Corporate Investors Fund, Inc. (ICIF) has no load and no contingent
deferred sales charge. A Distribution fee of .30% of the customers average daily
net assets in ICIF will be paid to the selling dealer.
<PAGE>
EXHIBIT 7
SunAmerica Disinterested Trustees' and Directors'
Retirement Plan
Section 1. Adoption and Purpose. The SunAmerica Fund or the Anchor Series
--------------------
Trust designated on Schedule A, as the case may be (the "Adopting Fund"), has
adopted the SunAmerica Disinterested Trustees' and Directors' Retirement Plan
(the "Plan"). The purpose of this Plan is to provide, in accordance with the
following terms, deferred compensation in the nature of pension benefits for (i)
Trustees of the Adopting Fund, if it is organized as a Massachusetts business
trust, and (ii) Directors of the Adopting Fund, if it is organized as a
corporation, who in either such case are not "interested persons" (as that term
is defined in the Investment Company Act of 1940, as amended). Such
disinterested Trustees or disinterested Directors are referred to herein
collectively as "Trustees."
Section 2. Effective Date. This Plan shall be effective as of January 1,
--------------
1993.
Section 3. Participation. Each Trustee shall become a participant in this
-------------
Plan ("Participant") upon the earlier of (a) attainment of age 55 and completion
of ten consecutive years of service as a Trustee of any of the SunAmerica Funds
or the Anchor Series Trust or (b) attainment of age 60 and completion of five
consecutive years of service as a Trustee of any of the SunAmerica Funds or the
Anchor Series Trust. Notwithstanding the foregoing, a Trustee who was a Trustee
on January 1, 1993, and who at that time, was under age 55, shall become a
Participant in this Plan upon completion of ten consecutive years of service,
without regard to his age at the time of completion of such service. Years of
service shall include service prior to the adoption of this Plan, and service as
a Trustee of any predecessor fund of an Adopting Fund.
Section 4. Eligibility for Benefits. Any Participant shall be eligible for
------------------------
the benefits described in Section 5 of the Plan upon (i) his death or disability
(within the meaning of Subsection 5(c) of the Plan) while a Trustee or (ii) the
termination of his tenure as a Trustee, other than by removal for cause, after
becoming a Participant, as provided in Section 3 of the Plan, and on or before
his 70th birthday. No benefits shall be payable to any Trustee whose service as
a Trustee terminates otherwise than as provided in this Section 4. Failure to
satisfy the requirements of this Section 4 shall result in forfeiture of any
benefits to which a Trustee might otherwise have been entitled under this Plan.
Section 5. Benefits.
--------
(a) Amount. As of each of the first ten birthdays, prior to his 70th
------
birthday, on which he is both a Trustee and a Participant, each Participant
shall be credited with an amount equal to 50% of his regular fees,
excluding separate committee meeting fees, for his services as a Trustee of
the Adopting
<PAGE>
Fund for the calendar year in which such birthday occurs (but in no event
shall such amount be less than 50% of the regular fees, excluding separate
committee meeting fees, in effect for 1993). As of each birthday, prior to
his 70th birthday, on which he is both a Trustee and a Participant, each
Participant shall also be credited with an amount equal to 8.50% of any
amount credited under this Section 5(a) as of any previous birthday.
Following a Participant's satisfaction of the requirements of Section 4 for
eligibility for benefits under the Plan, any amounts previously credited
under this Section 5 that have not been distributed as of any subsequent
birthday of the Participant (or any subsequent corresponding date on which
the Participant's birthday would have occurred if he were alive) shall be
credited as of such subsequent birthday or corresponding date with 8.5% of
such undistributed amounts.
(b) Retirement Benefits. On or before the earlier of (i) the last day
-------------------
of the calendar year immediately preceding the calendar year in which
payment of benefits commences under this Subsection 5(b) or (ii) the date
six months preceding the date on which payment of benefits commences under
this Subsection 5(b), each Participant may elect in writing, in a form and
manner acceptable to the Committee, as defined herein in Section 7, the
form for payment of benefits under the Plan. Any such election may be
revoked and a new election made prior to the earlier of (i) the last day of
the calendar year immediately preceding the calendar year in which payment
of benefits commences under this Subsection 5(b) or (ii) the date six
months preceding the date on which payment of benefits commences under this
Subsection 5(b), but any election in effect as of the earlier of such dates
shall be irrevocable. No Participant may make more than one election in any
calendar year, and all elections shall be subject to approval by the
Committee. A Participant may elect to receive such benefits in the form of
either (i) a lump sum or (ii) quarterly, semi-annual or annual installments
for a period of 5, 10 or 15 years, as the Participant may elect, with
payment of each installment on the quarterly, semiannual or annual
anniversary of the initial payment hereunder. The amount of each
installment shall be a quotient, the numerator of which is the aggregate
amount credited to the Participant under Subsection 5(a) as of the date for
payment under this Subsection 5(b), reduced by the amount of all previous
payments under the Plan, and the denominator of which is the number of
installments remaining. Payment of benefits shall commence as soon as
practicable following the Participant's satisfaction of the requirements of
Section 4 by reason of the termination of his tenure as a Trustee. If no
election is in effect at such time, benefits shall be paid in a lump SUM.
(c) Disability Benefits. If a Participant satisfies the requirements
-------------------
of Section 4 by becoming disabled while a Trustee, all amounts credited to
him under Subsection 5(a) shall be paid to him as soon as practicable in
accordance with
<PAGE>
his election for the form for payment of retirement benefits. If no
election is in effect at such time, benefits shall be paid in a lump sum. A
Participant shall be disabled if the Committee determines, in its sole
discretion, that he is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment which
can be expected to result in death or to be of long-continued and
indefinite duration.
(d) Death Benefits. If a Participant dies after satisfying the
--------------
requirements of Section 4 (or satisfies such requirements by reason of his
death) but before receiving all amounts credited to him under Subsection
5(a), any such remaining amounts shall be paid to the beneficiary
designated in writing by the Participant, which designation shall be in a
form and manner acceptable to the Committee, with payment commencing as
soon as practicable after the Participant's death. Payment to the
Participant's designated beneficiary shall be in a lump sum or installments
for a period of years, in accordance with the Participant's election for
the form for payment of retirement benefits. If no election is in effect at
such time, benefits shall be paid in a lump sum. If the Participant fails
to execute a valid beneficiary designation, any amounts otherwise payable
to a designated beneficiary under this Subsection 5(d) shall be paid in a
lump sum to the Participant's estate as soon as practicable after the
Participant's death. If the Committee is unable to locate the Participant's
beneficiary within two years following the Participant's death, any amounts
otherwise payable to the beneficiary under this Subsection 5(d) shall be
paid in a lump sum to the Participant's estate. Notwithstanding any
provision of this Subsection 5(d) or any beneficiary designation by the
Participant to the contrary, any Participant's surviving spouse whose
interests in marital property are determined under the community property
laws of any state shall receive 50% of amounts otherwise payable under this
Subsection 5(d), and the remainder of such amounts shall be paid in
accordance with this Subsection 5(d).
Section 6. Participants' Rights Unfunded and Unsecured. This Plan shall not
-------------------------------------------
be deemed to create any trust, escrow or other funding arrangement. The right of
any Participant to benefits under this Plan shall be an unsecured claim against
the general assets of the Adopting Fund. If the Adopting Fund is merged with any
other SunAmerica Fund(s), the obligations of the Adopting Fund under this Plan
shall become obligations of the merged fund and shall be aggregated with any
similar pre-merger obligations of the other SunAmerica Fund(s) involved in the
merger under any similar retirement plan. If the Adopting Fund is liquidated,
all amounts credited to a Participant under Section 5(a) as of the liquidation
date shall be paid to him in a lump sum as soon as practicable, provided that if
the Participant has not yet reached age 60, such amounts shall be discounted to
reflect payment prior to age 60, using the interest rates used by the Pension
Benefit Guaranty
<PAGE>
Corporation as of the date of distribution to determine the present value of a
lump sum distribution on termination of a tax-qualified pension plan.
Section 7. Administration. This Plan shall be administered by a committee
--------------
(the "Committee"), the members of which shall be appointed by the Board of
Trustees or Board of Directors of the Adopting Fund. The Committee shall be
responsible for the interpretation of the Plan and establishment of the rules
and regulations governing Plan administration. Any decision or action made or
taken by the Committee, arising out of or in connection with the construction,
administration or interpretation of the Plan or of its rules and regulations,
shall be conclusive and binding upon all Participants. In making any such
decision or taking any such action, the Committee shall have full and complete
discretion and authority to make eligibility determinations, construe provisions
of the Plan and resolve factual issues. All expenses of administering the Plan
shall be paid by the Adopting Fund and shall not affect the Participants, right
to or amount of benefits.
Section 8. Termination of Plan. The Board of Trustees of the Adopting Fund
-------------------
may terminate the Plan at any time. Upon termination of the Plan, benefits shall
continue to be credited and paid in accordance with Section 5 hereof to, or in
respect of, any deceased Participant or any Trustee or former Trustee who is a
Participant as of the date of termination of the Plan. No other payments shall
be made to any person under the Plan after the date of termination of the Plan.
Section 9. Amendment of Plan. The Board of Trustees or Board of Directors
-----------------
of the Adopting Fund may, without the consent of any Participant, amend the Plan
at any time and from time to time, provided, however, that no amendment shall
divest any Participant of rights to which he would have been entitled under
Section 8 if the Plan had been terminated on the effective date of such
amendment.
Section 10. Rights Non-Assignable. The rights of a Participant to receive
---------------------
payments under Section 5 shall not be assignable, nor shall they be subject to
garnishment, attachment, or any other legal process of creditors of a
Participant. Nothing in the Plan shall create any benefit, right, cause of
action, assignment, transfer or encumbrance in favor of any spouse, heirs or the
estate of any Participant. Notwithstanding the provisions of this Section 10,
each Participant agrees, as a condition of participation, to hold the Adopting
Fund, its officers, Board of Trustees or Board of Directors, employees and
agents harmless from any claim that may arise out of the Adopting Fund's
compliance with an order of any state or Federal court, whether such order
effects a judgment of such court or is issued to enforce a judgment or order of
another court.
Section 11. Withholding of Taxes. The Adopting Fund shall have the right to
--------------------
retain from distributions payable to a
<PAGE>
Participant amounts required by any government to be withheld and paid to such
government with respect to such payments.
Section 12. No Agreement to Retain Trustees. Nothing in this Plan shall be
-------------------------------
construed to provide any Trustee with an agreement or understanding, express or
implied, that the Trustee shall be retained as a Trustee for any specified
period of time or that the Board of Trustees or Board of Directors of the
Adopting Fund shall nominate the Trustee for reelection.
Section 13. Acceptance. The acceptance of payments under this Plan by any
----------
Participant constitutes his acceptance of the terms of the Plan and his
agreement to be bound thereby.
<PAGE>
SUNAMERICA DIRECTORS'/TRUSTEES' RETIREMENT PLAN
ENROLLMENT APPLICATION FORM
1. PERSONAL DATA
Name:______________________________ Date Elected:____________________________
Address:___________________________ Social Securities Number:________________
___________________________________ Telephone Number:________________________
City, State, Zip:__________________ Birthdate:_______________________________
________________________________________________________________________________
2. METHOD OF PAYMENT OF BENEFITS (Please Check One)
(a)___Lump Sum or
(b)___Quarterly, ___Semi-Annual or ___ Annual installments made
over a period of:
___5 years ___10 years ___15 years
Any such election may be revoked and a new election made prior to the
earlier of (i) the last day of the calendar year immediately preceding the
calendar year in which payment of benefits commences under Subsection 5(b)of the
Plan or (ii) the date six months preceding the date on which payment of benefits
commences under Subsection 5(b), but any election in effect as of the earlier of
such dates shall be irrevocable.
You may make only one election per calendar year, and all elections are
subject to approval by the Committee.
________________________________________________________________________________
3. DESIGNATION OF BENEFICIARY
Name:___________________________________________________________________________
Address:________________________________________________________________________
Telephone:______________________________________________________________________
Social Security Number:_________________________________________________________
If you fail to designate a beneficiary or your beneficiary cannot be
located within two (2) years after your death, any death benefits shall be paid
to your estate in accordance with the provisions of Subsection 5(d) of the Plan.
Notwithstanding any beneficiary designation, if you are subject to the
community property laws of any state, 50% of the amount of the death benefits
shall be payable to your surviving
<PAGE>
spouse under Subsection 5(d) of the Plan.
Any beneficiary named which can be located by reasonable efforts within two
(2) years after your death will receive payments in accordance with your
election for the method of payment of benefits in Part 2 above.
This Form automatically revokes any prior beneficiary designations you have
made.
______________________________________ ____________________________
Participant's Signature Date
________________________________________________________________________________
Acknowledgment
--------------
I understand that I shall become a participant in the Retirement Plan in
accordance with the provisions of Section 3 of the Plan.
Signature ____________________________ Date________________________
<PAGE>
EXHIBIT 9 (b)
SUNAMERICA MONEY MARKET FUNDS, INC.
SERVICE AGREEMENT
This AGREEMENT made as of this 23 day of September, 1993 by and between
SunAmerica Money Market Funds, Inc., a Maryland Corporation having its principal
place of business at 733 Third Avenue, New York, New York 10017 (hereinafter
called the "Corporation") and SunAmerica Fund Services, Inc., a Delaware
corporation, having its principal place of business at 733 Third Avenue, New
York, New York 10017 (hereinafter called "Fund Services").
W I T N E S S E T H:
WHEREAS, the Corporation desires to appoint Fund Services as its agent in
connection with certain shareholder servicing activities, and Fund Services
desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. Terms of Appointment; Duties of Fund Services
---------------------------------------------
A. Subject to the terms and conditions set forth in this Agreement, the
Corporation hereby employs and appoints Fund Services to act, and Fund Services
agrees to act, as servicing agent to assist State Street Bank and Trust Company
and its affiliates, the Corporation's transfer agent (the "Transfer Agent") for
the authorized and issued shares of common stock, $.001 par value of the
Corporation (the "Shares"), in connection with certain services offered to the
shareholders of the Corporation (the "Shareholders") as set out in the current
prospectus of the Corporation, as may be amended from time to time, as on file
with the Securities and Exchange Commission.
B. Fund Services agrees that it will perform the following services:
(a) In accordance with procedures established from time to time between
the Corporation, the Transfer Agent and Fund Services, Fund Services shall:
(i) receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation therefor to
the custodian of the Corporation authorized pursuant to the
Articles of Incorporation of the Corporation (the "Custodian"):
(ii) pursuant to purchase orders, assist the Transfer Agent to issue
the appropriate number of Shares
<PAGE>
and hold such Shares in the appropriate Shareholder account;
(iii) receive for acceptance, redemption requests and redemption
directions and deliver the appropriate documentation therefor to
the Custodian;
(iv) at the appropriate time as and when it receives monies paid to
it by the Custodian with respect to any redemption, pay over or
cause to be paid over in the appropriate manner such monies as
instructed by the redeeming Shareholders;
(v) assist the Transfer Agent to effect transfers of Shares by the
registered owners thereof upon receipt of appropriate
documentation;
(vi) assist the Transfer Agent to prepare and transmit payments for
dividends and distributions declared by the Corporation; and
(vii) assist the Transfer Agent to maintain records of account for the
Corporation and its Shareholders as to the foregoing.
