<PAGE>
As filed with the Securities and Exchange Commission on April 28, 2000
Securities Act File No. 2-85370
Investment Company Act File Act No. 811-3807
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. [_]
POST-EFFECTIVE AMENDMENT NO. 24 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 23
(Check appropriate box or boxes)
SUNAMERICA MONEY MARKET FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
The SunAmerica Center
733 Third Avenue
New York, NY 10017
(Address of Principal Executive Office)(Zip Code)
Registrant's telephone number, including area code: (800) 858-8850
Robert M. Zakem, Esq.
Senior Vice President and General Counsel
SunAmerica Asset Management Corp.
The SunAmerica Center
733 Third Avenue - 3rd Floor
New York, NY 10017-3204
(Name and Address for Agent for Service)
Copy to:
Margery K. Neale, Esq.
Swidler Berlin Shereff Friedman, LLP
The Chrysler Building
405 Lexington Avenue
New York, NY 10174
Approximate Date of Proposed Public Offering: As soon as practicable after
this Registration Statement becomes effective.
It is proposed that this filing will become effective (check appropriate
box)
[X] immediately upon filing pursuant to paragraph (b)
[_] on April 30, 1999 pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph (a)(1)
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[_] This post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
<PAGE>
April 28, 2000 PROSPECTUS
SUNAMERICA MONEY MARKET FUND
The Securities and
Exchange Commission has
not approved or
disapproved these
securities or passed
upon the adequacy of
this prospectus. Any
representation to the
contrary is a criminal
offense.
[LOGO OF SUNAMERICA
MUTUAL FUNDS]
<PAGE>
Table of Contents
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
FUND HIGHLIGHTS......................................... 2
FINANCIAL HIGHLIGHTS.................................... 6
SHAREHOLDER ACCOUNT INFORMATION......................... 7
FUND MANAGEMENT......................................... 14
</TABLE>
[LOGO OF SUNAMERICA MUTUAL FUNDS]
<PAGE>
Fund Highlights
- --------------------------------------------------------------------------------
Q&A
Money market in-
struments
are high-quality
short-term debt
obligations. The
money market in-
struments in
which the Fund
will invest in-
clude securities
issued or guaran-
teed as to prin-
cipal and inter-
est by the U.S.
government, its
agencies or in-
strumentalities;
certificates of
deposit, bankers'
acceptances and
time deposits;
commercial paper
and other short-
term obligations
of U.S. and for-
eign corpora-
tions; repurchase
agreements; re-
verse repurchase
agreements; and
asset-backed
securities.
"High-quality"
instruments
have a very
strong capacity
to pay interest
and repay
principal.
The following questions and answers are designed to give you an overview of,
and to provide you with information about, the Fund and its investment goal,
principal strategies, and principal investment techniques.
Q: What are the Fund's investment goal and principal investment strategies and
techniques?
A: The Fund seeks as high a level of current income as is consistent with li-
quidity and stability of capital. The goal may be changed without share-
holder approval. However, you will be notified of any change. The Fund in-
vests primarily in high-quality money market instruments, selected primarily
on the basis of quality and yield. The Fund is a money market fund and seeks
to maintain a stable share price of $1.00. In order to do this, the Fund
must comply with a rule of the Securities and Exchange Commission that lim-
its the types of securities in which the Fund may invest.
Q: What are the principal risks of investing in the Fund?
A: While the Fund invests only in high-quality money market instruments, you
should be aware that an investment in the Fund is subject to the risk that
the value of its investments may be subject to changes in interest rates.
Furthermore, although the Fund seeks to maintain a stable share price of
$1.00, there can be no assurance that the Fund will be able to do so and it
is possible to lose money by investing in the Fund.
Shares of the Fund are not bank deposits and are not guaranteed or insured
by any bank, government entity or the Federal Deposit Insurance Corporation.
As with any mutual fund, there is no guarantee that the Fund will be able to
achieve its investment goal or that the net return on an investment in the
Fund will exceed what could have been obtained through other investment or
savings vehicles.
Q: How has the Fund performed historically?
A: The following Risk/Return Bar Chart and Table illustrate the risks of in-
vesting in the Fund by showing changes in the Fund's performance from calen-
dar year to calendar year.
Sales charges are not reflected in the bar chart. If these amounts were re-
flected, returns would be less than those shown. Of course, past performance
is not necessarily an indication of how the Fund will perform in the future.
2
<PAGE>
- --------------------------------------------------------------------------------
(Class A)
During the 10-year period shown in
the bar chart, the highest return
for a quarter was 2.00% (quarter
ended 12/31/90) and the lowest
return for a quarter was 0.50%
(quarters ended 3/31/93 and
3/31/94)
[GRAPH]
1990 7.44%
1991 5.32%
1992 2.74%
1993 2.32%
1994 3.47%
1995 5.18%
1996 4.61%
1997 4.81%
1998 4.80%
1999 4.44%
<TABLE>
<CAPTION>
Average Annual Total Returns Past One Past Five Past Ten Return
(as of the calendar year ended Year Years Years Since
December 31, 1999) Inception*
<S> <C> <C> <C> <C> <C>
SunAmerica Money Market Fund A 4.44% 4.77% 4.50% 5.41%
B (0.41)% 3.63% N/A 3.68%
II 1.54% N/A N/A 3.33%
</TABLE>
*Inception Date for Class A shares is October 2, 1984; inception date for Class
B shares is September 24, 1993; inception date for Class C, which were
redesignated Class II on December 1, 1998, is October 2, 1997.
Q: What are the Fund's expenses?
A:The following table describes the fees and expenses that you may pay if you
buy and hold shares of the Fund.
3
<PAGE>
Fund Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A(/1/) Class B Class II
------------ ------- --------
<S> <C> <C> <C>
Shareholder Fees
(fees paid directly from your
investment)
Maximum Sales Charge (Load) Im-
posed on Purchases (as a per-
centage of offering price) None None 1.00%
Maximum Deferred Sales Charge
(Load) (as a per-centage of
amount redeemed)(/2/) None 4.00% 1.00%
Maximum Sales Charge (Load)
Imposed on Reinvested
Dividends None None None
Redemption Fee(/3/) None None None
Exchange Fee $5.00 $5.00 $5.00
Maximum Account Fee None None None
Annual Fund Operating Expenses
(expenses that are deducted
from Fund assets)
Management Fees 0.50% 0.50% 0.50%
Distribution (12b-1) Fees(/4/) 0.15% 0.90% 0.90%
Other Expenses 0.30%(/5/) 0.35% 0.35%
----- ----- -----
Total Annual Fund Operating
Expenses(/5/) 0.95% 1.75% 1.75%
Expense Reimbursement -- -- --
----- ----- -----
Net Expenses(/6/) 0.95% 1.75% 1.75%
</TABLE>
(1) Investors wishing to purchase shares of the Fund are generally required to
purchase Class A shares. Class B and Class II shares of the Fund will typi-
cally be issued in exchange for Class B shares or Class II shares, respec-
tively, of other SunAmerica Mutual Funds.
(2) You may pay a deferred sales charge on Class B shares only if you redeem
within six years from purchase date. The deferred sales charge on Class II
shares applies only to redemptions made within eighteen months of purchase.
(3) A $15.00 fee may be imposed for wire or overnight mail redemptions.
(4) Because these fees are paid out of the Fund's assets on an on-going basis,
over time these fees will increase the cost of your investment and may cost
you more than paying other types of sales charges.
(5) For the fiscal year ended December 31, 1999, the Total Operating Expenses
for Class A shares reflect the effect of a gross up of custody and transfer
agent expense credits of .01%.
(6) The Board of Directors, including a majority of the Independent Directors,
approved the Investment Advisory and Management Agreement subject to the
net expense ratio set forth above. The Adviser may not increase such ratio,
which is contractually required by agreement with the Board of Directors,
without the approval of the Directors, including a majority of the Indepen-
dent Directors. The expense waivers and fee reimbursements will continue
indefinitely, subject to termination by the Directors, including a majority
of the Independent Directors.
4
<PAGE>
- --------------------------------------------------------------------------------
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that
the Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions your costs would be:
If you redeemed your investment at the end of the periods indicated:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
(Class A shares)............................... $ 97 $303 $ 526 $1,166
(Class B shares)*.............................. $578 $851 $1,149 $1,752
(Class II shares).............................. $376 $646 $1,039 $2,142
You would pay the following expenses if you did not redeem your shares:
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
(Class A shares)............................... $ 97 $303 $ 526 $1,166
(Class B shares)*.............................. $178 $551 $ 949 $1,752
(Class II shares).............................. $276 $646 $1,039 $2,142
</TABLE>
* Class B shares convert to Class A shares approximately seven years after
purchase. Therefore, expense information for years 8, 9 and 10 is the same
for both Class A and B shares.
5
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------------
The Financial Highlights table for the Fund is intended to help you understand
the Fund's financial performance for the past 5 years. Certain information re-
flects financial results for a single Fund share. The total returns in each ta-
ble represent the rate that an investor would have earned (or lost) on an in-
vestment in the Fund (assuming reinvestment of all dividends and distribu-
tions). This information has been audited by PricewaterhouseCoopers LLP, whose
report, along with the Fund's financial statements, are incorporated by refer-
ence in the Fund's Statement of Additional Information (SAI) which is available
upon request.
SUNAMERICA MONEY MARKET FUND
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Total Dividends Net Assets Ratio of
Value Net from from net Net Asset end of expenses
Period beginning investment investment investment Value end Total period to average
Ended of period income operations income of period Return(/1/) (000's) net assets(/2/)
- ------ --------- ---------- ---------- ---------- --------- ----------- ---------- ---------------
<CAPTION>
Class A
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/95..... $ 1.000 $ 0.051 $ 0.051 ($0.051) $ 1.000 5.18% $ 316,308 1.01%
12/31/96..... 1.000 0.045 0.045 (0.045) 1.000 4.61 398,698 1.00
12/31/97..... 1.000 0.047 0.047 (0.047) 1.000 4.82 511,908 0.98
12/31/98..... 1.000 0.047 0.047 (0.047) 1.000 4.80 687,801 0.95
12/31/99..... 1.000 0.044 0.044 (0.044) 1.000 4.44 881,223 0.95
<CAPTION>
Class B
-------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/95..... $ 1.000 $ 0.044 $ 0.044 ($0.044) $ 1.000 4.49% $ 51,799 1.78%
12/31/96..... 1.000 0.038 0.038 (0.038) 1.000 3.83 29,114 1.77
12/31/97..... 1.000 0.040 0.040 (0.040) 1.000 4.03 28,391 1.74
12/31/98..... 1.000 0.039 0.039 (0.039) 1.000 3.96 34,828 1.75
12/31/99..... 1.000 0.035 0.035 (0.035) 1.000 3.59 35,103 1.75
<CAPTION>
Class II
--------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10/2/97-
12/31/97.... $ 1.000 $ 0.010 $ 0.010 ($0.010) $ 1.000 1.00% $ 402 1.75%(/3/)(/4/)
12/31/98..... 1.000 0.039 0.039 (0.039) 1.000 3.94 1,433 1.75(/4/)
12/31/99..... 1.000 0.035 0.035 (0.035) 1.000 3.57 8,235 1.61
<S> <C>
Ratio of net
investment
income to
Period average net
Ended assets
- ------ -----------------------
<CAPTION>
<S> <C>
12/31/95..... 5.04%
12/31/96..... 4.52
12/31/97..... 4.73
12/31/98..... 4.70
12/31/99..... 4.36
<CAPTION>
<S> <C>
12/31/95..... 4.37%
12/31/96..... 3.76
12/31/97..... 3.95
12/31/98..... 3.88
12/31/99..... 3.53
<CAPTION>
<S> <C>
10/2/97-
12/31/97.... 4.01%(/3/)(/4/)
12/31/98..... 3.83(/4/)
12/31/99..... 3.59
</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 as follows:
<TABLE>
<CAPTION>
12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Class A......... 0.05% 0.03% 0.02% 0.03% 0.01%
Class B......... 0.13% 0.04% 0.02% 0.01% --
(3) Annualized.
(4) Net of the following expense reimbursements (based on average net assets):
<CAPTION>
12/31/97 12/31/98
-------- --------
<S> <C> <C> <C> <C> <C>
Class II........ 4.74% 2.55%
</TABLE>
6
<PAGE>
Shareholder Account Information
- --------------------------------------------------------------------------------
SELECTING A SHARE CLASS
The Fund offers three classes of shares: Class A, Class B and Class II shares.
Each class of shares has its own cost structure, as shown below. If you wish to
purchase shares of the Fund, you will generally be required to purchase Class A
shares, as Class B and Class II shares of the Fund are typically issued only in
exchange for Class B shares or Class II shares of other SunAmerica Mutual
Funds.
Class A Class B Class II
. No front-end . No front-end . Front-end sales
sales charges; sales charge; charge, as
all your money all your money described below.
goes to work for goes to work for
you right away. you right away.
. Higher annual . Higher annual
. Lower annual expenses than expenses than
expenses than Class A shares. Class A shares.
Class B or Class . Deferred sales
II shares. . Deferred sales charge on shares
charge on shares you sell within
you sell within eighteen months
six years of of purchase, as
purchase, as described below.
described below. . No conversion to
Class A.
. Automatic
conversion to
Class A shares
after
approximately
one year after
such time that
no CDSC would be
payable upon
redemption, as
described below,
thus reducing
future annual
expenses.
CALCULATION OF SALES CHARGES
Class A. Class A shares are available with no front-end sales charge.
Class B. Shares are offered at their net asset value per share, without any
initial sales charge. However, there is a deferred sales charge on shares you
sell within six years of buying them. The longer the time between the purchase
and the sale of shares, the lower the rate of the CDSC.
Class B deferred charges:
<TABLE>
<CAPTION>
Deferred Sales Charge
Years after purchase on shares being sold
<S> <C>
1st or 2nd year 4.00%
3rd or 4th year 3.00%
5th year 2.00%
6th year 1.00%
7th year and thereafter None
</TABLE>
Class II. Sales Charges are as follows:
<TABLE>
<CAPTION>
Sales Charge Concession to Dealers
-----------------------------------------------------------------------------------
% of % of Net % of
Offering Amount Offering
Price Invested Price
-----------------------------------------------------------------------------------
<S> <C> <C>
1.00% 1.01% 1.00%
</TABLE>
There is also a CDSC of 1% on shares you sell within 18 months after you buy
them.
Determination of CDSC. Each CDSC is based on the original purchase cost or the
current market value of the shares being sold, whichever is less. There is no
CDSC on shares you purchase through reinvestment of dividends. To keep your
CDSC as low as possible, each time you place a request to sell shares we will
first sell any shares in your account that are not subject to a CDSC. If there
are not enough of these shares available, we will sell shares that have the
lowest CDSC.
For purposes of the deferred sales charge, we count all purchases you make dur-
ing a calendar month as having been made on the FIRST day of that month.
7
<PAGE>
Shareholder Account Information
- --------------------------------------------------------------------------------
SALES CHARGE REDUCTIONS AND WAIVERS
Waivers for Certain Investors. We will generally waive the deferred sales
charge for Class B or Class II shares in the following cases:
. within one year of the shareholder's death or becoming disabled
. taxable distributions or loans to participants made by qualified retire-
ment plans or retirement accounts (not including rollovers) for which
SunAmerica Fund Services, Inc. serves as a fiduciary
. Fund Directors and other individuals who are affiliated with the Fund or
other SunAmerica Mutual Funds and their families
. to make payments through the Systematic Withdrawal Plan (subject to cer-
tain conditions)
To utilize: if you think you may be eligible for a sales charge reduction or
deferred sales charge waiver, contact your broker or financial advisor.
Reinstatement privilege. If you sell shares of the Fund, you may invest some or
all of the proceeds in the same share class of the Fund within one year without
a sales charge. If you paid a CDSC when you sold your shares, we will credit
your account with the dollar amount of the CDSC at the time of sale. This may
impact the amount of gain or loss recognized on the previous sale, for tax pur-
poses. All accounts involved must be registered in the same name(s).
DISTRIBUTION AND SERVICE (12b-1) FEES
Each class of shares of the Fund has its own 12b-1 plan, which allows for dis-
tribution and account maintenance and service fees (payable to the Distributor)
based on a percentage of average daily net assets, as follows:
<TABLE>
<CAPTION>
Class Distribution Fee Service Fee
<S> <C> <C>
A None .15%
B .75% .15%
II .75% .15%
</TABLE>
Because 12b-1 fees are paid out of the Fund's assets on an ongoing basis, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales charges.
OPENING AN ACCOUNT
1. Read this prospectus carefully.
2. Determine how much you want to invest. The minimum initial investments for
the Fund are as follows:
. non-retirement account: $1,000
. retirement account: $250
. dollar cost averaging: $500 to open; you must invest at least $25 a month
The minimum subsequent investments for the Fund are as follows:
. non-retirement account: $100
. retirement account: $25
3. Complete the appropriate parts of the Account Application, carefully follow-
ing the instructions. If you have questions, please contact your broker or
financial advisor or call Shareholder/Dealer Services at 1-800-858-8850.
4. Complete the appropriate parts of the Supplemental Account Application. By
applying for additional investor services now, you can avoid the delay and
inconvenience of having to submit an additional application if you want to
add services later.
5. Make your initial investment using the chart on the next page. You can ini-
tiate any purchase, exchange or sale of shares through your broker or finan-
cial advisor.
8
<PAGE>
- --------------------------------------------------------------------------------
BUYING SHARES
Opening an account Adding to an account
By check
................................................................................
. Make out a check for the . Make out a check for the
investment amount, investment amount payable
payable to the Fund or to the Fund or SunAmerica
SunAmerica Funds. Funds.
. Deliver the check and . Include the stub from
your completed Account your Fund statement or a
Application (and note specifying the Fund
Supplemental Account name, your share class,
Application, if your account number and
applicable) to your the name(s) in which the
broker or financial account is registered.
advisor, or mail them to: . Indicate the Fund and
account number in the
SunAmerica Fund Services, Inc. memo section of your
Mutual Fund Operations, 3rd Floor check.
The SunAmerica Center . Deliver the check and
733 Third Avenue your note to your broker
New York, New York 10017-3204. or financial advisor, or
mail them to
. All purchases must be in
U.S. dollars. Cash will Non-Retirement Accounts:
not be accepted. A $25.00 SunAmerica Fund Services,
fee will be charged for Inc.
all checks returned due c/o NFDS
to insufficient funds. P.O. Box 219373
Kansas City, Missouri
64121-9373
Retirement Accounts:
SunAmerica Fund Services,
Inc.
Mutual Fund Operations, 3rd
Floor
The SunAmerica Center
733 Third Avenue
New York, New York 10017-
3204
By wire
................................................................................
. Deliver your completed . Instruct your bank to
application to your wire the amount of your
broker or financial investment to:
advisor or fax it to
SunAmerica Fund Services, State Street Bank & Trust
Inc. at 212-551-5585. Company
. Obtain your account Boston, MA
number by referring to ABA #0110-00028
your statement or by DDA # 99029712
calling your broker or
financial advisor or Specify the Fund name, your
Shareholder/Dealer choice of share class, your
Services at 1-800-858- Fund number and account num-
8850, ext. 5125. ber and the name(s) in which
the account is registered.
