<PAGE> 1
As filed with the Securities and Exchange Commission on March 27, 1998
File Nos. 33-52742; 811-7238
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 _
Pre-Effective Amendment No. _
Post-Effective Amendment No. 15 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 _
Amendment No. 17 X
(Check appropriate box or boxes)
SUNAMERICA SERIES TRUST
(Exact Name of Registrant as Specified in Charter)
1 SunAmerica Center
Los Angeles, CA 90067-6022
(Address of Principal Executive Office)(Zip Code)
Registrant's telephone number, including area code: (800) 858-8850
Robert M. Zakem
Senior Vice President and General Counsel
SunAmerica Asset Management Corp.
The SunAmerica Center
733 Third Avenue - 3rd Floor
New York, NY 10017-3204
(Name and Address of Agent for Service)
Copy to:
Susan L. Harris, Esq.
SunAmerica Inc.
1 SunAmerica Center
Los Angeles, CA 90067-6022
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
- ---
X on (April 1, 1998) pursuant to paragraph (b)
- ---
60 days after filing pursuant to paragraph (a)
- ---
on (date) pursuant to paragraph (a) of Rule 485
- ---
75 days after filing pursuant to paragraph (a)(2)
- ---
--------------------
================================================================================
<PAGE> 2
SUNAMERICA SERIES TRUST
CROSS REFERENCE SHEET
Pursuant to Rule 481(b)
Under the Securities Act of 1933
<TABLE>
<CAPTION>
PART A
Item No. Registration Statement Caption Caption in Prospectus
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis - Fee Table *
3. Financial Highlights Financial Highlights
4. General Description of Registrant The Trust, Its Investment
Objectives and Policies;
Description of Securities
and Investment Techniques
5. Management of the Fund Management
6. Capital Stock and Other Securities Dividends, Distributions and
Federal Taxes; Shareholder
Voting Rights; Shareholder
Inquiries
7. Purchase of Securities Being Offered Purchases and Redemptions
8. Redemption or Repurchase Purchases and Redemptions
9. Pending Legal Proceedings *
PART B Caption in Statement
Item No. Registration Statement Caption of Additional Information
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History The Trust
13. Investment Objectives and Policies Investment Objectives and
Policies; Investment
Restrictions
14. Management of the Fund Trust Officers and Trustees
15. Contact Persons and Principal Holders The Trust
of Securities
16. Investment Advisory and Other Services Investment Advisory and
Management Agreement;
Subadvisory Agreements;
General Information
17. Brokerage Allocation and Other Practices Execution of Portfolio
Transactions
18. Capital Stock and Other Securities *
19. Purchase, Redemption and Pricing of Price of Shares
Securities Being Offered
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
20. Tax Status Dividends, Distributions and Federal Taxes
21. Underwriters *
22. Calculation of Performance Data *
23. Financial Statements Financial Statements
</TABLE>
* Omitted from the Prospectus or Statement of Additional Information because
the item is not applicable.
PART C
The information required to be included in Part C is set forth under
the appropriate item, so numbered in Part C of this Registration Statement.
<PAGE> 4
PROSPECTUS -- APRIL 1, 1998
================================================================================
SUNAMERICA SERIES TRUST
================================================================================
P.O. BOX 54299
LOS ANGELES, CALIFORNIA 90054-0299
SunAmerica Series Trust ("Trust") is an open-end management investment company.
The Trust consists of 22 Portfolios, each of which has its own investment
objectives and policies.
The CASH MANAGEMENT PORTFOLIO seeks high current yield while preserving capital
by investing in a diversified selection of money market instruments.
The CORPORATE BOND PORTFOLIO seeks a high total return with only moderate price
risk by investing primarily in investment grade fixed-income securities.
The GLOBAL BOND PORTFOLIO seeks a high total return, emphasizing current income
and, to a lesser extent, providing opportunities for capital appreciation,
through investment in high quality fixed-income securities of U.S. and foreign
issuers and through transactions in foreign currencies.
The HIGH-YIELD BOND PORTFOLIO seeks a high level of current income and
secondarily seeks capital appreciation by investing primarily in intermediate
and long-term corporate obligations, with emphasis on higher-yielding,
higher-risk, lower-rated or unrated securities.
The WORLDWIDE HIGH INCOME PORTFOLIO seeks high current income and, secondarily,
capital appreciation, by investing primarily in a portfolio of high-yielding
fixed-income securities of issuers located throughout the world.
The SUNAMERICA BALANCED PORTFOLIO seeks to conserve principal by maintaining, at
all times, a balanced portfolio of stocks and bonds.
The BALANCED/PHOENIX INVESTMENT COUNSEL PORTFOLIO seeks reasonable income,
long-term capital growth and conservation of capital by investing primarily in
common stocks and fixed-income securities, with an emphasis on income-producing
securities which appear to have some potential for capital enhancement.
The ASSET ALLOCATION PORTFOLIO seeks high total return (including income and
capital gains) consistent with preservation of capital over the long-term
through a diversified portfolio that can include common stocks and other
securities having common stock characteristics, bonds and other intermediate and
long-term fixed-income securities and money market instruments (debt securities
maturing in one year or less) in any combination.
The UTILITY PORTFOLIO seeks high current income and moderate capital
appreciation by investing primarily in the equity and debt securities of utility
companies.
THE HIGH-YIELD BOND AND WORLDWIDE HIGH INCOME PORTFOLIOS INVEST PREDOMINANTLY
IN, AND THE CORPORATE BOND, BALANCED/PHOENIX INVESTMENT COUNSEL, ASSET
ALLOCATION, REAL ESTATE, INTERNATIONAL GROWTH AND INCOME AND EMERGING MARKETS
PORTFOLIOS MAY INVEST IN, LOWER-RATED AND UNRATED BONDS (ALSO KNOWN AS "JUNK
BONDS"). BONDS OF THIS TYPE ARE TYPICALLY SUBJECT TO GREATER MARKET FLUCTUATIONS
AND RISK OF LOSS OF INCOME AND PRINCIPAL DUE TO DEFAULT BY THE ISSUER THAN ARE
INVESTMENTS IN LOWER-YIELDING, HIGHER-RATED BONDS. SEE "DESCRIPTION OF
SECURITIES AND INVESTMENT TECHNIQUES -- RISK FACTORS RELATING TO HIGH-YIELD
BONDS" FOR A DISCUSSION OF THE RISKS ASSOCIATED WITH HIGH-YIELD, HIGH-RISK
SECURITIES.
(Cover continued on next page)
------------------------
INVESTMENTS IN A PORTFOLIO ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT OR ANY OTHER ENTITY OR PERSON.
This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Trust. Please read it carefully and retain
it for future reference. A Statement of Additional Information has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference. Further information about the performance of the Portfolios is
contained in the Trust's Annual Report to Shareholders. The Annual Report to
Shareholders and the Statement of Additional Information may be obtained upon
request and without charge by writing to the Trust at the above address or by
calling 1-800-445-SUN2.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE> 5
(Cover continued from previous page)
The GROWTH-INCOME PORTFOLIO seeks growth of capital and income by investing
primarily in common stocks or securities which demonstrate the potential for
appreciation and/or dividends.
The FEDERATED VALUE PORTFOLIO seeks growth of capital and income by investing
primarily in the securities of high quality companies.
The VENTURE VALUE PORTFOLIO seeks to achieve growth of capital by investing
primarily in common stocks.
The "DOGS" OF WALL STREET PORTFOLIO seeks total return (including capital
appreciation and current income) primarily through the annual selection of
thirty high dividend yielding common stocks from the Dow Jones Industrial
Average and the Standard & Poor's 400 Industrials.
The ALLIANCE GROWTH, GROWTH/PHOENIX INVESTMENT COUNSEL and PUTNAM GROWTH
PORTFOLIOS each seeks long-term growth of capital by investing primarily in
common stocks or securities with common stock characteristics which the Adviser
believes have the potential for appreciation.
The REAL ESTATE PORTFOLIO seeks to achieve total return through a combination of
growth and income by investing primarily in securities of companies principally
engaged in or related to the real estate industry or which own significant real
estate assets or which primarily invest in real estate financial instruments.
The AGGRESSIVE GROWTH PORTFOLIO seeks capital appreciation by investing
primarily in equity securities of small capitalization growth companies.
The INTERNATIONAL GROWTH AND INCOME PORTFOLIO seeks growth of capital with
current income as a secondary objective by investing primarily in common stocks
traded on markets outside the United States.
The GLOBAL EQUITIES PORTFOLIO seeks long-term growth of capital through
investment primarily in common stocks or securities of U.S. and foreign issuers
with common stock characteristics which demonstrate the potential for
appreciation and through transactions in foreign currencies.
The INTERNATIONAL DIVERSIFIED EQUITIES PORTFOLIO seeks long-term capital
appreciation by investing in accordance with country weightings determined by
its subadviser in common stocks of foreign issuers which, in the aggregate,
replicate broad country indices.
The EMERGING MARKETS PORTFOLIO seeks long-term capital appreciation by investing
mainly in the common stocks and other equity securities of companies that its
subadviser believes have above-average growth prospects primarily in emerging
markets outside the United States.
Shares of the Trust are issued and redeemed only in connection with investments
in and payments under variable annuity contracts and may be sold to fund
variable life contracts issued in the future. The contracts involve fees and
expenses not described in this Prospectus. Certain Portfolios may not be
available in connection with a particular contract. See the applicable contract
prospectus for information regarding contract fees and expenses and any
restrictions or limitations.
<PAGE> 6
=========================================================
TABLE OF CONTENTS
=========================================================
<TABLE>
<CAPTION>
TOPIC PAGE
----- ----
<S> <C> <C>
FINANCIAL HIGHLIGHTS...................... 4
THE TRUST, ITS INVESTMENT OBJECTIVES AND
POLICIES................................ 8
Cash Management Portfolio.......... 9
Corporate Bond Portfolio........... 9
Global Bond Portfolio.............. 10
High-Yield Bond Portfolio.......... 11
Worldwide High Income Portfolio.... 12
SunAmerica Balanced Portfolio...... 13
Balanced/Phoenix Investment Counsel
Portfolio.......................... 14
Asset Allocation Portfolio......... 15
Utility Portfolio.................. 15
Growth-Income Portfolio............ 16
Federated Value Portfolio.......... 16
Venture Value Portfolio............ 17
"Dogs" of Wall Street Portfolio.... 18
Alliance Growth, Growth/Phoenix
Investment Counsel and Putnam
Growth Portfolios.................. 20
Real Estate Portfolio.............. 20
Aggressive Growth Portfolio........ 21
International Growth and Income
Portfolio.......................... 21
Global Equities Portfolio.......... 22
International Diversified Equities
Portfolio.......................... 22
Emerging Markets Portfolio......... 23
DESCRIPTION OF SECURITIES AND INVESTMENT
TECHNIQUES.............................. 24
MANAGEMENT................................ 34
PORTFOLIO TURNOVER AND BROKERAGE.......... 40
DIVIDENDS, DISTRIBUTIONS AND FEDERAL
TAXES................................... 41
PRICE OF SHARES........................... 42
PURCHASES AND REDEMPTIONS................. 42
SHAREHOLDER VOTING RIGHTS................. 42
INDEPENDENT ACCOUNTANTS................... 43
GENERAL INFORMATION....................... 43
SHAREHOLDER INQUIRIES..................... 43
FINANCIAL INFORMATION..................... 43
</TABLE>
3
<PAGE> 7
================================================================================
FINANCIAL HIGHLIGHTS
================================================================================
The following Financial Highlights for the Portfolios and periods set forth
below have been audited by Price Waterhouse LLP, the Trust's independent
accountants, whose report on the financial statements containing such
information is included in the Trust's Annual Report to Shareholders. These
Financial Highlights* should be read in conjunction with the financial
statements and notes thereto, which are included in the Statement of Additional
Information.
<TABLE>
<CAPTION>
DIVIDENDS DIVIDENDS
NET TOTAL DECLARED FROM NET NET NET
NET ASSET NET REALIZED FROM FROM NET REALIZED ASSET ASSETS
VALUE INVEST- & UNREALIZED INVEST- INVEST- GAIN ON VALUE END OF
BEGINNING MENT GAIN (LOSS) ON MENT MENT INVEST- END OF TOTAL PERIOD
PERIOD ENDED OF PERIOD INCOME** INVESTMENTS OPERATIONS INCOME MENTS PERIOD RETURN*** (000'S)
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cash Management Portfolio
2/9/93-11/30/93 $10.00 $0.19 $ 0.01 $ 0.20 $ -- $ -- $10.20 2.00% $ 24,603
11/30/94 10.20 0.38 (0.02) 0.36 (0.09) -- 10.47 3.51 89,098
11/30/95 10.47 0.56 0.01 0.57 (0.34) -- 10.70 5.59 90,731
11/30/96 10.70 0.53 (0.02) 0.51 (0.45) -- 10.76 4.92 91,247
11/30/97 10.76 0.53 0.01 0.54 (0.56) -- 10.74 5.22 156,119
- --------------------------------------------------------------------------------------------------------------------------------
Corporate Bond Portfolio
7/1/93-11/30/93 10.00 0.14 0.05 0.19 -- -- 10.19 1.90 11,667
11/30/94 10.19 0.52 (0.87) (0.35) (0.05) (0.04) 9.75 (3.41) 15,869
11/30/95 9.75 0.60 1.00 1.60 (0.53) -- 10.82 17.01 29,475
11/30/96 10.82 0.65 0.03 0.68 (0.41) -- 11.09 6.51 37,207
11/30/97 11.09 0.77 0.21 0.98 (0.53) -- 11.54 9.26 62,272
- --------------------------------------------------------------------------------------------------------------------------------
Global Bond Portfolio
7/1/93-11/30/93 10.00 0.13 0.17 0.30 -- -- 10.30 3.00 25,010
11/30/94 10.30 0.53 (0.86) (0.33) (0.09) (0.05) 9.83 (3.18) 44,543
11/30/95 9.83 0.60 0.97 1.57 (0.38) -- 11.02 16.40 59,759
11/30/96 11.02 0.59 0.54 1.13 (0.75) -- 11.40 10.94 68,221
11/30/97 11.40 0.52 0.38 0.90 (0.75) (0.04) 11.51 8.43 89,043
- --------------------------------------------------------------------------------------------------------------------------------
High-Yield Bond Portfolio
2/9/93-11/30/93 10.00 0.76 0.36 1.12 -- -- 11.12 11.20 41,851
11/30/94 11.12 1.20 (1.65) (0.45) (0.29) (0.06) 10.32 (4.26) 55,803
11/30/95 10.32 1.11 0.12 1.23 (1.02) -- 10.53 12.64 82,174
11/30/96 10.53 0.98 0.48 1.46 (0.95) -- 11.04 14.86 113,229
11/30/97 11.04 1.04 0.48 1.52 (0.74) -- 11.82 14.53 195,639
- --------------------------------------------------------------------------------------------------------------------------------
Worldwide High Income Portfolio
10/28/94-11/30/94 10.00 0.04 (0.09) (0.05) -- -- 9.95 (0.50) 10,478
11/30/95 9.95 1.10 0.47 1.57 (0.10) -- 11.42 16.02 21,515
11/30/96 11.42 1.25 1.60 2.85 (0.87) (0.05) 13.35 26.87 49,204
11/30/97 13.35 0.98 0.68 1.66 (0.90) (0.91) 13.20 14.17 125,224
- --------------------------------------------------------------------------------------------------------------------------------
SunAmerica Balanced Portfolio
6/3/96-11/30/96 10.00 0.10 1.03 1.13 -- -- 11.13 11.30 10,224
11/30/97 11.13 0.23 2.15 2.38 (0.04) (0.02) 13.45 21.48 44,621
================================================================================================================================
<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
EXPENSES INCOME AVERAGE
TO AVERAGE TO AVERAGE PORTFOLIO COMMISSION
PERIOD ENDED NET ASSETS NET ASSETS TURNOVER PER SHARE
=====================================================================
<S> <C> <C> <C> <C>
Cash Management Portfolio
2/9/93-11/30/93 0.71%+++ 2.53%+++ --% N/A
11/30/94 0.70++ 3.73++ -- N/A
11/30/95 0.67 5.32 -- N/A
11/30/96 0.62 4.90 -- N/A
11/30/97 0.63 5.06 -- N/A
- ---------------------------------------------------------------------
Corporate Bond Portfolio
7/1/93-11/30/93 0.94+++ 3.92+++ 208 N/A
11/30/94 0.94++ 5.21++ 419 N/A
11/30/95 0.96++ 5.93++ 412 N/A
11/30/96 0.97 6.11 338 N/A
11/30/97 0.91 6.99 49 N/A
- ---------------------------------------------------------------------
Global Bond Portfolio
7/1/93-11/30/93 1.35+++ 3.56+++ 84 N/A
11/30/94 1.06 5.29 347 N/A
11/30/95 0.95 5.89 339 N/A
11/30/96 0.89 5.44 223 N/A
11/30/97 0.90 4.70 360 N/A
- ---------------------------------------------------------------------
High-Yield Bond Portfolio
2/9/93-11/30/93 0.94+++ 9.43+++ 229 N/A
11/30/94 0.92++ 11.07++ 225 N/A
11/30/95 0.80 10.80 174 N/A
11/30/96 0.77 9.41 107 N/A
11/30/97 0.75 9.26 243 N/A
- ---------------------------------------------------------------------
Worldwide High Income Portfolio
10/28/94-11/30/94 1.60+++ 4.48+++ 2 N/A
11/30/95 1.30 10.46 176 N/A
11/30/96 1.18 10.45 177 N/A
11/30/97 1.10 7.58 146 N/A
- ---------------------------------------------------------------------
SunAmerica Balanced Portfolio
6/3/96-11/30/96 1.00+++ 1.92+++ 40 0.0600
11/30/97 1.00 1.82 143 0.0600
=====================================================================
</TABLE>
* Calculated based upon average shares outstanding
** After fee waivers and expense reimbursements by the investment adviser
*** Does not reflect expenses that apply to the separate accounts of Anchor
National Life Insurance Company and First SunAmerica Life Insurance
Company. If such expenses had been included, total return would have been
lower for each period presented.
+ Annualized
++ During the periods ended November 30, 1993, 1994, 1995, 1996 and 1997, the
investment adviser waived a portion of or all fees and assumed a portion of
or all expenses for the Portfolios. If all fees and expenses had been
incurred by the Portfolios, the ratio of expenses to average net assets and
the ratio of net investment income to average net assets would have been as
follows:
<TABLE>
<CAPTION>
EXPENSES NET INVESTMENT INCOME
================================ ====================================
1993 1994 1995 1996 1997 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------------------
Cash Management Portfolio......................... 1.10% 0.78% 0.67% 0.62% 0.63% 2.14% 3.65% 5.32% 4.90% 5.06%
Corporate Bond Portfolio.......................... 1.81 1.09 0.97 0.97 0.91 3.05 5.06 5.92 6.11 6.99
Global Bond Portfolio............................. 1.81 1.06 0.95 0.89 0.90 3.10 5.29 5.89 5.44 4.70
High-Yield Bond Portfolio......................... 1.29 0.93 0.80 0.77 0.75 9.08 11.06 10.80 9.41 9.26
Worldwide High Income Portfolio................... -- 2.26 1.30 1.18 1.10 -- 3.82 10.46 10.45 7.58
SunAmerica Balanced Portfolio..................... -- -- -- 1.43 1.00 -- -- -- 1.49 1.82
=============================================================================================================================
</TABLE>
4
<PAGE> 8
The following Financial Highlights for the Portfolios and periods set forth
below have been audited by Price Waterhouse LLP, the Trust's independent
accountants, whose report on the financial statements containing such
information is included in the Trust's Annual Report to Shareholders. These
Financial Highlights* should be read in conjunction with the financial
statements and notes thereto, which are included in the Statement of Additional
Information.
<TABLE>
<CAPTION>
DIVIDENDS DIVIDENDS
NET NET TOTAL DECLARED FROM NET NET
NET ASSET INVEST- REALIZED FROM FROM NET REALIZED NET ASSET ASSETS
VALUE MENT & UNREALIZED INVEST- INVEST- GAIN ON VALUE END OF
BEGINNING INCOME GAIN (LOSS) ON MENT MENT INVEST- END OF TOTAL PERIOD
PERIOD ENDED OF PERIOD (LOSS)** INVESTMENTS OPERATIONS INCOME MENTS PERIOD RETURN*** (000'S)
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balanced/Phoenix Investment Counsel Portfolio
10/28/94-11/30/94 $10.00 $0.04 $(0.08) $(0.04) $ -- $ -- $ 9.96 (0.40)% $ 1,516
11/30/95 9.96 0.34 2.23 2.57 (0.05) -- 12.48 25.89 32,429
11/30/96 12.48 0.34 1.31 1.65 (0.19) (0.31) 13.63 13.75 70,021
11/30/97 13.63 0.37 1.39 1.76 (0.23) (0.41) 14.75 13.52 95,721
- -----------------------------------------------------------------------------------------------------------------------------------
Asset Allocation Portfolio
7/1/93-11/30/93 10.00 0.08 0.28 0.36 -- -- 10.36 3.60 35,590
11/30/94 10.36 0.29 (0.25) 0.04 (0.05) (0.03) 10.32 0.30 106,856
11/30/95 10.32 0.42 2.24 2.66 (0.20) (0.04) 12.74 26.10 199,836
11/30/96 12.74 0.48 2.00 2.48 (0.31) (0.39) 14.52 20.27 316,388
11/30/97 14.52 0.44 2.55 2.99 (0.40) (0.90) 16.21 21.97 526,585
- -----------------------------------------------------------------------------------------------------------------------------------
Utility Portfolio
6/3/96-11/30/96 10.00 0.24 0.51 0.75 -- -- 10.75 7.50 6,299
11/30/97 10.75 0.36 1.91 2.27 (0.09) (0.02) 12.91 21.26 24,366
- -----------------------------------------------------------------------------------------------------------------------------------
Growth-Income Portfolio
2/9/93-11/30/93 10.00 0.12 0.49 0.61 -- -- 10.61 6.10 45,080
11/30/94 10.61 0.13 (0.36) (0.23) (0.04) (0.01) 10.33 (2.20) 84,899
11/30/95 10.33 0.17 3.31 3.48 (0.10) -- 13.71 33.89 171,281
11/30/96 13.71 0.18 3.48 3.66 (0.12) (0.43) 16.82 27.41 325,463
11/30/97 16.82 0.17 4.69 4.86 (0.13) (0.73) 20.82 30.11 622,062
- -----------------------------------------------------------------------------------------------------------------------------------
Federated Value Portfolio
6/3/96-11/30/96 10.00 0.07 1.01 1.08 -- -- 11.08 10.80 12,460
11/30/97 11.08 0.13 2.72 2.85 (0.03) -- 13.90 25.75 59,024
- -----------------------------------------------------------------------------------------------------------------------------------
Venture Value Portfolio
10/28/94-11/30/94 10.00 0.03 (0.25) (0.22) -- -- 9.78 (2.20) 4,449
11/30/95 9.78 0.17 3.55 3.72 (0.03) -- 13.47 38.17 154,908
11/30/96 13.47 0.18 3.46 3.64 (0.09) (0.12) 16.90 27.44 516,413
11/30/97 16.90 0.19 4.73 4.92 (0.09) (0.26) 21.47 29.62 1,140,053
===================================================================================================================================
<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
EXPENSES INCOME AVERAGE
TO AVERAGE TO AVERAGE PORTFOLIO COMMISSION
PERIOD ENDED NET ASSETS NET ASSETS TURNOVER PER SHARE
=====================================================================
<S> <C> <C> <C> <C>
Balanced/Phoenix Investment Counsel Portfolio
10/28/94-11/30/94 1.00%++ 4.25%++ 10% N/A
11/30/95 0.98++ 3.08++ 153 N/A
11/30/96 0.84 2.74 194 0.0589
11/30/97 0.82 2.63 271 0.0526
- ---------------------------------------------------------------------
Asset Allocation Portfolio
7/1/93-11/30/93 0.99+++ 2.33+++ 71 N/A
11/30/94 0.94++ 2.71++ 152 N/A
11/30/95 0.81 3.62 207 N/A
11/30/96 0.74 3.66 200 0.0587
11/30/97 0.68 2.88 176 0.0591
- ---------------------------------------------------------------------
Utility Portfolio
6/3/96-11/30/96 1.05+++ 4.41+++ 24 0.0439
11/30/97 1.05++ 3.15++ 77 0.0365
- ---------------------------------------------------------------------
Growth-Income Portfolio
2/9/93-11/30/93 0.82+++ 1.59+++ 27 N/A
11/30/94 0.81++ 1.26++ 59 N/A
11/30/95 0.77 1.42 59 N/A
11/30/96 0.72 1.21 82 0.0597
11/30/97 0.65 0.89 44 0.0555
- ---------------------------------------------------------------------
Federated Value Portfolio
6/3/96-11/30/96 1.05+++ 1.26+++ 30 0.0520
11/30/97 1.03 1.03 46 0.0494
- ---------------------------------------------------------------------
Venture Value Portfolio
10/28/94-11/30/94 1.10+++ 3.93+++ -- N/A
11/30/95 1.00++ 1.43++ 18 N/A
11/30/96 0.85 1.21 22 0.0598
11/30/97 0.79 0.98 22 0.0599
=====================================================================
</TABLE>
* Calculated based upon average shares outstanding
** After fee waivers and expense reimbursements by the investment adviser
*** Does not reflect expenses that apply to the separate accounts of Anchor
National Life Insurance Company and First SunAmerica Life Insurance Company.
If such expenses had been included, total return would have been lower for
each period presented.
+ Annualized
++ During the periods ended November 30, 1993, 1994, 1995, 1996 and 1997, the
investment adviser waived a portion of or all fees and assumed a portion of
or all expenses for the Portfolios. If all fees and expenses had been
incurred by the Portfolios, the ratio of expenses to average net assets and
the ratio of net investment income to average net assets would have been as
follows:
<TABLE>
<CAPTION>
EXPENSES NET INVESTMENT INCOME (LOSS)
------------------------------------ -------------------------------------
1993 1994 1995 1996 1997 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------------------
Balanced/Phoenix Investment Counsel
Portfolio.................................... --% 6.82% 1.11% 0.84% 0.82% --% (1.57)% 2.95% 2.74% 2.63%
Asset Allocation Portfolio.................... 1.67 0.94 0.81 0.74 0.68 1.65 2.71 3.62 3.66 2.88
Utility Portfolio............................. -- -- -- 1.93 1.24 -- -- -- 3.53 2.96
Growth-Income Portfolio....................... 1.40 0.89 0.77 0.72 0.65 1.01 1.18 1.42 1.21 0.89
Federated Value Portfolio..................... -- -- -- 1.57 1.03 -- -- -- 0.74 1.03
Venture Value Portfolio....................... -- 3.89 1.02 0.85 0.79 -- 1.14 1.41 1.21 0.98
=============================================================================================================================
</TABLE>
5
<PAGE> 9
The following Financial Highlights for the Portfolios and periods set forth
below have been audited by Price Waterhouse LLP, the Trust's independent
accountants, whose report on the financial statements containing such
information is included in the Trust's Annual Report to Shareholders. These
Financial Highlights* should be read in conjunction with the financial
statements and notes thereto, which are included in the Statement of Additional
Information.
<TABLE>
<CAPTION>
DIVIDENDS DIVIDENDS
NET NET TOTAL DECLARED FROM NET NET
NET ASSET INVEST- REALIZED FROM FROM NET REALIZED NET ASSET ASSETS
VALUE MENT & UNREALIZED INVEST- INVEST- GAIN ON VALUE END OF
BEGINNING INCOME GAIN (LOSS) ON MENT MENT INVEST- END OF TOTAL PERIOD
PERIOD ENDED OF PERIOD (LOSS)** INVESTMENTS OPERATIONS INCOME MENTS PERIOD RETURN*** (000'S)
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Alliance Growth Portfolio
2/9/93-11/30/93 $10.00 $0.05 $ 0.87 $ 0.92 $ -- $ -- $10.92 9.20% $ 23,256
11/30/94 10.92 0.04 (0.14) (0.10) (0.01) (0.17) 10.64 (0.93) 52,213
11/30/95 10.64 0.07 5.08 5.15 (0.03) (0.13) 15.63 48.91 167,870
11/30/96 15.63 0.08 4.07 4.15 (0.04) (1.01) 18.73 28.05 381,367
11/30/97 18.73 0.16 4.76 4.92 (0.05) (1.04) 22.56 27.80 704,533
- --------------------------------------------------------------------------------------------------------------------------------
Growth/Phoenix Investment Counsel Portfolio
2/9/93-11/30/93 10.00 0.17 0.61 0.78 -- -- 10.78 7.80 65,032
11/30/94 10.78 0.16 (0.87) (0.71) (0.06) -- 10.01 (6.64) 104,194
11/30/95 10.01 0.12 3.14 3.26 (0.13) -- 13.14 32.92 149,910
11/30/96 13.14 0.11 2.16 2.27 (0.11) (0.91) 14.39 18.40 186,368
11/30/97 14.39 0.11 2.48 2.59 (0.10) (1.26) 15.62 19.78 218,496
- --------------------------------------------------------------------------------------------------------------------------------
Putnam Growth Portfolio
2/9/93-11/30/93 10.00 0.02 0.02 0.04 -- -- 10.04 0.40 42,911
11/30/94 10.04 0.03 (0.01) 0.02 (0.01) -- 10.05 0.19 75,342
11/30/95 10.05 (0.01) 3.09 3.08 (0.03) -- 13.10 30.66 115,276
11/30/96 13.10 -- 2.61 2.61 -- -- 15.71 19.92 160,073
11/30/97 15.71 0.03 3.93 3.96 -- (0.52) 19.15 26.01 234,726
- --------------------------------------------------------------------------------------------------------------------------------
Real Estate Portfolio
6/2/97-11/30/97 10.00 0.16 1.37 1.53 -- -- 11.53 15.30 29,565
- --------------------------------------------------------------------------------------------------------------------------------
Aggressive Growth Portfolio
6/3/96-11/30/96 10.00 0.02 0.34 0.36 -- -- 10.36 3.60 35,124
11/30/97 10.36 0.01 1.40 1.41 (0.01) -- 11.76 13.62 103,603
- --------------------------------------------------------------------------------------------------------------------------------
International Growth and Income Portfolio
6/2/97-11/30/97 10.00 0.03 0.38 0.41 -- -- 10.41 4.10 42,844
- --------------------------------------------------------------------------------------------------------------------------------
Global Equities Portfolio
2/9/93-11/30/93 10.00 0.03 0.96 0.99 -- -- 10.99 9.90 43,737
11/30/94 10.99 0.05 0.71 0.76 (0.01) (0.07) 11.67 6.87 136,758
11/30/95 11.67 0.12 1.64 1.76 (0.08) (0.29) 13.06 15.58 165,752
11/30/96 13.06 0.14 2.19 2.33 (0.14) (0.33) 14.92 18.21 246,482
11/30/97 14.92 0.09 1.79 1.88 (0.13) (0.69) 15.98 13.30 341,639
- --------------------------------------------------------------------------------------------------------------------------------
International Diversified Equities Portfolio
10/28/94-11/30/94 10.00 0.01 (0.23) (0.22) -- -- 9.78 (2.20) 12,438
11/30/95 9.78 0.07 0.38 0.45 (0.08) -- 10.15 4.63 48,961
11/30/96 10.15 0.05 1.43 1.48 (0.26) -- 11.37 14.85 157,008
11/30/97 11.37 0.09 0.28 0.37 (0.31) (0.10) 11.33 3.52 248,927
- --------------------------------------------------------------------------------------------------------------------------------
Emerging Markets Portfolio
6/2/97-11/30/97 10.00 0.06 (2.03) (1.97) -- -- 8.03 (19.70) 19,979
================================================================================================================================
<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
EXPENSES INCOME AVERAGE
TO AVERAGE TO AVERAGE PORTFOLIO COMMISSION
PERIOD ENDED NET ASSETS NET ASSETS TURNOVER PER SHARE
=====================================================================
<S> <C> <C> <C> <C>
Alliance Growth Portfolio
2/9/93-11/30/93 0.82%+++ 0.61%+++ 73% N/A
11/30/94 0.82++ 0.37++ 146 N/A
11/30/95 0.79 0.51 138 N/A
11/30/96 0.71 0.51 121 0.0649
11/30/97 0.65 0.37 110 0.0617
- ---------------------------------------------------------------------
Growth/Phoenix Investment Counsel Portfolio
2/9/93-11/30/93 0.82+++ 2.20+++ 165 N/A
11/30/94 0.81++ 1.52++ 211 N/A
11/30/95 0.76 1.01 229 N/A
11/30/96 0.74 0.82 164 0.0534
11/30/97 0.73 0.77 217 0.0530
- ---------------------------------------------------------------------
Putnam Growth Portfolio
2/9/93-11/30/93 0.97+++ 0.32+++ 40 N/A
11/30/94 0.96++ 0.31++ 54 N/A
11/30/95 0.93 (0.05) 52 N/A
11/30/96 0.90 (0.02) 63 0.0443
11/30/97 0.91 0.18 125 0.0324
- ---------------------------------------------------------------------
Real Estate Portfolio
6/2/97-11/30/97 1.25+++ 3.25+++ 7 0.0600
- ---------------------------------------------------------------------
Aggressive Growth Portfolio
6/3/96-11/30/96 1.05+++ 0.46+++ 47 0.0600
11/30/97 0.90 (0.13) 221 0.0600
- ---------------------------------------------------------------------
International Growth and Income Portfolio
6/2/97-11/30/97 1.60+++ 0.61+++ 19 0.0030
- ---------------------------------------------------------------------
Global Equities Portfolio
2/9/93-11/30/93 1.50+++ 0.38+++ 58 N/A
11/30/94 1.28 0.42 67 N/A
11/30/95 1.14 1.02 106 N/A
11/30/96 1.03 1.04 70 0.0256
11/30/97 0.95 0.58 115 0.0284
- ---------------------------------------------------------------------
International Diversified Equities Portfolio
10/28/94-11/30/94 1.70+++ 1.60+++ -- N/A
11/30/95 1.70++ 0.76++ 52 N/A
11/30/96 1.59 0.47 53 0.0023
11/30/97 1.35 0.82 56 0.0008
- ---------------------------------------------------------------------
Emerging Markets Portfolio
6/2/97-11/30/97 1.90+++ 1.33+++ 49 0.0011
=====================================================================
</TABLE>
* Calculated based upon average shares outstanding
** After fee waivers and expense reimbursements by the investment adviser
*** Does not reflect expenses that apply to the separate accounts of Anchor
National Life Insurance Company and First SunAmerica Life Insurance Company.
If such expenses had been included, total return would have been lower for
each period presented.
+ Annualized
++ During the periods ended November 30, 1993, 1994, 1995, 1996 and 1997, the
investment adviser waived a portion of or all fees and assumed a portion of
or all expenses for the Portfolios. If all fees and expenses had been
incurred by the Portfolios, the ratio of expenses to average net assets and
the ratio of net investment income (loss) to average net assets would have
been as follows:
6
<PAGE> 10
<TABLE>
<CAPTION>
EXPENSES NET INVESTMENT INCOME (LOSS)
------------------------------------ -----------------------------------------
1993 1994 1995 1996 1997 1993 1994 1995 1996 1997
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Alliance Growth Portfolio................. 1.56% 0.96% 0.79% 0.71% 0.65% (0.13)% 0.23% 0.51% 0.51% 0.37%
Growth/Phoenix Investment Counsel
Portfolio................................ 1.28 0.87 0.76 0.74 0.73 1.74 1.46 1.01 0.82 0.77
Putnam Growth Portfolio................... 1.46 1.05 0.93 0.90 0.91 (0.17) 0.22 (0.05) (0.02) 0.18
Real Estate Portfolio..................... -- -- -- -- 1.36 -- -- -- -- 3.14
Aggressive Growth Portfolio............... -- -- -- 1.09 0.90 -- -- -- 0.42 (0.13)
International Growth and Income
Portfolio................................ -- -- -- -- 2.02 -- -- -- -- 0.19
Global Equities Portfolio................. 2.52 1.28 1.14 1.03 0.95 (0.64) 0.42 1.02 1.04 0.58
International Diversified Equities
Portfolio................................ -- 3.50 2.09 1.59 1.35 -- (0.20) 0.37 0.47 0.82
Emerging Markets Portfolio................ -- -- -- -- 2.60 -- -- -- -- 0.63
=============================================================================================================================
</TABLE>
7
<PAGE> 11
=========================================================
THE TRUST, ITS INVESTMENT OBJECTIVES AND POLICIES
=========================================================
The Trust, organized as a Massachusetts business trust on September 11, 1992, is
an open-end management investment company. It was established to provide a
funding medium for certain annuity contracts which issue separate accounts (the
"Accounts"), which are separate accounts of Anchor National Life Insurance
Company and First SunAmerica Life Insurance Company (collectively referred to as
the "Life Companies").
The Trust issues 22 separate series of shares ("Portfolios"), each of which
represents a separate managed portfolio of securities with its own investment
objectives. The Board of Trustees may establish additional series in the future.
The current Portfolios are the Cash Management Portfolio, Corporate Bond
Portfolio, Global Bond Portfolio, High-Yield Bond Portfolio, Worldwide High
Income Portfolio, SunAmerica Balanced Portfolio, Balanced/Phoenix Investment
Counsel Portfolio, Asset Allocation Portfolio, Utility Portfolio, Growth-Income
Portfolio, Federated Value Portfolio, Venture Value Portfolio, "Dogs" of Wall
Street Portfolio, Alliance Growth Portfolio, Growth/Phoenix Investment Counsel
Portfolio, Putnam Growth Portfolio, Aggressive Growth Portfolio, International
Growth and Income Portfolio, Real Estate Portfolio, Global Equities Portfolio,
International Diversified Equities Portfolio, and Emerging Markets Portfolio.
All shares may be purchased or redeemed by the Accounts at net asset value
without any sales or redemption charge.
SunAmerica Asset Management Corp. ("SAAMCo" or the "Adviser"), an indirect,
wholly owned subsidiary of Anchor National Life Insurance Company, serves as
investment adviser for all the Portfolios of the Trust. See "Management." Some
Portfolios benefit from discretionary advisory services provided by separate
registered investment advisers (each a "Subadviser"). Alliance Capital
Management L.P. ("Alliance") serves as subadviser for the Global Equities,
Alliance Growth and Growth-Income Portfolios; Davis Selected Advisers, L.P.
("Davis Selected") serves as subadviser for the Venture Value and Real Estate
Portfolios; Federated Investment Counseling ("Federated") serves as subadviser
for the Corporate Bond, Federated Value and Utility Portfolios; Goldman Sachs
Asset Management ("GSAM") serves as subadviser for the Asset Allocation
Portfolio; Goldman Sachs Asset Management International ("GSAM-International")
serves as subadviser for the Global Bond Portfolio; Morgan Stanley Asset
Management Inc. ("MSAM") serves as subadviser for the International Diversified
Equities and Worldwide High Income Portfolios; Phoenix Investment Counsel, Inc.
("Phoenix") serves as subadviser for the Growth/Phoenix Investment Counsel and
Balanced/Phoenix Investment Counsel Portfolios; and Putnam Investment
Management, Inc. ("Putnam") serves as subadviser for the Putnam Growth,
International Growth and Income and Emerging Markets Portfolios. There is no
subadviser for the Cash Management, High-Yield Bond, SunAmerica Balanced, "Dogs"
of Wall Street or Aggressive Growth Portfolios. SAAMCo performs all investment
advisory services for these Portfolios.
Each Portfolio has investment objectives and certain policies as described in
this Prospectus. There can be no guarantee that any Portfolio's investment
objectives will be met or that the net return on an investment in a Portfolio
will exceed that which could have been obtained through other investment or
savings vehicles. Investors should carefully review the investment objectives
and policies of a Portfolio and consider their ability to assume the risks
involved before making an investment in a Portfolio. Each Portfolio also has
certain fundamental investment restrictions, which are described in the
Statement of Additional Information. A Portfolio's fundamental investment
restrictions may not be changed without a majority of the outstanding voting
securities of that Portfolio. See "Shareholder Voting Rights." All other
investment practices may be changed without a vote of the shareholders.
The Global Bond, Worldwide High Income, International Diversified Equities and
"Dogs" of Wall Street Portfolios are organized as separate "non-diversified"
portfolios of the Trust (as such term is defined under the Investment Company
Act of 1940, as amended, (the "1940 Act")); subject, however, to certain tax
diversification requirements. See "Dividends, Distributions and Federal Taxes."
Each of the Utility and Real Estate Portfolios intend to concentrate its
investments in the industry stated in its name, which means that each Portfolio
intends to invest at least 25% of its total assets in the securities of such
industry.
The Portfolios' investment objectives are discussed below. Please also refer,
however, to the section captioned "Description of Securities and Investment
Techniques" for a more detailed description of the characteristics and risks
associated with the types of securities in which the various Portfolios may
invest. Reference is also made in the following sections to ratings assigned to
certain types of securities by Standard & Poor's Rating Services, a Division of
the
8
<PAGE> 12
McGraw Hill Companies, Inc. ("S&P"), Moody's Investors Service, Inc.
("Moody's"), Fitch Investors Service, Inc. ("Fitch"), Duff & Phelps Credit
Rating Co. ("Duff & Phelps") and Thomson BankWatch, Inc. ("Thomson BankWatch"),
recognized independent securities ratings institutions. References to the
particular ratings categories of the securities in which a Portfolio may invest
should be read to include unrated securities deemed by the Adviser or Subadviser
to be of comparable quality to the rated securities in such categories. A
description of the ratings categories assigned by S&P, Moody's, Fitch, Thomson
BankWatch and Duff & Phelps is contained in the Statement of Additional
Information.
CASH MANAGEMENT PORTFOLIO
The Cash Management Portfolio seeks high current yield while preserving capital
by investing in a diversified selection of money market instruments including
corporate bonds and notes; commercial bank obligations; securities of the U.S.
government, its agencies and instrumentalities; commercial paper and savings
association obligations. These securities mature in one year or less. The Cash
Management Portfolio also may enter into repurchase agreements and firm
commitment agreements and purchase when-issued securities. See "Description of
Securities and Investment Techniques."
The Cash Management Portfolio invests only in securities determined, in
accordance with procedures established by the Trust's Board of Trustees, to
present minimal credit risks. It is the current policy to invest only in
instruments rated in the highest rating category by Moody's and S&P (for
example, commercial paper rated P-1 and A-1 by Moody's and S&P, respectively) or
in instruments that are issued, guaranteed or insured by the U.S. government,
its agencies or instrumentalities, as to the payment of principal and interest,
or in other instruments rated in the highest two categories by either Moody's or
S&P, provided the issuer has commercial paper rated in the highest rating
category by Moody's and S&P.
Although investments in the Cash Management Portfolio should present minimal
market risk because the investments of the Portfolio consists of only short-term
debt obligations, an investment in this Portfolio is subject to the risks of
declining interest rates and the economy as a whole. Also, the return on an
investment in the Cash Management Portfolio would not be the same as the return
on an investment in a money market fund available directly to the public even
where yields are equivalent, due to fees imposed at the variable annuity
contract level.
CORPORATE BOND PORTFOLIO
The Corporate Bond Portfolio seeks a high total return with only moderate price
risk by investing primarily in investment grade fixed-income securities. Under
normal market conditions, at least 65% of the Portfolio's total assets will be
invested in investment grade debt securities (i.e., those rated at the time of
purchase within the four highest grades assigned by Moody's (Aaa, Aa, A or Baa)
or by S&P (AAA, AA, A or BBB)), securities issued or guaranteed by the U.S.
government or its agencies or instrumentalities (including mortgage-backed
securities) or repurchase agreements collateralized by such investment grade or
U.S. government securities. In addition, under normal circumstances, the
Portfolio will invest at least 65% of the value of its total assets, taken at
market value at the time of investment, in corporate debt securities, including
asset-backed securities and privately placed debt securities, of domestic and
foreign issuers. Certain fixed rate obligations in which the Portfolio invests
may involve equity characteristics. The Portfolio may, for example, invest in
unit offerings that combine fixed rate securities and common stock or common
stock equivalents such as warrants, rights and options. These may be purchased
by the Portfolio only when the debt security meets the Portfolio's investment
criteria and the value of the equity security or equity equivalent is relatively
small. If the equity security or equity equivalent becomes valuable it will
ordinarily be sold rather than exercised in the case of warrants, rights or
options. It is anticipated that no more than 10% of the assets of the Portfolio
will constitute equity securities or equity equivalents regardless of how such
securities were acquired. To the extent that such securities are acquired, there
may be some additional investment risk and countervailing opportunity, depending
upon the extent to which the common stock price fluctuates.
Up to 35% of the Portfolio's total assets may be invested in the following:
other types of debt securities, including those rated below investment grade,
zero-coupon bonds, pay-in-kind securities, and units consisting of bonds and
equity equivalents; commercial paper rated at the time of purchase P-1 by
Moody's or A-1 by S&P; obligations of banks having total assets in excess of $1
billion; and preferred stocks (including those rated below investment grade,
convertible into, or carrying warrants to purchase, common stocks or other
equity interests).
The Portfolio will generally invest in debt securities and preferred stocks
rated below investment grade only to the extent that the Subadviser believes
that
9
<PAGE> 13
lower credit quality of such securities is offset by more attractive yields.
There is no limit with respect to the rating categories for securities in which
the Portfolio may invest. The weighted average ratings by S&P as a percentage of
all bonds held by the Portfolio during the fiscal year ended November 30, 1997
were: "AAA" 10.39%; "AA" 3.47%; "A" 21.23%; "BBB" 35.24%; "BB" 11.72%; and "B"
15.85%, and 2.10% in cash. See "Description of Securities and Investment
Techniques -- Corporate Debt Instruments -- Lower Grade" for a description of
lower-rated securities.
The Portfolio may invest in high quality short-term money market instruments
denominated in U.S. dollars, including repurchase agreements, which are also
authorized for purchase by the Cash Management Portfolio. The Portfolio may
enter into "dollar rolls" in which the Portfolio sells mortgage or other
asset-backed securities for delivery in the current month and simultaneously
contracts to repurchase substantially similar (same types, coupons and maturity)
securities on a specified future date. The Portfolio may also invest in
synthetic or derivative instruments based on permitted investments, including
futures contracts, options, interest-rate swaps, mortgage swaps and interest-
rate caps, floors and collars.
GLOBAL BOND PORTFOLIO
The investment objective of the Global Bond Portfolio is to provide investors
with a high total return, emphasizing current income and, to a lesser extent,
providing opportunities for capital appreciation. Under normal circumstances,
the Portfolio will seek to meet its investment objective by pursuing investment
opportunities in foreign and domestic fixed-income securities markets and by
engaging in currency transactions to enhance returns and for the purpose of
hedging its investments.
The fixed-income securities in which the Portfolio may invest include: (i)
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities and custodial receipts thereof; (ii) securities issued or
guaranteed by a foreign government or any of its political subdivisions,
authorities, agencies or instrumentalities or by multiple governmental entities
(i.e., international organizations designated or supported by governmental
entities to promote economic reconstruction or development, such as the World
Bank); (iii) corporate debt securities; (iv) certificates of deposit and
bankers' acceptances issued or guaranteed by, or time deposits maintained at,
banks (including U.S. or foreign branches of U.S. banks or U.S. or foreign
branches of foreign banks) having total assets of more than $1 billion; (v)
commercial paper; and (vi) mortgage-related and asset-backed securities.
All securities purchased by the Portfolio will be rated, at the time of
investment, at least BBB by S&P or Baa by Moody's. However, the Portfolio
generally intends to invest at least 50% of its total assets in securities
having the highest applicable credit quality rating. Unrated securities will be
determined by the Subadvisers to be of comparable quality. The debt securities
in which the Portfolio will invest may have fixed, variable or floating interest
rates.
In selecting securities for the Portfolio, the Subadviser will consider such
factors as the security's duration, sector and credit quality rating as well as
the security's yield and prospects for capital appreciation. It is expected that
the Portfolio will use currency transactions both to enhance returns for a given
level of risk and to hedge its exposure to foreign currencies. While the
Portfolio will have both long and short currency positions, neither its net long
foreign currency exposure nor its net short foreign currency exposure will
exceed the value of the Portfolio's total assets.
Under normal circumstances, the Portfolio's duration is expected to be equal to
that of its benchmark, the J.P. Morgan Global Government Bond Index, plus or
minus 2-5 years. In addition, the Portfolio will normally maintain a
dollar-weighted average duration of not more than 7.5 years. However, the
Portfolio is not subject to any limitation with respect to the average maturity
of its Portfolio or the individual securities in which the Portfolio may invest.
Duration represents the weighted average maturity of expected cash flows on a
debt obligation, discounted to present value. Maturity measures only the time
until final payment is due on a bond or other debt security; it takes no account
of the pattern of a security's cash flows over time. In computing the duration
of its portfolio, the Subadviser will have to estimate the duration of debt
obligations that are subject to prepayment or redemption by the issuer. The
Portfolio may use various techniques to shorten or lengthen its dollar-weighted
average duration, including the acquisition of debt obligations at a premium or
discount, transactions in options, futures contracts, options on futures and
mortgage and interest-rate swaps, caps, collars and floors. The Portfolio may
also enter into dollar rolls.
It is expected that the Portfolio will employ certain active currency and
interest-rate management techniques involving risks different from those
associated with investing solely in dollar-denominated
10
<PAGE> 14
fixed-income securities of U.S. issuers. Such active management techniques
include transactions in options (including yield curve options), futures and
options on futures, forward foreign currency exchange contracts, currency
options and futures, currency, mortgage and interest-rate swaps, floors, caps
and collars. The aggregate amount of the Portfolio's net currency exposure will
not exceed its total asset value. However, to the extent that the Portfolio is
fully invested in fixed-income securities while also maintaining currency
positions, it may be exposed to greater combined risk. The Portfolio's net
currency positions may expose it to risks independent of its securities
positions.
The Portfolio will, under normal market conditions, have at least 30% of its
total assets, adjusted to reflect the Portfolio's net exposure after giving
effect to currency transactions and positions, denominated in U.S. dollars. The
Portfolio may, for temporary defensive purposes (such as when instability or
unfavorable conditions exist in foreign countries), invest 100% of its total
assets in U.S. dollar-denominated securities or securities of U.S. issuers.
The Portfolio may invest more than 25% of its total assets in the securities of
corporate and governmental issuers located in each of Canada, Germany, Japan,
and the United Kingdom as well as in the securities of U.S. issuers.
Concentration of the Fund's investments in such issuers will subject the
Portfolio, to a greater extent than if investment was more limited, to the risks
of adverse securities markets, exchange rates and social, political or economic
events which may occur in those countries. Not more than 25% of the Portfolio's
total assets will be invested in securities of issuers in any other single
foreign country. Concentration of the Portfolio's investments in such issuers
will subject the Portfolio to the risks of adverse social, political or economic
events which may occur in those countries.
Investment in foreign securities involves special risks. See "Description of
Securities and Investment Techniques -- Risks and Considerations Applicable to
Investment in Securities of Foreign Issuers."
HIGH-YIELD BOND PORTFOLIO
The primary investment objective of the High-Yield Bond Portfolio is a high
level of current income; its secondary investment objective is capital
appreciation. Under normal market conditions, the Portfolio will invest at least
65% of its total assets in high-yield bonds. Subject to this requirement the
Portfolio may maintain assets in cash or cash equivalents, including commercial
bank obligations (certificates of deposit; bankers' acceptances, which are time
drafts on a commercial bank for which the bank accepts an irrevocable obligation
to pay at maturity; and demand or time deposits), commercial paper (short-term
notes issued by corporations or governmental bodies) and obligations issued or
guaranteed by the U.S. government. These "high-yield" bonds, commonly referred
to as "junk bonds," typically are subject to greater market fluctuations and
risk of loss of income and principal due to default by the issuer than are
investments in lower-yielding, higher-rated bonds. Further, a substantial
portion of the Portfolio's assets will generally be invested in long-term (over
10 years to maturity) and intermediate-term (3 to 10 years to maturity)
fixed-income securities, with emphasis on higher-yielding, higher-risk,
lower-rated or unrated corporate bonds.
High-yield, high-risk bonds generally include any bonds that are rated Ba or
below by Moody's or BB or below by S&P. Bonds rated Ba or BB or below are
considered speculative. The Portfolio may invest without limitation in bonds
rated as low as Ca by Moody's or C by S&P (or unrated but considered by the
Adviser of equivalent quality). In addition, the Portfolio may invest up to 10%
of its total assets in bonds rated C by Moody's or D by S&P. The weighted
average ratings by Moody's as a percentage of all bonds held by the Portfolio
during the fiscal year ended November 30, 1997 were: "Aaa" - 5.17%; "Ba" 14.04%;
"B" 62.04%; and "Caa" 11.45%; and the balance 7.3% in unrated bonds which the
adviser deemed comparable to "Caa" rating. See "Description of Securities and
Investment Techniques -- Corporate Debt Instruments -- Lower Grade" and
"Description of Securities and Investment Techniques -- Risk Factors Relating to
High-Yield Bonds" for a more detailed description of these securities.
In pursuing its secondary investment objective of capital appreciation, the
Portfolio may purchase high-yield bonds that are expected by the Adviser to
increase in value due to improvements in their credit quality or ratings or
anticipated declines in interest rates. In addition, the Portfolio may invest
for this purpose up to 25% of its assets in equity securities, such as common
stocks, or other securities having common stock characteristics. Securities
designated as having "common stock" characteristics include, but are not limited
to, securities convertible into or exchangeable for common stock. Such
securities normally will be purchased as part of a unit with fixed-income
securities or when an unusual opportunity for capital appreciation is perceived
due to anticipated improvement in the issuer's credit
11
<PAGE> 15
quality or ratings. The Portfolio also may purchase or hold warrants or rights.
Up to 25% of the Portfolio's assets may be invested in securities of foreign
issuers, which are generally denominated in currencies other than the U.S.
dollar. The Portfolio also has the ability to hold a portion of its assets in
foreign currencies and to enter into forward foreign currency exchange
contracts, currency options, currency and financial futures contracts, and
options on such futures contracts. The Portfolio may enter into repurchase
agreements and firm commitment agreements and may purchase securities on a
when-issued basis. Investment in foreign securities also involves special risks.
See "Description of Securities and Investment Techniques -- Risks and
Considerations Applicable to Investment in Securities of Foreign Issuers."
WORLDWIDE HIGH INCOME PORTFOLIO
The investment objective of the Worldwide High Income Portfolio is high current
income and, secondarily, capital appreciation, by investing primarily in a
portfolio of high-yielding, fixed-income securities of issuers located
throughout the world. The Portfolio seeks to achieve its investment objective by
allocating its assets among any or all of three investment sectors: U.S.
corporate lower-rated and unrated debt securities, emerging country debt
securities and global fixed-income securities offering high real yields. The
types of securities in each of these investment sectors are described in detail
in the Statement of Additional Information. In selecting U.S. corporate
lower-rated and unrated debt securities for the Portfolio, the Subadviser will
consider, among other things, the price of the security, and the financial
history, condition, prospects and management of the issuer. The Subadviser
intends to invest a portion of the Portfolio's assets in emerging country debt
securities that provide a high level of current income, while at the same time
holding the potential for capital appreciation if the perceived creditworthiness
of the issuers improves due to improving economic, financial, political, social
or other conditions in the country in which the issuer is located. In addition,
the Subadviser will attempt to invest a portion of the Portfolio's assets in
fixed-income securities of issuers in global fixed-income markets displaying
high real (inflation adjusted) yields. Under normal conditions, the Portfolio
intends to invest between 80% and 100% of its total assets in some or all of
three categories of higher-yielding securities, some of which may entail
increased credit and market risk.
The Subadviser's approach to multi-currency fixed-income management is strategic
and value-based and designed to produce an attractive real rate of return. The
Subadviser's assessment of the bond markets and currencies is based on an
analysis of real interest rates. Current nominal yields of securities are
adjusted for inflation prevailing in each currency sector using an analysis of
past and projected inflation rates. The Portfolio's aim is to invest in bond
markets which offer the most attractive real returns relative to inflation.
From time to time, a portion of the Portfolio's investments, which may be up to
100% of its investments, may be considered to have credit quality below
investment grade as determined by internationally recognized credit rating
agency organizations, such as Moody's and S&P. Such lower-rated bonds are
commonly referred to as "junk bonds." Securities in such lower rating categories
may have predominantly speculative characteristics or may be in default. See
"Description of Securities and Investment Techniques -- Corporate Debt
Instruments -- Lower Grade" for a description of Moody's and S&P's corporate
bond ratings. Ratings represent the opinion of rating agencies as to the quality
of bonds and other debt securities they undertake to rate at the time of
issuance. However, ratings are not absolute standards of quality and may not
reflect changes in an issuer's creditworthiness. Accordingly, while the
Subadviser will consider ratings, it will perform its own analysis and will not
rely principally on ratings. Emerging country debt securities in which the
Portfolio may invest will be subject to high risk and will not be required to
meet a minimum rating standard and may not be rated for creditworthiness by any
internationally recognized credit rating organization. The Portfolio's
investments in U.S. corporate lower-rated and unrated debt securities and
emerging country debt securities are expected to be rated in the lower and
lowest rating categories of internationally recognized credit rating
organizations. Ratings of a foreign debt instrument, to the extent that those
ratings are undertaken, are related to evaluations of the country in which the
issuer of the instrument is located. Ratings generally take into account the
currency in which a foreign debt instrument is denominated; instruments issued
by a foreign government in other than the local currency, for example, typically
have a lower rating than local currency instruments due to the existence of an
additional risk that the government will be unable to obtain the required
foreign currency to service its foreign currency-denominated debt. In general,
the ratings of debt securities or obligations issued by a foreign public or
private entity will not be
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<PAGE> 16
higher than the rating of the currency or the foreign currency debt of the
central government of the country in which the issuer is located, regardless of
the intrinsic creditworthiness of the issuer. To mitigate the risks associated
with investment in such lower-rated securities, the Portfolio will diversify its
holdings by market, issuer, industry and credit quality. The weighted average
ratings by Moody's as a percentage of all bonds held by the Portfolio during the
fiscal year ended November 30, 1997 were: "Aaa" 0.11%; "Baa" 1.11%; "Ba" 41.32%;
"B" 44.20%; "Caa" 12.56%; and the balance 0.70% in unrated bonds. See "Risk
Factors Relating to High-Yield Bonds" and "Risks and Considerations Applicable
to Investment in Securities of Foreign Issuers" under "Description of Securities
and Investment Techniques."
The Portfolio may invest in or own securities of companies in various stages of
financial restructuring, bankruptcy or reorganization which are not currently
paying interest or dividends, provided that the total value at the time of
purchase of all such securities will not exceed 10% of the value of the
Portfolio's total assets. The Portfolio may have limited recourse in the event
of default on such debt instruments. The Portfolio may invest in loans,
assignments of loans and participation in loans. See the Statement of Additional
Information for a description of these investments. The Portfolio may also
invest in depository receipts issued by U.S. or foreign financial institutions.
See the Statement of Additional Information for further information.
The Portfolio is not restricted in the portion of its assets which may be
invested in securities denominated in a particular currency and a substantial
portion of its assets may be invested in non-U.S. dollar-denominated securities.
The portion of the Portfolio's assets invested in securities denominated in
currencies other than the U.S. dollar will vary depending on market conditions.
The analysis of currencies is made independent of the analysis of markets. Value
in foreign exchange is determined by relative purchasing power parity of a given
currency. The Portfolio seeks to invest in currencies currently undervalued
based on purchasing power parity. The Subadviser analyzes current account and
capital account performance and real interest rates to adjust for short-term
currency flows. Although the Portfolio is permitted to engage in a wide variety
of investment practices designed to hedge against currency exchange rate risks
with respect to its holdings of non-U.S. dollar-denominated debt securities, the
Portfolio may be limited in its ability to hedge against these risks. See
"Foreign Currency Transactions" and "Short Sales" under "Description of
Securities and Investment Techniques." The Portfolio may also write (i.e.,
sell), covered call options and may enter into futures contracts and options on
futures and sell indexed financial futures contracts. See "Futures Contracts and
Options Thereon" and "Options on Securities and Securities Indices" under
"Description of Securities and Investment Techniques."
The average time to maturity of the Portfolio's securities will vary depending
upon the Subadviser's perception of market conditions. The Subadviser invests in
medium-term securities (i.e., those with a remaining maturity of approximately
five years) in a market neutral environment. When the Subadviser believes that
real yields are high, the Subadviser lengthens the remaining maturities of
securities held by the Portfolio and, conversely, when the Subadviser believes
real yields are low, it shortens the remaining maturities. Thus, the Portfolio
is not subject to any restrictions on the maturities of the debt securities it
holds, and the Subadviser may vary the average maturity of the securities held
in the Portfolio without limit.
The Portfolio may also invest in other types of securities and/or engage in a
variety of investment strategies including, but not limited to, zero-coupon,
pay-in-kind, illiquid and restricted securities; repurchase agreements; and
borrowing for investment and temporary purposes. See "Description of Securities
and Investment Techniques." For temporary defensive purposes, the Portfolio may
invest part or all of its total assets in cash or in short-term securities,
including certificates of deposit, commercial paper, notes, obligations issued
or guaranteed by the U.S. government or any of its agencies or
instrumentalities.
SUNAMERICA BALANCED PORTFOLIO
The investment objective of the SunAmerica Balanced Portfolio is to conserve
principal by maintaining at all times a balanced portfolio of stocks and bonds.
In seeking to achieve the investment objective of the Portfolio, the Adviser has
the flexibility to select among different types of investments for capital
growth and income and may alter the composition of the Portfolio as economic and
market trends change. The Adviser considers both the opportunity for gain and
the risk of loss in making investments. The Adviser anticipates that, over the
long term, the Portfolio will consist of equity investments, in the form of
common and preferred stocks, warrants and other rights, as well as long-term
bonds and other debt securities such as convertible securities, short-term
investments and U.S. government securities.
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<PAGE> 17
The Portfolio will, under normal circumstances, invest at least 25% of its
assets in fixed-income senior securities; however, the fixed-income component
will exceed 25% when the Adviser believes such an adjustment in portfolio mix to
be necessary in order to conserve principal, such as in anticipation of decline
in the equities market. The Adviser shifts its emphasis among these different
types of investments, as well as among various industry sectors, as financial
trends and economic conditions change.
In selecting equity investments, the Adviser typically seeks companies of medium
to large capitalizations (generally $1 billion or more) that, based on their
future prospects or opportunities, it believes are undervalued in the
marketplace. Investments in companies with market capitalizations of less than
$1 billion may be more volatile than investments in companies with larger market
capitalizations, and thus the Portfolio intends to limit its investments in such
companies to no more than 20% of its total assets. See "Description of
Securities and Investment Techniques -- Risks Associated with Investing in Small
Companies."
In selecting debt investments, the Adviser seeks debt securities with longer
maturities during periods of anticipated lower interest rates and shorter-term
debt securities when interest rates are expected to rise. The Adviser generally
selects long-term debt securities from high quality bonds (rated AA or higher by
S&P, Aa or higher by Moody's) to achieve income and capital gains. The Adviser
may also invest the Portfolio's assets in high quality, short-term debt
securities (such as commercial paper rated A-1 by S&P or P-1 by Moody's, or
determined by the Adviser to be of equivalent quality if unrated). However, the
Adviser may invest up to 10% of the value of the Portfolio's total assets
(measured at the time of investment) in securities rated as low as BBB by S&P or
Baa by Moody's. See "Fixed-Income Securities" in "Description of Securities and
Investment Techniques" below for a discussion of the risks associated with
investing in such securities. See also the Statement of Additional Information
for a description of securities ratings.
The Adviser may select equity and debt securities for the Portfolio issued by
either domestic or foreign issuers. See "Description of Securities and
Investment Techniques" for a description of the risks associated with foreign
securities.
BALANCED/PHOENIX INVESTMENT COUNSEL PORTFOLIO
The Balanced/Phoenix Investment Counsel Portfolio seeks as its investment
objectives reasonable income, long-term capital growth and conservation of
capital. The Portfolio intends to make investments based on combined
considerations of risk, income, capital enhancement and protection of capital
value.
The Portfolio may invest in any type or class of security. Under normal
circumstances, the Portfolio will invest in common stocks and fixed-income
securities; however, it may also invest in securities convertible into common
stock. At least 25% of the value of the Portfolio's assets will normally be
invested in fixed-income senior securities. The Portfolio may also engage in
certain options transactions and enter into financial futures contracts and
related options for hedging purposes, and may invest in zero coupon debt
obligations. Notwithstanding the foregoing, for temporary defensive purposes,
the Portfolio may actively pursue a policy of retaining cash or investing part
or all of its assets in cash equivalents, such as government securities and high
quality commercial paper. See "Description of Securities and Investment
Techniques" for a full discussion of the types of securities in which the
Portfolio may invest.
The Portfolio may invest up to 25% of the value of the Portfolio's total assets
in securities of foreign issuers, including emerging market securities and those
issued by foreign branches of U.S. banks. Such foreign investments may involve a
higher degree of risk than investments in domestic issuers. Foreign securities
are often denominated in foreign currencies, which means that their value will
be affected by changes in exchange rates, as well as other factors that affect
securities prices. Investment in foreign securities involves special risks. See
"Description of Securities and Investment Techniques -- Risks and Considerations
Applicable to Investment in Securities of Foreign Issuers."
With respect to investment in fixed-income securities, the Portfolio intends to
emphasize investments in investment grade fixed-income securities which are
rated within the four highest categories by recognized rating agencies such as
Moody's, S&P, Duff & Phelps or Fitch. However, the Portfolio may invest in
lower- or non-rated fixed-income securities, but will not invest more than 35%
of its net assets, determined at the time of investment, in high-yield,
high-risk fixed-income securities. A fixed-income securities issue may have its
ratings reduced below the minimum permitted for purchase by the Portfolio. In
that event, the Subadviser will determine whether the Portfolio should continue
to hold such security. If, in the Subadviser's opinion, market conditions
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<PAGE> 18
warrant, the Portfolio may, from time to time, increase its position in lowerand
non-rated securities. Investment in lower-rated and unrated fixed-income
securities involves certain risks not attendant to higher rated securities. For
the fiscal year ended November 30, 1997, 5.3% of the Portfolio's bond holdings
were below investment grade. See "Description of Securities and Investment
Techniques -- Corporate Debt Instruments and Risk Factors Relating to High-Yield
Bonds" for a full discussion of below investment grade fixed-income securities
and the risks associated therewith.
ASSET ALLOCATION PORTFOLIO
The investment objective of the Asset Allocation Portfolio is high total return
(including income and capital gains) consistent with preservation of capital
over the long-term. The Portfolio seeks to achieve its objectives by investing
in a diversified portfolio that can include common stocks and other securities
having common stock characteristics, bonds and other intermediate and long-term
fixed-income securities, including mortgage-related and asset-backed securities,
and money market instruments (debt securities maturing in one year or less).
Securities designated as having "common stock" characteristics include, but are
not limited to, securities convertible into, or exchangeable for, common stock.
The Subadviser will determine the relative mix of equities, fixed-income
securities and money market instruments for the Portfolio based on its view of
long-term economic and market trends under the relative risks and opportunities
for long-term total return of the different classes of assets. Under normal
conditions, the Subadviser expects (but is not required) to maintain an
investment mix falling within the following ranges: 40% to 80% in equities; 20%
to 50% in fixed-income securities; and 0% to 40% in money market instruments.
The Subadviser may make frequent shifts within these broad ranges whenever, in
the Subadviser's judgment, market or economic changes warrant a reallocation.
The Subadviser intends, in normal situations, to make any shifts in the
Portfolio's asset allocation gradually over time based on its views of long-term
trends and conditions.
The Portfolio may invest in securities of foreign issuers, including issuers in
emerging countries (which are generally denominated in currencies other than the
U.S. dollar), although there is no requirement that the Portfolio maintain
investments in foreign issuers. See "Description of Securities and Investment
Techniques -- Risks and Considerations Applicable to Investment in Securities of
Foreign Issuers." The Portfolio also has the ability to hold a portion of its
assets in foreign currencies and to enter into forward foreign currency exchange
contracts, currency options, currency swaps, currency and financial futures
contracts, and options on such futures contracts.
The Portfolio's fixed-income investments will consist primarily of "investment
grade" bonds; that is, bonds that are rated BBB or better by S&P or Baa or
better by Moody's. Up to 25% of the Portfolio's fixed-income assets may be
invested in securities that are below investment grade as defined above,
including securities rated as low as CC by S&P or Ca by Moody's. Securities
rated BBB or below by S&P or Baa or below by Moody's are considered to have
speculative characteristics. The weighted average ratings by S&P as a percentage
of all bonds held by the Portfolio during the fiscal year ended November 30,
1997 were: "AAA" 60.04%; "AA" 0.36%; "A" 6.46%; "BBB" 14.48%; "BB" 15.10%; "B"
2.04%; and CCC/NR 1.52%. For a more detailed description of the risks involved
with these securities, see "Description of Securities and Investment
Techniques -- Corporate Debt Instruments -- Lower Grade" and "Risk Factors
relating to High-Yield, High-Risk Bonds." The Portfolio's investments in foreign
fixed-income securities will be concentrated in securities issued or guaranteed
as to principal and interest by foreign governments or their agencies and
instrumentalities or by multinational agencies.
The Portfolio may enter into repurchase agreements and firm commitment
agreements, and may purchase when-issued securities. The Portfolio may also
engage in interest-rate swaps, mortgage swaps, transactions involving
interest-rate caps, floors and collars, dollar rolls and securities lending.
UTILITY PORTFOLIO
The Utility Portfolio seeks high current income and moderate capital
appreciation. The Portfolio's investment approach is based on the Subadviser's
conviction that over the long-term, the economy will continue to expand and
develop and that this economic growth will be reflected in the growth of the
revenues and earnings of utility companies. The Portfolio intends to achieve its
investment objective by investing in equity and debt securities of utility
companies that produce, transmit, or distribute gas and electric energy as well
as those companies that provide communications facilities, such as telephone and
telegraph companies.
The Portfolio will, under normal circumstances, invest at least 65% of its total
assets in securities of utility
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companies. Such investments will be primarily in common stocks selected by the
Subadviser on the basis of traditional research techniques, including assessment
of earnings and dividend growth prospects and of the risk and volatility of an
issuer's industry. However, other factors, such as product position, market
share, or profitability will also be considered by the Subadviser. The Portfolio
may also invest in preferred stocks, corporate bonds, notes, and warrants of
utility companies. Fixed-income securities purchased by the Portfolio will be
rated at least BBB by S&P or Baa by Moody's.
The Portfolio may also invest in other types of securities and/or engage in a
variety of investment strategies, including: U.S. government securities; money
market instruments; foreign securities; illiquid securities; repurchase and
reverse repurchase agreements; securities lending; when-issued and
delayed-delivery transactions; and options, financial futures and options on
such futures. See "Description of Securities and Investment Techniques" for more
information on these securities and strategies. For temporary defensive
purposes, the Portfolio may invest up to 100% of its assets in cash, cash
equivalents and short-term debt instruments.
Risk Factors Applicable to Utility Securities -- There exist certain risks
associated with the utility industry of which investors in the Portfolio should
be aware. These include (i) utility companies' difficulty in earning adequate
returns on investment despite frequent rate increases; (ii) restrictions on
operations and increased costs and delays due to governmental regulations; (iii)
building or construction delays; (iv) environmental regulations; (v) difficulty
of the capital markets in absorbing utility debt and equity securities; and (vi)
difficulties in obtaining fuel at reasonable prices. Further information
concerning the risks associated with the utility industry generally, and
particular segments within the utility industry is contained in the Statement of
Additional Information.
Reducing Risks of Utility Securities -- The Subadviser believes that the risks
of investing in utility securities can be reduced. The professional portfolio
management techniques used by the Subadviser to attempt to reduce these risks
include credit research and diversification techniques. The Subadviser will
perform its own credit analysis in addition to using recognized rating agencies,
and will obtain information from other sources, including the issuer's
management and other investment analysts. The Subadviser's credit analysis will
consider the issuer's financial soundness, its responsiveness to changes in
interest rates and business conditions, and its anticipated cash flow, interest
or dividend coverage, and earnings. In evaluating an issuer, the Subadviser
places special emphasis on the estimated current value of the issuer's assets
rather than historical cost.
GROWTH-INCOME PORTFOLIO
The Growth-Income Portfolio seeks growth of capital and income. In the selection
of securities for investment, the possibilities of appreciation and potential
dividends are given more weight than current yield. Ordinarily, the assets of
the Portfolio consist principally of a diversified group of common stocks, but
other types of securities, including preferred stocks, corporate bonds and
convertible bonds, may be held when deemed advisable. The Subadviser determines
the relative amounts to be invested in common stocks, preferred stocks, bonds
(including corporate and convertible), securities of the U.S. government, its
agencies and instrumentalities, cash and cash equivalents (such as commercial
bank and savings association obligations, commercial paper and short-term
corporate bonds and notes) and repurchase agreements. See "Description of
Securities and Investment Techniques."
FEDERATED VALUE PORTFOLIO
The Federated Value Portfolio seeks growth of capital and income. The Portfolio
pursues its investment objective by investing, under normal circumstances, at
least 65% of its assets in a portfolio of securities issued by the one hundred
companies contained in "The Leaders List" described below. The Portfolio's
investment approach is based upon the Subadviser's conviction that over the
longer term, the economy will continue to expand and develop and that this
economic growth will be reflected importantly in the growth of major
corporations. Generally, the Subadviser makes portfolio selections utilizing
fundamental analysis, with emphasis on the issuer's earning power, financial
condition and valuation.
The securities in which the Portfolio invests include, but are not limited to:
common stocks; preferred stocks; domestic issues of corporate debt obligations;
and warrants. The fixed-income securities in which the Portfolio may invest must
be rated, at the time of purchase, BBB or better by S&P, Baa by Moody's, or BBB
by Fitch. If a security loses its rating or has its rating reduced after the
Portfolio has purchased it, the Portfolio is not required to sell the security,
but will consider doing so.
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<PAGE> 20
The Portfolio may also invest in other securities and/ or engage in various
investment strategies, including: foreign securities; repurchase agreements;
illiquid securities; and securities lending. See "Description of Securities and
Investment Techniques" for more information on these securities and strategies.
For temporary or defensive purposes, the Portfolio may also hold cash and invest
in U.S. government securities in such proportions as the Subadviser may deem
necessary for such purposes.
"The Leaders List" is a trade name which represents a list of 100 blue chip
companies selected by the Subadviser. In the opinion of the Subadviser,
securities of these companies represent diversified and highly marketable
investments. The Subadviser uses its proprietary securities selection process to
evaluate the relative value of securities suitable for "The Leaders List." The
Subadviser also uses a number of standards and fundamental research factors in
selecting "The Leaders List." "The Leaders List" generally includes leading
companies in their industries determined in terms of sales, earnings, and/or
market capitalization. Companies on "The Leaders List" typically have a market
capitalization in excess of $1 billion. The list is subject to continuous review
and modification.
VENTURE VALUE PORTFOLIO
The Venture Value Portfolio seeks growth of capital. Under normal circumstances,
the assets of the Portfolio will be invested in securities which the Subadviser
believes have above-average appreciation potential. Usually these securities are
common stocks. Income is not a significant factor in selecting investments for
the Portfolio.
Generally, the Portfolio will invest predominantly in equity securities of
companies with market capitalizations of at least $250 million. Investments will
consist of issues which the Subadviser believes have capital growth potential
due to factors such as undervalued assets or earnings potential, product
development and demand, favorable operating ratios, resources for expansion,
management abilities, reasonableness of market price, and favorable overall
business prospects. These companies may offer greater potential for capital
appreciation but may also involve certain risks. See "Description of Securities
and Investment Techniques -- Risks Associated With Investing in Small
Companies."
The Portfolio may invest in securities of foreign issuers. Such foreign
investments may involve a higher degree of risk than investments in domestic
issuers. Foreign securities are often denominated in foreign currencies, which
means that their value will be affected by changes in exchange rates, as well as
other factors that affect securities prices. To help reduce exposure to currency
fluctuations, the Portfolio may trade in forward foreign currency exchange
contracts (forward contracts), currency futures contracts and options thereon,
and securities indexed to foreign securities. The Subadviser will use these
techniques to lock in an exchange rate in connection with transactions in
securities denominated or traded in foreign currencies, to hedge the currency
risk in foreign securities held by the Portfolio and to hedge a currency risk
involved in an anticipated purchase of foreign securities.
The Portfolio will generally invest in securities of foreign companies through
trades of individual securities on recognized exchanges and developed
over-the-counter markets, through American Depositary Receipts (ADRs) covering
such securities, and through U.S. registered investment companies primarily
investing in foreign securities. With respect to other registered investment
companies, no such investment may cause more than 10% of the Portfolio's total
assets to be invested in such companies. Such other investment companies usually
have their own management costs or fees and the Portfolio's Subadviser earns its
regular fee on such assets.
Investment in foreign securities and engaging in foreign currency transactions
involves special risks. See "Description of Securities and Investment
Techniques -- Risks and Considerations Applicable to Investment in Securities of
Foreign Issuers and Foreign Currency Transactions."
Sometimes a more defensive position may be desirable under certain economic or
financial circumstances. At these times, the Portfolio may, without limitation,
hold assets in cash and cash equivalents, including repurchase agreements, or in
fixed-income or other defensive securities rather than in securities selected
for appreciation potential. The Portfolio may also have such holdings
temporarily for the purpose of managing exceptional in-flows and out-flows of
cash.
The Portfolio may also engage in other types of investment practices, including,
but not limited to, investment in illiquid securities and lending of portfolio
securities. See "Description of Securities and Investment Techniques" for a
description of these investment techniques and a discussion of the other
techniques in which the Portfolio may engage.
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"DOGS" OF WALL STREET PORTFOLIO
The investment objective of the "Dogs" of Wall Street Portfolio is to seek total
return (including capital appreciation and current income) through a passively
managed strategy involving the annual selection of thirty high dividend yielding
common stocks from the Dow Jones Industrial Average ("DJIA")(1) and the broader
market. The thirty stocks will consist of (1) the ten highest yielding stocks in
the DJIA and (2) the twenty other highest yielding stocks of the largest
industrial companies in the market (with market capitalizations of at least $1
billion) that have been assessed as being of high quality from the perspective
of historical earnings and dividend performance. The Adviser will rely on
independently published reports for purposes of selecting these twenty stocks.
The Adviser will employ the same methodology, using the same analytical
parameters and benchmarks, in selecting the thirty stocks each year.
The Portfolio's stock selection criteria is designed to implement a "value"
oriented philosophy of investing principally in securities believed to be
undervalued in the market. This philosophy reflects a contrarian approach, in
that the potential for superior relative performance is believed to be the
highest when stocks of fundamentally solid companies are out of favor. The
selection criteria is calculated to identify stocks of large, well-known
companies with solid financial strength and generous dividend yields that have
low price-earnings ratios ("P/E ratios") and have been generally overlooked by
the market.
Upon commencement of its operations, the Portfolio will invest in the thirty
common stocks selected according to the methodology described above. The initial
thirty stocks will be identified based on information as of the immediately
preceding December 31; they will be purchased by the Portfolio in proportion to
their relative market prices as of the commencement of Portfolio operations.
Thereafter, the Adviser will annually rebalance the Portfolio's holdings within
the first several weeks of each succeeding year according to the same selection
criteria, based on information as of the preceding December 31. The Adviser will
rebalance the Portfolio's holdings to create equal weightings among the thirty
stocks by purchasing new stocks that meet the selection criteria, selling stocks
that no longer meet the selection criteria, and adjusting its ownership of
stocks that continue to meet the criteria in order to achieve the proper
weightings of each of the thirty stocks.
The Portfolio will employ a buy and hold strategy over the course of each year,
which ignores market timing and rejects active management. The Adviser
anticipates that the thirty stocks held by the Portfolio will remain the same
throughout the course of a year, despite any adverse developments concerning a
particular stock, an industry, the economy or the stock market generally.
However, due to purchases and redemptions of Portfolio shares during the year
and changes in the market value of the stock positions held by the Portfolio, it
is likely that the weightings of the stock positions in the Portfolio will
fluctuate throughout the year.
As the Portfolio's shares are sold during the year, new cash received by the
Portfolio will first be used to the extent necessary to meet redemption
requests. The balance of any such cash will be invested weekly (or more
frequently as the Adviser deems necessary) in the thirty stocks selected for the
Portfolio as of its most recent rebalancing in proportion to the current
weightings of such stocks in the Portfolio and without any intention to
rebalance the Portfolio's holdings on an interim basis. To the extent
redemptions exceed available cash, the Portfolio will generally meet redemption
requests by selling stocks on a pro rata basis (subject to rounding and
avoidance of odd lots), based on the current weightings of such stocks in the
Portfolio and without any intention to rebalance the Portfolio's holdings on an
interim basis.
The Adviser intends that the Portfolio be at all times fully invested in the
stocks that are selected using the criteria described above, but reserves the
right to deviate from the investment strategy to the extent necessary to comply
with federal tax laws applicable to the Portfolio. In order to enhance its
income, the Portfolio may lend its securities and enter into repurchase
agreements. It may also seek to equitize uninvested cash through the use of
options and futures strategies. See "Description of Securities and Investment
Techniques."
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(1) "Dow Jones Industrial Average" is a trademark of Dow Jones & Company, Inc.
("Dow Jones"). None of the Trust, the Portfolio or SAAMCo is affiliated
with, nor is the Trust or the Portfolio sponsored by, Dow Jones. Dow Jones
has not participated in any way in the creation of the Trust or the
Portfolio or in the selection of the stocks included in the Portfolio, nor
has Dow Jones viewed or approved any information included in this
Prospectus.
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HISTORICAL PERFORMANCE INFORMATION
The following tables compare the actual performance of the S&P 500 Index ("S&P
500") and the hypothetical performance of a model portfolio employing the same
stock selection criteria as the "Dogs" of Wall Street Portfolio, rebalanced
annually, for the historical periods indicated. The S&P 500 is used as the
performance comparison because (1) it is the performance benchmark against which
the Portfolio will be measured; and (2) it is the index most widely recognized
as representative of the performance of the U.S. stock market. The S&P 500 is a
composite index consisting of 500 common stocks that are traded on the New York
Stock Exchange ("NYSE"), American Stock Exchange and NASDAQ National Market
System. The companies that are included in the S&P 500 are leading companies of
important industry segments within the U.S. economy.
The Portfolio's actual performance may differ from that of the hypothetical
model for the following reasons: the Portfolio may not be fully invested at all
times; appreciation or depreciation in an individual stock's value may cause
stocks held by the Portfolio to be weighted unequally at any particular time;
cash surpluses and deficits from purchases and redemptions of Portfolio shares
may cause the Adviser to buy and sell stocks for the Portfolio between annual
rebalancings; the Adviser may modify slightly the Portfolio's investment
strategy as federal tax laws require; and the returns indicated in the
hypothetical model exclude commission costs, advisory fees, expenses and taxes
that would be borne by the Portfolio.
Because the returns for the model portfolio are hypothetical, they do not
represent actual trading or the impact that material economic and market factors
might have had on the Adviser's decision-making under actual circumstances.
However, except as described above, the Adviser can presently foresee no
circumstances that would cause deviation from the stock selection criteria used
in managing the Portfolio. All returns contained in the tables below reflect
reinvestment of dividends and other earnings. The results of the Portfolio's
strategy are based on statistical data gathered by the Adviser.
==========================================================
PERFORMANCE COMPARISON OF S&P 500 AND HYPOTHETICAL RESULTS
OF THE STRATEGY FOR
"DOGS" OF WALL STREET PORTFOLIO
DECEMBER 31, 1988 --
DECEMBER 31, 1997
==========================================================
The following tables represent the hypothetical performance of "Dogs" of Wall
Street Portfolio obtained by applying its stock selection criteria retroactively
to December 31, 1987. The performance of the Portfolio's stock selection
criteria does not represent the performance of the Portfolio, nor does it
reflect the advisory fees, commissions, expenses or taxes which would be borne
by the Portfolio. The Portfolio's performance, as well as that of the S&P 500,
would be lower if such fees and expenses were deducted. Past performance of the
Portfolio's stock selection criteria is not predictive of future performance of
such criteria or of the Portfolio.
ANNUAL RESULTS
<TABLE>
<CAPTION>
--------------------------------------------
"DOGS" OF
WALL STREET
YEAR ENDED S&P 500 STRATEGY
--------------------------------------------
<S> <C> <C>
12/31/88 16.56% 34.4%
12/31/89 31.62% 32.3%
12/31/90 -3.10% -1.1%
12/31/91 30.40% 39.3%
12/31/92 7.61% 11.9%
12/31/93 10.06% 12.7%
12/31/94 1.82% 10.2%
12/31/95 37.55% 36.8%
12/31/96 22.95% 20.8%
12/31/97 33.35% 31.2%
</TABLE>
SUMMARY RESULTS
<TABLE>
<CAPTION>
--------------------------------------------
"DOGS" OF
WALL STREET
S&P 500 STRATEGY
--------------------------------------------
<S> <C> <C>
Arithmetic average 18.83% 22.85%
Standard deviation of
return 14.42% 13.82%
1-yr 33.35% 31.20%
3-yr compounded* 31.14% 29.43%
5-yr compounded* 20.25% 21.91%
7-yr compounded* 19.74% 22.74%
10-yr compounded* 18.03% 22.13%
</TABLE>
* Quoted return is for the most recent period ended December 31, 1997
19
<PAGE> 23
ALLIANCE GROWTH PORTFOLIO
GROWTH/PHOENIX INVESTMENT COUNSEL PORTFOLIO
PUTNAM GROWTH PORTFOLIO
The three Growth Portfolios have the same investment objectives, policies and
restrictions, but have different Subadvisers. The investment objective of each
Portfolio is to seek long-term growth of capital. Whatever current income is
generated by the Portfolio is incidental to the objective of capital growth.
Each Portfolio's objective of capital growth is sought by investing primarily in
common stocks or securities with common stock characteristics. Securities
designated as having "common stock" characteristics include, but are not limited
to, securities convertible into or exchangeable for common stock. Such
convertible securities may be rated below BBB by S&P or Baa by Moody's or be
determined by the subadviser to be of comparable quality (i.e., junk bonds). See
"Description of Securities and Investment Techniques -- Risk Factors Relating to
High-Yield, High-Risk Securities"). In addition, each Portfolio may purchase
preferred stocks and debt securities if its Subadviser believes investment
decisions. Each Portfolio's Subadviser considers the factors that it believes
affect potential for capital appreciation, including an issuer's current and
projected revenue, earnings, cash flow and assets, as well as general market
conditions. When the outlook for common stocks is not considered promising, for
temporary defensive purposes, a substantial portion of the assets may be
invested in securities of the U.S. government, its agencies and
instrumentalities, cash and cash equivalents (such as commercial bank and
savings association obligations, commercial paper and short-term corporate bonds
and notes) and repurchase agreements. Because the securities purchased by these
Portfolios, in pursuing their investment objective, are selected for growth
potential rather than production of income, the market values of such securities
(and therefore, to a large extent, the net asset values per share of the
Portfolios) will tend to be more volatile in response to market changes than
they would be if income-producing securities were sought for investment by the
Portfolios. Up to 25% of each Portfolio's total assets may be invested in
foreign securities. See "Description of Securities and Investment
Techniques -- Risks and Considerations Applicable to Investment in Securities of
Foreign Issuers" and the Statement of Additional Information.
REAL ESTATE PORTFOLIO
The investment objective of the Real Estate Portfolio is total return through a
combination of growth and income. It invests primarily in securities of
companies principally engaged in or related to the real estate industry or which
own significant real estate assets or which primarily invest in real estate
financial instruments. Normally, at least 65% of its total assets will be
invested in securities of companies which have at least 50% of the value of
their assets, gross income or net profits attributable to ownership, financing,
construction, management or sale of real estate, or to products or services that
are related to real estate or the real estate industry. The Portfolio does not
invest directly in real estate. Real estate companies include real estate
investment trusts ("REITs"), or other securitized real estate investments,
brokers, developers, lenders and companies with substantial real estate holdings
such as paper, lumber, hotel and entertainment companies. The Portfolio invests
in common stocks and other equity securities and debt securities. In keeping
with its primary growth objective, it will normally invest primarily in equity
securities (including securities convertible into equity securities). It may
also invest in fixed income securities for income or as a defensive strategy
when the Subadviser believes that adverse economic or market conditions require
such strategy.
The remaining 35% of the Portfolio's assets may be invested in securities of
companies in any other industries. These may include companies which are not
primarily involved in real estate operations or ownership but which have
products or services relating to the real estate industry, such as manufacturers
and distributors of building supplies, financial institutions which make or
service real estate loans or companies which have substantial real estate assets
such as some companies in the energy, retailing or railroad industries. There is
no limitation on such investments except that the Portfolio intends to invest
less than 25% of its total assets in the securities of any industry other than
the real estate industry.