2. Services with Respect to the Registration of Shares.
---------------------------------------------------
On each day on which an issuance or redemption of Shares occurs, Fund
Services shall assist the Transfer Agent to prepare for the Corporation account
records opening, crediting, debiting and closing affected Shareholders' accounts
as necessary to reflect the issuances or redemptions occurring on that day. All
credits to Shareholders' accounts shall be for the price of the Shares at the
time of purchase, determined in accordance with the Corporation's current
prospectus.
3. Share Price for Purchase and Redemption
---------------------------------------
A. Fund Services shall assist the Transfer Agent to identify all share
transactions which involve purchase and redemption orders that are processed at
a time other than the time of the computation of net asset value per share next
computed after receipt of such orders, and shall compute the net effect upon the
Corporation of such transactions so identified on a daily and cumulative basis.
B. Fund Services shall supply to the Corporation monthly reports
summarizing the transactions identified pursuant to paragraph A. above, and the
daily and cumulative net effects of such transactions, and shall advise the
Corporation at the end of each month of the net cumulative effect at such time.
4. Books and Records
-----------------
Fund Services shall prepare for the Corporation and assist the Transfer
Agent in maintaining records showing for each Shareholder's account the
following:
2
<PAGE>
A. The name, address and tax identification number of such Shareholder;
B. The number of Shares held by such Shareholder;
C. Historical information including dividends paid and date and price
for all transactions;
D. Any stop or restraining order placed against such account;
E. Information with respect to the withholding of any portion of income
dividends or capital gains distributions;
F. Any dividend or distribution reinvestment election, withdrawal plan
application, and correspondence relating to the current maintenance
of the account;
G. The certificate numbers and denominations of any share certificates
issued to such Shareholder; and
H. Any additional information required by Fund Services to perform the
services contemplated by this Agreement.
Any such records required to be maintained by the Corporation pursuant to
Rule 31a-1 under the Investment Company Act of 1940, as amended (the "Act") or
any successor rule shall be preserved by the Transfer Agent or Fund Services for
the periods prescribed by Rule 31a-2 under the Act or any successor rule. Such
record retention shall be at the expense of the Corporation. Fund Services may,
at its option at any time, turn over to the Corporation and cease to retain
records created and maintained by Fund Services pursuant to this Agreement which
are no longer required by Fund Services to perform the services contemplated by
this Agreement. If not turned over to the Corporation, such records shall be
preserved by Fund Services for six years from the year of creation, during the
first two of which years such records shall be in readily accessible form. At
the conclusion of such six-year period, such records shall either be turned over
to the Corporation or destroyed in accordance with the Corporation's
authorization.
5. Information To Be Furnished To The Corporation
----------------------------------------------
Fund Services shall assist the Transfer Agent to furnish to the Corporation
periodically as agreed upon between the Corporation, Fund Services and the
Transfer Agent the following information:
3
<PAGE>
A. Copies of the daily transaction register for each business day of the
Corporation;
B. Copies of all dividend, distribution and reinvestment blotters;
C. Schedules of the quantities of Shares distributed in each state for
purposes of any state's laws or regulations as specified in
instructions given to Fund Services from time to time by the
Corporation or its agents;
D. Reports on transactions described in Paragraph 3 of this Agreement.
E. Such other information, including Shareholder lists, and statistical
information as may be requested by the Corporation from time to time.
6. Confirmations and Statements of Account
---------------------------------------
Fund Services shall assist the Transfer Agent to prepare and mail to each
Shareholder at his address as set forth on the transfer books of the Corporation
such confirmations of the Corporation for each purchase or sale of Shares by
each Shareholder and periodic statements of such Shareholder's account with the
Corporation as may be specified from time to time by the Corporation.
7. Correspondence
--------------
Fund Services shall respond to correspondence from Shareholders relating to
their accounts with the Corporation and such other correspondence as may from
time to time be mutually agreed upon by the Corporation, the Transfer Agent and
Fund Services.
8. Proxies
-------
Fund Services shall assist the Transfer Agent to mail to Shareholders
notices of meetings, proxy statements, forms of proxy and other material
supplied to it by the Corporation in connection with Shareholder meetings of the
Corporation and shall receive, examine and tabulate returned proxies and certify
such tabulations to the Corporation in such written form as the Corporation may
require.
9. Fees And Charges
----------------
A. For the services rendered by Fund Services as described above, subject
to the conditions described below, the Corporation shall pay to Fund Services a
fee calculated and payable monthly
4
<PAGE>
based upon the annual rate of .22% of average daily net assets. Fund Services
shall also be reimbursed for the cost of forms used by it in communicating with
Shareholders of the Corporation or specially prepared for use in connection with
its services hereunder, as well as the cost of postage, telephone and telegraph
(or similar electronic media) used in communicating with Shareholders of the
Corporation. It is agreed in this regard that Fund Services, prior to ordering
any form shall obtain the written consent of the Corporation. All forms for
which Fund Services has received reimbursement from the Corporation shall be the
property of the Corporation. Such fees and out-of-pocket expenses and advances
described herein may be changed from time to time subject to mutual written
agreement between the Corporation and Fund Services.
B. No fee shall be payable to Fund Services pursuant to this Agreement in
the event that the Board of Directors of the Corporation (the "Directors")
determines that Fund Services did not provide the services required by this
Agreement or provided services which were inadequate as determined by the
Directors, in its sole discretion.
10. Compliance With Government Rules And Regulations
------------------------------------------------
The Corporation understands and agrees that it shall be solely responsible
for ensuring that each prospectus of the Corporation complies with all
applicable provisions of, or regulations adopted pursuant to, the Securities Act
of 1933, as amended (the "Securities Act"), the Act, and any other laws, rules
and regulations of Federal, state or foreign governmental authorities having
jurisdiction in connection with the offering or sale of Shares.
11. Representations and Warranties of Fund Services
-----------------------------------------------
Fund Services represents and warrants to the Corporation that:
A. It is a corporation duly organized and existing and in good standing
under the laws of the State of Delaware.
B. It is empowered under applicable laws and by its charter and by-laws to
enter into and perform this Agreement.
C. All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
D. It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
12. Representations and Warranties of the Corporation
-------------------------------------------------
5
<PAGE>
The Corporation represents and warrants to Fund Services that:
A. It is a business trust duly organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts.
B. It is empowered under applicable laws and by its Declaration of
Corporation and By-Laws to enter into and perform this Agreement.
C. All proceedings required by said Declaration of Corporation and By-Laws
have been taken to authorize it to enter into and perform this Agreement.
D. It is an investment company registered under the Act .
E. A registration statement under the Securities Act is currently
effective and will remain effective, and appropriate state securities law
filings have been made and will continue to be made, with respect to all Shares
of the Corporation being offered for sale; information to the contrary will
result in immediate notification to Fund Services.
13. Indemnification
---------------
A. Fund Services shall not be responsible for, and the Corporation shall
indemnify and hold Fund Services harmless from and against, any and all losses,
damages, costs, charges, reasonable counsel fees, payments, expenses and
liability arising out of or attributable to:
(a) All actions of Fund Services or its agents or subcontractors
required to be taken pursuant to this Agreement, provided that such actions are
taken in good faith and without negligence or willful misconduct.
(b) The Corporation's refusal or failure to comply with the terms of
this Agreement, or which arise out of the Corporation's lack of good faith,
negligence or willful misconduct which arise out of the breach of any
representation or warranty of the Corporation hereunder.
(c) The reliance on or use by Fund Services or its agents or
subcontractors of information, records and documents which (i) are received by
Fund Services or its agents or subcontractors and furnished to it by or on
behalf of the Corporation, and (ii) have been prepared or maintained by the
Corporation.
(d) The reliance on, or the carrying out by Fund Services or its
agents or subcontractors of any instructions or requests of the Corporation
representative.
6
<PAGE>
(e) The offer or sale of Shares in violation of any requirement under
the Federal securities laws or regulations or the securities laws or regulations
of any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any Federal agency or any state
with respect to the offer or sale of such Shares in such state.
B. Fund Services shall indemnify and hold the Corporation harmless from
Fund Services refusal or failure to comply with the terms of this Agreement, or
which arise out of Fund Services lack of good faith, negligence or willful
misconduct or which arise out of the breach of any representation or warranty of
Fund Services or its agents or subcontractors hereunder.
C. At any time Fund Services may apply to any officer of the Corporation
for instructions, and may consult with outside legal counsel with respect to any
matter arising in connection with the services to be performed by Fund Services
under this Agreement, and Fund Services and its agents or subcontractors shall
not be liable and shall be indemnified by the Corporation for any action taken
or omitted by it in reliance upon such instructions or upon the opinion of such
counsel. Fund Services, its agents and subcontractors shall be protected and
indemnified in acting upon any paper or document furnished by or on behalf of
the Corporation, reasonably believed to be genuine and to have been signed by
the proper person or persons, or upon any instruction, information, data,
records or documents provided Fund Services or its agents or subcontractors by
telephone, in person, machine readable input, telex, CRT data entry or other
similar means authorized by the Corporation, and shall not be held to have
notice of any change of authority of any person, until receipt of written notice
thereof from the Corporation. Fund Services, its agents and subcontractors shall
also be protected and indemnified in recognizing stock certificates which are
reasonably believed to bear the proper manual or facsimile signatures of the
appropriate officer or officers of the Corporation, and the proper
countersignature of any former transfer agent or registrar, or of a co-transfer
agent or co-registrar.
D. In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
E. Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any act or
failure to act hereunder.
7
<PAGE>
F. In order that the indemnification provisions contained in this
Paragraph 13 shall apply, upon the assertion of a claim for which either party
may be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
14. Further Actions
---------------
Each party agrees to perform such further acts and execute and deliver such
further documents as are necessary to effectuate the purposes hereof.
15. Amendment, Termination and Delegation of Obligations
----------------------------------------------------
Upon its approval by the Directors and appropriate execution, this Agreement
shall remain in effect for two years and thereafter automatically for successive
one-year periods, provided that such continuance is specifically approved at
least annually by a vote of a majority of the Directors and by a majority of the
members who are not parties to this Agreement or interested persons, as defined
in the Act, of any such party. The Directors shall approve and renew this
Agreement upon determining that the fees provided by Paragraph 9 of this
Agreement are fair and reasonable in light of the usual and customary charges
made by others for services of the same nature and quality. This Agreement may
be modified or amended from time to time by written agreement between the
parties hereto. This Agreement may be terminated at any time by one hundred
twenty (120) days' written notice given by one party to the other. Upon
termination hereof, the Corporation shall pay to Fund Services such compensation
as may be due as of the date of such termination, and shall likewise reimburse
Fund Services in accordance herewith for its costs, expenses and disbursements.
16. Assignment
----------
A. Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the written consent of the other party.
B. This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
17. New York Law to Apply
---------------------
8
<PAGE>
This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of New York.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
ATTEST: SUNAMERICA MONEY MARKET FUNDS, INC.
By: /s/ Peter A. Harbeck
--------------------
Peter A. Harbeck
Executive Vice President
ATTEST: SUNAMERICA FUND SERVICES, INC.
By: /s/ Peter A. Harbeck
--------------------
Peter A. Harbeck
President
10
<PAGE>
EXHIBIT 99.11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 17 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
February 13, 1996, relating to the financial statements and financial highlights
of SunAmerica Money Market Fund, 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 "Independent Accountants and
Legal Counsel" in such Statement of Additional Information and to the references
to us under the headings "Financial Highlights" and "Independent Accountants and
Legal Counsel" in such Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
April 23, 1996
<PAGE>
SUNAMERICA
MUTUAL FUND
SARSEP PLAN
[ART WORK LOGO APPEARS HERE]
Salary
Reduction
Employee
Pension Plan
[LOGO] SunAmerica
Asset Management
<PAGE>
THE SUNAMERICA MUTUAL FUND SARSEP PLAN
===============================================================================
INTRODUCTION
SARSEP - Salary Reduction SEP, is a low-cost, easily manageable, retirement plan
that the small business owner can establish for employees. Employees contribute
their own income into the plan, on a pretax basis, up to $9,240 (for 1995) in
deferred compensation.
To establish a SARSEP, the employer must have 25 or fewer employees and at least
half of the company's eligible employees must elect to defer part of their
compensation into the plan.
OTHER ADVANTAGES OF A SARSEP PLAN INCLUDE:
. MINIMAL ADMINISTRATIVE COSTS - Reporting and disclosure requirements are few
as opposed to complicated and costly qualified retirement plans.
. CONTRIBUTION FLEXIBILITY - Employee contributions may vary. Employers can
terminate the plan at any time.
. PARTICIPANT DIRECTED INVESTMENTS - Employees control the investment allocation
of their account. Having a choice of mutual funds yields investment
flexibility and increases the likelihood of realizing your individual
investment goals.
. LOWER TAXES - The SARSEP is a salary reduction plan which reduces the taxable
wage base for the employee. Both income taxes and FICA taxes are reduced by
contributions to the Plan.
. TAX-DEFERRED ACCUMULATION - Earnings and return on earnings accumulate on a
tax-deferred basis until withdrawn.
. EMPLOYER CONTRIBUTIONS - A combination of employer contributions and the
employee elective deferral cannot exceed the lesser of 15% or $22,500 (for
1995).
Please read on for more details.
1
<PAGE>
QUESTIONS AND ANSWERS ABOUT SARSEPS
===============================================================================
Q. WHO MAY ESTABLISH A SARSEP?
A. This SARSEP may be established by an incorporated or unincorporated business
provided:
A) THE BUSINESS IS NOT A STATE OR LOCAL GOVERNMENT OR A TAX-EXEMPT
ORGANIZATION.
B) THE BUSINESS HAS NO MORE THAN 25 EMPLOYEES ELIGIBLE TO PARTICIPATE IN
THE SARSEP.
C) THE BUSINESS HAS AT LEAST ONE EMPLOYEE WHO IS NOT HIGHLY COMPENSATED.
Q. HOW DOES A SARSEP WORK?
A. SARSEP contributions are deducted from the employees paycheck and are
deposited by the employer into the employee's Individual Retirement Account.
They are not included in the employee's income and therefore are not
reported or deducted by the employee on his or her tax return. Salary
reduction contributions are not subject to federal or state (except
Pennsylvania) income tax withholding, however, they are subject to FICA
withholding.
Q. WHICH EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN THE SARSEP?
A. The plan must include non-union employees who meet all of the following
requirements:
. ARE AT LEAST 21 YEARS OLD.
. HAVE WORKED FOR THE EMPLOYER FOR ANY PART OF ANY THREE OF THE
PRECEDING FIVE PLAN YEARS.
. HAVE EARNED AT LEAST $396 FOR 1994 OR $400 FOR 1995 (INDEXED FOR
INFLATION) DURING THE YEAR FOR WHICH THE CONTRIBUTION IS MADE.