. Instruct your bank to Your bank may charge a fee to
wire the amount of your wire funds.
investment to:
State Street Bank & Trust Company
Boston, MA
ABA #0110-00028
DDA # 99029712
Specify the Fund name, your
share class, your Fund num-
ber, account number and the
name(s) in which the account
is registered. Your bank may
charge a fee to wire funds.
To open or add to an account using dollar cost averaging, see "Additional In-
vestor Services."
9
<PAGE>
Shareholder Account Information
- --------------------------------------------------------------------------------
SELLING SHARES
How Requirements
Through Your Broker or Financial Advisor
................................................................................
. Accounts of any type. . Call your broker or
. Sales of any amount. financial advisor to
place your order to sell
shares.
By mail
................................................................................
. Accounts of any type. . Write a letter of
instruction indicating
. Include all signatures the Fund name, your share
and any additional class, your account
documents that may be number, the name(s) in
required (see next page). which the account is
registered and the dollar
value or number of shares
. Mail the materials to: you wish to sell.
SunAmerica Fund Services,
Inc.
. Sales of $100,000 or more
Mutual Fund Operations, 3rd require the letter of
Floor instruction to have a
signature guarantee.
The SunAmerica Center
733 Third Avenue . A check will normally be
mailed on the next
New York, New York 10017- business day to the
3204 name(s) and address in
which the account is
registered, or otherwise
according to your letter
of instruction.
By phone
................................................................................
. Most accounts.
. Sales of less than . Call Shareholder/Dealer
$100,000. Services at 1-800-858-
8850, extension 5125
between 8:30 a.m. and
7:00 p.m. (Eastern time)
on most business days.
State the Fund name, the
name of the person
requesting the
redemption, your share
class, your account
number, the name(s) in
which the account is
registered and the dollar
value or number of shares
you wish to sell.
. A check will be mailed to
the name(s) and address
in which the account is
registered, or to a
different address
indicated in a written
authorization previously
provided to the Fund by
the shareholder(s) on the
account.
By wire
................................................................................
. Request by mail to sell . Proceeds will normally be
any amount (accounts of wired on the next
any type). business day. A $15 fee
. Request by phone to sell will be deducted from
less than $100,000. your account.
To sell shares through a systematic withdrawal plan, see "Additional Investor
Services."
10
<PAGE>
- --------------------------------------------------------------------------------
Selling shares in writing. In certain circumstances, you will need to make your
request to sell shares in writing. Corporations, executors, administrators,
trustees or guardians may need to include additional items with a request to
sell shares. You may also need to include a signature guarantee, which protects
you against fraudulent orders. You will need a signature guarantee if:
. your address of record has changed within the past 30 days
. you are selling more than $100,000 worth of shares
. you are requesting payment other than by a check mailed to the address of
record and payable to the registered owner(s)
You can generally obtain a signature guarantee from the following sources:
. a broker or securities dealer
. a federal savings, cooperative or other type of bank
. a savings and loan or other thrift institution
. a credit union
. a securities exchange or clearing agency
A notary public CANNOT provide a signature guarantee.
TRANSACTION POLICIES
Valuation of shares. The net asset value per share (NAV) for the Fund and class
is determined each business day at the close of regular trading on the New York
Stock Exchange (generally 4:00 p.m., Eastern time) by dividing the net assets
of each class by the number of its shares outstanding. It is the intention of
the Fund to maintain a net asset value per share of $1.00, although there can
be no assurance that the Fund will be able to do so. In accordance with the
rules and regulations of the Securities and Exchange Commission, the Fund in-
tends to value its portfolio securities based upon their amortized cost. This
entails initially valuing a security at its cost and thereafter assuming a con-
stant amortization to maturity of any premium or discount regardless of the im-
pact of fluctuating interest rates on the market value of the instrument. While
this method provides certainty in valuation, it may result in periods during
which value, as determined by the amortized cost method, is higher or lower
than the price the Fund would receive if it sold the instrument.
Buy and sell prices. When you buy shares, you pay the NAV plus any applicable
sales charges, as described earlier. When you sell shares, you receive the NAV
minus any applicable deferred sales charges.
Execution of requests. The Fund is open on those days when the New York Stock
Exchange is open for regular trading. We execute buy and sell requests at the
next NAV to be calculated after your request is received in proper form by the
Fund. If the Fund or the Distributor receives your order before the Fund's
close of business (generally 4:00 p.m., Eastern time), you will receive that
day's closing price. If the Fund or the Distributor receives your order after
that time, you will receive the next business day's closing price. If you place
your order through a broker or financial advisor, you should make sure the or-
der is transmitted to the Fund before its close of business. The Fund and the
Distributor reserve the right to reject any order to buy shares.
During periods of extreme volatility or market crisis, the Fund may temporarily
suspend the processing of sell requests, or may postpone payment of proceeds
for up to three business days or longer, as allowed by federal securities laws.
If the Fund determines that it would be detrimental to the best interests of
the remaining shareholders of the Fund to make payment of redemption proceeds
wholly or partly in cash, the Fund may pay the redemption price by a distribu-
tion in kind of securities from the Fund in lieu of cash. However, the Fund has
made an election that requires it to pay a certain portion of redemption pro-
ceeds in cash.
At various times, the Fund may be requested to redeem shares for which it has
not yet received good payment. The Fund may delay or cause to be delayed the
mailing of a redemption check until such time as good payment (e.g., cash or
certified check drawn on a United States bank) has been collected for the pur-
chase of such shares, which will not exceed 15 days.
Telephone transactions. For your protection, telephone requests are recorded in
order to verify their accuracy. In addition, Shareholder/Dealer Services will
take measures to verify the identity of the caller, such as asking for name,
account number, social security or other taxpayer ID number and other relevant
information. If appropriate measures are not taken, the Fund is responsible for
any losses that may occur to any account due to an unauthorized telephone call.
Also for your protection, telephone transactions are not permitted on accounts
whose names or addresses have changed within the past 30 days. At times of peak
activity, it may be difficult to place requests by phone. During these times,
consider sending your request in writing.
Exchanges. You may exchange shares of the Fund for shares of the same class of
any other fund distributed by SunAmerica Capital Services, Inc.; however, ex-
changes of Class A shares may be subject to applicable sales charges imposed by
the acquired fund. Before making an exchange, you should review a copy of the
prospectus of the fund into which you would like to exchange. All exchanges are
subject to applicable minimum investment requirements. A Systematic Exchange
Program is described under "Additional Investor Services."
11
<PAGE>
Shareholder Account Information
- --------------------------------------------------------------------------------
If you exchange shares that were purchased subject to a CDSC, the CDSC will
continue to apply following the exchange. In determining the CDSC applicable to
shares being sold after an exchange, we will take into account the length of
time you held those shares prior to the exchange. Your CDSC schedule will not
change if you exchange Class C or Class II shares that you purchased prior to
December 1, 1998 for another fund's Class II shares (which currently have a
longer CDSC schedule).
To protect the interests of other shareholders, we may cancel the exchange
privileges of any investors that, in the opinion of the Fund, are using market
timing strategies or making excessive exchanges. The Fund may change or cancel
its exchange privilege at any time, upon 60 days' written notice to its share-
holders. The Fund may also refuse any exchange order.
Multi-party checks. The Fund may agree to accept a "multi-party check" in pay-
ment for Fund shares. This is a check made payable to the investor by another
party and then endorsed over to the Fund by the investor. If you use a multi-
party check to purchase shares, you may experience processing delays. In addi-
tion, the Fund is not responsible for verifying the authenticity of any en-
dorsement and assumes no liability for any losses resulting from a fraudulent
endorsement.
ADDITIONAL INVESTOR SERVICES
To select one or more of these additional services, complete the relevant
part(s) of the Supplemental Account Application. To add a service to an exist-
ing account, contact your broker or financial advisor, or call
Shareholder/Dealer Services at 1-800-858-8850, extension 5125.
Dollar Cost Averaging lets you make regular investments from your bank account
to any fund of your choice distributed by SunAmerica Capital Services, Inc. You
determine the frequency and amount of your investments, and you can terminate
your participation at any time.
Systematic Withdrawal Plan may be used for routine bill payment or periodic
withdrawals from your account. To use:
. Make sure you have at least $5,000 worth of shares in your account.
. Make sure you are not planning to invest more money in this account (buy-
ing shares during a period when you are also selling shares of the same
fund is not advantageous to you, because of sales charges).
. Specify the payee(s) and amount(s). The payee may be yourself or any other
party, and there is no limit to the number of payees you may have, as long
as they are all on the same payment schedule. Each withdrawal must be at
least $50.
. Determine the schedule: monthly, quarterly, semi-annually, annually or in
certain selected months.
. Make sure your dividends and capital gains are being reinvested.
Systematic Exchange Program may be used to exchange shares of the Fund periodi-
cally for the same class of shares of one or more other funds distributed by
SunAmerica Capital Services, Inc. To use:
. Specify the SunAmerica Mutual Fund(s) from which you would like money
withdrawn and into which you would like money invested.
. Determine the schedule: monthly, quarterly, semi-annually, annually or in
certain selected months.
. Specify the amount(s). Each exchange must be worth at least $25.
. Accounts must be registered identically; otherwise a signature guarantee
will be required.
Asset Protection Plan (optional). Anchor National Life Insurance Company ("An-
chor National") offers an Asset Protection Plan to certain investors in the
Fund. The benefits of this optional coverage payable at death will be related
to the amounts paid to purchase Fund shares and to the value of the Fund shares
held for the benefit of the insured persons. However, to the extent the pur-
chased shares are redeemed prior to death, coverage with respect to these
shares will terminate.
Purchasers of the Asset Protection Plan are required to authorize periodic re-
demptions of Fund shares to pay the premiums for this coverage. These redemp-
tions will not be subject to deferred sales charges but will have the same tax
consequences as any other Fund redemptions.
The Asset Protection Plan will be available to eligible persons who enroll for
the coverage within a limited time period after shares in any Fund are ini-
tially purchased or transferred. In addition, coverage cannot be made available
unless Anchor National knows for whose benefit shares are purchased. For in-
stance, coverage cannot be made available for shares registered in the name of
your broker unless the broker provides Anchor National with information regard-
ing the beneficial owners of the shares. In addition, coverage is available
only to shares purchased on behalf of natural persons between 21 and 75 years
of age; coverage is not available with respect to shares purchased for a re-
tirement account. Other restrictions on the coverage apply. This coverage may
not be available in all states and may be subject to additional restrictions or
limitations. Purchasers of shares should also make themselves familiar with the
impact on the Asset Protection Plan coverage of purchasing additional shares,
reinvestment of dividends and capital gains distributions and redemptions.
12
<PAGE>
- --------------------------------------------------------------------------------
Anchor National is a SunAmerica company.
Please call 1-800-858-8850, extension 5660 for more information, including the
cost of the Asset Protection Plan option.
Retirement plans. SunAmerica Mutual Funds offer a range of qualified retirement
plans, including IRAs, Roth IRAs, Simple IRAs, SEPs, SARSEPs, 401(k) plans,
403(b) plans and other pension and profit-sharing plans. Using these plans, you
can invest in any SunAmerica Mutual Fund with a low minimum investment of $250
or, for some group plans, no minimum investment at all. To find out more, call
Retirement Plans at 1-800-858-8850, extension 5134.
DIVIDEND, DISTRIBUTION AND ACCOUNT POLICIES
Account statements. In general, you will receive account statements as follows:
. after every transaction that affects your account balance (except a divi-
dend reinvestment or automatic purchase from your bank account)
. after any changes of name or address of the registered owner(s)
. in all other circumstances, annually.
Every year you should also receive, if applicable, a Form 1099 tax information
statement, mailed by January 31.
Dividends. The Fund generally distributes most or all of its net earnings in
the form of dividends. Income dividends, if any, are declared daily and paid
monthly by the Fund. Capital gains distributions, if any, are paid annually by
the Fund.
Dividend Reinvestments. Your dividends and distributions, if any, will be auto-
matically reinvested in additional shares of the Fund and share class on which
they were paid. Alternatively, dividends and distributions may be reinvested in
any Fund distributed by SunAmerica Capital Services, Inc. or paid in cash (if
more than $10). You will need to complete the relevant part of the Account Ap-
plication to elect one of these other options. For existing accounts, contact
your broker or financial advisor or call Shareholder/Dealer Services at 1-800-
858-8850, extension 5125 to change dividend and distribution payment options.
Taxability of dividends. As long as the Fund meets the requirements for being a
tax-qualified regulated investment company, which the Fund has in the past and
intends to in the future, it pays no federal income tax on the earnings it dis-
tributes to shareholders.
Dividends you receive from the Fund, whether reinvested or taken as cash, are
generally considered taxable. The Fund intends to make distributions that may
be taxed as ordinary income and capital gains (which may be at different rates
depending on the length of time the Fund holds its assets).
Some dividends paid in January may be taxable as if they had been paid the pre-
vious December. Corporations may be entitled to take a dividends-received de-
duction for a portion of certain dividends they receive.
The Form 1099 that is mailed to you every January details your dividends and
their federal tax category, although you should verify your tax liability with
your tax professional.
"Buying into a Dividend." You should note that if you purchase shares just be-
fore a distribution, you will be taxed for that distribution like other share-
holders, even though that distribution represents simply a return of part of
your investment. You may wish to defer your purchase until after the record
date for the distribution, so as to avoid this tax impact.
Taxability of transactions. Any time you sell or exchange shares, it is consid-
ered a taxable event for you. Depending on the purchase price and the sale
price of the shares you sell or exchange, you may have a gain or a loss on the
transaction. You are responsible for any tax liabilities generated by your
transactions. If you hold Class B shares, you will not have a taxable event
when they convert into Class A shares.
Other Tax Considerations. If you are neither a lawful permanent resident nor a
citizen of the U.S. or if you are a foreign entity, ordinary income dividends
paid to you (which include distributions of net short-term capital gains) will
generally be subject to a 30% U.S. withholding tax, unless a lower treaty rate
applies.
By law, the Fund must withhold 31% of your distributions and proceeds if you
have not provided a taxpayer identification number or social security number.
13
<PAGE>
Fund Management
- --------------------------------------------------------------------------------
This section summarizes some of the consequences under current federal tax law
of an investment in the Fund. It is not a substitute for professional tax ad-
vice. Consult your tax advisor about the potential tax consequences of an in-
vestment in the Fund under all applicable laws.
Small accounts. If you draw down an account so that its total value is less
than $500 ($250 for retirement plan accounts), you may be asked to purchase
more shares within 60 days. If you do not take action, the Fund may close out
your account and mail you the proceeds. Alternatively, you may be charged a
$2.00 monthly charge to maintain your account. Your account will not be closed
if its drop in value is due to Fund performance or the effects of sales
charges.
Adviser. SunAmerica Asset Management Corp., which was organized in 1982 under
the laws of Delaware, selects and manages the investments, provides various ad-
ministrative services, and supervises the daily business affairs of the Fund.
In addition to managing the Fund, SunAmerica serves as adviser, manager and/or
administrator for SunAmerica Equity Funds, Anchor Pathway Fund, Anchor Series
Trust, Brazos Mutual Funds, SunAmerica Style Select Series, Inc., Seasons Se-
ries Trust, SunAmerica Income Funds, SunAmerica Strategic Investment Series,
Inc. and SunAmerica Series Trust. SunAmerica managed, advised or administered
assets in excess of $30 billion as of March 31, 2000.
For the fiscal year ended December 31, 1999, the Fund paid SunAmerica a fee
equal to .49% of average daily net assets.
SunAmerica's Fixed-Income Investment Team is responsible for the management of
the Fund.
Distributor. SunAmerica Capital Services, Inc. distributes the Fund's shares.
The Distributor, a SunAmerica company, receives deferred sales charges, all or
a portion of which may be re-allowed to other broker-dealers. In addition, the
Distributor receives fees under the Fund's 12b-1 plans.
Administrator. SunAmerica Fund Services, Inc. assists the Funds' transfer agent
in providing shareholder services. The Administrator, a SunAmerica company, is
paid a monthly fee by the Fund for its services at the annual rate of .22% of
average daily net assets. This fee represents the full cost of providing share-
holder and transfer agency services to the Fund.
SunAmerica, the Distributor and the Administrator are all located in The
SunAmerica Center, 733 Third Avenue, New York, New York 10017.
14
<PAGE>
For More Information
- --------------------------------------------------------------------------------
The following documents contain more information about the Fund and are avail-
able free of charge upon request:
Annual and Semi-annual Reports. Contain financial statements, performance
data and information on fund holdings. The annual report also contains a
written analysis of market conditions and investment strategies that signif-
icantly affected the Fund's performance during the last applicable period.
Statement of Additional Information (SAI). Contains additional information
about the Fund's policies, investment restrictions and business structure.
This prospectus incorporates the SAI by reference.
You may obtain copies of these documents or ask questions about the Funds by
contacting:
SunAmerica Fund Services, Inc.
Mutual Fund Operations
The SunAmerica Center
733 Third Avenue
New York, New York 10017-3204
1-800-858-8850, extension 5125
or
by calling your broker or financial advisor.
Information about the Fund (including the SAI) can be reviewed and copied at
the Public Reference Room of the Securities and Exchange Commission, Washing-
ton, D.C. Call 1-202-942-8090 for information on the operation of the Public
Reference Room. Information about the Fund is also available on the Securities
and Exchange Commission's web-site at http://www.sec.gov and copies may be ob-
tained upon payment of a duplicating fee by electronic request at the following
E-mail address: [email protected], or by writing the Public Reference Section
of the Securities and Exchange Commission, Washington, D.C. 20549-6009.
You should rely only on the information contained in this prospectus. No one is
authorized to provide you with any different information.
[LOGO OF SUN AMERICA
MUTUAL FUNDS]
DISTRIBUTOR: SunAmerica Capital Services
The Fund is a series of SunAmerica Money Market Funds, Inc.
INVESTMENT COMPANY ACT
File No. 811-03807
<PAGE>
SUNAMERICA MONEY MARKET FUND
Statement of Additional Information
dated April 28, 2000
The SunAmerica Center General Marketing and
733 Third Avenue Shareholder Information
New York, NY 10017-3204 (800) 858-8850
SunAmerica Money Market Fund (the "Fund") seeks as high a level of current
income as is consistent with liquidity and stability of capital by investing in
a portfolio of high quality, short-term money market instruments. The Fund is
the only series of SunAmerica Money Market Funds, Inc., which is registered as
an open-end diversified management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act") and organized as a Maryland
corporation (the "Corporation").
This Statement of Additional Information is not a Prospectus, but should be
read in conjunction with the Fund's Prospectus dated April 28, 2000. To obtain
a Prospectus, free of charge, please call the Fund at (800) 858-8850. The
Prospectus is incorporated by reference into this Statement of Additional
Information and this Statement of Additional Information is incorporated by
reference into the Prospectus. The Fund's audited financial statements are
incorporated in this Statement of Additional Information by reference to its
1999 annual report to shareholders. You may request a copy of the annual report
at no charge by calling (800) 858-8850 or writing the Fund at SunAmerica Fund
Services, Inc., Mutual Fund Operations, The SunAmerica Center, 733 Third Avenue,
New York, New York 10017-3204. Capitalized terms used herein but not defined
have the meanings assigned to them in the Prospectus.
