<PAGE>
[LETTERHEAD]
July 7, 1997
Dear Shareholders:
SunAmerica Equity Funds is proposing to transfer all of the assets and
liabilities of the Global Balanced Fund to the International Equity Portfolio,
one of the portfolios in SunAmerica's Style Select Series. If this
reorganization is approved, your Global Balanced Fund shares will be exchanged
for shares of the International Equity Portfolio in the same class and in the
same aggregate dollar amount without Federal income tax consequences.
To help you decide your vote, we have anticipated and answered the most commonly
asked questions regarding this reorganization.
Q: WHAT IS THE PURPOSE OF THE PROXY SOLICITATION?
A: For the reorganization to be achieved, a majority of the Global Balanced
Fund's outstanding shares must be represented either by proxy or in person at
the Special Meeting of Shareholders, and a majority of those shares must
approve of the proposal. Thus, we are asking for your vote. A Notice of
Meeting, Proxy Statement and Prospectus, Style Select Series Prospectus, and
Proxy Card are enclosed for your careful review.
Q: WHAT IS SUNAMERICA'S RECOMMENDATION?
A: The Board of Trustees of the SunAmerica Equity Funds, including the
independent Trustees, believes that the reorganization is in the best
interests of the shareholders of the Global Balanced Fund. They unanimously
recommend that the shareholders of the Global Balanced Fund vote FOR the
reorganization.
Q: HOW DO THE INTERNATIONAL EQUITY PORTFOLIO AND THE GLOBAL BALANCED FUND
COMPARE?
A: There are three primary differences between the two funds. First, the
International Equity Portfolio invests in securities of issuers in countries
other than the United States, while the Global Balanced Fund invests in both
foreign and domestic securities. Second, International Equity Portfolio is
not required to maintain a specified portion of its assets in fixed income
securities, while, under normal conditions, Global Balance Fund must do so.
Third, the International Equity Portfolio is part of Style Select Series,
while the Global Balanced Fund is part of the SunAmerica Equity Funds.
There are also several similarities between the two funds. Both funds:
- Use a multi-manager approach to asset management
- Pay annual dividends and have similar purchase, redemption, and exchange
privileges
- Are designed to take advantage of the dynamic international investment
opportunities available today, including foreign diversification, the
potential for enhanced returns and reduced volatility, and participation
in the rapid economic growth of so many regions around the world
benefitting from the changing political scene.
With nearly two-thirds of the world's equity investment opportunities found
outside the United States, the case for maintaining a portion of your
portfolio in international investments remains strong.
Q: WHAT IS THE STYLE SELECT SERIES?
A: Style Select Series offers a selection of portfolios, each defined by the
investment management style it employs. Every Style Select Series portfolio,
including the International Equity Portfolio, is advised by three separate
well-respected, professional investment advisers, each responsible for
approximately 1/3 of the portfolio and each seeking the same investment
objective.
<PAGE>
The goal of combining three different advisers in every Style Select Series
portfolio is to diversify within a style; the potential result is more
consistent returns and lower risk than a single-adviser fund. Of course,
investing in certain foreign companies or markets through any fund may
involve certain risks not generally associated with domestic investing such
as currency fluctuations.
Q: WHO ARE THE ADVISERS OF THE INTERNATIONAL EQUITY PORTFOLIO?
A: The three professional advisers of the International Equity Portfolio, each
of which is independently responsible for advising its respective portion of
the Portfolio's assets, are:
- ROWE PRICE-FLEMING INTERNATIONAL, INC.--Incorporated in 1979 and based in
Maryland, this adviser is a joint venture between T. Rowe Price
Associates, Inc. and Robert Flemings Holding Limited. As of December 31,
1996, Rowe-Fleming managed over $25 billion of foreign assets.
- STRONG CAPITAL MANAGEMENT, INC.--Strong is a Wisconsin corporation, which
since its beginnings in 1974, has focused on investment management for
individuals, institutions such as pension funds and profit-sharing plans,
and mutual funds. As of December 31, 1996, Strong had over $23 billion
under management.
- WARBURG, PINCUS COUNSELLORS, INC.--Warburg is a professional investment
counseling firm, incorporated in Delaware in 1970 and based in New York.
Warburg provides investment services to investment companies, employee
benefit plans, endowments, foundations, and other institutions and
individuals. As of January 31, 1997, Warburg managed approximately $17.9
billion in assets.
The assets of the International Equity Portfolio are allocated equally among
these three advisers by SunAmerica Asset Management Corp., which is the
manager of the Style Select Series.
Q: WHAT ARE THE FEATURES OF THE INTERNATIONAL EQUITY PORTFOLIO?
A: The International Equity Portfolio seeks long-term growth of capital by
investing in equity securities of issuers in countries other than the United
States. In addition to the opportunities of international investing and
multi-manager approach briefly described above, the Portfolio offers:
- NO LIMITATIONS ON COUNTRY SELECTION--Unlike some funds that focus on a
particular country or region, the International Equity Portfolio is
permitted to invest in any country where it is legal for U.S. investors to
invest. In this age of specialization, this feature may allow for
participation in the world's best managed and most profitable companies
wherever they may be. Country selection is a significant part of each
Adviser's investment process.
- FLEXIBILITY--Like the Global Balanced Fund, the International Equity
Portfolio may invest in a wide variety of securities, including small
companies, emerging markets, depositary receipts, and debt securities. The
Portfolio may also purchase securities on foreign stock exchanges, on U.S.
stock exchanges, or in the over-the-counter market. (See "Summary--Risk
Factors and Special Considerations.")
- EMPHASIS ON EQUITIES--Under normal conditions, at least 65% of the
Portfolio's total assets will be invested in equity securities (including
common and preferred stocks and other securities having equity features,
such as convertible securities, warrants, and rights) of issuers in at
least three countries outside of the United States.
Plus, shareholders of the International Equity Portfolio can take advantage
of all the benefits usually associated with investing in a mutual fund
group, including liquidity, exchange privileges, retirement planning
opportunities, automatic reinvestment options, dollar cost averaging
privileges, and systematic withdrawal plans. Of course, investment return
and the net asset value of the Portfolio's shares will fluctuate, so that
your shares, when redeemed, may be more or less than their original cost.
Q: WHY SHOULD I APPROVE THE REORGANIZATION?
A: There are several reasons the Trustees of SunAmerica Equity Funds are
recommending that you vote FOR the reorganization. These include:
- FUND EXPENSES--The estimated ratio of total net expenses, after waivers
and reimbursements, to average net assets for the International Equity
Portfolio is expected to be lower than that incurred by the Global
Balanced Fund since its inception in June 1994.
- SIMILARITIES OF THE FUNDS--The investment objectives, policies and risks
of the two funds are similar in many respects, as are their multi-managed
approaches and distribution and shareholder services.
2
<PAGE>
- NO IMPOSITION OF FEDERAL INCOME TAXES--Neither the Global Balanced Fund
nor its shareholders will incur Federal income taxes or any sales charges
as the result of the reorganization.
- NO DILUTION OF INTERESTS--The interests of Global Balanced Fund
shareholders will not be diluted as a result of the reorganization, and
Global Balanced Fund shareholders will receive shares of the International
Equity Portfolio equal in value to the aggregate value of their Global
Balanced Fund shares.
In short, we believe we're offering shareholders a new world of
opportunity. (See "The Reorganization-Background and Reasons for Proposed
Reorganization-Considerations of the Board of Trustees of SunAmerica
Equity Funds.")
Q: WHAT WILL BE THE EFFECT OF THE PROPOSED REORGANIZATION ON MY ACCOUNT WITH
THE GLOBAL BALANCED FUND?
A: If the reorganization is approved, you will receive shares of the
International Equity Portfolio of the same class (i.e., Class A or Class B)
and of the same aggregate dollar amount as the shares of the Global Balanced
Fund you hold at the time the reorganization is finalized, in exchange for
your Global Balanced Fund shares. The Global Balanced Fund will then be
completely liquidated. Receiving shares of the International Equity Portfolio
in exchange for your Global Balanced Fund shares will be accomplished without
the imposition of Federal income taxes or any sales charges.
Q: HOW DO I VOTE?
A: Casting your vote on the proposed reorganization is easy. Keep in mind that
as a shareholder of the Global Balanced Fund, you can vote FOR or AGAINST the
proposed reorganization or you can Abstain. If no instructions are given on
your returned Proxy Card, your shares will be voted FOR the proposed
reorganization; an abstention will have the same effect as voting against the
reorganization.
STEP ONE: Carefully read the enclosed Proxy Statement and Prospectus.
STEP TWO: A Proxy Card has been included with this package so that you can
vote by mail. IN ORDER TO ASSURE THAT YOUR VOTE WILL BE CONSIDERED, YOU ARE
URGED TO COMPLETE, DATE, AND SIGN THE PROXY CARD AND RETURN IT IN THE
ENCLOSED ENVELOPE PROMPTLY. Prompt return of your Proxy Card will save the
expense of an additional solicitation.
If you wish to vote in person, a meeting for that purpose will be held at The
SunAmerica Center in New York on September 5, 1997 at 10:00 a.m., or on such
adjourned date as may then be determined. Any proxy previously given may be
revoked by a written instrument received by the Secretary of SunAmerica
Equity Funds at any time before it is exercised, by the delivery of a
later-dated proxy, or by attendance at the Special Meeting and voting in
person.
If you have any questions, please call your financial professional or SunAmerica
Mutual Funds at 800-858-8850, ext. 5125.
Thank you for your attention to this matter and, as always, for your continuing
investment in the SunAmerica Mutual Funds.
Sincerely,
/s/ Peter A. Harbeck
- --------------------
Peter A. Harbeck
PRESIDENT
3
<PAGE>
SUNAMERICA EQUITY FUNDS
THE SUNAMERICA CENTER
733 THIRD AVENUE
NEW YORK, NEW YORK 10017-3204
NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS
TO BE HELD ON SEPTEMBER 5, 1997
------------------------
TO THE SHAREHOLDERS OF:
SUNAMERICA GLOBAL BALANCED FUND
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of SunAmerica Global Balanced Fund ("Global Balanced Fund"), a
separate series of SunAmerica Equity Funds, will be held at the offices of
SunAmerica Equity Funds, The SunAmerica Center, 733 Third Avenue, New York, New
York 10017-3204, on September 5, 1997 at 10:00 a.m., for the following purpose:
A. To approve an Agreement and Plan of Reorganization and the proposed
transaction with respect to Global Balanced Fund, whereby all of the assets and
liabilities of Global Balanced Fund will be transferred to International Equity
Portfolio, a series of Style Select Series, Inc., in exchange for shares of
International Equity Portfolio, which will be distributed pro rata by Global
Balanced Fund to the holders of its shares in complete liquidation of Global
Balanced Fund.
B. To transact such other business as may properly come before the Meeting
or any and all adjournments thereof.
The Board of Trustees has fixed the close of business on June 30, 1997, as
the record date for the determination of shareholders of Global Balanced Fund
entitled to notice of and to vote at the Meeting or any adjournment thereof.
A complete list of the shareholders of Global Balanced Fund entitled to vote
at the Meeting will be available and open to the examination of any shareholder
of Global Balanced Fund, for any purpose germane to the Meeting during ordinary
business hours at the offices of SunAmerica Equity Funds, The SunAmerica Center,
733 Third Avenue, New York, New York 10017-3204.
You are cordially invited to attend the Meeting. Shareholders who do not
expect to attend the Meeting in person are requested to complete, date and sign
the enclosed form of proxy and return it promptly in the envelope provided for
that purpose. The enclosed proxy is being solicited on behalf of the Board of
Trustees of SunAmerica Equity Funds.
By Order of the Board of Trustees,
Robert M. Zakem
Secretary
New York, New York
Dated: July 2, 1997
<PAGE>
PROXY STATEMENT AND PROSPECTUS
JULY 2, 1997
SUNAMERICA GLOBAL BALANCED FUND
A SERIES OF
SUNAMERICA EQUITY FUNDS
THE SUNAMERICA CENTER
733 THIRD AVENUE
NEW YORK, NEW YORK 10017-3204
800-858-8850
------------------------
PROXY STATEMENT
------------------------
INTERNATIONAL EQUITY PORTFOLIO
A SERIES OF
STYLE SELECT SERIES, INC.
THE SUNAMERICA CENTER
733 THIRD AVENUE
NEW YORK, NEW YORK 10017-3204
800-858-8850
------------------------
PROSPECTUS
---------------------
This Proxy Statement and Prospectus is being furnished to shareholders of
SunAmerica Global Balanced Fund ("Global Balanced Fund"), a series of SunAmerica
Equity Funds, a Massachusetts business trust. This Proxy Statement and
Prospectus is being furnished in connection with the Special Meeting of
Shareholders of Global Balanced Fund (the "Meeting") to be held on September 5,
1997, at which shareholders will be asked to vote on a proposed reorganization
(the "Reorganization") pursuant to which all of the assets and liabilities of
Global Balanced Fund will be transferred to International Equity Portfolio, a
series of Style Select Series, Inc. ("Style Select Series"), in exchange for
shares of International Equity Portfolio. (International Equity Portfolio and
Global Balanced Fund are collectively referred to as the "Funds.") Shares of
International Equity Portfolio received by Global Balanced Fund will be
distributed to the shareholders of Global Balanced Fund in liquidation of Global
Balanced Fund. Class A shareholders of Global Balanced Fund will receive Class A
shares of International Equity Portfolio, and Class B shareholders of Global
Balanced Fund will receive Class B shares of International Equity Portfolio.
Shareholders of International Equity Portfolio will not vote on the
Reorganization.
THE BOARD OF TRUSTEES OF SUNAMERICA EQUITY FUNDS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS OF GLOBAL BALANCED FUND VOTE FOR THE REORGANIZATION.
<PAGE>
International Equity Portfolio is a separate series of Style Select
Series-SM-, an open-end, management investment company registered under the
Investment Company Act of 1940 (the "1940 Act"). International Equity
Portfolio's investment objective is to seek long-term growth of capital by
investing in equity securities of issuers in countries other than the United
States. The investment objectives, policies and restrictions of International
Equity Portfolio, and consequently the risks of investing in International
Equity Portfolio, are similar in certain respects to those of Global Balanced
Fund, but differ in other respects. There can be no assurance that International
Equity Portfolio will achieve its objective. See "Summary Comparison of the
Funds" and "Risk Factors and Special Considerations."
SunAmerica Asset Management Corp. ("SAAMCo") is the investment manager to
International Equity Portfolio. The assets of International Equity Portfolio are
allocated by SAAMCo among three investment advisers, each of which is
independently responsible for advising its respective portion of International
Equity Portfolio's assets. The investment advisers for International Equity
Portfolio are Rowe Price-Fleming International, Inc., Strong Capital Management,
Inc. and Warburg, Pincus Counsellors, Inc. (each, an "Adviser," and
collectively, the "Advisers"). SunAmerica Capital Services, Inc. (the
"Distributor") acts as distributor of the shares of International Equity
Portfolio.
This Proxy Statement/Prospectus should be retained for future reference. It
sets forth concisely the information about International Equity Portfolio that a
prospective investor should know before investing. The Prospectus of Style
Select Series dated May 30, 1997 is enclosed herewith and is incorporated herein
by reference. The following additional information concerning the proposed
Reorganization has been filed with the Securities and Exchange Commission (the
"SEC"): (i) Prospectus of SunAmerica Equity Funds dated January 30, 1997; (ii)
Statement of Additional Information of SunAmerica Equity Funds dated January 30,
1997; (iii) Annual Report of SunAmerica Equity Funds for the fiscal year ended
September 30, 1996; (iv) Semi-Annual Report of SunAmerica Equity Funds for the
period ended March 31, 1997; and (iv) Statement of Additional Information of
Style Select Series dated May 30, 1997. In addition, the Statement of Additional
Information, filed as part of the Registration Statement of which this Proxy
Statement and Prospectus forms a part, is incorporated herein by reference.
Copies of any of the documents listed above may be obtained by writing or
calling Style Select Series or SunAmerica Equity Funds at the address and
telephone number shown above.
It is anticipated that this Proxy Statement and Prospectus will first be
mailed to shareholders on or about July 7, 1997.
THE SHARES OFFERED BY THIS PROXY STATEMENT AND PROSPECTUS ARE NOT
OBLIGATIONS OF OR GUARANTEED BY THE UNITED STATES GOVERNMENT, ARE NOT DEPOSITS
OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY, ANY BANK, AND ARE NOT INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
ii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS............................ i
PROXY STATEMENT AND PROSPECTUS....................................... i
SUMMARY OF EXPENSES.................................................. 1
SUMMARY.............................................................. 3
The Reorganization................................................. 3
Summary Comparison of the Funds.................................... 3
Investment Objectives and Policies............................... 3
Potential Portfolio Realignment.................................. 8
Advisory Fees and Expense Ratios................................. 8
Distribution Arrangements........................................ 9
Purchase, Redemption and Exchange Privileges..................... 10
Tax Considerations................................................. 11
Risk Factors and Special Considerations............................ 12
THE REORGANIZATION................................................... 14
Background and Reasons for Proposed Reorganization................. 15
Considerations of the Board of Trustees of SunAmerica Equity
Funds............................................................ 15
Considerations of the Board of Directors of Style Select Series.... 16
Terms of the Agreement............................................. 16
Description of Shares to be Issued................................. 18
Certain Effects of the Reorganization On Shareholders of Global
Balanced Fund.................................................... 18
Expenses of the Reorganization..................................... 18
Federal Income Tax Consequences.................................... 18
Comparative Information on Shareholder Rights and Obligations...... 19
FINANCIAL INFORMATION................................................ 21
Capitalization..................................................... 21
INFORMATION ABOUT INTERNATIONAL EQUITY PORTFOLIO AND GLOBAL BALANCED
FUND............................................................... 21
INFORMATION CONCERNING THE MEETING................................... 22
Voting Information................................................. 22
SECURITY OWNERSHIP OF CERTAIN SHAREHOLDERS AND MANAGEMENT............ 23
OTHER MATTERS........................................................ 24
SHAREHOLDER PROPOSALS................................................ 24
FORM AGREEMENT AND PLAN OF REORGANIZATION............................ Exhibit A
</TABLE>
iii
<PAGE>
SUMMARY OF EXPENSES
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------- ---------------
GLOBAL INTERNATIONAL GLOBAL INTERNATIONAL
BALANCED EQUITY PRO FORMA BALANCED EQUITY PRO FORMA
FUND PORTFOLIO COMBINED FUND PORTFOLIO COMBINED
------------ --------------- ------------- ------------ --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Initial Sales Load (A)......... 5.75% 5.75% 5.75% None None None
Maximum Sales Load on Reinvested
Dividends............................. None None None None None None
Maximum Deferred Sales Load (B)........ None None None 4.00% 4.00% 4.00%
Redemption Fees (C).................... None None None None None None
Exchange Fees.......................... None None None None None None
ANNUAL OPERATING EXPENSES
(Net of fee waivers/expense
reimbursements) (D)
Management Fees (E).................... 0.70% 0.70% 0.80% 0.70% 0.70% 0.80%
12b-1 Fees (F)......................... .35% .35% .35% 1.00% 1.00% 1.00%
Other Expenses (G)..................... 1.10% 1.05% .95% 1.10% 1.05% .95%
Net Operating Expenses (H)............. 2.15% 2.10% 2.10% 2.80% 2.75% 2.75%
</TABLE>
- ------------------------------
(A) The front-end sales charge on Class A shares decreases with the size of the
purchase to 0% for purchases of $1,000,000 or more. See "Purchase,
Redemption and Exchange Privileges."
(B) Purchases of Class A shares in excess of $1,000,000 will be subject to a
contingent deferred sales charge ("CDSC") on redemptions made within one
year of purchase. The CDSC on Class B shares applies only if a redemption
occurs within six years from their purchase date.
(C) A $15.00 fee may be imposed for wire redemptions.
(D) The information regarding Global Balanced Fund represents estimated amounts
for the fiscal year ending September 30, 1997. The information regarding
International Equity Portfolio represents estimated amounts for the fiscal
year ending October 31, 1997. SAAMCo may terminate voluntary fee waivers
and/or expense reimbursements at any time.
(E) The "Management Fees" for Global Balanced Fund and International Equity
Portfolio, without giving effect to any waivers or expense reimbursements,
are at the annual rate of 1.00% and 1.10%, respectively, of average daily
net assets. The pro forma management fee reflects an amount of reimbursement
on the part of SAAMCo necessary to maintain the net operating expenses at
the levels estimated in the table above. See "Summary Comparison of the
Funds--Advisory Fees and Expense Ratios."
(F) 0.25% of the 12b-1 fee comprises an Account Maintenance and Service Fee. A
portion of the Account Maintenance and Service Fee is paid for continuous
personal service to investors in the Funds, such as responding to
shareholder inquiries, quoting net asset values, providing current marketing
material and attending to other shareholder matters. Class B shareholders
who own their shares for an extended period of time may pay more in Rule
12b-1 distribution fees than the economic equivalent of the maximum
front-end sales charge permitted under the Conduct Rules of the National
Association of Securities Dealers, Inc.
(G) "Other Expenses" for Global Balanced Fund - Class A and International Equity
Portfolio - Class B are 1.13% and 1.23%, respectively, without giving effect
to any waivers or expense reimbursements.
(H) The "Annual Operating Expenses" for Global Balanced Fund - Class A,
International Equity Portfolio - Class A, Pro Forma Combined - Class A,
Global Balanced Fund - Class B, International Equity Portfolio - Class B and
Pro Forma Combined - Class B are 2.48%, 2.50%, 2.40%, 3.10%, 3.33% and
3.05%, respectively, without giving effect to any waivers or expense
reimbursements. See "Summary Comparison of the Funds--Advisory Fees and
Expense Ratios."
1
<PAGE>
The purpose of the foregoing table is to assist an investor in understanding
the various costs and expenses that a shareholder of Class A and Class B shares
of Global Balanced Fund, International Equity Portfolio and the Pro Forma
Combined Fund will bear, either directly or indirectly. For more complete
descriptions of the various costs and expenses, see "Summary Comparison of the
Funds--Advisory Fees and Expense Ratios" and "Summary Comparison of the
Funds--Distribution Arrangements."
EXAMPLE
The Examples below are intended to assist an investor in understanding the
various costs that an investor will bear directly or indirectly. The Examples
assume payment of net operating expenses, and reflect expense waivers and/or
reimbursements, at the levels set forth in the table above.
<TABLE>
<CAPTION>
An investor would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) redemption
at the end of each time period. 1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CLASS A
- --------------------------------------------------------------
Global Balanced Fund.......................................... $ 78 $ 121 $ 166 $ 291
International Equity Portfolio................................ $ 78 $ 120 $ 164 $ 287
Pro Forma Combined............................................ $ 78 $ 120 $ 164 $ 287
CLASS B*
- --------------------------------------------------------------
Global Balanced Fund.......................................... $ 68 $ 117 $ 168 $ 290
International Equity Portfolio................................ $ 68 $ 115 $ 165 $ 284
Pro Forma Combined............................................ $ 68 $ 115 $ 165 $ 284
<CAPTION>
An investor would pay the following expenses on the same
investment, assuming no redemption: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CLASS A
- --------------------------------------------------------------
Global Balanced Fund.......................................... $ 78 $ 121 $ 166 $ 291
International Equity Portfolio................................ $ 78 $ 120 $ 164 $ 287
Pro Forma Combined............................................ $ 78 $ 120 $ 164 $ 287
CLASS B*
- --------------------------------------------------------------
Global Balanced Fund.......................................... $ 28 $ 87 $ 148 $ 290
International Equity Portfolio................................ $ 28 $ 85 $ 145 $ 284
Pro Forma Combined............................................ $ 28 $ 85 $ 145 $ 284
</TABLE>
* Class B shares convert to Class A shares on the first business day of the
month following the seventh anniversary of the purchase of such Class B
shares. Therefore, with respect to the 10-year expense information, years 8,
9 and 10 reflect the expenses attributable to ownership of Class A shares.
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
2
<PAGE>
SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION RELATING TO THE PROPOSED
REORGANIZATION AND THE PARTIES THERETO CONTAINED ELSEWHERE IN THIS PROXY
STATEMENT AND PROSPECTUS (INCLUDING THE DOCUMENTS INCORPORATED HEREIN BY
REFERENCE), AND THE AGREEMENT AND PLAN OF REORGANIZATION BETWEEN SUNAMERICA
EQUITY FUNDS, ON BEHALF OF GLOBAL BALANCED FUND, AND STYLE SELECT SERIES, ON
BEHALF OF INTERNATIONAL EQUITY PORTFOLIO, A COPY OF WHICH IS ATTACHED TO THIS
PROXY STATEMENT AND PROSPECTUS AS EXHIBIT A.
THE REORGANIZATION
At a meeting held on May 22, 1997, the Trustees of SunAmerica Equity Funds
approved a proposal to transfer all of the assets and liabilities of Global
Balanced Fund to International Equity Portfolio in exchange for shares of
International Equity Portfolio.
Shares of International Equity Portfolio received by Global Balanced Fund
will be distributed to the shareholders of Global Balanced Fund in complete
liquidation of Global Balanced Fund. Class A and Class B shareholders of Global
Balanced Fund will receive Class A and Class B shares of International Equity
Portfolio, respectively. The acquisition of the assets and liabilities of Global
Balanced Fund by International Equity Portfolio, and the subsequent distribution
of shares of International Equity Portfolio to the shareholders of Global
Balanced Fund, respectively, is herein referred to as the "Reorganization."
SUMMARY COMPARISON OF THE FUNDS
The following comparison is a summary of information contained elsewhere in
this Proxy Statement and Prospectus.
1. INVESTMENT OBJECTIVES AND POLICIES.
See "Summary--Risk Factors and Special Considerations" for a discussion of
the comparative risks of the two Funds.
INTERNATIONAL EQUITY PORTFOLIO seeks long-term growth of capital by
investing in equity securities of issuers in countries other than the United
States. Country selection is a significant part of the Fund's investment
process. The Fund is permitted to invest in any country where it is legal for
U.S. investors to invest. Investment in foreign securities in general, and in
emerging markets in particular, involves certain risks not present when
investing in United States securities. See "Summary--Risk Factors and Special
Considerations."
The Fund will invest, under normal circumstances, at least 65% of its total
assets in equity securities (including common and preferred stocks and other
securities having equity features, such as convertible securities, warrants and
rights) of issuers in at least three countries other than the United States. The
Fund may purchase securities on foreign stock exchanges, on U.S. stock
exchanges, or in the over-the-counter market. Unlike Global Balanced Fund,
International Equity Portfolio does not as a matter of course invest in domestic
equity securities. International Equity Portfolio may also invest up to 35% of
its total assets in global debt securities that an Adviser expects have the
potential for capital appreciation. The types of debt securities in which
International Equity Portfolio may invest are described below under "Debt
Securities." (When used in this section with respect to both International
Equity Portfolio and Global Balanced Fund, the term "Adviser" refers both to
Advisers to International Equity Portfolio, as well as SAAMCo and AIG Global
Investment Corp. ("AIG Global") with respect to Global Balanced Fund.)
3
<PAGE>
GLOBAL BALANCED FUND seeks capital appreciation while conserving principal
by maintaining at all times a balanced portfolio of domestic and foreign stocks
and bonds. In seeking to achieve the investment objective of the Global Balanced
Fund, SAAMCo and AIG Global, the Fund's subadviser, have the flexibility to
select among a combination of domestic and foreign equity and debt securities
designed for capital growth and/or income, which will be varied from time to
time both with respect to types of securities and markets in response to
changing markets and economic trends. Country selection is a significant part of
the investment process. Investment in foreign securities involves risks not
generally associated with investment in domestic securities. See "Summary--Risk
Factors and Special Considerations." It is anticipated that, over the long term,
Global Balanced Fund's portfolio will consist of foreign and domestic equity
securities, in the form of common and preferred stocks, warrants and other
rights, as well as global bonds and other global debt securities such as
convertible securities, short-term instruments and securities of U.S. and
foreign governments. Under normal circumstances, the Fund will invest at least
(i) 25% of its assets in global fixed-income senior securities; (ii) 10% of its
assets in domestic equity securities; and (iii) 45% of its assets in foreign
equity securities. In addition, it is anticipated that, under normal
circumstances, the Fund will invest its assets in at least 10 countries at any
time, although it is only required, under such circumstances, to maintain
investments in at least three countries (one of which may be the United States).
Under normal circumstances, Global Balanced Fund will maintain a dollar weighted
average duration for its fixed income portfolio of not more than 7.5 years.
However, the Fund is not subject to any limitation with respect to the average
maturity of its portfolio or the individual securities in which it may invest.
While there are no prescribed limits on the geographical allocation of
Global Balanced Fund's assets, SAAMCo anticipates that investment of the Fund's
assets will be subject to the following guidelines, which may be revised from
time to time as market conditions warrant:
<TABLE>
<CAPTION>
MAXIMUM INVESTMENT
(AS A PERCENTAGE OF NET
REGION ASSETS)
- --------------------------------------------------------------------------- -----------------------------
<S> <C>
Europe..................................................................... 70%
Japan...................................................................... 50%
Asia/Pacific (excluding Japan)............................................. 60%
Latin America.............................................................. 20%
Canada..................................................................... 30%
United States.............................................................. 40%
Other...................................................................... 10%
</TABLE>
The types of securities and transactions in which each Fund may invest are
described below.
SMALL COMPANIES. Each Fund may invest in small companies having market
capitalizations of under $1 billion. See "Summary--Risk Factors and Special
Considerations--Small Companies."
EMERGING MARKETS. Global Balanced Fund may invest up to 20% of its assets,
and International Equity Portfolio may invest without limitation, in issuers
domiciled in, or government securities of, developing countries or emerging
markets. See "Summary--Risk Factors and Special Considerations-- Emerging
Markets."
DEPOSITARY RECEIPTS. Each Fund may invest in securities in the form of
sponsored or unsponsored American Depositary Receipts ("ADRs"), European
Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs") or other
similar securities representing a right to obtain underlying securities of
foreign issuers. Each Fund also may invest in securities denominated in European
Currency Units
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<PAGE>
("ECUs"). An ECU is a "basket" consisting of specified amounts of currencies of
certain of the twelve member states of the European Community.
DEBT SECURITIES. The debt securities in which each Fund may invest include
securities issued by the U.S. government and its agencies or instrumentalities,
securities issued by foreign governments and domestic or foreign corporations,
zero coupon bonds, deferred interest bonds and bonds on which the interest is
payable in kind. International Equity Portfolio may also invest in step-coupon
bonds. Under normal circumstances, SAAMCo expects that at least 30% of the fixed
income component of Global Balanced Fund, adjusted to reflect such component's
net exposure after giving effect to currency transactions and positions, will be
denominated in U.S. dollars. There is no similar expectation with respect to
International Equity Portfolio. Further, because the securities markets in each
of Canada, Germany, Japan and the United Kingdom are highly developed, liquid
and subject to extensive regulations, SAAMCo may invest more than 25% of the
fixed income component of Global Balanced Fund in the securities of corporate
and government issuers located in any of one of such countries. Allocation of
investments in such issuers could subject Global Balanced Fund to the risks of
adverse social, political or economic events which may occur in those countries.
Both Funds may invest in the securities of governmental issuers and in
corporate debt securities, including convertible debt securities, rated "BBB" or
better by Standard & Poor's Ratings Services, a Division of The McGraw-Hill
Companies Inc. ("S&P") or "Baa" or better by Moody's Investors Service, Inc.
("Moody's") or which, in the judgement of the Adviser, possess similar credit
characteristics ("investment grade bonds"). Notwithstanding the foregoing, it is
expected that Global Balanced Fund will generally invest a significant portion
of the fixed income component of its portfolio in securities having the highest
applicable credit quality rating or, if unrated, determined by SAAMCo at the
time of investment to be of comparable quality, with the remainder of such
component invested in securities rated of high quality by S&P or Moody's (i.e.,
"AA" or "Aa") or of comparable quality. However, with respect to obligations of
a government issuer, Global Balanced Fund may invest in such obligations if
rated "A" or better by S&P or Moody's, or if unrated, determined by SAAMCo to be
of comparable credit quality, provided that the obligations are denominated in
the issuer's own currency.
Each Fund may invest in debt securities rated below investment grade, that
is below "BBB" by S&P, or below "Baa" by Moody's, or if unrated, determined by
the Adviser to be of equivalent quality ("junk bonds"). See "Summary--Risk
Factors and Special Considerations--Debt Securities."