The Portfolio will invest in shares of REITs. REITs pool investors' funds for
investment primarily in income producing real estate or real estate related
loans or interests. A REIT is not taxed on income distributed to shareholders if
it complies with various requirements relating to its organization, ownership,
assets and income and with the requirement that it distribute to its
shareholders at least 95% of its taxable income (other than net capital gains)
for each taxable year. REITs can generally be classified as Equity REITs,
Mortgage REITs and Hybrid REITs. Equity REITs invest the majority of their
assets directly in real property and derive their income primarily from rents.
Equity REITs can also
20
<PAGE> 24
realize capital gains by selling property that has appreciated in value.
Mortgage REITs invest the majority of their assets in real estate mortgages and
derive their income primarily from interest payments. Hybrid REITs combine the
characteristics of both Equity REITs and Mortgage REITs.
Risk Factors Applicable to The Real Estate Portfolio -- The Real Estate
Portfolio will generally not purchase securities rated BB by S&P or Ba by
Moody's or lower if such purchase would then cause more than 30% of the
Portfolio's net assets to be invested in such securities. The Real Estate
Portfolio does not presently intend to have more than 5% of its assets invested
in fixed income securities rated below BBB by S&P or Baa by Moody's in the near
future.
Because the Portfolio invests primarily in the real estate industry, it is
subject to risks associated with the direct ownership of real estate. The
Portfolio could also be subject to such risks by reason of direct ownership as a
result of a default on a debt security it may own. These risks include declines
in the value of real estate, risks related to general and local economic
conditions, overbuilding and increased competition, increases in property taxes
and operating expenses, changes in zoning laws, casualty or condemnation losses,
fluctuations in rental income, changes in neighborhood values, the appeal of
properties to tenants and increases in interest rates. If the Portfolio has
rental income or income from the disposition of real property, the receipt of
such income may adversely affect its ability to retain its tax status as a
regulated investment company.
Equity REITs may be affected by changes in the value of the underlying property
owned by the trusts, while Mortgage REITs may be affected by the quality of
credit extended. Equity and Mortgage REITs are dependent upon management skill,
may not be diversified and are subject to project financing risks. Such trusts
are also subject to heavy cash flow dependency, defaults by borrowers,
self-liquidation and the possibility of failing to qualify for tax-free
pass-through of income under the Internal Revenue Code of 1986, as amended (the
"Code") and to maintain exemption from registration under the 1940 Act. Changes
in interest rates may also affect the value of the debt securities in the
Portfolio's portfolio. By investing in REITs indirectly through the Portfolio, a
shareholder will bear not only his proportionate share of the expense of the
Portfolio, but also, indirectly, similar expenses of the REITs, including
compensation of management.
AGGRESSIVE GROWTH PORTFOLIO
The Aggressive Growth Portfolio seeks capital appreciation as its objective. The
Portfolio pursues this investment objective by investing, under normal
circumstances, at least 65% of its total assets in the equity securities of
small, lesser known or new growth companies or industries, such as
telecommunications, media and biotechnology. Such "Small-Cap" companies will
typically have, at the time of purchase, market capitalizations of under $1
billion and have achieved, or are expected to achieve, growth or earnings over
various major business cycles. These companies may offer greater potential for
capital appreciation but may also involve certain risks. See "Description of
Securities and Investment Techniques -- Risks Associated With Investing in Small
Companies." The Portfolio may invest in securities issued by well known and
established domestic or foreign companies, as well as in newer and less-seasoned
companies. Such securities may be listed on an exchange or traded
over-the-counter. In addition, the Portfolio may invest up to 35% of its total
assets in debt securities that have the potential for capital appreciation due
to anticipated market conditions. The Portfolio may invest in securities rated
as low as BBB by S&P or Baa by Moody's.
The Portfolio is authorized to borrow, for investment purposes to increase the
opportunity for greater return and for payment of dividends. Such borrowings
would constitute leverage, which is a speculative characteristic. Leveraging
will magnify declines as well as increases in the net asset value of the
Portfolio's shares and in the yield on the Portfolio's investments. See
"Description of Securities and Investment Techniques -- Borrowing and Other
Forms of Leverage."
INTERNATIONAL GROWTH AND INCOME PORTFOLIO
The investment objective of the International Growth and Income Portfolio is
growth of capital with current income as a secondary objective. The Portfolio
will seek its objectives by investing primarily in common stocks that offer
potential for capital growth. The Portfolio may also invest, consistent with its
objectives, in stocks that offer potential for current income. Under normal
market conditions, the Portfolio expects to invest substantially all of its
assets in securities principally traded on markets outside the United States.
Moreover, the Portfolio will normally diversify its investments among a number
of different countries and, except when investing for defensive purposes,
21
<PAGE> 25
will invest at least 65% of its total assets in at least three countries other
than the United States.
The Portfolio may also purchase corporate bonds, notes and debentures (including
those rated below BBB by S&P or Baa by Moody's, i.e., junk bonds), preferred
stocks, securities convertible into common stocks or other equity securities, or
U.S. or foreign government securities if the Subadviser determines that their
purchase would help further the Portfolio's investment objectives or for
temporary defensive purposes. In addition, when circumstances warrant, the
Portfolio may hold some or all of its assets in cash or high-quality money
market instruments. See "Description of Securities and Investment
Techniques -- Corporate Debt Instruments" and "-- Risk Factors Relating to
High-Yield, High-Risk Bonds."
The types of securities selected for the Portfolio may vary from time to time in
light of the Portfolio's investment objectives, changes in interest rates, and
economic and other factors. The Subadviser will seek to identify securities that
offer the potential for capital growth, and that are undervalued in relation to
underlying asset values or earnings potential. In selecting securities for the
Portfolio, the Subadviser may invest in the securities of issuers in developed
countries, as well as emerging markets. Investing in emerging markets, however,
may involve risks not generally associated with more developed markets. See
"Description of Securities and Investment Techniques -- Risks and Considerations
Applicable to Investment in Securities of Foreign Issuers" for more details. In
addition, the Subadviser may invest in the securities of companies with equity
market capitalizations of less than $1 billion. These companies may offer
greater potential for capital appreciation, but may also involve certain risks.
See "Description of Securities and Investment Techniques -- Risks Associated
with Investing in Small Companies."
GLOBAL EQUITIES PORTFOLIO
The investment objective of the Global Equities Portfolio is to achieve
long-term growth of capital through investment primarily in common stocks or
securities of U.S. and foreign issuers with common stock characteristics and
through transactions in foreign currencies. Securities designated as having
"common stock" characteristics include, but are not limited to, securities
convertible into or exchangeable for common stock. A major premise of the
Portfolio's investment approach is the Subadviser's belief that economic and
political developments have helped to create new opportunities worldwide.
The assets of the Portfolio will be invested with geographic flexibility. Under
normal market conditions, the Portfolio will invest at least 50% of its assets
in equity securities of issuers domiciled outside the U.S. or dollar-denominated
securities or securities of U.S. issuers. The Subadviser seeks to identify those
companies, both domestic and foreign, likely to benefit from long-term trends
and shifting trade patterns as they develop in the global economy. The
Subadviser currently does not intend to invest more than 20% of the Portfolio's
total assets in issuers domiciled in, or governments of, developing countries
(i.e., those identified as such by the international financial community).
When prevailing market, economic, political or currency conditions warrant, the
Portfolio may purchase fixed-income securities (including securities of
governments other than the U.S., which may be securities of either national,
regional or local governments). For temporary defensive purposes, the Portfolio
may at times maintain all or any part of its assets in U.S. or
dollar-denominated or foreign currency-denominated cash or cash equivalents
(including U.S. government securities, foreign government securities,
certificates of deposit, time deposits, commercial paper, bankers' acceptances
and other high quality short-term debt securities).
The Portfolio may, from time to time, use currency transactions and financial
index futures both to enhance returns for a given level of risk and to hedge its
exposure to foreign currencies and local market conditions. While the Portfolio
will have both long and short currency positions, neither its net long foreign
currency exposure nor its net short foreign currency exposure will exceed the
value of the Portfolio's total assets. See "Description of Securities and
Investment Techniques -- Risks and Considerations Applicable to Investment in
Securities of Foreign Issuers" and the Statement of Additional Information.
INTERNATIONAL DIVERSIFIED EQUITIES PORTFOLIO
The investment objective of the International Diversified Equities Portfolio is
to provide long-term capital appreciation by investing in accordance with
country weightings determined by the Subadviser in common stocks of foreign
issuers which, in the aggregate, replicate broad country indices. The Subadviser
utilizes a top-down approach in selecting investments for the Portfolio that
emphasizes country selection and weighting rather than individual stock
selection. This approach reflects the Subadviser's philosophy that a diversified
selection of securities representing exposure to world markets, based upon
22
<PAGE> 26
the economic outlook and current valuation levels for each country, is an
effective way to maximize the return and minimize the risk associated with
international investment.
The Subadviser determines country allocations for the Portfolio on an ongoing
basis within policy ranges dictated by each country's market capitalization and
liquidity. The Portfolio will invest in the industrialized countries throughout
the world that comprise the Morgan Stanley Capital International EAFE (Europe,
Australia and the Far East) Index. The Portfolio will also invest in emerging
country equity securities. Further information concerning emerging country
equity securities is contained in the Statement of Additional Information. See
"Description of Securities and Investment Techniques -- Risks and Considerations
Applicable to Investment in Securities of Foreign Issuers."
By analyzing a variety of macroeconomic and political factors, the Subadviser
develops fundamental projections on interest rates, currencies, corporate
profits and economic growth for each country. These country projections are used
then to determine what the Subadviser believes to be a fair value for the stock
market of each country. Discrepancies between actual value and fair value, as
determined by the Subadviser, provide an expected return for each stock market.
The expected return is adjusted by currency return expectations derived from the
Subadviser's purchasing-power parity exchange rate model to arrive at an
expected total return in U.S. dollars. The final country allocation decision is
then arrived at by considering the expected total return in light of various
country specific considerations such as market size, volatility, liquidity and
country risk.
Within a particular country, investments are made through the purchase of common
stocks which, in aggregate, replicate a broad market index, which in most cases
will be the Morgan Stanley Capital International EAFE Index for the given
country. The Subadviser may overweight or underweight an industry segment of a
particular index if it concludes this would be advantageous to the Portfolio.
Common stocks purchased for the Portfolio include common stocks and equivalents,
such as securities convertible into common stocks and securities having common
stock characteristics, such as rights and warrants to purchase common stocks.
Indexation of the Portfolio's stock selection reduces stock-specific risk
through diversification and minimizes transaction costs, which can be
substantial in foreign markets.
Common stocks purchased for the Portfolio normally will be listed on a major
stock exchange in the subject country. The Portfolio will not invest in the
stocks of U.S. issuers. For a description of special considerations and certain
risks associated with investments in foreign issuers, see "Description of
Securities and Investment Techniques -- Risks and Considerations Applicable to
Investment in Securities of Foreign Issuers." The Portfolio may temporarily
reduce its equity holdings in response to adverse market conditions and invest
in domestic, Eurodollar and foreign short-term money market instruments for
defensive purposes. Notwithstanding the foregoing, the Portfolios may seek to
gain exposure to certain foreign markets where direct investment may be
difficult or impracticable through investment in domestic closed-end mutual
funds which invest predominately in such markets.
The Portfolio may also engage in certain options transactions and enter into
financial futures contracts and related options for hedging purposes.
EMERGING MARKETS PORTFOLIO
The investment objective of the Emerging Markets Portfolio is long-term capital
appreciation. The Portfolio will invest in companies that the Subadviser
believes have above-average growth prospects primarily in emerging markets
outside the United States. The Subadviser currently expects that, under normal
market conditions, the Portfolio will invest substantially all of its assets,
other than short-term investments held pending investment, and, except when
investing for defensive purposes as described below, at least 65% of its total
assets, in common stocks and other equity securities of "emerging market"
companies. The Portfolio will consider an issuer of securities to be an
"emerging market" company if it is organized under the laws of an emerging
market country and has a principal office in such country, or if it derives 50%
or more of its revenues from business in emerging market countries. For these
purposes, a country is considered to be an "emerging market country" based on
the Subadviser's evaluation of its level of economic development or the size and
experience of its securities markets. While emerging market countries may change
over time depending on market and economic conditions, at present the Subadviser
believes that these countries include every country in the world except
Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland,
Italy, Japan, the Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland,
the United Kingdom and the United States. Investing in emerging market countries
generally involves special risks. See "Description of Securities and Investment
Techniques -- Risks and Considerations Applicable to
23
<PAGE> 27
Investment in Securities of Foreign Issuers." The Portfolio will normally
diversify its investments among a number of different countries.
Common stocks and other equity securities are normally the Portfolio's main
investments. However, the Portfolio may purchase preferred stock, debt
securities and securities convertible into common stock or other equity
securities if the Subadviser believes they would help achieve the Portfolio's
objective. The Portfolio may also hold a portion of its assets in cash or
high-quality money market instruments.
Because the Subadviser evaluates securities for the Portfolio based on their
long-term potential for capital appreciation, the Portfolio's investments may
not appreciate or yield significant income over the shorter term, and, as a
result, the Portfolio's total return over certain periods may be less than that
of other equity mutual funds.
=========================================================
DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES
=========================================================
FIXED-INCOME SECURITIES -- Fixed-income securities are broadly characterized as
those that provide for periodic payments to the holder of the security at a
stated rate. Most fixed-income securities, such as bonds, represent indebtedness
of the issuer and provide for repayment of principal at a stated time in the
future. Others do not provide for repayment of a principal amount, although they
may represent a priority over common stockholders in the event of the issuer's
liquidation. Many fixed-income securities are subject to scheduled retirement,
or may be retired or "called" by the issuer prior to their maturity dates.
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.
Long-term instruments are generally more sensitive to these changes than are
short-term instruments. 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.
CORPORATE DEBT INSTRUMENTS -- These instruments, such as bonds, represent the
obligation of the issuer to repay a principal amount of indebtedness at a stated
time in the future and, in the usual case, to make periodic interim payments of
interest at a stated rate.
Investment Grade -- A designation applied to intermediate and long-term
corporate debt securities rated within the highest four rating categories
assigned by S&P (AAA, AA, A or BBB) or by Moody's (Aaa, Aa, A or Baa). The
ability of the issuer of an investment grade debt security to pay interest
and to repay principal is considered to vary from extremely strong (for the
highest ratings) through adequate (for the lowest ratings given above),
although the lower-rated investment grade securities may be viewed as having
speculative elements as well.
Lower Grade -- A designation applied to intermediate and long-term corporate
debt securities that are not investment grade; commonly referred to as "junk
bonds". These include bonds rated BB or below by S&P, or Ba or below by
Moody's. These securities are considered speculative.
The Corporate Bond and Worldwide High Income Portfolios may invest in bonds
rated as low as C by Moody's or D by S&P without limitation. The High-Yield Bond
Portfolio may invest in bonds rated as low as Ca by Moody's or CC by S&P and may
invest in bonds rated as low as C by Moody's or D by S&P. The Asset Allocation
and Balanced/Phoenix Investment Counsel Portfolios may invest in bonds rated as
low as Ca by Moody's or CC by S&P. The International Growth and Income Portfolio
may invest up to 20% of its assets in bonds rated as low as C by Moody's or S&P.
The Emerging Markets Portfolio may invest in both higher-rated and lower-rated
fixed-income securities and is not subject to any restrictions based on credit
rating. Bonds rated Ca by Moody's are described as "speculative in a high
degree; often in default or having other marked shortcomings." Bonds rated D by
Moody's -- the lowest rated class -- can be "regarded as having extremely poor
prospects of ever attaining any real investment standing." Not all fixed-income
securities are rated, and each of the foregoing Portfolios may invest in
securities that are not rated but that are determined by the Adviser or
Subadviser to be of comparable quality to the rated securities in which the
Portfolio may invest. Bonds rated C by S&P are of the "highest degree of
speculation"; those rated D by that organization are in default and in arrears.
RISK FACTORS RELATING TO HIGH-YIELD, HIGH-RISK BONDS -- High-yield, high-risk
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
24
<PAGE> 28
greater price fluctuations. Fluctuations in the value of a Portfolio'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.
High-yield bonds present the following risks:
Sensitivity to Interest Rate and Economic Changes -- High-yield, high-risk
bonds are very sensitive to adverse economic changes and corporate
developments. During an economic downturn or substantial period of rising
interest rates, highly leveraged issuers may experience financial stress
that would adversely affect their ability to service their principal and
interest payment obligations, to meet projected business goals and to obtain
additional financing. If the issuer of a bond defaulted on its obligations
to pay interest or principal or entered into bankruptcy proceedings, a
Portfolio may incur losses or expenses in seeking recovery of amounts owed
to it. In addition, periods of economic uncertainty and changes can be
expected to result in increased volatility of market prices (and therefore
yields) of high-yield bonds and the Portfolio's net asset value.
Payment Expectations -- High-yield, high-risk bonds may contain redemption
or call provisions. If an issuer exercised these provisions in a declining
interest-rate market, a Portfolio would have to replace the security with a
lower-yielding security, resulting in a decreased return for investors.
Conversely, a high-yield bond's value will decrease in a rising interest
rate market, as will the value of the Portfolio's assets. If the Portfolio
experiences unexpected net redemptions, this may force it to sell high-yield
bonds without regard to their investment merits, thereby decreasing the
asset base upon which expenses can be spread and possibly reducing the
Portfolio's rate of return.
Liquidity and Valuation -- There may be little trading in the secondary
market for particular bonds, which may affect adversely a Portfolio's
ability to value accurately or dispose of such bonds. Under such
circumstances, the task of accurate valuation becomes more difficult and
judgment would play a greater role due to the relative lack of reliable and
objective data. Adverse publicity and investor perceptions, whether or not
based on fundamental analysis, may decrease the values and liquidity of
high-yield bonds, especially in a thin market.
The Adviser or Subadviser attempts to reduce these risks through diversification
of the applicable Portfolio and by credit analysis of each issuer, as well as by
monitoring broad economic trends and corporate and legislative developments. If
a high-yield bond previously acquired by a Portfolio is downgraded, the Adviser
or Subadviser, as appropriate, will evaluate the security and determine whether
to retain or dispose of it.
U.S. GOVERNMENT SECURITIES -- Securities guaranteed by the U.S. government
include: (1) direct obligations of the U.S. Treasury (such as Treasury bills,
notes and bonds) and (2) federal agency obligations guaranteed as to principal
and interest by the U.S. Treasury (such as Government National Mortgage
Association ("GNMA") certificates and Federal Housing Administration
debentures). For these securities, the payment of principal and interest is
unconditionally guaranteed by the U.S. government. They are of the highest
possible credit quality. These securities are subject to variations in market
value due to fluctuations in interest rates, but if held to maturity, are
guaranteed by the U.S. government to be paid in full.
Securities issued by the U.S. government instrumentalities and certain federal
agencies are neither direct obligations of, nor are they guaranteed by, the U.S.
Treasury. However, they involve federal sponsorship in one way or another. For
example, some are backed by specific types of collateral; some are supported by
the issuer's right to borrow from the Treasury; some are supported by the
discretionary authority of the Treasury to purchase certain obligations of the
issuer; and others are supported only by the credit of the issuing government
agency or instrumentality. These agencies and instrumentalities include, but are
not limited to, Federal Land Banks, Farmers Home Administration, Central Bank
for Cooperatives, Federal Intermediate Credit Banks and Federal Home Loan Banks.
GNMA CERTIFICATES -- GNMA certificates are mortgage-backed securities
representing part ownership of a pool of mortgage loans on which timely payment
of interest and principal is guaranteed by the full faith and credit of the U.S.
government. GNMA certificates differ from
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typical bonds because principal is repaid monthly over the term of the loan
rather than returned in a lump sum at maturity. Because both interest and
principal payments (including prepayments) on the underlying mortgage loans are
passed through to the holder of the certificate, GNMA certificates are called
"pass-through" securities.
Although the mortgage loans in the pool have maturities of up to 30 years, the
actual average life of the GNMA certificates typically will be substantially
less because the mortgages are subject to normal principal amortization and may
be prepaid prior to maturity. Prepayment rates vary widely and may be affected
by changes in market interest rates. In periods of falling interest rates, the
rate of prepayment tends to increase, thereby shortening the actual average life
of the GNMA certificates. Conversely, when interest rates are rising, the rate
of prepayment tends to decrease, thereby lengthening the actual average life of
the GNMA certificates. Accordingly, it is not possible to predict accurately the
average life of a particular pool. Reinvestment of prepayments may occur at
higher or lower rates than the original yield on the certificates. Due to the
prepayment feature and the need to reinvest prepayments of principal at current
rates, GNMA certificates can be less effective than typical bonds of similar
maturities at "locking-in" yields during periods of declining interest rates,
although they may have comparable risks of decline in value during periods of
rising interest rates.
FNMA AND FHLMC MORTGAGE-BACKED OBLIGATIONS -- The Federal National Mortgage
Association ("FNMA"), a federally chartered and privately owned corporation,
issues pass-through securities representing an interest in a pool of
conventional mortgage loans. FNMA guarantees the timely payment of principal and
interest but this guarantee is not backed by the full faith and credit of the
U.S. government. The Federal Home Loan Mortgage Corporation ("FHLMC"), a
corporate instrumentality of the United States, issues participation
certificates that represent an interest in a pool of conventional mortgage
loans. FHLMC guarantees the timely payment of interest and the ultimate
collection of principal and maintains reserves to protect holders against losses
due to default, but the certificates are not backed by the full faith and credit
of the U.S. government. As is the case with GNMA certificates, the actual
maturity of and realized yield on particular FNMA and FHLMC pass-through
securities will vary based on the prepayment experience of the underlying pool
of mortgages.
OTHER MORTGAGE-RELATED SECURITIES -- The Global Bond, Corporate Bond, High-Yield
Bond, SunAmerica Balanced, Balanced/Phoenix Investment Counsel and Asset
Allocation Portfolios may invest in collateralized mortgage obligations ("CMOs")
or mortgage-backed bonds issued by financial institutions such as commercial
banks, savings and loan associations, mortgage banks and securities
broker-dealers (or affiliates of such institutions established to issue these
securities). CMOs are obligations fully collateralized directly or indirectly by
a pool of mortgages on which payments of principal and interest are dedicated to
payment of principal and interest on the CMOs. Payments on the underlying
mortgages (both interest and principal) are passed through to the holders,
although not necessarily on a pro rata basis, on the same schedule as they are
received. Mortgage-backed bonds are general obligations of the issuer fully
collateralized directly or indirectly by a pool of mortgages. The mortgages
serve as collateral for the issuer's payment obligations on the bonds, but
interest and principal payments on the mortgages are not passed through either
directly (as with GNMA certificates and FNMA and FHLMC pass-through securities)
or on a modified basis (as with CMOs). Accordingly, a change in the rate of
prepayments on the pool of mortgages could change the effective maturity of a
CMO but not that of a mortgage-backed bond (although, like many bonds,
mortgage-backed bonds may be callable by the issuer prior to maturity).
The Global Bond, Corporate Bond, High-Yield Bond, Asset Allocation and Emerging
Markets Portfolios may also invest in stripped mortgage-backed securities
("SMBS"), which are derivative multiclass mortgage securities, provided they are
issued or guaranteed by the U.S. government, its agencies or instrumentalities.
SMBS are usually structured with two classes that receive different proportions
of the interest and principal distributions from a pool of mortgage assets. A
common type of SMBS will have one class receiving all of the interest from the
mortgage assets, while the other class will receive all of the principal.
However, in some instances, one class will receive some of the interest and most
of the principal while the other class will receive most of the interest and the
remainder of the principal. If the underlying mortgage assets experience
greater-than-anticipated prepayments of principal, the Portfolio may fail to
fully recoup its initial investment in these securities. Although the market for
such securities is increasingly liquid, certain SMBS may not be readily
marketable and will be considered illiquid for purposes of the Portfolios'
limitation on investments in illiquid securities. The market value of
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the class consisting entirely of principal payments generally is unusually
volatile in response to changes in interest rates. The yields on a class of SMBS
that receives all or most of the interest from mortgage assets are generally
higher than prevailing market yields on other mortgage-backed securities because
their cash flow patterns are more volatile and there is a greater risk that the
initial investment will not be fully recouped.
ASSET-BACKED SECURITIES -- These securities represent an interest in a pool of
consumer or other types of loans ("asset-backed securities"). Payments of
principal and interest on the underlying loans are passed through to the holders
of asset-backed securities over the life of the securities. Some asset-backed
securities may be subject to early prepayment of principal, which can be
expected to accelerate during periods of declining interest rates. Such
prepayments can usually be reinvested only at the lower yields then prevailing
in the market. Therefore, during periods of declining interest rates, asset-
backed securities are less likely than other fixed-income obligations to
appreciate in value and less effective at locking in a particular yield. On the
other hand, asset-backed securities are subject to substantially the same risk
of depreciation during periods of rising interest rates as other fixed-income
securities.
DOLLAR ROLLS -- The Global Bond, Corporate Bond, High-Yield Bond, SunAmerica
Balanced, Balanced/Phoenix Investment Counsel, Asset Allocation and Emerging
Markets Portfolios may enter into "dollar rolls" in which the Portfolio sells
mortgage or other asset-backed securities ("Roll Securities") for delivery in
the current month and simultaneously contracts to repurchase substantially
similar (same type, coupon and maturity) securities on a specified future date.
During the roll period, the Portfolio foregoes principal and interest paid on
the Roll Securities. A Portfolio is compensated by the difference between the
current sales price and the lower forward price for the future purchase (often
referred to as the "drop") as well as by the interest earned on the cash
proceeds of the initial sale. A Portfolio also could be compensated through the
receipt of fee income equivalent to a lower forward price. A "covered roll" is a
specific type of dollar roll for which there is an offsetting cash position or a
cash equivalent security position which matures on or before the forward
settlement date of the dollar roll transaction. The Portfolio will hold and
maintain in a segregated account until the settlement date cash or liquid
securities in an amount equal to the forward purchase price. The Portfolios will
only enter into covered rolls. Covered rolls are not treated as a borrowing or
other senior security and will be excluded from the calculation of each
Portfolio's borrowings and other senior securities. Because "roll" transactions
involve both the sale and purchase of a security, they may cause the reported
portfolio turnover rate to be higher than that reflecting typical portfolio
management activities.
Dollar rolls involve certain risks including that if the broker-dealer to whom
the Portfolio sells the security becomes insolvent, the Portfolio's right to
purchase or repurchase the security subject to the dollar roll may be restricted
and the instrument which the Portfolio is required to repurchase may be worth
less than an instrument which the Portfolio originally held. Successful use of
dollar rolls will depend upon the Adviser's or Subadviser's ability to predict
correctly interest rates and in the case of mortgage dollar rolls, mortgage
prepayments. For these reasons, there is no assurance that dollar rolls can be
successfully employed.
SHORT-TERM DEBT SECURITIES -- Debt securities maturing within one year of the
date of purchase include (1) commercial bank obligations (certificates of
deposit, bankers' acceptances (time drafts on a commercial bank where the bank
accepts an irrevocable obligation to pay at maturity) and documented discount
notes (corporate promissory discount notes accompanied by a commercial bank
guarantee to pay at maturity)), (2) savings association obligations
(certificates of deposit issued by mutual savings banks or savings and loan
associations), (3) commercial paper (short-term notes with maturities of up to 9
months issued by corporations or governmental bodies), (4) corporate bonds and
notes (corporate obligations that mature, or that may be redeemed, in one year
or less), and (5) adjustable-rate mortgage securities backed by GNMA, FNMA,
FHLMC and other non-agency issuers. Although certain floating or variable rate
obligations (securities whose coupon rate changes at least annually and
generally more frequently) have maturities in excess of one year, they are also
considered short-term debt securities.
ZERO-COUPON, PAY-IN-KIND AND DEFERRED INTEREST BONDS -- The Global Bond,
Corporate Bond, High-Yield Bond, Worldwide High Income, SunAmerica Balanced,
Balanced/Phoenix Investment Counsel, Asset Allocation and Venture Value
Portfolios may invest in zero-coupon bonds and deferred interest bonds, or other
obligations that contain "original issue discount" for federal income tax
purposes. In addition, the Corporate Bond, High-Yield Bond and Worldwide High
Income Portfolios may invest in pay-
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in-kind securities. Zero-coupon, deferred interest and capital appreciation
bonds are debt obligations which are issued or purchased at a significant
discount from face value. Pay-in-kind bonds are debt obligations which provide
that the issuer thereof may, at its option, pay interest on such bonds in cash
or in the form of additional debt obligations. Such investments may experience
greater volatility in market value due to changes in interest rates than do debt
obligations, which make regular payments of interest. A Portfolio will accrue
income on such investments for tax and accounting purposes, as required, which
is distributable to shareholders and which, because no cash is received at the
time of accrual, may require the liquidation of other portfolio securities under
disadvantageous circumstances to satisfy the Portfolio's distribution
obligations.
REPURCHASE AGREEMENTS -- Each Portfolio may enter into repurchase agreements,
under which the Portfolio buys a security and obtains a simultaneous commitment
from the seller to repurchase the security at a specified time and price. The
seller must maintain appropriate collateral with the Trust's custodian or
subcustodian. A Portfolio will only enter into repurchase agreements involving
securities in which it could otherwise invest and with selected banks and
securities dealers whose financial condition is monitored by the Adviser or
applicable Subadviser, subject to the oversight of the Board of Trustees. If the
seller under the repurchase agreement defaults, the Portfolio may incur a loss
if the value of the collateral securing the repurchase agreement has declined,
and may incur disposition costs in connection with liquidating the collateral.
If bankruptcy proceedings are commenced with respect to the seller, realization
of the collateral by the Portfolio may be delayed or limited.
REVERSE REPURCHASE AGREEMENTS -- The Cash Management, Corporate Bond, High-Yield
Bond, Worldwide High Income, SunAmerica Balanced, Utility, Federated Value and
Aggressive Growth Portfolios may enter into reverse repurchase agreements. In a
reverse repurchase agreement, the Portfolio sells a security subject to the
right and obligation to repurchase such security. The Portfolio then invests the
proceeds from the transaction in another obligation in which the Portfolio is
authorized to invest. In order to minimize any risk involved, the Portfolio
maintains in a segregated account with the custodian cash or liquid securities
equal in value to the repurchase price.
ILLIQUID SECURITIES -- Each of the Portfolios may invest no more than 15% (10%
in the case of the Cash Management Portfolio) of the value of its net assets in
securities which are illiquid, including repurchase agreements providing for
settlement in more than seven days after notice, certain interest-rate and
currency swaps, caps, floors and collars. For this purpose, not all securities
which are restricted are deemed to be illiquid. For example, restricted
securities which the Board of Trustees, or the Adviser (or Subadviser, as the
case may be) pursuant to guidelines established by the Board of Trustees, has
determined to be marketable, such as securities eligible for sale under Rule
144A promulgated under the Securities Act of 1933, as amended, or certain
private placements of commercial paper issued in reliance on an exemption from
such Act pursuant to Section 4(2) thereof, may be deemed to be liquid for
purposes of this restriction. This investment practice could have the effect of
increasing the level of illiquidity in the Portfolio to the extent that
qualified institutional buyers (as defined in Rule 144A) become for a time
uninterested in purchasing these restricted securities. In addition, a
repurchase agreement which by its terms can be liquidated before its nominal
fixed-term on seven days or less notice is regarded as a liquid instrument.
Subject to the applicable limitation on illiquid securities investments, a
Portfolio may acquire securities issued by the U.S. government, its agencies or
instrumentalities in a private placement. See "Illiquid Securities" in the
Statement of Additional Information for a further discussion of investments in
such securities.
FIRM COMMITMENT AGREEMENTS AND WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS --
Each Portfolio may purchase securities on a firm commitment, when-issued or
delayed-delivery basis. Firm commitment agreements and when-issued or
delayed-delivery transactions call for the purchase or sale of securities at an
agreed-upon price on a specified future date. While a Portfolio will only
purchase securities on a when-issued or delayed-delivery basis with the
intention of acquiring the securities, the Portfolio may sell the securities
before the settlement date, if it is deemed advisable to do so. At the time a
Portfolio makes the commitment to purchase securities on a when-issued or
delayed-delivery basis, the Portfolio will record the transaction and thereafter
reflect the value, each day, of such security in determining the net asset value
of the Portfolio. At the time of delivery of the securities, the value may be
more or less than the purchase price. A Portfolio will maintain in a segregated
account liquid assets having a value equal to or greater than the Portfolio's
purchase commitments. The Portfolio will likewise segregate liquid assets
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with respect to securities sold on a delayed-delivery basis.
INTEREST-RATE SWAPS, MORTGAGE SWAPS, CAPS, FLOORS AND COLLARS -- In order to
protect the value of the Global Bond, Corporate Bond, Asset Allocation and
Emerging Markets Portfolios from interest rate fluctuations and to hedge against
fluctuations in the fixed-income market in which the Portfolio's investments are
traded, the Portfolios may enter into interest-rate swaps and mortgage swaps or
purchase or sell interest-rate caps, floors or collars. A Portfolio will enter
into these hedging transactions primarily to preserve a return or spread on a
particular investment or portion of the portfolio and to protect against any
increase in the price of securities the Portfolio anticipates purchasing at a
later date. The Global Bond Portfolio may also enter into interest-rate swaps
for non-hedging purposes. Interest-rate swaps involve the exchange by the
Portfolio with another party of their respective commitments to pay or receive
interest, e.g., an exchange of floating-rate payments for fixed-rate payments.
Since interest-rate swaps are individually negotiated, the Portfolios expect to
achieve an acceptable degree of correlation between their respective portfolio
investments and their interest-rate positions. The Portfolios will only enter
into interest-rate swaps on a net basis, which means that the two payment
streams are netted out, with the Portfolios receiving or paying, as the case may
be, only the net amount of the two payments. Interest-rate swaps do not involve
the delivery of securities, other underlying assets or principal. Accordingly,
the risk of loss with respect to interest-rate swaps is limited to the net
amount of interest payments that the Portfolio is contractually obligated to
make. If the other party to an interest-rate swap defaults, the Portfolio's risk
of loss consists of the net amount of interest payments that the Portfolio is
contractually entitled to receive, if any. The use of interest-rate swaps is a
highly specialized activity which involves investment techniques and risks
different from those associated with ordinary portfolio securities transactions.
Mortgage swaps are similar to interest-rate swaps in that they represent
commitments to pay and receive interest. The notional principal amount, upon
which the value of the interest payments is based, is tied to a reference pool
or pools of mortgages.
The purchase of an interest-rate cap entitles the purchaser, to the extent that
a specified index exceeds a predetermined interest rate, to receive payments of
interest on a notional principal amount from the party selling such
interest-rate cap. The purchase of an interest-rate floor entitles the
purchaser, to the extent that a specified index falls below a predetermined
interest rate, to receive payments of interest on a notional principal amount
from the party selling such interest rate floor. An interest-rate collar is the
combination of a cap and a floor that preserves a certain return within a
predetermined range of interest rates.
The Portfolios will not enter into any mortgage swap, interest-rate swap, cap or
floor transaction unless the unsecured commercial paper, senior debt, or the
claims paying ability of the other party thereto is rated either AA or A-1 or
better by S&P or Aa or P-1 or better by Moody's, or is determined to be of
equivalent quality by the applicable Subadviser.
STRUCTURED SECURITIES -- The Global Bond, Worldwide High Income, Asset
Allocation, International Growth and Income, and Emerging Markets Portfolios may
invest in structured notes, bonds or debentures, the value of the principal of
and/or interest on which is determined by reference to changes in the value of
specific currencies, interest rates, commodities, indices or other financial
indicators (the "Reference") or the relative change in two or more References.
The interest rate or the principal amount payable upon maturity or redemption
may be increased or decreased depending upon changes in the applicable
Reference. The terms of the structured securities may provide that in certain
circumstances no principal is due at maturity and, therefore, may result in the
loss of the Portfolio's investment. Structured securities may be positively or
negatively indexed, so that appreciation of the Reference may produce an
increase or decrease in the interest rate or value of the security at maturity.
In addition, the change in interest rate or the value of the security at
maturity may be a multiple of the change in the value of the Reference.
Consequently, structured securities entail a greater degree of market risk than
other types of debt obligations. Structured securities may also be more
volatile, less liquid and more difficult to price accurately than less complex
securities.
SECURITIES LENDING -- Each Portfolio (except the Cash Management Portfolio) may
lend portfolio securities in amounts up to 33 1/3% of its respective total
assets to brokers, dealers and other financial institutions, provided such loans
are callable at any time by the Portfolio and are at all times secured by cash
or equivalent collateral. By lending its portfolio securities, a Portfolio will
receive income while retaining the securities' potential for capital
appreciation. As with any extensions of credit, there are risks of delay in
recovery and, in some cases, even loss of rights in the collateral should the
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borrower of the securities fail financially. However, these loans of portfolio
securities will be made only to firms deemed by the Adviser or Subadviser to be
creditworthy. The proceeds of such loans will be invested in high-quality
short-term debt securities, including repurchase agreements.
BORROWING AND OTHER FORMS OF LEVERAGE -- All of the Portfolios (except the Cash
Management Portfolio) are authorized to borrow money to the extent permitted by
applicable law. The 1940 Act permits each Portfolio to borrow up to 33 1/3% of
its total assets from banks for temporary or emergency purposes. In seeking to
enhance performance, a Portfolio may borrow for investment purposes and may
pledge assets to secure such borrowings. The Cash Management Portfolio may not
borrow money, except from banks for temporary emergency purposes, and then in an
amount not in excess of 5% of the value of the Portfolio's total assets. In the
event that asset coverage for a Portfolio's borrowings falls below 300%, the
Portfolio will reduce within three days the amount of its borrowings in order to
provide for 300% asset coverage.
To the extent a Portfolio borrows for investment purposes, borrowing creates
leverage which is a speculative characteristic. Although a Portfolio is
authorized to borrow, it will do so only when the Adviser or Subadviser believes
that borrowing will benefit the Portfolio after taking into account
considerations such as the costs of borrowing and the likely investment returns
on securities purchased with borrowed monies. Borrowing by a Portfolio will
create the opportunity for increased net income but, at the same time, will
involve special risk considerations. Leveraging results from borrowing and will
magnify declines as well as increases in a Portfolio's net asset value per share
and net yield. The Portfolios expect that all of their borrowing will be made on
a secured basis. The Portfolios' custodian will either segregate the assets
securing the borrowing for the benefit of the lenders or arrangements will be
made with a suitable subcustodian. If assets used to secure a borrowing decrease
in value, a Portfolio may be required to pledge additional collateral to the
lender in the form of cash or securities to avoid liquidation of those assets.
RISKS ASSOCIATED WITH INVESTING IN SMALL COMPANIES -- Investing in smaller,
lesser known companies may involve certain risks not generally associated with
investments in larger, more well-established companies. For example, 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. Also, 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. Finally, 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 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.
RISKS AND CONSIDERATIONS APPLICABLE TO INVESTMENT IN SECURITIES OF FOREIGN
ISSUERS -- There are elements of risk and opportunity involved, when investments
in foreign issuers are made, which include: trade imbalances and related
economic policies; currency fluctuations; foreign exchange control policies;
taxation on income from sources in such countries; expropriation or confiscatory
taxation; limitation on the removal of funds or other assets; political or
social instability; the diverse structure and liquidity of securities markets in
various countries and regions; policies of governments with respect to possible
nationalization of their industries; and other specific local political and
economic considerations. There may be less information publicly available about
foreign companies, and foreign companies may not be subject to uniform
accounting, auditing and financial reporting standards and requirements
comparable to those of U.S. companies. Investment decisions made in the context
of the Portfolios' objectives and policies involve the evaluation of
opportunities and risks presented by probable future currency relationships,
especially during periods of broad adjustments in such relationships.
The Emerging Markets Portfolio will invest, and the other Portfolios may invest,
in issuers domiciled in, or governments of, developing countries or emerging
markets as well as developed countries. Although there is no universally
accepted definition, a developing or emerging market country is generally
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considered to be a country which is 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 have been more
volatile than the markets of developed countries; however, such markets can
provide higher rates of return to investors. The risks described above with
respect to investment in foreign securities generally may be exacerbated with
respect to investments in developing or emerging 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.
The performance of investments in securities denominated in a foreign currency
("non-dollar securities") will depend, among other things, on the strength of
the foreign currency against the dollar and the interest rate environment in the
country issuing the foreign currency. Absent other events which could otherwise
affect the value of non-dollar securities (such as a change in the political
climate or an issuer's credit quality), appreciation in the value of the foreign
currency generally can be expected to increase the value of a Portfolio's
nondollar securities in terms of U.S. dollars. A rise in foreign interest rates
or decline in the value of foreign currencies relative to the U.S. dollar
generally can be expected to depress the value of the Portfolio's non-dollar
securities. Currencies are evaluated on the basis of fundamental economic
criteria (e.g., relative inflation levels and trends, growth rate forecasts,
balance of payments status and economic policies) as well as technical and
political data.
Additional costs could be incurred in connection with a Portfolio's foreign
investment activities. Foreign brokerage commissions are generally higher than
in the U.S. and a Portfolio will bear certain expenses in connection with its
foreign currency transactions. Increased custodian costs as well as
administrative difficulties (such as the applicability of foreign laws to
foreign custodians in various circumstances including bankruptcy, ability to
recover lost assets, expropriation, nationalization, record access, etc.) may be
associated with the maintenance of assets in foreign jurisdictions.
FOREIGN CURRENCY TRANSACTIONS -- Currency exchange rate fluctuations are a major
area of risk and opportunity for the Global Bond, Worldwide High Income, Global
Equities, International Diversified Equities, International Growth and Income
and Emerging Markets Portfolios, and is of some risk to the other Portfolios.
Each Portfolio (other than the Cash Management Portfolio), 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 and purchase and sell put
and call options on currencies and futures contracts. A significant portion of
the Portfolios' currency transactions will be over-the-counter transactions.
Each Portfolio 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 Portfolio's portfolio securities.
Each Portfolio 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 the Portfolio's position, the Portfolio may
forfeit the entire amount of the premium plus related transaction costs. As with
other kinds of option transactions, the writing of an option on currency will
constitute only a partial hedge, up to an amount of the premium received, and a
Portfolio could be required to purchase or sell currencies at disadvantageous
exchange rates, thereby incurring losses.
Each Portfolio that invests in foreign securities may utilize certain techniques
to attempt to enhance return, including forward foreign currency exchange
contracts, currency options and currency swaps. These techniques may be used
when the Subadviser 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 Portfolio. Each
Portfolio may also use currency contracts and options to cross-hedge, which
involves selling or purchasing instruments on one currency to hedge against
changes in exchange rates for a different currency with a pattern of
correlation. To limit any leverage in connection with currency contract
transactions for hedging or non-hedging purposes, each Portfolio will segregate
cash or liquid securities
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in an amount sufficient to meet its payment obligations in these transactions or
otherwise "cover" the obligation. See the Statement of Additional Information
for more information regarding foreign currency transactions.
The Global Bond, Worldwide High Income, Asset Allocation, Global Equities,
International Diversified Equities, International Growth and Income, Real Estate
and Emerging Markets Portfolios may enter into currency swaps. Currency swaps
involve the exchange by the Portfolio 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 the Adviser or a Subadviser is incorrect in its
forecasts of market values and currency exchange rates, the investment
performance of the respective Portfolio would be less favorable than it would
have been if this investment technique were not used.
OPTIONS ON SECURITIES AND SECURITIES INDICES -- Each Portfolio (other than the
Cash Management Portfolio) may write (sell) covered call and put options on any
securities in which it may invest. All call options written by each Portfolio
are covered, which means that the Portfolio will own the securities subject to
the option so long as the option is outstanding. All put options written by each
Portfolio are covered, which means that the Portfolio would have deposited with
its custodian cash or liquid securities with a value at least equal to the
exercise price of the put option. A Portfolio may also write call and put
options on any securities index composed of securities in which it may invest. A
Portfolio may purchase put and call options on any securities in which it may
invest or options on any securities index composed of securities in which it may
invest.
Each Portfolio (other than the Cash Management Portfolio) may purchase and write
options on the yield "spread," or yield differential between two securities.
Such transactions are referred to as "yield curve" options. In contrast to other
types of options, a yield curve option is based on the difference between the
yields of designated securities, rather than the prices of the individual
securities, and is settled through cash payments. Accordingly, a yield curve
option is profitable to the holder if this differential widens (in the case of a
call) or narrows (in the case of a put), regardless of whether the yields of the
underlying securities increase or decrease. All yield curve options written by a
Portfolio will be covered in the manner described above.
There is no assurance that a liquid secondary market on a domestic or foreign
options exchange will exist for any particular exchange-traded option or at any
particular time. If a Portfolio is unable to effect a closing purchase
transaction with respect to covered options it has written, the Portfolio will
not be able to sell the underlying securities or dispose of assets held in a
segregated account until the options expire or are exercised. Similarly, if a
Portfolio is unable to effect a closing sale transaction with respect to options
it has purchased, it would have to exercise the options in order to realize any
profit and will incur transaction costs upon the purchase or sale of the
underlying securities. In a closing purchase or sale transaction, a Portfolio
acquires a position that offsets and cancels an option position then held by the
Portfolio.
A Portfolio may purchase and sell both options that are traded: (i) on U.S.
exchanges; (ii) on foreign exchanges; and (iii) over-the-counter with broker-
dealers who make markets in these options. The ability to terminate
over-the-counter options is more limited than with exchange-traded options and
may involve the risk that broker-dealers participating in such transactions will
not fulfill their obligations. Until such time as the staff of the U.S.
Securities and Exchange Commission ("SEC") changes its position, each Portfolio
will treat purchased over-the-counter options and all assets used to cover
written over-the-counter options as illiquid securities. However, for options
written with primary dealers in U.S. government securities pursuant to an
agreement requiring a closing purchase transaction at a formula price, the
amount of illiquid securities may be calculated with reference to a formula
approved by the SEC staff.
The writing and purchase of options is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. The use of options to increase total
return involves the risk of loss if the Adviser or Subadviser is incorrect in
its expectations of fluctuations in securities prices or interest rates. The
successful use of puts for hedging purposes depends in part on the ability of
the Adviser or Subadviser to predict future price fluctuations and the degree of
correlation between
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the options and securities markets. A Portfolio pays brokerage commissions or
spreads in connection with its options transactions. The writing of options
could significantly increase portfolio turnover rate of a Portfolio and,
therefore, associated brokerage commissions or spreads.
FUTURES CONTRACTS AND OPTIONS THEREON -- Futures contracts may be based on
various securities (including U.S. government securities), securities indices,
foreign currencies and other financial instruments and indices. The purchases of
futures contracts or call options thereon can serve as a long hedge, and the
sale of futures or the purchase of put options thereon can serve as a short
hedge. Writing covered call options on futures contracts can serve as a limited
short hedge, using a strategy similar to that used for writing covered call
options on securities and indices.
In addition, subject to regulations promulgated by the Commodity Futures Trading
Commission, a Portfolio may engage in futures transactions for non-hedging
purposes. For example, futures strategies can be used to manage the average
duration of a Portfolio. To shorten the average duration of a Portfolio, the
Portfolio may sell a futures contract or a call option thereon, or purchase a
put option on that futures contract; to lengthen the average duration of a
Portfolio, the Portfolio may buy a futures contract or a call option thereon.
No price is paid upon entering into a futures contract. Instead, at the
inception of a futures contract a Portfolio is required to deposit in a
segregated account with the Trust's custodian, in the name of the futures broker
through whom the transaction was effected, "initial margin" consisting of cash
or liquid securities, in an amount generally equal to 10% or less of the
contract value. Margin must also be deposited when writing a call option on a
futures contract, in accordance with applicable exchange rules. Unlike margin in
securities transactions, initial margin on futures contracts does not represent
a borrowing, but rather is in the nature of a performance bond or good-faith
deposit that is returned to the Portfolio at the termination of the transaction
if all contractual obligations have been satisfied. Under certain circumstances,
such as periods of high volatility, the Portfolio may be required by an exchange
to increase the level of its initial margin payment, and initial margin
requirements might be increased generally in the future by regulatory action.
Subsequent "variation margin" payments are made to and from the futures broker
daily as the value of the futures position varies, a process known as "marking
to market." Variation margin does not involve borrowing, but rather represents a
daily settlement of the Portfolio's obligations to or from a futures broker.
When a Portfolio purchases an option on a future, the premium paid plus
transaction costs is all that is at risk. In contrast, when a Portfolio
purchases or sells a futures contract or writes a call option thereon, it is
subject to daily variation margin calls that could be substantial in the event
of adverse price movements. If the Portfolio has insufficient cash to meet daily
variation margin requirements, it might need to sell securities at a time when
such sales are disadvantageous.
While transactions in futures contracts and options on futures may reduce
certain risks, such transactions themselves entail certain other risks. Thus,
while a Portfolio may benefit from the use of futures and options on futures,
unanticipated changes in interest rates, securities prices or currency exchange
rates may result in a poorer overall performance for the Portfolio than if it
had not entered into any futures contracts or options transactions. The loss
incurred by a Portfolio in writing options on futures is potentially unlimited
and may exceed the amount of the premium received.
In the event of an imperfect correlation between a futures position and a
portfolio position which is intended to be protected, the desired protection may
not be obtained and a Portfolio may be exposed to risk of loss. In addition, it
is not possible to hedge fully or perfectly against currency fluctuations
affecting the value of securities denominated in foreign currencies because the
value of such securities is also likely to fluctuate as a result of independent
factors not related to currency fluctuations. Therefore, perfect correlation
between a Portfolio's futures positions and portfolio positions will be
impossible to achieve.
Investment in futures contracts or options thereon may also involve liquidity
risks due, for example, to exchange-imposed daily trading limits that would
prevent the Portfolio from liquidating an unfavorable position. See the
Statement of Additional Information concerning futures and options contracts.
WARRANTS -- Certain Portfolios may invest in warrants which give the holder of
the warrant a right to purchase a given number of shares of a particular issue
at a specified price until expiration.
INVERSE FLOATERS -- The Corporate Bond, Asset Allocation and Emerging Markets
Portfolios may invest in leveraged inverse floating rate debt instruments
("inverse floaters"). The interest rate on an inverse floater resets in the
opposite direction
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from the market rate of interest to which the inverse floater is indexed. An
inverse floater may be considered to be leveraged to the extent that its
interest rate varies by a magnitude that exceeds the magnitude of the change in
the index rate of interest. The higher degree of leverage inherent in inverse
floaters is associated with greater volatility in their market values.
Accordingly, the duration of an inverse floater may exceed its stated final
maturity. Certain inverse floaters may be deemed to be illiquid securities for
purposes of a Portfolio's 15% limitation on investments in such securities.
=========================================================
MANAGEMENT
=========================================================
The Trust's Board of Trustees is responsible for the overall supervision of the
operations of the Trust and performs various duties imposed on trustees of
investment companies by the 1940 Act. The Board has retained others to provide
certain services to the Trust.
INVESTMENT ADVISER -- SAAMCo, located at The SunAmerica Center, 733 Third
Avenue, New York, New York 10017-3204, is a corporation organized in 1982 under
the laws of the State of Delaware. SAAMCo is an indirect, wholly-owned
subsidiary of Anchor National Life Insurance Company, which is an indirect
subsidiary of SunAmerica Inc., an investment grade financial services company
with assets held at December 31, 1997, of approximately $52 billion. SAAMCo is
engaged in providing investment advice and management services to the Trust,
other mutual funds and private accounts. As of February 28, 1998, SAAMCo
managed, advised and/or administered assets of approximately $13.7 billion.
The Trust, on behalf of each Portfolio, entered into an Investment Advisory and
Management Agreement (the "Agreement") with SAAMCo to handle the Trust's
day-to-day affairs, to provide investment advisory services, office space, and
other facilities for the management of the affairs of the Trust, and to pay the
compensation of certain officers of the Trust who are affiliated persons of
SAAMCo. The Agreement authorizes SAAMCo to retain one or more Subadvisers to
make the investment decisions for the Portfolios, and to place the purchase and
sale orders for the Portfolio transactions. SAAMCo has hired Subadvisers for
certain Portfolios, and manages the investments of other Portfolios itself
without the assistance of a Subadviser. SAAMCo, in consultation with one or more
SunAmerica affiliates, monitors the activities of the Subadvisers, and from time
to time will recommend the replacement of a Subadviser on the basis of
investment performance or other considerations.
SAAMCo may terminate any Subadvisory Agreement without shareholder approval.
Moreover, SAAMCo has obtained an exemptive order from the SEC which would permit
SAAMCo, subject to certain conditions, to enter into Subadvisory Agreements
relating to the Trust with Subadvisers approved by the Board without obtaining
shareholder approval. The exemptive order would also permit SAAMCo, subject to
the approval of the Board but without shareholder approval, to employ new
Subadvisers for new or existing Portfolios, change the terms of particular
Subadvisory Agreements or continue the employment of existing Subadvisers after
events that would otherwise cause an automatic termination of a Subadvisory
Agreement. Shareholders of a Portfolio have the right to terminate such
agreements for such Portfolio at any time by a vote of the majority of the
outstanding voting securities of such Portfolio. Shareholders will be notified
when SAAMCo intends to commence relying on the exemptive order, and would be
notified of any Subadviser changes effected thereafter.
Purchase and sale orders may be directed to any broker including, in the manner
and to the extent permitted by applicable law, affiliates of the Adviser or a
Subadviser. The individual Portfolio Managers for both the Adviser and
Subadvisers are identified in this section.
The annual rates of the investment advisory fees which apply to the Cash
Management Portfolio are .55% on the first $100 million of Assets, .50% on the
next $200 million and .45% on Assets over $300 million. The annual rates of the
investment advisory fees which apply to the Corporate Bond Portfolio are .70% on
the first $50 million of Assets, .60% on the next $100 million, .55% on the next
$100 million and .50% on Assets over $250 million. The annual rates of the
investment advisory fees which apply to both the Global Bond and Asset
Allocation Portfolios are .75% on the first $50 million of Assets, .65% on the
next $100 million, .60% on the next $100 million and .55% on Assets over $250
million. The annual rates of the investment advisory fees which apply to the
High-Yield Bond Portfolio are .70% on the first $50 million of Assets, .65% on
the next $100 million, .60% on the next $100 million, .55% on Assets over $250
million. The annual rate of the investment advisory fees which apply to each of
the Worldwide High Income and International Diversified Equities Portfolios are
1.00%. The annual rates of the investment advisory fees which apply to each of
the SunAmerica Balanced, Balanced/Phoenix
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Investment Counsel, Growth-Income, Alliance Growth, and Growth/Phoenix
Investment Counsel Portfolios are .70% on the first $50 million of Assets, .65%
on the next $100 million, .60% on the next $150 million, .55% on the next $200
million, and .50% on Assets over $500 million. The annual rates of the
investment advisory fees which apply to the Utility and Federated Value
Portfolios are .75% on the first $150 million of Assets, .60% on the next $350
million and .50% on Assets over $500 million. The annual rates of the investment
advisory fees which apply to the Venture Value and Real Estate Portfolios are
.80% on the first $100 million of Assets, .75% on the next $400 million and .70%
on Assets over $500 million. Effective April 16, 1997, the annual rates of the
investment advisory fees which apply to the Putnam Growth Portfolio are .85% on
the first $150 million of Assets, .80% on the next $150 million and .70% on
Assets over $300 million. The annual rates of the investment advisory fees which
apply to the International Growth and Income Portfolio are 1.00% on the first
$150 million of Assets, .90% on the next $150 million of Assets and .80% on
Assets over $300 million. The annual rate of the advisory fee which applies to
the Emerging Markets Portfolio is 1.25% of Assets. The annual rates of the
investment advisory fees which apply to the Global Equities Portfolio are .90%
on the first $50 million of Assets, .80% on the next $100 million, .70% on the
next $150 million and .65% of Assets over $300 million. The annual rate of the
investment advisory fees which applies to the "Dogs" of Wall Street Portfolio is
.60% of Assets. The annual rates of the investment advisory fees which apply to
the Aggressive Growth Portfolio are .75% on the first $100 million of Assets,
.675% on the next $150 million, .625% on the next $250 million and .60% on
Assets over $500 million. For the fiscal year ended November 30, 1997, the
following Portfolios paid to SAAMCo a fee equal to the following percentage of
average daily net assets: Cash Management Portfolio -- .54%, Global Bond
Portfolio -- .72%, Corporate Bond Portfolio -- .70%, High-Yield Bond Portfolio
- -- .66%, Worldwide High Income Portfolio -- 1.00%, Balanced/Phoenix Investment
Counsel Portfolio -- .68%, Asset Allocation Portfolio -- .61%, Growth-Income
Portfolio -- .60%, Venture Value Portfolio -- .74%, Alliance Growth Portfolio --
.59%, Growth/Phoenix Investment Counsel Portfolio -- .65%, Putnam Growth
Portfolio -- .83%, Global Equities Portfolio -- .76%, SunAmerica Balanced
Portfolio -- .70%, Utility Portfolio -- .75%, Federated Value Portfolio -- .75%,
Aggressive Growth Portfolio -- .75%, and International Diversified Equities
Portfolio -- 1.00%. The advisory fees for the Putnam Growth Portfolio for the
fiscal year ended November 30, 1997 were calculated at the annual rates set
forth in the Statement of Additional Information under "Investment Advisory and
Management Agreement -- Advisory Fees."
For certain Portfolios, the Adviser has voluntarily agreed to waive fees or
reimburse expenses, if necessary, to keep annual operating expenses at or below
the lesser of the following percentages of each of the following Portfolio's
average net assets: SunAmerica Balanced Portfolio -- 1.00%, "Dogs" of Wall
Street Portfolio -- 0.85%, Utility Portfolio -- 1.05%, Federated Value
Portfolio -- 1.05%, Real Estate Portfolio -- 1.25%, International Growth and
Income Portfolio -- 1.60%, and Emerging Markets Portfolio -- 1.90%. The Adviser
also may voluntarily waive or reimburse additional amounts to increase the
investment return to a Portfolio's investors. The Adviser may terminate all such
waivers and/or reimbursements at any time. Further, any waivers or
reimbursements made by the Adviser (after June 3, 1996) with respect to a
Portfolio are subject to recoupment from that Portfolio within the following two
years, provided that the Portfolio is able to effect such payment to the Adviser
and remain in compliance with the foregoing expense limitations. For the fiscal
year ended November 30, 1997, such recoupments were as follows: SunAmerica
Balanced Portfolio -- 0.02%; Federated Value Portfolio -- 0.05%; and Aggressive
Growth Portfolio -- 0.01%.
The term "Assets" means the average daily net assets of the Portfolio. The
investment advisory fees are accrued daily and paid monthly.
SAAMCo's Fixed Income Investment Team headed by P. Christopher Leary has been
responsible for managing the CASH MANAGEMENT PORTFOLIO, HIGH-YIELD BOND
PORTFOLIO and the fixed-income component of the SUNAMERICA BALANCED PORTFOLIO
since October 1996. Mr. Leary is an Executive Vice President of SAAMCo and has
been a portfolio manager with the firm since 1990. John W. Risner has
supervisory responsibility for the High-Yield Bond Portfolio. He is a Vice
President of SAAMCo and joined the firm in February 1997. Prior to joining
SAAMCo, Mr. Risner served as Senior Portfolio Manager of the Value Line
Aggressive Income Trust and the Value Line Convertible Fund.
The Domestic Equity Investment Team is responsible for managing the AGGRESSIVE
GROWTH PORTFOLIO, the equity component of the SUNAMERICA BALANCED PORTFOLIO and
the "DOGS" OF WALL STREET PORTFOLIO. The Team is composed of eight investment
professionals and traders, some of whom may focus more heavily on particular
Portfolios or particular
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aspects of the domestic equity markets. Donna Calder has supervisory
responsibility for the Aggressive Growth Portfolio. Ms. Calder is a Vice
President of SAAMCo and has been a portfolio manager with the firm since March
1998. Prior to joining SAAMCo, Ms. Calder was the Founder and General Partner of
Manhattan Capital Partners, L.P. Francis D. Gannon has supervisory
responsibility for the equity component of the SunAmerica Balanced Portfolio and
the "Dogs" of Wall Street Portfolio. Mr. Gannon joined SAAMCo as an equity
analyst in 1993.
SUBADVISERS AND PORTFOLIO MANAGEMENT -- The organizations described below act as
Subadvisers to the Trust and certain of its Portfolios pursuant to Subadvisory
Agreements with SAAMCo. Under the Subadvisory Agreements, the Subadvisers manage
the investment and reinvestment of the assets of the respective Portfolios for
which they are responsible. Each of the Subadvisers is independent of SAAMCo and
discharges its responsibilities subject to the policies of the Trustees and the
oversight and supervision of SAAMCo, which pays the Subadvisers' fees.
Alliance Capital Management L.P. The Subadviser for the Growth-Income, Alliance
Growth and Global Equities Portfolios is Alliance. Alliance is a Delaware
limited partnership with principal offices at 1345 Avenue of the Americas, New
York, New York 10105. Alliance is a major international investment manager,
supervising client accounts with assets totalling over $218.7 billion as of
December 31, 1997. Alliance serves its clients, who primarily are major
corporate employee benefit funds, investment companies, foundations, endowment
funds and public employee retirement systems. As of December 31, 1997, Alliance
was retained as an investment manager of employee benefit fund assets for 28 of
the Fortune 100 companies.
The portion of the annual investment advisory fees received by SAAMCo which is
paid to Alliance with respect to the Growth-Income Portfolio and the Alliance
Growth Portfolio is .35% on the first $50 million of Assets, .30% on the next
$100 million, .25% on the next $150 million, .20% on the next $200 million and
.15% on Assets over $500 million; and, with respect to the Global Equities
Portfolio, .50% on the first $50 million of Assets, .40% on the next $100
million, .30% on the next $150 million and .25% on Assets over $300 million. For
the fiscal year ended November 30, 1997, SAAMCo paid to Alliance, with respect
to each Portfolio subadvised by Alliance, a fee equal to the following
percentage of average daily net assets: Growth-Income Portfolio -- .25%,
Alliance Growth Portfolio -- .24%, and Global Equities Portfolio -- .36%.
James G. Reilly has served as the portfolio manager for the ALLIANCE GROWTH
PORTFOLIO since the inception date of February 9, 1993. Mr. Reilly is a Senior
Vice President of Alliance Capital Management and joined the company in 1984.
Michael R. Baldwin and Bruce W. Calvert have served as co-portfolio managers of
the GROWTH-INCOME PORTFOLIO since the inception date of February 9, 1993 and
Stephen W. Pelensky has served as a co-portfolio manager for the Portfolio since
June 30, 1995. Mr. Baldwin is a Vice President of Alliance Capital Management
and joined the company in 1989. Mr. Calvert is Vice Chairman and Chief
Investment Officer, and joined Alliance Capital Management in 1973. Mr. Pelensky
is a Vice President of Alliance Capital Management and joined the company in
1994. Prior to joining Alliance Capital Management, Mr. Pelensky was a portfolio
manager and analyst with Affinity Investment Advisors and BEA Associates.
Mr. Pelensky has also served as co-portfolio manager of the domestic equity
component of the GLOBAL EQUITIES PORTFOLIO since June 30, 1995 and Stephen
Beinhacker has served as co-portfolio manager of the foreign equity component of
the Global Equities Portfolio since February 1997. Mr. Beinhacker is a Director
and Vice President of Alliance Capital Management and joined the company in
1992.
Davis Selected Advisers, L.P. The Subadviser of the Venture Value and Real
Estate Portfolios is Davis Selected, 124 East Marcy Street, Sante Fe, New Mexico
87501. Venture Advisers, Inc. is the sole General Partner of the limited
partnership, which, in turn, is controlled by Shelby M.C. Davis. Davis Selected
provides advisory services to other investment companies. As of February 28,
1998, Davis Selected had over $16.58 billion of assets under management. The
Subadvisory Agreement with Davis Selected provides that Davis Selected may
delegate any of its responsibilities under the agreement to one of its
affiliates, including Davis Selected Advisers -- NY, Inc., a wholly-owned
subsidiary; however Davis Selected remains ultimately responsible (subject to
supervision by SAAMCo) for the assets of the Portfolios allocated to it.
The portion of the annual investment advisory fee received by SAAMCo which is
paid to Davis Selected with respect to the Venture Value and Real Estate
Portfolios is .45% on the first $100 million of Assets, .40% on the next $400
million and .35% on Assets
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over $500 million. For the fiscal year ended November 30, 1997, SAAMCo paid to
Davis Selected, with respect to the Venture Value and Real Estate Portfolios, a
fee equal to .39% and .22%, respectively, of each Portfolio's average daily net
assets.
Christopher C. Davis has served as portfolio manager of the VENTURE VALUE
PORTFOLIO since October 1994. He has been employed by Davis Selected since
September, 1989 as a research analyst, assistant portfolio manager, co-portfolio
manager, and portfolio manager, working side by side with Shelby M.C. Davis.
Andrew A. Davis has served as the primary portfolio manager of the REAL ESTATE
PORTFOLIO since October 1994. He is a Vice President of Davis Series, Inc. and a
Co-President of Davis Selected's General Partner. Until February 1993, he was
the Vice President and head of convertible research at PaineWebber Incorporated.
Shelby M.C. Davis previously served as co-portfolio manager of the Venture Value
Portfolio. He will continue to consult with Christopher and Andrew Davis in his
capacity as Chief Investment Officer of Davis Selected.
Federated Investment Counseling. The Subadviser for the Corporate Bond, Utility
and Federated Value Portfolios is Federated, Federated Investors Tower, 1001
Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779. Federated is a wholly owned
subsidiary of Federated Investors, and together with other subsidiaries of
Federated Investors serves as investment adviser to a number of investment
companies and private accounts. With over $139.5 billion invested across more
than 300 funds under management and/or administration as of December 31, 1997,
Federated Investors is one of the largest mutual fund investment managers in the
United States.
The portion of the annual investment advisory fees received by SAAMCo which is
paid to Federated with respect to the Corporate Bond Portfolio is .30% on the
first $25 million of Assets, .25% on the next $25 million, .20% on the next $100
million and .15% on Assets over $150 million; and with respect to each of the
Utility and Federated Value Portfolios is .55% on the first $20 million of
Assets, .35% on the next $30 million, .25% on the next $100 million, .20% on the
next $350 million and .15% on Assets over $500 million. For the fiscal year
ended November 30, 1997, SAAMCo paid to Federated, with respect to each
Portfolio subadvised by Federated, a fee equal to the following percentage of
average daily net assets: Utility -- .55%, Federated Value -- .46%, and
Corporate Bond Portfolio -- .27%.
Joseph M. Balestrino and Mark E. Durbiano have served as co-portfolio managers
of the CORPORATE BOND PORTFOLIO since May 1996. Mr. Balestrino joined Federated
Investors in 1986 and has been a Vice President of Federated Advisers since
1995. Mr. Balestrino served as an Assistant Vice President of Federated Advisers
from 1991 to 1995. Mr. Balestrino is a Chartered Financial Analyst. Mr. Durbiano
joined Federated Investors in 1982 and has been a Senior Vice President of
Federated Advisers since January 1996. From 1988 through 1995, Mr. Durbiano was
a Vice President of Federated Advisers. Mr. Durbiano is a Chartered Financial
Analyst.
Linda A. Duessel has served as portfolio manager of the UTILITY PORTFOLIO since
June 1996. Ms. Duessel joined Federated Investors in 1991, and has been a Vice
President of Federated Advisers since 1995. She was an Assistant Vice President
of Federated Advisers from 1991 until 1995. Ms. Duessel is a Certified Public
Accountant and a Chartered Financial Analyst.
Scott B. Schermerhorn and Michael P. Donnelly have served as co-portfolio
managers of the FEDERATED VALUE PORTFOLIO since May 1996 and October 1997,
respectively. Mr. Schermerhorn joined Federated Investors in 1996 as a Vice
President of Federated Advisers. From 1990 through 1996, Mr. Schermerhorn was a
Senior Vice President and Senior Investment Officer at J. W. Seligman & Co.,
Inc. Mr. Donnelly joined Federated Investors in 1989 as an Investment Analyst
and has been a Vice President of Federated Investors since 1994. He served as an
Assistant Vice President of an affiliate of Federated Investors from 1992 to
1994. Mr. Donnelly is a Chartered Financial Analyst.
Goldman Sachs Asset Management. The Subadviser for the Asset Allocation
Portfolio is GSAM, a separate operating division of Goldman, Sachs & Co.
Goldman Sachs Asset Management-International. The Subadviser for the Global Bond
Portfolio is GSAM-International, an affiliate of Goldman, Sachs & Co. Goldman,
Sachs & Co. is a New York limited partnership with its principal offices at 85
Broad Street, New York, New York 10004.
GSAM serves a wide range of clients including private and public pension funds,
endowments, foundations, banks, thrifts, insurance companies, corporations, and
private investors and family groups. The asset management services are divided
into the following areas: institutional fixed-income investment management;
global currency management;
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institutional equity investment management; fund management; money market mutual
fund management and administration; and private asset management. As of February
23, 1998, GSAM, together with its affiliates, acted as investment adviser,
administrator or distributor for approximately $148 billion in assets.
GSAM-International was organized in 1990 as a company with limited liability
under the laws of England. It is authorized to conduct investment advisory
business in the United Kingdom as a member of the Investment Management
Regulatory Organisation Limited, a United Kingdom self-regulatory organization.
GSAM and GSAM-International are able to draw on the research and market
expertise of Goldman, Sachs & Co. in making investment decisions for the
Portfolios for which they act as Subadviser. In performing their subadvisory
services, GSAM and GSAM-International, while remaining ultimately responsible
for the management of the Portfolio, are able to draw upon the research and
expertise of their affiliate offices, for portfolio decisions and management
with respect to certain portfolio securities.
The portion of the annual investment advisory fees received by SAAMCo which is
paid to GSAM with respect to the Asset Allocation Portfolio is .40% on the first
$50 million of Assets, .30% on the next $100 million, .25% on the next $100
million and .20% on Assets over $250 million. For the fiscal year ended November
30, 1997, SAAMCo paid to GSAM, with respect to the Asset Allocation Portfolio, a
fee equal to .26% of average daily net assets. The portion of the annual
investment advisory fees received by SAAMCo which is paid to GSAM-International
with respect to the Global Bond Portfolio is .40% on the first $50 million of
Assets, .30% on the next $100 million, .25% on the next $100 million and .20% on
Assets over $250 million. For the fiscal year ended November 30, 1997, SAAMCo
paid to GSAM-International, with respect to the Global Bond Portfolio, a fee
equal to .36% of the Portfolio's average daily net assets.
Ronald E. Gutfleish, G. Lee Anderson and Eileen A. Aptman serve as co-portfolio
managers of the equity portion of the ASSET ALLOCATION PORTFOLIO. Mr. Gutfleish
has served in this capacity since February 1, 1995. Mr. Anderson and Ms. Aptman
have served as co-portfolio managers since December 1, 1996. Mr. Gutfleish is a
Managing Director of GSAM, which he joined in 1993. Prior to 1993, he was a
principal of Sanford C. Bernstein & Co., Inc., in its Investment Management
Research Department. Mr. Anderson is a Vice President of GSAM, which he joined
in 1992. Ms. Aptman is a Vice President of GSAM, which she joined in 1993. Prior
to 1993, she was an equity analyst at Delphi Management.
Jonathan A. Beinner and Richard C. Lucy have served as co-portfolio managers of
the fixed-income portion of the ASSET ALLOCATION PORTFOLIO since its inception
date of July 1, 1993. Mr. Beinner is a Managing Director of Goldman, Sachs and
Co. -- Head of GSAM's U.S. Fixed-Income Department, where he joined the Funds
Group in 1990. Mr. Lucy is a Vice President of Goldman, Sachs and Co.'s
Fixed-Income Department, where he joined the Funds Group in 1992.
Stephen C. Fitzgerald and Andrew F. Wilson serve as co-portfolio managers of the
GLOBAL BOND PORTFOLIO. Mr. Fitzgerald has served as co-portfolio manager since
the inception date of July 1, 1993 and Mr. Wilson has served as co-portfolio
manager since December 1, 1995. Mr. Fitzgerald, an Executive Director and Chief
Investment Officer for international fixed-income in the London office, joined
GSAM-International in 1992. Mr. Wilson, an Executive Director and Portfolio
Manager for international fixed-income in the London office, joined
GSAM-International in December 1995. Prior to joining GSAM-International, Mr.
Wilson spent three years as an Assistant Director of Rothschild Asset
Management, where he was responsible for managing global and international bond
portfolios, with specific focus on the U.S., Canadian, Australian and Japanese
economies.
Morgan Stanley Asset Management Inc. The Subadviser of the Worldwide High
Income and International Diversified Equities Portfolios is MSAM, 1221 Avenue of
the Americas, New York, New York 10020. MSAM is a wholly owned subsidiary of
Morgan Stanley Dean Witter & Co., and provides a broad range of portfolio
management services to customers in the United States and abroad. As of February
28, 1998, MSAM, together with its affiliated institutional investment management
companies, had approximately $154.6 billion of assets under management
(inclusive of assets under fiduciary advisory control).
Morgan Stanley Dean Witter & Co. is a preeminent global financial services firm
that maintains leading market positions in each of its three primary businesses:
securities, asset management and credit services.
The portion of the annual investment advisory fee received by SAAMCo which is
paid to MSAM with respect to each of the Worldwide High Income and
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International Diversified Equities Portfolios is .65% on Assets up to $350
million and .60% on Assets thereafter. For the fiscal year ended November 30,
1997, SAAMCo paid to MSAM, with respect to the International Diversified
Equities Portfolio and Worldwide High Income Portfolio, a fee equal to .65% of
each Portfolio's average daily net assets.
Robert Angevine and Paul Ghaffari have served as co-portfolio managers of the
WORLDWIDE HIGH INCOME PORTFOLIO since the inception date of October 28, 1994.
Mr. Angevine is a principal of Morgan Stanley & Co. Incorporated ("Morgan
Stanley") and a portfolio manager of MSAM's high yield investments. He has been
with the firm since 1988. Mr. Ghaffari is a managing director of Morgan Stanley
and a portfolio manager of MSAM's emerging market debt instruments. He has been
with the firm since 1983.
Barton Biggs has served as a co-portfolio manager for the INTERNATIONAL
DIVERSIFIED EQUITIES PORTFOLIO since the inception date of October 28, 1994 and
Francine Bovich and Ann Thivierge have served as co-portfolio managers of the
Portfolio since July 1, 1995. Mr. Biggs is Chairman and Chief Investment Officer
of MSAM and a Director of Morgan Stanley Dean Witter & Co. He joined Morgan
Stanley in 1973 as a General Partner and Managing Director and is a member of
Morgan Stanley Dean Witter & Co.'s Board of Directors and of the Management
Committee. Ms. Bovich is a Managing Director of MSAM and is responsible for
product development, portfolio management and communication of asset allocation
strategy. She joined MSAM, as a Principal in 1993. Prior to joining MSAM, Ms.
Bovich was a Principal and Executive Vice President of Westwood Management Corp.
and was with the firm from 1986 to 1993. Ms. Thivierge is a Principal of MSAM
and joined the company in 1986 as an Analyst. From 1992 through 1996 she served
as a Vice President of MSAM.
Phoenix Investment Counsel, Inc. The Subadviser of the Growth/Phoenix
Investment Counsel and Balanced/Phoenix Investment Counsel Portfolios is
Phoenix, an indirect wholly-owned subsidiary of Phoenix Duff & Phelps
Corporation. Phoenix is located at 56 Prospect Street, Hartford, CT 06115.
Phoenix was originally organized in 1932 as John P. Chase, Inc. and has been
engaged in the management of mutual funds since 1958. As of December 31, 1997,
Phoenix Duff & Phelps through its affiliated companies, had over $46.4 billion
in total assets under management for all its clients. Phoenix, the subadviser,
had in excess of $22.2 billion under management as of December 31, 1997.
The portion of the annual investment advisory fees received by SAAMCo which is
paid to Phoenix with respect to each of the Balanced/Phoenix Investment Counsel
and Growth/Phoenix Investment Counsel Portfolios is .35% on the first $50
million of Assets, .30% on the next $100 million; .25% on the next $150 million;
.20% on the next $200 million and .15% on Assets over $500 million. For the
fiscal year ended November 30, 1997, SAAMCo paid to Phoenix, with respect to the
Balanced/Phoenix Investment Counsel and Growth/Phoenix Investment Counsel
Portfolios, a fee equal to .33% and .30%, respectively, of each Portfolio's
average daily net assets.
The Large Cap Growth Equity Investment Team is responsible for managing the
GROWTH/PHOENIX INVESTMENT COUNSEL PORTFOLIO. The Team is composed of 20
investment professionals and traders, some of whom may focus more heavily on
particular Portfolios or particular aspects of the domestic equity markets.
Pierre Trinque has supervisory responsibilities for the GROWTH/PHOENIX
INVESTMENT COUNSEL PORTFOLIO. Mr. Trinque has been with Phoenix since 1985.
The Large Cap Growth Equity Investment Team is responsible for managing the
equity component of the BALANCED/PHOENIX INVESTMENT COUNSEL PORTFOLIO. The Team
is composed of 20 investment professionals and traders, some of whom may focus
more heavily on particular Portfolios or particular aspects of the domestic
equity markets. Pierre Trinque has supervisory responsibilities for the equity
component of the BALANCED/PHOENIX INVESTMENT COUNSEL PORTFOLIO. Mr. Trinque has
been with Phoenix since 1985. The Fixed Income Team is responsible for managing
the fixed component of the BALANCED/PHOENIX INVESTMENT COUNSEL PORTFOLIO. The
Team is composed of 16 investment professionals and traders, some of whom may
focus more heavily on particular Portfolios or particular sectors of the fixed
income markets. Christopher J. Kelleher has supervisory responsibilities for the
fixed component of the BALANCED/PHOENIX INVESTMENT COUNSEL PORTFOLIO. Mr.
Kelleher has been with Phoenix since 1980.
Putnam Investment Management, Inc. The Subadviser of the Putnam Growth,
International Growth and Income and Emerging Markets Portfolios is Putnam, a
Massachusetts corporation with principal offices at One Post Office Square,
Boston, Massachusetts. Putnam has been managing mutual funds since 1937 and
serves as investment adviser to the funds in the Putnam Family. Putnam and its
affiliates managed approximately $256 billion as of
39
<PAGE> 43
February 28, 1998. Putnam is a subsidiary of Putnam Investments, Inc., which,
other than a minority interest owned by employees, is wholly owned by Marsh &
McLennan Companies, Inc., a publicly owned holding company whose principal
businesses are international insurance and reinsurance brokerage, employee
benefit consulting and investment management.
The portion of the annual investment advisory fees received by SAAMCo which is
paid to Putnam with respect to the Putnam Growth Portfolio is .50% on the first
$150 million of Assets, .45% on the next $150 million of Assets and .35% on
Assets over $300 million. Putnam became the Subadviser to the Putnam Growth
Portfolio on April 15, 1997. For the fiscal year ended November 30, 1997, with
respect to the International Growth and Income and Emerging Markets Portfolios,
and for the period April 15, 1997 through November 30, 1997, with respect to the
Putnam Growth Portfolio, SAAMCo paid to Putnam, a fee equal to .32%, .50% and
.33%, respectively. For the period December 1, 1996 through April 14, 1997,
SAAMCo paid to the Portfolio's predecessor subadviser, Provident Investment
Counsel, Inc., with respect to the Provident Growth Portfolio a fee equal to
.15% of the Portfolio's average daily net assets. See "Investment Advisory and
Management Agreement -- Advisory Fees" in the Statement of Additional
Information for the annual rates applicable with respect to the predecessor
subadvisers. The portion of the annual investment advisory fees received by
SAAMCo which is paid to Putnam with respect to the International Growth and
Income Portfolio is .65% on the first $150 million of Assets, .55% on the next
$150 million of Assets and .45% on Assets over $300 million. The portion of the
annual investment advisory fees received by SAAMCo which is paid to Putnam with
respect to the Emerging Markets Portfolio is 1.00% on the first $150 million of
Assets, .95% on the next $150 million of Assets and .85% on Assets over $300
million.
C. Beth Cotner, Richard England, Manuel H. Weiss and David Santos have served as
co-portfolio managers of the PUTNAM GROWTH PORTFOLIO since April 1997. Ms.
Cotner, a Senior Vice President of Putnam has been an investment professional
with Putnam since 1995. Prior to that time, she was an Executive Vice President
of Kemper Financial Services. Mr. England, a Senior Vice President of Putnam has
been an investment professional with Putnam since 1992. Mr. Weiss, a Senior Vice
President of Putnam has been an investment professional with Putnam since 1987.
Mr. Santos, a Vice President of Putnam has been an investment professional with
Putnam since 1986.
Deborah F. Kuenstner and George W. Stairs have served as co-portfolio managers
of the INTERNATIONAL GROWTH AND INCOME PORTFOLIO since March 1998. Ms. Kuenstner
is a Senior Vice President of Putnam. Prior to March 1997, she was Senior
Portfolio Manager at Dupont Pension Fund Management. Mr. Stairs is a Senior Vice
President of Putnam. Prior to July 1994, he was an Associate at Value Quest Ltd.
Thomas R. Haslett, Managing Director of Putnam and J. Peter Grant, Senior Vice
President of Putnam, serve as co-portfolio managers of the EMERGING MARKETS
PORTFOLIO. Mr. Haslett has been an investment professional with Putnam since
1996. Prior to December 1996, he was a Managing Director of Montgomery Asset
Management, Ltd. Mr. Grant has been an investment professional with Putnam since
1973.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND PAYING AGENT -- State Street Bank and
Trust Company ("State Street"), 225 Franklin Street, Boston, Massachusetts
02110, is the Trust's custodian, transfer agent and dividend paying agent. State
Street maintains custody of the Trust's securities and cash and the records of
each shareholder's account. State Street also performs other related shareholder
service functions.
=========================================================
PORTFOLIO TURNOVER AND BROKERAGE
=========================================================
All Portfolios effect portfolio transactions without regard to the length of
time particular investments have been held. Under certain market conditions, the
investment policies of the Portfolios may result in high portfolio turnover. The
portfolio turnover rates for the Portfolios (other than the "Dogs" of Wall
Street Portfolio) are contained in the section entitled "Financial Highlights."
The portfolio turnover rate for the "Dogs" of Wall Street Portfolio is not
expected to exceed 25%. High portfolio turnover involves correspondingly greater
brokerage commissions, to the extent such commissions are payable, and other
transaction costs that are borne directly by the Portfolio involved. Higher
turnover rates reflect an increased rate of realization of gains and losses by
the Portfolio, which would normally affect the taxable income of the Portfolio's
shareholders. Where the shareholder is an insurance company separate account
funding variable annuity contracts, qualified as such under the Code; however,
the contractowners are not currently charged with such income or losses except
to the extent provided under the Code (normally when distributions under the
contracts are made). Corporate bonds and
40
<PAGE> 44
U.S. government securities are generally traded on a net basis and usually
neither brokerage commissions nor transfer taxes are involved.
Broker-dealers involved in the execution of portfolio transactions on behalf of
the Trust are selected on the basis of their professional capability and the
value and quality of their services. In selecting such broker-dealers, the
Adviser and Subadvisers will consider various relevant factors, including, but
not limited to, the size and type of the transaction; the nature and character
of the markets in which the security can be purchased or sold; the execution
efficiency, settlement capability, and financial condition of the broker-dealer;
the broker-dealer's execution services rendered on a continuing basis; and the
reasonableness of any commissions. The Adviser or a Subadviser also may select
broker-dealers which provide it with research services and may cause a Portfolio
to pay such broker-dealers commissions which exceed those which other broker-
dealers may have charged, if in the Adviser's or Subadviser's view the
commissions are reasonable in relation to the value of the brokerage and/or
research services provided by the broker-dealer. Further, the Adviser or a
Subadviser may effect portfolio transactions through broker-dealer affiliates of
the Trust, Adviser or Subadvisers.
=========================================================
DIVIDENDS, DISTRIBUTIONS AND
FEDERAL TAXES
=========================================================
Under the Code, each Portfolio is treated as a separate regulated investment
company providing qualification requirements are met. To qualify as a regulated
investment company, a Portfolio must, among other things, (a) derive at least
90% of its gross income from dividends, interest, payments with respect to
securities loans, gains from the sale or other disposition of stocks, securities
or foreign currencies, or other income (including, but not limited to, gains
from options, futures or forward contracts) derived with respect to its business
of investing in such stocks, securities or currencies; and (b) diversify its
holdings so that, at the end of each fiscal quarter, (i) at least 50% of the
market value of the Portfolio's assets is represented by cash, U.S. government
securities and other securities limited in respect of any one issuer to 5% of
the Portfolio's assets and to not more than 10% of the voting securities of such
issuer, and (ii) not more than 25% of the value of its assets is invested in the
securities of any one issuer (other than U.S. government securities). Each
Portfolio is intended to meet these qualification requirements.
So long as a Portfolio qualifies as a regulated investment company, such
Portfolio will not be subject to federal income tax on the net investment
company taxable income or net capital gains distributed to shareholders as
ordinary income dividend or capital gains dividends. It is the policy of each
Portfolio to distribute to its shareholders substantially all of its ordinary
income and net capital gains realized during each fiscal year. All distributions
are reinvested in shares of the Portfolio at net asset value unless the transfer
agent is instructed otherwise.
Each Portfolio of the Trust is also subject to variable contract asset
diversification regulations prescribed by the U.S. Treasury Department under the
Code. These regulations generally provide that, as of the end of each calendar
quarter or within 30 days thereafter, no more than 55% of the total assets of
the Portfolio may be represented by any one investment, no more than 70% by any
two investments, no more than 80% by any three investments, and no more than 90%
by any four investments. For this purpose, all securities of the same issuer are
considered a single investment, but each U.S. agency or instrumentality is
treated as a separate issuer. If a Portfolio fails to comply with these
regulations, the contracts invested in that Portfolio will not be treated as
annuity, endowment or life insurance contracts for tax purposes. The Real Estate
Portfolio may invest in REITs that hold residual interests in real estate
mortgage investment conduits ("REMICs"). Under Treasury regulations that have
not yet been issued, but may apply retroactively, a portion of the Portfolio's
income from a REIT that is attributable to the REIT's residual interest in a
REMIC (referred to in the Code as an "excess inclusion") will be subject to
federal income tax. These regulations are also expected to provide that excess
inclusion income of a regulated investment company, such as the Portfolio, will
be allocated to shareholders of the regulated investment company in proportion
to the dividends received by such shareholders, with the same consequences as if
the shareholders held the related REMIC residual interest directly.
A "passive foreign investment company" ("PFIC") is a foreign corporation that,
in general, meets either of the following tests: (a) at least 75% of its gross
income is passive or (b) an average of at least 50% of its assets produce, or
are held for the production of, passive income. If a Portfolio acquires and
holds stock in a PFIC beyond the end of the year of its acquisition, the
Portfolio will be subject to federal income tax on a portion of any "excess
distribution" received on the stock or of any gain from disposition of the stock
(collectively, "PFIC income"), plus
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interest thereon, even if the Portfolio distributes the PFIC income as a taxable
dividend to its shareholders. The balance of the PFIC income will be included in
the Portfolio's investment company taxable income and, accordingly, will not be
taxable to it to the extent that income is distributed to its shareholders.
Recently enacted legislation provides that the Portfolio may make a
"mark-to-market" election with respect to any stock it holds of a PFIC, if such
stock is marketable (as defined for purposes of such legislation). If the
election is in effect at the end of the Portfolio's taxable year, the Portfolio
will recognize the amount of gains, if any, with respect to PFIC stock. Such
mark-to-market gain will be treated as ordinary income. Alternatively, the
Portfolio may elect to treat any PFIC in which it invests as a "qualified
electing fund," in which case, in lieu of the foregoing tax and interest
obligation, the Portfolio will be required to include in its income each year,
its pro rata share of the qualified electing fund's annual ordinary earnings and
net capital gain, even if they are not distributed to the Portfolio; those
amounts would be subject to the distribution requirements applicable to the
Portfolio described above. It may be very difficult, if not impossible, to make
this election because of certain requirements thereof.
See the applicable contract prospectus for information regarding the federal
income tax treatment of the contracts and distributions to the separate
accounts.
=========================================================
PRICE OF SHARES
=========================================================
The Portfolios are open for business on any day the NYSE is open for regular
trading. Shares of each Portfolio of the Trust are sold at the net asset value
per share calculated daily at the close of regular trading on the NYSE
(generally, 4:00 p.m., Eastern time). Each Portfolio calculates its net asset
value per share by dividing the total value of its net assets by the number of
shares outstanding. Assets are generally valued at their market value, where
available, except that short-term securities with 60 days or less to maturity
are valued on an amortized cost basis. For a complete description of the
procedures involved in valuing various Trust assets, see the Statement of
Additional Information.
