<PAGE>
SunAmerica Money Market Funds Annual Report
February 16, 1999
Dear Shareholder:
The investment objective of the SunAmerica Money Market Fund is to seek as
high a level of current income as is consistent with liquidity and stability of
capital. The Fund will seek to achieve its objective by investing in a
portfolio of high quality money market instruments. The portfolio is structured
according to our fundamental outlook of the economy and maintains a high level
of diversity in order to reduce investment risk. For the year ended December
31, 1998, the Fund's Class A shares posted a total return of 4.80% and the SEC
7 day effective yield was 4.40%. Since the Fund invests only in short-term
obligations with a maturity of 13 months or less, its performance generally
tracks the short-term market levels.
The United States fixed income market is currently caught between a domestic
economy that refuses to slow down and a global economy that dips in and out of
crisis. The bull market of the 1990's has added $10 trillion to the market
value of U.S. equities. While some industries are experiencing a profit squeeze
due to higher labor costs and stiff pricing competition, others are seeing
increased profits due to increased productivity and low material costs. We
believe this mixed outlook portends continued growth, but at a slower rate than
the raging bull market of recent times. This slowed growth may forestall
interest rate hikes that hurt fixed income investment prices in the near-term.
Alongside this predominantly positive outlook in the equity markets, we
continue to see many global economic conditions that may still affect the US
economy. Aside from the continuing uncertainties in Asia, recent developments
in Latin America will most certainly have consequences in the United States and
around the world. The poor outlook for the Brazilian market may hurt economic
growth in Argentina, Chile and Venezuela, which in turn may slow the U.S.
export of goods to these countries. These troubles overseas should help to
slow, but not stop, the pace of domestic expansion. Again, this may help the
overall health of the U.S. economy as it may prevent increased interest rates
from the Federal Reserve.
In conclusion, we remain optimistic regarding the U.S. fixed income market
and expect the growth rate of the economy to moderate in the first quarter. We
look for the Federal Reserve to hold short-term rates steady at 4.75% for the
next few months until further signs of a domestic slowdown appear later in the
first quarter. We also expect that short-term rates will once again begin to
trend lower at the end of the first or beginning of the second quarter. During
these times, we will continue to search for the best relative valued securities
and will structure the portfolio to be flexible for any changes in our economic
outlook.
/s/ John J. DiVito /s/ Brian H. Wiese
John J. DiVito Brian H. Wiese
Portfolio Manager Portfolio Manager
1
<PAGE>
SunAmerica Money Market Fund
STATEMENT OF ASSETS AND LIABILITIES -- December 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investment securities, at value (amortized cost $725,340,441)...... $725,340,441
Cash............................................................... 1,603,450
Receivable for fund shares sold.................................... 15,517,255
Interest receivable................................................ 3,898,485
Prepaid expenses................................................... 148,519
------------
Total assets..................................................... 746,508,150
------------
LIABILITIES:
Payable for fund shares repurchased................................ 11,543,205
Payable for investments purchased.................................. 10,109,950
Accrued expenses................................................... 305,273
Investment advisory and management fees payable.................... 294,520
Dividends payable.................................................. 103,859
Distribution and service maintenance fees payable.................. 89,680
------------
Total liabilities................................................ 22,446,487
------------
Net assets...................................................... $724,061,663
============
NET ASSETS WERE COMPOSED OF:
Common stock, $.001 par value (10 billion shares authorized)....... $ 724,052
Additional paid-in capital......................................... 723,232,951
------------
723,957,003
Accumulated undistributed net investment income.................... 104,660
------------
Net assets...................................................... $724,061,663
============
Class A:
Net asset value ($687,800,855/687,791,187 shares outstanding)...... $ 1.00
============
Class B:
Net asset value ($34,827,694/34,827,696 shares outstanding)........ $ 1.00
============
Class II:
Net asset value ($1,433,114/1,432,883 shares outstanding).......... $ 1.00
============
</TABLE>
See Notes to Financial Statements
2
<PAGE>