TABLE OF CONTENTS
Page
----
History of the Fund....................................................... B-2
Investment Objective and Policies......................................... B-2
Investment Restrictions................................................... B-8
Directors and Officers.................................................... B-10
Adviser, Personal Trading, Distributor and Administrator.................. B-14
Portfolio Transactions and Brokerage...................................... B-17
Additional Information Regarding Purchase of Shares....................... B-18
Additional Information Regarding Redemption of Shares..................... B-21
Determination of Net Asset Value.......................................... B-21
Performance Data.......................................................... B-22
Dividends, Distributions and Taxes........................................ B-24
Retirement Plans.......................................................... B-26
Description of Shares..................................................... B-27
Additional Information.................................................... B-29
Financial Statements...................................................... B-30
Appendix...........................................................Appendix - 1
<PAGE>
No dealer, salesman or other person has been authorized to give any information
or to make any representations, other than those contained in this Statement of
Additional Information or in the Prospectus, and, if given or made, such other
information or representations must not be relied upon as having been authorized
by the Fund, the Adviser or the Distributor. This Statement of Additional
Information and the Prospectus do not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction in which such an offer to sell or solicitation of an offer to buy
may not lawfully be made.
HISTORY OF THE FUND
The Corporation is a diversified open-end management investment company
organized in Maryland in 1983. On September 23, 1993, the Articles of
Incorporation of the Corporation were amended to permit the creation of multiple
series and classes of shares, and on September 24, 1993, the Corporation
reorganized with the SunAmerica Cash Fund ("Cash Fund") and was renamed
SunAmerica Money Market Funds, Inc. (the "Reorganization"). All of the
outstanding shares of the Corporation were redesignated Class A shares of the
Fund in the Reorganization. In addition, in the Reorganization, the
shareholders of Cash Fund received Class B shares of the Fund. Class C shares
commenced offering on October 2, 1997. On December 1, 1998, Class C shares of
the Fund were redesignated as Class II shares.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective (or "goal") and policies of the Fund are described
in the Prospectus. Certain types of securities in which the Fund may invest and
certain investment practices the Fund may employ, which are described in the
Prospectus, are discussed more fully below. The stated percentage limitations
are applied to an investment at the time of purchase unless indicated otherwise.
U.S. Government Obligations. The Fund may invest in a variety of short-term
debt securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities. These securities include a variety of Treasury securities
that differ primarily in their interest rates, the length of their maturities
and dates of issuance. Treasury bills are obligations issued with maturities of
one year or less. Treasury notes are generally issued with maturities of from
one to ten years. Treasury bonds are generally issued with maturities of more
than ten years. Obligations issued by agencies and instrumentalities, which may
be purchased by the Fund, also vary in terms of their maturities at the time of
issuance. However, the Fund invests only in obligations that, at their time of
purchase by the Fund, have remaining maturities of 397 calendar days or less.
Bank Obligations. Certificates of deposit ("CD's") and bankers' acceptances may
be purchased by the Fund. CD's are securities that represent deposits in a
depository institution (e.g., a commercial bank or savings and loan association)
for a specified period at a specified rate of interest and normally are
negotiable. CD's issued by a foreign branch (usually London) of a U.S. domestic
bank, are known as Eurodollar CD's. Although certain risks may be associated
with Eurodollar CD's that are not associated with CD's issued in the U.S. by
domestic banks, the credit risks of these
B-2
<PAGE>
obligations are similar because U.S. banks generally are liable for the
obligations of their branches. CD's issued through U.S. branches of foreign
banks are known as Yankee CD's. These branches are subject to federal or state
banking regulations. The secondary markets for Eurodollar and Yankee CD's may be
less liquid than the market for CD's issued by domestic branches of U.S. banks.
Bankers' acceptances are short-term credit instruments that represent the
promise of a bank to pay a draft drawn by one of its customers at its maturity.
These obligations are used to finance the import, export, transfer or storage of
goods and represent the obligation of both the accepting bank and its customer.
Commercial Paper. The commercial paper in which the Fund may invest may be
unsecured or may be backed by letters of credit. Commercial paper backed by a
letter of credit is, in effect, "two party" paper with the issuer of the paper
initially responsible for repayment and a bank guaranteeing the repayment if not
made by the issuer at maturity. The Fund may also invest in variable amount
master demand notes, which represent a direct lending arrangement between the
Fund and a corporate borrower. These notes permit daily changes in the amount
borrowed. The Fund has the right to increase the amount loaned under the note
at any time up to the full amount provided in the loan agreement or to decrease
the amount loaned. The borrower generally has the right to prepay up to the
full amount of the loan without penalty. These notes are generally not traded
in a secondary market; however, the Fund will enter into such arrangements only
where it has the right to redeem the note on not more than seven days notice.
Corporate Obligations. These obligations include bonds, debentures and notes
issued by corporations to finance long-term credit needs. Although issued with
maturities in excess of one year, the Fund's investments in corporate
obligations are limited to obligations having remaining maturities of 365
calendar days or less at the time of purchase by the Fund.
Illiquid Securities. The Fund may invest up to 10% of its net assets,
determined as of the date of purchase, in illiquid securities including
repurchase agreements that have a maturity of longer than seven days or in other
securities that are illiquid by virtue of the absence of a readily available
market or legal or contractual restrictions on resale. Historically, illiquid
securities have included securities subject to contractual or legal restrictions
on resale because they have not been registered under the Securities Act of
1933, as amended (the "Securities Act"), securities otherwise not readily
marketable and repurchase agreements having a maturity of longer than seven
days. Repurchase agreements subject to demand are deemed to have a maturity
equal to the notice period. Securities not registered under the Securities Act
are referred to as private placements or restricted securities and are purchased
directly from the issuer or in the secondary market. Mutual funds do not
typically hold a significant amount of these restricted or other illiquid
securities because of the potential for delays on resale and uncertainty in
valuation. Limitations on resale may have an adverse effect on the
marketability of portfolio securities, and a mutual fund might be unable to
dispose of restricted or other illiquid securities promptly or at reasonable
prices and might thereby experience difficulty satisfying redemptions within
seven days. A mutual fund might also have to register such restricted
securities in order to dispose of them, resulting in additional expense and
delay. There generally will be a lapse of time between a mutual fund's decision
to sell an unregistered security and the registration of such security promoting
sale. Adverse market conditions could impede a public
B-3
<PAGE>
offering of such securities. When purchasing unregistered securities, the Fund
will seek to obtain the right of registration at the expense of the issuer.
In recent years, a large institutional market has developed for certain
securities that are not registered under the Securities Act, including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale to the general public or
to certain institutions may not be indicative of the liquidity of such
investments.
Restricted securities eligible for resale pursuant to Rule 144A under the
Securities Act for which there is a readily available market will not be deemed
to be illiquid. The Fund's investment adviser, SunAmerica Asset Management
Corp. ("SunAmerica," or the "Adviser"), will monitor the liquidity of such
restricted securities subject to the supervision of the Board of Directors of
the Corporation (the "Directors"). In reaching liquidity decisions the Adviser
will consider, inter alia, pursuant to guidelines and procedures established by
the Directors, the following factors: (1) the frequency of trades and quotes
for the security; (2) the number of dealers wishing to purchase or sell the
security and the number of other potential purchasers; (3) dealer undertakings
to make a market in the security; and (4) the nature of the security and the
nature of the marketplace trades (e.g., the time needed to dispose of the
security, the method of soliciting offers and the mechanics of the transfer).
Commercial paper issues in which the Fund may invest include securities
issued by major corporations without registration under the Securities Act in
reliance on the exemption from such registration afforded by Section 3(a)(3)
thereof, and commercial paper issued in reliance on the so-called private
placement exemption from registration afforded by Section 4(2) of the Securities
Act ("Section 4(2) paper"). Section 4(2) paper is restricted as to disposition
under the federal securities laws in that any resale must similarly be made in
an exempt transaction. Section 4(2) paper is normally resold to other
institutional investors through or with the assistance of investment dealers who
make a market in Section 4(2) paper, thus providing liquidity. Section 4(2)
paper that is issued by a company that files reports under the Securities
Exchange Act of 1934 is generally eligible to be sold in reliance on the safe
harbor of Rule 144A described above. The Fund's 10% limitation on investments
in illiquid securities includes Section 4(2) paper other than Section 4(2) paper
that the Adviser has determined to be liquid pursuant to guidelines established
by the Directors. The Directors have delegated to the Adviser the function of
making day-to-day determinations of liquidity with respect to Section 4(2)
paper, pursuant to guidelines approved by the Directors that require the Adviser
to take into account the same factors described above for other restricted
securities and require the Adviser to perform the same monitoring and reporting
functions.
Repurchase Agreements. The Fund may enter into repurchase agreements with
banks, brokers or securities dealers. In such agreements, the seller agrees to
repurchase a security from the Fund at a mutually agreed-upon time and price.
The period of maturity is usually quite short, either overnight or a few days
although it may extend over a number of months. The repurchase price is in
excess of the purchase price by an amount that reflects an agreed-upon rate of
return effective for
B-4
<PAGE>
the period of time the Fund's money is invested in the security. Whenever the
Fund enters into a repurchase agreement, it obtains collateral having a value at
least equal to 102% (100% if such collateral is in the form of cash) of the
repurchase price. The instruments held as collateral are valued daily, and if
the value of the instruments declines, the Fund will require additional
collateral. If the seller defaults and the value of the collateral securing the
repurchase agreements declines, the Fund will incur a loss. In addition, if
bankruptcy proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited. The
Directors have established guidelines to be used by the Adviser in connection
with transactions in repurchase agreements and will regularly monitor the Fund's
use of repurchase agreements. The Fund will not invest in repurchase agreements
maturing in more than seven days if the aggregate of such investments along with
other illiquid securities exceeds 10% of the value of its net assets. However,
there is no limit on the amount of the Fund's net assets that may be subject to
repurchase agreements having a maturity of seven days or less for temporary
defensive purposes.
Reverse Repurchase Agreements. The Fund may enter into reverse repurchase
agreements with brokers, dealers and other financial institutions determined by
the Adviser to be creditworthy. A reverse repurchase agreement involves the
sale of a security held by the Fund, subject to an agreement by the Fund to
repurchase that security at a mutually agreed upon price, date and interest
payment. The Fund uses the proceeds of the reverse repurchase agreement to make
additional investments that mature on or prior to the repurchase date and will
enter into a reverse repurchase agreement when it anticipates that the interest
income to be earned from investing the proceeds of the reverse repurchase
agreement will exceed the interest expense of the transaction. During the time
a reverse repurchase agreement is outstanding, the Fund will maintain with the
custodian a segregated account containing cash or liquid securities having a
value at least equal to the repurchase price under the agreement. In the event
that the other party to the reverse repurchase agreement defaults on its
obligation to resell to the Fund the underlying securities because of insolvency
or otherwise, the Fund could experience delays and costs in gaining access to
the securities and could suffer a loss to the extent that the value of the
proceeds of the agreement fell below the value of the underlying securities.
Reverse repurchase agreements are considered to be borrowings and are subject to
the percentage limitations on borrowings. See "Investment Restrictions."
Asset-Backed Securities. The Fund may invest up to 15% of its net assets in
asset-backed securities rated in conformance with both the Fund's credit quality
restrictions and Rule 2a-7 under the 1940 Act. These securities, issued by
trusts and special purpose corporations, are backed by a pool of assets, such as
credit card and automobile loan receivables, representing the obligations of a
number of different parties. The Fund may also invest in privately issued
asset-backed securities.
Asset-backed securities present certain risks. For instance, in the case
of credit card receivables, these securities may not have the benefit of any
security interest in the related collateral. Credit card receivables are
generally unsecured and the debtors are entitled to the protection of a number
of state and federal consumer credit laws, many of which give such debtors the
right to set off certain amounts owed on the credit cards, thereby reducing the
balance due. Most issuers of automobile receivables permit the servicer to
retain possession of the underlying obligations. If the servicer were to sell
these obligations to another party, there is a risk that the purchaser would
B-5
<PAGE>
acquire an interest superior to that of the holders of the related automobile
receivables. In addition, because of the large number of vehicles involved in a
typical issuance and technical requirements under state laws, the trustee for
the holders of the automobile receivables may not have a proper security
interest in all of the obligations backing such receivables. Therefore, there
is the possibility that recoveries on repossessed collateral may not, in some
cases, be available to support payments on these securities.
Asset-backed securities are often backed by a pool of assets representing
the obligations of a number of different parties. To lessen the effect of
failures by obligors to make payments on underlying assets, the securities may
contain elements of credit support, which fall into two categories: (i)
liquidity protection and (ii) protection against losses resulting from ultimate
default by an obligor on the underlying assets. Liquidity protection refers to
the provision of advances, generally by the entity administering the pool of
assets, to ensure that the receipt of payments on the underlying pool occurs in
a timely fashion. Protection against losses resulting from ultimate default
ensures payment through insurance policies or letters of credit obtained by the
issuer or sponsor from third parties. The Fund will not pay any additional or
separate fees for credit support. The degree of credit support provided for
each issue is generally based on historical information respecting the level of
credit risk associated with the underlying assets. Delinquency or loss in
excess of that anticipated or failure of the credit support could adversely
affect the return on an investment in such a security.
Loans of Portfolio Securities. Consistent with applicable regulatory
requirements, the Fund may lend portfolio securities in amounts up to 20% of
total assets to brokers, dealers and other financial institutions, provided,
that such loans are callable at any time by the Fund and are at all times
secured by cash or equivalent collateral. In lending its portfolio securities,
a Fund receives income while retaining the securities' potential for capital
appreciation. The advantage of such loans is that a Fund continues to receive
the interest and dividends on the loaned securities while at the same time
earning interest on the collateral, which will be invested in short-term
obligations. Where securities instead of cash are delivered to the Fund as
collateral, the Fund earns its return in the form of a loan premium paid by the
borrower. A loan may be terminated by the borrower on one business day's notice
or by the Fund at any time. If the borrower fails to maintain the requisite
amount of collateral, the loan automatically terminates, and the Fund can use
the collateral to replace the securities while holding the borrower liable for
any excess of replacement cost over collateral. As with any extensions of
credit, there are risks of delay in recovery and in some cases even loss of
rights in the collateral should the borrower of the securities fail financially.
However, these loans of portfolio securities will only be made to firms deemed
by the Adviser to be creditworthy. On termination of the loan, the borrower is
required to return the securities to the Fund; and any gain or loss in the
market price of the loaned security during the loan would inure to the Fund.
The Fund will pay reasonable finders', administrative and custodial fees in
connection with a loan of its securities or may share the interest earned on
collateral with the borrower.
Since voting or consent rights that accompany loaned securities pass to the
borrower, the Fund will follow the policy of calling the loan, in whole or in
part as may be appropriate, to permit the exercise of such rights if the matters
involved would have a material effect on the Fund's investment in the securities
that are the subject of the loan.
B-6
<PAGE>
Borrowings. The Fund may borrow for temporary or emergency purposes or to meet
redemption requests. The consequence of such borrowings might be to reduce the
Fund's yield below that which would have been realized in the absence of such
borrowings.
When-Issued and Delayed-Delivery Securities. From time to time, in the ordinary
course of business, the Fund may purchase securities on a when-issued or
delayed-delivery basis - i.e., delivery and payment can take place a month or
more after the date of the transactions. Such agreements might be entered into,
for example, when the Fund anticipates a decline in the yield of securities of a
given issuer and is able to obtain a more advantageous yield by committing
currently to purchase securities to be issued later. The securities so
purchased are subject to market fluctuation and no interest accrues to the
purchaser during this period. At the time of delivery of the securities, the
value may be more or less than the purchase price. The Fund will establish and
maintain until the date of delivery of such when-issued securities, a segregated
account with the Fund's custodian in which it will maintain cash or liquid
securities at least equal in value to commitments for such when-issued or
delayed-delivery securities. The Fund will make payment for such when-issued
securities on the delivery date utilizing then-available cash and, if cash is
not available, or if it is not disadvantageous to the Fund, utilizing the
proceeds of the liquidation of portfolio securities held in such segregated
account.
Special Risk Factors. In the case of bank obligations not insured by the
Federal Deposit Insurance Corporation ("FDIC") or the Federal Savings and Loan
Insurance Corporation ("FSLIC"), the Fund will be dependent solely on the
financial resources of the issuing bank for payment of principal and interest.
The Fund's investments in commercial paper issued by foreign corporations and
securities of foreign branches of domestic banks and domestic branches of
foreign banks involve certain investment risks in addition to those affecting
obligations of U.S. domestic issuers. These risks include the possibility of
adverse political and economic developments, and the risk of: imposition of
foreign withholding taxes on the interest payable on such securities; seizure,
expropriation or nationalization of foreign deposits; and adoption of foreign
governmental restrictions, such as exchange controls, which might adversely
affect the payment of principal and interest on such securities. In addition,
certain reserve requirements and other regulations to which domestic banks are
subject may not apply to foreign branches or foreign banks, which also may use
accounting methods different from those used by U.S. domestic banks. Non-
negotiable time deposits, unlike negotiable certificates of deposit, cannot be
sold in a secondary market and may be subject to penalties for early withdrawal.
Extendable Commercial Notes ("ECNs"). ECNs are a type of commercial paper in
which the issuer has the option to extend maturity to 390 days. ECNs are issued
at a discount rate with an initial redemption of not more than 90 days from the
date of issue. The issuer of an ECN has the option to extend maturity to 390
days. If ECNs are not redeemed by the issuer on the initial redemption date the
issuer will pay a premium (step-up) rate based on the ECNs' credit rating at the
time. The MMF may purchase ECNs only if judged by the Adviser to be of suitable
investment quality. This includes ECNs that are (a) rated in the two highest
categories by Standard & Poor's and by Moody's, or (b) other ECNs deemed on the
basis of the issuer's creditworthiness to be of a quality appropriate for the
MMF. (No more than 5% of the MMF assets may be invested in ECNs in the second
highest rating category; no more than the greater of 1% of the MMF assets or $1
B-7
<PAGE>
million may be invested in such securities of any one issuer.) See "Description
of Commercial Paper and Bond Ratings" for a description of the ratings. The MMF
will not purchase ECNs described in (b) above if such paper would in the
aggregate exceed 15% of its total assets after such purchase.
INVESTMENT RESTRICTIONS
The Fund is subject to a number of investment restrictions that are
fundamental policies and may not be changed without the approval of the holders
of a majority of the Fund's outstanding voting securities. As defined in the
1940 Act, a "majority of the outstanding voting securities" of the Fund means
the lesser of (i) 67% of the shares of the Fund represented at a meeting at
which more than 50% of the outstanding shares are present in person or
represented by proxy or (ii) more than 50% of the outstanding shares. Unless
otherwise indicated, all percentage limitations apply only at the time the
investment is made; any subsequent change in any applicable percentage resulting
from fluctuations in value will not be deemed an investment contrary to these
restrictions. Under these restrictions, the Fund may not:
1. Purchase securities other than those described under "Investment
Objective and Policies."
2. Enter into reverse repurchase agreements exceeding in the aggregate 1/3
of the value of the Fund's total assets, less liabilities other than
obligations under such reverse repurchase agreements.
3. Purchase the securities of issuers conducting their principal business
activity in the same industry if immediately after such purchase the
value of its investments in such industry would exceed 25% of the value
of the Fund's total assets, provided that there is no limitation with
respect to investments in securities issued by domestic branches of U.S.
banks or the U.S. Government, its agencies or instrumentalities.
