<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
SUNAMERICA EQUITY FUNDS
SUNAMERICA INCOME FUNDS
SUNAMERICA MONEY MARKET FUNDS, INC.
STYLE SELECT SERIES, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 set forth the amount on which the
filing fee is calculated and state how it was determined:
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(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
SUNAMERICA INC.
The SunAmerica Center
733 Third Avenue
New York, NY 10017
212.551.5969
800.858.8850
November 1998
Dear Shareholder,
On August 19, 1998, SunAmerica Inc. entered into an agreement with American
International Group, Inc. ("AIG"), the leading U.S.-based international
insurance organization. Under the terms of the agreement, AIG will acquire
SunAmerica Inc. and, consequently, SunAmerica Asset Management Corp. ("SAAMCo")
will become part of AIG. SunAmerica will not change its name and no
organizational changes are planned which would effect services provided to the
Funds. As a result of this transaction, it is necessary for the shareholders of
each SunAmerica Mutual Fund or Style Select Series Portfolio for which
SunAmerica Asset Management acts as investment manager, including your Fund, to
approve a new investment management agreement.
The following important facts about the transaction are outlined below:
- - The transaction has no effect on the number of shares you own or the value of
those shares.
- - The advisory fees and expenses paid by your Fund will not increase as a
result of this transaction.
- - The investment objective of your Fund will remain the same.
- - The disinterested Directors and Trustees of the Funds have carefully reviewed
the proposed merger, and have concluded that the transaction will not cause a
reduction in the quality of services provided to your Fund and should enhance
SAAMCo's ability to provide such services.
Shareholders are also being asked to approve certain other matters that have
been set forth in the Fund's Notice of Joint Special Meeting of Shareholders. We
have included a Q&A to help you better understand matters relating to this proxy
vote. THE BOARD MEMBERS OF YOUR FUND BELIEVE THAT EACH OF THE PROPOSALS SET
FORTH IN THE NOTICE OF MEETING IS IMPORTANT AND RECOMMEND THAT YOU READ THE
ENCLOSED MATERIALS CAREFULLY AND THEN VOTE FOR ALL PROPOSALS.
You will receive a proxy for each Fund and/or Trust in which you are
invested. There are several ways to vote your shares including mail, fax,
touch-tone telephone, live operator and the Internet. Some of these options may
not be available to all shareholders. Please refer to the insert accompanying
these proxy materials for more information on how to vote. Your vote is
important. PLEASE TAKE A MOMENT NOW TO VOTE USING ANY OF THE AVAILABLE OPTIONS
LISTED ABOVE. If we do not receive a response by one of these methods, you may
receive a telephone call from our proxy solicitor, Shareholder Communications
Corporation, reminding you to vote.
If you have any questions about the proxy voting process, you may call
Shareholder Communications Corporation toll-free at 1-800-248-3249.
YOUR VOTES ARE VERY IMPORTANT!
We appreciate your cooperation and continued support.
Sincerely,
[LOGO]
Eli Broad
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER OF SUNAMERICA
INC.
SHAREHOLDERS ARE URGED TO SIGN THE PROXY CARD(S) AND RETURN IT IN THE
POSTAGE-PAID ENVELOPE TO ENSURE A QUORUM AT THE MEETING. YOUR VOTE IS IMPORTANT
REGARDLESS OF THE SIZE OF YOUR SHAREHOLDINGS.
<PAGE>
November 1998
IMPORTANT NEWS FOR SHAREHOLDERS OF
SUNAMERICA EQUITY FUNDS
SUNAMERICA INCOME FUNDS
SUNAMERICA MONEY MARKET FUNDS, INC.
STYLE SELECT SERIES, INC.
While we encourage you to read the full text of the enclosed Proxy
Statement, here is a brief overview of some matters affecting your SunAmerica
Mutual Funds which require a shareholder vote.
Q & A: QUESTIONS AND ANSWERS
Q. WHAT IS HAPPENING?
A. SunAmerica Inc. ("SunAmerica"), the parent company of SunAmerica Asset
Management Corp. ("SAAMCo"), your SunAmerica Mutual Funds' adviser, has
agreed to merge with and into American International Group, Inc.
("AIG"). AIG is the leading U.S.-based international insurance and
financial services organization. As a result of the proposed merger,
there will be a change in ownership of SAAMCo. The following pages give
you additional information on AIG, the proposed merger and the matters
on which you are being asked to vote. THE BOARD MEMBERS OF YOUR
SUNAMERICA MUTUAL FUNDS, INCLUDING THOSE WHO ARE NOT AFFILIATED WITH THE
SUNAMERICA MUTUAL FUNDS, AIG, SAAMCO OR SUNAMERICA, UNANIMOUSLY
RECOMMEND THAT YOU VOTE FOR THESE PROPOSALS.
Q. WHY DID YOU SEND ME THIS BOOKLET?
A. You are receiving these proxy materials--a booklet that includes the
Proxy Statement and one or more proxy cards--because you have the right
to vote on the important proposals concerning your investment in the
SunAmerica Mutual Funds.
Q. WHY ARE MULTIPLE CARDS ENCLOSED?
A. [If you own shares of more than one SunAmerica Mutual Fund, you will
receive a proxy card for each SunAmerica Mutual Fund you own.]
Q. WHY AM I BEING ASKED TO VOTE ON THE PROPOSED NEW ADVISORY AGREEMENT IN
PROPOSAL NO. 2?
A. The Investment Company Act of 1940, which regulates investment companies
such as your SunAmerica Mutual Funds, requires a vote whenever there is
a change in control of an investment company's adviser. Upon a change of
control, the advisory agreement between the investment adviser and the
investment company terminates. SunAmerica's merger with AIG will result
in a change of control of SAAMCo and therefore requires shareholder
approval of a new advisory agreement between your SunAmerica Mutual
Funds and SAAMCo. The new advisory agreement is identical in all
material respects to the existing advisory agreement.
Q. WHAT ELSE AM I BEING ASKED TO VOTE ON?
A. You are being asked to elect a Board of Trustees or Directors. Also, in
order to save the expense of a subsequent meeting, you are being asked
to vote to change certain of the fundamental investment restrictions of
the SunAmerica Mutual Funds. Additionally, you are being asked to vote
to ratify the Board's selection of your Funds' independent accountants.
Q. WHY AM I BEING ASKED TO VOTE ON PROPOSALS REGARDING THE SUNAMERICA MONEY
MARKET FUND?
A. You may have received a proxy card soliciting your vote for the
SunAmerica Money Market Fund but did not know you were a shareholder. If
you are a brokerage customer of a brokerage firm
<PAGE>
that is affiliated with SunAmerica, the free cash balances from your
brokerage account may be automatically "swept" into the SunAmerica Money
Market Fund. Even if your investment in the SunAmerica Money Market Fund
is through a "sweep" of your brokerage account, your vote is important
and you are entitled to vote on proposals affecting the Fund.
Q. HOW WILL THE AIG MERGER AFFECT ME?
A. The merger should have no impact on the operations of the SunAmerica
Mutual Funds. SAAMCo has assured the Board that there will be no
reduction in the nature or quality of its services to the SunAmerica
Mutual Funds as a result of the merger, and in fact anticipates that its
resources may be enhanced.
Q. HOW DO THE SUNAMERICA MUTUAL FUNDS' BOARDS RECOMMEND THAT I VOTE?
A. After careful consideration, the Boards of the SunAmerica Mutual Funds,
including those Board members who are not affiliated with the SunAmerica
Mutual Funds, AIG, SAAMCo or SunAmerica, recommend that you vote FOR all
of the proposals on the enclosed proxy card.
A. You have several different ways to provide your SunAmerica Mutual Funds
with your vote. These ways include mail, speaking with a representative
on the telephone, fax, touch-tone voting and voting on-line over the
Internet. Not all of these options are available to all of you and you
should refer to the insert accompanying this Q&A to see which of these
options you can use. If you need more information on how to vote, or if
you have any questions, please call your SunAmerica Mutual Funds'
information agent, Shareholder Communications Corporation, at
1-800-248-3249.
YOUR VOTE IS IMPORTANT AND WILL HELP AVOID THE ADDITIONAL
EXPENSE OF ANOTHER SOLICITATION.
THANK YOU FOR PROMPTLY RECORDING YOUR VOTE.
<PAGE>
SUNAMERICA EQUITY FUNDS
SUNAMERICA INCOME FUNDS
SUNAMERICA MONEY MARKET FUNDS, INC.
STYLE SELECT SERIES, INC.
THE SUNAMERICA CENTER
733 THIRD AVENUE
NEW YORK, NY 10017-3204
------------------------
NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS
---------------------
To the Shareholders:
NOTICE IS HEREBY GIVEN that a joint special meeting (the "Meeting") of
shareholders of SunAmerica Equity Funds ("Equity Funds"), SunAmerica Income
Funds ("Income Funds"), SunAmerica Money Market Funds, Inc. ("Money Market
Fund") and Style Select Series, Inc. ("Style Select") (each a "SunAmerica Mutual
Fund" and collectively the "SunAmerica Mutual Funds") will be held on December
30, 1998, at [ .m.], Eastern time, at the offices of SunAmerica Asset
Management Corp. ("SAAMCo"), The SunAmerica Center, 733 Third Avenue, New York,
NY 10017 for the purpose of considering the following proposals with respect to
each SunAmerica Mutual Fund or with respect to one or more of their separate
investment portfolios or series (each, a "Portfolio" and collectively, the
"Portfolios"), as indicated below. Proposal No. 2 will be effective only upon
consummation of the proposed acquisition of SunAmerica Inc. by American
International Group, Inc. pursuant to an Agreement and Plan of Merger dated as
of August 19, 1998, as more fully described in the Proxy Statement attached
hereto.
1. For each SunAmerica Mutual Fund separately, to elect a slate of five
members to its Board of Trustees or Directors to hold office until their
successors are duly elected and qualified;
2. For each Portfolio separately, to approve or disapprove a new investment
advisory and management agreement between each SunAmerica Mutual Fund, on behalf
of each of the SunAmerica Mutual Funds' respective Portfolios, and SAAMCo, the
terms of which are identical in all material respects to each existing
investment advisory and management agreement;
3. For each of the Portfolios indicated below, separately, to approve or
disapprove changing the fundamental investment restriction relating to:
(a) short sales of securities with respect to each Portfolio of Equity
Funds and Income Funds;
(b) the ability to engage in borrowing transactions with respect to each
Portfolio of each SunAmerica Mutual Fund;
(c) the ability to engage in lending transactions with respect to each
Portfolio of each SunAmerica Mutual Fund;
4. For each SunAmerica Mutual Fund separately, to ratify the selection of
independent accountants; and
5. To transact such other business as may properly come before the Meeting
or any adjournments thereof.
<PAGE>
The Board of each SunAmerica Mutual Fund has fixed the close of business on
October 30, 1998 as the record date for determining the number of shares
outstanding and the shareholders entitled to vote at the Meeting and at any and
all adjournments thereof.
By Order of the Boards of Trustees or
Directors,
Robert M. Zakem
SECRETARY
November , 1998
EACH SHAREHOLDER IS URGED TO EXERCISE THE RIGHT TO VOTE AT THE JOINT SPECIAL
MEETING OF SHAREHOLDERS OF THE SUNAMERICA MUTUAL FUNDS BY FILLING IN, DATING AND
SIGNING THE ENCLOSED PROXY CARD(S) AND RETURNING IT IN THE RETURN ENVELOPE
PROVIDED. SHAREHOLDERS ALSO HAVE THE OPTION TO PROVIDE THEIR VOTE BY CALLING AN
AGENT OF THE SUNAMERICA MUTUAL FUNDS OR SHAREHOLDERS MAY VOTE BY TELEPHONE OR ON
THE INTERNET BY FOLLOWING THE INSTRUCTIONS ON THE INSERT ACCOMPANYING THE PROXY
CARD(S).
<PAGE>
PRELIMINARY COPY
SUNAMERICA EQUITY FUNDS
SUNAMERICA INCOME FUNDS
SUNAMERICA MONEY MARKET FUNDS, INC.
STYLE SELECT SERIES, INC.
THE SUNAMERICA CENTER
733 THIRD AVENUE
NEW YORK, NY 10017-3204
------------------------
PROXY STATEMENT
---------------------
JOINT SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 30, 1998, [ .M.]
SunAmerica Equity Funds ("Equity Funds") is an open-end management
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act") and consists of six separate investment portfolios or
series: SunAmerica Balanced Assets Fund, SunAmerica Blue Chip Growth Fund,
SunAmerica Mid-Cap Growth Fund, SunAmerica Small Company Growth Fund, SunAmerica
Growth and Income Fund and "Dogs" of Wall Street Fund (each, an "Equity
Portfolio," and collectively, the "Equity Portfolios").
SunAmerica Income Funds ("Income Funds") is an open-end management
investment company registered under the 1940 Act and consists of five separate
investment portfolios or series: SunAmerica U.S. Government Securities Fund,
SunAmerica Federal Securities Fund, SunAmerica Diversified Income Fund,
SunAmerica High Income Fund and SunAmerica Tax Exempt Insured Fund (each, an
"Income Portfolio," and collectively, the "Income Portfolios").
SunAmerica Money Market Funds, Inc. ("Money Market Fund") is an open-end
diversified management investment company registered under the 1940 Act and
consists of one investment portfolio or series, SunAmerica Money Market Fund
(the "Money Market Portfolio"). Shareholders of the Money Market Portfolio
include those shareholders who are brokerage customers of brokerage firms, such
as Royal Alliance Associates, Inc., that are affiliated with SunAmerica Inc.
("SunAmerica"). Such brokerage customers may have become shareholders of Money
Market Portfolio when their free cash balances were "swept" from their accounts
and invested into the Money Market Portfolio. Such brokerage customers are
shareholders of the Money Market Portfolio and are entitled to vote on any
proposal relating to the Money Market Portfolio.
Style Select Series, Inc. ("Style Select") is an open-end management
investment company registered under the 1940 Act and consists of nine different
investment portfolios: Large-Cap Growth Portfolio, Mid-Cap Growth Portfolio,
Aggressive Growth Portfolio, Large-Cap Blend Portfolio, Large-Cap Value
Portfolio, Value Portfolio, Small-Cap Value Portfolio, International Equity
Portfolio and Focus Portfolio (each, a "Style Select Portfolio" and
collectively, the "Style Select Portfolios"). Equity Funds, Income Funds, Money
Market Fund and Style Select are each hereafter referred to as a "Fund" or a
"SunAmerica Mutual Fund" and collectively, as the "Funds" or the "SunAmerica
Mutual Funds." The Equity Portfolios, Income Portfolios, Money Market Portfolio
and Style Select Portfolios are hereinafter each sometimes referred to as a
"Portfolio" and collectively, as the "Portfolios."
SunAmerica Asset Management Corp. ("SAAMCo" or the "Adviser") serves as
adviser, manager and administrator for each Portfolio.