SunAmerica Money Market Fund
STATEMENT OF OPERATIONS -- For the year ended December 31, 1998
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest.............................................. $35,342,048
-----------
EXPENSES:
Investment advisory and management fees............... $3,124,567
Transfer Agent and shareholder servicing fees and
expenses--Class A.................................... 1,523,795
Transfer Agent and shareholder servicing fees and
expenses--Class B.................................... 120,589
Transfer Agent and shareholder servicing fees and
expenses--Class II................................... 10,950
Service maintenance fees--Class A..................... 881,428
Distribution and service maintenance fees--Class B.... 362,053
Distribution and service maintenance fees--Class II... 8,725
Custodian fees and expenses........................... 147,719
Registration fees--Class A............................ 58,762
Registration fees--Class B............................ 8,046
Registration fees--Class II........................... 16,910
Directors' fees and expenses.......................... 21,091
Legal fees and expenses............................... 9,125
Insurance expense..................................... 6,541
Audit and tax consulting fees......................... 1,825
Miscellaneous expenses................................ 10,060
----------
6,312,186
-----------
Less: expense offset and reimbursement............... (157,435)
-----------
Net expenses......................................... 6,154,751
-----------
Net investment income.................................. 29,187,297
-----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....... $29,187,297
===========
</TABLE>
See Notes to Financial Statements
3
<PAGE>
SunAmerica Money Market Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the year For the year
ended ended
December 31, 1998 December 31, 1997
----------------- -----------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income..................... $ 29,187,297 $ 23,424,418
------------ ------------
Net increase in net assets resulting from
operations................................ 29,187,297 23,424,418
Dividends and distributions to
shareholders:
From net investment income (Class A)...... (27,620,422) (22,107,661)
From net investment income (Class B)...... (1,562,707) (1,279,869)
From net investment income (Class II)..... (37,151) (4,562)
------------ ------------
Total dividends and distributions to
shareholders.............................. (29,220,280) (23,392,092)
Increase in net assets from fund share
transactions (Note 5)..................... 183,393,962 112,855,857
------------ ------------
Total increase in net assets............... 183,360,979 112,888,183
NET ASSETS:
Beginning of year......................... 540,700,684 427,812,501
------------ ------------
End of period (including undistributed net
investment income of $104,660 and
$137,643 at December 31, 1998 and
December 31, 1997, respectively)......... $724,061,663 $540,700,684
============ ============
</TABLE>
See Notes to Financial Statements
4
<PAGE>
SunAmerica Money Market Fund
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Net Net Net Ratio of
Asset Dividends Asset Assets Ratio of net investment
Value Net Total from from net Value end of expenses income to
Period beginning investment investment investment end of Total period to average average
Ended of period income operations income period Return(1) (000's) net assets net assets
- ------------------------ --------- ---------- ---------- ---------- ------ --------- -------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A
-------
12/31/94................ $1.000 $0.034 $0.034 $(0.034) $1.000 3.47% $213,958 1.00% 3.43%
12/31/95................ 1.000 0.051 0.051 (0.051) 1.000 5.18 316,308 1.01(2) 5.04
12/31/96................ 1.000 0.045 0.045 (0.045) 1.000 4.61 398,698 1.00(3) 4.52
12/31/97................ 1.000 0.047 0.047 (0.047) 1.000 4.82 511,908 0.98(3) 4.73
12/31/98................ 1.000 0.047 0.047 (0.047) 1.000 4.80 687,801 0.95(3) 4.70
Class B
-------
12/31/94................ $1.000 $0.027 $0.027 $(0.027) $1.000 2.76% $ 98,398 1.69% 2.91%
12/31/95................ 1.000 0.044 0.044 (0.044) 1.000 4.49 51,799 1.78(2) 4.37
12/31/96................ 1.000 0.038 0.038 (0.038) 1.000 3.83 29,114 1.77(3) 3.76
12/31/97................ 1.000 0.040 0.040 (0.040) 1.000 4.03 28,391 1.74(3) 3.95
12/31/98................ 1.000 0.039 0.039 (0.039) 1.000 3.96 34,828 1.75(3) 3.88
Class II
--------
10/2/97-12/31/97........ $1.000 $0.010 $0.010 $(0.010) $1.000 1.00% $ 402 1.75%(4)(5) 4.01%(4)
12/31/98................ 1.000 0.039 0.039 (0.039) 1.000 3.94 1,433 1.75(5) 3.83
</TABLE>
- ------
(1) Total return is not annualized and does not reflect sales load
(2) The expense ratio reflects the effect of a gross up of custody and transfer
agent expense credits for the year ended December 31, 1995 of 0.05% and
0.13% for Class A and Class B, respectively.