4. Invest more than 5% of its assets in the securities of any one issuer
(exclusive of securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities) except that up to 25% of the value of
the Fund's total assets may be invested without regard to such 5%
limitation, subject to applicable limitations imposed by Rule 2a-7 under
the 1940 Act.
5. Make loans, except through the purchase or holding of debt obligations
in accordance with the Fund's investment objective and policies (see
"Investment Objective and Policies"), or as otherwise permitted by
exemptive order of the Securities and Exchange Commission.
6. Lend its portfolio securities in excess of 20% of its total assets
provided that such loans are made according to the guidelines of the
Securities and Exchange
B-8
<PAGE>
Commission and the Fund's Board of Directors, including maintaining
collateral from the borrower equal at all times to the current market
value of the securities loaned.
7. Borrow money except for temporary or emergency purposes to meet
redemption requests which might otherwise require the untimely
disposition of securities (not for the purpose of increasing income),
provided that borrowings in the aggregate may not exceed 10% of the
value of the Fund's total assets, including the amount borrowed, at the
time of such borrowing.
8. Purchase or sell puts, calls, straddles, spreads or any combination
thereof, real estate, commodities, commodity contracts or interests in
oil, gas and/or mineral exploration or development programs, provided
that the Fund may purchase bonds or commercial paper issued by
companies, including real estate investment trusts, which invest in real
estate or interests therein.
9. Invest in securities of other registered investment companies, except by
purchases in the open market involving only customary brokerage
commissions and as a result of which the Fund will not hold more than 3%
of the outstanding voting securities of any one investment company, will
not have invested more than 5% of its total assets in any one investment
company and will not have invested more than 10% of its total assets in
such securities of one or more investment companies (each of the above
percentages to be determined at the time of investment), or except as
part of a merger, consolidation or other acquisition.
10. Act as an underwriter of securities.
11. Make short sales of securities or maintain a short position, provided
that this restriction shall not be deemed to be applicable to the
purchase or sale of "when-issued" securities or of securities for
delivery at a future date.
12. Invest in or hold securities of any issuer if those officers and
Directors of the Fund or the Adviser owning individually more than 1/2
of 1% of the securities of such issuer together own more than 5% of the
securities of such issuer.
In addition to the foregoing, the Fund may not issue senior securities as
defined in the 1940 Act except as permitted by law and the Fund's prospectus and
Statement of Additional Information. The Fund has adopted a non-fundamental
policy (which may be changed by the Directors without shareholder approval) of
not investing more than 10% of its net assets in illiquid securities, including
repurchase agreements that have a maturity of longer than seven days, time
deposits with a maturity of longer than seven days, securities with legal or
contractual restrictions on resale and securities that are not readily
marketable in securities markets either within or without the United States.
Restricted securities eligible for resale pursuant to Rule 144A under the
Securities Act that have a readily available market, and commercial paper
exempted from registration under the Securities Act pursuant to Section 4(2) of
the Securities Act that may be offered and sold to "qualified institutional
buyers" as defined in Rule 144A, which the Adviser has determined to be
B-9
<PAGE>
liquid pursuant to guidelines established by the Directors, will not be
considered illiquid for purposes of this 10% limitation on illiquid securities.
Pursuant to Rule 2a-7 under the 1940 Act (the "Rule"), the Fund is required
to limit its portfolio investments to those U.S. dollar denominated instruments
determined in accordance with procedures established by the Directors to present
minimal credit risks and which are at the time of acquisition "eligible
securities" as defined in the Rule. Under the Rule an eligible security is
generally an instrument that is rated (or that has been issued by an issuer
rated with respect to other short-term debt of comparable priority and security)
by at least two nationally recognized statistical rating organizations (or if
only one such organization has issued a rating, by that organization) in one of
the two highest rating categories for short-term debt obligations, or an unrated
security determined to be of comparable quality under procedures established by
the Directors. The Rule prohibits the Fund from investing more than 5% of its
assets in the securities of any one issuer, except that the Fund may invest up
to 25% of its assets in the securities rated (or deemed comparable to securities
rated) in the highest rating category of a single issuer for a period of up to
three business days after purchase. In addition, the Fund may not invest more
than 5% of its assets in securities that have not been rated (or deemed
comparable to securities rated) in the highest rating category, with investment
in such second tier securities of any one issuer limited to the greater of 1% of
the Fund's assets or $1 million. These issuer diversification restrictions do
not apply to U.S. government securities. The Rule also prohibits the Fund from
purchasing any instrument with a remaining maturity of greater than 365
calendar days and requires the Fund to maintain a dollar-weighted average
portfolio maturity of 90 days or less. For purposes of the Rule, certain
variable or floating rate instruments are deemed to have a maturity equal to the
period remaining until the next readjustment of their interest rate or, in the
case of an instrument that is subject to a demand feature, the period remaining
until the principal amount can be recovered through demand.
DIRECTORS AND OFFICERS
The following table lists the Directors and executive officers of the
Corporation, their ages, business addresses, and principal occupations during
the past five years. The SunAmerica Mutual Funds ("SAMF") consist of SunAmerica
Equity Funds, SunAmerica Income Funds, SunAmerica Money Market Funds, Inc.,
SunAmerica Style Select Series, Inc. and SunAmerica Strategic Investment Series,
Inc.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Name, Age and Address Position with the Trust Principal Occupations During Past 5 Years
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
S. James Coppersmith, 66 Director Retired; formerly, President and General
7 Elmwood Road Manager, WCVB-TV, a division of the Hearst
Marblehead, MA 01945 Corp. (1982 to 1994); Director/Trustee of
SAMF and Anchor Series Trust ("AST").
- -------------------------------------------------------------------------------------------------
Samuel M. Eisenstat, 59 Director and Chairman Attorney, solo practitioner, Chairman of the
430 East 86th Street Boards of Directors/Trustees of SAMF and
New York, NY 10028 AST.
- -------------------------------------------------------------------------------------------------
</TABLE>
B-10
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Name, Age and Address Position with the Trust Principal Occupations During Past 5 Years
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Stephen J. Gutman, 56 Director Partner and Managing Member of B.B.
515 East 79th Street Associates LLC (menswear specialty retailing
New York, NY 10021 and other activities) since June 1988;
Director/Trustee of SAMF and AST.
- -----------------------------------------------------------------------------------------------------
Peter A. Harbeck*, 46 Director and President Director and President, the Adviser, since
The SunAmerica Center August 1995; Director, AIG Asset
733 Third Avenue Management International, Inc. ("AIGAMI")
New York, NY 10017-3204 since February 2000; Managing Director, John
McStay Investment Counsel, L.P. ("JMIC")
since June 1999; Director, SunAmerica Capital
Services, Inc. ("SACS"), since August 1993;
Director and President, SunAmerica Fund
Services, Inc.("SAFS"), since May 1988;
President, SAMF and AST; Executive Vice
President and Chief Operating Officer, the
Adviser, from May 1988 to August 1995;
Executive Vice President, SACS, from
November 1991 to August 1995; Director,
Resources Trust Company, since June 1988.
- -----------------------------------------------------------------------------------------------------
Sebastiano Sterpa, 70 Director Founder and Chairman of the Board of the
73473 Mariposa Drive Sterpa Group (real estate), since 1962;
Palm Desert, CA 92260 Director, Real Estate Business Service and
Countrywide Financial; Director/Trustee of
SAMF.
- -----------------------------------------------------------------------------------------------------
J. Steven Neamtz, 39 Vice President Executive Vice President of the Adviser, since
The SunAmerica Center April 1996; Director and Chairman of the
733 Third Avenue Board, AIGAMI since February 2000; Vice
New York, NY 10017-3204 President, SAMF since November 1999;
Director and President, SACS, since April
1996; formerly, Executive Vice President,
New England Funds, L.P. from July 1990 to
April 1996.
- -----------------------------------------------------------------------------------------------------
Peter C. Sutton, 35 Treasurer Senior Vice President, the Adviser, since April
The SunAmerica Center 1997; Vice President, AIGAMI since February
733 Third Avenue 2000; Treasurer and Controller of Seasons
New York, NY 10017-3204 Series Trust ("Seasons"), SunAmerica Series
Trust ("SAST") and Anchor Pathway Fund
("APF") since February 2000; Treasurer of
SAMF and AST since February 1996; Vice
President of SAST and APF since 1994;
formerly, Assistant Treasurer of SAST and
APF from 1994 to February 2000; Vice
President, Seasons, since April 1997; formerly,
Vice President, the Adviser, from 1994 to
1997; Controller, SAMF and AST, from
March 1993 to February 1996; Assistant
Controller, SAMF and AST, from 1990 to
1993.
- -----------------------------------------------------------------------------------------------------
</TABLE>
B-11
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Name, Age and Address Position with the Trust Principal Occupations During Past 5 Years
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Robert M. Zakem, 42 Secretary and Chief Senior Vice President and General Counsel,
The SunAmerica Center Compliance Officer the Adviser, since April 1993; Vice President,
733 Third Avenue General Counsel and Assistant Secretary,
New York, NY 10017-3204 AIGAMI since February 2000; Executive Vice
President, General Counsel and Director,
SACS, since August 1993; Vice President,
General Counsel and Assistant Secretary,
SAFS, since January 1994; Vice President,
SAST, APF and Seasons; Assistant Secretary,
SAST and APF, since September 1993;
Assistant Secretary, Seasons, since April 1997;
formerly, Vice President and Associate
General Counsel, the Adviser, from March
1992 to April 1993.
- -----------------------------------------------------------------------------------------------------
</TABLE>
*A director who may be deemed to be an interested person as that term is
defined in the 1940 Act.
The Directors of the Corporation are responsible for the overall
supervision of the operation of the Fund and Corporation and perform various
duties imposed on directors of investment companies by the 1940 Act and under
the Corporation's Articles of Incorporation. Directors and officers of the
Corporation are also directors or trustees and officers of some or all of the
other investment companies managed, administered or advised by the Adviser and
distributed by SunAmerica Capital Services, Inc. ("SACS" or the "Distributor")
and other affiliates of SunAmerica Inc.
The Corporation pays each Director who is not an interested person of the
Corporation or the Adviser (each a "disinterested" Director) annual compensation
in addition to reimbursement of out-of-pocket expenses in connection with
attendance at meetings of the Directors. Specifically, each disinterested
Director receives a pro rata portion (based upon the Corporation's net assets)
of the $40,000 in annual compensation for acting as a director or trustee to all
the retail funds in the SAMF. In addition, Mr. Eisenstat receives an aggregate
of $2,000 in annual compensation for serving as Chairman of the Boards of the
retail funds in the SAMF. Officers of the Corporation receive no direct
remuneration in such capacity from the Corporation or the Fund.
In addition, each disinterested Director also serves on the Audit Committee
of the Board of Directors. The Audit Committee is charged with recommending to
the full Board the engagement or discharge of the Fund's independent
accountants; directing investigations into matters within the scope of the
independent accountants' duties; reviewing with the independent accountants the
audit plan and results of the audit; approving professional services provided by
the independent accountants and other accounting firms prior to the performance
of such services; reviewing the independence of the independent accountants;
considering the range of audit and non-audit fees; and preparing and submitting
Committee minutes to the full Board. Each member of the Audit Committee
receives an aggregate of $5,000 in annual compensation for serving on the Audit
Committees of all of the SAMF as well as AST. With respect to the Corporation,
each member of the Audit Committee receives a pro rata portion of the $5,000
annual compensation, based on the relative net assets of the Corporation. The
Corporation also has a Nominating Committee, composed solely of disinterested
Directors, which recommends to the Directors those persons to be
B-12
<PAGE>
nominated for election as Directors by shareholders and selects and proposes
nominees for election by Directors between shareholders' meetings. Members of
the Nominating Committee serve without compensation.
The Directors (and Trustees) of the SAMF have adopted the SunAmerica
Disinterested Trustees' and Directors' Retirement Plan (the "Retirement Plan")
effective January 1, 1993 for the disinterested Directors of the SAMF. The
Retirement Plan provides generally that if a disinterested Director who has at
least 10 years of consecutive service as a disinterested Director of any of the
SAMF (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 of the SAMF with respect to which he or she is an
Eligible Director. With respect to Sebastiano Sterpa, the Disinterested
Directors have determined to make an exception to existing policy and allow Mr.
Sterpa to remain on the Board past age 70, until he has served for ten years.
Mr. Sterpa will cease accruing retirement benefits upon reaching age 70,
although such benefits will continue to accrue interest as provided for in the
Retirement Plan. As of each birthday, prior to the 70th birthday, each Eligible
Director will be credited with an amount equal to (i) 50% of his or her regular
fees (excluding committee fees) for services as a disinterested Director of each
of the SAMF for the calendar year in which such birthday occurs, plus (ii) 8.5%
of any amounts credited under clause (i) during prior years. An Eligible
Director may receive any benefits payable under the Retirement Plan, at his or
her election, either in one lump sum or in up to fifteen annual installments.
The following table sets forth information summarizing the compensation of
each disinterested Director as defined herein of the Corporation for his
services as Director for the fiscal year ended December 31, 1999.
<TABLE>
<CAPTION>
COMPENSATION TABLE
- ---------------------------------------------------------------------------------
TOTAL
PENSION OR COMPENSATION
RETIREMENT FROM
BENEFITS ESTIMATED REGISTRANT
AGGREGATE ACCRUED AS ANNUAL AND
COMPENSATION PART OF BENEFITS FUND COMPLEX
FROM FUND UPON PAID TO
DIRECTOR REGISTRANT EXPENSES* RETIREMENT DIRECTORS*
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
S. James Coppersmith $8,369 $45,110 $29,670 $65,000
- ----------------------------------------------------------------------------------
Samuel M. Eisenstat $8,759 $39,723 $46,083 $69,000
- ----------------------------------------------------------------------------------
Stephen J. Gutman $8,369 $41,132 $60,912 $65,000
- ----------------------------------------------------------------------------------
Sebastiano Sterpa $8,440 $18,568 $ 7,900 **$43,333
- ----------------------------------------------------------------------------------
</TABLE>
* Information is for the five investment companies in the complex that pay fees
to these directors/trustees. The complex consists of the SAMF and AST.
** Mr. Sterpa is not a trustee of AST.
As of April 11, 2000, the Directors and officers of the Fund owned in the
aggregate less than 1% of the Fund's total outstanding shares.
The following shareholders owned of record or beneficially 5% or more of the
SunAmerica Money Market Fund's shares outstanding as of April 11, 2000: Money
Market - Class II - A G Edwards & Sons, Inc. as custodian, LaJolla, CA 92037 -
owned of record 10.68%. A shareholder
B-13
<PAGE>
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.
ADVISER, PERSONAL TRADING, DISTRIBUTOR AND ADMINISTRATOR
The Adviser. The Adviser, organized as a Delaware corporation in 1982, is
located at The SunAmerica Center, 733 Third Avenue, New York, NY 10017-3204, and
serves as adviser to the Fund pursuant to the Investment Advisory and Management
Agreement dated January 1, 1999 (the "Advisory Agreement") with the Corporation,
on behalf of the Fund. As of March 31, 2000, SunAmerica managed more than $30
billion in assets. SunAmerica is a wholly-owned subsidiary of SunAmerica, Inc.,
which is a wholly-owned subsidiary of American International Group, Inc.
("AIG"), the leading U.S.-based international insurance organization. AIG, a
Delaware corporation, is a holding company that 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. AIG, through its
subsidiaries, is also engaged in a range of financial services activities.
Under the Advisory Agreement, the Adviser selects and manages the investments
of the Fund, provides various administrative services and supervises the Fund's
daily business affairs, subject to general review by the Directors.
Except to the extent otherwise specified in the Advisory Agreement, the Fund
pays, or causes to be paid, all other expenses of the Corporation and the Fund,
including, without limitation, charges and expenses of any registrar, custodian,
transfer and dividend disbursing agent; brokerage commissions; taxes; engraving
and printing of share certificates; registration costs of the Fund and its
shares under federal and state securities laws; the cost and expense of
printing, including typesetting and distributing Prospectuses and Statements of
Additional Information respecting the Fund, and supplements thereto, to the
shareholders of the Fund; all expenses of shareholders' and Directors' meetings
and of preparing, printing and mailing proxy statements and reports to
shareholders; all expenses incident to any dividend, withdrawal or redemption
options; fees and expenses of legal counsel and independent accountants;
membership dues of industry associations; interest on borrowings of the Fund;
postage; insurance premiums on property or personnel (including Officers and
Directors) of the Corporation that inure to its benefit; extraordinary expenses
(including, but not limited to, legal claims and liabilities and litigation
costs and any indemnification relating thereto); and all other costs of the
Corporation's operation.
As compensation for its services to the Fund, the Adviser receives a fee from
the Fund, payable monthly, computed daily at the annual rate of .50% on the
first $600 million of the Fund's average daily net assets, .45% on the next $900
million of net assets and .40% on net assets over $1.5 billion.
The following table sets forth the total advisory fees paid to the Adviser by
the Fund for the fiscal years ended December 31, 1999, 1998 and 1997 pursuant to
the Advisory Agreement.
ADVISORY FEES
-----------------------------------------------------
1999 1998 1997
-----------------------------------------------------
$3,948,616 $3,124,567 $2,497,734
-----------------------------------------------------
B-14
<PAGE>
No advisory fees were waived for the fiscal years ended December 31, 1999,
1998 and 1997. For Class II shares (which were previously designated as Class C
shares), the Adviser reimbursed expenses to the Fund in the amount of $5,383 for
the fiscal year ended December 31, 1997 and $24,706 for the fiscal year ended
December 31, 1998. There were no other fee waivers or expense reimbursements.
The Advisory Agreement continues in effect with respect to the Fund for an
initial two-year term, and thereafter from year to year, if approved at least
annually by vote of a majority of the Directors or by the holders of a majority
of the Fund's outstanding voting securities. Any such continuation also
requires approval by a majority of the Directors who are not parties to the
Advisory Agreement or "interested persons" of any such party as defined in the
1940 Act by vote cast in person at a meeting called for such purpose. The
Advisory Agreement may be terminated with respect to the Fund at any time,
without penalty, on 60 days' written notice by the Directors, by the holders of
a majority of the Fund's outstanding voting securities or by the Adviser. The
Advisory Agreement automatically terminates with respect to the Fund in the
event of its assignment (as defined in the 1940 Act and the rules thereunder).
Under the terms of the Advisory Agreement, the Adviser is not liable to the
Fund or its shareholders for any act or omission by it or for any losses
sustained by the Fund or its shareholders, except in the case of willful
misfeasance, bad faith, gross negligence or reckless disregard of duty.
Personal Trading. The Fund and the Adviser have adopted a written Code of
Ethics which prescribes general rules of conduct and sets forth guidelines with
respect to personal securities trading by "Access Persons" thereof. An Access
Person as defined in the Code of Ethics is an individual who is a trustee,
director, officer, general partner or advisory person of the Fund or the
Adviser. The guidelines on personal securities trading include: (i) securities
being considered for purchase or sale, or purchased or sold, by any Investment
Company advised by the Adviser, (ii) Initial Public Offerings, (iii) private
placements, (iv) blackout periods, (v) short-term trading profits, (vi) gifts,
and (vii) services as a director. These guidelines are substantially similar to
those contained in the Report of the Advisory Group on Personal Investing issued
by the Investment Company Institute's Advisory Panel. The Adviser reports to
the Board of Directors on a quarterly basis, as to whether there were any
violations of the Code of Ethics by Access Persons of the Fund or the Adviser
during the quarter.