1
<PAGE>
In accordance with applicable law, this Proxy Statement is being mailed, on
or about November 9, 1998 on behalf of the Board of Trustees or Directors (the
"Board Members" or the "Board") of each SunAmerica Mutual Fund, to the
shareholders of each of the respective Funds in connection with a solicitation
of proxies to be used at a joint special meeting (the "Meeting") of shareholders
of the SunAmerica Mutual Funds scheduled to be held at the offices of SAAMCo,
The SunAmerica Center, 733 Third Avenue, New York, New York 10017, on December
30, 1998, at [ .m], Eastern time. The Board Members have fixed the close of
business on October 30, 1998 as the record date (the "Record Date") for
determining the number of shares outstanding and the shareholders entitled to be
present at the Meeting and vote their shares as of the Record Date.
A listing of the proposals described in this Proxy Statement and the
SunAmerica Mutual Fund(s) to which each applies is set forth below.
<TABLE>
<CAPTION>
SUMMARY OF PROPOSAL FUND TO WHICH PROPOSAL APPLIES
- ------------------------------------------------------ ------------------------------------------------------
<S> <C>
1. To elect a slate of five members to the Board of Each SunAmerica Mutual Fund--all Portfolios of each
Trustees or Board of Directors to hold office until Fund voting together as a single class
their successors are duly elected and qualified.
2. To approve or disapprove a new investment advisory Each SunAmerica Mutual Fund--each Portfolio of each
and management agreement between each Fund, on behalf Fund voting separately
of each Portfolio thereof, and SAAMCo, the terms of
which are identical in all material respects to the
existing investment advisory and management agreement.
3. To approve or disapprove changing the fundamental
investment restriction relating to:
3(a) short sales of securities; Equity Funds and Income Funds--each Portfolio of each
of Equity Funds and Income Funds voting separately
3(b) the ability to engage in borrowing transactions; Each SunAmerica Mutual Fund--each Portfolio of each
and SunAmerica Mutual Fund voting separately
3(c) the ability to engage in lending transactions. Each SunAmerica Mutual Fund--each Portfolio of each
SunAmerica Mutual Fund voting separately
4. To ratify the selection of independent accountants. Each SunAmerica Mutual Fund--all Portfolios of each
Fund voting together as a single class
5. To transact such other business as may properly Each SunAmerica Mutual Fund
come before the Meeting or any adjournments thereof.
</TABLE>
The Funds expect that the solicitation of proxies from shareholders will be
made by mail, and solicitation also may be made by telephone communications from
officers or employees of SAAMCo, SunAmerica, or their affiliates, who will not
receive any compensation therefor from the Funds. In addition, Shareholder
Communications Corporation ("SCC"), a professional proxy solicitation firm has
been engaged to assist in the solicitation of proxies. None of the fees and
expenses of such solicitation will be borne by a Fund.
Shareholders may also provide their proxy through telephone touch-tone
voting or Internet voting. These options require a shareholder to input a twelve
digit control number which is located on each proxy card. Subsequent to
inputting these numbers, shareholders will be prompted to enter their vote on
each
2
<PAGE>
proposal. Shareholders will have an opportunity to review their vote and make
any necessary changes before submitting their vote and terminating their
telephone call or Internet link. Shareholders who vote on the Internet, in
addition to confirming their vote prior to submission, will also receive an
e-mail confirming their vote.
As the Meeting date approaches, certain shareholders of the Funds may
receive a telephone call from SCC if their vote has not yet been received.
Authorization to permit SCC to execute proxies may be obtained by telephonically
transmitted instructions from shareholders of the SunAmerica Mutual Funds.
Proxies that are obtained telephonically will be recorded in accordance with the
procedures set forth below. The Board Members believe that these procedures are
reasonably designed to ensure that the identity of the shareholder casting the
vote is accurately determined and that the voting instructions of the
shareholder are accurately determined. The cost of this assistance is expected
to be approximately $210,000 and, as stated above, will not be borne by any
Fund.
In all cases where a telephonic proxy is solicited, the SCC representative
is required to ask for each shareholder's full name, address, social security or
taxpayer identification number, title (if the shareholder is authorized to act
on behalf of an entity, such as a corporation), and the number of shares owned
and to confirm that the shareholder has received the Proxy Statement and proxy
card in the mail. If the information solicited agrees with the information
provided to SCC, then the SCC representative has the responsibility to explain
the process, read the proposals listed on the proxy card, and ask for the
shareholder's instructions on each proposal. The SCC representative, although
permitted to answer questions about the process, is not permitted to recommend
to the shareholder how to vote, other than to read any recommendation set forth
in the Proxy Statement. The SCC representative will record the shareholder's
instructions on the card. Within 72 hours, SCC will send the shareholder a
letter or mailgram to confirm his or her vote and ask the shareholder to call
SCC immediately if his or her instructions are not correctly reflected in the
confirmation.
If the shareholder wishes to participate in the Meeting, but does not wish
to give his or her proxy by telephone communication with SCC, telephone
touch-tone voting or Internet voting, the shareholder may still submit the proxy
card originally sent with the Proxy Statement or attend in person. Should
shareholders require additional information regarding the Proxy or replacement
voting instructions cards, they may contact SCC toll-free at 1-800-248-3249.
Proxies executed by shareholders may be revoked by (i) a written instrument
received by the Secretary of a Fund at any time before they are exercised; (ii)
delivery of a later-dated proxy; or (iii) attendance at the Meeting and voting
in person.
The following tables set forth the share ownership of the Portfolios and
each Fund as a whole as of the Record Date:
EQUITY FUNDS
<TABLE>
<CAPTION>
TOTAL NUMBER OF
PORTFOLIO SHARES OUTSTANDING
- ---------------------------------------------------------------------------------------------- ------------------
<S> <C>
SunAmerica Balanced Assets Fund...............................................................
SunAmerica Blue Chip Growth Fund..............................................................
SunAmerica Mid-Cap Growth Fund................................................................
SunAmerica Small Company Growth Fund..........................................................
SunAmerica Growth and Income Fund.............................................................
"Dogs" of Wall Street Fund....................................................................
Total Equity Funds............................................................................
</TABLE>
3
<PAGE>
INCOME FUNDS
<TABLE>
<CAPTION>
TOTAL NUMBER OF
PORTFOLIO SHARES OUTSTANDING
- ---------------------------------------------------------------------------------------------- ------------------
<S> <C>
SunAmerica U.S. Government Securities Fund....................................................
SunAmerica Federal Securities Fund............................................................
SunAmerica Diversified Income Fund............................................................
SunAmerica High Income Fund...................................................................
SunAmerica Tax Exempt Insured Fund............................................................
Total Income Funds............................................................................
</TABLE>
STYLE SELECT
<TABLE>
<CAPTION>
TOTAL NUMBER OF
PORTFOLIO SHARES OUTSTANDING
- ---------------------------------------------------------------------------------------------- ------------------
<S> <C>
Large-Cap Growth Portfolio....................................................................
Mid-Cap Growth Portfolio......................................................................
Aggressive Growth Portfolio...................................................................
Large-Cap Blend Portfolio.....................................................................
Large-Cap Value Portfolio.....................................................................
Value Portfolio...............................................................................
Small-Cap Value Portfolio.....................................................................
International Equity Portfolio................................................................
Focus Portfolio...............................................................................
Total Style Select............................................................................
</TABLE>
With respect to Income Funds, as of June 30, 1998, the following
shareholders owned of record or beneficially 5% or more of the outstanding
shares of the indicated class of Portfolio shares: SunAmerica Diversified Income
Fund - Class A - Anderson Lithograph Company, Englewood, Colorado 80155 - owned
5%; SunAmerica High Income Fund - Class C - Merrill Lynch, Pierce, Fenner &
Smith Inc., Jacksonville, Florida 32246 - owned 25%.
With respect to Equity Funds, as of December 31, 1997, the following
shareholders owned of record 5% or more of the outstanding shares of the
indicated class of Portfolio shares: SunAmerica Growth and Income Fund - Class A
- -Eli Broad, Los Angeles, California 90067 - owned 5% and SAAMCo, New York, NY
10017 owned 8%.
With respect to Style Select, as of June 1, 1998, the following shareholders
owned of record or beneficially 5% or more of the outstanding shares of the
indicated class of Portfolio shares: Large-Cap Growth Portfolio - Class A -
SunAmerica Inc., Los Angeles, CA 90067 - owned beneficially 12%; Class B -
Merrill Lynch, Pierce, Fenner & Smith, Inc. ("Merrill Lynch"), Jacksonville, FL
32246 - owned of record 12%; Class C - Keith Dillard, Salt Lake City, UT 84165 -
owned beneficially 6%; Merrill Lynch, Jacksonville, FL 32246 - owned of record
20%; Evereen Clearing Corp., Milwaukee, WI 53202 - owned of record 9%; Mid-Cap
Growth Portfolio - Class B - Merrill Lynch, Jacksonville, FL 32246 - owned of
record 9%; Class C - Merrill Lynch, Jacksonville, FL 32246 - owned of record
32%; Tramco Inc. Profit Sharing Plan Trust, Wichita, KS 67214 - owned
beneficially 6%; Aggressive Growth Portfolio - Class B - Merrill Lynch,
Jacksonville, FL 32246 - owned of record 9%; Class C - Merrill Lynch,
Jacksonville, FL 32246 - owned of record 35%; Tramco Inc. Profit Sharing Plan
Trust, Wichita, KS 67214 - owned beneficially 5%; Class Z - Fidelity Investments
Institutional Operations Co. ("FIIOC") As Agent for Certain Employee Benefit
Plans, Covington, KY 41015 - owned of record 62%; FIIOC As Agent for Certain
Non-Qualified Employee Benefit Plans, Covington, KY 41015 - owned of record 37%;
Large-Cap Blend Portfolio - Class A - SunAmerica Inc., Los Angeles, CA 90067 -
owned beneficially 51%; Class B - Merrill Lynch, Jacksonville, FL 32246 - owned
of record 7%; Class C - Merrill Lynch, Jacksonville, FL 32246 - owned of record
21%; SunAmerica Asset Management Corp., New York, NY 10017 - owned beneficially
6%; Large-
4
<PAGE>
Cap Value Portfolio - Class B - Merrill Lynch, Jacksonville, FL 32246 - owned of
record 7%; Class C - Merrill Lynch, Jacksonville, FL 32246 - owned of record
19%; Donaldson Lufkin Jenrette Securities Corporation, Inc., owned beneficially
6%; Value Portfolio - Class B - Merrill Lynch, Jacksonville, FL 32246 -owned of
record 8%; Class C - Merrill Lynch, Jacksonville, FL 32246 - owned of record
22%; Small-Cap Value Portfolio - Class B - Merrill Lynch, Jacksonville, FL 32246
- -owned of record 9%; Class C - Merrill Lynch, Jacksonville, FL 32246 - owned of
record 23%; Keith Dillard, Salt Lake City, UT 84165 - owned beneficially 5%;
International Equity Portfolio - Class A -SunAmerica Inc., Account B, Los
Angeles, CA 90067 - owned beneficially 5%; Class B - Merrill Lynch,
Jacksonville, FL 32246 - owned of record 6%; Class C - Merrill Lynch,
Jacksonville, FL 32246 - owned of record 31%.
With respect to Money Market, as of March 31, 1998, the following
shareholders owned of record or beneficially 5% or more of the outstanding
shares of the indicated class of Portfolio shares: Class B - Resources Trust Co.
A/C, Micro Instrument Corp., Englewood, CO 80155 - owned of record 5%; Chicago
Board of Education, C/O Michael J. Gurgone Trustee, Chicago, IL 60602 - owned
beneficially 26%; Class C - Resources Trust Co. TR UA, FBO Craig Stratton,
Tinton Falls, NJ 07742 - owned of record 6%; Resources Trust Co. TR UA, FBO
Jorge Dehombre, North Bergen, NJ 07047 - owned of record 6%; Dain Rauscher
Custodian, John I. Hull, Canby, OR 97013 - owned of record 6%; Resources Trust
Co. IRA, FBO James F. Adden, Jr., Mt. Olive, IL 62069 - owned of record 7%; Paul
and Kathy Ruez, Vista, CA 92083 - owned of record 8%; Resources Trust Co. TR UA,
FBO Howard S. Jacket, Spring Hill, FL 34608 - owned of record 22%.
A shareholder who owns beneficially, directly or indirectly, 25% or more of
a Portfolio's outstanding voting securities may be deemed to "control" (as
defined in the 1940 Act) that Portfolio.
To the knowledge of management, Board Members and the executive officers of
each Fund, both individually and as a group, owned less than 1% of the
outstanding shares of each Fund and each respective Portfolio as of the Record
Date.
A quorum for the transaction of business at the Meeting is constituted with
respect to Equity Funds, Income Funds, and Style Select by the presence in
person or by proxy of holders of a majority of the shares of the respective Fund
or Portfolio entitled to vote at the Meeting. A quorum for the transaction of
business at the Meeting is constituted with respect to Money Market Portfolio by
the presence in person or by proxy of holders of one-third of the shares of the
Portfolio entitled to vote at the Meeting. If a proxy is properly executed and
returned accompanied by instructions to withhold authority, or is marked with an
abstention, the shares represented thereby will be considered to be present at
the Meeting for determining the existence of a quorum for the transaction of
business with respect to such Fund.
Abstentions and "broker non-votes" (i.e., shares held by brokers or nominees
as to which (i) instructions have not been received from the beneficial owners
or the persons entitled to vote or (ii) the broker or nominee does not have
discretionary voting power on a particular matter) will have the effect of a
negative vote on Proposal No. 2 or 3. Unmarked voting instructions from
shareholders will be voted in favor of the proposals. Each Fund may adjourn the
Meeting to the extent permitted by law, if necessary to obtain additional
proxies from shareholders. Neither the Funds nor the Portfolios will bear the
costs of preparing and distributing to shareholders additional proxy materials,
if required in connection with any adjournment.
Approval of Proposal Nos. 2 and 3, with respect to each applicable
Portfolio, requires the affirmative vote of a majority of the outstanding voting
securities of that Fund. "Majority" for this purpose under the 1940 Act means
the lesser of (1) more than 50% of the outstanding shares of the Fund or (2) 67%
or more of the shares of the Fund represented at the meeting if more than 50% of
such shares are represented. Each such proposal must be approved by shareholders
of the respective Portfolio voting separately. Approval of a Proposal with
respect to one Portfolio is not conditioned on approval by shareholders of any
other Portfolio.
5
<PAGE>
For Proposal No. 1, with respect to Equity Funds and Income Funds, the
nominee who receives the affirmative vote of the holders of a majority of shares
represented in person or by proxy and entitled to vote at the Meeting at which a
quorum is present will be elected. With respect to Money Market Fund, the
nominee who receives the affirmative vote of the holders of a majority of shares
entitled to vote at the Meeting will be elected. With respect to Style Select, a
plurality of all the votes cast at the Meeting at which a quorum is present is
sufficient to elect a nominee. Shareholders of all Portfolios of each Fund vote
together as a single class with respect to Proposal No. 1.
Approval of Proposal No. 4, with respect to Equity Funds, Income Funds and
Style Select, requires a majority of the votes cast at the Meeting at which a
quorum is present. With respect to Money Market Fund, approval requires a
majority of shares entitled to vote at the Meeting. Shareholders of all
Portfolios of each Fund vote together as a single class with respect to Proposal
No. 4.
All information in the Proxy Statement about SAAMCo has been provided by
SAAMCo. All information in the Proxy Statement about American International
Group, Inc. ("AIG") has been provided by AIG.
The Board Members do not know of any other business to be brought before the
Meeting. If any other matters properly come before the Meeting, the proxies
named by the shareholders will vote on such matters in their discretion.