HEDGING AND INCOME ENHANCEMENT. Each Fund may write covered call options to
enhance income. After writing such a covered call up to 25% of the total assets
of International Equity Portfolio and 100% of the total assets of Global
Balanced Fund may be subject to calls. For hedging purposes, and with respect to
International Equity Portfolio, income enhancement, each Fund may use interest
rate futures, and stock and bond index futures, including futures on U.S.
government securities (together, "Futures"); forward contracts on foreign
currencies; and call and put options on equity and debt securities, Futures,
stock and bond indices and foreign currencies (all of the foregoing are referred
to as "Hedging Instruments"). All puts and calls on securities, interest rate
futures or stock and bond index futures or options on such Futures purchased or
sold by a Fund will be listed on a national securities or commodities exchange
or on U.S. over-the-counter markets. Each Fund may also use spread transactions
for any lawful purpose consistent with its investment objective such as hedging
or managing risk, but not for speculation. Global Balanced Fund may invest up to
5% of its total assets in yield curve options. See "Summary--Risk Factors and
Special Considerations--Hedging Instruments."
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<PAGE>
FOREIGN CURRENCY TRANSACTIONS. Each Fund may enter into foreign currency
transactions. In connection therewith, each Fund has the ability to hold a
portion of its assets in foreign currencies and to enter into forward foreign
currency exchange contracts. Each may also purchase and sell exchange-traded
futures contracts relating to foreign currency, purchase and sell put and call
options on currencies and futures contracts and enter into currency swaps. Each
Fund may enter into forward foreign currency exchange contracts, currency
options and currency swaps for non-hedging purposes when an Adviser anticipates
that a foreign currency will appreciate or depreciate in value, but securities
denominated in that currency do not present attractive investment opportunities
or are not included in the Fund's portfolio. Each Fund may use currency
contracts and options to cross-hedge, which involves selling or purchasing
instruments in one currency to hedge against changes in exchange rates for a
different currency with a pattern of correlation. See "Summary--Risk Factors and
Special Considerations--Foreign Currency Transactions."
SHORT SALES. International Equity Portfolio may sell a security it does not
own in anticipation of a decline in the market value of that security (short
sales). To complete such a transaction, International Equity Portfolio must
borrow the security to make delivery to the buyer. The Fund then is obligated to
replace the security borrowed by purchasing it at market price at the time of
replacement. The price at such time may be more or less than the price at which
the security was sold by the Fund. Until the security is replaced, the Fund is
required to pay to the lender any dividends or interest which accrue during the
period of the loan. To borrow the security, the Fund also may be required to pay
a premium, which would increase the cost of the security sold. The proceeds of
the short sale will be retained by the broker, to the extent necessary to meet
margin requirements, until the short position is closed out. International
Equity Portfolio will incur a loss as a result of the short sale if the price of
the security increases between the date of the short sale and the date on which
the Fund replaces the borrowed security. International Equity Portfolio will
realize a gain if the security declines in price between those dates. This
result is the opposite of what one would expect from a cash purchase of a long
position in a security. The amount of any gain will be decreased, and the amount
of any loss increased, by the amount of any premium, dividends or interest the
Fund may be required to pay in connection with a short sale.
Each Fund may make "short sales against the box." A short sale is against
the box to the extent that the Fund contemporaneously owns, or has the right to
obtain without payment, securities identical to those sold short. A Fund may not
enter into a short sale, including a short sale against the box, if, as a
result, more than 25% of its net assets would be subject to such short sales.
BORROWING. In seeking to enhance investment performance, each Fund may
borrow money for investment purposes and may pledge assets to secure such
borrowings. This is the speculative factor known as leverage. This practice may
help increase the net asset value of the assets of a Fund in an amount greater
than would otherwise be the case when the market values of the securities
purchased through borrowing increase. In the event the return on an investment
of borrowed monies does not fully recover the costs of such borrowing, the value
of the Fund's assets would be reduced by a greater amount than would otherwise
be the case. The effect of leverage will therefore tend to magnify the gains or
losses to the Fund as a result of investing the borrowed monies. During periods
of substantial borrowings, the value of the Fund's assets would be reduced due
to the added expense of interest on borrowed monies. Each Fund is authorized to
borrow, and to pledge assets to secure such borrowings, to the maximum extent
permissible under the 1940 Act (i.e., presently 50% of net assets).
6
<PAGE>
SHORT-TERM AND TEMPORARY INVESTMENTS. In addition to its primary
investments, International Equity Portfolio may also invest up to 25% of its
total assets in both U.S. and non-U.S. dollar denominated money market
instruments (a) for liquidity purposes (to meet redemptions and expenses) or (b)
to generate a return on idle cash held in its portfolio during periods when an
Adviser is unable to locate favorable investment opportunities. In addition to
its primary investments, Global Balanced Fund may also invest up to 10% of its
total assets in money market instruments for liquidity purposes (to meet
redemptions and expenses). For temporary defensive purposes, each Fund may
invest up to 100% of its total assets in cash or fixed-income securities,
including corporate debt obligations and money market instruments rated in one
of the two highest categories by a nationally recognized statistical rating
organization (or determined by an Adviser to be of equivalent quality). Money
market instruments include securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities, repurchase agreements, commercial
paper, bankers' acceptances and certificates of deposit.
HYBRID INSTRUMENTS. International Equity Portfolio may invest up to 10% of
its assets in Hybrid Instruments. These instruments, including indexed or
structured securities, can combine the characteristics of equity or debt
securities, futures, and options. For example, the principal amount, redemption,
or conversion terms of a security could be related to the market price of some
commodity, currency, or securities index. Such securities may bear interest or
pay dividends at below market (or even relatively nominal) rates. Under certain
conditions, the redemption value of such an investment could be zero. Global
Balanced Fund does not invest in Hybrid Instruments.
SPECIAL SITUATIONS. International Equity Portfolio may invest without
limitation, and Global Balanced Fund may invest up to 25% of its assets, in
Special Situations. A "special situation" arises when, in the opinion of the
Adviser, the securities of a particular issuer will be recognized and appreciate
in value due to a specific development with respect to that issuer. Developments
creating a special situation might include, among others, a new product or
process, a technological breakthrough, a management change or other
extraordinary corporate event, or differences in market supply of and demand for
the security. Investment in special situations may carry an additional risk of
loss in the event that the anticipated development does not occur or does not
attract the expected attention.
UNSEASONED ISSUERS. Global Balanced Fund may not invest more than 5% of its
total assets (taken at market value at the time of each investment) in
securities of companies having a record, together with predecessors, of less
than three years of continuous operations, except that this restriction shall
not apply to U.S. government securities. International Equity Portfolio is not
subject to this restriction.
DIVERSIFICATION. Each Fund is "non-diversified" under the 1940 Act,
subject, however, to certain tax diversification requirements. Accordingly, each
Fund may invest more than 5% of the value of its assets in the obligations of a
single issuer and may acquire more than 10% of the voting securities of a single
issuer. However, in order to meet certain tax diversification requirements, each
Fund must, among other things, limit its investments so that at the close of
each fiscal quarter (i) not more than 25% of the market value of the Fund's
total assets are invested in the securities of a single issuer, or any two or
more issuers which are controlled by the Fund and engaged in the same, similar
or related businesses, and (ii) with respect to 50% of the market value of its
total assets, not more than 5% of the market value of its total assets are
invested in the securities of a single issuer, and the Fund does not own more
than 10% of the outstanding voting securities of a single issuer. Investment in
the securities of the U.S. Government, its agencies and instrumentalities are
not included within the definition of "issuer" for these purposes, while foreign
government securities are included within such definition.
7
<PAGE>
The other investment policies of International Equity Portfolio are
substantially similar to those of Global Balanced Fund.
2. POTENTIAL PORTFOLIO REALIGNMENT
If the Reorganization is approved by shareholders of Global Balanced Fund,
it is anticipated that certain securities in the investment portfolio of Global
Balanced Fund will be liquidated preceding consummation of the Reorganization,
in order to accommodate certain differences in the investment policies and
restrictions of the two Funds. For example, International Equity Portfolio does
not as a matter of course hold U.S. equity securities. It is possible that up to
30% of the portfolio of Global Balanced Fund may be liquidated in the ordinary
course of business prior to the Reorganization. Such sales of securities will
affect the aggregate amount of taxable gains and losses recognized by Global
Balanced Fund prior to the Reorganization. If the net effect of such sales is a
gain, such gain would have to be distributed to shareholders of Global Balanced
Fund and may be subject to taxation. Shareholders should consult their personal
tax advisers regarding the possible tax consequences to them in light of their
personal circumstances.
3. ADVISORY FEES AND EXPENSE RATIOS
INTERNATIONAL EQUITY PORTFOLIO. SAAMCo serves as the investment manager to
International Equity Portfolio. International Equity Portfolio pays a management
fee to SAAMCo at the annual rate of 1.10% of Assets. The term "Assets" means the
average daily net assets of the Fund.
SAAMCo has the authority to allocate the assets of International Equity
Portfolio among Advisers, each of which is independently responsible for
advising its respective portion of International Equity Portfolio's assets. The
Advisers for International Equity Portfolio are Rowe Price-Fleming
International, Inc., Strong Capital Management, Inc. and Warburg, Pincus
Counsellors, Inc.
Each of the Advisers is independent of SAAMCo and discharges its
responsibilities subject to the oversight and supervision of SAAMCo, which pays
the Advisers' fees. Each Adviser is paid monthly a fee equal to a percentage of
the Assets of International Equity Portfolio allocated to the Adviser. Based on
Assets of $38,213,000 for International Equity Portfolio as of April 30, 1997,
and assuming such a constant level of assets for the year ending October 31,
1997, the aggregate annual rate of the fees payable by SAAMCo to the Advisers
for International Equity Portfolio for such fiscal year would be .63% of Assets.
There can be no assurance that International Equity Portfolio will maintain a
level of Assets in the amount estimated.
As of June 17, 1997, SAAMCo has voluntarily agreed to waive fees and/or
reimburse expenses, if necessary, to keep International Equity Portfolio's
annual operating expenses at or below 2.03% of Assets for Class A shares and
2.68% of Assets for Class B shares. (Prior to June 17, 1997, SAAMCo had
voluntarily agreed to waive fees and/or reimburse expenses, if necessary, to
keep International Equity Portfolio's annual operating expenses at or below
2.15% of Assets for Class A shares and 2.80% of Assets for Class B shares.)
SAAMCo also may voluntarily waive or reimburse additional amounts to increase
the investment return to International Equity Portfolio's investors. SAAMCo may
terminate all such waivers and/or reimbursements at any time. Further, any such
waivers or reimbursements made by SAAMCo are subject to recoupment from
International Equity Portfolio within the following two years, provided that
International Equity Portfolio is able to effect such payment to SAAMCo and
remain in compliance with the foregoing expense limitations.
8
<PAGE>
SAAMCo may terminate any agreement with an Adviser without shareholder
approval. Moreover, SAAMCo has obtained an exemptive order from the SEC which
permits SAAMCo, subject to certain conditions, to enter into subadvisory
agreements relating to International Equity Portfolio with Advisers approved by
the Board of Trustees without obtaining shareholder approval. The exemptive
order also permits SAAMCo, subject to the approval of the Board but without
shareholder approval, to employ new Advisers for the Fund, change the terms of
particular subadvisory agreements with Advisers or continue the employment of
existing Advisers after events that would otherwise cause an automatic
termination of a subadvisory agreement. Shareholders of International Equity
Portfolio have the right to terminate a subadvisory agreement for the Fund at
any time by a vote of the majority of the outstanding voting securities of the
Fund. Shareholders will be notified of any Adviser changes. The order also
permits the Fund to disclose to shareholders the Advisers' fees only in the
aggregate.
GLOBAL BALANCED FUND. SAAMCo also serves as the investment manager and
adviser to Global Balanced Fund. Global Balanced Fund pays SAAMCo a fee at the
annual rate of 1.00% on the first $350 million of Assets, .90% on the next $350
million and .85% on Assets over $700 million. For the fiscal year ended
September 30, 1996, SAAMCo was entitled to a fee from Global Balanced Fund equal
to 1.00% of Assets. For the same period, Global Balanced Fund paid SAAMCO a fee
equal to 1.00% of Assets, of which .41% was voluntarily reimbursed to the Fund
by SAAMCo. SAAMCo may discontinue such voluntary fee reimbursement at any time.
SAAMCo has entered into a subadvisory agreement with AIG Global pursuant to
which AIG Global serves as subadviser for the foreign equity component of Global
Balanced Fund. In providing such services, AIG Global utilizes the services of
certain of its affiliates. SAAMCo pays AIG Global a fee with respect to the
Assets of Global Balanced Fund actually managed by AIG Global and its affiliates
at the following rates: .50% on the first $50 million, .40% on the next $100
million, .30% on the next $150 million and .25% on Assets in excess of $300
million. For the fiscal year ended September 30, 1996, SAAMCo paid AIG Global a
fee equal to .50% of Assets. The foregoing fees are paid from the investment
advisory fee payable to SAAMCo and do not increase the expenses of Global
Balanced Fund. AIG Global discharges its responsibilities subject to the
direction and control of the Trustees and the oversight and review of SAAMCo.
A comparison of annual operating expense data for the Funds is set forth in
the "Summary of Expenses" at pages 1-2.
Although International Equity Portfolio pays advisory fees at a higher
annual rate than Global Balanced Fund, at the Funds' current expense cap levels
International Equity Portfolio is subject to a total net expense ratio which is
currently less (and was in the past no higher) than that of Global Balanced
Fund. There is no assurance that SAAMCo will continue any voluntary fee waivers/
reimbursements with respect to either Fund. Nevertheless, given the economies of
scale that should result from the Reorganization and in view of all relevant
factors, the Board of Trustees of SunAmerica Equity Funds has determined that
the Reorganization would be beneficial to Global Balanced Fund and its
shareholders. See "The Reorganization--"Background and Reasons for Proposed
Reorganization."
4. DISTRIBUTION ARRANGEMENTS
Global Balanced Fund currently offers Class A and Class B shares.
International Equity Portfolio currently offers Class A, Class B and Class C
shares. Pursuant to the Reorganization, shareholders of Global Balanced Fund
will receive shares of International Equity Portfolio of the same class as the
shares
9
<PAGE>
of Global Balanced Fund they hold at the time the Reorganization is consummated.
Class A and Class B shares of International Equity Portfolio are subject to
sales charges and distribution fees on identical terms as Class A and Class B
shares, respectively, of Global Balanced Fund. As described below under
"Purchase, Redemption and Exchange Privileges," Class A shares of each Fund are
sold at the respective net asset value plus a sales charge imposed at the time
of purchase, and Class B shares of each Fund are sold at the respective net
asset value subject to a CDSC if redeemed within six years of the date of
purchase. Class C shares of International Equity Portfolio are sold at net asset
value subject to a CDSC if redeemed within one year of the date of purchase.
Class C shares of International Equity Portfolio are not being offered hereby
and will not be issued in connection with the Reorganization.
Each Fund has adopted distribution plans (hereinafter referred to as the
"Class A Plans" and the "Class B Plans," and collectively as the "Distribution
Plans"). Under the Class A Plans, the Distributor may receive payments from a
Fund at an annual rate of up to 0.10% of average daily net assets of such Fund's
Class A shares to compensate the Distributor and certain securities firms for
providing sales and promotional activities for distributing that class of
shares. Under the Class B Plans, the Distributor may receive payments from a
Fund at the annual rate of up to 0.75% of the average daily net assets of such
Fund's Class B shares, respectively, to compensate the Distributor and certain
securities firms for providing sales and promotional activities for distributing
that class of shares. The distribution costs for which the Distributor may be
reimbursed out of such distribution fees include fees paid to broker-dealers
that have sold Fund shares, commissions, and other expenses such as those
incurred for sales literature, prospectus printing and distribution and
compensation to wholesalers. It is possible that in any given year the amount
paid to the Distributor under the Class A Plans or Class B Plans may exceed the
Distributor's distribution costs as described above. The Distribution Plans
provide that Class A and Class B shares of each Fund may also pay the
Distributor an account maintenance and service fee of up to 0.25% of the
aggregate average daily net assets of such class of shares for payments to
broker-dealers for providing continuing account maintenance. In this regard,
some payments are used to compensate broker-dealers with account maintenance and
service fees in an amount up to 0.25% per year of the assets maintained in a
Fund by their customers.
SunAmerica Capital Services, Inc. acts as distributor of each of the Funds
and bears all of each Fund's distribution expenses. The Distributor receives all
distribution and account maintenance fees and all initial and deferred sales
charges in connection with the sale of shares of each Fund, all or a portion of
which it may reallow to other broker-dealers.
5. PURCHASE, REDEMPTION AND EXCHANGE PRIVILEGES
Reference is made to the Style Select Series Prospectus dated May 30, 1997,
and the Prospectus of SunAmerica Equity Funds dated January 30, 1997, for a
complete description of the purchase, exchange and redemption procedures
applicable to purchases, exchanges and redemptions of the Funds. Any questions
about such procedures may be directed to Shareholder/Dealer Services at (800)
858-8850.
PURCHASE. The sales charges and Rule 12b-1 fees applicable to Class A and
Class B shares of International Equity Portfolio are identical to those
applicable to Class A and B shares, respectively, of Global Balanced Fund. Class
A shares of each Fund are offered at net asset value plus an initial sales
charge, which varies with the size of the purchase. The sales charge may be
waived or reduced in certain circumstances. Class B shares of each Fund are
offered at net asset value. Certain redemptions of Class B shares within the
first six years of the date of purchase are subject to a CDSC. See the
prospectus of each Fund for more detailed information regarding the purchase of
shares, and the Statement of Additional
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<PAGE>
Information of each Fund for information concerning the conditions under which
the CDSC will be waived in connection with certain redemptions.
CONVERSION FEATURE. Class B shares of each Fund (including a pro-rata
portion of the Class B shares purchased through the reinvestment of dividends
and distributions) will convert automatically to Class A shares on the first
business day of the month following the seventh anniversary of the issuance of
such Class B shares. Subsequent to the conversion of a Class B share to a Class
A share, such shares will no longer be subject to the higher distribution fee of
Class B shares. Such conversion will be on the basis of the relative net asset
values of Class B shares and Class A shares, without the imposition of any sales
load, fee or charge. A shareholder's holding period for Class B shares of
International Equity Portfolio received in the Reorganization will include the
shareholder's holding period for the Class B shares of Global Balanced Fund
exchanged in the Reorganization, for purposes of determining the applicable
holding period for conversion.
REDEMPTION. Shares of each Fund may be redeemed at any time at their net
asset value next determined, less any applicable CDSC, after receipt by the Fund
of a redemption request in proper form. Any capital gain or loss realized by a
shareholder upon any redemption of shares will be recognized for federal income
tax purposes. A shareholder's holding period for Class B shares of International
Equity Portfolio received in the Reorganization will include the shareholder's
holding period for Class B shares of Global Balanced Fund exchanged in the
Reorganization for purposes of determining the applicability of a CDSC upon
redemption of such shares. The Funds have identical redemption procedures,
including redemption through SunAmerica Fund Services, Inc. or the Distributor,
telephone redemption and the Systematic Withdrawal Plan. See "Redemption of
Shares" in each Fund's Prospectus for more information.
The right of a shareholder to redeem shares of Global Balanced Fund at net
asset value at any time prior to the Closing Date will not be impaired by the
approval of the Reorganization. Therefore, a shareholder may redeem in
accordance with the redemption procedures set forth in SunAmerica Equity Fund's
current prospectus until the date on which the Reorganization is consummated.
Shareholders should consult with their personal tax advisors as to the different
tax consequences of redeeming their shares as opposed to exchanging their shares
for shares of International Equity Portfolio in the Reorganization. See "Tax
Considerations" below.
EXCHANGE PRIVILEGE. Shareholders in each Fund may exchange their shares for
the same class of shares of any other SunAmerica sponsored fund that offers such
class at the respective net asset value per share. Before making an exchange, a
shareholder should obtain and review the prospectus of the fund whose shares are
being acquired. The exchange privilege is the same for both Funds. See the
prospectus of each Fund for more information regarding the exchange privilege
and restrictions thereon.
TAX CONSIDERATIONS
The Reorganization is being structured as a tax-free reorganization of the
Global Balanced Fund pursuant to which no gain or loss would be recognized by
Global Balanced Fund or shareholders of Global Balanced Fund for federal income
tax purposes as a result of the receipt of shares of International Equity
Portfolio in the Reorganization. The aggregate tax basis of shares of
International Equity Portfolio received by shareholders of Global Balanced Fund
in the Reorganization would be the same as the aggregate tax basis of the Global
Balanced Fund's shares held by a shareholder immediately prior to the
Reorganization. In addition, a shareholder's holding period in International
Equity Portfolio shares will
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<PAGE>
include the shareholder's holding period in Global Balanced Fund's shares
surrendered in exchange therefor, provided that such shares are held by the
shareholder as a capital asset on the closing date. A legal opinion will be
provided which describes the tax consequences of the Reorganization.
For further information about the tax consequences of the Reorganization,
see "The Reorganization--Federal Income Tax Consequences."
RISK FACTORS AND SPECIAL CONSIDERATIONS
EQUITY SECURITIES. Under normal circumstances, International Equity
Portfolio invests at least 65% and Global Balanced Fund invests at least 55% of
their respective assets in equity securities and as such, are subject to market
risks. That is, the possibility exists that common stocks and other equity
securities will decline over short or even extended periods of time, and equity
markets tend to be cyclical, experiencing both periods when stock prices
generally increase and periods when stock prices generally decrease. Since both
Funds invest in equity securities, these risk factors are generally present in
investments in each Fund.
FOREIGN SECURITIES. Each Fund invests heavily in the securities of foreign
issuers, which may present greater risks in the form of nationalization,
confiscation, domestic marketability, or other national or international
restrictions. Since Global Balanced Fund may be expected to invest from 10% to
40% of its assets in domestic equity securities, International Equity Portfolio
may have greater exposure to the risks of foreign securities. Similarly, Global
Balanced Fund may have greater exposure to the risks of the domestic equity
market.
EMERGING MARKETS. International Equity Portfolio may invest without
limitation, and Global Balanced Fund may invest up to 20% of its assets, in
issuers domiciled in, or government securities of, developing countries or
emerging markets. Although there is no universally accepted definition, a
developing country is generally considered to be a country in the initial stages
of its industrialization cycle with a low per capita gross national product.
Historical experience indicates that the markets of developing countries or
emerging markets have been more volatile than the markets of developed
countries; however, such markets can provide higher rates of return to
investors. Investment in an emerging market country may involve certain risks,
including a less diverse and mature economic structure, a less stable political
system, an economy based on only a few industries or dependent on international
aid or development assistance, the vulnerability to local or global trade
conditions, extreme debt burdens, or volatile inflation rates.
SMALL COMPANIES. Each Fund may invest in small companies having market
capitalizations of under $1 billion. It may be difficult to obtain reliable
information and financial data on such companies and the securities of these
small companies may not be readily marketable, making it difficult to dispose of
shares when desirable. Securities of small or emerging growth companies may be
subject to more abrupt or erratic market movements than larger, more established
companies or the market average in general. A risk of investing in smaller,
emerging companies is that they often are at an earlier stage of development and
therefore have limited product lines, market access for such products, financial
resources and depth in management than larger, more established companies, and
their securities may be subject to more abrupt or erratic market movements than
securities of larger, more established companies or the market averages in
general. In addition, certain smaller issuers may face difficulties in obtaining
the capital necessary to continue in operation and may go into bankruptcy, which
could result in a complete loss of an investment. Smaller companies also may be
less significant factors within their industries and may have difficulty
12
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withstanding competition from larger companies. While smaller companies may be
subject to these additional risks, they may also realize more substantial growth
than larger, more established companies.
DEBT SECURITIES. As with other mutual funds that invest in fixed income
securities, each Fund is subject to market risks. The market values of fixed
income securities tend to vary inversely with the level of interest rates--when
interest rates rise, their values will tend to decline; when interest rates
decline, their values generally will tend to rise. The potential for capital
appreciation with respect to variable rate obligations or floating rate
instruments will be less than with respect to fixed-rate obligations. Long-term
instruments are generally more sensitive to these changes than short-term
instruments. Furthermore, there is no limit to portfolio maturity for either
Fund. The market value of fixed income securities and therefore their yield is
also affected by the perceived ability of the issuer to make timely payments of
principal and interest. These risk factors are generally present in an
investment in either Fund.
In addition to U.S. government securities, each Fund may invest in debt
securities, including corporate obligations issued by domestic and foreign
corporations and money market instruments, without regard to the maturities of
such securities. Those debt securities which are rated "BBB" or "Baa" by S&P or
Moody's, while considered to be "investment grade", may have speculative
characteristics and changes in economic conditions or other circumstances are
more likely to lead to a weakened capacity to make principal and interest
payments than is the case with higher grade bonds. As a consequence of the
foregoing, the opportunities for income and gain may be limited.
HIGH-YIELD, HIGH-RISK SECURITIES. Each Fund may also invest in debt
securities rated below investment grade (I.E., below "BBB" by S&P, or below
"Baa" by Moody's, or if unrated, determined by the Adviser to be of equivalent
quality). High-yield, high-risk bonds (otherwise known as "junk bonds") are
subject to greater fluctuations in value than are higher rated bonds because the
values of high-yield bonds tend to reflect short-term corporate, economic and
market developments and investor perceptions of the issuer's credit quality to a
greater extent. Although under normal market conditions longer-term securities
yield more than shorter-term securities, they are subject to greater price
fluctuations. Fluctuations in the value of a Fund's investments will be
reflected in its net asset value per share. The growth of the high-yield bond
market paralleled a long economic expansion, followed by an economic downturn
which severely disrupted the market for high-yield bonds and adversely affected
the value of outstanding bonds and the ability of the issuers to repay principal
and interest. The economy may affect the market for high-yield bonds in a
similar fashion in the future including an increased incidence of defaults on
such bonds. From time to time, legislation may be enacted which could have a
negative effect on the market for high-yield bonds.
HEDGING INSTRUMENTS. Each Fund may invest in Hedging Instruments (as
defined above under "Summary Comparison of the Funds--Investment Objectives and
Policies"). Participation in the options or Futures markets and in currency
exchange transactions involves investment risks and transaction costs to which a
Fund would not be subject absent the use of these strategies. If an Adviser's
predictions of movements in the direction of the securities, foreign currency
and interest rate markets are inaccurate, the adverse consequences to a Fund may
leave the Fund in a worse position than if such strategies were not used. Risks
inherent in the use of options, foreign currency and Futures contracts and
options on Futures contracts include (1) dependence on the Adviser's ability to
predict correctly movements in the direction of interest rates, securities
prices and currency markets; (2) imperfect correlation between the price of
options and Futures contracts and options thereon and movements in the prices of
the securities or currencies being hedged; (3) the fact that skills needed to
use these strategies are different from those
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<PAGE>
needed to select portfolio securities; (4) the possible absence of a liquid
secondary market for any particular instrument at any time; (5) the possible
need to defer closing out certain hedged positions to avoid adverse tax
consequences; and (6) the possible inability of the Fund to purchase or sell a
portfolio security at a time that otherwise would be favorable for it to do so,
or the possible need for the Fund to sell a portfolio security at a
disadvantageous time, due to the need for the Fund to maintain "cover" or to
segregate securities in connection with hedging transactions. A transaction is
"covered" when the Fund owns the security subject to the option on such
security, or some other security acceptable for applicable escrow requirements.
The Funds may invest in Hedging Instruments for hedging purposes and for income
enhancement.
FOREIGN CURRENCY TRANSACTIONS. Each Fund may enter into forward foreign
currency exchange contracts to reduce the risks of fluctuations in exchange
rates; however, these contracts cannot eliminate all such risks and do not
eliminate fluctuations in the prices of the Fund's portfolio securities.
Each Fund may purchase and write put and call options on currencies for the
purpose of protecting against declines in the U.S. dollar value of foreign
portfolio securities and against increases in the U.S. dollar cost of foreign
securities to be acquired. The purchase of an option on currency may constitute
an effective hedge against exchange rate fluctuations; however, in the event of
exchange rate movements adverse to a Fund's position, the Fund may forfeit the
entire amount of the premium plus related transaction costs. As with other kinds
of option transactions, however, the writing of an option on currency will
constitute only a partial hedge, up to the amount of the premium received, and a
Fund could be required to purchase or sell currencies at disadvantageous
exchange rates, thereby incurring losses.
Each Fund may enter into currency swaps. Currency swaps involve the exchange
by a Fund with another party of their respective rights to make or receive
payments in specified currencies. Currency swaps usually involve the delivery of
the entire principal value of one designated currency in exchange for the other
designated currency. Therefore, the entire principal value of a currency swap is
subject to the risk that the other party to the swap will default on its
contractual delivery obligations. The use of currency swaps is a highly
specialized activity which involves investment techniques and risks different
from those associated with ordinary portfolio securities transactions. If an
Adviser is incorrect in its forecasts of market values and currency exchange
rates, the investment performance of a Fund would be less favorable than it
would have been if this investment technique were not used.
A full discussion of the risks inherent in investment in each of the Funds
is set forth in the Prospectus and Statement of Additional Information of each
Fund.
THE REORGANIZATION
The terms and conditions upon which the Reorganization may be consummated
are set forth in the Form of Agreement and Plan of Reorganization (the
"Agreement") between SunAmerica Equity Funds and Style Select Series, on behalf
of Global Balanced Fund and International Equity Portfolio, respectively (see
Exhibit A hereto). If certain conditions, including approval by the shareholders
of Global Balanced Fund, are satisfied, all of Global Balanced Fund's assets
will be sold to International Equity Portfolio and its liabilities assumed by
International Equity Portfolio. This will occur on the "Closing Date" of the
Reorganization, which is September 12, 1997, or such other date as the parties
may agree. The parties are seeking to consummate the Reorganization prior to
September 30, 1997, the last day of the fiscal year of Global Balanced Fund.
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<PAGE>
On the Closing Date, after the transfer of Global Balanced Fund's assets to
International Equity Portfolio and assumption of Global Balanced Fund's
liabilities by International Equity Portfolio, Global Balanced Fund's
shareholders will receive the number of newly-issued Class A or Class B shares,
as appropriate, of International Equity Portfolio of equal aggregate value to
the aggregate value of the Class A and Class B shares of Global Balanced Fund
which were previously held. The newly-issued shares will be credited to each
shareholder's account as of the Closing Date.
Because of the ownership interest of an affiliated person of SAAMCo in
International Equity Portfolio, consummation of the Reorganization is subject to
receipt by the Funds of an order from the SEC granting exemptive relief from the
provisions of Section 17(a) of the 1940 Act, unless a change in facts
subsequently eliminates the need for such relief. See "Security Ownership of
Certain Shareholders and Management." There can be no assurance that such
exemptive order will be granted.
BACKGROUND AND REASONS FOR PROPOSED REORGANIZATION
CONSIDERATIONS OF THE BOARD OF TRUSTEES OF SUNAMERICA EQUITY FUNDS
In deciding to approve the Agreement and recommend it to shareholders of
Global Balanced Fund, the Trustees, including the independent Trustees, acted
upon information provided to them indicating that the proposed Reorganization
would operate in the best interests of Global Balanced Fund and its shareholders
and that the interests of Global Balanced Fund shareholders would not be diluted
as a result of the Reorganization. In particular, the Trustees determined that
the proposed Reorganization offered the following benefits:
- PERFORMANCE OF FUNDS; FEES AND EXPENSES: The Trustees received information
relating to the performance of International Equity Portfolio, with which
Global Balanced Fund would be reorganized. International Equity Portfolio
was recently organized and has a performance record of less than a year.
For information purposes, in addition to the performance record for
International Equity Portfolio for the period November 12, 1996 to April
30, 1997, the Trustees were provided with historical performance
information for each Adviser thereof relating to comparable accounts. The
Trustees also received information about the fees and expenses charged (or
to be charged) to International Equity Portfolio, which information tended
to show that Global Balanced Fund shareholders who become Class A and
Class B shareholders of International Equity Portfolio as a result of the
proposed Reorganization will be subject to total expenses that are no
higher than expenses relating to Global Balanced Fund, even after taking
into account voluntary waivers and/or reimbursements that have been in
effect for Global Balanced Fund. Moreover, the Trustees were informed that
SAAMCo is under no obligation to continue any such waivers and/or
reimbursements.