The Distributor. The Corporation, on behalf of the Fund, has entered into a
distribution agreement (the "Distribution Agreement") with the Distributor, a
registered broker-dealer and an indirect wholly owned subsidiary of SunAmerica
Inc., to act as the principal underwriter in connection with the continuous
offering of each class of shares of the Fund. The address of the Distributor is
The SunAmerica Center, 733 Third Avenue, New York, NY 10017-3204. The
Distribution Agreement provides that the Distributor has the exclusive right to
distribute shares of the Fund through its registered representatives and
authorized broker-dealers. The Distribution Agreement also provides that the
Distributor will pay the promotional expenses, including the incremental cost of
printing prospectuses, annual reports and other periodic reports respecting the
Fund, for distribution to persons who are not shareholders of the Fund and the
costs of preparing and distributing any other supplemental sales literature.
However, certain promotional expenses may be borne by the Fund (see
"Distribution Plans" below).
B-15
<PAGE>
The Distribution Agreement continues in effect for an initial two-year term
and thereafter from year to year with respect to the Fund if such continuance is
approved at least annually by the Directors, including a majority of the
Directors who are not "interested persons" of the Corporation. The Corporation
or the Distributor each has the right to terminate the Distribution Agreement
with respect to the Fund on 60 days' written notice, without penalty. The
Distribution Agreement will terminate automatically in the event of its
assignment (as defined in the 1940 Act and the rules thereunder).
Distribution Plans. As indicated in the Prospectus, the Directors of the
Corporation and the shareholders of each class of shares of the Fund have
adopted Distribution Plans (the "Class A Plan," the "Class B Plan," and the
"Class II Plan," and collectively, the "Distribution Plans"). Reference is made
to "Management of the Corporation - Distribution Plans" in the Prospectus for
certain information with respect to the Distribution Plans.
Under the Class B and Class II Plans, the Distributor may receive payments
from the Fund at the annual rate of up to 0.75% of the average daily net assets
of the Fund's Class B and Class II shares, to compensate the Distributor and
certain securities firms for sales and promotional activities for distributing
each such class of shares. The distribution costs for which the Distributor may
be reimbursed out of such distribution fees include fees paid to broker-dealers
that have sold Fund shares, commissions and other expenses such as sales
literature, prospectus printing and distribution and compensation to
wholesalers. It is possible that in any given year the amount paid to the
Distributor under the Class B and Class II Plans will exceed the Distributor's
distribution costs as described above. The Class A Plan does not provide for a
distribution fee. The Distribution Plans, however, provide that each class of
shares of the Fund may pay the Distributor an account maintenance and service
fee for payments to broker-dealers for providing continuing account maintenance.
This account maintenance and service fee is up to 0.15% of the aggregate average
daily net assets of Class A and Class B shares and up to 0.25% of the aggregate
average daily net assets of Class II shares. 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 net assets maintained in the Fund with
respect to Class A and Class B shares and up to 0.25% per year for Class II
shares.
The following table sets forth the distribution fees received by the
Distributor from each class of the Fund's shares for the fiscal years ended
December 31, 1999, 1998 and 1997.
<TABLE>
<CAPTION>
DISTRIBUTION FEES
- ---------------------------------------------------------------------------------------------
1999 1998 1997
- ---------------------------------------------------------------------------------------------
Class A Class B Class II Class A Class B Class II Class A Class B Class II*
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$1,140,729 $396,861 $55,995 $881,428 $362,053 $8,725 $700,579 $291,401 $1,023
- ---------------------------------------------------------------------------------------------
</TABLE>
* The Fund commenced offering Class II shares (previously designated Class C
shares) on October 2, 1997.
Continuance of the Distribution Plans with respect to the Fund is subject to
annual approval by vote of the Directors, including a majority of the
Independent Directors. A Distribution Plan may not be amended to increase
materially the amount authorized to be spent thereunder with respect to a class
of shares of the Fund, without approval of the shareholders of the affected
class of shares of the Fund. In addition, all material amendments to the
Distribution Plans must be approved by the
B-16
<PAGE>
Directors in the manner described above. A Distribution Plan may be terminated
at any time with respect to the Fund without payment of any penalty by vote of a
majority of the Independent Directors or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the affected class
of shares of the Fund. So long as the Distribution Plans are in effect, the
election and nomination of the Independent Directors of the Corporation shall be
committed to the discretion of the Independent Directors. In the Directors'
quarterly review of the Distribution Plans, they will consider the continued
appropriateness of, and the level of, compensation provided in the Distribution
Plans. In their consideration of the Distribution Plans with respect to the
Fund, the Directors must consider all factors they deem relevant, including
information as to the benefits of the Fund and the shareholders of the relevant
class of the Fund.
The Administrator. The Corporation has entered into a Service Agreement, under
the terms of which SunAmerica Fund Services, Inc. ("SAFS"), an indirect wholly-
owned subsidiary of SunAmerica Inc. and AIG, acts as a servicing agent assisting
State Street Bank and Trust Company ("State Street") in connection with certain
services offered to the shareholders of the Fund. Under the terms of the
Service Agreement, SAFS may receive reimbursement of its costs in providing such
shareholder services. SAFS is located at The SunAmerica Center, 733 Third
Avenue, New York, NY 10017-3204.
The Service Agreement continues in effect from year to year provided that
such continuance is approved annually by vote of the Directors including a
majority of the disinterested Directors.
Pursuant to the Service Agreement, as compensation for services rendered,
SAFS receives a fee from the Corporation, computed and payable monthly based
upon an annual rate of 0.22% of average daily net assets subject to review and
approval by the Directors. This fee represents the full cost of providing
shareholder and transfer agency services to the Corporation. From this fee,
SAFS pays a fee to State Street, and its affiliate, National Financial Data
Services ("NFDS" and with State Street, the "Transfer Agent")(other than out-of-
pocket charges of the Transfer Agent which are paid by the Corporation). For
further information regarding the Transfer Agent see the section entitled
"Additional Information" below.
PORTFOLIO TRANSACTIONS AND BROKERAGE
As discussed in the Prospectus, the Adviser is responsible for decisions to
buy and sell securities for the Fund, selection of broker-dealers and
negotiation of commission rates. Purchases and sales of securities on a
securities exchange are effected through broker-dealers who charge a negotiated
commission for their services. Orders may be directed to any broker-dealer
including, to the extent and in the manner permitted by applicable law, an
affiliated brokerage subsidiary of SunAmerica Inc.
In the over-the-counter market, securities are generally traded on a "net"
basis with dealers acting as principal for their own accounts without a stated
commission (although the price of the security usually includes a profit to the
dealer). In underwritten offerings, securities are purchased at a fixed price
which includes an amount of compensation to the underwriter, generally referred
to as the underwriter's concession or discount. On occasion, certain money
market instruments may be purchased directly from an issuer, in which case no
commissions or discounts are paid.
B-17
<PAGE>
The Adviser's primary consideration in effecting a security transaction is to
obtain the best net price and the most favorable execution of the order.
However, the Adviser may select broker-dealers that provide it with research
services and may cause the Fund to pay broker-dealers commissions that exceed
those other broker-dealers may have charged, if in its view the commissions are
reasonable in relation to the value of the brokerage and/or research services
provided by the broker-dealer. Certain research services furnished by brokers
may be useful to the Adviser with clients other than the Corporation, and not
all of these services may be used by the Adviser in connection with the
Corporation. No specific value can be determined for research services
furnished without cost to the Adviser by a broker. The Adviser is of the
opinion that because the material must be analyzed and reviewed by its staff,
its receipt does not tend to reduce expenses, but may be beneficial in
supplementing the Adviser's research and analysis. Therefore, it may tend to
benefit the Fund by improving the quality of the Adviser's investment advice.
The investment advisory fees paid by the Fund are not reduced because the
Adviser receives such services. When making purchases of underwritten issues
with fixed underwriting fees, the Adviser may designate the use of broker-
dealers who have agreed to provide the Adviser with certain statistical,
research and other information.
Subject to applicable law and regulations, consideration may also be given to
the willingness of particular brokers to sell shares of the Fund as a factor in
the selection of brokers for transactions effected on behalf of the Fund,
subject to the requirement of best price and execution.
Although the objectives of other accounts or investment companies that the
Adviser manages may differ from those of the Fund, it is possible that, at
times, identical securities will be acceptable for purchase by the Fund and one
or more other accounts or investment companies that the Adviser manages.
However, the position of each account or company in the securities of the same
issue may vary with the length of the time that each account or company may
choose to hold its investment in those securities. The timing and amount of
purchase by each account and company will also be determined by its cash
position. If the purchase or sale of a security is consistent with the
investment policies of the Fund and one or more of these other accounts or
companies is considered at or about the same time, transactions in such
securities will be allocated in a manner deemed equitable by the Adviser. The
Adviser may combine such transactions, in accordance with applicable laws and
regulations, where the size of the transaction would enable it to negotiate a
better price or reduced commission. However, simultaneous transactions could
adversely affect the ability of the Fund to obtain or dispose of the full amount
of a security, which it seeks to purchase or sell, or the price at which such
security can be purchased or sold.
For the fiscal years ended December 31, 1999, 1998 and 1997, no brokerage
commissions were paid by the Fund.
ADDITIONAL INFORMATION REGARDING PURCHASE OF SHARES
Class A shares of the Fund are sold at net asset value next-determined after
receipt of a purchase order, without a sales charge. Class B and Class II
shares are sold at the respective net asset value next calculated after receipt
of a purchase order, plus a sales charge, which, at the election of the
investor, either may (i) be imposed on a deferred basis (Class B shares) or (ii)
contain certain elements of a sales charge imposed at the time of purchase and
deferred (Class II shares).
B-18
<PAGE>
Reference is made to "Purchase of Shares" in the Prospectus for certain
information as to the purchase of Fund shares.
The following table sets forth the front-end sales charges with respect to
Class II shares of the Fund, the amount of such front-end sales charges which
was reallowed to affiliated broker-dealers, and the contingent deferred sales
charges with respect to Class B and Class II shares of each Fund, received by
the Distributor for the fiscal years ended December 31, 1999, 1998 and 1997.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Amount
Front-End Amount Reallowed to Contingent Contingent
Sales Reallowed to Non- Deferred Deferred
Fiscal Concessions* Affiliated Affiliated Percentage Sales Sales
Year Class II Broker- Broker- of Offering Charge Charge
Ended Shares** Dealers Dealers Price Class B Class II
Shares Shares**
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12/31/99 $96,721 $37,727 $58,994 1.00% $316,449 $6,915
- -----------------------------------------------------------------------------------------------
12/31/98 -- -- -- -- $156,328 --
- -----------------------------------------------------------------------------------------------
12/31/97 -- -- -- -- $169,724 --***
- -----------------------------------------------------------------------------------------------
</TABLE>
* No Class II front-end sales charges were in effect prior to December 1,
1998.
** Commenced offering (as Class C shares) on October 2, 1997.
*** For the period October 2, 1997 through December 31, 1997.
Waiver of Contingent Deferred Sales Charges. CDSCs may be waived on redemptions
of Class B and Class II shares under certain circumstances. The conditions set
forth below are applicable with respect to the following situations with the
proper documentation:
Death. CDSCs may be waived on redemptions within one year following the
-----
death (i) of the sole shareholder on an individual account, (ii) of a joint
tenant where the surviving joint tenant is the deceased's spouse, or (iii) of
the beneficiary of a Uniform Gifts to Minors Act, Uniform Transfers to Minors
Act or other custodial account. The CDSC waiver is also applicable in the case
where the shareholder account is registered as community property. If, upon the
occurrence of one of the foregoing, the account is transferred to an account
registered in the name of the deceased's estate, the CDSC will be waived on any
redemption from the estate account occurring within one year of the death. If
the Class B or Class II shares are not redeemed within one year of the death,
they will remain subject to the applicable CDSC, when redeemed.
Disability. CDSCs may be waived on redemptions occurring within one year
----------
after the sole shareholder on an individual account or a joint tenant on a
spousal joint tenant account becomes disabled (as defined in Section 72(m)(7) of
the Internal Revenue Code of 1986, as amended (the "Code")). To be eligible for
such waiver, (i) the disability must arise after the purchase of shares and (ii)
the disabled shareholder must have been under age 65 at the time of the initial
determination of disability. If the account is transferred to a new
registration and then a redemption is requested, the applicable CDSC will be
charged.
B-19
<PAGE>
Purchase through SAFS. SAFS will effect a purchase order on behalf of a
customer who has an investment account upon confirmation of a verified credit
balance at least equal to the amount of the purchase order (subject to the
minimum investment requirements set forth in the Prospectus). Orders for
purchases of shares received by the Distributor by wire transfer in the form of
Federal Funds will be effected at the next-determined net asset value if
received at or prior to the Fund's close of business. Orders for purchases
accompanied by check or other negotiable bank draft will be accepted and
effected as of the Fund's close of business on the next business day following
receipt of such order. Shares will be entitled to receive a dividend, if any,
commencing on the next business day after the day the purchase is effected.
Purchase by Check. Checks should be made payable to the Fund or to "SunAmerica
Funds." If the payment is for a retirement plan account for which the Adviser
serves as fiduciary, please indicate on the check that payment is for such an
account. In the case of a new account, purchase orders by check must be
submitted directly by mail to SunAmerica Fund Services, Inc., Mutual Fund
Operations, The SunAmerica Center, 733 Third Avenue, New York, New York 10017-
3204, together with payment for the purchase price of such shares and a
completed New Account Application. Payment for subsequent purchases should be
mailed to SunAmerica Fund Services, Inc., c/o NFDS, P.O. Box 219373, Kansas
City, Missouri 64121-9373 and the shareholder's account number should appear on
the check. For fiduciary retirement plan accounts, both initial and subsequent
purchases should be mailed to SunAmerica Fund Services, Inc., Mutual Fund
Operations, The SunAmerica Center, 733 Third Avenue, New York, New York 10017-
3204. Certified checks are not necessary but checks are accepted subject to
collection at full face value in United States funds and must be drawn on a bank
located in the United States. Upon receipt of the completed New Account
Application and payment check, the Transfer Agent will purchase full and
fractional shares of the Fund at the net asset value next computed after the
check is received. Subsequent purchases of shares of the Fund may be purchased
directly through the Transfer Agent. Orders for purchases accompanied by check
or other negotiable bank draft will be accepted and effected as of the Fund's
close of business on the next business day following receipt of such order and
such shares will receive the dividend for the business day following the day the
purchase is effected. SAFS reserves the right to reject any check made payable
other than in the manner indicated above. Under certain circumstances, the Fund
will accept a multi-party check (e.g., a check made payable to the shareholder
by another party and then endorsed by the shareholder to the Fund in payment for
the purchase of shares); however, the processing of such a check may be subject
to a delay. The Fund does not verify the authenticity of the endorsement of such
multi-party check, and acceptance of the check by the Fund should not be
considered verification thereof. Neither the Fund nor its affiliates will be
held liable for any losses incurred as a result of a fraudulent endorsement.
There are restrictions on the redemption of shares purchased by check for which
funds are being collected. (See "Redemption of Shares.")
Purchase by Federal Funds Wire. An investor may make purchases by having his or
her bank wire federal funds to the Corporation's Transfer Agent. Federal funds
purchase orders will be accepted only on a day on which the Corporation and the
Transfer Agent are open for business. Orders for purchase of shares received by
wire transfer in the form of federal funds will be effected at the next-
determined net asset value if received at or prior to the Fund's close of
business. Such shares will receive the dividend for the next business day. In
order to insure prompt receipt of a Federal funds wire, it is important that
these steps be followed:
1. You must have an existing SunAmerica Fund Account before wiring funds. To
establish an account, complete the New Account Application and send it via
facsimile to SunAmerica Fund Services, Inc. at: (212) 551-5343.
B-20
<PAGE>
2. Call SunAmerica Fund Services' Shareholder/Dealer Services, toll free at
(800) 858-8850, extension 5125 to obtain your new account number.
3. Instruct the bank to wire the specified amount to the Transfer Agent:
State Street Bank and Trust Company, Boston, MA, ABA# 0110-00028; DDA#
99029712, SunAmerica [name of Fund, Class __] (include shareholder name
and account number).
ADDITIONAL INFORMATION REGARDING REDEMPTION OF SHARES
Reference is made to "Redemption of Shares" in the Prospectus for certain
information as to the redemption of Fund shares.
If the Directors determine that it would be detrimental to the best interests
of the remaining shareholders of the Fund to make payment wholly or partly in
cash, the Corporation, having filed with the Securities and Exchange Commission
("SEC") a notification of election pursuant to Rule 18f-1 on behalf of the Fund,
may pay the redemption price in whole, or in part, by a distribution in kind of
securities from the Fund in lieu of cash. In conformity with applicable rules
of the SEC, the Fund is committed to pay in cash all requests for redemption of
Fund shares, by any shareholder of record, limited in amount with respect to
each shareholder during any 90-day period to the lesser of (i) $250,000, or (ii)
1% of the net asset value of the Fund at the beginning of such period. If
shares are redeemed in kind, the redeeming shareholder would incur brokerage
costs in converting the assets into cash. The method of valuing portfolio
securities is described below in the section entitled "Determination of Net
Asset Value," and such valuation will be made as of the same time the redemption
price is determined.
DETERMINATION OF NET ASSET VALUE
The Fund is open for business on any day the New York Stock Exchange ("NYSE")
is open for regular trading. Shares are valued each day as of the close of
regular trading on the NYSE (generally, 4:00 p.m., Eastern time). The Fund
calculates the net asset value of each class of its shares separately by
dividing the total value of each class's net assets by the shares outstanding of
such class. The net asset value may not be computed on a day in which no orders
to purchase, sell or redeem Fund shares have been received.
Under applicable rules of the SEC, the valuation of the Fund's investments is
based upon their amortized cost. This entails valuing an instrument at its cost
and thereafter assuming a constant amortization to maturity of any premium or
discount regardless of the impact of fluctuating interest rates on the market
value of the instrument. While this method provides certainty in valuation, it
may result in periods during which the value of an instrument, as determined by
the amortized cost method, is higher or lower than the price the Fund would
receive if it sold the instrument. During periods of rising interest rates, the
daily yield on shares of the Fund computed on an amortized cost basis may tend
to be higher than the like computation made by a mutual fund with identical
investments utilizing a method of valuation based upon market prices. The
converse would apply in a period of declining rates. The purpose of this method
of valuation is to facilitate the
B-21
<PAGE>
maintenance of a constant net asset value per share of $1.00. There can be no
assurance, however, that the Fund will be able to maintain a stable net asset
value of $1.00 per share.
Certain conditions must be met in connection with the application of
valuation rules to the Fund. These conditions include maintaining a dollar-
weighted average portfolio maturity of 90 days or less, purchasing instruments
having remaining maturities of 397 calendar days or less, and investing only in
securities determined by the Adviser under procedures adopted by the Directors
to present minimal credit risks and which are of high quality as determined by
the requisite number of nationally recognized statistical rating organizations
or, in the case of any instrument that is not rated, determined to be of
comparable quality by the Adviser under procedures adopted by the Directors. In
accordance with the applicable regulations, the Directors have established
procedures designed to stabilize at $1.00 the Fund's net asset value per share
to the extent reasonably possible. Such procedures include review of the Fund's
portfolio holdings at such intervals as appropriate to determine whether the
Fund's net asset value, calculated by using available market quotations,
deviates from $1.00 per share based on amortized cost. If such deviation
exceeds .5% of the Fund's $1.00 per share net asset value, the Directors will
promptly consider what action, if any, will be initiated. In the event that the
Directors determine that a deviation exists that may result in material dilution
or other unfair results to investors or existing shareholders, they will take
such corrective action as they deem necessary and appropriate, which may include
selling portfolio instruments, withholding dividends or establishing a net asset
value per share based upon available market quotations.