------------------------
6
<PAGE>
ELECTION OF BOARD MEMBERS
PROPOSAL NO. 1
INTRODUCTION
On August 19, 1998, SunAmerica and AIG entered into an Agreement and Plan of
Merger (the "Merger Agreement") pursuant to which SunAmerica will merge with and
into AIG (the "Merger") with AIG as the corporation surviving the Merger. Under
the terms of the Merger Agreement, each share of common stock, $1.00 par value
per share, of SunAmerica outstanding at the effective time of the Merger will be
converted into 0.855 shares of common stock, $2.50 par value per share, of AIG.
SunAmerica and AIG expect that the closing of the Merger (the "Closing")
will take place during either the last quarter of 1998 or the first quarter of
1999.
The Merger is subject to certain regulatory approvals and other customary
conditions as well as to the approval of the Merger by the stockholders of
SunAmerica and AIG. Shareholders of the SunAmerica Mutual Funds are not being
asked to vote on the Merger of SunAmerica and AIG.
SECTION 15(f) OF THE 1940 ACT
Section 15(f) of the 1940 Act provides that a manager or investment adviser
(such as SAAMCo) to a registered investment company, and the affiliates of such
adviser, may receive any amount or benefit in connection with a sale of any
interest in such manager or investment adviser which results in an assignment of
an investment advisory contract if the following two conditions are satisfied:
(1) for a period of three years after such assignment, at least 75% of the board
of directors of the investment company cannot be "interested persons" (within
the meaning of Section 2(a)(19) of the 1940 Act) of the new investment adviser
or its predecessor; and (2) no "unfair burden" (as defined in the 1940 Act) may
be imposed on the investment company as a result of the assignment or any
express or implied terms, conditions or understandings applicable thereto.
Consistent with the first condition of Section 15(f), SunAmerica and AIG
have agreed in the Merger Agreement that, for a period of three years after the
Closing, they will not take or recommend any action that would cause more than
25% of the Board Members of a Fund to be interested persons of the entity acting
as each Fund's investment adviser.
With respect to the second condition of Section 15(f), an unfair burden on
an investment company is defined in the 1940 Act to include any arrangement
during the two-year period after any such transaction occurs whereby the manager
or investment adviser or its predecessor or successor, or any interested person
of such adviser, predecessor or successor, receives or is entitled to receive
any compensation of two types, either directly or indirectly. The first type is
compensation from any person in connection with the purchase or sale of
securities or other property to, from or on behalf of the investment company,
other than bona fide ordinary compensation as principal underwriter for such
company. The second type is compensation from the investment company or its
security holders for other than bona fide investment advisory or other services.
In the Merger Agreement, SunAmerica and AIG have agreed not to take or
recommend any action that would constitute an unfair burden on a Fund or a
Portfolio within the meaning of Section 15(f).
INFORMATION REGARDING NOMINEES
At a meeting held on October 20, 1998, the Board Members, including all of
those Board Members who are not interested persons of SunAmerica, AIG or any
Subadviser (the "Disinterested Board Members"), to ensure compliance with
Section 15(f) of the 1940 Act, unanimously nominated the 5 persons described
below for election as Board Members, to take office effective as of the date of
the Meeting. All of the nominees are currently Board Members of each Fund. The
Board of each Fund
7
<PAGE>
currently consists of six members, one of whom will resign effective upon the
election of the nominees listed in this Proxy Statement, to ensure that at least
75% of each Board will consist of Board Members who are not interested persons
of SunAmerica, AIG or a Fund. If elected, each will serve from the date of the
Meeting until their successors are duly elected and qualified. It is the
intention of the persons named in the accompanying form of proxy to vote for the
election of each of the nominees named below, each of whom has consented to be a
nominee.
If any of the nominees become unavailable for election as a Board Member
before the meeting, proxies will be voted for the other persons that the Board
Members recommend.
Biographical data concerning all nominees is listed below.
PRINCIPAL OCCUPATION AND OTHER INFORMATION
The nominee designated by an asterisk (*), Peter Harbeck, is an "interested
person" of each Fund, as that term is defined in the 1940 Act and of the Adviser
because Mr. Harbeck is an officer of the Adviser.
<TABLE>
<CAPTION>
NAME, AGE, AND ADDRESS PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
- --------------------------------------------------- ---------------------------------------------------------
<S> <C>
S. James Coppersmith, 65........................... Director/Trustee of the Boston Stock Exchange, Uno
Emerson College Restaurant Corp., Waban Corp., Kushner- Locke Co.,
100 Beacon Street Chayron Inc.; Chairman of the Board of Emerson College;
Boston, MA 02116 formerly, President and General Manager, WCVB-TV, a
Trustee of Equity Funds since 1986 division of the Hearst Corporation from 1982 to 1994
Trustee of Income Funds since 1987 (retired); Trustee of Anchor Series Trust ("AST").
Director of Money Market Fund since 1987
Director of Style Select since 1996
Samuel M. Eisenstat, 58............................ Attorney in private practice; President and Chief
430 East 86th Street Executive Officer, Abjac Energy Corporation;
New York, NY 10028 Director/Trustee of Atlantic Realty Trust, UMB Bank and
Chairman of the Boards of: Trust (a subsidiary of United Mizrachi Bank), North
Trustees of Equity Funds since 1986 European Royalty Trust, Volt Information Sciences
Trustees of Income Funds since 1986 Funding, Inc. (a subsidiary of Volt Information Sciences,
Directors of Money Market Fund since 1985 Inc.) and Venture Partners International (an Israeli
Directors of Style Select since 1996 venture capital fund); Chairman of the Board of Trustees
of AST.
Stephen J. Gutman, 55.............................. Partner and Chief Operating Officer of B.B. Associates
515 East 79th Street LLC (menswear specialty retailing and other activities)
New York, NY 10021 since May 1989; Trustee of AST.
Trustee of Equity Funds since 1986
Trustee of Income Funds since 1986
Director of Money Market Fund since 1984
Director of Style Select since 1996
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, AND ADDRESS PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
- --------------------------------------------------- ---------------------------------------------------------
<S> <C>
Peter A. Harbeck*, 44.............................. Director and President, SAAMCo; Director, SunAmerica
The SunAmerica Center Capital Services, Inc. ("SACS"), since February 1993;
733 Third Avenue Director and President, SunAmerica Fund Services, Inc.
New York, NY 10017-3204 ("SAFS"), since May 1988; President, SunAmerica Mutual
Trustee of Equity Funds since 1994 Funds; Trustee and President, AST; Executive Vice
Trustee of Income Funds since 1994 President and Chief Operating Officer, SAAMCo, from May
Director of Money Market Fund since 1994 1988 to August 1995; Executive Vice President, SACS, from
Director of Style Select since 1996 November 1991 to August 1995; Director, Resources Trust
Company.
Sebastiano Sterpa, 68.............................. Founder of Sterpa Realty Inc., a full service real estate
Suite 200 firm, since 1962; Chairman of the Sterpa Group, real
200 West Glenoaks Blvd. estate investments and management company, since 1962.
Glendale, CA 91202
Trustee of Equity Funds since 1993
Trustee of Income Funds since 1993
Director of Money Market Fund since 1993
Director of Style Select since 1996
</TABLE>
The Board Members of each Fund met 5 times during each of their most recent
fiscal years. The incumbents attended 96% of the aggregate number of meetings of
the Board. The Audit Committee reviews annually the nature and cost of the
professional services rendered by each of the Funds' independent accountants,
the result of their year-end audit and their findings and recommendations as to
accounting and financial matters, including the adequacy of internal controls.
On the basis of this review, the Audit Committee makes recommendations to the
Board Members as to the appointment of independent accountants for the following
year. The members of the Audit Committee of each Fund are Messrs. Coppersmith,
Eisenstat, Gutman and Sterpa. Each Committee met 2 times in each of its most
recent fiscal years and the incumbents attended 100% of the aggregate number of
meetings of the Audit Committee.
EXECUTIVE OFFICERS OF THE FUNDS
Currently, the principal executive officers of each of the SunAmerica Mutual
Funds are all officers and/or employees of SAAMCo or its affiliates. The
principal executive officers of the SunAmerica Mutual Funds are expected to
remain the same after the Closing.
The following table sets forth certain information furnished by each of the
current principal executive officers of each of the SunAmerica Mutual Funds who
are not listed above as nominees.
9
<PAGE>
Unless otherwise noted, the address of each individual listed below is the
SunAmerica Center, 733 Third Avenue, New York, NY 10017-3204.
<TABLE>
<CAPTION>
POSITION, FUND
AND YEAR FIRST PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE BECAME AN OFFICER DURING PAST FIVE YEAR
- --------------------------- ------------------------- ---------------------------------------------------------
<S> <C> <C>
J. Steven Neamtz, 38 Vice President, Style Executive Vice President, SAAMCo, since April 1996;
Select (1997) President, SACS, since April 1996; formerly, Executive
Vice President, New England Funds, L.P. from July 1990 to
April 1996.
P. Christopher Leary, 38 Vice President, Money Executive Vice President, SAAMCo, since October 1997;
Market and Income (1997) Senior Vice President, SAAMCo, from January 1994 to
October 1997; Director of Fixed-Income, SAAMCo, since
October 1996; Vice President and Senior Portfolio
Manager, SAAMCo, since January 1991.
John DiVito, 27 Vice President, Money Assistant Vice President, SAAMCo, since July 1997;
Market and Income (1997) Portfolio Manager, SAAMCo, since July 1997; joined
SAAMCo, November 1994.
James T. McGrath, 31 Vice President, Income Portfolio Manager, SAAMCo, since August 1997; Investment
(1997) Assistant, Assistant Vice President and Municipal Bond
Trader, Chase Asset Management, from 1991 to 1997.
Karolann Patranzino, 28 Vice President, Income Assistant Vice President, SAAMCo, since April 1997; Fixed
(1997) Income Analyst, SAAMCo, since July 1993.
John W. Risner, 39 Vice President, Income Senior Portfolio Manager, SAAMCo, since February 1997;
(1997) Vice President and Senior Portfolio Manager, Value Line
Asset Management, from April 1992 to January 1997.
Francis D. Gannon, 30 Vice President, Equity Vice President and Portfolio Manager, SAAMCo, since May
(1997) 1997; Co-Portfolio Manager, SAAMCo from November 1996 to
May 1997; previously, Assistant Vice President and Equity
Analyst, SAAMCo from 1993 to 1997.
Nancy Kelly, 46 Vice President, Equity Vice President and Head Trader, SAAMCo, since 1994;
(1997) formerly, Vice President, Whitehorne & Co. Ltd., from
1991 to 1994; Sales Trader, Lynch Jones & Ryan, from 1992
to 1994.
Peter C. Sutton, 34 Treasurer, each Fund Treasurer (since February 1996), Anchor Series Trust
(1996) ("AST"); Vice President and Assistant Treasurer of
SunAmerica Series Trust (since 1994); Senior Vice
President, SAAMCo (since April 1997); Vice President and
Assistant Treasurer, APF (since October 1994) and Seasons
(since April 1997); Formerly, Vice President, SAAMCo
(1994-1997); Controller, Fund and AST (1993-1996); Joined
SAAMCo in 1990.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
POSITION, FUND
AND YEAR FIRST PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE BECAME AN OFFICER DURING PAST FIVE YEAR
- --------------------------- ------------------------- ---------------------------------------------------------
<S> <C> <C>
Robert M. Zakem, 40 Secretary and Chief Vice President and Assistant Secretary, SunAmerica Series
Compliance Officer, each Trust and Anchor Pathway Fund (since April 1993); Vice
Fund [( )] President, and Assistant Secretary, Seasons (since April
1997); Secretary and Chief Compliance Officer (since
September 1993), AST; Senior Vice President and General
Counsel, SAAMCo (since April 1993); Executive Vice
President, General Counsel and Director, SACS (since
February 1993); Vice President, General Counsel and
Assistant Secretary, SAFS (since January 1994);
</TABLE>
All officers of each Fund are elected annually and serve until their
successors are elected and qualified.
REMUNERATION OF BOARD MEMBERS AND OFFICERS
Officers of the SunAmerica Mutual Funds receive no direct remuneration in
such capacity from the Funds or the Portfolios. The SunAmerica Mutual Funds pay
an aggregate fee of $40,000 to each Disinterested Board Member in annual
compensation for acting as director or trustee to SunAmerica Mutual Funds. Each
Disinterested Board Member is also reimbursed for out-of-pocket expenses in
connection with attendance at meetings of the Board. In addition, Mr. Eisenstat
receives an aggregate of $2,000 in annual compensation for serving as Chairman
of the Boards of the Funds. In addition, each Disinterested Board Member also
serves on the Audit Committee of the Board. Each member of the Audit Committee
receives an aggregate of $5,000 in annual compensation for serving on the Audit
Committees of the SunAmerica Mutual Funds and AST. The Boards of SunAmerica
Mutual Funds and AST have adopted the SunAmerica Disinterested Trustees' and
Directors' Retirement Plan (the "Retirement Plan") effective January 1, 1993 for
the Disinterested Board Members. The Retirement Plan provides generally that if
a Disinterested Board Member who has at least 10 years of consecutive service as
a Disinterested Board Member of any of the SunAmerica Mutual Funds or AST (an
"Eligible Board Member") retires after reaching age 60 but before age 70 or dies
while a Board Member, 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 Board Member. As of each birthday, prior to the 70th birthday,
each Eligible Board Member will be credited with an amount equal to (i) 50% of
his or her regular fees (excluding committee fees) for services as a
Disinterested Board Member 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 Board Member 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 of the Disinterested Board
Members for his services as Board Member for the most recently completed fiscal
year. The Board Members who are interested persons of a Fund receive no
compensation.
11
<PAGE>
COMPENSATION TABLE
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
PENSION OR FROM
RETIREMENT SUNAMERICA
AGGREGATE BENEFITS MUTUAL FUNDS
COMPENSATION ACCRUED AS PART ESTIMATED AND FUND
FROM OF SUNAMERICA ANNUAL COMPLEX PAID
SUNAMERICA MUTUAL FUNDS BENEFITS UPON TO BOARD
BOARD MEMBER MUTUAL FUNDS EXPENSES* RETIREMENT+ MEMBERS*
- -------------------------------------------------- ------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
S. James Coppersmith.............................. $ 42,429 $ 25,042 $ 29,670 $ 65,000
Samuel M. Eisenstat............................... 44,454 21,527 46,089 69,000
Stephen J. Gutman................................. 42,429 21,673 60,912 65,000
Sebastiano Sterpa**............................... 43,333 23,021 7,900 43,333
</TABLE>
- ------------------------
* Information is as of March 31, 1998 for the five investment companies in the
complex which pay fees to these Board Members (each Fund and AST).
** Mr. Sterpa is not a Trustee of AST.
+ Assuming participant elects to receive benefits in 15 yearly installments.
THE BOARD OF EACH FUND UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" EACH OF THE NOMINEES UNDER PROPOSAL NO. 1
------------------------
APPROVAL OR DISAPPROVAL OF A NEW INVESTMENT ADVISORY
AND MANAGEMENT AGREEMENT BETWEEN EACH FUND AND SAAMCO
PROPOSAL NO. 2
The Board of each Fund is submitting for approval by the shareholders of
each Portfolio a new investment advisory and management agreement (each, a "New
Advisory Agreement" and together, the "New Advisory Agreements") between each
Fund, on behalf of each respective Portfolio, and SAAMCo, the terms of which are
identical in all material respects to the current investment advisory and
management agreement with respect to each Portfolio (each an "Existing Advisory
Agreement" and together, the "Existing Advisory Agreements").