=========================================================
PURCHASES AND REDEMPTIONS
=========================================================
Shares of the Trust currently are offered only to separate accounts of Anchor
National Life Insurance Company and First SunAmerica Life Insurance Company. At
present, Trust shares are used as the investment vehicle for annuity contracts
only. The Life Companies may issue variable life contracts that also will use
the Trust as the underlying investment. The offering of Trust shares to variable
annuity and variable life separate accounts is referred to as "mixed funding."
It may be disadvantageous for variable annuity separate accounts and variable
life separate accounts to invest in the Trust simultaneously. Although neither
the Life Companies nor the Trust currently foresees such disadvantages either to
variable annuity or variable life contract owners, the Board of Trustees of the
Trust, based upon information provided by the Life Companies, would monitor
events in order to determine, should a material conflict arise, what action, if
any, need be taken in response thereto. Shares of the Trust may be offered to
separate accounts of other life insurance companies which are affiliates of the
Life Companies.
All shares may be purchased or redeemed by the separate accounts without any
sales or redemption charge at the next computed net asset value. Purchases and
redemptions are made subsequent to corresponding purchases and redemptions of
units of the separate accounts without delay.
Except in extraordinary circumstances and as permissible under the 1940 Act, the
redemption proceeds are paid on or before the seventh day following the request
for redemption.
=========================================================
SHAREHOLDER VOTING RIGHTS
=========================================================
All shares of the Trust have equal voting rights and may be voted in the
election of trustees and on other matters submitted to the vote of the
shareholders. Shareholders' meetings ordinarily will not be held unless required
by the 1940 Act. As permitted by Massachusetts law, there normally will be no
shareholders' meetings for the purpose of electing trustees unless and until
such time as fewer than a majority of the trustees holding office have been
elected by shareholders. At that time, the trustees then in office will call a
shareholders' meeting for the election of trustees. The trustees must call a
meeting of shareholders for the purpose of voting upon the removal of any
trustee when requested to do so by the record holders of 10% or more of the
outstanding shares of the Trust. A trustee may be removed after the holders of
record of not less than two-thirds of the outstanding shares have declared that
the trustee be removed either by declaration in writing or by votes cast in
person or by proxy. Except as set forth above, the trustees shall continue to
hold office and may appoint successor trustees, provided that immediately after
the appointment of any successor
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<PAGE> 46
trustee, at least two-thirds of the trustees have been elected by the
shareholders. Shares do not have cumulative voting rights. Thus, holders of a
majority of the shares voting for the election of trustees can elect all the
trustees. No amendment may be made to the Declaration of Trust without the
affirmative vote of a majority of the outstanding shares of the Trust, except
that amendments to conform the Declaration to the requirements of applicable
federal laws or regulations or the regulated investment company provisions of
the Code may be made by the trustees without the vote or consent of
shareholders. If not terminated by the vote or written consent of a majority of
its outstanding shares, the Trust will continue indefinitely.
A change in the fundamental investment restrictions of a Portfolio requires the
vote of a "majority of the outstanding voting securities" of that Portfolio.
This term is defined in the 1940 Act and explained in the Statement of
Additional Information.
In matters affecting only a particular Portfolio, the matter shall have been
effectively acted upon by a vote of that Portfolio even though: (1) the matter
has not been approved by a vote of any other Portfolio; or (2) the matter has
not been approved by a vote of the Trust as a whole.
The Life Companies' separate accounts, as shareholders of the Portfolios, have
the right to vote each Portfolio's shares at any meeting of shareholders.
However, the separate account will vote each Portfolio's shares in accordance
with instructions received from contract owners. See the applicable contract
prospectus for information regarding contract owners' voting rights.
=========================================================
INDEPENDENT ACCOUNTANTS
=========================================================
Price Waterhouse LLP has been selected as independent accountants for the Trust.
=========================================================
GENERAL INFORMATION
=========================================================
YEAR 2000 COMPLIANCE
Many services provided to the Trust and its shareholders by the Adviser rely on
both the smooth functioning of the Adviser's computer and computer-based systems
as well as those of its outside service providers. Many computer and
computer-based systems cannot distinguish the year 2000 from the year 1900
because of the way systems encode and calculate dates. This Year 2000 Issue
potentially could have an adverse impact on the handling of security trades, the
payment of interest and dividends, pricing and account services. The Adviser
recognizes the importance of the Year 2000 Issue and is taking appropriate steps
necessary in preparation of the year 2000. The Adviser fully anticipates that
its systems and those of its outside service providers will be adapted in time
for the year 2000, and to further this goal it has coordinated a plan to repair,
adapt or replace systems that are not Year 2000 compliant, and has obtained
similar assurances from its outside service providers. The Adviser expects to
complete its plan significantly by the end of the 1998 calendar year and then
perform appropriate systems testing during the 1999 calendar year.
=========================================================
SHAREHOLDER INQUIRIES
=========================================================
Shareholder inquiries should be directed to Anchor National Life Insurance
Company or First SunAmerica Life Insurance Company, Service Center, P.O. Box
54299, Los Angeles, California 90054-0299, telephone number (800) 445-SUN2. In
New York, shareholders should call (800) 99-NYSUN.
=========================================================
FINANCIAL INFORMATION
=========================================================
Further financial information can be found in the Statement of Additional
Information, which is available upon written request to the Trust.
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Statement of Additional Information
SUNAMERICA SERIES TRUST
This Statement of Additional Information is not a prospectus, but should be read
in conjunction with the current Prospectus of SunAmerica Series Trust ("Trust").
Capitalized terms used herein but not defined have the meanings assigned to them
in the Prospectus. The Prospectus may be obtained by writing to the Trust at the
following address:
P.O. Box 54299
Los Angeles, California 90054-0299
April 1, 1998
<PAGE> 48
TABLE OF CONTENTS
TOPIC PAGE
- ----- ----
The Trust ................................................................ B-2
Investment Objectives and Policies ....................................... B-3
Description of Commercial Paper and Bond Ratings ......................... B-27
Investment Restrictions .................................................. B-31
Trust Officers and Trustees .............................................. B-36
Investment Advisory and Management Agreement ............................. B-38
Subadvisory Agreements ................................................... B-41
Dividends, Distributions and Federal Taxes ............................... B-44
Price of Shares .......................................................... B-44
Execution of Portfolio Transactions ...................................... B-46
General Information ...................................................... B-51
Financial Statements ..................................................... B-53
THE TRUST
The Trust, organized as a Massachusetts business trust on September 11,
1992, is an open-end management investment company. Shares of the Trust are
issued and redeemed only in connection with investments in and payments under
variable annuity contracts, and may be sold to fund variable life contracts in
the future.
Shares of the Trust are held by separate accounts of Anchor National
Life Insurance Company, an Arizona corporation, and First SunAmerica Life
Insurance Company, a New York corporation. Anchor National Life Insurance
Company and First SunAmerica Life Insurance
B-2
<PAGE> 49
Company are wholly owned subsidiaries of SunAmerica Life Insurance Company, an
Arizona corporation wholly owned by SunAmerica Inc., a Maryland corporation.
INVESTMENT OBJECTIVES AND POLICIES
The discussion below is intended to supplement the information
contained in the Prospectus.
CASH MANAGEMENT PORTFOLIO. The Cash Management Portfolio seeks to
achieve its investment objective by investing in a diversified selection of
money market instruments. The money market instruments that the Portfolio may
invest in are as follows:
Commercial Bank Obligations. Certificates of deposit (interest-bearing
time deposits), bankers' acceptances (time drafts drawn on a commercial
bank where the bank accepts an irrevocable obligation to pay at
maturity) and documented discount notes (corporate promissory discount
notes accompanied by a commercial bank guarantee to pay at maturity)
representing direct or contingent obligations of commercial banks with
total assets in excess of $1 billion, based on the latest published
reports. The Cash Management Portfolio may also invest in obligations
issued by commercial banks with total assets of less than $1 billion if
the principal amount of these obligations owned by the Cash Management
Portfolio is fully insured by the Federal Deposit Insurance Corporation
("FDIC").
Savings Association Obligations. Certificates of deposit
(interest-bearing time deposits) issued by mutual savings banks or
savings and loan associations with assets in excess of $1 billion and
whose deposits are insured by the FDIC. The Cash Management Portfolio
may also invest in obligations issued by mutual savings banks or
savings and loan associations with total assets of less than $1 billion
if the principal amount of these obligations owned by the Cash
Management Portfolio is fully insured by the FDIC.
Commercial Paper. Short-term notes (up to 9 months) issued by
corporations or governmental bodies. The Cash Management Portfolio may
only purchase commercial paper judged by SunAmerica Asset Management
Corp. ("SAAMCo" or the "Adviser") to be of suitable investment quality.
This includes commercial paper that is (a) rated in the two highest
categories by Standard & Poor's Ratings
B-3
<PAGE> 50
Services, a Division of The McGraw-Hill Companies, Inc. ("Standard &
Poor's") and by Moody's Investors Service, Inc. ("Moody's"), or (b)
other commercial paper deemed on the basis of the issuer's
creditworthiness to be of a quality appropriate for the Cash Management
Portfolio. (No more than 5% of the Cash Management Portfolio's assets
may be invested in commercial paper in the second highest rating
category; no more than the greater of 1% of the Cash Management
Portfolio's assets or $1 million may be invested in such securities of
any one issuer.) See "Description of Commercial Paper and Bond Ratings"
for a description of the ratings. The Cash Management Portfolio will
not purchase commercial paper described in (b) above if such paper
would in the aggregate exceed 15% of its total assets after such
purchase. The commercial paper in which the Cash Management Portfolio
may invest includes variable amount master demand notes. Variable
amount master demand notes permit the Cash Management Portfolio to
invest varying amounts at fluctuating rates of interest pursuant to the
agreement in the master note. These are direct lending obligations
between the lender and borrower, they are generally not traded, and
there is no secondary market. Such instruments are payable with accrued
interest in whole or in part on demand. The amounts of the instruments
are subject to daily fluctuations as the participants increase or
decrease the extent of their participation. Investments in these
instruments are limited to those that have a demand feature enabling
the Cash Management Portfolio unconditionally to receive the amount
invested from the issuer upon seven or fewer days' notice. Generally,
the Cash Management Portfolio attempts to invest in instruments having
a one-day notice provision. In connection with master demand note
arrangements, the Adviser, subject to the direction of the trustees,
monitors on an ongoing basis, the earning power, cash flow and other
liquidity ratios of the borrower, and its ability to pay principal and
interest on demand. The Adviser also considers the extent to which the
variable amount master demand notes are backed by bank letters of
credit. These notes generally are not rated by Moody's or Standard &
Poor's and the Cash Management Portfolio may invest in them only if it
is determined that at the time of investment the notes are of
comparable quality to the other commercial paper in which the Portfolio
may invest. Master demand notes are considered to have a maturity equal
to the repayment notice period unless the Adviser has reason to believe
that the borrower could not make timely repayment upon demand.
B-4
<PAGE> 51
Corporate Bonds and Notes. The Cash Management Portfolio may purchase
corporate obligations that mature or that may be redeemed in one year
or less. These obligations originally may have been issued with
maturities in excess of one year. The Cash Management Portfolio may
invest only in corporate bonds or notes of issuers having outstanding
short-term securities rated in the top two rating categories by
Standard & Poor's and Moody's. See "Description of Commercial Paper and
Bond Ratings" for description of investment-grade ratings by Standard &
Poor's and Moody's.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Worldwide High Income
Portfolio may invest in fixed and floating rate loans ("Loans") arranged through
private negotiations between an issuer of sovereign or corporate debt
obligations and one or more financial institutions ("Lenders"). The Portfolio's
investments in Loans are expected in most instances to be in the form of
participations in Loans ("Participations") and assignments of all or a portion
of Loans ("Assignments") from third parties. In the case of Participations, the
Portfolio will have the right to receive payments of principal, interest and any
fees to which it is entitled only from the Lender selling the Participation and
only upon receipt by the Lender of the payments from the borrower. In the event
of the insolvency of the Lender selling a Participation, the Portfolio may be
treated as a general creditor of the Lender and may not benefit from any set-off
between the Lender and the borrower. The Portfolio will acquire Participations
only if the Lender interpositioned between the Portfolio and the borrower is
determined by the Subadviser to be creditworthy. When the Portfolio purchases
Assignments from Lenders it will acquire direct rights against the borrower on
the Loan. Because Assignments are arranged through private negotiations between
potential assignees and potential assignors, however, the rights and obligations
acquired by the Portfolio as the purchaser of an Assignment may differ from, and
be more limited than, those held by the assigning Lender. Because there is no
liquid market for such securities, the Portfolio anticipates that such
securities could be sold only to a limited number of institutional investors.
The lack of a liquid secondary market may have an adverse impact on the value of
such securities and the Portfolio's ability to dispose of particular Assignments
or Participations when necessary to meet the Portfolio's liquidity needs or in
response to a specific economic event such as a deterioration in the
creditworthiness of the borrower. The lack of a liquid secondary market for
Assignments and Participations also may make it more difficult for the Portfolio
to assign a value to these securities for purposes of valuing the Portfolio and
calculating its net asset value.
B-5
<PAGE> 52
STRUCTURED INVESTMENTS. The Global Bond Portfolio, Asset Allocation
Portfolio, Emerging Markets Portfolio, Worldwide High Income Portfolio and the
International Growth and Income Portfolio may invest a portion of its assets in
entities organized and operated solely for the purpose of restructuring the
investment characteristics of sovereign debt obligations. This type of
restructuring involves the deposit with or purchase by an entity, such as a
corporation or trust, of specified instruments (such as commercial bank loans)
and the issuance by that entity of one or more classes of securities
("Structured Securities") backed by, or representing interests in, the
underlying instruments. The cash flow on the underlying instruments may be
apportioned among the newly issued Structured Securities to create securities
with different investment characteristics, such as varying maturities, payment
priorities and interest rate provisions, and the extent of the payments made
with respect to Structured Securities is dependent on the extent of the cash
flow on the underlying instruments. Because Structured Securities of the type in
which the Portfolio anticipates it will invest typically involve no credit
enhancement, their credit risk generally will be equivalent to that of the
underlying instruments. The Portfolio is permitted to invest in a class of
Structured Securities that is either subordinated or unsubordinated to the right
of payment of another class. Subordinated Structured Securities typically have
higher yields and present greater risks than unsubordinated Structured
Securities. Structured Securities are typically sold in private placement
transactions, and there currently is no active trading market for Structured
Securities.
The Portfolio's investments in government and government-related and
restructured debt instruments are subject to special risks, including the
inability or unwillingness to repay principal and interest, requests to
reschedule or restructure outstanding debt and requests to extend additional
loan amounts.
U.S. CORPORATE HIGH-YIELD FIXED-INCOME SECURITIES. A portion of each of
the Worldwide High Income and High-Yield Bond Portfolios' assets will be
invested in U.S. corporate high-yield fixed-income securities, which offer a
yield above that generally available on U.S. corporate debt securities in the
four highest rating categories of the recognized rating services. The Portfolio
may acquire fixed-income securities of U.S. issuers, including debt obligations
(e.g., bonds, debentures, notes, equipment lease certificates, equipment trust
certificates, conditional sales contracts, commercial paper and obligations
issued or guaranteed by the U.S. government or any of its political
subdivisions, agencies or instrumentalities) and preferred stock. These
fixed-income securities may have equity features, such as conversion rights or
warrants, and the Portfolio may invest up to 10% of its total
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assets in equity features, such as conversion rights or warrants, and the
Portfolio may invest up to 10% of its total assets in equity securities other
than preferred stock (e.g., common stock, warrants and rights and limited
partnership interests). The Portfolio may not invest more than 5% of its total
assets at the time of acquisition in either of (1) equipment lease certificates,
equipment trust certificates, equipment trust certificates and conditional sales
contracts or (2) limited partnership interests.
EMERGING COUNTRY FIXED-INCOME SECURITIES. Certain of the Portfolios may
invest their assets, to varying degrees, in emerging country fixed-income
securities, which are debt securities of government and government-related
issuers located in emerging countries (including participations in loans between
governments and financial institutions), and of entities organized to
restructure outstanding debt of such issuers and debt securities of corporate
issuers located in or organized under the laws of emerging countries. As used
with respect to these Portfolios, an emerging country is any country that the
International Bank for Reconstruction and Development (more commonly known as
the World Bank) has determined to have a low or middle income economy. There are
currently over 150 countries which are considered to be emerging countries. The
countries generally include every nation in the world except the United States,
Canada, Japan, Australia, Singapore, New Zealand and most nations located in
Western Europe. Not withstanding the foregoing with respect to Putnam, in
addition to the exclusions listed above, the following countries should also be
excluded from the countries considered emerging markets: Austria, Belgium,
Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway,
Spain, Sweden, Switzerland and the United Kingdom.
In selecting emerging country debt securities for investment by the
Portfolio, the Subadviser will apply a market risk analysis contemplating
assessment of factors such as liquidity, volatility, tax implications, interest
rate sensitivity, counterparty risks and technical market considerations.
Currently, investing in many emerging country securities is not feasible or may
involve unacceptable political risks. The Portfolio expects that its investments
in emerging country debt securities will be made primarily in some or all of the
following emerging countries:
Argentina Indonesia Poland
Brazil Malaysia Portugal
Chile Mexico South Africa
Czech Republic Morocco Thailand
Egypt Pakistan Turkey
Greece Peru Uruguay
Hungary Philippines Venezuela
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As opportunities to invest in debt securities in other emerging
countries develop, the Portfolio expects to expand and further diversify the
emerging countries in which it invests. While the Portfolio generally is not
restricted in the portion of its assets which may be invested in a single
country or region, it is anticipated that, under normal circumstances, the
Portfolio's assets will be invested in at least three countries.
The Portfolio's investments in government and government-related and
restructured debt securities will consist of (i) debt securities or obligations
issued or guaranteed by governments, governmental agencies or instrumentalities
and political subdivisions located in emerging countries (including
participation in loans between governments and financial institutions), (ii)
debt securities or obligations issued by government owned, controlled or
sponsored entities located in emerging countries, and (iii) interests in issuers
organized and operated for the purpose of restructuring the investment
characteristics of instruments issued by any of the entities described above.
Such type of restructuring involves the deposit with or purchase by an entity of
specific instruments and the issuance by that entity of one or more classes of
securities backed by, or representing an interest in, the underlying
instruments. Certain issuers of such structured securities may be deemed to be
"investment companies" as defined in the Investment Company Act of 1940, as
amended, (the "1940 Act"). As a result, the Portfolio's investment in such
securities may be limited by certain investment restrictions contained in the
1940 Act.
The Portfolio's investments in debt securities of corporate issuers in
emerging countries may include debt securities or obligations issued (i) by
banks located in emerging countries or by branches of emerging country banks
located outside the country or (ii) by companies organized under the laws of an
emerging country. Determinations as to eligibility will be made by the
Subadviser based on publicly available information and inquiries made to the
issuer. The Portfolio may also invest in certain debt obligations customarily
referred to as "Brady Bonds," which are created through the exchange of existing
commercial bank loans to foreign entities for new obligations in connection with
debt restructuring under a plan introduced by former U.S. Secretary of the
Treasury Nicholas F. Brady.
Emerging country debt securities held by the Portfolio will take the
form of bonds, notes, bills, debentures, convertible securities, warrants, bank
debt obligations, short-term paper, mortgage-backed and other asset-backed
securities, loan participations, loan assignments and interests issued by
entities organized and operated for the purpose of restructuring the investment
characteristics of instruments issued by emerging country issuers. U.S.
dollar-denominated emerging country debt
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securities held by the Portfolio will generally be listed but not traded on a
securities exchange, and non-U.S. dollar-denominated securities held by the
Portfolio may or may not be listed or traded on a securities exchange. The
Portfolio may invest in mortgage-backed securities and in other asset-backed
securities issued by non-governmental entities such as banks and other financial
institutions. Mortgage-backed securities include mortgage pass-through
securities and collateralized mortgage obligations. Asset-backed securities are
collateralized by such assets as automobile or credit card receivables and are
securitized either in a pass-through structure or in a pay-through structure
similar to a collaterized mortgage obligation.
Investments in emerging country debt securities entail special
investment risks. Many of the emerging countries listed above may have less
stable political environments than more developed countries. Also, it may be
more difficult to obtain a judgment in a court outside the United States.
GLOBAL FIXED-INCOME SECURITIES. Certain of the Portfolios may invest
their assets, to varying degrees, in global fixed-income securities. These are
debt securities denominated in currencies of countries displaying high real
yields. Such securities include government obligations issued or guaranteed by
U.S. or foreign governments and their political subdivisions, authorities,
agencies or instrumentalities, and by supranational entities (such as the World
Bank, The European Economic Community, The Asian Development Bank and the
European Coal and Steel Community), Eurobonds, and corporate bonds with varying
maturities denominated in various currencies. In this portion of the Portfolio,
the Subadviser seeks to minimize investment risk by investing in a high quality
portfolio of debt securities, the majority of which will be rated in one of the
two highest rating categories by a nationally recognized statistical rating
organization. U.S. government securities in which the Portfolio may invest
include obligations issued or guaranteed by the U.S. government, such as U.S.
Treasury securities, as well as those backed by the full faith and credit of the
United States, such as obligations of the Government National Mortgage
Association and The Export-Import Bank. The Portfolio may also invest in
obligations issued or guaranteed by U.S. government agencies or
instrumentalities where the Portfolio must look principally to the issuing or
guaranteeing agency for ultimate repayment. The Portfolio may invest in
obligations issued or guaranteed by foreign governments and their political
subdivisions, authorities, agencies or instrumentalities, and by supranational
entities (such as the World Bank, The European Economic Community, The Asian
Development Bank and the European Coal and Steel Community). Investment in
foreign government securities for this portion of the Portfolio will be limited
to those of developed nations which the Subadviser believes to pose limited
credit risk.
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These countries currently include Australia, Austria, Belgium, Canada, Denmark,
Finland, France, Germany, Ireland, Italy, Japan, Luxembourg, the Netherlands,
New Zealand, Norway, Portugal, Spain, Sweden, Switzerland and the United
Kingdom. Corporate and supranational obligations selected for this portion of
the portfolio will be limited to those rated A or better by Moody's, Standard &
Poor's or IBCA Ltd.
In selecting securities for this portion of the Portfolio, the
Subadviser evaluates the currency, market and individual features of the
securities being considered for investment. The Subadviser believes that
countries displaying the highest real yields will over time generate a high
total return, and accordingly, the Subadviser's focus for this portion of the
Portfolio will be to analyze the relative rates of real yield of twenty global
fixed-income markets. In selecting securities, the Subadviser will first
identify the global markets in which the Portfolio's assets will be invested by
ranking such countries in order of highest real yield. In this portion of its
portfolio, the Portfolio will invest its assets primarily in fixed-income
securities denominated in the currencies of countries within the top quartile of
the Subadviser's ranking.
The Subadviser's assessment of the global fixed-income markets is based
on an analysis of real interest rates. The Subadviser calculates real yield for
each global market by adjusting current nominal yields of securities in each
such market for inflation prevailing in each country using an analysis of past
and projected (one-year) inflation rates for that country. The Subadviser
expects to review and update on a regular basis its real yield ranking of
countries and market sectors and to alter the allocation of this portion of the
Portfolio's investments among markets as necessary when changes to real yields
and inflation estimates significantly alter the relative rankings of the
countries and market sectors.
The Global Bond Portfolio may invest in trust preferred securities. A
trust preferred or capital security is a long dated bond (for example, 30 years)
with preferred features. The preferred features are that payment of interest can
be deferred for a specified period without initiating a default event. From a
bondholder's viewpoint, the securities are senior in claim to standard preferred
but are junior to other bondholders. From the issuer's viewpoint, the securities
are attractive because their interest is deductible for tax purposes like other
types of debt instruments.
SHORT SALES. Each Portfolio (other than the Cash Management and "Dogs"
of Wall Street Portfolios) may make short sales, including "short sales against
the box." A short sale is effected
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by selling a security which the Portfolio does not own. A short sale is against
the box to the extent that the Portfolio contemporaneously owns, or has the
right to obtain without payment, securities identical to those sold short. A
short sale against the box is treated as a sale by the Portfolio, for federal
income tax purposes. A Portfolio may not enter into a short sale against the
box, if, as a result, more than 25% of its total assets would be subject to such
short sales.
When a Portfolio makes a short sale, the proceeds it receives from the
sale will be held on behalf of a broker until the Portfolio replaces the
borrowed securities. To deliver the securities to the buyer, the Portfolio will
need to arrange through a broker to borrow the securities and, in so doing, the
Portfolio will become obligated to replace the securities borrowed at their
market price at the time of replacement, whatever that price may be. The
Portfolio may have to pay a premium to borrow the securities and must pay any
dividends or interest payable on the securities until they are replaced.
The Portfolio's obligation to replace the securities borrowed in
connection with a short sale will be secured by collateral deposited with the
Trust's Custodian in the name of the broker that consists of cash or liquid
securities. In addition, the Portfolio will place in a segregated account with
its Custodian an amount of cash or liquid securities equal to the difference, if
any, between (1) the market value of the securities sold at the time they were
sold short and (2) any cash or liquid securities deposited as collateral with
the broker in connection with the short sale (not including the proceeds of the
short sale). In the event that the value of the collateral deposited with the
broker, plus the value of the assets in the segregated account should fall below
the value of the securities sold short, additional amounts to cover the
difference will be placed in the segregated accounts. Short sales by the
Portfolio involve certain risks and special considerations. Possible losses from
short sales differ from losses that could be incurred from a purchase of a
security, because losses from short sales may be unlimited, whereas losses from
purchases can equal only the total amount invested.
ILLIQUID SECURITIES. Each of the Portfolios may invest no more than 15%
(10% in the case of the Cash Management Portfolio) of its net assets, determined
as of the date of purchase, in illiquid securities including repurchase
agreements which have a maturity of longer than seven days or in other
securities that are illiquid by virtue of the absence of a readily available
market or legal or contractual restrictions on resale. Historically, illiquid
securities have included securities subject to contractual or legal restrictions
on resale because they have not been registered under the Securities Act of
1933, as amended (the "Securities Act"), securities which are otherwise not
readily marketable and
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repurchase agreements having a maturity of longer than seven days. Repurchase
agreements subject to demand are deemed to have a maturity equal to the notice
period. Securities which have not been registered under the Securities Act are
referred to as private placements or restricted securities and are purchased
directly from the issuer or in the secondary market. Mutual funds do not
typically hold a significant amount of these restricted or other illiquid
securities because of the potential for delays on resale and uncertainty in
valuation. Limitations on resale may have an adverse effect on the marketability
of portfolio securities and a mutual fund might be unable to dispose of
restricted or other illiquid securities promptly or at reasonable prices and
might thereby experience difficulty satisfying redemptions within seven days. A
mutual fund might also have to register such restricted securities in order to
dispose of them, resulting in additional expense and delay. There generally will
be a lapse of time between a mutual fund's decision to sell an unregistered
security and the registration of such security promoting sale. Adverse market
conditions could impede a public offering of such securities. When purchasing
unregistered securities, the Portfolios will seek to obtain the right of
registration at the expense of the issuer.
In recent years, a large institutional market has developed for certain
securities that are not registered under the Securities Act, including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale to the general public or
to certain institutions may not be indicative of the liquidity of such
investments.
Restricted securities eligible for resale pursuant to Rule 144A under
the Securities Act for which there is a readily available market will not be
deemed to be illiquid. The Adviser or subadviser, as the case may be, will
monitor the liquidity of such restricted securities subject to the supervision
of the Board of Trustees of the Trust. In reaching liquidity decisions, the
Adviser, or subadviser, as the case may be, will consider, inter alia, pursuant
to guidelines and procedures established by the Trustees, the following factors:
(1) the frequency of trades and quotes for the security; (2) the number of
dealers wishing to purchase or sell the security and the number of other
potential purchasers; (3) dealer undertakings to make a market in the security;
and (4) the nature of the security and the nature of the marketplace trades
(e.g., the time needed to dispose of the security, the method of soliciting
offers and the mechanics of the transfer).
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The Cash Management Portfolio may invest in commercial paper issues
which include securities issued by major corporations without registration under
the Securities Act in reliance on the exemption from such registration afforded
by Section 3(a)(3) thereof, and commercial paper issued in reliance on the
so-called private placement exemption from registration which is afforded by
Section 4(2) of the Securities Act ("Section 4(2) paper"). Section 4(2) paper is
restricted as to disposition under the federal securities laws in that any
resale must similarly be made in an exempt transaction. Section 4(2) paper is
normally resold to other institutional investors through or with the assistance
of investment dealers who make a market in Section 4(2) paper, thus providing
liquidity. Section 4(2) paper that is issued by a company that files reports
under the Securities Exchange Act of 1934 is generally eligible to be sold in
reliance on the safe harbor of Rule 144A described above. The Cash Management
Portfolio's 10% limitation on investments in illiquid securities includes
Section 4(2) paper other than Section 4(2) paper that the Adviser has determined
to be liquid pursuant to guidelines established by the Trustees. The Portfolio's
Board of Trustees delegated to the Adviser the function of making day-to-day
determinations of liquidity with respect to Section 4(2) paper, pursuant to
guidelines approved by the Trustees that require the Adviser to take into
account the same factors described above for other restricted securities and
require the Adviser to perform the same monitoring and reporting functions.
REVERSE REPURCHASE AGREEMENTS. The Cash Management, Corporate Bond,
High-Yield Bond, Worldwide High Income, SunAmerica Balanced, Utility, Federated
Value and Aggressive Growth Portfolios may enter into reverse repurchase
agreements with brokers, dealers, domestic and foreign banks or other financial
institutions that have been determined by the Adviser or Subadviser to be
creditworthy. In a reverse repurchase agreement, the Portfolio sells a security
and agrees to repurchase it at a mutually agreed upon date and price, reflecting
the interest rate effective for the term of the agreement. It may also be viewed
as the borrowing of money by the Portfolio. The Portfolio's investment of the
proceeds of a reverse repurchase agreement is the speculative factor known as
leverage. The Portfolios will enter into a reverse repurchase agreement only if
the interest income from investment of the proceeds is expected to be greater
than the interest expense of the transaction and the proceeds are invested for a
period no longer than the term of the agreement. The Portfolio will maintain
with the Custodian a separate account with a segregated portfolio of cash or
liquid securities in an amount at least equal to its purchase obligations under
these agreements (including accrued interest). In the event that the buyer of
securities under a reverse repurchase agreement files for bankruptcy or becomes
insolvent, the buyer or its trustee or receiver may receive an extension of time
to determine whether to enforce the Portfolio's repurchase obligation, and the
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Portfolio's use of proceeds of the agreement may effectively be restricted
pending such decision. Reverse repurchase agreements are considered to be
borrowings and are subject to the percentage limitations on borrowings. See
"Investment Restrictions."
FLOATING RATE OBLIGATIONS. These securities have a coupon rate that
changes at least annually and generally more frequently. The coupon rate is set
in relation to money market rates. The obligations, issued primarily by banks,
other corporations, governments and semi-governmental bodies, may have a
maturity in excess of one year. In some cases, the coupon rate may vary with
changes in the yield on Treasury bills or notes or with changes in LIBOR (London
Interbank Offering Rate). The Adviser considers floating rate obligations to be
liquid investments because a number of United States and foreign securities
dealers make active markets in these securities.
COVERED OPTIONS. Each Portfolio may write (sell) covered call and put
options on any securities in which it may invest. A Portfolio may purchase and
write such options on securities that are listed on national domestic securities
exchanges (and, for certain Portfolios, foreign securities exchanges) or traded
in the over-the-counter market. A call option written by a Portfolio obligates a
Portfolio to sell specified securities to the holder of the option at a
specified price if the option is exercised at any time before the expiration
date. All call options written by a Portfolio are covered, which means that a
Portfolio will own the securities subject to the option so long as the option is
outstanding. The purpose of writing covered call options is to realize greater
income than would be realized on portfolio securities transactions alone.
However, in writing covered call options for additional income, a Portfolio may
forego the opportunity to profit from an increase in the market price of the
underlying security.
A put option written by a Portfolio would obligate a Portfolio to
purchase specified securities from the option holder at a specified price if the
option is exercised at any time before the expiration date. All put options
written by a Portfolio would be covered, which means that the Portfolio would
have deposited with its custodian cash, U.S. government securities or other
high-grade debt securities (i.e., securities rated in one of the top three
categories by Moody's or Standard & Poor's, or, if unrated, deemed by the
Adviser or subadviser to be of comparable credit quality) with a value at least
equal to the exercise price of the put option. The purpose of writing such
options is to generate additional income for a Portfolio. However, in return for
the option premium, a Portfolio accepts the risk that it may be required to
purchase the underlying securities at a price in excess of the securities'
market value at the time of purchase.
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PORTFOLIO STRATEGIES RELATED TO FOREIGN SECURITIES. Each Portfolio may
engage in various portfolio strategies to reduce certain risks of their
respective investments and/or to attempt to enhance return. Each Portfolio may
engage in strategies including the purchase and sale of forward foreign currency
exchange contracts, currency and financial index futures contracts (including,
in the case of the International Growth and Income, Emerging Markets and
Global Equities Portfolios, stock index futures) and options thereon, put and
call options on currencies and financial indices, and combinations thereof. The
Adviser or Subadviser will use such techniques as market conditions warrant.
Each Portfolio's ability to use these strategies may be limited by market
conditions, regulatory limits and tax considerations and there can be no
assurance that any of these strategies will succeed. New financial products and
risk management techniques continue to be developed and these Portfolios may use
these new investments and techniques to the extent consistent with their
investment objective and policies.
In addition to direct investment, the Portfolios which may invest in
foreign securities may also invest in American Depositary Receipts ("ADRs") and
in other Depositary Receipts, including Global Depositary Receipts ("GDRs"),
European Depositary Receipts ("EDRs") and others (which, together with ADRs,
GDRs and EDRs, are hereinafter collectively referred to as "Depositary
Receipts"), to the extent that such Depositary Receipts become available. ADRs
are securities, typically issued by a U.S. financial institution (a
"depositary"), that evidence ownership interests in a security or a pool of
securities issued by a foreign issuer (the "underlying issuer") and deposited
with the depositary. ADRs include American Depositary Shares and New York Shares
and may be "sponsored" or "unsponsored." Sponsored ADRs are established jointly
by a depositary and the underlying issuer, whereas unsponsored ADRs may be
established by a depositary without participation by the underlying issuer.
GDRs, EDRs and other types of Depositary Receipts are typically issued by
foreign depositaries, although they may also be issued by U.S. depositaries, and
evidence ownership interests in a security or pool of securities issued by
either a foreign or a U.S. corporation. Holders of unsponsored Depositary
Receipts generally bear all the costs associated with establishing the
unsponsored Depositary Receipt. The depositary of unsponsored Depositary
Receipts is under no obligation to distribute shareholder communications
received from the underlying issuer or to pass through to the holders of the
unsponsored Depositary Receipt voting rights with respect to the deposited
securities or pool of securities. Depositary Receipts are not necessarily
denominated in the same currency as the underlying securities to which they may
be connected. Generally, Depositary Receipts in registered form are designed for
use in the U.S. securities market and Depositary Receipts in bearer form are
designed for use in securities markets outside the United States.
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A Portfolio may invest in sponsored and unsponsored Depositary Receipts. For
purposes of a Portfolio's investment policies, the Portfolio's investments in
Depositary Receipts will be deemed to be investments in the underlying
securities. The Portfolios also may invest in securities denominated in European
Currency Units ("ECUs"). Generally ADRs, in registered form, are dollar
denominated securities designed for use in the U.S. securities markets, which
represent and may be converted into the underlying foreign security. EDRs, in
bearer form, are designed for use in the European securities markets. An "ECU"
is a "basket" consisting of specified amounts of currencies of certain of the
twelve member states of the European Community. The specific amount of
currencies comprising the ECU may be adjusted by the Council of Ministers of the
European Community from time to time to reflect changes in relative values of
the underlying currencies. In addition, the Portfolios may invest in securities
denominated in other currency "baskets." See "Description of Securities and
Investment Techniques - Risks and Considerations Applicable to Investment in
Securities of Foreign Issuers" in the Prospectus.
The Portfolios may also invest in emerging country securities. As used
with respect to this Portfolio, the term "emerging country" applies to any
country which, in the opinion of the Subadviser, is generally considered to be
an emerging or developing country by the international financial community,
including the International Bank for Reconstruction and Development (more
commonly known as the World Bank) and the International Finance Corporation.
There are currently over 150 countries which, in the opinion of the Subadviser,
are generally considered to be emerging or developing countries by the
international financial community. These countries generally include every
nation in the world except the United States, Canada, Japan, Australia, New
Zealand, Singapore (with the exception of the Emerging Markets Portfolio) and
most nations located in Western Europe. Not withstanding the foregoing with
respect to the Emerging Markets Portfolio, the Subadviser believes that in
addition to the exclusions listed above, the following countries should also be
excluded from the countries considered emerging markets: Austria, Belgium,
Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway,
Spain, Sweden, Switzerland and the United Kingdom. Currently, investing in many
emerging countries is not feasible or may invoke unacceptable political risks.
The International Diversified Equities Portfolio will focus its
investments on those emerging market countries in which it believes the
economies are developing strongly and in which the markets are becoming more
sophisticated. With respect to the portions of such Portfolio that is invested
in emerging country equity securities, the Portfolio initially intends to invest
primarily in some or all of the following countries:
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Argentina Indonesia Portugal Thailand
Brazil Mexico South Africa Turkey
India Philippines South Korea
As markets in other countries develop, the International Diversified
Equities Portfolio expects to expand and further diversify the emerging
countries in which it invests. The Portfolio does not intend to invest in any
security in a country where the currency is not freely convertible to U.S.
dollars, unless the Portfolio has obtained the necessary governmental licensing
to convert such currency or other appropriately licensed or sanctioned
contractual guarantee to protect such investment against loss of that currency's
external value, or the Portfolio has a reasonable expectation at the time the
investment is made that such governmental licensing or other appropriately
licensed or sanctioned guarantee would be obtained or that the currency in which
the security is quoted would be freely convertible at the time of any proposed
sale of the security by the Portfolio.
An emerging country security is one issued by a company that,
in the opinion of the Subadviser, has one or more of the following
characteristics:(i) it is organized under the laws of, or has its principal
office in, an emerging country, or (ii) alone or on a consolidated basis it
derives 50% or more of its annual revenue from business in emerging countries.
An emerging market security may also include a company which has its principal
securities trading market in an emerging country. The Subadviser will base
determinations as to eligibility on publicly available information and inquiries
made to the companies.
FOREIGN CURRENCY AND FINANCIAL INDEX TRANSACTIONS - FORWARD EXCHANGE
AND FUTURES CONTRACTS, OPTIONS AND OPTIONS ON FUTURES CONTRACTS. Each Portfolio
may enter into contracts for the purchase or sale for future delivery of foreign
currencies ("forward currency exchange contracts"), financial and foreign
currency futures contracts or contracts based on financial indices ("futures
contracts") and may purchase and write put and call options to buy or sell
currencies and to buy or sell futures contracts ("options on futures
contracts").
A forward foreign currency contract is an obligation to purchase or
sell a currency against another currency at a future date and price as agreed
upon by the parties. A "sale" of a foreign currency futures contract means
entering into a contract to deliver the foreign currencies called for by the
contract at a specified price on a specified date. A "purchase" of a foreign
currency futures contract means entering into a contract to acquire the foreign
currencies called for by the contract at a specified price on a specified date.
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An exchange-traded futures contract relating to foreign currency, or a
financial index, is similar to a forward foreign currency exchange contract but
has a standardized size and exchange date. A Portfolio may either accept or make
delivery of the currency at the maturity of such a contract or, prior to
maturity, enter into a closing transaction involving the purchase or sale of an
offsetting contract. The purchaser of a futures contract on an index agrees to
take or make delivery of an amount of cash equal to the difference between a
specified dollar multiple of the value of the index on the expiration date of
the contract and the price at which the contract was originally struck. No
physical delivery of the securities underlying the index is made.
Over-the-counter currency instruments are subject to the risk that the
counterparty to such instruments will default on its obligations. Since
over-the-counter currency instruments are not guaranteed by an exchange or
clearinghouse, a default on the instrument would deprive the Portfolio of
unrealized profits, transaction costs or the benefits of a currency hedge or
force the Portfolio to cover its purchase or sale commitments, if any, at the
current market price. A Portfolio will not enter into such transactions unless
the credit quality of the unsecured senior debt or the claims-paying ability of
the counterparty is considered to be investment grade by the Adviser or
Subadviser.
Each Portfolio may enter into futures contracts in anticipation of, or
to protect against, fluctuations in currency exchange rates. A Portfolio might,
for example, enter into a futures contract when it wanted to hold securities
denominated in a particular currency but anticipated, and wished to be protected
against, a decline in that currency against the U.S. dollar. Similarly, it might
enter into futures contracts to "lock in" the U.S. dollar price of non-U.S.
dollar denominated securities that it anticipated purchasing. Although futures
contracts typically will involve the purchase and sale of a foreign currency
against the U.S. dollar, a Portfolio also may enter into currency contracts not
involving the U.S. dollar.
In connection with these futures transactions, the Trust has filed a
notice of eligibility with the Commodity Futures Trading Commission ("CFTC")
that exempts the Trust from CFTC registration as a "commodity pool operator" as
defined under the Commodity Exchange Act. Pursuant to this notice, each
Portfolio will observe certain CFTC guidelines with respect to its futures
transactions that, among other things, require the Portfolio to use futures for
bona fide "hedging" purposes only (as defined by CFTC rules), and, in the case
of futures transactions for non-bona fide hedging purposes, to limit initial
margin deposits to no more than 5% of its net assets after taking into account
unrealized profits and unrealized losses on any such contracts entered into. In
addition, subject to the limitation on margin deposits described above, a
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Portfolio may engage in futures transactions for non-bona fide hedging purposes,
provided that the total value of such long futures positions will not exceed the
sum of (a) cash or cash equivalents set aside in an identifiable manner for this
purpose, (b) cash proceeds on existing investments due within 30 days, and (c)
accrued profits on such futures or options positions.
Parties to futures contracts and holders and writers of options on
futures can enter into offsetting closing transactions, similar to closing
transactions on options, by selling or purchasing, respectively, an instrument
identical to the instrument held or written. Positions in futures and options on
futures may be closed only on an exchange or board of trade where there appears
to be a liquid secondary market. However, there can be no assurance that such a
market will exist for a particular contract at a particular time. Secondary
markets for options on futures are currently in the development stage, and no
Portfolio will trade options on futures on any exchange or board of trade
unless, in the judgment of the Adviser or applicable Subadviser, the markets for
such options have developed sufficiently that the liquidity risks for such
options are not greater than the corresponding risks for futures.
Under certain circumstances, futures exchanges may establish daily
limits on the amount that the price of a future or related option can vary from
the previous day's settlement price; once that limit is reached, no trades may
be made that day at a price beyond the limit. Daily price limits do not limit
potential losses because prices could move to the daily limit for several
consecutive days with little or no trading, thereby preventing liquidation of
unfavorable positions.
If a Portfolio were unable to liquidate a futures or related options
position due to the absence of a liquid secondary market or the imposition of
price limits, it could incur substantial losses. The Portfolio would continue to
be subject to market risk with respect to its position. In addition, except in
the case of purchased options, the Portfolio would continue to be required to
make daily variation margin payments and might be required to maintain the
position being hedged by the future or option or to maintain cash or securities
in a segregated account.
Certain characteristics of the futures market might increase the risk
that movements in the prices of futures contracts or related options might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the futures and related options markets
are subject to daily variation margin calls and might be compelled to liquidate
futures or related option positions whose prices are moving unfavorably to avoid
being subject to further calls. These liquidations could increase price
volatility of the instruments and
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distort the normal price relationship between the futures or options and the
investments being hedged. Also, because initial margin deposit requirements in
the futures markets are less onerous than margin requirements in the securities
markets, there might be increased participation by speculators in the futures
markets. This participation also might cause temporary price distortions. In
addition, activities of large traders in both the futures and securities markets
involving arbitrage, "program trading" and other investment strategies might
result in temporary price distortions.
In connection with the purchase of futures contracts, a Portfolio will
deposit and maintain in a segregated account with the Trust's custodian an
amount of cash or liquid securities equal to its obligations under the futures
contracts less any amounts maintained in a margin account with the Trust's
futures broker.
OPTIONS - Each Portfolio may attempt to accomplish objectives similar
to those involved in their use of futures contracts by purchasing or selling put
or call options on currencies, currency futures contracts, and financial index
futures (including, in the case of the Global Equities Portfolio, stock index
futures). A foreign currency put option gives the Portfolio as purchaser the
right (but not the obligation) to sell a specified amount of currency at the
exercise price until the expiration of the option. A call option gives the
Portfolio as purchaser the right (but not the obligation) to purchase a
specified amount of currency at the exercise price until its expiration. A
Portfolio might purchase a currency put option, for example, to protect itself
during the contract period against a decline in the U.S. dollar value of a
currency in which it holds or anticipates holding securities. If the currency's
value should decline against the U.S. dollar, the loss in currency value should
be offset, in whole or in part, by an increase in the value of the put. If the
value of the currency instead should rise against the U.S. dollar, any gain to
the Portfolio would be reduced by the premium it had paid for the put option. A
currency call option might be purchased, for example, in anticipation of, or to
protect against, a rise in the value against the U.S. dollar of a currency in
which a Portfolio anticipates purchasing securities.
Currency options may be either listed on an exchange or traded
over-the-counter ("OTC options"). Listed options are third-party contracts
(i.e., performance of the obligations of the purchaser and seller is guaranteed
by the exchange or clearing corporation), and have standardized strike prices
and expiration dates. OTC options are two-party contracts with negotiated strike
prices and expiration dates. OTC options differ from exchange-traded options in
that OTC options are transacted with dealers directly and not through a clearing
corporation (which guarantees performance). Consequently, there is a risk of
non-performance by the dealer.
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Since no exchange is involved, OTC options are valued on the basis of a quote
provided by the dealer. A Portfolio will not purchase an OTC option unless it is
believed that daily valuations for such options are readily obtainable. In the
case of OTC options, there can be no assurance that a liquid secondary market
will exist for any particular option at any specific time.
An option on a securities index is similar to an option on a security
except that, rather than the right to take or make delivery of a security at a
specified price, an option on an index gives the holder the right to receive,
upon exercise of the option, an amount of cash if the closing level of the
chosen index is greater than (in the case of a call) or less than (in the case
of a put) the exercise price of the option.
Options on futures contracts to be written or purchased by a Portfolio
will be traded on U.S. or foreign exchanges or over-the-counter. These
investment techniques will be used only to hedge against anticipated future
changes in market conditions or exchange rates which otherwise might either
adversely affect the value of a Portfolio's securities or adversely affect the
prices of securities which a Portfolio intends to purchase at a later date.
CERTAIN RISK FACTORS RELATING TO HIGH-YIELD BONDS. The Corporate Bond,
High-Yield Bond, Worldwide High Income, Balanced/Phoenix Investment Counsel,
Asset Allocation, Real Estate and Emerging Markets Portfolios may invest in
high-yield bonds. These bonds present certain risks which are discussed below:
Sensitivity to Interest Rate and Economic Changes -High-yield bonds are
very sensitive to adverse economic changes and corporate developments.
During an economic downturn or substantial period of rising interest
rates, highly leveraged issuers may experience financial stress that
would adversely affect their ability to service their principal and
interest payment obligations, to meet projected business goals, and to
obtain additional financing. If the issuer of a bond defaulted on its
obligations to pay interest or principal or entered into bankruptcy
proceedings, a Portfolio may incur losses or expenses in seeking
recovery of amounts owed to it. In addition, periods of economic
uncertainty and changes can be expected to result in increased
volatility of market prices of high-yield bonds and the Portfolio's net
asset value.
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Payment Expectations - High-yield bonds may contain redemption or call
provisions. If an issuer exercised these provisions in a declining
interest rate market, a Portfolio would have to replace the security
with a lower yielding security, resulting in a decreased return for
investors. Conversely, a high-yield bond's value will decrease in a
rising interest rate market, as will the value of the Portfolio's
assets. If the Portfolio experiences unexpected net redemptions, this
may force it to sell high-yield bonds without regard to their
investment merits, thereby decreasing the asset base upon which
expenses can be spread and possibly reducing the Portfolio's rate of
return.
Liquidity and Valuation - There may be little trading in the secondary
market for particular bonds, which may affect adversely a Portfolio's
ability to value accurately or dispose of such bonds. Adverse publicity
and investor perceptions, whether or not based on fundamental analysis,
may decrease the values and liquidity of high-yield bonds, especially
in a thin market.
CERTAIN RISK FACTORS AFFECTING UTILITY COMPANIES. The Utility and Real
Estate Portfolios may invest in equity and debt securities of utility companies.
There are certain risks and considerations affecting utility companies, and the
holders of utility company securities, which an investor should take into
account when investing in those securities. Factors which may adversely affect
utility companies include: difficulty in financing large construction programs
during inflationary periods; technological innovations which may cause existing
plants, equipment, or products to become less competitive or obsolete; the
impact of natural or man-made disaster (especially on regional utilities);
increased costs or reductions in production due to the unavailability of
appropriate types of fuels; seasonally or occasionally reduced availability or
higher cost of natural gas; and reduced demand due to energy conservation among
consumers. These revenues of domestic and foreign utility companies generally
reflect the economic growth and developments in the geographic areas in which
they do business. Furthermore, utility securities tend to be interest rate
sensitive.
In addition, most utility companies in the United States and in foreign
countries are subject to government regulation. Generally, the purpose of such
regulation is to ensure desirable levels of service and adequate capacity to
meet public demand. To this end, prices are often regulated to enable consumers
to obtain service at what is perceived to be a fair price, while attempting
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to provide utility companies with a rate of return sufficient to attract capital
investment necessary for continued operation and necessary growth. Recently,
utility regulators have permitted utilities to diversify outside of their
original geographic regions and their traditional lines of business. While the
Subadvisers believe that these opportunities will permit certain utility
companies to earn more than their traditional regulated rates of return, other
companies may be forced to defend their core business and may be less
profitable. Of course, there can be no assurance that all of the regulatory
policies described in this paragraph will continue in the future.
In addition to the effects of regulation described in the previous
paragraph, utility companies may also be adversely affected by the following
regulatory considerations: (i) the development and implementation of a national
energy policy; (ii) the differences between regulatory policies of different
jurisdictions (or different regulators which have concurrent jurisdiction);
(iii) shifts in regulatory policies; (iv) adequacy of rate increases; and (v)
future regulatory legislation.
Foreign utility companies may encounter different risks and
opportunities than those located in the United States. Foreign utility companies
may be more heavily regulated than their United States counterparts. Many
foreign utility companies currently use fuels which cause more pollution than
fuels used by United States utilities. In the future, it may be necessary for
such foreign utility companies to invest heavily in pollution control equipment
or otherwise meet pollution restrictions. Rapid growth in certain foreign
economies may encourage the growth of utility industries in those countries.
In addition to the foregoing considerations which affect most utility
companies, there are specific considerations which affect specific utility
industries:
Electric. The electric utility industry is composed of companies that
are engaged in the generation, transmission, and sale of electric energy.
Electric utility companies may be affected either favorably or unfavorably,
depending upon the circumstances, by the following: fuel costs; financing costs;
size of the region in which sales are made; operating costs; environmental and
safety regulations; changes in the regulatory environment; and the length of
time needed to complete major construction projects.
In the United States, the construction and operation of nuclear power
facilities is subject to a high degree of regulatory oversight by the Nuclear
Regulatory Commission and state agencies with concurrent jurisdiction. In
addition, the design, construction, licensing, and operation of nuclear power
facilities
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are often subject to lengthy delays and unanticipated costs due to changes in
regulatory policy, regional political actions, and lawsuits. Furthermore, during
rate authorizations, utility regulators may disallow the inclusion in electric
rates of the higher operating costs and expenditures resulting from these delays
and unanticipated costs, including the costs of a nuclear facility which a
utility company may never be able to use.
Telecommunications. The telephone industry is large and highly
concentrated. The greatest portion of this segment is comprised of companies
which distribute telephone services and provide access to the telephone
networks. While many telephone companies have diversified into other businesses
in recent years, the profitability of telephone utility companies could be
adversely affected by increasing competition, technological innovations, and
other structural changes in the industry.
Cable television companies are typically local monopolies, subject to
scrutiny by both utility regulators and municipal governments. Emerging
technologies and legislation encouraging local competition are combining to
threaten these monopolies and may slow future growth rates of these companies.
The radio telecommunications segment of this industry, including cellular
telephone, is in its early developmental phase and is characterized by emerging,
rapidly growing companies.
Gas. Gas transmission and distribution companies are undergoing
significant changes. In the United States, the Federal Energy Regulatory
Commission is reducing its regulation of interstate transmission of gas. While
gas utility companies have in the recent past been adversely affected by
disruptions in the oil industry, increased concentration, and increased
competition, the Subadviser believes that environmental considerations should
benefit the gas industry in the future.
Water. Water utility companies purify, distribute, and sell water. This
industry is highly fragmented because most of the water supplies are owned by
local authorities. Water utility companies are generally mature and are
experiencing little or no per capita volume growth. The Subadviser believes that
favorable investment opportunities may result if anticipated consolidation and
foreign participation in this industry occurs.
CONVENTIONAL MORTGAGE PASS-THROUGH SECURITIES. Conventional mortgage
pass-through securities ("Conventional Mortgage Pass-Throughs") represent
participation interests in pools of mortgage loans that are issued by trusts
formed by originators of the institutional investors in mortgage loans (or
represent custodial arrangements administered by such institutions). These
originators and institutions include commercial banks, savings and loan
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associations, credit unions, savings banks, insurance companies, investment
banks or special purpose subsidiaries of the foregoing. For federal income tax
purposes, such trusts are generally treated as grantor trusts or real estate
mortgage conduits ("REMIC") and, in either case, are generally not subject to
any significant amount of federal income tax at the entity level.
The mortgage pools underlying Conventional Mortgage Pass-Throughs
consist of conventional mortgage loans evidenced by promissory notes secured by
first mortgages or first deeds of trust or other similar security instruments
creating a first lien on residential or mixed residential and commercial
properties. Conventional Mortgage Pass-Throughs (whether fixed or adjustable
rate) provide for monthly payments that are a "pass-through" of the monthly
interest and principal payments (including any prepayments) made by the
individual borrowers on the pooled mortgage loans, net of any fees or other
amount paid to any guarantor, administrator and/or servicer of the underlying
mortgage loans. A trust fund with respect to which a REMIC election has been
made may include regular interests in other REMICs which in turn will ultimately
evidence interests in mortgage loans.
Conventional mortgage pools generally offer a higher rate of interest
than government and government-related pools because of the absence of any
direct or indirect government or agency payment guarantees. However, timely
payment of interest and principal of mortgage loans in these pools may be
supported by various forms of insurance or guarantees, including individual
loans, title, pool and hazard insurance and letters of credit. The insurance and
guarantees may be issued by private insurers and mortgage poolers. Although the
market for such securities is becoming increasingly liquid, mortgage-related
securities issued by private organizations may not be readily marketable.
CERTAIN COLLATERALIZED MORTGAGE OBLIGATIONS. Principal and interest on
the underlying mortgage assets may be allocated among the several classes of
Collateralized Mortgage Obligations ("CMOs") in various ways. In certain
structures (known as "sequential pay" CMOs), payments of principal, including
any principal prepayments, on the mortgage assets generally are applied to the
classes of CMOs in the order of their respective final distribution dates. Thus,
no payment of principal will be made on any class of sequential pay CMOs until
all other classes having an earlier final distribution date have been paid in
full.
Additional structures of CMOs include, among others, "parallel pay"
CMOs. Parallel pay CMOs are those which are structured to apply principal
payments and prepayments of the mortgage assets to two or more classes
concurrently on a proportionate or disproportionate basis. These simultaneous
payments are taken into account in calculating the final distribution date of
each class.
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A wide variety of CMOs may be issued in the parallel pay or sequential
pay structures. These securities include accrual certificates (also known as
"Z-Bonds"), which only accrue interest at a specified rate until all other
certificates having an earlier final distribution date have been retired and are
converted thereafter to an interest-paying security, and planned amortization
class ("PAC") certificates, which are parallel pay CMOs which generally require
that specified amounts of principal be applied on each payment date to one or
more classes of CMOs (the "PAC Certificates"), even though all other principal
payments and prepayments of the mortgage assets are then required to be applied
to one or more other classes of the certificates. The scheduled principal
payments for the PAC Certificates generally have the highest priority on each
payment date after interest due has been paid to all classes entitled to receive
interest currently. Shortfalls, if any, are added to the amount payable on the
next payment date. The PAC Certificate payment schedule is taken into account in
calculating the final distribution date of each class of PAC. In order to create
PAC tranches, one or more tranches generally must be created that absorb most of
the volatility in the underlying mortgage assets. These tranches tend to have
market prices and yields that are much more volatile than the PAC classes.
WARRANTS. The Corporate Bond, High-Yield Bond, SunAmerica Balanced,
Utility, Federated Value, Aggressive Growth, Real Estate, International Growth
and Income, and Emerging Markets Portfolios may invest in warrants which give
the holder of the warrant a right to purchase a given number of shares of a
particular issue at a specified price until expiration. Such investments can
generally provide a greater potential for profit or loss than investments of
equivalent amounts in the underlying common stock. The prices of warrants do not
necessarily move with the prices of the underlying securities. If the holder
does not sell the warrant, it risks the loss of its entire investment if the
market price of the underlying stock does not, before the expiration date,
exceed the exercise price of the warrant plus the cost thereof. Investment in
warrants is a speculative activity. Warrants pay no dividends and confer no
rights (other than the right to purchase the underlying stock) with respect to
the assets of the issuer. Although certain of the Portfolios may not invest
directly in warrants, such Portfolios may invest in securities that are acquired
as part of a unit consisting of a combination of fixed-income and equity
securities or securities to which warrants are attached.
DESCRIPTION OF COMMERCIAL PAPER AND BOND RATINGS
COMMERCIAL PAPER RATINGS. Moody's employs the designations "P-1," "P-2"
and "P-3" to indicate commercial paper having the highest capacity for timely
repayment. Issuers rated P-1 have a
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superior capacity for repayment of short-term promissory obligations. P-1
repayment capacity will normally be evidenced by the following characteristics:
leading market positions in well-established industries; high rates of return on
funds employed; conservative capitalization structures with moderate reliance on
debt and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established access
to a range of financial markets and assured sources of alternate liquidity.
Issues rated P-2 have a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the characteristics
cited above, but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample
alternative liquidity is maintained.
Standard & Poor's ratings of commercial paper are graded into four
categories ranging from A for the highest quality obligations to D for the
lowest. A - Issues assigned its highest rating are regarded as having the
greatest capacity for timely payment. Issues in this category are delineated
with numbers 1, 2, and 3 to indicate the relative degree of safety. A-1 - This
designation indicates that the degree of safety regarding timely payment is
either overwhelming or very strong. Those issues determined to possess
overwhelming safety characteristics will be denoted with a plus (+) sign
designation. A-2 - Capacity for timely payments on issues with this designation
is strong. However, the relative degree of safety is not as high as for issues
designated A-1.
Duff & Phelps Rating Co. ("Duff & Phelps") commercial paper ratings are
consistent with the short-term rating criteria utilized by money market
participants. Duff & Phelps commercial paper ratings refine the traditional 1
category. The majority of commercial issuers carry the higher short-term rating
yet significant quality differences within that tier do exist. As a consequence,
Duff & Phelps has incorporated gradations of 1+ and 1- to assist investors in
recognizing those differences.
Duff 1+ - Highest certainty of time repayment. Short-term liquidity,
including internal operating factors and/or access to alternative sources of
funds, is outstanding, and safety is just below risk-free U.S. Treasury
short-term obligations. Duff 1 Very high certainty of timely payment. Liquidity
factors are excellent and supported by good fundamental protection factors. Risk
factors are minor. Duff 1- - High certainty of timely payment. Liquidity factors
are strong and supported by good fundamental protection factors. Risk factors
are very small. Duff 2 - Good certainty of timely payment. Liquidity factors and
company fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is
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good. Risk factors are small. Duff 3 - Satisfactory liquidity and other
protection factors, qualify issue as investment grade. Risk factors are larger
and subject to more variation. Nevertheless, timely payment is expected. Duff 4
- - Speculative investment characteristics. Liquidity is not sufficient to insure
against disruption in debt service. Operating factors and market access may be
subject to a high degree of variation. Duff 5 Default.
The short-term ratings of Fitch Investor Services, Inc. ("Fitch") apply
to debt obligations that are payable on demand or have original maturities of
generally up to three years, including commercial paper, certificates of
deposit, medium-term notes, and municipal and investment notes. The short-term
rating places greater emphasis than a long-term rating on the existence of
liquidity necessary to meet the issuer's obligations in a timely manner. Fitch
short-term ratings are as follows: F-1+ Exceptionally Strong Credit Quality -
Issues assigned this rating are regarded as having the strongest degree of
assurance for timely payment. F-1 Very Strong Credit Quality -Issues assigned
this rating reflect an assurance of timely payment only slightly less in degree
than issues rated F-1+. F-2 Good Credit Quality - Issues assigned this rating
have a satisfactory degree of assurance for timely payment, but the margin of
safety is not as great as for issues assigned F-1+ and F-1 ratings. F-3 Fair
Credit Quality Issues assigned this rating have characteristics suggesting that
the degree of assurance for timely payment is adequate, however, near-term
adverse changes could cause these securities to be rated below investment grade.
F-5 Weak Credit Quality -Issues assigned this rating have characteristics
suggesting a minimal degree of assurance for timely payment and are vulnerable
to near-term adverse changes in financial and economic conditions. D Default
Issues assigned this rating are in actual or imminent payment default. LOC - The
symbol LOC indicates that the rating is based on a letter of credit issued by a
commercial bank.
Thomson BankWatch, Inc. ("BankWatch") short-term ratings apply only to
unsecured instruments that have a maturity of one year or less. These short-term
ratings specifically assess the likelihood of an untimely payment of principal
and interest. TBW-1 is the highest category, which indicates a very high degree
of likelihood that principal and interest will be paid on a timely basis. TBW-2
is the second highest category and, while the degree of safety regarding timely
repayment of principal and interest is strong, the relative degree of safety is
not as high as for issues rated TBW-1.
CORPORATE DEBT SECURITIES. Moody's rates the long-term debt securities
issued by various entities from "Aaa" to "C." Aaa Best quality. These securities
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a larger, or by an exceptionally
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stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are more unlikely to impair
the fundamentally strong position of these issues. Aa - High quality by all
standards. They are rated lower than the best bond because margins of protection
may not be as large as in Aaa securities, fluctuation of protective elements may
be of greater amplitude, or there may be other elements present that make the
long-term risks appear somewhat greater. A - Upper medium grade obligations.
These bonds possess many favorable investment attributes. Factors giving
security to principal and interest are considered adequate, but elements may be
present that suggest a susceptibility to impairment sometime in the future. Baa
- - Medium grade obligations. Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or may
be characteristically unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and, in fact, have speculative
characteristics as well. Ba - Have speculative elements; future cannot be
considered as well assured. The protection of interest and principal payments
may be very moderate and thereby not well safeguarded during both good and bad
times over the future. Bonds in this class are characterized by uncertainty of
position. B - Generally lack characteristics of the desirable investment
assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small. Caa - Of poor standing.
Issues may be in default or there may be present elements of danger with respect
to principal or interest. Ca - Speculative in a high degree; often in default or
have other marked shortcomings. C - Lowest rated class of bonds; can be regarded
as having extremely poor prospects of ever attaining any real investment
standings.
Standard & Poor's rates the long-term securities debt of various
entities in categories ranging from "AAA" to "D" according to quality. AAA -
Highest rating. Capacity to pay interest and repay principal is extremely
strong. AA - High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small degree.
A Have a strong capacity to pay interest and repay principal, although they are
somewhat more susceptible to the adverse effects of change in circumstances and
economic conditions than debt in higher rated categories. BBB - Regarded as
having adequate capacity to pay interest and repay principal. These bonds
normally exhibit adequate protection parameters, but adverse economic conditions
or changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal than for debt in higher rated categories. BB, B,
CCC, CC, C - Regarded, on balance, as predominately speculative with respect to
capacity to pay interest and repay principal in accordance with the terms of the
obligation. BB indicated the lowest degree of speculation and
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C the highest degree of speculative. While this debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions. C1 - Reserved for
income bonds on which no interest is being paid. D - In default and payment of
interest and/or repayment of principal is in arrears.
Fitch rates the long-term debt securities issued by various entities in
categories "AAA" to "D" according to quality. AAA is considered to be investment
grade and of the highest credit quality. The ability to pay interest and repay
principal is exceptionally strong. AA is considered to be investment grade and
of very high credit quality. The ability to pay interest and repay principal is
very strong, although not quite as strong as AAA issues. A is considered to be
investment grade and of high credit quality. The ability to pay interest and
repay principal is strong, but these issues may be more vulnerable to adverse
changes in economic conditions and circumstances than higher rated issues. BBB
is considered to be investment grade and of satisfactory credit quality. The
ability to pay interest and repay principal is adequate. These issues are more
likely to be affected by adverse changes in economic conditions and
circumstances and, therefore, impair timely payment. The likelihood that the
ratings of these issues will fall below investment grade is higher than for
issues with higher ratings. BB is considered speculative. The ability to pay
interest and repay principal may be affected over time by adverse economic
changes. B is considered highly speculative. The probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue. CCC issues are considered to have certain identifiable
characteristics which may lead to default. The ability to meet obligations
requires an advantageous business and economic environment. CC issues are
minimally protected and default in payment of interest and/or principal seems
probable over time. Issues rated C are in imminent default in payment of
interest or principal. DDD, DD, and D issues are in default on interest and/or
principal payments and are extremely speculative. Plus(+) and minus(-) signs are
used with a rating symbol to indicate the relative position within the rating
category.
Duff & Phelps rates long-term debt specifically to credit quality,
i.e., the likelihood of timely payment for principal and interest. AAA is
considered the highest quality. AA is considered high quality. A is regarded as
good quality. BBB is considered to be investment grade and of satisfactory
credit quality. BB and B are considered to be non-investment grade and CCC is
regarded as speculative. Ratings in the long-term debt categories may include a
plus(+) or minus(-) designation which indicates where within the respective
category the issue is placed.
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BankWatch rates the long-term debt securities issued by various
entities either AAA or AA. AAA is the highest category, which indicates the
ability to repay principal and interest on a timely basis is very high. AA is
the second highest category, which indicates a superior ability to repay
principal and interest on a timely basis with limited incremental risk versus
issues rated in the highest category. Ratings in the long-term debt categories
may include a plus (+) or minus (-) designation which indicates where within the
respective category the issue is placed.
INVESTMENT RESTRICTIONS
The Trust has adopted certain investment restrictions for each
Portfolio that cannot be changed without approval by a majority of its
outstanding voting securities. Such majority is defined as the vote of the
lesser of (i) 67% or more of the outstanding shares of the Portfolios present at
a meeting, if the holders of more than 50% of the outstanding shares are present
in person or by proxy or (ii) more than 50% of the outstanding shares of the
Portfolios.
INVESTMENT RESTRICTIONS OF THE CASH MANAGEMENT PORTFOLIO
The Cash Management Portfolio has adopted the following restrictions
that are fundamental policies. These fundamental policies, as well as the Cash
Management Portfolio's investment objective, cannot be changed without approval
by a majority of its outstanding voting securities. All percentage limitations
expressed in the following investment restrictions are measured immediately
after the relevant transaction is made. The Cash Management Portfolio may not:
1. Invest more than 5% of the value of its total assets in the
securities of any one issuer, provided that this limitation shall apply only to
75% of the value of the Portfolio's total assets, and, provided further, that
the limitation shall not apply to obligations of the government of the U.S. or
of any corporation organized as an instrumentality of the U.S. under a general
act of Congress.
2. As to 75% of its total assets, purchase more than 10% of the
outstanding voting class of securities of an issuer.
3. Invest more than 25% of the Portfolio's total assets in the
securities of issuers in the same industry. Obligations of the U.S. Government,
its agencies and instrumentalities, are not subject to this 25% limitation on
industry concentration. In addition, the Portfolio may, if deemed advisable,
invest more than 25% of its assets in the obligations of domestic commercial
banks.
B-31
<PAGE> 78
4. Make loans to others except for the purchase of the debt securities
listed above under its Investment Policies. The Portfolio may, however, enter
into repurchase agreements.
5. Borrow money, except from banks for temporary purposes, and then in
an amount not in excess of 5% of the value of the Portfolio's total assets.
Moreover, in the event that the asset coverage for such borrowings falls below
300%, the Portfolio will reduce within three days the amount of its borrowings
in order to provide for 300% asset coverage.
6. Sell securities short except to the extent that the Portfolio
contemporaneously owns or has the right to acquire at no additional cost
securities identical to those sold short.
7. Act as underwriter of securities issued by others, engage in
distribution of securities for others, or make investments in other companies
for the purpose of exercising control or management.
In addition to the foregoing, the Cash Management Portfolio has adopted
the following non-fundamental policies (which may be changed by the Trustees
without shareholder approval). Under these restrictions, the Cash Management
Portfolio may not:
a. Enter into any repurchase agreement maturing in more than seven days
or invest in any other illiquid security if, as a result, more than 10% of the
Portfolio's total assets would be so invested.
b. Pledge or hypothecate its assets.
c. Invest in puts, calls, straddles, spreads or any combination
thereof, except as permitted by the Prospectus and Statement of Additional
Information, as amended from time to time.
d. Invest in securities of other investment companies except to the
extent permitted by applicable law and the Prospectus and Statement of
Additional Information, as amended from time to time.
e. Invest more than 5% of its assets (measured at the time of purchase)
in the securities of any one issuer (other than the U.S. Government); provided
however, that the Cash Management Portfolio may invest, as to 25% of its assets,
more than 5% of its assets in certain high quality securities (as defined in the
Rule) of a single issuer for a period of up to three business days.
Notwithstanding fundamental investment restriction Number 1 above, in order to
comply with Rule 2a-7 under the 1940 Act, the Cash Management Portfolio has
adopted this more restrictive policy The purchase by the Cash Management
Portfolio of securities that have "put" or "stand-by" commitment features are
not considered "puts" for purposes of non-fundamental investment restriction C
above.
B-32
<PAGE> 79
INVESTMENT RESTRICTIONS OF THE CORPORATE BOND PORTFOLIO, GLOBAL BOND PORTFOLIO,
HIGH-YIELD BOND PORTFOLIO, WORLDWIDE HIGH INCOME PORTFOLIO, SUNAMERICA BALANCED
PORTFOLIO, BALANCED/PHOENIX INVESTMENT COUNSEL PORTFOLIO, ASSET ALLOCATION
PORTFOLIO, UTILITY PORTFOLIO, GROWTH-INCOME PORTFOLIO, FEDERATED VALUE
PORTFOLIO, VENTURE VALUE PORTFOLIO, "DOGS" OF WALL STREET PORTFOLIO, ALLIANCE
GROWTH PORTFOLIO, GROWTH/PHOENIX INVESTMENT COUNSEL PORTFOLIO, PUTNAM GROWTH
PORTFOLIO, REAL ESTATE PORTFOLIO, AGGRESSIVE GROWTH PORTFOLIO, INTERNATIONAL
GROWTH AND INCOME PORTFOLIO, GLOBAL EQUITIES PORTFOLIO, INTERNATIONAL
DIVERSIFIED EQUITIES PORTFOLIO AND EMERGING MARKETS PORTFOLIO
The Corporate Bond Portfolio, Global Bond Portfolio, High-Yield Bond
Portfolio, Worldwide High Income Portfolio, SunAmerica Balanced Portfolio,
Balanced/Phoenix Investment Counsel Portfolio, Asset Allocation Portfolio,
Utility Portfolio, Growth-Income Portfolio, Federated Value Portfolio, Venture
Value Portfolio, "Dogs" of Wall Street Portfolio, Alliance Growth Portfolio,
Growth/Phoenix Investment Counsel Portfolio, Putnam Growth Portfolio, Real
Estate Portfolio, Aggressive Growth Portfolio, International Growth and Income
Portfolio, Global Equities Portfolio, International Diversified Equities
Portfolio and Emerging Markets Portfolio have each adopted the following
investment restrictions that are fundamental policies. These fundamental
policies cannot be changed without the approval of the holders of a majority of
the outstanding voting securities of the respective Portfolio. All percentage
limitations expressed in the following investment restrictions are measured
immediately after the relevant transaction is made. These Portfolios may not:
1. Other than the Global Bond, Worldwide High Income, "Dogs" of Wall
Street and International Diversified Equities Portfolios, invest more than 5% of
the value of the total assets of a Portfolio in the securities of any one
issuer, provided that this limitation shall apply only to 75% of the value of
the Portfolio's total assets and, provided further, that the limitation shall
not apply to obligations issued or guaranteed by the government of the United
States or of any of its agencies or instrumentalities.
2. As to 75% of its total assets, purchase more than 10% of any class of
the outstanding voting securities of an issuer. This restriction does not apply
to the Global Bond, International Diversified Equities, "Dogs" of Wall Street
and Worldwide High Income Portfolios.
3. Invest more than 25% of the Portfolio's total assets in the securities
of issuers in the same industry, except that the Utility Portfolio will invest
at least 25% of its total assets in the securities of utility companies, the
Real Estate Portfolio will invest at least 25% of its total assets in the
securities of real estate companies and the "Dogs" of Wall Street Portfolio may
invest
B-33
<PAGE> 80
more than 25% of its assets in the securities of issuers in the same industry to
the extent such investments would be selected according to stock selection
criteria. Obligations of the U.S. Government, its agencies and instrumentalities
are not subject to this 25% limitation on industry concentration. The Portfolio
may, if deemed advisable, invest more than 25% of its assets in the obligations
of domestic commercial banks. With respect to all Portfolios other than the
Utility Portfolio, as to utility companies, the gas, electric, water and
telephone businesses will be considered separate industries.
4. Invest in real estate (including in the case of all Portfolios except
the Real Estate Portfolio limited partnership interests, but excluding in the
case of all Portfolios securities of companies, such as real estate investment
trusts, which deal in real estate or interests therein); provided that a
Portfolio may hold or sell real estate acquired as a result of the ownership of
securities. This limitation shall not prevent a Portfolio from investing in
securities secured by real estate or interests therein.
5. Purchase commodities or commodity contracts; except that any Portfolio
may engage in transactions in put and call options on securities, indices and
currencies, forward and futures contracts on securities, indices and currencies,
put and call options on such futures contracts, forward commitment transactions,
forward foreign currency exchange contracts, interest-rate, mortgage and
currency swaps and interest-rate floors and caps.
6. Borrow money, except to the extent permitted by applicable law.
7. Purchase securities on margin.
8. Make loans to others except for (a) the purchase of debt securities;
(b) entering into repurchase agreements; and (c) the lending of its portfolio
securities.
In addition to the foregoing, the Global Bond, Corporate Bond, High-Yield
Bond, Worldwide High Income, SunAmerica Balanced, Balanced/Phoenix Investment
Counsel, Asset Allocation, Utility, Growth-Income, Federated Value, Venture
Value, "Dogs" of Wall Street, Alliance Growth, Growth/Phoenix Investment
Counsel, Provident Growth, Global Equities, International Diversified Equities,
Aggressive Growth, International Growth and Income, Real Estate and Emerging
Markets Portfolios have each adopted the following non-fundamental policies
(which may be changed by the Trustees without shareholder approval). Under these
restrictions, such Portfolios may not:
B-34
<PAGE> 81
a. Enter into any repurchase agreement maturing in more than seven days or
investing in any other illiquid security if, as a result, more than 15% of a
Portfolio's total assets would be so invested.
b. Invest in securities of other investment companies, except to the
extent permitted by applicable law and the Prospectus and Statement of
Additional Information, as amended from time to time.
c. Other than the Emerging Markets Portfolio, pledge, mortgage or
hypothecate its assets, except to the extent necessary to secure permitted
borrowings and, to the extent related to the segregation of assets in connection
with the writing of covered put and call options and the purchase of securities
or currencies on a forward commitment or delayed-delivery basis and collateral
and initial or variation margin arrangements with respect to forward contracts,
options, futures contracts and options on futures contracts. In addition, the
Corporate Bond, High-Yield Bond, Worldwide High Income, SunAmerica Balanced,
Aggressive Growth, Federated Value and Utility Portfolios may pledge assets in
reverse repurchase agreements.
d. Invest in companies for the purpose of exercising control or
management.
e. Engage in underwriting of securities issued by others, except to the
extent it may be deemed to be acting as an underwriter in the purchase and
resale of portfolio securities.
f. Sell securities short except to the extent permitted by applicable law.
g. Invest in puts, calls, straddles, spreads or any combination thereof,
except as permitted by the Prospectus and Statement of Additional Information,
as amended from time to time.
TRUST OFFICERS AND TRUSTEES
The Trustees and executive officers of the Trust, their ages and principal
occupations for the past five years are set forth below. Each Trustee also
serves as a trustee of the Anchor Pathway Fund and Seasons Series Trust. Unless
otherwise noted, the address of each executive officer and trustee is 1
SunAmerica Center, Los Angeles, California 90067-6022.
<TABLE>
<CAPTION>
Name, Age and Position(s)
Held with the Trust Principal Occupation(s) During Past Five Years
- ------------------- ----------------------------------------------
<S> <C>
RICHARDS D. BARGER,* 68, Trustee Senior Partner, Law Firm of Barger & Wolen; former Director,
Anchor National Life Insurance Company ("Anchor National")(from
1980 to 1986).
</TABLE>
B-35
<PAGE> 82
<TABLE>
<CAPTION>
Name, Age and Position(s)
Held with the Trust Principal Occupation(s) During Past Five Years
- ------------------- ----------------------------------------------
<S> <C>
JAMES K. HUNT, * 45, Executive Vice President, SunAmerica Investments, Inc. (1993 to
Trustee, Chairman and President present); President, SunAmerica Corporate Finance (since January
1994); Senior Vice President, SunAmerica Investments, Inc.
(1990-1993).
NORMAN J. METCALFE, * 54, Trustee Vice Chairman and Chief Financial Officer, The Irvine Company
(March 1993 to Present); Executive Vice President (1986-1992) and
Director (1984-1993), SunAmerica Inc.; formerly, President,
SunAmerica Investments, Inc.(1988-1992); and Executive Vice
President and Director, Anchor National (1986-1992).
ALLAN L. SHER, 65, Director, Board of Governors, American Stock Exchange (1991 to
Trustee present); Former Chairman and Chief Executive Officer, Bateman
Eichler, Hill Richards (securities firm) (1990-1992).
WILLIAM M. WARDLAW, 50, Partner, Freeman Spogli & Co., Incorporated (privately owned
Trustee merchant banking firm) (1988-Present).
SCOTT L. ROBINSON, 51, Senior Vice President and Controller, SunAmerica Inc. (since
Senior Vice President, Treasurer and Controller 1991); Senior Vice President of Anchor National (since 1988).
SUSAN L. HARRIS, 40, Senior Vice President (since November 1995), Secretary (since
Vice President, Counsel and Secretary 1989) and General Counsel-Corporate Affairs (since December
1994), SunAmerica Inc.; Senior Vice President and Secretary,
Anhcor National (since 1990); Joined SunAmerica Inc. in 1985.
</TABLE>
B-36
<PAGE> 83
<TABLE>
<CAPTION>
Name, Age and Position(s)
Held with the Trust Principal Occupation(s) During Past Five Years
- ------------------- ----------------------------------------------
<S> <C>
PETER C. SUTTON, 32 Senior Vice President, SunAmerica since April 1997; Treasurer,
Vice President and Assistant Treasurer SunAmerica Mutual Funds since February, 1996; Vice President
Anchor Pathway Fund, since October 1994; Controller,
SunAmerica Mutual Funds (March 1993 to February 1996);
Assistant Controller, SunAmerica Mutual Funds (1990 -
1993).
</TABLE>
* A trustee who may be deemed to be an "interested person" of the Trust as
that term is defined in the 1940 Act.
The Trust pays no salaries or compensation to any of its officers, all
of whom are officers or employees of Anchor National Life Insurance Company or
its affiliates. An annual fee of $7,000, plus $500 for each meeting attended,
and expenses are paid to each Trustee who is not an officer or employee of
Anchor National Life Insurance Company or its affiliates for attendance at
meetings of the Board of Trustees. All other Trustees receive no remuneration
from the Trust.
The following table sets forth information summarizing the compensation
of each of the Trustees for his services as Trustee for the fiscal year ended
November 30, 1997.
COMPENSATION TABLE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
AGGREGATE PENSION OR RETIREMENT TOTAL COMPENSATION FROM
COMPENSATION FROM BENEFITS ACCRUED AS REGISTRANT AND FUND COMPLEX
TRUSTEE REGISTRANT PART OF FUND EXPENSES PAID TO TRUSTEES*
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Richards D. Barger $9,000 - $23,000
- ------------------------------------------------------------------------------------------------------------------------
Frank L. Ellsworth** $2,250 - $ 5,500
- ------------------------------------------------------------------------------------------------------------------------
William M. Wardlaw $6,250 - $15,250
- ------------------------------------------------------------------------------------------------------------------------
Norman J. Metcalfe $9,000 $23,000
- ------------------------------------------------------------------------------------------------------------------------
Allan L. Sher $6,750 - $17,500
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Information is as of November 30, 1997 for the two funds in the complex
which pay fees to these Trustees (the Trust and Anchor Pathway Fund).
B-37
<PAGE> 84
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
The Trust, on behalf of each Portfolio, entered into an Investment Advisory
and Management Agreement with SunAmerica Asset Management Corp. to handle the
management of the Trust and its day to day affairs.
The Investment Advisory and Management Agreement provides that the
Adviser shall act as investment adviser to the Trust, manage the Trust's
investments, administer its business affairs, furnish offices, necessary
facilities and equipment, provide clerical, bookkeeping and administrative
services, and permit any of the Adviser's officers or employees to serve without
compensation as Trustees or officers of the Trust if duly elected to such
positions. Under the Agreement, the Trust agrees to assume and pay certain
charges and expenses of its operations, including: direct charges relating to
the purchase and sale of portfolio securities, interest charges, fees and
expenses of independent legal counsel and independent accountants, cost of stock
certificates and any other expenses (including clerical expenses) of issue,
sale, repurchase or redemption of shares, expenses of registering and qualifying
shares for sale, expenses of printing and distributing reports, notices and
proxy materials to shareholders, expenses of data processing and related
services, shareholder recordkeeping and shareholder account service, expenses of
printing and distributing prospectuses and statements of additional information,
expenses of annual and special shareholders' meetings, fees and disbursements of
transfer agents and custodians, expenses of disbursing dividends and
distributions, fees and expenses of Trustees who are not employees of the
Adviser or its affiliates, membership dues in the Investment Company Institute
or any similar organization, all taxes and fees to Federal, state or other
governmental agencies, insurance premiums and extraordinary expenses such as
litigation expenses.
Each Portfolio pays its actual expenses for custodian services and a
portion of the Custodian's costs determined by the ratio of portfolio assets to
the total assets of the Trust, brokerage commissions or transaction costs, and
registration fees. Subject to supervision of the Board of Trustees, fees for
independent accountants, legal counsel, costs of reports of notices to
shareholders will be allocated based on the relative net assets of each
Portfolio. With respect to audit or legal fees clearly attributable to one
Portfolio, they will be assessed, subject to review by the Board of Trustees,
against that Portfolio.
The Investment Advisory and Management Agreement (except with respect
to the International Growth and Income, Real Estate,
B-38
<PAGE> 85
"Dogs" of Wall Street and Emerging Markets Portfolios) continues in effect from
year to year, in accordance with its terms, unless terminated, and may be
renewed from year to year as to each Portfolio for so long as such renewal is
specifically approved at least annually by (i) the Board of Trustees, or by the
vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of each relevant Portfolio, and (ii) the vote of a majority of
Trustees who are not parties to the Agreement or interested persons (as defined
in the 1940 Act) of any such party, cast in person, at a meeting called for the
purpose of voting on such approval. With respect to the International Growth and
Income, Real Estate and Emerging Markets Portfolios, the Agreement will continue
in effect for a period of two years from the date of execution, unless
terminated sooner, and may be renewed from year to year thereafter in the manner
set forth above. With respect to the "Dogs" of Wall Street Portfolio, the
Agreement will continue in effect until January 22, 2000, unless terminated, and
may be renewed from year-to-year thereafter in the manner set forth above. The
Agreement also provides that it may be terminated by either party without
penalty upon 60 days' written notice to the other party. The Agreement provides
for automatic termination upon assignment.
Under the terms of the Advisory Agreement, the Adviser is not liable to
the Trust, or to any other person, for any act or omission by it or for any
losses sustained by the Trust or its shareholders, except in the case of willful
misfeasance, bad faith, gross negligence or reckless disregard of duty.
As compensation for its services, the Adviser receives from the Trust a
fee, accrued daily and payable monthly, based on the net assets of each
Portfolio. The following table sets forth the total advisory fees received by
the Adviser from each Portfolio pursuant to the Investment Advisory and
Management Agreement for the fiscal years ended November 30, 1997, 1996 and
1995.
ADVISORY FEES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
PORTFOLIO 1997 1996 1995
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Management $718,297 $694,655 $438,400
- ---------------------------------------------------------------------------------------------
Corporate Bond (formerly, Fixed
Income) $325,988 $230,031 $144,546
- ---------------------------------------------------------------------------------------------
</TABLE>
B-39
<PAGE> 86
<TABLE>
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Global Bond $ 550,533 $ 458,390 $ 365,313
- -----------------------------------------------------------------------------------------------------
High-Yield Bond $1,000,566 $ 638,948 $ 478,203
- -----------------------------------------------------------------------------------------------------
Worldwide High Income $ 915,682 $ 368,821 $ 143,765
- -----------------------------------------------------------------------------------------------------
SunAmerica Balanced $ 178,845 $ 20,449* --
- -----------------------------------------------------------------------------------------------------
Balanced/Phoenix Investment
Counsel $ 558,675 $ 354,683 $ 92,499
- -----------------------------------------------------------------------------------------------------
Asset Allocation $2,556,963 $1,616,647 $1,000,248
- -----------------------------------------------------------------------------------------------------
Utility $ 100,647 $ 13,890* --
- -----------------------------------------------------------------------------------------------------
Growth-Income $2,784,063 $1,476,902 $ 794,078
- -----------------------------------------------------------------------------------------------------
Federated Value $ 237,339 $ 23,973* --
- -----------------------------------------------------------------------------------------------------
Venture Value $5,952,702 $2,305,064 $ 504,014
- -----------------------------------------------------------------------------------------------------
Alliance Growth $3,145,937 $1,522,222 $ 635,979
- -----------------------------------------------------------------------------------------------------
Growth/Phoenix Investment Counsel $1,299,894 $1,072,976 $ 835,634
- -----------------------------------------------------------------------------------------------------
Putnam Growth**
(formerly Provident Growth) $1,565,910 $1,073,769 $ 785,809
- -----------------------------------------------------------------------------------------------------
Global Equities $2,337,577 $1,627,510 $1,185,831
- -----------------------------------------------------------------------------------------------------
International Diversified
Equities $2,127,386 $1,025,593 $ 283,908
- -----------------------------------------------------------------------------------------------------
Aggressive Growth $ 506,503 $ 65,277* --
- -----------------------------------------------------------------------------------------------------
Real Estate* $ 58,800 -- --
- -----------------------------------------------------------------------------------------------------
International Growth and Income* $ 125,310 -- --
- -----------------------------------------------------------------------------------------------------
Emerging Markets* $ 99,436 -- --
- -----------------------------------------------------------------------------------------------------
</TABLE>
For the fiscal year ended November 30, 1997, the Adviser voluntarily waived fees
or reimbursed expenses of each of the following Portfolio's: Utility Portfolio -
$25,537; Real Estate Portfolio - $7,874; International Growth and Income
Portfolio - $52,507; and Emerging Markets Portfolio - $55,614. Certain
Portfolios had recoupments for the fiscal year ended November 30, 1997, and such
recoupments, which are not included as part of the advisory fee in the above
advisory fee table, were as follows: SunAmerica Balanced Portfolio - $9,879;
Federated Value Portfolio - $16,677; and Aggressive Growth Portfolio - $3,186.
* For the period 6/2/97 (commencement of operations) through 11/30/97
** Until April 15, 1997, the Advisory Agreement with respect to the Putnam
Growth Portfolio provided for an advisory fee payable to the Adviser at
the following annual rates: .85% on the first $50 million of average daily
net assets; .80% on the next $100 million; .70% on the next $100 million;
.65% on the next $100 million; and .60% over $350 million. The Advisory
Agreement relating to the Putnam Growth Portfolio was amended as of April
15, 1997 to provide for the following annual fee rates: .85% on the first
$150 million of average daily net assets; .80% on the next $150 million;
and .70% over $300 million.