PERFORMANCE DATA
The Fund may advertise performance data that reflects various measures of
yield. An explanation of the data presented and the methods of computation that
will be used are as follows.
The Fund's performance may be compared to the historical returns of various
investments, performance indices of those investments or economic indicators,
including, but not limited to, stocks, bonds, certificates of deposit, money
market deposit accounts, money market funds and U.S. Treasury Bills. Certain of
these alternative investments may offer fixed rates of return and guaranteed
principal and may be insured.
Yield is determined separately for Class A, Class B and Class II shares of
the Fund in accordance with a standardized formula prescribed by the SEC and is
not indicative of the amounts which were or will be paid to shareholders. The
yield quoted in the Fund's advertisements is computed by determining the net
change, exclusive of capital changes, in the value of a hypothetical pre-
existing account having a balance of one share at the beginning of the 7-day
period. A hypothetical charge reflecting deductions for shareholder accounts is
subtracted from the above net change and the difference is divided by the value
of the account at the beginning of the 7-day period. The resulting figure is
multiplied by 365 divided by seven and carried to the nearest one hundredth of
one percent.
Effective yield quoted in the Fund's advertisements is computed by
determining the net change, exclusive of capital changes, in the value of a
hypothetical pre-existing account having a balance of one share at the beginning
of the 7-day period. A hypothetical charge reflecting
B-22
<PAGE>
deductions from shareholder accounts is subtracted from the above net change and
the difference is divided by the value of the account at the beginning of the 7-
day period. The resulting figure is then compounded by adding one, raising the
sum to a power equal to 365 divided by seven, and subtracting one. The following
formula illustrates the effective yield computation.
[(Base period return + 1) /365/7/] - 1
The following table sets forth the Fund's yield and effective yield for the
Class A, Class B and Class II shares for the 7-day periods ended December 31,
1999, 1998 and 1997.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
1999 1998 1997
- --------------------------------------------------------------------------------------------------------------
Class A Class B Class II Class A Class B Class II Class A Class B Class II*
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Yield 4.92% 4.12% 4.10% 4.40% 3.59% 3.57% 4.84% 4.08% 4.15%
- --------------------------------------------------------------------------------------------------------------
Effective Yield 5.04% 4.20% 4.18% 4.50% 3.65% 3.64% 4.96% 4.16% 4.24%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* The Fund commenced offering Class II shares (previously designated Class C
shares) on October 2, 1997.
Comparisons
- -----------
The Fund may compare its yield to similar measures as calculated by various
publications, services, indices, or averages. Such comparisons are made to
assist in evaluating an investment in the Fund. The following references may be
used:
a) Lipper: Mutual Fund Performance Analysis, Fixed Income Analysis, and
Mutual Fund Indices -- measures total return and average current yield for the
mutual fund industry. Ranks individual mutual fund performance over specified
time periods assuming reinvestment of all distributions, exclusive of sales
charges.
b) CDA Mutual Fund Report, published by CDA Investment Technologies, Inc.,
analyzes price, current yield, risk, total return, and average rate of return
(average annual compounded growth rate) over specified time periods for the
mutual fund industry.
c) Stocks, Bonds, Bills, and Inflation, published by Ibbotson Associates -
- - historical measure of yield, price, and total return for common and small
company stock, long-term government bonds, treasury bills, and inflation.
d) IBC/Donoghue's Inc. Money Fund Report --comprehensive evaluation of
money market funds which monitors portfolio characteristics on a weekly basis.
The Report provides the information with respect to yield, average maturity,
security selection (asset allocation) and credit quality.
In assessing such comparisons of performance, an investor should keep
in mind that the composition of the investments in the reported indices and
averages is not identical to the Fund's portfolio, that the averages are
generally unmanaged and that the items included in the calculations of such
averages may not be identical to the formula used by the Fund to calculate its
figures.
B-23
<PAGE>
Specifically, the Fund may compare its performance to that of certain indices
that include securities with government guarantees. However, the Fund's shares
do not contain any such guarantees. In addition, there can be no assurance that
the Fund will continue its performance as compared to such other standards.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Dividends and Distributions. The Fund intends to distribute to the registered
holders of its shares all or substantially all of its net investment income,
which includes dividends, interest and net short-term capital gains, if any, in
excess of any net long-term capital losses. The Fund intends to distribute any
long-term capital gains in excess of any net short-term capital losses.
Dividends from net investment income are declared daily and paid monthly.
Dividends are paid on or about the fifteenth day of the month. Net capital
gains, if any, will be paid annually. In determining amounts of capital gains
to be distributed, any capital loss carry-forwards from prior years will be
offset against capital gains. At December 31, 1999, the Fund had a capital loss
carry-forward of $39,546, which is available to the extent not utilized to
offset future gains from 2002 through 2006. The utilization of such losses will
be subject to annual limitations under the Code and the regulations thereunder.
Dividends and distributions are paid in additional Fund shares based on the
net asset value at the close of business on the record date, unless the
dividends total in excess of $10 per distribution period and the shareholder
notifies the Fund at least five business days prior to the payment date to
receive such distributions in cash.
If a shareholder has elected to receive dividends and/or capital gain
distributions in cash, and the postal or other delivery service is unable to
deliver checks to the shareholder's address of record, no interest will accrue
on amounts represented by uncashed dividend or distribution checks.
Taxes. The Fund is qualified and intends to remain qualified and elects to be
treated as a regulated investment company under Subchapter M of the Code for
each taxable year. In order to remain qualified as a regulated investment
company, the Fund generally must, among other things, (a) derive at least 90% of
its gross income from dividends, interest, proceeds from loans of stock or
securities and certain other related income; and (b) diversify its holdings so
that, at the end of each fiscal quarter, (i) 50% of the market value of the
Fund's assets is represented by cash, government securities, securities of other
regulated investment companies and other securities limited, in respect of any
one issuer, to an amount not greater than 5% of the Fund's assets and not
greater than 10% of the outstanding voting securities of such issuer, and (ii)
not more than 25% of the value of its assets is invested in the securities of
any one issuer (other than government securities or the securities of other
regulated investment companies).
As a regulated investment company, the Fund will not be subject to U.S.
federal income tax on its income and gains which it distributes as dividends or
capital gains distributions to shareholders provided that it distributes to
shareholders at least 90% of its investment company taxable income for the
taxable year. The Fund intends to distribute sufficient income to meet this
qualification requirement.
B-24
<PAGE>
Under the Code, amounts not distributed on a timely basis in accordance with
a calendar year distribution requirement are subject to a nondeductible 4%
excise tax. To avoid the tax, the Fund must distribute during each calendar
year (1) at least 98% of its ordinary income (not taking into account any
capital gains or losses) for the calendar year, (2) at least 98% of its net
capital gains, i.e., capital gains in excess of its capital losses for the 12-
month period ending on October 31 of the calendar year, and (3) all ordinary
income and net capital gains for previous years that were not distributed during
such years. To avoid application of the excise tax, the Fund intends to make
distributions in accordance with the calendar year distribution requirement.
Generally, a distribution will be subject to tax in the year it is received.
However, distribution will be treated as paid on December 31 of the calendar
year if declared by the Fund in October, November or December of such year,
payable to shareholders of record on a date in such month and paid by the Fund
during January of the following year. Any such distributions paid during
January of the following year will be taxable to shareholders as of December 31,
rather than the date on which the distributions are received.
Distributions of net investment income and short-term capital gains
("ordinary income dividends") are taxable to a shareholder as ordinary dividend
income regardless of whether the shareholder receives such distributions in
additional shares or in cash. Distributions of net capital gains, if any, are
taxable as capital gains regardless of whether the shareholder receives such
distributions in additional shares or in cash or how long the investor has held
his or her shares. Dividends and distributions paid by the Fund will not be
eligible for the dividends received deduction for corporations.
Upon a sale or exchange of its shares, a shareholder may realize a taxable
gain or loss depending upon its basis in the shares. Such gain or loss will be
treated as capital gain or loss if the shares are capital assets in the
shareholder's hands. In the case of an individual, any such capital gain will
be treated as short-term capital gain if the shares were held for not more than
12 months, and long-term capital gain, taxable at the maximum rate of 20%, if
such shares were held for more than 12 months. In the case of a corporation,
any such capital gain will be treated as long-term capital gain, taxable at the
same rates as ordinary income, if such shares were held for more than 12 months.
Any such capital loss will be long-term capital gain or loss if the shares have
been held for more than one year. The amount of any CDSC will reduce the amount
realized on the sale or exchange of shares for purposes of determining gain or
loss. Generally, any loss realized on a sale or exchange will be disallowed to
the extent the shares disposed of are replaced within a period of 61 days
beginning 30 days before and ending 30 days after the shares are disposed of.
Any loss realized by a shareholder on the sale of shares of the Fund held by the
shareholder for six months or less will be treated for tax purposes as a long-
term capital loss to the extent of any distributions of net capital gains
received by the shareholder with respect to such shares.
Under certain circumstances (such as the exercise of an exchange privilege in
certain cases), the tax effect of sales load charges imposed on the purchase of
shares in a regulated investment company is deferred if the shareholder does not
hold the shares for at least 90 days.
Income received by the Fund from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries. Income tax
treaties between certain countries and the United States may reduce or eliminate
such taxes. It is impossible to determine in advance the effective rate of
foreign tax to which the Fund will be subject, since the amount of the Fund's
assets to be invested in various countries is not known. It is not anticipated
that the Fund
B-25
<PAGE>
will qualify to pass through to shareholders the ability to claim as a foreign
tax credit their respective shares of foreign taxes paid by the Fund.
The Fund may be required to backup withhold U.S. Federal income tax at the
rate of 31% of all taxable distributions payable to shareholders who fail to
provide their correct taxpayer identification number or fail to make required
certifications, or who have been notified by the Internal Revenue Service that
they are subject to backup withholding. Backup withholding is not an additional
tax. Any amounts withheld may be credited against a shareholder's U.S. Federal
income tax liability.
Foreign shareholders generally will be subject to a withholding tax at the
rate of 30% (or lower treaty rate) on any ordinary income dividends pay by the
Fund.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury regulations currently in effect.
Shareholders are urged to consult their tax advisers regarding specific
questions as to Federal, state and local taxes. In addition, foreign investors
should consult with their own tax advisers regarding the particular tax
consequences, including foreign tax consequences, to them of an investment in
the Fund. Qualification as a regulated investment company under the Code for
tax purposes does not entail government supervision of management or investment
policies.
RETIREMENT PLANS
Shares of the Fund are eligible to be purchased in conjunction with various
types of qualified retirement plans. The summary below is only a brief
description of the federal income tax laws for each plan and does not purport to
be complete. Further information or an application to invest in shares of the
Fund by establishing any of the retirement plans described below may be obtained
by calling Retirement Plans at (800) 858-8850. However, it is recommended that
a shareholder considering any retirement plan consult a tax advisor before
participating.
Pension and Profit-Sharing Plans. Sections 401(a) and 401(k) of the Code permit
business employers and certain associations to establish pension and profit
sharing plans for employees. Shares of the Fund may be purchased by those who
would have been covered under the rules governing old H.R. 10 (Keogh) Plans, as
well as by corporate plans. Each business retirement plan provides tax
advantages for owners and participants. Contributions made by the employer are
tax-deductible, and participants do not pay taxes on contributions or earnings
until withdrawn.
Tax-Sheltered Custodial Accounts. Section 403(b)(7) of the Code permits public
school employees and employees of certain types of charitable, educational and
scientific organizations specified in Section 501(c)(3) of the Code, to purchase
shares of the Fund and, subject to certain limitations, exclude the amount of
purchase payments from gross income for tax purposes. Individual Retirement
Accounts (IRA). Section 408 of the Code permits eligible individuals to
contribute to an individual retirement program, including Simplified Employee
Pension Plans, commonly referred to as SEP-IRA. Section 408A of the Code treats
Roth IRAs as IRAs subject to certain special rules applicable thereto. IRAs are
subject to limitations with respect to the amount that may be contributed, the
eligibility of individuals to make contributions, the amount if any,
B-26
<PAGE>
entitled to be contributed on a deductible basis, and the time in which
distributions would be allowed to commence. In addition, certain distributions
from some other types of retirement plans may be placed on a tax-deferred basis
in an IRA.
Salary Reduction Simplified Employee Pension (SARSEP). This plan was introduced
by a provision of the Tax Reform Act of 1986 as a unique way for small employers
to provide the benefit of retirement planning for their employees.
Contributions are deducted from the employee's paycheck before tax deductions
and are deposited into an IRA by the employer. These contributions are not
included in the employee's income and therefore are not reported or deducted on
his or her tax return.
Savings Incentive Match Plan for Employees (SIMPLE IRA). This plan was
introduced by a provision of the Small Business Job Protection Act of 1996 to
provide small employers with a simplified tax-favored retirement plan.
Contributions are deducted from the employee's paycheck before taxes and are
deposited into a SIMPLE IRA by the employer, who must make either matching
contributions or non-elective contributions. Contributions are tax-deductible
for the employer and participants do not pay taxes on contributions on earnings
until they are withdrawn.
Roth IRA. This plan, introduced by Section 302 of the Taxpayer Relief Act of
1997, generally permits individuals with adjusted gross income of up to $95,000,
and married couples with joint adjusted gross income of up to $150,000, to
contribute to a "Roth IRA." Contributions are not tax-deductible, but
distribution of assets (contributions and earnings) held in the account for at
least five years may be distributed tax-free under certain qualifying
conditions.
Education IRA. Established by the Taxpayer Relief Act of 1997, under Section
530 of the Code, this plan permits individuals to contribute to an IRA on behalf
of any child under the age of 18. Contributions are not tax-deductible but
distributions are tax-free if used for qualified educational expenses.
DESCRIPTION OF SHARES
Ownership of the Corporation is represented by transferable shares of common
stock, having a par value of $.001 per share. The Articles of Incorporation, as
amended to date (the "Articles of Incorporation"), authorize the Corporation to
issue 10 billion shares of common stock and to divide or combine the shares into
a greater or lesser number of shares without thereby changing the proportionate
interests of shareholders of the Corporation.
Currently, one series of shares of the Corporation, the Fund, has been
authorized pursuant to the Articles of Incorporation. This series has been
divided into three classes of shares, designated as Class A, Class B and Class
II shares. The Directors may authorize the creation of additional series of
shares so as to be able to offer to investors additional investment portfolios
within the Corporation that would operate independently from the Corporation's
present portfolio, or to distinguish among shareholders, as may be necessary, to
comply with future regulations or other unforeseen circumstances. Each series
of the Corporation's shares, in the event that more than one series is
authorized, will represent the interests of the shareholders of that series in a
particular portfolio of the Corporation's assets. In addition, the Directors
may authorize the creation of additional classes of shares in the future.
B-27
<PAGE>
Shareholders are entitled to a full vote for each full share held. The
Directors have terms of unlimited duration (subject to certain removal
procedures) and have the power to alter the number of Directors, and appoint
their own successors, provided that at all times at least a majority of the
Directors have been elected by shareholders. The voting rights of shareholders
are not cumulative, so that holders of more than 50% of the shares voting can,
if they choose, elect all Directors being elected, while the holders of the
remaining shares would be unable to elect any Directors. Although the
Corporation need not hold annual meetings of shareholders, the Directors may
call special meetings of shareholders for action by shareholder vote as may be
required by the 1940 Act, Maryland law, the Articles of Incorporation or the By-
Laws of the Corporation (the "By-Laws"). Also, a shareholders meeting must be
called, if so requested in writing by the holders of record of 10% or more of
the outstanding shares of the Corporation. In addition, the Directors may be
removed only for cause by the action of the holders of record of at least a
majority of all outstanding shares entitled to vote for election of Directors.
All series of shares will vote with respect to certain matters, such as election
of Directors. When all series of shares, to the extent that more than one
series is authorized, are not affected by a matter to be voted upon, such as
approval of investment advisory agreements or changes in a series' policies,
only shareholders of the series affected by the matter may be entitled to vote.
All classes of shares of the Fund are identical in all respects, except that
(i) each class may bear differing amounts of certain class-specific expenses,
(ii) Class A shares are subject to an ongoing account maintenance and service
fee, (iii) Class B shares are subject to a contingent deferred sales charge, a
distribution fee and an ongoing account maintenance and service fee, (iv) Class
II shares are subject to an initial sales charge, a CDSC, a distribution fee and
an ongoing account maintenance and service fee; (v) Class B shares convert
automatically to Class A shares on the first business day of the month seven
years after the purchase of such Class B shares, (vi) each class has voting
rights on matters that pertain to the Rule 12b-1 plan adopted with respect to
such class, except that under certain circumstances, the holders of Class B
shares may be entitled to vote on material changes to the Class A Rule 12b-1
plan, and (vii) each class of shares will be exchangeable only into the same
class of shares of any of the other SunAmerica Mutual Funds. All shares of the
Fund issued and outstanding and all shares offered by the Prospectus when issued
are fully paid and non-assessable. Shares have no preemptive or other
subscription rights and are freely transferable on the books of the Corporation.
In addition, shares have no conversion rights, except as described above.
The By-Laws provide that the Corporation shall indemnify any person who was
or is a Director, officer or employee of the Corporation to the maximum extent
permitted by Maryland law and the 1940 Act upon a determination, made in
accordance with the terms of the By-Laws, that indemnification is proper in the
circumstances. In addition, the By-Laws provide that the Corporation may
maintain insurance on behalf of any person who is or was a Director or officer,
employee or agent of the Corporation or who is or was serving at the request of
the Corporation as Director, officer, agent or employee of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted or incurred in connection with serving in such capacity. However, no
Director or officer of the Corporation will be protected by indemnification,
insurance or otherwise from any liability to the Corporation or its shareholders
to which he or she would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in his
or her office.
B-28
<PAGE>
ADDITIONAL INFORMATION
Reports to Shareholders. The Fund sends audited annual and unaudited semi-
annual reports to shareholders of the Fund. In addition, the Transfer Agent
sends a statement to each shareholder having an account directly with the Fund
to confirm transactions in the account.
Custodian and Transfer Agent. State Street Bank and Trust Company, 1776
Heritage Drive, North Quincy, MA 02171, serves as Custodian and Transfer Agent
for the Fund and in those capacities maintains certain financial and accounting
books and records pursuant to agreements with the Corporation. Transfer agent
functions are performed for State Street, by National Financial Data Services,
P.O. Box 419572, Kansas City, MO 64141-6572, an affiliate of State Street.
Independent Accountants and Legal Counsel. PricewaterhouseCoopers LLP, 1177
Avenue of the Americas, New York, NY 10036, serves as the Corporation's
independent accountants and in that capacity examines the annual financial
statements of the Fund. The firm of Swidler Berlin Shereff Friedman, LLP, The
Chrysler Building, 405 Lexington Avenue, New York, NY 10174, serves as legal
counsel to the Corporation.