As required by the 1940 Act, each Existing Advisory Agreement provides for
automatic termination upon assignment. The Closing of the Merger will constitute
an assignment, as that term is defined in the 1940 Act, of the Existing Advisory
Agreements, and, consequently, their termination. Accordingly, New Advisory
Agreements with SAAMCo to take effect upon the Closing are being proposed for
approval by the shareholders of each Portfolio, even though those agreements
will be identical in all material respects to, and essentially a continuation
of, the Existing Advisory Agreements with SAAMCo. (The Existing Advisory
Agreements and New Advisory Agreements are sometimes collectively referred to as
the "Advisory Agreements.")
In addition, with respect to Style Select, each of the current subadvisory
agreements (each, an "Existing Subadvisory Agreement" and together, the
"Existing Subadvisory Agreements") between SAAMCo and the respective subadvisers
("Subadvisers") to each Style Select Portfolio provides for termination upon
termination of the Existing Advisory Agreement. Accordingly, each of the
Existing Subadvisory Agreements will also terminate upon the Closing. New
Subadvisory Agreements, identical in all material respects to, and essentially a
continuation of, the Existing Subadvisory Agreements will be entered into to
take effect upon the Closing. Pursuant to an exemptive order (the "Style Select
Exemptive Order") obtained by Style Select from the Securities and Exchange
Commission ("SEC"), the New Subadvisory Agreements will not require shareholder
approval. Pursuant to the Style Select Exemptive
12
<PAGE>
Order, shareholders of Style Select will receive an Information Statement within
60 days of the Closing describing the New Subadvisory Agreements in more detail.
Although it is anticipated that the Closing will take place subsequent to
the shareholders' consideration and vote upon this Proposal No. 2 regarding New
Advisory Agreements, it is possible that due to unforeseen delays in the holding
of the Meeting, the Closing will occur first. If the Closing were to occur prior
to the shareholders' vote upon this Proposal, there would technically be a
termination of the Existing Advisory (and Subadvisory) Agreements (collectively,
the "Existing Agreements"). To ensure the uninterrupted receipt by the Funds of
investment advice and management services, SAAMCo and each Fund have applied for
an exemptive order from the SEC that would allow SAAMCo (and the current
Subadvisers) to continue to provide services to the Portfolios, with the
advisory and subadvisory fees being paid into escrow during the period between
the termination of the Existing Agreements and shareholder approval of the New
Advisory Agreements. The fees will be released from escrow and paid to SAAMCo
and the Subadvisers, respectively, only if the shareholders approve this
Proposal No. 2. There can be no assurance that the SEC will grant the requested
exemptive order.
APPROVAL OF THE NEW ADVISORY AGREEMENTS
As described below, each Fund's Board is proposing that shareholders of each
Fund approve a New Advisory Agreement with SAAMCo to become effective as of the
Closing. A description of the New Advisory Agreements and the services to be
provided by SAAMCo is set forth below. This description is qualified in its
entirety by reference to the form of New Advisory Agreement attached to this
Proxy Statement as Exhibit A.
As more fully described below, the proposed New Advisory Agreements,
including advisory fees, are identical in all material respects to the Existing
Advisory Agreements. The New Advisory Agreements differ from the Existing
Advisory Agreements only with respect to their effective dates.
At a meeting held on October 20, 1998, the Board of each Fund, including all
of the Disinterested Board Members, unanimously approved the New Advisory
Agreements. In connection with this approval, the Board Members considered that
the terms of the Merger Agreement do not contemplate any changes in the overall
form of the advisory contracts, the advisory fees, or any Portfolio's objectives
or policies. Among other things, the Board Members considered the fact that
although ultimate ownership of SAAMCo's parent company will change, senior
officers of SAAMCo had assured the Board that there would be no change in the
personnel providing services to the SunAmerica Mutual Funds and the Portfolios
and no reduction in the nature or quality of those services. Senior officers of
SAAMCo also informed the Board Members that they did not foresee any changes in
the day-to-day operations of SAAMCo as a result of the Merger. As part of their
deliberations, the Board Members also took into account the following, among
other factors: the nature and quality of the services provided or reasonably
anticipated to be provided and the results achieved or reasonably anticipated to
be achieved by SAAMCo; the amount and structure of investment advisers' fees
generally and the fees payable under the New Advisory Agreement; and the
organizational capability and financial condition of SAAMCo and its affiliates.
The Board Members also took into account the financial strength of AIG, the
management, personnel and operations of AIG, the commitment of AIG to the
financial services industry, and the proposed structure of the Merger. The Board
Members based their determinations in this regard on discussions with
representatives of AIG at the meeting and a review of materials provided by AIG
in connection with the meeting. The Board Members also considered the additional
resources that were likely to be available to SAAMCo following the Closing.
13
<PAGE>
RECOMMENDATION OF THE BOARD
Based on the considerations set forth above, the Board Members, including
all of the Disinterested Board Members, unanimously determined that it was
necessary and in the best interests of each Fund and its shareholders to enter
into the New Advisory Agreements and to recommend approval of the New Advisory
Agreements by shareholders.
INFORMATION ABOUT THE ADVISER AND AIG
SAAMCO. SAAMCo is a Delaware corporation and an indirect, wholly owned
subsidiary of Anchor National Life Insurance Company ("Anchor National"), which
is an indirect wholly owned subsidiary of SunAmerica, an investment grade
financial services company with approximately $55 billion in assets. SAAMCo
provides investment advice and management services to each Fund, other mutual
funds and private accounts. As of June 30, 1998, SAAMCo managed, advised or
administered assets of more than $15 billion. The address of SAAMCo is The
SunAmerica Center, 733 Third Avenue, New York, NY 10017-3204. The principal
business address of Anchor National and SunAmerica is 1 SunAmerica Center,
Century City, Los Angeles, California 90067-6022. SAAMCo is the investment
adviser to other investment companies having similar investment objectives to
the Funds as indicated in Exhibit B.
The following chart lists the principal executive officers and directors of
SAAMCo and their principal occupations, if different from their positions with
SAAMCo:
<TABLE>
<CAPTION>
NAME POSITION WITH SAAMCO AND PRINCIPAL OCCUPATION
- ----------------------- --------------------------------------------------------------------------------------
<S> <C>
Peter A. Harbeck President, Chief Executive Officer and Director
Susan L. Harris Secretary and Director; Senior Vice President, General Counsel-Corporate Affairs and
Secretary, SunAmerica; Senior Vice President, Director and Secretary, Anchor
National and First SunAmerica Life Insurance Company ("First SunAmerica")
Jay S. Wintrob Director; Vice Chairman and Director of SunAmerica; Executive Vice President and
Director of Anchor National and First SunAmerica
P. Christopher Leary Executive Vice President and Director of Fixed Income
J. Steven Neamtz Executive Vice President
Per Furmark Senior Vice President
Vorise Midgette Senior Vice President
Peter C. Sutton Senior Vice President
Robert M. Zakem Senior Vice President, General Counsel and Assistant Secretary
</TABLE>
The business address of each of the above listed persons other than Ms.
Harris and Mr. Wintrob is The SunAmerica Center, 733 Third Avenue, New York, New
York 10017-3204. The business address of Ms. Harris and Mr. Wintrob is 1
SunAmerica Center, Century City, Los Angeles, California 90067-6022. In
addition, Mr. Harbeck also serves as President of each Fund; Mr. Leary serves as
Vice President of Income and Money Market; Mr. Neamtz serves as Vice President
of Style Select; Mr. Sutton serves as Treasurer of each Fund; and Mr. Zakem
serves as Secretary and Chief Compliance Officer of all Funds.
Pursuant to the Equity Funds' Existing Advisory Agreement, SAAMCo manages
the investment of the assets of each Portfolio and obtains and evaluates
economic, statistical and financial information to formulate and implement
investment policies for each Portfolio. SAAMCo also provides certain
administrative services to each Portfolio. The Equity Funds' Existing Advisory
Agreement was last submitted to shareholders of Equity Funds on September 23,
1993 for the purpose of obtaining the initial shareholder approval. An amendment
to the Equity Funds Existing Advisory Agreement was submitted to shareholders of
certain Portfolios on June 15, 1994 and May 21, 1998.
14
<PAGE>
Pursuant to the Existing Advisory Agreement for each of the Income Funds and
Money Market Funds, SAAMCo selects and manages the investment of each Portfolio,
provides various administrative services and supervises the Portfolios' daily
business affairs. The Existing Advisory Agreement for each of the Income Funds
and Money Market Funds was last submitted to shareholders of the respective
Funds on September 23, 1993 for the purpose of obtaining the initial shareholder
approval.
Pursuant to the Style Select Existing Advisory Agreement, SAAMCo, except as
delegated to the Subadvisers, manages the investment of the assets of each
Portfolio and obtains and evaluates economic, statistical and financial
information to formulate and implement investment policies for each Portfolio.
The Style Select Existing Advisory Agreement was last submitted to shareholders
of Style Select on September 17, 1996 for the purpose of obtaining the initial
shareholder approval. An amendment to the Style Select Existing Advisory
Agreement was submitted to shareholders of certain Portfolios on August 20, 1997
and May 21, 1998.
The annual advisory fees which SAAMCo is entitled to receive from the Funds,
and which will be payable to SAAMCo following the Closing provided the New
Agreements are approved by the shareholders of the Funds, is set forth below in
the section entitled "Information About the New Advisory Agreements."
AIG. American International Group, Inc., a Delaware corporation, is a
holding company which through its subsidiaries is primarily engaged in a broad
range of insurance and insurance related activities and financial services in
the United States and abroad. Its member companies write property, casualty,
marine, life and financial services insurance in approximately 130 countries and
jurisdictions. At December 31, 1997, AIG and its subsidiaries had approximately
40,000 employees.
AIG, through its subsidiaries, is also engaged in a range of financial
services activities. AIG's asset management operations are carried out primarily
by AIG Global Investment Group, Inc., a direct wholly owned subsidiary of AIG,
and its affiliates (collectively, "AIG Global"). AIG Global manages the
investment portfolios of various AIG subsidiaries, as well as third party
assets, and is responsible for product design and origination, marketing and
distribution of third party asset management products, including offshore and
private investment funds and direct investment. As of June 30, 1998, AIG Global
managed more than $86 billion of assets, of which approximately $10.8 billion
represented assets of unaffiliated third parties. AIG Capital Management Corp.,
an indirect wholly owned subsidiary of AIG Global Investment Group, Inc., serves
as investment adviser to The AIG Money Market Fund, a separate series of The
Advisors' Inner Circle Fund, a registered investment company. In addition, AIG
Global Investment Corp., an AIG Global group company, serves as the
sub-investment adviser to an unaffiliated registered investment company. AIG
companies do not otherwise provide investment advice to any registered
investment companies.
AIG's common stock is listed on the New York Stock Exchange, as well as the
stock exchanges in London, Paris, Switzerland and Tokyo. For 1997, AIG reported
net income of $3.3 billion on revenues of $30.6 billion. Total assets at
December 31, 1997 were $164.0 billion. For the six months ended June 30, 1998,
AIG reported net income of $1.8 billion on revenues of $15.8 billion, and
period-end total assets of $176.1 billion. AIG's headquarters are located at 70
Pine Street, New York, New York 10270.
INFORMATION ABOUT THE NEW ADVISORY AGREEMENTS
As stated above, the form of New Advisory Agreement is annexed to this Proxy
Statement as Exhibit A.
The New Advisory Agreements are identical in all material respects to the
Existing Advisory Agreements, and provide that SAAMCo, with respect to Equity
Funds, Income Funds and Money Market Fund, shall select and manage each
Portfolio's investments, provide various administrative services, and supervise
its daily business affairs. With respect to Style Select, SAAMCo may delegate
certain of these
15
<PAGE>
responsibilities to the Subadvisers. Under the Advisory Agreements, each Fund
agrees to assume and pay certain charges and expenses of its operations,
including: charges and expenses of any registrar, custodian, transfer and
dividend disbursing agent; brokerage commissions; taxes; engraving and printing
of share certificates; registration and qualification costs of the SunAmerica
Mutual Funds and their shares under Federal and state securities laws; the cost
and expense of printing, including typesetting, and distributing prospectuses
and statements of additional information regarding the Funds, and supplements
thereto, to the shareholders of the Funds; all expenses of shareholders' and
Board meetings and of preparing, printing and mailing proxy statement and
reports of 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 Funds, postage; insurance premiums on property or personnel (including
Officers and Board Members) of the SunAmerica Mutual Funds 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 SunAmerica Mutual Funds' operation.
The Advisory Agreements provide that as compensation for its services,
SAAMCo will receive from each Portfolio a fee, accrued daily and payable
monthly, based on the net assets of each Portfolio. The following table sets
forth the rate of the advisory fee payable by each Portfolio under the Advisory
Agreements and the total advisory fees incurred by SAAMCo from each Portfolio
pursuant to the Existing Advisory Agreement for the most recently completed
fiscal year.
The annual rate of the advisory fees under the New Advisory Agreements is
the same rate that was in effect under the Existing Advisory Agreements.
ADVISORY FEES
SUNAMERICA EQUITY FUNDS
<TABLE>
<CAPTION>
ADVISORY FEE
(AS A PERCENTAGE OF DAILY NET YEAR ENDING
PORTFOLIO ASSETS) SEPTEMBER 30, 1997
- ----------------------------------------- -------------------------------- ------------------
<S> <C> <C>
SunAmerica Balanced Assets .75% on first $350 million $ 2,430,522
.70% on next $350 million
.65% thereafter
SunAmerica Blue Chip Growth .75% on first $350 million $ 701,489
.70% on next $350 million
.65% thereafter
SunAmerica Mid-Cap Growth .75% on first $350 million $ 416,078
.70% on next $350 million
.65% thereafter
SunAmerica Small Company Growth .75% on first $350 million $ 1,955,511
.70% on next $350 million
.65% thereafter
SunAmerica Growth and Income .75% on first $350 million $ 531,071
.70% on next $350 million
.65% thereafter
"Dogs" of Wall Street .35% of net assets Not Applicable*
</TABLE>
16
<PAGE>
SUNAMERICA INCOME FUNDS
<TABLE>
<CAPTION>
ADVISORY FEE
(AS A PERCENTAGE OF DAILY NET YEAR ENDING
PORTFOLIO ASSETS) MARCH 31, 1998
- --------------------------------------------- ------------------------------ --------------------
<S> <C> <C>
SunAmerica U.S. Government Securities .75% on first $200 million $ 2,618,884
.72% on next $200 million
.55% thereafter
SunAmerica Federal Securities .55% on first $25 million $ 259,246
.50% on next $25 million
.45% thereafter
SunAmerica Diversified Income .65% on first $350 million $ 630,297
.60% thereafter
SunAmerica High Income .75% on first $200 million $ 1,128,548
.72% on next $200 million
.55% thereafter
SunAmerica Tax Exempt Insured .50% on first $350 million $ 582,729
.45% thereafter
</TABLE>
SUNAMERICA MONEY MARKET FUND
<TABLE>
<CAPTION>
ADVISORY FEE
(AS A PERCENTAGE OF DAILY NET YEAR ENDING
PORTFOLIO ASSETS) DECEMBER 31, 1997
- ------------------------------- ------------------------------ --------------------
<S> <C> <C>
SunAmerica Money Market .50% on first $600 million $ 2,497,734
.45% on next $900 million
.40% thereafter
</TABLE>
STYLE SELECT
<TABLE>
<CAPTION>
ADVISORY FEE
(AS A PERCENTAGE OF DAILY NET YEAR ENDING
PORTFOLIO ASSETS) OCTOBER 31, 1997
- ------------------------ -------------------------------- --------------------
<S> <C> <C>
Large-Cap Growth 1.00% of net assets $ 11,611
Mid-Cap Growth 1.00% of net assets $ 390,221
Aggressive Growth 1.00% of net assets $ 533,055
Large-Cap Blend 1.00% of net assets $ 11,730
Large-Cap Value 1.00% of net assets $ 11,729
Value 1.00% of net assets $ 671,560
Small-Cap Value 1.00% of net assets $ 12,079
International Equity 1.10% of net assets $ 440,671
Focus .85% of net assets Not Applicable**
</TABLE>
For the fiscal year ended September 30, 1997, SAAMCo voluntarily waived fees
or reimbursed expenses of the SunAmerica Balanced Assets Fund in the amount of
$9,394; SunAmerica Growth and Income Fund in the amount of $151,366; SunAmerica
Small Company Growth Fund in the amount of $9,971.