B-40
<PAGE> 87
PERSONAL TRADING. The Trust and the Adviser have adopted a written Code
of Ethics (the "Code") which prescribes general rules of conduct and sets forth
guidelines with respect to personal securities trading by "Access Persons"
thereof. An Access Person as defined in the Code is an individual who is a
trustee, director, officer, general partner or advisory person of the Trust or
the Adviser. The guidelines on personal securities trading include: (i)
securities being considered for purchase or sale, or purchased or sold, by any
Investment Company advised by the Adviser, (ii) Initial Public Offerings, (iii)
private placements, (iv) blackout periods, (v) short-term trading profits, (vi)
gifts, and (vii) services as a director. These guidelines are substantially
similar to those contained in the Report of the Advisory Group on Personal
Investing issued by the Investment Company Institute's Advisory Panel. The
Adviser reports to the Board of Trustees on a quarterly basis, as to whether
there were any violations of the Code by Access Persons of the Trust or any
Subadviser during the quarter.
The Subadvisers have adopted a written Code of Ethics, the provisions
of which are materially similar to those in the Code, and have, with exception
to Putnam, undertaken to comply with the provisions of the Code to the extent
such provisions are more restrictive. Further, the Subadvisers report to the
Adviser on a quarterly basis, as to whether there were any Code of Ethics
violations by employees thereof who may be deemed Access Persons of the Trust.
In turn, the Adviser reports to the Board of Trustees as to whether there were
any violations of the Code by Access Persons of the Trust or any Subadviser.
SUBADVISORY AGREEMENTS
Alliance Capital Management L.P. ("Alliance"), Goldman Sachs Asset
Management ("GSAM"), a separate division of Goldman, Sachs & Co., Goldman Sachs
Asset Management International, ("GSAM-International"), an affiliate of Goldman,
Sachs & Co., Morgan Stanley Asset Management Inc., Phoenix Investment Counsel,
Inc., Davis Selected Advisers, L.P., Putnam Investment Management, Inc. and
Federated Investment Counseling act as Subadvisers to certain of the Trust's
Portfolios pursuant to various Subadvisory Agreements with SAAMCo. Under the
Subadvisory Agreements, the Subadvisers manage the investment and reinvestment
of the assets of the respective Portfolios for which they are responsible. Each
of the Subadvisers is independent of SAAMCo and discharges its responsibilities
subject to the policies of the Trustees and the oversight and supervision of
SAAMCo, which pays the Subadvisers' fees.
The Adviser pays each Subadviser a monthly fee with respect to each
Portfolio for which the Subadviser performs services, computed on average daily
net assets, at the following annual rates:
B-41
<PAGE> 88
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
SUBADVISER PORTFOLIO FEE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alliance Alliance Growth and .35% on the first $50 million
Growth-Income Portfolios .30% on the next $100 million
.25% on the next $150 million
.20% on the next $200 million
.15% thereafter
------------------------------------------------------------------------------
Global Equities Portfolio .50% on the first $50 million
.40% on the next $100 million
.30% on the next $150 million
.25% thereafter
- -----------------------------------------------------------------------------------------------------------
Davis Selected Advisers, Venture Value and Real Estate .45% on the first $100 million
L.P. Portfolios .40% on the next $400 million
.35% thereafter
- -----------------------------------------------------------------------------------------------------------
Federated Investment Corporate Bond .30% on the first $25 million
Counseling Portfolio .25% on the next $25 million
.20% on the next $100 million
.15% thereafter
------------------------------------------------------------------------------
Federated Value and Utility .55% on the first $20 million
Portfolios .35% on the next $30 million
.25% on the next $100 million
.20% on the next $350 million
.15% thereafter
- -----------------------------------------------------------------------------------------------------------
GSAM Asset Allocation Portfolio .40% on the first $50 million
.30% on the next $100 million
.25% on the next $100 million
.20% thereafter
- -----------------------------------------------------------------------------------------------------------
GSAM-International Global Bond Portfolio .40% on the first $50 million
.30% on the next $100 million
.25% on the next $100 million
.20% thereafter
- -----------------------------------------------------------------------------------------------------------
Morgan Stanley Asset International Diversified Equities .65% on the first $350 million
Management Inc. and Worldwide High Income Portfolios .60% thereafter
- -----------------------------------------------------------------------------------------------------------
Phoenix Investment Growth/Phoenix Investment Counsel .35% on the first $50 million
Counsel, Inc. and Balanced/Phoenix Investment .30% on the next $100 million
Counsel Portfolios .25% on the next $150 million
.20% on the next $200 million
.15% thereafter
- -----------------------------------------------------------------------------------------------------------
Putnam Investment Putnam Growth Portfolio .50% on the first $150 million
Management, Inc. .45% on the next $150 million
.35% thereafter
------------------------------------------------------------------------------
Emerging Markets Portfolio 1.00% on the first $150 million
.95% on the next $150 million
.85% thereafter
------------------------------------------------------------------------------
International Growth and Income .65% on the first $150 million
Portfolio .55% on the next $150 million
.45% thereafter
- -----------------------------------------------------------------------------------------------------------
</TABLE>
The following table sets forth the fees paid to the Subadvisers for the
fiscal years ended November 30, 1997, 1996 and 1995.
B-42
<PAGE> 89
SUBADVISORY FEES
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
SUBADVISER PORTFOLIO 1997 1996 1995
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alliance Growth
$1,280,957 $ 691,140 $306,832
Alliance
------------------------------------------------------------------------------------------
Growth-Income
$1,161,812 $ 673,445 $379,671
------------------------------------------------------------------------------------------
Global Equities
$1,109,352 $ 811,790 $616,892
--------------------------------------------------------------------------------------------------------------------
Davis Selected Venture Value
Advisers, L.P. $3,126,351 $1,252,661 $281,866
------------------------------------------------------------------------------------------
Real Estate $ 33,075++ -- --
--------------------------------------------------------------------------------------------------------------------
Asset Allocation
GSAM $1,088,896 $ 743,084 $485,722
--------------------------------------------------------------------------------------------------------------------
GSAM International
Global Bond $ 281,015 $ 238,488 $194,306
--------------------------------------------------------------------------------------------------------------------
Growth/Phoenix Investment
Phoenix Investment Counsel
Counsel, Inc. $ 599,956 $ 505,458 $399,134
------------------------------------------------------------------------------------------
Balanced/
Phoenix Investment Counsel
$ 271,312 $ 176,158 $ 46,249
--------------------------------------------------------------------------------------------------------------------
Provident Investment
Counsel, Inc.+ Provident Growth
$ 284,164+++ $ 614,720 $452,955
--------------------------------------------------------------------------------------------------------------------
Worldwide High Income
Morgan Stanley Asset $ 595,193 $ 239,733 $ 93,447
Management
Inc.
------------------------------------------------------------------------------------------
International Diversified
Equities
$1,382,736 $ 666,635 $184,540
--------------------------------------------------------------------------------------------------------------------
Federated Investment Corporate Bond $ 128,651 $ 48,744** --
Counseling
------------------------------------------------------------------------------------------
Federated Value
$ 146,523 $ 17,580* --
------------------------------------------------------------------------------------------
Utility $ 73,542 $ 10,186* --
--------------------------------------------------------------------------------------------------------------------
Putnam Investment International Growth and
Management, Inc. Income $ 81,451++ -- --
------------------------------------------------------------------------------------------
Emerging Markets
$ 79,549++ -- --
------------------------------------------------------------------------------------------
Putnam Growth $ 618,584 -- --
--------------------------------------------------------------------------------------------------------------------
</TABLE>
* For the period 6/3/96 (commencement of operations) through 11/30/96 ** For
the period 6/3/96 through 11/30/96
+ Until April 15, 1997, Provident Investment Counsel, Inc. served as
Subadviser to the Putnam Growth Portfolio (formerly named the Provident
Growth Portfolio) The Subadvisory fee was calculated at the following
annual rates: .50% on the first $50 million of average daily net assets;
.45% on the next $100 million; .35% on the next $100 million; .30% on the
next $100 million; .25% over $350 million.
++ For the period 6/2/97 (commencement of operations) through 11/30/97
+++ For the period 12/1/96 through 4/14/97 (termination of operations)
B-43
<PAGE> 90
The Subadvisory Agreements (with the exception of the Putnam Growth,
International Growth and Income, Real Estate and Emerging Markets Portfolios)
continue in effect from year to year, so long as such continuance is
specifically approved at least annually in accordance with the requirements of
the 1940 Act. The Subadvisory Agreements with respect to the Putnam Growth,
International Growth and Income, Real Estate and Emerging Markets Portfolios
will continue in effect for a period of two years from the date of their
execution, unless terminated sooner. Such Agreements may be renewed from year to
year thereafter, so long as such continuance is approved at least annually in
accordance with the requirements of the 1940 Act. The Subadvisory Agreements
provide that they will terminate in the event of an assignment (as defined in
the 1940 Act) or upon termination of the Advisory Agreement. The Subadvisory
Agreements may be terminated by the Trust, the Adviser or the respective
Subadviser upon 60 days' prior notice.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
The Cash Management, Corporate Bond, Aggressive Growth and Emerging
Markets Portfolios had capital loss carry-forwards of $684, $273,407, $2,868,661
and $927,325, respectively, at November 30, 1997. To the extent not yet
utilized, such losses will be available to each of the Portfolios to offset
future gains through 2004 and 2005. The utilization of such losses will be
subject to annual limitations under the Internal Revenue Code.
PRICE OF SHARES
Shares of the Trust are currently offered only to the Variable Separate
Account. The Trust is open for business on any day the New York Stock Exchange
("NYSE") is open for business. Shares are valued each day as of the close of
regular trading on the NYSE (generally, 4:00 p.m., Eastern time). Each Portfolio
calculates the net asset value of its shares separately by dividing the total
value of it's net assets by the shares outstanding. The net asset value of a
Portfolio's shares will also be computed on each other day in which there is a
sufficient degree of trading in such portfolio's securities that the net asset
value of its shares might be materially affected by changes in the values of the
portfolio securities; provided, however, that on such day the Trust receives a
request to purchase or redeem such Portfolio's shares. The days and times of
such computation may, in the future, be changed by the Trustees in the event
that the portfolio securities are traded in significant amounts in markets other
than the NYSE, or on days or at times other than those during which the NYSE is
open for trading.
B-44
<PAGE> 91
Stocks and convertible bonds and debentures traded on the NYSE are valued
at the last sale price on such exchange on the day of valuation, or if there is
no sale on the day of valuation, at the last-reported bid price. Non-convertible
bonds and debentures and other long-term debt securities normally are valued at
prices obtained for the day of valuation from a bond pricing service, when such
prices are available. In circumstances where the Adviser or Subadviser deems it
appropriate to do so, an over-the-counter or exchange quotation (at the mean of
representative quoted bid or asked prices for such securities or, if such prices
are not available, at prices for securities of comparable maturity, quality and
type) may be used. Securities traded primarily on securities exchanges outside
the United States are valued at the last sale price on such exchanges on the day
of valuation, or if there is no sale on the day of valuation, at the
last-reported bid price. U.S. Treasury bills, and other obligations issued by
the U.S. Government, its agencies or instrumentalities, certificates of deposit
issued by banks, corporate short-term notes and other short-term investments
with original or remaining maturities in excess of 60 days are valued at the
mean of representative quoted bid and asked prices for such securities or, if
such prices are not available, for securities of comparable maturity, quality
and type. Short-term securities with 60 days or less to maturity are amortized
to maturity based on their cost to the Trust if acquired within 60 days of
maturity or, if already held by the Trust on the 60th day, are amortized to
maturity based on the value determined on the 61st day. Options on currencies
purchased by a Portfolio are valued at their last bid price in the case of
listed options or at the average of the last bid prices obtained from dealers in
the case of OTC options. Futures contracts involving foreign currencies traded
on exchanges are valued at their last sale or settlement price as of the close
of such exchanges or if no sales are reported, at the mean between the last
reported bid and asked prices. Other securities are valued on the basis of last
sale or bid price (if a last sale price is not available) in what is, in the
opinion of the Adviser or Subadviser, the broadest and most representative
market, that may be either a securities exchange or the over-the-counter market.
Where quotations are not readily available, securities are valued at fair value
as determined in good faith by the Board of Trustees. The fair value of all
other assets is added to the value of securities to arrive at the respective
Portfolio's total assets.
A Portfolio's liabilities, including proper accruals of expense items, are
deducted from total assets. The net asset value of the respective Portfolio is
divided by the total number of shares outstanding to arrive at the net asset
value per share.
EXECUTION OF PORTFOLIO TRANSACTIONS
It is the policy of the Trust, in effecting transactions in portfolio
securities, to seek the best execution at the most
B-45
<PAGE> 92
favorable prices. The determination of what may constitute best execution
involves a number of considerations, including the economic result to the Trust
(involving both price paid or received and any commissions and other costs), the
efficiency with which the transaction is effected where a large block is
involved, the availability of the broker to stand ready to execute potentially
difficult transactions and the financial strength and stability of the broker.
Such considerations are judgmental and are considered in determining the overall
reasonableness of brokerage commissions paid.
A factor in the selection of brokers is the receipt of research services
- -- analyses and reports concerning issuers, industries, securities, economic
factors and trends -- and other statistical and factual information. Research
and other statistical and factual information provided by brokers is considered
to be in addition to and not in lieu of services required to be performed by the
Adviser or Subadviser.
The extent to which commissions may reflect the value of research services
cannot be presently determined. To the extent that research services of value
are provided by broker-dealers with or through whom the Adviser or Subadviser
places the Trust's portfolio transactions, the Adviser or Subadviser may be
relieved of expenses it might otherwise bear. Research services furnished by
broker-dealers could be useful and of value to the Adviser or Subadviser in
serving other clients as well as the Trust and research services obtained by the
Adviser or Subadviser as a result of the placement of portfolio brokerage of
other clients could be useful and of value in serving the Trust.
In the over-the-counter market, securities are generally traded on a "net"
basis with dealers acting as principal for their own accounts without a stated
commission, although the price of a security usually includes a profit to the
dealer. In underwritten offerings, securities are purchased at a fixed price
which includes an amount of compensation to the underwriter, generally referred
to as the underwriter's concession or discount. On occasion, certain money
market instruments may be purchased directly from an issuer, in which case no
commissions or discounts are paid. The Trust has obtained exemptive orders from
the Securities and Exchange Commission (the "SEC"), permitting the Trust in
certain circumstances to deal with securities dealers (that may be deemed to be
affiliated persons of affiliated persons of the Trust solely because of a
subadvisory relationship with one or more Portfolios) as a principal in
purchases and sales of certain securities, and to pay commissions, fees or other
remuneration to such securities dealers in connection with the sale of
securities to or by any of the Portfolios on a securities exchange without
complying with certain of the requirements of Rule 17e-1 under the 1940 Act.
Subject to the above considerations, the Adviser or a Subadviser may use
broker-dealer affiliates of the Adviser or a Subadviser,
B-46
<PAGE> 93
as a broker for any Portfolio. In order for such broker-dealer to effect any
portfolio transactions for a Portfolio, the commissions, fees or other
remuneration received by the broker-dealer must be reasonable and fair compared
to the commissions, fees or other remuneration paid to other brokers in
connection with comparable transactions involving similar securities being
purchased or sold on a securities exchange during a comparable period of time.
This standard would allow such broker-dealer to receive no more than the
remuneration which would be expected to be received by an unaffiliated broker in
a commensurate arm's-length transaction. Furthermore, the Trustees of the Trust,
including a majority of the non-interested Trustees, have adopted procedures
which are reasonably designed to provide that any commissions, fees or other
remuneration paid to such broker-dealers are consistent with the foregoing
standard. These types of brokerage transactions are also subject to such
fiduciary standards as may be imposed upon the broker-dealers by applicable law.
The following tables set forth the brokerage commissions paid by the
Portfolios and the amounts of the brokerage commissions which were paid to
affiliated broker-dealers of such Portfolios for the fiscal years ended November
30, 1997, 1996 and 1995.
1997 BROKERAGE COMMISSIONS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
AGGREGATE BROKERAGE AMOUNT PAID TO AFFILIATED PERCENTAGE PAID TO
PORTFOLIO COMMISSIONS BROKER-DEALERS AFFILIATED BROKER-DEALERS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Management -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Global Bond -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Corporate Bond -- -- --
- ------------------------------------------------------------------------------------------------------------------------
High-Yield Bond $ 90 -- --
- ------------------------------------------------------------------------------------------------------------------------
Worldwide High Income -- -- --
- ------------------------------------------------------------------------------------------------------------------------
SunAmerica Balanced $ 73,801 -- --
- ------------------------------------------------------------------------------------------------------------------------
Balanced/Phoenix Investment Counsel $ 153,408 -- --
- ------------------------------------------------------------------------------------------------------------------------
Asset Allocation $ 618,233 $77,151 12.48%
- ------------------------------------------------------------------------------------------------------------------------
Utility $ 40,772 -- --
- ------------------------------------------------------------------------------------------------------------------------
Growth-Income $ 547,081 -- --
- ------------------------------------------------------------------------------------------------------------------------
Federated Value $ 77,121 -- --
- ------------------------------------------------------------------------------------------------------------------------
Venture Value $ 634,966 $87,696 13.81%
- ------------------------------------------------------------------------------------------------------------------------
Alliance Growth $1,020,216 -- --
- ------------------------------------------------------------------------------------------------------------------------
Growth/Phoenix Investment Counsel $ 731,747 $ 1,220 .17%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-47
<PAGE> 94
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Putnam Growth
(formerly Provident Growth) $ 241,968 $ 920 .38%
- ------------------------------------------------------------------------------------------------------------------------
Real Estate* $ 53,466 -- --
- ------------------------------------------------------------------------------------------------------------------------
Global Equities $1,376,002 -- --
- ------------------------------------------------------------------------------------------------------------------------
International Diversified Equities $ 269,652 -- --
- ------------------------------------------------------------------------------------------------------------------------
Aggressive Growth* $ 251,919 -- --
- ------------------------------------------------------------------------------------------------------------------------
International Growth and Income * $ 120,957 -- --
- ------------------------------------------------------------------------------------------------------------------------
Emerging Markets* $ 80,600 -- --
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* For the period June 2, 1997 (commencement of operations) through November
30, 1997.
1996 BROKERAGE COMMISSIONS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
AGGREGATE AMOUNT PAID TO PERCENTAGE PAID
PORTFOLIO BROKERAGE AFFILIATED TO AFFILIATED
COMMISSIONS BROKER-DEALERS BROKER-DEALERS
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Management -- -- --
- -------------------------------------------------------------------------------------------------------
Global Bond -- -- --
- -------------------------------------------------------------------------------------------------------
Corporate Bond -- -- --
- -------------------------------------------------------------------------------------------------------
High-Yield Bond $ 753 -- --
- -------------------------------------------------------------------------------------------------------
Worldwide High Income -- -- --
- -------------------------------------------------------------------------------------------------------
SunAmerica Balanced* $ 10,184 -- --
- -------------------------------------------------------------------------------------------------------
Balanced/Phoenix Investment Counsel $ 99,713 -- --
- -------------------------------------------------------------------------------------------------------
Asset Allocation $ 256,864 $23,078 8.98%
- -------------------------------------------------------------------------------------------------------
Utility* $ 9,359 -- --
- -------------------------------------------------------------------------------------------------------
Growth-Income $ 469,309 -- --
- -------------------------------------------------------------------------------------------------------
Federated Value* $ 14,785 -- --
- -------------------------------------------------------------------------------------------------------
Venture Value $ 413,771 $ 3,792 0.92%
- -------------------------------------------------------------------------------------------------------
Alliance Growth $ 672,137 -- --
- -------------------------------------------------------------------------------------------------------
Growth/Phoenix Investment Counsel $ 483,274 -- --
- -------------------------------------------------------------------------------------------------------
Putnam Growth $ 144,932 -- --
(formerly Provident Growth)
- -------------------------------------------------------------------------------------------------------
Global Equities $1,022,821 -- --
- -------------------------------------------------------------------------------------------------------
</TABLE>
B-48
<PAGE> 95
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
International Diversified Equities $ 256,477 -- --
- -------------------------------------------------------------------------------------------------------
Aggressive Growth* $ 34,130 -- --
- -------------------------------------------------------------------------------------------------------
</TABLE>
* For the period 6/3/96 (commencement of operations) through November 30,
1996.
1995 BROKERAGE COMMISSIONS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
AGGREGATE AMOUNT PAID TO PERCENTAGE PAID
BROKERAGE AFFILIATED TO AFFILIATED
PORTFOLIO COMMISSIONS BROKER-DEALERS BROKER-DEALERS
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Management -- -- --
- -------------------------------------------------------------------------------------------------------
Corporate Bond* $ 562 $ 562 100%
- -------------------------------------------------------------------------------------------------------
Global Bond -- -- --
- -------------------------------------------------------------------------------------------------------
High-Yield Bond $ 9,100 -- --
- -------------------------------------------------------------------------------------------------------
Worldwide High Income -- -- --
- -------------------------------------------------------------------------------------------------------
Balanced/Phoenix Investment Counsel $ 49,029 -- --
- -------------------------------------------------------------------------------------------------------
Asset Allocation* $331,914 $35,946 10.83%
- -------------------------------------------------------------------------------------------------------
Growth-Income $262,353 -- --
- -------------------------------------------------------------------------------------------------------
Alliance Growth $353,849 -- --
- -------------------------------------------------------------------------------------------------------
Growth/Phoenix Investment Counsel $548,063 -- --
- -------------------------------------------------------------------------------------------------------
Putnam Growth $118,520 -- --
(formerly Provident Growth)
- -------------------------------------------------------------------------------------------------------
Venture Value $184,729 -- --
- -------------------------------------------------------------------------------------------------------
Global Equities $630,010 -- --
- -------------------------------------------------------------------------------------------------------
International Diversified Equities $117,482 -- --
- -------------------------------------------------------------------------------------------------------
</TABLE>
- - For the fiscal year ended November 30, 1995, the percentage of the
aggregate dollar amount of the transactions involving the payment of
commissions effected through affiliated brokers with respect to the
Corporate Bond Portfolio and Asset Allocation Portfolio were 10.34% and
100%, respectively.
The policy of the Trust with respect to brokerage is reviewed by the Board
of Trustees from time to time. Because of the possibility of further regulatory
developments affecting the securities exchanges and brokerage practices
generally, the foregoing practices may be modified.
The Adviser and the Subadvisers and their respective affiliates may
manage, or have proprietary interests in, accounts with similar or dissimilar or
the same investment objectives as one or more Portfolios of the Trust. Such
account may or may not be in competition with a Portfolio for investments.
Investment
B-49
<PAGE> 96
decisions for such accounts are based on criteria relevant to such accounts;
portfolio decisions and results of the Portfolio's investments may differ from
those of such other accounts. There is no obligation to make available for use
in managing the Portfolio any information or strategies used or developed in
managing such accounts. In addition, when two or more accounts seek to purchase
or sell the same assets, the assets actually purchased or sold may be allocated
among accounts on a good faith equitable basis at the discretion of the
account's adviser. In some cases, this system may adversely affect the price or
size of the position obtainable for a Portfolio.
If determined by the Adviser or Subadviser to be beneficial to the
interests of the Trust, partners and/or employees of the Adviser or Subadvisers
may serve on investment advisory committees, which will consult with the Adviser
regarding investment objectives and strategies for the Trust. In connection with
serving on such a committee, such persons may receive information regarding a
Portfolio's proposed investment activities which is not generally available to
unaffiliated market participants, and there will be no obligation on the part of
such persons to make available for use in managing the Portfolio any information
or strategies known to them or developed in connection with their other
activities.
It is possible that a Portfolio's holdings may include securities of
entities for which a subadviser or its affiliate performs investment banking
services as well as securities of entities in which a subadviser or its
affiliate makes a market. From time to time, such activities may limit a
Portfolio's flexibility in purchases and sales of securities. When a subadviser
or its affiliate is engaged in an underwriting or other distribution of
securities of an entity, the subadviser may be prohibited from purchasing or
recommending the purchase of certain securities of that entity for the
Portfolio.
GENERAL INFORMATION
CUSTODIAN - State Street Bank and Trust Company ("State Street"), 225
Franklin Street, Boston, Massachusetts 02110, serves as the Trust's custodian.
In this capacity, State Street maintains the portfolio securities held by the
Trust, administers the purchase and sale of portfolio securities and performs
certain other duties. State Street also serves as transfer agent and dividend
disbursing agent for the Trust.
INDEPENDENT ACCOUNTANTS AND LEGAL COUNSEL - Price Waterhouse LLP, 1177
Avenue of the Americas, New York, New York 10036, is the Trust's independent
accountants. Price Waterhouse LLP performs an annual audit of the Trust's
financial statements and provides tax consulting, tax return preparation and
accounting services relating to filings with the SEC. The firm of Shereff,
Friedman, Hoffman & Goodman, LLP, 919 Third Avenue, New York, NY 10022, has been
selected as legal counsel to the Corporation.
REPORTS TO SHAREHOLDERS - Persons having a beneficial interest in the
Trust are provided at least semi-annually with reports
B-50
<PAGE> 97
showing the investments of the Portfolios, financial statements and other
information.
SHAREHOLDER AND TRUSTEE RESPONSIBILITY - Shareholders of a
Massachusetts business trust may, under certain circumstances, be held
personally liable as partners for the obligations of the Trust. The risk of a
shareholder incurring any financial loss on account of shareholder liability is
limited to circumstances in which the Trust itself would be unable to meet its
obligations. The Declaration of Trust contains an express disclaimer of
shareholder liability for acts or obligations of the Trust and provides that
notice of the disclaimer must be given in each agreement, obligation or
instrument entered into or executed by the Trust or Trustees. The Declaration of
Trust provides for indemnification of any shareholder held personally liable for
the obligations of the Trust and also provides for the Trust to reimburse the
shareholder for all legal and other expenses reasonably incurred in connection
with any such claim or liability.
Under the Declaration of Trust, the trustees or officers are not
liable for actions or failure to act; however, they are not protected from
liability by reason of their willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of their office. The
Trust provides indemnification to its trustees and officers as authorized by its
By-Laws and by the 1940 Act and the rules and regulations thereunder.
REGISTRATION STATEMENT - A registration statement has been filed with
the SEC under the Securities Act of 1933, as amended and the 1940 Act. The
Prospectus and this Statement of Additional Information do not contain all
information set forth in the registration statement, its amendments and exhibits
thereto, that the Trust has filed with the Securities and Exchange Commission,
Washington, D.C., to all of which reference is hereby made.
FINANCIAL STATEMENTS
Set forth following this Statement of Additional Information are the
audited financial statements of the Trust with respect to the fiscal year ended
November 30, 1997.
B-51
<PAGE> 98
<PAGE> 1
- ---------------------
SUNAMERICA SERIES TRUST
CASH MANAGEMENT PORTFOLIO INVESTMENT PORTFOLIO -- NOVEMBER 30, 1997
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM SECURITIES -- 91.0% AMOUNT VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
CERTIFICATES OF DEPOSIT -- 5.8%
Rabobank Nederland N. V. 6.07% due 3/26/98............................. $ 4,000,000 $ 4,000,098
Rabobank Nederland N. V. 6.20% due 4/09/98............................. 1,000,000 1,000,522
Sanwa Bank Ltd. 5.72% due 1/20/98...................................... 4,000,000 4,000,149
-------------
TOTAL CERTIFICATES OF DEPOSIT (cost $9,000,112)........................ 9,000,769
-------------
COMMERCIAL PAPER -- 58.4%
Accor SA 5.61% due 1/21/98............................................. 5,000,000 4,960,263
Avnet, Inc. 5.70% due 2/13/98.......................................... 3,000,000 2,964,911
Banco Credito Nacional 5.55% due 2/03/98............................... 2,000,000 1,979,804
Bavaria Global Corp. 5.60% due 1/15/98................................. 3,000,000 2,979,000
BTM Capital Corp. 5.65% due 1/26/98.................................... 5,000,000 4,956,056
Certain Funding Corp. 5.66% due 2/12/98................................ 5,000,000 4,941,295
Commed Fuel, Inc. 5.55% due 1/29/98.................................... 5,000,000 4,953,538
Cooperative Association of Tractor Dealers 5.57% due 2/24/98........... 5,000,000 4,932,944
Cregem North America Inc. 5.55% due 1/06/98............................ 4,000,000 3,977,800
Demir Funding Corp. 5.57% due 1/12/98.................................. 3,000,000 2,980,505
First Data Corp. 5.55% due 2/18/98..................................... 5,000,000 4,937,678
Greenwich Asset Funding, Inc. 5.55% due 1/22/98........................ 4,000,000 3,967,933
Guinness PLC 5.58% due 1/21/98......................................... 4,000,000 3,968,380
Merrill Lynch & Co., Inc. 5.58% due 1/08/98............................ 4,000,000 3,976,440
Minmetals Capital & Securities, Inc. 5.59% due 12/08/97................ 3,000,000 2,996,739
Morgan (J.P.) & Co., Inc. 5.57% due 1/30/98............................ 5,000,000 4,952,750
Morgan Stanley Group, Inc. 5.58% due 1/08/98........................... 4,000,000 3,976,440
National City Corp. 5.58% due 1/26/98.................................. 3,000,000 2,973,960
Prospectus Repeat Offering Securitization Entity (ROSE), Inc. 5.65% due
2/06/98.............................................................. 5,000,000 4,947,051
Safeco Corp. 5.62% due 1/15/98......................................... 4,000,000 3,971,900
Transport Adora De Gas 5.62% due 1/22/98............................... 4,000,000 3,967,529
Tribune Co. 5.60% due 2/13/98.......................................... 3,000,000 2,964,665
Working Capital Management Co., L.P. 5.70% due 1/23/98................. 4,000,000 3,966,433
-------------
TOTAL COMMERCIAL PAPER (cost $91,201,451).............................. 91,194,014
-------------
CORPORATE SHORT-TERM NOTES -- 19.2%
American General Finance Corp. 7.25% due 3/01/98....................... 2,000,000 2,006,960
Barnett Banks, Inc. 5.84% due 12/29/97(1).............................. 3,000,000 3,006,270
Bear Stearns Co., Inc. 5.72% due 1/06/98(1)............................ 2,500,000 2,500,000
Bear Stearns Co., Inc. 5.73% due 2/10/98(1)............................ 3,000,000 3,000,000
First Interstate Bancorp 11.00% due 3/05/98............................ 2,630,000 2,663,243
General Motors Acceptance Corp. 5.88% due 2/06/98(1)................... 4,000,000 4,004,800
Lehman Brothers Holdings, Inc. 5.99% due 12/02/97(1)................... 2,000,000 2,002,400
Nationsbank Corp. 6.63% due 1/15/98.................................... 2,705,000 2,707,259
Norwest Corp. 5.75% due 3/15/98........................................ 2,000,000 1,999,700
Sigma Finance Corp. 6.28% due 4/24/98.................................. 4,000,000 4,003,693
USL Capital Corp. 5.86% due 1/06/98(1)................................. 2,000,000 2,002,080
-------------
TOTAL CORPORATE SHORT-TERM NOTES (cost $29,893,381).................... 29,896,405
-------------
MUNICIPAL BONDS -- 7.6%
Illinois Student Assistance Commission 5.63% 12/03/97(1)............... 4,000,000 4,000,000
Illinois Student Assistance Corp. 5.63% 12/03/97(1).................... 3,000,000 3,000,000
</TABLE>
- ---------------------
6
<PAGE> 2
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM SECURITIES (continued) AMOUNT VALUE
---------------------------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS (continued)
New Hampshire State Industrial Development Authority, Revenue 5.83% due
3/11/98.............................................................. $ 3,000,000 $ 3,000,000
Texas State General Obligation 5.63% 12/03/97(1)....................... 1,875,000 1,875,000
-------------
TOTAL MUNICIPAL BONDS (cost $11,875,000)............................... 11,875,000
-------------
TOTAL SHORT-TERM SECURITIES (cost $141,969,944)........................ 141,966,188
-------------
REPURCHASE AGREEMENT -- 8.5%
----------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 8.5%
Joint Repurchase Agreement Account (Note 3) (cost $13,341,000)......... 13,341,000 13,341,000
-------------
TOTAL INVESTMENTS -- (cost $155,310,944) 99.5% 155,307,188
Other assets less liabilities -- 0.5 812,266
------ -------------
NET ASSETS -- 100.0% $156,119,454
====== =============
</TABLE>
-----------------------------
(1) Variable rate security; maturity date reflects next reset
date; rate as of November 30, 1997.
See Notes to Financial Statements
---------------------
7
<PAGE> 3
- ---------------------
SUNAMERICA SERIES TRUST
GLOBAL BOND PORTFOLIO INVESTMENT PORTFOLIO -- NOVEMBER 30, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(DENOMINATED IN
FOREIGN BONDS & NOTES -- 65.3% LOCAL CURRENCY) VALUE
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
AUSTRALIAN DOLLAR -- 0.8%
Commonwealth of Australia 10.00% 2006................................ 800,000 $ 680,638
-----------
FRENCH FRANC -- 3.0%
Government of France 4.75% 2002...................................... 16,000,000 2,695,712
-----------
GERMAN MARK -- 13.9%
Republic of Germany 6.00% 2007....................................... 12,700,000 7,473,808
Republic of Germany 6.25% 2024....................................... 5,500,000 3,208,307
Republic of Germany 6.50% 2005....................................... 1,200,000 727,417
Republic of Germany 8.00% 2002....................................... 1,500,000 953,757
-----------
12,363,289
-----------
ITALIAN LIRA -- 10.6%
Republic of Italy 6.75% 2007......................................... 4,700,000,000 2,894,991
Republic of Italy 9.50% 2001......................................... 10,000,000,000 6,520,757
-----------
9,415,748
-----------
JAPANESE YEN -- 7.9%
Asian Development Bank 5.00% 2003.................................... 221,000,000 2,041,165
Asian Development Bank 5.63% 2002.................................... 320,000,000 2,971,205
European Investment Bank 2.13% 2007.................................. 60,000,000 472,568
Republic of Italy 5.13% 2003......................................... 170,000,000 1,590,108
-----------
7,075,046
-----------
NETHERLANDS GUILDER -- 3.4%
Dutch Government 8.25% 2007.......................................... 5,000,000 3,019,172
-----------
NEW ZEALAND DOLLAR -- 4.7%
Federal National Mortgage Association 7.00% 2000..................... 2,200,000 1,352,138
International Bank of Reconstruction & Development 7.00% 2000........ 2,500,000 1,526,951
New Zealand Government 8.00% 2001.................................... 2,000,000 1,273,192
-----------
4,152,281
-----------
POUND STERLING -- 6.5%
United Kingdom Treasury 8.50% 2007................................... 3,000,000 5,749,122
-----------
SPANISH PESETA -- 3.2%
Government of Spain 10.30% 2002...................................... 360,000,000 2,894,172
-----------
SWEDISH KRONA -- 4.4%
Kingdom of Sweden 6.00% 2005......................................... 10,000,000 1,280,800
Kingdom of Sweden 6.50% 2006......................................... 20,000,000 2,643,373
-----------
3,924,173
-----------
</TABLE>
- ---------------------
8
<PAGE> 4
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(DENOMINATED IN
FOREIGN BONDS & NOTES (continued) LOCAL CURRENCY) VALUE
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES DOLLAR -- 6.9%
Bayerische Landesbank Girozentrale 6.63% 2007........................ $ 3,000,000 $ 3,062,568
International Bank of Reconstruction & Development 6.63% 2006........ 3,000,000 3,103,236
-----------
6,165,804
-----------
TOTAL FOREIGN BONDS & NOTES (cost $58,272,076)....................... 58,135,157
-----------
U.S. GOVERNMENT -- 24.7%
-----------------------------------------------------------------------------------------------------
U.S. GOVERNMENT -- 24.7%
United States Treasury Notes 6.50% 2005.............................. 1,500,000 1,554,135
United States Treasury Notes 6.50% 2006.............................. 6,400,000 6,654,976
United States Treasury Notes 7.00% 2006.............................. 11,300,000 12,119,250
United States Treasury Notes 7.88% 2004.............................. 1,500,000 1,668,045
-----------
21,996,406
-----------
TOTAL U.S. GOVERNMENT (cost $21,435,889)............................. 21,996,406
-----------
TOTAL INVESTMENT SECURITIES (cost $79,707,965)....................... 80,131,563
-----------
SHORT-TERM SECURITIES -- 3.4%
-----------------------------------------------------------------------------------------------------
TIME DEPOSIT -- 3.4%
Cayman Island Time Deposit with State Street Bank & Trust Co. 5.63%
due 12/01/97....................................................... 3,047,000 3,047,000
-----------
TOTAL SHORT-TERM SECURITIES (cost $3,047,000)........................ 3,047,000
-----------
TOTAL INVESTMENTS --
(cost $82,754,965) 93.4% 83,178,563
Other assets less liabilities -- 6.6 5,863,960
----- -----------
NET ASSETS -- 100.0% $89,042,523
===== ===========
</TABLE>
<TABLE>
<CAPTION>
OPEN FORWARD FOREIGN CURRENCY CONTRACTS
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------
CONTRACT IN DELIVERY GROSS UNREALIZED
TO DELIVER EXCHANGE FOR DATE APPRECIATION
<CAPTION>
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
*AUD 9,434,250 USD 7,000,591 12/18/97 $ 554,480
*AUD 1,374,648 USD 953,428 12/18/97 14,177
*DEM 4,306,461 USD 2,497,947 01/08/98 49,758
*FIM 9,593,829 DEM 3,196,345 01/09/98 12,456
*JPY 299,313,340 DEM 4,414,000 01/22/98 144,745
DEM 8,328,011 USD 4,858,816 02/23/98 112,802
DEM 189,071 USD 110,065 02/23/98 1,974
FRF 40,466,000 USD 7,027,787 02/24/98 136,913
GBP 7,310,932 USD 12,417,618 01/26/98 104,428
*USD 1,145,937 GBP 687,000 01/26/98 11,120
*USD 6,406,177 GBP 3,840,461 01/26/98 61,990
ITL 1,696,135,000 USD 994,567 02/13/98 13,127
ITL 14,759,821,130 USD 8,765,989 02/13/98 225,464
JPY 1,039,421,163 USD 8,677,136 01/22/98 458,682
JPY 124,698,113 USD 990,985 01/22/98 5,027
NLG 6,174,021 USD 3,148,605 01/14/98 32,306
NZD 9,670,059 USD 6,014,777 12/19/97 52,862
*SEK 20,327,889 USD 2,689,408 12/12/97 55,189
*SEK 2,761,000 USD 364,214 12/12/97 6,426
-----------
2,053,926
-----------
See Notes to Financial Statements
</TABLE>
---------------------
9
<PAGE> 5
<TABLE>
<CAPTION>
OPEN FORWARD FOREIGN CURRENCY CONTRACTS (continued)
----------------------------------------------------------------------------
CONTRACT IN DELIVERY GROSS UNREALIZED
TO DELIVER EXCHANGE FOR DATE DEPRECIATION
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
*USD 3,391,756 AUD 4,664,516 12/18/97 $ (204,645)
*USD 3,594,157 AUD 5,115,000 12/18/97 (99,247)
CHF 6,128,000 DEM 7,483,209 02/27/98 (75,559)
DEM 7,631,620 CHF 6,128,000 02/27/98 (9,035)
DEM 7,387,924 SEK 31,641,000 12/12/97 (92,827)
IEP 1,452,000 DEM 3,701,584 01/08/98 (50,266)
IEP 1,252,520 DEM 3,182,278 01/08/98 (49,484)
IEP 195,480 DEM 496,891 01/08/98 (7,590)
*DEM 3,874,023 JPY 277,996,000 01/22/98 (6,076)
DEM 5,951,784 USD 3,387,273 02/23/98 (4,569)
ESP 430,336,620 USD 2,820,215 12/11/97 (66,764)
*USD 1,826,005 FIM 9,593,829 01/08/98 (21,260)
*GBP 1,534,000 USD 2,547,844 01/26/98 (35,943)
*USD 164,768 JPY 20,150,825 01/22/98 (5,438)
*USD 2,000,687 JPY 249,435,611 01/22/98 (28,459)
*SEK 6,518,665 USD 840,034 12/12/97 (4,697)
----------
(761,859)
----------
Net Unrealized Appreciation.................... $ 1,292,067
==========
</TABLE>
-----------------------------
* Represents open forward foreign currency contracts and
offsetting or partially offsetting open forward foreign currency
contracts that do not have additional market risk but have
continued counterparty settlement risk.
<TABLE>
<S> <C> <C>
AUD -- Australian Dollar
CHF -- Swiss Franc
DEM -- Deutsche Mark
ESP -- Spanish Peseta
FIM -- Finnish Marke
FRF -- French Franc
GBP -- Pound Sterling
ITL -- Italian Lira
IEP -- Irish Pound
JPY -- Japanese Yen
SEK -- Swedish Krona
NLG -- Netherlands Guilder
NZD -- New Zealand Dollar
USD -- United States Dollar
</TABLE>
See Notes to Financial Statements
- ---------------------
10
<PAGE> 6
- ---------------------
SUNAMERICA SERIES TRUST
CORPORATE BOND PORTFOLIO INVESTMENT PORTFOLIO -- NOVEMBER 30, 1997
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES -- 95.0% AMOUNT VALUE
---------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER DISCRETIONARY -- 6.5%
Apparel & Textiles -- 1.8%
Collins & Aikman Corp. 11.50% 2006...................................... $ 100,000 $ 113,000
Dyersburg Corp. 9.75% 2007*............................................. 100,000 103,500
GFSI Inc. 9.63% 2007*................................................... 100,000 102,250
Pillowtex Corp. 10.00% 2006............................................. 125,000 131,875
Reliance Industries Ltd. 8.25% 2027*.................................... 500,000 517,450
Westpoint Stevens, Inc. 9.38% 2005...................................... 150,000 156,750
Automotive -- 0.3%
Aftermarket Technology Corp. 12.00% 2004................................ 75,000 82,313
Exide Corp. 10.00% 2005................................................. 50,000 52,250
Lear Corp. 9.50% 2006................................................... 50,000 54,500
Housing -- 0.2%
Falcon Building Products, Inc. zero coupon 2007(1)...................... 100,000 65,500
Syratech Corp. 11.00% 2007.............................................. 50,000 46,750
Retail -- 4.2%
Brylane Capital Corp. 10.00% 2003....................................... 250,000 265,000
Harcourt General, Inc. 7.20% 2027....................................... 750,000 749,865
Jitney Jungle Stores of America, Inc. 10.38% 2007*...................... 50,000 51,750
Leslie's Poolmart, Inc. 10.38% 2004*.................................... 50,000 51,625
Penney (J.C.) Co., Inc. 7.65% 2016...................................... 500,000 537,315
ShopKo Stores, Inc. 9.25% 2022.......................................... 750,000 887,962
Stater Brothers Holdings, Inc. 9.00% 2004*.............................. 100,000 104,000
-------------
4,073,655
-------------
CONSUMER STAPLES -- 2.9%
Food, Beverage & Tobacco -- 1.9%
Ameriserve Food Distribution, Inc. 10.13% 2007*......................... 100,000 104,000
Aurora Foods Inc. 9.88% 2007............................................ 50,000 52,125
Carr Gottstein Foods Co. 12.00% 2005.................................... 100,000 110,500
Di Giorgio Corp. 10.00% 2007............................................ 100,000 99,000
International Home Foods, Inc. 10.38% 2006.............................. 100,000 106,000
Philip Morris Cos, Inc. 7.75% 2027...................................... 500,000 531,325
Ralphs Grocery Co. 10.45% 2004.......................................... 150,000 168,938
Household Products -- 1.0%
NBTY, Inc. 8.63% 2007*.................................................. 100,000 97,250
Playtex Family Products Corp. 9.00% 2003................................ 100,000 101,000
Polymer Group, Inc. 9.00% 2007.......................................... 150,000 148,125
Renaissance Cosmetics 11.75% 2004*...................................... 50,000 45,500
Revlon Consumer Products Corp. 10.50% 2003.............................. 100,000 105,500
Simmons Co. 10.75% 2006................................................. 100,000 105,250
-------------
1,774,513
-------------
EDUCATION -- 0.9%
University -- 0.9%
Boston University 7.63% 2097............................................ 500,000 540,675
-------------
</TABLE>
---------------------
11
<PAGE> 7
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (continued) AMOUNT VALUE
---------------------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY -- 6.4%
Energy Services -- 2.2%
Coastal Corp. 9.75% 2003................................................ $ 250,000 $ 286,893
Dailey International, Inc. 9.75% 2007*.................................. 100,000 104,500
Enersis SA 7.40% 2016................................................... 600,000 596,058
Pride Petroleum Services, Inc. 9.38% 2007............................... 100,000 107,000
Tosco Corp. 7.00% 2000.................................................. 250,000 253,835
Energy Sources -- 4.2%
Abraxas Petroleum Corp. 11.50% 2004..................................... 75,000 81,000
Anker Coal Group, Inc. 9.75% 2007*...................................... 100,000 100,750
Clark Oil & Refining Corp. 10.50% 2001.................................. 750,000 781,875
Di Industries, Inc. 8.88% 2007.......................................... 50,000 51,500
Forcenergy, Inc. 9.50% 2006............................................. 50,000 52,625
Husky Oil Ltd. 7.13% 2006............................................... 500,000 502,135
Petsec Energy, Inc. 9.50% 2007*......................................... 50,000 51,688
Sun Co., Inc. 9.00% 2024................................................ 750,000 889,147
United Meridian Corp. 10.38% 2005....................................... 75,000 81,937
XCL Ltd. 13.50% 2004(1)(2).............................................. 50,000 60,000
-------------
4,000,943
-------------
FINANCE -- 23.9%
Banks -- 6.1%
ABN Amro Holdings NV 7.30% 2026......................................... 500,000 503,580
African Development Bank 6.88% 2015..................................... 500,000 511,980
Continental Bank NA 12.50% 2001(1)...................................... 300,000 353,535
First Nationwide Holdings, Inc. 10.63% 2003............................. 200,000 224,500
Firstbank Puerto Rico 7.63% 2005........................................ 750,000 769,575
National Bank of Canada 8.13% 2004...................................... 750,000 807,653
Security Pacific Corp. 11.50% 2000...................................... 275,000 312,451
Signet Banking Corp. 9.63% 1999......................................... 300,000 313,800
Financial Services -- 14.2%
Allmerica Financial Corp. 7.63% 2025.................................... 500,000 523,590
American General Corp. 9.63% 2018....................................... 500,000 525,180
Arvin Capital I 9.50% 2027.............................................. 500,000 548,780
Case Equipment Loan Trust 7.30% 2002.................................... 82,742 83,263
Chevy Chase Auto Receivables 5.80% 2002................................. 66,858 66,649
CNA Financial Corp. 7.25% 2023.......................................... 500,000 493,620
ContiFinancial Corp. 8.38% 2003......................................... 100,000 103,750
Continental Corp. 8.25% 1999............................................ 100,000 102,465
Continental Global Group, Inc. 11.00% 2007.............................. 150,000 161,250
Delphi Funding L L C 9.31% 2027......................................... 800,000 888,104
Ford Capital BV 9.38% 2001.............................................. 600,000 654,864
Ford Capital BV 9.50% 2001.............................................. 200,000 219,674
General Motors Acceptance Corp. 5.63% 2001.............................. 300,000 293,751
Green Tree Financial Corp. 10.25% 2002.................................. 450,000 510,741
Green Tree Financial Corp. 6.50% 2002................................... 300,000 300,315
Hutchinson Whampoa Finance Ltd. 7.50% 2027*............................. 500,000 472,355
Lehman Brothers, Inc. 7.38% 2007........................................ 575,000 591,664
Navistar Financial 6.55% 2001........................................... 77,353 77,643
Outsourcing Solutions, Inc. 11.00% 2006*................................ 50,000 55,500
Premier Auto Trust 4.90% 1998........................................... 12,301 12,266
Premier Auto Trust 7.90% 1999........................................... 5,933 5,933
Reinsurance Group America, Inc. 7.25% 2006*............................. 500,000 517,955
Resolution Funding Corp. zero coupon 2021............................... 640,000 150,982
</TABLE>
- ---------------------
12
<PAGE> 8
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (continued) AMOUNT VALUE
---------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE (continued)
Financial Services (continued)
Salomon, Inc. 7.20% 2004................................................ $ 525,000 $ 540,435
Susa Partnership LP 8.20% 2017.......................................... 250,000 271,478
Swedish Export Credit Corp. 9.88% 2038.................................. 500,000 524,760
Tanger Properties Ltd. 8.75% 2001....................................... 85,000 87,444
Trizec Finance Corp., Ltd. 10.88% 2005.................................. 67,000 75,207
Insurance -- 3.6%
Conseco Inc. 10.50% 2004................................................ 750,000 894,135
Life Re Capital Trust I 8.72% 2027*..................................... 500,000 536,290
USF&G Capital II 8.47% 2027............................................. 500,000 526,875
USF&G Capital III 8.31% 2046*........................................... 250,000 266,750
-------------
14,880,742
-------------
HEALTHCARE -- 0.9%
Health Services -- 0.7%
Genesis Health Ventures, Inc. 9.25% 2006................................ 50,000.... 50,625
Genesis Health Ventures, Inc. 9.75% 2005................................ 50,000 51,625
Tenet Healthcare Corp. 8.00% 2005....................................... 250,000 252,500
Tenet Healthcare Corp. 10.13% 2005...................................... 100,000 108,500
Medical Products & Services -- 0.2%
Dade International, Inc. 11.13% 2006*................................... 100,000 111,750
-------------
575,000
-------------
INDUSTRIAL & COMMERCIAL -- 7.9%
Business Services -- 3.0%
Allied Waste Industries, Inc. zero coupon 2007*......................... 50,000 34,375
Allied Waste North America, Inc. 10.25% 2006*........................... 100,000 109,000
Coinmach Corp. 11.75% 2005*............................................. 50,000 55,125
Glenoit Corp. 11.00% 2007*.............................................. 50,000 53,625
Knoll, Inc. 10.88% 2006................................................. 65,000 72,150
National Equipment Services, Inc. 10.00% 2004*.......................... 50,000 49,188
Roller Bearing Co. America, Inc. 9.63% 2007*............................ 50,000 50,625
Statia Terminals International 11.75% 2003.............................. 50,000 53,250
Tokheim Corp. 11.50% 2006............................................... 50,000 57,000
United Stationers Supply Co. 12.75% 2005................................ 33,000 36,713
USA Waste Service, Inc. 7.13% 2007...................................... 750,000 767,820
Waste Management, Inc. 8.75% 2018....................................... 500,000 537,980
Electrical Equipment -- 0.1%
Amphenol Corp. 9.88% 2007............................................... 50,000 52,625
Machinery -- 0.5%
Alvey Systems, Inc. 11.38% 2003......................................... 100,000 106,000
CLARK Material Handling Co. 10.75% 2006................................. 100,000 105,500
Neenah Corp. 11.13% 2007*............................................... 50,000 54,124
Werner Holdings Co., Inc. 10.00% 2007*.................................. 50,000 50,875
Multi-Industry -- 1.1%
EnviroSource, Inc. 9.75% 2003........................................... 50,000 50,500
Four M Corp. 12.00% 2006................................................ 50,000 53,250
News America Holdings, Inc. 10.13% 2012................................. 500,000 579,010
Transportation -- 3.2%
Allied Holdings, Inc. 8.63% 2007*....................................... 50,000 51,125
Ameritruck Distribution Corp. 12.25% 2005............................... 100,000 104,000
Chemical Leaman Corp. 10.38% 2005....................................... 50,000 51,875
Continental Airlines, Inc. 6.90% 2018(3)................................ 500,000 503,750
</TABLE>
---------------------
13
<PAGE> 9
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (continued) AMOUNT VALUE
---------------------------------------------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL & COMMERCIAL (continued)
Transportation (continued)
Gearbulk Holdings Ltd. 11.25% 2004...................................... $ 100,000 $ 111,000
Johnstown America Industries, Inc. 11.75% 2005*......................... 50,000 54,125
Stena AB 8.75% 2007..................................................... 50,000 49,875
Stena AB 10.50% 2005.................................................... 100,000 108,125
Transport Ocean Container Corp. 12.25% 2004............................. 850,000 993,437
-------------
4,956,047
-------------
INFORMATION & ENTERTAINMENT -- 13.1%
Broadcasting & Media -- 11.4%
Acme Television LLC zero coupon 2004*(4)................................ 75,000.... 55,125
Affiliated Newspapers Investments, Inc. zero coupon 2006(1)(4).......... 100,000 91,500
Bell Cablemedia PLC zero coupon 2004(4)................................. 75,000 69,675
Cablevision Systems Corp. 9.25% 2005.................................... 150,000 157,500
Chancellor Media Corp. 8.75% 2007*...................................... 50,000 51,000
Chancellor Media Corp. 9.38% 2004....................................... 100,000 104,250
Comcast Cable Communications 8.50% 2027*................................ 500,000 569,370
Comcast Cellular Holdings, Inc. 9.50% 2007.............................. 50,000 51,750
Comcast Corp. 9.38% 2005................................................ 100,000 106,967
Comcast UK Cable Partners Ltd. zero coupon 2007(4)...................... 175,000 139,563
Continental Cablevision, Inc. 9.50% 2013................................ 750,000 863,107
Dialog Corp. 11.00% 2007*............................................... 75,000 75,938
Diamond Cable PLC zero coupon 2007*(4).................................. 100,000 65,500
Echostar Satellite Broadcasting Corp. zero coupon 2004(4)............... 150,000 123,750
Fox/Liberty Networks LLC zero coupon 2007*(4)........................... 200,000 125,500
Garden State Newspapers, Inc. 8.75% 2009*............................... 50,000 49,875
Heritage Media Corp. 8.75% 2006*........................................ 100,000 106,375
Hollinger International Publishing, Inc. 9.25% 2007..................... 75,000 77,250
Katz Media Corp. 10.50% 2007............................................ 100,000 110,250
Lenfest Communications, Inc. 8.38% 2005................................. 100,000 100,500
Millicom International Cellular zero coupon 2006(4)..................... 100,000 73,000
Nextel Communications, Inc. zero coupon 2004(4)......................... 125,000 107,812
Outdoor Systems, Inc. 8.88% 2007........................................ 100,000 103,250
Paging Network, Inc. 10.00% 2008........................................ 100,000 102,750
Paramount Communications, Inc. 8.25% 2022............................... 500,000 497,915
Rogers Cablesystems Ltd. 10.00% 2007.................................... 100,000 109,000
Rogers Cablesystems Ltd. Class B 10.00% 2005............................ 50,000 54,750
Sci Television, Inc. 11.00% 2005........................................ 475,000 492,960
SFX Broadcasting, Inc. 10.75% 2006...................................... 50,000 54,500
Sinclair Broadcast Group, Inc. 9.00% 2007*.............................. 50,000 50,187
Sinclair Broadcast Group, Inc. 10.00% 2005.............................. 50,000 52,750
Sullivan Braodcasting 10.25% 2005....................................... 100,000 106,750
Telesystem International Wireless, Inc. zero coupon 2007*(4)............ 100,000 59,875
Telewest Communications PLC zero coupon 2007(4)......................... 300,000 228,750
Teligent, Inc. 11.50% 2007.............................................. 50,000 50,375
TKR Cable, Inc. 10.50% 2007............................................. 750,000 840,068
UIH Australia Pacific, Inc. zero coupon 2006(4)......................... 100,000 65,000
Valassis Inserts, Inc. 9.38% 1999....................................... 750,000 769,912
Viacom, Inc. 8.00% 2006................................................. 200,000 198,548
Entertainment Products -- 0.1%
Cobblestone Golf Group, Inc. 11.50% 2003................................ 50,000 53,750
Leisure & Tourism -- 1.6%
AMF Group, Inc., zero coupon 2006(4).................................... 122,000 92,720
Courtyard Marriott Ltd. 10.75% 2008..................................... 50,000 54,438
Livent, Inc. 9.38% 2004*................................................ 50,000 49,625
</TABLE>
- ---------------------
14
<PAGE> 10
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (continued) AMOUNT VALUE
---------------------------------------------------------------------------------------------------
<S> <C> <C>
INFORMATION & ENTERTAINMENT (continued)
Leisure & Tourism (continued)
Premier Parks, Inc. 12.00% 2003......................................... $ 100,000 $ 110,875
Six Flags Theme Parks, Inc. zero coupon 2005(4)......................... 125,000 132,812
Southwest Airlines Co. 7.38% 2027....................................... 500,000 522,460
-------------
8,129,577
-------------
INFORMATION TECHNOLOGY -- 5.8%
Communication Equipment -- 0.1%
Elgin National Industries, Inc. 11.00% 2007*............................ 75,000 76,500
Computers & Business Equipment -- 0.9%
Harris Corp. 10.38% 2018................................................ 500,000 541,205
Electronics -- 1.7%
Advanced Micro Devices, Inc. 11.00% 2003................................ 50,000 53,000
Decisionone Corp. 9.75% 2007*........................................... 50,000 52,250
Fairchild Semiconductor Corp. 10.13% 2007............................... 100,000 104,500
Figgie International, Inc. Delaware 9.88% 1999.......................... 750,000 781,875
Viasystems Group, Inc. 9.75% 2007*...................................... 50,000 51,625
Telecommunications -- 3.1%
American Communications Services, Inc. 13.75% 2007*..................... 50,000 57,375
Anixter, Inc. 8.00% 2003................................................ 500,000 523,725
Brooks Fiber Properties, Inc. zero coupon 2006(4)....................... 100,000 82,125
Brooks Fiber Properties, Inc. zero coupon 2006(4)....................... 100,000 79,250
Call-Net Enterprises, Inc. zero coupon 2007(4).......................... 100,000 67,125
Charter Communications South East LP 11.25% 2006........................ 50,000 55,500
Frontiervision Holdings LP zero coupon 2007*(4)......................... 100,000 69,750
Hermes Europe Railtel BV 11.50% 2007*................................... 50,000 54,375
Highwaymaster Communciations 13.75% 2005*(1)............................ 50,000 50,250
Intermedia Communications, Inc. zero coupon 2006(4)..................... 100,000 77,500
Intermedia Communications, Inc. zero coupon 2007(4)..................... 50,000 34,250
International CableTel, Inc. zero coupon 2006(4)........................ 150,000 113,250
McLeod USA, Inc. zero coupon 2007(4).................................... 150,000 102,750
Metronet Communications Corp. 12.00% 2007(1)............................ 50,000 56,875
PanAmSat Corp. 12.75% 2005.............................................. 119,000 144,213
Qwest Communications International, Inc. 10.88% 2007*................... 100,000 112,500
RCN Corp. 11.13% 2007*(4)............................................... 50,000 28,938
Teleport Communications Group zero coupon 2007(4)....................... 150,000 118,875
Vanguard Cellular Systems, Inc. 9.38% 2006.............................. 100,000 103,000
-------------
3,592,581
-------------
MATERIALS -- 9.8%
Chemicals -- 0.2%
Climachem, Inc. 10.75% 2007............................................. 50,000 50,250
ISP Holdings, Inc. 9.75% 2002........................................... 50,000 52,625
Forest Products -- 4.2%
Buckeye Cellulose Corp. 9.25% 2008...................................... 125,000 131,875
Donohue Forest Products, Inc. 7.63% 2007................................ 750,000 787,500
Pope & Talbot, Inc. 8.38% 2013.......................................... 250,000 252,295
Repap Wisconsin, Inc. 9.25% 2002........................................ 500,000 535,570
Repap Wisconsin, Inc. 9.88% 2006........................................ 750,000 824,737
Stone Container Corp. 11.50% 2004....................................... 50,000 54,000
Metals & Minerals -- 5.4%
Acme Metals, Inc. 13.50% 2004(2)........................................ 50,000 58,000
Barrick Gold Finance, Inc. 7.50% 2007................................... 750,000 785,513
</TABLE>
---------------------
15
<PAGE> 11
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (continued) AMOUNT VALUE
---------------------------------------------------------------------------------------------------
<S> <C> <C>
MATERIALS (continued)
Metals & Minerals (continued)
Echo Bay Mines Ltd. 11.00% 2027......................................... $ 50,000 $ 38,625
Euramax International PLC 11.25% 2006................................... 50,000 53,875
GS Technologies, Inc. 12.25% 2005....................................... 100,000 111,000
Inco Ltd. 9.60% 2022.................................................... 750,000 858,593
MMI Products, Inc. 11.25% 2007*......................................... 50,000 53,875
Placer Dome, Inc. 8.50% 2045............................................ 750,000 762,187
Ryderson Tull, Inc. 9.13% 2006.......................................... 100,000 107,000
Southdown, Inc. 10.00% 2006............................................. 500,000 555,000
-------------
6,072,520
-------------
MUNICIPAL BONDS -- 1.2%
Municipal Bonds -- 1.2%
Atlanta & Fulton County Georgia Recreation 7.00% 2028................... 500,000 495,615
McKeesport Pennsylvania 7.30% 2020...................................... 250,000 254,253
-------------
749,868
-------------
NON-U.S. GOVERNMENT OBLIGATIONS -- 2.9%
Foreign Government -- 2.9%
Province of Quebec 13.25% 2014.......................................... 890,000 1,030,326
Republic of Columbia 7.25% 2003......................................... 250,000 243,445
Republic of South Africa 9.63% 1999..................................... 500,000 522,825
-------------
1,796,596
-------------
REAL ESTATE -- 1.6%
Real Estate Companies -- 0.1%
AEI Holdings, Inc. 10.00% 2007*......................................... 50,000 50,750
Real Estate Investment Trusts -- 1.5%
Chelsea GCA Realty, Inc. 7.75% 2001..................................... 150,000 154,556
Price REIT, Inc. 7.50% 2006............................................. 750,000 784,170
-------------
989,476
-------------
U.S. GOVERNMENT & AGENCIES -- 8.5%
U.S. Government & Agencies -- 8.5%
Federal National Mortgage Association 6.50% 2011........................ 1,365,477 1,362,910
Federal National Mortgage Association 8.50% 2005........................ 750,000 785,153
Government National Mortgage Association 8.00% 2026..................... 1,392,271 1,439,691
United States Treasury Bonds 6.00% 2026................................. 1,750,000 1,722,385
-------------
5,310,139
-------------
UTILITIES -- 2.7%
Electric Utilities -- 2.7%
California Energy, Inc. 10.25% 2004(2).................................. 750,000 819,450
Israel Electric Corp. Ltd. 7.88% 2026*.................................. 350,000 368,939
Tenaga Nasional Berhad 7.50% 2096*...................................... 500,000 519,195
-------------
1,707,584
-------------
TOTAL BONDS & NOTES (cost $57,362,410).................................. 59,149,916
-------------
</TABLE>
- ---------------------
16
<PAGE> 12
<TABLE>
<S> <C> <C>
COMMON STOCK -- 0.0% SHARES VALUE
---------------------------------------------------------------------------------------------------
INFORMATION & ENTERTAINMENT -- 0.0%
Broadcasting & Media -- 0.0%
Nextel Communications, Inc., Class A+ (cost $2,485)..................... $ 154 $ 3,889
-------------
PREFERRED STOCK -- 1.9%
---------------------------------------------------------------------------------------------------
INFORMATION & ENTERTAINMENT -- 0.9%
Broadcasting & Media -- 0.9%
American Radio Systems Corp. Series B 11.38%............................ 1,053 124,219
Capstar Broadcasting Partners 12.00%.................................... 500 56,875
Pegasus Communications Corp. 12.75%..................................... 105 117,094
Primedia, Inc. 9.25%*................................................... 1,250 125,937
SFX Broadcasting, Inc. 12.63%........................................... 500 59,250
Sinclair Capital 11.63%*................................................ 500 55,375
-------------
538,750
-------------
INFORMATION TECHNOLOGY -- 0.1%
Computers & Business Equipment -- 0.1%
Microsoft Corp. $2.1960................................................. 1,000 88,562
REAL ESTATE -- 0.9%
Real Estate Investment Trusts -- 0.9%
Crown American Realty Trust 11.00%...................................... 1,000 52,875
Highwood Properties Inc. 8.63%.......................................... 500 532,875
-------------
585,750
-------------
TOTAL PREFERRED STOCK (cost $1,125,654)................................. 1,213,062
-------------
WARRANTS -- 0.0%+
<CAPTION>
---------------------------------------------------------------------------------------------------
<S> <C> <C>
INFORMATION & ENTERTAINMENT -- 0.0%
Broadcasting & Media -- 0.0%
Australis Holdings Property Ltd. 10/30/01............................... 50 0
Pegasus Communications Corp. 1/01/07.................................... 100 1,700
-------------
1,700
-------------
INFORMATION TECHNOLOGY -- 0.0%
Telecommunications -- 0.0%
Highwaymaster Communications, Inc. 1/01/49.............................. 50 88
-------------
TOTAL WARRANTS (cost $1,416)............................................ 1,788
-------------
TOTAL INVESTMENT SECURITIES (cost $58,491,965).......................... 60,368,655
-------------
</TABLE>
---------------------
17
<PAGE> 13
<TABLE>
<S> <C> <C>
PRINCIPAL
SHORT-TERM SECURITIES -- 2.1% AMOUNT VALUE
---------------------------------------------------------------------------------------------------
CORPORATE SHORT-TERM NOTES -- 0.6%
Arkla, Inc. 9.20% due 12/18/97.......................................... $ 65,000 65,075
Time Warner, Inc. 7.45% due 2/1/98...................................... 290,000 290,499
-------------
355,574
-------------
TIME DEPOSIT -- 1.5%
Cayman Island Time Deposit with State Street Bank & Trust Co.