B-29
<PAGE>
FINANCIAL STATEMENTS
The Fund's audited financial statements are incorporated in this Statement of
Additional Information by reference to its 1999 annual report to shareholders.
You may request a copy of the annual report at no charge by calling (800) 858-
8850 or writing the Fund at SunAmerica Fund Services, Inc., Mutual Fund
Operations, The SunAmerica Center, 733 Third Avenue, New York, New York 10017-
3204.
B-30
<PAGE>
APPENDIX
BOND, NOTE AND COMMERCIAL PAPER RATINGS
Description of Applicable Moody's Investors Service, Inc.'s ("Moody's")
Corporate Bond Ratings
Aaa Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as
can be visualized are most unlikely to impair the fundamentally
strong position of such issues.
Aa Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.
Note: Moody's may apply numerical modifiers 1, 2 and 3 to issues rated
Aa to denote relative strength within such classification. The modifier 1
indicates that the security ranks in the higher end of the Aa rating category;
the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that
the issue ranks in the lower end of the Aa rating category.
Description of Applicable Moody's Note Ratings
MIG 1 Notes bearing the designation MIG 1 are judged to be of the best
quality, enjoying strong protection from established cash flows
of funds for their servicing or from established and broad-based
access to the market for refinancing, or both.
MIG 2 Notes bearing the designation MIG 2 are judged to be of high
quality, with margins of protection ample although not so large
as in the preceding group.
Description of Applicable Moody's Commercial Paper Ratings
The term "commercial paper" as used by Moody's means promissory obligations
not having an original maturity in excess of nine months. Moody's makes no
representations as to whether such commercial paper is by any other definition
"commercial paper" or is exempt from registration under the Securities Act.
Moody's commercial paper ratings are opinions of the ability of issuers
to repay punctually promissory obligations not having an original maturity in
excess of nine months. Moody's makes no representation that such obligations are
exempt from registration under the Securities Act, nor
Appendix-1
<PAGE>
does it represent that any specific note is a valid obligation of a rated issuer
or issued in conformity with any applicable law.
Issuers rated P-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. P-1 repayment
capacity will normally be evidenced by the following characteristics:
-- Leading market positions in well established industries
-- High rates of return on funds employed
-- Conservative capitalization structures with moderate reliance on debt and
ample asset protection
-- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation
-- Well established access to a range of financial markets and assured
sources of alternate liquidity.
Issuers rated P-2 (or related supporting institutions) have a strong capacity
for repayment of short-term promissory obligations. This will normally be
evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
If an issuer represents to Moody's that its commercial paper obligations are
supported by the credit of another entity or entities, then the name or names of
such supporting entity or entities are listed within parentheses beneath the
name of the issuer, or there is a footnote referring the reader to another page
for the name or names of the supporting entity or entities. In assigning
ratings to such issuers, Moody's evaluates the financial strength of the
indicated affiliated corporations, commercial banks, insurance companies,
foreign governments or other entities, but only as one factor in the total
rating assessment. Moody's makes no representation and gives no opinion on the
legal validity or enforceability of any support arrangement. You are cautioned
to review with your counsel any questions regarding particular support
arrangements.
Among the factors considered by Moody's in assigning ratings are the
following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and an appraisal of
speculative type risks that may be inherent in certain areas; (3) evaluation of
the issuer's products in relation to competition and customer acceptance; (4)
liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over
a period of ten years; (7) financial strength of a parent company and the
relationships that exist with the issuer; and (8) recognition by management of
obligations that may be present or may arise as a result of public interest
questions and preparations to meet such obligations.
Description of Applicable Standard & Poor's Ratings Services, a Division of The
McGraw-Hill Companies, Inc. ("S&P") Bond Ratings
Appendix-2
<PAGE>
An S&P corporate rating is a current assessment of the creditworthiness of an
obligor with respect to a specific obligation. This assessment may take into
consideration obligors such as guarantors, insurers, or lessees.
The debt rating is not a recommendation to purchase, sell or hold a security,
inasmuch as it does not comment as to market price or suitability for a
particular investor.
The ratings are based on current information furnished by the issuer or
obtained by S&P from other sources it considers reliable. S&P does not perform
an audit in connection with any rating and may, on occasion, rely on unaudited
financial information. The ratings may be changed, suspended or withdrawn as a
result of changes in, or unavailability of, such information, or for other
reasons.
The ratings are based, in varying degrees, on the following considerations:
(1) likelihood of default capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation; (2) nature of and provisions of the obligation; and (3)
protection afforded by, and relative position of, the obligation in the event of
bankruptcy, reorganization or other arrangement under the laws of bankruptcy and
other laws affecting creditors' rights.
AAA Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest-rated issues only in small
degree.
Plus (+) or minus (-): The rating of "AA" may be modified by the addition of
a plus or minus sign to show relative standing within these ratings
categories.
Provisional ratings:
P The letter "p" indicates that the rating is provisional. A provisional
rating assumes the successful completion of the project being financed by
the debt being rated and indicates that payment of debt service
requirements is largely or entirely dependent upon the successful and
timely completion of the project. This rating, however, while addressing
credit quality subsequent to completion of the project, makes no comment
on the likelihood or risk of default upon failure of such completion. The
investor should exercise judgment with respect to such likelihood and
risk.
L The letter "L" indicates that the rating pertains to the principal amount
of those bonds to the extent that the underlying deposit collateral is
insured by the Federal Savings & Loan Insurance Corp. or the Federal
Deposit Insurance Corp. and interest is adequately collateralized.
* Continuance of the rating is contingent upon S&P receipt of an executed
copy of the escrow agreement or closing documentation confirming
investments and cash flows.
Appendix-3
<PAGE>
NR Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that S&P does not rate a
particular type of obligation as a matter of policy.
Debt Obligations of Issuers outside the United States and its territories are
rated on the same basis as domestic corporate issues. The ratings measure the
credit worthiness of the obligor but do not take into account currency exchange
and related uncertainties.
Applicable Bond Investment Quality Standards: Under present commercial bank
regulations issued by the Comptroller of the Currency, bonds rated "AAA" or "AA"
(commonly known as "investment grade" ratings) are generally regarded as
eligible for bank investment. In addition, the laws of various states governing
legal investments impose certain rating or other standards for obligations
eligible for investment by savings banks, trust companies, insurance companies
and fiduciaries generally.
Description of Applicable S&P Note Ratings
SP-1 The designation "SP-1" indicates a very strong capacity to pay
principal and interest. A "+" is added for those issues determined to
possess overwhelming safety characteristics.
SP-2 An "SP-2" designation indicates a satisfactory capacity to pay
principal and interest.
Description of Applicable S&P Commercial Paper Ratings.
A S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of not more than 365 days.
A Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with
the numbers 1, 2 and 3 to indicate the relative degree of safety.
A-1 This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues designated
"A-1" that are determined to possess overwhelming safety characteristics
are denoted with a plus (+) sign designation.
The commercial paper rating is not a recommendation to purchase or sell a
security. The ratings are based on current information furnished to S&P by the
issuer or obtained from other sources it considers reliable. The ratings may be
changed, suspended, or withdrawn as a result of changes in or unavailability of
such information.
Appendix-4
<PAGE>
PART C
OTHER INFORMATION
Item 23: Exhibits.
(a) (i) Articles of Incorporation. Incorporated herein by reference to
Exhibit 1(A) of Post-Effective Amendment No. 17 to Registrant's
Registration Statement on Form N-1A (File No. 2-85370) filed on
April 26, 1996.
(ii) Articles of Amendment. Incorporated herein by reference to
Exhibit 1(B) of Post-Effective Amendment No. 17 to Registrant's
Registration Statement on Form N-1A (File No. 2-85370) filed on
April 26, 1996.
(b) By-Laws, as amended. Incorporated herein by reference to Exhibit 2 of
Post-Effective Amendment No. 17 to Registrant's Registration Statement
on Form N-1A (File No. 2-85370) filed on April 26, 1996.
(c) Inapplicable.
(d) Investment Advisory and Management Agreement between Registrant and
SunAmerica Asset Management Corp. Incorporated herein by reference to
Exhibit (d) of Post-Effective Amendment No. 23 of Form N-1A (File No.
2-85370) filed on April 30, 1999.
(e) (i) Distribution Agreement between the Registrant and SunAmerica
Capital Services, Inc. Incorporated herein by reference to
Exhibit (e)(i) of Post-Effective Amendment No. 23 of Form N-1A
(File No. 2-85370) filed on April 30, 1999.
(ii) Dealer Agreement. Incorporated herein by reference to
Exhibit 6(B) of Post-Effective Amendment No. 17 to Registrant's
Registration Statement on Form N-1A (File No. 2-85370) filed on
April 26, 1996.
(f) Directors'/Trustees' Retirement Plan. Incorporated herein by reference
to Exhibit 7 of Post-Effective Amendment No. 17 to Registrant's
Registration Statement on Form N-1A (File No. (2-85370) filed on
April 26, 1996.
(g) Custodian Agreement between Registrant and State Street Bank and Trust
Company. Incorporated herein by reference to Exhibit 8 of Post-
Effective Amendment No. 16 to Registrant's Registration Statement on
Form N-1A (File No. 2-85370) filed on April 27, 1995.
(h) (i) Transfer Agency and Service Agreement between Registrant and
State Street Bank and Trust Company. Incorporated herein by
reference to Exhibit 9(a) of Post-Effective Amendment No. 16 to
Registrant's Registration Statement on Form N-1A (File No.
2-85370) filed on April 27, 1995.
(ii) Service Agreement between Registrant and SunAmerica Fund
Services, Inc. Incorporated herein by reference to Exhibit
(h)(ii) of Post-Effective Amendment No. 23 of Form N-1A (File No.
2-85370) filed on April 30, 1999.
(i) Opinion of Legal Counsel. Filed herewith.
(j) Consent of Independent Accountants. Filed herewith.
(k) Inapplicable.
(l) Inapplicable.
(m) (i) Distribution Plan pursuant to Rule 12b-1 (Class A Shares).
Incorporated herein by reference to Exhibit (m)(i) of Post-
Effective Amendment No. 23 of Form N-1A (File No. 2-85370) filed
on April 30,1999.
(ii) Distribution Plan pursuant to Rule 12b-1 Plan (Class B Shares).
Incorporated herein by reference to Exhibit (m)(ii) of Post-
Effective Amendment No. 23 of Form N-1A (File No. 2-85370) filed
on April 30, 1999.
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<PAGE>
(iii) Distribution Plan pursuant to Rule 12b-1 (Class II Shares).
Incorporated herein by reference to Exhibit (m) (iii) of Post-
Effective Amendment No. 23 of Form N-1A (File No. 2-85370)
filed on April 30, 1999.
(n) Financial Data Schedules.
(o) (i) 18f-3 Plan. Incorporated herein by reference to Exhibit 18(B) of
Post-Effective Amendment No. 19 to Registrant's Registration
Statement on Form N-1A (File No. 2-85370) filed on July 21,
1997.
(ii) Powers of Attorney. Incorporated herein by reference to Exhibit
24 of Post-Effective Amendment No. 16 to Registrant's
Registration Statement on Form N-1A (File No. 2-85370) filed on
April 27, 1995.
(p) Code of Ethics. Filed herewith.
Item 24. Persons Controlled by or under Common Control with Registrant.
There are no persons controlled by or under common control with Registrant.
Item 25. Indemnification.
Section 1. The Corporation shall indemnify any person who was or is a
director, officer, or employee of the Corporation to the maximum extent
permitted by the Maryland General Corporation law; provided, however, that any
indemnification hereunder (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of such persons is proper in the circumstances. Such
determination shall be made (i) by the Board of Directors, by a majority vote of
quorum which consists of Directors who are neither "interested persons" of the
Corporation as defined in Section 2(a)(19) of the Investment Company Act of
1940, as amended, nor parties to the proceeding, or (ii) if the required quorum
is not obtainable, or if a quorum of such Directors so directs, by independent
legal counsel in a written opinion.
Section 2. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director or officer, employee or agent of
the Corporation or who is or was serving at the request of the Corporation as
director, officer, agent or employee of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity or arising out of his position, whether
or not the Corporation would have power to indemnify him.
Section 3. Notwithstanding anything in this Article VII to the
contrary, nothing herein contained shall protect or purport to protect any
director or officer of the Corporation against any liability to the Corporation
or its security holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office; and in the absence of a court
determination that such director or officer is not liable or that such director
or officer was not guilty of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office, no
indemnification will be permitted to such director or officer (either directly
or through insurance provided by the Corporation) unless an independent legal
counsel determines, based on a review of the facts, that such person was not
guilty of such willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
Item 26. Business and Other Connections of the Investment Adviser.
Information concerning the business and other connections of
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<PAGE>
SunAmerica is incorporated herein by reference to SunAmerica's Form ADV
(File No. 801-19813) and is currently on file with the Securities and
Exchange Commission.
Reference is also made to the caption "Fund Management" in the Prospectus
constituting Part A of the Registration Statement and "Adviser, Personal
Trading, Distributor and Administrator" and "Directors and Officers"
constituting Part B of the Registration Statement.
Item 27. Principal Underwriters.
(a) The principal underwriter of the Registrant also acts as principal
underwriter for:
SunAmerica Equity Funds
SunAmerica Income Funds
SunAmerica Strategic Investment Series, Inc.
SunAmerica Style Select Series, Inc.
(b) The following persons are the officers and directors of SunAmerica Capital
Services, Inc., the principal underwriter of Registrant's shares:
Name and Principal Position with Position with
Business Address Underwriter the Registrant
---------------- ----------- --------------
Peter A. Harbeck Director Director and President
The SunAmerica Center
733 Third Avenue
New York, NY 10017-3204
J. Steven Neamtz Chief Executive Vice President
The SunAmerica Center Officer,President
733 Third Avenue and Director
New York, NY 10017-3204
Robert M. Zakem Chief Legal Officer, Secretary & Chief
The SunAmerica Center Chief Compliance Compliance Officer
733 Third Avenue Officer and Director
New York, NY 10017-3204
Susan L. Harris Secretary None
SunAmerica, Inc.
1 Sun America Center
Los Angeles, CA 90067-6022
Debbie E. Potash-Turner Chief Financial None
The SunAmerica Center Officer and
733 Third Avenue Controller
New York, NY 10017-3204
(c) Inapplicable
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<PAGE>
Item 28. Location of Accounts and Records.
SunAmerica Asset Management Corp., The SunAmerica Center, 733 Third Avenue,
New York, NY 10017-3204, or an affiliate thereof, will maintain physical
possession of each such accounts, books or other documents of Registrant,
except for those maintained by Registrant's custodian, State Street Bank
and Trust Company, 1776 Heritage Drive, North Quincy, MA 02171, and its
affiliate, National Financial Data Services, P.O. Box 419572, Kansas City,
MO 64141-6572.
Item 29. Management Services.
Inapplicable.
Item 30. Undertakings.
Inapplicable.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
(the "1933 Act") and the Investment Company Act of 1940, as amended, the
Registrant certifies that it meets all of the requirements for effectiveness of
this Post-Effective Amendment No. 24 to the Registration Statement under Rule
485 (b) under the 1933 Act and has duly caused this Post-Effective Amendment No.
24 to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, and State of New York, on
the 27th of April, 2000.
SunAmerica Money Market Funds, Inc.
By: /s/ Peter C. Sutton
-----------------------------------
Peter C. Sutton
Treasurer
Pursuant to the requirements of the 1933 Act, the Post-Effective Amendment
No. 24 to the Registrant's Registration Statement on Form N-1A has been signed
below by the following persons in the capacities and on the date indicated:
<TABLE>
<CAPTION>
<S> <C> <C>
* President and Director
- ------------------------- (Principal Executive Officer)
Peter A. Harbeck
/s/ Peter C. Sutton Treasurer April 27, 2000
- ------------------------- (Principal Financial and
Peter C. Sutton Accounting Officer)
* Director
- -------------------------
S. James Coppersmith
* Director
- -------------------------
Samuel M. Eisenstat
*
- ------------------------- Director
Stephen J. Gutman
*
- ------------------------- Director
Sebastiano Sterpa
*By: /s/ Robert M. Zakem April 27, 2000
- -------------------------
Attorney-in-Fact
Robert M. Zakem
</TABLE>
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EXHIBIT INDEX
(i) Opinion of Legal Counsel.
(j) Consent of Independent Accountants.
(p) Code of Ethics.
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Exhibit 99.i
[LETTERHEAD OF SUNAMERICA ASSET MANAGEMENT CORP.]
April 28, 2000
SunAmerica Money Market Funds, Inc.
The SunAmerica Center
733 Third Avenue
New York, NY 10017-3204
Ladies and Gentlemen:
This opinion is being furnished in connection with the filing by
SunAmerica Money Market Funds, Inc. (the "Corporation"), a Maryland corporation
which issues and sells an indefinite number of shares of beneficial interest
(the "Shares"), of Post-Effective Amendment No. 24 to the Registration Statement
on Form N-1A (the "Amendment").
I am familiar with the proceedings taken by the Corporation in
connection with the authorization, issuance and sale of the Shares. In addition,
I have examined the Corporation's Articles of Incorporation, its By-Laws and
such other documents that have been deemed relevant to the matters referred to
in this opinion.
Based upon the foregoing, I am of the opinion that the Shares are
legally issued, fully paid and non-assessable shares of beneficial interest of
the Corporation.
I hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Amendment of the Corporation, and to
the filing of this opinion under the securities laws of any state.
Very truly yours,
SUNAMERICA ASSET MANAGEMENT CORP.
By: /s/ Robert M. Zakem
---------------------------
Robert M. Zakem
Senior Vice President and
General Counsel
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Exhibit 99.j
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Post-Effective
Amendment number 24 to the Registration Statement on Form N-1A ("Registration
Statement") of our report dated February 16, 2000, relating to the financial
statements and financial highlights which appear in the December 31, 1999 Annual
Report to Shareholders of the SunAmerica Money Market Fund, which are also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the headings "Independent Accountants and Legal
Counsel" and "Financial Highlights" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
New York, New York
April 25, 2000
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EXHIBIT 99.P
CODE OF ETHICS
FOR
SUNAMERICA ASSET MANAGEMENT CORP.
SUNAMERICA CAPITAL SERVICES, INC.
AND
ANCHOR SERIES TRUST
SUNAMERICA EQUITY FUNDS
SUNAMERICA INCOME FUNDS
SUNAMERICA MONEY MARKET FUNDS, INC.
SUNAMERICA SERIES TRUST
SUNAMERICA STYLE SELECT SERIES, INC.
SUNAMERICA STRATEGIC INVESTMENT SERIES, INC.