- GROWTH RATE; ECONOMIES OF SCALE: Since commencing operations in June of
1994, Global Balanced Fund has, in the current market environment, been
unable to attract sufficient new assets to offset redemptions and has
incurred relatively high expense ratios. Global Balanced Fund has had
fluctuating aggregate net assets ranging from $26,632,000 at September 30,
1994, to $23,497,269 at April 30, 1997. As a result of this stagnant
growth in its aggregate net asset level, Global Balanced Fund has incurred
high expense ratios and does not enjoy economies of scale. As of April 30,
1997, International Equity Portfolio had aggregate net assets of
$37,118,155. The ratio of total expenses to average net assets for the
fiscal year ended September 30, 1996, for Global Balanced Fund was 2.15%
and 2.80% for the Class A and Class B shares, respectively, including fee
waivers and
15
<PAGE>
expense reimbursements. If fee waivers and expense reimbursements are
excluded, the ratio of total expenses to average net assets for the fiscal
year ended September 30, 1996, for Global Balanced Fund was 2.59% and
3.21% for Class A and Class B shares, respectively. The estimated ratio of
total expenses to average net assets for the fiscal year ending October
31, 1997, for International Equity Portfolio is 2.10% and 2.75%
(annualized) for the Class A and Class B shares, respectively, net of fee
waivers and expense reimbursements. The estimated ratios of total expenses
to average net assets on a gross basis for the fiscal year ending October
31, 1997, for International Equity Portfolio are 2.50% and 3.33%
(annualized) for the Class A and Class B shares, respectively.
- SIMILARITIES OF THE FUNDS: In addition, International Equity Portfolio and
Global Balanced Fund have a number of similarities that led to
consideration of the Reorganization. Both Global Balanced Fund and
International Equity Portfolio invest a significant portion of their
assets in foreign equity securities, although Global Balanced Fund also
invests in domestic equity securities and places a greater emphasis on
debt securities. Global Balanced Fund and International Equity Portfolio
both pay dividends of any net investment income and make distributions of
any net capital gains at least annually. In addition, each Fund is managed
by SAAMCo, advised by unaffiliated investment advisers, and distributed by
SunAmerica Capital Services, Inc., and has similar purchase, redemption
and exchange privileges.
- TAX-FREE NATURE OF TRANSACTION; LACK OF DILUTION: The Trustees were
informed that the proposed Reorganization involving Global Balanced Fund
and International Equity Portfolio would be accomplished without the
imposition of federal income taxes on either Global Balanced Fund or its
shareholders. In addition, the Trustees were informed that the interests
of Global Balanced Fund shareholders would not be diluted as a result of
the proposed Reorganization and that the Global Balanced Fund shareholders
would receive shares of International Equity Portfolio equal in value to
the aggregate value of their Global Balanced Fund shares.
THE BOARD OF TRUSTEES OF SUNAMERICA EQUITY FUNDS, INCLUDING THE INDEPENDENT
TRUSTEES, UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF GLOBAL BALANCED FUND
VOTE FOR THE REORGANIZATION.
CONSIDERATIONS OF THE BOARD OF DIRECTORS OF STYLE SELECT SERIES
The Board of Directors of Style Select Series, including the independent
Directors, has unanimously concluded that consummation of the Reorganization is
in the best interests of International Equity Portfolio and its shareholders and
that the interests of International Equity Portfolio shareholders would not be
diluted as a result of the Reorganization, and has unanimously voted to approve
the Agreement.
TERMS OF THE AGREEMENT
On the Closing Date, all the assets and liabilities of Global Balanced Fund
will be transferred to International Equity Portfolio in exchange for Class A
and Class B shares of International Equity Portfolio on the basis of relative
net asset value. Global Balanced Fund will then distribute to its shareholders
the shares of International Equity Portfolio received by Global Balanced Fund
pursuant to the terms of the Agreement in complete liquidation of Global
Balanced Fund. Immediately upon distribution, the shares of International Equity
Portfolio received by Global Balanced Fund's shareholders will have an aggregate
net asset value equal to the aggregate net asset value of the shares of the
Acquired Fund held immediately prior to the Reorganization.
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<PAGE>
As of the Closing Date, International Equity Portfolio will, through its
transfer agent, credit on its books and confirm in writing an appropriate number
of its Class A and Class B shares to each shareholder of Global Balanced Fund,
regardless of whether such shareholder holds physically issued certificates.
International Equity Portfolio will not issue share certificates in connection
with the Reorganization. With respect to any Global Balanced Fund shareholder
holding Global Balanced Fund receipts for shares as of the Closing Date, until
International Equity Portfolio is notified by Equity Funds' transfer agent that
such shareholder has surrendered his or her outstanding Global Balanced Fund
receipts for shares or, in the event of lost, stolen or destroyed receipts for
shares, posted adequate bond or submitted a lost certificate form, as the case
may be, International Equity Portfolio will not permit such shareholder to (1)
receive dividends or other distributions on International Equity Portfolio
shares in cash (although such dividends and distributions shall be credited to
the account of such shareholder established on International Equity Portfolio's
books as described above, as provided in the next sentence), (2) exchange
International Equity Portfolio shares credited to such shareholder's account for
shares of other SunAmerica sponsored funds as provided in the prospectus of
International Equity Portfolio, or (3) pledge or redeem such shares. In the
event that a shareholder is not permitted to receive dividends or other
distributions on International Equity Portfolio shares in cash as provided in
the preceding sentence, International Equity Portfolio shall pay such dividends
or other distributions in additional International Equity Portfolio shares,
notwithstanding any election such shareholder shall have made previously with
respect to the payment of dividends or other distributions on shares of Global
Balanced Fund. Global Balanced Fund will, at its expense, request its
shareholders to surrender their outstanding Global Balanced Fund receipts for
shares, post adequate bond or submit a lost certificate form, as the case may
be.
The Agreement sets forth certain additional conditions to the obligations of
the parties to proceed with the Reorganization, including the approval of the
Reorganization by shareholders of Global Balanced Fund, an opinion of counsel as
to tax matters (depending on then-existing facts and circumstances) and the
accuracy of various representations and warranties of Global Balanced Fund and
International Equity Portfolio. As a condition to consummation of the
Reorganization, Global Balanced Fund will make one or more distributions to
shareholders prior to the Closing Date which, together with all previous
distributions, have the effect of distributing to its Class A and B shareholders
all of its net investment income and capital gains for the period from the close
of its last fiscal year to the close of business on the Closing Date and any
undistributed amounts thereof from the last fiscal year. Further, if the
Reorganization is not approved at the Meeting by shareholders of Global Balanced
Fund, Global Balanced Fund will continue to operate separately; however, the
proposal may be resubmitted to shareholders of Global Balanced Fund, or the
Board of Trustees of SunAmerica Equity Funds may consider what other action, if
any, should be taken with respect to Global Balanced Fund.
The foregoing description of the Agreement is qualified in its entirety by
the terms and provisions of the Agreement, a copy of which is attached hereto as
Exhibit A.
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<PAGE>
DESCRIPTION OF SHARES TO BE ISSUED
Full and fractional Class A and Class B shares of International Equity
Portfolio will be issued without the imposition of a sales charge or other fee
to the shareholders of Global Balanced Fund in accordance with the procedures
described above. Class A and Class B shares to be issued in the Reorganization
will be fully paid and nonassessable when issued and transferable without
restriction and will have no preemptive or conversion rights. Reference is
hereby made to the Prospectus of Style Select Series, enclosed herewith for
additional information about Class A and Class B shares of International Equity
Portfolio. A shareholder's holding period for Class B shares of International
Equity Portfolio received pursuant to the Reorganization will include the
shareholder's holding period for Global Balanced Fund shares surrendered in
exchange therefor for purposes of determining any applicable CDSC upon
redemption of such shares as well as the conversion schedule into Class A
shares.
CERTAIN EFFECTS OF THE REORGANIZATION ON SHAREHOLDERS OF GLOBAL BALANCED FUND
Upon consummation of the Reorganization, the prior election of Global
Balanced Fund's shareholders to reinvest dividends and distributions in
additional shares or to receive dividends or distributions in cash will continue
in effect until changed as set forth in the Prospectus of Style Select Series
(such options for reinvestment being identical to those of Global Balanced
Fund). Shareholders of Global Balanced Fund will receive shares of International
Equity Portfolio having, on the Closing Date, the equivalent value in the
aggregate of the shares of Global Balanced Fund previously held, in accordance
with the terms of the Agreement.
EXPENSES OF THE REORGANIZATION
SAAMCo will bear all of the expenses in connection with the Reorganization.
FEDERAL INCOME TAX CONSEQUENCES
Each Fund has elected to qualify as a regulated investment company under the
Internal Revenue Code of 1986, as amended (the "Code"), and International Equity
Portfolio intends to continue to so qualify.
As a condition to the Reorganization, the Funds will receive an opinion from
Shereff, Friedman, Hoffman & Goodman, LLP, counsel to the Funds, to the effect
that, on the basis of the existing provisions of the Code, current
administrative rules and court decisions, for federal income tax purposes: (1)
the Reorganization as set forth in the Agreement will constitute a tax-free
reorganization under Section 368(a)(1)(C) of the Code; (2) no gain or loss will
be recognized by International Equity Portfolio upon its receipt of Global
Balanced Fund's assets solely in exchange for Class A and Class B shares of
International Equity Portfolio; (3) no gain or loss will be recognized by Global
Balanced Fund upon the transfer of its assets to International Equity Portfolio
solely in exchange for Class A and Class B shares of International Equity
Portfolio and the assumption of Global Balanced Fund's liabilities, if any, or
upon the distribution (whether actual or constructive) of the Class A and Class
B shares of International Equity Portfolio to Global Balanced Fund shareholders
in exchange for their shares of the Class A and Class B shares of International
Equity Portfolio; (4) no gain or loss will be recognized by shareholders of
Global Balanced Fund upon the exchange of their Global Balanced Fund shares for
Class A and Class B shares of International Equity Portfolio; (5) the tax basis
of Global Balanced Fund's assets acquired by International Equity Portfolio will
be the same as the tax basis of such assets to Global Balanced Fund immediately
prior
18
<PAGE>
to the Reorganization; (6) the tax basis of Class A and Class B shares of
International Equity Portfolio received by each shareholder of Global Balanced
Fund pursuant to the Agreement will be the same as the tax basis of Global
Balanced Fund shares held by such shareholder immediately prior to the
Reorganization; (7) the holding period of the assets of Global Balanced Fund in
the hands of International Equity Portfolio will include the period during which
those assets were held by Global Balanced Fund; and (8) the holding period of
Class A and Class B shares of International Equity Portfolio received by each
shareholder of Global Balanced Fund will include the period during which Global
Balanced Fund shares exchanged therefor were held by such shareholder, provided
the Global Balanced Fund shares were held as capital assets on the date of the
Reorganization.
The opinion of counsel will be based upon certain representations made by
SunAmerica Equity Funds and Style Select Series. While an opinion of counsel
does not bind the Internal Revenue Service or the courts, it will reflect such
counsel's view, as of the closing of the Reorganization, as to the expected
federal income tax treatment of the Reorganization. If the Internal Revenue
Service were to take a position contrary to the views expressed by such counsel,
and succeed in asserting such position, shareholders would be treated as having
received shares of International Equity Portfolio in a transaction in which gain
or loss would be recognized for federal income tax purposes and International
Equity Portfolio would be treated for such purposes as having purchased the
assets of Global Balanced Fund for their fair market value.
As of September 30, 1996, Global Balanced Fund had net capital loss
carryforwards of $217,014. It is currently anticipated that this entire amount
will be utilized to offset capital gains prior to the consummation of the
Reorganization. To the extent they are not so utilized, any unused amount will
be assumed by International Equity Portfolio and utilized to the full extent
permitted under applicable federal tax law and regulations.
Shareholders should consult their tax advisers regarding the effect of the
proposed transaction in light of their individual circumstances. As the
foregoing discussion relates only to federal income tax consequences,
shareholders should also consult their tax advisers as to the state and local
tax consequences of such transactions.
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS AND OBLIGATIONS
SunAmerica Equity Funds is an open-end management investment company that
currently offers six different investment portfolios. It is organized as a
business trust under the laws of the Commonwealth of Massachusetts and its
Declaration of Trust permits the Trustees to issue an unlimited number of full
and fractional shares of beneficial interest ($.01 par value per share) in
separate series and classes. Global Balanced Fund, a portfolio of SunAmerica
Equity Funds, consists of two classes of shares, designated Class A and Class B.
Each shareholder is entitled to a full vote for each full share of beneficial
interest held. Each class represents an interest in the same assets of the Fund
and is identical in all respects except that each class bears certain
distribution expenses and has voting rights with respect to certain distribution
and service plans. Except for the conversion feature applicable to the Class B
shares, there are no conversion, preemptive or other subscription rights. In the
event of liquidation, each share of Global Balanced Fund is entitled to its
portion of all of the Fund's assets after all debt and expenses of the Fund have
been paid. Since Class B shares generally bear higher distribution expenses than
Class A shares, the liquidation proceeds to shareholders of Class B shares are
likely to be lower than to Class A shareholders.
Under Massachusetts law, shareholders of a business trust, such as
SunAmerica Equity Funds, in certain circumstances may be held personally liable
as partners for the obligations of the trust. However,
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<PAGE>
the Declaration of Trust of SunAmerica Equity Funds contains an express
disclaimer of shareholder liability for acts or obligations of SunAmerica Equity
Funds. The Declaration of Trust also provides for indemnification out of
SunAmerica Equity Funds' property for any shareholder held personally liable for
any trust obligation. Thus the risk of a shareholder being personally liable, as
a partner for obligations of Global Balanced Fund, is limited to the unlikely
circumstance in which Global Balanced Fund itself would be unable to meet its
obligations. Under Maryland law, shareholders of a corporation, such as Style
Select Series, will not be held personally liable for the obligations of the
corporation.
Like SunAmerica Equity Funds, Style Select Series is an open-end management
investment company. Style Select Series currently offers four separate
investment portfolios. It is organized as a Maryland corporation and is
authorized to issue one billion (1,000,000,000) shares of common stock (par
value $0.0001 per share). International Equity Portfolio, a series of Style
Select Series, consists of four classes, designated Class A, Class B, Class C
and Class Z, each of which consists of twenty-five million (25,000,000) shares.
Only Class A, Class B and Class C shares are currently being offered to the
public. Each shareholder is entitled to a full vote for each full share of
common stock held. Except for the conversion feature applicable to the Class B
shares, there are no conversion, preemptive or other subscription rights. In the
event of liquidation, each share of common stock of International Equity
Portfolio is entitled to its portion of all of the Fund's assets after all debt
and expenses of the Fund have been paid. Since Class B and Class C shares
generally bear higher distribution expenses than Class A shares, the liquidation
proceeds to shareholders of Class B and Class C shares are likely to be lower
than to Class A shareholders. Class C shares of International Equity Portfolio
are not being offered hereby and will not be issued in connection with the
Reorganization.
Shares of both Global Balanced Fund and International Equity Portfolio are,
when issued as described in their respective Prospectus, fully paid,
nonassessable by the respective Fund, fully transferrable and redeemable at the
option of the holder. SunAmerica Equity Funds' Declaration of Trust and Style
Select Series' Articles of Incorporation permit the Board of Trustees or
Directors, respectively, to authorize the creation of additional series of
beneficial interest or common stock, respectively, and classes within such
series, with such preferences, privileges, limitations and voting and dividend
rights as each Board may determine.
Neither SunAmerica Equity Funds' Declaration of Trust nor Style Select
Series' Articles of Incorporation requires annual meetings of shareholders
except as required under the 1940 Act. Shareholder approval is necessary only
for certain changes in operations or the election of Trustees/Directors under
certain circumstances. No shares have cumulative voting rights for the election
of Trustees/Directors. In addition, each Fund's Declaration of Trust or Articles
of Incorporation permit a shareholder meeting to be called if requested in
writing by holders of record of more than 10% or more of the outstanding shares
of the Fund.
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<PAGE>
FINANCIAL INFORMATION
CAPITALIZATION
The capitalization of Class A and Class B shares of each Fund as of April
30, 1997, and the pro forma combined capitalization as of that date after giving
effect to the Reorganization are as follows:
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL EQUITY
GLOBAL BALANCED EQUITY PORTFOLIO
FUND PORTFOLIO PRO FORMA COMBINED
(CLASS A) (CLASS A) (CLASS A)
--------------- ------------------ ---------------------------
<S> <C> <C> <C>
Net Assets........................... $7,944,521 $ 22,994,862 $ 30,938,766
Shares Outstanding................... 1,020,559 1,841,936 2,478,516
Net Asset Value per Share............ $7.78 $12.48 $12.48
Maximum Sales Charge................. $0.47 $0.76 $0.76
Maximum Offering Price............... $8.25 $13.24 $13.24
<CAPTION>
INTERNATIONAL INTERNATIONAL EQUITY
GLOBAL BALANCED EQUITY PORTFOLIO
FUND PORTFOLIO PRO FORMA COMBINED
(CLASS B) (CLASS B) (CLASS B)
--------------- ------------------ ---------------------------
<S> <C> <C> <C>
Net Assets........................... $ 15,552,748 $ 14,123,293 $ 29,674,834
Shares Outstanding................... 2,010,954 1,134,927 2,385,148
Net Asset Value per Share............ $7.73 $12.44 $12.44
</TABLE>
INFORMATION ABOUT INTERNATIONAL EQUITY PORTFOLIO
AND GLOBAL BALANCED FUND
INTERNATIONAL EQUITY PORTFOLIO
Information about International Equity Portfolio and Style Select Series is
contained in the Style Select Series prospectus dated May 30, 1997, a copy of
which is enclosed herewith. Additional information about International Equity
Portfolio and Style Select Series is included in the Statement of Additional
Information of Style Select Series dated May 30, 1997 and the Statement of
Additional Information (relating to this Proxy Statement and Prospectus). Copies
of such Statements of Additional Information, which have been filed with the
SEC, may be obtained upon request and without charge by contacting Style Select
Series at 1-800-858-8850, or by writing Style Select Series at The SunAmerica
Center, 733 Third Avenue, New York, New York 10017-3204. Style Select Series is
subject to the informational requirements of the Securities Act of 1933, as
amended (the "1933 Act"), the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and the 1940 Act and in accordance therewith files reports and
other information with the SEC. Reports, proxy and information statements,
charter documents and other information filed by Style Select Series can be
obtained by calling or writing Style Select Series and can also be inspected and
copied by the public at the public reference facilities maintained by the SEC in
Washington, D.C. located at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549 and at certain of its regional offices located at Suite 1400, Northwestern
Atrium Center, 500 West Madison Street, Chicago, IL 60661 and 13th Floor, Seven
World Trade Center, New York, NY 10048. Copies of such material can be obtained
from the Public Reference Branch, Office of Consumer Affairs and Information
Services, SEC, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates.
This Proxy Statement and Prospectus, which constitutes part of a
Registration Statement filed by Statement of Additional Information with the SEC
under the 1933 Act, omits certain of the information
21
<PAGE>
contained in the Registration Statement. Reference is hereby made to the
Registration Statement and to the exhibits thereto for further information with
respect to International Equity Portfolio and the shares offered hereby.
Statements contained herein concerning the provisions of documents are
necessarily summaries of such documents, and each such statement is qualified in
its entirety by reference to the copy of the applicable document filed with the
SEC.
GLOBAL BALANCED FUND
Information about Global Balanced Fund and SunAmerica Equity Funds is
contained in the Prospectus of SunAmerica Equity Funds dated January 30, 1997,
the Annual Report to Shareholders dated September 30, 1996, the Semi-Annual
Report to Shareholders dated March 31, 1997, the Statement of Additional
Information of SunAmerica Equity Funds dated January 30, 1997, and the Statement
of Additional Information (relating to this Proxy Statement and Prospectus).
Copies of such prospectus, Annual Report, Semi-Annual Report and Statements of
Additional Information, which have been filed with the SEC, may be obtained upon
request and without charge from SunAmerica Equity Funds by calling
1-800-858-8850 or by writing to SunAmerica Equity Funds at SunAmerica Equity
Funds, The SunAmerica Center, 733 Third Avenue, New York, New York 10017-3204.
SunAmerica Equity Funds is subject to the informational requirements of the 1933
Act, the 1934 Act and the 1940 Act and in accordance therewith files reports and
other information with the SEC. Reports, proxy and information statements,
charter documents and other information filed by SunAmerica Equity Funds can be
obtained by calling or writing SunAmerica Equity Funds and can also be inspected
at the public reference facilities maintained by the SEC or obtained at
prescribed rates at the addresses listed in the previous section.
INFORMATION CONCERNING THE MEETING
VOTING INFORMATION
Proxies in the form enclosed with this Proxy Statement and Prospectus are
being solicited by the Board of Trustees of SunAmerica Equity Funds for use at
the Meeting. If the proxy cards in the accompanying form are properly executed
and returned, the shares of Global Balanced Fund represented thereby will be
voted as instructed on the proxy. If no instructions are given, such shares will
be voted FOR the proposed Reorganization and in the discretion of the proxies
named in the proxy card, on any other proposals to properly come before the
Meeting or any adjournment thereof. Any proxy may be revoked by a shareholder
prior to its exercise upon written notice to the Secretary of SunAmerica Equity
Funds, by the shareholder signing and sending a later-dated proxy, or by the
vote of a shareholder cast in person at the Meeting.
All costs of the Reorganization, including the costs of printing and mailing
the accompanying Notice of Special Meeting and this Proxy Statement and
Prospectus and the costs of the Meeting, will be borne by SAAMCo.
Shareholders of record at the close of business on June 30, 1997 are
entitled to vote at the Meeting. Each share of Global Balanced Fund is entitled
to one vote with respect to the proposed Reorganization. On June 30, 1997 there
were issued and outstanding an aggregate of 2,896,737.041 shares of Global
Balanced Fund, including 958,205.368 Class A shares and 1,938,531.673 Class B
shares. See "Security Ownership of Certain Shareholders and Management."
22
<PAGE>
As of the record date, there were issued and outstanding an aggregate of
3,758,237.802 shares, including 2,024,788.175 Class A shares, 1,539,452.129
Class B shares and 193,998.498 Class C shares, of International Equity
Portfolio. See "Security Ownership of Certain Shareholders and Management."
If, by the time scheduled for the Meeting, a quorum of shareholders of
Global Balanced Fund is not present or if a quorum of Global Balanced Fund's
shareholders is present but sufficient votes in favor of the Reorganization are
not received, SunAmerica Equity Funds may propose one or more adjournments of
the Meeting to permit further solicitation of proxies from shareholders of
Global Balanced Fund. Any such adjournment will require the vote of a majority
of the shares of the Global Balanced Fund present in person or by proxy at the
session of the Meeting to be adjourned. In the event of a proposal to adjourn
the Meeting, the persons named as proxies will vote the proxies in favor of such
adjournment if they determine that such adjournment and additional solicitation
is reasonable and in the interest of Global Balanced Fund's shareholders.
A quorum for the transaction of business at the Meeting is constituted by
the presence in person or by proxy of holders of a majority of the outstanding
shares of Global Balanced Fund entitled to vote at the Meeting. If a proxy is
properly executed and returned accompanied by instructions to withhold authority
("non-vote"), or is marked with an abstention, the shares represented thereby
will be considered to be present at the Meeting for determining the existence of
a quorum for the transaction of business. Approval of the Reorganization
requires the affirmative vote of a majority of Global Balanced Fund's shares
represented in person or by proxy and entitled to vote at the Meeting. The
shares represented by a proxy that constitutes a non-vote or an abstention will
be considered present at the Meeting for purposes of determining a quorum for
the transaction of business but, not being cast in favor, will have the effect
of a vote against approval of the Reorganization. Approval of the Reorganization
by the shareholders of International Equity Portfolio is not necessary.
SECURITY OWNERSHIP OF
CERTAIN SHAREHOLDERS AND MANAGEMENT
On June 30, 1997, the record date for the Meeting, the Trustees and officers
of SunAmerica Equity Funds as a group owned less than 1% of the outstanding
shares of Global Balanced Fund. To the best knowledge of SunAmerica Equity
Funds, as of the record date, no person owned beneficially or of record 5% or
more of Global Balanced Fund's outstanding shares.
On the record date, the Directors and officers of Style Select Series as a
group owned less than 1% of the outstanding shares of International Equity
Portfolio. To the best knowledge of Style Select Series, as of the record date,
no person, except as set forth in the table below, owned beneficially or of
record 5% or more of the outstanding shares of International Equity Portfolio:
<TABLE>
<CAPTION>
NUMBER OF
NAME AND ADDRESS SHARES OWNED PERCENT OWNED NUMBER OF
OF RECORD OR OF RECORD AND OF RECORD AND SHARES OWNED OF PERCENT OWNED
BENEFICIAL OWNER BENEFICIALLY BENEFICIALLY RECORD ONLY OF RECORD ONLY
- --------------------------------- ----------------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C>
SunAmerica Inc.
Los Angeles, CA 90067........... 1,200,000 31.9% -- --
Merrill Lynch, Pierce,
Fenner & Smith, Inc.
Jacksonville, FL 32246.......... -- -- 316,066 8.4%
</TABLE>
23
<PAGE>
OTHER MATTERS
The Board of Trustees of SunAmerica Equity Funds knows of no other matters
that may come before the Meeting. If any such matters should properly come
before the Meeting, it is the intention of the persons named in the enclosed
form of proxy to vote such proxy in accordance with their best judgment.
SHAREHOLDER PROPOSALS
It is the present intention of the Board of Directors/Trustees of each Fund
not to hold annual meetings of shareholders unless the election of
Directors/Trustees is required under the 1940 Act nor to hold special meetings
of shareholders unless required by the 1940 Act or state law.
A shareholder proposal intended to be presented at any subsequent meeting of
the shareholders of Global Balanced Fund must be received by SunAmerica Equity
Funds a reasonable time before the Trustees' solicitation relating to such
meeting is made in order to be included in Global Balanced Fund's proxy
statement and form of proxy relating to that meeting. The mere submission of a
proposal by a shareholder does not guarantee that such proposal will be included
in the proxy statement because certain rules under the federal securities laws
must be complied with before the inclusion of the proposal is required. In the
event that the Reorganization is approved at this Meeting, it is not expected
that there will be any future shareholder meetings of Global Balanced Fund.
PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE
IS REQUIRED ON THE ENCLOSED ENVELOPE IF MAILED IN THE UNITED STATES.
By Order of the Board of Trustees
Robert M. Zakem
SECRETARY
New York, NY
July 2, 1997
24
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated May 22, 1997 (the "Agreement")
between SunAmerica Equity Funds, a Massachusetts business trust ("Equity
Funds"), on behalf of its Global Balanced Fund ("Global Balanced"), and Style
Select Series, Inc., a Maryland corporation ("Style Select"), on behalf of its
International Equity Portfolio ("International Equity").
W I T N E S S E T H:
WHEREAS, Global Balanced is a separate, non-diversified series of Equity
Funds, an open-end management investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, International Equity is a separate series of Style Select, a
non-diversified, open-end management investment company registered under the
1940 Act; and
WHEREAS, the Board of Trustees of Equity Funds and the Board of Directors of
Style Select have determined that it is advisable that Global Balanced sell all
of its assets to International Equity in exchange for Class A and Class B shares
of common stock of International Equity (the "Issued Shares"), that
International Equity assume all of the liabilities of Global Balanced, on the
terms and conditions hereinafter set forth and that the Issued Shares be
distributed to shareholders of Global Balanced in liquidation thereof (the
"Sale") and in accordance with the applicable provisions of the 1940 Act, the
Declaration of Trust of Equity Funds, the Articles of Incorporation of Style
Select, and the laws of the Commonwealth of Massachusetts and the State of
Maryland, and have duly approved this Agreement; and
WHEREAS, it is intended that this Agreement constitute a Plan of
Reorganization within the meaning of Section 368(a)(1)(C) of the Internal
Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the mutual promises contained herein,
the parties hereto agree as follows:
1. AGREEMENT OF SALE. At the Effective Date (as hereinafter defined),
Global Balanced shall transfer all the business and assets of Global Balanced
and assign all the liabilities of Global Balanced to International Equity, and
International Equity shall acquire all such business and assets of Global
Balanced in exchange for assumption of such liabilities and delivery to Global
Balanced by International Equity of a number (both full and fractional) of
Issued Shares having an aggregate net asset value (calculated in accordance with
the description of the net asset value in the then-current Prospectus of
International Equity) equal to the aggregate net asset value of Global Balanced
(calculated in accordance with the description of the net value in the
then-current Prospectus of Global Balanced). The net asset value of the Class A
and B shares of each of International Equity and Global Balanced shall be
determined separately for purposes of Section 2 hereof.
All debts, liabilities and duties of Global Balanced, to the extent they
exist at or after the Effective Date, shall after the Effective Date attach to
International Equity, and may be enforced against International Equity to the
same extent as if the same had been incurred by International Equity.
2. LIQUIDATION OF GLOBAL BALANCED AND DISTRIBUTION OF ITS
ASSETS. Immediately after the Effective Date, (a) the Issued Shares received by
Global Balanced pursuant to Section 1 hereof will be distributed to the
shareholders of Global Balanced in exchange for their Class A and Class B shares
("Exchanged Shares") in Global Balanced, such that each shareholder of Global
Balanced shall receive a number of full and fractional
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Issued Shares of the same class as, and having, at the Effective Date, an
aggregate net asset value equal to the aggregate net asset value of, the
Exchanged Shares held by such shareholder at the Effective Date, and (b) the
Exchanged Shares will thereupon be canceled on the books of the Trust. The net
asset value of the Issued Shares and of the Exchanged Shares will be calculated
as provided in Section 1 hereof.
The distribution of the Issued Shares to the shareholders of Global Balanced
will be accomplished by the establishment of an open account on the share
records of International Equity in the name of each shareholder of Global
Balanced and representing the respective pro rata number of Issued Shares of the
same class as, and equal in value to the value of, the Exchanged Shares held by
such shareholder at the Effective Date. Exchanged Shares held in an open account
with State Street Bank and Trust Company, or such other bank or trust company as
is, at the Effective Date, the transfer agent of Global Balanced, will
automatically become the number of Issued Shares provided for above and be held
in an open account with State Street Bank and Trust Company, or such other bank
or trust company, in its capacity as the transfer agent of International Equity.
International Equity shall not issue certificates representing its shares in
connection with such exchange. With respect to any Global Balanced shareholder
holding Global Balanced receipts for shares as of the Effective Date, until
International Equity is notified by Equity Funds' transfer agent that such
shareholder has surrendered his or her outstanding Global Balanced receipts for
shares or, in the event of lost, stolen or destroyed receipts for shares, posted
adequate bond or submitted a lost certificate form, as the case may be,
International Equity will not permit such shareholder to (1) receive dividends
or other distributions on International Equity shares in cash (although such
dividends and distributions shall be credited to the account of such shareholder
established on International Equity's books as described above, as provided in
the next sentence), (2) exchange International Equity shares credited to such
shareholder's account for shares of other SunAmerica sponsored funds as provided
in the prospectus of International Equity, or (3) pledge or redeem such shares.
In the event that a shareholder is not permitted to receive dividends or other
distributions on International Equity shares in cash as provided in the
preceding sentence, International Equity shall pay such dividends or other
distributions in additional International Equity shares, notwithstanding any
election such shareholder shall have made previously with respect to the payment
of dividends or other distributions on shares of Global Balanced. Global
Balanced will, at its expense, request its shareholders to surrender their
outstanding Global Balanced receipts for shares, post adequate bond or submit a
lost certificate form, as the case may be.
Ownership of International Equity shares will be shown on the books of
International Equity's transfer agent. Shares of International Equity will be
issued in the manner described in International Equity's then-current prospectus
and statement of additional information.
Any transfer taxes payable upon issuance of shares of International Equity
in exchange for shares of Global Balanced in a name other than that of the
registered holder of the shares being exchanged on the books of Global Balanced
as of that time shall be paid by the person to whom such shares are to be issued
as a condition to the registration of such transfer.
Any reporting responsibility with the Securities and Exchange Commission
(the "Commission") or any state securities commission of Equity Funds with
respect to Global Balanced is and shall remain the responsibility of Equity
Funds up to and including the Effective Date.
All books and records of Global Balanced, including all books and records
required to be maintained under the 1940 Act and the rules and regulations
thereunder, shall be available to International Equity
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from and after the Effective Date and shall be turned over to International
Equity on or prior to the Effective Date.