3.00% due 12/1/97..................................................... 932,000 932,000
-------------
TOTAL SHORT-TERM SECURITIES (cost $1,286,580)........................... 1,287,574
-------------
TOTAL INVESTMENTS -- (cost $59,778,545) 99.0% 61,656,229
Other assets less liabilities -- 1.0 615,389
------ ----- ------------
NET ASSETS -- 100.0% $62,271,618
====== ===== ============
</TABLE>
-----------------------------
* Resale restricted to qualified institutional buyers
+ Non-income producing securities
(1) Consists of more than one class of securities traded together
as a unit; generally bonds with attached stocks or warrants
(2) Variable rate security; rate as of November 30, 1997
(3) Fair valued security; see Note 2
(4) Represents a zero coupon bond which will convert to an
interest-bearing security at a later date
See Notes to Financial Statements
- ---------------------
18
<PAGE> 14
- ---------------------
SUNAMERICA SERIES TRUST
HIGH-YIELD BOND PORTFOLIO INVESTMENT PORTFOLIO -- NOVEMBER 30, 1997
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES -- 85.6% AMOUNT VALUE
---------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER DISCRETIONARY -- 7.8%
Apparel & Textiles -- 3.0%
Dominion Textile USA, Inc. 8.88% 2003................................. $ 2,900,000 $ 2,929,000
Dominion Textile USA, Inc. 9.25% 2006................................. 1,000,000 1,010,000
J Crew Operating Corp. 10.38% 2007*................................... 2,000,000 1,990,000
Housing -- 1.2%
Lifestyle Furnishings International Ltd. 10.88% 2006.................. 2,000,000 2,230,000
Retail -- 3.6%
Commemorative Brands, Inc. 11.00% 2007................................ 1,500,000 1,511,250
Electronic Retailing Systems International, Inc. zero coupon
2004(1)............................................................. 1,500,000 1,035,000
Eye Care Centers of America, Inc. 12.00% 2003......................... 2,000,000 2,155,000
Jitney Jungle Stores of America, Inc. 12.00% 2006..................... 1,500,000 1,695,000
Jumbo Sports, Inc. 4.25% 2000......................................... 1,000,000 641,250
------------
15,196,500
------------
CONSUMER STAPLES -- 4.5%
Food, Beverage & Tobacco -- 1.8%
Specialty Foods Acquisition Corp. Series B zero coupon 2005(1)........ 1,500,000 628,125
Specialty Foods Corp. Series B 11.13% 2002............................ 2,850,000 2,864,250
Household Products -- 2.7%
Drypers Corp. Series B 10.25% 2007.................................... 1,000,000 1,010,000
French Fragrances, Inc. Series B 10.38% 2007.......................... 2,250,000 2,362,500
Polymer Group Inc. Series B 9.00% 2007................................ 2,000,000 1,975,000
------------
8,839,875
------------
ENERGY -- 4.8%
Energy Services -- 0.3%
DeepTech International, Inc. 12.00% 2000.............................. 500,000 531,250
Energy Sources -- 4.5%
Clark (R&M), Inc. 8.38% 2007*......................................... 2,250,000 2,250,000
ICO, Inc. Series B 10.38% 2007........................................ 1,250,000 1,340,625
Southwest Royal Ties, Inc. 10.50% 2004*............................... 2,250,000 2,244,375
Statia Terms International Series B 11.75% 2003*...................... 2,000,000 2,130,000
Transamerican Energy Corp. zero coupon 2002*(1)....................... 1,000,000 815,000
------------
9,311,250
------------
FINANCE -- 2.8%
Banks -- 0.7%
Western Financial Savings Bank 8.88% 2007............................. 1,500,000 1,436,250
Financial Services -- 2.1%
Crown Castle International Corp. 10.63% 2007*......................... 500,000 301,875
Dollar Financial Group, Inc. Series A 10.88% 2006..................... 2,000,000 2,140,000
Homeside, Inc. Series B 11.25% 2003................................... 1,299,000 1,545,810
------------
5,423,935
------------
HEALTHCARE -- 4.9%
Health Services -- 4.9%
Abbey Healthcare Group, Inc. 9.50% 2002............................... 2,000,000 2,070,000
Integrated Health Services, Inc. 9.25% 2008*.......................... 1,000,000 997,500
</TABLE>
---------------------
19
<PAGE> 15
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (continued) AMOUNT VALUE
---------------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE (continued)
Health Services (continued)
Signature Brands USA, Inc. 13.00% 2002................................ $ 1,995,000 $ 2,204,475
Tenet Healthcare Corp. 10.13% 2005.................................... 4,000,000 4,340,000
------------
9,611,975
------------
INDUSTRIAL & COMMERCIAL -- 8.5%
Aerospace & Military Technology -- 2.1%
Interlake Corp. 12.13% 2002........................................... 2,000,000 2,090,000
L-3 Communications Corp. 10.38% 2007.................................. 2,000,000 2,160,000
Business Services -- 1.6%
Huntsman Corp. 9.09% 1998*(5)......................................... 1,500,000 1,571,250
W.R. Carpenter North America, Inc. 10.63% 2007*....................... 1,500,000 1,563,750
Multi-Industry -- 1.1%
Golden Ocean Group Ltd. 10.00% 2001(2)................................ 2,500,000 2,150,000
Transportation -- 3.7%
Pegasus Shipping Hellas Ltd. 11.88% 2004*............................. 1,500,000 1,466,250
Stena AB 8.75% 2007................................................... 2,000,000 1,995,000
Stena AB 10.50% 2005.................................................. 2,000,000 2,150,000
Travelcenters America, Inc. 10.25% 2007............................... 1,500,000 1,575,000
------------
16,721,250
------------
INFORMATION & ENTERTAINMENT -- 17.2%
Broadcasting & Media -- 8.2%
Benedek Communications Corp. zero coupon 2006(1)...................... 1,000,000 735,000
Busse Broadcasting Corp. 11.63% 2000.................................. 1,000,000 1,068,750
Falcon Holding Group, L.P. Series B 11.00% 2003(4).................... 1,000,000 1,050,000
Fox Kids Worldwide, Inc. 9.25% 2007*.................................. 2,000,000 1,905,000
Midcom Communications, Inc. 8.25% 2003(6)............................. 1,000,000 160,000
Nextel Communications, Inc. zero coupon 2004(1)....................... 2,500,000 2,156,250
Nextel Communications, Inc. 10.65% 2007*.............................. 1,000,000 607,500
Peoples Choice TV Corp. zero coupon 2004(1)........................... 1,500,000 555,000
Peoples Choice TV Corp. zero coupon 2004(1)(2)........................ 2,000,000 780,000
Radio One, Inc. Series B 7.00% 2004................................... 1,000,000 965,000
Source Media, Inc. 12.00% 2004*....................................... 1,500,000 1,481,250
Spanish Broadcasting Systems, Inc. 12.50% 2002........................ 2,250,000 2,576,250
Young Broadcasting, Inc. Series B 8.75% 2007.......................... 2,000,000 1,950,000
Cable -- 7.1%
Australis Holdings Property Ltd. zero coupon 2002(1).................. 1,750,000 822,483
Comcast UK Cable Partners Ltd. zero coupon 2007(1).................... 1,000,000 797,500
Diamond Cable Communications PLC zero coupon 2007(1).................. 2,000,000 1,310,000
Echostar DBS Corp. 12.50% 2002*....................................... 1,000,000 1,063,750
Echostar Satellite Broadcasting Corp. zero coupon 2004(1)............. 4,250,000 3,506,250
International CableTel, Inc. 7.00% 2008............................... 500,000 490,000
UIH Australia Pacific, Inc. Series B zero coupon 2006(1).............. 1,000,000 650,000
United International Holdings, Inc. zero coupon 1999.................. 5,250,000 4,252,500
Wavetek Corp. 10.13% 2007(3).......................................... 1,000,000 1,025,000
Gaming -- 0.8%
California Hotel Finance Corp. 11.00% 2002............................ 1,500,000 1,561,875
Leisure & Tourism -- 1.1%
HMH Properties, Inc. Series B 9.50% 2005.............................. 2,000,000 2,105,000
------------
33,574,358
------------
</TABLE>
- ---------------------
20
<PAGE> 16
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (continued) AMOUNT VALUE
---------------------------------------------------------------------------------------------------
<S> <C> <C>
INFORMATION TECHNOLOGY -- 23.8%
Cellular -- 8.3%
Cellular Communications International, Inc. zero coupon 2000.......... $ 3,000,000 $ 2,355,000
Centennial Cellular Corp. 8.88% 2001.................................. 2,000,000 2,030,000
Comcast Cellular Holdings, Inc. Series B 9.50% 2007................... 1,500,000 1,552,500
Globalstar L.P. 10.75% 2004*.......................................... 1,500,000 1,458,750
International Wireless Communication zero coupon 2001(3).............. 1,250,000 662,500
Microcell Telecommunications, Inc. Series B zero coupon 2006(1)....... 3,000,000 1,920,000
Occidente Y Caribe Celular SA Series B zero coupon 2004(1)............ 2,000,000 1,519,980
Omnipoint Corp. Series A 11.63% 2006.................................. 2,750,000 2,915,000
Orbcomm Global L.P. 14.00% 2004....................................... 1,750,000 1,859,375
Computers & Business Equipment -- 1.4%
Verio, Inc. 13.50% 2004(2)............................................ 2,250,000 2,700,000
Electronics -- 3.2%
Advanced Micro Devices, Inc. 11.00% 2003.............................. 3,000,000 3,180,000
Details, Inc. 10.00% 2005*............................................ 1,000,000 1,012,500
Hawk Corp. Series B 10.25% 2003....................................... 2,000,000 2,120,000
Telecommunications -- 10.9%
Colt Telecommunications Group PLC zero coupon 2006(1)(2).............. 2,000,000 1,540,000
Econophone, Inc. 13.50% 2007(2)....................................... 1,000,000 1,065,000
GST USA, Inc. zero coupon 2005(1)..................................... 2,500,000 1,815,625
Hermes Europe Railtel BV 11.50% 2007*................................. 1,500,000 1,631,250
International Logistics Ltd. 9.75% 2007*.............................. 2,000,000 1,985,000
Ionica PLC zero coupon 2007(1)(2)..................................... 5,750,000 2,350,312
IXC Communications, Inc. Series B 12.50% 2005......................... 2,000,000 2,280,000
NTL, Inc. Series B 10.00% 2007........................................ 1,500,000 1,571,250
Poland Telecom Fin BV 14.00% 2007(2).................................. 1,000,000 1,025,000
RCN Corp. 10.00% 2007*................................................ 1,500,000 1,500,000
Transtel Pass Through Trust 12.50% 2007*.............................. 1,500,000 1,417,500
USN Communications, Inc. 14.63% 2004(2)*.............................. 2,250,000 1,687,500
Viatel, Inc. 15.00% 2005(1)........................................... 2,000,000 1,505,000
------------
46,659,042
------------
MATERIALS -- 8.8%
Chemicals -- 1.5%
NL Industries, Inc. 11.75% 2003....................................... 2,595,000 2,854,500
Forest Products -- 4.8%
Ainsworth Lumber Ltd. 12.50% 2007*(4)................................. 1,750,000 1,763,125
American Pad & Paper Co. Series B 13.00% 2005......................... 650,000 763,750
Doman Industries Ltd. 8.75% 2004...................................... 3,000,000 2,962,500
Florida Coast Paper Co. LLC Series B 12.75% 2003...................... 2,250,000 2,407,500
Stone Container Corp. 11.88% 1998..................................... 1,500,000 1,567,500
Metals & Minerals -- 2.5%
Acme Metals, Inc. 12.50% 2002......................................... 1,500,000 1,650,000
GS Technologies Operating, Inc. 12.00% 2004........................... 1,500,000 1,650,000
Renco Metals, Inc. 11.50% 2003........................................ 1,500,000 1,590,000
------------
17,208,875
------------
UTILITIES -- 2.5%
Telephone -- 2.5%
BTI Telecom Corp. 10.50% 2007*........................................ 1,500,000 1,503,750
Iridium Capital Corp., Series A 13.00% 2005........................... 1,250,000 1,293,750
</TABLE>
---------------------
21
<PAGE> 17
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (continued) AMOUNT VALUE
---------------------------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES (continued)
Telephone (continued)
MGC Communications, Inc. 13.00% 2004*(2).............................. $ 1,000,000 $ 997,500
Primus Telecommunications Group 11.75% 2004........................... 1,000,000 1,065,000
------------
4,860,000
------------
TOTAL BONDS & NOTES (cost $166,458,408)............................... 167,407,060
------------
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCK -- 0.0% SHARES VALUE
---------------------------------------------------------------------------------------------------
<S> <C> <C>
INFORMATION & ENTERTAINMENT -- 0.0%
Gaming -- 0.0%
Capital Gaming International, Inc.+ (cost $155,541)................... 103 $ 1
-------------
<CAPTION>
PREFERRED STOCK -- 9.2%
---------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE -- 1.0%
Financial Services -- 1.0%
Bankunited Capital Trust Series A 10.25%*............................. 2,000 2,065,000
-------------
HEALTHCARE -- 1.2%
Health Services -- 1.2%
Fresenius Medical Care Capital Trust 9.00%............................ 2,250 2,351,250
-------------
INFORMATION & ENTERTAINMENT -- 3.4%
Broadcasting & Media -- 2.1%
Benedek Communications Corp. 15.00%(3)................................ 11,500 1,437,500
Echostar Communications Corp. Series C 6.75%.......................... 33,000 1,633,500
Echostar Communications Corp. 12.13%*................................. 1,000 1,030,000
Cable -- 1.3%
Cablevision Systems Corp. 11.125%..................................... 22,500 2,565,000
-------------
6,666,000
-------------
INFORMATION TECHNOLOGY -- 2.9%
Telecommunications -- 2.9%
ICG Holdings, Inc. 14.00%............................................. 1,529 1,758,063
Intermedia Communications, Inc. Series B 13.50%(4).................... 1,216 1,447,040
Intermedia Communications, Inc. 7.00%(3)*............................. 40,000 990,000
IXC Communications, Inc. 12.50%*(4)................................... 250 286,250
NTL, Inc. Series B 13.00%............................................. 1,000 1,146,250
-------------
5,627,603
-------------
MATERIALS -- 0.7%
Forest Products -- 0.7%
SDW Holdings Corp. 15.00%(3)*......................................... 37,000 1,382,875
-------------
TOTAL PREFERRED STOCK (cost $17,262,218).............................. 18,092,728
-------------
<CAPTION>
WARRANTS -- 0.4%+
---------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER DISCRETIONARY -- 0.1%
Retail -- 0.1%
Electronic Retailing Systems International, Inc. 2/01/04*............. 1,500 90,000
-------------
INDUSTRIAL & COMMERCIAL -- 0.0%
Multi-Industry -- 0.0%
Golden Ocean Group Ltd. 8/31/01....................................... 2,500 25
-------------
</TABLE>
- ---------------------
22
<PAGE> 18
<TABLE>
<CAPTION>
WARRANTS (continued) SHARES VALUE
---------------------------------------------------------------------------------------------------
<S> <C> <C>
INFORMATION & ENTERTAINMENT -- 0.0%
Broadcasting & Media -- 0.0%
Benedek Communications Corp. 7/01/07.................................. 12,500 $ 18,750
Cable -- 0.0%
Australis Holdings Property Ltd. 10/30/01*............................ 1,750 0
United International Holdings, Inc. 11/15/99(3)....................... 1,750 13,125
Gaming -- 0.0%
Fitzgerald South, Inc. 3/15/99*....................................... 2,000 20
-------------
31,895
-------------
INFORMATION TECHNOLOGY -- 0.3%
Cellular -- 0.1%
Cellular Communications International, Inc. 8/15/03................... 2,000 20
Clearnet Communications, Inc. 9/15/05................................. 3,300 19,800
International Wireless Communications Holdings, Inc. 8/15/01(3)*...... 1,250 0
Microcell Telecommunications 6/15/06*................................. 8,000 108,000
Microcell Telecommunications 6/15/06(3)............................... 8,000 0
Occidente Y Caribe Celular SA 3/15/04*................................ 8,000 0
Telecommunications -- 0.2%
Colt Telecommunications Group PLC 3/31/98............................. 2,000 20
Hyperion Telecommunications, Inc. 4/01/01*............................ 3,000 179,997
Intermedia Communications, Inc. 6/01/00(3)*........................... 2,500 187,500
Ionica PLC 8/15/06.................................................... 1,000 100,000
-------------
595,337
-------------
UTILITIES -- 0.0%
Telephone -- 0.0%
Primus Telecommunications Group 8/01/04(3)............................ 1,000 10,000
-------------
TOTAL WARRANTS (cost $685,723)........................................ 727,257
-------------
TOTAL INVESTMENT SECURITIES (cost $184,561,890)....................... 186,227,046
-------------
<CAPTION>
PRINCIPAL
REPURCHASE AGREEMENT -- 5.9% AMOUNT
---------------------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT -- 5.9%
Joint Repurchase Agreement Account (Note 3) (cost $11,659,000)........ $11,659,000 11,659,000
-------------
TOTAL INVESTMENTS --
(cost $196,220,890) 101.1% 197,886,046
Liabilities in excess of other assets -- (1.1) (2,247,040)
------ -------------
NET ASSETS -- 100.0% $195,639,006
====== =============
</TABLE>
-----------------------------
+ Non-income producing securities
* Resale restricted to qualified institutional buyers
(1) Represents a zero coupon bond which will convert to an
interest-bearing security at a later date
(2) Consists of more than one class of securities traded together
as a unit; generally bonds with attached stocks or warrants
(3) Fair valued security; see Note 2
(4) PIK ("Payment-in-Kind") payment made with additional
securities in lieu of cash
(5) Variable rate security; rate as of November 30, 1997
(6) Bond in default
See Notes to Financial Statements
---------------------
23
<PAGE> 19
- ---------------------
SUNAMERICA SERIES TRUST
WORLDWIDE HIGH INCOME
PORTFOLIO INVESTMENT PORTFOLIO -- NOVEMBER 30, 1997
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES -- 94.1% AMOUNT VALUE
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER DISCRETIONARY -- 1.2%
Retail -- 1.2%
Kmart Corp. 7.75% 2012........................................... $ 150,000 $ 144,737
Kmart Corp. 8.38% 2022........................................... 135,000 132,300
Southland Corp. 5.00% 2003....................................... 1,445,000 1,246,313
------------
1,523,350
------------
CONSUMER STAPLES -- 1.2%
Food, Beverage & Tobacco -- 0.8%
Ameriserve Food Distribution, Inc. 8.88% 2006*................... 300,000 300,000
Ameriserve Food Distribution, Inc. 10.13% 2007*.................. 135,000 140,400
Fleming Cos., Inc. 10.50% 2004*.................................. 365,000 385,075
Fleming Cos., Inc. 10.63% 2007*.................................. 120,000 126,900
Household Products -- 0.4%
Revlon Worldwide Parent Corp. zero coupon 2001................... 685,000 474,362
------------
1,426,737
------------
ENERGY -- 1.0%
Energy Services -- 0.2%
EES Coke Battery, Inc. 9.38% 2007*............................... 175,000 183,591
Energy Sources -- 0.8%
Nuevo Energy Co. 9.50% 2006...................................... 375,000 398,438
Synder Oil Corp. 8.75% 2007...................................... 490,000 494,900
Transamerican Energy Corp. zero coupon 2002(2)*.................. 175,000 142,188
------------
1,219,117
------------
FINANCE -- 9.3%
Banks -- 3.5%
Export Credit Bank of Turkey 9.00% 2000.......................... 1,750,000 1,666,875
SBC Agro Finance Bank 10.25% 2000................................ 2,400,000 1,968,000
Western Financial Savings Bank 8.88% 2007........................ 735,000 703,763
Financial Services -- 5.8%
Alps Series 96-1, Class D 12.72% 2006*........................... 149,588 161,313
California FM Lease Trust 8.50% 2017*............................ 244,664 258,120
Criimi Mae, Inc. 9.13% 2002...................................... 300,000 300,375
Dillon Read Structured Finance Corp. Series 1993 Class A 6.66%
2010........................................................... 90,902 82,670
Dillon Read Structured Finance Corp. Series 1994 Class A 7.60%
2007........................................................... 273,484 267,361
Dillon Read Structured Finance Corp. Series 1994 Class A 8.38%
2015........................................................... 625,000 611,913
FMAC Loan Receivables Trust Class C 7.93% 2018*.................. 147,489 130,787
Fox/Liberty Networks LLC 8.88% 2007.............................. 160,000 159,200
Fox/Liberty Networks LLC zero coupon 2007........................ 2,300,000 1,443,250
Long Beach Acceptance Auto Grantor Trust Series 1997-1 Class B
14.22% 2003.................................................... 500,000 499,760
Navistar Financial Corp. 9.00% 2002.............................. 105,000 108,675
OHA Auto Grantor Trust 11.00% 2004*.............................. 1,000,000 1,001,559
Securitized Multiple Asset Series 1997-5 Class A1 7.72% 2005*.... 543,661 544,665
Unexim International Finance Bank 9.88% 2000*.................... 2,100,000 1,701,000
------------
11,609,286
------------
</TABLE>
- ---------------------
24
<PAGE> 20
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (continued) AMOUNT VALUE
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE -- 2.8%
Health Services -- 2.6%
Integrated Health Services, Inc. 9.50% 2007*..................... $ 1,095,000 $ 1,105,950
Tenet Healthcare Corp. 8.63% 2007................................ 745,000 761,762
Vencor, Inc. 8.63% 2007*......................................... 1,395,000 1,374,075
Medical Products -- 0.2%
Kinetic Concepts, Inc. 9.63% 2007*............................... 300,000 302,250
------------
3,544,037
------------
INDUSTRIAL & COMMERCIAL -- 3.3%
Aerospace & Military Technology -- 0.3%
Jet Equipment Trust 11.79% 2013*................................. 300,000 399,117
Business Services -- 0.6%
Norcal Waste Systems, Inc. 13.50% 2005(1)........................ 615,000 707,250
Electrical Equipment -- 2.4%
CSN Iron SA 9.13% 2007........................................... 2,100,000 1,800,750
Horseshoe Gaming LLC 9.38% 2007.................................. 1,220,000 1,262,700
------------
4,169,817
------------
INFORMATION & ENTERTAINMENT -- 8.9%
Broadcasting & Media -- 5.5%
Big Flower Press Holdings, Inc. 8.88% 2007....................... 500,000 505,000
Grupo Televisa SA de CV zero coupon 2008(2)...................... 950,000 722,000
Nextel Communications, Inc. zero coupon 2004(2).................. 955,000 823,688
Outdoor Systems Inc., 8.88% 2007................................. 750,000 774,375
Paramount Communications, Inc. 8.25% 2022........................ 1,375,000 1,377,626
RCN Corp. zero coupon 2007(2)*................................... 900,000 520,875
Sinclair Broadcast Group, Inc. 9.00% 2007........................ 840,000 844,200
TCI Satellite Entertainment, Inc. zero coupon 2007(2)*........... 1,250,000 787,500
Telesystem International Wireless, Inc. zero coupon 2007(2)*..... 1,000,000 542,500
Cable -- 1.1%
Cablevision Systems Corp. 9.88% 2006............................. 525,000 569,625
Rogers Cablesystems Ltd. 10.13% 2012............................. 425,000 459,000
Rogers Cablesystems Ltd. Series B 10.00% 2005.................... 295,000 323,025
Gaming -- 0.9%
Grand Casino, Inc. 10.13% 2003................................... 680,000 722,500
Station Casinos, Inc. 9.75% 2007*................................ 400,000 403,000
Leisure & Tourism -- 1.4%
Host Marriott Corp. Acquisition Properties, Inc. Class B 9.00%
2007........................................................... 555,000 571,650
Host Marriott Travel Plazas Class B 9.50% 2005................... 680,000 717,400
Huntsman Corp. 9.09% 1998(1)*.................................... 440,000 460,900
------------
11,124,864
------------
INFORMATION TECHNOLOGY -- 10.7%
Cellular -- 2.0%
Comcast Cellular Holdings, Inc. 9.50% 2007*...................... 1,035,000 1,078,988
Rogers Cantel, Inc. 8.30% 2007................................... 1,195,000 1,196,494
Rogers Communications, Inc. 8.88% 2007........................... 75,000 75,562
Rogers Communications, Inc. 9.13% 2006........................... 90,000 91,350
Electronics -- 1.0%
Advanced Micro Devices, Inc. 11.00% 2003......................... 1,140,000 1,225,500
</TABLE>
---------------------
25
<PAGE> 21
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (continued) AMOUNT VALUE
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
INFORMATION TECHNOLOGY (continued)
Telecommunications -- 7.7%
Brooks Fiber Properties, Inc. zero coupon 2006(2)................ $ 475,000 $ 390,094
Brooks Fiber Properties, Inc. 11.88% 2006(1)*.................... 650,000 515,125
CIA International de Telecommunicaciones 10.38% 2004............. 5,000,000 4,250,000
Comcast Corp. 1.13% 2007......................................... 415,000 267,675
Consorcio Ecuatoriano de Telecomunicaciones 14.00% 2002.......... 1,600,000 1,600,000
Dial Callable Communications, Inc. zero coupon 2004(2)........... 600,000 570,000
Hermes Europe Railtel BV 11.50% 2007............................. 90,000 97,875
Intermedia Communications, Inc. zero coupon 2007(2).............. 400,000 274,000
IXC Communications, Inc. 12.50% 2005............................. 425,000 484,500
Lenfest Communications, Inc. 8.38% 2005.......................... 165,000 165,412
Qwest Communications International, Inc. 10.88% 2007............. 200,000 225,000
Teleport Communications Group zero coupon 2007(2)................ 1,070,000 847,975
------------
13,355,550
------------
MATERIALS -- 2.3%
Chemicals -- 0.9%
ISP Holdings, Inc. Class B 9.00% 2003............................ 1,090,000 1,130,875
Forest Products -- 0.2%
S.D. Warren Co. 12.00% 2004...................................... 265,000 296,800
Metals & Minerals -- 1.2%
Acindar Industria Argentina de Aceros SA 11.66% due 1998......... 1,500,000 1,507,500
------------
2,935,175
------------
NON-U.S. GOVERNMENT OBLIGATIONS -- 46.6%
Foreign Government -- 46.6%
Brazil Credit Linked Note zero coupon 1999(2).................... 4,000,000 3,320,000
Federal Republic of Brazil 4.50% 2014(1)......................... 11,815,850 8,861,888
Federal Repuplic of Brazil 10.13% 2027........................... 1,460,000 1,287,720
Ivory Coast Floating Rate Interest Reduction Bond 2.00%
2049(1)*....................................................... 2,400,000 792,000
Jamaica Government Bonds 9.63% 2002.............................. 1,000,000 945,000
Jamaica Government Bonds 12.00% 1999............................. 2,000,000 2,020,000
Republic of Argentina 6.69% 2005(1).............................. 2,112,000 1,869,120
Repuplic of Argentina 9.75% 2027................................. 1,100,000 1,013,100
Republic of Argentina 11.75% 2007*............................... 3,500,000 3,255,000
Republic of Bulgaria 2.25% 2012(1)............................... 6,000,000 3,547,500
Republic of Bulgaria 6.69% 2011(1)............................... 5,500,000 3,867,188
Republic of Ecuador 6.69% 2015(3)(1)............................. 4,374,240 2,706,561
Republic of Ecuador 6.69% 2015(1)................................ 2,460,510 1,522,440
Republic of Panama 8.88% 2027.................................... 650,000 598,000
Republic of Peru 3.25% 2017(1)*.................................. 4,300,000 2,451,000
Republic of Venezuela 6.75% 2007(1).............................. 5,000,000 4,412,500
Republic of Venezuela 9.25% 2027(1).............................. 5,000,000 4,395,000
Russia Federation Ministry Finance 3.00% 2003 GDR*............... 1,200,000 747,000
Russia Principal Notes zero coupon 1999(3)....................... 7,600,000 4,332,000
United Mexican States 6.25% 2019................................. 3,750,000 3,039,375
United Mexican States 11.38% 2016................................ 3,000,000 3,390,000
------------
58,372,392
------------
UTILITIES -- 1.9%
Electric Utilities -- 1.7%
AES Corp. 8.50% 2007*............................................ 490,000 485,101
Midland Cogeneration 10.33% 2002................................. 260,301 284,181
Midland Funding Corp. 11.75% 2005................................ 40,000 47,821
Mosenergo Finance BV 8.38% 2002*................................. 1,550,000 1,333,000
</TABLE>
- ---------------------
26
<PAGE> 22
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (continued) AMOUNT VALUE
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES (continued)
Telephone -- 0.2%
Teligent, Inc. 11.50% 2007....................................... $ 250,000 $ 250,000
------------
2,400,103
------------
LOAN AGREEMENT -- 4.9%
Loan Agreement -- 4.9%
Columbia Hercules 1991 Integrated Loan 7.00% 1997................ 1,350,000 1,269,000
Gabon Loans 6.69% 2004........................................... 2,785,714 2,312,143
Ivory Coast Caisse Autonome zero coupon+......................... DEM 1,445,000 340,048
Morocco Restructing & Consolidating Agreement 5.84% 1998(1)...... 2,000,000 1,680,000
Russian Bank of Foreign Economic Affairs loan zero coupon+....... 600,000 512,400
------------
6,113,591
------------
TOTAL BONDS & NOTES (cost $119,967,539).......................... 117,794,019
------------
<CAPTION>
COMMON STOCK -- 0.0% SHARES
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
INFORMATION & ENTERTAINMENT -- 0.0%
Broadcasting & Media -- 0.0%
Nextel Communications, Inc., Class A+ (cost $35,613)............. 2,207 55,727
------------
<CAPTION>
PREFERRED STOCK -- 1.5%
--------------------------------------------------------------------------------------------------------
INFORMATION & ENTERTAINMENT -- 1.5%
Broadcasting & Media -- 1.5%
Time Warner, Inc. Series M 10.25% (cost $1,874,714).............. 1,670 1,907,975
------------
TOTAL INVESTMENT SECURITIES (cost $121,877,866).................. 119,757,721
------------
</TABLE>
---------------------
27
<PAGE> 23
<TABLE>
<CAPTION>
PRINCIPAL
REPURCHASE AGREEMENT -- 6.5% AMOUNT VALUE
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT -- 6.5%
Agreement with State Street Bank & Trust Co., bearing interest of
5.00% dated 11/28/97, to be repurchased 12/01/97 in the amount
of $8,100,374 and collateralized by $8,155,000 U.S. Treasury
Notes 6.35% due 4/30/99 approximate aggregate value $8,266,568
(cost $8,097,000).............................................. $ 8,097,000 $ 8,097,000
---------------
TOTAL INVESTMENTS --
(cost $129,974,866) 102.1% 127,854,721
Liabilities in excess of other assets -- (2.1) (2,630,400)
------ --------------
NET ASSETS -- 100.0% $ 125,224,321
====== ==============
</TABLE>
-----------------------------
+ Non-income producing security
* Resale restricted to qualified institutional buyers
(1) Variable rate security; rate as of November 30, 1997
(2) Represents a zero coupon bond which will convert to an
interest-bearing security at a later date
(3) A portion of the coupon interest is received in cash and a
portion is capitalized in the principal of the security
DEM -- Deutsche Mark GDR -- Global Depository
Receipt
Allocation of investments as a percentage of net assets by country
as of November 30, 1997:
<TABLE>
<S> <C>
United States............................................................ 36.5%
Brazil................................................................... 10.8
Argentina................................................................ 9.5
Venezuela................................................................ 7.0
Russia................................................................... 6.6
Bulgaria................................................................. 5.9
Mexico................................................................... 5.7
Ecuador.................................................................. 4.7
Jamaica.................................................................. 2.4
Peru..................................................................... 2.0
Panama................................................................... 1.9
Netherlands.............................................................. 1.9
Gabon.................................................................... 1.9
Canada................................................................... 1.8
Morocco.................................................................. 1.3
Turkey................................................................... 1.3
Ivory Coast.............................................................. 0.9
-----
102.1%
======
</TABLE>
See Notes to Financial Statements
- ---------------------
28
<PAGE> 24
- ---------------------
SUNAMERICA SERIES TRUST
SUNAMERICA BALANCED
PORTFOLIO INVESTMENT PORTFOLIO -- NOVEMBER 30, 1997
<TABLE>
<CAPTION>
COMMON STOCK -- 67.9% SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER DISCRETIONARY -- 4.0%
Apparel & Textiles -- 0.8%
Gap, Inc............................................................... 7,000 $ 375,813
Housing -- 0.9%
Home Depot, Inc........................................................ 7,500 419,531
Retail -- 2.3%
CVS Corp............................................................... 4,000 265,500
Republic Industries, Inc.+............................................. 5,000 130,312
Wal-Mart Stores, Inc................................................... 10,000 399,375
Woolworth Corp.+....................................................... 10,000 216,250
-------------
1,806,781
-------------
CONSUMER STAPLES -- 2.1%
Food, Beverage & Tobacco -- 1.4%
PepsiCo, Inc........................................................... 5,000 184,375
Philip Morris Cos., Inc................................................ 10,000 435,000
Household Products -- 0.7%
Procter & Gamble Co.................................................... 4,000 305,250
-------------
924,625
-------------
ENERGY -- 6.3%
Energy Services -- 2.1%
ENSCO International, Inc............................................... 6,000 214,500
Halliburton Co......................................................... 6,000 323,625
Schlumberger Ltd....................................................... 5,000 411,563
Energy Sources -- 4.2%
Baker Hughes, Inc...................................................... 6,000 251,250
Chevron Corp........................................................... 5,000 400,937
Mobil Corp............................................................. 4,000 287,750
Noble Affiliates, Inc.................................................. 5,000 185,625
Royal Dutch Petroleum Co. ADR.......................................... 4,000 210,750
Seagull Energy Corp.+.................................................. 10,000 228,125
Texaco, Inc............................................................ 5,000 282,500
-------------
2,796,625
-------------
FINANCE -- 20.3%
Banks -- 10.4%
Ahmanson (H.F.) & Co................................................... 5,000 297,500
Banc One Corp.......................................................... 5,000 256,875
BankAmerica Corp....................................................... 5,000 365,000
BankBoston Corp........................................................ 5,000 445,625
Barnett Banks, Inc..................................................... 3,500 246,312
Chase Manhattan Corp................................................... 4,000 434,500
Citicorp............................................................... 2,000 239,875
First Union Corp....................................................... 6,000 292,500
Fleet Financial Group, Inc............................................. 3,000 198,187
Hibernia Corp., Class A................................................ 20,000 362,500
Mellon Bank Corp....................................................... 3,000 170,063
Summit Bancorp......................................................... 15,000 699,375
Wells Fargo & Co....................................................... 2,000 614,500
</TABLE>
---------------------
29
<PAGE> 25
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE (continued)
Financial Services -- 7.6%
American Express Co.................................................... 7,000 $ 552,125
Beneficial Corp........................................................ 3,000 232,875
C.I.T Group, Inc. Class A.............................................. 7,000 212,625
Donaldson, Lufkin & Jenrette, Inc...................................... 4,000 291,500
Household International, Inc........................................... 2,000 252,000
Lehman Brothers Holdings, Inc.......................................... 5,000 252,813
Morgan Stanley, Dean Witter, Discover & Co............................. 5,000 271,563
Providian Financial Corp............................................... 7,000 308,437
ReliaStar Financial Corp............................................... 9,300 344,100
Transamerica Corp...................................................... 2,000 217,125
Travelers Group, Inc................................................... 9,000 454,500
Insurance -- 2.3%
Allstate Corp.......................................................... 5,000 429,375
Conseco, Inc........................................................... 8,000 372,500
St. Paul Co., Inc...................................................... 3,000 240,000
-------------
9,054,350
-------------
HEALTHCARE -- 10.0%
Drugs -- 7.9%
Amgen, Inc.+........................................................... 4,000 204,500
Biogen, Inc.+.......................................................... 3,000 105,000
Bristol-Myers Squibb Co................................................ 5,000 468,125
IDEC Pharmaceuticals Corp.+............................................ 19,500 681,281
Lilly (Eli) & Co....................................................... 6,000 378,375
Merck & Co., Inc....................................................... 4,000 378,250
Pfizer, Inc............................................................ 7,000 509,250
Schering-Plough Corp................................................... 6,000 376,125
Warner-Lambert Co...................................................... 3,000 419,625
Health Services -- 0.2%
Chiron Corp.+.......................................................... 6,000 109,125
Medical Products -- 1.9%
Johnson & Johnson...................................................... 5,000 314,687
Neurex Corp.+.......................................................... 10,000 156,250
Novartis AG ADR........................................................ 3,000 239,674
US Surgical Corp....................................................... 5,000 131,875
-------------
4,472,142
-------------
INDUSTRIAL & COMMERCIAL -- 4.1%
Aerospace & Military Technology -- 1.5%
AlliedSignal, Inc...................................................... 3,000 111,375
Boeing Co.............................................................. 6,000 318,750
United Technologies Corp............................................... 3,400 254,787
Electrical Equipment -- 1.9%
General Electric Co.................................................... 6,000 442,500
Westinghouse Electric Corp............................................. 13,000 390,000
Machinery -- 0.3%
Deere & Co............................................................. 2,000 109,625
Transportation -- 0.4%
Burlington Northern Santa Fe........................................... 2,000 183,000
-------------
1,810,037
-------------
</TABLE>
- ---------------------
30
<PAGE> 26
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
INFORMATION & ENTERTAINMENT -- 2.4%
Broadcasting & Media -- 1.0%
AirTouch Communications, Inc.+......................................... 8,000 $ 314,000
Teligent, Inc.......................................................... 5,000 128,125
Leisure & Tourism -- 1.4%
Carnival Corp., Class A................................................ 5,000 270,313
HFS, Inc.+............................................................. 5,000 343,125
-------------
1,055,563
-------------
INFORMATION TECHNOLOGY -- 10.9%
Communication Equipment -- 2.3%
Nokia Corp., Class A ADR............................................... 3,000 249,375
Northern Telecom Ltd................................................... 5,000 449,062
Tellabs, Inc.+......................................................... 6,000 312,000
Computers & Business Equipment -- 2.5%
Compaq Computer Corp................................................... 3,000 187,313
Dell Computer Corp.+................................................... 3,000 252,562
Hewlett-Packard Co..................................................... 4,000 244,250
International Business Machines Corp................................... 4,000 438,250
Electronics -- 2.5%
Intel Corp............................................................. 5,000 388,125
Motorola, Inc.......................................................... 7,000 440,125
Texas Instruments, Inc................................................. 6,000 295,500
Software -- 1.2%
Cisco Systems, Inc.+................................................... 3,000 258,750
Microsoft Corp.+....................................................... 2,000 283,000
Telecommunications -- 2.4%
Lucent Technologies, Inc............................................... 10,000 801,250
Teleport Communications Group Inc., Class A+........................... 5,000 245,000
-------------
4,844,562
-------------
MATERIALS -- 1.9%
Chemicals -- 0.7%
du Pont (E.I.) de Nemours & Co......................................... 5,000 302,813
Forest Products -- 0.9%
Champion International Corp............................................ 8,000 428,500
Metals & Minerals -- 0.3%
Aluminum Co. of America................................................ 2,000 134,500
-------------
865,813
-------------
REAL ESTATE -- 0.7%
Real Estate Companies -- 0.3%
Security Capital Group, Inc., Class B+................................. 5,000 160,625
Real Estate Investment Trusts -- 0.4%
Equity Office Properties Trust......................................... 5,000 162,188
-------------
322,813
-------------
UTILITIES -- 5.2%
Electric Utilities -- 0.5%
CalEnergy Co., Inc.+................................................... 7,000 232,750
Gas & Pipeline Utilities -- 1.0%
Enron Corp............................................................. 10,000 387,500
TransCoastal Marine Services, Inc.+.................................... 2,000 39,000
</TABLE>
---------------------
31
<PAGE> 27
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES (continued)
Telephone -- 3.7%
AT&T Corp.............................................................. 22,000 $ 1,229,250
Bell Atlantic Corp..................................................... 5,000 446,250
-----------
2,334,750
-----------
TOTAL COMMON STOCK (cost $27,039,307).................................. 30,288,061
-----------
PRINCIPAL
BONDS & NOTES -- 26.6% AMOUNT
---------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY -- 1.7%
Automotive -- 1.7%
Chrysler Corp. 7.45% 2027.............................................. $ 750,000 792,578
-----------
FINANCE -- 2.3%
Financial Services -- 2.3%
Morgan Stanley Group, Inc. 6.88% 2007.................................. 1,000,000 1,015,970
-----------
INFORMATION TECHNOLOGY -- 2.2%
Electronics -- 2.2%
Texas Instruments, Inc. 6.13% 2006..................................... 1,000,000 972,930
-----------
U.S. GOVERNMENT -- 20.4%
U.S. Treasury Bonds & Notes -- 20.4%
United States Treasury Bonds 6.63% 2027................................ 1,150,000 1,231,396
United States Treasury Notes 6.00% 2000................................ 1,000,000 1,004,690
United States Treasury Notes 6.13% 2007................................ 3,500,000 3,567,270
United States Treasury Notes 6.25% 2002................................ 2,250,000 2,283,750
United States Treasury Notes 6.38% 2000................................ 1,000,000 1,012,810
-----------
9,099,916
-----------
TOTAL BONDS & NOTES (cost $11,565,014)................................. 11,881,394
-----------
TOTAL INVESTMENT SECURITIES (cost $38,604,321)......................... 42,169,455
-----------
<CAPTION>
REPURCHASE AGREEMENT -- 5.3%
---------------------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT -- 5.3%
Joint Repurchase Agreement Account (Note 3)
(cost $2,364,000).................................................... 2,364,000 2,364,000
-----------
TOTAL INVESTMENTS --
(cost $40,968,321) 99.8% 44,533,455
Other assets less liabilities -- 0.2 87,701
----- -----------
NET ASSETS -- 100.0% $44,621,156
===== ===========
</TABLE>
-----------------------------
+ Non-income producing securities
ADR -- American Depository Receipt
See Notes to Financial Statements
- ---------------------
32
<PAGE> 28
- ---------------------
SUNAMERICA SERIES TRUST
BALANCED/PHOENIX INVESTMENT
COUNSEL PORTFOLIO INVESTMENT PORTFOLIO -- NOVEMBER 30, 1997
<TABLE>
<CAPTION>
COMMON STOCK -- 56.2% SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER DISCRETIONARY -- 4.6%
Housing -- 0.9%
Home Depot, Inc...................................................... 14,900 $ 833,469
Retail -- 3.7%
Borders Group, Inc.+................................................. 13,100 374,169
CVS Corp............................................................. 15,200 1,008,900
Rite Aid Corp........................................................ 15,900 1,045,425
Safeway, Inc.+....................................................... 19,300 1,172,475
-----------
4,434,438
-----------
CONSUMER STAPLES -- 3.9%
Food, Beverage & Tobacco -- 1.5%
Philip Morris Cos., Inc.............................................. 33,800 1,470,300
Household Products -- 2.4%
Colgate-Palmolive Co................................................. 8,700 581,269
Gillette Co.......................................................... 12,400 1,144,675
Sunbeam Corp......................................................... 12,200 537,562
-----------
3,733,806
-----------
ENERGY -- 7.2%
Energy Services -- 4.9%
BJ Services Co.+..................................................... 6,600 473,962
Cooper Cameron Corp.+................................................ 3,700 225,469
Diamond Offshore Drilling, Inc....................................... 8,900 443,888
Halliburton Co....................................................... 16,500 889,969
Nabors Industries, Inc.+............................................. 9,300 326,081
Noble Drilling Corp.+................................................ 7,800 234,488
Rowan Cos., Inc.+.................................................... 7,000 238,000
Santa Fe International Corp.+........................................ 7,500 314,531
Schlumberger Ltd..................................................... 12,500 1,028,906
Transocean Offshore, Inc............................................. 10,100 479,119
Energy Sources -- 2.3%
Elf Aquitaine SA ADR................................................. 13,400 767,150
Tosco Corp........................................................... 26,700 869,419
YPF Sociedad Anonima, Class D ADR.................................... 16,900 567,206
-----------
6,858,188
-----------
FINANCE -- 9.9%
Banks -- 4.8%
AmSouth Bancorp...................................................... 3,400 177,013
Banco Rio de La Plata SA, Class B ADR+............................... 18,000 226,125
BankAmerica Corp..................................................... 9,600 700,800
BankBoston Corp...................................................... 9,700 864,512
Citicorp............................................................. 3,600 431,775
Fleet Financial Group, Inc........................................... 600 39,638
Mellon Bank Corp..................................................... 20,000 1,133,750
NationsBank Corp..................................................... 17,400 1,045,087
</TABLE>
---------------------
33
<PAGE> 29
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE (continued)
Financial Services -- 3.7%
American Express Co.................................................. 2,500 $ 197,188
Compass Bancshares, Inc.............................................. 2,500 100,000
Franklin Resources, Inc.............................................. 1,100 98,863
Merrill Lynch & Co., Inc............................................. 13,000 912,437
Price (T. Rowe) Associates, Inc...................................... 8,150 529,750
Travelers Group, Inc................................................. 21,750 1,098,375
Washington Mutual Inc................................................ 8,400 580,650
Insurance -- 1.4%
Allstate Corp........................................................ 12,000 1,030,500
Hartford Financial Services Group, Inc............................... 3,600 301,500
-----------
9,467,963
-----------
HEALTHCARE -- 9.3%
Drugs -- 6.7%
Bristol-Myers Squibb Co.............................................. 9,400 880,075
Cardinal Health, Inc................................................. 11,300 855,975
Elan Corp. PLC ADR+.................................................. 5,700 300,675
Lilly (Eli) & Co..................................................... 12,700 800,894
Pfizer, Inc.......................................................... 27,000 1,964,250
Warner-Lambert Co.................................................... 8,100 1,132,987
Watson Pharmaceuticals, Inc.+........................................ 16,900 502,775
Health Services -- 0.6%
HEALTHSOUTH Corp.+................................................... 21,400 561,750
Medical Products -- 2.0%
Centocor, Inc.+...................................................... 9,600 417,600
Guidant Corp......................................................... 14,300 918,775
Medtronic, Inc....................................................... 12,600 601,650
-----------
8,937,406
-----------
INDUSTRIAL & COMMERCIAL -- 3.2%
Electrical Equipment -- 1.2%
General Electric Co.................................................. 16,300 1,202,125
Machinery -- 0.6%
Deere & Co........................................................... 10,400 570,050
Multi-Industry -- 1.2%
Tyco International Ltd............................................... 29,000 1,138,250
Transportation -- 0.2%
Federal Express Corp.+............................................... 2,700 181,069
-----------
3,091,494
-----------
INFORMATION & ENTERTAINMENT -- 2.6%
Broadcasting & Media -- 2.6%
AirTouch Communications, Inc.+....................................... 35,600 1,397,300
Chancellor Media Corp.+.............................................. 3,700 222,231
Liberty Media Group Corp. Class A+................................... 24,900 840,375
-----------
2,459,906
-----------
INFORMATION TECHNOLOGY -- 13.7%
Communication Equipment -- 0.8%
CIENA Corp.+......................................................... 14,900 804,600
Computers & Business Equipment -- 4.7%
EMC Corp.+........................................................... 28,800 873,000
International Business Machines Corp................................. 28,000 3,067,750
Staples, Inc.+....................................................... 21,300 600,394
</TABLE>
- ---------------------
34
<PAGE> 30
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
INFORMATION TECHNOLOGY (continued)
Electronics -- 4.3%
Adaptec, Inc.+....................................................... 16,900 $ 836,550
Linear Technology Corp............................................... 4,200 270,375
National Semiconductor Corp.+........................................ 23,500 778,437
Philips Electronics NV ADR........................................... 24,200 1,621,400
Texas Instruments, Inc............................................... 12,000 591,000
Software -- 3.2%
BMC Software, Inc.+.................................................. 9,000 583,875
Cisco Systems, Inc.+................................................. 8,500 733,125
Compuware Corp.+..................................................... 17,700 618,394
HBO & Co.+........................................................... 19,100 857,112
J.D. Edwards & Co.+.................................................. 2,000 68,500
Yahoo!, Inc.+........................................................ 3,100 158,488
Telecommunications -- 0.7%
Lucent Technologies, Inc............................................. 8,100 649,012
-----------
13,112,012
-----------
MATERIALS -- 0.3%
Chemicals -- 0.3%
Solutia, Inc......................................................... 12,500 285,156
-----------
UTILITIES -- 1.5%
Telephone -- 1.5%
AT&T Corp............................................................ 25,900 1,447,163
-----------
TOTAL COMMON STOCK (cost $49,744,386)................................ 53,827,532
-----------
<CAPTION>
PRINCIPAL
BONDS & NOTES -- 32.7% AMOUNT
----------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE -- 4.4%
Financial Services -- 4.4%
Aesop Funding II LLC 6.40% 2003*..................................... $ 600,000 600,096
CS First Boston Mortgage Securities Corp. 7.18% 2027(1).............. 300,000 303,000
DLJ Mortgage Acceptance Corp. 7.58% 2028*............................ 100,000 106,063
Federal National Mortgage Association Remic Trust 6.85% 2020......... 700,000 711,375
First Union-Lehman Brothers Commercial Mortgage Trust 7.43% 2029..... 140,000 146,650
Fleetwood Credit Grantor Trust 6.90% 2012............................ 74,058 74,834
GE Capital Mortgage Services, Inc. 7.25% 2026........................ 296,041 300,166
Green Tree Financial Corp. 7.40% 2027................................ 125,000 128,926
Green Tree Financial Corp. 7.60% 2027................................ 125,000 129,668
Nationslink Funding Corp. 7.69% 2005................................. 250,000 264,102
Residential Asset Securitization Trust 8.00% 2026.................... 205,594 212,179
Residential Funding Mortgage Securities 6.75% 2011................... 279,930 282,336
Residential Funding Mortgage Securities 7.10% 2026................... 200,000 202,622
Residential Funding Mortgage Securities 7.25% 2026................... 295,391 297,976
Structured Asset Securities Corp. 6.95% 2007......................... 140,000 142,625
Structured Asset Securities Corp. 7.00% 2026......................... 300,000 300,562
-----------
4,203,180
-----------
INDUSTRIAL & COMMERCIAL -- 0.4%
Electrical Equipment -- 0.4%
Capital Equipment Resolution 6.45% 2002.............................. 360,000 358,987
-----------
</TABLE>
---------------------
35
<PAGE> 31
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (continued) AMOUNT VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
MATERIALS -- 0.4%
Forest Products -- 0.4%
Buckeye Cellulose Corp. 8.50% 2005................................... $ 300,000 $ 304,500
Buckeye Cellulose Corp. 9.25% 2008................................... 100,000 105,500
-----------
410,000
-----------
MUNICIPAL BONDS -- 2.6%
Municipal Bonds -- 2.6%
California State Department Water Resources 5.00% 2029............... 190,000 182,390
Florida State Department of Transportation 5.00% 2027................ 230,000 219,740
Houston Texas Water & Sewer Systems Revenue 5.00% 2025............... 290,000 277,785
Kern County California Pension Obligation 7.26% 2014................. 220,000 231,563
Long Beach California Pension Obligation 6.87% 2006.................. 30,000 31,093
Massachusetts State Water Resources Authority 5.00% 2024............. 230,000 220,506
Miami Beach Florida Special Obligation 8.60% 2021.................... 430,000 473,714
Newport News 7.05% 2025.............................................. 250,000 251,407
Orange County California Pension Obligation 7.62% 2008............... 160,000 172,791
San Bernardino County California Financing Authority 6.87% 2008...... 15,000 15,491
San Bernardino County California Financing Authority 6.94% 2009...... 35,000 36,329
University Miami Florida Exchange Revenue 7.65% 2020................. 80,000 82,907
Ventura County California Pension 6.54% 2005......................... 30,000 30,127
Washington State General Obligation Series 1997E 5.00% 2022.......... 290,000 279,261
-----------
2,505,104
-----------
NON-U.S. GOVERNMENT OBLIGATIONS -- 1.6%
Foreign Government -- 1.6%
Columbia Republic 7.63% 2007......................................... 300,000 281,042
Compania Sud Americana de Vapores SA 7.38% 2003...................... 50,000 48,300
Federative Republic of Brazil 5.25% 2024(2).......................... 300,000 207,000
Federative Republic of Brazil 6.69% 2024(2).......................... 170,000 133,875
Republic of Argentina 5.50% 2023(2).................................. 475,000 337,250
Republic of Argentina 6.88% 2023(2).................................. 175,000 142,187
United Mexican States 6.25% 2019..................................... 225,000 179,016
United Mexican States 6.62% 2019..................................... 250,000 226,550
-----------
1,555,220
-----------
U.S. GOVERNMENT AND AGENCIES -- 23.3%
U.S. Government & Agencies -- 23.3%
Government National Mortgage Association 6.50% 2023.................. 251,489 248,190
Government National Mortgage Association 6.50% 2026.................. 317,404 312,344
Government National Mortgage Association 6.50% 2026.................. 3,243,779 3,192,073
United States Treasury Bonds 6.00% 2026.............................. 210,000 206,686
United States Treasury Bonds 6.38% 2027.............................. 2,045,000 2,126,473
United States Treasury Notes 5.75% 2000.............................. 350,000 349,342
United States Treasury Notes 5.75% 2002.............................. 4,860,000 4,844,059
United States Treasury Notes 6.00% 2000.............................. 3,500,000 3,516,415
United States Treasury Notes 6.50% 2005.............................. 1,450,000 1,501,881
United States Treasury Notes 6.50% 2006.............................. 3,895,000 4,050,177
United States Treasury Notes 6.75% 2000.............................. 1,200,000 1,224,936
United States Treasury Notes 6.88% 2000.............................. 450,000 460,264
United States Treasury Notes 7.50% 2005.............................. 200,000 218,532
-----------
22,251,372
-----------
TOTAL BONDS & NOTES (cost $30,789,546)............................... 31,283,863
-----------
</TABLE>
- ---------------------
36
<PAGE> 32
<TABLE>
<CAPTION>
PRINCIPAL
RIGHTS -- 0.0%+ AMOUNT VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
NON-U.S. GOVERNMENT OBLIGATIONS -- 0.0%
Foreign Government -- 0.0%
United Mexican States 6/30/03 (cost $0).............................. $ 1,070,000 $ 0
-------------
WARRANTS -- 0.0%+
----------------------------------------------------------------------------------------------------
<S> <C> <C>
NON-U.S. GOVERNMENT OBLIGATIONS -- 0.0%
Foreign Government -- 0.0%
Republic of Venezuela 4/15/20........................................ 535 0
-------------
TOTAL INVESTMENT SECURITIES (cost $80,533,932)....................... 85,111,395
-------------
SHORT-TERM SECURITIES -- 16.0%
----------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE SHORT-TERM NOTES -- 13.5%
AT&T Corp., 5.47% due 12/1/97........................................ 2,805,000 2,805,000
du Pont (E.I.) de Nemours & Co. 5.54% due 12/10/97................... 660,000 659,086
Enterprise Capital Funding Corp. 5.65% due 2/17/98................... 477,000 471,130
General Reinsurance Corp. 5.57% due 12/17/97......................... 844,000 841,911
Heinz (H.J.) Co. 5.52% due 12/11/97.................................. 670,000 668,973
International Lease Finance Corp. 5.52% due 12/2/97.................. 2,145,000 2,144,671
International Lease Finance Corp. 5.74% due 12/2/97.................. 580,000 579,907
Koch Industries 5.53% due 12/1/97.................................... 755,000 755,000
Sara Lee Corp. 5.54% due 12/11/97.................................... 4,000,000 3,993,844
-------------
12,919,522
-------------
FEDERAL AGENCY OBLIGATIONS -- 2.5%
Federal Home Loan Bank Consolidated Discount Note 5.60% due
12/1/97............................................................ 2,400,000 2,400,000
-------------
TOTAL SHORT-TERM SECURITIES (cost $15,319,553)....................... 15,319,522
-------------
TOTAL INVESTMENTS --
(cost $95,853,485) 104.9% 100,430,917
Liabilities in excess of other assets -- (4.9) (4,709,881)
------ -------------
NET ASSETS -- 100.0% $ 95,721,036
====== ==============
</TABLE>
-----------------------------
+ Non-income producing securities
* Resale restricted to qualified institutional buyers
(1) Fair valued security; see Note 2
(2) Variable rate security; rate as of November 30, 1997
ADR -- American Depository Receipt
See Notes to Financial Statements
---------------------
37
<PAGE> 33
- ---------------------
SUNAMERICA SERIES TRUST
ASSET ALLOCATION PORTFOLIO INVESTMENT PORTFOLIO -- NOVEMBER 30, 1997
<TABLE>
<CAPTION>
COMMON STOCK -- 59.1% SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER DISCRETIONARY -- 7.3%
Apparel & Textiles -- 1.4%
Fruit of The Loom, Inc.+............................................ 314,000 $ 7,320,125
Automotive -- 3.3%
Ford Motor Co. ..................................................... 207,000 8,901,000
Goodyear Tire & Rubber Co. ......................................... 137,100 8,320,256
Housing -- 1.6%
Centex Corp. ....................................................... 78,300 4,962,262
Lennar Corp. ....................................................... 161,800 3,377,575
Retail -- 1.0%
Fleming Cos., Inc. ................................................. 254,200 4,226,075
Sears, Roebuck & Co. ............................................... 28,200 1,291,913
------------
38,399,206
------------
CONSUMER STAPLES -- 3.4%
Food, Beverage & Tobacco -- 1.9%
SUPERVALU, Inc. .................................................... 168,800 6,635,950
UST, Inc. .......................................................... 100,200 3,093,675
Household Products -- 1.5%
Sunbeam Corp. ...................................................... 183,900 8,103,094
------------
17,832,719
------------
ENERGY -- 3.1%
Energy Services -- 3.1%
Texaco, Inc. ....................................................... 75,200 4,248,800
Tosco Corp. ........................................................ 370,700 12,070,919
------------
16,319,719
------------
FINANCE -- 15.1%
Banks -- 5.7%
Chase Manhattan Corp. .............................................. 71,200 7,734,100
Fleet Financial Group, Inc. ........................................ 128,600 8,495,638
Republic New York Corp. ............................................ 59,200 6,438,000
Wells Fargo & Co. .................................................. 23,700 7,281,825
Financial Services -- 2.9%
Capital One Financial Corp. ........................................ 81,600 3,697,500
CNA Financial Corp.+................................................ 5,700 698,250
Morgan Stanley, Dean Witter, Discover & Co. ........................ 196,300 10,661,544
Insurance -- 6.5%
Aetna, Inc. ........................................................ 144,300 10,876,612
CIGNA Corp. ........................................................ 79,600 13,313,100
Loews Corp. ........................................................ 73,800 7,832,025
USF & G Corp. ...................................................... 123,600 2,495,175
------------
79,523,769
------------
HEALTHCARE -- 3.5%
Health Services -- 3.5%
Foundation Health Systems, Inc.+.................................... 233,000 6,538,562
Tenet Healthcare Corp.+............................................. 375,700 11,904,994
------------
18,443,556
------------
</TABLE>
- ---------------------
38
<PAGE> 34
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL & COMMERCIAL -- 7.2%
Aerospace & Military Technology -- 5.1%
Boeing Co. ......................................................... 95,550 $ 5,076,094
Lear Corp.+......................................................... 216,700 10,144,269
Lockheed Martin Corp................................................ 118,500 11,561,156
Transportation -- 2.1%
AMR Corp.+.......................................................... 50,400 6,107,850
CNF Transportation, Inc............................................. 114,600 4,985,100
------------
37,874,469
------------
INFORMATION & ENTERTAINMENT -- 2.9%
Leisure & Tourism -- 2.9%
Circus Circus Enterprises, Inc.+.................................... 178,000 3,671,250
Continental Airlines, Inc., Class B+................................ 182,700 8,324,269
Royal Caribbean Cruises Ltd. ....................................... 76,000 3,648,000
------------
15,643,519
------------
INFORMATION TECHNOLOGY -- 6.2%
Communication Equipment -- 1.3%
Bay Networks, Inc.+................................................. 223,600 6,721,975
Computers & Business Equipment -- 2.8%
Quantum Corp.+...................................................... 563,300 14,997,862
Electronics -- 2.1%
Avnet, Inc. ........................................................ 163,100 10,805,375
------------
32,525,212
------------
MATERIALS -- 6.5%
Chemicals -- 1.8%
Union Carbide Corp. ................................................ 218,100 9,623,663
Forest Products -- 2.6%
Georgia-Pacific Corp. .............................................. 102,900 8,785,087
Stone Container Corp. .............................................. 371,800 4,647,500
Metals & Minerals -- 2.1%
AK Steel Holding Corp. ............................................. 317,400 6,248,812
Ispat International NV+............................................. 221,600 5,055,250
------------
34,360,312
------------
REAL ESTATE -- 0.7%
Real Estate Companies -- 0.7%
LNR Property Corp. ................................................. 161,800 3,761,850
------------
UTILITIES -- 3.2%
Electric Utilities -- 3.2%
Northeast Utilities+................................................ 338,800 4,383,225
Unicom Corp. ....................................................... 423,300 12,328,613
------------
16,711,838
------------
TOTAL COMMON STOCK (cost $263,725,553).............................. 311,396,169
------------
</TABLE>
---------------------
39
<PAGE> 35
<TABLE>
<CAPTION>
PREFERRED STOCK -- 0.3% SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
INFORMATION & ENTERTAINMENT -- 0.3%
Broadcasting & Media -- 0.1%
Time Warner, Inc. Series M 10.25%(1)................................ 277 $ 315,780
Leisure & Tourism -- 0.2%
Royal Caribbean Cruises Ltd. Series A 7.25%......................... 16,000 1,240,000
-------------
1,555,780
-------------
TOTAL PREFERRED STOCK (cost $1,080,040)............................. 1,555,780
-------------
PRINCIPAL
BONDS & NOTES -- 34.9% AMOUNT
----------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER DISCRETIONARY -- 0.3%
Automotive -- 0.0%
Chrysler Corp. 7.45% 2097........................................... $ 190,000 198,822
Housing -- 0.2%
United States Home Corp. 7.95% 2001................................. 605,000 611,050
USI American Holdings, Inc. 7.25% 2006.............................. 240,000 239,868
Retail -- 0.1%
Fleming Cos., Inc. 10.63% 2001...................................... 270,000 285,525
Kmart Corp. 7.96% 1999.............................................. 500,000 503,825
-------------
1,839,090
-------------
CONSUMER STAPLES -- 0.4%
Food, Beverage & Tobacco -- 0.4%
Ceval Alimentos 11.13% 2004......................................... 300,000 291,750
Instituto Fomento Industrial 8.38% 2001............................. 10,000 10,255
Instituto Fomento Industrial 8.38% 2001*............................ 80,000 82,040
RJR Nabisco, Inc. 8.00% 2001........................................ 460,000 473,552
RJR Nabisco, Inc. 8.63% 2002........................................ 1,200,000 1,272,108
-------------
2,129,705
-------------
ENERGY -- 0.8%
Energy Services -- 0.7%
CMS Energy Corp. 7.38% 2000(1)...................................... 950,000 946,437
Edison Mission Energy Funding Corp. 6.77% 2003*..................... 241,693 243,310
Global Marine, Inc. 12.75% 1999..................................... 900,000 924,750
National Power 7.63% 2000........................................... 320,000 326,449
Oryx Energy Co. 9.50% 1999.......................................... 910,000 954,490
Oryx Energy Co. 10.00% 2001......................................... 100,000 109,686
YPF Sociedad Anonima 7.50% 2002..................................... 83,046 83,118
Energy Sources -- 0.1%
Triton Energy Ltd. 8.75% 2002....................................... 880,000 917,400
-------------
4,505,640
-------------
FINANCE -- 8.5%
Banks -- 1.5%
Auburn Hills Trust 12.00% 2020...................................... 170,000 267,592
Banco Nacional de Obras y Servicios Publicos SNC 9.63% 2003......... 180,000 182,925
BankAmerica Corp. 9.75% 2000........................................ 400,000 432,032
Capital One Bank 6.60% 2001......................................... 1,870,000 1,879,556
Capital One Bank 6.66% 2000......................................... 150,000 150,191
Capital One Bank 6.75% 2000......................................... 1,000,000 1,003,070
Capital One Bank 6.88% 2000......................................... 850,000 861,075
Capital One Bank 6.90% 1999......................................... 500,000 505,535
Capital One Bank 8.13% 2000......................................... 340,000 351,849
Continental Bank NA 11.25% 2001..................................... 300,000 308,364
</TABLE>
- ---------------------
40
<PAGE> 36
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (continued) AMOUNT VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE (continued)
Banks (continued)
Continental Bank NA 12.50% 2001..................................... $ 450,000 $ 530,302
Security Pacific Corp. 11.50% 2000.................................. 600,000 681,714
Signet Banking Corp. 9.63% 1999..................................... 775,000 810,650
Financial Services -- 6.9%
APP International Finance Co. 10.25% 2000........................... 490,000 492,450
APP International Finance Co. 8.53% 1999(1)(2)...................... 550,000 509,982
APP International Finance Co. 8.87% 1999(2)......................... 300,000 276,000
APP International Finance Co. 10.25% 2000........................... 150,000 149,625
Asset Securitization Corp. 7.49% 2027............................... 1,450,000 1,539,379
Autoflow 1996 A Grantor Trust 7.48% 2002*(1)........................ 1,248,410 1,258,358
Bear Stearns Mortgage Securities, Inc. 6.75% 2008................... 1,000,959 999,269
Case Equipment Loan Trust 7.30% 2002................................ 237,882 239,381
Chevy Chase Auto Receivables 5.80% 2002............................. 152,288 151,811
Conseco Financing Trust I 8.70% 2026................................ 690,000 747,367
Countrywide Capital I 8.05% 2027.................................... 520,000 543,686
Countrywide Funding Corp. 7.73% 2001................................ 300,000 313,515
Countrywide Funding Corp. 8.43% 1999................................ 450,000 468,747
Discover Card Master Trust I 6.04% 2004(2).......................... 300,000 301,968
Discover Card Master Trust I 6.24% 2013(2).......................... 2,000,000 1,998,120
EQCC Home Equity Loan Trust 5.80% 2028(1)........................... 3,503,814 3,498,887
Fasco Grantor Trust 6.65% 2001...................................... 1,054,698 1,061,258
Financiera Energetica Nacional SA 9.38% 2006........................ 150,000 153,938
Fingerhut Financial Services 6.45% 2002............................. 920,000 924,600
First Union-Lehman Brothers Commercial Mortgage Trust 6.60% 2029.... 1,950,000 1,944,501
First Union-Lehman Brothers Commercial Mortgage Trust 7.30% 2029.... 1,050,000 1,092,656
Ford Capital BV 9.50% 2001.......................................... 800,000 878,696
Ford Credit Auto Loan Master Trust 6.50% 2002....................... 550,000 552,403
GE Capital Mortgage Services, Inc. 6.50% 2024(2).................... 637,890 600,414
General Motors Acceptance Corp. 5.63% 2001.......................... 750,000 734,377
Guangdong Enterprises Ltd. 8.88% 2007*.............................. 660,000 649,163
H&T Master Trust 8.00% 2002(1)*..................................... 900,000 898,875
Imperial Credit Capital Trust I zero coupon 2002.................... 205,000 202,438
Indah Kiat International Finance Co BV 11.38% 1999.................. 350,000 354,375
MBNA Master Credit Card Trust II 6.01% 1998(2)...................... 3,200,000 3,189,984
Morgan Stanley Capital I 7.46% 2006(1).............................. 1,400,000 1,458,660
Mortgage Capital Funding, Inc. 7.29% 2007........................... 1,500,000 1,563,516
Nacional Financiera, Inc. 8.59% 1997(2)............................. 600,000 600,750
Nacional Financiera, Inc. 9.00% 1999................................ 50,000 50,625
NWA Trust 8.26% 2006................................................ 244,815 262,329
Premier Auto Trust 4.90% 1998....................................... 537,132 535,617
PXRE Capital Trust I 8.85% 2027*.................................... 265,000 281,229
Sears Credit Account Master Trust 6.20% 2006........................ 700,000 697,809
Sears Credit Account Master Trust 8.10% 2004........................ 700,000 721,651
Standard Credit Card Master Trust 8.25% 2003........................ 1,010,000 1,073,751
Standard Credit Card Master Trust 8.25% 2007........................ 1,610,000 1,762,435
Voto Votorantim Overseas Trading Operations NV 8.50% 2005........... 350,000 311,671
Insurance -- 0.1%
Conseco, Inc. 10.50% 2004........................................... 500,000 596,090
-------------
44,607,211
-------------
HEALTHCARE -- 0.0%
Health Services -- 0.0%
Tenet Healthcare Corp. 9.63% 2002................................... 240,000 261,300
-------------
</TABLE>
---------------------
41
<PAGE> 37
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (continued) AMOUNT VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL & COMMERCIAL -- 0.4%
Aerospace & Military Technology -- 0.0%
Newport News Shipbuilding, Inc. 9.25% 2006.......................... $ 250,000 $ 261,250
Business Services -- 0.3%
Hertz Corp. 7.00% 2003.............................................. 750,000 759,210
Loewen Group International, Inc. 8.25% 2003......................... 600,000 633,114
Multicanal Participacoes SA 12.63% 2004*............................ 200,000 189,500
Transportation -- 0.1%
MRS Logistica SA 9.00% 2005*(1)..................................... 100,000 94,000
MRS Logistica SA 10.63% 2005*....................................... 230,000 211,025
-------------
2,148,099
-------------
INFORMATION & ENTERTAINMENT -- 3.5%
Broadcasting & Media -- 3.0%
Bonos Del Tesoro 8.75% 2002......................................... 460,000 425,500
CBS 7.75% 1999...................................................... 740,000 750,908
CenCall Communications Corp. zero coupon 2004....................... 485,000 423,769
Globo Participacoes Limitada 11.50% 2003(2)......................... 360,000 356,400
Grupo Insacell SA de CV 10.00% 2004................................. 250,000 252,500
Grupo Televisa SA 11.38% 2003....................................... 210,000 227,086
Innova S de R. L. 12.88% 2007*...................................... 270,000 265,950
NWCG Holding Corp. zero coupon 1999................................. 1,380,000 1,252,750
Paramount Communications, Inc. 7.50% 2002........................... 200,000 203,952
Poland Communications, Inc. 9.88% 2003.............................. 160,000 160,400
Rogers Cablesystems Ltd. 9.63% 2002................................. 440,000 464,200
SCI Television, Inc. 11.00% 2005.................................... 200,000 207,562
Tele-Communications, Inc. 8.25% 2003................................ 2,500,000 2,646,800
Tele-Communications, Inc. 9.65% 2003................................ 375,000 400,804
Time Warner Pass Through Asset Trust 4.90% 1999..................... 1,600,000 1,563,232
Time Warner, Inc 7.25% 2017......................................... 850,000 849,133
Time Warner, Inc. 7.95% 2000........................................ 4,345,000 4,464,357
United International Holdings, Inc. zero coupon 1999................ 210,000 169,050
Viacom, Inc. 9.13% 1999............................................. 325,000 329,199
Viacom, Inc. 10.25% 2001............................................ 175,000 187,778
Leisure & Tourism -- 0.5%
America West Airlines 8.16% 2002.................................... 1,498,595 1,495,238
Northwest Airlines Corp. 12.09% 2000................................ 365,926 409,068
Northwest Airlines Corp. 8.97% 2015................................. 864,431 934,994
-------------
18,440,630
-------------
INFORMATION TECHNOLOGY -- 0.4%
Communication Equipment -- 0.0%
TCI Communications, Inc. 6.82% 2010................................. 95,000 95,289
TCI Communications, Inc. 8.75% 2015................................. 120,000 136,342
Electronics -- 0.1%
Axa SA de CV 9.00% 2004(1).......................................... 320,000 308,800
Telecommunications -- 0.3%
360 Communications Co. 7.13% 2003................................... 1,130,000 1,143,323
Adelphia Communications Corp. 10.25% 2000........................... 250,000 257,500
-------------
1,941,254
-------------
MATERIALS -- 0.5%
Forest Products -- 0.2%
Grupo Industrial Durango SA de CV 12.00% 2001....................... 140,000 151,150
Grupo Industrial Durango SA de CV 12.63% 2003....................... 560,000 621,600
PT Indah Kiat Pulp & Paper Corp. 8.88% 2000......................... 110,000 104,609
</TABLE>
- ---------------------
42
<PAGE> 38
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (continued) AMOUNT VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
MATERIALS (continued)
Metals & Minerals -- 0.3%
Cemex SA de CV 10.00% 1999.......................................... $ 690,000 $ 710,700
Freeport McMorgan Resource LP 8.75% 2004............................ 240,000 250,800
Industrias Metalurgicas Pescarmona SA 9.50% 2002.................... 210,000 201,075
LTV Corp. 8.20% 2007................................................ 600,000 588,000
-------------
2,627,934
-------------
MUNICIPAL BONDS -- 1.0%
Municipal Bonds -- 1.0%
Chicago Illinois Skyway Toll Bridge Revenue 5.50% 2023.............. 585,000 588,832
Indiana Health Facility Financing Authority Hospital Revenue 5.13%
2017.............................................................. 435,000 417,896
Marion County Indiana Convention and Recreational Facilities 5.00%
2027.............................................................. 570,000 538,143
Massachusetts Bay Authority 5.00% 2027.............................. 810,000 769,394
Massachusetts State Turnpike Authority Metropolitan Highway Systems
5.00% 2037........................................................ 1,110,000 1,051,747
New York City Municipal Water Finance Authority Water and Sewer
System Revenue 5.13% 2021......................................... 450,000 435,937
New York City Municipal Water Finance Authority Water and Sewer
System Revenue 5.75% 2026......................................... 445,000 457,745
North Central Texas Health Facility Development Corporation Revenue
5.13% 2022........................................................ 900,000 870,246
-------------
5,129,940
-------------
NON-U.S. GOVERNMENT OBLIGATIONS -- 1.7%
Foreign Government -- 1.7%
Republic of Croatia 7.00% 2002(1)................................... 300,000 288,000
City of Moscow 9.50% 2000*.......................................... 370,000 356,665
City of Moscow 9.50% 2000........................................... 750,000 725,625
Ministry of Finance Russia 10.00% 2007.............................. 670,000 599,231
Province of Quebec 13.25% 2014...................................... 625,000 723,544
Republic of Argentina zero coupon 2001.............................. 1,600,000 1,689,000
Republic of Argentina 5.50% 2000(1).................................JPY 60,000,000 475,771
Republic of Argentina 8.00% 1998(1)................................. 1,200,000 1,183,800
Republic of Panama 6.84% 1998(2).................................... 1,800,006 1,758,426
Russian Federation 10.00% 2007...................................... 270,000 238,950
State of Israel 6.38% 2005.......................................... 635,000 626,802
Tucuman Province Secured Medium Term 9.45% 2004..................... 163,929 160,650
-------------
8,826,464
-------------
REAL ESTATE -- 0.7%
Real Estate Investment Trusts -- 0.7%
Chelsea GCA Realty, Inc. 7.75% 2001................................. 570,000 587,317
Dynex Capital Corp. 7.88% 2002...................................... 750,000 756,795
Felcor Suites LP 7.38% 2004......................................... 705,000 705,296
Liberty Property Trust 7.10% 2004................................... 640,000 650,105
Tanger Properties Ltd. 8.75% 2001................................... 760,000 781,850
-------------
3,481,363
-------------
U.S. GOVERNMENT & AGENCIES -- 16.2%
U.S. Government & Agencies -- 16.2%
Federal Home Loan Mortgage Corp. 5.50% 2008......................... 1,971,071 1,882,037
Federal Home Loan Mortgage Corp. 6.35% 2018......................... 3,000,000 3,001,860
Federal Home Loan Mortgage Corp. 6.50% 2099 TBA..................... 5,000,000 4,985,900
Federal Home Loan Mortgage Corp. 7.00% 1999 TBA..................... 4,000,000 4,047,480
Federal Home Loan Mortgage Corp. 7.50% 2099 TBA..................... 3,000,000 3,063,750
Federal National Mortgage Association 6.50% 2025.................... 542,378 533,906
Federal National Mortgage Association 6.50% 2025.................... 637,626 627,667
Federal National Mortgage Association 6.50% 2025.................... 751,154 739,421
</TABLE>
---------------------
43
<PAGE> 39
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (continued) AMOUNT VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT & AGENCIES (continued)
U.S. Government & Agencies (continued)
Federal National Mortgage Association 6.50% 2026.................... $ 993,826 $ 976,126
Federal National Mortgage Association 6.50% 2099.................... 1,000,000 980,620
Federal National Mortgage Association 6.50% 2099.................... 4,000,000 4,000,000
Federal National Mortgage Association 7.00% 2024.................... 1,232,926 1,185,544
Federal National Mortgage Association 7.00% 2099.................... 12,000,000 12,022,440
Government National Mortgage Association 7.00% 2023................. 393,293 394,398
Government National Mortgage Association 7.00% 2023................. 222,057 222,681
Government National Mortgage Association 7.00% 2023................. 544,591 546,121
Government National Mortgage Association 7.00% 2023................. 929,925 935,439
Government National Mortgage Association 7.00% 2023................. 231,513 232,164
Government National Mortgage Association 7.00% 2023................. 458,785 461,506
Government National Mortgage Association 7.00% 2023................. 549,756 553,016
Government National Mortgage Association 7.00% 2023................. 546,439 547,975
Government National Mortgage Association 7.00% 2023................. 190,334 190,869
Government National Mortgage Association 7.00% 2023................. 259,920 261,462
Government National Mortgage Association 7.00% 2023................. 62,125 62,494
Government National Mortgage Association 7.00% 2023................. 491,746 494,971
Government National Mortgage Association 7.50% 2023................. 862,056 881,987
Government National Mortgage Association 7.50% 2099 TBA............. 8,000,000 8,160,000
Government National Mortgage Association 8.00% 2026................. 216,701 224,082
Government National Mortgage Association 8.00% 2026................. 683,849 707,140
Government National Mortgage Association 8.00% 2099 TBA............. 3,000,000 3,102,180
United States Treasury Bonds 7.63% 2025............................. 1,070,000 1,281,828
United States Treasury Bonds 7.88% 2021@............................ 2,510,000 3,045,333
United States Treasury Bonds 8.13% 2021............................. 200,000 248,968
United States Treasury Bonds 8.75% 2020............................. 6,360,000 8,369,378
United States Treasury Bonds Strip zero coupon 2004................. 15,690,000 10,452,835
United States Treasury Bonds Strip zero coupon 2017................. 50,000 14,997
United States Treasury Bonds Strip zero coupon 2019................. 40,000 10,423
United States Treasury Bonds Strip zero coupon 2020................. 7,920,000 2,003,760
United States Treasury Bonds Strip zero coupon 2021................. 1,000,000 230,270
United States Treasury Bonds Strip zero coupon 2005................. 2,800,000 1,809,752
United States Treasury Notes 5.63% 2000............................. 1,850,000 1,839,307
-------------
85,332,087
-------------
UTILITIES -- 0.5%
Electric Utilities -- 0.5%
Central Maine Power Co. 7.45% 1999.................................. 885,000 892,744
Korea Electric Power Corp. 7.40% 2016............................... 607,862 651,847
Niagara Mohawk Power Corp. 6.88% 2003............................... 870,000 868,921
Gas & Pipeline Utilities -- 0.0%
Bridas Corp. 9.50% 1999*............................................ 130,000 131,137
Bridas Corp. 12.50% 1999............................................ 60,000 63,545
-------------
2,608,194
-------------
TOTAL BONDS & NOTES (cost $181,316,232)............................. 183,878,911
-------------
TOTAL INVESTMENT SECURITIES (cost $446,121,825)..................... 496,830,860
-------------
</TABLE>
- ---------------------
44
<PAGE> 40
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM SECURITIES -- 2.0% AMOUNT VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE SHORT-TERM NOTES -- 0.7%
Advanta Corporation Medium Term Notes 7.00% due 9/16/98............. $ 1,350,000 $ 1,351,013
Arkla, Inc. 9.20% due 12/18/97...................................... 250,000 250,290
Blockbuster Entertainment Corp. 6.63% due 2/15/98................... 580,000 579,919
General Motors Acceptance Corp. 7.63% due 3/9/98.................... 585,000 587,445
Tele-Communications, Inc. 7.13% due 2/2/98.......................... 1,000,000 1,000,770
-------------
3,769,437
-------------
FOREIGN SHORT-TERM NOTES -- 1.3%
Acindar Industries 11.66% due 11/12/98.............................. 440,000 435,147
Banco Nacional de Desenvolvimento Economico e Social 10.38% due
4/27/98........................................................... 220,000 222,200
Empresa Col de Petroleos 7.25% due 7/8/98........................... 240,000 240,600
Empresas Ica Sociedad ADS 9.75% due 2/11/98......................... 1,810,000 1,823,575
Globo Participacoes Limitada zero coupon due 4/20/98(1)............. 280,000 270,200
Nacional Financiera, Inc. 5.88% due 2/17/98......................... 310,000 309,031
Nacional Financiera, Inc. 8.13% due 4/9/98*......................... 160,000 159,800
Petroleo Brasileiro SA 7.25% due 2/6/98............................. 250,000 249,089
Polysindo Eka Perkasa zero coupon due 11/19/98(1)................... 1,000,000 849,890
Polysindo Eka Perkasa zero coupon due 7/14/98....................... 1,000,000 906,144
Republic of Argentina zero coupon due 3/20/98....................... 800,000 779,785
Republic of Argentina zero coupon due 10/16/98...................... 50,000 46,234
Republic of Argentina zero coupon due 4/4/98(1)..................... 110,170 109,895
Republic of Argentina zero coupon due 4/6/98(1)..................... 105,800 105,535
Trikem SA 10.63% due 5/8/98(1)...................................... 380,000 355,300
-------------
6,862,425
-------------
TOTAL SHORT-TERM SECURITIES (cost $10,747,235)...................... 10,631,862
-------------
</TABLE>
<TABLE>
<CAPTION>
REPURCHASE AGREEMENT -- 10.0%
<S> <C> <C>
----------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
REPURCHASE AGREEMENT -- 10.0%
Agreement with State Street Bank and Trust, Co., bearing interest of
5.55% dated 11/28/97, to be repurchased 12/01/97 in the amount of
$52,528,283 and collateralized by $40,990,000 U.S. Treasury Note
8.5% due 2/15/20 approximate aggregate value $53,525,366 (cost
$52,504,000)....................................................... 52,504,000 52,504,000
-------------
TOTAL INVESTMENTS --
(cost $509,364,650) 106.3% 559,966,722
Total currency swap agreement, at value(3)-- (0.0) (8,410)
Liabilities in excess of other assets -- (6.3) (33,372,917)
------ -------------
NET ASSETS -- 100.0% $526,585,395
==============
======
</TABLE>
-----------------------------
+ Non-income producing securities
* Resale restricted to qualified institutional buyers
(1) Fair valued security; see Note 2
(2) Variable rate security; rate as of November 30, 1997
(3) The Portfolio entered into a currency swap agreement with
Swiss Bank Corporation ("Swiss Bank"). Under the agreement the
Portfolio will pay Swiss Bank 3,300,000 Yen each year
commencing September 6, 1997 until September 6, 2000, with an
additional payment of 60,000,000 Yen due September 6, 2000. In
return, Swiss Bank will pay the Portfolio $21,570 on March 6
and September 6 each year commencing March 6, 1997 until
September 6, 2000 with an additional payment of $488,003 due
September 6, 2000.
ADS -- American Depository Shares
JPY -- Japanese Yen
@ The security or a portion thereof represents collateral for the
currency swap agreement and the following open futures
contracts:
---------------------
45
<PAGE> 41
<TABLE>
<CAPTION>
OPEN FUTURES CONTRACTS
------------------------------------------------------------------------------------------------------------
UNREALIZED
NUMBER OF EXPIRATION VALUE AT VALUE AS OF APPRECIATION/
CONTRACTS DESCRIPTION DATE TRADE DATE NOVEMBER 30, 1997 DEPRECIATION
------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
18 Long 90 Day Euro Dollar......... December 1997 $ 4,228,569 $ 4,234,726 $ 6,157
45 Long 90 Day Euro Dollar......... December 1997 4,871,441 4,864,219 (7,222)
5 Long 90 Day Euro Dollar......... March 1998 1,174,532 1,176,812 2,280
4 Long 90 Day Euro Dollar......... June 1998 936,725 940,900 5,175
5 Long 90 Day Euro Dollar......... September 1998 1,172,657 1,175,375 2,718
41 Long 90 Day Euro Dollar......... December 1998 4,641,885 4,886,688 244,803
10 Long U.S. 2 Year Note........... March 1998 2,073,500 2,072,812 (688)
31 Long U.S. 10 Year Note.......... March 1998 3,458,633 3,452,625 (6,008)
16 Long U.S. 20 Year Note.......... March 1998 1,904,632 1,904,500 (132)
--------------
Net Unrealized Appreciation..................................................... $ 247,083
=============
</TABLE>
-----------------------------
TBA -- Securities purchased on a forward commitment basis with an
approximate principal amount and no definitive maturity
date. The actual principal amount and maturity date will be
determined upon settlement.
See Notes to Financial Statements
- ---------------------
46
<PAGE> 42
- ---------------------
SUNAMERICA SERIES TRUST
UTILITY PORTFOLIO INVESTMENT PORTFOLIO -- NOVEMBER 30, 1997
<TABLE>
<CAPTION>
COMMON STOCK -- 80.0% SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER STAPLES -- 0.7%
Food, Beverage & Tobacco -- 0.7%
RJR Nabisco Holdings Corp. ............................................ 4,600 $ 167,612
-------------
ENERGY -- 4.2%
Energy Sources -- 4.2%
Atlantic Richfield Co. ................................................ 1,800 146,700
Sonat, Inc. ........................................................... 9,800 426,912
Texaco, Inc. .......................................................... 2,200 124,300
Ultramar Diamond Shamrock Corp.+....................................... 10,900 331,769
-------------
1,029,681
-------------
INDUSTRIAL & COMMERCIAL -- 0.8%
Multi-Industry -- 0.8%
Viag AG................................................................ 400 203,278
-------------
INFORMATION TECHNOLOGY -- 2.7%
Telecommunications -- 2.7%
U.S. West Communications Group......................................... 14,500 655,219
-------------
REAL ESTATE -- 8.4%
Real Estate Investment Trusts -- 8.4%
Associated Estates Realty Corp. ....................................... 10,200 230,138
Avalon Properties, Inc. ............................................... 5,100 156,825
Boston Properties, Inc. ............................................... 7,100 231,637
Duke Realty Investments, Inc. ......................................... 13,300 305,900
Equity Residential Properties Trust.................................... 4,500 225,000
Liberty Property Trust................................................. 6,100 170,419
Meditrust Corp. ....................................................... 8,977 341,126
Price REIT, Inc. ...................................................... 2,600 102,700
Security Capital Industrial Trust...................................... 2,300 57,931
Security Capital Pacific Trust......................................... 8,614 209,428
-------------
2,031,104
-------------
UTILITIES -- 63.2%
Electric Utilities -- 32.2%
Central & South West Corp. ............................................ 5,100 127,500
Cinergy Corp. ......................................................... 9,400 334,875
DPL, Inc. ............................................................. 16,700 438,375
DQE, Inc. ............................................................. 13,500 448,031
Duke Energy Corp. ..................................................... 10,768 559,936
Electric de Portugal................................................... 9,680 174,960
Entergy Corp. ......................................................... 21,700 564,200
Florida Progress Corp. ................................................ 3,400 120,488
FPL Group, Inc. ....................................................... 12,500 699,219
Montana Power Co. ..................................................... 6,900 188,887
National Power PLC Corp. ADR........................................... 3,400 127,713
New Century Energies, Inc. ............................................ 5,000 221,250
NIPSCO Industries, Inc. ............................................... 12,700 594,519
PacifiCorp............................................................. 24,600 573,487
Pinnacle West Capital Corp. ........................................... 11,900 458,894
Potomac Electric Power Co. ............................................ 1,000 24,750
</TABLE>
---------------------
47
<PAGE> 43
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES (continued)
Electric Utilities (continued)
Public Service Enterprise Group, Inc. ................................. 5,300 $ 154,694
Puget Sound Energy, Inc. .............................................. 11,100 306,637
Southern Co. .......................................................... 19,400 465,600
TECO Energy, Inc. ..................................................... 16,600 425,375
Texas Utilities Co. ................................................... 13,000 520,000
Union Electric Co. .................................................... 5,000 199,062
UtiliCorp United, Inc. ................................................ 3,700 126,494
Gas & Pipeline Utilities -- 18.6%
AGL Resources, Inc. ................................................... 1,500 29,438
American Water Works, Inc. ............................................ 2,400 68,850
Atmos Energy Corp. .................................................... 1,400 37,188
CMS Energy Corp. ...................................................... 19,600 771,750
Columbia Gas Systems, Inc. ............................................ 1,800 130,950
Consolidated Natural Gas Co. .......................................... 8,700 525,262
El Paso Natural Gas Co. ............................................... 5,600 343,700
Enron Corp. ........................................................... 12,200 472,750
Keyspan Energy Corp. .................................................. 2,900 96,606
MAPCO, Inc. ........................................................... 3,500 150,938
MCN Energy Group Inc. ................................................. 15,500 591,906
New Jersey Resources Corp. ............................................ 1,100 38,294
Pacific Enterprises.................................................... 15,300 541,237
PG&E Corp. ............................................................ 11,500 324,875
SCANA Corp............................................................. 9,100 251,387
Williams Cos., Inc. ................................................... 3,050 162,984
Telephone -- 12.4%
Ameritech Corp. ....................................................... 2,800 215,775
Bell Atlantic Corp. ................................................... 5,000 446,250
BellSouth Corp. ....................................................... 7,200 394,200
Cincinnati Bell, Inc. ................................................. 1,500 44,250
GTE Corp. ............................................................. 7,300 369,106
MCI Communications Corp. .............................................. 10,600 465,738
SBC Communications, Inc. .............................................. 7,600 553,375
Sprint Corp. .......................................................... 8,900 521,206
-------------
15,402,961
-------------
TOTAL COMMON STOCK (cost $17,496,482).................................. 19,489,855
-------------
<CAPTION>
PREFERRED STOCK -- 8.3%
----------------------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY -- 1.2%
Energy Sources -- 1.2%
Unocal Capital Trust 6.25% convertible................................. 5,000 288,125
-------------
FINANCE -- 3.5%
Banks -- 1.0%
National Australia Bank Ltd. 7.88%..................................... 8,500 239,062
Financial Services -- 2.5%
Merrill Lynch & Co., 6.25% convertible................................. 6,000 210,000
Salomon, Inc. 6.25% convertible........................................ 6,800 387,600
-------------
836,662
-------------
</TABLE>
- ---------------------
48
<PAGE> 44
<TABLE>
<CAPTION>
PREFERRED STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
MATERIALS -- 0.4%
Metals & Minerals -- 0.4%
Coeur D' Alene Mines Corp. 7.00% convertible........................... 8,100 $ 106,819
-------------
UTILITIES -- 3.2%
Electric Utilities -- 0.8%
CalEnergy Capital Trust II 6.25%*...................................... 4,000 197,500
Gas & Pipeline Utilities -- 2.4%
MCN Financing III 8.00%................................................ 3,000 179,250
Williams Cos., Inc. 3.50%.............................................. 3,300 413,738
-------------
790,488
-------------
TOTAL PREFERRED STOCK (cost $1,974,598)................................ 2,022,094
-------------
<CAPTION>
PRINCIPAL
CONVERTIBLE BONDS -- 0.5% AMOUNT
----------------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE -- 0.5%
Drugs -- 0.5%
Roche Holdings, Inc. zero coupon 2012 convertible* (cost $121,296)..... $ 300,000 133,874
-------------
TOTAL INVESTMENT SECURITIES (cost $19,592,376)......................... 21,645,823
-------------
<CAPTION>
SHORT-TERM SECURITIES -- 11.5%
----------------------------------------------------------------------------------------------------
<S> <C> <C>
TIME DEPOSIT -- 11.5%
Cayman Island Time Deposit with State Street Bank & Trust Co.
4.50% due 12/1/97 (cost $2,801,000).................................. 2,801,000 2,801,000
-------------
TOTAL INVESTMENTS --
(cost $22,393,376) 100.3% 24,446,823
Liabilities in excess of other assets -- (0.3) (80,696)
------ -------------
NET ASSETS -- 100.0% $24,366,127
====== =============
</TABLE>
-----------------------------
+ Non-income producing securities
ADR -- American Depository Receipt
* Resale restricted to qualified institutional buyers
See Notes to Financial Statements
---------------------
49
<PAGE> 45
- ---------------------
SUNAMERICA SERIES TRUST
GROWTH-INCOME PORTFOLIO INVESTMENT PORTFOLIO -- NOVEMBER 30, 1997
<TABLE>
<CAPTION>
COMMON STOCK -- 90.8% SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER DISCRETIONARY -- 4.4%
Apparel & Textiles -- 0.5%
Nautica Enterprises, Inc.+........................................... 115,000 $ 3,227,188
Automotive -- 1.0%
Harley-Davidson, Inc................................................. 115,000 3,040,313
Magna International, Inc., Class A ADR............................... 46,000 2,903,750
Housing -- 1.0%
Home Depot, Inc...................................................... 115,000 6,432,812
Retail -- 1.9%
Dayton Hudson Corp................................................... 77,000 5,115,687
Kohl's Corp.+........................................................ 44,000 3,184,500
Kroger Co.+.......................................................... 110,000 3,788,125
----------
27,692,375
----------
CONSUMER STAPLES -- 13.1%
Food, Beverage & Tobacco -- 7.6%
Campbell Soup Co..................................................... 102,000 5,712,000
Coca-Cola Co......................................................... 250,000 15,625,000
Coca-Cola Enterprises, Inc........................................... 110,000 3,361,875
Nabisco Holdings Corp., Class A...................................... 93,000 4,336,125
Philip Morris Cos., Inc.............................................. 360,000 15,660,000
Tyson Foods, Inc., Class A........................................... 145,000 2,628,125
Household Products -- 5.5%
Colgate-Palmolive Co................................................. 93,000 6,213,562
Estee Lauder Cos., Inc., Class A..................................... 59,900 3,208,394
Gillette Co.......................................................... 79,700 7,357,306
Procter & Gamble Co.................................................. 146,000 11,141,625
Sunbeam Corp......................................................... 83,000 3,657,188
United States Industries, Inc.+...................................... 97,800 2,518,350
----------
81,419,550
----------
ENERGY -- 5.7%
Energy Services -- 1.8%
BJ Services Co.+..................................................... 38,000 2,728,875
Nabors Industries, Inc.+............................................. 90,000 3,155,625
Noble Drilling Corp.+................................................ 100,000 3,006,250
Transocean Offshore, Inc............................................. 46,100 2,186,869
Energy Sources -- 3.9%
Apache Corp.......................................................... 70,000 2,572,500
Gulf Canada Resources Ltd.+.......................................... 300,000 2,100,000
Texaco, Inc.......................................................... 290,000 16,385,000
USX-Marathon Group, Inc.............................................. 95,000 3,253,750
----------
35,388,869
----------
</TABLE>
- ---------------------
50
<PAGE> 46
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE -- 16.3%
Banks -- 6.7%
Banc One Corp........................................................ 112,000 $ 5,754,000
Chase Manhattan Corp................................................. 60,000 6,517,500
Citicorp............................................................. 58,000 6,956,375
First Union Corp..................................................... 133,800 6,522,750
Fleet Financial Group, Inc........................................... 75,000 4,954,687
NationsBank Corp..................................................... 106,000 6,366,625
U.S. Bancorp......................................................... 41,000 4,410,063
Financial Services -- 6.9%
Federal National Mortgage Association................................ 130,000 6,865,625
First Data Corp...................................................... 58,000 1,642,125
Household International, Inc......................................... 29,500 3,717,000
MBNA Corp............................................................ 180,000 4,781,250
Merrill Lynch & Co., Inc............................................. 106,000 7,439,875
Morgan Stanley, Dean Witter, Discover & Co........................... 156,265 8,487,143
PennCorp Financial Group, Inc........................................ 75,000 2,535,937
Travelers Group, Inc................................................. 153,600 7,756,800
Insurance -- 2.7%
American International Group, Inc.................................... 82,000 8,266,625
Hartford Financial Services, Inc..................................... 31,000 2,596,250
PMI Group, Inc....................................................... 53,300 3,464,500
Travelers Property Casualty Corp., Class A........................... 65,000 2,583,750
----------
101,618,880
----------
HEALTHCARE -- 13.3%
Drugs -- 8.8%
Bristol-Myers Squibb Co.............................................. 130,000 12,171,250
GelTex Pharmaceuticals, Inc.+........................................ 135,000 3,780,000
IDEC Pharmaceuticals Corp.+.......................................... 85,000 2,969,688
Merck & Co., Inc..................................................... 154,900 14,647,731
Pfizer, Inc.......................................................... 155,000 11,276,250
Schering-Plough Corp................................................. 160,000 10,030,000
Health Services -- 0.6%
United Healthcare Corp............................................... 70,000 3,644,375
Medical Products -- 3.9%
Abbott Laboratories, Inc............................................. 97,000 6,305,000
Centocor, Inc.+...................................................... 77,200 3,358,200
Genzyme Corp......................................................... 92,000 2,466,750
Johnson & Johnson Co................................................. 104,000 6,545,500
Medtronic, Inc....................................................... 112,700 5,381,425
----------
82,576,169
----------
INDUSTRIAL & COMMERCIAL -- 9.6%
Aerospace & Military Technology -- 2.4%
AlliedSignal, Inc.................................................... 180,000 6,682,500
Boeing Co............................................................ 100,000 5,312,500
Gulfstream Aerospace Corp.+.......................................... 105,000 3,084,375
Business Services -- 0.4%
USA Waste Services, Inc.+............................................ 65,000 2,149,062
Electrical Equipment -- 3.5%
General Electric Co.................................................. 290,000 21,387,500
Machinery -- 0.9%
Applied Materials, Inc.+............................................. 174,000 5,742,000
</TABLE>
---------------------
51
<PAGE> 47
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL & COMMERCIAL (continued)
Multi-Industry -- 1.4%
Tyco International Ltd............................................... 131,800 $ 5,173,150
United Technologies Corp............................................. 50,000 3,746,875
Transportation -- 1.0%
CNF Transportation, Inc.............................................. 80,000 3,480,000
Union Pacific Corp................................................... 1 60
Wisconsin Central Transportation Corp.+.............................. 95,000 2,861,875
----------
59,619,897
----------
INFORMATION & ENTERTAINMENT -- 6.6%
Broadcasting & Media -- 2.9%
Gannett Co., Inc..................................................... 66,000 3,832,125
Liberty Media Group, Corp., Class A+................................. 128,975 4,352,906
New York Times Co., Class A.......................................... 44,000 2,612,500
Reuters Holdings PLC, Class B ADR.................................... 66,000 4,463,250
Scripps (E.W) Co., Class A........................................... 75,000 3,154,688
Leisure & Tourism -- 3.7%
Carnival Corp., Class A.............................................. 95,200 5,146,750
Disney (Walt) Co..................................................... 110,000 10,443,125
US Airways Group, Inc.+.............................................. 75,000 4,134,375
Viad Corp............................................................ 160,000 3,050,000
----------
41,189,719
----------
INFORMATION TECHNOLOGY -- 16.0%
Communication Equipment -- 2.5%
ADC Telecommunications, Inc.+........................................ 75,000 2,789,063
Cox Communications, Inc., Class A+................................... 110,000 3,733,125
DSC Communications Corp.+............................................ 100,000 2,256,250
Northern Telecom Ltd................................................. 40,400 3,628,425
Tellabs, Inc.+....................................................... 60,000 3,120,000
Computers & Business Equipment -- 2.8%
Compaq Computer Corp................................................. 118,500 7,398,844
Dell Computer Corp.+................................................. 80,000 6,735,000
Staples, Inc.+....................................................... 110,000 3,100,625
Electronics -- 4.0%
Altera Corp.+........................................................ 66,000 3,089,625
Intel Corp........................................................... 180,000 13,972,500
National Semiconductor Corp.+........................................ 105,000 3,478,125
Solectron Corp.+..................................................... 70,000 2,550,625
Xilinx, Inc.+........................................................ 55,000 1,900,937
Software -- 5.1%
Cisco Systems, Inc.+................................................. 100,000 8,625,000
Microsoft Corp.+..................................................... 125,000 17,687,500
Oracle Systems Corp.+................................................ 165,000 5,496,562
Telecommunications -- 1.6%
Lucent Technologies, Inc............................................. 80,000 6,410,000
Teleport Communications Group Inc., Class A+......................... 75,000 3,675,000
----------
99,647,206
----------
MATERIALS -- 1.5%
Chemicals -- 0.9%
Monsanto Co.......................................................... 120,000 5,242,500
Solutia, Inc......................................................... 24,000 547,500
</TABLE>
- ---------------------
52
<PAGE> 48
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
MATERIALS (continued)
Metals & Minerals -- 0.6%
Sealed Air Corp.+.................................................... 60,000 $ 3,412,500
----------
9,202,500
----------
UTILITIES -- 4.3%
Electric Utilities -- 1.8%
AES Corp.+........................................................... 70,000 2,563,750
FPL Group, Inc....................................................... 160,000 8,950,000
Gas & Pipeline Utilities -- 0.7%
CMS Energy Corp...................................................... 110,000 4,331,250
Telephone -- 1.8%
MCI Communications Corp.............................................. 130,000 5,711,875
WorldCom, Inc.+...................................................... 165,000 5,280,000
----------
26,836,875
----------
TOTAL INVESTMENT SECURITIES (cost $417,165,603)...................... 565,192,040
----------
<CAPTION>
PRINCIPAL
SHORT-TERM SECURITIES -- 9.9% AMOUNT
----------------------------------------------------------------------------------------------------
<S> <C> <C>
TIME DEPOSIT -- 9.6%
Cayman Island Time Deposit with State Street Bank & Trust Co.