SEASONS SERIES TRUST
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I. PURPOSE
SunAmerica Asset Management Corp. has a fiduciary duty to Investment Company
and investment advisory clients which requires each employee to act solely
for the benefit of clients. This Code of Ethics (the "Code") has been
adopted in accordance with Rule 17j-1(b) under the Investment Company Act of
1940, as amended (the "Act"). Rule 17j-1 under the Act generally proscribes
fraudulent or manipulative practices with respect to purchases or sales of
securities held or to be acquired by investment companies, if effected by
associated persons of such companies. The purpose of this Code is to provide
regulations and procedures consistent with the Act, and Rule 17j-1
thereunder, designed to give effect to the general prohibitions set forth in
Rule 17j-1(a) as follows:
A. It shall be unlawful for any affiliated person of or principal underwriter
for a registered investment company, or any affiliated person of an
investment adviser of or principal underwriter for a registered investment
company in connection with the purchase or sale, directly or indirectly,
by such person of a security held or to be acquired, as defined in the
Rule, by such registered investment company-
1. To employ any device, scheme or artifice to defraud such registered
investment company;
2. To make to such registered investment company any untrue statement of a
material fact or omit to state to such registered investment company a
material fact necessary in order to make the statements made, in light of
the circumstances under which they are made, not misleading;
3. To engage in any act, practice, or course of business which operates or
would operate as a fraud or deceit upon any such registered investment
company; or
4. To engage in any manipulative practice with respect to such registered
investment company.
Also, each employee has a duty to act in the best interest of the firm. In
addition to the various laws and regulations covering our activities, it is
clearly in our best interest as a professional investment advisory
organization to avoid potential conflicts of interest or even the appearance
of such conflict with respect to the conduct of our officers and employees.
While it is not possible to anticipate all instances of potential conflict,
the standard is clear.
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II. GENERAL PRINCIPLES
In light of our professional and legal responsibilities, we believe it is
appropriate to restate and periodically distribute the firm's Code to all
employees. Our aim is to be as flexible as possible in our organization and
our internal procedures, while simultaneously protecting our organization and
our clients from the damage that could arise from a situation involving a
real or apparent conflict of interest. While it is not possible to
specifically define and prescribe rules regarding all possible cases in which
conflicts might arise, this Code is designed to set forth our policy
regarding employee conduct in those situations in which conflicts are most
likely to develop. As a general principle, it is imperative that those who
work for or on behalf of an Investment Company, avoid any such situation that
might comprise, or call into question, their exercise of fully independent
judgement in the interests of shareholders. If you have any doubt as to the
propriety of any activity, you should consult the General Counsel.
III. DEFINITIONS
A. "Adviser" means SunAmerica Asset Management Corp.
B. "Investment Company" means a company registered as such under the Act,
any series thereof or any component of such series for which the
Adviser is an investment adviser.
C. "Access person" means any trustee, director, officer, general partner or
advisory person of the Investment Company or Adviser. (For purposes of
this Code, the term "Access Person" shall mean only those
trustees/directors, officers, general partners or advisory persons of
the Investment Company or Adviser who, with respect to any Investment
Company or advisory client, make a recommendation, participate in the
determination of which recommendation shall be made, or whose principal
function or duties relate to the determination of which recommendation
shall be made to any Investment Company or advisory client, or who, in
connection with their duties, obtain any information concerning such
recommendations which are being made to the Investment Company or
advisory client.)
D. "Advisory person" means (i) any employee of the Investment Company or
Adviser or any company in a control relationship to such Investment
Company or the Adviser, who in connection with his or her regular
functions or duties, makes, participates in, or obtains information
regarding the purchase or sale of a security by an Investment Company,
or whose functions relate to the making of any recommendations with
respect to such purchases or sales; and (ii) any natural person in a
control relationship, or deemed by the Review Officer to be in a
control relationship, to the Investment Company or Adviser who
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obtains information concerning the recommendations made to an Investment
Company with regard to the purchase or sale of a security.
E. A security is "being considered for purchase or sale" when a
recommendation to purchase or sell a security has been made and
communicated and, with respect to the person making the recommendation,
when such person seriously considers making such a recommendation.
F. "Beneficial ownership" shall be interpreted to include any person who,
directly or indirectly, through any contract, arrangement,
understanding, relationship, or otherwise has or shares a direct or
indirect pecuniary interest in the security. As set forth in Rule 16a-
1(a)(2) of the Securities Exchange Act of 1934, their term "pecuniary
interest" in securities shall mean the opportunity, directly or
indirectly, to profit or share in any profit derived from a transaction
in the subject securities.
G. "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the Act.
H. "Disinterested director or trustee" means a director or trustee of an
Investment Company who is not an "interested person" of an Investment
Company within the meaning of Section 2(a)(19) of the Act.
I. "Purchase or sale of a security" includes, inter alia, the writing of an
option to purchase or sell a security, the conversion of a convertible
security, and the exercise of a warrant for the purchase of a security.
J. "Review Officer" means the officer of the Adviser designated from time-
to-time by the Adviser to receive and review reports of purchases and
sales by Access Persons.
K. "Security" shall have the meaning set forth in Section 2(a)(36) of the
Act, except that it shall not include shares of registered open-end
investment companies, securities issued by the United States
Government, short-term debt securities which are "government
securities" within the meaning of Section 2(a)(16) of the Act, bankers'
acceptances, bank certificates of deposit and commercial paper.
L. "Security held or to be acquired" by a registered Investment Company
means any security as defined in Rule 17j-1(e) under the Act which,
within the most recent 15 days, (i) is or has been held by such
company, or (ii) is being or has been considered by such company or its
Adviser for purchase by such company.
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M. "Personal securities transaction" means (i) transactions for your own
account, including IRA's, or (ii) transactions for an account in which
you have indirect beneficial ownership, unless you have no direct or
indirect influence or control over the account. Accounts involving
family (including husband, wife, minor children or other dependent
relatives), or accounts in which you have a beneficial interest (such
as a trust of which you are an income or principal beneficiary) are
included within the meaning of "indirect beneficial interest."
IV. INCORPORATION OF INVESTMENT SUB-ADVISERS' CODES OF ETHICS
Those provisions of an Investment Sub-Adviser's Code of Ethics
applicable to persons who, in connection with their regular functions
or duties, make, participate in, or obtain information regarding the
purchase or sale of a security, or whose functions relate to the making
of any recommendation with respect to such purchase or sale by
registered investment companies managed by such Investment Sub-Adviser
are hereby incorporated herein by reference as additional provisions of
this Code of Ethics (to the extent such provisions are in addition to
or more restrictive than the provision set forth in this Code)
applicable to those officers, trustees, directors and advisory
personnel of the Adviser or Investment Company who have direct
responsibility of investments of the Investment Company, except that
approval or disclosure required thereunder shall be obtained from or
made to the officer designated in Section IX. A violation of an
Investment Sub-Adviser's Code of Ethics shall constitute a violation of
this Code.
V. EXEMPTED TRANSACTIONS
A. Purchases or sales effected in any account over which the Access Person
has no direct or indirect influence or control;
B. Purchases or sales of securities which are not eligible for purchase or
sale by the Investment Company (e.g., SunAmerica Inc.);
C. Purchases or sales which are non-volitional on the part of either the
Access Person or the Investment Company. Non-volitional transactions
include gifts to you over which you have no control of the timing or
transactions which result from corporate action applicable to all
similar security holders (such as splits, tender offers, mergers, stock
dividends, etc.);
D. Purchases which are part of an automatic dividend reinvestment plan;
E. Purchases effected upon the exercise of rights issued by an issuer pro
---
rata to all holders of a class of its securities, to the extent such
----
rights were acquired from such issuer, and sales of such rights so
acquired;
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F. Purchases or sales approved by a majority vote of those trustees or
directors having no interest in the transaction upon a showing of good
cause. Good cause will be deemed to exist where unexpected hardship
occasions the need for additional funds. A change in investment
objectives will not be deemed "good cause;" and
G. Purchases or sales which receive the prior approval of the Review
Officer because they are only remotely potentially harmful to the
Investment Company because they would be very unlikely to affect a
highly institutional market, or because they clearly are not related
economically to the securities to be purchased, sold or held by the
Investment Company.
H. The Review Officer can grant exemptions from the personal trading
restrictions in this Code upon determining that the transaction for
which an exemption is requested would not violate any policy embodied in
this Code and that an exemption is appropriate to avoid an injustice to
the employee in the particular factual situation presented. Factors to
be considered may include: the size and holding period of the employee's
position in the security, the market capitalization of the issuer, the
liquidity of the security, the reason for the employee's requested
transaction, the amount and timing of client trading in the same or a
related security, and other relevant factors.
Any employee wishing an exemption should submit a written request to the
Review Officer setting forth the pertinent facts and reasons why the
employee believes that the exemption should be granted. Employees are
cautioned that exemptions are intended to be exceptions, and repetitive
exemptive applications by an employee will not be well received.
VI. RESTRICTIONS AND PROCEDURES ON PERSONAL SECURITIES
TRANSACTIONS
A. Prohibited Purchases and Sales - Except as otherwise provided in Section V
------------------------------
hereof:
1. No Access Person shall purchase or sell, directly or indirectly, any
security in which he or she has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership and which to his
or her actual knowledge at the time of such purchase or sale:
(a) is being considered for purchase or sale by an Investment Company;
or
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(b) is being purchased or sold by an Investment Company./1/
2. No Access Person shall reveal to any other person (except in the
normal course of his or her duties on behalf of an Investment
Company) any information regarding securities transactions by an
Investment Company or consideration by an Investment Company or the
Adviser of any such securities transaction.
3. No Access Person shall recommend any securities transaction by an
Investment Company without having disclosed his or her interest, if
any, in such securities or the issuer thereof, including without
limitation (i) his or her direct or indirect beneficial ownership of
any securities or such issuer, (ii) any contemplated transaction by
such person in such securities, (iii) any position with such issuer
or its affiliates and (iv) any present or proposed business
relationship between such issuer or its affiliates, on the one hand,
and such person or any party in which such person has a significant
interest, on the other; provided, however, that in the event the
interest of such Access Person in such securities or issuer is not
material to his or her personal net worth and any contemplated
transaction by such person in such securities cannot reasonably be
expected to have a material adverse effect on any such transaction
by the company or on the market for the securities generally, such
Access Person shall not be required to disclose his or her interest
in the securities or issuer thereof in connection with any such
recommendation.
B. Initial Public Offerings: No Access Person shall acquire any
------------------------
securities in an initial public offering, in order to preclude any
possibility of their profiting improperly from their positions on
behalf of an Investment Company.
C. Private Placements: No Advisory Person shall acquire any securities
------------------
in a private placement without the prior approval of the Review
Person. This prior approval should take into account, among other
factors, whether the investment opportunity should be reserved for
an Investment Company and its shareholders, and whether the
opportunity is being offered to an individual by virtue of his or
her position with the Investment Company. Advisory Persons who have
been authorized to acquire securities in a private placement should
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/1/ The Adviser, and any and all Access Persons or Advisory Persons
thereof, shall not be deemed to have actual knowledge, for purposes
hereof, of securities transactions effected for any company, series
thereof, or component of such series, for which the Adviser is the
investment adviser, but for which the portfolio management is
performed by an entity which is not an affiliate of SunAmerica Inc.
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disclose such private placement investment if he or she plays a material role
in an Investment Company's subsequent investment decision regarding the same
issuer. In the foregoing circumstances, the Investment Company's decision to
purchase securities of the issuer shall be subject to an independent review
by Advisory Persons with no personal interest in such issuer.
D. Blackout Periods: No Access Person shall execute a securities
-----------------
transaction, other than an exempted transaction, on a day during which
any Investment Company in the complex has a pending "buy" or "sell"
order in that same security and no Access Person shall execute such
securities transaction until one trading day after such Investment
Company order is executed or withdrawn. In addition, no portfolio
manager shall purchase or sell a security within at least seven calendar
days before and after an Investment Company that he or she manages
trades in that security.
E. Short-Term Trading Profits: Subject to the other provisions of this
--------------------------
Code, while there is no prohibition on short-term trading profits, the
Review Officer will monitor quarterly reports and address abuses of
short-term trading profits on a case-by-case basis.
F. Gifts: No Access Person shall receive any gift or other thing of more
------
than de minimis value ($100) from any person or entity that does
business with or on behalf of the Investment Company.
G. Service as a Director: No Access Person shall serve on the boards of
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directors of publicly traded companies, absent prior authorization based
upon a determination that the board service would be consistent with the
interests of the Investment Company and its shareholders. See "Other
Conflicts of Interest - Outside Activities."
H. Other Conflicts of Interest: Employees should also be aware that areas
----------------------------
other than personal securities transactions or gifts and sensitive
payments may involve conflicts of interest. The following should be
regarded as examples of situations involving real or potential conflicts
rather than a complete list of situations to avoid.
1. "Inside Information" - Specific reference is made to the firm's policy
of the use of "inside information" which applies to personal
securities transactions as well as to client transactions.
2. "Use of Information" - Information acquired in connection with
employment by the organization may not be used in any way which might
be contrary to or in competition with the interests of clients.
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Employees are reminded that certain clients have specifically required their
relationship with us to be treated confidentially.
3. "Disclosure of Information" - Information regarding actual or
contemplated investment decisions, research priorities or client
interests should not be disclosed to persons outside our organization
and in no way can be used for personal gain.
4. "Outside Activities" - All outside relationships such as
directorships or trusteeships of any kind or membership in investment
organizations (e.g., an investment club) should be discussed with the
President and/or General Counsel prior to the acceptance of such
position.
As a general matter, directorships in unaffiliated public companies
or companies which may reasonably be expected to become public
companies will not be authorized because of the potential for
conflicts which may impede our freedom to act in the best interests
of clients. Service with charitable organizations generally will be
authorized, subject to considerations related to time required during
working hours and use of proprietary information.
VII. DISINTERESTED DIRECTORS OR TRUSTEES
A director or trustee of an Investment Company who is not an officer of such
Investment Company or an officer, employee or director of the Adviser need
only report a transaction in a security if the director or trustee, at the
time of that transaction, knew or, in the ordinary course of fulfilling his
official duties as a director or trustee of the Investment Company, should
have known that, during the 15-day period immediately preceding the date of
the transaction by the director or trustee, the security was under active
consideration by the Investment Company.
VIII. COMPLIANCE PROCEDURES
A. Preclearance: All Advisory Persons are to "preclear" personal
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securities investments prior to execution through the firm's Head Trader, or
such other person as is designated from time-to-time by the Review Officer.
This includes bonds, stocks (including closed-end funds), convertibles,
preferreds, options on securities, warrants, rights, etc. for domestic and
foreign securities whether publicly traded or privately placed. In addition,
any portfolio manager wishing to effect a personal securities transaction
which might be viewed as contrary to a position held in any portfolio for
which he or she serves as portfolio manager must preclear such transaction
with the firm's Review Officer, in addition to the normal preclearance
procedure. The only
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exceptions to this requirement are automatic dividend reinvestment plan
acquisitions, financial futures and options on futures, automatic employee
stock purchase plan acquisitions, transactions in open-end mutual funds, U.S.
Government securities, commercial paper, or exempted transactions. Please
note, however, that most of these transactions must be reported even though
they do not have to be precleared. The Review Officer may require other
persons to preclear personal securities transactions as he or she may deem
necessary and appropriate for compliance with this Code. See the Section "IX"
for reporting obligations.
B. Records of Securities Transactions: All Advisory Persons are to direct
-----------------------------------
their brokers to supply to a designated compliance official, on a timely
basis, duplicate copies of confirmations of all personal securities
transactions and copies of periodic statements for all securities
accounts.
C. Post-Trade Monitoring: The Review Officer shall review all personal
----------------------
securities transactions by Access Persons to ensure that no conflict
exists with Investment Company trades.
D. Disclosure of Personal Holdings: Access Persons are required to
--------------------------------
disclose all personal securities holdings upon commencement of
employment and thereafter on an annual basis.
E. Certification of Compliance With Code of Ethics: All Access Persons
------------------------------------------------
are required to certify annually that they have read and understand the
Code and recognize that they are subject thereto. Further, Access
Persons are required to certify annually that they have complied with
the requirements of the Code and that they have disclosed or reported
all personal securities transactions required to be disclosed or
reported pursuant to the requirements of the Code.
F. Review by the Board of Directors or Trustees: Management will prepare
---------------------------------------------
a report to the Board of Directors or Trustees (1) quarterly that
identifies any violations requiring significant remedial action during
the past quarter; and (2) annually that a) summarizes existing
procedures concerning personal investing and any changes in the
procedures made during the past year, and b) identifies any recommended
changes in existing restrictions or procedures based upon the Investment
Company's experience under the Code, evolving industry practices, or
developments in applicable laws or regulations.
The Board of Directors or Trustees will review the operations of this
policy and make recommendations if necessary, as stated in Section "X"
at least once a year.
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IX. REPORTING
The Securities and Exchange Commission requires that a record of all personal
securities transactions be kept available for inspection, and that these
records be maintained on at least a quarterly basis. To comply with these
rules, it is necessary to have every Access Person file a quarterly report
(on the form attached hereto as Exhibit 1) within 10 calendar days after the
end of each calendar quarter/2/. Quarterly Report forms will be distributed
to all employees on the last business day of each quarter. Completed forms
should be sent to the Review Officer. The forms and transactions in all
personal accounts will be reviewed each quarter on a confidential basis.
The quarterly report must include the required information for all personal
securities transactions as defined above, except transactions in open-end
mutual funds, U.S. Government securities or commodities. Except as noted
above, exempted transactions must also be reported and the nature of the
transaction clearly specified in the report.
Quarterly reports must be filed by all Access Persons even if there were no
reportable transactions during the quarter. (Write "none" and return with
your signature.)
The report required by this section shall state: (i) the title and amount of
the security involved; (ii) the date and nature of the transaction (i.e.,
purchase, sale or other acquisition or disposition); (iii) the price at which
the transaction was effected; and (iv) the name of the broker, dealer or bank
with or through whom the transaction was effected. A copy of the broker's
confirmation may be submitted in lieu of the required report.
The report may also contain a statement declaring that the reporting or
recording of any transaction shall not be construed as an admission that the
Access Person making the report has any direct or indirect Beneficial
Ownership in the Security to which the report relates.
X. AUDIT BY REVIEW OFFICER
Adherence to the Code is considered a basic condition of employment with our
organization. The Review Officer will monitor compliance with the Code and
review such violations of the Code as may occur and determine what action or
sanctions are appropriate in the event of a violation. The Review Officer
will report, periodically
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/2/ Advisory Persons who are required to provide copies of
confirmations and periodic statements pursuant to Section VIII.B
hereof are only required to certify in such report that no other
transactions were executed during the quarter.
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and upon request, to the Boards of Directors or Trustees of the various
Investment Companies for which the Adviser serves as investment adviser.
Again, we emphasize the importance of Advisory Persons obtaining prior
clearance of all personal securities transactions, filing the quarterly
reports promptly and avoiding other situations which might involve even the
appearance of a conflict of interest. Questions regarding interpretation of
this policy or questions related to specific situations should be directed to
the Review Officer.
XI. SANCTIONS
Upon discovering a violation of this Code, the Adviser may impose such
sanctions as it deems appropriate, including, among other things, a letter of
censure or suspension or termination of the employment of the violator. All
material violations of this Code and any sanctions imposed with respect
thereto shall be reported periodically to the Board of Directors or Trustees
of the Investment Company with respect to whose securities the violation
occurred.
XII. ADDITIONAL DISCLOSURE
General disclosure concerning Access Persons engaging in personal securities
transactions, restrictions and procedures as well as a statement from the
Investment Company addressing any conflicts of interest that might arise has
been incorporated into Investment Company's Statement of Additional
Information ("SAI").
XIII. EFFECTIVE DATE
This Code was adopted at a meeting of the Boards of Directors/Trustees of the
Investment Companies. This Code shall become effective on February 26, 1997
and remain in effect until amended or replaced by the Boards of
Directors/Trustees by subsequent action.
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