Less restrictive eligibility requirements may be imposed in lieu of the
above requirements.
At least 50% of the employees eligible to participate must elect to make
salary reduction contributions in order for the SARSEP to be qualified.
Q. HOW MUCH CAN AN EMPLOYEE ELECT TO CONTRIBUTE TO THE SARSEP?
A. The maximum amount that an employee can elect to contribute to the SARSEP
for a calendar year is 15% of his or her compensation, not to exceed $9,240
(indexed for 1995).
Q. WHAT HAPPENS WHEN AN EMPLOYEE LEAVES BEFORE RETIREMENT?
A. All SARSEP contributions made by an employee, or by the employer, belong to
that employee as soon as they are made. Should an employee terminate
employment before retirement, his or her entire account may then go directly
to the employee. In most instances, the employee will maintain the account
on an individual basis so that it would continue to accumulate on a tax-
deferred basis until withdrawn at retirement, or some later date.
Q. WHEN MAY WITHDRAWALS BE MADE?
A. Contributions and earnings on contributions will ordinarily remain in the
plan until age 59-1/2. After that, they may be withdrawn at any time without
penalty and will be taxed as ordinary income. Distributions taken before age
59-1/2 are taxed as ordinary income and are subject to a 10% federal penalty
tax. In the event of death or disability, payments may begin immediately
without penalty. Payments from the SARSEP Plan must begin no later than
April 1st of the year following the year in which the participant reaches
age 70-1/2. Further contributions may be made to the participant's account
after age 70-1/2 as long as the participant is still an employee.
2
<PAGE>
Q. WHAT ARE THE NONDISCRIMINATION REQUIREMENTS FOR A SARSEP?
A. In no case may contributions, or the manner of making contributions,
discriminate in favor of any highly compensated employee. Therefore, the
SARSEP must meet the requirements for top-heavy defined contribution plans.
A plan is considered "top-heavy" if 60% or more of the assets were in the
accounts of key employees on the last day of the preceding plan year (the
last day of the first plan year for new plans). Employers establishing a
SARSEP may elect to have the top-heavy test based upon 60% of the aggregate
plan contributions. This service is not provided by SunAmerica.
Also, the Actual Deferral Percentage (ADP) of each highly compensated
employee cannot be greater than 1.25 times the average deferral of all non-
highly compensated employees. The ADP is calculated by dividing the
employee's elective deferral for any year by his or her compensation for the
year.
Q. WHAT ARE "KEY EMPLOYEES" AND "HIGHLY COMPENSATED EMPLOYEES"?
A. I. A "key employee" is defined as:
a) an officer who earned $45,000 or more.
b) a more than 5% owner of the business.
c) a 1% or more owner in the business having annual compensation of
more than $150,000.
d) an employee who is one of the ten largest owners and makes more than
$30,000 annual compensation.
II. A "highly compensated employee" is defined as:
a) a 5% owner of the business.
b) received more than $75,000 in annual compensation.
c) received more than $50,000 in compensation and was in the top-paid
20% of the employees, ranked by compensation.
d) was an officer of the employer's business and received more than
$45,000 in annual compensation.
3
<PAGE>
PRIME COMPARISONS:
SEP-IRA VS. PROFIT SHARING
SARSEP VS. 401(K)
===============================================================================
The chart below compares the features of SEP-IRA, Profit Sharing, SARSEP and
401(k) Plans.
- -------------------------------------------------------------------------------
SEP-IRA/Profit Sharing Plan
- -------------------------------------------------------------------------------
SIMILARITIES
. Employer sponsored and funded
. Employer contributions cannot exceed 15% of compensation or $22,500,
whichever is less
. Contributions can be discretionary; employer does not need to fund in a year
in which there are no profits
DIFFERENCES
SEP-IRA PROFIT SHARING
- -------------------------------------------------------------------------------
Plan Establishment Requires IRS Form Requires adoption
5305-SEP or Prototype agreement
Administration Not required Required
Vesting 100% immediate 5 year cliff/3-7 year graded
Set up Tax Filing Deadline Calendar year or fiscal year end
- -------------------------------------------------------------------------------
SARSEP/401(k) Plan
- -------------------------------------------------------------------------------
SIMILARITIES
. Salary reduction contributions are made at the request of the employees
. Employee elective deferrals are limited to 15% or $9,240 (for 1995),
whichever is less
. Actual deferral percentage testing is required to comply with non-
discrimination testing
DIFFERENCES
SARSEP 401(K)
- -------------------------------------------------------------------------------
Plan Establishment Requires IRS Form Requires adoption agreement
5305A-SEP or Prototype
Administration Not required Required
Vesting 100% immediate 5 year cliff/3-7 year graded
Set up Tax Filing Deadline Calendar year or fiscal year end
Eligibility Firms with 25 or fewer No limit on number of
employees and at participants, but need
least 50% participation 56% participation
4
<PAGE>
HOW TO ESTABLISH A SARSEP
===============================================================================
1) The SunAmerica SARSEP Kit contains the following pieces:
. ADOPTION AGREEMENT - the agreement completed by the employer
specifying the terms of the SARSEP (page 9).
. SALARY REDUCTION AGREEMENT - an extension of the adoption agreement
allowing employees to make contributions to the SARSEP (page 11).
. SALARY REDUCTION ELECTION - an election by each employee to participate
in the SARSEP and indicating deferral percentages for contributions
(page 13).
. SARSEP DISCLOSURE STATEMENT - the definition of a SARSEP and how it
works, including how an employer makes contributions and how the Code
treats contributions for tax purposes (page 15).
2) To establish the plan, read the Plan Document and complete the Adoption
Agreement.
3) A Salary Reduction Agreement and an Individual Retirement Account
application (if not previously prepared) must be completed and signed by
each employee to allow for the plan elective deferrals.
4) A Salary Reduction Election must be completed and signed by each employee to
indicate allocation instructions for contributions.
5) Conduct the nondiscrimination test and monitor participation to determine if
your plan is likely to unfairly benefit certain employees and to make sure
that 50% of eligible employees will be participating. In performing this
test, it is recommended that you project the numbers to the end of the year.
This would give you a meaningful indication of whether or not you will pass
the test. Your tax advisor should review this test with you.
6) The Actual Deferral Percentage (ADP) test must be completed annually,
showing the contribution formula for the year and how contributions will be
allocated.
7) Group investment lists can be provided to a plan administrator for
allocation of employee deferrals (page 14).
8) Employer mails the following items to SunAmerica Fund Services Attn:
Retirement Plans Department, 733 Third Avenue, 3rd floor, New York, NY
10017-3204:
. Signed Adoption Agreement including Salary Reduction Agreement
(employer must keep a file copy)
. Check for the first contributions, made payable to the Trustee, Resources
Trust Company
. Salary Reduction Election (allocation instructions for each employee)
. Employee IRA application (if applicable)
5
<PAGE>
INSTRUCTIONS
FOR COMPLETING THE SEP ADOPTION AGREEMENTS
===============================================================================
ARTICLE I
DEFINITIONS
1.01 PLAN. Fill in the name of the employer.
1.04 EMPLOYEE. The employer should complete this section of the adoption
agreement by checking the appropriate exclusions, if any. If the definition of
"employee" is to be all inclusive, the employer should check Option (a)
indicating no exclusions.
1.06 COMPENSATION. Options (a) and (b) represent two alternative safe harbor
definitions of compensation which satisfy Code Section 408(k)(7)(B). Both
definitions are very similar and contain only minor differences. For example,
both definitions include basic compensation items such as salary, overtime,
bonuses and commissions. Since the definitions are very similar, the determining
factor for the employer should be administrative convenience.
Options (c) and (d) represent safe harbor modifications to compensation as
permitted under Treas. Reg. Section 1.414(s)-1(c). By checking Option (c), the
plan "grosses up" the compensation definition for certain elective amounts
(e.g., SARSEP deferrals). The gross up will apply to whichever definition the
employer elects (i.e., (a) or (b)). By checking Option (d), the plan excludes
certain extraordinary forms of compensation (e.g., fringe benefits) from the
definition of compensation elected under (a) or (b).
1.09 EFFECTIVE DATE. If the employer is adopting a new plan, it must specify
the effective date in the first sentence. In general, the effective date would
be the first day of the plan year for which the employer adopts the SEP Plan
(e.g., January 1, 1993) unless the employer started its business during the
calendar year. If the employer is amending an existing SEP Plan, the employer
must specify the restated effective date in the first blank and the original
plan execution date (e.g., "April 13, 1986") or effective date (e.g., "as of
January 1, 1986") in the second blank. If the employer is restating the SEP for
TRA, the restated effective date should be the later of (1) the first day of the
first plan year beginning after December 31, 1988, or (2) the first day of the
first plan year for which the SEP was effective.
1.11 PLAN YEAR. The plan year of the SEP may be the calendar year or the
employer's taxable year. No other measuring period is acceptable. If the
employer elects a calendar plan year and the employer's taxable year is not the
calendar year, the employer must determine its deduction limitation on the basis
of the calendar year ending within the employer's taxable year. The employee's
gross income exclusion limitation also applies on a plan year basis.
ARTICLE II
ELIGIBILITY TO PARTICIPATE IN EMPLOYER CONTRIBUTIONS
2.01 PARTICIPATION.
(a) Insert the age desired. If the employer does not wish to condition
eligibility upon age, do not check (a), or complete (a) with "N/A."
(b) (1) Insert the number of prior years of service required as an
eligibility condition.
(2) Check Option (b)(2) if service in a prior year is not an
eligibility condition; for example, in the case of a new
business established during the plan year.
ARTICLE III
EMPLOYER CONTRIBUTIONS
3.01 AMOUNT. The only contribution formula the plan provides is a
discretionary contributions formula.
Options (a) and (b) relate to the allocation of the employer's discretionary
contribution to the participant's IRA. Option (a) is a "nonintegrated formula"
which allocates employer contributions pro rata on the basis of compensation (as
defined in Section 1.06). Option (b) is an "integrated" formula which
incorporates the Code Section 401(l) safe harbor permitted disparity rules. If
the employer elects an integrated formula, it also must define excess
compensation by completing the blank spaces in Option (b). Excess compensation
is simply the employee's compensation in excess of a
6
<PAGE>
specified integration level. The amount of the integration level also will
affect the "applicable percentage" portion of the integrated formula. The
"applicable percentage" in the integrated portion of the formula can be 5.7%,
5.4% or 4.3%, depending on the integration level.
Option (b) provides for a "floating" integration level. This approach permits
the employer to select a percentage of the taxable wage base for purposes of the
"float." Please note the maximum floating integration level for a plan year is
the taxable wage base in effect at the beginning of that plan year. If the
employer wishes to "float" the integration level with the full taxable wage
base, the employer should insert "100%" in the first space provided in Option
(b) and insert an "N/A" in the second space. The taxable wage base for 1993 is
$57,600.
For many highly compensated employees, experience has shown an "applicable
percentage" of 5.4% is the most advantageous. To use 5.4%, the integration level
must exceed 80% of the taxable wage base. For example, the employer may specify
80% in the first space in Option (b) rounded to the next "$1,000." By rounding
to the next $1,000, the plan ensures the integration level is greater than 80%
of the taxable wage base (permitting use of the 5.4% applicable percentage) and
at the same time provides a rounded number for simpler administration.
The integrated contribution formula under Option (b) is a two-tiered formula.
Under the first tier, the employer contributes a uniform percentage of
compensation to each eligible participant. The second tier is the integrated
contribution. However, to ensure the plan is in compliance with the top-heavy
rules, the employer may not contribute under the second tier unless the first
tier contribution percentage is at least 3%. Under the second tier, the employer
contributes a uniform percentage of excess compensation which may not exceed the
lesser of (1) the percentage contributed under the fast tier, or (2) the
percentage determined in the maximum disparity table.
7.01 SALARY REDUCTION CONTRIBUTION. If the employer is not establishing a SEP
with a salary reduction agreement, the employer should elect Option (a) and
complete the "Execution" section. If the employer wishes to permit employees to
make salary reduction contributions to the plan, the employer must elect Option
(b) and complete Appendix A of the agreement.
ACTUAL DEFERRAL PERCENTAGE TEST. Section 7.06 of the basic plan document
describes the actual deferral percentage ("ADP") test each highly compensated
employee must satisfy. Please note the ADP test is on a plan year basis, whereas
the annual deferral limitation under Code Section 402(g) is on a calendar year
basis. The maximum ADP each highly compensated employee may have depends on the
average ADP of the non highly compensated employees.
Section 7.06(C) of the basic plan document satisfies Code Section 408(k)(6),
under which the plan may distribute excess contributions which cause the plan to
fail to satisfy the ADP test. Under a SEP, the excess contributions are part of
the highly compensated employee's IRA to which the employer makes the
contributions. Accordingly, it is the sponsor of the highly compensated
employee's IRA that will need to distribute the excess contributions adjusted
for allocable income or loss. The plan directs the employer to notify the IRA
sponsor of the amount of the excess contribution. However, the highly
compensated employee should request the necessary withdrawal from his IRA. The
highly compensated employee must receive the distribution of excess
contributions, as adjusted for allocable income or loss, by the last day of the
following plan year for the elective deferral arrangement to continue to
qualify. However, the employer is liable for a 10% excise tax on the excess
contributions not distributed by the 15th day of the third month of the
following plan year. The highly compensated employee must include in his gross
income the excess contribution (plus allocable income, if any) distributed from
his IRA. However, the taxable year in which the highly compensated employee
includes this amount in income depends on the timing of the distribution from
the IRA. The disclosure statement explains the income tax consequences to the
highly compensated employee.
COORDINATION WITH DISCRETIONARY CONTRIBUTIONS. If the employees make elective
deferrals for a plan year, the employer should not make its discretionary
contribution until after the close of that plan year. The law requires a SEP to
allocate discretionary contributions on the basis of a uniform percentage of
compensation, subject to the integration option. Therefore, if the employer
elects a nonintegrated allocation for the discretionary contribution, all
eligible employees must receive the same percentage of compensation as an
allocation of discretionary contributions. If the employer elects an integrated
allocation for the discretionary contribution, all eligible employees must
receive the same percentage of excess compensation, under the integrated portion
of the allocation formula, plus the same percentage of compensation under the
nonintegrated portion of the allocation formula. The employer cannot determine
the maximum uniform percentage it can contribute for the eligible employees
until it determines the highest elective deferral rate elected by an employee.
In addition, the employer cannot determine the maximum percentage until after
the employer has reduced the employee's compensation for his salary reduction
contributions. An employer's SEP contribution will not be includible in the
employee's gross income to the extent the contribution does not exceed the
lesser of (1) 15% of the employer compensation for the year, or (2) a specified
dollar amount (currently $30,000). In applying the 15% limit, the Code
determines compensation after the reduction for the salary reduction
contributions.