5.25% due 12/01/97 @............................................... $59,665,000 59,665,000
----------
U.S. GOVERNMENT -- 0.3%
United States Treasury Bills 4.94% due 12/18/97 @.................... 1,665,000 1,661,116
----------
TOTAL SHORT-TERM SECURITIES (cost $61,326,116)....................... 61,326,116
----------
TOTAL INVESTMENTS --
(cost $478,491,719) 100.7% 626,518,156
Liabilities in excess of other assets -- (0.7) (4,455,660)
------ ----------
NET ASSETS -- 100.0% $622,062,496
====== ==========
</TABLE>
-----------------------------
+ Non-income producing securities
ADR -- American Depository Receipt
@ The security or a portion thereof represents collateral for the
following open futures contracts:
<TABLE>
<CAPTION>
OPEN FUTURES CONTRACTS
<C> <S> <C> <C> <C> <C>
---------
<CAPTION>
VALUE AS OF
NUMBER OF EXPIRATION VALUE AT NOVEMBER 30, UNREALIZED
CONTRACTS DESCRIPTION DATE TRADE DATE 1997 APPRECIATION
--------- ----------- ---------- ---------- ------------ ------------
<C> <S> <C> <C> <C> <C>
128 Long Standard & Poor's 500 Index........ December 1997 $30,368,000 $30,556,800 $188,800
===========
</TABLE>
See Notes to Financial Statements
---------------------
53
<PAGE> 49
- ---------------------
SUNAMERICA SERIES TRUST
FEDERATED VALUE PORTFOLIO INVESTMENT PORTFOLIO -- NOVEMBER 30, 1997
<TABLE>
<CAPTION>
COMMON STOCK -- 93.3% SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER DISCRETIONARY -- 8.5%
Apparel & Textiles -- 1.3%
Russell Corp........................................................... 24,500 $ 748,781
Automotive -- 1.3%
Borg-Warner Automotive, Inc............................................ 9,100 428,838
General Motors Corp.................................................... 6,000 366,000
Housing -- 1.0%
Centex Corp............................................................ 9,000 570,375
Retail -- 4.9%
Dayton Hudson Corp..................................................... 12,600 837,112
Kmart Corp.+........................................................... 83,500 1,048,969
Wal-Mart Stores, Inc................................................... 25,500 1,018,406
-------------
5,018,481
-------------
CONSUMER STAPLES -- 9.4%
Food, Beverage & Tobacco -- 6.9%
Archer-Daniels-Midland Co.............................................. 39,500 844,312
CPC International, Inc................................................. 7,500 775,313
PepsiCo, Inc........................................................... 23,500 866,562
Philip Morris Cos., Inc................................................ 8,000 348,000
RJR Nabisco Holdings Corp.............................................. 12,500 455,469
Sara Lee Corp.......................................................... 14,500 766,688
Household Products -- 2.5%
Rubbermaid, Inc........................................................ 22,900 555,325
Unilever NV............................................................ 16,000 929,000
-------------
5,540,669
-------------
ENERGY -- 12.3%
Energy Services -- 1.0%
Occidental Petroleum Corp.............................................. 20,500 608,594
Energy Sources -- 11.3%
Amerada Hess Corp...................................................... 8,000 448,000
Chevron Corp........................................................... 7,500 601,406
Exxon Corp............................................................. 9,500 579,500
Houston Industries, Inc................................................ 24,000 568,500
Mobil Corp............................................................. 8,500 611,469
Royal Dutch Petroleum Co............................................... 9,500 500,531
Sun Co., Inc........................................................... 28,500 1,152,469
Texaco, Inc............................................................ 9,000 508,500
USX-Marathon Group, Inc................................................ 33,000 1,130,250
YPF Sociedad Anonima ADR............................................... 16,500 553,781
-------------
7,263,000
-------------
FINANCE -- 11.4%
Banks -- 1.1%
Republic New York Corp................................................. 6,000 652,500
</TABLE>
- ---------------------
54
<PAGE> 50
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE (continued)
Financial Services -- 4.1%
Bear Stearns Cos., Inc................................................. 14,000 $ 581,000
H&R Block, Inc......................................................... 12,500 512,500
Morgan Stanley, Dean Witter, Discover and Co........................... 11,500 624,594
Nationwide Financial Services, Inc., Class A........................... 7,000 239,312
Travelers Group, Inc................................................... 8,500 429,250
Insurance -- 6.2%
Allstate Corp.......................................................... 6,000 515,250
CIGNA Corp............................................................. 7,000 1,170,750
General Re Corp........................................................ 2,600 516,100
Loews Corp............................................................. 4,500 477,563
Marsh & McLennan Cos., Inc............................................. 13,500 1,004,906
-------------
6,723,725
-------------
HEALTHCARE -- 9.0%
Drugs -- 5.2%
Bristol-Myers Squibb Co................................................ 13,000 1,217,125
Merck & Co., Inc....................................................... 6,000 567,375
Perrigo Co.+........................................................... 15,500 220,875
Pharmacia & Upjohn, Inc................................................ 32,500 1,096,875
Health Services -- 1.1%
United Healthcare Corp................................................. 8,500 442,531
Vencor, Inc.+.......................................................... 9,000 218,250
Medical Products -- 2.7%
Abbott Laboratories, Inc............................................... 9,000 585,000
Biomet, Inc............................................................ 15,400 367,675
US Surgical Corp....................................................... 23,500 619,813
-------------
5,335,519
-------------
INDUSTRIAL & COMMERCIAL -- 13.6%
Aerospace & Military Technology -- 1.0%
General Motors Corp., Class H.......................................... 8,500 569,500
Business Services -- 3.9%
Browning-Ferris Industries, Inc........................................ 14,924 532,600
Johnson Controls, Inc.................................................. 15,500 710,094
Waste Management, Inc.................................................. 43,500 1,071,187
Electrical Equipment -- 1.1%
AMP, Inc............................................................... 15,500 673,281
Machinery -- 2.1%
Cincinnati Milacron, Inc............................................... 9,600 283,800
Ingersoll-Rand Co...................................................... 24,000 981,000
Multi-Industry -- 1.9%
ITT Industries, Inc.................................................... 34,500 1,095,375
Transportation -- 3.6%
Abb Ab ADR............................................................. 4,200 520,800
AMR Corp.+............................................................. 3,700 448,394
CNF Transportation, Inc................................................ 14,400 626,400
Ryder System, Inc...................................................... 14,000 508,375
-------------
8,020,806
-------------
</TABLE>
---------------------
55
<PAGE> 51
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
INFORMATION & ENTERTAINMENT -- 2.8%
Broadcasting & Media -- 2.6%
News Corp., Ltd. ADR................................................... 4,000 $ 86,750
Readers Digest Association, Inc., Class A.............................. 24,500 586,469
Viacom, Inc., Class A+................................................. 14,500 503,875
Viacom, Inc., Class B+................................................. 10,500 367,500
Leisure & Tourism -- 0.2%
Tricon Global Restaurants, Inc.+....................................... 2,350 79,459
-------------
1,624,053
-------------
INFORMATION TECHNOLOGY -- 11.7%
Computers & Business Equipment -- 5.0%
Cabletron Systems, Inc.+............................................... 12,000 276,000
International Business Machines Corp................................... 5,500 602,594
Lexmark International Group, Inc., Class A+............................ 19,500 621,562
Seagate Technology, Inc.+.............................................. 20,000 453,750
Storage Technology Corp.+.............................................. 15,500 1,000,719
Electronics -- 1.2%
Matsushita Electric Industrial Co., Ltd. ADR........................... 4,500 697,781
Software -- 2.5%
First Data Corp........................................................ 31,500 891,844
Novell, Inc.+.......................................................... 64,000 592,000
Telecommunications -- 3.0%
Tele-Communications TCI Ventures Group, Series A+...................... 11,263 254,825
Tele-Communications, Inc., Series A+................................... 37,500 858,984
U.S. West Communications Group......................................... 14,500 655,219
-------------
6,905,278
-------------
MATERIALS -- 4.5%
Chemicals -- 2.5%
Arco Chemical Co....................................................... 6,900 316,106
Dow Chemical Co........................................................ 7,500 740,625
Eastman Kodak Co....................................................... 6,300 381,938
Forest Products -- 1.2%
Consolidated Papers, Inc............................................... 5,500 296,313
Louisiana-Pacific Corp................................................. 21,500 434,031
Metals & Minerals -- 0.8%
USX-US Steel Group, Inc................................................ 15,700 491,606
-------------
2,660,619
-------------
REAL ESTATE -- 1.2%
Real Estate Companies -- 0.3%
Security Capital Group, Inc., Class B+................................. 6,500 208,813
Real Estate Investment Trusts -- 0.9%
Boston Properties, Inc................................................. 15,500 505,687
-------------
714,500
-------------
UTILITIES -- 8.9%
Electric Utilities -- 2.0%
Entergy Corp........................................................... 23,500 611,000
Public Service Enterprise Group, Inc................................... 20,000 583,750
Gas & Pipeline Utilities -- 3.0%
Coastal Corp........................................................... 8,500 497,781
Columbia Gas Systems, Inc.............................................. 6,000 436,500
Pacific Gas & Electric Co.............................................. 29,500 833,375
</TABLE>
- ---------------------
56
<PAGE> 52
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES (continued)
Telephone -- 3.9%
GTE Corp............................................................... 7,000 $ 353,938
MCI Communications Corp................................................ 27,900 1,225,856
SBC Communications, Inc................................................ 9,501 691,772
-------------
5,233,972
-------------
TOTAL COMMON STOCK (cost $48,922,930).................................. 55,040,622
-------------
PREFERRED STOCK -- 1.9%
----------------------------------------------------------------------------------------------------
INFORMATION & ENTERTAINMENT -- 1.9%
Broadcasting & Media -- 1.9%
News Corp. Ltd. ADR (cost $898,748).................................... 57,000 1,125,750
-------------
TOTAL INVESTMENT SECURITIES (cost $49,821,678)......................... 56,166,372
-------------
<CAPTION>
PRINCIPAL
SHORT-TERM SECURITIES -- 5.3% AMOUNT
----------------------------------------------------------------------------------------------------
<S> <C> <C>
TIME DEPOSIT -- 5.3%
Cayman Island Time Deposit with State Street Bank & Trust Co. 4.50% due
12/1/97 (cost $3,130,000)............................................ $3,130,000 3,130,000
-------------
TOTAL INVESTMENTS --
(cost $52,951,678) 100.5% 59,296,372
Liabilities in excess of other assets -- (0.5) (272,428)
------ -------------
NET ASSETS -- 100.0% $59,023,944
====== =============
</TABLE>
-----------------------------
+ Non-income producing securities
ADR -- American Depository Receipt
See Notes to Financial Statements
---------------------
57
<PAGE> 53
- ---------------------
SUNAMERICA SERIES TRUST
VENTURE VALUE PORTFOLIO INVESTMENT PORTFOLIO -- NOVEMBER 30, 1997
<TABLE>
<CAPTION>
COMMON STOCK -- 88.3% SHARES VALUE
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER DISCRETIONARY -- 4.2%
Apparel & Textiles -- 1.3%
Nike, Inc., Class B................................................. 296,700 $ 14,445,581
Housing -- 2.2%
Masco Corp. ........................................................ 529,100 24,933,837
Maytag Corp. ....................................................... 4,200 135,713
Retail -- 0.7%
Harcourt General, Inc. ............................................. 150,600 8,245,350
------------
47,760,481
------------
CONSUMER STAPLES -- 6.0%
Food, Beverage & Tobacco -- 6.0%
Archer-Daniels-Midland Co. ......................................... 610,920 13,058,420
Coca-Cola Co. ...................................................... 12,400 775,000
Gallaher Group PLC ADR.............................................. 4,200 90,038
Nestle SA ADR....................................................... 338,600 24,913,680
Philip Morris Cos., Inc. ........................................... 557,900 24,268,650
Tyson Foods, Inc., Class A.......................................... 276,400 5,009,750
Household Products -- 0.0%
Fortune Brands, Inc. ............................................... 4,200 151,988
------------
68,267,526
------------
ENERGY -- 9.2%
Energy Services -- 7.3%
British Petroleum Co. PLC ADR....................................... 81,995 6,805,585
Burlington Resources, Inc. ......................................... 341,300 15,187,850
Cooper Cameron Corp.+............................................... 203,300 12,388,593
EVI, Inc.+.......................................................... 165,300 8,502,619
Halliburton Co. .................................................... 494,800 26,688,275
Nabors Industries, Inc.+............................................ 44,900 1,574,306
Schlumberger Ltd. .................................................. 149,100 12,272,794
Energy Sources -- 1.9%
Amerada Hess Corp. ................................................. 1,800 100,800
Amoco Corp. ........................................................ 1,400 126,000
Atlantic Richfield Co. ............................................. 4,800 391,200
Chevron Corp. ...................................................... 8,100 649,519
Exxon Corp. ........................................................ 24,800 1,512,800
Mobil Corp. ........................................................ 2,200 158,262
Noble Affiliates, Inc. ............................................. 245,557 9,116,304
Pioneer Natural Resources Co. ...................................... 167,100 5,336,756
Sonat, Inc. ........................................................ 2,200 95,838
Tosco Corp. ........................................................ 122,800 3,998,675
------------
104,906,176
------------
FINANCE -- 32.9%
Banks -- 11.2%
Banc One Corp. ..................................................... 273,980 14,075,723
BankAmerica Corp. .................................................. 388,800 28,382,400
Barnett Banks, Inc. ................................................ 2,800 197,050
Citicorp. .......................................................... 189,475 22,725,158
First Union Corp. .................................................. 35,400 1,725,750
</TABLE>
- ---------------------
58
<PAGE> 54
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE (continued)
Banks (continued)
Golden West Financial Corp. ........................................ 73,000 $ 6,542,625
U.S. Bancorp........................................................ 131,400 14,133,712
Wells Fargo & Co. .................................................. 129,000 39,635,250
Financial Services -- 12.0%
American Express Co. ............................................... 434,100 34,239,637
Donaldson, Lufkin & Jenrette, Inc. ................................. 106,800 7,783,050
Federal Home Loan Mortgage Corp. ................................... 339,600 14,008,500
Morgan (J.P.) & Co., Inc. .......................................... 81,800 9,340,537
Morgan Stanley, Dean Witter, Discover & Co. ........................ 497,425 27,016,395
State Street Corp. ................................................. 159,600 9,496,200
TCF Financial Corp. ................................................ 44,100 2,607,413
Travelers Group, Inc. .............................................. 646,995 32,673,248
Insurance -- 9.4%
20th Century Industries............................................. 147,500 3,715,156
Allstate Corp. ..................................................... 204,495 17,561,008
American International Group, Inc. ................................. 62,700 6,320,944
Berkley (W.R.) Corp. ............................................... 201,600 8,391,600
Chubb Corp. ........................................................ 180,700 12,818,406
General Re Corp..................................................... 177,500 35,233,750
Progressive Corp., Ohio............................................. 100,900 10,291,800
Transatlantic Holdings, Inc. ....................................... 144,000 10,287,000
UNUM Corp. ......................................................... 56,000 2,656,500
Investment Companies -- 0.3%
Morgan Stanley Asia-Pacific Fund.................................... 475,467 3,536,286
------------
375,395,098
------------
HEALTHCARE -- 5.3%
Drugs -- 4.1%
American Home Products Corp. ....................................... 2,200 153,725
Bristol-Myers Squibb Co. ........................................... 51,600 4,831,050
Lilly (Eli) & Co. .................................................. 60,200 3,796,362
Merck & Co., Inc. .................................................. 25,100 2,373,519
Pfizer, Inc. ....................................................... 185,200 13,473,300
SmithKline Beecham PLC ADR.......................................... 446,600 22,162,525
Medical Products -- 1.2%
Johnson & Johnson Co. .............................................. 55,700 3,505,619
Novartis AG ADR..................................................... 125,900 10,058,302
------------
60,354,402
------------
INDUSTRIAL & COMMERCIAL -- 6.2%
Aerospace & Military Technology -- 0.8%
Boeing Co. ......................................................... 170,300 9,047,188
Business Services -- 0.0%
ACNielsen Corp.+.................................................... 133 2,984
Cognizant Corp.+.................................................... 400 17,150
Dun & Bradstreet Corp. ............................................. 400 11,200
Waste Management, Inc. ............................................. 1,400 34,475
</TABLE>
---------------------
59
<PAGE> 55
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL & COMMERCIAL (continued)
Electrical Equipment -- 0.1%
General Electric Co. ............................................... 12,200 $ 899,750
Machinery -- 1.1%
Smith International, Inc.+.......................................... 194,200 12,428,800
Transportation -- 4.2%
Burlington Northern Santa Fe........................................ 273,400 25,016,100
Illinois Central Corp. ............................................. 211,650 7,632,628
Union Pacific Corp. ................................................ 253,400 15,204,000
------------
70,294,275
------------
INFORMATION & ENTERTAINMENT -- 5.6%
Broadcasting & Media -- 2.8%
AirTouch Communications, Inc.+...................................... 413,600 16,233,800
Gannett Co., Inc. .................................................. 188,600 10,950,588
Tribune Co. ........................................................ 89,800 5,062,475
Washington Post Co., Class B........................................ 100 45,525
Leisure & Tourism -- 2.8%
McDonald's Corp. ................................................... 661,800 32,097,300
------------
64,389,688
------------
INFORMATION TECHNOLOGY -- 13.9%
Communication Equipment -- 0.2%
Molex, Inc. ........................................................ 66,225 2,520,689
Computers & Business Equipment -- 7.3%
Hewlett-Packard Co. ................................................ 630,900 38,524,332
International Business Machines Corp. .............................. 405,200 44,394,725
Electronics -- 5.0%
Intel Corp. ........................................................ 154,400 11,985,300
Motorola, Inc. ..................................................... 233,200 14,662,450
Novellus Systems, Inc.+............................................. 188,600 7,096,075
Texas Instruments, Inc. ............................................ 472,000 23,246,000
Telecommunications -- 1.4%
360 Communications Co.+............................................. 298,600 5,748,050
Globalstar Telecommunications Ltd.+................................. 21,148 1,048,148
Loral Space & Communications Corp.+................................. 83,200 1,846,000
Qwest Communications International, Inc.+........................... 129,500 7,073,937
------------
158,145,706
------------
MATERIALS -- 1.0%
Chemicals -- 0.0%
Dow Chemical Co. ................................................... 600 59,250
Forest Products -- 0.0%
International Paper Co. ............................................ 1,300 61,669
Union Camp Corp. ................................................... 2,000 120,125
Metals & Minerals -- 1.0%
Martin Marietta Materials, Inc. .................................... 312,300 10,813,387
------------
11,054,431
------------
REAL ESTATE -- 4.0%
Real Estate Companies -- 0.8%
Crescent Operating, Inc.+........................................... 45,330 759,277
The Rouse Co. ...................................................... 272,700 8,590,050
</TABLE>
- ---------------------
60
<PAGE> 56
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
REAL ESTATE (continued)
Real Estate Investment Trusts -- 3.2%
Crescent Real Estate Equities Co. .................................. 449,400 $ 17,301,900
Federal Realty Investment Trust..................................... 47,800 1,203,963
General Growth Properties........................................... 224,500 8,278,437
Kimco Realty Corp. ................................................. 10,550 362,656
Saul Centers, Inc. ................................................. 30,500 537,563
Simon DeBartolo Group, Inc. ........................................ 400 13,075
United Dominion Realty Trust, Inc. ................................. 52,200 766,688
Vornado Realty Trust................................................ 159,400 7,143,112
Weingarten Realty Investors......................................... 15,200 633,650
------------
45,590,371
------------
UTILITIES -- 0.0%
Electric Utilities -- 0.0%
Carolina Power & Light Co. ......................................... 900 33,637
Duke Energy Corp. .................................................. 1,400 72,800
Edison International................................................ 700 18,769
Enova Corp. ........................................................ 500 13,000
New England Electric Systems........................................ 500 20,625
Southern Co. ....................................................... 1,600 38,400
Wisconsin Energy Corp. ............................................. 800 21,600
Telephone -- 0.0%
SBC Communications, Inc. ........................................... 1,200 87,375
------------
306,206
------------
TOTAL COMMON STOCK (cost $765,631,967).............................. 1,006,464,360
------------
<CAPTION>
PREFERRED STOCK -- 0.5%
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE -- 0.3%
Banks -- 0.1%
Banc One Corp., Series convertible 3.50%............................ 7,500 735,938
Financial Services -- 0.2%
Devon Financing Trust convertible 6.50%............................. 30,700 2,256,450
------------
2,992,388
------------
INFORMATION & ENTERTAINMENT -- 0.1%
Broadcasting & Media -- 0.1%
AirTouch Communications, Inc., Class C convertible 4.25%............ 24,597 1,488,117
------------
REAL ESTATE -- 0.1%
Real Estate Companies -- 0.0%
Rouse Co., Series B 3.00%........................................... 10,000 500,000
Real Estate Investment Trusts -- 0.1%
Vornado Realty Trust, Series A 6.50%................................ 9,100 609,131
------------
1,109,131
------------
TOTAL PREFERRED STOCK (cost $4,810,031)............................. 5,589,636
------------
TOTAL INVESTMENT SECURITIES (cost $770,441,998)..................... 1,012,053,997
------------
</TABLE>
---------------------
61
<PAGE> 57
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM SECURITIES -- 11.0% AMOUNT VALUE
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
FEDERAL AGENCY OBLIGATIONS -- 11.0%
Federal Home Loan Mortgage Discount Notes 5.46% 12/01/97............ $12,275,000 $ 12,275,000
Federal Home Loan Mortgage Discount Notes 5.48% 12/02/97............ 20,000,000 19,996,956
Federal Home Loan Mortgage Discount Notes 5.48% 12/03/97............ 26,080,000 26,072,060
Federal Home Loan Mortgage Discount Notes 5.48% 12/05/97............ 12,210,000 12,202,565
Federal Home Loan Mortgage Discount Notes 5.48% 12/10/97............ 18,900,000 18,874,107
Federal National Mortgage Association Discount Notes 5.50%
12/11/97.......................................................... 13,820,000 13,798,886
Federal National Mortgage Association Discount Notes 5.60%
12/11/97.......................................................... 22,920,000 22,884,347
---------------
TOTAL SHORT-TERM SECURITIES (cost $126,103,921)..................... 126,103,921
---------------
TOTAL INVESTMENTS --
(cost $896,545,919) 99.8% 1,138,157,918
Other assets less liabilities -- 0.2 1,895,369
----- --------------
NET ASSETS -- 100.0% $1,140,053,287
===== ==============
</TABLE>
-----------------------------
+ Non-income producing securities
ADR -- American Depository Receipt
See Notes to Financial Statements
- ---------------------
62
<PAGE> 58
- ---------------------
SUNAMERICA SERIES TRUST
PUTNAM GROWTH PORTFOLIO INVESTMENT PORTFOLIO -- NOVEMBER 30, 1997
<TABLE>
<CAPTION>
COMMON STOCK -- 94.8% SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER DISCRETIONARY -- 13.1%
Apparel & Textiles -- 0.9%
Liz Claiborne, Inc................................................... 40,800 $ 2,050,200
Housing -- 0.9%
Masco Corp........................................................... 44,700 2,106,488
Retail -- 11.3%
Consolidated Stores Corp.+........................................... 57,750 2,808,094
Costco Cos., Inc.+................................................... 83,000 3,677,937
CVS Corp............................................................. 87,139 5,783,851
Dayton Hudson Corp................................................... 41,700 2,770,444
Safeway, Inc.+....................................................... 27,300 1,658,475
TJX Cos., Inc........................................................ 67,000 2,311,500
Wal-Mart Stores, Inc................................................. 131,700 5,259,769
Walgreen Co.......................................................... 75,100 2,417,281
-------------
30,844,039
-------------
CONSUMER STAPLES -- 8.6%
Food, Beverage & Tobacco -- 3.3%
Campbell Soup Co..................................................... 29,400 1,646,400
Coca-Cola Enterprises, Inc........................................... 79,900 2,441,944
ConAgra, Inc......................................................... 64,000 2,300,000
Sara Lee Corp........................................................ 26,300 1,390,612
Household Products -- 5.3%
Clorox Co............................................................ 35,200 2,732,400
Colgate-Palmolive Co................................................. 37,300 2,492,106
Estee Lauder Cos., Inc., Class A..................................... 22,500 1,205,156
Procter & Gamble Co.................................................. 78,600 5,998,163
-------------
20,206,781
-------------
ENERGY -- 6.2%
Energy Services -- 3.9%
Halliburton Co....................................................... 86,400 4,660,200
Schlumberger Ltd..................................................... 55,800 4,593,038
Energy Sources -- 2.3%
Exxon Corp........................................................... 56,500 3,446,500
Mobil Corp........................................................... 26,700 1,920,731
-------------
14,620,469
-------------
FINANCE -- 16.6%
Banks -- 4.6%
Banc One Corp........................................................ 12,000 616,500
BankAmerica Corp..................................................... 68,900 5,029,700
Barnett Banks, Inc................................................... 19,200 1,351,200
Comerica, Inc........................................................ 33,000 2,811,187
Fifth Third Bancorp.................................................. 9,400 662,700
SunTrust Banks, Inc.................................................. 5,800 411,800
Financial Services -- 9.6%
American Express Co.................................................. 64,100 5,055,888
Associates First Capital Corp. Class A............................... 7,400 475,450
Franklin Resources, Inc.............................................. 19,600 1,761,550
MBNA Corp............................................................ 125,925 3,344,883
</TABLE>
---------------------
63
<PAGE> 59
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE (continued)
Financial Services (continued)
Morgan Stanley, Dean Witter, Discover & Co........................... 41,700 $ 2,264,831
Travelers Group, Inc................................................. 105,000 5,302,500
Washington Mutual, Inc............................................... 62,400 4,313,400
Insurance -- 2.4%
American International Group, Inc.................................... 32,350 3,261,285
Conseco, Inc......................................................... 49,700 2,314,156
-------------
38,977,030
-------------
HEALTHCARE -- 13.1%
Drugs -- 12.0%
Bristol-Myers Squibb Co.............................................. 59,600 5,580,050
Cardinal Health, Inc................................................. 26,100 1,977,075
Lilly (Eli) & Co..................................................... 50,500 3,184,656
Merck & Co., Inc..................................................... 44,300 4,189,119
Pfizer, Inc.......................................................... 72,300 5,259,825
Schering-Plough Corp................................................. 52,100 3,266,019
Warner-Lambert Co.................................................... 33,100 4,629,862
Health Services -- 1.1%
HEALTHSOUTH Corp.+................................................... 100,100 2,627,625
Medical Products -- 0.0%
Guidant Corp......................................................... 1,700 109,225
-------------
30,823,456
-------------
INDUSTRIAL & COMMERCIAL -- 10.1%
Business Services -- 1.1%
Quintiles Transnational Corp.+....................................... 13,300 1,039,063
USA Waste Services, Inc.+............................................ 43,300 1,431,606
Electrical Equipment -- 5.0%
General Electric Co.................................................. 116,000 8,555,000
Westinghouse Electric Corp........................................... 102,900 3,087,000
Machinery -- 0.9%
Ingersoll-Rand Co.................................................... 54,400 2,223,600
Multi-Industry -- 3.1%
Textron, Inc......................................................... 49,600 2,932,600
Tyco International Ltd............................................... 110,200 4,325,350
-------------
23,594,219
-------------
INFORMATION & ENTERTAINMENT -- 5.1%
Broadcasting & Media -- 2.9%
Gannett Co., Inc..................................................... 89,600 5,202,400
Interpublic Group of Cos., Inc....................................... 35,600 1,706,575
Leisure & Tourism -- 2.2%
Carnival Corp., Class A.............................................. 36,300 1,962,469
Marriott International, Inc.......................................... 44,000 3,187,250
-------------
12,058,694
-------------
INFORMATION TECHNOLOGY -- 19.5%
Communication Equipment -- 1.7%
Ericsson (L.M.) Telephone Co. ADR Class B............................ 46,900 1,896,519
Tellabs, Inc.+....................................................... 40,900 2,126,800
Computers & Business Equipment -- 3.8%
Compaq Computer Corp.+............................................... 41,100 2,566,181
Dell Computer Corp.+................................................. 25,500 2,146,781
</TABLE>
- ---------------------
64
<PAGE> 60
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
INFORMATION TECHNOLOGY (continued)
Computers & Business Equipment (continued)
EMC Corp.+........................................................... 93,200 $ 2,825,125
Hewlett-Packard Co................................................... 18,200 1,111,338
Pitney Bowes, Inc.................................................... 2,300 193,344
Electronics -- 2.4%
Applied Materials, Inc.+............................................. 34,600 1,141,800
Motorola, Inc........................................................ 40,300 2,533,862
Texas Instruments, Inc............................................... 39,200 1,930,600
Software -- 10.3%
BMC Software, Inc.+.................................................. 53,000 3,438,375
Computer Associates International, Inc............................... 70,650 3,678,216
Compuware Corp.+..................................................... 53,800 1,879,638
HBO & Co. ........................................................... 69,500 3,118,812
Microsoft Corp.+..................................................... 51,900 7,343,850
Parametric Technology Corp.+......................................... 37,400 1,891,038
PeopleSoft, Inc.+.................................................... 43,400 2,839,987
Telecommunications -- 1.3%
Lucent Technologies, Inc............................................. 30,200 2,419,775
Tele-Communications TCI Ventures Group, Series A+.................... 25,900 585,987
-------------
45,668,028
-------------
UTILITIES -- 2.5%
Telephone -- 2.5%
SBC Communications, Inc.............................................. 16,300 1,186,844
Sprint Corp.......................................................... 77,900 4,562,018
-------------
5,748,862
-------------
TOTAL INVESTMENT SECURITIES (cost $176,927,574)...................... 222,541,578
-------------
<CAPTION>
PRINCIPAL
REPURCHASE AGREEMENT -- 5.2% AMOUNT
----------------------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT -- 5.2%
Agreement with SBC Warburg, bearing interest of 5.67% dated 11/28/97,
to be repurchased 12/1/97 in the amount of $12,233,778 and
collateralized by $8,233,000 U.S. Treasury Notes 10.625% due
08/15/15 approximate aggregate value $12,473,023 (cost
$12,228,000)....................................................... $12,228,000 12,228,000
-------------
TOTAL INVESTMENTS --
(cost $189,155,574) 100.0% 234,769,578
Liabilities in excess of other assets -- 0.0 (43,364)
------ -------------
NET ASSETS -- 100.0% $234,726,214
====== =============
</TABLE>
-----------------------------
+ Non-income producing securities
ADR -- American Depository Receipt
See Notes to Financial Statements
---------------------
65
<PAGE> 61
- ---------------------
SUNAMERICA SERIES TRUST
GROWTH/PHOENIX INVESTMENT
COUNSEL PORTFOLIO INVESTMENT PORTFOLIO -- NOVEMBER 30, 1997
<TABLE>
<CAPTION>
COMMON STOCK -- 98.6% SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER DISCRETIONARY -- 8.1%
Housing -- 1.7%
Home Depot, Inc. ..................................................... 65,000 $ 3,635,937
Retail -- 6.4%
Borders Group, Inc.+.................................................. 50,000 1,428,125
CVS Corp. ............................................................ 60,000 3,982,500
Rite Aid Corp. ....................................................... 62,400 4,102,800
Safeway, Inc.+........................................................ 75,500 4,586,625
------------
17,735,987
------------
CONSUMER STAPLES -- 6.7%
Food, Beverage & Tobacco -- 2.6%
Philip Morris Cos., Inc. ............................................. 132,500 5,763,750
Household Products -- 4.1%
Colgate-Palmolive Co. ................................................ 34,000 2,271,625
Gillette Co. ......................................................... 48,600 4,486,388
Sunbeam Corp. ........................................................ 47,700 2,101,781
------------
14,623,544
------------
ENERGY -- 12.4%
Energy Services -- 8.4%
BJ Services Co.+...................................................... 26,000 1,867,125
Cooper Cameron Corp.+................................................. 14,400 877,500
Diamond Offshore Drilling, Inc. ...................................... 34,900 1,740,637
Halliburton Co. ...................................................... 64,900 3,500,544
Nabors Industries, Inc.+.............................................. 36,600 1,283,287
Noble Drilling Corp.+................................................. 30,600 919,913
Rowan Cos., Inc.+..................................................... 27,600 938,400
Santa Fe International Corp.+......................................... 30,100 1,262,319
Schlumberger Ltd. .................................................... 49,100 4,041,544
Transocean Offshore, Inc. ............................................ 39,700 1,883,269
Energy Sources -- 4.0%
Elf Aquitaine SA ADR.................................................. 52,800 3,022,800
Tosco Corp. .......................................................... 105,000 3,419,062
YPF Sociedad Anonima ADR.............................................. 66,300 2,225,194
------------
26,981,594
------------
FINANCE -- 15.8%
Banks -- 8.4%
AmSouth Bancorp. ..................................................... 10,000 520,625
Banco Rio de La Plata SA ADR+......................................... 65,000 816,563
BankAmerica Corp. .................................................... 57,200 4,175,600
BankBoston Corp. ..................................................... 36,900 3,288,712
Citicorp.............................................................. 22,000 2,638,625
Fleet Financial Group, Inc. .......................................... 1,900 125,519
Mellon Bank Corp. .................................................... 65,000 3,684,687
NationsBank Corp. .................................................... 51,500 3,093,219
Financial Services -- 4.9%
American Express Co. ................................................. 40,000 3,155,000
</TABLE>
- ---------------------
66
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<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE (continued)
Compass Bancshares, Inc. ............................................. 14,200 $ 568,000
Franklin Resources, Inc. ............................................. 4,100 368,487
Merrill Lynch & Co., Inc. ............................................ 30,000 2,105,625
Price (T. Rowe) Associates, Inc. ..................................... 10,100 656,500
Travelers Group, Inc. ................................................ 75,000 3,787,500
Insurance -- 2.5%
Allstate Corp. ....................................................... 45,000 3,864,375
Hartford Financial Services, Inc. .................................... 18,400 1,541,000
------------
34,390,037
------------
HEALTHCARE -- 18.1%
Drugs -- 13.6%
Bristol-Myers Squibb Co. ............................................. 36,700 3,436,038
Cardinal Health, Inc. ................................................ 44,500 3,370,875
Elan Corp. PLC ADR+................................................... 22,300 1,176,325
Lilly (Eli) & Co. .................................................... 49,700 3,134,206
Pfizer, Inc. ......................................................... 106,200 7,726,050
SmithKline Beecham PLC ADR............................................ 90,000 4,466,250
Warner-Lambert Co. ................................................... 31,900 4,462,012
Watson Pharmaceuticals, Inc.+......................................... 66,300 1,972,425
Health Services -- 1.0%
HEALTHSOUTH Corp.+.................................................... 83,900 2,202,375
Medical Products -- 3.5%
Centocor, Inc.+....................................................... 37,800 1,644,300
Guidant Corp. ........................................................ 56,400 3,623,700
Medtronic, Inc. ...................................................... 49,400 2,358,850
------------
39,573,406
------------
INDUSTRIAL & COMMERCIAL -- 6.1%
Electrical Equipment -- 2.1%
General Electric Co. ................................................. 62,500 4,609,375
Machinery -- 1.0%
Deere & Co. .......................................................... 41,100 2,252,794
Multi-Industry -- 2.1%
Tyco International Ltd. .............................................. 115,000 4,513,750
Transportation -- 0.9%
Federal Express Corp.+................................................ 30,000 2,011,875
------------
13,387,794
------------
INFORMATION & ENTERTAINMENT -- 4.6%
Broadcasting & Media -- 4.6%
AirTouch Communications, Inc.+........................................ 139,700 5,483,225
Chancellor Media Corp.+............................................... 20,800 1,249,300
Liberty Media Group Corp., Class A+................................... 97,700 3,297,375
------------
10,029,900
------------
INFORMATION TECHNOLOGY -- 23.8%
Communication Equipment -- 1.4%
CIENA Corp.+.......................................................... 57,000 3,078,000
Computers & Business Equipment -- 8.0%
EMC Corp.+............................................................ 113,000 3,425,313
International Business Machines Corp. ................................ 106,800 11,701,275
Staples, Inc.+........................................................ 83,500 2,353,656
</TABLE>
---------------------
67
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<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
INFORMATION TECHNOLOGY (continued)
Electronics -- 7.9%
Adaptec, Inc.+........................................................ 66,400 $ 3,286,800
Linear Technology Corp. .............................................. 16,400 1,055,750
National Semiconductor Corp.+......................................... 92,200 3,054,125
Philips Electronics NV ADR............................................ 113,200 7,584,400
Texas Instruments, Inc. .............................................. 45,000 2,216,250
Software -- 5.4%
BMC Software, Inc.+................................................... 35,200 2,283,600
Cisco Systems, Inc.+.................................................. 33,500 2,889,375
Compuware Corp.+...................................................... 67,400 2,354,787
HBO & Co.+............................................................ 75,100 3,370,112
J.D. Edwards & Co.+................................................... 6,000 205,500
Yahoo!, Inc.+......................................................... 12,100 618,613
Telecommunications -- 1.1%
Lucent Technologies, Inc. ............................................ 31,700 2,539,963
------------
52,017,519
------------
MATERIALS -- 0.5%
Chemicals -- 0.5%
Solutia, Inc. ........................................................ 49,000 1,117,813
------------
UTILITIES -- 2.5%
Telephone -- 2.5%
AT&T Corp. ........................................................... 99,300 5,548,387
------------
TOTAL INVESTMENT SECURITIES (cost $190,643,244)....................... 215,405,981
------------
<CAPTION>
PRINCIPAL
SHORT-TERM SECURITIES -- 1.0% AMOUNT
----------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE SHORT-TERM NOTES -- 1.0%
International Lease Finance Corp. 5.52% due 12/2/97................... $1,615,000 1,614,752
Koch Industries 5.53% due 12/1/97..................................... 600,000 600,000
------------
TOTAL CORPORATE SHORT-TERM NOTES (cost $2,214,752).................... 2,214,752
------------
TOTAL SHORT-TERM SECURITIES (cost $2,214,752)......................... 2,214,752
------------
TOTAL INVESTMENTS --
(cost $192,857,996) 99.6% 217,620,733
Other assets less liabilities -- 0.4 875,085
------ ------------
NET ASSETS -- 100.0% $218,495,818
====== ============
</TABLE>
-----------------------------
+ Non-income producing securities
ADR -- American Depository Receipt
See Notes to Financial Statements
- ---------------------
68
<PAGE> 64
- ---------------------
SUNAMERICA SERIES TRUST
ALLIANCE GROWTH PORTFOLIO INVESTMENT PORTFOLIO -- NOVEMBER 30, 1997
<TABLE>
<CAPTION>
COMMON STOCK -- 95.7% SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER DISCRETIONARY -- 6.7%
Automotive -- 0.7%
Ford Motor Co......................................................... 104,900 $ 4,510,700
Housing -- 3.8%
Home Depot, Inc....................................................... 482,600 26,995,438
Retail -- 2.2%
Dayton Hudson Corp.................................................... 138,900 9,228,169
Kohl's Corp.+......................................................... 90,300 6,535,462
------------
47,269,769
------------
CONSUMER STAPLES -- 8.1%
Food, Beverage & Tobacco -- 6.9%
Campbell Soup Co...................................................... 106,400 5,958,400
Coca-Cola Co.......................................................... 157,600 9,850,000
Philip Morris Cos., Inc............................................... 758,400 32,990,400
Household Products -- 1.2%
Colgate-Palmolive Co.................................................. 37,000 2,472,062
Gillette Co........................................................... 60,600 5,594,138
------------
56,865,000
------------
ENERGY -- 1.7%
Energy Services -- 1.5%
Halliburton Co........................................................ 193,100 10,415,331
Energy Sources -- 0.2%
Texaco, Inc........................................................... 21,700 1,226,050
------------
11,641,381
------------
FINANCE -- 24.3%
Banks -- 7.8%
Chase Manhattan Corp.................................................. 98,594 10,709,773
Citicorp.............................................................. 168,700 20,233,456
NationsBank Corp...................................................... 107,200 6,438,700
Norwest Corp.......................................................... 262,040 9,810,122
U.S. Bancorp.......................................................... 70,275 7,558,955
Financial Services -- 14.7%
Associates First Capital Corp., Class A............................... 70,300 4,516,775
Federal National Mortgage Association................................. 261,100 13,789,344
First Data Corp....................................................... 153,400 4,343,138
Household International, Inc.......................................... 48,600 6,123,600
MBNA Corp............................................................. 1,126,500 29,922,656
Merrill Lynch & Co., Inc.............................................. 238,900 16,767,794
Morgan Stanley, Dean Witter, Discover & Co............................ 403,800 21,931,387
Washington Mutual, Inc................................................ 88,000 6,083,000
Insurance -- 1.8%
American International Group, Inc..................................... 51,100 5,151,519
Progressive Corp...................................................... 76,100 7,762,200
------------
171,142,419
------------
</TABLE>
---------------------
69
<PAGE> 65
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE -- 11.5%
Drugs -- 8.5%
Merck & Co., Inc...................................................... 259,200 $ 24,510,600
Pfizer, Inc........................................................... 193,000 14,040,750
Schering-Plough Corp.................................................. 337,100 21,131,956
Health Services -- 2.9%
United Healthcare Corp................................................ 392,800 20,450,150
Medical Products -- 0.1%
Medtronic, Inc........................................................ 25,000 1,193,750
------------
81,327,206
------------
INDUSTRIAL & COMMERCIAL -- 7.1%
Machinery -- 0.1%
Applied Materials, Inc.+.............................................. 35,800 1,181,400
Multi-Industry -- 7.0%
Tyco International Ltd................................................ 778,000 30,536,500
United Technologies Corp.............................................. 249,100 18,666,931
------------
50,384,831
------------
INFORMATION & ENTERTAINMENT -- 9.7%
Broadcasting & Media -- 3.5%
AirTouch Communications, Inc.+........................................ 497,500 19,526,875
Liberty Media Group Corp., Class A+................................... 144,600 4,880,250
Leisure & Tourism -- 6.2%
Disney (Walt) Co...................................................... 112,400 10,670,975
KLM Royal Dutch Air Lines NV ADR...................................... 53,100 1,911,600
Northwest Airlines Corp. Class A+..................................... 273,200 11,337,800
UAL Corp.+............................................................ 235,200 19,992,000
------------
68,319,500
------------
INFORMATION TECHNOLOGY -- 24.3%
Communication Equipment -- 7.6%
Ericsson (L.M.) Telecommunications Co., Class B ADR................... 387,500 15,669,531
Nokia Corp., Class A ADR.............................................. 457,400 38,021,375
Computers & Business Equipment -- 8.2%
Compaq Computer Corp.................................................. 486,800 30,394,575
Dell Computer Corp.+.................................................. 322,100 27,116,794
Electronics -- 2.0%
Intel Corp............................................................ 55,300 4,292,663
KLA-Tencor Corp.+..................................................... 100,900 3,909,875
Texas Instruments, Inc................................................ 126,600 6,235,050
Software -- 5.5%
Cisco Systems, Inc.+.................................................. 298,500 25,745,625
Microsoft Corp.+...................................................... 72,600 10,272,900
Oracle Systems Corp.+................................................. 74,600 2,485,112
Telecommunications -- 1.0%
Lucent Technologies, Inc.............................................. 86,500 6,930,813
------------
171,074,313
------------
</TABLE>
- ---------------------
70
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<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES -- 2.3%
Telephone -- 2.3%
MCI Communications Corp............................................... 355,200 $ 15,606,600
WorldCom, Inc.+....................................................... 19,900 636,800
------------
16,243,400
------------
TOTAL COMMON STOCK (cost $593,295,973)................................ 674,267,819
------------
WARRANTS -- 3.4%+
----------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY -- 3.4%
Electronics -- 3.4%
Intel Corp. 3/14/98 (cost $3,321,125)................................. 422,000 24,027,625
------------
TOTAL INVESTMENT SECURITIES (cost $596,617,098)....................... 698,295,444
------------
PRINCIPAL
SHORT-TERM SECURITIES -- 1.3% AMOUNT
----------------------------------------------------------------------------------------------------
TIME DEPOSIT -- 1.2%
Cayman Island Time Deposit with State Street Bank & Trust Co. 5.25%
due 12/01/97 @...................................................... $8,674,000 8,674,000
------------
U.S. GOVERNMENT -- 0.1%
United States Treasury Bills 4.91% due 12/18/97 @..................... 300,000 299,304
------------
TOTAL SHORT-TERM SECURITIES (cost $8,973,304)......................... 8,973,304
------------
TOTAL INVESTMENTS --
(cost $605,590,402) 100.4% 707,268,748
Liabilities in excess of other assets -- (0.4) (2,735,481)
------ ------------
NET ASSETS -- 100.0% $704,533,267
====== ============
</TABLE>
-----------------------------
+ Non-income producing securities
ADR -- American Depository Receipt
@ The security or a portion thereof represents collateral for the
following open futures contracts:
<TABLE>
<CAPTION>
OPEN FUTURES CONTRACTS
<C> <S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------
<CAPTION>
NUMBER OF EXPIRATION VALUE AT VALUE AS OF UNREALIZED
CONTRACTS DESCRIPTION DATE TRADE DATE NOVEMBER 30, 1997 DEPRECIATION
------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
Standard & Poor's 500
24 Long Index........................ December 1997 $ 5,736,900 $ 5,729,400 $ (7,500)
===========
</TABLE>
See Notes to Financial Statements
---------------------
71
<PAGE> 67
- ---------------------
SUNAMERICA SERIES TRUST
GLOBAL EQUITIES PORTFOLIO INVESTMENT PORTFOLIO -- NOVEMBER 30, 1997
<TABLE>
<CAPTION>
COMMON STOCK -- 95.1% SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
ARGENTINA -- 0.3%
Telecommunications Argentina ADR, Class B (Information Technology)... 30,000 $ 920,625
------------
AUSTRALIA -- 0.6%
Goodman Fielder Wattie Ltd. (Consumer Staples)....................... 900,328 1,352,536
Normandy Mining Ltd. (Materials)..................................... 658,000 566,138
------------
1,918,674
------------
BELGIUM -- 1.0%
Barco NV (Industrial & Commercial)................................... 8,989 1,679,979
Bekaert SA (Industrial & Commercial)................................. 2,700 1,678,943
------------
3,358,922
------------
BRAZIL -- 0.2%
Telecomunicacoes Brasileirassa SA ADR (Information Technology)....... 6,000 626,250
------------
DENMARK -- 0.7%
Den Danske Bank (Finance)+........................................... 7,300 866,769
Sophus Berendsen A/S, Series AB (Industrial & Commercial)............ 9,000 1,407,842
------------
2,274,611
------------
FINLAND -- 1.8%
Enso Oy, Series R (Materials)........................................ 203,000 1,781,987
Huhtamaki Oy (Industrial & Commercial)............................... 19,100 816,829
Nokia Corp. AB, Class A ADR (Information Technology)................. 35,569 2,862,146
Orion-yhtyma OY Series B (Healthcare)................................ 21,000 807,488
------------
6,268,450
------------
FRANCE -- 5.3%
Banque Nationale de Paris (Finance).................................. 30,248 1,475,687
Compagnie de St. Gobain (Materials).................................. 16,786 2,280,483
Compagnie Francaise d'Etudes et de Construction Technip (Industrial &
Commercial)........................................................ 6,500 673,860
Elf Aquitaine SA (Energy)............................................ 15,070 1,748,675
L'Air Liquide SA (Materials)......................................... 11,600 1,825,487
Pinault Printemps Redoute (Consumer Discretionary)................... 5,400 2,762,523
Schneider SA (Industrial & Commercial)+.............................. 43,000 2,301,763
Societe Generale (Finance)+.......................................... 16,554 2,176,055
Total SA, Series B (Energy).......................................... 28,030 2,943,879
------------
18,188,412
------------
GERMANY -- 1.8%
Adidas AG (Consumer Discretionary)................................... 15,400 2,170,060
Continental AG (Consumer Discretionary).............................. 48,900 1,238,097
Merck KGAA (Healthcare).............................................. 40,200 1,463,476
Schmalbach-Lubeca AG (Materials)..................................... 7,300 1,368,103
------------
6,239,736
------------
HONG KONG -- 2.1%
Cheung Kong Holdings Ltd. (Real Estate).............................. 274,000 1,931,749
CITIC Pacific Ltd. (Information & Entertainment)..................... 368,000 1,466,230
Dickson Concept Industries Ltd. (Industrial & Commercial)............ 223,000 418,289
</TABLE>
- ---------------------
72
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<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
HONG KONG (continued)
HSBC Holdings PLC (Finance)+......................................... 57,473 $ 1,386,585
Sun Hung Kai Properties Ltd. (Real Estate)+.......................... 244,000 1,862,282
------------
7,065,135
------------
INDONESIA -- 0.4%
PT Indostat alien shares (Information Technology)+................... 350,000 794,037
PT Telekomunikasi Indonesia, Series B alien shares (Information
Technology)........................................................ 559,000 409,959
PT Telekomunikasi Indonesia ADR (Information Technology)............. 6,000 87,750
PT Tempo Scan Pacific (Healthcare)................................... 310,000 118,986
------------
1,410,732
------------
ITALY -- 2.0%
Credito Italiano SpA (Finance)....................................... 1,190,000 3,258,179
Istituto Mobiliare Italiano (Finance)................................ 63,900 667,644
Telecom Italia Mobile SpA (Information Technology)................... 230,000 931,284
Telecom Italia SpA (Information Technology).......................... 344,111 2,145,266
------------
7,002,373
------------
JAPAN -- 13.9%
Advantest Corp. (Information Technology)............................. 28,900 1,999,506
Bank of Tokyo-Mitsubishi Ltd. (Finance)+............................. 91,300 1,323,448
Canon, Inc. (Information Technology)................................. 60,000 1,447,992
Daito Trust Construction Co. (Industrial & Commercial)............... 95,130 614,199
Daiwa Securities Co., Ltd. (Finance)................................. 375,000 1,307,542
Fujitec Co. (Information Technology)................................. 102,000 505,105
Fujitsu Ltd. (Information Technology)................................ 220,000 2,465,034
Hirose Electric Co., Ltd. (Industrial & Commercial).................. 12,000 721,175
Honda Motor Co., Ltd. (Consumer Discretionary)....................... 69,000 2,497,787
Hoya Corp. (Healthcare).............................................. 28,000 855,632
Kokuyo Co., Ltd. (Industrial & Commercial)........................... 40,000 695,789
Kuraray Co., Ltd. (Materials)........................................ 80,000 689,520
Long-Term Credit Bank of Japan Ltd. (Finance)........................ 680,000 1,145,544
Mabuchi Motor Co., Ltd. (Consumer Discretionary)..................... 25,000 1,310,480
Makita Corp. (Industrial & Commercial)............................... 166,000 1,964,035
Nichiei Co., Ltd. (Materials)........................................ 18,100 1,985,504
Nintendo Co., Ltd. (Information & Entertainment)..................... 15,900 1,644,505
Olympus Optical Co. (Information & Entertainment).................... 130,000 951,381
Omron Corp. (Industrial & Commercial)................................ 106,000 1,810,617
Rohm Co. (Information Technology).................................... 36,000 3,554,163
Santen Pharmaceutical Co. (Healthcare)+.............................. 61,320 840,823
Shiseido Co., Ltd. (Consumer Staples)................................ 66,000 894,652
Sony Corp. (Information Technology).................................. 43,000 3,672,478
Sumitomo Electric Industries Ltd. (Industrial & Commercial).......... 132,000 1,768,619
Taisho Pharmaceutical Co., Ltd. (Healthcare)......................... 40,000 1,002,938
TDK Corp. (Information Technology)................................... 48,000 3,911,459
Terumo Corp. (Healthcare)............................................ 123,000 1,927,522
Yamaha Motor Co. (Consumer Discretionary)............................ 209,000 1,398,519
Yamanouchi Pharmaceutical Co., Ltd. (Healthcare)..................... 112,000 2,720,470
------------
47,626,438
------------
KOREA -- 0.0%
Pohang Iron & Steel Co., Ltd. ADR (Materials)........................ 11,000 183,563
------------
MEXICO -- 0.6%
Fomento Economico Mexicano SA de CV, Class B (Consumer Staples)+..... 155,000 1,256,833
Panamerican Beverages, Inc., Class A ADR (Consumer Staples).......... 26,000 890,500
------------
2,147,333
------------
</TABLE>
---------------------
73
<PAGE> 69
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
NETHERLANDS -- 4.2%
Akzo Nobel NV (Materials)+........................................... 19,810 $ 3,484,917
ASM Lithography Holdings NV (Industrial & Commercial)................ 38,000 2,395,914
ING Groep NV (Finance)............................................... 65,025 2,643,798
KLM Royal Dutch Air Lines NV (Information & Entertainment)........... 35,000 1,259,246
Philips Electronics NV (Information Technology)...................... 18,000 1,189,252
Stork NV (Industrial & Commercial)................................... 45,600 1,670,447
Wolters Kluwer NV (Information & Entertainment)+..................... 12,500 1,654,884
------------
14,298,458
------------
NORWAY -- 0.7%
Bergesen d.y. ASA, Class A (Industrial & Commercial)................. 67,000 1,718,928
Den Norske Bank ASA (Finance)........................................ 152,000 646,773
------------
2,365,701
------------
PHILIPPINES -- 0.0%
Manila Electric Co., Class B (Utilities)............................. 12,771 44,214
------------
SPAIN -- 1.5%
Banco Bilbao Vizcaya SA (Finance).................................... 40,500 1,223,610
Banco de Santander SA (Finance)...................................... 21,000 635,169
Tabacalera SA, Series A (Consumer Staples)........................... 27,878 2,131,374
Telefonica de Espana SA (Utilities).................................. 42,500 1,225,606
------------
5,215,759
------------
SWEDEN -- 1.3%
Ericsson L.M. Telecommunications Co., Classs B ADR (Information
Technology)........................................................ 46,000 1,876,578
Volvo AB, Class B (Consumer Discretionary)........................... 62,700 1,672,758
Volvo AB, Class A (Consumer Discretionary)........................... 36,000 946,448
------------
4,495,784
------------
SWITZERLAND -- 3.2%
Ciba Specialty Chemicals AG (Materials)+............................. 19,400 2,064,771
Nestle SA (Consumer Staples)+........................................ 2,540 3,737,495
Novartis AG (Healthcare)............................................. 1,300 2,077,009
Schindler Holding AG registered (Industrial & Commercial)............ 400 454,482
Schindler Holding AG (Industrial & Commercial)....................... 960 1,097,489
Zurich Versicherungsgesellschaft (Finance)........................... 3,480 1,464,441
------------
10,895,687
------------
UNITED KINGDOM -- 8.6%
Bass PLC (Consumer Staples)+......................................... 190,800 2,739,060
Beazer Group PLC (Consumer Discretionary)............................ 435,000 1,208,535
BPB Industries PLC (Materials)....................................... 74,700 426,424
British Aerospace PLC (Industrial & Commercial)...................... 79,100 2,158,848
British Airways PLC (Information & Entertainment).................... 140,000 1,269,716
British Petroleum Co. PLC (Energy)................................... 73,852 1,010,303
Compass Group PLC (Information & Entertainment)...................... 204,400 2,440,644
Holliday Chemical Holdings PLC (Materials)........................... 334,860 978,394
HSBC Holdings PLC (Finance).......................................... 25,000 637,138
Kingfisher PLC (Consumer Discretionary).............................. 65,993 909,478
Ladbroke Group PLC (Information & Entertainment)..................... 507,352 2,304,973
Lloyds TSB Group Ltd. PLC (Finance).................................. 187,000 2,131,815
Royal & Sun Alliance Insurance Group PLC (Finance)................... 187,967 1,692,049
Rugby Group PLC (Industrial & Commercial)............................ 593,060 1,252,025
SmithKline Beecham PLC ADR (Healthcare).............................. 30,800 1,528,450
TI Group PLC (Industrial & Commercial)............................... 15,016 121,350
Tomkins PLC (Multi-industry)......................................... 500,700 2,545,355
</TABLE>
- ---------------------
74
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<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
UNITED KINGDOM (continued)
United News & Media PLC (Information & Entertainment)................ 83,426 $ 1,052,510
Whitbread PLC (Consumer Staples)..................................... 210,000 2,968,581
------------
29,375,648
------------
UNITED STATES -- 44.9%
Abbott Laboratories, Inc. (Healthcare)............................... 35,100 2,281,500
ADC Telecommunications, Inc. (Information Technology)+............... 74,000 2,751,875
AlliedSignal, Inc. (Industrial & Commercial)......................... 75,800 2,814,075
American Express Co. (Finance)....................................... 19,000 1,498,625
American International Group, Inc. (Finance)......................... 27,600 2,782,425
Applied Materials, Inc. (Industrial & Commercial)+................... 48,200 1,590,600
Baker Hughes, Inc. (Energy).......................................... 45,000 1,884,375
Brunswick Corp. (Information & Entertainment)........................ 45,000 1,504,688
Campbell Soup Co. (Consumer Staples)................................. 72,100 4,037,600
Carnival Corp., Class A (Information & Entertainment)................ 52,100 2,816,656
Chase Manhattan Corp. (Finance)...................................... 34,100 3,704,112
Cisco Systems, Inc. (Information Technology)+........................ 41,000 3,536,250
COMPAQ Computer, Corp. (Information Technology)+..................... 75,250 4,698,422
CUC International, Inc. (Industrial & Commercial)+................... 110,000 3,162,500
Dayton Hudson Corp. (Consumer Discretionary)......................... 51,200 3,401,600
Dell Computer Corp. (Information Technology)+........................ 35,200 2,963,400
Disney (Walt) Co. (Information & Entertainment)...................... 41,600 3,949,400
DSC Communications Corp. (Information Technology)+................... 117,000 2,639,813
Federal Express Corp. (Industrial & Commercial)+..................... 48,000 3,219,000
First Union Corp. (Finance).......................................... 70,400 3,432,000
Gannett Co., Inc. (Information & Entertainment)...................... 80,000 4,645,000
Gillette Co. (Consumer Staples)...................................... 16,200 1,495,463
Halliburton Co. (Energy)............................................. 53,400 2,880,262
Harley-Davidson, Inc. (Consumer Discretionary)....................... 80,000 2,115,000
Hartford Financial Services, Inc. (Finance).......................... 15,900 1,331,625
Household International, Inc. (Finance).............................. 21,800 2,746,800
Intel Corp. (Information Technology)................................. 35,000 2,716,875
Kroger Co. (Consumer Discretionary)+................................. 80,200 2,761,887
Liberty Media Group Corp., Class A (Information & Entertainment)..... 91,550 3,089,812
Liz Claiborne, Inc. (Consumer Discretionary)......................... 50,000 2,512,500
Lucent Technologies, Inc. (Information Technology)................... 40,176 3,219,102
MBIA, Inc. (Finance)................................................. 34,000 2,137,750
MBNA Corp. (Finance)................................................. 121,125 3,217,383
Medtronic, Inc. (Healthcare)......................................... 42,200 2,015,050
Merck & Co., Inc. (Healthcare)....................................... 38,600 3,650,112
Microsoft Corp. (Information Technology)+............................ 13,200 1,867,800
Morgan Stanley, Dean Witter, Discover & Co. (Finance)................ 62,300 3,383,669
Nautica Enterprises, Inc. (Consumer Discretionary)+.................. 79,000 2,216,938
New York Times Co., Class A (Information & Entertainment)............ 59,900 3,556,562
Oracle Systems Corp. (Information Technology)+....................... 58,050 1,933,791
PepsiCo, Inc. (Consumer Staples)..................................... 40,000 1,475,000
Philip Morris Cos., Inc. (Consumer Staples).......................... 110,200 4,793,700
Praxair, Inc. (Materials)............................................ 40,000 1,757,500
Procter & Gamble Co. (Consumer Staples).............................. 30,400 2,319,900
Schering-Plough Corp. (Healthcare)................................... 49,800 3,121,837
Schlumberger Ltd. (Energy)........................................... 14,400 1,185,300
Solectron Corp. (Information Technology)+............................ 43,000 1,566,813
Sun Microsystems, Inc. (Information Technology)+..................... 27,000 972,000
Sunbeam Corp. (Consumer Staples)..................................... 75,100 3,309,094
Texaco, Inc. (Energy)................................................ 45,000 2,542,500
TJX Cos., Inc. (Consumer Discretionary).............................. 82,000 2,829,000
Transocean Offshore, Inc. (Energy)................................... 23,300 1,105,294
Travelers Group, Inc. (Finance)...................................... 76,599 3,868,249
Tyco International Ltd. (Industrial & Commercial).................... 120,400 4,725,700
</TABLE>
---------------------
75
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<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (continued)
United States Industries, Inc. (Consumer Staples)+................... 80,400 $ 2,070,300
USA Waste Services, Inc. (Industrial & Commercial)+.................. 41,200 1,362,175
WorldCom, Inc. (Utilities)........................................... 64,300 2,057,600
-------------
153,224,259
-------------
TOTAL COMMON STOCK (cost $287,982,927)............................... 325,146,764
-------------
PREFERRED STOCK -- 0.8%
----------------------------------------------------------------------------------------------------
GERMANY -- 0.8%
Henkel KGaA (Consumer Staples)....................................... 22,160 1,362,146
ProSieben Media AG (Information & Entertainment)..................... 26,658 1,278,858
-------------
2,641,004
-------------
TOTAL PREFERRED STOCK (cost $2,330,689).............................. 2,641,004
-------------
TOTAL INVESTMENT SECURITIES (cost $290,313,616)...................... 327,787,768
-------------
PRINCIPAL
SHORT-TERM SECURITIES -- 3.4% AMOUNT
----------------------------------------------------------------------------------------------------
TIME DEPOSIT -- 3.4%
Cayman Island Time Deposit with State Street Bank & Trust Co.
5.25% due 12/01/97 (cost $11,473,000).............................. $11,473,000 11,473,000
-------------
TOTAL INVESTMENTS --
(cost $301,786,616) 99.3% 339,260,768
Other assets less liabilities -- 0.7 2,378,426
------ -------------
NET ASSETS -- 100.0% $341,639,194
====== =============
</TABLE>
-----------------------------
+ Non-income producing securities
ADR -- American Depository Receipt
See Notes to Financial Statements
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
OPEN FORWARD FOREIGN CURRENCY CONTRACTS
<CAPTION>
--------------------------------------------------------------------------
CONTRACT IN DELIVERY GROSS UNREALIZED
TO DELIVER EXCHANGE FOR DATE APPRECIATION
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JPY 3,060,300,000 USD 25,710,325 02/04/98 $ 1,468,715
-----------
<CAPTION>
GROSS UNREALIZED
DEPRECIATION
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FRF 70,000,000 USD 11,485,201 12/05/97 (378,320)
-----------
Net Unrealized Appreciation..................... $ 1,090,395
===========
</TABLE>
-----------------------------
<TABLE>
<S> <C> <C> <C> <C> <C>
FRF -- French Franc USD -- United States Dollar
JPY -- Japanese Yen
</TABLE>
- ---------------------
76
<PAGE> 72
- ---------------------
SUNAMERICA SERIES TRUST
INTERNATIONAL GROWTH
AND INCOME PORTFOLIO INVESTMENT PORTFOLIO -- NOVEMBER 30, 1997
<TABLE>
<CAPTION>
COMMON STOCK -- 93.4% SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
ARGENTINA -- 0.9%
YPF Sociedad Anonima ADR (Energy)..................................... 11,058 $ 371,134
------------
AUSTRALIA -- 1.0%
Westpac Banking Corp. (Finance)....................................... 71,000 445,553
------------
BRAZIL -- 0.6%
Petroleo Brasileiro SA ADR (Energy)(1)................................ 10,798 236,206
------------
CANADA -- 2.4%
Bank of Nova Scotia (Finance)......................................... 14,251 618,807
National Bank of Canada (Finance)..................................... 28,163 413,246
------------
1,032,053
------------
FRANCE -- 10.4%
Compagnie Generale des Eaux (Multi-industry).......................... 6,895 911,033
Elf Aquitaine SA (Energy)............................................. 6,112 709,217
Lafarge SA (Materials)................................................ 6,717 443,757
Michelin SA, Class B (Consumer Discretionary)......................... 12,750 686,819
Renault SA (Consumer Discretionary)................................... 1,080 30,241
Scor (Finance)........................................................ 7,423 319,262
Societe Generale (Finance)+........................................... 3,595 472,570
Television Francais (Information & Entertainment)..................... 3,024 266,885
Total SA, Class B (Energy)............................................ 6,022 632,467
------------
4,472,251
------------
GERMANY -- 12.0%
Altana AG (Healthcare)................................................ 1,870 129,050
Bayer AG (Multi-industry)............................................. 24,006 888,501
Bayerische Motoren Werke AG (Consumer Discretionary).................. 949 708,723
Deutsche Bank AG (Finance)............................................ 7,271 466,317
Deutsche Lufthansa AG (Information & Entertainment)................... 24,051 456,880
Deutsche Telekom AG (Information Technology).......................... 42,324 858,000
Deutsche Telekom AG, ADR (Information Technology)..................... 2,800 57,225
Siemens AG (Industrial & Commercial).................................. 9,579 562,464
Thyssen AG (Materials)................................................ 1,965 467,990
VEBA AG (Utilities)................................................... 9,405 558,914
------------
5,154,064
------------
HONG KONG -- 1.8%
Dao Heng Bank Group Ltd. (Finance).................................... 119,000 281,709
Guoco Group Ltd. (Finance)............................................ 130,000 303,546
HSBC Holdings PLC (Finance)+.......................................... 8,000 193,007
------------
778,262
------------
IRELAND -- 3.4%
Allied Irish Banks (Finance).......................................... 104,336 913,955
CRH PLC (Industrial & Commercial)..................................... 45,403 532,537
------------
1,446,492
------------
ITALY -- 2.1%
ENI SpA (Energy)...................................................... 151,441 884,069
------------
</TABLE>
---------------------
77
<PAGE> 73
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
JAPAN -- 11.7%
Canon, Inc. (Information Technology).................................. 24,000 $ 579,197
Fuji Photo Film Co., Ltd. (Materials)................................. 13,000 467,542
Ito-Yokado Co., Ltd. (Consumer Discretionary)......................... 10,000 451,322
KAO Corp. (Consumer Staples).......................................... 45,000 599,412
Kawasaki Steel Corp. (Materials)...................................... 140,000 230,362
Matsushita Electric Works Ltd. (Information Technology)............... 6,000 48,893
NEC Corp. (Information Technology).................................... 38,000 401,959
Nikko Securities Co., Ltd. (Finance).................................. 3,000 9,168
Promise Co (Finance).................................................. 12,860 710,386
Ricoh Co. Ltd. (Industrial & Commercial).............................. 32,000 386,131
Sankyo Co., Ltd. (Healthcare)......................................... 13,000 414,574
Sony Corp. (Information Technology)................................... 8,200 700,333
------------
4,999,279
------------
MEXICO -- 1.1%
Cemex SA de CV (Materials)............................................ 80,739 345,035
Fomento Economico Mexicano SA de CV, Class B (Consumer Staples)+...... 13,300 108,330
------------
453,365
------------
NETHERLANDS -- 8.6%
ABN Amro Holdings NV (Finance)........................................ 17,944 342,212
Akzo Nobel NV (Materials)+............................................ 5,247 923,037
ING Groep NV (Finance)................................................ 14,515 590,153
KLM Royal Dutch Air Lines NV (Information & Entertainment)............ 8,326 299,557
Koninlijke PTT Nederland NV (Information Technology).................. 9,485 380,870
Philips Electronics NV (Information Technology)....................... 8,840 584,055
SGS Thomson Microelectronics NV (Information Technology).............. 8,266 582,917
------------
3,702,801
------------
NEW ZEALAND -- 0.1%
Telecommunications Corp. of New Zealand Ltd. (Information
Technology)......................................................... 4,000 20,532
------------
NORWAY -- 1.6%
Den Norske Bank ASA (Finance)......................................... 160,641 683,541
------------
PORTUGAL -- 1.2%
Electricidad de Portugal SA (Utilities)............................... 900 16,267
Portugal Telecom SA (Information Technology).......................... 11,001 506,705
------------
522,972
------------
SINGAPORE -- 0.9%
Development Bank of Singapore Ltd. alien shares (Finance)............. 42,000 395,170
------------
SPAIN -- 1.1%
Iberdrola SA (Utilities).............................................. 37,899 484,190
------------
SWEDEN -- 4.8%
Pharmacia & Upjohn, Inc. ADR (Healthcare)............................. 29,930 1,034,943
Sandvik AB, Class B (Industrial & Commercial)......................... 8,711 261,166
SKF AB Series B (Materials)........................................... 18,200 426,627
Svenska Cellulosa AB, Class B (Materials)............................. 15,105 331,580
------------
2,054,316
------------
SWITZERLAND -- 6.3%
Ciba Specialty Chemicals AG (Materials)+.............................. 6,924 736,932
Julius Baer Holdings AG (Finance)..................................... 54 88,056
Nestle SA (Consumer Staples)+......................................... 584 859,329
Schweizerische Bankgesellschaft (Finance)+............................ 383 487,547
Schweiz Bankverein (Finance)+......................................... 1,770 508,357
------------
2,680,221
------------
</TABLE>
- ---------------------
78
<PAGE> 74
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
UNITED KINGDOM -- 21.4%
B.A.T. Industries PLC (Multi-industry)................................ 120,669 $ 1,084,205
Bass PLC (Consumer Staples)+.......................................... 40,687 584,089
British Petroleum Co. PLC (Energy).................................... 38,857 531,568
BTR Ltd. PLC (Industrial & Commercial)................................ 174,400 605,289
Cookson Group PLC (Materials)......................................... 113,440 392,757
General Electric Co. PLC (Multi-industry)............................. 137,295 893,888
Glaxo Wellcome PLC (Healthcare)....................................... 30,039 659,528
National Westminster Bank PLC (Finance)............................... 42,279 641,217
Norwich Union PLC (Finance)+.......................................... 14,275 86,311
P & O PLC (Industrial & Commercial)................................... 35,094 379,923
Rio Tinto PLC (Materials)............................................. 44,209 533,852
Rolls Royce PLC (Consumer Discretionary).............................. 211,492 846,538
Scottish Power PLC (Utilities)........................................ 60,624 491,462
Shell Transport & Trading Co. PLC (Energy)............................ 61,935 421,546
Tomkins PLC (Multi-industry).......................................... 94,969 482,784
Unilever NV PLC (Consumer Staples).................................... 69,710 549,520
------------
9,184,477
------------
TOTAL COMMON STOCK (cost $40,269,929)................................. 40,000,948
------------
PREFERRED STOCK -- 0.6%
----------------------------------------------------------------------------------------------------
BRAZIL -- 0.6%
Banco Bradesco SA (Finance) (cost $260,300)........................... 36,400,000 265,790
------------
TOTAL INVESTMENT SECURITIES (cost $40,530,229)........................ 40,266,738
------------
PRINCIPAL
SHORT-TERM SECURITIES -- 4.7% AMOUNT
----------------------------------------------------------------------------------------------------
FEDERAL AGENCY OBLIGATIONS -- 4.7%
Federal Home Loan Mortgage Discount Notes 5.50% due 12/17/97.......... $ 1,000,000 997,556
Federal National Mortgage Association Discount Note 5.49% due
12/23/97............................................................ 1,000,000 996,645
------------
TOTAL SHORT-TERM SECURITIES (cost $1,994,201)......................... 1,994,201
------------
</TABLE>
<TABLE>
<CAPTION>
REPURCHASE AGREEMENT -- 2.1%
<S> <C> <C>
----------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
REPURCHASE AGREEMENT -- 2.1%
Agreement with SBC Warburg, bearing interest of 5.67% dated 11/28/97,
to be repurchased 12/1/97 in the amount of $917,433 and
collateralized by $618,000 U.S. Treasury Notes 10.625% due 8/15/15
approximate aggregate value $936,272 (cost $917,000)................ 917,000 917,000
------------
TOTAL INVESTMENTS --
(cost $43,441,430) 100.8% 43,177,939
Liabilities in excess of other assets -- (0.8) (333,977)
------ -------------
NET ASSETS -- 100.0% $42,843,962
====== =============
</TABLE>
-----------------------------
+ Non-income producing securities
(1) Fair valued security; see Note 2
ADR -- American Depository Receipt
See Notes to Financial Statements
---------------------
79
<PAGE> 75
<TABLE>
<CAPTION>
OPEN FORWARD FOREIGN CURRENCY CONTRACTS
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------------------
CONTRACT IN DELIVERY GROSS UNREALIZED
TO DELIVER EXCHANGE FOR DATE APPRECIATION
<CAPTION>
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FRF 115,220 USD 19,723 12/31/97 $ 161
-----------
<CAPTION>
GROSS UNREALIZED
DEPRECIATION
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
*USD 1,694,423 FRF 9,920,000 02/11/98 $ (6,245)
*USD 631,992 FRF 3,700,000 02/11/98 (2,329)
*USD 529,507 FRF 3,100,000 02/11/98 (1,952)
*FRF 9,920,000 USD 1,602,585 02/11/98 (85,593)
*FRF 3,700,000 USD 603,953 02/11/98 (25,710)
*FRF 3,100,000 USD 524,175 02/11/98 (3,380)
----------
(125,209)
----------
Net Unrealized Depreciation................ $ (125,048)
==========
</TABLE>
-----------------------------
* Represents open forward foreign currency contracts and
offsetting or partially offsetting open forward foreign currency
contracts that do not have additional market risk but have
continued counterparty settlement risk.