For the fiscal year ended March 31, 1998, SAAMCo voluntarily reimbursed
expenses of the High Income Fund in the amount of $3,859.
- ------------------------
* The "Dogs" of Wall Street Portfolio commenced operations 6/8/98.
** The Focus Portfolio commenced operations 6/8/98.
17
<PAGE>
For the fiscal year ended October 31, 1997, SAAMCo voluntarily waived fees
of the Large-Cap Growth Portfolio in the amount of $7,167; Mid-Cap Growth
Portfolio in the amount of $155,055; Aggressive Growth Portfolio in the amount
of $158,172; Large-Cap Blend Portfolio in the amount of $7,175; Large-Cap Value
Portfolio in the amount of $7,175; Value Portfolio in the amount of $217,432;
Small-Cap Value Portfolio in the amount of $7,200; and International Equity
Portfolio in the amount of $169,822.
Under the terms of the Advisory Agreements, SAAMCo shall not be liable to
the Funds, or to their shareholders for any act or omission by it or for any
losses sustained by the Funds or their shareholders, except in the case of
willful misfeasance, bad faith, gross negligence or reckless disregard of duty.
If approved by the shareholders, each New Advisory Agreement will continue
in effect for a period of two years from the Closing, and from year to year
thereafter as to each Fund for so long as such renewal is specifically approved
at least annually by (i) the vote of a majority of the Board, or by the vote of
a majority (as defined in the 1940 Act) of the outstanding voting securities of
each relevant Fund, and (ii) the vote of a majority of Board Members who are not
parties to the New Advisory Agreement or interested persons (as defined in the
1940 Act) of any such party, cast in person, at a meeting called for the purpose
of voting on such approval. The New Advisory Agreements provide that they may be
terminated by either party without penalty upon the specified written notice
contained in the Agreement. The New Advisory Agreements also provide for
automatic termination upon assignment.
BROKERAGE COMMISSIONS
The following table sets forth the brokerage commissions paid by those
Portfolios that paid brokerage commissions and the amounts of the brokerage
commissions which were paid to affiliated broker-dealers of such Portfolios for
their most recently completed fiscal years.
EQUITY
<TABLE>
<CAPTION>
AMOUNT PAID TO AFFILIATED
AGGREGATE BROKER-DEALERS AS A
AGGREGATE AMOUNT PAID TO PERCENTAGE OF PORTFOLIO'S
BROKERAGE AFFILIATED AGGREGATE BROKERAGE
PORTFOLIO COMMISSIONS BROKER-DEALERS COMMISSIONS
- ---------------------------------------------------------- ------------ -------------- -------------------------
<S> <C> <C> <C>
SunAmerica Balanced Assets Fund........................... $ 777,773 -- --
SunAmerica Blue Chip Growth............................... $ 398,417 -- --
SunAmerica Mid-Cap Growth................................. $ 310,572 -- --
SunAmerica Small Company Growth........................... $1,096,605 -- --
SunAmerica Growth and Income.............................. $ 354,892 -- --
</TABLE>
MONEY MARKET
<TABLE>
<CAPTION>
AMOUNT PAID TO AFFILIATED
AGGREGATE BROKER-DEALERS AS A
AGGREGATE AMOUNT PAID TO PERCENTAGE OF PORTFOLIO'S
BROKERAGE AFFILIATED AGGREGATE BROKERAGE
PORTFOLIO COMMISSIONS BROKER-DEALERS COMMISSIONS
- ---------------------------------------------------------- ------------ -------------- -------------------------
<S> <C> <C> <C>
SunAmerica Money Market................................... -- -- --
</TABLE>
18
<PAGE>
STYLE SELECT
<TABLE>
<CAPTION>
AMOUNT PAID TO AFFILIATED
AGGREGATE BROKER-DEALERS AS A
AGGREGATE AMOUNT PAID TO PERCENTAGE OF PORTFOLIO'S
BROKERAGE AFFILIATED AGGREGATE BROKERAGE
PORTFOLIO COMMISSIONS BROKER-DEALERS COMMISSIONS
- ---------------------------------------------------------- ------------ -------------- -------------------------
<S> <C> <C> <C>
Large-Cap Growth.......................................... $ 14,945 -- --
Mid-Cap Growth............................................ $ 86,452 -- --
Aggressive Growth......................................... $ 128,678 -- --
Large-Cap Blend........................................... $ 17,998 -- --
Large-Cap Value........................................... $ 20,352 -- --
Value..................................................... $ 218,608 $ 47,675 21.80%
Small-Cap Value........................................... $ 30,356 -- --
International Equity...................................... $ 338,366 $ 61,259 18.10%
</TABLE>
None of the Income Portfolios paid brokerage commissions for the year ended
March 31, 1998.
THE BOARD OF EACH FUND UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" PROPOSAL NO. 2
If Proposal No. 2 is not approved by the shareholders of any Fund and the
Closing of the Merger is not effectuated, the Board Members will determine the
appropriate actions to be taken with respect to such Fund's advisory
arrangements at that time.
------------------------
APPROVAL OR DISAPPROVAL OF PROPOSALS CHANGING
CERTAIN FUNDAMENTAL INVESTMENT RESTRICTIONS
PROPOSAL NO. 3(a)
(PROPOSAL TO CHANGE THE FUNDAMENTAL RESTRICTION RELATING TO
SHORT SALES OF SECURITIES TO NON-FUNDAMENTAL FOR CERTAIN FUNDS)
The Boards of Equity Funds and Income Funds are submitting for approval by
shareholders of the Portfolios, a proposal to change the fundamental investment
restriction on selling securities short and to make such restriction
non-fundamental. The Board of each Fund approved this proposal at a meeting held
on October 20, 1998.
As described below, the Board Members recommend that shareholders approve
the reclassification of the investment restriction relating to the short sale of
securities as non-fundamental. Fundamental restrictions may be changed only with
shareholder approval, while restrictions designated as non-
fundamental may be changed by the Board without shareholder approval.
If the proposed change to each of the Portfolios' investment restrictions is
approved by shareholders at the Meeting, the Funds' prospectuses and statements
of additional information will be revised as appropriate to reflect the change.
This Proposal No. 3(a) will not result in a change to the investment objective
or operating procedure of any Portfolio.
19
<PAGE>
PROPOSED CHANGE
Changing the applicable Portfolios' fundamental investment restriction
relating to short sales of securities.
Upon approval of this Proposal, the existing fundamental restriction of each
applicable Portfolio relating to short sales of securities will be changed to
non-fundamental. Each such Portfolio would in turn become subject to the
following proposed non-fundamental restriction:
Each Portfolio may not: "make short sales of securities or maintain a short
position, except that each [Portfolio] may effect short sales against the box
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."
DISCUSSION
There is no requirement under the 1940 Act that a Portfolio have a
fundamental restriction with respect to short sales of securities. In the past,
certain state securities may have required the Funds to adopt this restriction.
In order to maximize each Portfolio's flexibility in this area, the Boards
believe that each applicable Portfolio's fundamental restriction on short sales
of securities should be eliminated and restated as a non-fundamental
restriction.
PROPOSAL NO. 3(b)
(PROPOSAL CHANGING THE FUNDAMENTAL INVESTMENT
RESTRICTION WITH RESPECT TO EACH PORTFOLIO'S ABILITY
TO ENGAGE IN BORROWING TRANSACTIONS)
The Board of each Fund is submitting for approval by shareholders of each
Portfolio a proposal to amend the fundamental investment restriction relating to
borrowing transactions in order to permit each Portfolio to borrow money from
other mutual funds in the SunAmerica complex (the "Affiliate Funds"), subject to
receipt of appropriate exemptive relief from the SEC. The Board of each Fund
approved this proposal at a meeting held on October 20, 1998.
For the reasons described below, each Fund's Board Members recommend that
shareholders approve the proposed amendment. Fundamental investment restrictions
may be changed only with shareholder approval.
If the proposed change to the Portfolios' fundamental investment
restrictions is approved by shareholders at the Meeting, the Funds' prospectuses
and statements of additional information will be revised as appropriate to
reflect the changes. This Proposal No. 3(b) will not result in a change to the
investment objective or operating procedure of any Portfolio.
PROPOSED CHANGE
Amending a portion of each Portfolio's fundamental investment restriction
relating to borrowing transactions by, in each case, taking out the reference to
borrowing "from a bank," as follows:
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL PROPOSED FUNDAMENTAL
FUND INVESTMENT RESTRICTION INVESTMENT RESTRICTION
- --------- ----------------------------------------- ---------------------------------------------------------
<S> <C> <C>
Each Portfolio may not: Each Portfolio may not:
EQUITY Purchase securities on margin, borrow Purchase securities on margin, borrow money or pledge
FUNDS money or pledge their assets, except that their assets, except that . . . each Fund may borrow for
. . . each Fund may borrow FROM A BANK temporary or emergency purposes . . .
for temporary or emergency purposes . . .
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL PROPOSED FUNDAMENTAL
FUND INVESTMENT RESTRICTION INVESTMENT RESTRICTION
- --------- ----------------------------------------- ---------------------------------------------------------
Each Portfolio may not: Each Portfolio may not:
<S> <C> <C>
INCOME . . . issue senior securities or borrow . . . issue senior securities or borrow money or pledge
FUNDS money or pledge its assets except that: its assets except that: (i) each Fund may borrow for
(i) each Fund may borrow FROM A BANK for temporary or emergency purposes . . .
temporary or emergency purposes . . .
MONEY Borrow money except FROM BANKS for Borrow money except for temporary or emergency purposes .
MARKET temporary or emergency purposes . . . . .
FUND
STYLE Borrow money, except that (i) each Borrow money, except that (i) each Portfolio may borrow
SELECT Portfolio may borrow FROM BANKS in in amounts up to 33 1/3% of its total assets for
amounts up to 33 1/3% of its total assets temporary or emergency purposes . . .
for temporary or emergency purposes . . .
</TABLE>
Upon approval of this Proposal, portions of the existing fundamental
investment restrictions of each Portfolio relating to borrowing transactions
will be replaced with the applicable portions of the proposed fundamental
investment restrictions, each as set forth above. Those portions of the existing
fundamental investment restrictions that are not described above will not be
affected by the adoption of this Proposal.
DISCUSSION
The proposed change to each Portfolio's fundamental investment restrictions
would allow each Portfolio to borrow from persons other than banks, to the
extent consistent with applicable law. The proposed changes are designed to
permit each Portfolio the greatest degree of flexibility permitted by law in
pursuing its investment program.
Current law prohibits a Portfolio from borrowing other than from banks.
Accordingly, a Portfolio may not borrow from an Affiliate Fund. If the proposed
amendments to the Portfolios' fundamental investment restrictions on borrowing
are approved by shareholders, then the Funds, on behalf of the Portfolios, may
apply to the SEC for an exemption from this prohibition on interfund borrowing.
There is, of course, no assurance that the SEC would grant such request. If the
SEC did grant the request, each Portfolio would be allowed to borrow from other
Affiliate Funds. The Adviser and each Board believes that the ability to engage
in borrowing transactions with participating Affiliate Funds as part of a
program, referred to as the "interfund lending program," may allow a Portfolio
to obtain lower interest rates on money borrowed for temporary or emergency
purposes.
When a Portfolio is required to borrow money, under the 1940 Act it may do
so only from banks. When a Portfolio borrows money from banks, it typically pays
interest on those borrowings at a rate that is higher than rates available
contemporaneously from investments in repurchase agreements. If the proposed
amendments are approved (and an SEC exemptive order is granted), eligible
Affiliate Funds would be permitted to participate in an interfund lending
program to allow various Affiliate Funds, through a master loan agreement to
lend available cash to, and borrow from, other Affiliate Funds. Each lending
fund could lend available cash to another Affiliate Fund only when the interfund
rate was higher than repurchase agreement rates or rates on other comparable
short-term investments. Each borrowing fund could borrow through the interfund
lending program only when the interfund loan rate was lower than available bank
loan rates. Thus, each Affiliate Fund would participate in the interfund lending
program only when it would be in such fund's economic best interest to do so.
21
<PAGE>
In determining to recommend the proposed amendments to shareholders for
approval, the Adviser discussed with each Board the possible risks to a
Portfolio of participating in the interfund lending program. The Adviser has
indicated that it does not view the difference in rates available on bank
borrowings and repurchase agreements or other short-term investments as
reflecting a material difference in the quality of the risk of the transactions,
but rather as an indication of the ability of banks to earn a higher rate of
interest on loans than they pay on repurchase agreements or other short-term
investments. There is a risk that a lending fund could experience a delay in
obtaining prompt repayment of a loan and, unlike repurchase agreements, the
lending fund would not necessarily have received collateral for its loan,
although it could require that collateral be provided as a condition for making
an interfund loan. A delay in obtaining prompt payment could cause a lending
fund to miss an investment opportunity or to incur costs to borrow money to
replace the delayed payment. There is also a risk that a borrowing fund could
have a loan recalled on one day's notice and the borrowing fund might then have
to borrow from a bank at a higher interest rate if money could not be borrowed
from another Affiliate Fund. A Portfolio will participate in the interfund
lending program only if its Board considers that the benefits to the Portfolio
of participating in the program outweigh the possible risks of such
participation.
As discussed above, in order to permit each Portfolio to engage in interfund
lending transactions, regulatory approval of the SEC is required because, among
other reasons, the transactions may be considered to be among affiliated
parties. If the proposed amendments are approved by shareholders, the proposed
interfund lending program would be implemented only to the extent permitted by
rule or by order of the SEC and to the extent that the transactions were
otherwise consistent with the investment objectives and limitations of each
participating Affiliate Fund. As previously noted, if exemptive relief from the
SEC is not granted, no Portfolio will be able to engage in the interfund lending
program even though shareholders have approved this proposal. No prediction can
be made as to whether the SEC would grant such relief.