3. REPRESENTATIONS AND WARRANTIES BY STYLE SELECT.
Style Select represents and warrants to Equity Funds that:
(a) ORGANIZATION. Style Select is a corporation duly organized and
validly existing under the laws of the State of Maryland. Style Select is
registered under the 1940 Act as a non-diversified, open-end management
investment company and all of its outstanding Class A and Class B shares
have been sold pursuant to an effective registration statement filed under
the Securities Act of 1933, as amended (the "1933 Act") (File No.
333-11283).
(b) AUTHORITY TO ISSUE SHARES. Style Select is duly authorized to
issue the Issued Shares hereunder, and each such share will be, upon
issuance, duly authorized, validly issued, fully-paid and non-assessable,
and will have full voting rights. All of Style Select's issued and
outstanding Class A and Class B shares are duly authorized, validly issued,
fully-paid and non-assessable, and have full voting rights.
(c) SECURITIES LAWS. As of the Effective Date, the Issued Shares will
be duly qualified for offering to the public in all jurisdictions in which
the sale of such shares is required to be qualified to carry out the
transactions contemplated hereby, and there are a sufficient number of such
Issued Shares registered under the 1933 Act to permit the transfers
contemplated by this Agreement to be consummated.
(d) TRANSACTION PROXY. With respect to the combined proxy statement
and prospectus pursuant to which approval of the Global Balanced
shareholders to the transactions contemplated hereby will be sought (the
"Transaction Proxy"), the information therein regarding Style Select and
International Equity will not contain any untrue statement of a material
fact, or omit to state a material fact required to be stated therein in
order to make the statements made therein, in light of the circumstances
under which they are made, not misleading.
(e) AUTHORIZATION. Style Select has full power and authority to enter
into and perform its obligations under this Agreement. The execution and
delivery of this Agreement and performance of the matters contemplated
hereby by Style Select have been duly authorized by its Board of Directors,
and approval by its shareholders of the matters contemplated hereby is not
required. This Agreement constitutes the valid and binding obligation of
Style Select, enforceable against it in accordance with its terms.
(f) LEGAL PROCEEDINGS. There are no legal, administrative or other
proceedings pending or, to the knowledge of Style Select, threatened against
Style Select which would materially affect the financial condition of Style
Select or the ability of Style Select to consummate the transactions
contemplated by this Agreement. Style Select is not charged with or, to the
best of its knowledge, threatened with any violation of any provisions of
any federal, state or local law or regulation or administrative ruling
relating to any aspect of its business.
(g) NO CONFLICTS. Style Select is not a party to or obligated under
any provision of its Articles of Incorporation, By-laws, or any contract or
any other commitment or obligation, and is not subject to any order or
decree, which would be violated by its execution of or performance under
this Agreement.
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<PAGE>
(h) SUBCHAPTER M. International Equity satisfies, has satisfied since
its inception, will at the Effective Date satisfy, and consummation of the
transactions contemplated by this Agreement will not cause it to fail to
satisfy for any period, the requirements of Subchapter M of the Code for
Federal income taxation as a regulated investment company.
(i) CURRENT INFORMATION. The statements contained in Style Select's
Prospectus dated March 5, 1997 and Statement of Additional Information of
even date, each as supplemented to date, at the time such Prospectus and
Statement of Additional Information became effective, at the date of the
signing of this Agreement, and at the Effective Date did not and will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein not misleading.
(j) FINANCIAL STATEMENTS. The Portfolio of Investments, Statement of
Assets and Liabilities, Statement of Operations, Statement of Changes in Net
Assets, and Financial Highlights of International Equity at April 30, 1997
(unaudited) for the six month period then ended which have been prepared in
accordance with generally accepted accounting principles and present fairly,
in all material respects, the financial condition, results of operations,
changes in net assets and financial highlights of International Equity as of
and for the six month period ended on such date, and there are not material
known liabilities of International Equity (contingent or otherwise) not
disclosed therein.
(k) MATERIAL ADVERSE CHANGE. Since April 30, 1997, there has not been
any material adverse change in International Equity's financial condition,
assets, liabilities, or business other than changes occurring in the
ordinary course of business, or any incurrence by International Equity of
indebtedness maturing more than one year from the date such indebtedness was
incurred, except as otherwise disclosed to and accepted by Equity Funds. For
the purposes of this paragraph 3(k), a decline in net assets or change in
the number of shares outstanding shall not constitute a material adverse
change.
(l) TAX RETURN. At the date hereof and at the Effective Date, all
federal and other tax returns and reports of International Equity required
by law to have been filed on or before such dates shall have been timely
filed, and all federal and other taxes shown as due on said returns and
reports shall have been paid insofar as due, or provision shall have been
made for the payment thereof, and, to the best of Style Select's knowledge,
all federal or other taxes required to be shown on any such return or report
have been shown on such return or report, no such return is currently under
audit and no assessment has been asserted with respect to such returns.
4. REPRESENTATIONS AND WARRANTIES BY EQUITY FUNDS.
Equity Funds represents and warrants to Style Select that:
(a) ORGANIZATION. Equity Funds is a business trust duly organized and
validly existing under the laws of the Commonwealth of Massachusetts. Equity
Funds is registered under the 1940 Act as an open-end management investment
company and all the outstanding Class A and Class B shares of its Global
Balanced series have been sold pursuant to an effective registration
statement filed under the 1933 Act (File No. 33-08021).
(b) AUTHORITY TO ISSUE SHARES. All of Equity Funds' issued and
outstanding shares of its Global Balanced series are duly authorized,
validly issued, fully-paid and non-assessable, and have full voting rights.
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<PAGE>
(c) TRANSACTION PROXY. The information in the Transaction Proxy
regarding Equity Funds and its Global Balanced series will not contain any
untrue statement of a material fact, or omit to state a material fact
required to be stated therein in order to make the statements made therein,
in light of the circumstances under which they are made, not misleading.
(d) AUTHORIZATION. Equity Funds has full power and authority to enter
into and perform its obligations under this Agreement. The execution and
delivery of this Agreement and performance of the matters contemplated
hereby by Equity Funds have been duly authorized by the Board of Trustees of
Equity Funds, and subject to approval by the Class A and Class B
shareholders of Global Balanced of the matters contemplated hereby, this
Agreement constitutes the valid and binding obligation of Equity Funds,
enforceable against it in accordance with its terms.
(e) LEGAL PROCEEDINGS. There are no legal, administrative or other
proceedings pending or, to the knowledge of Equity Funds, threatened against
Equity Funds which would materially affect the financial condition of Equity
Funds or the ability of Equity Funds to consummate the transactions
contemplated by this Agreement. Equity Funds is not charged with or, to the
best of its knowledge, threatened with any violation of any provisions of
any federal, state or local law or regulation or administrative ruling
relating to any aspect of its business.
(f) NO CONFLICTS. Equity Funds is not a party to or obligated under
any provision of its Declaration of Trust, By-laws, or any contract or any
other commitment or obligation, and is not subject to any order or decree,
which would be violated by its execution of or performance under this
Agreement.
(g) SUBCHAPTER M. Global Balanced satisfies, has satisfied since its
inception, and will immediately prior to the Effective Date satisfy, the
requirements of Subchapter M of the Code.
(h) CURRENT INFORMATION. The statements contained in Equity Funds'
Prospectus dated January 30, 1997 and Statement of Additional Information of
even date, as supplemented to date, at the time such Prospectus and
Statement of Additional Information became effective and at the date of the
signing of this Agreement, did not and will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein not misleading.
(i) MATERIAL CONTRACTS. All material contracts or other commitments to
which Global Balanced, or the properties or assets of Global Balanced, is
subject, or by which Global Balanced is bound except this Agreement will be
terminated on or prior to the Effective Date without Global Balanced or
International Equity incurring any liability or penalty with respect
thereto.
(j) FINANCIAL STATEMENTS. The Portfolio of Investments, Statement of
Assets and Liabilities, Statement of Operations, Statement of Changes in Net
Assets, and Financial Highlights of Global Balanced at September 30, 1996
and for the year then ended (copies of which have been furnished to
International Equity) have been audited by Price Waterhouse LLP, independent
auditors, in accordance with generally accepted accounting principles and
present fairly, in all material respects, the financial condition, results
of operations, changes in net assets and financial highlights of Global
Balanced as of and for the period ended on such date, and there are not
material known liabilities of Global Balanced (contingent or otherwise) not
disclosed therein;
The Portfolio of Investments, Statement of Assets and Liabilities,
Statement of Operations, Statement of Changes in Net Assets, and Financial
Highlights of Global Balanced at March 31, 1997
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<PAGE>
(unaudited) for the six month period then ended, which have been prepared in
accordance with generally accpeted accounting principles and present fairly,
in all material respects, the financial condition, results of operations,
changes in net assets and financial highlights of Global Balanced as of and
for the six month period ended on such date, and there are not material
known liabilities of Global Balanced (contingent or otherwise) not disclosed
therein.
(k) MATERIAL ADVERSE CHANGE. Since March 31, 1997, there has not been
any material adverse change in Global Balanced's financial condition,
assets, liabilities, or business other than changes occurring in the
ordinary course of business, or any incurrence by Global Balanced of
indebtedness maturing more than one year from the date such indebtedness was
incurred, except as otherwise disclosed to and accepted by Style Select. For
the purposes of this paragraph 4(k), a decline in net assets or change in
the number of shares outstanding shall not constitute a material adverse
change.
(l) TAX RETURNS. At the date hereof and at the Effective Date, all
federal and other tax returns and reports of Global Balanced required by law
to have been filed on or before such dates shall have been timely filed, and
all federal and other taxes shown as due on said returns and reports shall
have been paid insofar as due, or provision shall have been made for the
payment thereof, and, to the best of Equity Funds' knowledge, all federal or
other taxes required to be shown on any such return or report have been
shown on such return or report, no such return is currently under audit and
no assessment has been asserted with respect to such returns.
(m) MARKETABLE TITLE. At the Effective Date, Equity Funds will have
good and marketable title to the assets of Global Balanced to be transferred
to International Equity pursuant to Section 1, and full right, power and
authority to sell, assign, transfer and deliver such assets hereunder free
of any liens, claims, charges or other encumbrances, and, upon delivery and
payment for such assets, International Equity will acquire good and
marketable title thereto.
5. COVENANTS OF STYLE SELECT AND EQUITY FUNDS.
(a) REGISTRATION STATEMENT. Style Select will as promptly as
practicable file with the Commission a Registration Statement on Form N-14
under the 1933 Act (the "Registration Statement") relating to the Issued
Shares, including the Transaction Proxy, and will use its best efforts to
ensure that such Registration Statement becomes effective as promptly as
practicable. At the time such Registration Statement becomes effective, it
will comply in all material respects with the applicable provisions of the
1933 Act, the 1940 Act and the Securities Exchange Act of 1934, and rules
and regulations promulgated thereunder.
(b) REVIEW. Each party will give the other a reasonable opportunity to
review and comment upon all reports, notices, registration statements, proxy
statements and other material relating to any aspect of this Agreement or
the transactions contemplated hereunder filed by such party with the
Commission or with any other federal, state or local authority or to be
distributed to shareholders of such party.
(c) INDEMNIFICATION. Each party will indemnify and hold harmless the
other and its trustees, directors, officers, employees and agents from and
against any and all claims, demands, liabilities, and expenses (including
the cost of investigating or defending such claims, demands or liabilities
and reasonable counsel fees and expenses incurred in connection therewith)
that arise out of or are based upon statements or omissions in the
Transaction Proxy or the Registration Statement made in reliance upon and in
conformity with written information furnished by such party or its
affiliates.
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(d) COOPERATION. Each party will cooperate with the other in executing
such documents and taking such actions, before and after the Effective Date,
as may be reasonably necessary to effect the transactions contemplated
hereby.
(e) OPERATION OF BUSINESS. Equity Funds, with respect to Global
Balanced, and Style Select, with respect to International Equity, each
covenants to operate its respective business in the ordinary course between
the date hereof and the Effective Date, it being understood that the
ordinary course of business will include declaring and paying customary
dividends and other distributions and such changes in operations as are
contemplated by the normal operations of the Funds, except as may otherwise
be required by paragraph 6(i) hereof.
(f) MEETING OF SHAREHOLDERS. Equity Funds covenants to call a meeting
of the shareholders of Global Balanced to consider and act upon this
Agreement and to take all other action necessary to obtain approval of the
transactions contemplated hereby (including the determinations of its
Trustees as set forth in Rule 17a-8(a) under the 1940 Act).
6. CONDITIONS PRECEDENT. The obligations of Equity Funds and Style Select
to effectuate the Sale hereunder shall be subject to the satisfaction of each of
the following conditions:
(a) CONSENTS. Such authority, including "no-action" letters and orders
from the Commission, if any, as may be determined by the Board of
Directors/Trustees of Style Select and Equity Funds, to be necessary and
appropriate to permit the parties to carry out the transactions contemplated
by this Agreement shall have been received.
(b) NO PROCEEDINGS. The Commission shall not have issued an
unfavorable report under Section 25(b) of the 1940 Act, nor instituted any
proceedings seeking to enjoin consummation of the transactions contemplated
by this Agreement under Section 25(c) of the 1940 Act, and no other action,
suit or other proceeding shall be threatened or pending before any court or
governmental agency which seeks to restrain or prohibit, or obtain damages
or other relief in connection with, this Agreement or the transactions
contemplated herein.
(c) REGISTRATION STATEMENT. Style Select shall have filed with the
Commission the Registration Statement and the Commission shall have declared
effective such Registration Statement and such effectiveness shall not have
been withdrawn, suspended or terminated and no proceeding for that purpose
shall have been initiated or threatened by the Commission.
(d) TAX OPINION. Prior to the Effective Date, in the event that
Shereff, Friedman, Hoffman & Goodman, LLP, counsel to Equity Funds,
determines, based upon facts and circumstances then existing, that the Sale
will constitute a reorganization within the meaning of Section 368(a)(1)(C)
of the Code, then such firm shall deliver an opinion to Equity Funds and
Style Select (or shall obtain a private letter ruling from the Internal
Revenue Service) to the effect that:
I. The Sale as provided for herein will constitute a reorganization
within the meaning of Section 368(a)(1)(C) of the Code;
II. Global Balanced and International Equity will each be a "party to
a reorganization" within the meaning of Section 368(b) of the Code;
III. Pursuant to Sections 361(a) and 357(a) of the Code, no gain or
loss will be recognized to Global Balanced as a result of the transfer
of its assets to and the assumption of its liabilities by International
Equity as a result of the Sale;
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IV. Pursuant to Section 1032(a) of the Code, no gain or loss will be
recognized to International Equity upon its acquisition of Global
Balanced's assets solely in exchange for the Issued Shares and the
assumption of Global Balanced's liabilities;
V. Pursuant to Section 362(b) of the Code, the basis of the assets of
Global Balanced acquired by International Equity will be the same as the
basis of such assets when held by Global Balanced immediately prior to
the exchange;
VI. Pursuant to Section 1223(2) of the Code, the holding period of the
assets of Global Balanced when held by International Equity will include
the period during which such assets were held by Global Balanced;
VII. Pursuant to Section 354(a)(1) of the Code, no gain or loss will
be recognized to a shareholder of Global Balanced upon the exchange of
his or her Exchanged Shares for Issued Shares, including fractional
Issued Shares of the same class;
VIII. Pursuant to Section 358(a)(1) of the Code, the basis of the
Issued Shares received by former Global Balanced Class A and Class B
shareholders will be the same as the basis of the Exchanged Shares
surrendered in exchange therefor; and
IX. Pursuant to Section 1223(1) of the Code, the holding period for
Issued Shares received by Class A and Class B shareholders of Global
Balanced in exchange for the Exchanged Shares will include the period
during which such shareholders held the Exchanged Shares (provided the
Exchanged Shares were held as capital assets as of the Effective Date).
(e) BLUE SKY. The Issued Shares shall have been duly qualified for
offering to the public in such states of the United States, and the District
of Columbia (except where such qualifications are not required) so as to
permit the transfers contemplated by this Agreement to be consummated.
(f) SHAREHOLDER APPROVAL. A resolution approving this Agreement and
the Sale contemplated hereby shall have been adopted by vote of the
shareholders of Global Balanced at an annual or special meeting of
shareholders.
(g) AUTHORIZATION OF ISSUED SHARES. The Board of Directors of Style
Select shall have authorized the issuance by Style Select of the Issued
Shares at the Effective Date in exchange for the assets of Global Balanced
pursuant to the terms and provisions of this Agreement.
(h) ACCURACY. All the representations and warranties of the other
party contained herein shall be true and correct as of the Effective Date
with the same effect as though made as of and at the Effective Date.
(i) DISTRIBUTIONS. Global Balanced shall have made a distribution or
distributions prior to the Effective Date which, together with all previous
distributions, shall have the effect of distributing to its Class A and
Class B shareholders all of its net investment income and capital gains for
the period from the close of its last fiscal year to the close of business
on the Effective Date and any undistributed amounts thereof from the last
fiscal year.
7. EFFECTIVE DATE. Subject to the satisfaction of the provisions of
Section 6 hereof, the exchange of the business, assets and liabilities of Global
Balanced for Issued Shares shall be effective as of 5:30 p.m., New York time, on
September 12, 1997 or at such other time and date as fixed by the mutual consent
of the parties (the "Effective Date").
A-8
<PAGE>
8. BROKERAGE FEES AND EXPENSES.
(a) BROKERS. Style Select and Global Balanced each represents and
warrants to the other that there are no brokers or finders entitled to
receive any payments from it in connection with the transactions provided
for herein.
(b) EXPENSES. Each party shall bear its respective costs and expenses
incurred in connection with the Sale unless otherwise assumed by its
investment adviser.
9. TERMINATION. This Agreement and the transactions contemplated hereby
may be terminated and abandoned by resolution of the Board of Directors/Trustees
of either party notwithstanding approval thereof by the shareholders of Global
Balanced, at any time prior to the Effective Date, if circumstances should
develop that, in the opinion of the Board of Trustees of Equity Funds or the
Board of Directors of Style Select, make proceeding with the Agreement
inadvisable.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to any
principles of conflicts of law, except insofar as provisions hereof are governed
by the 1940 Act.
11. ASSIGNMENT. The Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns. Except as
specifically provided herein, no assignment hereof or of any rights or
obligations hereunder shall be made without the prior written consent of the
other party.
12. NO LIABILITY OF SHAREHOLDERS OR TRUSTEES OF EQUITY FUNDS; AGREEMENT AN
OBLIGATION ONLY OF GLOBAL BALANCED, AND ENFORCEABLE ONLY AGAINST ASSETS OF
GLOBAL BALANCED. The name "SunAmerica Equity Funds" is the designation of the
Trustees from time to time acting under an Amended and Restated Declaration of
Trust dated September 24, 1993, as the same may be from time to time amended,
and the name "Global Balanced Fund" is the designation of a portfolio of the
assets of Equity Funds. Style Select, on behalf of International Equity,
acknowledges that it must look, and agrees that it shall look, solely to the
assets of Global Balanced for the enforcement of any claims arising out of or
based on the obligations of Global Balanced hereunder, and with respect to
obligations relating to Global Balanced, only to the assets of Global Balanced,
and in particular that (i) neither the Trustees, officers, agents or
shareholders of Equity Funds assume or shall have any personal liability for
obligations of Global Balanced hereunder, and (ii) none of the assets of Equity
Funds other than the portfolio assets of Global Balanced may be resorted to for
the enforcement of any claim based on the obligations of Global Balanced
hereunder.
13. ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof, and
supersedes all prior agreements and understandings, whether written or oral,
with respect to the subject matter hereof. This Agreement may be amended only by
mutual consent of the parties in writing.
A-9
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its President and attested by its Secretary as of the date first
above written.
SUNAMERICA EQUITY FUNDS
(SunAmerica Global Balanced)
<TABLE>
<S> <C> <C>
Attest:
By:
- ----------------------------------------- --------------------------------------------
Robert M. Zakem Peter A. Harbeck
SECRETARY PRESIDENT
STYLE SELECT SERIES, INC.
ATTEST:
BY:
- ----------------------------------------- --------------------------------------------
Robert M. Zakem Peter A. Harbeck
SECRETARY PRESIDENT
</TABLE>
A-10
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
JULY 2, 1997
Acquisition of the Assets of
SUNAMERICA GLOBAL BALANCED FUND
A SERIES OF
SUNAMERICA EQUITY FUNDS
The SunAmerica Center
733 Third Avenue
New York, New York 10017-3204
800-858-8850
By and in exchange for Class A and Class B Shares of
INTERNATIONAL EQUITY PORTFOLIO
A SERIES OF
STYLE SELECT SERIES-SM-
The SunAmerica Center
733 Third Avenue
New York, New York 10017-3204
800-858-8850
This Statement of Additional Information dated July 2, 1997 is not a
prospectus. A Prospectus and Proxy Statement dated July 2, 1997 related to the
above-referenced matter may be obtained from Style Select Series-SM-, The
SunAmerica Center, 733 Third Avenue, New York, New York 10017-3204. This
Statement of Additional Information should be read in conjunction with such
Prospectus/Proxy Statement.
<PAGE>
TABLE OF CONTENTS
1. Statement of Additional Information of Style Select Series dated May 30,
1997.
2. Statement of Additional Information of SunAmerica Equity Funds dated
January 30, 1997.
3. Annual Report of SunAmerica Equity Funds for the year ended September 30,
1996.
4. Semi-Annual Report of SunAmerica Equity Funds for the period ended March
31, 1997.
5. Pro Forma Statement of Assets and Liabilities.
2
<PAGE>
ADDITIONAL INFORMATION ABOUT STYLE SELECT SERIES, INC. AND SUNAMERICA EQUITY
FUNDS
The Statement of Additional Information of Style Select Series dated May
30, 1997 is attached hereto and incorporated herein by reference.
The Statement of Additional Information of SunAmerica Equity Funds dated
January 30, 1997 is attached hereto and incorporated herein by reference.
The Annual Report of SunAmerica Equity Funds dated September 30, 1996, is
attached hereto and incorporated herein by reference.
The Semi-Annual Report of SunAmerica Equity Funds dated March 31, 1997, is
attached hereto and incorporated herein by reference.
Pro forma financial statements of International Equity Portfolio and Global
Balanced Fund as of April 30, 1997 are attached hereto and incorporated herein
by reference.
<PAGE>
SUNAMERICA EQUITY FUNDS - GLOBAL BALANCED FUND
STYLE SELECT SERIES - INTERNATIONAL EQUITY PORTFOLIO
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
GLOBAL INTERNATIONAL PRO FORMA
BALANCED EQUITIES PRO FORMA COMBINED
FUND PORTFOLIO ADJUSTMENTS (NOTE 1)
------------ ------------- ----------- ----------
<S> <C> <C> <C> <C>
ASSETS:
Investments securities, at value (identified cost
$17,642,708, $33,151,969 and $50,794,677, respectively) $19,060,980 $32,848,094 - $51,909,074
Short-term securities (cost equals market) 1,329,000 706,000 - 2,035,000
Repurchase agreements (cost equals market) 1,924,000 3,469,000 - 5,393,000
Cash 225,124 1,152 - 226,276
Foreign cash 699,407 109,165 - 808,572
Receivable for investments sold 92,899 265,641 - 358,540
Interest and dividends receivable 208,963 148,894 - 357,857
Foreign currency contracts - 366,055 - 366,055
Receivable for shares of beneficial interest sold 748 972,187 - 972,935
Prepaid expenses 1,185 43,674 - 44,859
Receivable from investment adviser 7,623 12,421 - 20,044
Unrealized appreciation of foreign currency contracts 103,608 95,395 - 199,003
Deferred organizational expenses 1,824 20,019 (1,824)(A) 20,019
----------- ----------- ----------- -----------
Total assets 23,655,361 39,057,697 (1,824) 62,711,234
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
LIABILITIES:
Payable for investments purchased 79,655 321,699 - 401,354
Payable for shares of beneficial interest redeemed - 55,385 - 55,385
Investment advisory and management fees payable 19,259 32,101 - 51,360
Accrued expenses 44,824 40,813 - 85,637
Foreign currency contracts - 367,253 - 367,253
Distribution and service maintenance fees payable 14,354 17,217 - 31,571
Unrealized depreciation of foreign currency contracts - 10,444 - 10,444
----------- ----------- ----------- -----------
Total liabilities 158,092 844,912 - 1,003,004
----------- ----------- ----------- -----------
Net assets $23,497,269 $38,212,785 ($1,824) $61,708,230
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
NET ASSETS WERE COMPOSED OF:
Shares of beneficial interest, $.01 and $.0001 par value, respectively $30,315 $30,648 - $60,963
Paid-in capital 20,995,781 38,284,035 - 59,279,816
----------- ----------- ----------- -----------
21,026,096 38,314,683 - 59,340,779
Accumulated undistributed net investment income (loss) (183,825) 38,459 (1,824)(A) (147,190)
Accumulated undistributed net realized gain (loss) on
investments, foreign currency and other assets and liabilities 1,146,527 79,148 - 1,225,675
Net unrealized appreciation (depreciation) of investments 1,418,272 (303,875) - 1,114,397
Net unrealized appreciation of foreign currency, other
assets and liabilities 90,199 84,370 - 174,569
----------- ----------- ----------- -----------
Net assets $23,497,269 $38,212,785 ($1,824) $61,708,230
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net assets $7,944,521 $22,994,862 ($617)(A) $30,938,766
Shares of beneficial interest issued and outstanding (Note 1) 1,020,559 1,841,936 (383,979)(B) 2,478,516
Net asset value and redemption price per share $7.78 $12.48 - $12.48
Maximum sales charge (5.75% of offering price) 0.47 0.76 - 0.76
----------- ----------- ----------- -----------
Maximum offering price to public $8.25 $13.24 - $13.24
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net assets $15,552,748 $14,123,293 ($1,207)(A) $29,674,834
Shares of beneficial interest issued and outstanding (Note 1) 2,010,954 1,134,927 (760,733)(B) 2,385,148
Net asset value, offering and redemption price per share $7.73 $12.44 - $12.44
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
(excluding any applicable contigent deferred sales charge)
CLASS C (UNLIMITED SHARES AUTHORIZED):
Net assets - $1,094,630 - $1,094,630
Shares of beneficial interest issued and outstanding - 87,909 - 87,909
Net asset value, offering and redemption price per share - $12.45 - $12.45
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
(excluding any applicable contigent deferred sales charge)
</TABLE>
(A) To adjust for the remaining balance of deferred organizational costs on the
Global Balanced Fund to be expensed prior to the combination
(B) To adjust for a tax free exchange of Global Balanced shares for shares of
International Equities
See Notes to Pro Forma Financial Statements
<PAGE>
SUNAMERICA EQUITY FUNDS - GLOBAL BALANCED FUND
STYLE SELECT SERIES - INTERNATIONAL EQUITY PORTFOLIO
PRO FORMA STATEMENT OF OPERATIONS
FOR THE PERIOD NOVEMBER 19, 1996* THROUGH APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
GLOBAL INTERNATIONAL
BALANCED EQUITIES PRO FORMA COMBINED
FUND PORTFOLIO ADJUSTMENTS PRO FORMA
----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Income:
Interest (net of wthholding taxes of $1,960 on Global Balanced Fund) $170,741 $80,390 - $251,131
Dividends (net of withholding taxes of $12,564 and
$27,741, respectively) 79,312 228,370 - 307,682
----------- ----------- ----------- ---------
Total investment income 250,053 308,760 - 558,813
----------- ----------- ----------- ---------
Expenses:
Investment advisory and management fees 92,532 129,340 32,038 253,910 (C)
Distribution and service maintenance fees-Class A 12,140 31,730 - 43,870
Distribution and service maintenance fees-Class B 57,849 26,172 - 84,021
Distribution and service maintenance fees-Class C - 753 - 753
Transfer agent fees and expenses-Class A 10,320 24,742 - 35,062
Transfer agent fees and expenses-Class B 16,060 7,466 - 23,526
Transfer agent fees and expenses-Class C - 218 - 218
Custodian fees and expenses 68,165 42,347 (27,414) 83,098 (D)
Registration fees-Class A 1,734 8,291 (1,500) 8,525 (E)
Registration fees-Class B 1,735 3,421 (1,500) 3,656 (E)
Registration fees-Class C - 140 - 140
Audit and tax consulting fees 6,060 13,820 (6,060) 13,820 (E)
Trustees' fees and expenses 1,601 1,064 - 2,665
Printing expense 1,510 7,335 (1,000) 7,845 (F)
Legal fees and expenses - 2,445 - 2,445
Amortization of organizational expenses 315 18,164 (315) 18,164 (E)
Miscellaneous expenses 978 814 (700) 1,092 (E)
----------- ----------- ----------- ---------
Total expenses 270,999 318,262 (6,451) 582,810
Less: expenses reimbursed by investment adviser (34,226) (47,961) - (82,187)
----------- ----------- ----------- ---------
Net expenses 236,773 270,301 (6,451) 500,623
----------- ----------- ----------- ---------
Net investment income (loss) 13,280 38,459 6,451 58,190
----------- ----------- ----------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 705,613 54,101 - 759,714
Net realized gain on foreign currency and other
assets and liabilities 849,581 25,047 - 874,628
Net change in unrealized appreciation/depreciation
of investments (1,135,454) (303,875) - (1,439,329)
Net change in unrealized appreciation/depreciation
of foreign currency and other assets and liabilities 29,073 84,371 - 113,444
----------- ----------- ----------- ---------
Net realized and unrealized gain (loss) on investments, foreign currency
and other assets and liabilities 448,813 (140,356) - 308,457
----------- ----------- ----------- ---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS: $462,093 ($101,897) $6,451 $366,647
----------- ----------- ----------- ---------
----------- ----------- ----------- ---------