<TABLE>
<S> <C> <C> <C> <C> <C>
FRF -- French Franc USD -- United States Dollar
</TABLE>
See Notes to Financial Statements
- ---------------------
80
<PAGE> 76
- ---------------------
SUNAMERICA SERIES TRUST
INTERNATIONAL DIVERSIFIED
EQUITIES PORTFOLIO INVESTMENT PORTFOLIO -- NOVEMBER 30, 1997
<TABLE>
<CAPTION>
COMMON STOCK -- 81.8% SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
AUSTRALIA -- 1.3%
Amcor Holdings Ltd. (Materials)...................................... 15,900 $ 71,115
Australian Gas Light Co., Ltd. (Utilities)........................... 7,400 49,773
Australian National Industries Ltd. (Materials)...................... 21,500 19,232
Boral Ltd. (Industrial & Commercial)................................. 29,125 73,586
Brambles Industries Ltd. (Industrial & Commercial)................... 5,400 103,273
Broken Hill Proprietary Co., Ltd. (Materials)........................ 45,622 418,385
Burns Philp & Co., Ltd. (Consumer Staples)........................... 11,879 2,433
Coca-Cola Amatil Ltd. (Consumer Staples)............................. 18,862 140,417
Coles Myer Ltd. (Consumer Discretionary)............................. 26,138 128,508
Crown Ltd. (Information & Entertainment)............................. 13,534 8,040
CSR Ltd. (Industrial & Commercial)................................... 26,900 88,170
Fosters Brewing Group Ltd. (Consumer Staples)........................ 45,700 84,569
General Property Trust (Real Estate)................................. 29,800 53,314
Gio Australia Holdings Ltd. (Finance)................................ 23,374 56,502
Goodman Fielder Wattie Ltd. (Consumer Staples)....................... 29,602 44,470
ICI Australia Ltd. (Materials)....................................... 7,000 47,871
Leighton Holdings Ltd. (Industrial & Commercial)..................... 6,000 23,353
Lend Lease Corp., Ltd. (Finance)..................................... 5,849 119,420
M.I.M. Holdings Ltd. (Materials)..................................... 34,347 24,861
National Australia Bank Ltd. (Finance)............................... 29,241 386,765
Newcrest Mining Ltd. (Materials)..................................... 6,331 6,312
News Corp., Ltd. (Information & Entertainment)....................... 43,658 233,129
Normandy Mining Ltd. (Materials)..................................... 38,131 32,808
North Ltd. (Materials)............................................... 16,332 41,877
Pacific Dunlop Ltd. (Industrial & Commercial)........................ 21,700 44,454
Pioneer International Ltd. (Industrial & Commercial)+................ 22,200 58,363
Plutonic Resources Ltd. (Materials).................................. 5,500 8,000
Renison Goldfields Consolidated Ltd. (Materials)..................... 4,771 7,004
Rio Tintro Ltd. (Materials).......................................... 7,800 85,752
Santos Ltd. (Energy)................................................. 14,613 60,370
Smith (Howard) Ltd. (Industrial & Commercial)........................ 4,900 38,144
Sons of Gwalia Ltd. (Materials)...................................... 3,000 7,006
Southcorp Holdings Ltd. (Industrial & Commercial).................... 15,165 46,703
TABCORP Holdings Ltd. (Information & Entertainment).................. 7,900 36,683
Telstra Corp. (Information Technology)+.............................. 60,300 113,234
Western Mining Corp. Holdings Ltd. (Materials)+...................... 23,822 76,210
Westfield Trust new shares (Real Estate)............................. 1,677 3,058
Westfield Trust (Real Estate)........................................ 30,054 59,022
Westpac Banking Corp., Ltd. (Finance)................................ 41,300 259,174
------------
3,161,360
------------
AUSTRIA -- 0.4%
Austria Mikro Systeme International AG (Industrial & Commercial)..... 200 12,087
Austrian Airlines Osterreische Luftverkehrs AG (Information &
Entertainment)+.................................................... 800 17,084
Bank Austria AG (Finance)............................................ 2,600 121,520
Bank Austria AG (Finance)+........................................... 2,264 105,086
Bau Holdings AG (Consumer Discretionary)............................. 200 11,443
Boehler-Uddeholm AG (Materials)...................................... 600 40,517
BWT AG (Industrial & Commercial)..................................... 100 15,593
</TABLE>
---------------------
81
<PAGE> 77
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
AUSTRIA (continued)
EA-Generali AG (Finance)............................................. 300 $ 70,833
Flughafen Wien AG (Industrial & Commercial).......................... 1,500 61,127
Lenzing AG (Materials)+.............................................. 200 10,879
Mayr-Melnhof Karton AG (Materials)................................... 700 39,204
Oesterreichische Elektrizitaetswirtschafts AG, Class A (Utilities)... 1,800 144,180
Oesterreichische Brau-Beteiligungs AG (Consumer Staples)............. 300 14,505
OMV AG (Energy)...................................................... 1,300 169,174
Radex Heraklith Industriebeteiligungs AG (Materials)................. 800 29,010
Steyr-Daimler-Puch AG (Industrial & Commercial)...................... 600 17,092
VA Technologie AG (Industrial & Commercial).......................... 700 105,427
Wienerberger Baust (Materials)....................................... 500 97,165
------------
1,081,926
------------
FRANCE -- 8.3%
Accor SA (Information Technology).................................... 1,898 358,811
Alcatel Alsthom Compagnie General D'Electricite (Information
Technology)........................................................ 7,193 901,669
AXA SA de CV (Finance)+.............................................. 15,110 1,096,526
Banque Nationale de Paris (Finance).................................. 10,119 493,668
Bouygues SA (Consumer Discretionary)................................. 1,351 136,627
Canal Plus (Information & Entertainment)............................. 1,619 281,658
Carrefour SA (Consumer Discretionary)................................ 1,850 989,980
Compagnie Financiere de Paribas SA (Finance)+........................ 5,239 378,506
Compagnie Bancaire SA (Finance)...................................... 1,370 204,689
Compagnie de St. Gobain (Materials).................................. 4,215 572,634
Compagnie Generale des Eaux (Multi-industry)......................... 6,011 794,230
Elf Aquitaine SA (Energy)............................................ 12,300 1,427,253
Eridania Beghin-Say SA (Consumer Staples)............................ 1,450 225,484
Essilor International (Healthcare)................................... 545 151,961
Etablissements Economiques du Casino Guichard-Perrachon (Consumer
Discretionary)..................................................... 4,225 234,178
France Telecom SA (Information Technology)+.......................... 35,750 1,312,927
Groupe Danone (Consumer Staples)..................................... 3,702 590,735
Havas SA (Industrial & Commercial)................................... 3,562 232,607
Imetal SA (Materials)................................................ 775 91,898
L'Air Liquide SA (Materials)......................................... 3,580 563,383
L' Oreal (Consumer Staples).......................................... 3,203 1,226,226
Lafarge SA (Materials)............................................... 4,629 305,814
Lagardere Group S.C.A. (Industrial & Commercial)..................... 5,300 152,627
Legrand SA (Information Technology).................................. 1,490 283,951
Michelin SA, Class B (Consumer Discretionary)........................ 5,836 314,375
Moet Henessy Louis Vuitton (Consumer Staples)........................ 4,150 715,651
Pathe SA (Information & Entertainment)............................... 400 77,109
Pernod-Ricard (Consumer Staples)..................................... 3,275 166,432
Peugeot SA (Consumer Discretionary).................................. 2,475 279,644
Pinault Printemps Redoute (Consumer Discretionary)................... 1,010 516,694
Promodes (Consumer Discretionary).................................... 910 334,508
Rhone-Poulenc Rorer SA, Class A (Healthcare)......................... 16,113 724,407
Sagem SA (Industrial & Commercial)................................... 240 108,102
Sanofi SA (Healthcare)............................................... 5,167 517,286
Schneider SA (Industrial & Commercial)+.............................. 6,272 335,736
Simco SA registered (Real Estate).................................... 1,221 86,870
Societe BIC SA (Industrial & Commercial)............................. 3,200 222,086
Societe Eurafrance SA (Finance)...................................... 190 76,601
Societe Generale (Finance)+.......................................... 4,645 610,594
Sodexho SA (Information & Entertainment)............................. 335 178,586
Suez Lyonnaise des Eaux (Multi-industry)+............................ 5,875 631,956
Thomson CSF (Industrial & Commercial)................................ 5,775 167,088
Total SA, Series B (Energy).......................................... 11,392 1,196,456
</TABLE>
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FRANCE (continued)
Usinor Sacilor (Materials)........................................... 12,060 $ 189,583
Valeo SA (Consumer Discretionary).................................... 3,150 208,317
------------
20,666,123
------------
GERMANY -- 8.9%
Adidas AG (Consumer Discretionary)................................... 2,071 291,831
Agiv AG (Multi-industry)+............................................ 1,486 30,504
Allianz Holdings AG (Finance)........................................ 9,569 2,270,840
AMB Aachener Und Muenchner (Finance)................................. 167 171,309
BASF AG (Materials).................................................. 25,017 885,206
Bayer AG (Multi-industry)............................................ 30,578 1,131,741
Bayerische Hypotheken Und Bank AG (Finance).......................... 9,947 431,497
Bayerische Vereinsbank AG (Finance).................................. 10,524 625,114
Bilfinger & Berger Bau AG (Consumer Discretionary)................... 2,455 90,348
Brau Und Brunnen AG (Consumer Staples)............................... 334 27,841
CKAG Colonia Konzern AG (Finance).................................... 1,169 98,770
Continental AG (Consumer Discretionary).............................. 3,440 87,097
Daimler-Benz AG (Consumer Discretionary)............................. 22,562 1,597,955
Degussa AG (Materials)............................................... 4,108 190,550
Deutsche Bank AG (Finance)........................................... 21,259 1,363,421
Deutsche Telekom AG (Information Technology)......................... 92,569 1,876,576
Dresdner Bank AG (Finance)........................................... 19,105 741,016
Heidelberg Zement AG (Materials)..................................... 2,278 178,261
Hochtief AG (Industrial & Commercial)................................ 4,392 181,807
Karstadt AG (Consumer Discretionary)................................. 418 145,299
Klockner Humboldt Deutz AG (Industrial & Commercial)................. 2,171 14,773
Linde AG (Industrial & Commercial)................................... 484 301,625
Lufthansa AG (Information & Entertainment)........................... 15,247 289,637
Manitoba AG (Industrial & Commercial)................................ 601 178,920
Mannesmann AG (Industrial & Commercial).............................. 1,570 730,916
Merck KGAA (Healthcare).............................................. 7,895 287,417
Metro AG (Consumer Discretionary).................................... 9,660 443,697
Munchener Ruckversicherungs (Finance)................................ 3,399 1,062,007
Preussag AG (Materials).............................................. 785 224,572
RWE AG (Utilities)................................................... 14,880 729,445
SAP AG (Information Technology)...................................... 2,713 789,208
Schering AG (Healthcare)............................................. 3,390 332,560
Siemens AG (Industrial & Commercial)................................. 23,236 1,364,382
STRABAG AG (Consumer Staples)........................................ 167 11,004
Thyssen AG (Materials)............................................... 1,503 357,959
VEBA AG (Utilities).................................................. 21,827 1,297,119
Viag AG (Materials).................................................. 1,290 655,570
Volkswagen AG (Consumer Discretionary)............................... 1,219 691,239
------------
22,179,033
------------
ITALY -- 6.0%
Acciaierie & Ferriere Lombarde (Materials)........................... 9,500 41,298
Assicurazione Generali SpA (Finance)................................. 65,510 1,469,421
Banca Commerciale Italiana SpA (Finance)+............................ 103,200 295,700
Banco Ambrosiano Veneto SpA (Finance)................................ 40,900 134,001
Benetton Group SpA (Consumer Discretionary).......................... 13,678 207,439
Burgo (Cartiere) SpA (Materials)..................................... 11,700 69,080
Credito Italiano SpA (Finance)....................................... 178,500 488,727
Edison SpA (Utilities)............................................... 48,000 260,066
ENI SpA (Energy)..................................................... 566,000 3,304,146
Fiat SpA (Consumer Discretionary).................................... 238,720 689,535
Fiat SpA nonconvertible (Consumer Discretionary)..................... 52,870 83,855
Impreglio SpA (Industrial & Commercial)+............................. 20,000 14,344
</TABLE>
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<S> <C> <C>
ITALY (continued)
Istituto Bancario San Paolotorno (Finance)........................... 62,300 $ 516,053
Istituto Mobiliare Italiano (Finance)................................ 45,450 474,874
Istituto Nazionale Delle Asazioni SpA (Finance)...................... 301,700 525,664
Italcementi Fabbriche SpA (Materials)................................ 17,050 108,465
Italcementi Fabbriche SpA nonconvertible (Materials)................. 11,650 29,807
Italgas-Societa Itailiana per il Gas SpA (Utilities)................. 47,900 184,800
La Rinascente Per L'Eserciz Grandi Magazzini SpA (Consumer
Discretionary)..................................................... 17,000 128,910
Magneti Marelli SpA (Industrial & Commercial)........................ 35,000 57,031
Mediaset SpA (Information & Entertainment)........................... 85,500 422,165
Mediobanca SpA (Finance)............................................. 35,700 249,426
Montedison SpA (Multi-industry)...................................... 209,650 173,297
Montedison SpA nonconvertible (Multi-industry)....................... 67,100 37,948
Olivetti Spa (Information Technology)+............................... 260,720 146,240
Parmalat Finanziar SpA (Finance)+.................................... 112,920 163,083
Pirelli SpA (Consumer Discretionary)................................. 119,000 295,509
Riunione Adriatica de Sicur (Finance)................................ 21,225 197,499
S.A.I Societa Assicuratrice Industriale SpA (Finance)................ 9,950 100,792
Saffa SpA (Materials)+............................................... 1,300 3,582
Sirti SpA (Consumer Discretionary)................................... 22,100 133,043
SNIA BPD SpA (Multi-industry)........................................ 53,000 52,768
Telecom Italia Mobile SpA (Information Technology)................... 467,900 1,894,557
Telecom Italia Mobile SpA RNC (Information Technology)............... 112,500 246,156
Telecom Italia SpA (Information Technology).......................... 253,055 1,577,602
Telecom Italia SpA nonconvertible (Information Technology)........... 64,709 255,081
------------
15,031,964
------------
JAPAN -- 15.1%
Advantest Corp. (Information Technology)............................. 60 4,151
Ajinomoto Co., Inc. (Consumer Staples)............................... 35,000 318,120
Aoki Corp. (Industrial & Commercial)................................. 36,400 8,556
Aoyama Trading Co., Ltd. (Consumer Discretionary).................... 3,100 78,942
Asahi Bank Ltd. (Finance)............................................ 100 423
Asahi Breweries Ltd. (Consumer Staples).............................. 23,400 328,196
Asahi Chemical Industry Co., Inc. (Materials)........................ 70,000 301,665
Asahi Glass Co., Ltd. (Materials).................................... 64,200 409,975
Bank of Tokyo-Mitsubishi Ltd. (Finance)+............................. 110,400 1,600,313
Bank of Yokohama Ltd. (Finance)...................................... 100 310
Bridgestone Corp. (Industrial & Commercial).......................... 23,400 507,879
Canon, Inc. (Information Technology)................................. 28,200 680,556
Casio Computer Co. (Information Technology).......................... 13,600 108,693
Chiba Bank Ltd. (Finance)............................................ 8,000 31,216
Chugai Pharmaceutical Co., Ltd. (Healthcare)......................... 23,400 145,763
Dai Nippon Printing Co., Ltd. (Industrial & Commercial).............. 27,400 543,169
Daiei, Inc. (Consumer Discretionary)................................. 24,200 104,859
Daikin Industries Ltd. (Consumer Staples)............................ 23,400 123,028
Daiwa House Industry Co., Ltd. (Consumer Discretionary).............. 23,400 188,850
Daiwa Securities Co., Ltd. (Finance)................................. 600 2,092
East Japan Railway Co. (Industrial & Commercial)..................... 137 622,605
Ebara Corp. (Industrial & Commercial)................................ 14,600 162,445
Fanuc Ltd. (Information Technology).................................. 9,900 372,341
Fuji Bank Ltd. (Finance)............................................. 800 4,294
Fuji Photo Film Co., Ltd. (Materials)................................ 13,600 489,121
Fujitsu Ltd. (Information Technology)................................ 54,400 609,536
Furukawa Electric Co., Ltd. (Industrial & Commercial)................ 15,600 76,274
Hankyu Corp. (Industrial & Commercial)............................... 28,000 133,830
Hazama Corp. (Consumer Staples)...................................... 21,300 12,684
Hitachi Ltd. (Information Technology)+............................... 116,800 828,239
</TABLE>
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JAPAN (continued)
Honda Motor Co., Ltd. (Consumer Discretionary)....................... 27,000 $ 977,395
Ito-Yokado Co., Ltd. (Consumer Discretionary)........................ 14,600 658,931
Japan Airlines Co., Ltd. (Information & Entertainment)............... 72,100 224,280
Japan Energy Corp. (Energy).......................................... 52,400 78,420
Joyo Bank Ltd. (Finance)............................................. 200 802
Jusco Co., Ltd. (Consumer Discretionary)............................. 10,800 181,093
Kajima Corp. (Industrial & Commercial)............................... 43,800 144,141
Kansai Electric Power Co., Inc. (Utilities).......................... 31,100 528,791
KAO Corp. (Consumer Staples)......................................... 28,800 383,624
Kawasaki Steel Corp. (Materials)..................................... 36,000 59,236
Kinki Nippon Railway Co., Ltd. (Industrial & Commercial)............. 50,500 279,753
Kirin Brewery Co., Ltd. (Consumer Staples)........................... 45,800 352,763
Komatsu Ltd. (Industrial & Commercial)............................... 41,800 250,882
Kubota Ltd. (Industrial & Commercial)................................ 63,000 217,693
Kumagai Gumi Co., Ltd. (Industrial & Commercial)..................... 71,800 48,382
Kyocera Corp. (Information Technology)............................... 6,600 318,558
Kyowa Hakko Kogyo Co., Ltd. (Materials).............................. 20,400 102,300
Long-Term Credit Bank of Japan Ltd. (Finance)........................ 60,000 101,077
Marubeni Corp. (Consumer Discretionary).............................. 59,200 147,971
Marui Co., Ltd. (Consumer Discretionary)............................. 3,800 59,549
Matsushita Electric Industrial Co., Ltd. (Information Technology)+... 63,000 982,331
Mitsubishi Chemical Corp. (Materials)................................ 70,000 136,572
Mitsubishi Corp. (Consumer Discretionary)............................ 61,000 476,051
Mitsubishi Electric Corp. (Information Technology)................... 81,800 226,252
Mitsubishi Estate Co., Ltd. (Real Estate)............................ 600 6,958
Mitsubishi Heavy Industries Ltd. (Industrial & Commercial)........... 127,400 501,115
Mitsubishi Materials Corp. (Materials)............................... 41,600 93,875
Mitsubishi Trust & Banking Corp. (Finance)........................... 30,800 410,264
Mitsui & Co. (Materials)............................................. 60,600 421,173
Mitsui Engineering & Shipbuilding Co., Ltd. (Industrial &
Commercial)........................................................ 44,800 39,666
Mitsui Trust & Banking Co., Ltd. (Finance)........................... 600 1,011
Mitsukoshi Ltd. (Consumer Discretionary)............................. 22,200 62,621
Murata Manufacturing Co. Ltd. (Information Technology)............... 7,800 234,076
Mycal Corp. (Consumer Discretionary)................................. 14,600 120,118
NEC Corp. (Information Technology)................................... 39,800 420,999
New Oji Paper Co., Ltd. (Materials)+................................. 45,800 190,557
NGK Insulators Ltd. (Industrial & Commercial)........................ 23,400 218,186
Nippon Denso Co., Ltd. (Industrial & Commercial)..................... 25,200 460,067
Nippon Express Co., Ltd. (Industrial & Commercial)................... 16,400 85,839
Nippon Fire & Marine Insurance Co., Ltd. (Finance)................... 20,400 63,138
Nippon Light Metal Co., Ltd. (Materials)............................. 19,400 36,634
Nippon Meat Packers, Inc. (Consumer Staples)......................... 20,400 266,938
Nippon Oil Co., Ltd. (Energy)........................................ 66,200 230,825
Nippon Steel Corp. (Materials)....................................... 259,000 478,934
Nippon Telegraph & Telephone Corp. (Utilities)....................... 350 2,879,530
Nippon Yusen Kabushiki Kaish (Industrial & Commercial)............... 63,000 193,011
Nissan Motor Co., Ltd. (Consumer Discretionary)...................... 79,600 346,155
NKK Corp. (Materials)................................................ 136,200 137,667
Nomura Securities Co., Ltd. (Finance)................................ 400 4,952
Odakyu Electric Railway Co., Ltd. (Industrial & Commercial).......... 24,000 115,651
Osaka Gas Co., Ltd. (Utilities)...................................... 98,200 219,291
Penta Ocean Construction Co., Ltd. (Consumer Staples)................ 20,400 35,325
Pioneer Electronic Corp. (Industrial & Commercial)................... 5,600 97,410
Rohm Co. (Information Technology).................................... 1,800 177,708
Sakura Bank Ltd. (Finance)........................................... 80,400 280,967
Sankyo Co., Ltd. (Healthcare)........................................ 17,600 561,269
Sanwa Bank Ltd. (Finance)............................................ 80,000 877,571
Sanyo Electric Co., Ltd. (Information Technology).................... 63,000 177,708
</TABLE>
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JAPAN (continued)
Secom Co. (Information Technology)................................... 5,000 $ 313,418
Sega Enterprises Ltd. (Consumer Discretionary)....................... 4,600 102,362
Sekisui House Ltd. (Consumer Discretionary).......................... 23,400 168,315
Sharp Corp. (Information Technology)................................. 40,800 273,012
Shimano, Inc. (Industrial & Commercial).............................. 5,800 132,701
Shimizu Corp. (Consumer Discretionary)............................... 33,000 106,014
Shin-Etsu Chemical Co. Ltd. (Materials).............................. 9,000 213,673
Shiseido Co., Ltd. (Consumer Staples)................................ 8,600 116,576
Shizuoka Bank Ltd. (Finance)......................................... 200 1,849
Showa Denko KK (Materials)........................................... 41,800 61,902
Sony Corp. (Information Technology).................................. 10,800 922,390
Sumitomo Chemical Co., Ltd. (Materials).............................. 83,400 277,728
Sumitomo Corp. (Industrial & Commercial)............................. 44,400 280,055
Sumitomo Electric Industries Ltd. (Industrial & Commercial).......... 31,200 418,037
Sumitomo Forestry Co., Ltd. (Materials).............................. 8,800 59,299
Sumitomo Metal Industries Ltd. (Materials)........................... 83,800 170,719
Sumitomo Metal Mining Co., Ltd. (Materials).......................... 21,400 85,181
Sumitomo Osaka Cement Co., Ltd. (Materials).......................... 21,200 40,365
Sumitomo Trust & Banking Co., Ltd. (Finance)......................... 200 2,539
Taisei Corp. (Consumer Discretionary)................................ 45,800 105,865
Taisho Pharmaceutical Co., Ltd. (Healthcare)......................... 13,600 340,999
Taiyo Yuden Co., Ltd. (Information Technology)....................... 25,000 238,981
Takeda Chemical Industries Ltd. (Healthcare)......................... 28,200 824,180
Teijin Ltd. (Consumer Discretionary)................................. 45,800 120,219
Tobu Railway Co., Ltd. (Industrial & Commercial)..................... 28,200 98,327
Tohoku Electric Power Co., Inc. (Utilities).......................... 16,200 244,983
Tokyo Corp. (Industrial & Commercial)................................ 35,000 149,461
Tokyo Electric Power Co., Inc. (Utilities)........................... 39,000 699,785
Tokyo Electron Ltd. (Information Technology)......................... 3,100 118,778
Tokyo Gas Co. Ltd. (Utilities)....................................... 93,400 223,209
Tokyo Marine & Fire Insurance Co., Ltd. (Finance).................... 70,000 663,663
Toppan Printing Co., Ltd. (Information & Entertainment).............. 28,200 382,261
Toray Industries, Inc. (Materials)................................... 70,100 318,574
Toto Ltd. (Materials)................................................ 23,200 212,686
Toyobo Co., Ltd. (Consumer Discretionary)............................ 45,800 69,978
Toyota Motor Corp. (Consumer Discretionary).......................... 91,200 2,629,704
Ube Industries Ltd. (Materials)...................................... 41,800 75,330
Yamaichi Securities Co., Ltd. (Finance).............................. 900 14
Yasuda Trust & Banking Co., Ltd. (Finance)........................... 900 769
Yokogawa Electric Corp. (Information Technology)..................... 23,000 151,021
-------------
37,597,103
-------------
KOREA -- 0.0%
Samsung Electronic Co., Ltd. (Information Technology)................ 27 967
-------------
NETHERLANDS -- 2.6%
ABN Amro Holdings NV (Finance)....................................... 28,172 537,271
Akzo Nobel NV (Materials)+........................................... 1,575 277,069
Elsevier NV (Consumer Discretionary)................................. 14,500 245,157
Getronics NV (Information Technology)+............................... 1,810 62,207
Heineken NV (Consumer Staples)....................................... 1,000 169,325
ING Groep NV (Finance)............................................... 15,958 648,823
KLM Royal Dutch Air Lines NV (Information & Entertainment)........... 1,924 69,223
Koninklijke Ahold NV (Consumer Discretionary)........................ 14,601 389,399
Koninklijke KNP BT (Materials)....................................... 2,175 46,952
Koninklijke PTT Nederland NV (Information Technology)................ 9,299 373,401
Nedlloyd Groep NV (Industrial & Commercial).......................... 550 12,648
Oce-Van Der Grinten NV (Information Technology)+..................... 405 46,159
</TABLE>
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NETHERLANDS (continued)
Philips Electronics NV (Information Technology)...................... 7,050 $ 465,790
Royal Dutch Petroleum Co. (Energy)................................... 42,300 2,203,014
Stork NV (Industrial & Commercial)................................... 744 27,255
Unilever NV PLC (Consumer Staples)................................... 12,800 744,568
Wolters Kluwer NV (Information & Entertainment)+..................... 1,368 181,111
-------------
6,499,372
-------------
NORWAY -- 0.5%
Aker RGI ASA, Series A (Industrial & Commercial)..................... 2,600 45,916
Bergesen d.y. ASA, Series A (Industrial & Commercial)................ 2,300 59,008
Bergesen d.y. ASA, Series B (Industrial & Commercial)................ 900 22,777
Christiania Bank Og Kreditkasse+ (Finance)........................... 22,400 80,674
Dyno Industrier ASA (Materials)...................................... 1,300 25,127
Elkem ASA (Materials)................................................ 2,100 29,786
Hafslund ASA, Series A (Utilities)................................... 4,100 24,515
Helikopter Services Group ASA (Industrial & Commercial).............. 900 10,262
Kvaerner ASA, Series A (Industrial & Commercial)..................... 1,700 83,920
Leif Hoegh & Co. ASA (Industrial & Commercial)....................... 1,300 25,489
NCL Holdings, ASA (Information & Entertainment)...................... 5,600 20,947
Norsk Hydro ASA...................................................... 9,600 494,591
Norske Skogindustrier ASA, Class A (Materials)+...................... 1,100 33,651
Orkla ASA (Finance).................................................. 1,900 163,807
Petroleum Geo-Services (Energy)+..................................... 1,300 83,697
Unified Storebrand ASA (Finance)..................................... 11,600 78,878
Unitor ASA (Industrial & Commercial)................................. 800 10,346
-------------
1,293,391
-------------
PORTUGAL -- 1.1%
Banco Commercial Portugues SA (Finance).............................. 13,000 274,140
Banco Espirito Santo e Comercial de Lisboa (Finance)+................ 6,900 194,096
Banco Totta & Acores SA (Finance).................................... 5,000 94,340
BPI-SGPS SA (Finance)+............................................... 6,600 146,687
Cimpor-Cimentos de Portugal SA SGPS (Consumer Staples)............... 6,900 174,759
CIN-Corparacao Industrial de Norte SA (Materials).................... 300 18,629
Corticeira Amorim SA (Materials)..................................... 1,300 14,789
Electricidad de Portugal SA (Utilities).............................. 30,500 551,268
INAPA-Investimentos Participacoes e Gestao SA (Materials)............ 400 13,319
Jeronimo Martins SGPS SA (Consumer Staples).......................... 2,000 63,208
Portucel Industrial-Empresa Produtora de Celulose SA (Materials)..... 7,400 47,554
Portugal Telecom SA (Information Technology)......................... 19,100 879,745
Soares Da Costa (Consumer Discretionary)............................. 1,000 7,769
Sonae Investimentos-Sociedade Gestora de Participacoes Sociais SA
(Industrial & Commercial).......................................... 3,400 127,075
UNICER-Uniao Cervejeira SA (Consumer Staples)........................ 900 14,084
-------------
2,621,462
-------------
SINGAPORE -- 0.9%
Asis Foods & Properties Ltd. (Consumer Staples)+..................... 22,666 5,440
City Developments Ltd. (Real Estate)................................. 32,000 157,566
Creative Technolog Ltd. (Information Technology)..................... 4,000 111,149
Cycle & Carriage Ltd. (Consumer Discretionary)....................... 9,000 38,106
DBS Land Ltd. (Real Estate).......................................... 38,000 64,595
Development Bank of Singapore Ltd. alien shares (Finance)............ 19,000 178,767
First Capital Corp., Ltd. alien shares (Real Estate)................. 12,000 13,549
Fraser & Neave Ltd. alien shares (Consumer Staples).................. 11,800 58,843
Hai Sun Hup Group Ltd. alien shares (Finance)........................ 23,000 10,027
Hotel Properties Ltd. alien shares (Real Estate)..................... 19,000 13,706
Inchcape Bhd alien shares (Multi-industry)........................... 8,000 21,377
</TABLE>
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<S> <C> <C>
SINGAPORE (continued)
Keppel Corp., Ltd. (Industrial & Commercial)......................... 29,000 $ 98,228
Metro Holdings Ltd. (Consumer Discretionary)......................... 4,000 7,502
NatSteel Ltd. (Materials)............................................ 13,000 27,398
Neptune Orient Lines Ltd. (Industrial & Commercial).................. 35,000 20,856
Overseas Chinese Banking Corp., Ltd. alien shares (Finance).......... 33,534 200,878
Overseas Union Enterprise Ltd. (Information & Entertainment)......... 6,000 13,925
Parkway Holdings Ltd. alien shares (Real Estate)..................... 13,000 30,823
Robinson & Co., Ltd. alien shares (Consumer Discretionary)........... 2,400 7,437
Shangri-La Hotel Ltd. alien shares (Information & Entertainment)..... 6,400 12,284
Singapore Airlines Ltd. alien shares (Information & Entertainment)... 35,000 228,321
Singapore Press Holdings Ltd. alien shares (Information &
Entertainment)..................................................... 7,800 106,658
Singapore Tech Industrial Corp. (Industrial & Commercial)............ 29,000 29,468
Singapore Telecommunications Ltd. (Information Technology)........... 243,000 469,462
Straits Trading Co., Ltd. (Materials)................................ 14,000 20,022
United Industrial Corp., Ltd. (Multi-industry)....................... 58,000 27,286
United Overseas Bank Ltd. alien shares (Finance)..................... 33,000 196,644
United Overseas Land (Real Estate)................................... 22,000 21,389
-------------
2,191,706
-------------
SPAIN -- 4.4%
Acerinox SA (Materials).............................................. 787 122,977
Autopistas Concesionaria Espana SA (Industrial & Commercial)......... 15,186 202,670
Banco Bilbao Vizcaya SA (Finance).................................... 48,450 1,463,800
Banco Central Hispanoamericano SA (Finance).......................... 23,600 452,659
Banco de Santander SA (Finance)...................................... 34,350 1,038,954
Corporacion Bancaria de Espana SA (Finance).......................... 9,050 561,414
Corporacion Financiera Alba SA (Multi-industry)...................... 1,125 121,471
Corporacion Mapfre SA registered (Finance)........................... 1,968 96,084
Dragados & Construcciones SA (Consumer Discretionary)................ 4,150 88,227
Ebro Agricolas, Compania de Alimentacion SA (Industrial &
Commercial)........................................................ 3,450 59,694
Empresa Nacional Celulos SA (Materials).............................. 1,475 23,939
Endesa SA (Utilities)................................................ 73,200 1,377,010
Ercros SA (Materials)................................................ 12,200 12,436
Fomento de Construcciones y Contratas SA (Consumer Discretionary).... 4,300 170,720
Gas Natural SDG, SA (Utilities)...................................... 10,800 534,532
Iberdrola SA (Utilities)............................................. 66,700 852,146
Inmobiliaria Metropolitana Vasco Central SA (Real Estate)............ 1,712 73,826
Mapfre Vida SA (Finance)............................................. 13 802
Portland Valderrivas SA (Materials).................................. 475 38,705
Repsol SA (Energy)................................................... 21,600 934,344
Sociedad General de Aguas de Barcelona SA (Utilities)................ 3,143 129,000
Tabacalera SA, Series A (Consumer Staples)........................... 2,600 198,779
Telefonica de Espana SA (Utilities).................................. 67,400 1,943,666
Union Electrica Fenosa SA (Utilities)................................ 20,900 209,547
Uralita SA (Materials)............................................... 3,800 44,216
Vallehermoso SA (Real Estate)........................................ 3,083 90,457
Viscofan Industria Navarra De Envolturas Celulosicas SA
(Materials)........................................................ 1,700 41,956
Zardoya Otis SA (Industrial & Commercial)............................ 625 72,723
-------------
10,956,754
-------------
SWEDEN -- 2.7%
ABB AB, Class A (Utilities).......................................... 30,700 391,627
ABB AB, Class B (Utilities).......................................... 5,200 64,651
AGA AB, Series B (Materials)......................................... 8,750 109,920
Astra AB, Class A (Healthcare)....................................... 58,266 1,011,156
Astra AB, Class B (Healthcare)....................................... 13,600 227,210
Atlas Copco AB, Series A (Industrial & Commercial)................... 6,850 210,251
</TABLE>
- ---------------------
88
<PAGE> 84
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
SWEDEN (continued)
Electrolux AB, Series B (Consumer Discretionary)..................... 3,700 $ 291,342
Ericsson L.M. Telecommunications Co., Class B (Information
Technology)........................................................ 40,100 1,635,887
Esselte AB, Series B (Information Technology)........................ 1,800 37,182
Granges AB (Materials)+.............................................. 1,650 26,284
Hennes & Mauritz AB Class B (Consumer Discretionary)................. 8,900 411,487
Scanem AB, Series A (Industrial & Commercial)........................ 250 9,551
Securitas AB, Series B (Industrial & Commercial)..................... 3,700 111,170
Skandinaviska Enskilda Banken., Series A (Finance)................... 24,200 285,204
Skandia Forsakrings AB (Finance)..................................... 4,700 247,737
Skanska AB, Series B (Industrial & Commercial)....................... 5,600 230,629
SKF AB, Series B (Materials)......................................... 3,600 84,388
Stora Kopparbergs Bergslags Aktiebolag, Series A (Materials)......... 14,550 193,146
Svenska Cellulosa AB, Class B (Materials)............................ 8,200 180,004
Svenska Handelsbanken, Series A (Finance)+........................... 9,800 345,218
Swedish Match AB (Consumer Staples).................................. 25,000 84,504
Trelleborg AB, Series B (Materials).................................. 6,700 93,712
Volvo AB, Series B (Consumer Discretionary).......................... 16,400 437,531
-------------
6,719,791
-------------
SWITZERLAND -- 5.4%
ABB AG (Utilities)+.................................................. 310 412,449
Adecco SA (Industrial & Commercial)+................................. 585 172,324
Alusuisse-Lonza Holdings AG (Multi-industry)......................... 180 165,255
CS Holding AG (Finance)+............................................. 6,750 987,077
Fischer (Georg) AG, Series B (Consumer Staples)...................... 25 34,367
Gebrueder Sulzer AG (Consumer Staples)+.............................. 130 85,889
Holderbank Financiere Glarus AG (Materials).......................... 215 187,435
Nestle SA (Consumer Staples)+........................................ 1,245 1,831,961
Novartis AG (Healthcare)............................................. 2,025 3,235,342
Roche Holdings AG (Healthcare)....................................... 51 776,196
Roche Holdings AG Genusscheine NPV (Healthcare)...................... 218 1,950,961
Schweizerische BankGesellschaft (Finance)+........................... 730 185,086
Schweizerische BankGesellschaft, Series B (Finance)+................. 660 840,160
Schweizerische Rueckversicherungs-Gesellschaft (Consumer
Discretionary)..................................................... 455 743,228
SGS Societe Generale de Surveillance Holding SA, Series B (Industrial
& Commercial)...................................................... 60 112,105
SMH AG (Consumer Discretionary)...................................... 165 90,149
Swiss Bank Corp. (Finance)+.......................................... 2,390 686,425
Swissair AG, Series B (Information & Entertainment)+................. 110 143,576
Valora Holding AG (Industrial & Commercial).......................... 205 43,134
Zurich Versicherungs-Gesellschaft (Finance).......................... 1,495 629,120
-------------
13,312,239
-------------
THAILAND -- 0.0%
Advance Agro PCL alien shares (Materials)+........................... 660 590
CMIC Finance & Security PCL alien shares (Finance)................... 6,700 0
Finance One PCL alien shares (Finance)............................... 37,700 0
General Finance & Securities PCL alien shares (Finance).............. 7,650 0
Land & House PCL alien shares (Real Estate)+......................... 34,119 10,384
Phoenix Pulp & Paper PCL alien shares (Materials).................... 1,600 477
TPI Polene PCL alien shares (Materials).............................. 51,400 5,108
Univest Land PCL alien shares (Real Estate).......................... 22,500 0
-------------
16,559
-------------
UNITED KINGDOM -- 24.2%
Abbey National PLC (Finance)......................................... 74,650 1,191,423
Arjo Wiggins Appleton PLC (Materials)................................ 37,325 106,535
Associated British Foods PLC (Consumer Staples)...................... 26,650 245,525
</TABLE>
---------------------
89
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<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
UNITED KINGDOM (continued)
B.A.T. Industries PLC (Multi-industry)............................... 165,361 $ 1,485,761
Barclays PLC (Finance)............................................... 90,645 2,186,131
Bass PLC (Consumer Staples).......................................... 58,700 842,677
BG PLC (Utilities)................................................... 278,735 1,336,947
BICC Group PLC (Industrial & Commercial)............................. 37,343 97,126
Blue Circle Industries PLC (Materials)............................... 69,400 398,513
BOC Group PLC (Materials)............................................ 37,395 596,828
Boots Co. PLC (Consumer Discretionary)............................... 58,700 862,505
BPB Industries PLC (Materials)....................................... 37,325 213,069
British Aerospace PLC (Industrial & Commercial)...................... 26,638 727,021
British Airways PLC (Information & Entertainment).................... 63,904 579,571
British Petroleum Co. PLC (Energy)................................... 301,728 4,127,669
British Sky Broadcasting Group PLC (Information & Entertainment)..... 85,425 634,807
British Steel PLC (Materials)........................................ 106,675 249,076
British Telecommunications PLC (Information Technology).............. 309,350 2,387,649
BTR Ltd. PLC (Industrial & Commercial)............................... 224,077 777,702
Burmah Castrol PLC (Energy).......................................... 16,029 269,902
Cable & Wireless PLC (Information Technology)........................ 133,315 1,211,338
Cadbury Schweppes PLC (Consumer Discretionary)....................... 58,696 609,660
Caradon PLC (Materials).............................................. 42,620 134,604
Centrica PLC (Utilities)+............................................ 234,600 340,746
Coats Viyella PLC (Consumer Discretionary)........................... 48,095 83,664
Commercial Union PLC (Finance)....................................... 37,348 514,078
Courtaulds PLC (Materials)........................................... 26,650 122,875
De La Rue PLC (Information & Entertainment).......................... 5,269 35,595
Emi Group PLC (Information & Entertainment).......................... 26,648 200,726
General Electric Co. PLC (Multi-industry)............................ 154,675 1,007,045
GKN PLC (Industrial & Commercial).................................... 31,975 695,014
Glaxo Wellcome PLC (Healthcare)...................................... 170,650 3,746,742
Granada Group PLC (Information & Entertainment)...................... 37,331 534,020
Grand Metropolitan PLC (Information & Entertainment)................. 73,942 673,107
Great Universal Stores PLC (Consumer Discretionary).................. 63,975 750,930
Guardian Royal Exchange PLC (Finance)................................ 42,611 205,102
Guinness PLC (Consumer Staples)...................................... 78,500 711,948
Hanson PLC (Industrial & Commercial)................................. 32,072 163,312
Harrisons & Crossfield PLC (Multi-industry).......................... 69,250 138,593
HSBC Holdings PLC (Finance).......................................... 117,418 2,861,576
Imperial Chemical Industries PLC (Materials)......................... 48,000 710,149
Ladbroke Group PLC (Information & Entertainment)..................... 64,046 290,970
Land Securities PLC (Real Estate).................................... 42,600 692,851
LASMO PLC (Energy)................................................... 42,600 189,221
Legal & General Group Ltd PLC (Finance)+............................. 63,975 545,640
Lloyds TSB Group Ltd. (Finance)...................................... 293,324 3,343,918
Lonrho PLC (Multi-industry).......................................... 42,604 66,198
Marks & Spencer PLC (Consumer Discretionary)......................... 186,600 1,919,257
MEPC PLC (Real Estate)............................................... 31,925 287,923
National Power PLC (Utilities)....................................... 74,650 712,962
Peninsular & Oriental Steam PLC (Industrial & Commercial)+........... 42,673 461,972
Pilkington PLC (Materials)........................................... 80,014 174,325
Prudential Corp. PLC (Finance)....................................... 106,710 1,149,820
Rank Group PLC (Information & Entertainment)......................... 48,100 280,671
Redland PLC (Materials).............................................. 31,999 184,287
Reed International PLC (Information & Entertainment)................. 74,650 794,912
Reuters Holdings PLC (Industrial & Commercial)....................... 90,700 1,023,265
Rexam PLC (Materials)................................................ 31,925 156,363
Rio Tinto PLC (Materials)............................................ 63,998 772,817
RMC Group PLC (Materials)............................................ 15,950 241,364
Royal & Sun Alliance Insurance Group PLC (Finance)................... 74,731 672,717
</TABLE>
- ---------------------
90
<PAGE> 86
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
UNITED KINGDOM (continued)
Royal Bank of Scotland Group PLC (Finance)........................... 26,651 $ 306,524
Safeway PLC (Consumer Discretionary)+................................ 47,952 262,395
Sainsbury (J.) PLC (Consumer Discretionary).......................... 85,272 701,358
Schroders PLC (Finance).............................................. 10,675 307,575
Scottish Power PLC (Utilities)....................................... 53,303 432,113
Sears PLC (Consumer Discretionary)................................... 106,675 88,280
Sedgwick Group PLC (Finance)......................................... 32,071 67,706
Slough Estates PLC (Real Estate)..................................... 26,650 155,507
Smithkline Beecham PLC (Healthcare).................................. 282,683 2,625,830
Southern Electric PLC (Utilities).................................... 26,571 201,492
Tarmac PLC (Consumer Discretionary).................................. 74,737 145,157
Taylor Woodrow PLC (Industrial & Commercial)......................... 42,679 126,141
Tesco PLC (Consumer Staples)......................................... 101,305 818,685
Thames Water PLC (Industrial & Commercial)........................... 37,261 561,337
Thorn PLC (Consumer Discretionary)+.................................. 26,650 67,289
TI Group PLC (Industrial & Commercial)............................... 26,571 214,731
Unilever NV PLC (Consumer Staples)................................... 157,225 1,239,396
United Utilities PLC (Utilities)..................................... 37,347 480,004
Vodafone Group PLC (Information Technology).......................... 176,057 1,177,478
Zeneca Group PLC (Real Estate)....................................... 48,000 1,532,171
-------------
60,239,883
-------------
TOTAL COMMON STOCK (cost $193,789,194)............................... 203,569,633
-------------
PREFERRED STOCK -- 0.5%
----------------------------------------------------------------------------------------------------
AUSTRALIA -- 0.1%
News Corp., Ltd. (Information & Entertainment)....................... 31,965 155,454
-------------
AUSTRIA -- 0.0%
Bank Austria AG (Finance)............................................ 1,200 49,317
Bank Austria AG (Finance)............................................ 900 37,351
Bau Holdings AG (Consumer Discretionary)............................. 100 4,593
-------------
91,261
-------------
GERMANY -- 0.4%
RWE AG (Utilities)................................................... 9,920 399,669
SAP AG non voting (Information Technology)........................... 1,894 583,182
-------------
982,851
-------------
ITALY -- 0.0%
Fiat SpA (Consumer Discretionary).................................... 80,850 124,020
-------------
TOTAL PREFERRED STOCK (cost $1,091,560).............................. 1,353,586
-------------
<CAPTION>
PRINCIPAL
BONDS & NOTES -- 0.0% AMOUNT
----------------------------------------------------------------------------------------------------
<S> <C> <C>
FRANCE -- 0.0%
Establissements Economiques du Casino -- Perrachon 4.50% 2001
(Consumer Discretionary)........................................... FRF 43,400 15,753
Simco SA 3.25% 2006 (Real Estate).................................... FRF 479 41,463
Sodexho SA 6.00% 2004 (Industrial & Commercial)...................... FRF 30,000 5,162
-------------
62,378
-------------
</TABLE>
---------------------
91
<PAGE> 87
<TABLE>
<CAPTION>
PRINCIPAL
BONDS & NOTES (continued) AMOUNT VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
ITALY -- 0.0%
Mediobanca SpA 4.50% 2000 (Finance).................................. ITL16,000,000 $ 9,104
-------------
TOTAL BONDS & NOTES (cost $71,642)................................... 71,482
-------------
RIGHTS -- 0.1%+ SHARES
----------------------------------------------------------------------------------------------------
FRANCE -- 0.0%
Sodexho SA 12/11/97 (Information & Entertainment).................... 335 4,188
-------------
ITALY -- 0.1%
Banco Ambrosiano Veneto SpA 1/2/98 (Finance)......................... 36,900 133,391
-------------
NORWAY -- 0.0%
NCL Holding ASA 12/23/97 (Information & Entertainment)............... 622 0
-------------
PORTUGAL -- 0.0%
Jeronimo Martins 12/31/97 (Consumer Staples)......................... 2,000 94,811
-------------
SPAIN -- 0.0%
Sociedad General de Aguas De Barcelona SA 12/15/97 (Utilities)....... 3,143 14
-------------
TOTAL RIGHTS (cost $0)............................................... 232,404
-------------
<CAPTION>
WARRANTS -- 0.0%+ SHARES
----------------------------------------------------------------------------------------------------
<S> <C> <C>
FRANCE -- 0.0%
Establissements Economiques du Casino -- Perrachon 12/31/99 (Consumer
Discretionary)..................................................... 434 9,558
Compagnie Generale des Eaux 5/02/01 (Multi-industry)................. 4,504 2,754
Sodexho SA 6/7/04 (Information & Entertainment)...................... 6 1,320
-------------
13,632
-------------
HONG KONG -- 0.0%
Hongkong & Shanghai Hotels Ltd. 12/10/98 (Information &
Entertainment)..................................................... 5,666 136
Hysan Development Co., Ltd. 4/30/98 (Real Estate).................... 975 13
Oriental Press Group 10/02/98 (Information & Entertainment).......... 5,600 40
Peregrine Investment Holdings Ltd. 5/15/98 (Finance)................. 1,200 15
Stelux Holdings 2/28/98 (Consumer Discretionary)..................... 5,800 7
-------------
211
-------------
ITALY -- 0.0%
La Rinascente 11/30/99 (Finance)..................................... 2,650 3,259
Mediobanca SpA 12/31/99 (Finance).................................... 2,000 865
Riunione Adriatica de Sicurta SpA 12/16/97 (Finance)................. 250 673
Riunione Adriatica de Sicurta SpA 12/16/97 RNC (Finance)............. 150 374
-------------
5,171
-------------
</TABLE>
- ---------------------
92
<PAGE> 88
<TABLE>
<CAPTION>
WARRANTS (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
SINGAPORE -- 0.0%
Asia Foods & Properties Ltd. 7/12/02 (Consumer Staples).............. 1,700 $ 238
Straits Steamship Land Ltd. 12/12/00 (Multi-industry)................ 4,750 1,505
-------------
1,743
-------------
TOTAL WARRANTS (cost $11,963)........................................ 20,757
-------------
TOTAL INVESTMENT SECURITIES (cost $194,964,359)...................... 205,247,862
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
REPURCHASE AGREEMENT -- 17.9% AMOUNT
<S> <C> <C>
----------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
REPURCHASE AGREEMENT -- 17.9%
Agreement with State Street Bank & Trust Co., bearing interest of
5.0% dated 11/28/97 to be repurchased 12/01/97 in the amount of
$44,568,563 and collateralized by $44,375,000 U.S. Treasury Notes
6.25% due 7/31/98
approximate aggregate value $45,445,788 (cost $44,550,000)......... $44,550,000 44,550,000
-------------
TOTAL INVESTMENTS --
(cost $239,514,359) 100.3% 249,797,862
Liabilities in excess of other assets -- (0.3) (871,150)
----- -------------
NET ASSETS -- 100.0% $248,926,712
===== =============
</TABLE>
-----------------------------
+ Non-income producing securities
FRF -- French Franc
ITL -- Italian Lira
---------------------
93
<PAGE> 89
<TABLE>
<CAPTION>
OPEN FORWARD FOREIGN CURRENCY CONTRACTS
-------------------------------------------------------------------------------
CONTRACT IN DELIVERY GROSS UNREALIZED
TO DELIVER EXCHANGE FOR DATE APPRECIATION
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
*AUD 1,423,993 USD 1,022,000 12/18/97 $ 49,003
*DEM 269,771 USD 157,099 01/16/98 3,666
*DEM 1,309,000 USD 748,556 01/16/98 4,058
*DEM 1,050,000 USD 600,446 01/16/98 3,255
*DEM 3,471,355 USD 1,985,106 01/16/98 10,762
*DEM 6,162,229 USD 3,523,892 01/16/98 19,103
*DEM 3,229,313 USD 1,875,000 02/12/98 35,674
DEM 4,089,516 USD 2,337,000 03/16/98 3,832
*ESP 86,733,100 USD 593,770 02/12/98 10,952
*ESP 3,831,540 USD 26,230 02/12/98 484
*FRF 5,910,284 USD 1,025,966 12/15/97 23,605
*FRF 12,083,773 USD 2,078,464 01/21/98 24,326
*FRF 1,176,727 USD 202,402 01/21/98 2,369
FRF 12,223,976 USD 2,087,000 03/16/98 3,169
*ITL 2,620,000,000 USD 1,533,150 01/21/98 17,011
*ITL 1,454,574,300 USD 851,176 01/21/98 9,444
*ITL 1,859,990,000 USD 1,088,414 01/21/98 12,076
*ITL 2,654,510,860 USD 1,553,345 01/21/98 17,235
*ITL 1,433,292,000 USD 840,000 02/19/98 10,649
*ITL 428,018,000 USD 252,269 02/19/98 4,604
JPY 1,047,959,750 USD 8,725,000 01/29/98 430,867
JPY 526,968,188 USD 4,362,500 01/29/98 191,782
JPY 199,916,000 USD 1,640,000 01/29/98 57,754
JPY 1,026,888,875 USD 8,725,000 02/05/98 589,527
JPY 526,335,625 USD 4,362,500 02/05/98 192,634
*JPY 45,479,716 USD 361,754 02/26/98 362
*JPY 19,827,084 USD 157,708 02/26/98 158
*NLG 1,295,840 USD 667,890 02/19/98 12,612
*NLG 630,778 USD 325,110 02/19/98 6,139
*USD 3,726,000 FRF 22,089,098 12/15/97 16,835
*USD 627,000 ESP 93,636,180 12/18/97 1,283
*USD 1,968,000 DEM 3,471,355 01/16/98 6,345
*USD 1,510,827 ITL 2,620,000,000 01/21/98 5,313
*USD 839,000 ITL 1,454,574,300 01/21/98 2,732
----------
1,779,620
----------
</TABLE>
- ---------------------
94
<PAGE> 90
<TABLE>
<CAPTION>
OPEN FORWARD FOREIGN CURRENCY CONTRACTS (continued)
-------------------------------------------------------------------------------
CONTRACT IN DELIVERY GROSS UNREALIZED
TO DELIVER EXCHANGE FOR DATE DEPRECIATION
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
*ESP 93,636,180 USD 626,664 12/18/97 $ (1,619)
*ESP 86,827,505 USD 581,097 12/18/97 (1,501)
*ESP 149,395,675 USD 999,837 12/18/97 (2,583)
*FRF 6,198,357 USD 1,040,377 12/15/97 (10,841)
*FRF 22,069,098 USD 3,704,236 12/15/97 (38,599)
*FRF 1,107,975 USD 186,387 01/21/98 (1,960)
*SGD 3,132,716 USD 1,939,162 03/05/98 (15,625)
*USD 1,028,681 FRF 5,910,284 12/15/97 (26,319)
*USD 1,078,819 FRF 6,198,357 12/15/97 (27,602)
*USD 597,500 ESP 86,827,505 12/18/97 (14,902)
*USD 1,025,999 ESP 149,395,675 12/18/97 (23,579)
*USD 1,027,838 AUD 1,423,993 12/19/97 (54,841)
*USD 157,282 DEM 269,771 01/16/98 (3,849)
*USD 749,842 DEM 1,309,000 01/16/98 (5,344)
*USD 602,983 DEM 1,050,000 10/16/98 (5,772)
*USD 3,592,718 DEM 6,162,229 01/16/98 (87,930)
*USD 192,748 FRF 1,107,975 01/21/98 (4,402)
*USD 2,107,500 FRF 12,083,773 01/21/98 (53,362)
*USD 204,709 FRF 1,176,727 01/21/98 (4,675)
*USD 1,100,000 ITL 1,859,990,000 01/21/98 (23,663)
*USD 1,565,603 ITL 2,654,510,860 01/21/98 (29,493)
*USD 1,883,530 DEM 3,229,313 02/12/98 (44,204)
*USD 597,500 ESP 86,733,100 02/12/98 (14,683)
*USD 26,341 ESP 3,831,540 02/12/98 (594)
*USD 847,049 ITL 1,433,292,000 02/19/98 (17,699)
*USD 252,951 ITL 428,018,000 02/19/98 (5,285)
*USD 672,500 NLG 1,295,840 02/19/98 (17,222)
*USD 326,524 NLG 630,778 02/19/98 (7,553)
*USD 364,801 JPY 45,479,716 02/26/98 (3,409)
*USD 157,972 JPY 19,827,084 02/26/98 (422)
USD 792,028 JPY 99,407,416 02/26/98 (2,114)
*USD 1,967,168 SGD 3,132,716 03/05/98 (12,382)
USD 47,523 JPY 5,937,000 03/16/98 (213)
----------
(564,241)
----------
Net Unrealized Appreciation....................... $ 1,215,379
==========
</TABLE>
-----------------------------
* Represents open forward foreign currency contracts and
offsetting or partially offsetting open forward foreign currency
contracts that do not have additional market risk but have
continued counterparty settlement risk.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AUD -- Australian Dollar FRF -- French Franc NLG -- Netherlands Guilder
DEM -- Deutsche Mark ITL -- Italian Lira SGD -- Singapore Dollar
ESP -- Spanish Peseta JPY -- Japanese Yen USD -- United States Dollar
</TABLE>
See Notes to Financial Statements
---------------------
95
<PAGE> 91
- ---------------------
SUNAMERICA SERIES TRUST
REAL ESTATE PORTFOLIO INVESTMENT PORTFOLIO -- NOVEMBER 30, 1997
<TABLE>
<CAPTION>
COMMON STOCK -- 84.0% SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
INFORMATION & ENTERTAINMENT -- 8.6%
Leisure & Tourism -- 8.6%
Bristol Hotel Co.+..................................................... 7,300 $ 180,675
CapStar Hotel Co.+..................................................... 25,500 954,656
Host Marriott Corp.+................................................... 7,300 151,931
Premier Parks, Inc.+................................................... 12,400 483,600
Servico, Inc.+......................................................... 39,500 683,844
WHG Resorts & Casinos, Inc.+........................................... 3,800 84,550
-------------
2,539,256
-------------
REAL ESTATE -- 75.4%
Real Estate Companies -- 7.0%
Boardwalk Equities, Inc.+.............................................. 26,200 298,940
Catellus Development Corp.+............................................ 50,800 939,800
Crescent Operating, Inc.+.............................................. 1,780 29,815
Security Capital Group, Inc., Class B+................................. 7,800 250,575
The Rouse Co........................................................... 2,000 63,000
TrizecHahn Corp........................................................ 21,700 501,812
Real Estate Investment Trusts -- 68.4%
Alexandria Real Estate Equities, Inc................................... 14,100 438,862
Ambassador Apartments, Inc. Class A.................................... 18,400 366,850
Apartment Investment & Management Co................................... 4,900 173,338
Arden Reality, Inc..................................................... 3,200 97,400
Avalon Properties, Inc................................................. 5,700 175,275
Bay Apartment Communities, Inc......................................... 10,200 407,362
Beacon Properties Corp................................................. 14,100 634,500
Boston Properties, Inc................................................. 26,100 851,512
Boykin Lodging Co...................................................... 7,000 181,563
California Reality Corp................................................ 21,700 861,219
Camden Property Trust.................................................. 10,000 326,875
CarrAmerica Realty Corp................................................ 2,000 60,250
CCA Prison Reality Trust............................................... 5,100 181,687
CenterPoint Properties Corp............................................ 12,100 400,812
Chelsea GCA Realty, Inc................................................ 2,500 95,000
Crescent Real Estate Equities Co....................................... 25,300 974,050
Duke Realty Investments, Inc........................................... 6,200 142,600
Equity Office Properties Trust......................................... 5,700 184,894
Equity Residential Properties Trust.................................... 1,100 55,000
Essex Property Trust, Inc.............................................. 18,200 657,475
FelCor Suite Hotels, Inc............................................... 18,100 657,256
First Industrial Reality Trust, Inc.................................... 18,000 635,625
First Union Real Estate Investments.................................... 9,900 147,263
Gables Residential Trust............................................... 7,300 198,469
Glenborough Reality Trust, Inc......................................... 21,800 588,600
Golf Trust of America, Inc............................................. 14,300 386,100
Home Properties of New York, Inc....................................... 5,600 148,750
IRT Property Co........................................................ 10,800 130,275
Irvine Apartment Communities, Inc...................................... 8,800 273,350
JDN Realty Corp........................................................ 17,000 528,062
Kilroy Reality Corp.................................................... 6,400 168,000
Kimco Realty Corp...................................................... 5,500 189,062
Liberty Property Trust................................................. 28,700 801,806
National Golf Properties, Inc.......................................... 4,400 139,700
</TABLE>
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<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
REAL ESTATE (continued)
Real Estate Investment Trusts (continued)
Oasis Residential, Inc................................................. 1,000 $ 21,813
Pacific Gulf Properties, Inc........................................... 3,800 85,025
Parkway Properties, Inc................................................ 21,900 721,331
Patriot American Hospitality, Inc...................................... 25,312 791,000
Post Properties, Inc................................................... 12,200 471,225
Prentiss Properties Trust.............................................. 10,300 266,512
Public Storage, Inc.................................................... 24,800 685,100
Reckson Associates Realty Corp......................................... 21,100 560,469
Security Capital Pacific Trust......................................... 8,642 210,109
Simon DeBartolo Group, Inc............................................. 18,100 591,644
SL Green Reality Corp.................................................. 9,700 252,200
Starwood Lodging Trust................................................. 16,600 890,175
Storage USA, Inc....................................................... 6,000 234,375
Sunstone Hotel Investors, Inc.......................................... 29,900 525,119
The Macerich Co........................................................ 6,600 179,025
Tower Reality Trust Inc.+.............................................. 6,100 148,688
United States Restaurant Properties, Inc............................... 9,850 235,169
Urban Shopping Centers, Inc............................................ 3,200 106,600
Vornado Realty Trust................................................... 20,300 909,694
Weingarten Realty Investors............................................ 1,800 75,038
-------------
22,303,095
-------------
TOTAL COMMON STOCK (cost $23,518,812).................................. 24,842,351
-------------
PREFERRED STOCK -- 3.7%
----------------------------------------------------------------------------------------------------
REAL ESTATE -- 3.7%
Real Estate Companies -- 1.0%
Oasis Residential, Inc. convertible, Series A 2.25%.................... 700 17,500
The Rouse Co. convertible, Series B 3.0%............................... 5,400 270,000
Real Estate Investment Trusts -- 2.7%
Equity Residential Properties Trust convertible, Series E 7.0%......... 24,200 674,575
Security Capital Pacific Trust convertible, Series A 1.75%............. 400 13,350
Vornado Realty Trust convertible, Series A 6.50%....................... 1,700 113,794
-------------
1,089,219
-------------
TOTAL PREFERRED STOCK (cost $1,090,413)................................ 1,089,219
-------------
TOTAL INVESTMENT SECURITIES (cost $24,609,225)......................... 25,931,570
-------------
PRINCIPAL
SHORT-TERM SECURITIES -- 12.6% AMOUNT
----------------------------------------------------------------------------------------------------
FEDERAL AGENCY OBLIGATIONS -- 12.6%
Federal Home Loan Bank Consolidated Discount Note 5.35% due 12/1/97.... $ 130,000 130,000
Federal Home Loan Mortgage Discount Notes 5.46% due 12/1/97............ 3,600,000 3,600,000
-------------
TOTAL SHORT-TERM SECURITIES (cost $3,730,000).......................... 3,730,000
-------------
TOTAL INVESTMENTS --
(cost $28,339,225) 100.3% 29,661,570
Liabilities in excess of other assets -- (0.3) (96,712)
------ -------------
NET ASSETS -- 100.0% $29,564,858
====== =============
</TABLE>
-----------------------------
+ Non-income producing securities
See Notes to Financial Statements
---------------------
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SUNAMERICA SERIES TRUST
AGGRESSIVE GROWTH
PORTFOLIO INVESTMENT PORTFOLIO -- NOVEMBER 30, 1997
<TABLE>
<CAPTION>
COMMON STOCK -- 94.8% SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER DISCRETIONARY -- 6.6%
Apparel & Textiles -- 1.5%
Gap, Inc.............................................................. 10,000 $ 536,875
Liz Claiborne, Inc.................................................... 10,000 502,500
Tefron Ltd.+.......................................................... 26,200 550,200
Housing -- 0.6%
D.R. Horton, Inc...................................................... 25,000 445,313
Toll Brothers, Inc.+.................................................. 10,000 241,250
Retail -- 4.5%
The Neiman Marcus Group, Inc.+........................................ 25,000 823,437
Amazon.com., Inc.+.................................................... 7,000 346,500
Ames Department Stores, Inc.+......................................... 65,000 1,105,000
Costco Cos., Inc.+.................................................... 5,000 221,563
CVS Corp.............................................................. 13,000 862,875
Kohl's Corp.+......................................................... 5,000 361,875
Office Depot, Inc.+................................................... 15,500 366,187
Woolworth Corp.+...................................................... 25,000 540,625
------------
6,904,200
------------
CONSUMER STAPLES -- 4.7%
Food, Beverage & Tobacco -- 1.7%
800-JR Cigar, Inc.+................................................... 20,000 550,000
Beringer Wine Estates Holdings, Inc., Class B+........................ 4,900 159,250
Chiquita Brands International, Inc.................................... 25,000 423,438
Fresh Del Monte Produce, Inc.+........................................ 15,000 221,250
Ryan's Family Steak Houses, Inc.+..................................... 45,000 399,375
Household Products -- 3.0%
A.C. Moore Arts & Crafts, Inc.+....................................... 2,000 30,000
Dial Corp. New........................................................ 60,000 1,162,500
Furniture Brands International, Inc.+................................. 10,000 195,625
Scotts Co., Class A+.................................................. 7,000 204,750
Silgan Holdings, Inc.+................................................ 12,000 417,000
Steiner Leisure Ltd.+................................................. 15,000 431,250
Sunbeam Corp.......................................................... 15,000 660,937
------------
4,855,375
------------
ENERGY -- 15.8%
Energy Services -- 13.5%
Anadarko Petroleum Corp............................................... 10,000 650,000
Baker Hughes, Inc..................................................... 10,000 418,750
Cliffs Drilling Co.+.................................................. 17,600 976,800
Cooper Cameron Corp.+................................................. 20,000 1,218,750
Core Laboratories NV+................................................. 30,000 1,087,500
Diamond Offshore Drilling, Inc........................................ 15,400 768,075
Eagle Geophysical, Inc.+.............................................. 3,000 48,750
EVI, Inc.+............................................................ 10,000 514,375
Falcon Drilling Co., Inc.+............................................ 40,000 1,290,000
Friede Goldman International, Inc.+................................... 50,000 1,487,500
Global Marine, Inc.+.................................................. 10,000 263,125
Marine Drilling Co., Inc. +........................................... 20,000 455,000
</TABLE>
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<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY (continued)
Energy Services (continued)
Nabors Industries, Inc. +............................................. 20,000 $ 701,250
Noble Drilling Corp.+................................................. 28,000 841,750
Patterson Energy, Inc.+............................................... 20,200 742,350
Rowan Cos., Inc.+..................................................... 10,000 340,000
Seagull Energy Corp.+................................................. 10,000 228,125
Tidewater, Inc........................................................ 3,000 168,187
Trico Marine Services, Inc.+.......................................... 36,400 1,012,375
UTI Energy Corp.+..................................................... 15,000 420,000
Varco International, Inc.+............................................ 6,400 327,600
Energy Sources -- 2.3%
ENSCO International, Inc. +........................................... 26,000 929,500
Kerr-McGee Corp....................................................... 10,000 663,125
KN Energy, Inc........................................................ 10,000 467,500
Smith International, Inc.+............................................ 5,000 320,000
------------
16,340,387
------------
FINANCE -- 19.7%
Banks -- 9.4%
Bankers Trust New York Corp........................................... 17,490 2,073,658
First American Corp................................................... 33,800 1,673,100
First Chicago Corp.................................................... 10,000 782,500
First International Bancorp, Inc...................................... 14,500 197,563
Hamilton Bancorp, Inc.+............................................... 20,000 562,500
Hibernia Corp. Class A................................................ 15,000 271,875
ING Groep NV.......................................................... 15,115 615,936
Long Island Bancorp, Inc.............................................. 5,367 252,920
PNC Bank Corp......................................................... 26,400 1,420,650
Popular Inc........................................................... 16,000 852,000
Summit Bancorp........................................................ 22,500 1,049,062
Financial Services -- 9.0%
Allmerica Financial Corp.............................................. 5,000 242,500
American Capital Strategies Ltd.+..................................... 18,000 333,000
Associates First Capital Corp., Class A............................... 5,000 321,250
Countrywide Credit Industries, Inc.................................... 17,600 720,500
Crestar Financial Corp................................................ 10,000 513,750
Donaldson, Lufkin & Jenrette, Inc..................................... 10,000 728,750
Federal Agricultural Mortgage Corp.+.................................. 4,100 271,625
Hambrecht & Quist Group, Inc.+........................................ 10,000 383,750
Healthcare Financial Partners, Inc.+.................................. 25,400 838,200
Interra Financial, Inc................................................ 9,000 496,687
Jefferies Group, Inc.................................................. 400 28,350
Legg Mason, Inc....................................................... 9,900 478,913
Lehman Brothers Holdings, Inc......................................... 18,000 910,125
Merrill Lynch & Co., Inc.............................................. 5,000 350,938
Metris Cos., Inc.+.................................................... 9,500 361,000
New Century Financial Corp.+.......................................... 25,000 328,125
PaineWebber Group, Inc................................................ 15,000 504,375
Reliance Group Holdings, Inc.......................................... 50,000 637,500
Stirling Cooke Brown Holdings......................................... 24,000 582,000
T&W Financial Corp.+.................................................. 15,000 241,875
</TABLE>
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<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE (continued)
Insurance -- 1.3%
Conseco, Inc.......................................................... 10,000 $ 465,625
Hartford Life, Inc.................................................... 15,000 575,625
Penn Treaty American Corp.+........................................... 10,000 325,000
------------
20,391,227
------------
HEALTHCARE -- 9.8%
Drugs -- 2.3%
IDEC Pharmaceuticals Corp.+........................................... 20,000 698,750
LifeCell Corp.+....................................................... 9,000 43,875
Mylan Laboratories, Inc............................................... 49,000 1,087,188
Watson Pharmaceuticals, Inc.+......................................... 20,000 595,000
Health Services -- 4.9%
Access Health, Inc.+.................................................. 10,000 297,500
Advance Paradigm, Inc.+............................................... 10,000 296,250
Arterial Vascular Engineering, Inc.+.................................. 20,000 1,107,500
Assisted Living Concepts, Inc.+....................................... 30,000 513,750
CORR Therapeutics, Inc.+.............................................. 20,000 455,000
HEALTHSOUTH Corp.+.................................................... 20,000 525,000
Neurex Corp.+......................................................... 20,000 312,500
NovaCare, Inc.+....................................................... 50,000 618,750
PhyCor, Inc.+......................................................... 10,000 246,250
Vision Twenty One, Inc.+.............................................. 70,000 669,375
Medical Products -- 2.6%
Guidant Corp.......................................................... 12,500 803,125
Gulf South Medical Supply, Inc. +..................................... 15,000 489,375
Osteotech, Inc.+...................................................... 10,000 302,500
Protein Design Labs, Inc.+............................................ 20,000 840,000
Rexall Sundown, Inc.+................................................. 10,000 237,500
------------
10,139,188
------------
INDUSTRIAL & COMMERCIAL -- 10.2%
Aerospace & Military Technology -- 0.4%
REMEC, Inc.+.......................................................... 17,000 397,375
Business Services -- 6.2%
American Disposal Services, Inc.+..................................... 20,000 712,500
Budget Group, Inc., Class A+.......................................... 5,000 177,500
Checkfree Corp.+...................................................... 15,000 392,812
Corrections Corp. of America+......................................... 5,000 173,125
Culligan Water Technologies, Inc.+.................................... 15,000 673,125
Hvide Marine, Inc., Class A+.......................................... 3,000 84,938
Jackson Hewitt, Inc.+................................................. 25,000 1,676,562
JLK Direct Distribution, Inc.+........................................ 12,600 358,312
NCO Group, Inc.+...................................................... 5,000 189,375
Personnel Group Of America, Inc.+..................................... 10,000 365,625
Philip Services Corp.+................................................ 10,000 158,125
Pre-Paid Legal Services, Inc.+........................................ 10,000 283,125
Seitel, Inc.+......................................................... 15,000 577,500
Snyder Communications, Inc............................................ 5,000 169,688
Transcrypt International, Inc.+....................................... 5,200 120,900
Vestcom International, Inc.+.......................................... 15,000 303,750
Machinery -- 1.0%
IRI International Corp.+.............................................. 2,000 32,250
Kennametal, Inc....................................................... 20,000 1,053,750
</TABLE>
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<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL & COMMERCIAL (continued)
Transportation -- 2.6%
Airborne Freight Corp................................................. 10,000 $ 636,875
Caliber System, Inc................................................... 25,000 1,335,938
CNF Transportation, Inc............................................... 15,000 652,500
Consolidated Freightways Corp.+....................................... 4,000 62,500
------------
10,588,150
------------
INFORMATION & ENTERTAINMENT -- 4.9%
Broadcasting & Media -- 2.6%
Cinar Films, Inc., Class B+........................................... 22,000 907,500
Nextel Communications, Inc., Class A+................................. 20,000 505,000
Tele-Communications Liberty Media Group, Inc., Series A+.............. 15,000 506,250
TV Azteca SA de CV ADR+............................................... 6,000 124,125
Univision Communications, Inc., Class A+.............................. 10,000 665,625
Entertainment Products -- 0.4%
Mattel, Inc........................................................... 10,000 400,625
Leisure & Tourism -- 1.9%
CapStar Hotel Co.+.................................................... 20,000 748,750
Carnival Corp., Class A............................................... 10,000 540,625
Four Seasons Hotels, Inc.............................................. 7,000 224,875
Ryanair Holdings PLC ADR+............................................. 16,200 433,350
------------
5,056,725
------------
INFORMATION TECHNOLOGY -- 18.0%
Communication Equipment -- 2.1%
CIENA Corp.+.......................................................... 5,000 270,000
Digital Microwave Corp.+.............................................. 20,000 315,000
Tekelec, Inc.+........................................................ 20,000 757,500
Tellabs, Inc.+........................................................ 6,000 312,000
World Access, Inc.+................................................... 20,000 490,000
Computers & Business Equipment -- 0.2%
Ikon Office Solutions, Inc............................................ 7,500 228,281
Electronics -- 4.9%
Aehr Test Systems+.................................................... 4,000 36,500
Alpha Industries, Inc.+............................................... 10,000 186,250
DII Group, Inc.+...................................................... 20,000 447,500
Jabil Circuit, Inc.+.................................................. 15,000 721,875
Lernout & Hauspie Speech Products NV+................................. 10,000 479,375
Level One Communications, Inc.+....................................... 20,000 835,000
PMC-Sierra, Inc.+..................................................... 20,000 550,000
RF Micro Devices, Inc.+............................................... 10,000 141,250
Tandy Corp............................................................ 20,000 860,000
Uniphase Corp.+....................................................... 5,000 200,625
Vitesse Semiconductor Corp.+.......................................... 5,500 246,125
Yurie System, Inc.+................................................... 15,000 373,125
</TABLE>
---------------------
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<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
INFORMATION TECHNOLOGY (continued)
Software -- 8.4%
Applied Voice Technology, Inc.+....................................... 10,000 $ 280,000
Baan Co. NV+.......................................................... 5,000 357,500
Cambridge Technology Partners, Inc.+.................................. 10,000 388,750
Check Point Software Technologies, Ltd.+.............................. 10,000 451,250
Computer Task Group, Inc.............................................. 19,300 607,950
Compuware Corp.+...................................................... 30,000 1,048,125
Concord Communications, Inc.+......................................... 2,000 43,750
HBO & Co.+............................................................ 20,000 897,500
Keane, Inc.+.......................................................... 15,000 475,313
Legato Systems, Inc.+................................................. 10,000 381,250
Lycos Inc.+........................................................... 20,000 611,250
New Era of Networks, Inc.+............................................ 10,000 127,500
Novell, Inc.+......................................................... 15,000 138,750
QuadraMed Corp.+...................................................... 25,000 653,125
The Learning Company Inc.+............................................ 20,000 362,500
Veritas DGC, Inc.+.................................................... 15,000 600,000
Veritas Software Co................................................... 15,000 655,781
Yahoo!, Inc.+......................................................... 12,500 639,062
Telecommunications -- 2.4%
At Home Corp., Series A+.............................................. 10,000 206,250
COLT Telecommunications Group PLC ADR+................................ 5,000 217,500
Globalstar Telecommunications Ltd.+................................... 10,000 495,625
Lucent Technologies, Inc.............................................. 5,000 400,625
Pacific Gateway Exchange, Inc.+....................................... 10,000 388,750
Teleport Communications Group+........................................ 15,000 735,000
-------------
18,613,512
-------------
REAL ESTATE -- 3.1%
Real Estate Companies -- 0.6%
Security Capital Group, Inc., Class B+................................ 10,000 321,250
Westfield America, Inc................................................ 20,000 333,750
Real Estate Investment Trusts -- 2.5%
CCA Prison Reality Trust.............................................. 5,000 178,125
Equity Office Properties Trust........................................ 10,000 324,375
Innkeepers USA Trust.................................................. 20,000 321,250
Ocwen Asset Investment Corp........................................... 12,500 227,344
Starwood Lodging Trust................................................ 15,000 804,375
Vornado Realty Trust.................................................. 15,000 672,187
-------------
3,182,656
-------------
UTILITIES -- 2.0%
Gas & Pipeline Utilities -- 1.7%
Aquila Gas Pipeline Corp.............................................. 50,000 706,250
TransCoastal Marine Services, Inc.+................................... 12,000 234,000
Western Gas Resources, Inc............................................ 35,000 800,626
Telephone -- 0.3%
McLeodUSA, Inc., Class A+............................................. 10,000 370,000
-------------
2,110,876
-------------
TOTAL COMMON STOCK (cost $83,284,878)................................. 98,182,296
-------------
</TABLE>
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<TABLE>
<CAPTION>
PRINCIPAL
U.S. GOVERNMENT AND AGENCIES -- 2.3% AMOUNT VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT & AGENCIES -- 2.3%
United States Treasury Bonds 6.13% 2027............................... $1,200,000 $ 1,213,500
United States Treasury Notes 6.13% 2007............................... 1,200,000 1,223,064
-------------
2,436,564
-------------
TOTAL U.S. GOVERNMENT AND AGENCIES (cost $2,424,112).................. 2,436,564
-------------
TOTAL INVESTMENT SECURITIES (cost $85,708,990)........................ 100,618,860
-------------
REPURCHASE AGREEMENT -- 5.8%
----------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 5.8%
Joint Repurchase Agreement Account (Note 3)
(cost $5,956,000)................................................... 5,956,000 5,956,000
-------------
TOTAL INVESTMENTS --
(cost $91,664,990) 102.9% 106,574,860
Liabilities in excess of other assets -- (2.9) (2,971,396)
------ -------------
NET ASSETS -- 100.0% $103,603,464
====== ==============
</TABLE>
-----------------------------
+ Non-income producing securities
ADR -- American Depository Receipt
See Notes to Financial Statements
---------------------
103
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- ---------------------
SUNAMERICA SERIES TRUST
EMERGING MARKETS
PORTFOLIO INVESTMENT PORTFOLIO -- NOVEMBER 30, 1997
<TABLE>
COMMON STOCK -- 82.2% SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
ARGENTINA -- 5.4%
Banco Frances del Rio de la Plata SA ADR (Finance).................... 17,500 $ 157,558
Irsa Inversiones y Represenaciones SA GDR (Real Estate)............... 2,400 73,350
Perez Cos. SA (Multi-industry)........................................ 31,000 222,041
Telefonica de Argentina SA ADR (Utilities) GDR........................ 11,000 363,687
YPF Sociedad Anonima ADR (Energy)..................................... 8,000 268,500
------------
1,085,136
------------
BRAZIL -- 9.6%
Brazil Realty SA Empreendimentos & Participacoes GDR (Real
Estate)(1)*......................................................... 2,900 50,750
Centrais Electricas de Santa Brasileiras SA (Utilities)............... 1,900 198,678
Companhia Siderurgica Nacional (Materials)............................ 2,100,000 56,793
Companhia Siderurgica Nacional ADR (Materials)........................ 2,500 67,608
Companhia Vale do Rio Doce (Materials)................................ 18,000 322,897
Compania Brasileira de Distribuidora GDR (Industrial & Commercial).... 15,700 233,660
Compania Energetica de Minas ADR non voting (Materials)............... 10,400 506,251
Petroleo Brasileiro SA ADR (Energy)................................... 9,100 198,516
Telecomunicacoes Brasileirassa SA ADR (Information Technology)........ 2,750 287,031
------------
1,922,184
------------
CANADA -- 2.1%
Bell Canada International, Inc. (Utilities)+.......................... 5,000 72,734
Hurricane Hydrocarbons Ltd. (Energy).................................. 21,700 133,307
Super Sol Ltd. ADR (Materials)........................................ 15,700 219,800
------------
425,841
------------
CHILE -- 4.2%
Compania de Telecomunicaciones de Chile SA ADR (Utilities)............ 10,000 270,625
Distribucion y Servicio D&S SA ADR (Consumer Discretionary)+.......... 13,600 237,150
Linea Aerea Nacional Chile SA ADR (Information & Entertainment)....... 9,700 122,462
Madeco SA ADR (Materials)............................................. 11,800 199,125
------------
829,362
------------
CHINA -- 1.3%
Beijing Datang Pow (Utilities)........................................ 156,000 72,145
Guangdong Kelon Electric Holdings (Industrial & Commercial)........... 100,000 111,251
Qingling Motors Co., Ltd. (Consumer Discretionary).................... 139,000 74,172
------------
257,568
------------
HONG KONG -- 2.7%
Asia Satellite Telecom Holdings Ltd. (Information Technology)+........ 29,000 63,400
Cheung Kong Holdings Ltd. (Real Estate)............................... 40,000 93,140
China Foods Holdings (Consumer Staples)............................... 116,000 40,891
Guangnan Holdings (Consumer Staples).................................. 70,000 52,521
Hutchison Whampoa Ltd. (Multi-industry)............................... 18,000 119,918
New World Development Co. Ltd. (Real Estate)+......................... 53,900 106,331
Ng Fung Hong (Consumer Staples)....................................... 56,000 54,694
------------
530,895
------------
</TABLE>
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<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
INDIA -- 4.2%
BSES Ltd. GDR (Industrial & Commercial)............................... 5,600 $ 75,600
Gujarat Ambuja Cements Ltd. GDR (Industrial & Commercial)............. 14,000 112,000
Hindalco Industries Ltd. GDR (Materials)*............................. 4,200 94,500
Indian Hotel Co., Ltd. (Information & Entertainment).................. 2,400 45,600
Larsen & Torbo GDR (Industrial & Commercial).......................... 3,000 29,250
Ranbaxy Laboratories Ltd. (Healthcare)................................ 4,100 95,325
Reliance Industries GDS (Materials)*.................................. 14,000 108,850
State Bank of India GDR (Finance)..................................... 8,200 108,650
Tata Engineering & Locomotive Co., Ltd. GDR (Consumer
Discretionary)...................................................... 10,000 81,378
Videsh Sanchar Nigam Ltd. GDR (Information Technology)*............... 7,000 92,750
------------
843,903
------------
INDONESIA -- 2.3%
Astra International, Inc. (Consumer Discretionary).................... 50,000 26,045
Gudang Garam Perus (Consumer Staples)................................. 30,000 63,742
PT Astra Agro Niaga Lestari Tbk (Energy)(1)........................... 77,000 32,721
PT Indah Kiat Pulp & Paper Corp. (Materials).......................... 237,500 55,346
PT Indorama Synthetics (Consumer Discretionary)....................... 70,000 35,984
PT Indostat alien (Information Technology)+........................... 31,000 70,329
PT Telekomunikasi Indonesia ADR alien (Information Technology)+....... 8,000 117,000
Ramayana Lestari Sentosa (Consumer Discretionary)..................... 45,000 52,125
------------
453,292
------------
KOREA -- 1.5%
Daewoo Heavy Industries (Industrial & Commercial)..................... 7,000 31,962
Housing & Commercial Bank, Korea GDR (Finance)*....................... 7,100 41,712
Korea Mobile Telecommunications Corp. (Information & Entertainment)... 100 32,591
LG Electronics, Inc. (Consumer Goods)................................. 3,000 33,604
Samsung Electronics Co. (Information Technology)...................... 4,500 161,223
------------
301,092
------------
MALAYSIA -- 2.6%
Berjaya Sports Toto Berhad (Information & Entertainment).............. 57,000 124,399
IJM Corp. Berhad (Industrial & Commercial)............................ 102,000 37,829
KFC Holdings (Information & Entertainment)............................ 58,000 86,042
Malakoff Berhad (Industrial & Commercial)............................. 53,000 83,161
Malaysian Assurance (Finance)+........................................ 44,000 51,466
PPB Oil Palms Berhad (Consumer Staples)............................... 65,000 56,002
Telekom Malaysia Berhad (Information Technology)...................... 36,000 80,108
------------
519,007
------------
MEXICO -- 17.8%
Alfa SA de CV, Class A (Multi-industry)+.............................. 66,000 495,793
Cemex SA de CV Class B ADR (Materials)................................ 71,100 349,722
Cifra SA de CV (Consumer Staples)..................................... 87,000 182,188
Corporacion Moctezuma SA de CV (Materials)............................ 66,700 79,259
Fomento Economico Mexicano SA de CV, Class B (Consumer Staples)+...... 61,000 496,853
G Accion SA de CV ADR (Real Estate)(1)*............................... 7,400 69,375
Grupo Financiero Banamex-Accival SA de CV., Class B (Finance)......... 100,000 219,151
Grupo Imsa SA de CV ADR (Multi-industry).............................. 12,300 319,031
Grupo Televisa SA de CV, ADR (Information & Entertainment)............ 11,000 407,000
Kimberly-Clark de Mexico SA de CV ADR (Materials)..................... 44,600 196,026
Panamerican Beverages, Inc., Class A ADR (Consumer Staples)........... 13,500 462,375
Telefonos de Mexico SA ADR (Utilities)................................ 5,800 287,100
------------
3,563,873
------------
</TABLE>
---------------------
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<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
PHILIPPINES -- 2.9%
Ayala Land, Inc. Class B (Real Estate)................................ 292,300 $ 114,996
Belle Corp. (Real Estate)............................................. 746,000 35,859
Benpres Holdings Corp. GDR (Industrial & Commercial)(1)............... 9,000 25,875
International Container Systems, Inc. (Materials)+.................... 413,400 67,421
Ionics Circuit, Inc. (Information Technology)......................... 60,200 34,880
Manila Electric Co. (Utilities)....................................... 14,000 48,469
Philippine Long Distance Telephone Co. (Utilities).................... 2,200 52,876
Philippine Long Distance Telephone Co. ADR (Utilities)................ 3,700 91,575
SM Prime Holdings (Real Estate)....................................... 480,000 75,537
Solid Group, Inc. (Industrial & Commercial)........................... 650,000 34,220
------------
581,708
------------
POLAND -- 1.5%
Bank Handlowy Warsza (Finance)........................................ 12,200 143,144
KGHM Polska Miedz SA (Materials)...................................... 19,000 156,750
------------
299,894
------------
PORTUGAL -- 2.7%
Colep-Companhia Portuguesa de Embalagens (Materials).................. 17,100 284,683
Electricidad de Portugal SA (Utilities)............................... 5,200 93,987
Investec Consultoria International SA (Information & Entertainment)... 5,200 158,857
------------
537,527
------------
RUSSIA -- 4.3%
Ao Mosenergo ADR (Energy)(1)*......................................... 4,400 132,000
Ao Tatneft ADR (Utilities)*........................................... 2,200 270,990
Oil Co Lukoil ADR (Utilities)......................................... 2,300 184,288
Tatneft (Energy) ADR*................................................. 700 86,224
Unified Energy Systems Russia GDR (Utilities)(1)...................... 8,000 182,000
------------
855,502
------------
SINGAPORE -- 0.4%
Asia Pulp & Paper Ltd. ADR (Materials)+............................... 7,250 78,844
------------
SOUTH AFRICA -- 5.9%
Energy Africa Ltd GDR (Energy)*....................................... 3,600 81,000
Engen Botswana Ltd. (Energy).......................................... 39,600 222,106
First National Bank (Finance)......................................... 30,700 259,072
Gencor (Materials).................................................... 7,000 10,878
Liberty Life Association of Africa Ltd. (Finance)..................... 13,200 334,177
Sasol Ltd. (Multi-industry)........................................... 26,200 263,968
------------
1,171,201
------------
TAIWAN, PROVINCE OF CHINA -- 3.7%
Acer, Inc. GDR (Information Technology)............................... 7,950 60,420
ASE Test Ltd. (Information Technology)+............................... 2,850 159,600
Asustek Computer, Inc. GDR (Information Technology)*.................. 15,000 229,971
China Steel Corp. ADR (Materials)*.................................... 4,700 68,710
China Steel Corp. GDS (Materials)..................................... 4,800 68,520
Siliconware Precision Industries Co. GDR (Information Technology)..... 11,605 159,278
------------
746,499
------------
</TABLE>
- ---------------------
106
<PAGE> 102
<TABLE>
<CAPTION>
COMMON STOCK (continued) SHARES VALUE
----------------------------------------------------------------------------------------------------
<S> <C> <C>
THAILAND -- 1.2%
Advanced Information Services PCL alien shares (Information &
Entertainment)...................................................... 9,000 $ 46,957
Electricity Generating PCL (Utilities)................................ 35,000 67,391
Industrial Finance Corp. of Thailand alien shares (Finance)........... 56,000 32,348
PTT Exploration & Production PCL alien shares (Energy)................ 8,000 88,646
------------
235,342
------------
TURKEY -- 2.3%
Dogan Sirketler Grubu Holdings SA (Multi-industry).................... 2,180,000 82,434
Haci Omer Sabanci Holdings SA ADR (Finance)........................... 12,900 183,825
Yapi Ve Kredi Bankasi SA ADR (Finance)................................ 3,700 117,938
Yapi Ve Kredi Bankasi SA GDR (Finance)................................ 2,400 76,500
------------
460,697
------------
UNITED KINGDOM -- 2.2%
Billiton PLC (Materials).............................................. 60,000 148,194
Lonrho PLC (Multi-industry)........................................... 95,800 143,942
Ramco Energy PLC-ADR (Energy)......................................... 11,400 147,487
------------
439,623
------------
UNITED STATES -- 0.3%
At Entertainment, Inc. (Information & Entertainment).................. 6,000 65,250
------------
VENEZUELA -- 1.1%
Compania Anon Nacional Tele de Venezuela ADR (Information &
Entertainment)...................................................... 3,400 134,300
Siderurgica Venezolana "Sivensa" SA (Industrial & Commercial)......... 18,000 81,000
------------
215,300
------------
TOTAL COMMON STOCK (cost $19,682,170)................................. 16,419,540
------------
PREFERRED STOCK -- 2.4%
----------------------------------------------------------------------------------------------------
BRAZIL -- 2.4%
Banco Bradesco SA (Finance)........................................... 26,000,000 189,850
Banco Itau SA (Finance) 8.00%......................................... 450,000 201,208
Multicanal Participacoes SA ADR (Information Technology).............. 17,600 83,600
------------
474,658
------------
TOTAL PREFERRED STOCK (cost $683,083)................................. 474,658
------------
PRINCIPAL
BONDS & NOTES -- 2.0% AMOUNT
----------------------------------------------------------------------------------------------------
INDIA -- 0.4%
Mahindra + Mahindra Ltd. 5.00% 2001+.................................. $ 90,000 83,952
------------
TAIWAN, PROVINCE OF CHINA -- 1.6%
Delta Electronic, Inc. convertible, zero coupon 2004.................. 100,000 127,030
Formosa Chemicals & Fibre Co. convertible, 1.75% 2001................. 110,000 117,150
Nan Ya Plastics Corp. convertible, 1.75% 2001......................... 60,000 67,464
------------
311,644
------------
TOTAL BONDS & NOTES (cost $492,234)................................... 395,596
------------
</TABLE>
---------------------
107
<PAGE> 103
<TABLE>
<CAPTION>
RIGHTS -- 0.0% SHARES VALUE
<S> <C> <C>
----------------------------------------------------------------------------------------------------
KOREA -- 0.0%
Housing & Commercial Bank, Korea GDR (Finance)*(1).................... 423 $ 0
------------
</TABLE>
<TABLE>
<CAPTION>
WARRANTS -- 0.0%+
<S> <C> <C>
----------------------------------------------------------------------------------------------------
PHILIPPINES -- 0.0%
Belle Corp (Real Estate) 12/31/00(1).................................. 129,200 0
------------
TOTAL INVESTMENT SECURITIES (cost $20,857,487)........................ 17,289,794
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM SECURITIES -- 10.0% AMOUNT
<S> <C> <C>
----------------------------------------------------------------------------------------------------
FEDERAL AGENCY OBLIGATIONS -- 10.0%
Federal Home Loan Mortgage Discount Notes 5.50% due 12/11/97.......... $ 1,000,000 998,472
Federal Home Loan Mortgage Discount Notes 5.47% due 12/17/97.......... 1,000,000 997,569
------------
TOTAL SHORT-TERM SECURITIES (cost $1,996,041)......................... 1,996,041
------------
</TABLE>
<TABLE>
<CAPTION>
REPURCHASE AGREEMENT -- 3.9%
<S> <C> <C>
----------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 3.9%
Agreement with SBC Warburg, bearing interest of 5.67% dated 11/28/97,
to be repurchased 12/1/97 in the amount of $784,370 and
collateralized by $528,000 U.S. Treasury Notes 10.625% due 08/15/15
approximate aggregate value $799,918 (cost $784,000)................ 784,000 784,000
TOTAL INVESTMENTS --
(cost $23,637,528) 100.5% 20,069,835
Liabilities in excess of other assets -- (0.5) (90,742)
------- ------------
NET ASSETS -- 100.0% $19,979,093
======= =============
</TABLE>
-----------------------------
+ Non-income producing securities
* Resale restricted to qualified institutional buyers
(1) Fair valued securities; see Note 2
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
GDS -- Global Depository Shares
See Notes to Financial Statements
- ---------------------
108
<PAGE> 104
- ---------------------
SUNAMERICA SERIES TRUST
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
CASH CORPORATE HIGH-YIELD
MANAGEMENT GLOBAL BOND BOND BOND
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investment securities, at value*........................ $ -- $ 80,131,563 $60,368,655 $186,227,046
Short-term securities*.................................. 141,966,188 3,047,000 1,287,574 --
Repurchase agreements (cost equals market).............. 13,341,000 -- -- 11,659,000
Cash.................................................... 98 73 237 1,449,115
Foreign currency........................................ -- -- -- --
Receivables for--
Dividends and accrued interest......................... 765,335 2,126,992 1,280,323 3,412,574
Fund shares sold....................................... 554,205 63,875 161,673 378,474
Foreign currency contracts............................. -- 9,797,009 -- --
Sales of investments................................... -- 6,486,159 59,512 5
Prepaid expenses........................................ 6,304 32,422 1,750 5,592
Deferred organizational expenses........................ 1,220 686 686 672
Unrealized appreciation on forward foreign currency
contracts.............................................. -- 2,053,926 -- --
------------ ------------ ----------- ------------
156,634,350 103,739,705 63,160,410 203,132,478
------------ ------------ ----------- ------------
LIABILITIES:
Payables for--
Fund shares redeemed................................... 378,564 25,974 15,392 102,928
Management fees........................................ 74,645 50,539 33,758 102,750
Foreign currency contracts............................. -- 9,857,325 -- --
Purchases of investments............................... -- 3,923,947 785,637 7,220,901
Unrealized depreciation on forward foreign currency
contracts.............................................. -- 761,859 -- --
Other accrued expenses.................................. 61,687 77,538 54,005 66,893
------------ ------------ ----------- ------------
514,896 14,697,182 888,792 7,493,472
------------ ------------ ----------- ------------
NET ASSETS.............................................. $156,119,454 $ 89,042,523 $62,271,618 $195,639,006
============ ============ =========== ============
Shares of beneficial interest outstanding (unlimited
shares authorized)..................................... 14,542,029 7,733,604 5,395,202 16,552,238
Net asset value per share............................... $ 10.74 $ 11.51 $ 11.54 $ 11.82
============ ============ =========== ============
COMPOSITION OF NET ASSETS:
Capital paid in......................................... $149,355,823 $ 80,711,428 $57,398,970 $178,477,367
Accumulated undistributed net investment income......... 6,768,071 5,020,328 3,269,106 13,972,776
Accumulated undistributed net realized gain (loss) on
investments, future contracts and options contracts.... (684) 1,605,904 (274,142) 1,523,707
Unrealized appreciation (depreciation) on investments... (3,756) 423,598 1,877,684 1,665,156
Unrealized foreign exchange gain on other assets and
liabilities............................................ -- 1,281,265 -- --
------------ ------------ ----------- ------------
$156,119,454 $ 89,042,523 $62,271,618 $195,639,006
============ ============ =========== ============
---------------
* Cost
Investment securities.................................. $ -- $ 79,707,965 $58,491,965 $184,561,890
============ ============ =========== ============
Short-term securities.................................. $141,969,944 $ 3,047,000 $ 1,286,580 $ --
============ ============ =========== ============
BALANCED/
<CAPTION> PHOENIX
WORLDWIDE SUNAMERICA INVESTMENT
HIGH INCOME BALANCED COUNSEL
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investment securities, at value*........................ $119,757,721 $42,169,455 $ 85,111,395
Short-term securities*.................................. -- -- 15,319,522
Repurchase agreements (cost equals market).............. 8,097,000 2,364,000 --
Cash.................................................... 232 1,595 3,977
Foreign currency........................................ 59 -- --
Receivables for--
Dividends and accrued interest......................... 2,303,684 246,894 321,617
Fund shares sold....................................... 176,382 270,950 140,918
Foreign currency contracts............................. -- -- --
Sales of investments................................... 851,147 -- 1,451,011
Prepaid expenses........................................ 3,157 871 2,928
Deferred organizational expenses........................ -- -- --
Unrealized appreciation on forward foreign currency
contracts.............................................. -- -- --
------------ ----------- ------------
131,189,382 45,053,765 102,351,368
------------ ----------- ------------
LIABILITIES:
Payables for--
Fund shares redeemed................................... 58,525 8,251 25,768
Management fees........................................ 98,981 26,829 52,534
Foreign currency contracts............................. -- -- --
Purchases of investments............................... 5,748,483 362,849 6,502,832
Unrealized depreciation on forward foreign currency
contracts.............................................. -- -- --
Other accrued expenses.................................. 59,072 34,680 49,198
------------ ----------- ------------
5,965,061 432,609 6,630,332
------------ ----------- ------------
NET ASSETS.............................................. $125,224,321 $44,621,156 $ 95,721,036
============ =========== ============
Shares of beneficial interest outstanding (unlimited
shares authorized)..................................... 9,486,861 3,317,577 6,489,618
Net asset value per share............................... $ 13.20 $ 13.45 $ 14.75
============ =========== ============
COMPOSITION OF NET ASSETS:
Capital paid in......................................... $113,325,866 $38,981,052 $ 79,442,975
Accumulated undistributed net investment income......... 6,387,381 461,406 2,153,212
Accumulated undistributed net realized gain (loss) on
investments, future contracts and options contracts.... 7,631,219 1,613,564 9,547,417
Unrealized appreciation (depreciation) on investments... (2,120,145) 3,565,134 4,577,432
Unrealized foreign exchange gain on other assets and
liabilities............................................ -- -- --
------------ ----------- ------------
$125,224,321 $44,621,156 $ 95,721,036
============ =========== ============
---------------
* Cost
Investment securities.................................. $121,877,866 $38,604,321 $ 80,533,932
============ =========== ============
Short-term securities.................................. $ -- $ -- $ 15,319,553
============ =========== ============
</TABLE>
See Notes to Financial Statements
---------------------
109
<PAGE> 105
- ---------------------
SUNAMERICA SERIES TRUST
STATEMENT OF ASSETS AND LIABILITIES (continued)
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
ASSET GROWTH- FEDERATED
ALLOCATION UTILITY INCOME VALUE
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investment securities, at value*........................ $496,830,860 $21,645,823 $565,192,040 $56,166,372
Short-term securities*.................................. 10,631,862 2,801,000 61,326,116 3,130,000
Repurchase agreements (cost equals market).............. 52,504,000 -- -- --
Cash.................................................... 945,534 882 459 823
Foreign currency........................................ -- 877 -- --
Receivables for--
Dividends and accrued interest......................... 2,742,334 55,313 568,010 103,415
Fund shares sold....................................... 791,649 48,346 958,580 153,937
Sales of investments................................... 12,276,079 110,198 -- 273,156
Variation margin on futures contracts.................. -- -- -- --
Prepaid expenses........................................ 37,340 209 15,996 1,099
Deferred organizational expenses........................ 686 211 672 --
Due from Adviser........................................ -- 1,169 -- --
-------------------------------------------------------------
576,760,344 24,664,028 628,061,873 59,828,802
-------------------------------------------------------------
LIABILITIES:
Payables for--
Fund shares redeemed................................... 128,952 9,738 268,316 10,747
Management fees........................................ 255,970 13,108 288,149 34,009
Purchases of investments............................... 49,666,164 241,720 5,342,717 720,993
Variation margin on futures contracts.................. 2,404 -- 3,200 --
Unrealized depreciation on currency swap agreement...... 8,410 -- -- --
Other accrued expenses.................................. 113,049 33,335 96,995 39,109
-------------------------------------------------------------
50,174,949 297,901 5,999,377 804,858
-------------------------------------------------------------
NET ASSETS.............................................. $526,585,395 $24,366,127 $622,062,496 $59,023,944
=============================================================
Shares of beneficial interest outstanding (unlimited
shares authorized)..................................... 32,487,541 1,887,046 29,882,556 4,247,184
Net asset value per share............................... $ 16.21 $ 12.91 $ 20.82 $ 13.90
=============================================================
COMPOSITION OF NET ASSETS:
Capital paid in......................................... $413,144,255 $21,043,201 $438,003,681 $50,587,529
Accumulated undistributed net investment income......... 11,185,024 416,193 4,138,634 322,155
Accumulated undistributed net realized gain on