In this proposal, shareholders are being asked to approve an amendment to
each Portfolio's fundamental investment restriction on borrowing. Shareholders
are also being asked to vote separately on an amendment to each Portfolio's
fundamental investment restriction on lending (see Proposal No. 3(c)). If both
amendments are adopted, each Portfolio, subject to its investment objective and
policies, will be able to participate in the interfund lending program as both a
lender and a borrower. If only one of the two proposals is adopted, then such
Portfolio's participation in the interfund lending program will be confined to
either lending or borrowing, depending on which amendment is approved.
Each Board believes the proposed amendments may benefit each Portfolio by
facilitating its flexibility to explore cost-effective alternatives to satisfy
its borrowing requirements by borrowing money from other Affiliate Funds.
Implementation of interfund borrowing would be accomplished consistent with
applicable regulatory requirements, including the provisions of any order the
SEC might issue to each Portfolio and to other Affiliate Funds.
PROPOSAL NO. 3(c)
(PROPOSAL CHANGING THE FUNDAMENTAL INVESTMENT
RESTRICTION WITH RESPECT TO EACH PORTFOLIO'S
ABILITY TO ENGAGE IN LENDING TRANSACTIONS)
The Board of each Fund is submitting for approval by shareholders of each
Portfolio a proposal to amend the fundamental investment restriction relating to
lending transactions in order to permit each Portfolio to participate in
interfund lending transactions as described in Proposal No. 3(b). The Board of
each Fund approved this proposal at a meeting held on October 20, 1998.
For the reasons described below, each Fund's Board Members recommend that
shareholders approve the proposed amendment. Fundamental investment restrictions
may be changed only with shareholder approval.
22
<PAGE>
If the proposed change to the Funds' fundamental investment restrictions is
approved by shareholders at the Meeting, the Portfolios' prospectuses and
statements of additional information will be revised as appropriate to reflect
the changes. This Proposal No. 3(c) will not result in a change to the
investment objective or operating procedure of any Portfolio.
PROPOSED CHANGE
Amending each Portfolio's fundamental investment restriction relating to
lending transactions by, in each case, adding a clause (which is bolded for ease
of reference) permitting interfund lending, as follows:
<TABLE>
<CAPTION>
CURRENT FUNDAMENTAL PROPOSED FUNDAMENTAL
FUND INVESTMENT RESTRICTION INVESTMENT RESTRICTION
- --------- ----------------------------------------- ---------------------------------------------------------
<S> <C> <C>
Each Portfolio may not: Each Portfolio may not:
EQUITY Make loans, except through . . . or (iii) Make loans, except through . . . (iii) the purchase of
FUNDS the purchase of portfolio securities . . portfolio securities . . . , OR (IV) PARTICIPATION IN AN
. INTERFUND LENDING PROGRAM WITH OTHER FUNDS THAT ARE IN
THE SUNAMERICA COMPLEX . . .
INCOME . . . make loans, except through . . . . . . make loans, except through . . . , (iii)
FUNDS and (iii) participation in loans to participation in loans to foreign governments or
foreign governments or companies; companies, AND (IV) PARTICIPATION IN AN INTERFUND LENDING
PROGRAM WITH OTHER FUNDS THAT ARE IN THE SUNAMERICA
COMPLEX;
MONEY Make loans, except through the purchase Make loans, except through the purchase or holding of
MARKET or holding of debt obligations . . . debt obligations . . . , OR THROUGH PARTICIPATION IN AN
FUND INTERFUND LENDING PROGRAM WITH OTHER FUNDS THAT ARE IN
THE SUNAMERICA COMPLEX . . .
STYLE Make loans to others except for . . .; Make loans to others except for . . . ; (c) the lending
SELECT and (c) the lending of its portfolio of its portfolio securities; AND (D) PARTICIPATING IN AN
securities. INTERFUND LENDING PROGRAM WITH OTHER FUNDS THAT ARE IN
THE SUNAMERICA COMPLEX.
</TABLE>
Upon approval of this Proposal, the existing fundamental investment
restriction of each Portfolio relating to lending transactions will be amended
by adding the bolded portions of the proposed fundamental investment
restrictions, as set forth above. No other portions of the existing fundamental
investment restrictions will be affected by the adoption of this Proposal.
DISCUSSION
The proposed amendment to each Portfolio's fundamental investment
restriction would allow a Portfolio to participate in an interfund lending
program with other Affiliate Funds. The nature of this program and the risks
associated with each Portfolio's participation therein are set forth under
Proposal No. 3(b). Shareholders are being asked to consider, and vote
separately, on each Portfolio's participation in the interfund lending program
as a borrower and as a lender.
The Board believes that the interfund lending program: (i) may benefit each
Portfolio by providing it with greater flexibility to engage in lending
transactions; and (ii) could facilitate a Portfolio's ability to earn a higher
return on short-term investments by allowing it to lend cash to other Affiliate
Funds. Implementation of interfund lending would be accomplished consistent with
applicable regulatory requirements, including the provisions of any order the
SEC might issue to the Funds, on behalf of the Portfolios and to other Affiliate
Funds. The Funds have not yet applied for such order and there can be no
assurance that any such order would be granted, even if applied for.
23
<PAGE>
THE BOARD OF EACH FUND UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" EACH ITEM IN PROPOSAL NO. 3
If one or more of the changes contemplated by Proposal No. 3 are not
approved by the shareholders of one of the applicable Portfolio(s), the related
existing fundamental restriction of that Portfolio will continue in effect for
that Portfolio. Disapproval of all or part of Proposal No. 3 by shareholders of
one Portfolio will not affect any approvals of Proposal No. 3 that are obtained
with respect to any other Portfolio.
------------------------
RATIFICATION OF SELECTION OF
INDEPENDENT ACCOUNTANTS
PROPOSAL NO. 4
Subject to ratification by the shareholders at the Meeting, the Board of
each Fund (including all the Disinterested Board Members) at a meeting held
October 20, 1998, approved the selection of PricewaterhouseCoopers LLP as the
independent accountants for the fiscal year ending September 30, 1999 for Equity
Funds; March 31, 1999 for Income Funds; December 31, 1998 for Money Market Fund;
and October 31, 1999 for Style Select.
The firm of PricewaterhouseCoopers LLP and its predecessor entity has
extensive experience in investment company accounting and auditing and has
served as independent accountant to each Fund since each Fund's inception. The
financial statements included in each Fund's Annual Report have been examined by
PricewaterhouseCoopers LLP. It is not expected that a representative of
PricewaterhouseCoopers LLP will be present at the meeting.
PricewaterhouseCoopers LLP and its members do not have any direct or
indirect material financial interest in or connection with a Fund in any
capacity other than as independent accountants.
THE BOARD OF EACH FUND UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" PROPOSAL NO. 4
------------------------
GENERAL INFORMATION
OTHER MATTERS
The Board Members know of no matters to be presented at the Meeting other
than those specified in the attached Notice of Meeting. However, if any other
matters come before the Meeting, it is intended that the proxies will vote
thereon in their discretion.
SHAREHOLDER PROPOSALS AND SHAREHOLDER MEETINGS
Notwithstanding the approval or disapproval of the proposals described
above, as in the past, the Boards do not intend to hold annual meetings of
shareholders of each Fund. The Board will call a meeting of shareholders as may
be required under the 1940 Act (such as to approve a new investment advisory
agreement for a Fund) or as they may determine in their discretion. The Board
will call a meeting of shareholders to elect additional Board Members if more
than 50% of the Board Members were not elected by shareholders. The By-laws of
Equity Funds, Income Funds and Money Market Fund require the Board to call a
meeting of shareholders when requested in writing to do so by shareholders
entitled to vote not less than 25% of all the votes entitled to be cast a
meeting. In addition, for each of the SunAmerica Mutual Funds, pursuant to
Section 16(c) of the 1940 Act, a meeting requested exclusively for the stated
purpose of
24
<PAGE>
removing a Board Member shall be called when requested in writing to do so by
the record holders of not less than 10% of the outstanding shares. With respect
to Equity Funds and Income Funds, no meeting need be called upon the request of
the holders of shares entitled to cast less than a majority of all votes
entitled to be cast at such meeting, to consider any matter which is
substantially the same as a matter voted upon at any meeting of the same
shareholders held during the preceding twelve months. If a shareholder wishes to
present a proposal to be included in the proxy statement for the next meeting of
shareholders of a Fund, such proposal must be received by the Fund a reasonable
time before the solicitation is to be made.
REPORTS TO SHAREHOLDERS AND FINANCIAL STATEMENTS
EACH FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF THE MOST RECENT ANNUAL AND
SEMI-ANNUAL REPORT TO SHAREHOLDERS TO SHAREHOLDERS OF THE FUND. COPIES OF SUCH
REPORTS MAY BE OBTAINED BY CONTACTING EACH FUND IN WRITING AT THE ADDRESS ON THE
COVER OF THIS PROXY STATEMENT, OR BY CALLING 1-800-858-8850.
SHAREHOLDERS ARE REQUESTED TO FILL IN, DATE AND SIGN THE PROXY CARD(S) AND
RETURN IT PROMPTLY IN THE ENCLOSED PREPAID ENVELOPE. SHAREHOLDERS ALSO HAVE THE
OPTION TO PROVIDE THEIR VOTE BY CALLING AN AGENT OF THE SUNAMERICA MUTUAL FUNDS
OR SHAREHOLDERS MAY VOTE BY TELEPHONE OR ON THE INTERNET BY FOLLOWING THE
INSTRUCTIONS ON THE INSERT ACCOMPANYING THE PROXY CARD(S).
Boards of Trustees or Directors,
SunAmerica Mutual Funds
November [ ], 1998
25
<PAGE>
EXHIBIT LIST
<TABLE>
<S> <C>
EXHIBIT A Form of New Advisory Agreement Between Each SunAmerica Mutual Fund and SAAMCo
EXHIBIT B Mutual Funds Advised by SAAMCo
</TABLE>
26
<PAGE>
EXHIBIT A
[Form of]
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
This INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT is dated as of
_________________, by and between ____________ Investment Company, a Maryland
corporation/Massachusetts business trust (the "Corporation"), and SUNAMERICA
ASSET MANAGEMENT CORP., a Delaware corporation (the "Adviser").
W I T N E S S E T H:
WHEREAS, the Corporation is registered under the Investment Company Act of
1940, as amended (the "Act"), as an open-end management investment company and
may issue shares of common stock, par value $.0001 per share, in separately
designated Portfolio representing separate funds with their own investment
objectives, policies and purposes (each, a "Fund" and collectively, the
"Funds"); and
WHEREAS, the Adviser is engaged in the business of rendering investment
management, advisory and administrative services and is registered as an
investment adviser under the Investment Advisers Act of 1940; and
WHEREAS, the Corporation desires to retain the Adviser to furnish investment
management, advisory and administrative services to the Corporation and the
Funds and the Adviser is willing to furnish such services;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. DUTIES OF THE ADVISER. The Adviser shall manage the affairs of the
Funds including, but not limited to, continuously providing the Funds with
investment management, including investment research, advice and supervision,
determining which securities shall be purchased or sold by the Funds, making
purchases and sales of securities on behalf of the Funds and determining how
voting and other rights with respect to securities owned by the Funds shall be
exercised, subject in each case to the control of the Board of Directors of the
Corporation (the "Directors") and in accordance with the objectives, policies
and principles set forth in Corporation's Registration Statement and the Funds'
current Prospectus and Statement of Additional Information, as amended from time
to time, the requirements of the Act and other applicable law. In performing
such duties, the Adviser (i) shall provide such office space, such bookkeeping,
accounting, clerical, secretarial and administrative services (exclusive of, and
in addition to, any such service provided by any others retained by the Funds or
Corporation on behalf of the Funds) and such executive and other personnel as
shall be necessary for the operations of the Funds, (ii) shall be responsible
for the financial and accounting records required to be maintained by the Funds
(including those maintained by Corporation's custodian) and (iii) shall oversee
the performance of services provided to the Funds by others, including the
custodian, transfer and shareholder servicing agent. The Corporation understands
that the Adviser also acts as the manager of other investment companies.
Subject to Section 36 of the Act, the Adviser shall not be liable to the
Funds or Corporation for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the management of
the Funds and the performance of its duties under this Agreement except for
willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of reckless disregard of its obligations and duties under
this Agreement.
2. RETENTION BY ADVISER OF SUB-ADVISERS, ETC. In carrying out its
responsibilities hereunder, the Adviser may employ, retain or otherwise avail
itself of the services of other persons or entities including, without
limitation, affiliates of the Adviser, on such terms as the Adviser shall
determine to be necessary, desirable or appropriate. Without limiting the
generality of the foregoing, and subject to the requirements of Section 15 of
the Act, the Adviser may retain one or more sub-advisers to manage all or a
portion of the
A-1
<PAGE>
investment portfolio of a Fund, at the Adviser's own cost and expense. Retention
of one or more sub-advisers, or the employment or retention of other persons or
entities to perform services, shall in no way reduce the responsibilities or
obligations of the Adviser under this Agreement and the Adviser shall be
responsible for all acts and omissions of such sub-advisers, or other persons or
entities, in connection with the performance of the Adviser's duties hereunder.
3. EXPENSES. The Adviser shall pay all of its expenses arising from the
performance of its obligations under Section 1 and shall pay any salaries, fees
and expenses of the Corporation's Directors and Officers who are employees of
the Adviser. The Adviser shall not be required to pay any other expenses of the
Funds, including, but not limited to, direct charges relating to the purchase
and sale of portfolio securities, interest charges, fees and expenses of
independent attorneys and auditors, taxes and governmental fees, cost of share
certificates and any other expenses (including clerical expenses) of issue,
sale, repurchase or redemption of shares, expenses of registering and qualifying
shares for sale, expenses of printing and distributing reports, notices and
proxy materials to shareholders, expenses of data processing and related
services, shareholder recordkeeping and shareholder account service, expenses of
printing and filing reports and other documents filed with governmental
agencies, expenses of printing and distributing prospectuses, expenses of annual
and special shareholders meetings, fees and disbursements of transfer agents and
custodians, expenses of disbursing dividends and distributions, fees and
expenses of Directors who are not employees of the Adviser or its affiliates,
membership dues in the Investment Company Institute, insurance premiums and
extraordinary expenses such as litigation expenses.
4. COMPENSATION OF THE ADVISER.
(a) As full compensation for the services rendered, facilities furnished and
expenses paid by the Adviser under this Agreement, the Corporation agrees to pay
to the Adviser a fee at the annual rates set forth in Schedule A hereto with
respect to each Fund indicated thereon. Such fee shall be accrued daily and paid
monthly as soon as practicable after the end of each month (i.e., the applicable
annual fee rate divided by 365 is applied to each prior days' net assets in
order to calculate the daily accrual). For purposes of calculating the Adviser's
fee with respect to any Fund, the average daily net asset value of a Fund shall
be determined by taking an average of all determinations of such net asset value
during the month. If the Adviser shall serve for less than the whole of any
month the foregoing compensation shall be prorated.
(b) Upon any termination of this Agreement on a day other than the last day
of the month, the fee for the period from the beginning of the month in which
termination occurs to the date of termination shall be prorated according to the
proportion which such period bears to the full month.