7
<PAGE>
For example, assume after the close of the plan year the employer determines
eligible employee A had the highest deferral rate. A's compensation is $70,000,
and he deferred $7,000 of that amount. Accordingly, A's compensation for 15%
allocation limit is $63,000. A's maximum SEP contribution is 15% of $63,000, or
$9,450. Therefore, A's allocation of employer discretionary contributions cannot
exceed $2,450 [$9,450 - $7,000]. If the employer elected a nonintegrated
allocation formula, the maximum discretionary contribution is 3.88%, which is
the maximum percentage A may receive and, thus, all participants may receive. If
the employer elected an integrated allocation formula, the computation becomes
more complicated because the employer must factor in not only the uniform rate
of contribution requirement and the contribution limits but also the permitted
disparity rules. For example, assume the same facts as in the example above
except the employer elected an integrated contribution formula. Assume further
the employer elects an integration level of 80% of the taxable wage base rounded
to the next $1,000 ($47,000 for 1993) to maximize the permitted disparity
contribution. As with the nonintegrated contribution formula, A's contribution
may not exceed $2,450. Therefore, the maximum integrated contribution A may
receive and thus, the maximum all participants may receive is: 3.1% of total
compensation [3.1% x $63,000 = $1,953] plus 3.1% of excess compensation [3.1% x
16,000 = $497].
APPENDIX A OF ADOPTION AGREEMENT
Complete Appendix A only if the employer checked Section 7.01(b). Appendix A
includes three Sections: 7.02, 8.01 and 8.04.
7.02 SALARY REDUCTION AGREEMENTS. Option (a) provides limitations on the
employees' salary reduction contributions. It is not necessary to prescribe the
Code 402(g) limitations (see Section 7.04 of the basic plan document) nor the
Code Section 415 limitation (see Section 3.02 of the basic plan document). The
employer should complete Option (a) to provide a lesser limitation (e.g., 10% of
compensation for the plan year). A lesser limitation may minimize the chance of
an employee's elective deferrals causing a Code Section 415 violation or a
chance of exceeding the deduction limitation of Code Section 404.
Options (b) and (c) set parameters on the frequency of changing the salary
reduction agreement. Option (b) addresses the complete revocation of the salary
reduction agreement and the execution of a new agreement following revocation.
Option (c) addresses increases or decreases in the level of salary reduction
contributions.
8.01 TOP-HEAVY REQUIREMENTS. If the plan permits salary reduction
contributions to the plan, the employer must specify whether the plan will
operate as a "deemed top-heavy plan" or as a "not deemed top-heavy plan". If the
employer elects Option (a), the employer will not need to make a determination
as to whether the plan is top-heavy. However, the plan will require the employer
to make a top-heavy minimum contribution for each plan year, even if the plan is
not top-heavy. If the employer elects Option (b), the employer will need to make
a top-heavy minimum contribution only in plan years in which the plan is top-
heavy.
The top-heavy minimum contribution is the lesser of 3% of the participant's
compensation for the plan year or the highest contribution rate for a key
employee for the plan year. A key employee's contribution rate is the sum of the
employer contributions and salary reduction contributions, divided by the key
employee's compensation for the plan year.
The following example demonstrates the effect of the top-heavy election.
Assume for the 1993 plan year, employer X adopts a SEP with a salary reduction
feature. Assume further the plan is not top-heavy for the 1993 plan year. For
the 1993 plan year, X makes no contribution other than the participant's
elective deferrals. The elective deferral contributions for the two key
employees are 6% and 4% respectively, while the elective deferral contributions
for the four nonkey employees are 4%, 3%, 2% and 0% respectively. If the
employer elects Option (a) under Section 8.01, the employer will need to make a
3% top-heavy minimum contribution to each nonkey employee because the plan is
operating as a deemed top-heavy plan. However, if the employer elects Option
(b), the employer will not need to make a top-heavy minimum contribution for the
1993 plan year because the plan is not top-heavy.
8.04 TOP-HEAVY MINIMUM ALLOCATION. The employer may complete Section 8.04 to
specify a different plan to satisfy the top-heavy minimum benefit requirement.
For example, if the employer is adopting both a SEP and a profit sharing plan,
the employer might specify the profit sharing plan as the plan which guarantees
the top-heavy minimum allocation. If the employer maintains only one plan, it
never would complete Section 8.04.
EXECUTION
On page 10, the Employer must complete the date of execution. The employer
then must execute the adoption agreement and complete the employer informational
items. There is no provision within the adoption agreement for the designation
of a plan administrator. Therefore, the employer is the plan administrator. The
employer's acting as plan administrator avoids the necessity of a separate EIN
for an individual plan administrator. However, the employer must designate the
person (by name or title) who will provide additional information to
participants regarding the SEP.
8
<PAGE>
<TABLE>
<CAPTION>
ADOPTION AGREEMENT
PROTOTYPE SIMPLIFIED EMPLOYEE PENSION PLAN
==================================================================================================================================
<S> <C>
The undersigned Employer establishes a Simplified Employee Pension Plan under Resources Trust Company Prototype Simplified Employee
Pension Plan which the undersigned incorporates within this Adoption Agreement by this reference. The undersigned Employer makes the
following elections granted under the Plan:
1.01 PLAN. The name of the Plan as adopted by the Employer is -------------------------------------------------------------------
Simplified Employee Pension Plan. (Name of Company)
1.04 EMPLOYEE. The following Employees are not eligible to participate in the Plan: (Choose (a) or at least one of (b) or (c))
_______ (a) No exclusions.
_______ (b) Collective bargaining employees. [Note: If the Employer excludes union employees from the Plan, the Employer must be
able to provide evidence that retirement benefits were the subject of good faith bargaining.]
_______ (c) Nonresident aliens who do not receive any earned income (as defined in Code Section 911(d)(2)) from the Employer which
constitutes United States source income (as defined in Code Section 861(a)(3)).
1.06 COMPENSATION.
DEFINITION OF COMPENSATION (SEE SECTION 1.06 OF THE PLAN). Compensation means: (Choose (a) or (b); (c) and (d) are available only as
additional selections.)
_______ (a) Federal income tax wages.
_______ (b) W-2 wages.
_______ (c) The Plan increases Compensation by the amount of elective contributions made by the Employer on the Employee's behalf.
_______ (d) The Plan excludes reimbursements or other expense allowances, fringe benefits (cash and noncash), moving expenses,
deferred compensation and welfare benefits.
1.09 EFFECTIVE DATE. The effective date of the Plan as adopted by the Employer is ______________________________________________ .
This Plan replaces a simplified employee pension plan adopted ___________________________________________________________________ .
1.11 PLAN YEAR. Plan Year means: (Choose (a) or (b))
_______ (a) The calendar year.
_______ (b) The Employer's taxable year, ending every __________________________________________________________________________ .
2.01 PARTICIPATION. For each Plan Year on account of which the Employer makes a contribution under the Plan, the Employer will
contribute on behalf of each Employee who: (Choose (a) or (b) or both)
_______ (a) Has attained age _________________________ (may not exceed age 21), and
_______ (b) Has performed any service for the Employer:
_______ (1) During at least ________________ (may not exceed 3) of the 5 Plan Years immediately preceding the Plan
Year.
_______ (2) During the Plan Year.
</TABLE>
9
<PAGE>
3.01 AMOUNT. The Employer will make its discretionary contribution under the
following formula: (Choose (a) or (b)).
_______ (a) Uniform contribution allocation formula.
_______ (b) Permitted disparity contribution formula. For purposes of this
formula, "Excess Compensation" means Compensation in excess of the
following Integration Level:______% (not exceeding 100%) of the
taxable wage base, as determined under Section 230 of the Social
Security Act, in effect on the first day of the Plan Year rounded
to the next $________(but not exceeding the taxable wage base).
7.01 SALARY REDUCTION CONTRIBUTIONS. The Plan: (Choose (a) or (b))
_______ (a) Does not permit Participant Salary Reduction Contributions.
_______ (b) Permits Participant Salary Reduction Contributions (If the Employer
elects (b), the Employer must complete Appendix A.)
IN WITNESS WHEREOF, the Employer has executed this Adoption Agreement, in
duplicate, each constituting an original Adoption Agreement, on this ____ day
of ______ , 199 .
By:_________________________________________________
"EMPLOYER"
The name or title of the individual the Employer has designated to provide
additional information to Participants concerning this SEP is _______________
_______________________________________________.
[Name or Title]
_____________________________________ _____________________________________
Street Address City State ZIP
_____________________________________ _____________________________________
Telephone Number Federal Employer Identification Number
For inquiries regarding the SEP, please contact the Sponsor at the following
address and telephone number:
SUNAMERICA FUND SERVICES
RETIREMENT PLANS DEPARTMENT
733 THIRD AVENUE
3RD FLOOR
NEW YORK, NY 10017-3204
212/551-5134
800/858-8850 EXTENSION 5134
10
<PAGE>
APPENDIX A
SALARY REDUCTION AGREEMENT
===============================================================================
[Note: Complete this Appendix A only if the Employer elected Adoption Agreement
Section 7.01(b). Leave this page blank if the Employer elected Adoption
Agreement Section 7.01(a).]
7.02 SALARY REDUCTION AGREEMENTS. The following rules and restrictions apply to
an Employee's salary reduction agreement: (Choose the applicable elections).
_______ (a) LIMITATION ON AMOUNT. The Employee's salary reduction contributions
are subject to the following limitations:__________________________
___________________________________________________________________
_________________________________________________________________.
[Note: If the Employer does not elect Option (a), the salary
reduction contributions are not subject to any limitations other
than the 15% limitation described in Section 3.02 of the Plan and
the 402(g) limitation described in Section 7.02 of the Plan.]
_______ (b) REVOCATION. An Employee, on a prospective basis, may revoke a
salary reduction agreement or may file a new agreement following a
prior revocation: (Choose one)
_______ (1) As of any Plan Entry Date.
_______ (2) As of the first day of each Plan Year quarter.
_______ (3) (Specify at least once per Plan Year)_______________
_________________________________________________________ .
_______ (c) MODIFYING ELECTIONS. An Employee, on a prospective basis, may
increase or may decrease his salary reduction percentage or dollar
amount: (Choose one)
_______ (1) As of the beginning of each payroll period.
_______ (2) As of the first day of each Plan Year quarter.
_______ (3) As of any Plan Entry Date.
_______ (4) (Specify at least once per Plan Year)________________
__________________________________________________________.
8.01 TOP-HEAVY REQUIREMENTS. For purposes of the top-heavy requirements, the
Employer will treat this Plan as a:
_______ (a) Deemed Top-Heavy Plan.
_______ (b) Not Deemed Top-Heavy Plan.
8.04 TOP-HEAVY MINIMUM ALLOCATION. The Employer will satisfy the top heavy
minimum allocation under the following plan it maintains:______________________
_______________________________________________________________________________
_______________________________________________________________________________.
11
<PAGE>
(This page left intentionally blank.)
12
<PAGE>
SUNAMERICA SIMPLIFIED EMPLOYEE PENSION [LOGO]
PLAN SALARY REDUCTION ELECTION
===============================================================================
Complete this form to indicate the amount of money to be deferred from your
salary and contributed to your account each pay period. Both you and your
Employer must sign where indicated. This form should be retained by the
Employer; you should keep a copy for your records and send a copy to SunAmerica
Fund Services.
PARTICIPANT INFORMATION
___________________________________________________________________
Name
___________________________________________________________________
Address
___________________________________________________________________
___________________________________________________________________
Social Security Number
[_] New Enrollment [_] Change
ELECTION TO PARTICIPATE IN A SALARY REDUCTION SEP
[_] I DO WISH to participate in the Company's SARSEP.
Subject to the requirements of the Company's SARSEP, I
authorize the following amount or percentage of my Compensation
to be withheld from each paycheck and contributed to my
SEP-IRA:
[_] __________% of my Compensation (not in excess of 15% ); or
[_] $__________________ (not in excess of $9,240 (as adjusted))
Subject to the requirements of the Company's SARSEP, I
authorize the following amount to be contributed to my SEP-IRA,
rather than paid to me in cash:
[_] Cash Bonus Deferral: $________________ (not in excess of
$9,240 (as adjusted)).
I understand that the total amount I defer in any calendar year
to this SEP may not exceed the lesser of 15% of my Compensation
(determined without including any SEP IRA contributions) or
$9,240 (adjusted annually for inflation). This deferral
election shall remain in effect until, in writing, I either
terminate or change it. I may make future contribution changes
and may stop my pay deductions at any time. I further
understand that I should not withdraw or transfer any amounts
from my SEP that are attributable to elective deferrals and
income on elective deferrals for a particular plan year (except
for excess elective deferrals) until 2-1/2 months after the end
of the plan year, or if sooner, when my employer notifies me
that the deferral percentage limitation test for that plan year
has been completed. Any such amounts that I withdraw or
transfer before this time will be included in income for
purposes of sections 72(t) and 408(d)91 of the Code.
13
<PAGE>
[_] I DO NOT WISH to participate in the Company's SARSEP, subject to the
provisions of the plan regarding such election. I release and hold harmless
the Company from and against any and all claims the undersigned may have or
hereafter claim to have against said Company with respect to my election to
not participate in the SARSEP. I understand that the Company shall not be
responsible or liable for any loss or expense which may arise or result
from compliance with this election. This designation shall remain in effect
until such time as I specifically revoke it by delivering such revocation,
in writing, to the Company.
SIGNATURES
_____________________________ ______________________________
Employee Signature Date
_____________________________ ______________________________
Company Signature (Employer) Date
<TABLE>
<CAPTION>
INVESTMENT INSTRUCTIONS
CLASS A CLASS B
<S> <C> <C> <C> <C> <C> <C>
Growth and Income Fund (24) [_] (524) [_] $_______ or _______ %
Balanced Assets Fund (51) [_] (551) [_] $_______ or _______ %
Global Balanced Fund (23) [_] (523) [_] $_______ or _______ %
Blue Chip Growth Fund (522) [_] (22) [_] $_______ or _______ %
Mid-Cap Growth Fund (71) [_] (571) [_] $_______ or _______ %
Small Company Growth Fund (36) [_] (536) [_] $_______ or _______ %
U.S. Gov't Securities Fund (70) [_] (570) [_] $_______ or _______ %
Federal Securities Fund (534) [_] (34) [_] $_______ or _______ %
Tax Exempt Insured Fund (33) [_] (533) [_] $_______ or _______ %
Diversified Income Fund (580) [_] (80) [_] $_______ or _______ %
High Income Fund (28) [_] (228) [_] $_______ or _______ %
Money Market Fund (35) [_] (535) [_] $_______ or _______ %
TOTAL AMOUNT ENCLOSED $_________
</TABLE>
[_] CHECK HERE TO RECEIVE A MONTHLY GROUP INVESTMENT LIST
SEND monthly transmittal forms for employee contributions to:
Company's Name:______________________________________________________________
Company's Address:___________________________________________________________
______________________________________________________________________________
Contact:_____________________________________________________________________
Telephone #: (__________)____________________________________________________
Instructions for the above Salary Reduction Election
. Sign as employee
. Employer should keep original copy on file
. Send in copy to SunAmerica
14
<PAGE>
PROTOTYPE
SIMPLIFIED EMPLOYEE PENSION PLAN
===============================================================================
Resources Trust Company hereby provides a prototype simplified employee pension
which an employer may adopt by completing and executing the complementary
adoption agreement.