(3) The expense ratio reflects the effect of a gross up of custody and transfer
agent expense credits as follows:
<TABLE>
<CAPTION>
12/31/96 12/31/97 12/31/98
-------- -------- --------
<S> <C> <C> <C>
Class A................... 0.03% 0.02% 0.03%
Class B................... 0.04% 0.02% 0.01%
</TABLE>
(4) Annualized
(5) Net of the following expense reimbursements (based on average net assets):
<TABLE>
<CAPTION>
12/31/97 12/31/98
-------- --------
<S> <C> <C>
Class II............................ 4.74% 2.55%
</TABLE>
See Notes to Financial Statements
5
<PAGE>
SunAmerica Money Market Fund
PORTFOLIO OF INVESTMENTS -- December 31, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
Security Description (in thousands) Rate** Maturity (Note 2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CERTIFICATES OF DEPOSIT-
4.6%
ABN Amro Bank........... $15,000 5.65-5.72% 3/22/99-4/05/99 $ 14,998,352
Deutsche Bank AG........ 8,000 5.66 3/03/99 7,999,359
Toronto Dominion+....... 10,000 5.42 1/14/99 9,995,494
------------
Total Certificates of
Deposit
(amortized cost
$32,993,205)........... 32,993,205
------------
COMMERCIAL PAPER-50.7%
American Home Products
Corp................... 15,000 5.15 3/09/99 14,856,229
Apreco, Inc............. 10,000 5.03 5/17/99 9,809,978
Banco Itau SA........... 20,000 4.95-5.45 3/16/99-6/17/99 19,645,431
Banco Mercantile del
Norte SA............... 5,000 5.40 1/29/99 4,979,000
Banco Rio De La Plata... 12,000 5.70 2/04/99 11,935,400
Barton Capital Corp..... 7,000 5.28 2/18/99 6,950,720
BellSouth
Telecommunications,
Inc.................... 10,000 5.45 2/19/99 9,925,819
British Gas Capital,
Inc.................... 10,000 5.00 4/12/99 9,859,722
Chase Manhattan Corp.... 20,000 5.02-5.20 2/16/99-3/30/99 19,810,844
Coral Sea Funding Corp.. 10,000 5.50 2/12/99 9,935,833
Daewoo International
Corp................... 10,000 5.52 1/19/99 9,972,400
Dairy Investments Ltd... 10,000 5.00 4/05/99 9,869,444
Dorada Finance, Inc..... 10,000 5.24 3/03/99 9,911,211
Edison Asset
Securitization LLP..... 20,000 4.95-5.02 3/15/99-5/28/99 19,696,081
Fairway Finance Corp.... 10,000 5.30 1/25/99 9,964,667
Four Winds Funding
Corp................... 10,000 5.07 3/19/99 9,891,558
Greyhawk Capital Corp... 10,000 5.30 1/29/99 9,958,778
Grupo Finance Grand
Cayman................. 10,000 5.05 4/09/99 9,862,528
Hitachi America Ltd..... 12,000 5.28 3/12/99 11,876,800
Intrepid Funding Master
Trust.................. 10,000 5.09 4/29/99 9,833,161
KZH Holding Corp........ 5,000 5.53 1/29/99 4,978,494
Moat Funding LLC........ 18,000 5.00-5.40 1/08/99-6/11/99 17,767,989
Monsanto Co............. 21,000 5.05-5.39 1/28/99-3/10/99 20,860,144
Motiva Enterprises LLC.. 10,000 5.13 3/05/99 9,910,225
New York Life Capital
Corp................... 10,000 4.90 4/28/99 9,840,750
Sigma Finance Corp...... 20,000 5.44-5.49 1/11/99-2/05/99 19,931,514
Silver Tower US Funding
LLC.................... 11,000 5.50 2/24/99 10,909,250
Thames Asset Global
Securitization......... 10,000 5.45 3/15/99 9,889,486
Transamerica Finance
Corp................... 10,000 4.90 3/26/99 9,885,667
Westways Funding III
Ltd.................... 10,000 5.43 1/08/99 9,989,442
Windmill Funding Corp... 15,000 5.15 3/10/99 14,854,083
------------
Total Commercial Paper
(amortized cost
$367,362,648).......... 367,362,648
------------
</TABLE>
6
<PAGE>
SunAmerica Money Market Fund
PORTFOLIO OF INVESTMENTS -- December 31, 1998 -- (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
Security Description (in thousands) Rate** Maturity (Note 2)
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GOVERNMENT AGENCIES-3.0%
Agency for International
Development India+..... $1,000 5.09% 1/05/99 $ 1,000,474
Agency for International
Development Israel+.... 1,494 5.03 1/05/99 1,494,340
Agency for International
Development Panama+.... 4,540 5.19 1/05/99 4,564,921
Federal Home Loan
Mortgage Association... 15,000 4.93 3/26/99 14,827,450
-----------
Total Government
Agencies
(amortized cost
$21,887,185)........... 21,887,185
-----------
MEDIUM TERM NOTES-30.2%
Aetna Services, Inc.+... 10,000 5.66 5/14/99 10,000,000
Bank of Boston+......... 5,000 5.36 1/25/99 5,000,580
Bankers Trust Co.+...... 10,000 4.83 1/01/99 9,999,090
Bank of New York........ 10,000 5.42 2/12/99 9,996,348
Banque Nationale de
Paris.................. 10,000 5.71 3/30/99 9,999,076
Citicorp.+.............. 16,000 5.20-5.62 1/20/99-3/17/99 16,020,322