5. PORTFOLIO TRANSACTIONS. The Adviser is responsible for decisions to buy
or sell securities and other investments for a portion of the assets of each
Portfolio, broker-dealers and futures commission merchants' selection, and
negotiation of brokerage commission and futures commission merchants' rates. As
a general matter, in executing Portfolio transactions, the Adviser may employ or
deal with such broker-dealers or futures commission merchants as may, in the
Adviser's best judgement, provide prompt and reliable execution of the
transactions at favorable prices and reasonable commission rates. In selecting
such broker-dealers or futures commission merchants, the Adviser shall consider
all relevant factors including price (including the applicable brokerage
commission, dealer spread or futures commission merchant rate), the size of the
order, the nature of the market for the security or other investment, the timing
of the transaction, the reputation, experience and financial stability of the
broker-dealer or futures commission merchant involved, the quality of the
service, the difficulty of execution, the execution capabilities and operational
facilities of the firm involved, and, in the case of securities, the firm's risk
in positioning a block of securities. Subject to such policies as the Directors
may determine and consistent with Section 28(e) of the Securities Exchange Act
of 1934, as amended (the "1934 Act"), the Adviser shall not be deemed to have
acted unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of the Adviser's having caused a Portfolio to pay a
member of an exchange, broker or dealer an amount of commission for effecting a
securities transaction in excess of the amount of
A-2
<PAGE>
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, if the Adviser determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such member of an exchange, broker
or dealer viewed in terms of either that particular transaction or the Adviser's
overall responsibilities with respect to such Portfolio and to other clients as
to which the Adviser exercises investment discretion. In accordance with Section
11(a) of the 1934 Act and Rule 11a2-2(T) thereunder, and subject to any other
applicable laws and regulations including Section 17(e) of the Act and Rule
17e-1 thereunder, the Adviser may engage its affiliates or any other subadviser
to the Corporation and its respective affiliates, as broker-dealers or futures
commission merchants to effect Portfolio transactions in securities and other
investments for a Portfolio. The Adviser will promptly communicate to the
officers and the Directors of the Corporation such information relating to
Portfolio transactions as they may reasonably request. To the extent consistent
with applicable law, the Adviser may aggregate purchase or sell orders for the
Portfolio with contemporaneous purchase or sell orders of other clients of the
Adviser or its affiliated persons. In such event, allocation of the securities
so purchased or sold, as well as the expenses incurred in the transaction, will
be made by the Adviser in the manner the Adviser determines to be equitable and
consistent with its and its affiliates' fiduciary obligations to the Portfolio
and to such other clients. The Adviser hereby acknowledges that such aggregation
of orders may not result in more favorable pricing or lower brokerage
commissions in all instances.
6. TERM OF AGREEMENT. This agreement shall continue in full force and
effect for two years from the date hereof, and shall continue in full force and
effect from year to year thereafter if such continuance is approved in the
manner required by the Act and the Adviser has not notified the Corporation in
writing at least 60 days prior to the anniversary date of the previous
continuance that it does not desire such continuance. With respect to each Fund,
this Agreement may be terminated at any time, without payment of penalty by the
Fund or the Corporation, on 60 days written notice to the Adviser, by vote of
the Directors, or by vote of a majority of the outstanding voting securities (as
defined by the Act) of the Fund, voting separately from any other Portfolio of
the Corporation. The termination of this Agreement with respect to any Fund or
the addition of any Fund to Schedule A hereto (in the manner required by the
Act) shall not affect the continued effectiveness of this Agreement with respect
to each other Fund subject hereto. This Agreement shall automatically terminate
in the event of its assignment (as defined by the Act).
The Corporation hereby agrees that if (i) the Adviser ceases to act as
investment manager and adviser to the Corporation and (ii) the continued use of
the Corporation's present name would create confusion in the context of the
Adviser's business, then the Corporation will use its best efforts to change its
name in order to delete the word "SunAmerica" from its name.
7. LIABILITY OF THE ADVISER. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
("disabling conduct") hereunder on the part of the Adviser (and its officers,
directors, agents, employees, controlling persons, shareholders and any other
person or entity affiliated with the Adviser) the Adviser shall not be subject
to liability to the Corporation or to any shareholder of the Corporation for any
act or omission in the course of, or connected with, rendering services
hereunder, including without limitation, any error of judgment or mistake of law
or for any loss suffered by any of them in connection with the matters to which
this Agreement relates, except to the extent specified in Section 36(b) of the
Act concerning loss resulting from a breach of fiduciary duty with respect to
the receipt of compensation for services. Except for such disabling conduct, the
Corporation shall indemnify the Adviser (and its officers, directors, partners,
agents, employees, controlling persons, shareholders and any other person or
entity affiliated with the Adviser) (collectively, the "Indemnified Parties")
from any liability arising from the Adviser's conduct under this Agreement.
Indemnification to the Adviser or any of its personnel or affiliates shall
be made when (i) a final decision on the merits rendered, by a court or other
body before whom the proceeding was brought, that the person to be indemnified
was not liable by reason of disabling conduct or, (ii) in the absence of such a
A-3
<PAGE>
decision, a reasonable determination, based upon a review of the facts, that the
person to be indemnified was not liable by reason of disabling conduct, by (a)
the vote of a majority of a quorum of the Directors who are neither "interested
persons" of the Corporation as defined in section 2(a)(19) of the Act nor
parties to the proceeding ("disinterested, non-party Directors") or (b) an
independent legal counsel in a written opinion. The Corporation may, by vote of
a majority of the disinterested, non-party Directors advance attorneys' fees or
other expenses incurred by an Indemnified Party in defending a proceeding upon
the undertaking by or on behalf of the Indemnified Party to repay the advance
unless it is ultimately determined that he is entitled to indemnification. Such
advance shall be subject to at least one of the following: (1) the person to be
indemnified shall provide a security for his undertaking, (2) the Corporation
shall be insured against losses arising by reason of any lawful advances, or (3)
a majority of a quorum of the disinterested, non-party Directors or an
independent legal counsel in a written opinion, shall determine, based on a
review of readily available facts, that there is reason to believe that the
person to be indemnified ultimately will be found entitled to indemnification.
8. NON-EXCLUSIVITY. Nothing in this Agreement shall limit or restrict the
right of any director, officer or employee of the Adviser who may also be a
Director, officer or employee of the Corporation to engage in any other business
or devote his or her time and attention in part to the management or other
aspects of any business, whether of a similar or dissimilar nature, nor limit or
restrict the right of the Adviser to engage in any other business or to render
services of any kind to any other corporation, firm, individual or association.
9. AMENDMENTS. This Agreement may be amended by mutual consent in writing,
but the consent of the Corporation must be obtained in conformity with the
requirements of the Act.
10. GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the State of New York and the applicable provisions of the Act. To the
extent the applicable laws of the State of New York, or any of the provisions
herein, conflict with the applicable provisions of the Act, the latter shall
apply.
11. SEPARATE PORTFOLIO. Pursuant to the provisions of the Declaration, each
Fund is a separate Portfolio of the Corporation, and all debts, liabilities,
obligations and expenses of a particular Fund shall be enforceable only against
the assets of that Fund and not against the assets of any other Fund or of the
Corporation as a whole.
IN WITNESS WHEREOF, the Corporation and the Adviser have caused this
Agreement to be executed by their duly authorized officers as of the date first
above written.
INVESTMENT COMPANY
By:
--------------------------------------
Name: Peter A. Harbeck
Title: President
SUNAMERICA ASSET MANAGEMENT CORP.
By:
--------------------------------------
Name: Robert M. Zakem
Title: Senior Vice President
A-4
<PAGE>
EXHIBIT B
INVESTMENT OBJECTIVES AND ADVISORY FEES
FOR FUNDS ADVISED BY SUNAMERICA ASSET MANAGEMENT CORP.
<TABLE>
<CAPTION>
NET ASSETS ANNUAL ADVISORY FEE
(AS OF SEPTEMBER AS A PERCENTAGE OF NET
FUND 30, 1998) ASSETS
- ------------------------------------------- ------------------- -------------------------
<S> <C> <C>
DOMESTIC EQUITY FUNDS
ANCHOR SERIES TRUST*
Capital Appreciation Portfolio........... $ 822,618,819 0.750% on first $100
million
0.675% on next $150
million
0.625% on next $250
million
0.600% thereafter
Growth Portfolio......................... $ 531,472,722 0.750% on first $250
million
0.675% on next $250
million
0.600% thereafter
Growth and Income Portfolio.............. $ 43,419,683 0.700% on first $100
million
0.650% on next $150
million
0.600% on next $250
million
0.575% thereafter
SEASONS SERIES TRUST*
Multi-Managed Growth Portfolio........... $ 45,882,835 0.890%
Multi-Managed Moderate Growth $ 49,135,686 0.850%
Portfolio..................................
Stock Portfolio.......................... $ 62,369,024 0.850%
STYLE SELECT SERIES, INC.
Aggressive Growth Portfolio.............. $ 136,431,133+ 1.000% on first $750
million
0.950% on next $750
million
0.900% thereafter
Focus Portfolio.......................... $ 95,231,521+ 0.850%
Large-Cap Blend Portfolio................ $ 26,602,315+ 1.000%
Large-Cap Growth Portfolio............... $ 42,285,010+ 1.000%
Large-Cap Value Portfolio................ $ 42,242,450+ 1.000%
Mid-Cap Growth Portfolio................. $ 89,403,531+ 1.000% on first $750
million
0.950% on next $750
million
0.900% thereafter
Small-Cap Value Portfolio................ $ 44,535,215+ 1.000%
Value Portfolio.......................... $ 183,288,467+ 1.000% on first $750
million
0.950% on next $750
million
0.900% thereafter
</TABLE>
B-1
<PAGE>
<TABLE>
<CAPTION>
NET ASSETS ANNUAL ADVISORY FEE
(AS OF SEPTEMBER AS A PERCENTAGE OF NET
FUND 30, 1998) ASSETS
- ------------------------------------------- ------------------- -------------------------
<S> <C> <C>
SUNAMERICA EQUITY FUNDS
SunAmerica Blue Chip Growth Fund......... $ 108,376,466 0.750% on first $350
million
0.700% on next $350
million
0.650% thereafter
SunAmerica Growth and Income Fund........ $ 136,984,018+ 0.750% on first $350
million
0.700% on next $350
million
0.650% thereafter
SunAmerica Mid-Cap Growth Fund........... $ 48,218,491 0.750% on first $350
million
0.700% on next $350
million
0.650% thereafter
SunAmerica Small-Company Growth Fund..... $ 167,744,383 0.750% on first $350
million
0.700% on next $350
million
0.650% thereafter
"Dogs" of Wall Street Fund............... $ 56,146,950 0.350%
SUNAMERICA SERIES TRUST*
Alliance Growth Portfolio................ $1,092,068,236 0.700% on first $50
million
0.650% on next $100
million
0.600% on next $150
million
0.550% on next $200
million
0.500% thereafter
Aggressive Growth Portfolio.............. $ 103,369,840 0.750% on first $100
million
0.675% on next $150
million
0.625% on next $250
million
0.600% thereafter
"Dogs" of Wall Street Portfolio.......... $ 44,171,974 0.600%
Growth-Income Portfolio.................. $ 808,122,639 0.700% on first $50
million
0.650% on next $100
million
0.600% on next $150
million
0.550% on next $200
million
0.500% thereafter
Growth/Phoenix Investment Counsel $ 218,272,854 0.350% on first $50
Portfolio.................................. million
0.300% on next $100
million
0.250% on next $150
million
0.200% on next $200
million
0.150% thereafter
Putnam Growth Portfolio.................. $ 333,221,134 0.850% on first $150
million
0.800% on next $150
million
0.700% thereafter
Venture Value Portfolio.................. $1,445,244,534 0.800% on first $100
million
0.750% on next $400
million
0.700% thereafter
</TABLE>
B-2
<PAGE>
<TABLE>
<CAPTION>
NET ASSETS ANNUAL ADVISORY FEE
(AS OF SEPTEMBER AS A PERCENTAGE OF NET
FUND 30, 1998) ASSETS
- ------------------------------------------- ------------------- -------------------------
<S> <C> <C>
INTERNATIONAL AND GLOBAL EQUITY
ANCHOR SERIES TRUST*
Foreign Securities Portfolio............. $ 27,235,989 0.900% on first $100
million
0.825% on next $150
million
0.750% on next $250
million
0.700% thereafter
STYLE SELECT SERIES, INC.
International Equity Portfolio........... $ 77,331,516+ 1.100% on first $750
million
1.050% on next $750
million
1.000% thereafter
SUNAMERICA SERIES TRUST*
Emerging Markets Portfolio............... $ 25,161,994 1.250%
Global Equities Portfolio................ $ 355,437,814 0.900% on first $50
million
0.800% on next $100
million
0.700% on next $150
million
0.650% thereafter
International Growth and Income $ 102,653,451 1.000% on first $150
Portfolio.................................. million
0.900% on next $150
million
0.800% thereafter
International Diversified Equities $ 296,903,485 1.000%
Portfolio..................................
DOMESTIC FIXED INCOME
ANCHOR SERIES TRUST*
Fixed Income Portfolio................... $ 17,826,195 0.625% on first $200
million
0.575% on next $300
million
0.500% thereafter
Government and Quality Bond Portfolio.... $ 373,807,107 0.625% on first $200
million
0.575% on next $300
million
0.500% thereafter
High Yield Portfolio..................... $ 26,004,577 0.700% on first $250
million
0.575% on next $250
million
0.500% thereafter
SEASONS SERIES TRUST*
Multi-Managed Income Portfolio........... $ 32,953,853 0.770%
</TABLE>
B-3
<PAGE>
<TABLE>
<CAPTION>
NET ASSETS ANNUAL ADVISORY FEE
(AS OF SEPTEMBER AS A PERCENTAGE OF NET
FUND 30, 1998) ASSETS
- ------------------------------------------- ------------------- -------------------------
<S> <C> <C>
SUNAMERICA INCOME FUNDS
SunAmerica Diversified Income Fund....... $ 71,732,231 0.650% on first $350
million
0.600% thereafter
SunAmerica Federal Securities Fund....... $ 55,408,272 0.550% on first $25
million
0.500% on next $25
million
0.450% thereafter
SunAmerica High Income Fund.............. $ 157,285,790 0.750% on first $200
million
0.720% on next $200
million
0.550% thereafter
SunAmerica Tax Exempt Insured Fund....... $ 107,981,185 0.500% on first $350
million
0.450% thereafter
SunAmerica U.S. Government Securities $ 284,236,480 0.750% on first $200
Fund....................................... million
0.720% on next $200
million
0.550% thereafter
SUNAMERICA SERIES TRUST*
Corporate Bond Portfolio................. $ 129,225,050 0.700% on first $50
million
0.600% on next $100
million
0.550% on next $100
million
0.500% thereafter
High-Yield Bond Portfolio................ $ 258,454,534 0.700% on first $50
million
0.650% on next $100
million
0.600% on next $100
million
0.550% thereafter
INTERNATIONAL AND GLOBAL FIXED INCOME
SUNAMERICA SERIES TRUST*
Global Bond Portfolio.................... $ 128,437,423 0.750% on first $50
million
0.650% on next $100
million
0.600% on next $100
million
0.550% thereafter
Worldwide High Income Portfolio.......... $ 108,620,733 1.000%
ASSET ALLOCATION
ANCHOR SERIES TRUST*
Multi-Asset Portfolio.................... $ 134,773,617 1.000% on first $200
million
0.875% on next $300
million
0.800% thereafter
Strategic Multi-Asset Portfolio.......... $ 44,365,552 1.000% on first $200
million
0.875% on next $300
million
0.800% thereafter
SEASONS SERIES TRUST*
Asset Allocation: Diversified Growth $ 76,254,323 0.850%
Portfolio..................................