</TABLE>
* Inception of the International Equity Portfolio
(C) Management fee calculated at 1.10% of combined average daily net assets
(D) Custodian fee adjusted for combined net assets using fees based on
International Equity's custodian agreement
(E) Duplication of expenses not required
(F) Expenses based upon combined net assets
See Notes to Pro Forma Financial Statements
<PAGE>
SUNAMERICA GLOBAL BALANCED FUND -(UNAUDITED)
Investment Portfolio -- April 30, 1997
<TABLE>
<CAPTION>
Value
Security Description Shares (Note 2)
- -------------------------------------------------------------------------------------------------------------------------------
Common Stock -- 60.3%
<S> <C> <C>
AUSTRALIA -- 0.2%
News Corp., Ltd. (Information & Entertainment) . . . . . . . . . . . . . . . . . . . 8,000 $ 36,871
----------
BRAZIL -- 0.3%
Telecomunicacoes Brasileras SA ADR(1) (Information Technology) . . . . . . . . . . . 650,000 69,981
----------
CANADA -- 1.7%
Abitibi Price, Inc. (Information & Entertainment). . . . . . . . . . . . . . . . . . 1,790 30,175
Air Canada, Inc. (Information & Entertainment) . . . . . . . . . . . . . . . . . . . 3,004 16,127
Barrick Gold Corp. (Materials) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,126 25,027
BCE, Inc. (Information Technology) . . . . . . . . . . . . . . . . . . . . . . . . . 417 19,522
Bombardier, Inc. Class B (Industrial & Commercial) . . . . . . . . . . . . . . . . . 426 8,645
Chauvco Resources Ltd.+ (Energy) . . . . . . . . . . . . . . . . . . . . . . . . . . 800 11,052
Cominco Ltd. (Materials) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 387 9,973
Crestar Energy, Inc. (Energy). . . . . . . . . . . . . . . . . . . . . . . . . . . . 968 18,189
Diamond Fields International Ltd.(2)+ (Materials). . . . . . . . . . . . . . . . . . 400 272
Finning Ltd. (Materials) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400 8,933
Fletcher Challenge Ltd., Class A (Materials) . . . . . . . . . . . . . . . . . . . . 1,647 27,705
Hudsons Bay Co. (Consumer Discretionary) . . . . . . . . . . . . . . . . . . . . . . 470 9,555
Inco Ltd. (Materials). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 422 13,518
Inco Ltd., Class V (Materials) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 20,938
Macmillan Bloedel Ltd. (Materials) . . . . . . . . . . . . . . . . . . . . . . . . . 600 8,203
Northern Telecom Ltd (Information Technology). . . . . . . . . . . . . . . . . . . . 89 6,473
Renaissance Energy Ltd.+ (Energy). . . . . . . . . . . . . . . . . . . . . . . . . . 968 26,816
Seagram Ltd. (Industrial & Commercial) . . . . . . . . . . . . . . . . . . . . . . . 383 14,681
Stelco, Inc. Class A+ (Materials). . . . . . . . . . . . . . . . . . . . . . . . . . 3,330 19,546
Suncor, Inc. (Energy). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240 10,995
Toronto Dominion Bank Ontario (Finance). . . . . . . . . . . . . . . . . . . . . . . 850 24,064
TransCanada Pipelines Ltd. (Energy). . . . . . . . . . . . . . . . . . . . . . . . . 2,325 42,522
Trizec Hahn Corp. (Real Estate). . . . . . . . . . . . . . . . . . . . . . . . . . . 610 13,318
----------
386,249
----------
CHILE -- 0.1%
Maderas Y Sinteticos SA ADR(1) (Materials) . . . . . . . . . . . . . . . . . . . . . 1,900 30,400
----------
FINLAND -- 1.8%
Konecranes International Corp.+ (Consumer Discretionary) . . . . . . . . . . . . . . 4,500 173,064
Nokia Corp. Class A ADR(1) (Information Technology). . . . . . . . . . . . . . . . . 2,000 129,250
Nokian Tyres (Consumer Discretionary). . . . . . . . . . . . . . . . . . . . . . . . 5,000 120,183
----------
422,497
----------
FRANCE -- 3.6%
AXA SA+ (Finance). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 123,053
Compagnie Generale des Eaux (Multi-industry) . . . . . . . . . . . . . . . . . . . . 1,000 139,296
Rhone- Poulenc Rorer SA (Healthcare) . . . . . . . . . . . . . . . . . . . . . . . . 3,500 117,716
Schneider SA+ (Industrial & Commercial). . . . . . . . . . . . . . . . . . . . . . . 4,000 225,478
Societe Generale+ (Finance). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 112,053
Total SA, Series B (Energy). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500 124,390
----------
841,986
----------
GERMANY -- 2.4%
Adidas AG (Consumer Discretionary) . . . . . . . . . . . . . . . . . . . . . . . . . 1,100 114,649
Bilfinger & Berger Bau AG (Consumer Discretionary) . . . . . . . . . . . . . . . . . 2,800 104,123
VEBA AG (Utilities). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500 77,261
Volkswagen AG (Consumer Discretionary) . . . . . . . . . . . . . . . . . . . . . . . 210 133,508
Walter AG (Consumer Discretionary) . . . . . . . . . . . . . . . . . . . . . . . . . 400 139,970
----------
569,511
----------
</TABLE>
<PAGE>
SUNAMERICA GLOBAL BALANCED FUND -(UNAUDITED)-(CONTINUED)
Investment Portfolio--April 30, 1997
<TABLE>
<CAPTION>
Value
Security Description Shares (Note 2)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HONG KONG -- 1.7%
Cheung Kong Holdings Ltd. (Real Estate). . . . . . . . . . . . . . . . . . . . . . . 8,000 70,225
Cheung Kong Infrastructure (Consumer Discretionary). . . . . . . . . . . . . . . . . 20,000 56,671
HSBC Holdings PLC (Finance). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200 80,966
Hutchison Whampoa Ltd. (Finance) . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000 66,804
RBI Holdings Ltd. (Information & Entertainment). . . . . . . . . . . . . . . . . . . 800,000 131,156
----------
405,822
----------
INDONESIA -- 0.6%
PT Bank Negara Indonesia alien shares (Finance)+*. . . . . . . . . . . . . . . . . . 165,000 91,667
PT Telekomunikasi (Utilities). . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000 43,518
----------
135,185
----------
ITALY -- 1.2%
Banca Pop Di Milano (Finance). . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000 73,853
Parmalat Finanziar (Finance) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000 87,258
STET Risp. (Industrial & Commercial) . . . . . . . . . . . . . . . . . . . . . . . . 30,000 111,262
----------
272,373
----------
JAPAN -- 11.5%
Advantest Corp. (Information Technology) . . . . . . . . . . . . . . . . . . . . . . 980 54,429
Amano Corp. (Multi-industry) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 37,499
Aoki International Co., Ltd. (Consumer Discretionary). . . . . . . . . . . . . . . . 5,000 87,052
Bank Of Tokyo-Mitsubishi Ltd.+ (Finance) . . . . . . . . . . . . . . . . . . . . . . 6,600 104,510
Best Denki Co. (Information Technology). . . . . . . . . . . . . . . . . . . . . . . 5,000 44,905
Calsonic Corp. (Consumer Discretionary). . . . . . . . . . . . . . . . . . . . . . . 6,000 29,779
Canon, Inc. (Information Technology) . . . . . . . . . . . . . . . . . . . . . . . . 3,000 71,139
Chiba Bank Ltd. (Finance). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 107,141
Fanuc Ltd. (Information Technology). . . . . . . . . . . . . . . . . . . . . . . . . 1,500 51,168
Honda Motor Co., Ltd. (Consumer Discretionary) . . . . . . . . . . . . . . . . . . . 2,000 62,079
Industrial Bank of Japan Ltd. (Finance). . . . . . . . . . . . . . . . . . . . . . . 6,640 70,619
Kamigumi Co., Ltd. (Industrial & Commercial) . . . . . . . . . . . . . . . . . . . . 7,000 34,632
Katokichi Co. (Consumer Staples) . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 78,780
Kissei Pharmaceutical Co. (Healthcare) . . . . . . . . . . . . . . . . . . . . . . . 3,400 64,553
Kyocera Corp. (Information Technology) . . . . . . . . . . . . . . . . . . . . . . . 1,000 59,873
Matsushita Electric Works Ltd. (Information Technology). . . . . . . . . . . . . . . 8,000 81,301
Mitsubishi Heavy Industrial Ltd. (Consumer Discretionary). . . . . . . . . . . . . . 15,000 99,027
Mitsubishi Logistc Corp. (Industrial & Commercial) . . . . . . . . . . . . . . . . . 3,000 35,215
Mitsubishi Motors Corp. (Consumer Discretionary) . . . . . . . . . . . . . . . . . . 9,000 62,394
Mori Seiki Co., Ltd. (Consumer Discretionary). . . . . . . . . . . . . . . . . . . . 3,000 43,487
NEC Corp. (Information Technology) . . . . . . . . . . . . . . . . . . . . . . . . . 8,000 97,688
New Oji Paper Co., Ltd.+ (Materials) . . . . . . . . . . . . . . . . . . . . . . . . 8,000 40,399
Nippon Electric Glass Co., Ltd. (Materials). . . . . . . . . . . . . . . . . . . . . 7,000 107,535
Nippon Express Co., Ltd. (Industrial & Commercial) . . . . . . . . . . . . . . . . . 6,000 41,360
Nippon Shokubai Co. (Materials). . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000 51,680
Nippon Steel Corp. (Materials) . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000 85,556
Nippon Telegraph & Telephone Corp. (Utilities) . . . . . . . . . . . . . . . . . . . 12 84,610
Nissho Iwai Corp. (Multi-industry) . . . . . . . . . . . . . . . . . . . . . . . . . 16,000 53,445
Nomura Securities Co., Ltd. (Finance). . . . . . . . . . . . . . . . . . . . . . . . 7,000 78,308
Ono Pharmaceutical Co., Ltd. (Healthcare). . . . . . . . . . . . . . . . . . . . . . 2,000 56,722
Sanwa Bank Ltd. (Finance). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000 74,999
Seino Transportation (Industrial & Commercial) . . . . . . . . . . . . . . . . . . . 6,000 54,359
Sekisui Chemical Co., Ltd. (Materials) . . . . . . . . . . . . . . . . . . . . . . . 4,000 38,445
Sumitomo Metal Mining Co., Ltd. (Materials). . . . . . . . . . . . . . . . . . . . . 15,000 100,445
Suzuki Motor Corp. (Consumer Discretionary). . . . . . . . . . . . . . . . . . . . . 5,000 53,177
Toagosei Co., Ltd. (Materials) . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 74,369
Tokio Marine & Fire Insurance Co., Ltd. (Finance) . . . . . . . . . . . . . . . . . 9,000 87,919
Tokyo Electron Ltd. (Information Technology) . . . . . . . . . . . . . . . . . . . . 2,300 88,786
Toshiba Corp. (Information Technology) . . . . . . . . . . . . . . . . . . . . . . . 10,000 56,092
Toyota Motor Corp. (Consumer Discretionary). . . . . . . . . . . . . . . . . . . . . 2,000 57,982
Ushio, Inc. (Information Technology) . . . . . . . . . . . . . . . . . . . . . . . . 4,000 46,953
----------
2,710,411
----------
</TABLE>
<PAGE>
SUNAMERICA GLOBAL BALANCED FUND -(UNAUDITED)-(CONTINUED)
Investment Portfolio--April 30, 1997
<TABLE>
<CAPTION>
Value
Security Description Shares (Note 2)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
KOREA -- 0.2%
SK Telecom Co., Ltd ADR(1) (Information Technology). . . . . . . . . . . . . . . . . 5,160 49,023
----------
MALAYSIA -- 0.8%
Oriental Holdings Bhd (Consumer Discretionary) . . . . . . . . . . . . . . . . . . . 14,000 105,942
YTL Power International Bhd (Consumer Discretionary) . . . . . . . . . . . . . . . . 50,000 79,656
----------
185,598
----------
MEXICO -- 0.2%
Cemex SA de CV Class B (Materials) . . . . . . . . . . . . . . . . . . . . . . . . . 6,000 21,972
Telefonos de Mexico SA ADR(1) (Utilities). . . . . . . . . . . . . . . . . . . . . . 750 30,937
----------
52,909
----------
NETHERLANDS -- 2.3%
Gamma Holding NV (Consumer Discretionary). . . . . . . . . . . . . . . . . . . . . . 2,600 134,784
Getronics NV (Information Technology). . . . . . . . . . . . . . . . . . . . . . . . 3,000 90,848
Kon Ahrend NV (Consumer Discretionary) . . . . . . . . . . . . . . . . . . . . . . . 1,700 102,962
Koninklijke Ahold NV (Consumer Discretionary). . . . . . . . . . . . . . . . . . . . 1,500 102,397
Volker Stevin (Koninklijke) NV (Consumer Discretionary). . . . . . . . . . . . . . . 1,000 113,689
----------
544,680
----------
NORWAY -- 0.5%
Tomra Systems ASA (Industrial & Commercial). . . . . . . . . . . . . . . . . . . . . 6,500 125,962
----------
PERU -- 0.2%
Banco Credito del Peru (Finance) . . . . . . . . . . . . . . . . . . . . . . . . . . 18,386 32,150
CPT Telefonica de Peru (Information Technology). . . . . . . . . . . . . . . . . . . 9,000 21,681
----------
53,831
----------
PHILIPPINES -- 0.4%
Ayala Land, Inc. (Real Estate) . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,000 31,703
Davao Union Cement (Materials) . . . . . . . . . . . . . . . . . . . . . . . . . . . 140,000 20,971
Metro Bank + Trust Co. (Finance) . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500 51,194
----------
103,868
----------
PORTUGAL -- 0.2%
Banco Totta & Acores (Finance) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500 34,944
----------
SINGAPORE -- 0.6%
City Developments Ltd. (Real Estate) . . . . . . . . . . . . . . . . . . . . . . . . 4,000 32,332
Overseas Union Bank Ltd. (Finance) . . . . . . . . . . . . . . . . . . . . . . . . . 6,000 39,378
Singapore Press Holdings Ltd. alien shares (Information & Entertainment) . . . . . . 1,000 18,515
Want Want Holdings+ (Real Estate). . . . . . . . . . . . . . . . . . . . . . . . . . 12,000 40,080
----------
130,305
----------
SWEDEN -- 1.3%
Astra AB., Class A (Healthcare). . . . . . . . . . . . . . . . . . . . . . . . . . . 1,600 65,471
Hoganas AG (Information Technology). . . . . . . . . . . . . . . . . . . . . . . . . 2,500 74,891
Scania AB, Class A (Consumer Discretionary). . . . . . . . . . . . . . . . . . . . . 3,200 82,604
Volvo AB Class A (Consumer Discretionary). . . . . . . . . . . . . . . . . . . . . . 3,500 88,117
----------
311,083
----------
SWITZERLAND -- 2.0%
Alusuisse-Lonza Holdings AG (Multi-industry) . . . . . . . . . . . . . . . . . . . . 100 84,797
CS Holding AG+ (Finance) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,020 114,863
Hilti AG (Consumer Discretionary). . . . . . . . . . . . . . . . . . . . . . . . . . 125 78,014
Logitech International SA+ (Information Technology). . . . . . . . . . . . . . . . . 400 73,265
Roche Holdings AG (Healthcare) . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 118,242
----------
469,181
----------
</TABLE>
<PAGE>
SUNAMERICA GLOBAL BALANCED FUND -(UNAUDITED)-(CONTINUED)
Investment Portfolio--April 30, 1997
<TABLE>
<CAPTION>
Value
Security Description Shares (Note 2)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
THAILAND -- 0.2%
Bangkok Bank PLC alien (Finance) . . . . . . . . . . . . . . . . . . . . . . . . . . 1,900 17,602
PTT Exploration & Production PCL alien shares (Energy) . . . . . . . . . . . . . . . 3,100 39,636
----------
57,238
----------
UNITED KINGDOM -- 10.1%
Airtours PLC (Information & Entertainment) . . . . . . . . . . . . . . . . . . . . . 13,000 193,209
Cable & Wireless PLC (Information Technology). . . . . . . . . . . . . . . . . . . . 24,000 184,814
Glaxo Wellcome PLC (Healthcare). . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 196,596
Glynwed International PLC (Consumer Discretionary) . . . . . . . . . . . . . . . . . 42,000 175,624
Great Universal Stores PLC (Consumer Discretionary). . . . . . . . . . . . . . . . . 18,000 186,710
Inchcape PLC (Multi-industry). . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000 177,634
Laporte PLC (Materials). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,000 193,128
Legal & General Group PLC (Materials). . . . . . . . . . . . . . . . . . . . . . . . 10,000 67,018
National Westminster Bank PLC (Finance). . . . . . . . . . . . . . . . . . . . . . . 30,000 354,943
Sainsbury (J.) PLC (Consumer Staples). . . . . . . . . . . . . . . . . . . . . . . . 35,000 187,763
Tarmac PLC (Consumer Discretionary). . . . . . . . . . . . . . . . . . . . . . . . . 85,000 169,449
Vaux Group PLC (Consumer Staples). . . . . . . . . . . . . . . . . . . . . . . . . . 37,000 164,911
Waddington (John) PLC (Materials). . . . . . . . . . . . . . . . . . . . . . . . . . 25,000 123,987
----------
2,375,786
----------
UNITED STATES -- 16.2%
AlliedSignal, Inc. (Multi-industry). . . . . . . . . . . . . . . . . . . . . . . . . 2,000 144,500
Associates First Capital Corp. Class A (Finance) . . . . . . . . . . . . . . . . . . 2,000 102,500
Banco Santander-Chile Series A ADR(1) (Finance). . . . . . . . . . . . . . . . . . . 800 12,800
Boeing Co. (Industrial & Commercial) . . . . . . . . . . . . . . . . . . . . . . . . 1,000 98,625
Bristol-Myers Squibb Co. (Healthcare). . . . . . . . . . . . . . . . . . . . . . . . 3,000 196,500
Chase Manhattan Corp. (Finance). . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 92,625
Citicorp. (Finance). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 112,625
Du Pont (E.I.) de Nemours & Co. (Materials). . . . . . . . . . . . . . . . . . . . . 1,000 106,125
Ericsson (L.M.) Telephone Co., Class B ADR(1) (Information Technology) . . . . . . . 4,000 134,500
Ford Motor Co. (Consumer Discretionary). . . . . . . . . . . . . . . . . . . . . . . 2,500 86,875
General Electric Co. (Multi-industry). . . . . . . . . . . . . . . . . . . . . . . . 800 88,700
General Motors Corp. (Consumer Discretionary). . . . . . . . . . . . . . . . . . . . 4,000 231,500
GTE Corp. (Information Technology) . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 229,375
Hibernia Corp., Class A (Finance). . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 64,375
Johnson & Johnson Co. (Healthcare) . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 245,000
Lilly (Eli) & Co. (Healthcare) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 175,750
Lucent Technologies, Inc. (Information Technology) . . . . . . . . . . . . . . . . . 2,000 118,250
McDonald's Corp. (Consumer Staples). . . . . . . . . . . . . . . . . . . . . . . . . 3,000 160,875
Merck & Co., Inc. (Healthcare) . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000 271,500
Morgan Stanley Group, Inc. (Finance) . . . . . . . . . . . . . . . . . . . . . . . . 2,000 126,250
Nationwide Financial Services, Inc. Class A+ (Finance) . . . . . . . . . . . . . . . 4,100 108,650
Neurex Corp.+ (Healthcare) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 55,000
Pfizer, Inc. (Healthcare). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200 115,200
Philip Morris Cos., Inc. (Consumer Staples). . . . . . . . . . . . . . . . . . . . . 3,000 118,125
Schering-Plough Corp. (Healthcare) . . . . . . . . . . . . . . . . . . . . . . . . . 3,200 256,000
Scotts Co. Class A (Consumer Staples). . . . . . . . . . . . . . . . . . . . . . . . 3,000 76,875
Tellabs, Inc.+ (Information Technology). . . . . . . . . . . . . . . . . . . . . . . 4,000 159,500
Travelers Group, Inc. (Finance). . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 110,750
----------
3,799,350
----------
TOTAL COMMON STOCK (cost $12,744,166). . . . . . . . . . . . . . . . . . . . . . . . 14,175,044
----------
PREFERRED STOCK -- 1.1% Shares
---------------------------------------------------------------------------------------------------------------------------
BRAZIL -- 0.2%
Cemig Cia Energy MG (Energy) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 935,000 42,631
---------
CANADA -- 0.0%
Inco Ltd., (Materials) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 2,571
</TABLE>
<PAGE>
SUNAMERICA GLOBAL BALANCED FUND -(UNAUDITED)-(CONTINUED)
Investment Portfolio--April 30, 1997
<TABLE>
<CAPTION>
Shares/
Principal Amount
(denominated in
local currency) Value
Security Description (in thousands) (Note 2)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
----------
GERMANY -- 0.9%
Friedrich Grohe AG non-voting (Industrial & Commercial). . . . . . . . . . . . . . . 400 119,760
Hornbach Holding AG non-voting (Consumer Discretionary). . . . . . . . . . . . . . . 1,450 92,938
----------
212,698
----------
TOTAL PREFERRED STOCK (cost $247,750). . . . . . . . . . . . . . . . . . . . . . . . 257,900
----------
WARRANTS -- 0.0%+ Shares
--------------------------------------------------------------------------------------------------------------------------
THAILAND -- 0.0%
Industrial Finance Corp. of Thailand alien (Finance) . . . . . . . . . . . . . . . . 12,000 6,087
----------
Principal
FOREIGN BONDS & NOTES -- 9.4% Amount
(denominated in
local currency)
--------------------------------------------------------------------------------------------------------------------------
AUSTRALIA -- 0.3%
Commonwealth of Australia 7.50% 2005. . . . . . . . . . . . . . . . . . . . . . . . 100,000 76,896
----------
BELGIUM -- 0.5%
Kingdom of Belgium 6.50% 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000,000 117,975
----------
CANADA -- 0.6%
Government of Canada 7.50% 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000 151,134
----------
DENMARK -- 0.7%
Kingdom of Denmark 9.00% 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 171,514
----------
FRANCE -- 0.6%
Government of France 7.00% 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . 700,000 128,594
----------
GERMANY -- 0.3%
Treuhandanstalt (Germany) 6.13% 1998. . . . . . . . . . . . . . . . . . . . . . . . 100,000 59,493
----------
ITALY -- 1.1%
Republic of Italy 10.50% 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,000,000 258,385
----------
SPAIN -- 0.4%
Government of Spain 10.00% 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 82,166
----------
SWEDEN -- 2.0%
Kingdom of Sweden 10.25% 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500,000 224,835
Kingdom of Sweden 13.00% 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500,000 238,661
----------
463,496
----------
UNITED KINGDOM -- 2.9%
United Kingdom Treasury 8.50% 2005. . . . . . . . . . . . . . . . . . . . . . . . . 300,000 518,740
United Kingdom Treasury 9.00% 2000. . . . . . . . . . . . . . . . . . . . . . . . . 100,000 169,874
----------
688,614
----------
TOTAL FOREIGN BONDS & NOTES (cost $2,234,630). . . . . . . . . . . . . . . . . . . . 2,198,267
----------
Principal
U.S. TREASURY NOTES -- 10.3% Amount
--------------------------------------------------------------------------------------------------------------------------
UNITED STATES -- 10.3%
United States Treasury Notes 5.25% 2001 . . . . . . . . . . . . . . . . . . . . . . 100,000 95,953
</TABLE>
<PAGE>
SUNAMERICA GLOBAL BALANCED FUND -(UNAUDITED)-(CONTINUED)
Investment Portfolio--April 30, 1997
<TABLE>
<CAPTION>
Principal Amount Value
Security Description (in thousands) (Note 2)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
United States Treasury Notes 5.88% 2000 . . . . . . . . . . . . . . . . . . . . . . 750,000 739,920
United States Treasury Notes 6.13% 2000 . . . . . . . . . . . . . . . . . . . . . . 150,000 148,383
United States Treasury Notes 6.38% 2001 . . . . . . . . . . . . . . . . . . . . . . 200,000 198,938
United States Treasury Notes 6.50% 2005 . . . . . . . . . . . . . . . . . . . . . . 500,000 492,580
United States Treasury Notes 7.88% 2004 . . . . . . . . . . . . . . . . . . . . . . 700,000 747,908
----------
2,423,682
----------
TOTAL U.S. TREASURY NOTES (cost $2,399,089). . . . . . . . . . . . . . . . . . . . . 2,423,682
----------
TOTAL INVESTMENT SECURITIES (cost $17,642,708) . . . . . . . . . . . . . . . . . . . 19,060,980
----------
REPURCHASE AGREEMENT -- 8.2%
--------------------------------------------------------------------------------------------------------------------------
Joint Agreement with Paine Webber, Inc., representing 3.20% undivided interest,
bearing 5.30% dated 4/30/97 to be repurchased 5/01/97 in the amount of $60,776,946
collaterized by $50,000,000 U.S. Treasury Note 6.50% due 5/31/01, $10,050,000 1,924,000 1,924,000
U.S. Treasury Note 6.50% due 5/31/01 approximate aggregate value $62,001,625 ----------
(cost $1,924,000)
TIME DEPOSIT -- 5.7%
--------------------------------------------------------------------------------------------------------------------------
Cayman Island Time Deposit with State Street Bank & Trust Co. 4.50% 5/01/97 1,329,000 1,329,000
----------
TOTAL SHORT-TERM SECURITIES (cost $3,253,000). . . . . . . . . . . . . . . . . . . . 3,253,000
----------
TOTAL INVESTMENTS --
(cost $20,895,708) 95.0% 22,313,980
Other assets less liabilities-- 5.0 1,183,289
------ ----------
NET ASSETS-- 100.0% $23,497,269
------ -----------
------ -----------
---------------------
+ Non-income producing securities
* Resale restricted to qualified institutional buyers
(1) ADR-American Depositary Receipts
(2) Fair valued security, see Note 2
OPEN FORWARD FOREIGN CURRENCY CONTRACTS
GROSS
CONTRACT IN DELIVERY UNREALIZED
TO DELIVER EXCHANGE FOR DATE APPRECIATION
---------- ------------ ---- ------------
IEP 107,348 USD 169,889 5/06/97 $8,780
DEM 2,000,000 USD 1,170,257 6/12/97 11,884
JPY 300,000,000 USD 2,461,304 6/12/97 82,944
------------
Net Appreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $103,608
------------
------------
DEM Deutsche Mark
IEP Irish Pound
JPY Japanese Yen
USD United States Dollar
</TABLE>
See Notes to Financial Statements.
<PAGE>
22
[LOGO]
INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- APRIL 30, 1997 (UNAUDITED)
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
- --------------------------------------------------------------------------------
COMMON STOCK--83.8%
ARGENTINA--1.2%
Banco Frances del Rio de la
Plata SA ADR(1) (Finance).............................. 560 $ 17,010
Perez Companies SA
(Multi-industry)....................................... 2,550 20,683
Telefonica de Argentina SA ADR(1) (Utilities)............ 4,620 153,615
YPF Sociedad Anonima ADR(1)
(Energy)............................................... 9,640 266,305
-----------
457,613
-----------
AUSTRALIA--4.9%
AAPC Ltd.
(Information & Entertainment).......................... 837,600 509,497
Australia & New Zealand
Banking Group Ltd. (Finance)........................... 2,000 12,774
Australian Gas Light Co., Ltd.
(Utilities)............................................ 3,000 17,196
Broken Hill Proprietary Co., Ltd. (Materials)............ 2,000 28,199
Coca-Cola Amatil Ltd.
(Consumer Staples)..................................... 18,000 205,772
Commonwealth Instalment
Receipt Trustee Ltd. (Finance)......................... 2,000 14,973
David Jones Ltd.
(Consumer Discretionary)............................... 8,400 11,005
FAI Insurances Ltd. (Finance)............................ 275,073 135,145
Lend Lease Corp., Ltd. (Finance)......................... 1,000 19,138
National Australia Bank Ltd.
(Finance).............................................. 7,200 98,542
News Corp., Ltd.
(Information & Entertainment).......................... 3,000 13,827
Normandy Mining Ltd. (Energy)............................ 162,366 198,795
Publishing & Broadcasting Ltd.
(Information & Entertainment).......................... 35,000 184,785
St. George Bank Ltd.
(Finance).............................................. 2,000 12,290
TABCORP Holdings Ltd.
(Information & Entertainment).......................... 3,000 14,821
Western Mining Corp.
Holdings Ltd. (Materials).............................. 3,000 17,781
Westpac Banking Corp., Ltd.
(Finance).............................................. 2,000 10,778
Woodside Petroleum Ltd.
(Energy)............................................... 3,000 23,863
Woolworths Ltd.
(Consumer Discretionary)............................... 117,200 345,485
-----------
1,874,666
-----------
AUSTRIA--0.8%
Boehler-Uddeholm AG (Materials).......................... 1,767 $ 127,494
VAE Eisenbahnsysteme AG
(Industrial & Commercial).............................. 1,776 171,878
-----------
299,372
-----------
BELGIUM--0.4%
Generale de Banque Belge Pour
l'Etranger SA (Finance)................................ 90 37,322
Kredietbank NV (Finance)................................. 250 97,378
UCB SA (Healthcare)...................................... 10 27,440
-----------
162,140
-----------
BRAZIL--1.0%
Centrais Eletricas Brasileiras
SA ADR+(1) (Utilities)................................. 1,000 22,519
Compania Brasileira de Distribuidora GDR(2)
(Industrial & Commercial).............................. 1,000 20,121
Compania Energetica de Minas ADR(1) (Materials).......... 1,000 45,508
Telecomunicacoes Brasileras SA
ADR(1)
(Information Technology)............................... 2,000 229,500
Usinas Siderurgicas de Minas
Gerais ADR(1) (Materials).............................. 6,000 70,519
-----------
388,167
-----------
CANADA--0.1%
Alcan Aluminum Ltd. (Materials).......................... 620 21,037
Royal Bank of Canada
(Finance).............................................. 310 12,360
-----------
33,397
-----------
CHILE--0.9%
Chilectra SA ADR(1) (Utilities).......................... 169 10,237
Compania de Telecomunicaciones de Chile SA(Utilities).... 480 15,540
Empresa Nacional de
Electricidad SA ADR(1)
(Utilities)............................................ 765 14,726
Enersis SA ADR(1) (Energy)............................... 2,994 94,311
Santa Isabel SA ADR(1)
(Consumer Discretionary)............................... 2,000 48,750
Sociedad Quimica Minera ADR(1) (Materials)............... 2,700 159,975
-----------
343,539
-----------
DENMARK--0.3%
Den Danske Bank+ (Finance)............................... 150 12,973
<PAGE>
23
INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- APRIL 30, 1997 (UNAUDITED) -- (CONTINUED)
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
- --------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
DENMARK (CONTINUED)
ISS International Service
Systems A/S
(Industrial & Commercial).............................. 2,600 $ 76,926
Unidanmark A/S (Finance)................................. 200 9,893
-----------
99,792
-----------
FINLAND--0.9%
Huhtamaki Oy (Consumer Staples).......................... 5,224 226,523
Rauma Oy
(Industrial & Commercial).............................. 97 1,996
UPM-Kymmene Oy (Materials)............................... 4,230 96,794
-----------
325,313
-----------
FRANCE--6.0%
Accor SA
(Information & Entertainment).......................... 80 11,473
Alcatel Alsthom Compagnie
Generael D' Electricite
(Information Technology)............................... 310 34,471
AXA SA (Finance)......................................... 220 13,536
Bertrand Faure
(Consumer Discretionary)............................... 1,700 81,410
Canal Plus
(Information & Entertainment).......................... 70 12,641
Carrefour SA
(Consumer Discretionary)............................... 180 112,382
Chargeurs International SA+
(Consumer Discretionary)............................... 1,200 70,933
Cie Generale des Eaux
(Industrial & Commercial).............................. 2,960 412,316
Club Mediterranee SA
(Information & Entertainment).......................... 2,300 178,120
Compagine de St. Gobain
(Materials)............................................ 370 49,574
Elf Aquitaine SA (Energy)................................ 520 50,427
Guilbert SA
(Information Technology)............................... 120 18,710
L' Oreal (Consumer Staples).............................. 60 21,290
Lapeyre (Materials)...................................... 340 20,505
Legrand SA
(Information Technology)............................... 130 21,940
Louis Dreyfus Citrus+
(Consumer Staples)..................................... 7,200 258,689
Marine-Wendel SA
(Multi-industry)....................................... 1,100 114,024
Moet Hennessy Louis Vuitton
(Consumer Staples)..................................... 340 83,012
Pathe SA
(Information & Entertainment).......................... 50 11,677
FRANCE (CONTINUED)
Pinault Printemps Redoute
(Consumer Discretionary)............................... 170 $ 71,507
Primagaz Cie (Utilities)................................. 120 11,760
Sanofi SA (Healthcare)................................... 460 42,954
Schneider SA+
(Industrial & Commercial).............................. 640 36,076
Societe Generale+ (Finance).............................. 2,800 313,750
Sodexho SA
(Information & Entertainment).......................... 150 68,877
Television Francais (Utilities).......................... 625 60,289
Total SA, Series B (Energy).............................. 1,140 94,536
-----------
2,276,879
-----------
GERMANY--4.1%
Allianz Holdings AG (Finance)............................ 200 38,803
Ashanti Goldfields Ltd. GDR(2)
(Materials)............................................ 10,000 118,750
Ava Allgememeine
Handelsgesellschaft AG
(Consumer Discretionary)............................... 600 162,143
Bayer AG (Multi-industry)................................ 1,583 62,980
Bayerische Hypotheken-Und
Bank AG (Finance)...................................... 766 23,885
Bayerische Motoren Werke
(Consumer Discretionary)............................... 327 267,748
Bilfinger & Berger
(Industrial & Commercial).............................. 410 15,247
Commerzbank AG (Finance)................................. 6,540 175,415
Deutsche Bank AG (Finance)............................... 4,940 260,721
Deutsche Telekom AG (Information Technology)............. 557 12,087
Gehe AG
(Consumer Discretionary)............................... 1,590 105,767
Hoechst AG (Healthcare).................................. 430 16,884
Leica Camera AG+
(Information & Entertainment).......................... 5,100 156,080
Mannesmann AG
(Industrial & Commercial).............................. 40 15,729
Rhon-Klinikum AG
(Consumer Discretionary)............................... 200 25,869
SAP AG
(Information Technology)............................... 80 14,565
Schering AG (Healthcare)................................. 140 13,420
VEBA AG (Utilities)...................................... 1,380 71,080
Volkswagen AG
(Consumer Discretionary)............................... 30 19,073
-----------
1,576,246
-----------
<PAGE>
24
INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- APRIL 30, 1997 (UNAUDITED) -- (CONTINUED)
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
- --------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
HONG KONG--3.3%
Cathay Pacific Airways Ltd.
(Industrial & Commercial).............................. 15,000 $ 23,333
CDL Hotels International Ltd.
(Information & Entertainment).......................... 340,000 148,132
China Hong Kong Photo
Products Holdings Ltd.
(Information & Entertainment).......................... 110,000 34,435
Dao Heng Bank Group Ltd.
(Finance).............................................. 4,000 19,002
First Pacific Co., Ltd.