Deere (John) Capital
Corp................... 10,000 6.30 6/01/99 10,048,700
FCC National Bank+...... 8,000 4.48 1/01/99 7,998,328
First Bank of Sioux
Falls+................. 3,000 5.52 1/19/99 2,999,745
General Motors
Acceptance Corp.+...... 5,000 4.63 1/07/99 4,990,997
General Motors
Acceptance Corp. ...... 8,000 5.88 1/12/99 8,000,592
Goldman Sachs & Co.+.... 28,000 5.35-5.62 1/15/99-3/28/99 28,000,000
IBM Credit Corp......... 8,000 5.61 7/30/99 7,996,627
Liberty Lighthouse
Funding+............... 18,000 5.20-5.52 1/15/99-1/17/99 17,998,599
Merrill Lynch & Co.,
Inc.+.................. 17,000 4.95-5.31 1/01/99-2/12/99 16,989,908
Merrill Lynch & Co.,
Inc. .................. 10,000 8.25 11/15/99 10,263,675
Morgan Stanley Dean
Witter & Co.+.......... 12,000 5.34 1/14/99 12,000,000
Portland General
Electric Co............ 3,250 6.63 8/31/99 3,268,868
7 World Trade Center
Finance+............... 10,000 5.48 3/01/99 10,000,000
Sigma Finance Corp.+.... 5,000 5.66 1/01/99 5,000,000
Sigma Finance Corp...... 7,000 5.71 3/24/99 6,998,692
Xerox Corp.+............ 5,000 5.76 2/09/99 4,978,256
-----------
Total Medium Term Notes
(amortized cost
$218,548,403).......... 218,548,403
-----------
TAXABLE MUNICIPAL MEDIUM
TERM NOTES-7.0%
California Pollution
Control Financing+..... 6,500 5.59 1/06/99 6,500,000
Courtyards Mackinaw
LLC+................... 6,000 5.27 1/07/99 6,000,000
Illinois Student
Assistance Corp.+...... 21,000 5.47-5.52 1/06/99 21,000,000
New Hampshire State
Industrial Development
Authority.............. 10,000 5.20 2/19/99 10,000,000
Texas G.O.+............. 7,415 5.50 1/06/99 7,415,000
-----------
Total Taxable Municipal
Medium Term Notes
(amortized cost
$50,915,000)........... 50,915,000
-----------
Total Investment
Securities
(amortized cost
$691,706,441).......... 691,706,441
-----------
</TABLE>
7
<PAGE>
SunAmerica Money Market Fund
PORTFOLIO OF INVESTMENTS -- December 31, 1998 -- (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
Security Description (in thousands) Rate** Maturity (Note 2)
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENT-4.7%
<S> <C> <C> <C> <C> <C>
Joint Repurchase Agreement
Account (Note 3)
(cost $33,634,000)........ $33,634 4.45% 1/04/99 $ 33,634,000
------------
TOTAL INVESTMENTS--
(amortized cost
$725,340,441*)............ 100.2% 725,340,441
Liabilities in excess of
other assets.............. (0.2) (1,278,778)
----- ------------
NET ASSETS................. 100.0% $724,061,663
===== ============
</TABLE>
* At December 31, 1998 the cost of securities for Federal income tax purposes
was the same for book purposes
** Rates shown are rates in effect as of December 31, 1998
+ Variable rate security; maturity date reflects the next reset date
G.O.-General Obligation
Portfolio breakdown as a percentage of net assets (excluding Repurchase
Agreement) by industry@
<TABLE>
<S> <C>
Securities
Holding Company 21.9%
Finance 19.6
Banking 18.2
Receivable
Company 7.0
Municipalities 7.0
</TABLE>
<TABLE>
<S> <C>
Industrials 6.3%
Gov't Agency 3.0
Insurance 2.7
Medical 2.1
Leasing 1.8
</TABLE>
<TABLE>
<S> <C>
Electronics 1.6%
Telecommunications 1.4
Distribution 1.4
Computers 1.1
Utilities 0.4
----
95.5%
====
</TABLE>
@ As grouped by Moody's Investors Service Global Short Term Market Record
See Notes to Financial Statements
8
<PAGE>
SunAmerica Money Market Fund
NOTES TO FINANCIAL STATEMENTS -- December 31, 1998
Note 1. Organization
SunAmerica Money Market Fund (the "Fund") is an open-end diversified
management investment company organized as a Maryland Corporation.
The Fund offers multiple classes of shares. The classes within the Fund are
presented in the Statement of Assets and Liabilities. The cost structure for
each class is as follows:
Class A shares-- Offered at the next determined net asset value per share.
Class B shares-- Offered at the next determined net asset value per share,
although a declining contingent deferred sales charge
("CDSC") may be imposed on redemptions made within six
years of purchase. Class B shares will convert
automatically to Class A shares on the first business day
of the month after seven years from the issuance of such
shares and at such time are no longer subject to a
distribution fee.
Class II shares-- Offered at the next determined net asset value per share.
Certain redemptions made within the first year of the date
of purchase are subject to a contingent deferred sales
charge.