ARTICLE I
DEFINITIONS
1.01 "PLAN" means the simplified employee pension established by the Employer in
the form of this document, including the Employer's Adoption Agreement. The
Employer will designate the name of the Plan in its Adoption Agreement. The
Employer must use this Plan only in conjunction with an individual retirement
account or individual retirement annuity for which the Internal Revenue Service
has issued a favorable opinion or ruling letter or in conjunction with model
individual retirement accounts issued by the Internal Revenue Service.
1.02 "EMPLOYER" means each employer who adopts this Plan by executing an
Adoption Agreement, and any other employer which is a member with the Employer
of the same controlled group of corporations as defined in Code Section 414(b),
which is a trade or business (whether or not incorporated) under the same common
control as defined in Code Section 414(c) or which is a member of an affiliated
service group within the meaning of Code Section 414(m) or Code Section 414(o).
1.03 "CUSTODIAN" means Resources Trust Company.
1.04 "EMPLOYEE" means any employee of the Employer, including a self-employed
individual who is an employee of the Employer by reason of Code Section
401(c)(1), except as otherwise provided in the Employer's Adoption Agreement.
Employee also means any individual (who otherwise is not an Employee of the
Employer) who is the Employer's leased employee under Code Section 414(n).
1.05 "PARTICIPANT" means an eligible Employee for whose benefit the Employer
makes a contribution to an Account.
1.06 "COMPENSATION" means Compensation as defined in the Employer's Adoption
Agreement. For a Self-Employed Individual, Compensation means Earned Income. Any
reference in this Plan to Compensation is a reference to the definition in this
Section 1.06, unless the Plan reference specifies a modification to this
definition. The Plan will take into account only Compensation actually paid, or
Compensation which the Employee had the right to receive, for the relevant
period. A Compensation payment includes Compensation paid by the Employer
through another person under the common paymaster provisions in Code Sections
3121 and 3306.
(A) DEFINITIONS. For purposes of the Compensation definition elections in the
Adoption Agreement, the following definitions apply:
(1) "FEDERAL INCOME TAX WAGES" definition of Compensation. All wages
for federal income tax withholding purposes, as defined under Code
Section 3401(a) (for purposes of income tax withholding at the
source), disregarding any rules limiting the remuneration included
as wages based on the nature or location of the employment or the
services performed.
(2) "W-2 WAGES" definition of Compensation. All wages as described in
the "federal income tax wages" definition, and all other payments
to an Employee in the course of the Employer's trade or business,
for which the Employer must furnish the Employee a written
statement under Code Sections 6041(d) and 6051(a)(3). As long as
the instructions to Form W-2, Box 10, remain consistent with the
instructions for the 1990 or 1991 Form W-2, the Employer may treat
the amount reported in Box 10 as satisfying this definition.
(3) "ELECTIVE CONTRIBUTIONS." Elective contributions are amounts
excludible from the Employee's gross income under Code Sections
125, 402(a)(8), 402(h) or 403(b), and contributed by the Employer,
at the Employee's election, to a Code Section 401(k) arrangement,
a Simplified Employee Pension, cafeteria plan or tax-sheltered
annuity. Elective contributions also include Compensation deferred
under a Code Section 457 plan maintained by the Employer and
Employee contributions "picked up" by a governmental entity and,
pursuant to Code Section 414(h)(2), treated as Employer
contributions.
The definitions of Compensation in paragraphs (1) and (2) do not include
elective contributions, unless otherwise specified in the Plan or in the
Adoption Agreement.
(B) COMPENSATION DOLLAR LIMITATION. The Plan must take into account only the
first $200,000 (or such larger amount as the Commissioner of Internal Revenue
may prescribe) of any Participant's Compensation. This dollar limitation applies
on a prorated basis to any measuring period less than 12 months.
1.07 "HIGHLY COMPENSATED EMPLOYEE" means an Employee who, during the Plan Year
or during the preceding 12-month period:
(a) is more than 5% owner of the Employer (applying the constructive
ownership rules of Code Section 318, and applying the principles of Code
Section 318, for an unincorporated entity);
(b) has Compensation in excess of $75,000 (as adjusted by the Commissioner of
Internal Revenue for the relevant year);
(c) has Compensation in excess of $50,000 (as adjusted by the Commissioner of
Internal Revenue for the relevant year) and is part of the top-paid 20%
group of employees (based on Compensation for the relevant year); or
(d) has Compensation in excess of 50% of the dollar amount prescribed in Code
Section 415(b)(1)(A) (relating to defined benefit plans) and is an
officer of the Employer.
If the Employee satisfies the definition in clause (b), (c) or (d) in the Plan
Year but does not satisfy clause (b), (c) or (d) during the preceding 12-month
period and does not satisfy clause (a) in either period, the Employee is a
Highly Compensated Employee only if he is one of the 100 most highly compensated
Employees for the Plan Year. The number of officers taken into account under
clause (d) will not exceed the greater of 3 or 10% of the total number (after
application of the Code Section 414(q) exclusions) of Employees, but no more
than 50 officers. If no Employee satisfies the Compensation requirement in
clause (d) for the relevant year, the Employer will treat the highest paid
officer as satisfying clause (d) for that year.
For purposes of applying this definition, compensation must include elective
contributions and the Employer will disregard any exclusions elected in Adoption
Agreement Section 1.06. The Employer must make the determination of who is a
Highly Compensated Employee, including the determinations of the number of
identity of the top paid 20% group, the top 100 paid Employees, the number of
officers includible in clause (d) and the relevant Compensation, consistent with
Code Section 414(q) and regulations issued under that Code section. The Employer
may make a calendar year election to determine the Highly Compensated Employees
for the Plan Year, as prescribed by Treasury regulations. A calendar year
election must apply to all plans and arrangements of the Employer.
For purposes of applying any nondiscrimination test, the Employer will treat a
Highly Compensated Employee and all family members (a spouse, a lineal ascendant
or descendant, or a spouse of a lineal ascendant or descendant) as a single
Highly Compensated Employee, but only if the Highly Compensated Employee is more
15
<PAGE>
than 5% owner or is one of the 10 Highly Compensated Employees with the greatest
Compensation for the Plan Year. This aggregation rule applies to a family member
even if that family member is a Highly Compensated Employee without family
aggregation. This family aggregation rule will apply only for Plan Years in
which Code Section 414(q) requires its application.
1.08 "ACCOUNT" means the IRA account or annuity contract established and
maintained by a Participant to which the Employer makes contributions pursuant
to the Plan.
1.09 "NONFORFEITABLE" means a Participant's or Beneficiary's unconditional
claim, legally enforceable against the Plan, to the Participant's Account.
1.10 "EFFECTIVE DATE" of this Plan is the date specified by the Employer in its
Adoption Agreement.
1.11 "CODE" means the Internal Revenue Code of 1986, as amended.
1.12 "PLAN YEAR" means the fiscal year of the Plan, as specified in the
Employer's Adoption Agreement.
ARTICLE II
ELIGIBILITY TO PARTICIPATE IN EMPLOYER CONTRIBUTIONS
2.01 PARTICIPATION. The Employer will specify in its Adoption Agreement the
conditions for eligibility to participate in the Plan.
2.02 PARTICIPANTS' RIGHT TO EMPLOYMENT. Nothing contained in this Plan, or in
the establishment of a Participant's Account, or any modification or amendment
to the Plan or a Participant's Account, or in the creation of any Account, or
the payment of any benefit, shall give any Employee, even if he is a
Participant, or any Beneficiary, any right to continue employment, any legal or
equitable right against the Employer or any officer, or employee of the
Employer, except as expressly provided by the Plan.
ARTICLE III
EMPLOYER CONTRIBUTIONS
3.01 AMOUNT. In the Adoption Agreement, the Employer will elect to contribute
under a uniform contribution formula or under a permitted disparity contribution
formula. For each Plan Year, the Employer will contribute to each Participant's
Account, the lesser of the amount determined under this Section 3.01 or the
maximum amount permitted under Section 3.02.
(A) UNIFORM CONTRIBUTION FORMULA. For each Plan Year, the Employer will
contribute to each Participant's Account a uniform percentage of Compensation,
as determined in the Employer's sole discretion.
(B) PERMITTED DISPARITY CONTRIBUTION FORMULA. For each Plan Year the Employer
will contribute the following amount to each Participant's Account:
(1) A uniform percentage of Compensation, as determined in the Employer's
sole discretion; plus
(2) A uniform percentage of Excess Compensation, as determined in the
Employer's sole discretion.
The percentage described in (2) may not exceed the lesser of the percentage
determined in (1) or the percentage determined in the Maximum Disparity Table in
the next paragraph. Furthermore, the Employer may not contribute an amount
described in (2) unless the contribution percentage under ( 1 ) is at least 3%.
If at any time during the Plan Year, the Employer maintains a qualified plan or
another SEP that also uses a permitted disparity formula (or imputes permitted
disparity to satisfy the nondiscrimination requirements), the Employer may not
contribute an amount described in (2).
Maximum Disparity Table
Integration Level (as percentage Applicable
of taxable wage base). Percentages
- ---------------------------------------- -----------
100% 5.7%
More than 80% but less than 100% 5.4%
More than 20% (but at least more
than $10,000) and no more than 80% 4.3%
20% (or $10,000, if greater) or less 5.7%
(C) OTHER REQUIREMENTS. Employment by a Participant on the last day of the Plan
Year is not a condition to an allocation of an Employer contribution under the
Plan for that Plan Year. However, the Employer will not make a contribution for
the Plan Year for any Participant whose Compensation is less than $300 (or the
adjusted dollar amount determined by the Internal Revenue Service). For this
purpose, a Participant's compensation must include elective contributions and
the Employer will disregard any exclusions elected in Adoption Agreement Section
1.06.
(D) DEDUCTION. Contributions to the SEP are deductible by the Employer for the
taxable year with or within which the Plan Year of the SEP ends. The Code treats
contributions made for a particular taxable year and contributed by the due date
of the Employer's income tax return, including extensions, as made during that
taxable year.
3.02 CONTRIBUTION LIMITATION. The total of the Employer contributions (as
determined under Sections 3.01 and 7.01) allocated to a Participant's Account
for any Plan Year may not exceed the lesser of 15% of the Participant's
Compensation or $30,000 (or, if greater, one fourth of the defined benefit
dollar limitation under Code Section 415(b)(1)(A)).
3.03 EMPLOYER CONTRIBUTIONS NOT CONDITIONAL. The Employer does not condition any
contribution made under the Plan on behalf of a Participant upon the retention
by the Participant of the contribution within the Participant's Account.
Furthermore, the Employer does not impose any restriction on a Participant's
withdrawal of any amount from the Participant's Account.
ARTICLE IV
PARTICIPANT'S SIMPLIFIED EMPLOYEE
PENSION IRA
4.01 ESTABLISHMENT OF ACCOUNT. Each Participant must establish in his own name
an individual retirement account with the Custodian or with any bank or other
institution maintaining individual retirement accounts or individual retirement
annuities. The Employer may establish an Account with the Custodian for the
benefit of an eligible Employee if the Employee is unable or unwilling to
execute the necessary documents to establish an Account or if the Employer is
unable to locate the Employee.
4.02 NONFORFEITABLE ACCOUNT. The interest of any Participant in the balance of
his Account is at all times 100% Nonforfeitable.
4.03 EXCLUSIVE BENEFIT. The Employer will have no beneficial interest in any
asset of a Participant's Account and no part of any asset in a Participant's
Account will revert to or be repaid to the Employer, either directly or
indirectly; nor will any part of the corpus or income of a Participant's
Account, or any asset of a Participant's Account, be (at any time) used for, or
diverted to, purposes other than the exclusive benefit of the Participant or his
Beneficiaries.
4.04 ADMINISTRATION OF ACCOUNT. The provisions of the document under which a
Participant maintains his Account will determine the administration,
distribution and investment of the Employer's and the Employee's, if any,
contribution(s) to a Participant's Account. The Employer does not in any way
guarantee a Participant's Account from loss or depreciation.
4.05 PARTICIPANT CONTRIBUTIONS. Nothing in the Plan prohibits a Participant from
making IRA contributions (deductible or nondeductible) to his Account, as
permitted by Code Sections 219 and 408.
16
<PAGE>
ARTICLE V
MISCELLANEOUS
5.01 SUCCESSORS. The Plan is binding upon all persons entitled to benefits under
the Plan and their respective heirs and legal representatives.
5.02 WORD USAGE AND TITLES. Words used in the masculine will apply to the
feminine where applicable, and wherever the context of the Plan dictates, the
plural includes as the singular and the singular includes the plural. Article
and Section titles are for reference only.
5.03 STATE LAW. Except to the extent superseded by Federal statute, the law of
the state of the Employer's principal place of business will determine all
questions arising with respect to the provisions of this Plan.
5.04 PARTICIPATION IN PROTOTYPE. If the Employer ever maintained a defined
benefit plan which is now terminated or, subsequent to the adoption of this
Plan, terminates a defined benefit plan, the Employer can no longer be a
participating Employer in this Prototype. If the Employer currently maintains a
defined benefit plan, the Employer may not elect under Adoption Agreement
Section 7.01 to permit Employees to make salary reduction contributions. An
Employer which is not a participating Employer in this Prototype cannot rely on
the Sponsor's opinion letter issued by the Revenue Service and must treat this
Plan as an individually designed plan.
ARTICLE VI
AMENDMENT AND TERMINATION
6.01 AMENDMENT. The Employer has the right at any time and from time to time:
(a) To amend this Plan and its Adoption Agreement, without any Participant's
consent, in any manner it deems necessary or advisable in order to
qualify (or maintain qualification of) this Plan under the provisions of
Code Section 408(k); and
(b) To amend this Plan and its Adoption Agreement in any other manner.
However, no amendment may authorize or permit any portion of an Account
to be used for or diverted to purposes other than for the exclusive
benefit of the Participant, his Beneficiaries or their estates.
If the Employer amends this Plan and its Adoption Agreement, other than by
changing its elections in the Adoption Agreement, the Employer no longer can
participate in this Prototype. See Section 5.04.
6.02 NOTICE OF AMENDMENT. The Sponsor will inform the Employer of any amendments
to the prototype SEP or if the Sponsor has discontinued sponsorship of this
prototype SEP.
6.03 DISCONTINUANCE. The Employer has the right to suspend or discontinue its
contributions under the Plan, and to terminate this Plan, at any time.
ARTICLE VII
ELECTIVE DEFERRAL ARRANGEMENT
7.01 APPLICATION. This Article VII applies to an Employer's Plan only if the
Employer elects in Section 7.01 of the Adoption Agreement to permit Employees
to make salary reduction contributions to the Plan. The Sponsor intends for this
arrangement to qualify as a salary reduction simplified employee pension
("SARSEP") under Code Section 408(k)(6) and the applicable regulations.