(Industrial & Commercial).............................. 32,000 38,211
Guoco Group Ltd. (Finance)............................... 40,000 190,021
Henderson China Holdings Ltd. (Real Estate).............. 16,200 27,918
Hong Kong Land Holdings Ltd. ADR(1) (Finance)............ 163,000 339,040
Hopewell Holdings Ltd.
(Real Estate).......................................... 39,000 20,264
Hutchison Whampoa Ltd.
(Multi-industry)....................................... 12,000 89,073
Jardine Matheson Holdings Ltd. ADR(1)
(Industrial & Commercial).............................. 21,200 116,600
New World Development Co.,
Ltd. (Real Estate)..................................... 14,165 81,737
Swire Pacific Ltd. Class A
(Multi-Industry)....................................... 8,100 62,477
Wharf Holdings Ltd.
(Real Estate).......................................... 15,000 56,735
-----------
1,246,978
-----------
INDIA--0.4%
Hindalco Industries Ltd. GDR*(2) (Materials)............. 700 22,659
Tata Engineering & Locomotive
Ltd. GDR(2)
(Consumer Discretionary)............................... 9,450 115,526
-----------
138,185
-----------
INDONESIA--2.5%
PT Bank Internasional Indonesia alien (Finance).......... 7,000 5,041
PT Bank Bali alien (Finance)............................. 93,000 223,889
PT Bank Tiara Asia alien
(Finance).............................................. 194,000 235,514
PT Indonesian Satellite Corp. alien (Utilities).......... 130,000 358,436
PT Semen Cibinong alien (Materials) ..................... 51,000 150,587
-----------
973,467
-----------
ISRAEL--0.2%
Blue Square Israel Ltd. ADR(1)
(Consumer Staples)..................................... 4,300 $ 80,087
-----------
ITALY--2.4%
Banca Commerciale Italiana
SpA (Finance).......................................... 85,000 182,444
BCA Fideuram SpA (Finance)............................... 9,000 22,603
Brembo SpA
(Industrial & Commercial).............................. 16,000 172,880
Credito Italiano SpA (Finance)........................... 10,000 14,017
ENI SpA (Energy)......................................... 5,000 25,377
Gemina SpA+
(Consumer Staples)..................................... 12,600 5,085
Holding di Partecipazione
(Multi-industry)....................................... 179,000 97,572
Industrie Natuzzi SpA ADR(1)
(Consumer Discretionary)............................... 1,000 22,250
Istituto Mobiliare Italiano
(Finance).............................................. 3,000 25,555
Seat SpA+
(Information & Entertainment).......................... 7,000 2,142
Societa Italiana per il Gas SpA (Utilities).............. 5,000 13,156
STET (Industrial & Commercial)........................... 10,000 47,279
STET risp (Industrial & Commercial) ..................... 3,000 11,126
Telecom Italia SpA
(Information Technology)............................... 25,000 78,628
Zucchini SpA
(Information Technology)............................... 29,600 196,218
-----------
916,332
-----------
JAPAN--16.5%
Aiwa Co., Ltd.
(Information Technology)............................... 3,000 51,759
Alps Electric Co., Ltd.
(Information Technology)............................... 2,000 23,319
Amada Co., Ltd.
(Industrial & Commercial).............................. 4,000 29,905
Canon, Inc.
(Information Technology)............................... 8,000 189,703
Citizen Watch Co.
(Consumer Discretionary)............................... 3,000 21,578
Daiichi Pharmaceutical
(Healthcare)........................................... 4,000 64,285
Dainippon Screen MFG Co., Ltd.
(Information Technology)............................... 2,000 15,914
Daiwa House Industry Co., Ltd.
(Consumer Discretionary)............................... 5,000 55,934
DDI Corp. (Utilities).................................... 15 99,618
<PAGE>
25
INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- APRIL 30, 1997 (UNAUDITED) -- (CONTINUED)
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
- --------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
JAPAN (CONTINUED)
East Japan Railway Co.
(Industrial & Commercial).............................. 12 $ 51,901
Fanuc Ltd.
(Information Technology)............................... 600 20,467
Fujitsu Denso
(Industrial & Commercial).............................. 2,000 60,503
Fujitsu Ltd.
(Information Technology)............................... 12,000 124,788
Hankyu Realty Co. (Real Estate).......................... 7,000 48,804
Hitachi Zosen Corp.
(Industrial & Commercial).............................. 4,000 13,897
Hitachi Ltd.+
(Information Technology)............................... 6,000 54,359
Imagineer Co., Ltd.+
(Information & Entertainment).......................... 3,600 114,578
Inax Corp.
(Consumer Staples)..................................... 2,000 12,416
Ito-Yokado Co., Ltd.
(Consumer Discretionary)............................... 2,000 95,955
Jusco Co., Ltd.
(Consumer Discretionary)............................... 2,000 61,449
KAO Corp. (Consumer Staples)............................. 2,000 23,319
Kawasaki Heavy Industries Ltd.
(Industrial & Commercial).............................. 14,000 55,257
Kokuyo Co., Ltd. (Materials)............................. 2,000 43,487
Komatsu Ltd.
(Industrial & Commercial).............................. 3,000 21,932
Komori Corp.
(Industrial & Commercial).............................. 2,000 42,699
Kuraray Co., Ltd. (Healthcare)........................... 4,000 35,294
Kyocera Corp.
(Information Technology)............................... 2,000 119,746
Makita Corp.
(Industrial & Commercial).............................. 2,000 27,416
Marubeni Corp.
(Consumer Discretionary)............................... 30,000 111,317
Marui Co., Ltd.
(Consumer Discretionary)............................... 4,000 65,860
Matsushita Electric Industrial
Co., Ltd.
(Information Technology)+.............................. 6,000 95,955
Matsushita Electric Works Ltd.
(Industrial & Commercial).............................. 19,000 193,091
Meiwa Estate Co.+ (Real Estate).......................... 2,600 43,014
Mitsubishi Corp.
(Consumer Discretionary)............................... 2,000 18,750
Mitsubishi Estate Co., Ltd.
(Real Estate).......................................... 5,000 63,024
JAPAN (CONTINUED)
Mitsubishi Heavy Industries Ltd.
(Industrial & Commercial).............................. 15,000 $ 99,027
Mitsui Fudosan Co., Ltd.
(Real Estate).......................................... 24,000 274,156
Miyota Co.
(Information Technology)............................... 13,000 153,622
Murata Manufacturing Co., Ltd.
(Information Technology)............................... 2,000 73,739
Mycal Corp.
(Consumer Discretionary)............................... 4,000 49,159
NEC Corp.
(Information Technology)............................... 25,000 305,274
Nippon Denso Co., Ltd.
(Industrial & Commercial).............................. 5,000 113,838
Nippon Steel Corp. (Materials)........................... 25,000 71,296
Nippon Telegraph & Telephone
Corp. (Utilities)...................................... 35 246,780
Nomura Securities Co., Ltd.
(Finance).............................................. 6,000 67,121
Orix Corp. (Finance)..................................... 3,000 151,495
Pioneer Electronic Corp.
(Industrial & Commercial).............................. 11,000 196,715
Rohm Co.
(Information Technology)............................... 1,000 77,520
Sankyo Co., Ltd. (Healthcare)............................ 8,000 214,283
Sekisui Chemical Co., Ltd.
(Materials)............................................ 5,000 48,056
Sekisui House Ltd.
(Consumer Discretionary)............................... 3,000 26,707
Sharp Corp.
(Information Technology)............................... 9,000 116,989
Shin-Etsu Chemical Co., Ltd.
(Materials)............................................ 3,000 60,503
Shiseido Co., Ltd.
(Consumer Staples)..................................... 20,000 286,761
Shohkoh Fund & Co.
(Finance).............................................. 600 140,859
Sony Corp.
(Information Technology)............................... 4,000 291,173
Sumitomo Corp.
(Industrial & Commercial).............................. 8,000 53,823
Sumitomo Electric Industries Ltd.
(Industrial & Commercial).............................. 12,000 162,603
Sumitomo Forestry Co., Ltd.
(Materials)............................................ 2,000 20,325
TDK Corp.
(Information Technology)............................... 2,000 144,168
Teijin Ltd.
(Consumer Discretionary)............................... 7,000 28,290
<PAGE>
26
INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- APRIL 30, 1997 (UNAUDITED) -- (CONTINUED)
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
- --------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
JAPAN (CONTINUED)
Tokio Marine & Fire Insurance
Co., Ltd. (Finance).................................... 18,000 $ 175,838
Tokyo Electron Ltd.
(Information Technology)............................... 5,300 204,593
Tokyo Steel Manufacturing Co.
(Materials)............................................ 2,000 21,428
Toppan Printing Co., Ltd.
(Information & Entertainment).......................... 3,000 38,760
Toray Industries, Inc.
(Materials)............................................ 9,000 56,013
UNY Co., Ltd.
(Consumer Staples)..................................... 2,000 35,136
Yamanouchi Pharmaceutical Co., Ltd.
(Healthcare)........................................... 6,000 128,097
-----------
6,305,440
-----------
KOREA--0.7%
Kookmin Bank GDR*(2)
(Finance).............................................. 5,000 89,375
Korea Electric Power Corp. ADR(1)
(Utilities)............................................ 8,500 144,500
Korea Fund, Inc. (Finance)............................... 2,800 36,050
-----------
269,925
-----------
LUXEMBOURG--0.3%
Millicom International Cellular SA
(Information & Entertainment).......................... 2,700 122,850
-----------
MALAYSIA--1.5%
Berjaya Sports Toto Bhd
(Information & Entertainment).......................... 7,000 33,455
Commerce Asset Holding Bhd
(Finance).............................................. 3,000 17,923
Land & General Bhd+
(Multi-industry)....................................... 21,600 29,422
MBF Capital Bhd (Finance)................................ 15,000 22,224
Multi-Purpose Holdings Bhd
(Finance).............................................. 11,000 17,962
Renong Bhd+ (Multi-industry)............................. 18,000 24,661
Resorts World Bhd
(Information & Entertainment).......................... 5,000 18,420
TA Enterprise Bhd (Finance).............................. 144,000 168,042
Technology Resources
Industries Bhd
(Information Technology)............................... 77,000 141,071
Time Engineering Bhd+
(Information Technology)............................... 6,000 10,993
MALAYSIA (CONTINUED)
United Engineers Bhd
(Industrial & Commercial).............................. 11,000 $ 77,983
-----------
562,156
-----------
MEXICO--1.8%
Cemex SA de CV Class B
(Materials)............................................ 4,000 14,648
Cifra SA de CV ADR(1)
(Consumer Staples)..................................... 120,000 182,880
Gruma SA de CV ADR*(1)
(Consumer Staples)..................................... 610 11,751
Gruma SA de CV Class B+
(Consumer Staples)..................................... 2,000 9,639
Grupo Financiero Banamex-
Accival SA de CV
(Finance).............................................. 69,000 147,786
Grupo Industrial Maseca SA
de CV Class B
(Industrial & Commercial).............................. 9,000 8,789
Grupo Modelo SA de CV Class C
(Consumer Staples)..................................... 2,000 12,131
Kimberly-Clark de Mexico SA de CV (Materials)............ 6,526 24,227
Panamerican Beverages, Inc. Class A ADR(1)
(Consumer Staples)..................................... 7,400 214,600
Telefonos de Mexico SA ADR(1)
(Utilities)............................................ 1,000 41,250
-----------
667,701
-----------
NETHERLANDS--4.4%
ABN AMRO Holdings NV (Finance) .......................... 1,200 82,472
ASM Lithography Holding NV (Information Technology)...... 400 29,872
ASM Lithography Holding NV ADR+(1)
(Information Technology)............................... 1,300 102,863
Baan Co. NV+
(Information Technology)............................... 250 13,406
CSM NV (Consumer Staples)................................ 1,190 68,347
Elsevier NV
(Consumer Discretionary)............................... 13,550 216,989
Fortis Amev NV (Finance)................................. 1,030 38,857
Gucci Group NV (Consumer Discretionary) ................. 187 12,973
Hagemeyer NV
(Multi-industry)....................................... 270 23,490
ING Groep NV (Finance)................................... 3,490 137,035
<PAGE>
27
INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- APRIL 30, 1997 (UNAUDITED) -- (CONTINUED)
Value
SECURITY DESCRIPTION SHARES (NOTE 2)
- --------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
NETHERLANDS (CONTINUED)
Koninklijke Ahold NV (Consumer Discretionary)............ 820 $ 55,977
Koninlijke PTT Nederland NV (Utilities).................. 290 10,300
Nutricia Ver Bedrijuen NV (Consumer Staples)............. 140 21,241
Philips Electronics NV (Information Technology).......... 4,500 234,897
PolyGram NV
(Information & Entertainment).......................... 1,750 85,780
Royal Dutch Petroleum Co.
(Energy)............................................... 1,430 255,570
Unilever NV & PLC (Consumer Staples)..................... 510 99,183
Wolters Kluwer NV+
(Information & Entertainment).......................... 1,740 206,214
-----------
1,695,466
-----------
NEW ZEALAND--2.5%
Air New Zealand Ltd.+
(Information & Entertainment).......................... 74,000 213,920
Brierley Investment Ltd.+(Finance) ...................... 160,900 141,659
Carter Holt Harvey Ltd. (Consumer Staples)............... 4,000 8,873
CDL Hotels New Zealand Ltd.
(Information & Entertainment).......................... 575,000 211,265
Fletcher Challenge Ltd. forest shares +
(Multi-industry)....................................... 62,800 86,636
Fletcher Challenge Ltd. building shares+
(Multi-industry)....................................... 4,000 11,230
Kiwi Income Property Trust
(Real Estate).......................................... 275,000 211,612
Telecom Corp. of New Zealand Ltd.
(Information Technology)............................... 3,000 13,456
Wrightson Ltd.
(Multi-industry)....................................... 112,000 65,997
-----------
964,648
-----------
NORWAY--1.5%
Alvern Norway ASA+ (Information & Entertainment)......... 12,000 92,681
Norman Data Defense Systems+ (Industrial & Commercial)... 5,600 86,502
Norsk Hydro ASA (Energy)................................. 2,080 101,354
Orkla ASA
(Consumer Discretionary)............................... 1,420 119,045
Saga Petroleum ASA Class B (Energy)...................... 770 12,435
Smedvig ASA (Energy)..................................... 1,850 42,781
NORWAY (CONTINUED)
Smedvig ASA Class B (Energy)............................. 4,700 $ 110,550
-----------
565,348
-----------
PERU--0.4%
Backus & Johnston
(Consumer Staples)..................................... 187,000 162,090
Telefonica Peru SA ADR(1) (Industrial & Commercial)...... 346 8,304
-----------
170,394
-----------
PHILIPPINES--0.1%
Philippine Long Distance Telephone Co. (Utilities)....... 300 17,122
Philippine National Bank (Finance) ...................... 2,750 18,041
-----------
35,163
-----------
PORTUGAL--0.5%
Cimpor-Cimentos de Portugal SA (Materials)............... 7,100 152,741
Establecimentos Jeronimo Martins & Filho SA
(Consumer Discretionary)............................... 519 31,047
-----------
183,788
-----------
SINGAPORE--3.1%
City Developments Ltd. (Real Estate) .................... 2,000 16,166
DBS Land Ltd. (Real Estate).............................. 35,000 113,161
Development Bank of Singapore Ltd. alien (Finance)....... 1,000 11,883
FJ Benjamin Holdings Ltd.+ (Consumer Discretionary)...... 230,000 111,226
Fraser & Neave Ltd. (Consumer Staples)................... 3,000 21,762
Hour Glass Ltd. (Consumer Discretionary)................. 246,000 160,601
Keppel Bank (Finance).................................... 158,000 412,601
Keppel Corp., Ltd. (Industrial & Commercial)............. 7,500 32,643
Overseas Chinese Banking Corp., Ltd. alien (Finance)..... 1,000 11,675
Overseas Union Bank Ltd. alien (Finance)................. 5,000 32,815
Sembawang Shipyard Ltd. (Industrial & Commercial)........ 27,000 116,580
Singapore Land Ltd. (Real Estate)........................ 7,000 32,643
Singapore Press Holdings Ltd. alien (Information &
Entertainment)......................................... 2,000 37,029
United Industrial Corp., Ltd.
(Multi-industry)....................................... 13,000 9,789
<PAGE>
28
INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- APRIL 30, 1997 (UNAUDITED) -- (CONTINUED)
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
- --------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
SINGAPORE (CONTINUED)
United Overseas Bank Ltd. alien (Finance)................ 6,000 $ 56,373
Wing Tai Holdings Ltd.
(Real Estate).......................................... 4,000 10,335
-----------
1,187,282
-----------
SOUTH AFRICA--0.6%
Energy Africa Ltd. GDR(2) (Energy)....................... 11,000 231,000
-----------
SPAIN--1.0%
Banco Bilbao Vizcaya SA
(Finance).............................................. 180 12,114
Banco de Santander SA
(Finance).............................................. 710 53,418
Banco Popular Espanol SA
(Finance).............................................. 120 25,444
Corporacion Bancaria
de Espana SA (Finance)................................. 270 12,041
Empresa Nacional
de Electricidad SA (Utilities)......................... 540 37,747
Gas Natural SDG SA (Utilities)........................... 240 50,969
Iberdrola SA (Utilities)................................. 5,610 63,312
Repsol SA (Energy)....................................... 694 29,098
Repsol SA ADR(1) (Energy)................................ 1,800 75,375
Telefonica de Espana SA
(Utilities)............................................ 946 24,231
-----------
383,749
-----------
SWEDEN--1.7%
ABB AB (Utilities)....................................... 1,300 15,826
Astra AB (Healthcare).................................... 3,150 125,081
Atlas Copco AB Class B
(Industrial & Commercial).............................. 740 18,348
Electrolux AB Class B (Consumer Discretionary)........... 6,860 393,514
Hennes & Mauritz AB
(Consumer Discretionary)............................... 360 52,086
Sandvik AB (Industrial & Commercial)..................... 1,500 36,904
-----------
641,759
-----------
SWITZERLAND--6.0%
Adia SA
(Industrial & Commercial).............................. 190 63,415
BBC Brown Boveri AG
(Industrial & Commercial).............................. 90 108,982
Ciba Specialty Chemicals AG+ (Materials)................. 80 6,892
Compagnie Financiere Richemont AG
(Industrial & Commercial).............................. 2,300 33,622
SWITZERLAND (CONTINUED)
CS Holding AG+ (Finance)................................. 210 $ 23,648
Julius Baer Holdings AG
(Finance).............................................. 339 424,296
Liechtenstein Global Trust AG+ (Finance)................. 400 219,795
Nestle SA+ (Consumer Staples)............................ 110 133,573
Novartis AG (Healthcare)................................. 280 368,876
Roche Holdings AG
(Healthcare)........................................... 36 304,050
SMH AG (Consumer Discretionary).......................... 730 413,507
Swiss Bank Corp. + (Finance)............................. 160 34,950
TAG Heuer International SA+ (Consumer Discretionary)..... 1,049 147,306
-----------
2,282,912
-----------
TAIWAN--0.5%
Compal Electronics, Inc.+ (Information Technology)....... 124,000 181,970
-----------
THAILAND--0.9%
Advanced Information Services PCL alien
(Information & Entertainment).......................... 1,000 6,508
Bangkok Bank PCL alien (Finance) ........................ 1,900 17,602
Industrial Finance Corp. of Thailand alien (Finance)..... 18,000 48,234
Matichon PCL alien (Information & Entertainment)......... 50,000 160,781
PTT Exploration & Production PCL alien (Energy).......... 700 8,950
Siam City Cement PCL alien (Materials)................... 4,300 115,226
-----------
357,301
-----------
UNITED KINGDOM--10.4%
Abbey National PLC (Finance)............................. 7,000 97,569
Argos PLC (Consumer Staples)............................. 6,000 62,723
Argyll Group PLC (Consumer Discretionary)................ 9,000 49,887
ASDA Group PLC (Consumer Staples)........................ 21,000 39,141
BG PLC (Energy).......................................... 6,000 17,310
British Petroleum Co. PLC
(Energy)............................................... 4,000 45,900
Cable & Wireless PLC (Information Technology)............ 10,000 77,006
Cadbury Schweppes PLC (Consumer Staples)................. 7,000 58,088
Caradon PLC (Materials).................................. 12,000 48,039
Centrica PLC+ (Utilities)................................ 6,000 5,494
<PAGE>
29
INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- APRIL 30, 1997 (UNAUDITED) -- (CONTINUED)
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
- --------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
UNITED KINGDOM (CONTINUED)
Compass Group PLC (Industrial & Commercial).............. 3,000 $ 32,869
Cookson Group PLC
(Multi-industry)....................................... 58,400 205,394
Electrocomponents PLC (Information Technology)........... 2,000 12,804
Energy Group PLC+ (Utilities)............................ 16,340 129,767
Glaxo Wellcome PLC (Healthcare).......................... 7,000 137,617
Grand Metropolitan PLC (Information & Entertainment)..... 12,000 100,162
Guinness PLC (Consumer Staples).......................... 10,000 82,658
Hanson PLC (Industrial & Commercial)..................... 24,125 117,106
Inchcape PLC (Multi-industry)............................ 44,000 195,397
Kingfisher PLC (Consumer Staples) ....................... 10,000 108,266
Ladbroke Group PLC
(Information & Entertainment).......................... 6,000 22,366
Lonrho PLC (Multi-industry).............................. 38,000 84,992
Medeva PLC (Healthcare).................................. 11,300 55,126
Morgan Stanley Emerging Market Fund, Inc. (Finance)...... 12,600 201,600
National Westminster Bank PLC (Finance).................. 16,000 189,303
Orange PLC+ (Information & Entertainment)................ 114,000 399,092
Rank Group PLC
(Information & Entertainment).......................... 7,000 48,217
Reed International PLC (Information & Entertainment)..... 16,500 304,060
RTZ Corp. PLC (Materials)................................ 5,000 79,417
Shell Transport & Trading Co. (Energy)................... 8,000 141,459
Smith (David S) Holdings PLC (Materials)................. 5,000 18,152
Smithkline Beecham PLC (Healthcare)...................... 15,000 241,045
T & N PLC
(Consumer Discretionary)............................... 7,000 15,429
Tanjong PLC
(Information & Entertainment).......................... 10,000 36,243
Tesco PLC
(Consumer Discretionary)............................... 8,000 46,418
UNITED KINGDOM (CONTINUED)
Thistle Hotels PLC
(Information & Entertainment).......................... 58,300 $ 156,853
Tomkins PLC (Consumer Staples)........................... 19,000 81,912
United News & Media PLC
(Information & Entertainment).......................... 8,000 97,763
Vickers PLC (Multi-industry)............................. 43,000 148,444
-----------
3,991,088
-----------
VENEZUELA--0.0%
Compania Anon Nacional Tele de Venezuela ADR(1)
(Utilities)............................................ 230 6,900
-----------
TOTAL COMMON STOCK
(cost $32,323,012)....................................... 31,999,013
-----------
PREFERRED STOCK--1.6%
FINLAND--0.1%
Nokia Corp. (Information Technology)..................... 520 32,438
-----------
GERMANY--1.1%
Friedrich Grohe AG (Industrial & Commercial)............. 730 218,561
GEA AG (Industrial & Commercial) ........................ 580 197,598
SAP AG (Information Technology).......................... 90 16,573
-----------
432,732
-----------
ITALY--0.4%
Instituto Finanziario (Finance).......................... 12,600 151,597
-----------
TOTAL PREFERRED STOCK
(cost $585,143).......................................... 616,767
-----------
OPTIONS--0.0%+(3)
JAPAN--0.0%
NIKKEI 225 Index,
Jun 1997/17700 Put..................................... 1,894 833
-----------
SINGAPORE--0.0%
DBS 50 Index, Jan 1998/403 Call.......................... 83 480
DBS 50 Index, Jan 1998/407 Call.......................... 80 415
DBS 50 Index, Jan 1998/407 Call.......................... 79 411
DBS 50 Index, Feb 1998/404 Call.......................... 23 160
-----------
1,466
-----------
<PAGE>
30
INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- APRIL 30, 1997 (UNAUDITED) -- (CONTINUED)
SHARES/WARRANTS/
PRINCIPAL
AMOUNT VALUE
SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 2)
- --------------------------------------------------------------------------------
OPTIONS (CONTINUED)
THAILAND--0.0%
SET 50 Index, Jan 1998/2 Call........................... 11,229 $ 1,037
SET 50 Index, Jan 1998/2 Call........................... 11,194 1,235
SET 50 Index, Jan 1998/2 Call........................... 11,164 449
SET 50 Index, Jan 1998/2 Call........................... 11,438 721
----------
3,442
----------
TOTAL OPTIONS (COST $44,596).............................. 5,741
----------
WARRANTS--0.2%+
PORTUGAL--0.0%
Jeronimo Martins 9/15/03
(Consumer Staples).................................... 43 544
----------
UNITED KINGDOM--0.2%
Morgan Stanley Group, Inc. 8/15/97 (Finance)............ 18,300 62,906
----------
TOTAL WARRANTS (COST $68,103)............................. 63,450
----------
CONVERTIBLE BONDS--0.4%
TAIWAN--0.3%
Compal Electronics zero coupon 2003*.................... $ 93 136,478
----------
THAILAND--0.1%
Bangkok Bank PCL 3.25%
2004.................................................. 29 26,645
----------
TOTAL CONVERTIBLE BONDS
(cost $131,115)......................................... 163,123
----------
TOTAL INVESTMENT SECURITIES--86.0%
(cost $33,151,969).................................... 32,848,094
----------
SHORT-TERM SECURITIES--1.8%
Cayman Island Time Deposit
3.00% due 5/01/97
(cost $706,000)....................................... 706 706,000
----------
REPURCHASE AGREEMENTS--9.1%
Agreement with State Street Bank and Trust Co.,
bearing 4.00%, dated 4/30/97 to be repurchased
5/01/97 in the amount of $2,434,270
collateralized by $2,475,000 U.S Treasury Note
5.75%, due 9/30/97 approximate aggregate value
$2,488,406
(cost $2,434,000)............................. $2,434 $ 2,434,000
Agreement with State Street Bank and Trust Co.,
bearing 5.30%, dated 4/30/97 to be repurchased
5/01/97 in the amount of $1,035,152
collateralized by $1,055,000 U.S Treasury Note
5.25%, due 7/31/98 approximate aggregate value
$1,057,902
(cost $1,035,000)............................. 1,035 1,035,000
----------
TOTAL REPURCHASE AGREEMENTS
(cost $3,469,000)............................... 3,469,000
----------
TOTAL INVESTMENTS--
(cost $37,326,969).............................. 96.9% 37,023,094
Other assets less liabilities................... 3.1 1,189,691
--------- ----------
NET ASSETS--.................................... 100.0% $38,212,785
--------- ----------
--------- ----------
- ------------------
+ Non-income producing security
* Resale restricted to qualified institutional buyers
(1) ADR ("American Depositary Receipt")
(2) GDR ("Global Depositary Receipt")
(3) Fair valued security, see Note 2
Open Forward Foreign Currency Contracts
GROSS
CONTRACT IN DELIVERY UNREALIZED
TO DELIVER EXCHANGE FOR DATE APPRECIATION
---------------- -------------- -------- ------------
*DEM 241,478 USD 150,000 7/23/97 $ 9,721
JPY 25,702,500 USD 230,000 10/24/97 22,093
JPY 47,907,500 USD 433,454 10/24/97 45,932
*JPY 18,407,500 USD 166,546 10/24/97 17,649
---------
95,395
---------
GROSS
UNREALIZED
APPRECIATION
------------
USD 405,400 GBP 250,000 6/30/97 $ (651)
*USD 144,327 DEM 241,478 7/23/97 (4,048)
*USD 154,643 JPY 18,407,500 10/24/97 (5,745)
---------
(10,444)
---------
Net Appreciation. . . . . . . . . . . . . . . . . . $ 84,951
---------
---------
* Represents open forward foreign currency contracts and offsetting open
forward foreign currency contracts that do not have additional market risk
but have continued counterparty settlement risk.
DEM--Deutsche Mark
GBP--Great Britain Pound
JPY--Japanese Yen
USD--United States Dollar
See Notes to Financial Statements
<PAGE>
PRO FORMA
PORTFOLIO OF INVESTMENTS - April 30, 1997 - (UNAUDITED)
Value
SECURITY DESCRIPTION SHARES (NOTE 2)
- --------------------------------------------------------------------------------
COMMON STOCK -- 74.8%
ARGENTINA -- 0.7%
Banco Frances del Rio de la
Plata SA ADR(1) (Finance). . . . . . . . . . . . . 560 $ 17,010
Perez Companies SA
(Multi-industry). . . . . . . . . . . . . . . . . . 2,550 20,683
Telefonica de Argentina SA ADR(1)
(Utilities) . . . . . . . . . . . . . . . . . . . . 4,620 153,615
YPF Sociedad Anonima ADR(1)
(Energy). . . . . . . . . . . . . . . . . . . . . . 9,640 266,305
---------
457,613
---------
AUSTRALIA -- 3.1%
AAPC Ltd. (Information &
Entertainment). . . . . . . . . . . . . . . . . . . 837,600 509,497
Australia & New Zealand Banking
Group Ltd. (Finance). . . . . . . . . . . . . . . . 2,000 12,774
Australian Gas Light Co., Ltd.
(Utilities) . . . . . . . . . . . . . . . . . . . . 3,000 17,196
Broken Hill Proprietary Co., Ltd.
(Materials) . . . . . . . . . . . . . . . . . . . . 2,000 28,199
Coca-Cola Amatil Ltd. (Consumer
Staples). . . . . . . . . . . . . . . . . . . . . . 18,000 205,772
Commonwealth Installment Receipt
Trustee Ltd. (Finance). . . . . . . . . . . . . . . 2,000 14,973
David Jones Ltd. (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 8,400 11,005
FAI Insurances Ltd. (Finance). . . . . . . . . . . . . . 275,073 135,145
Lend Lease Corp., Ltd. (Finance) . . . . . . . . . . . . 1,000 19,138
National Australia Bank Ltd.
(Finance) . . . . . . . . . . . . . . . . . . . . . 7,200 98,542
News Corp., Ltd. (Information &
Entertainment). . . . . . . . . . . . . . . . . . . 11,000 50,698
Normandy Mining Ltd. (Energy). . . . . . . . . . . . . . 162,366 198,795
Publishing & Broadcasting Ltd.
(Information & Entertainment) . . . . . . . . . . . 35,000 184,785
St. George Bank Ltd. (Finance) . . . . . . . . . . . . . 2,000 12,290
TABCORP Holdings Ltd.
(Information & Entertainment) . . . . . . . . . . . 3,000 14,821
Western Mining Corp. Holdings
Ltd. (Materials). . . . . . . . . . . . . . . . . . 3,000 17,781
Westpac Banking Corp., Ltd.
(Finance) . . . . . . . . . . . . . . . . . . . . . 2,000 10,778
Woodside Petroleum Ltd. (Energy) 3,000 23,863
Woolworths Ltd. (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 117,200 345,485
---------
1,911,537
---------
AUSTRIA -- 0.5%
Boehler-Uddeholm AG (Materials). . . . . . . . . . . . . 1,767 127,494
VAE Eisenbahnsysteme AG
(Industrial & Commercial) . . . . . . . . . . . . . 1,776 171,878
---------
299,372
---------
BELGIUM -- 0.3%
Generale de Banque Belge Pour
l'Etranger SA (Finance) . . . . . . . . . . . . . . 90 37,322
Kredietbank NV (Finance) . . . . . . . . . . . . . . . . 250 97,378
UCB SA (Healthcare). . . . . . . . . . . . . . . . . . . 10 27,440
---------
162,140
---------
BRAZIL -- 0.7%
Centrais Eletricas Brasileiras SA
ADR+(1) (Utilities) . . . . . . . . . . . . . . . . 1,000 22,519
Compania Brasileira de
Distribuidora GDR(2) (Industrial
& Commercial) . . . . . . . . . . . . . . . . . . . 1,000 20,121
Compania Energetica de Minas
ADR(1) non voting (Materials). . . . . . . . . . . . . . 1,000 45,509
Telecomunicacoes Brasileras SA
(Information Technology). . . . . . . . . . . . . . 650,000 69,981
Telecomunicacoes Brasileras SA ADR(1)
(Information Technology). . . . . . . . . . . . . . 2,000 229,500
Usinas Siderurgicas de Minas
Gerais SA ADR(1) (Materials) . . . . . . . . . . . . . . 6,000 70,519
---------
458,149
---------
CANADA -- 0.7%
Abitibi Price, Inc. (Information
& Entertainment). . . . . . . . . . . . . . . . . . 1,790 30,175
Air Canada, Inc. (Information &
Entertainment). . . . . . . . . . . . . . . . . . . 3,004 16,127
Alcan Aluminum Ltd. (Materials). . . . . . . . . . . . . 620 21,037
Barrick Gold Corp. (Materials) . . . . . . . . . . . . . 1,126 25,027
BCE, Inc. (Information
Technology) . . . . . . . . . . . . . . . . . . . . 417 19,522
Bombardier, Inc. Class B
(Industrial & Commercial) . . . . . . . . . . . . . 426 8,645
Chauvco Resources Ltd.+ (Energy) . . . . . . . . . . . . 800 11,052
Cominco Ltd. (Materials) . . . . . . . . . . . . . . . . 387 9,973
Crestar Energy, Inc. (Energy). . . . . . . . . . . . . . 968 18,189
Diamond Fields International Ltd.(3)+ (Materials). . . . 400 272
Finning Ltd. (Materials) . . . . . . . . . . . . . . . . 400 8,933
Fletcher Challenge Ltd., Class A
(Materials) . . . . . . . . . . . . . . . . . . . . 1,647 27,705
Hudsons Bay Co. (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 470 9,555
Inco Ltd. (Materials). . . . . . . . . . . . . . . . . . 422 13,518
Inco Ltd., Class V (Materials) . . . . . . . . . . . . . 1,000 20,938
MacMillan Bloedel Ltd.