Each class of shares bears the same voting, dividend, liquidation and other
rights and conditions. Class A, Class B, and Class II shares each make
distribution and account maintenance and service fee payments under the
distribution plans pursuant to Rule 12b-1 under the Investment Company Act
of 1940 (the "Act"), except that Class B shares and Class II shares are
subject to distribution fees.
Note 2. Significant Accounting Policies
The following is a summary of the significant accounting policies followed
by the Fund in the preparation of its financial statements:
Security Valuations: Portfolio securities are valued at amortized cost,
which approximates market value. The amortized cost method involves valuing
a security at its cost on the date of purchase and thereafter assuming a
constant amortization to maturity of any discount or premium.
Repurchase Agreements: The Fund, along with other affiliated registered
investment companies, may transfer uninvested cash balances into a single
joint account, the daily aggregate balance of which is invested in one or
more repurchase agreements collateralized by U.S. Treasury or federal agency
obligations. The Fund's custodian takes possession of the collateral pledged
for investments in repurchase agreements. The underlying collateral is
valued daily on a mark to market basis to ensure that the value, including
accrued interest, is at least equal to the repurchase price. In the event of
9
<PAGE>
SunAmerica Money Market Fund
NOTES TO FINANCIAL STATEMENTS -- December 31, 1998 -- (continued)
default of the obligation to repurchase, the Fund has the right to liquidate
the collateral and apply the proceeds in satisfaction of the obligation. If
the seller defaults and the value of the collateral declines or if
bankruptcy proceedings are commenced with respect to the seller of the
security, realization of the collateral by the Fund may be delayed or
limited.
Securities Transactions, Investment Income and Distributions to
Shareholders: Securities transactions are recorded as of the trade date.
Interest income, including the accretion of discount and amortization of
premium, is accrued daily. Realized gains and losses on sales of investments
are calculated on the identified cost basis.
Net investment income other than class specific expenses, and realized and
unrealized gains and losses are allocated daily to each class of shares
based upon the relative net asset value of outstanding shares of each
class of shares at the beginning of the day (after adjusting for the current
capital shares activity of the respective class).
Dividends from net investment income are declared daily and paid monthly.
Use of Estimates in Financial Statement Preparation: The preparation of
financial statements in accordance with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts and disclosures in the financial statements. Actual
results could differ from these estimates.
Federal Income Taxes: It is the Fund's policy to meet the requirements of
the Internal Revenue Code of 1986, as amended, applicable to regulated
investment companies and to distribute all of its taxable net income to its
shareholders. Therefore, no federal income or excise tax provisions are
required.
At December 31, 1998, the Fund had a capital loss carryforward available of
$40,283 which will expire as follows:
<TABLE>
<CAPTION>
Expiration
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
2002 2003 2004 2005
------ ------- ------- ------
$5,123 $11,725 $15,660 $7,775
</TABLE>
To the extent that these capital loss carryforwards are utilized to offset
future net realized gains on securities transactions, the gain, so offset
will not be distributed to the shareholders, to the extent provided by the
regulations.
10
<PAGE>
SunAmerica Money Market Fund
NOTES TO FINANCIAL STATEMENTS -- December 31, 1998 -- (continued)
Capital losses incurred after October 31 within the Fund's fiscal year are
deemed to arise on the first business day of the following fiscal year for
tax purposes. The Fund has incurred and will elect to defer $770 of such
capital losses.
Note 3. Joint Repurchase Agreement Account
As of December 31, 1998, the Fund had a 20.25% undivided interest, which
represented $33,634,000 in principal amount, in a repurchase agreement in a
joint account with other SunAmerica managed funds. As of such date, the
repurchase agreement in the joint account and the collateral therefore was
as follows:
State Street Bank & Trust Co. Repurchase Agreement, 4.45% dated 12/31/98, in
the principal amount of $166,079,000, repurchase price $166,161,117 due
1/4/99 collateralized by $49,880,000 U.S. Treasury Notes 5.75% due 9/30/99,
$49,770,000 U.S. Treasury Notes 5.125% due 8/31/00, $47,720,000 U.S.
Treasury Notes 6.25% due 2/28/02, and $14,020,000 U.S. Treasury Notes 7.875%
due 11/15/04, approximate aggregate value $169,408,050.
Note 4. Investment Advisory and Management Agreement, Distribution Agreement
and Service Agreement
The Fund has an Investment Advisory and Management Agreement (the
"Agreement") with SunAmerica Asset Management Corp. ("SAAMCo"), an indirect
wholly owned subsidiary of SunAmerica Inc. Under the Agreement, SAAMCo
provides continuous supervision of the Fund's portfolio and administers its
corporate affairs, subject to general review by the Directors. In connection
therewith, SAAMCo furnishes the Fund with office facilities, maintains
certain of the Fund's books and records, and pays the salaries and expenses
of all personnel, including officers of the Fund who are employees of SAAMCo
and its affiliates. The investment advisory and management fee to SAAMCo is
computed daily and payable monthly, at an annual rate of .50% on the first
$600 million of the Fund's daily net assets, .45% on the next $900 million
of net assets and .40% on net assets over $1.5 billion.