7.02 ELECTIVE DEFERRALS. The Employer will contribute to each Participant's
Account the elective deferrals the Participant has elected the Employer to
withhold from his Compensation under his salary reduction agreement on file with
the Employer. The salary reduction agreement will not apply to Compensation
actually paid before its effective date. The effective date of the salary
reduction agreement may not be earlier than its execution date. The salary
reduction agreement will apply to subsequent increases in the Participant's
Compensation unless the Participant revokes or modifies the salary reduction
agreement. The Employer only may contribute elective deferrals for a Plan Year
to any Participant's Account if:
(a) At least 50% of Employer's eligible Employees have salary reduction
agreements in effect for at least part of that Plan Year; and
(b) The Employer has no more than 25 Employees eligible to participate in the
Plan at any time during the prior Plan Year.
(A) DISALLOWED DEFERRALS. If the Plan does not satisfy the 50% requirement at
any time during the Plan Year, the Plan will consider all elective deferrals
made by Employees for than Plan Year as "disallowed deferrals." Disallowed
deferrals are IRA contributions which are not SEP-IRA contributions. If the
Employer determines the Plan has made contributions to Participants' IRAs which
are disallowed deferrals, the Plan must notify each affected Employee the Code
Section no longer considers the deferrals as SEP-IRA contributions. The Employer
must provide the notification within 21/2 months following the end of the Plan
Year to which the disallowed deferrals relate.
(B) NOTIFICATION PROCEDURE. The notification must specify (1) the amount of the
disallowed deferrals (2) that the disallowed deferrals are includible in the
Employee's gross income for the calendar year or years in which the amounts
deferred would have been received by the Employee in cash had he not made an
election to defer and that the income allocable to the disallowed deferrals is
includible in the year withdrawn from the IRA; and (3) that the Employee must
withdraw the disallowed deferrals (and allocable income) from the SEP-IRA by
April 15 following the calendar year of notification by the Employer. The Code
will subject disallowed deferrals not withdrawn by April 15 following the year
of notification to the IRA contribution limitations of Code Sections 219 and
408. The Code will consider disallowed deferrals in excess of the limitations as
excess IRA contributions and subject to the 6% excise tax on excess
contributions under Code Section 4973. If income allocable to a disallowed
deferral is not withdrawn by April 15 following the year of notification by the
Employer, the income may be subject to the 10% tax on early distributions under
Code Section 72(t) when withdrawn. The Employer will report disallowed deferrals
in the same manner as excess SEP contributions.
7.03 PARTICIPATION. To the extent prohibited by law, an Employer which is a
state or local government or a tax-exempt organization may not permit
Participant salary reduction contributions. In addition, an Employer with leased
employees as defined under Code Section 414(n)(2) may not permit Participant
salary reduction contributions.
7.04 ANNUAL ELECTIVE DEFERRAL LIMITATIONS. A Participant's elective deferrals
may not exceed the lesser of 15% of the Participant's Compensation, or 402(g)
limitation. The 402(g) limitation is the greater of $7,000 or the adjusted
amount determined by the Secretary of the Treasury. If, pursuant to a salary
reduction agreement, the Employer determines the Participant's elective
deferrals to the Plan for a calendar year would exceed the 402(g) limitation,
the Employer will suspend the employee's salary reduction agreement, if any,
until the following January 1 and refund any elective deferrals in excess of the
402(g) limitation which the Employer has not contributed to the Participant's
Account. The Employer will make all refunds no later than April 15 of the
following calendar year.
7.05 DEFINITIONS. For purposes of this Article VII:
(a) "Highly Compensated Employee" means an Eligible Employee who satisfies
the definition in Section 1.07 of the Plan. Family members aggregated as
a single Employee under Section 1.07 constitute a single Highly
Compensated Employee, whether a particular family member is a Highly
Compensated Employee or a Nonhighly Compensated Employee without the
application of family aggregation.
(b) "Nonhighly Compensated Employee" means an Eligible Employee who is not a
Highly Compensated Employee and who is not a family member treated as a
Highly Compensated Employee.
17
<PAGE>
(c) "Eligible Employee" means an Employee who is eligible to enter into a
salary reduction agreement for the Plan Year, regardless of whether he
actually enters into such an agreement.
(d) "Nonhighly Compensated Group" means the group of Eligible Employees who
are Nonhighly Compensated Employees for the Plan Year.
(e) "Compensation" means any definition of Compensation which is permissible
under Adoption Agreement Section 1.06, regardless of the actual elections
made by the Employer in the Adoption Agreement. The definition used by
the Employer for a Plan Year must apply uniformly to all Eligible
Employees.
7.06 ACTUAL DEFERRAL PERCENTAGE TEST. For each Plan Year, the Employer must
determine whether the elective deferrals for each Highly Compensated Employee
satisfy the actual deferral percentage ("ADP") test. A Highly Compensated
Employee satisfies the ADP test if his ADP does not exceed 1.25 times the
average ADP of the Nonhighly Compensated Group.
(A) CALCULATION OF ADP. The average ADP for the Nonhighly Compensated group is
the average of the separate ADPs calculated for each Eligible Employee who is a
member of that group. An Eligible employee's ADP for a Plan Year is the ratio of
the Eligible Employee's deferral contributions for the Plan Year to the
Employee's Compensation for the Plan Year. In calculating the average ADP, the
percentage for an eligible Nonhighly Compensated Employee who does not make
deferral contributions for the Plan Year is 0%. For aggregated family members
treated as a single Highly Compensated Employee, the ADP of the family unit is
the ADP determined by combining the deferral contributions and Compensation of
all aggregated family members. A Nonhighly Compensated Employee's ADP does not
include elective deferrals made to this Plan or to any other Plan maintained by
the Employer, to the extent such elective deferrals exceed the 402(g) limitation
described in this Section.
(B) EXCESS SEP CONTRIBUTIONS. If the Employer determines a Highly Compensated
Employee fails to satisfy the ADP test for a Plan Year, the Employer must notify
the affected employee of the excess contribution and tax consequences of the
excess contribution during the next Plan Year. However, the Employer will incur
an excise tax equal to 10% of the amount of the excess SEP contribution if the
Employer does not notify the Employee during the first 21/2 months of that next
Plan Year. The excess SEP contributions are that amount if deferral
contributions made by a Highly Compensated Employee which exceeds 1.25 times the
average ADP of the Nonhighly Compensated Group. An Excess SEP contribution is
includible in an Employee's gross income on the earliest date any elective
deferral made by an Employee during the Plan Year would have been received by
the Employee had he originally elected to receive the amounts in cash. However,
if the excess SEP contribution (not including allocable income) totals less than
$100, then the excess contribution is includible in the Employee's gross income
in the year of notification. Income allocable to the excess SEP contribution is
includible in the year of withdrawal from the IRA.
(C) NOTIFICATION PROCEDURE. The Employer's notification to each affected Highly
Compensated Employee of the excess SEP contributions must state specifically, in
a manner calculated to be understood by the average Participant: (1) the amount
of the excess contribution attributable to that Employee's elective deferrals;
(2) the calendar year for which the excess SEP contribution is includible in the
employee's gross income; (3) that the employee must withdraw the excess SEP
contribution (and allocable income) from the SEP-IRA by April 15 following the
year of notification by the Employer. Excess SEP contributions not withdrawn by
April 15 following the year of notification will be subject to the IRA
contribution limitations of Code Sections 219 and 408 for the preceding calendar
year. The Code will consider contributions in excess of the limitations as
excess IRA contributions and subject to the 6% excise tax on excess
contributions under Code Section 4973. If income allocable to an excess SEP
contribution is not withdrawn by April 15 following the year of notification by
the Employer, the income when withdrawn may be subject to the 10% tax on early
distributions under Code Section 72(t).
If the Employer fails to notify Employees by the end of the Plan year following
the Plan Year in which the Employees made the excess SEP contribution, the
Revenue Service will no longer consider the SEP to meet the requirements of Code
Sections 408(k)(6). If the SEP no longer meets the requirements of Code Section
408(k)(6), any contribution to an Employee's IRA will be subject to the
contribution limitations of Code Section 219 and 408. The Code will consider
contributions in excess of the limitations as excess IRA contributions.
(D) WITHDRAWAL RESTRICTIONS. For each Eligible Employee who makes an elective
deferral to a SEP-IRA, the Employer will provide a notice explaining the IRA
distribution rules of Code Section 408(d)(1) and the penalty tax provisions of
Code Section 72(t) will apply to the transfer or distribution from a SEP-IRA of
any elective deferrals prior to the earlier of (1) 21/2 months after the close
of the Plan Year or (2) the determination of whether the SEP satisfies the ADP
test.
ARTICLE VIII
TOP HEAVY REQUIREMENTS
8.01 DEEMED TOP HEAVY PLAN ELECTION. If the Employer does not permit Participant
salary reduction contributions, the Plan must operate the SEP as a Deemed Top
Heavy Plan. If the Employer permits salary reduction contributions, the Employer
must specify in its Adoption Agreement whether the Plan will operate as a Deemed
Top Heavy Plan or as a Not Deemed Top Heavy Plan.
(A) DEEMED TOP HEAVY PLAN. If the Employer elects in the Adoption Agreement to
treat the Plan as a Deemed Top Heavy Plan, the top heavy minimum allocation
requirement applies in all Plan Years even if the Plan is not top heavy.
(B) NOT DEEMED TOP HEAVY PLAN. The top heavy minimum allocation requirement
applies to a Not Deemed Top Heavy Plan only in Plan Years for which the Plan is
top heavy.
8.02 DETERMINATION OF TOP HEAVY STATUS. The Plan is top heavy for a Plan Year if
the top heavy ratio as of the Determination Date exceeds 60%. The top heavy
ratio is a fraction, the numerator of which is the sum of the Employer
contributions (including election deferrals, if any) made to the Accounts of all
Key Employees as of the Determination Date and the denominator of which is a
similar sum determined for all Employees. The Plan must calculate the top heavy
ratio by disregarding the Employer Contributions of any Non-Key Employee who was
formerly a Key Employee, and by disregarding the Employer Contributions of an
individual who has not received credit for at least one Hour of Service with the
Employer during the Determination Period. The Plan must calculate the top heavy
ratio in accordance with Code Section 416 and the regulations under that Code
section. Under a Deemed Top Heavy Plan, the Plan need not determine whether the
Plan actually is top heavy.
If the Employer maintains (or maintained within the prior 5 years) any other SEP
or qualified plan in which a key employee participates or participated, the
Employer must aggregate contributions, accrued benefits or account balances
(whichever is applicable), with contributions made to this SEP to determine top
heavy status.
8.03 DEFINITIONS. For purposes of applying the top heavy provisions:
(1) "Key Employee" means, as of any Determination Date, any Employee or
former Employee (or Beneficiary of such Employee) who, for any Plan Year
in the Determination Period: (i) has Compensation in excess of 50% of the
dollar amount prescribed in Code Section 415(b)(1)(A) and is an officer
of the Employer; (ii) has Compensation in excess of the dollar amount
prescribed in Code Section 415(c)(1)(A) and is one of the Employees
owning the ten largest interests in the Employer; (iii) is a more than 5%
owner of the Employer; or (iv) is a more than 1% owner of the Employer
and has Compensation of more than $150,000. The constructive ownership
rules of Code Section 318 (or the principles of that section, in the case
of an unincorporated Employer,) will apply to determine ownership in the
18
<PAGE>
Employer. The number of officers taken into account under clause (i) will
not exceed the greater of 3 or 10% of the total number (after application
of the Code Section 414(q) exclusions) of Employees, but no more than 50
officers. The Plan will make the determination of who is a Key Employee
in accordance with Code Section 416(i)(1) and the regulations under that
Code Section.
(2) "Non-Key Employee" means an Employee who does not meet the definition of
Key Employee.
(3) The Plan defines "Hour of Service" in accordance with the rules of Labor
Reg. Section 2530.200b-2, which the Plan, by this reference, specifically
incorporates in full.
(4) "Determination Date" for any Plan Year is the last day of the preceding
Plan Year or, in the case of the first Plan Year of the Plan, the last
day of that Plan Year. The "Determination Period" is the 5 year period
ending on the Determination Date.
(5) "Participant" includes any Employee otherwise eligible to participate in
the Plan but who is not a Participant because of his failure to make
elective deferrals under the salary reduction arrangement.
(6) "Compensation" The Employer will determine Compensation by excluding
elective contributions (even if included under Adoption Agreement Section
1.06) and by disregarding any exclusion from compensation elected in
Adoption Agreement Section 1.06.
8.04 TOP HEAVY MINIMUM ALLOCATION. Unless the Employer designates in the
Adoption Agreement another plan to satisfy the top heavy minimum requirements,
the Employer will make a minimum contribution each year to the Account of each
Non-Key Employee eligible to participate in this Plan. The top heavy minimum
contribution is the lesser of 3% of the Participant's Compensation for the Plan
Year or the highest Key Employee contribution rate for the Plan Year. A Key
Employee's contribution is the sum of the Employer contributions made to the Key
Employee's Account under Sections 3.01 and 7.01, divided by the Key Employee's
Compensation. A Non-Key Employee's contribution rate is the Employer's
contributions made to the Non-Key Employee's Account, exclusive of the elective
deferrals, divided by the Non-Key Employee's Compensation.
19
<PAGE>
SEP DISCLOSURE STATEMENT
===============================================================================
A Simplified Employee Pension, or SEP, is a written arrangement through which an
employer can make a contribution toward its employees' retirement income without
becoming involved in more complex retirement plans. Under a SEP, an employer
makes contributions directly to each employee's Individual Retirement Account or
Annuity ("IRA"). The IRA to which the employer contributes is referred to as a
SEP-IRA.
An employer who signs a SEP agreement is not statutorily required to make any
contribution to the SEP-IRAs of eligible employees. However, if the employer
makes any contribution, the SEP must allocate the contribution in accordance
with a written formula which does not discriminate in favor of highly
compensated employees.
The employer does not report SEP contributions made on behalf of participants as
gross income on Form W-2, unless the contribution exceeds certain limits. For
more specific instructions regarding the income tax exclusion for SEP
contributions, see Question 4. If an eligible employee makes less than $300 in
the year for which the employer makes a contribution, the employer need not make
a SEP contribution for that employee. The Revenue Service will increase the $300
amount, on an annual basis, by a cost of living adjustment factor ($400 for
1995).
The employer may impose participation requirements which may not be more
restrictive than the Internal Revenue Code ("Code") permits, but they may be
less restrictive. Under the Code, all employees who have attained age 21 and
have worked for the employer for some period of time (however short) in any
three of the immediately preceding five plan years, are eligible to receive the
employer's SEP contribution (if any). The plan year of the SEP must be either
the calendar year or the employer's taxable year. The SEP document defines the
plan year. The employer also may exclude from participation certain nonresident
aliens and certain union employees who already have negotiated with respect to
retirement benefits.
This information and the following "Questions and Answers" should provide a
basic understanding of what a SEP is, how an employer makes its contribution,
and how the Code treats the contribution for tax purposes. An employee who has
unresolved questions concerning SEPs should call the Federal tax information
number, or the toll free number, shown in the white pages of the local telephone
directory.
(1) WHAT IS A SIMPLIFIED EMPLOYEE PENSION, OR SEP?