(Materials) . . . . . . . . . . . . . . . . . . . . 600 8,203
Northern Telecom Ltd (Information
Technology) . . . . . . . . . . . . . . . . . . . . 89 6,473
Renaissance Energy Ltd.+ (Energy). . . . . . . . . . . . 968 26,816
Royal Bank of Canada (Finance) . . . . . . . . . . . . . 310 12,360
Seagram Ltd. (Industrial & Commercial) . . . . . . . . . 383 14,681
Stelco, Inc. Class A+ (Materials). . . . . . . . . . . . 3,330 19,546
Suncor, Inc. (Energy). . . . . . . . . . . . . . . . . . 240 10,995
Toronto Dominion Bank Ontario (Finance). . . . . . . . . 850 24,064
TransCanada Pipelines Ltd. (Energy). . . . . . . . . . . 2,325 42,522
Trizec Hahn Corp. (Real Estate). . . . . . . . . . . . . 610 13,318
---------
419,646
---------
CHILE -- 0.6%
Chilectra SA ADR(1) (Utilities). . . . . . . . . . . . . 169 10,237
Compania de Telecomunicaciones de
<PAGE>
PRO FORMA
PORTFOLIO OF INVESTMENTS - April 30, 1997 - (UNAUDITED)
Value
SECURITY DESCRIPTION SHARES (NOTE 2)
- --------------------------------------------------------------------------------
Chile SA ADR(1) (Utilities). . . . . . . . . . . . . . . 480 15,540
Empresa Nacional de Electricidad
SA ADR(1) (Utilities) . . . . . . . . . . . . . . . 765 14,726
Enersis SA ADR(1) (Energy) . . . . . . . . . . . . . . . 2,994 94,311
Maderas Y Sinteticos SA ADR(1)
(Materials) . . . . . . . . . . . . . . . . . . . . 1,900 30,400
Santa Isabel SA ADR(1) (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 2,000 48,750
Sociedad Quimica Minera ADR(1)
(Materials) . . . . . . . . . . . . . . . . . . . . 2,700 159,975
---------
373,939
---------
DENMARK -- 0.2%
Den Danske Bank+ (Finance) . . . . . . . . . . . . . . . 150 12,973
ISS International Service Systems
A/S Class B (Industrial &
Commercial) . . . . . . . . . . . . . . . . . . . . 2,600 76,926
Unidanmark A/S (Finance) . . . . . . . . . . . . . . . . 200 9,893
---------
99,792
---------
FINLAND -- 1.2%
Huhtamaki Oy (Consumer Staples). . . . . . . . . . . . . 5,224 226,523
Konecranes International Corp.+
(Consumer Discretionary). . . . . . . . . . . . . . 4,500 173,064
Nokia Corp. Class A ADR(1)
(Information Technology). . . . . . . . . . . . . . 2,000 129,250
Nokian Tyres (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 5,000 120,183
Rauma Oy (Industrial &
Commercial) . . . . . . . . . . . . . . . . . . . . 97 1,996
UPM-Kymmene Oy (Materials) . . . . . . . . . . . . . . . 4,230 96,794
---------
747,810
---------
FRANCE -- 5.0%
Accor SA (Information Technology). . . . . . . . . . . . 80 11,473
Alcatel Alsthom Compagnie Generael D' Electricite
(Information Technology). . . . . . . . . . . . . . 310 34,471
AXA SA+ (Finance). . . . . . . . . . . . . . . . . . . . 2,220 136,589
Bertrand Faure (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 1,700 81,410
Canal Plus (Information &
Entertainment). . . . . . . . . . . . . . . . . . . 70 12,641
Carrefour SA (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 180 112,382
Chargeurs International SA+
(Consumer Discretionary). . . . . . . . . . . . . . 1,200 70,933
Club Mediterranee SA (Information
& Entertainment). . . . . . . . . . . . . . . . . . 2,300 178,120
Compagnie de St. Gobain
(Materials) . . . . . . . . . . . . . . . . . . . . 370 49,574
Compagnie Generale des Eaux
(Multi-industry). . . . . . . . . . . . . . . . . . 3,960 551,611
Elf Aquitaine SA (Energy). . . . . . . . . . . . . . . . 520 50,428
Guilbert SA (Information
Technology) . . . . . . . . . . . . . . . . . . . . 120 18,710
L' Oreal (Consumer Staples). . . . . . . . . . . . . . . 60 21,290
Lapeyre (Materials). . . . . . . . . . . . . . . . . . . 340 20,505
Legrand SA (Information
Technology) . . . . . . . . . . . . . . . . . . . . 130 21,940
Louis Dreyfus Citrus+ (Consumer
Staples). . . . . . . . . . . . . . . . . . . . . . 7,200 258,689
Marine-Wendel SA (Multi-industry). . . . . . . . . . . . 1,100 114,024
Moet Hennessy Louis Vuitton
(Consumer Staples). . . . . . . . . . . . . . . . . 340 83,012
Pathe SA+ (Information &
Entertainment). . . . . . . . . . . . . . . . . . . 50 11,677
Pinault Printemps Redoute
(Consumer Discretionary). . . . . . . . . . . . . . 170 71,507
Primagaz Cie (Utilities) . . . . . . . . . . . . . . . . 120 11,760
Rhone- Poulenc Rorer, SA
(Healthcare). . . . . . . . . . . . . . . . . . . . 3,500 117,716
Sanofi SA (Healthcare) . . . . . . . . . . . . . . . . . 460 42,954
Schneider SA+ (Industrial &
Commercial) . . . . . . . . . . . . . . . . . . . . 4,640 261,554
Societe Generale+ (Finance). . . . . . . . . . . . . . . 3,800 425,803
Sodexho SA (Information &
Entertainment). . . . . . . . . . . . . . . . . . . 150 68,877
Television Francais (Utilities). . . . . . . . . . . . . 625 60,289
Total SA, Series B (Energy). . . . . . . . . . . . . . . 2,640 218,926
---------
3,118,865
---------
GERMANY -- 3.5%
Adidas AG (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 1,100 114,650
Allianz Holdings AG (Finance). . . . . . . . . . . . . . 200 38,804
Ashanti Goldfields Co., Ltd.
GDR(2) (Materials). . . . . . . . . . . . . . . . . 10,000 118,750
Ava Allgemeneine
Handelsgesellschaft der
Verbraucher AG (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 600 162,143
Bayer AG (Multi-industry). . . . . . . . . . . . . . . . 1,583 62,980
Bayerische Hypotheken Und Bank AG
(Finance) . . . . . . . . . . . . . . . . . . . . . 766 23,885
Bayerische Motoren Werke
(Consumer Discretionary) . . . . . . . . . . . . . . . . 327 267,748
Bilfinger & Berger Bau AG
(Consumer Discretionary). . . . . . . . . . . . . . 3,210 119,369
Commerzbank AG (Finance) . . . . . . . . . . . . . . . . 6,540 175,415
Deutsche Bank AG (Finance) . . . . . . . . . . . . . . . 4,940 260,721
Deutsche Telekom AG (Information
Technology) . . . . . . . . . . . . . . . . . . . . 557 12,087
Gehe AG (Consumer Discretionary) . . . . . . . . . . . . 1,590 105,767
Hoechst AG (Healthcare). . . . . . . . . . . . . . . . . 430 16,884
Leica Camera AG+ (Information
Technology) . . . . . . . . . . . . . . . . . . . . 5,100 156,080
Mannesmann AG (Industrial &
Commercial) . . . . . . . . . . . . . . . . . . . . 40 15,729
Rhon-Klinikum AG (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 200 25,869
SAP AG (Information Technology). . . . . . . . . . . . . 80 14,565
Schering AG (Healthcare) . . . . . . . . . . . . . . . . 140 13,420
VEBA AG (Utilities) . . . . . . . . . . . . . . . . . . 2,880 148,341
Volkswagen AG (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 240 152,581
Walter AG (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 400 139,970
---------
2,145,758
---------
HONG KONG -- 2.7%
<PAGE>
PRO FORMA
PORTFOLIO OF INVESTMENTS - April 30, 1997 - (UNAUDITED)
Value
SECURITY DESCRIPTION SHARES (NOTE 2)
- --------------------------------------------------------------------------------
Cathay Pacific Airways Ltd.
(Industrial & Commercial) . . . . . . . . . . . . . 15,000 23,333
CDL Hotels Intnernational Ltd.
(Information & Entertainment) . . . . . . . . . . . 340,000 148,131
Cheung Kong Holdings Ltd. (Real
Estate) . . . . . . . . . . . . . . . . . . . . . . 8,000 70,225
Cheung Kong Infrastructure
(Consumer Discretionary). . . . . . . . . . . . . . 20,000 56,671
China Hong Kong Photo Products
Holdings Ltd. (Information &
Entertainment). . . . . . . . . . . . . . . . . . . 110,000 34,435
Dao Heng Bank Group Ltd.
(Finance) . . . . . . . . . . . . . . . . . . . . . 4,000 19,002
First Pacific Co., Ltd.
(Industrial & Commercial) . . . . . . . . . . . . . 32,000 38,211
Guoco Group Ltd. (Finance) . . . . . . . . . . . . . . . 40,000 190,021
Henderson China Holdings Ltd.
(Real Estate) . . . . . . . . . . . . . . . . . . . 16,200 27,918
Hong Kong Land Holdings Ltd.
ADR(1) (Finance). . . . . . . . . . . . . . . . . . 163,000 339,040
Hopewell Holdings Ltd. (Real
Estate) . . . . . . . . . . . . . . . . . . . . . . 39,000 20,264
HSBC Holdings PLC (Finance). . . . . . . . . . . . . . . 3,200 80,966
Hutchison Whampoa Ltd. (Finance) . . . . . . . . . . . . 21,000 155,877
Jardine Matheson Holdings Ltd.
ADR(1) (Industrial & Commercial) . . . . . . . . . . . . 21,200 116,600
New World Development Co., Ltd.
(Real Estate) . . . . . . . . . . . . . . . . . . . 14,165 81,737
RBI Holdings Ltd. (Information &
Entertainment) . . . . . . . . . . . . . . . . . . 800,000 131,156
Swire Pacific Ltd. Class A
(Multi-industry). . . . . . . . . . . . . . . . . . 8,100 62,477
Wharf Holdings Ltd. (Real Estate). . . . . . . . . . . . 15,000 56,735
---------
1,652,799
---------
INDIA -- 0.2%
Hindalco Industries Ltd. GDR+(2)
(Materials) . . . . . . . . . . . . . . . . . . . . 700 22,659
Tata Engineering & Locomotive
Co., Ltd. GDR(2) (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 9,450 115,526
---------
138,185
---------
INDONESIA -- 1.8%
PT Bank Bali alien shares
(Finance) . . . . . . . . . . . . . . . . . . . . . 93,000 223,889
PT Bank International Indonesia
alien shares (Finance). . . . . . . . . . . . . . . 7,000 5,041
PT Bank Negara Indonesia alien
shares (Finance)+*. . . . . . . . . . . . . . . . . 165,000 91,667
PT Bank Tiara Asia alien shares
(Finance) . . . . . . . . . . . . . . . . . . . . . 194,000 235,514
PT Indonesian Satellite Corp.
alien shares (Utilities). . . . . . . . . . . . . . 130,000 358,436
PT Semen Cibinong alien shares
(Materials) . . . . . . . . . . . . . . . . . . . . 51,000 150,586
PT Telekomunikasi (Utilities). . . . . . . . . . . . . . 30,000 43,519
---------
1,108,652
---------
ISRAEL -- 0.1%
Blue Square Israel Ltd. ADR(1)
(Consumer Staples). . . . . . . . . . . . . . . . . 4,300 80,088
---------
ITALY -- 1.9%
Banca Commerciale Italiana SpA
(Finance) . . . . . . . . . . . . . . . . . . . . . 85,000 182,443
Banca Pop Di Milano (Finance). . . . . . . . . . . . . . 15,000 73,854
BCA Fideuram SpA (Finance) . . . . . . . . . . . . . . . 9,000 22,603
Brembo SpA (Industrial &
Commercial) . . . . . . . . . . . . . . . . . . . . 16,000 172,880
Credito Italiano SpA (Finance) . . . . . . . . . . . . . 10,000 14,017
ENI SpA (Energy) . . . . . . . . . . . . . . . . . . . . 5,000 25,377
Gemina SpA+ (Consumer Staples) . . . . . . . . . . . . . 12,600 5,085
Holding Oi Partecipazione
(Multi-industry). . . . . . . . . . . . . . . . . . 179,000 97,572
Industrie Natuzzi SpA ADR(1)
(Consumer Discretionary). . . . . . . . . . . . . . 1,000 22,250
Istituto Mobiliare Italiano
(Finance) . . . . . . . . . . . . . . . . . . . . . 3,000 25,555
Italgas-Societa Italiana per il
Gas SpA (Utilities) . . . . . . . . . . . . . . . . 5,000 13,156
Parmalat Finanziar (Finance) . . . . . . . . . . . . . . 60,000 87,258
Seat SpA+ (Information &
Entertainment). . . . . . . . . . . . . . . . . . . 7,000 2,142
STET (Industrial & Commercial) . . . . . . . . . . . . . 10,000 47,279
STET Risp. (Industrial &
Commercial) . . . . . . . . . . . . . . . . . . . . 33,000 122,388
Telecom Italia SpA (Information
Technology) . . . . . . . . . . . . . . . . . . . . 25,000 78,628
Zucchini SpA (Information
Technology) . . . . . . . . . . . . . . . . . . . . 29,600 196,218
---------
1,188,705
---------
JAPAN -- 14.6%
Advantest Corp. (Information
Technology) . . . . . . . . . . . . . . . . . . . . 980 54,429
Aiwa Co., Ltd. (Information
Technology) . . . . . . . . . . . . . . . . . . . . 3,000 51,759
Alps Electric Co., Ltd.
(Information Technology). . . . . . . . . . . . . . 2,000 23,319
Amada Co., Ltd. (Industrial &
Commercial) . . . . . . . . . . . . . . . . . . . . 4,000 29,905
Amano Corp. (Multi-industry) . . . . . . . . . . . . . . 4,000 37,500
Aoki International Co., Ltd.
(Consumer Discretionary). . . . . . . . . . . . . . 5,000 87,052
Bank Of Tokyo-Mitsubishi Ltd.+
(Finance) . . . . . . . . . . . . . . . . . . . . . 6,600 104,510
Best Denki Co. (Information
Technology) . . . . . . . . . . . . . . . . . . . . 5,000 44,905
Calsonic Corp. (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 6,000 29,779
Canon, Inc. (Information
Technology) . . . . . . . . . . . . . . . . . . . . 11,000 260,842
Chiba Bank Ltd. (Finance). . . . . . . . . . . . . . . . 20,000 107,141
Citizen Watch Co. (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 3,000 21,578
Daiichi Pharmaceutical
(Healthcare). . . . . . . . . . . . . . . . . . . . 4,000 64,285
Dainippon Screen MFG Co., Ltd.
(Information Technology). . . . . . . . . . . . . . 2,000 15,914
<PAGE>
PRO FORMA
PORTFOLIO OF INVESTMENTS - April 30, 1997 - (UNAUDITED)
Value
SECURITY DESCRIPTION SHARES (NOTE 2)
- --------------------------------------------------------------------------------
Daiwa House Industry Co., Ltd.
(Consumer Discretionary). . . . . . . . . . . . . . 5,000 55,934
DDI Corp. (Utilities). . . . . . . . . . . . . . . . . . 15 99,618
East Japan Railway Co.
(Industrial & Commercial) . . . . . . . . . . . . . 12 51,901
Fanuc Ltd. (Information
Technology) . . . . . . . . . . . . . . . . . . . . 2,100 71,635
Fujitsu Denso (Industrial &
Commercial) . . . . . . . . . . . . . . . . . . . . 2,000 60,503
Fujitsu Ltd. (Information
Technology) . . . . . . . . . . . . . . . . . . . . 12,000 124,788
Hankyu Realty Co. (Real Estate). . . . . . . . . . . . . 7,000 48,804
Hitachi Ltd.+ (Information
Technology) . . . . . . . . . . . . . . . . . . . . 6,000 54,359
Hitachi Zosen Corp. (Industrial &
Commercial) . . . . . . . . . . . . . . . . . . . . 4,000 13,897
Honda Motor Co., Ltd. (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 2,000 62,079
Imagineer Co., Ltd.+ (Information
Technology) . . . . . . . . . . . . . . . . . . . . 3,600 114,578
Inax Corp. (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 2,000 12,416
Industrial Bank of Japan Ltd.
(Finance) . . . . . . . . . . . . . . . . . . . . . 6,640 70,619
Ito-Yokado Co., Ltd. (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 2,000 95,955
Jusco Co., Ltd. (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 2,000 61,449
Kamigumi Co., Ltd. (Industrial &
Commercial) . . . . . . . . . . . . . . . . . . . . 7,000 34,632
KAO Corp. (Consumer Staples) . . . . . . . . . . . . . . 2,000 23,319
Katokichi Co. (Consumer Staples) . . . . . . . . . . . . 5,000 78,780
Kawasaki Heavy Industries Ltd.
(Industrial & Commercial) . . . . . . . . . . . . . 14,000 55,257
Kissei Pharmaceutical Co.
(Healthcare). . . . . . . . . . . . . . . . . . . . 3,400 64,553
Kokuyo Co., Ltd. (Materials) . . . . . . . . . . . . . . 2,000 43,487
Komatsu Ltd. (Industrial &
Commercial) . . . . . . . . . . . . . . . . . . . . 3,000 21,932
Komori Co., Ltd. (Industrial &
Commercial) . . . . . . . . . . . . . . . . . . . . 2,000 42,699
Kuraray Co., Ltd. (Healthcare) . . . . . . . . . . . . . 4,000 35,294
Kyocera Corp. (Information
Technology) . . . . . . . . . . . . . . . . . . . . 3,000 179,619
Makita Corp. (Industrial &
Commercial) . . . . . . . . . . . . . . . . . . . . 2,000 27,416
Marubeni Corp. (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 30,000 111,317
Marui Co., Ltd. (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 4,000 65,860
Matsushita Electric Industrial
Co., Ltd. (Information
Technology)+. . . . . . . . . . . . . . . . . . . . 6,000 95,955
Matsushita Electric Works Ltd.
(Industrial & Commercial) . . . . . . . . . . . . . 27,000 274,392
Meiwa Estate Co.+ (Real Estate). . . . . . . . . . . . . 2,600 43,014
Mitsubishi Corp. (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 2,000 18,750
Mitsubishi Estate Co., Ltd. (Real
Estate) . . . . . . . . . . . . . . . . . . . . . . 5,000 63,024
Mitsubishi Heavy Industrial Ltd.
(Industrial & Commercial) . . . . . . . . . . . . . 30,000 198,054
Mitsubishi Logistcs Corp.
(Industrial & Commercial) . . . . . . . . . . . . . 3,000 35,215
Mitsubishi Motor (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 9,000 62,394
Mitsui Fudosan Co., Ltd. (Real
Estate) . . . . . . . . . . . . . . . . . . . . . . 24,000 274,156
Miyota Co. (Information
Technology) . . . . . . . . . . . . . . . . . . . . 13,000 153,622
Mori Seiki Co., Ltd. (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 3,000 43,487
Murata Manufacturing Co., Ltd.
(Information Technology). . . . . . . . . . . . . . 2,000 73,739
Mycal Corp. (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 4,000 49,159
NEC Corp. (Information
Technology) . . . . . . . . . . . . . . . . . . . . 33,000 402,962
New Oji Paper Co., Ltd.+
(Materials) . . . . . . . . . . . . . . . . . . . . 8,000 40,399
Nippon Denko Co., Ltd.
(Industrial & Commercial) . . . . . . . . . . . . . 5,000 113,838
Nippon Electric Glass Co., Ltd.
(Materials) . . . . . . . . . . . . . . . . . . . . 7,000 107,535
Nippon Express Co., Ltd.
(Industrial & Commercial). . . . . . . . . . . . . . . . 6,000 41,360
Nippon Shokubai Co. (Materials). . . . . . . . . . . . . 8,000 51,680
Nippon Steel Corp. (Materials) . . . . . . . . . . . . . 55,000 156,852
Nippon Telegraph & Telephone
Corp. (Utilities) . . . . . . . . . . . . . . . . . 47 331,390
Nissho Iwai Corp.
(Multi-industry). . . . . . . . . . . . . . . . . . 16,000 53,445
Nomura Securities Co., Ltd.
(Finance) . . . . . . . . . . . . . . . . . . . . . 13,000 145,429
Ono Pharmaceutical Co., Ltd.
(Healthcare). . . . . . . . . . . . . . . . . . . . 2,000 56,722
Orix Corp. (Finance) . . . . . . . . . . . . . . . . . . 3,000 151,495
Pioneer Electronic Corp.
(Industrial & Commercial) . . . . . . . . . . . . . 11,000 196,715
Rohm Co. (Information Technology). . . . . . . . . . . . 1,000 77,520
Sankyo Co., Ltd. (Healthcare). . . . . . . . . . . . . . 8,000 214,283
Sanwa Bank Ltd. (Finance). . . . . . . . . . . . . . . . 7,000 74,999
Seino Transportation (Industrial
& Commercial) . . . . . . . . . . . . . . . . . . . 6,000 54,359
Sekisui Chemical Co., Ltd.
(Materials) . . . . . . . . . . . . . . . . . . . . 9,000 86,501
Sekisui House Ltd. (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 3,000 26,707
Sharp Corp. (Information
Technology) . . . . . . . . . . . . . . . . . . . . 9,000 116,989
Shin-Etsu Chemical Co., Ltd.
(Materials) . . . . . . . . . . . . . . . . . . . . 3,000 60,503
Shiseido Co., Ltd. (Consumer
Staples). . . . . . . . . . . . . . . . . . . . . . 20,000 286,761
Shohkoh Fund & Co. (Finance) . . . . . . . . . . . . . . 600 140,859
Sony Corp. (Information
Technology) . . . . . . . . . . . . . . . . . . . . 4,000 291,173
Sumitomo Corp. (Industrial &
<PAGE>
PRO FORMA
PORTFOLIO OF INVESTMENTS - April 30, 1997 - (UNAUDITED)
Value
SECURITY DESCRIPTION SHARES (NOTE 2)
- --------------------------------------------------------------------------------
Commercial) . . . . . . . . . . . . . . . . . . . . 8,000 53,823
Sumitomo Electric Industries,
Ltd. (Industrial & Commercial). . . . . . . . . . . 12,000 162,603
Sumitomo Forestry Co., Ltd.
(Materials) . . . . . . . . . . . . . . . . . . . . 2,000 20,325
Sumitomo Metal Mining Co., Ltd.
(Materials). . . . . . . . . . . . . . . . . . . . . . . 15,000 100,445
Suzuki Motor Corp. (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 5,000 53,177
TDK Corp. (Information
Technology) . . . . . . . . . . . . . . . . . . . . 2,000 144,168
Teijin Ltd. (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 7,000 28,290
Toagosei Co., Ltd. (Materials) . . . . . . . . . . . . . 20,000 74,369
Tokio Marine & Fire Insurance
Co., Ltd. (Finance) . . . . . . . . . . . . . . . . 27,000 263,757
Tokyo Electron Ltd. (Information
Technology) . . . . . . . . . . . . . . . . . . . . 7,600 293,378
Tokyo Steel Manufacturing Co.
(Materials) . . . . . . . . . . . . . . . . . . . . 2,000 21,428
Toppan Printing Co., Ltd.
(Information & Entertainment) . . . . . . . . . . . 3,000 38,760
Toray Industries, Inc.
(Materials) . . . . . . . . . . . . . . . . . . . . 9,000 56,013
Toshiba Corp. (Information
Technology) . . . . . . . . . . . . . . . . . . . . 10,000 56,092
Toyota Motor Corp. (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 2,000 57,982
Uny Co., Ltd. (Consumer Staples) . . . . . . . . . . . . 2,000 35,136
Ushio, Inc. (Information
Technology) . . . . . . . . . . . . . . . . . . . . 4,000 46,953
Yamanouchi Pharmaceutical Co.,
Ltd. (Healthcare) . . . . . . . . . . . . . . . . . 6,000 128,097
---------
9,015,851
---------
KOREA -- 0.5%
Kookmin Bank GDR*(2) (Finance) . . . . . . . . . . . . . 5,000 89,375
Korea Electric Power Corp. ADR(1)
(Utilities) . . . . . . . . . . . . . . . . . . . . 8,500 144,500
Korea Fund, Inc. (Finance) . . . . . . . . . . . . . . . 2,800 36,050
SK Telecom Co., Ltd ADR(1)
(Information Technology). . . . . . . . . . . . . . 5,160 49,023
---------
318,948
---------
LUXEMBOURG -- 0.2%
Millicom International Cellular
SA+ (Information & Entertainment). . . . . . . . . . . . 2,700 122,850
---------
MALAYSIA -- 1.2%
Berjaya Sports Toto Bhd
(Information & Entertainment) . . . . . . . . . . . 7,000 33,455
Commerce Asset Holding Bhd
(Finance) . . . . . . . . . . . . . . . . . . . . . 3,000 17,923
Land & General Bhd+
(Multi-industry). . . . . . . . . . . . . . . . . . 21,600 29,422
MBF Capital Bhd (Finance). . . . . . . . . . . . . . . . 15,000 22,224
Multi-Purpose Holdings Bhd
(Finance) . . . . . . . . . . . . . . . . . . . . . 11,000 17,962
Oriental Holdings Bhd (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 14,000 105,942
Renong Bhd+ (Multi-industry) . . . . . . . . . . . . . . 18,000 24,661
Resorts World Bhd (Information &
Entertainment). . . . . . . . . . . . . . . . . . . 5,000 18,420
TA Enterprise Bhd (Finance). . . . . . . . . . . . . . . 144,000 168,042
Technology Resources Industries
Bhd (Information Technology). . . . . . . . . . . . 77,000 141,071
Time Engineering Bhd+
(Information Technology). . . . . . . . . . . . . . 6,000 10,993
United Engineers Bhd (Industrial
& Commercial) . . . . . . . . . . . . . . . . . . . 11,000 77,983
YTL Power International Bhd
(Consumer Discretionary). . . . . . . . . . . . . . 50,000 79,656
---------
747,754
---------
MEXICO -- 1.2%
Cemex SA de CV Class B
(Materials) . . . . . . . . . . . . . . . . . . . . 10,000 36,620
Cifra SA de CV ADR(1) (Consumer
Staples). . . . . . . . . . . . . . . . . . . . . . 120,000 182,880
Gruma SA de CV ADR*(1) (Consumer
Staples). . . . . . . . . . . . . . . . . . . . . . 610 11,751
Gruma SA de CV Class B+ (Consumer
Staples). . . . . . . . . . . . . . . . . . . . . . 2,000 9,639
Grupo Financiero Banamex-Accival
SA de CV., Class B (Finance). . . . . . . . . . . . 69,000 147,786
Grupo Industrial Maseca SA de CV
Class B (Industrial & Commercial). . . . . . . . . . . . 9,000 8,789
Grupo Modelo SA de CV Class C
(Consumer Staples). . . . . . . . . . . . . . . . . 2,000 12,131
Kimberly-Clark Corp. (Materials) . . . . . . . . . . . . 6,526 24,227
Panamerican Beverages, Inc. Class
A ADR(1) (Consumer Staples) . . . . . . . . . . . . 7,400 214,600
Telefonos de Mexico SA ADR(1)
(Utilities) . . . . . . . . . . . . . . . . . . . . 1,750 72,187
---------
720,610
---------
NETHERLANDS -- 3.6%
ABN AMRO Holdings NV (Finance) . . . . . . . . . . . . . 1,200 82,472
ASM Lithography Holding NV
(Information Technology). . . . . . . . . . . . . . 400 29,872
ASM Lithography Holding NV+
(Information Technology). . . . . . . . . . . . . . 1,300 102,863
Baan Co. NV+ (Information
Technology) . . . . . . . . . . . . . . . . . . . . 250 13,406
CSM NV (Consumer Staples). . . . . . . . . . . . . . . . 1,190 68,347
Elsevier NV (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 13,550 216,989
Fortis Amev NV (Finance) . . . . . . . . . . . . . . . . 1,030 38,857
Gamma Holdings NV (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 2,600 134,784
Getronics NV (Information
Technology) . . . . . . . . . . . . . . . . . . . . 3,000 90,848
Gucci Group NV (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 187 12,973
Hagemeyer NV (Multi-industry). . . . . . . . . . . . . . 270 23,490
ING Groep NV (Finance) . . . . . . . . . . . . . . . . . 3,490 137,035
Kon Ahrend NV (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 1,700 102,962
Koninklijke Ahold NV (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 2,320 158,374
<PAGE>
PRO FORMA
PORTFOLIO OF INVESTMENTS - April 30, 1997 - (UNAUDITED)
Value
SECURITY DESCRIPTION SHARES (NOTE 2)
- --------------------------------------------------------------------------------
Koninlijke PTT Nederland NV
(Utilities) . . . . . . . . . . . . . . . . . . . . 290 10,300
Nutricia Ver Bedrijuen NV
(Consumer Staples). . . . . . . . . . . . . . . . . 140 21,241
Philips Electronics NV
(Information Technology). . . . . . . . . . . . . . 4,500 234,897
PolyGram NV (Information &
Entertainment). . . . . . . . . . . . . . . . . . . 1,750 85,780
Royal Dutch Petroleum Co.
(Energy). . . . . . . . . . . . . . . . . . . . . . 1,430 255,570
Unilever NV and PLC (Consumer
Staples). . . . . . . . . . . . . . . . . . . . . . 510 99,183
Volker Stevin (Koninklijke) NV+
(Consumer Discretionary). . . . . . . . . . . . . . 1,000 113,689
Wolters Kluwer NV+ (Information &
Entertainment). . . . . . . . . . . . . . . . . . . 1,740 206,214
---------
2,240,146
---------
NEW ZEALAND -- 1.6%
Air New Zealand Ltd.+
(Information & Entertainment) . . . . . . . . . . . 74,000 213,920
Brierley Investments Ltd.+
(Finance) . . . . . . . . . . . . . . . . . . . . . 160,900 141,659
Carter Holt Harvey Ltd. (Consumer
Staples). . . . . . . . . . . . . . . . . . . . . . 4,000 8,873
CDL Hotels New Zealand Ltd.
(Information & Entertainment) . . . . . . . . . . . 575,000 211,265
Fletcher Challenge building
shares Ltd.+ (Multi-industry) . . . . . . . . . . . 4,000 11,230
Fletcher Challenge forest shares
Ltd.+ (Multi-industry). . . . . . . . . . . . . . . 62,800 86,636
Kiwi Income Property Trust (Real
Estate) . . . . . . . . . . . . . . . . . . . . . . 275,000 211,612
Telecom Corp. of New Zealand Ltd.