SunAmerica has voluntarily agreed to waive fees or reimburse expenses, if
necessary, to keep annual operating expenses at or below 1.75% for Class II
Shares. For the year ended December 31, 1998 SAAMCO reimbursed $24,706 of
expenses.
The Fund has a Distribution Agreement with SunAmerica Capital Services, Inc.
("SACS" or the "Distributor"), an indirect wholly owned subsidiary of
SunAmerica Inc. The Fund has adopted a Distribution Plan (the "Plan") in
accordance with the provisions of Rule 12b-1 under the 1940 Act. Rule 12b-1
permits an investment company directly or indirectly to pay expenses
associated with the distribution of its shares ("distribution expenses") in
accordance with a plan adopted by the investment
11
<PAGE>
SunAmerica Money Market Fund
NOTES TO FINANCIAL STATEMENTS -- December 31, 1998 -- (continued)
company's board of directors and approved by its shareholders. Pursuant to
such rule, the Directors and the shareholders of each class of shares of the
Fund have adopted Distribution Plans hereinafter referred to as the "Class A
Plan," the "Class B Plan" and the "Class II Plan". In adopting the Class A
Plan, the Class B Plan and the Class II Plan, the Directors determined that
there was a reasonable likelihood that each such Plan would benefit the Fund
and the shareholders of the respective class. The sales charge and
distribution fees of the Class B shares and Class II shares will not be used
to subsidize the sale of Class A shares.
Under the Class B Plan and the Class II Plan the Distributor receives
payments from the Fund at the annual rate of up to 0.75% of the average
daily net assets of the Fund's Class B and Class II shares, to compensate
the Distributor and certain securities firms for providing sales and
promotional activities for distributing that class of shares. The
distribution costs for which the Distributor may be reimbursed out of such
distribution fees include fees paid to broker-dealers that have sold Fund
shares, commissions, and other expenses such as those incurred for sales
literature, prospectus printing and distribution and compensation to
wholesalers. It is possible that in any given year the amount paid to the
Distributor under the Class B and Class II Plan may exceed the Distributor's
distribution costs as described above. The Class A Plan does not provide for
a distribution fee. The Distribution Plans provide that each class of shares
of the Fund may also pay the Distributor an account maintenance and service
fee of up to an annual rate of 0.15% of the aggregate average daily net
assets of such class of shares for payments to broker-dealers for providing
continuing account maintenance. In this regard, some payments are used to
compensate broker-dealers with account maintenance and service fees in an
amount up to 0.15% per year of the assets maintained in the Fund by their
customers. For the year ended December 31, 1998, SACS earned fees of
$1,252,206 from the Fund.
SACS also receives the proceeds of contingent deferred sales charges paid by
investors in connection with certain redemptions of the Fund's Class B and
Class II shares. For the year ended December 31, 1998, SACS informed the
Fund that it received approximately $156,328 in contingent deferred sales
charges.
The Fund has entered into a Service Agreement with SunAmerica Fund Services,
Inc. ("SAFS"), an indirect wholly owned subsidiary of SunAmerica Inc. Under
the Service Agreement, SAFS performs certain shareholder account functions
by assisting the Fund's transfer agent in connection with the services that
it offers to the shareholders of the Fund. The Service Agreement permits the
Fund to reimburse SAFS for costs incurred in providing such services which
is approved annually by the Directors. For the year ended December 31, 1998
the Fund (Class A, Class B and Class II) incurred expenses of $1,383,396 to
reimburse SAFS pursuant to the terms of the Service Agreement. Of this
amount, $131,531 was payable to SAFS at December 31, 1998.