A SEP is a retirement income arrangement under which your employer may
contribute any amount each year up to the lesser of $22,500 or 15% of your
compensation into your own IRA.
Your employer will provide you with a copy of the agreement containing
participation requirements and a description of the method under which the SEP
allocates its employer contribution to your IRA.
All amounts contributed to your IRA by your employer belong to you, even after
you separate from service with the employer.
(2) MUST MY EMPLOYER CONTRIBUTE TO MY IRA UNDER THE SEP?
Whether or not your employer makes a contribution to the SEP is entirely within
the employer's discretion. If a contribution is made under the SEP, an employer
makes a contribution under the SEP, the SEP agreement, must provide a method for
allocating the contribution to all eligible employees.
(3) HOW MUCH MAY MY EMPLOYER CONTRIBUTE TO MY SEP-IRA IN ANY YEAR?
Under a SEP, your employer will determine each year the amount of contribution
it wishes to make to your IRA. However, the contribution for any year may not
exceed the lesser of $22,500 or 15% of your compensation for that year. The
compensation used to determine this limit does not include any amount which the
employer contributed to your IRA under the SEP. The agreement does not require
an employer to maintain a particular level of contributions. It is possible the
employer may not make a contribution for a particular year. Also see Question 5.
(4) HOW DO I TREAT MY EMPLOYER'S SEP CONTRIBUTIONS FOR MY TAXES?
The amount your employer contributes is excludible from your gross income
subject to certain limitations (see Question 1) and is not includible as taxable
wages on your Form W-2.
(5) MAY I ALSO CONTRIBUTE TO AN IRA IF I AM A PARTICIPANT IN A SEP?
Yes. You may still contribute the lesser of $2,000 or 100% of your compensation
to an IRA. However, the amount which is deductible is subject to various
limitations. Also see Question 11.
(6) ARE THERE ANY RESTRICTIONS ON THE IRA I SELECT TO DEPOSIT MY SEP
CONTRIBUTIONS IN?
Under the SEP which is approved by the IRS, contributions must be made to either
a Model IRA which is executed on an IRS form or a master or prototype IRA for
which the IRS has issued a favorable opinion letter.
(7) WHAT IF I DON'T WANT A SEP-IRA?
Your employer may require you become a participant in such an arrangement as a
condition of employment. If the employer does not require all eligible employees
to become participants and an eligible employee elects not to participate, the
Code would prohibit the employer from contributing to the SEP-IRAs of all other
employees of the same employer. If one or more eligible employees do not
participate and the employer attempts to establish a SEP-IRA agreement with the
remaining employees, the resulting arrangement may result in adverse tax
consequences to the participating employees.
(8) CAN I MOVE FUNDS FROM MY SEP-IRA TO ANOTHER TAX-SHELTERED IRA?
Yes, it is permissible for you to withdraw, or receive, funds from your SEP-IRA,
and no more than 60 days later, place such funds in another IRA, or SEP-IRA. The
Code refers to this as a "rollover" and you may not make more than one rollover
per IRA during a one-year interval. However, there are no restrictions on the
number of times you may make "transfers" if you arrange to have your IRA funds
transferred between the trustees, so you never have possession of the funds.
(9) WHAT HAPPENS IF I WITHDRAW MY EMPLOYER'S CONTRIBUTION FROM MY IRA?
If you do not want to leave the employer's contribution in your IRA, you may
withdraw it at any time, but any amount withdrawn is includible in your income.
Also, if withdrawals occur before attainment of age 59 1/2, and not on account
of death or disability, you may be subject to a penalty tax.
(10) MAY I PARTICIPATE IN A SEP EVEN THOUGH I'M COVERED BY ANOTHER PLAN?
Yes. You can participate in a SEP (other than the IRS Model SEP) even though you
participate in another plan of the same employer. However, the Code imposes
combined contribution limits. Also, if you work for several employers, one
employer may cover you under a SEP and the other employer may cover you under a
pension or profit sharing plan.
(11) WHAT HAPPENS IF AN EMPLOYER CONTRIBUTES TOO MUCH TO MY SEP-IRA IN ONE
YEAR?
You may withdraw any contribution which exceeds the yearly limitations without
penalty by the due date (plus extensions) for filing your tax return (normally
April 15th). The withdrawn contribution is includible in your gross income.
Excess contributions left in your SEP-IRA account after the prescribed time for
withdrawal may have adverse tax consequences. Withdrawals of the excess
contributions may be subject to the premature distribution penalty tax
withdrawals.
20
<PAGE>
(12) DO I NEED TO FILE ANY ADDITIONAL FORMS WITH THE IRS BECAUSE I PARTICIPATE
IN A SEP?
No.
(13) IS MY EMPLOYER REQUIRED TO PROVIDE ME WITH INFORMATION ABOUT SEP-IRAS AND
THE SEP AGREEMENT?
Yes. In addition to the SEP Disclosure Information contained in this document,
your employer must provide you with the following information:
(a) At the time you become eligible to participate in the SEP your
employer must inform you in writing it has adopted a SEP agreement
and state which employees may participate, how the SEP allocates
employer contributions, and who can provide you with additional
information.
(b) Your employer must inform you in writing of all employer
contributions to your SEP-IRA (the employer must supply this
information by January 31st of the year following the year for which
the employer makes the contribution, or 30 days after the employer
makes the contribution, whichever is later).
(c) If your employer amends the SEP, or replaces it with another SEP, the
employer must furnish a copy of the amendment or new SEP (with a
clear written explanation of its terms and effects) to each
participant within 30 days of the date the SEP or amendment becomes
effective.
(d) If your employer selects or recommends the IRAs into which it will
deposit the SEP contribution (or substantially influences you or
other employees to choose them), your employer must ensure a clear
written explanation of the terms of those IRAs is provided at the
time each employee becomes eligible to participate. The explanation
must include information about the terms of those IRAs, such as rates
of return and any restrictions on a Participant's ability to
"rollover," transfer, or withdraw funds from the IRAs (including
restrictions which allow rollovers or withdrawals but reduce earnings
of the IRAs or impose other penalties).
(e) If your employer selects, recommends, or substantially influences you
to choose a specific IRA and the IRA prohibits the withdrawal of
funds, the Department of Labor may require your employer to provide
you additional information.
(14) IS THE FINANCIAL INSTITUTION WHERE I ESTABLISH MY IRA ALSO REQUIRED TO
PROVIDE ME WITH INFORMATION?
Yes, it must provide you with a disclosure statement which contains the
following items of information in plain, nontechnical language:
(1) the statutory requirements which relate to your IRA;
(2) the tax consequences which follow the exercise of various options and
what those options are;
(3) participation eligibility rules, and rules on the deductibility and
nondeductibility of retirement savings;
(4) the circumstances and procedures under which you may revoke your IRA,
including the name, address and telephone number of the person
designated to receive notice of revocation (this explanation must be
prominently displayed at the beginning of the disclosure statement);
(5) explanations of when penalties may be assessed against you because of
specified prohibited or penalized activities concerning your IRA; and
(6) financial disclosure information which:
(a) either projects value growth rates of your IRA under various
contribution and retirement schedules, or describes the method
of computing and allocating the annual earnings and charges
which the financial institution may assess;
(b) describes whether, and for what period, the financial
institution guarantees growth projections for the plan, or a
statement describing the basis of earnings rate projections;
(c) states the sales commission the financial institution will
charge in each year expressed as a percentage of $1,000; and
(d) states the proportional amount of any nondeductible life
insurance which may be a feature of your IRA.
(15) CAN SEP CONTRIBUTIONS BE REDUCED BY EMPLOYER CONTRIBUTIONS TO SOCIAL
SECURITY?
Although employer contributions under the SEP agreement must bear a uniform
relationship to employees' compensation, your employer may take into
consideration certain amounts it already has paid on your account as Social
Security taxes. This is called "integration" and is permissible only if the
employer satisfies certain statutory requirements. If your employer chooses an
integration formula, the SEP allocation information your employer provides you
must clearly show the integration formula.
See Publication 590 available at most IRS offices, for a more complete
explanation of disclosure requirements. In addition to this disclosure
statement, the financial institution must provide you with a financial statement
each year. It may be necessary to retain and refer to statements for more than
one year to evaluate the investment performance of the IRA and in order that you
will know how to report IRA distributions for tax purposes.
21
<PAGE>
DISCLOSURE STATEMENT ADDENDUM
ELECTIVE DEFERRAL ARRANGEMENT
===============================================================================
The SEP your employer has adopted includes an elective deferral arrangement.
Under a SEP elective deferral arrangement, you may elect to reduce your
compensation (usually by a payroll deduction agreement) by an amount you wish
the employer to contribute to your SEP-IRA. The SEP refers to these amounts you
elect to have the Employer contribute from your compensation as "elective
deferrals."
(16) WHAT IS A SEP ELECTIVE DEFERRAL ARRANGEMENT?
A SEP elective deferral arrangement is a SEP which permits you to defer
compensation to your own IRA. You may elect to defer from your regular salary or
on a bonus. This type of elective SEP is available only to an employer with 25
or fewer eligible employees.
Your Employer will provide you with a copy of the agreement containing
eligibility requirements and a description of the method for making elective
deferral contributions to your IRA.
All amounts contributed to your IRA belong to you, even after you separate from
service with the employer.
(17) MUST I MAKE ELECTIVE DEFERRALS TO AN IRA?
No. However, if more than half of the eligible employees choose not to make
elective deferrals in a particular year, then no employee may participate in an
elective SEP of that employer for the year.
(18) HOW MUCH MAY I ELECT TO DEFER TO MY SEP-IRA IN A PARTICULAR YEAR?
For any year, the amount which you may defer to this SEP may not exceed the
lesser of:
(1) 15% of compensation; or
(2) $7,000 (as adjusted for increases in the cost of living.)
If your employer also makes non-elective contributions to the SEP, the total
contributions on your behalf to the SEP (non-elective contributions and elective
contributions) may not exceed the lesser of $22,500 or 15% of your compensation.
The $7,000 is an overall cap on the maximum amount you may defer in each
calendar year to all elective SEPs and cash-or-deferred arrangements under Code
401(k), even if maintained by unrelated employers. If you participate in two
arrangements which permit elective deferrals, you are responsible for
determining whether you exceed this limit for any calendar year.
If you are a highly compensated employee, the Code imposes a further limit on
the amount you may contribute to a SEP-IRA for a particular year. The employer
calculates this limit on the basis of a mathematical formula which limits the
percentage of pay that highly compensated employees may elect to defer to a SEP-
IRA. As discussed below, your employer will notify you if you have exceeded the
ADP limits.
(19) HOW DO I TREAT ELECTIVE DEFERRALS FOR TAX PURPOSES?
The amount you elect to defer to your SEP-IRA is excludable from your gross
income, subject to the limitations discussed above, and is not includible as
taxable wages on your Form W-2. However, elective deferrals are subject to FICA
taxes.
(20) HOW WILL I KNOW IF THE EMPLOYER CONTRIBUTES TOO MUCH TO MY SEP-IRA IN ONE
YEAR?
There are two different ways in which you may contribute too much to your SEP-
IRA. One way is to make elective deferrals in excess of the $7,000 limitation
described above ("excess elective deferrals"). The second way is to make
elective deferrals which violate the ADP test ("excess SEP contributions"). You
are responsible for calculating whether or not you have exceeded the $7,000
limitation. Your employer is responsible for determining whether you have made
any excess SEP contributions.
The Code requires your employer to notify you by March 15 if you have made any
excess SEP contributions for the preceding calendar year. Your employer will
notify you of an excess SEP contribution by providing you with any required form
for the preceding calendar year.
(21) WHAT MUST I DO ABOUT EXCESS DEFERRALS TO AVOID ADVERSE TAX CONSEQUENCES?
Excess deferrals are includible in your gross income in the year of the
deferral. You should withdraw excess deferrals under this SEP and any income
allocable to the excess deferrals from your SEP-IRA by April 15. You may not
transfer or rollover excess deferrals to another SEP-IRA.
If you fail to withdraw your excess deferrals and any income allocable to the
excess deferrals by April 15 of the following year, your excess deferrals will
be subject to a 6% excise tax for each year they remain in the SEP-IRA.
If you have both excess deferrals and excess SEP contributions (as described in
21a below), the amount of excess deferrals you withdraw by April 15 will reduce
your excess SEP contributions.
(21A) WHAT MUST I DO ABOUT EXCESS SEP CONTRIBUTIONS TO AVOID ADVERSE TAX
CONSEQUENCES?
Excess SEP contributions are includible in your gross income in the year of the
deferral. You should withdraw excess SEP contributions for a calendar year and
any income allocable to the excess SEP contributions by the due date (including
extensions) for filing your income tax return for the year. You may not transfer
or rollover excess SEP contributions to another SEP-IRA.
If you fail to withdraw your excess SEP contributions and income allocable to
the excess SEP contributions by the due date (including extensions) for filing
your income tax return, your excess SEP contributions will be subject to a 6%
excise tax for each year they remain in the SEP-IRA.
(22) CAN I REDUCE EXCESS ELECTIVE DEFERRALS OR EXCESS SEP CONTRIBUTIONS BY
ROLLING OVER OR TRANSFERRING AMOUNTS FROM MY SEP-IRA TO ANOTHER IRA ?
No. You may reduce excess elective deferrals or excess SEP contributions only by
a distribution to you. Excess amounts rolled over or transferred to another IRA
will be includible in income and subject to the penalties discussed above.
(23) HOW DO I KNOW HOW MUCH INCOME IS ALLOCABLE TO MY EXCESS ELECTIVE DEFERRALS
OR ANY EXCESS SEP CONTRIBUTIONS?
The rules for determining and allocating income to excess elective deferrals or
SEP contributions are the same as those governing regular IRA contributions. The
trustee or custodian of your SEP-IRA may be able to inform you of the amount of
income allocable to your excess amounts.
(24) WHAT HAPPENS IF I WITHDRAW MY ELECTIVE DEFERRALS TO MY SEP-IRA?
If you don't want to leave the money in the IRA, you may withdraw it at any
time, but any amount withdrawn is includible in your income. Also, if
withdrawals occur before you are 591/2, and not on account of death or
disability, you may be subject to a 10% penalty tax. (As discussed above,
different rules apply to the removal of excess amounts contributed to your SEP-
IRA.)
(25) WHAT HAPPENS IF I TRANSFER OR DISTRIBUTE CONTRIBUTIONS FROM MY SEP BEFORE
THE ADP TEST DESCRIBED IN QUESTION 3 HAS BEEN SATISFIED ?
If you make a transfer or a distribution from your SEP before the Employer
satisfies the nondiscrimination test, the distribution will be subject to
regular income tax and the additional 10% tax on early distributions.
22
<PAGE>
[LOGO] SunAmerica
Asset Management
To order additional brochures or prospectuses
relating to the shares of SunAmerica's funds call:
800/858-8850, extension 5134.
Please read the prospectuses carefully before investing.