(Information Technology). . . . . . . . . . . . . . 3,000 13,456
Wrightson Ltd. (Multi-industry). . . . . . . . . . . . . 112,000 65,997
---------
964,648
---------
NORWAY -- 1.1%
Alvern Norway ASA+ (Information &
Entertainment). . . . . . . . . . . . . . . . . . . 12,000 92,681
Norman Data Defense Systems+
(Industrial & Commercial) . . . . . . . . . . . . . 5,600 86,502
Norsk Hydro ASA (Energy) . . . . . . . . . . . . . . . . 2,080 101,354
Orkla ASA (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 1,420 119,045
Saga Petroleum ASA Class B
(Energy). . . . . . . . . . . . . . . . . . . . . . 770 12,435
Smedvig ASA Class B (Energy). . . . . . . . . . . . . . 4,700 110,550
Smedvig ASA ADR(1) (Energy). . . . . . . . . . . . . . . 1,850 42,781
Tomra Systems ASA (Industrial &
Commercial) . . . . . . . . . . . . . . . . . . . . 6,500 125,962
---------
691,310
---------
PERU -- 0.4%
Backus & Johnston (Consumer
Staples) . . . . . . . . . . . . . . . . . . . . . . 187,000 162,090
Banco Credito del Peru (Finance). . . . . . . . . . . . . 18,386 32,150
CPT Telefonica de Peru
(Information Technology) . . . . . . . . . . . . . . 9,000 21,681
Telefonica Peru SA ADR(1)
(Industrial & Commercial) . . . . . . . . . . . . . . . . 346 8,304
---------
224,225
---------
PHILIPPINES -- 0.2%
Ayala Land, Inc. (Real Estate) . . . . . . . . . . . . . 44,000 31,703
Davao Union Cement (Materials) . . . . . . . . . . . . . 140,000 20,971
Metro Bank + Trust Co. (Finance) . . . . . . . . . . . . 2,500 51,194
Philippine Long Distance
Telephone Co. (Utilities) . . . . . . . . . . . . . 300 17,122
Philippine National Bank
(Finance) . . . . . . . . . . . . . . . . . . . . . 2,750 18,041
---------
139,031
---------
PORTUGAL -- 0.4%
Banco Totta & Acores (Finance) . . . . . . . . . . . . . 2,500 34,944
Cimpor-Cimentos de Portugal SA
(Materials) . . . . . . . . . . . . . . . . . . . . 7,100 152,741
Establecimentos Jeronimo Martins
& Filho SA (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 519 31,047
---------
218,732
---------
SINGAPORE -- 2.1%
City Developments Ltd. (Real
Estate) . . . . . . . . . . . . . . . . . . . . . . 6,000 48,497
DBS Land Ltd. (Real Estate). . . . . . . . . . . . . . . 35,000 113,161
Development Bank of Singapore
Ltd. alien shares (Finance) . . . . . . . . . . . . 1,000 11,883
FJ Benjamin Holdings Ltd.+
(Consumer Discretionary). . . . . . . . . . . . . . 230,000 111,226
Fraser & Neave Ltd. (Consumer
Staples). . . . . . . . . . . . . . . . . . . . . . 3,000 21,762
Hour Glass Ltd. (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 246,000 160,601
Keppel Bank (Finance). . . . . . . . . . . . . . . . . . 158,000 412,601
Keppel Corp., Ltd. (Industrial &
Commercial) . . . . . . . . . . . . . . . . . . . . 7,500 32,643
Overseas Chinese Banking Corp.,
Ltd. alien shares (Finance) . . . . . . . . . . . . 1,000 11,675
Overseas Union Bank (Finance). . . . . . . . . . . . . . 6,000 39,378
Overseas Union Bank Ltd. alien
shares (Finance). . . . . . . . . . . . . . . . . . 5,000 32,815
Sembawang Shipyard Ltd.
(Industrial & Commercial) . . . . . . . . . . . . . 27,000 116,580
Singapore Land Ltd. (Real Estate). . . . . . . . . . . . 7,000 32,643
Singapore Press Holdings Ltd.
alien shares (Information &
Entertainment). . . . . . . . . . . . . . . . . . . 3,000 55,544
United Industrial Corp., Ltd.
(Multi-industry). . . . . . . . . . . . . . . . . . 13,000 9,789
United Overseas Bank Ltd. alien
shares (Finance). . . . . . . . . . . . . . . . . . 6,000 56,373
Want Want Holdings+ (Real Estate). . . . . . . . . . . . 12,000 40,080
Wing Tai Holdings Ltd. (Real
Estate) . . . . . . . . . . . . . . . . . . . . . . 4,000 10,335
---------
1,317,586
---------
SOUTH AFRICA -- 0.4%
Energy Africa Ltd. GDR(2)
(Energy). . . . . . . . . . . . . . . . . . . . . . 11,000 231,000
<PAGE>
PRO FORMA
PORTFOLIO OF INVESTMENTS - April 30, 1997 - (UNAUDITED)
Value
SECURITY DESCRIPTION SHARES (NOTE 2)
- --------------------------------------------------------------------------------
SPAIN -- 0.6%
Banco Bilbao Vizcaya SA (Finance). . . . . . . . . . . . 180 12,114
Banco de Santander SA (Finance) . . . . . . . . . . . . 710 53,418
Banco Popular Espanol SA
(Finance) . . . . . . . . . . . . . . . . . . . . . 120 25,444
Corporation Bancaria de Espana SA
(Finance) . . . . . . . . . . . . . . . . . . . . . 270 12,041
Empresa Nacional de Electricidad
SA (Utilities). . . . . . . . . . . . . . . . . . . 540 37,747
Gas Natural SDG SA (Utilities) . . . . . . . . . . . . . 240 50,969
Iberdrola SA (Utilities) . . . . . . . . . . . . . . . . 5,610 63,312
Repsol SA (Energy) . . . . . . . . . . . . . . . . . . . 694 29,098
Repsol SA ADR(1) (Energy). . . . . . . . . . . . . . . . 1,800 75,375
Telefonica de Espana SA
(Utilities) . . . . . . . . . . . . . . . . . . . . 946 24,231
---------
383,749
---------
SWEDEN -- 1.5%
ABB AB Class A (Utilities) . . . . . . . . . . . . . . . 1,300 15,826
Astra AB Class A (Healthcare). . . . . . . . . . . . . . 1,600 65,471
Astra AB Class B (Healthcare). . . . . . . . . . . . . . 3,150 125,081
Atlas Copco AB Class B
(Industrial & Commercial) . . . . . . . . . . . . . 740 18,347
Electrolux AB Class B (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 6,860 393,514
Hennes & Mauritz AB Class B
(Consumer Discretionary). . . . . . . . . . . . . . 360 52,086
Hoganas AG (Information
Technology) . . . . . . . . . . . . . . . . . . . . 2,500 74,891
Sandvik AB (Industrial &
Commercial) . . . . . . . . . . . . . . . . . . . . 1,500 36,904
Scania AB, Class A (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 3,200 82,604
Volvo AB Class A (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 3,500 88,117
---------
952,841
---------
SWITZERLAND -- 4.5%
Adia SA (Industrial & Commercial)
. . . . . . . . . . . . . . . . . . . . . . . . . . . 190 63,415
Alusuisse-Lonza Holdings AG
(Multi-industry). . . . . . . . . . . . . . . . . . 100 84,797
BBC Brown Boveri AG (Industrial &
Commercial) . . . . . . . . . . . . . . . . . . . . 90 108,982
Ciba Specialty Chemicals AG+
(Materials) . . . . . . . . . . . . . . . . . . . . 80 6,892
Compagnie Financiere Richemont AG
(Finance) . . . . . . . . . . . . . . . . . . . . . 2,300 33,622
CS Holding AG+ (Finance) . . . . . . . . . . . . . . . . 1,230 138,512
Hilti AG (Consumer Discretionary)
. . . . . . . . . . . . . . . . . . . . . . . . . . 125 78,014
Julius Baer Holdings AG (Finance)
. . . . . . . . . . . . . . . . . . . . . . . . . . 339 424,296
Liechtenstein Global Trust AG+
(Finance). . . . . . . . . . . . . . . . . . . . . 400 219,795
Logitech International SA+
(Information Technology). . . . . . . . . . . . . . 400 73,265
Nestle SA+ (Consumer Staples). . . . . . . . . . . . . . 110 133,573
Novartis AG (Healthcare) . . . . . . . . . . . . . . . . 280 368,876
Roche Holdings AG (Healthcare) . . . . . . . . . . . . . 50 422,292
SMH AG (Consumer Discretionary). . . . . . . . . . . . . 730 413,507
Swiss Bank Corp. NY+ (Finance) . . . . . . . . . . . . . 160 34,950
TAG Heuer International SA+
(Consumer Discretionary). . . . . . . . . . . . . . 1,049 147,305
---------
2,752,093
---------
TAIWAN -- 0.3%
Compal Electronics, Inc.+
(Information Technology). . . . . . . . . . . . . . 124,000 181,970
---------
THAILAND -- 0.7%
Advanced Information Services PCL
alien shares (Information &
Entertainment). . . . . . . . . . . . . . . . . . . 1,000 6,508
Bangkok Bank PCL alien shares
(Finance) . . . . . . . . . . . . . . . . . . . . . 3,800 35,203
Industrial Finance Corp. of
Thailand alien (Finance). . . . . . . . . . . . . . 18,000 48,234
Matichon PCL alien shares
(Information & Entertainment) . . . . . . . . . . . 50,000 160,781
PTT Exploration & Production PCL
alien shares (Energy) . . . . . . . . . . . . . . . 3,800 48,587
Siam City Cement PCL alien shares
(Materials) . . . . . . . . . . . . . . . . . . . . 4,300 115,226
---------
414,539
---------
UNITED KINGDOM -- 10.3%
Abbey National PLC (Finance) . . . . . . . . . . . . . . 7,000 97,569
Airtours PLC (Information &
Entertainment). . . . . . . . . . . . . . . . . . . 13,000 193,209
Argos PLC (Consumer Staples) . . . . . . . . . . . . . . 6,000 62,723
Argyll Group PLC (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 9,000 49,887
ASDA Group PLC (Consumer Staples)
. . . . . . . . . . . . . . . . . . . . . . . . . . . 21,000 39,141
BG PLC (Energy). . . . . . . . . . . . . . . . . . . . . 6,000 17,310
British Petroleum Co. PLC
(Energy). . . . . . . . . . . . . . . . . . . . . . 4,000 45,900
Cable & Wireless PLC (Information
Technology) . . . . . . . . . . . . . . . . . . . . 34,000 261,819
Cadbury Schweppes PLC (Consumer
Staples). . . . . . . . . . . . . . . . . . . . . . 7,000 58,088
Caradon PLC (Materials). . . . . . . . . . . . . . . . . 12,000 48,039
Centrica PLC+ (Utilities). . . . . . . . . . . . . . . . 6,000 5,494
Compass Group PLC (Industrial &
Commercial) . . . . . . . . . . . . . . . . . . . . 3,000 32,869
Cookson Group PLC
(Multi-industry). . . . . . . . . . . . . . . . . . 58,400 205,394
Electrocomponents PLC
(Information Technology). . . . . . . . . . . . . . 2,000 12,804
Energy Group PLC+ (Utilities). . . . . . . . . . . . . . 16,340 129,767
Glaxo Wellcome PLC (Healthcare). . . . . . . . . . . . . 17,000 334,214
Glynwed International PLC
(Consumer Discretionary) . . . . . . . . . . . . . 42,000 175,624
Grand Metropolitan PLC
(Information & Entertainment). . . . . . . . . . . 12,000 100,162
Great Universal Stores PLC
(Consumer Discretionary) . . . . . . . . . . . . . 18,000 186,710
Guinness PLC (Consumer Staples) . . . . . . . . . . . . 10,000 82,658
Hanson PLC (Industrial &
Commercial). . . . . . . . . . . . . . . . . . . . 24,125 117,106
<PAGE>
PRO FORMA
PORTFOLIO OF INVESTMENTS - April 30, 1997 - (UNAUDITED)
Value
SECURITY DESCRIPTION SHARES (NOTE 2)
- --------------------------------------------------------------------------------
Inchcape PLC (Multi-industry). . . . . . . . . . . . . . 84,000 373,031
Kingfisher PLC (Consumer Staples)
. . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 108,266
Ladbroke Group PLC (Information &
Entertainment) . . . . . . . . . . . . . . . . . . . . . 6,000 22,366
Laporte PLC (Materials). . . . . . . . . . . . . . . . . 18,000 193,128
Legal & General PLC (Finance). . . . . . . . . . . . . . 10,000 67,018
Lonrho PLC (Multi-industry). . . . . . . . . . . . . . . 38,000 84,992
Medeva PLC (Healthcare). . . . . . . . . . . . . . . . . 11,300 55,126
Morgan Stanley Emerging Market
Fund, Inc. (Finance). . . . . . . . . . . . . . . . 12,600 201,600
National Westminster Bank PLC
(Finance) . . . . . . . . . . . . . . . . . . . . . 46,000 544,246
Orange PLC+ (Information &
Entertainment). . . . . . . . . . . . . . . . . . . 114,000 399,092
Rank Group PLC (Information &
Entertainment). . . . . . . . . . . . . . . . . . . 7,000 48,217
Reed International PLC
(Information & Entertainment) . . . . . . . . . . . 16,500 304,060
RTZ Corp. PLC (Materials). . . . . . . . . . . . . . . . 5,000 79,417
Sainsbury (J.) PLC (Consumer
Staples). . . . . . . . . . . . . . . . . . . . . . 35,000 187,763
Shell Transport & Trading Co.
(Energy). . . . . . . . . . . . . . . . . . . . . . 8,000 141,459
Smith (David S) Holdings PLC
(Materials) . . . . . . . . . . . . . . . . . . . . 5,000 18,152
Smithkline Beecham PLC
(Healthcare). . . . . . . . . . . . . . . . . . . . 15,000 241,045
T & N PLC (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 7,000 15,429
Tanjong PLC (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 10,000 36,243
Tarmac PLC (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 85,000 169,449
Tesco PLC (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 8,000 46,418
Thistle Hotels PLC (Information &
Entertainment). . . . . . . . . . . . . . . . . . . 58,300 156,853
Tomkins PLC (Consumer Staples) . . . . . . . . . . . . . 19,000 81,912
United News & Media PLC
(Information & Entertainment) . . . . . . . . . . . 8,000 97,763
Vaux Group PLC (Consumer Staples). . . . . . . . . . . . 37,000 164,911
Vickers PLC (Multi-industry) . . . . . . . . . . . . . . 43,000 148,444
Waddington (John) PLC (Materials). . . . . . . . . . . . 25,000 123,987
---------
6,366,874
---------
UNITED STATES -- 6.2% (4)
AlliedSignal, Inc.
(Multi-industry). . . . . . . . . . . . . . . . . . 2,000 144,500
Associates First Capital Corp.
Class A (Finance) . . . . . . . . . . . . . . . . . 2,000 102,500
Banco Santander-Chile, Class A
ADR(1) (Finance). . . . . . . . . . . . . . . . . . 800 12,800
Boeing Co. (Industrial &
Commercial) . . . . . . . . . . . . . . . . . . . . 1,000 98,625
Bristol-Myers Squibb Co.
(Healthcare). . . . . . . . . . . . . . . . . . . . 3,000 196,500
Chase Manhattan Corp. (Finance). . . . . . . . . . . . . 1,000 92,625
Citicorp (Finance) . . . . . . . . . . . . . . . . . . . 1,000 112,625
Du Pont (E.I.) de Nemours & Co.
(Materials) . . . . . . . . . . . . . . . . . . . . 1,000 106,125
Ericsson (L.M.) Telephone Co.
ADR(1) (Information Technology) . . . . . . . . . . 4,000 134,500
Ford Motor Co. (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 2,500 86,875
General Electric Co.
(Multi-industry). . . . . . . . . . . . . . . . . . 800 88,700
General Motors Corp. (Consumer
Discretionary). . . . . . . . . . . . . . . . . . . 4,000 231,500
GTE Corp. (Information
Technology) . . . . . . . . . . . . . . . . . . . . 5,000 229,375
Hibernia Corp. Class A (Finance)
. . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 64,375
Johnson & Johnson Co.
(Healthcare). . . . . . . . . . . . . . . . . . . . 4,000 245,000
Lilly (Eli) & Co. (Healthcare) . . . . . . . . . . . . . 2,000 175,750
Lucent Technologies, Inc.
(Information Technology). . . . . . . . . . . . . . 2,000 118,250
McDonald's Corp. (Consumer
Staples). . . . . . . . . . . . . . . . . . . . . . 3,000 160,875
Merck & Co., Inc. (Healthcare) . . . . . . . . . . . . . 3,000 271,500
Morgan Stanley Group, Inc.
(Finance) . . . . . . . . . . . . . . . . . . . . . 2,000 126,250
Nationwide Financial Services,
Inc. Class A+ (Finance) . . . . . . . . . . . . . . . . 4,100 108,650
Neurex Corp.+ (Healthcare) . . . . . . . . . . . . . . . 5,000 55,000
Pfizer, Inc. (Healthcare). . . . . . . . . . . . . . . . 1,200 115,200
Philip Morris Cos., Inc.
(Consumer Staples). . . . . . . . . . . . . . . . . 3,000 118,125
Schering-Plough Corp.
(Healthcare). . . . . . . . . . . . . . . . . . . . 3,200 256,000
Scotts Co., Class A+ (Consumer
Staples). . . . . . . . . . . . . . . . . . . . . . 3,000 76,875
Tellabs, Inc.+ (Information
Technology) . . . . . . . . . . . . . . . . . . . . 4,000 159,500
Travelers Group, Inc. (Finance). . . . . . . . . . . . . 2,000 110,750
---------
3,799,350
---------
VENEZUELA -- 0.0%
Compania Anon Nacional Tele de
Venezuela ADR(1) (Utilities). . . . . . . . . . . . 230 6,900
---------
TOTAL COMMON STOCK (cost $45,067,178) . . . . . . . . . 46,174,057
---------
PREFERRED STOCK -- 1.4%
BRAZIL -- 0.1%
Cemig Cia Energy MG (Energy) . . . . . . . . . . . . . . 935,000 42,631
---------
CANADA -- 0.0%
Inco Ltd. (Materials). . . . . . . . . . . . . . . . . . 36 2,571
---------
FINLAND -- 0.1%
Nokia Corp., Class A ADR+(1)
(Information Technology) . . . . . . . . . . . . . . . . 520 32,437
---------
GERMANY -- 1.0%
Friedrich Grohe AG non voting
(Industrial & Commercial) . . . . . . . . . . . . . 1,130 338,321
GEA AG non voting (Industrial &
<PAGE>
PRO FORMA
PORTFOLIO OF INVESTMENTS - April 30, 1997 - (UNAUDITED)
SHARES/
PRINCIPAL AMOUNT
(DENOMINATED IN
LOCAL CURRENCY) Value
SECURITY DESCRIPTION (IN THOUSANDS) (Note 2)
- --------------------------------------------------------------------------------
Commercial) . . . . . . . . . . . . . . . . . . . . 580 197,598
Hornbach Holding AG non voting
(Consumer Discretionary). . . . . . . . . . . . . . 1,450 92,938
SAP AG non voting (Information
Technology) . . . . . . . . . . . . . . . . . . . . 90 16,573
---------
645,430
---------
ITALY -- 0.2%
Istituto Finanziario (Finance) . . . . . . . . . . . . . 12,600 151,597
---------
TOTAL PREFERRED STOCK (cost $832,893) . . . . . . . . . 874,666
---------
CONVERTIBLE BONDS -- 0.3%
TAIWAN -- 0.2%
Compal Electronics* zero coupon 2003 . . . . . . . . . . 93,000 136,478
---------
THAILAND -- 0.1%
Bangkok Bank PCL alien shares 3.25% 2004 . . . . . . . . 29,000 26,645
---------
TOTAL CONVERTIBLE BONDS (cost $131,115) . . . . . . . . 163,123
---------
WARRANTS -- 0.1% +
PORTUGAL -- 0.0%
Jeronimo Martins 9/15/03
(Consumer Staples). . . . . . . . . . . . . . . . . 43 544
---------
THAILAND -- 0.0%
Industrial Finance Corp. of
Thailand alien (Finance) . . . . . . . . . . . . . . . . 12,000 6,087
---------
UNITED KINGDOM -- 0.1%
Morgan Stanley Group, Inc.
8/15/97 (Finance) . . . . . . . . . . . . . . . . . 18,300 62,906
---------
TOTAL WARRANTS (cost $85,177). . . . . . . . . . . . . . 69,537
---------
FOREIGN BONDS & NOTES -- 3.6% (4)
AUSTRALIA -- 0.1%
Commonwealth of Australia 7.50% 2005. . . . . . . . . . 100 76,896
---------
BELGIUM -- 0.2%
Kingdom of Belgium 6.50% 2005 . . . . . . . . . . . . . 4,000 117,975
---------
CANADA -- 0.3%
Government of Canada 7.50% 2000 . . . . . . . . . . . . 200 151,134
---------
DENMARK -- 0.3%
Kingdom of Denmark 9.00% 2000 . . . . . . . . . . . . . 1,000 171,514
---------
FRANCE -- 0.2%
Government of France 7.00% 1999 . . . . . . . . . . . . 700 128,594
---------
GERMANY -- 0.1%
Treuhandanstalt (Germany) 6.13% 1998. . . . . . . . . . 100 59,493
---------
ITALY -- 0.4%
Republic of Italy 10.50% 2000 . . . . . . . . . . . . . 400,000 258,385
---------
SPAIN -- 0.1%
Government of Spain 10.00% 2005 . . . . . . . . . . . . 10,000 82,166
---------
SWEDEN -- 0.8%
Kingdom of Sweden 10.25% 2003 . . . . . . . . . . . . . 1,500 224,835
---------
Kingdom of Sweden 13.00% 2001 . . . . . . . . . . . . . 1,500 238,661
---------
. . . . . . . . . . . . . . . . . . . . . . . . . . 463,496
---------
UNITED KINGDOM -- 1.1%
United Kingdom Treasury 8.50% 2005. . . . . . . . . . . 300 518,740
---------
United Kingdom Treasury 9.00% 2000. . . . . . . . . . . 100 169,874
---------
. . . . . . . . . . . . . . . . . . . . . . . . . . 688,614
---------
TOTAL FOREIGN BONDS & NOTES
(cost $2,234,630) . . . . . . . . . . . . . . . . . . . 2,198,267
---------
U.S. TREASURY NOTES -- 3.9% (4)
UNITED STATES -- 3.9%
5.25% due 1/31/01. . . . . . . . . . . . . . . . . . . . 100 95,954
5.88% due 2/15/00. . . . . . . . . . . . . . . . . . . . 750 739,920
6.13% due 9/30/00. . . . . . . . . . . . . . . . . . . . 150 148,383
6.38% due 3/31/01. . . . . . . . . . . . . . . . . . . . 200 198,938
6.50% due 8/15/05. . . . . . . . . . . . . . . . . . . . 500 492,580
7.88% due 11/15/04 . . . . . . . . . . . . . . . . . . . 700 747,908
---------
2,423,683
---------
TOTAL U.S. TREASURY NOTES (cost $2,399,088) . . . . . . 2,423,683
---------
OPTIONS -- 0.0% +
JAPAN -- 0.0%
Nikkei 225 Index,Jun1997/17700 Put(3) zero coupon 1997. 189,400 833
---------
SINGAPORE -- 0.0%
Dbs 50 Index,Jan1998/403 Call(3) . . . . . . . . . . . . 8,300 480
Dbs 50 Index,Jan1998/404 Call(3) . . . . . . . . . . . . 2,300 160
Dbs 50 Index,Jan1998/407 Call(3) . . . . . . . . . . . . 8,000 415
Dbs 50 Index,Jan1998/407 Call(3) . . . . . . . . . . . . 7,900 411
1,466
THAILAND -- 0.0%
Set 50 Index,Jan1998/2 Call(3) . . . . . . . . . . . . 1,119,400 1,235
Set 50 Index,Jan1998/2 Call(3) . . . . . . . . . . . . 1,143,800 720
Set 50 Index,Jan1998/2 Call(3) . . . . . . . . . . . . 1,116,400 449
Set 50 Index,Jan1998/2 Call(3) . . . . . . . . . . . . 1,122,900 1,038
3,442
TOTAL OPTIONS (cost $44,596) . . . . . . . . . . . . . . 5,741
---------
TOTAL INVESTMENT SECURITIES
(cost $50,794,677) . . . . . . . . . . . . . . . . . . . 51,909,074
---------
SHORT-TERM SECURITIES -- 3.3%
Cayman Island Time Deposit 3.00% with
State Street Bank and Trust co.,
due 5/01/97 1997. . . . . . . . . . . . . . . . . . 706 706,000
Cayman Island Time Deposit 4.50% with
State Street Bank and Trust Co.,
due 5/01/971997 . . . . . . . . . . . . . . . . . . 1,329 1,329,000
---------
2,035,000
---------
TOTAL SHORT-TERM SECURITIES
(cost $2,035,000) . . . . . . . . . . . . . . . . . . . 2,035,000
---------
<PAGE>
PRO FORMA
PORTFOLIO OF INVESTMENTS - APRIL 30, 1997 - (UNAUDITED) - (CONTINUED)
PRINCIPAL AMOUNT VALUE
SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 2)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 8.8%
Agreement with State Street Bank and Trust Co.,
bearing 4.00%, dated 4/30/97 to be repurchased
5/01/97 in the amount of $2,434,270 collaterized
by $2,475,000 U.S. Treasury Notes 5.76% due
5/30/97 approximate aggregate value $2,488,406
(cost $2,434,000) $ 2,434 $ 2,434,000
Agreement with State Street Bank and Trust Co.,
bearing 5.30%, dated 4/30/97 to repurchased
5/01/97 in the amount of $1,035,152 collaterized
by $1,055,000 U.S. Treasury Note 5.25% due
7/01/97 approximate aggregate value $1,057,902
(cost $1,035,000) 1,035 1,035,000
Joint Agreement with Paine Webber, Inc.,
representing 3.20% undivided Interest, bearing
5.30% dated 4/30/97 to be repurchased 5/01/97
in the amount of $60,776,946 collaterized by
$50,000,000 U.S. Treasury Note 6.50% due 5/30/01
approximate aggregate value $62,001,625
(cost $1,924,000) 1,924 1,924,000
----------
TOTAL REPURCHASE AGREEMENT
(cost $5,393,000) . . . . . . . . . . . . . . . . . . . 5,393,000
----------
TOTAL INVESTMENTS --
(cost $58,222,677) 96.2% 59,337,074
Other assets less liabilities-- 3.8 2,371,156
------------------
NET ASSETS-- 100.0% $61,708,230
------------------
------------------
- -------------------------
+ Non-Income producing securities
* Resale restricted to qualified institutional buyers
(1) ADR-American Depositary Receipts
(2) GDR-Global Depositary Receipts
(3) Fair valued security, see Note 2
(4) Securities are not consistant with the investment
policy of international Equity Portfolio, the surviving
entity, and will be disposed of upon shareholder
approval of the combination.
See Notes to Pro Forma Financial Statements.
<PAGE>
PRO FORMA
PORTFOLIO OF INVESTMENTS - April 30, 1997 - (UNAUDITED)
OPEN FORWARD FOREIGN CURRENCY CONTRACTS
GROSS
CONTRACT IN DELIVERY UNREALIZED
TO DELIVER EXCHANGE FOR DATE APPRECIATION
---------- ------------ ---- ------------
IEP 107,348 USD 169,889 5/06/97 $6,780
IDEM 2,000,000 USD 1,170,275 6/12/97 11,884
JPY 300,000,000 USD 2,461,034 6/12/97 82,944
* DEM 241,478 USD 150,000 7/23/97 9,721
JPY 25,702,500 USD 230,000 10/24/97 22,093
JPY 47,907,500 USD 433,454 10/24/97 45,932
* JPY 18,407,500 USD 166,546 10/24/97 17,649
------------
199,003
------------
------------
GROSS
UNREALIZED
DEPRECIATION
------------
USD 405,400 GBP 250,000 6/30/97 $(651)
* USD 144,327 DEM 241,478 7/23/97 (4,048)
* USD 154,643 JPY 18,407,500 10/24/97 (5,745)
------------
(10,444)
------------
Net Appreciation. . . . . . . . . . . . . . . . . . . . $188,559
------------
------------
*Represents open forward foreign currency contracts and offsetting open forward
foreign currency contracts that do not have additional market risk but have
continued couterparty settlement risk.
DEM-Deutsche mark
GBP-Great Britain Pound
IEP-Irish Pound
JPY-Japanese Yen
USD-United States Dollar
<PAGE>
STYLE SELECT INTERNATIONAL EQUITY PORTFOLIO
SUNAMERICA GLOBAL BALANCED FUND
NOTES TO PRO FORMA FINANCIAL STATEMENTS
APRIL 30, 1997
(Unaudited)
1. BASIS OF COMBINATION
The Pro Forma Statement of Assets and Liabilities and Statement of
Operations ("Pro Forma Statements") reflect the actual accounts of Style Select
International Equity Portfolio ("International Equity") a separately managed
portfolio of Style Select Series, Inc., and SunAmerica Global Balanced Fund
("Global Balanced") a separately managed portfolio of SunAmerica Equity Funds,
for the period November 19, 1996, commencement of operations for the
International Equity Portfolio, through April 30, 1997. These statements have
been derived from the books and records of International Equity and Global
Balanced used in calculating their respective daily net asset values for the
periods stated above. The Pro Forma Combined Statement of Assets and
Liabilities has been restated to reflect a tax free exchange of the Global
Balanced Fund Class A and Class B as of the close of business on April 30, 1997.
The Pro Forma Statements give effect to the proposed transfer of all assets
and liabilities of Global Balanced in exchange for shares of International
Equity. In conjunction with the reorganization, International Equity is the
surviving portfolio.
The Pro Forma Statements should be read in conjunction with the historical
financial statements of International Equity and Global Balanced included in
their respective Statements of Additional Information.
2. VALUATION
Securities that are actively traded in the over-the-counter market,
including listed securities for which the primary market is believed by the
Adviser to be over-the-counter, are valued at the quoted bid price provided by
principal market makers. Securities listed on the New York Stock Exchange
("NYSE") or other national securities exchanges, are valued on the basis of the
last sale price on the exchange on which they are primarily traded. If there is
no sale on that day, then securities are valued at the closing bid price on the
NYSE or other primary exchange for that
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day. However, if the last sale price on the NYSE is different than the last sale
price on any other exchange, the NYSE price is used. Securities that are traded
on foreign exchanges are ordinarily valued at the last quoted sale price
available before the time when the assets are valued. If a security's price is
available from more than one foreign exchange, a Fund uses the exchange that is
the primary market for the security. Values of portfolio securities primarily
traded on foreign exchanges are already translated into U.S. dollars when
received from a quotation service. The Funds may make use of a pricing service
in the determination of their net asset values. Securities for which market
quotations are not readily available and other assets are valued at fair value
as determined pursuant to procedures adopted in good faith by the Trustees.
Short-term securities which mature in less than 60 days are valued at amortized
cost, if their original maturity was 60 days or less, or by amortizing their
value on the 61st day prior to maturity, if their original term to maturity
exceeded 60 days.
3. CAPITAL SHARES
The pro forma combined net asset value per share assumes the issuance of
additional shares of International Equity which would have been issued at April
30, 1997 in connection with the proposed reorganization. The amount of
additional shares assumed to be issued was calculated based on the April 30,
1997 net asset value of International Equity Class A ($12.48) and Class B
($12.44).
The pro forma number of shares outstanding are as follows:
Class A Class B Class C
Shares
International Equity 1,841,936 1,134,927 87,909
Additional Shares issued 636,580 1,250,221 -
Pro Forma
Shares outstanding 2,478,516 2,385,148 87,909
These pro forma financial statements assume that all shares of Global
Balanced Class A and Class B outstanding on April 30, 1997 were exchanged, tax
free, for International Equity Class A and Class B shares, respectively. Class C
shares were not affected by the combination.
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4. PRO FORMA OPERATING EXPENSES
The Pro Forma Statement of Operations assumes expense adjustments based on
the agreements of International Equity, the surviving entity. Certain accounts
have been adjusted to reflect the expenses of the combined entity more closely.
Pro forma operating expenses include the actual expenses of Global Balanced and
International Equity combined, adjusted for certain items which are factually
supportable. Advisory fees have been charged to the combined entity based upon
the contract in effect for International Equity at the level of assets of the
combined fund for the stated period.