12
<PAGE>
SunAmerica Money Market Fund
NOTES TO FINANCIAL STATEMENTS -- December 31, 1998 -- (continued)
Note 5. Capital Share Transactions
Transactions in shares of each class, all at $1.00 per share, for the year
ended December 31, 1998 and for the prior year were as follows:
<TABLE>
<CAPTION>
Money Market Fund
--------------------------------------------------------------------------------------
Class A Class B Class II
------------------------------ -------------------------- --------------------------
For the
For the year ended For the For the For the For the
year ended December 31, year ended year ended year ended year ended
December 31, 1997 December 31, December 31, December 31, December 31,
1998 1998 1997 1998 1997
-------------- -------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold........... 3,164,014,503 2,362,300,860 119,850,351 116,212,070 14,608,130 2,571,799
Reinvested dividends.. 27,236,164 21,803,390 1,348,769 1,087,163 28,248 3,398
Shares redeemed....... (3,015,326,722) (2,270,925,578) (114,760,361) (118,023,672) (13,605,120) (2,173,572)
-------------- -------------- ------------ ------------ ----------- ----------
Net increase
(decrease)........... 175,923,945 113,178,672 6,438,759 (724,439) 1,031,258 401,625
============== ============== ============ ============ =========== ==========
</TABLE>
Note 6. Directors' Retirement Plan
The Directors (and Trustees) of the SunAmerica Family of Mutual Funds have
adopted the SunAmerica Disinterested Trustees' and Directors' Retirement
Plan (the "Retirement Plan") effective January 1, 1993 for the unaffiliated
Directors. The Retirement Plan provides generally that if an unaffiliated
Director who has at least 10 years of consecutive service as a Disinterested
Director of any of the SunAmerica mutual funds (an "Eligible Director")
retires after reaching age 60 but before age 70 or dies while a Director,
such person will be eligible to receive a retirement or death benefit from
each SunAmerica mutual fund with respect to which he or she is an Eligible
Director. As of each birthday, prior to the 70th birthday, but in no event
for a period greater than 10 years, each Eligible Director will be credited
with an amount equal to 50% of his or her regular fees (excluding committee
fees) for services as a Disinterested Director of each SunAmerica mutual
fund for the calendar year in which such birthday occurs. In addition, an
amount equal to 8.5% of any amounts credited under the preceding clause
during prior years, is added to each Eligible Director's account until such
Eligible Director reaches his or her 70th birthday. An Eligible Director may
receive benefits payable under the Retirement Plan, at his or her election,
either in one lump sum or in up to fifteen annual installments. As of
December 31, 1998, the Fund had accrued $69,379 for the Retirement Plan,
which is included in accrued expenses on the Statement of Assets and
Liabilities and for the year ended December 31, 1998 expensed $21,091 for
the Retirement Plan, which is included in Directors' fees and expenses on
the Statement of Operations.
13
<PAGE>
SunAmerica Money Market Fund
NOTES TO FINANCIAL STATEMENTS -- December 31, 1998 (continued)
Note 7. Subsequent Events
On January 1, 1999, SunAmerica Inc., pursuant to the terms of an agreement
entered into with American International Group, Inc. ("AIG"), merged with
and into AIG, and consequently, SunAmerica Asset Management Corp.
("SAAMCo"), which acts as investment adviser of SunAmerica Money Market Fund
(the "Fund"), became an indirect wholly owned subsidiary of AIG. In
connection therewith, on December 30, 1998, shareholders approved a new
investment advisory and management agreement with SAAMCo to take effect on
January 1, 1999. The new agreement has no effect on the fees or expenses
payable by the Fund or its shareholders.
14
<PAGE>
SunAmerica Money Market Fund
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of SunAmerica Money Market Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of SunAmerica Money Market Fund (the
"Fund") at December 31, 1998, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities at December 31, 1998 by correspondence with the custodian and
brokers, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
February 16, 1999
15
<PAGE>
SunAmerica Money Market Fund
SHAREHOLDER INFORMATION (unaudited)
Supplemental Proxy Information: A Special Meeting of the Shareholders of the
SunAmerica Money Market Fund was held on December 30, 1998. The fund voted in
favor of adopting the following proposals.
1. To elect a slate of five members to the Board of Trustees to hold office
until their successors are duly elected and qualified.
<TABLE>
<CAPTION>
Votes in Votes
Favor of Abstained
----------- ----------
<S> <C> <C>
S. James Coppersmith......................... 336,826,186 29,808,978
Samuel M. Eisenstat.......................... 336,826,186 29,808,978
Stephen J. Gutman............................ 336,826,186 29,808,978
Peter A. Harbeck............................. 336,826,186 29,808,978
Sebastiano Sterpa............................ 336,826,186 29,808,978
</TABLE>
2. To approve a new investment advisory and management agreement between
SunAmerica Money Market Fund, 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 and
management agreement.
<TABLE>
<CAPTION>
Votes in Votes Votes
Favor of Against Abstained
-------- --------- ----------
<S> <C> <C>
327,327,260 8,056,203 31,251,700
</TABLE>
3. To approve changing the fundamental investment restriction relating to:
(a) the ability to engage in borrowing transactions.
<TABLE>
<CAPTION>
Votes in Votes Votes
Favor of Against Abstained
-------- ---------- ----------
<S> <C> <C>
299,828,261 25,441,013 41,365,890
</TABLE>
(b) the ability to engage in lending transactions.