SunAmerica Fund Services
Retirement Plans Department
733 Third Avenue
New York, NY 10017-3204
<PAGE>
PLAN OF DISTRIBUTION PURSUANT
TO RULE 12b-1
(CLASS A SHARES)
PLAN OF DISTRIBUTION adopted as of the 23 day of September, 1993, by
SunAmerica Money Market Funds, Inc., a Maryland Corporation (the "Corporation"),
on behalf of the Class A shares of its separately designated series, SunAmerica
Money Market Fund (the "Fund").
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
WHEREAS, the Fund is a separately designated investment series of the
Corporation with its own investment objective, policies and purposes offering
two separate classes of shares of common stock, par value $.001 per share, of
the Corporation (the "Shares"); and
WHEREAS, the Corporation has entered into a Distribution Agreement with
SunAmerica Capital Services, Inc. (the "Distributor"), pursuant to which the
Distributor acts as the exclusive distributor and representative of the
Corporation in the offer and sale of the Shares to the public; and
WHEREAS, the Corporation desires to adopt this Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Investment Company Act, pursuant to
which the Fund will pay an account maintenance fee and a distribution fee to the
Distributor with respect to Class A shares of the Fund; and
WHEREAS, the Board of Directors of the Corporation (the "Directors") as a
whole, and the Directors who are not interested persons of the Corporation and
who have no direct or indirect financial interest in the operation of this Plan
or in any agreement relating hereto (the "12b-1 Directors"), having determined,
in the exercise of reasonable business judgment and in light of their fiduciary
duties under state law and under Sections 36(a) and (b) of the Act, that there
is a reasonable likelihood that this Plan will benefit the Fund and its Class A
shareholders, have approved this Plan by votes cast in person at a meeting
called for the purpose of voting hereon and on any agreements related hereto;
NOW THEREFORE, the Corporation on behalf of the Fund hereby adopts this
Plan on the following terms:
1. Account Maintenance Activities. The Fund shall pay the Distributor an
------------------------------
account maintenance fee under the Plan at the
<PAGE>
end of each month at the annual rate of up to 0.15% of average daily net assets
attributable to Class A shares of the Fund to compensate the Distributor and
Securities Firms for account maintenance activities.
2. Payments to Other Parties. The Fund hereby authorizes the Distributor
-------------------------
to enter into agreements with Securities Firms to provide compensation to such
Securities Firms for activities and services of the type referred to in Sections
1 and 2 hereof. The Distributor may reallocate all or a portion of its account
maintenance fee or distribution fee to such Securities Firms as compensation for
the above-mentioned activities and services. Such agreements shall provide that
the Securities Firms shall deliver to the Distributor such information as is
reasonably necessary to permit the Distributor to comply with the reporting
requirements set forth in Section 5 hereof.
3. Related Agreements. All agreements with any person relating to
------------------
implementation of this Plan shall be in writing, and any agreement related to
this Plan shall provide:
(a) that such agreement may be terminated at any time, without payment
of any penalty, by vote of a majority of the 12b-1 Directors or, by vote of a
majority of the outstanding voting securities (as defined in the Act) of Class A
shares of the Fund, on not more than 60 days' written notice to any other party
to the agreement; and
(b) that such agreement shall terminate automatically in the event of
its assignment.
4. Quarterly Reports. The Treasurer of the Corporation shall provide to
-----------------
the Directors and the Directors shall review, at least quarterly, a written
report of the amounts expended pursuant to this Plan with respect to Class A
shares of the Fund and any related agreement and the purposes for which such
expenditures were made.
5. Term and Termination. (a) This Plan shall become effective as of the
--------------------
date hereof, and, unless terminated as herein provided, shall continue from year
to year thereafter, so long as such continuance is specifically approved at
least annually by votes, cast in person at a meeting called for the purpose of
voting on such approval, of a majority of both the (i) the Directors of the
Corporation, and (ii) the 12b-1 Directors.
(b) This Plan may be terminated at any time by vote of a majority of
the 12b-1 Directors or by vote of a majority of the outstanding voting
securities (as defined in the Act) of Class A shares of the Fund.
-2-
<PAGE>
6. Amendments. This Plan may not be amended to increase materially the
----------
maximum expenditures permitted by Sections 1 and 2 hereof unless such amendment
is approved by a vote of a majority of the outstanding voting securities (as
defined in the Act) of Class A shares of the Fund, and no material amendment to
this Plan shall be made unless approved in the manner provided for the annual
renewal of this Plan in Section 6(a) hereof.
7. Selection and Nomination of Directors. While this Plan is in effect,
-------------------------------------
the selection and nomination of those Directors of the Corporation who are not
interested persons of the Corporation shall be committed to the discretion of
such disinterested Directors.
8. Recordkeeping. The Corporation shall preserve copies of this Plan and
-------------
any related agreement and all reports made pursuant to Section 5 hereof for a
period of not less than six years from the date of this Plan, any such related
agreement or such reports, as the case may be, the first two years in an easily
accessible place.
9. Definition of Certain Terms. For purposes of this Plan, the terms
---------------------------
"assignment," "interested person," "majority of the outstanding voting
securities," and "principal underwriter" shall have their respective meanings
defined in the Act and the rules and regulations thereunder, subject, however,
to such exemptions as may be granted to either the Corporation or the principal
underwriter of the Shares by the Securities and Exchange Commission, or its
staff under the Act.
10. Separate Series. Pursuant to the provisions of the Articles of
---------------
Incorporation the Fund is a separate series of the Corporation, and all debts,
liabilities and expenses of Class A shares of the Fund shall be enforceable only
against the assets of Class A shares of the Fund and not against the assets of
any other fund or class of shares or of the Corporation as a whole.
IN WITNESS WHEREOF, the Corporation has caused this Plan to be executed as
of the day and year first written above.
SUNAMERICA MONEY MARKET FUNDS, INC.
By: /s/ Peter A. Harbeck
--------------------
Peter A. Harbeck
Executive Vice President
-3-
<PAGE>
PLAN OF DISTRIBUTION PURSUANT
TO RULE 12b-1
(CLASS B SHARES)
PLAN OF DISTRIBUTION adopted as of the 23 day of September, 1993, by
SunAmerica Money Market Funds, Inc., a Maryland Corporation (the "Corporation"),
on behalf of the Class B shares of its separately designated series, SunAmerica
Money Market Fund (the "Fund").
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
WHEREAS, the Fund is a separately designated investment series of the
Corporation with its own investment objective, policies and purposes offering
two separate classes of shares of common stock, par value $.001 per share, of
the Corporation (the "Shares"); and
WHEREAS, the Corporation has entered into a Distribution Agreement with
SunAmerica Capital Services, Inc. (the "Distributor"), pursuant to which the
Distributor acts as the exclusive distributor and representative of the
Corporation in the offer and sale of the Shares to the public; and
WHEREAS, the Corporation desires to adopt this Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Investment Company Act, pursuant to
which the Fund will pay an account maintenance fee and a distribution fee to the
Distributor with respect to Class B shares of the Fund; and
WHEREAS, the Board of Directors of the Corporation (the "Directors") as a
whole, and the Directors who are not interested persons of the Corporation and
who have no direct or indirect financial interest in the operation of this Plan
or in any agreement relating hereto (the "12b-1 Directors"), having determined,
in the exercise of reasonable business judgment and in light of their fiduciary
duties under state law and under Sections 36(a) and (b) of the Act, that there
is a reasonable likelihood that this Plan will benefit the Fund and its Class B
shareholders, have approved this Plan by votes cast in person at a meeting
called for the purpose of voting hereon and on any agreements related hereto;
NOW THEREFORE, the Corporation on behalf of the Fund hereby adopts this
Plan on the following terms:
-4-
<PAGE>
11. Distribution Activities. The Fund shall pay the Distributor a
-----------------------
distribution fee under the Plan at the end of each month at the annual rate of
0.75% of average daily net assets attributable to Class B shares of the Fund to
compensate the Distributor and certain securities firms ("Securities Firms") for
providing sales and promotional activities and services. Such activities and
services will relate to the sale, promotion and marketing of the Class B shares.
Such expenditures may consist of sales commissions to financial consultants for
selling Class B shares, compensation, sales incentives and payments to sales and
marketing personnel, and the payment of expenses incurred in its sales and
promotional activities, including advertising expenditures related to the Class
B shares of the Fund and the costs of preparing and distributing promotional
materials with respect to such Class B shares. Payment of the distribution fee
described in this Section 1 shall be subject to any limitations set forth in
applicable regulations of the National Association of Securities Dealers, Inc.
Nothing herein shall prohibit the Distributior from collecting distribution fees
in any given year, as provided hereunder, in excess of expenditures made in such
year for sales and promotional activities with respect to the Fund.
12. Account Maintenance Activities. The Fund shall pay the Distributor an
------------------------------
account maintenance fee under the Plan at the end of each month at the annual
rate of up to 0.15% of average daily net assets attributable to Class B shares
of the Fund to compensate the Distributor and Securities Firms for account
maintenance activities.
13. Payments to Other Parties. The Fund hereby authorizes the Distributor
-------------------------
to enter into agreements with Securities Firms to provide compensation to such
Securities Firms for activities and services of the type referred to in Sections
1 and 2 hereof. The Distributor may reallocate all or a portion of its account
maintenance fee or distribution fee to such Securities Firms as compensation for
the above-mentioned activities and services. Such agreements shall provide that
the Securities Firms shall deliver to the Distributor such information as is
reasonably necessary to permit the Distributor to comply with the reporting
requirements set forth in Section 5 hereof.
14. Related Agreements. All agreements with any person relating to
------------------
implementation of this Plan shall be in writing, and any agreement related to
this Plan shall provide:
(a) that such agreement may be terminated at any time, without
payment of any penalty, by vote of a majority of the 12b-1 Directors or, by vote
of a majority of the outstanding voting securities (as defined in the Act) of
Class B shares of the Fund, on not more than 60 days' written notice to any
other party to the agreement; and
-5-
<PAGE>
(b) that such agreement shall terminate automatically in the event of its
assignment.
15. Quarterly Reports. The Treasurer of the Corporation shall provide to
-----------------
the Directors and the Directors shall review, at least quarterly, a written
report of the amounts expended pursuant to this Plan with respect to Class B
shares of the Fund and any related agreement and the purposes for which such
expenditures were made.
16. Term and Termination. (a) This Plan shall become effective as of the
--------------------
date hereof, and, unless terminated as herein provided, shall continue from year
to year thereafter, so long as such continuance is specifically approved at
least annually by votes, cast in person at a meeting called for the purpose of
voting on such approval, of a majority of both the (i) the Directors of the
Corporation, and (ii) the 12b-1 Directors.
(b) This Plan may be terminated at any time by vote of a majority of
the 12b-1 Directors or by vote of a majority of the outstanding voting
securities (as defined in the Act) of Class B shares of the Fund.
17. Amendments. This Plan may not be amended to increase materially the
----------
maximum expenditures permitted by Sections 1 and 2 hereof unless such amendment
is approved by a vote of a majority of the outstanding voting securities (as
defined in the Act) of Class B shares of the Fund, and no material amendment to
this Plan shall be made unless approved in the manner provided for the annual
renewal of this Plan in Section 6(a) hereof.
18. Selection and Nomination of Directors. While this Plan is in effect,
-------------------------------------
the selection and nomination of those Directors of the Corporation who are not
interested persons of the Corporation shall be committed to the discretion of
such disinterested Directors.
19. Recordkeeping. The Corporation shall preserve copies of this Plan and
-------------
any related agreement and all reports made pursuant to Section 5 hereof for a
period of not less than six years from the date of this Plan, any such related
agreement or such reports, as the case may be, the first two years in an easily
accessible place.
20. Definition of Certain Terms. For purposes of this Plan, the terms
---------------------------
"assignment," "interested person," "majority of the outstanding voting
securities," and "principal underwriter" shall have their respective meanings
defined in the Act and the rules and regulations thereunder, subject, however,
to such exemptions as may be granted to either the Corporation or the principal
underwriter
-6-
<PAGE>
of the Shares by the Securities and Exchange Commission, or its staff under the
Act.
-7-
<PAGE>
21. Separate Series. Pursuant to the provisions of the Articles of
---------------
Incorporation, the Fund is a separate series of the Corporation, and all debts,
liabilities and expenses of Class B shares of the Fund shall be enforceable only
against the assets of Class B shares of the Fund and not against the assets of
any other fund or class of shares or of the Corporation as a whole.
IN WITNESS WHEREOF, the Corporation has caused this Plan to be executed as
of the day and year first written above.
SUNAMERICA MONEY MARKET FUNDS, INC.
By: /s/Peter A. Harbeck
--------------------
Peter A. Harbeck
Executive Vice President
-8-
<PAGE>
Exhibit 16(a)
SUNAMERICA MONEY MARKET FUND CLASS A
PERFORMANCE CALCULATION
-----------------------
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
Yield:
Yield = d x 365
--- ---
7
Where: d = 7 days dividends
Yield = .000950803 x 365 = 4.96%
---------- ---
7
Effective Yield:
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1) /(365 divided by 7)/] - 1
Effective Yield = 5.08%
<PAGE>
Exhibit 16(b)
SUNAMERICA MONEY MARKET FUND CLASS B
PERFORMANCE CALCULATION
-----------------------
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
Yield:
Yield = d x 365
--- ---
7
Where: d = 7 days dividends
Yield = .000822688 x 365 = 4.29%
---------- ---
7
Effective Yield:
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1) /(365 divided by 7)/] - 1
Effective Yield = 4.38%
<PAGE>
Exhibit 99.17
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of SunAmerica
Money Market Funds, Inc. do hereby severally constitute and appoint Peter A.
Harbeck, Peter Sutton and Robert M. Zakem or any of them, the true and lawful
agents and attorneys-in-fact of the undersigned with respect to all matters
arising in connection with the Registration Statement on Form N-1A and any and
all amendments (including post-effective amendments) thereto, with full power
and authority to execute said Registration Statement for and on behalf of the
undersigned, in our names and in the capacity indicated below, and to file the
same, together with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission. The undersigned hereby
gives to said agents and attorneys-in-fact full power and authority to act in
the premises, including, but not limited to, the power to appoint a substitute
or substitutes to act hereunder with the same power and authority as said agents
and attorneys-in fact would have if personally acting. The undersigned hereby
ratify and confirm all that said agents and attorneys-in-fact, or any substitute
or substitutes, may do by virtue hereof.
WITNESS the due execution hereof on the date and in the capacity set forth
below.
Signature Title Date
- --------- ----- ----
/s/ Peter A. Harbeck Director and President November 30, 1994
- --------------------- (Principal Executive Officer)
Peter A. Harbeck
/s/ Peter C. Sutton Treasurer (Principal November 30, 1994
- --------------------- Financial and Accounting Officer)
Peter C. Sutton
/s/ S. James Coppersmith Director November 30, 1994
- ------------------------
S. James Coppersmith
/s/ Samuel M. Eisenstat Director November 30, 1994
- -----------------------
Samuel M. Eisenstat
/s/ Stephen J. Gutman Director November 30, 1994
- ---------------------
Stephen J. Gutman
/s/ Sebastiano Sterpa Director November 30, 1994
- ---------------------
Sebastiano Sterpa
/s/ Peter McMillan III Director December 4, 1995
- ----------------------
Peter McMillan III