Multi-Managed Income/Equity Portfolio.... $ 41,227,837 0.810%
</TABLE>
B-4
<PAGE>
<TABLE>
<CAPTION>
NET ASSETS ANNUAL ADVISORY FEE
(AS OF SEPTEMBER AS A PERCENTAGE OF NET
FUND 30, 1998) ASSETS
- ------------------------------------------- ------------------- -------------------------
<S> <C> <C>
SUNAMERICA EQUITY FUNDS
SunAmerica Balanced Assets Fund.......... $ 355,891,072 0.750% on first $350
million
0.700% on next $350
million
0.650% thereafter
SUNAMERICA SERIES TRUST*
Asset Allocation Portfolio............... $ 657,318,956 0.750% on first $50
million
0.650% on next $100
million
0.600% on next $100
million
0.550% thereafter
Balanced/Phoenix Investment Counsel $ 119,739,829 0.350% on first $50
Portfolio.................................. million
0.300% on next $100
million
0.250% on next $150
million
0.200% on next $200
million
0.150% thereafter
Federated Value Portfolio................ $ 119,331,542 0.750% on first $150
million
0.600% on next $350
million
0.500% thereafter
SunAmerica Balanced Portfolio............ $ 112,033,596 0.700% on first $50
million
0.650% on next $100
million
0.600% on next $150
million
0.550% on next $200
million
0.500% thereafter
MONEY MARKET
ANCHOR SERIES TRUST*
Money Market Portfolio................... $ 71,244,988 0.500% on first $150
million
0.475% on next $100
million
0.450% on next $250
million
0.425% thereafter
SUNAMERICA MONEY MARKET FUNDS, INC.
SunAmerica Money Market Fund............. $ 692,803,417 0.500% on first $600
million
0.450% on next $900
million
0.400% thereafter
SUNAMERICA SERIES TRUST*
Cash Management Portfolio................ $ 299,176,786 0.550% on first $100
million
0.500% on next $200
million
0.450% thereafter
SPECIALTY
ANCHOR SERIES TRUST*
Natural Resources Portfolio.............. $ 42,261,724 0.750%
SUNAMERICA SERIES TRUST*
Real Estate Portfolio.................... $ 56,858,074 0.800% on first $100
million
0.750% on next $400
million
0.700% thereafter
Utility Portfolio........................ $ 57,477,132 0.750% on first $150
million
0.600% on next $350
million
0.500% thereafter
</TABLE>
- ------------------------
* Funds underlie variable annuities
+ Subject to waivers and/or expense limitations
B-5
<PAGE>
PRELIMINARY COPY
INDICATE YOUR VOTE BY FILLING IN THE APPROPRIATE BOXES IN THIS MANNER /X/ USING
BLUE OR BLACK INK OR DARK PENCIL.
PLEASE DO NOT USE RED INK
- --------------------------------------------------------------------------------
THIS PROXY CARD, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL
PROPOSALS, PLEASE REFER TO THE PROXY STATEMENT FOR A DISCUSSION OF THE
PROPOSALS.
<TABLE>
<CAPTION>
<S><C>
FOR WITHHOLD
ALL AUTHORITY
1. Election of Trustees. / / / /
S. James Coppersmith, Samuel M. Eisenstat, Stephen J.
Gutman, Peter A. Harbeck, Sebastiano Sterpa
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, PRINT
THAT NOMINEE'S NAME ON THE LINE BELOW
- ---------------------------------------------------------------
<PAGE>
FOR AGAINST ABSTAIN
2. To approve a new investment advisory and management / / / / / /
agreement between SunAmerica Equity Funds, on behalf of each
separate investment portfolio thereof, and SunAmerica Asset
Management Corp. ("SAAMCo"), the terms of which are
identical in all material respects to the existing
investment advisory and management agreement.
3. To approve changing the fundamental investment restriction / / / / / /
relating to:
(a) short sales of securities; / / / / / /
(b) the ability to engage in borrowing transactions; and / / / / / /
(c) the ability to engage in lending transactions. / / / / / /
4. To ratify the selection of independent accountants. / / / / / /
5. To transact such other business as may properly come before
the Meeting or any adjournments thereof.
</TABLE>
<PAGE>
PLEASE MARK YOUR PROXY CARD, DATE AND SIGN IT WHERE INDICATED, AND RETURN IT
PROMPTLY IN THE ACCOMPANYING ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. PROXY CARDS MUST BE RECEIVED BY DECEMBER 29, 1998 TO BE VOTED
FOR THE MEETING TO BE HELD ON DECEMBER 30, 1998.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. A PROXY CARD IS
PROVIDED FOR THE FUND IN WHICH YOU OWN SHARES AS OF OCTOBER 30, 1998.
The undersigned hereby appoints Peter C. Sutton and Robert M. Zakem, as proxies,
each with full power to appoint his substitute, and hereby authorizes each of
them to appear and vote as indicated above, all shares of the Fund which the
undersigned is entitled to vote at the joint Special Meeting of Shareholders to
be held at the offices of the Fund, The SunAmerica Center, 733 Third Avenue, New
York, New York 10017 at [ .m.], Eastern Standard Time, December 30,
1998, and any adjournments thereof, as indicated on the reverse side.
<PAGE>
PLEASE SIGN IN BOX BELOW
If shares are owned jointly, all parties should sign. If only one signs, his or
her signature will be binding. If the shareholder is a corporation, the
President or a Vice President should sign in his or her own name, indicating
title. If the shareholder is a partnership, a partner should sign in his or her
own name, indicating that he or she is a partner.
--------------------------------------------------
Dated:
--------------------------------------------------
Signature(s) Title(s), if applicable
<PAGE>
PRELIMINARY COPY
INDICATE YOUR VOTE BY FILLING IN THE APPROPRIATE BOXES IN THIS MANNER /X/ USING
BLUE OR BLACK INK OR DARK PENCIL.
PLEASE DO NOT USE RED INK
- --------------------------------------------------------------------------------
THIS PROXY CARD, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL
PROPOSALS, PLEASE REFER TO THE PROXY STATEMENT FOR A DISCUSSION OF THE
PROPOSALS.
<TABLE>
<CAPTION>
<S><C> FOR WITHHOLD
ALL AUTHORITY
1. Election of Trustees. / / / /
S. James Coppersmith, Samuel M. Eisenstat, Stephen J.
Gutman, Peter A. Harbeck, Sebastiano Sterpa
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, PRINT
THAT NOMINEE'S NAME ON THE LINE BELOW
- ---------------------------------------------------------------
FOR AGAINST ABSTAIN
2. To approve a new investment advisory and management / / / / / /
agreement between SunAmerica Income Funds, on behalf of each
separate investment portfolio thereof, and SunAmerica Asset
Management Corp. ("SAAMCo"), the terms of which are
identical in all material respects to the existing
investment advisory and management agreement.
<PAGE>
FOR AGAINST ABSTAIN
3. To approve changing the fundamental investment restriction / / / / / /
relating to:
(a) short sales of securities; / / / / / /
(b) the ability to engage in borrowing transactions; and / / / / / /
(c) the ability to engage in lending transactions. / / / / / /
4. To ratify the selection of independent accountants. / / / / / /
5. To transact such other business as may properly come before
the Meeting or any adjournments thereof.
</TABLE>
<PAGE>
PLEASE MARK YOUR PROXY CARD, DATE AND SIGN IT WHERE INDICATED, AND RETURN IT
PROMPTLY IN THE ACCOMPANYING ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. PROXY CARDS MUST BE RECEIVED BY DECEMBER 29, 1998 TO BE VOTED
FOR THE MEETING TO BE HELD ON DECEMBER 30, 1998.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. A PROXY CARD IS
PROVIDED FOR THE FUND IN WHICH YOU OWN SHARES AS OF OCTOBER 30, 1998.
The undersigned hereby appoints Peter C. Sutton and Robert M. Zakem, as proxies,
each with full power to appoint his substitute, and hereby authorizes each of
them to appear and vote as indicated above, all shares of the Fund which the
undersigned is entitled to vote at the joint Special Meeting of Shareholders to
be held at the offices of the Fund, The SunAmerica Center, 733 Third Avenue, New
York, New York 10017 at [ .m.], Eastern Standard Time, December 30,
1998, and any adjournments thereof, as indicated on the reverse side.
<PAGE>
PLEASE SIGN IN BOX BELOW
If shares are owned jointly, all parties should sign. If only one signs, his or
her signature will be binding. If the shareholder is a corporation, the
President or a Vice President should sign in his or her own name, indicating
title. If the shareholder is a partnership, a partner should sign in his or her
own name, indicating that he or she is a partner.
--------------------------------------------------
Dated:
--------------------------------------------------
Signature(s) Title(s), if applicable
<PAGE>
PRELIMINARY COPY
INDICATE YOUR VOTE BY FILLING IN THE APPROPRIATE BOXES IN THIS MANNER /X/ USING
BLUE OR BLACK INK OR DARK PENCIL.
PLEASE DO NOT USE RED INK
- --------------------------------------------------------------------------------
THIS PROXY CARD, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL
PROPOSALS, PLEASE REFER TO THE PROXY STATEMENT FOR A DISCUSSION OF THE
PROPOSALS.
<TABLE>
<CAPTION>
<S><C>
FOR WITHHOLD
ALL AUTHORITY
1. Election of Trustees. / / / /
S. James Coppersmith, Samuel M. Eisenstat, Stephen J.
Gutman, Peter A. Harbeck, Sebastiano Sterpa
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, PRINT
THAT NOMINEE'S NAME ON THE LINE BELOW
- ---------------------------------------------------------------
FOR AGAINST ABSTAIN
2. To approve a new investment advisory and management / / / / / /
agreement between SunAmerica Money Market Funds, Inc., on
behalf of the SunAmerica Money Market Fund, and SunAmerica
Asset Management Corp. ("SAAMCo"), the terms of which are
identical in all material respects to the existing
investment advisory and management agreement.
<PAGE>
FOR AGAINST ABSTAIN
3. To approve changing the fundamental investment restriction / / / / / /
relating to:
(a) the ability to engage in borrowing transactions; and / / / / / /
(b) the ability to engage in lending transactions. / / / / / /
4. To ratify the selection of independent accountants. / / / / / /
5. To transact such other business as may properly come before
the Meeting or any adjournments thereof.
</TABLE>
<PAGE>
PLEASE MARK YOUR PROXY CARD, DATE AND SIGN IT WHERE INDICATED, AND RETURN IT
PROMPTLY IN THE ACCOMPANYING ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. PROXY CARDS MUST BE RECEIVED BY DECEMBER 29, 1998 TO BE VOTED
FOR THE MEETING TO BE HELD ON DECEMBER 30, 1998.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. A PROXY CARD IS
PROVIDED FOR THE FUND IN WHICH YOU OWN SHARES AS OF OCTOBER 30, 1998.
The undersigned hereby appoints Peter C. Sutton and Robert M. Zakem, as proxies,
each with full power to appoint his substitute, and hereby authorizes each of
them to appear and vote as indicated above, all shares of the Fund which the
undersigned is entitled to vote at the joint Special Meeting of Shareholders to
be held at the offices of the Fund, The SunAmerica Center, 733 Third Avenue, New
York, New York 10017 at [ .m.], Eastern Standard Time, December 30,
1998, and any adjournments thereof, as indicated on the reverse side.
<PAGE>
PLEASE SIGN IN BOX BELOW
If shares are owned jointly, all parties should sign. If only one signs, his or
her signature will be binding. If the shareholder is a corporation, the
President or a Vice President should sign in his or her own name, indicating
title. If the shareholder is a partnership, a partner should sign in his or her
own name, indicating that he or she is a partner.
--------------------------------------------------
Dated:
--------------------------------------------------
Signature(s) Title(s), if applicable
<PAGE>
PRELIMINARY COPY
INDICATE YOUR VOTE BY FILLING IN THE APPROPRIATE BOXES IN THIS MANNER /X/ USING
BLUE OR BLACK INK OR DARK PENCIL.
PLEASE DO NOT USE RED INK
- --------------------------------------------------------------------------------
THIS PROXY CARD, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL
PROPOSALS, PLEASE REFER TO THE PROXY STATEMENT FOR A DISCUSSION OF THE
PROPOSALS.
<TABLE>
<CAPTION>
<S><C>
FOR WITHHOLD
ALL AUTHORITY
1. Election of Trustees. / / / /
S. James Coppersmith, Samuel M. Eisenstat, Stephen J.
Gutman, Peter A. Harbeck, Sebastiano Sterpa
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, PRINT
THAT NOMINEE'S NAME ON THE LINE BELOW
- ---------------------------------------------------------------
FOR AGAINST ABSTAIN
2. To approve a new investment advisory and management / / / / / /
agreement between Style Select Series, Inc., on behalf of
each separate investment portfolio thereof, and SunAmerica
Asset Management Corp. ("SAAMCo"), the terms of which are
identical in all material respects to the existing
investment advisory and management agreement.
<PAGE>
FOR AGAINST ABSTAIN
3. To approve changing the fundamental investment restriction / / / / / /
relating to:
(a) the ability to engage in borrowing transactions; and / / / / / /
(b) the ability to engage in lending transactions. / / / / / /
4. To ratify the selection of independent accountants. / / / / / /
5. To transact such other business as may properly come before
the Meeting or any adjournments thereof.
</TABLE>
<PAGE>
PLEASE MARK YOUR PROXY CARD, DATE AND SIGN IT WHERE INDICATED, AND RETURN IT
PROMPTLY IN THE ACCOMPANYING ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. PROXY CARDS MUST BE RECEIVED BY DECEMBER 29, 1998 TO BE VOTED
FOR THE MEETING TO BE HELD ON DECEMBER 30, 1998.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. A PROXY CARD IS
PROVIDED FOR THE FUND IN WHICH YOU OWN SHARES AS OF OCTOBER 30, 1998.
The undersigned hereby appoints Peter C. Sutton and Robert M. Zakem, as proxies,
each with full power to appoint his substitute, and hereby authorizes each of
them to appear and vote as indicated above, all shares of the Fund which the
undersigned is entitled to vote at the joint Special Meeting of Shareholders to
be held at the offices of the Fund, The SunAmerica Center, 733 Third Avenue, New
York, New York 10017 at [ .m.], Eastern Standard Time, December 30,
1998, and any adjournments thereof, as indicated on the reverse side.
<PAGE>
PLEASE SIGN IN BOX BELOW
If shares are owned jointly, all parties should sign. If only one signs, his or
her signature will be binding. If the shareholder is a corporation, the
President or a Vice President should sign in his or her own name, indicating
title. If the shareholder is a partnership, a partner should sign in his or her
own name, indicating that he or she is a partner.
--------------------------------------------------
Dated:
--------------------------------------------------
Signature(s) Title(s), if applicable