<TABLE>
<CAPTION>
Votes in Votes Votes
Favor of Against Abstained
-------- ---------- ----------
<S> <C> <C>
301,545,646 24,430,197 40,659,321
</TABLE>
4. To ratify the selection of independent accountants.
<TABLE>
<CAPTION>
Votes in Votes Votes
Favor of Against Abstained
-------- --------- ----------
<S> <C> <C>
329,108,634 6,728,966 30,797,563
</TABLE>
16
<PAGE>
SunAmerica Money Market Fund
FASTFACTS . . . Available for your convenience
The easy and convenient way to obtain the most current information on your
mutual funds. By calling our toll free number, 1-800-654-4760, you can receive
mutual fund information 24 hours a day. If you require any additional
information, please call us at 1-800-858-8850 Monday-Friday 8:30 a.m.-7:00 p.m.
(Eastern time).
Here's How it Works
All you need is:
* A Touch-Tone Telephone
* Your account number
* Your Personal Identification number "PIN"
(the last four digits of your Social Security number, a tax identification
number or a number chosen by you)
* Your Fund Code
<TABLE>
<CAPTION>
CLASS
-----------
A B II
EQUITY FUNDS --- --- ---
<S> <C> <C> <C>
Balanced Assets 51 551 731
Blue Chip Growth 522 22 820
Mid-Cap Growth 71 571 821
Small Company
Growth 36 536 836
Growth and
Income 24 524 824
"Dogs" of Wall
Street 720 730 740
</TABLE>
<TABLE>
<CAPTION>
CLASS
-----------
A B II
INCOME FUNDS --- --- ---
<S> <C> <C> <C>
U.S. Government
Securities 70 570 N/A
Federal
Securities 534 34 N/A
Diversified
Income 580 80 N/A
High Income 28 228 828
Tax Exempt
Insured 33 533 N/A
Money Market 35 535 735
</TABLE>
<TABLE>
<CAPTION>
CLASS
-----------
STYLE SELECT A B II
SERIES --- --- ---
<S> <C> <C> <C>
Aggressive
Growth 701 711 771
Mid-Cap Growth 702 712 772
Value 704 714 774
International
Equity 703 713 773
Small-Cap Value 705 715 775
Large-Cap Value 706 716 776
Large-Cap Blend 708 728 778
Large-Cap Growth 709 719 779
Focus 722 732 742
</TABLE>
Press the following Touch-Tone Button(s) to make your selection:
------------------------
2-1 Account Balances and
Recent Transaction
2-2 Fund Prices and
Dividend Information
on Funds You Own
--2-3 To Process an
- - ----------------------------------------------- | Exchange
1--Fund Prices and Dividend Information | 2-4 To Change your
- - ----------------------------------------------- | Personal
| Identification
- - ----------------------------------------------- | Number
2--To Work with Funds You Own ---- ------------------------
- - -----------------------------------------------
- - ----------------------------------------------- . Press 0 at anytime
3--Order Statements and Checkbooks during this recording to
- - ----------------------------------------------- be transferred to a
service representative
- - ----------------------------------------------- Monday-Friday, 8:30 am
4--Fund Objectives and Fund Literature Information to 7:00 pm, EST.
- - -----------------------------------------------
. To return to the main or
- - ----------------------------------------------- previous menu press "*".
5--Mailing and Wiring Instructions
- - ----------------------------------------------- . When working with a list
of funds, you may touch
- - ----------------------------------------------- "9" to fast forward to
6--Year-End Information and Duplicate Tax Forms the next fund, or "7" to
- - ----------------------------------------------- go back to the previous
fund.
17
<PAGE>
Trustees
S. James Coppersmith
Samuel M. Eisenstat
Stephen J. Gutman
Peter A. Harbeck
Peter McMillan III
Sebastiano Sterpa
Officers
Peter A. Harbeck, President
Nancy Kelly, Vice President
P. Christopher Leary, Vice President
Robert M. Zakem, Secretary
Peter C. Sutton, Treasurer
John T. Genoy, Assistant Treasurer
Donna M. Handel, Assistant Treasurer
Cheryl L. Hawthorne, Assistant Treasurer
Abbe P. Stein, Assistant Secretary
Investment Adviser
SunAmerica Asset Management Corp.
The SunAmerica Center
733 Third Avenue
New York, NY 10017-3204
Distributor
SunAmerica Capital Services, Inc.
The SunAmerica Center
733 Third Avenue
New York, NY 10017-3204
Shareholder Servicing Agent
SunAmerica Fund Services, Inc.
The SunAmerica Center
733 Third Avenue
New York, NY 10017-3204
Custodian and Transfer Agent
State Street Bank and Trust Company
P.O. Box 419572
Kansas City, MO 64141-6572
This report is submitted solely for the general information of shareholders of
the Fund. Distribution of this report to persons other than shareholders of the
Fund is authorized only in connection with a currently effective prospectus,
setting forth details of the Fund, which must precede or accompany this report.
[LOGO] SunAmerica
Mutual Funds
The SunAmerica Center
733 Third Avenue
New York, NY 10017-3204
Bulk Rate
U.S. Postage
PAID
Kansas City, MO
Permit No. 2891
MM ANN