investments, future contracts and options contracts.... 51,414,744 853,295 31,704,944 1,769,566
Unrealized appreciation on investments.................. 50,593,662 2,053,447 148,026,437 6,344,694
Unrealized foreign exchange gain (loss) on other assets
and liabilities........................................ 627 (9) -- --
Unrealized appreciation on futures contracts and
currency swap agreements............................... 247,083 -- 188,800 --
-------------------------------------------------------------
$526,585,395 $24,366,127 $622,062,496 $59,023,944
=============================================================
---------------
* Cost
Investment securities.................................. $446,121,825 $19,592,376 $417,165,603 $49,821,678
=============================================================
Short-term securities.................................. $ 10,747,235 $ 2,801,000 $ 61,326,116 $ 3,130,000
=============================================================
<CAPTION>
GROWTH/
PHOENIX
VENTURE PUTNAM INVESTMENT
VALUE GROWTH COUNSEL
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investment securities, at value*........................ $1,012,053,997 $222,541,578 $215,405,981
Short-term securities*.................................. 126,103,921 -- 2,214,752
Repurchase agreements (cost equals market).............. -- 12,228,000 --
Cash.................................................... 736,601 221 2,557
Foreign currency........................................ -- -- --
Receivables for--
Dividends and accrued interest......................... 804,672 164,008 127,576
Fund shares sold....................................... 1,873,756 399,157 98,218
Sales of investments................................... -- 5,462,669 3,842,655
Variation margin on futures contracts.................. -- -- --
Prepaid expenses........................................ 35,473 6,843 7,371
Deferred organizational expenses........................ -- 672 1,248
Due from Adviser........................................ -- -- --
------------- ----------- -----------
1,141,608,420 240,803,148 221,700,358
------------- ----------- -----------
LIABILITIES:
Payables for--
Fund shares redeemed................................... 249,291 194,394 49,264
Management fees........................................ 665,592 155,558 115,904
Purchases of investments............................... 465,655 5,665,775 2,972,257
Variation margin on futures contracts.................. -- -- --
Unrealized depreciation on currency swap agreement...... -- -- --
Other accrued expenses.................................. 174,595 61,207 67,115
-------------- ------------ ------------
1,555,133 6,076,934 3,204,540
-------------- ------------ ------------
NET ASSETS.............................................. $1,140,053,287 $234,726,214 $218,495,818
============== ============ ============
Shares of beneficial interest outstanding (unlimited
shares authorized)..................................... 53,109,248 12,258,209 13,988,236
Net asset value per share............................... $ 21.47 $ 19.15 $ 15.62
============== ============ ============
COMPOSITION OF NET ASSETS:
Capital paid in......................................... $ 849,021,743 $145,094,700 $155,204,329
Accumulated undistributed net investment income......... 7,883,673 333,117 1,533,739
Accumulated undistributed net realized gain on
investments, future contracts and options contracts.... 41,535,418 43,684,393 36,995,013
Unrealized appreciation on investments.................. 241,611,999 45,614,004 24,762,737
Unrealized foreign exchange gain (loss) on other assets
and liabilities........................................ 454 -- --
Unrealized appreciation on futures contracts and
currency swap agreements............................... -- -- --
-------------- ------------ ------------
$1,140,053,287 $234,726,214 $218,495,818
--------------- ============== ============ ============
* Cost
Investment securities.................................. $ 770,441,998 $176,927,574 $190,643,244
============== ============ ============
Short-term securities.................................. $ 126,103,921 $ -- $ 2,214,752
============== ============ ============
</TABLE>
See Notes to Financial Statements
- ---------------------
110
<PAGE> 106
- ---------------------
SUNAMERICA SERIES TRUST
STATEMENT OF ASSETS AND LIABILITIES (continued)
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL
ALLIANCE GLOBAL GROWTH AND DIVERSIFIED
GROWTH EQUITIES INCOME EQUITIES
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investment securities, at value*........................ $698,295,444 $327,787,768 $40,266,738 $205,247,862
Short-term securities*.................................. 8,973,304 11,473,000 1,994,201 --
Repurchase agreements (cost equals market).............. -- -- 917,000 44,550,000
Cash.................................................... 813 385,923 392 16,023
Foreign currency........................................ -- 345,112 -- 437,864
Receivables for--
Dividends and accrued interest......................... 325,867 557,501 58,554 671,626
Fund shares sold....................................... 1,278,511 264,049 199,328 305,909
Foreign currency contracts............................. -- -- 596,320 4,052,939
Sales of investments................................... 1,924,478 362,414 208,346 787,282
Prepaid expenses........................................ 17,936 10,891 615 8,524
Deferred organizational expenses........................ 672 672 5,859 --
Unrealized appreciation on forward foreign currency
contracts.............................................. -- 1,468,715 161 1,779,620
Due from Adviser........................................ -- -- 14,713 --
------------ ------------ ----------- ------------
710,817,025 342,656,045 44,262,227 257,857,649
------------ ------------ ----------- ------------
LIABILITIES:
Payables for--
Fund shares redeemed................................... 244,428 177,177 24,750 58,637
Management fees........................................ 323,021 210,552 32,596 202,250
Foreign currency contracts............................. -- -- 594,996 4,045,331
Purchases of investments............................... 5,598,029 -- 542,281 3,724,039
Variation margin on futures contract................... 600 -- -- --
Unrealized depreciation on forward foreign currency
contracts.............................................. -- 378,320 125,209 564,241
Other accrued expenses.................................. 117,680 250,802 98,433 336,439
------------ ------------ ----------- ------------
6,283,758 1,016,851 1,418,265 8,930,937
------------ ------------ ----------- ------------
NET ASSETS.............................................. $704,533,267 $341,639,194 $42,843,962 $248,926,712
============ ============ =========== ============
Shares of beneficial interest outstanding (unlimited
shares authorized)..................................... 31,224,923 21,381,428 4,115,661 21,967,802
Net asset value per share............................... $ 22.56 $ 15.98 $ 10.41 $ 11.33
============ ============ =========== ============
COMPOSITION OF NET ASSETS:
Capital paid in......................................... $519,726,389 $275,796,920 $42,824,015 $236,980,243
Accumulated undistributed net investment income......... 1,954,191 1,870,601 188,142 7,621,922
Accumulated undistributed net realized gain (loss) on
investments, future contracts and options contracts.... 81,181,841 25,413,638 219,703 (7,167,648)
Unrealized appreciation (depreciation) on investments... 101,678,346 37,474,152 (263,491) 10,283,503
Unrealized foreign exchange gain (loss) on other assets
and liabilities........................................ -- 1,083,883 (124,407) 1,208,692
Unrealized depreciation on futures contracts............ (7,500) -- -- --
------------ ------------ ----------- ------------
$704,533,267 $341,639,194 $42,843,962 $248,926,712
============ ============ =========== ============
---------------
* Cost
Investment securities.................................. $596,617,098 $290,313,616 $40,530,229 $194,964,359
============ ============ =========== ============
Short-term securities.................................. $ 8,973,304 $ 11,473,000 $ 1,994,201 $ --
============ ============ =========== ============
<CAPTION>
REAL AGGRESSIVE EMERGING
ESTATE GROWTH MARKETS
-----------------------------------------------------------------------------------------------------------------------
<S> <C><C> <C> <C>
ASSETS:
Investment securities, at value*........................ $25,931,570 $100,618,860 $17,289,794
Short-term securities*.................................. 3,730,000 -- 1,996,041
Repurchase agreements (cost equals market).............. -- 5,956,000 784,000
Cash.................................................... 3,137 300 5,153
Foreign currency........................................ -- -- --
Receivables for--
Dividends and accrued interest......................... 13,233 38,215 16,583
Fund shares sold....................................... 120,720 370,728 32,252
Foreign currency contracts............................. -- -- 370,739
Sales of investments................................... -- 1,548,048 267,432
Prepaid expenses........................................ 422 1,146 390
Deferred organizational expenses........................ 5,859 1,177 5,859
Unrealized appreciation on forward foreign currency
contracts.............................................. -- -- --
Due from Adviser........................................ -- -- 18,257
----------- ------------ -----------
29,804,941 108,534,474 20,786,500
----------- ------------ -----------
LIABILITIES:
Payables for--
Fund shares redeemed................................... 6,381 86,408 2,709
Management fees........................................ 19,802 64,448 19,791
Foreign currency contracts............................. -- -- 372,893
Purchases of investments............................... 181,402 4,735,724 331,558
Variation margin on futures contract................... -- -- --
Unrealized depreciation on forward foreign currency
contracts.............................................. -- -- --
Other accrued expenses.................................. 32,498 44,430 80,456
----------- ------------ -----------
240,083 4,931,010 807,407
----------- ------------ -----------
NET ASSETS.............................................. $29,564,858 $103,603,464 $19,979,093
=========== ============ ===========
Shares of beneficial interest outstanding (unlimited
shares authorized)..................................... 2,565,065 8,810,027 2,488,005
Net asset value per share............................... $ 11.53 $ 11.76 $ 8.03
=========== ============ ===========
COMPOSITION OF NET ASSETS:
Capital paid in......................................... $27,980,419 $ 92,229,280 $24,387,385
Accumulated undistributed net investment income......... 239,716 -- 170,105
Accumulated undistributed net realized gain (loss) on
investments, future contracts and options contracts.... 22,378 (3,535,686) (1,010,674)
Unrealized appreciation (depreciation) on investments... 1,322,345 14,909,870 (3,567,693)
Unrealized foreign exchange gain (loss) on other assets
and liabilities........................................ -- -- (30)
Unrealized depreciation on futures contracts............ -- -- --
----------- ------------ -----------
$29,564,858 $103,603,464 $19,979,093
=========== ============ ===========
---------------
* Cost
Investment securities.................................. $24,609,225 $ 85,708,990 $20,857,487
=========== ============ ===========
Short-term securities.................................. $ 3,730,000 $ -- $ 1,996,041
=========== ============ ===========
</TABLE>
See Notes to Financial Statements
---------------------
111
<PAGE> 107
- ---------------------
SUNAMERICA SERIES TRUST
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1997
<TABLE>
<CAPTION>
BALANCED/
PHOENIX
CASH GLOBAL CORPORATE HIGH-YIELD WORLDWIDE SUNAMERICA INVESTMENT
MANAGEMENT BOND BOND BOND HIGH INCOME BALANCED COUNSEL
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME:
Interest..................... $7,617,078 $4,309,054 $3,644,019 $15,031,427 $ 7,808,222 $ 508,106 $ 2,375,878
Dividends.................... -- -- 55,418 84,459 139,982 212,724 453,642
--------------------------------------------------------------------------------------------
Total income*............ 7,617,078 4,309,054 3,699,437 15,115,886 7,948,204 720,830 2,829,520
--------------------------------------------------------------------------------------------
EXPENSES:
Management fees.............. 718,297 550,533 325,988 1,000,566 915,682 188,724 558,675
Custodian fees............... 62,095 79,040 53,830 63,910 33,230 36,045 66,585
Reports to investors......... 22,755 22,675 13,035 35,555 23,980 6,920 19,715
Auditing fees................ 21,825 30,285 25,845 24,815 31,065 21,430 20,370
Amortization of
organizational expenses.... 7,172 3,953 3,953 3,822 -- -- --
Legal fees................... 2,026 1,003 569 1,632 1,279 827 1,026
Trustees' fees............... 1,350 586 356 928 964 331 740
Interest expense............. -- -- -- 963 -- -- --
Other expenses............... 5,670 2,590 1,654 3,881 2,025 1,215 2,476
--------------------------------------------------------------------------------------------
Total expenses............. 841,190 690,665 425,230 1,136,072 1,008,225 255,492 669,587
--------------------------------------------------------------------------------------------
Net investment income.......... 6,775,888 3,618,389 3,274,207 13,979,814 6,939,979 465,338 2,159,933
--------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCIES:
Net realized gain on
investments#............... 925 2,772,480 505,509 9,993,528 8,159,728 1,624,801 9,676,697
Net realized gain (loss) on
futures contracts and
options contracts.......... -- (11,209) -- -- -- -- 24,811
Net realized foreign exchange
gain (loss) on other assets
and liabilities............ -- 758,012 -- -- (120,494) -- --
Change in unrealized
appreciation/ depreciation
on investments............. 2,661 (1,617,087) 718,565 (3,228,125) (5,021,473) 2,742,326 (1,288,697)
Change in unrealized foreign
exchange gain on other
assets and liabilities..... -- 956,961 -- -- 4,477 -- --
--------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments and
foreign currencies........... 3,586 2,859,157 1,224,074 6,765,403 3,022,238 4,367,127 8,412,811
--------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.... $6,779,474 $6,477,546 $4,498,281 $20,745,217 $ 9,962,217 $4,832,465 $10,572,744
============================================================================================
---------------
* Net of foreign withholding
taxes on interest and
dividends of................. $ -- $ 31,949 $ 4,216 $ 5,542 $ 1,997 $ 1,879 $ 1,276
============================================================================================
# Net of foreign withholding
taxes on capital gains of.... $ -- $ -- $ -- $ -- $ 12,564 $ -- $ --
============================================================================================
</TABLE>
See Notes to Financial Statements
- ---------------------
112
<PAGE> 108
- ---------------------
SUNAMERICA SERIES TRUST
STATEMENT OF OPERATIONS (continued)
FOR THE YEAR ENDED NOVEMBER 30, 1997
<TABLE>
<CAPTION>
GROWTH/
PHOENIX
ASSET GROWTH- FEDERATED VENTURE PUTNAM INVESTMENT
ALLOCATION UTILITY INCOME VALUE VALUE GROWTH COUNSEL
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME:
Interest.................. $10,731,204 $ 46,740 $ 2,045,423 $ 82,192 $ 4,033,128 $ 435,543 $ 1,002,237
Dividends................. 4,181,705 517,013 5,129,759 570,525 10,198,724 1,612,893 1,994,394
------------------------------------------------------------------------------------------------
Total income*......... 14,912,909 563,753 7,175,182 652,717 14,231,852 2,048,436 2,996,631
------------------------------------------------------------------------------------------------
EXPENSES:
Management fees........... 2,556,963 100,647 2,784,063 254,016 5,952,702 1,565,910 1,299,894
Custodian fees............ 169,075 38,915 124,620 38,930 196,340 72,505 83,605
Reports to investors...... 71,425 4,171 82,450 8,880 131,790 44,240 45,415
Auditing fees............. 19,265 20,820 20,180 21,500 30,240 19,305 18,545
Amortization of
organizational
expenses................ 3,953 88 3,821 -- -- 3,822 3,821
Legal fees................ 4,222 620 4,278 725 8,410 2,637 1,761
Trustees' fees............ 3,925 164 4,460 397 7,623 1,578 1,605
Other expenses............ 9,701 1,018 9,484 1,251 14,155 5,322 6,063
------------------------------------------------------------------------------------------------
Total expenses before
reimbursement......... 2,838,529 166,443 3,033,356 325,699 6,341,260 1,715,319 1,460,709
Expenses reimbursed by
the investment
adviser............... -- (25,537) -- -- -- -- --
------------------------------------------------------------------------------------------------
Net investment income....... 12,074,380 422,847 4,141,826 327,018 7,890,592 333,117 1,535,922
------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCIES:
Net realized gain on
investments............. 52,482,439 861,442 26,372,396 1,792,042 41,598,668 43,697,799 36,951,244
Net realized gain on
futures contracts and
options contracts....... 1,244,312 -- 6,303,783 -- -- -- 194,755
Net realized foreign
exchange gain (loss) on
other assets and
liabilities............. (21,372) (3,129) 65 (1) 1,065 -- 22
Change in unrealized
appreciation/
depreciation on
investments............. 14,589,518 1,765,756 80,954,336 5,148,585 150,492,499 278,511 (2,566,236)
Change in unrealized
foreign exchange gain
(loss) on other assets
and liabilities......... 627 (148) -- -- 113 -- --
Change in unrealized
appreciation/
depreciation on futures
contracts, written
option contracts and
currency swap
agreements.............. (1,014,448) -- (773,581) -- -- -- --
------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments and
foreign currencies........ 67,281,076 2,623,921 112,856,999 6,940,626 192,092,345 43,976,310 34,579,785
------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS................ $79,355,456 $3,046,768 $116,998,825 $7,267,644 $199,982,937 $44,309,427 $36,115,707
================================================================================================
---------------
* Net of foreign withholding
taxes on interest and
dividends of.............. $ 4,004 $ 5,251 $ 22,784 $ 4,090 $ 76,913 $ 6,691 $ 50,798
================================================================================================
</TABLE>
See Notes to Financial Statements
---------------------
113
<PAGE> 109
- ---------------------
SUNAMERICA SERIES TRUST
STATEMENT OF OPERATIONS (continued)
FOR THE YEAR ENDED NOVEMBER 30, 1997
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL
ALLIANCE GLOBAL GROWTH AND DIVERSIFIED REAL AGGRESSIVE EMERGING
GROWTH EQUITIES INCOME+ EQUITIES ESTATE+ GROWTH MARKETS+
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME:
Interest.................. $ 268,071 $ 659,468 $ 100,461 $ 903,536 $ 59,009 $ 219,165 $ 74,404
Dividends................. 5,137,345 4,033,068 176,163 3,711,005 272,067 296,137 182,454
------------------------------------------------------------------------------------------------
Total income*......... 5,405,416 4,692,536 276,624 4,614,541 331,076 515,302 256,858
------------------------------------------------------------------------------------------------
EXPENSES:
Management fees........... 3,145,937 2,337,577 125,310 2,127,386 58,800 509,688 99,436
Custodian fees............ 154,780 452,185 94,075 640,475 18,225 51,540 74,350
Reports to investors...... 97,675 74,135 2,345 59,015 1,720 20,275 1,885
Auditing fees............. 22,605 27,750 28,785 29,575 18,795 21,285 28,815
Amortization of
organizational
expenses................ 3,821 3,821 515 -- 515 -- 515
Legal fees................ 5,368 2,830 690 2,438 690 1,110 690
Trustees' fees............ 4,807 2,700 335 1,765 82 652 144
Other expenses............ 10,066 7,633 937 3,249 922 1,763 923
------------------------------------------------------------------------------------------------
Total expenses before
reimbursement......... 3,445,059 2,908,631 252,992 2,863,903 99,749 606,313 206,758
Expenses reimbursed by
the investment
adviser............... -- -- (52,507) -- (7,874) -- (55,614)
------------------------------------------------------------------------------------------------
Net investment income
(loss).................... 1,960,357 1,783,905 76,139 1,750,638 239,201 (91,011) 105,714
------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCIES:
Net realized gain (loss)
on investments#......... 81,524,855 26,101,178 219,703 (6,297,980) 22,378 (2,829,784) (913,203)
Net realized gain on
futures contracts....... 1,379,640 -- -- -- -- -- --
Net realized foreign
exchange gain (loss) on
other assets and
liabilities............. -- 69,950 111,488 6,707,753 -- -- (33,595)
Change in unrealized
appreciation/
depreciation on
investments............. 34,851,529 7,084,155 (263,491) 3,910,822 1,322,345 11,818,657 (3,567,693)
Change in unrealized
foreign exchange gain
(loss) on other assets
and liabilities......... -- 1,082,247 (124,407) 211,844 -- -- (30)
Change in unrealized
appreciation/
depreciation on futures
contracts............... (405,000) -- -- -- -- -- --
------------------------------------------------------------------------------------------------
Net realized and
unrealized gain (loss)
on investments and
foreign currencies...... 117,351,024 34,337,530 (56,707) 4,532,439 1,344,723 8,988,873 (4,514,521)
------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS................ $119,311,381 $36,121,435 $ 19,432 $ 6,283,077 $1,583,924 $ 8,897,862 $(4,408,807)
================================================================================================
---------------
* Net of foreign withholding
taxes on interest and
dividends of.............. $ 24,621 $ 419,620 $ 15,908 $ 546,208 $ 261 $ 780 $ 6,795
================================================================================================
# Net of foreign withholding
taxes on capital gains
of........................ $ -- $ -- $ -- $ 33,058 $ -- $ -- $ 1,462
================================================================================================
+ Commenced operations June
2, 1997
</TABLE>
See Notes to Financial Statements
- ---------------------
114
<PAGE> 110
- ---------------------
SUNAMERICA SERIES TRUST
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED NOVEMBER 30, 1997
<TABLE>
<CAPTION>
CASH CORPORATE HIGH-YIELD
MANAGEMENT GLOBAL BOND BOND BOND
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income.................................. $ 6,775,888 $ 3,618,389 $ 3,274,207 $ 13,979,814
Net realized gain on investments....................... 925 2,772,480 505,509 9,993,528
Net realized gain (loss) on futures contracts and
options contracts..................................... -- (11,209) -- --
Net realized foreign exchange gain (loss) on other
assets and liabilities................................ -- 758,012 -- --
Change in unrealized appreciation/depreciation on
investments........................................... 2,661 (1,617,087) 718,565 (3,228,125)
Change in unrealized foreign exchange gain/loss on
other assets and liabilities.......................... -- 956,961 -- --
----------------------------------------------------------------
Net increase in net assets resulting from operations... 6,779,474 6,477,546 4,498,281 20,745,217
----------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income.................. (6,330,000) (4,705,000) (2,010,000) (8,890,000)
Distributions from net realized gain on investments... -- (275,000) -- --
----------------------------------------------------------------
Total dividends and distributions to shareholders...... (6,330,000) (4,980,000) (2,010,000) (8,890,000)
----------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold.............................. 811,621,512 33,606,421 33,721,704 154,271,836
Proceeds from shares issued for reinvestment of
dividends and distributions........................... 6,330,000 4,980,000 2,010,000 8,890,000
Cost of shares repurchased............................. (753,528,328) (19,262,861) (13,155,774) (92,607,140)
----------------------------------------------------------------
Net increase in net assets resulting from capital share
transactions.......................................... 64,423,184 19,323,560 22,575,930 70,554,696
----------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS........................... 64,872,658 20,821,106 25,064,211 82,409,913
NET ASSETS:
Beginning of period.................................... 91,246,796 68,221,417 37,207,407 113,229,093
----------------------------------------------------------------
End of period.......................................... $ 156,119,454 $ 89,042,523 $ 62,271,618 $195,639,006
=======================================================================
---------------
Accumulated undistributed net investment income........ $ 6,768,071 $ 5,020,328 $ 3,269,106 $ 13,972,776
=======================================================================
Shares issued and repurchased:
Sold................................................... 76,477,014 3,008,825 3,044,110 13,781,218
Issued in reinvestment of dividends and
distributions......................................... 611,004 466,729 190,883 837,889
Repurchased............................................ (71,025,735) (1,726,496) (1,194,160) (8,319,515)
----------------------------------------------------------------
Net increase........................................... 6,062,283 1,749,058 2,040,833 6,299,592
=======================================================================
<CAPTION>
BALANCED/
PHOENIX
WORLDWIDE SUNAMERICA INVESTMENT
HIGH INCOME BALANCED COUNSEL
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income.................................. $ 6,939,979 $ 465,338 $ 2,159,933
Net realized gain on investments....................... 8,159,728 1,624,801 9,676,697
Net realized gain (loss) on futures contracts and
options contracts..................................... -- -- 24,811
Net realized foreign exchange gain (loss) on other
assets and liabilities................................ (120,494) -- --
Change in unrealized appreciation/depreciation on
investments........................................... (5,021,473) 2,742,326 (1,288,697)
Change in unrealized foreign exchange gain/loss on
other assets and liabilities.......................... 4,477 -- --
------------ ---------- -----------
Net increase in net assets resulting from operations... 9,962,217 4,832,465 10,572,744
------------ ---------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income.................. (3,530,000) (60,000) (1,265,000)
Distributions from net realized gain on investments... (3,570,000) (40,000) (2,245,000)
------------ ---------- -----------
Total dividends and distributions to shareholders...... (7,100,000) (100,000) (3,510,000)
------------ ---------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold.............................. 122,351,745 35,534,375 34,361,684
Proceeds from shares issued for reinvestment of
dividends and distributions........................... 7,100,000 100,000 3,510,000
Cost of shares repurchased............................. (56,294,138) (5,969,478) (19,233,950)
------------ ---------- -----------
Net increase in net assets resulting from capital share
transactions.......................................... 73,157,607 29,664,897 18,637,734
------------ ---------- -----------
TOTAL INCREASE IN NET ASSETS........................... 76,019,824 34,397,362 25,700,478
NET ASSETS:
Beginning of period.................................... 49,204,497 10,223,794 70,020,558
------------ ---------- -----------
End of period.......................................... $125,224,321 $44,621,156 $ 95,721,036
============ ========== ===========
---------------
Accumulated undistributed net investment income........ $ 6,387,381 $ 461,406 $ 2,153,212
============ ========== ===========
Shares issued and repurchased:
Sold................................................... 9,588,842 2,875,391 2,475,607
Issued in reinvestment of dividends and
distributions......................................... 606,319 8,651 269,378
Repurchased............................................ (4,394,496) (485,362) (1,391,401)
------------ ---------- -----------
Net increase........................................... 5,800,665 2,398,680 1,353,584
============ ========== ===========
</TABLE>
See Notes to Financial Statements
---------------------
115
<PAGE> 111
- ---------------------
SUNAMERICA SERIES TRUST
STATEMENT OF CHANGES IN NET ASSETS (continued)
FOR THE YEAR ENDED NOVEMBER 30, 1997
<TABLE>
<CAPTION>
ASSET GROWTH- FEDERATED
ALLOCATION UTILITY INCOME VALUE
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income.................................. $ 12,074,380 $ 422,847 $ 4,141,826 $ 327,018
Net realized gain on investments....................... 52,482,439 861,442 26,372,396 1,792,042
Net realized gain on futures contracts and options
contracts............................................. 1,244,312 -- 6,303,783 --
Net realized foreign exchange gain (loss) on other
assets and liabilities................................ (21,372) (3,129) 65 (1)
Change in unrealized appreciation/depreciation on
investments........................................... 14,589,518 1,765,756 80,954,336 5,148,585
Change in unrealized foreign exchange gain/loss on
other assets and liabilities.......................... 627 (148) -- --
Change in unrealized appreciation/depreciation on
futures contracts, written options contracts and
currency swap agreements.............................. (1,014,448) -- (773,581) --
---------------------------------------------------------------
Net increase in net assets resulting from operations... 79,355,456 3,046,768 116,998,825 7,267,644
---------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income.................. (9,550,000) (85,000) (2,770,000) (45,000)
Distributions from net realized gain on investments... (21,740,000) (21,000) (15,835,000) --
---------------------------------------------------------------
Total dividends and distributions to shareholders...... (31,290,000) (106,000) (18,605,000) (45,000)
---------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold.............................. 198,007,930 19,909,225 281,329,957 53,713,595
Proceeds from shares issued for reinvestment of
dividends and distributions........................... 31,290,000 106,000 18,605,000 45,000
Cost of shares repurchased............................. (67,166,417) (4,888,513) (101,729,611) (14,416,823)
---------------------------------------------------------------
Net increase in net assets resulting from capital share
transactions.......................................... 162,131,513 15,126,712 198,205,346 39,341,772
---------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS........................... 210,196,969 18,067,480 296,599,171 46,564,416
NET ASSETS:
Beginning of period.................................... 316,388,426 6,298,647 325,463,325 12,459,528
---------------------------------------------------------------
End of period.......................................... $526,585,395 $24,366,127 $ 622,062,496 $ 59,023,944
===============================================================
---------------
Accumulated undistributed net investment income........ $ 11,185,024 $ 416,193 $ 4,138,634 $ 322,155
===============================================================
Shares issued and repurchased:
Sold................................................... 12,863,082 1,709,480 14,863,689 4,266,674
Issued in reinvestment of dividends and
distributions......................................... 2,220,724 9,628 1,105,466 3,896
Repurchased............................................ (4,387,167) (417,938) (5,441,625) (1,147,636)
---------------------------------------------------------------
Net increase........................................... 10,696,639 1,301,170 10,527,530 3,122,934
===============================================================
</TABLE>
<TABLE>
<CAPTION>
GROWTH/
PHOENIX
VENTURE PUTNAM INVESTMENT
VALUE GROWTH COUNSEL
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income.................................. $ 7,890,592 $ 333,117 $ 1,535,922
Net realized gain on investments....................... 41,598,668 43,697,799 36,951,244
Net realized gain on futures contracts and options
contracts............................................. -- -- 194,755
Net realized foreign exchange gain (loss) on other
assets and liabilities................................ 1,065 -- 22
Change in unrealized appreciation/depreciation on
investments........................................... 150,492,499 278,511 (2,566,236)
Change in unrealized foreign exchange gain/loss on
other assets and liabilities.......................... 113 -- --
Change in unrealized appreciation/depreciation on
futures contracts, written options contracts and
currency swap agreements.............................. -- -- --
-------------- ----------- ------------
Net increase in net assets resulting from operations... 199,982,937 44,309,427 36,115,707
-------------- ----------- ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income.................. (3,390,000) -- (1,325,000)
Distributions from net realized gain on investments... (9,745,000) (5,465,000) (16,255,000)
-------------- ----------- ------------
Total dividends and distributions to shareholders...... (13,135,000) (5,465,000) (17,580,000)
-------------- ----------- ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold.............................. 607,026,485 84,068,227 36,491,255
Proceeds from shares issued for reinvestment of
dividends and distributions........................... 13,135,000 5,465,000 17,580,000
Cost of shares repurchased............................. (183,369,506) (53,724,485) (40,478,722)
-------------- ----------- ------------
Net increase in net assets resulting from capital share
transactions.......................................... 436,791,979 35,808,742 13,592,533
-------------- ------------ ------------
TOTAL INCREASE IN NET ASSETS........................... 623,639,916 74,653,169 32,128,240
NET ASSETS:
Beginning of period.................................... 516,413,371 160,073,045 186,367,578
-------------- ----------- ------------
End of period.......................................... $1,140,053,287 $234,726,214 $218,495,818
============== =========== ============
---------------
Accumulated undistributed net investment income........ $ 7,883,673 $ 333,117 $ 1,533,739
============== =========== ============
Shares issued and repurchased:
Sold................................................... 31,474,224 4,939,017 2,470,784
Issued in reinvestment of dividends and
distributions......................................... 755,319 357,190 1,337,900
Repurchased............................................ (9,684,502) (3,227,119) (2,775,949)
-------------- ----------- ------------
Net increase........................................... 22,545,041 2,069,088 1,032,735
============== =========== ============
</TABLE>
See Notes to Financial Statements
- ---------------------
116
<PAGE> 112
- ---------------------
SUNAMERICA SERIES TRUST
STATEMENT OF CHANGES IN NET ASSETS (continued)
FOR THE YEAR ENDED NOVEMBER 30, 1997
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL
ALLIANCE GLOBAL GROWTH AND DIVERSIFIED
GROWTH EQUITIES INCOME+ EQUITIES
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............................ $ 1,960,357 $ 1,783,905 $ 76,139 $ 1,750,638
Net realized gain (loss) on investments................. 81,524,855 26,101,178 219,703 (6,297,980)
Net realized gain on futures contracts and options
contracts.............................................. 1,379,640.... -- -- --
Net realized foreign exchange gain (loss) on other
assets and liabilities................................. -- 69,950 111,488 6,707,753
Change in unrealized appreciation/depreciation on
investments............................................ 34,851,529 7,084,155 (263,491) 3,910,822
Change in unrealized foreign exchange gain/loss on other
assets and liabilities................................. -- 1,082,247 (124,407) 211,844
Change in unrealized appreciation/depreciation on
futures contracts, options contracts and currency swap
agreements............................................. (405,000) -- -- --
---------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations............................................. 119,311,381 36,121,435 19,432 6,283,077
---------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
Dividends from net investment income................... (1,200,000) (2,305,000) -- (5,175,000)
Distributions from net realized gain on investments.... (23,710,000) (12,550,000) -- (1,715,000)
---------------------------------------------------------
Total dividends and distributions to shareholders....... (24,910,000) (14,855,000) -- (6,890,000)
---------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold............................... 393,697,806 147,050,332 47,363,333 148,423,226
Proceeds from shares issued for reinvestment of
dividends and distributions............................ 24,910,000 14,855,000 -- 6,890,000
Cost of shares repurchased.............................. (189,842,593) (88,014,579) (4,538,803) (62,787,984)
---------------------------------------------------------
Net increase in net assets resulting from capital share
transactions........................................... 228,765,213 73,890,753 42,824,530 92,525,242
---------------------------------------------------------
TOTAL INCREASE IN NET ASSETS............................ 323,166,594 95,157,188 42,843,962 91,918,319
NET ASSETS:
Beginning of period..................................... 381,366,673 246,482,006 -- 157,008,393
---------------------------------------------------------
End of period........................................... $ 704,533,267 $341,639,194 $42,843,962 $248,926,712
=========================================================
---------------
Accumulated undistributed net investment income......... $ 1,954,191 $ 1,870,601 $ 188,142 $ 7,621,922
=========================================================
Shares issued and repurchased:
Sold.................................................... 18,866,011 9,425,673 4,546,734 12,963,775
Issued in reinvestment of dividends and distributions... 1,397,084 1,045,391 -- 646,315
Repurchased............................................. (9,403,821) (5,605,026) (431,073) (5,452,782)
---------------------------------------------------------
Net increase............................................ 10,859,274 4,866,038 4,115,661 8,157,308
=========================================================
---------------
+ Commenced operations June 2, 1997
<CAPTION>
REAL AGGRESSIVE EMERGING
ESTATE+ GROWTH MARKETS+
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............................ $ 239,201 $ (91,011) $ 105,714
Net realized gain (loss) on investments................. 22,378 (2,829,784) (913,203)
Net realized gain on futures contracts and options
contracts.............................................. -- -- --
Net realized foreign exchange gain (loss) on other
assets and liabilities................................. -- -- (33,595)
Change in unrealized appreciation/depreciation on
investments............................................ 1,322,345 11,818,657 (3,567,693)
Change in unrealized foreign exchange gain/loss on other
assets and liabilities................................. -- -- (30)
Change in unrealized appreciation/depreciation on
futures contracts, options contracts and currency swap
agreements............................................. -- -- --
----------- ------------ -----------
Net increase (decrease) in net assets resulting from
operations............................................. 1,583,924 8,897,862 (4,408,807)
----------- ------------ -----------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
Dividends from net investment income................... -- (43,000) --
Distributions from net realized gain on investments.... -- -- --
----------- ------------ -----------
Total dividends and distributions to shareholders....... -- (43,000) --
----------- ------------ -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold............................... 32,073,915 93,642,244 26,523,263
Proceeds from shares issued for reinvestment of
dividends and distributions............................ -- 43,000 --
Cost of shares repurchased.............................. (4,092,981) (34,060,944) (2,135,363)
----------- ------------ -----------
Net increase in net assets resulting from capital share
transactions........................................... 27,980,934 59,624,300 24,387,900
----------- ------------ -----------
TOTAL INCREASE IN NET ASSETS............................ 29,564,858 68,479,162 19,979,093
NET ASSETS:
Beginning of period..................................... -- 35,124,302 --
----------- ------------ -----------
End of period........................................... $29,564,858 $103,603,464 $19,979,093
=========== ============ ===========
Accumulated undistributed net investment income......... $ 239,716 $ -- $ 170,105
=========== ============ ===========
Shares issued and repurchased:
Sold.................................................... 2,929,568 8,405,394 2,715,811
Issued in reinvestment of dividends and distributions... -- 4,470 --
Repurchased............................................. (364,503) (2,989,260) (227,806)
----------- ------------ -----------
Net increase............................................ 2,565,065 5,420,604 2,488,005
=========== ============ ===========
</TABLE>
---------------
+ Commenced operations June 2, 1997
See Notes to Financial Statements
---------------------
117
<PAGE> 113
- ---------------------
SUNAMERICA SERIES TRUST
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED NOVEMBER 30, 1996
<TABLE>
<CAPTION>
CASH GLOBAL CORPORATE HIGH-YIELD
MANAGEMENT BOND BOND BOND
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income.................................. $ 6,327,403 $ 3,420,685 $ 2,009,395 $ 8,892,022
Net realized gain (loss) on investments................ (1,609) 845,133 (242,797) 567,983
Net realized gain (loss) on futures and options
contracts............................................. -- 59,164 (180,880) --
Net realized foreign exchange gain (loss) on other
assets and liabilities................................ -- 1,545,047 -- --
Change in unrealized appreciation/depreciation on
investments........................................... (9,491) 1,124,599 647,548 4,227,884
Change in unrealized foreign exchange gain/loss on
other assets and liabilities.......................... -- (253,318) -- --
Change in unrealized appreciation/depreciation on
futures contracts..................................... -- -- (39,889) --
----------------------------------------------------------------
Net increase in net assets resulting from operations... 6,316,303 6,741,310 2,193,377 13,687,889
----------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income.................. (4,240,000) (4,060,000) (1,225,000) (7,420,000)
Distributions from net realized gain on investments... (4,750) -- -- --
----------------------------------------------------------------
Total dividends and distributions to shareholders...... (4,244,750) (4,060,000) (1,225,000) (7,420,000)
----------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold.............................. 615,571,205 26,461,284 20,121,281 89,355,894
Proceeds from shares issued for reinvestment of
dividends and distributions........................... 4,244,750 4,060,000 1,225,000 7,420,000
Cost of shares repurchased............................. (621,371,905) (24,740,221) (14,581,771) (71,988,357)
----------------------------------------------------------------
Net increase (decrease) in net assets resulting from
capital share transactions............................ (1,555,950) 5,781,063 6,764,510 24,787,537
----------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS........................... 515,603 8,462,373 7,732,887 31,055,426
NET ASSETS:
Beginning of period.................................... 90,731,193 59,759,044 29,474,520 82,173,667
----------------------------------------------------------------
End of period.......................................... $ 91,246,796 $ 68,221,417 $ 37,207,407 $113,229,093
================================================================
---------------
Accumulated undistributed net investment income........ $ 6,322,183 $ 4,377,089 $ 2,004,899 $ 8,882,962
================================================================
Shares issued and repurchased:
Sold................................................... 57,928,895 2,437,840 1,891,179 8,529,658
Issued in reinvestment of dividends and
distributions......................................... 408,149 391,137 118,015 744,233
Repurchased............................................ (58,340,347) (2,268,851) (1,379,014) (6,827,580)
----------------------------------------------------------------
Net increase (decrease)................................ (3,303) 560,126 630,180 2,446,311
================================================================
<CAPTION>
WORLDWIDE
HIGH SUNAMERICA
INCOME BALANCED#
----------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................. $ 3,853,929 $ 56,068
Net realized gain (loss) on investments................ 2,824,669 28,763
Net realized gain (loss) on futures and options
contracts............................................. -- --
Net realized foreign exchange gain (loss) on other
assets and liabilities................................ (245,282) --
Change in unrealized appreciation/depreciation on
investments........................................... 2,512,138 822,808
Change in unrealized foreign exchange gain/loss on
other assets and liabilities.......................... (4,477) --
Change in unrealized appreciation/depreciation on
futures contracts..................................... -- --
------------ -----------
Net increase in net assets resulting from operations... 8,940,977 907,639
------------ -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income.................. (1,700,000) --
Distributions from net realized gain on investments... (100,000) --
------------ -----------
Total dividends and distributions to shareholders...... (1,800,000) --
------------ -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold.............................. 48,071,872 11,344,623
Proceeds from shares issued for reinvestment of
dividends and distributions........................... 1,800,000 --
Cost of shares repurchased............................. (29,323,432) (2,028,468)
------------ -----------
Net increase (decrease) in net assets resulting from
capital share transactions............................ 20,548,440 9,316,155
------------ -----------
TOTAL INCREASE IN NET ASSETS........................... 27,689,417 10,223,794
NET ASSETS:
Beginning of period.................................... 21,515,080 --
------------ -----------
End of period.......................................... $ 49,204,497 $10,223,794
============ ===========
---------------
Accumulated undistributed net investment income........ $ 3,097,896 $ 56,068
============ ===========
Shares issued and repurchased:
Sold................................................... 4,060,525 1,113,491
Issued in reinvestment of dividends and
distributions......................................... 166,821 --
Repurchased............................................ (2,425,678) (194,594)
------------ -----------
Net increase (decrease)................................ 1,801,668 918,897
============ ===========
</TABLE>
# Commenced operations June 3, 1996
See Notes to Financial Statements
- ---------------------
118
<PAGE> 114
- ---------------------
SUNAMERICA SERIES TRUST
STATEMENT OF CHANGES IN NET ASSETS (continued)
FOR THE YEAR ENDED NOVEMBER 30, 1996
<TABLE>
<CAPTION>
BALANCED/
PHOENIX
INVESTMENT ASSET GROWTH-
COUNSEL ALLOCATION UTILITY# INCOME
-------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income.................................. $ 1,397,620 $ 9,136,961 $ 81,705 $ 2,773,321
Net realized gain (loss) on investments................ 2,107,376 19,730,122 12,853 13,516,427
Net realized gain on futures and options contracts..... -- 391,668 -- 1,426,165
Net realized foreign exchange gain (loss) on other
assets and liabilities................................ -- 89 (230) 29
Change in unrealized appreciation/depreciation on
investments........................................... 3,902,857 18,681,439 287,691 42,693,932
Change in unrealized foreign exchange gain/loss on
other assets and liabilities.......................... -- -- 139 --
Change in unrealized appreciation/depreciation on
futures contracts..................................... -- 1,166,581 -- 962,381
-------------------------------------------------------------
Net increase in net assets resulting from operations... 7,407,853 49,106,860 382,158 61,372,255
-------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income.................. (540,000) (5,505,000) -- (1,680,000)
Distributions from net realized gain on investments... (890,000) (6,805,000) -- (5,975,000)
-------------------------------------------------------------
Total dividends and distributions to shareholders...... (1,430,000) (12,310,000) -- (7,655,000)
-------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold.............................. 44,916,086 108,836,939 6,090,461 145,602,473
Proceeds from shares issued for reinvestment of
dividends and distributions........................... 1,430,000 12,310,000 -- 7,655,000
Cost of shares repurchased............................. (14,731,916) (41,391,763) (173,972) (52,792,476)
-------------------------------------------------------------
Net increase in net assets resulting from capital share
transactions.......................................... 31,614,170 79,755,176 5,916,489 100,464,997
-------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS........................... 37,592,023 116,552,036 6,298,647 154,182,252
NET ASSETS:
Beginning of period.................................... 32,428,535 199,836,390 -- 171,281,073
-------------------------------------------------------------
End of period.......................................... $ 70,020,558 $316,388,426 $6,298,647 $325,463,325
=============================================================
---------------
Accumulated undistributed net investment income........ $ 1,258,279 $ 8,660,644 $ 81,475 $ 2,766,743
=============================================================
Shares issued and repurchased:
Sold................................................... 3,604,718 8,296,399 602,909 9,953,598
Issued in reinvestment of dividends and
distributions......................................... 117,502 970,055 -- 541,755
Repurchased............................................ (1,184,892) (3,164,619) (17,033) (3,630,349)
-------------------------------------------------------------
Net increase........................................... 2,537,328 6,101,835 585,876 6,865,004
=============================================================
<CAPTION>
FEDERATED VENTURE
VALUE# VALUE
--------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................. $ 40,137 $ 3,640,938
Net realized gain (loss) on investments................ (22,475) 9,692,354
Net realized gain on futures and options contracts..... -- --
Net realized foreign exchange gain (loss) on other
assets and liabilities................................ -- 2,021
Change in unrealized appreciation/depreciation on
investments........................................... 1,196,109 75,918,377
Change in unrealized foreign exchange gain/loss on
other assets and liabilities.......................... -- 341
Change in unrealized appreciation/depreciation on
futures contracts..................................... -- --
----------- ------------
Net increase in net assets resulting from operations... 1,213,771 89,254,031
----------- ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income.................. -- (1,150,000)
Distributions from net realized gain on investments... -- (1,631,000)
----------- ------------
Total dividends and distributions to shareholders...... -- (2,781,000)
----------- ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold.............................. 11,583,467 358,199,882
Proceeds from shares issued for reinvestment of
dividends and distributions........................... -- 2,781,000
Cost of shares repurchased............................. (337,710) (85,948,539)
----------- ------------
Net increase in net assets resulting from capital share
transactions.......................................... 11,245,757 275,032,343
----------- ------------
TOTAL INCREASE IN NET ASSETS........................... 12,459,528 361,505,374
NET ASSETS:
Beginning of period.................................... -- 154,907,997
----------- ------------
End of period.......................................... $12,459,528 $516,413,371
=========== ============
Accumulated undistributed net investment income........ $ 40,137 $ 3,382,016
=========== ============
Shares issued and repurchased:
Sold................................................... 1,158,140 24,918,067
Issued in reinvestment of dividends and
distributions......................................... -- 208,003
Repurchased............................................ (33,890) (6,065,330)
----------- ------------
Net increase........................................... 1,124,250 19,060,740
=========== ============
</TABLE>
# Commenced operations June 3, 1996
See Notes to Financial Statements
---------------------
119
<PAGE> 115
- ---------------------
SUNAMERICA SERIES TRUST
STATEMENT OF CHANGES IN NET ASSETS (continued)
FOR THE YEAR ENDED NOVEMBER 30, 1996
<TABLE>
<CAPTION>
GROWTH/
PHOENIX
PUTNAM INVESTMENT ALLIANCE GLOBAL
GROWTH COUNSEL GROWTH EQUITIES
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)........................... $ (23,455) $ 1,327,266 $ 1,199,438 $ 2,128,761
Net realized gain (loss) on investments................ 8,612,831 16,211,794 21,793,902 12,300,321
Net realized gain on futures and options contracts..... -- -- 433,180 --
Net realized foreign exchange gain (loss) on other
assets and liabilities................................ -- (510) -- 496,594
Change in unrealized appreciation/depreciation on
investments........................................... 17,288,052 10,855,474 46,485,737 19,341,166
Change in unrealized foreign exchange gain/loss on
other assets and liabilities.......................... -- 21 -- (27,011)
Change in unrealized appreciation/depreciation on
futures contracts..................................... -- -- 300,750 --
----------------------------------------------------------------
Net increase in net assets resulting from operations... 25,877,428 28,394,045 70,213,007 34,239,831
----------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income.................. -- (1,265,000) (483,000) (1,885,000)
Distributions from net realized gain on investments... -- (10,645,000) (13,185,000) (4,480,000)
----------------------------------------------------------------
Total dividends and distributions to shareholders...... -- (11,910,000) (13,668,000) (6,365,000)
----------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold.............................. 55,935,417 46,376,696 247,316,545 99,072,900
Proceeds from shares issued for reinvestment of
dividends and distributions........................... -- 11,910,000 13,668,000 6,365,000
Cost of shares repurchased............................. (37,015,839) (38,313,646) (104,032,606) (52,582,422)
----------------------------------------------------------------
Net increase in net assets resulting from capital share
transactions.......................................... 18,919,578 19,973,050 156,951,939 52,855,478
----------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS........................... 44,797,006 36,457,095 213,496,946 80,730,309
NET ASSETS:
Beginning of period.................................... 115,276,039 149,910,483 167,869,727 165,751,697
----------------------------------------------------------------
End of period.......................................... $160,073,045 $186,367,578 $ 381,366,673 $246,482,006
================================================================
---------------
Accumulated undistributed net investment income........ $ -- $ 1,322,795 $ 1,193,834 $ 2,209,001
================================================================
Shares issued and repurchased:
Sold................................................... 4,113,284 3,516,917 15,394,232 7,165,202
Issued in reinvestment of dividends and
distributions......................................... -- 949,004 893,333 472,181
Repurchased............................................ (2,724,390) (2,922,221) (6,661,296) (3,815,033)
----------------------------------------------------------------
Net increase........................................... 1,388,894 1,543,700 9,626,269 3,822,350
================================================================
<CAPTION>
INTERNATIONAL
DIVERSIFIED AGGRESSIVE
EQUITIES GROWTH#
------------------------------------------------------------------------------------------------------------------------
<S> <C><C> <C>
OPERATIONS:
Net investment income (loss)........................... $ 481,375 $ 39,730
Net realized gain (loss) on investments................ 1,688,079 (705,902)
Net realized gain on futures and options contracts..... -- --
Net realized foreign exchange gain (loss) on other
assets and liabilities................................ 5,292,994 --
Change in unrealized appreciation/depreciation on
investments........................................... 5,555,457 3,091,213
Change in unrealized foreign exchange gain/loss on
other assets and liabilities.......................... (813,250) --
Change in unrealized appreciation/depreciation on
futures contracts..................................... -- --
------------ -----------
Net increase in net assets resulting from operations... 12,204,655 2,425,041
------------ -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income.................. (1,350,000) --
Distributions from net realized gain on investments... -- --
------------ -----------
Total dividends and distributions to shareholders...... (1,350,000) --
------------ -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold.............................. 133,585,152 39,091,029
Proceeds from shares issued for reinvestment of
dividends and distributions........................... 1,350,000 --
Cost of shares repurchased............................. (37,742,073) (6,391,768)
------------ -----------
Net increase in net assets resulting from capital share
transactions.......................................... 97,193,079 32,699,261
------------ -----------
TOTAL INCREASE IN NET ASSETS........................... 108,047,734 35,124,302
NET ASSETS:
Beginning of period.................................... 48,960,659 --
------------ -----------
End of period.......................................... $157,008,393 $35,124,302
============ ===========
Accumulated undistributed net investment income........ $ 4,077,453 $ 39,730
============ ===========
Shares issued and repurchased:
Sold................................................... 12,354,619 4,051,127
Issued in reinvestment of dividends and
distributions......................................... 130,941 --
Repurchased............................................ (3,499,995) (661,704)
------------ -----------
Net increase........................................... 8,985,565 3,389,423
============ ===========
</TABLE>
# Commenced operations June 3, 1996
See Notes to Financial Statements
- ---------------------
120
<PAGE> 116
- ---------------------
SUNAMERICA SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION: SunAmerica Series Trust
(the "Trust"), organized as a Massachusetts business trust on September 11,
1992, is an open-end management investment company. It was established to
provide a funding medium for certain annuity contracts issued by Variable
Separate Account (the "Account"), a separate account of Anchor National Life
Insurance Company ("Life Company"), organized under the laws of the state of
Arizona; and by FS Variable Separate Account (the "FS Account"), a separate
account of First SunAmerica Life Insurance Company ("FS Life Company"),
organized under the laws of the state of New York.
The Trust issues 21 separate series of shares (the "Portfolios"), each of
which represents a separate managed portfolio of securities with its own
investment objectives. The Trustees may establish additional series in the
future. All shares may be purchased or redeemed by the Account at net asset
value without any sales or redemption charge.
The investment objectives for each portfolio are as follows:
The Cash Management Portfolio seeks high current yield while preserving capital
by investing in a diversified selection of money market instruments.
The Global Bond Portfolio seeks a high total return, emphasizing current income
and, to a lesser extent, providing opportunities for capital appreciation,
through investment in high quality fixed-income securities of U.S. and foreign
issuers and through transactions in foreign currencies.
The Corporate Bond Portfolio seeks a high total return with only moderate price
risk by investing primarily in investment grade fixed-income securities.
The High-Yield Bond Portfolio seeks a high level of current income and
secondarily seeks capital appreciation by investing primarily in intermediate
and long-term corporate obligations, with emphasis on higher-yielding,
higher-risk, lower-rated or unrated securities.
The Worldwide High Income Portfolio seeks high current income and, secondarily,
capital appreciation, by investing primarily in a portfolio of high-yielding
fixed-income securities of issuers located throughout the world.
The SunAmerica Balanced Portfolio seeks to conserve principal by maintaining at
all times a balanced portfolio of stocks and bonds.
The Balanced/Phoenix Investment Counsel Portfolio seeks reasonable income,
long-term capital growth and conservation of capital by investing primarily in
common stocks and fixed-income securities, with an emphasis on income-producing
securities which appear to have some potential for capital enhancement.
The Asset Allocation Portfolio seeks high total return (including income and
capital gains) consistent with preservation of capital over the long-term
through a diversified portfolio that can include common stocks and other
securities having common stock characteristics, bonds and other intermediate and
long-term fixed-income securities and money market instruments (debt securities
maturing in one year or less) in any combination.
The Utility Portfolio seeks high current income and moderate capital
appreciation by investing primarily in the equity and debt securities of utility
companies.
The Growth-Income Portfolio seeks growth of capital and income by investing
primarily in common stocks or securities which demonstrate the potential for
appreciation and/or dividends.
The Federated Value Portfolio seeks growth of capital and income by investing
primarily in the securities of high quality companies.
The Venture Value Portfolio seeks to achieve growth of capital by investing
primarily in common stocks.
The Putnam Growth (formerly, the Provident Growth Portfolio), Growth/Phoenix
Investment Counsel and Alliance Growth Portfolios each seeks long-term growth of
capital by investing primarily in common stocks or securities with common stock
characteristics which demonstrate the potential for appreciation.
The Global Equities Portfolio seeks long-term growth of capital through
investment primarily in common stocks or securities of U.S. and foreign issuers
with common stock characteristics which demonstrate the potential for
appreciation and through transactions in foreign currencies.
---------------------
121
<PAGE> 117
The International Growth and Income Portfolio seeks growth of capital and
current income through investment primarily in common stocks and securities
principally traded on markets outside the United States that offer potential for
capital growth and current income.
The International Diversified Equities Portfolio seeks long-term capital
appreciation by investing in accordance with country weightings determined by
the Subadviser in common stocks of foreign issuers which, in the aggregate,
replicate broad country indices.
The Real Estate Portfolio seeks total return through a combination of growth and
income by investment primarily in securities of companies principally engaged in
or related to the real estate industry or which own significant real estate
assets or which primarily invest in real estate instruments.
The Aggressive Growth Portfolio seeks long-term growth of capital through
investment primarily in equity securities of small capitalization growth
companies.
The Emerging Markets Portfolio seeks long-term capital appreciation by investing
in common stocks that have above-average growth prospects primarily in emerging
markets outside the United States.
2. SIGNIFICANT ACCOUNTING POLICIES: The preparation of financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from these estimates.
In the opinion of management of the Trust, the accompanying financial statements
contain all normal and recurring adjustments necessary for the fair presentation
of the financial position of the Trust at November 30, 1997, and the results of
its operations, the changes in its net assets and its financial highlights for
the periods then ended. The following is a summary of significant accounting
policies consistently followed by the Trust in the preparation of its financial
statements.
SECURITY VALUATIONS: Stocks are stated at value based upon closing sales
prices reported on recognized securities exchanges or, for listed securities
having no sales reported and for unlisted securities, upon last-reported bid
prices. Nonconvertible bonds, debentures, other long-term debt securities, and
short-term securities with original or remaining maturities in excess of 60 days
are valued at prices obtained for the day of valuation from a bond pricing
service of a major dealer in bonds when such prices are available; however, in
circumstances where the investment adviser deems it appropriate to do so, an
over-the-counter or exchange quotation at the mean of representative bid or
asked prices may be used. Securities traded primarily on securities exchanges
outside the United States are valued at the last sale price on such exchanges on
the day of valuation, or if there is no sale on the day of valuation, at the
last reported bid price. If a security's price is available from more than one
foreign exchange, a portfolio uses the exchange that is the primary market for
the security. Developing markets securities involve risks not typically
associated with investing in securities of issuers in more developed markets.
These investments are subject to various risk factors including market, credit
and sovereign risk. The markets in which these securities trade can be volatile
and at times illiquid. Futures contracts are valued at the last sale price
established each day by the board of trade or exchange on which they are traded.
Short-term securities with 60 days or less to maturity are amortized to maturity
based on their cost to the Trust if acquired within 60 days of maturity or, if
already held by the Trust on the 60th day, are amortized to maturity based on
the value determined on the 61st day. Securities for which quotations are not
readily available are valued at fair value as determined in good faith under the
direction of the Trust's Trustees.
REPURCHASE AGREEMENTS: The Trust's custodian takes possession of the
collateral pledged for investments in repurchase agreements. The underlying
collateral is valued daily on a mark-to-market basis to assure that the value,
including accrued interest, is at least equal to the repurchase price. In the
event of default of the obligation to repurchase, the Trust has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. If the seller defaults and the value of the collateral declines or
if bankruptcy proceedings are commenced with respect to the seller of the
security, realization of the collateral by the Trust may be delayed or limited.
FOREIGN CURRENCY TRANSLATION: The books and records of the Trust are
maintained in U.S. dollars. Assets and liabilities denominated in foreign
currencies and commitments under forward foreign currency contracts are
translated into U.S. dollars at the mean of the quoted bid and asked prices of
such currencies against the U.S. dollar.
The Trust does not isolate that portion of the results of operations arising
as a result of changes in the foreign exchange rates from the changes in the
market prices of securities held at fiscal year-end. Similarly, the Trust does
not isolate the effect of changes in foreign exchange rates from the changes in
the market prices of portfolio securities sold during the year.
Realized foreign exchange gain and losses on other assets and liabilities and
change in unrealized foreign exchange gain and losses on other assets and
liabilities include realized foreign exchange gains and losses from currency
gains or losses between the trade and settlement dates of securities
transactions, the difference between the amounts of interest, dividends and
foreign withholding taxes recorded on the Trust's books and the U.S. dollar
equivalent amounts actually received or paid and changes in the unrealized
foreign exchange gains and losses relating to the other assets and liabilities
arising as a result of changes in the exchange rate.
FORWARD FOREIGN CURRENCY CONTRACTS: Certain portfolios may enter into forward
foreign currency contracts ("forward contracts") to attempt to protect
securities and related receivables and payables against changes in future
foreign exchange
- ---------------------
122
<PAGE> 118
rates or to enhance return. A forward contract is an agreement between two
parties to buy or sell currency at a set price on a future date. The market
value of the contract will fluctuate with changes in currency exchange rates.
The contract is marked-to-market daily using the forward rate and the change in
market value is recorded by the Portfolio as unrealized gain or loss. On the
settlement date, the Portfolio records either realized gains or losses when the
contract is closed equal to the difference between the value of the contract at
the time it was opened and the value at the time it was closed. Risks may arise
upon entering into these contracts from the potential inability of
counterparties to meet the terms of their contracts and from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar.
Forward contracts involve elements of risk in excess of the amount reflected in
the Statement of Assets and Liabilities. The Trust bears the risk of an
unfavorable change in the foreign exchange rate underlying the forward contract.
FUTURES CONTRACTS: A futures contract is an agreement between two parties to
buy and sell a financial instrument at a set price on a future date. Upon
entering into such a contract the Trust is required to pledge to the broker an
amount of cash or U.S. government securities equal to the minimum "initial
margin" requirements of the exchange on which the futures contract is traded.
The contract amount reflects the extent of a Portfolio's exposure in these
financial instruments. A Portfolio's participation in the futures markets
involves certain risks, including imperfect correlation between movements in the
price of futures contracts and movements in the price of the securities hedged
or used for cover. The Trust's activities in the futures contracts are conducted
through regulated exchanges which do not result in counterparty credit risks.
Pursuant to a contract, the Portfolios agree to receive from or pay to the
broker an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as "variation margin" and are
recorded by the Portfolios as unrealized appreciation or depreciation. When a
contract is closed, the Portfolios record a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed.
OPTIONS: An option is a contract conveying a right to buy or sell a financial
instrument at a specified price during a stipulated period. The premium paid by
a Portfolio for the purchase of a call or a put option is included in the
Portfolio's Statement of Assets and Liabilities as an investment and
subsequently marked to market to reflect the current market value of the option.
When a Portfolio writes a call or a put option, an amount equal to the premium
received by the Portfolio is included in the Portfolio's Statement of Assets and
Liabilities as a liability and is subsequently marked to market to reflect the
current market value of the option written. If an option which the Portfolio has
written either expires on its stipulated expiration date, or if the Portfolio
enters into a closing purchase transaction, the Portfolio realizes a gain (or
loss if the cost of a closing purchase transaction exceeds the premium received
when the option was written) without regard to any unrealized gain or loss on
the underlying security, and the liability related to such options is
extinguished. If a call option which the Portfolio has written is exercised, the
Portfolio realizes a capital gain or loss from the sale of the underlying
security and the proceeds from such sale are increased by the premium originally
received. If a put option which the Portfolio has written is exercised, the
amount of the premium originally received reduces the cost of the security which
the Portfolio purchased upon exercise of the option.
CURRENCY SWAPS: Currency swaps involve the exchange by a Portfolio with
another party of its respective rights to make or receive payments in specified
currencies. Currency swaps usually involve the delivery of the 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 will default on its contractual delivery obligations.
Currency swaps involve elements of risk in excess of the amount reflected in the
Statement of Assets and Liabilities. Changes in the value of the swap are
reported as unrealized appreciation or depreciation in the Statement of Assets
and Liabilities. A realized gain or loss is recorded upon early termination of
such agreement.
SECURITIES TRANSACTIONS, INVESTMENT INCOME, EXPENSES, DIVIDENDS AND
DISTRIBUTIONS: As is customary in the mutual fund industry, securities
transactions are recorded on a trade date basis. Interest income is accrued
daily except when collection is not expected. Dividend income and distributions
to shareholders are recorded on the ex-dividend date except for certain
dividends from foreign securities, which are recorded as soon as the Trust is
informed after the ex-dividend date. The Trust amortizes premiums and accretes
discounts on fixed income securities, as well as those original issue discounts
for which amortization is required for federal income tax purposes; gains and
losses realized upon the sale of such securities are based on their identified
cost. Portfolios which earn foreign income and capital gains may be subject to
foreign withholding taxes at various rates.
Common expenses incurred by the Trust are allocated among the Portfolios based
upon relative net assets or other appropriate allocation methods. In all other
respects, expenses are charged to each Portfolio as incurred on a specific
identification basis.
The Portfolios record dividends and distributions to their shareholders on the
ex-dividend date. The amount of dividends and distributions from net investment
income and net realized capital gains are determined and presented in accordance
with federal income tax regulations, which may differ from generally accepted
accounting principles. These "book/tax" differences are either considered
temporary or permanent in nature. To the extent these differences are permanent
in nature, such amounts are reclassified within the capital accounts based on
their federal tax-basis treatment; temporary differences do not require
reclassification. Dividends and distributions which exceed net investment income
and net realized capital gains for financial reporting purposes but not for tax
purposes are reported as dividends in excess of net investment income or
distributions in excess of net realized capital gains. To the extent
distributions exceed current and accumulated earnings and profits for federal
income tax purposes, they are reported as distributions of paid-in capital. Net
investment income/loss, net realized gain/loss, and net assets are not affected.
---------------------
123
<PAGE> 119
For the year ended November 30, 1997, the reclassification arising from
book/tax differences resulted in increases (decreases) to the components of net
assets as follows:
<TABLE>
<CAPTION>
ACCUMULATED ACCUMULATED
UNDISTRIBUTED NET UNDISTRIBUTED NET PAID-IN
INVESTMENT INCOME/(LOSS) REALIZED GAIN/(LOSS) CAPITAL
----------------------------------------------------
<S> <C> <C> <C>
Global Bond*............................................ $1,729,850 $ (1,729,850) $ --
Worldwide High Income*.................................. (120,494) 120,494 --
Utility*................................................ (3,129) 3,129 --
Growth-Income*.......................................... 65 (65) --
Venture Value........................................... 1,065 (1,065) --
Growth/Phoenix Investment Counsel*...................... 22 (22) --
Global Equities......................................... 182,695 (182,696) 1
International Growth and Income*........................ 112,003 (111,488) (515)
International Diversified Equities*..................... 6,968,831 (6,964,267) (4,564)
Real Estate............................................. 515 -- (515)
Aggressive Growth....................................... 94,281 -- (94,281)
Emerging Markets........................................ 64,391 (63,876) (515)
</TABLE>
* Reclassification is primarily due to differing book/tax treatments for
foreign currency transactions.
3. JOINT REPURCHASE AGREEMENT ACCOUNT: The Cash Management, High-Yield Bond,
SunAmerica Balanced and Aggressive Growth Portfolios, along with other
affiliated registered investment companies, transfer uninvested cash balances
into a single joint account, the daily aggregate balance of which is invested in
one or more repurchase agreements collateralized by U.S. Treasury or federal
agency obligations. As of November 30, 1997, the Cash Management, High-Yield
Bond, SunAmerica Balanced, and Aggressive Growth Portfolios had a 9.1%, 8.0%,
1.6% and 4.1%, undivided interest, respectively, which represented $13,341,000,
$11,659,000, $2,364,000 and $5,956,000, respectively, in principal amount in a
repurchase agreement in the joint account. As of such date, the repurchase
agreement in the joint account and the collateral therefore was as follows:
Paine Webber Securities, Inc. Repurchase Agreement, 5.625% dated 11/28/97, in
the principal amount of $146,239,000 repurchase price $146,307,550 due 12/1/97
collateralized by $50,000,000 U.S. Treasury Note 4.75% due 10/31/98, $1,230,000
U.S. Treasury Note 6.00% due 5/01/98, $45,440,000 U.S. Treasury Note 6.125% due
3/31/98, and $50,000,000 U.S. Treasury Note 7.125% due 2/29/00; approximate
aggregate value $149,265,739.
4. FEDERAL INCOME TAXES: The Trust intends to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and
distribute all of its taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal tax provision is
required.
The amounts of aggregate unrealized gain (loss) and the cost of investment
securities for tax purposes, including short-term securities and repurchase
agreements at November 30, 1997, were as follows:
<TABLE>
<CAPTION>
AGGREGATE AGGREGATE CAPITAL CAPITAL
UNREALIZED UNREALIZED GAIN/(LOSS) COST OF LOSS LOSS
GAIN LOSS NET INVESTMENTS CARRYOVER*+ UTILIZED
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cash Management....................... $ 7,172 $ 10,928 $ (3,756) $155,310,944 $ 684 $ --
Global Bond........................... 1,338,086 967,034 371,052 82,807,511 -- --
Corporate Bond**...................... 2,067,215 189,531 1,877,684 59,778,545 273,407 496,303
High-Yield Bond....................... 4,764,218 3,212,750 1,551,468 196,334,578 -- 8,449,586
Worldwide High Income................. 2,518,941 4,641,796 (2,122,855) 129,977,576 -- --
SunAmerica Balanced................... 4,149,254 590,567 3,558,687 40,974,768 -- --
Balanced/Phoenix Investment Counsel... 5,661,780 1,178,789 4,482,991 95,947,926 -- --
Asset Allocation...................... 59,367,949 8,856,636 50,511,313 509,455,409 -- --
Utility***............................ 2,176,864 131,767 2,045,097 22,401,726 -- --
Growth-Income**....................... 154,097,849 6,071,412 148,026,437 478,491,719 -- --
Federated Value....................... 7,547,700 1,210,799 6,336,901 52,959,471 -- 16,874
Venture Value......................... 253,113,615 11,549,359 241,564,256 896,593,662 -- --
Putnam Growth......................... 46,989,293 1,414,609 45,574,684 189,194,894 -- --
Growth/Phoenix Investment Counsel..... 28,315,376 3,626,289 24,689,087 192,931,646 -- --
Alliance Growth....................... 114,823,260 13,918,508 100,904,752 606,363,996 -- --
Global Equities**..................... 53,292,719 15,961,693 37,331,026 301,929,742 -- --
International Growth and Income....... 1,333,688 1,700,124 (366,436) 43,544,375 -- --
International Diversified
Equities**.......................... 21,025,270 13,968,835 7,056,435 242,741,427 -- --
Real Estate........................... 1,567,814 245,597 1,322,217 28,339,353 -- --
Aggressive Growth**................... 17,160,892 2,375,151 14,785,741 91,789,119 2,868,661 --
Emerging Markets...................... 519,396 4,170,438 (3,651,042) 23,720,877 927,325 --
</TABLE>
* Expire 2004-2005
** Post 10/31/97 Capital Loss Deferrals: Corporate Bond $735; Growth-Income
$159,504; Global Equities $4,392,999; International Diversified Equities
$7,883,251 and Aggressive Growth $542,896.
*** Post 10/31/97 Currency Loss Deferrals: Utility $379.
+ Net capital loss carryovers reported as of November 30, 1997, which are
available to the extent provided in regulations to offset future capital
gains. To the extent that these carryovers are used to offset future capital
gains, it is probable that these gains so offset will not be distributed.
- ---------------------
124
<PAGE> 120
5. MANAGEMENT OF THE TRUST: SunAmerica Asset Management Corp. ("SAAMCo" or the
"Adviser"), an indirect wholly owned subsidiary of the Life Company, serves as
investment adviser for all the portfolios of the Trust. The Trust, on behalf of
each Portfolio, entered into an Investment Advisory and Management Agreement
(the "Agreement") with SAAMCo to handle the Trust's day-to-day affairs. It is
the responsibility of the Adviser and, for certain Portfolios pursuant to
Subadvisory Agreements described below, the subadvisers, to make investment
decisions for the Portfolios and to place the purchase and sale orders for the
Portfolio transactions. Such orders may be directed to any broker including, in
the manner and to the extent permitted by applicable law, affiliates of the
Adviser or a subadviser. The Agreement provides that SAAMCo shall administer the
Trust's business affairs; furnish offices, necessary facilities and equipment;
provide clerical, bookkeeping and administrative services; and permit any of its
officers or employees to serve, without compensation, as trustees or officers of
the Trust, if duly elected to such positions. There is no subadviser for the
Cash Management, High-Yield Bond, SunAmerica Balanced and Aggressive Growth
Portfolios, and SAAMCo, therefore, performs all investment advisory services for
these Portfolios. The term "Assets", as used in the following table, means the
average daily net assets of the Portfolios.
The Trust pays SAAMCo a monthly fee calculated at the following annual
percentages of each Portfolio's assets:
<TABLE>
<CAPTION>
MANAGEMENT
PORTFOLIO ASSETS FEES
- ---------------------------------------------------------
<S> <C> <C>
Cash Management $0--$100 million 0.55%
> $100 million 0.50%
> $300 million 0.45%
Corporate Bond $0--$ 50 million 0.70%
> $ 50 million 0.60%
> $150 million 0.55%
> $250 million 0.50%
Global Bond- $0--$ 50 million 0.75%
Asset Allocation > $ 50 million 0.65%
> $150 million 0.60%
> $250 million 0.55%
High-Yield Bond $0--$ 50 million 0.70%
> $ 50 million 0.65%
> $150 million 0.60%
> $250 million 0.55%
Worldwide High > $ 0 1.00%
Income-International
Diversified Equities
SunAmerica Balanced- $0--$ 50 million 0.70%
Balanced/Phoenix > $ 50 million 0.65%
Investment Counsel- > $150 million 0.60%
Growth-Income- > $300 million 0.55%
Alliance Growth- > $500 million 0.50%
Growth/Phoenix
Investment Counsel
<CAPTION>
MANAGEMENT
PORTFOLIO ASSETS FEES
- ---------------------------------------------------------
<S> <C> <C>
Utility-Federated Value $0--$150 million 0.75%
> $150 million 0.60%
> $500 million 0.50%
Venture Value-Real Estate $0--$100 million 0.80%
> $100 million 0.75%
> $500 million 0.70%
Putnam Growth $0--$150 million 0.85%
> $150 million 0.80%
> $300 million 0.70%
International Growth and $0--$150 million 1.00%
Income > $150 million 0.90%
> $300 million 0.80%
Global Equities $0--$ 50 million 0.90%
> $ 50 million 0.80%
> $150 million 0.70%
> $300 million 0.65%
Aggressive Growth $0--$100 million 0.75%
> $100 million 0.675%
> $250 million 0.625%
> $500 million 0.60%
Emerging Markets > $ 0 1.25%
</TABLE>
The organizations described below act as subadvisers to the Trust and certain
of its Portfolios pursuant to Subadvisory Agreements with SAAMCo. Under the
Subadvisory Agreements, the subadvisers manage the investment and reinvestment
of the assets of the respective Portfolios for which they are responsible. Each
of the subadvisers is independent of SAAMCo and discharges its responsibilities
subject to the policies of the Trust's Trustees and the oversight and
supervision of SAAMCo, which pays the subadvisers' fees.
Goldman Sachs Asset Management International, an affiliate of Goldman Sachs &
Co., serves as subadviser for the Global Bond Portfolio; Goldman Sachs Asset
Management, a separate operating division of Goldman Sachs & Co., serves as
subadviser for the Asset Allocation Portfolio; Federated Investment Counseling
serves as a subadviser for the Corporate Bond, Utility and Federated Value
Portfolios; Morgan Stanley Asset Management Inc., a wholly owned subsidiary of
Morgan Stanley Dean Witter Discover & Co., serves as subadviser for the
Worldwide High Income and International Diversified Equities Portfolios; Phoenix
Investment Counsel, Inc. serves as subadviser for the Balanced/Phoenix
Investment Counsel and Growth/Phoenix Investment Counsel Portfolios; Alliance
Capital Management L.P. serves as a subadviser for the Growth-Income, Alliance
Growth and Global Equities Portfolios; Davis Selected Advisers, L.P. serves as
subadviser for the Venture Value and Real Estate Portfolios; and Putnam
Investment Management, Inc. serves as subadviser for the Putnam Growth,
International Growth and Income and Emerging Markets Portfolios. Effective April
16, 1997 Putnam Investment Management, Inc. assumed the role as subadviser from
Provident Investment Counsel, Inc. for the Putnam Growth Portfolio (formerly the
Provident Growth Portfolio).
---------------------
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<PAGE> 121
The portion of the investment advisory fees received by SAAMCo which are paid
to subadvisers are as follows:
<TABLE>
<CAPTION>
MANAGEMENT
PORTFOLIO ASSETS FEES
- ---------------------------------------------------------
<S> <C> <C>
Corporate Bond $0--$ 25 million 0.30%
> $ 25 million 0.25%
> $ 50 million 0.20%
> $150 million 0.15%
Global Bond- $0--$ 50 million 0.40%
Asset Allocation > $ 50 million 0.30%
> $150 million 0.25%
> $250 million 0.20%
Worldwide High Income- $0--$350 million 0.65%
International Diversified > $350 million 0.60%
Equities
Balanced/Phoenix $0--$ 50 million 0.35%
Investment Counsel- > $ 50 million 0.30%
Growth-Income- > $150 million 0.25%
Alliance Growth- > $300 million 0.20%
Growth/Phoenix > $500 million 0.15%
Investment Counsel
Utility-Federated Value $0--$ 20 million 0.55%
> $ 20 million 0.35%
> $ 50 million 0.25%
> $150 million 0.20%
> $500 million 0.15%
<CAPTION>
MANAGEMENT
PORTFOLIO ASSETS FEES
- ---------------------------------------------------------
<S> <C> <C>
Venture Value-Real Estate $0--$100 million 0.45%
> $100 million 0.40%
> $500 million 0.35%
Putnam Growth $0--$150 million 0.50%
> $150 million 0.45%
> $300 million 0.35%
Global Equities $0--$ 50 million 0.50%
> $ 50 million 0.40%
> $150 million 0.30%
> $300 million 0.25%
International Growth $0--$150 million 0.65%
and Income > $150 million 0.55%
> $300 million 0.45%
Emerging Markets $0--$150 million 1.00%
> $150 million 0.95%
> $300 million 0.85%
</TABLE>
For certain Portfolios, the Adviser has voluntarily agreed to reimburse
expenses, if necessary, to keep annual operating expenses at or below the
following percentages of each of the following Portfolio's average net assets:
SunAmerica Balanced Portfolio -- 1.00%, Utility Portfolio -- 1.05%, Federated
Value Portfolio -- 1.05%, International Growth and Income Portfolio -- 1.60%,
Real Estate Portfolio -- 1.25%, Aggressive Growth Portfolio -- 1.05% and
Emerging Markets Portfolio -- 1.90%. The Adviser also may voluntarily reimburse
additional amounts to increase the investment return to a Portfolio's investors.
The Adviser may terminate all such waivers and/or reimbursements at any time.
Further, effective June 3, 1996, any waivers or reimbursements made by the
Adviser with respect to a Portfolio are subject to recoupment from that
Portfolio within the following two years, provided that the Portfolio is able to
effect such payment to the Adviser and remain in compliance with the foregoing
expense limitations.
At November 30, 1997, the amounts repaid to the Adviser which are included in
the management fee along with the remaining balance subject to recoupment are as
follows:
<TABLE>
<CAPTION>
BALANCE
AMOUNT SUBJECT TO
RECOUPED RECOUPMENT
-------- ----------
<S> <C> <C>
SunAmerica Balanced Portfolio.................................... $ 9,879 $ 2,613
Utility Portfolio................................................ -- 41,753
Federated Value Portfolio........................................ 16,677 --
International Growth and Income Portfolio........................ -- 52,507
Real Estate Portfolio............................................ -- 7,874
Aggressive Growth Portfolio...................................... 3,185 --
Emerging Markets Portfolio....................................... -- 55,614
</TABLE>
6. ORGANIZATIONAL EXPENSES: Costs incurred by the Adviser in connection with
the organization and registration of the Trust amounted to $223,826. During the
year ended November 30, 1997, an additional $19,122 was incurred as part of the
organization and registration of International Growth and Income Portfolio, Real
Estate Portfolio and Emerging Markets Portfolio. Organizational expenses are
amortized on a straight line basis by each applicable Portfolio of the Trust
over the period of benefit not to exceed 60 months from the date the respective
Portfolio commenced operations.
- ---------------------
126
<PAGE> 122
7. PURCHASES AND SALES OF SECURITIES: Information with respect to purchases and
sales of long-term securities for the year ended November 30, 1997, was as
follows:
<TABLE>
<CAPTION>
CASH GLOBAL CORPORATE HIGH-YIELD WORLDWIDE SUNAMERICA
MANAGEMENT BOND BOND BOND HIGH INCOME BALANCED
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------
Purchases of portfolio
securities (excluding
U.S. government
securities).............. $ -- $226,029,858 $40,815,699 $408,262,796 $194,084,987 $48,399,099
Sales of portfolio
securities (excluding
U.S. government
securities).............. -- 192,808,617 19,086,248 344,823,245 120,395,277 26,738,310
Purchases of U.S.
government securities.... -- 41,002,858 5,180,703 2,907,188 -- 14,242,858
Sales of U.S. government
securities............... -- 46,845,461 3,319,617 2,898,750 -- 6,484,046
</TABLE>
<TABLE>
<CAPTION>
BALANCED/PHOENIX
INVESTMENT ASSET FEDERATED
COUNSEL ALLOCATION UTILITY GROWTH-INCOME VALUE
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------
Purchases of portfolio securities
(excluding U.S. government
securities)....................... $110,377,548 $ 365,429,006 $ 22,656,282 $ 330,671,857 $ 51,917,160
Sales of portfolio securities
(excluding U.S. government
securities)....................... 100,829,574 243,861,209 9,881,504 182,382,955 13,400,918
Purchases of U.S. government
securities........................ 100,506,017 497,120,181 -- 9,846,665 218,901
Sales of U.S. government
securities........................ 97,873,551 472,455,217 -- 5,699,550 580,945
</TABLE>
<TABLE>
<CAPTION>
GROWTH/PHOENIX
VENTURE PUTNAM INVESTMENT ALLIANCE GLOBAL
VALUE GROWTH COUNSEL GROWTH EQUITIES
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------
Purchases of portfolio securities
(excluding U.S. government
securities)....................... $507,736,131 $ 250,004,586 $408,396,428 $ 775,660,350 $ 389,226,183
Sales of portfolio securities
(excluding U.S. government
securities)....................... 158,915,378 217,634,080 389,098,707 565,919,094 334,058,797
Purchases of U.S. government
securities........................ 667,651 868,261 6,089,651 8,594,670 --
Sales of U.S. government
securities........................ 376,658 9,311,633 8,038,393 15,660,791 --
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL
GROWTH AND DIVERSIFIED AGGRESSIVE EMERGING
INCOME EQUITIES REAL ESTATE GROWTH MARKETS
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------
Purchases of portfolio securities
(excluding U.S. government
securities)....................... $ 45,154,469 $ 166,708,332 $ 25,575,741 $ 198,662,040 $ 28,502,038
Sales of portfolio securities
(excluding U.S. government
securities)....................... 4,855,692 107,056,502 1,008,403 141,546,246 6,848,213
Purchases of U.S. government
securities........................ -- -- -- 2,424,188 --
Sales of U.S. government
securities........................ -- -- -- -- --
</TABLE>
8. TRANSACTIONS WITH AFFILIATES: The following Portfolios incurred brokerage
commissions with an affiliated broker:
<TABLE>
<CAPTION>
GOLDMAN SHELBY SUNAMERICA ROYAL ALLIANCE
SACHS & CO. CULLOM DAVIS SECURITIES, INC. ASSOCIATES, INC.
----------- ------------ ---------------- ----------------
<S> <C> <C> <C> <C>
Asset Allocation Portfolio........................... $77,151 $ -- $ -- $ --
Venture Value Portfolio.............................. -- 43,704 43,992 --
Putnam Growth Portfolio.............................. -- -- 400 520
Growth/Phoenix Investment Counsel Portfolio.......... -- -- -- 1,220
</TABLE>
9. COMMITMENTS AND CONTINGENCIES: The High-Yield Bond Portfolio has established
an uncommitted line of credit with State Street Bank and Trust Company with
interest payable at the Federal Funds rate plus 125 basis points. Borrowings
under the line of credit will commence when the Fund's cash shortfall exceeds
$100,000. During the year ended November 30, 1997, the High-Yield Bond Portfolio
had borrowings outstanding for 5 days under the line of credit and incurred $963
in interest charges related to these borrowings. The High-Yield Bond Portfolio
did not have any outstanding borrowing at November 30, 1997.
---------------------
127
<PAGE> 123
- ---------------------
SUNAMERICA SERIES TRUST
FINANCIAL HIGHLIGHTS*
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET DIVIDENDS DIVIDENDS NET
ASSET NET REALIZED & TOTAL DECLARED FROM FROM NET ASSET
VALUE NET UNREALIZED FROM NET REALIZED VALUE
PERIOD BEGINNING INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT GAIN ON END OF TOTAL
ENDED OF PERIOD INCOME** INVESTMENTS OPERATIONS INCOME INVESTMENTS PERIOD RETURN***
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash Management Portfolio
2/9/93-
11/30/93 $ 10.00 $ 0.19 $ 0.01 $ 0.20 $ -- $ -- $10.20 2.00%
11/30/94 10.20 0.38 (0.02) 0.36 (0.09) -- 10.47 3.51
11/30/95 10.47 0.56 0.01 0.57 (0.34) -- 10.70 5.59
11/30/96 10.70 0.53 (0.02) 0.51 (0.45) -- 10.76 4.92
11/30/97 10.76 0.53 0.01 0.54 (0.56) -- 10.74 5.22
Global Bond Portfolio
7/1/93-
11/30/93 10.00 0.13 0.17 0.30 -- -- 10.30 3.00
11/30/94 10.30 0.53 (0.86) (0.33) (0.09) (0.05) 9.83 (3.18)
11/30/95 9.83 0.60 0.97 1.57 (0.38) -- 11.02 16.40
11/30/96 11.02 0.59 0.54 1.13 (0.75) -- 11.40 10.94
11/30/97 11.40 0.52 0.38 0.90 (0.75) (0.04) 11.51 8.43
Corporate Bond Portfolio
7/1/93-
11/30/93 10.00 0.14 0.05 0.19 -- -- 10.19 1.90
11/30/94 10.19 0.52 (0.87) (0.35) (0.05) (0.04) 9.75 (3.41)
11/30/95 9.75 0.60 1.00 1.60 (0.53) -- 10.82 17.01
11/30/96 10.82 0.65 0.03 0.68 (0.41) -- 11.09 6.51
11/30/97 11.09 0.77 0.21 0.98 (0.53) -- 11.54 9.26
High-Yield Bond Portfolio
2/9/93-
11/30/93 10.00 0.76 0.36 1.12 -- -- 11.12 11.20
11/30/94 11.12 1.20 (1.65) (0.45) (0.29) (0.06) 10.32 (4.26)
11/30/95 10.32 1.11 0.12 1.23 (1.02) -- 10.53 12.64
11/30/96 10.53 0.98 0.48 1.46 (0.95) -- 11.04 14.86
11/30/97 11.04 1.04 0.48 1.52 (0.74) -- 11.82 14.53
Worldwide High Income Portfolio
10/28/94-
11/30/94 10.00 0.04 (0.09) (0.05) -- -- 9.95 (0.50)
11/30/95 9.95 1.10 0.47 1.57 (0.10) -- 11.42 16.02
11/30/96 11.42 1.25 1.60 2.85 (0.87) (0.05) 13.35 26.87
11/30/97 13.35 0.98 0.68 1.66 (0.90) (0.91) 13.20 14.17
SunAmerica Balanced Portfolio
6/3/96-
11/30/96 10.00 0.10 1.03 1.13 -- -- 11.13 11.30
11/30/97 11.13 0.23 2.15 2.38 (0.04) (0.02) 13.45 21.48
Balanced/Phoenix Investment Counsel Portfolio
10/28/94-
11/30/94 10.00 0.04 (0.08) (0.04) -- -- 9.96 (0.40)
11/30/95 9.96 0.34 2.23 2.57 (0.05) -- 12.48 25.89
11/30/96 12.48 0.34 1.31 1.65 (0.19) (0.31) 13.63 13.75
11/30/97 13.63 0.37 1.39 1.76 (0.23) (0.41) 14.75 13.52
<CAPTION>
NET RATIO OF NET
ASSETS RATIO OF INVESTMENT
END OF EXPENSES TO INCOME TO AVERAGE
PERIOD PERIOD AVERAGE NET AVERAGE NET PORTFOLIO COMMISSION
ENDED (000'S) ASSETS ASSETS TURNOVER PER SHARE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash Management Portfolio
2/9/93-
11/30/93 $ 24,603 0.71%+++ 2.53%+++ --% $ NA
11/30/94 89,098 0.70++ 3.73++ -- NA
11/30/95 90,731 0.67 5.32 -- NA
11/30/96 91,247 0.62 4.90 -- NA
11/30/97 156,119 0.63 5.06 -- NA
Global Bond Portfolio
7/1/93-
11/30/93 25,010 1.35+++ 3.56+++ 84 NA
11/30/94 44,543 1.06 5.29 347 NA
11/30/95 59,759 0.95 5.89 339 NA
11/30/96 68,221 0.89 5.44 223 NA
11/30/97 89,043 0.90 4.70 360 NA
Corporate Bond Portfolio
7/1/93-
11/30/93 11,667 0.94+++ 3.92+++ 208 NA
11/30/94 15,869 0.94++ 5.21++ 419 NA
11/30/95 29,475 0.96++ 5.93++ 412 NA
11/30/96 37,207 0.97 6.11 338 NA
11/30/97 62,272 0.91 6.99 49 NA
High-Yield Bond Portfolio
2/9/93-
11/30/93 41,851 0.94+++ 9.43+++ 229 NA
11/30/94 55,803 0.92++ 11.07++ 225 NA
11/30/95 82,174 0.80 10.80 174 NA
11/30/96 113,229 0.77 9.41 107 NA
11/30/97 195,639 0.75 9.26 243 NA
Worldwide High Income Portfolio
10/28/94-
11/30/94 10,478 1.60+++ 4.48+++ 2 NA
11/30/95 21,515 1.30 10.46 176 NA
11/30/96 49,204 1.18 10.45 177 NA
11/30/97 125,224 1.10 7.58 146 NA
SunAmerica Balanced Portfolio
6/3/96-
11/30/96 10,224 1.00+++ 1.92+++ 40 .0600
11/30/97 44,621 1.00 1.82 143 .0600
Balanced/Phoenix Investment Portfolio
10/28/94-
11/30/94 1,516 1.00+++ 4.25+++ 10 NA
11/30/95 32,429 0.98++ 3.08++ 153 NA
11/30/96 70,021 0.84 2.74 194 .0589
11/30/97 95,721 0.82 2.63 271 .0526
</TABLE>
* Calculated based upon average shares outstanding
** After fee waivers and expense reimbursements by the investment adviser
*** Does not reflect expenses that apply to the separate accounts of Anchor
National Life Insurance Company and First SunAmerica Life Insurance
Company. If such expenses had been included, total return would have
been lower for each period presented.
+ Annualized
++ During the periods ended November 30, 1993, 1994, 1995, 1996 and 1997,
the investment adviser waived a portion of or all fees and assumed a
portion of or all expenses for the portfolios. If all fees and expenses
had been incurred by the portfolios, the ratio of expenses to average
net assets and the ratio of net investment income to average net assets
would have been as follows:
<TABLE>
<CAPTION>
EXPENSES NET INVESTMENT INCOME
----------------------------------------- --------------------------------------------
1993 1994 1995 1996 1997 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------- --------------------------------------------
Cash Management Portfolio.......... 1.10% 0.78% 0.67% 0.62% 0.63% 2.14% 3.65% 5.32% 4.90% 5.06%
Global Bond Portfolio.............. 1.81 1.06 0.95 0.89 0.90 3.10 5.29 5.89 5.44 4.70
Corporate Bond Portfolio........... 1.81 1.09 0.97 0.97 0.91 3.05 5.06 5.92 6.11 6.99
High-Yield Bond Portfolio.......... 1.29 0.93 0.80 0.77 0.75 9.08 11.06 10.80 9.41 9.26
Worldwide High Income Portfolio.... -- 2.26 1.30 1.18 1.10 -- 3.82 10.46 10.45 7.58
SunAmerica Balanced Portfolio...... -- -- -- 1.43 1.00 -- -- -- 1.49 1.82
Balanced/Phoenix Investment Counsel
Portfolio........................ -- 6.82 1.11 0.84 0.82 -- (1.57) 2.95 2.74 2.63
</TABLE>
See Notes to Financial Statements
- ---------------------
128
<PAGE> 124
- ---------------------
SUNAMERICA SERIES TRUST
FINANCIAL HIGHLIGHTS* -- (CONTINUED)
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET TOTAL DIVIDENDS DIVIDENDS NET
ASSET NET NET REALIZED & FROM DECLARED FROM FROM NET ASSET
VALUE INVEST- UNREALIZED INVEST- NET REALIZED VALUE
PERIOD BEGINNING MENT GAIN (LOSS) ON MENT INVESTMENT GAIN ON END OF TOTAL
ENDED OF PERIOD INCOME** INVESTMENTS OPERATIONS INCOME INVESTMENTS PERIOD RETURN***
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Asset Allocation Portfolio
7/1/93-
11/30/93 $ 10.00 $ 0.08 $ 0.28 $ 0.36 $ -- $ -- $10.36 3.60%
11/30/94 10.36 0.29 (0.25) 0.04 (0.05) (0.03) 10.32 0.30
11/30/95 10.32 0.42 2.24 2.66 (0.20) (0.04) 12.74 26.10
11/30/96 12.74 0.48 2.00 2.48 (0.31) (0.39) 14.52 20.27
11/30/97 14.52 0.44 2.55 2.99 (0.40) (0.90) 16.21 21.97
Utility Portfolio
6/3/96-
11/30/96 10.00 0.24 0.51 0.75 -- -- 10.75 7.50
11/30/97 10.75 0.36 1.91 2.27 (0.09) (0.02) 12.91 21.26
Growth-Income Portfolio
2/9/93-
11/30/93 10.00 0.12 0.49 0.61 -- -- 10.61 6.10
11/30/94 10.61 0.13 (0.36) (0.23) (0.04) (0.01) 10.33 (2.20)
11/30/95 10.33 0.17 3.31 3.48 (0.10) -- 13.71 33.89
11/30/96 13.71 0.18 3.48 3.66 (0.12) (0.43) 16.82 27.41
11/30/97 16.82 0.17 4.69 4.86 (0.13) (0.73) 20.82 30.11
Federated Value Portfolio
6/3/96-
11/30/96 10.00 0.07 1.01 1.08 -- -- 11.08 10.80
11/30/97 11.08 0.13 2.72 2.85 (0.03) -- 13.90 25.75
Venture Value Portfolio
10/28/94-
11/30/94 10.00 0.03 (0.25) (0.22) -- -- 9.78 (2.20)
11/30/95 9.78 0.17 3.55 3.72 (0.03) -- 13.47 38.17
11/30/96 13.47 0.18 3.46 3.64 (0.09) (0.12) 16.90 27.44
11/30/97 16.90 0.19 4.73 4.92 (0.09) (0.26) 21.47 29.62
Putnam Growth Portfolio
2/9/93-
11/30/93 10.00 0.02 0.02 0.04 -- -- 10.04 0.40
11/30/94 10.04 0.03 (0.01) 0.02 (0.01) -- 10.05 0.19
11/30/95 10.05 (0.01) 3.09 3.08 (0.03) -- 13.10 30.66
11/30/96 13.10 -- 2.61 2.61 -- -- 15.71 19.92
11/30/97 15.71 0.03 3.93 3.96 -- (0.52) 19.15 26.01
Growth/Phoenix Investment Counsel Portfolio
2/9/93-
11/30/93 10.00 0.17 0.61 0.78 -- -- 10.78 7.80
11/30/94 10.78 0.16 (0.87) (0.71) (0.06) -- 10.01 (6.64)
11/30/95 10.01 0.12 3.14 3.26 (0.13) -- 13.14 32.92
11/30/96 13.14 0.11 2.16 2.27 (0.11) (0.91) 14.39 18.40
11/30/97 14.39 0.11 2.48 2.59 (0.10) (1.26) 15.62 19.78
NET RATIO OF NET
ASSETS RATIO OF INVESTMENT
END OF EXPENSES TO INCOME TO AVERAGE
PERIOD PERIOD AVERAGE NET AVERAGE NET PORTFOLIO COMMISSION
ENDED (000'S) ASSETS ASSETS TURNOVER PER SHARE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Asset Allocation Portfolio
7/1/93-
11/30/93 $ 35,590 0.99%+++ 2.33%+++ 71% $ NA
11/30/94 106,856 0.94++ 2.71++ 152 NA
11/30/95 199,836 0.81 3.62 207 NA
11/30/96 316,388 0.74 3.66 200 .0587
11/30/97 526,585 0.68 2.88 176 .0591
Utility Portfolio
6/3/96-
11/30/96 6,299 1.05+++ 4.41+++ 24 .0439
11/30/97 24,366 1.05++ 3.15++ 77 .0365
Growth-Income Portfolio
2/9/93-
11/30/93 45,080 0.82+++ 1.59+++ 27 NA
11/30/94 84,899 0.81++ 1.26++ 59 NA
11/30/95 171,281 0.77 1.42 59 NA
11/30/96 325,463 0.72 1.21 82 .0597
11/30/97 622,062 0.65 0.89 44 .0555
Federated Value Portfolio
6/3/96-
11/30/96 12,460 1.05+++ 1.26+++ 30 .0520
11/30/97 59,024 1.03 1.03 46 .0494
Venture Value Portfolio
10/28/94-
11/30/94 4,449 1.10+++ 3.93+++ -- NA
11/30/95 154,908 1.00++ 1.43++ 18 NA
11/30/96 516,413 0.85 1.21 22 .0598
11/30/97 1,140,053 0.79 0.98 22 .0599
Putnam Growth Portfolio
2/9/93-
11/30/93 42,911 0.97+++ 0.32+++ 40 NA
11/30/94 75,342 0.96++ 0.31++ 54 NA
11/30/95 115,276 0.93 (0.05) 52 NA
11/30/96 160,073 0.90 (0.02) 63 .0443
11/30/97 234,726 0.91 0.18 125 .0324
Growth/Phoenix Investment Counsel Portfolio
2/9/93-
11/30/93 65,032 0.82+++ 2.20+++ 165 NA
11/30/94 104,194 0.81++ 1.52++ 211 NA
11/30/95 149,910 0.76 1.01 229 NA
11/30/96 186,368 0.74 0.82 164 .0534
11/30/97 218,496 0.73 0.77 217 .0530
</TABLE>
* Calculated based upon average shares outstanding
** After fee waivers and expense reimbursements by the investment adviser
*** Does not reflect expenses that apply to the separate accounts of Anchor
National Life Insurance Company and First SunAmerica Life Insurance
Company. If such expenses had been included, total return would have
been lower for each period presented.
+ Annualized
++ During the periods ended November 30, 1993, 1994, 1995, 1996 and 1997,
the investment adviser waived a portion of or all fees and assumed a
portion of or all expenses for the portfolios. If all fees and expenses
had been incurred by the portfolios, the ratio of expenses to average
net assets and the ratio of net investment income (loss) to average net
assets would have been as follows:
<TABLE>
<CAPTION>
EXPENSES NET INVESTMENT INCOME (LOSS)
----------------------------------------- ---------------------------------------------
1993 1994 1995 1996 1997 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------- ---------------------------------------------
Asset Allocation Portfolio........ 1.67% 0.94% 0.81% 0.74% 0.68% 1.65% 2.71% 3.62% 3.66% 2.88%
Utility Portfolio................. -- -- -- 1.93 1.24 -- -- -- 3.53 2.96
Growth-Income Portfolio........... 1.40 0.89 0.77 0.72 0.65 1.01 1.18 1.42 1.21 0.89
Federated Value Portfolio......... -- -- -- 1.57 1.03 -- -- -- 0.74 1.03
Venture Value Portfolio........... -- 3.89 1.02 0.85 0.79 -- 1.14 1.41 1.21 0.98
Putnam Growth Portfolio........... 1.46 1.05 0.93 0.90 0.91 (0.17) 0.22 (0.05) (0.02) 0.18
Growth/Phoenix Investment Counsel
Portfolio....................... 1.28 0.87 0.76 0.74 0.73 1.74 1.46 1.01 0.82 0.77
</TABLE>
See Notes to Financial Statements
---------------------
129
<PAGE> 125
- ---------------------
SUNAMERICA SERIES TRUST
FINANCIAL HIGHLIGHTS* -- (CONTINUED)
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET NET TOTAL DIVIDENDS DIVIDENDS NET
ASSET INVEST- NET REALIZED & FROM DECLARED FROM FROM NET ASSET
VALUE MENT UNREALIZED INVEST- NET REALIZED VALUE
PERIOD BEGINNING INCOME GAIN (LOSS) ON MENT INVESTMENT GAIN ON END OF TOTAL
ENDED OF PERIOD (LOSS)** INVESTMENTS OPERATIONS INCOME INVESTMENTS PERIOD RETURN***
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alliance Growth Portfolio
2/9/93-
11/30/93 $ 10.00 $ 0.05 $ 0.87 $ 0.92 $ -- $ -- $10.92 9.20%
11/30/94 10.92 0.04 (0.14) (0.10) (0.01) (0.17) 10.64 (0.93)
11/30/95 10.64 0.07 5.08 5.15 (0.03) (0.13) 15.63 48.91
11/30/96 15.63 0.08 4.07 4.15 (0.04) (1.01) 18.73 28.05
11/30/97 18.73 0.16 4.76 4.92 (0.05) (1.04) 22.56 27.80
Global Equities Portfolio
2/9/93-
11/30/93 10.00 0.03 0.96 0.99 -- -- 10.99 9.90
11/30/94 10.99 0.05 0.71 0.76 (0.01) (0.07) 11.67 6.87
11/30/95 11.67 0.12 1.64 1.76 (0.08) (0.29) 13.06 15.58
11/30/96 13.06 0.14 2.19 2.33 (0.14) (0.33) 14.92 18.21
11/30/97 14.92 0.09 1.79 1.88 (0.13) (0.69) 15.98 13.30
International Growth and Income Portfolio
6/2/97-
11/30/97 10.00 0.03 0.38 0.41 -- -- 10.41 4.10
International Diversified Equities Portfolio
10/28/94-
11/30/94 10.00 0.01 (0.23) (0.22) -- -- 9.78 (2.20)
11/30/95 9.78 0.07 0.38 0.45 (0.08) -- 10.15 4.63
11/30/96 10.15 0.05 1.43 1.48 (0.26) -- 11.37 14.85
11/30/97 11.37 0.09 0.28 0.37 (0.31) (0.10) 11.33 3.52
Real Estate Portfolio
6/2/97-
11/30/97 10.00 0.16 1.37 1.53 -- -- 11.53 15.30
Aggressive Growth Portfolio
6/3/96-
11/30/96 10.00 0.02 0.34 0.36 -- -- 10.36 3.60
11/30/97 10.36 0.01 1.40 1.41 (0.01) -- 11.76 13.62
Emerging Markets Portfolio
6/2/97-
11/30/97 10.00 0.06 (2.03) (1.97) -- -- 8.03 (19.70)
<CAPTION>
NET RATIO OF NET
ASSETS RATIO OF INVESTMENT
END OF EXPENSES TO INCOME TO AVERAGE
PERIOD PERIOD AVERAGE NET AVERAGE NET PORTFOLIO COMMISSION
ENDED (000'S) ASSETS ASSETS TURNOVER PER SHARE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance Growth Portfolio
2/9/93-
11/30/93 $ 23,256 0.82%+++ 0.61%+++ 73% $ NA
11/30/94 53,213 0.82++ 0.37++ 146 NA
11/30/95 167,870 0.79 0.51 138 NA
11/30/96 381,367 0.71 0.51 121 .0649
11/30/97 704,533 0.65 0.37 110 .0617
Global Equities Portfolio
2/9/93-
11/30/93 43,737 1.50+++ 0.38+++ 58 NA
11/30/94 136,758 1.28 0.42 67 NA
11/30/95 165,752 1.14 1.02 106 NA
11/30/96 246,482 1.03 1.04 70 .0256
11/30/97 341,639 0.95 0.58 115 .0284
International Growth and Income Portfolio
6/2/97-
11/30/97 42,844 1.60+++ 0.61+++ 19 .0030
International Diversified Equities Portfolio
10/28/94-
11/30/94 12,438 1.70+++ 1.60+++ -- NA
11/30/95 48,961 1.70++ 0.76++ 52 NA
11/30/96 157,008 1.59 0.47 53 .0023
11/30/97 248,927 1.35 0.82 56 .0008
Real Estate Portfolio
6/2/97-
11/30/97 29,565 1.25+++ 3.25+++ 7 .0600
Aggressive Growth Portfolio
6/3/96-
11/30/96 35,124 1.05+++ 0.46+++ 47 .0600
11/30/97 103,603 0.90 (0.13) 221 .0600
Emerging Markets Portfolio
6/2/97-
11/30/97 19,979 1.90+++ 1.33+++ 49 .0011
</TABLE>
* Calculated based upon average shares outstanding
** After fee waivers and expense reimbursements by the investment adviser
*** Does not reflect expenses that apply to the separate accounts of Anchor
National Life Insurance Company and First SunAmerica Life Insurance
Company. If such expenses had been included, total return would have
been lower for each period presented.
+ Annualized
++ During the periods ended November 30, 1993, 1994, 1995, 1996 and 1997,
the investment adviser waived a portion of or all fees and assumed a
portion of or all expenses for the portfolios. If all fees and expenses
had been incurred by the portfolios, the ratio of expenses to average net
assets and the ratio of net investment income (loss) to average net
assets would have been as follows:
<TABLE>
<CAPTION>
EXPENSES NET INVESTMENT INCOME (LOSS)
----------------------------------------- ---------------------------------------------
1993 1994 1995 1996 1997 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------- ---------------------------------------------
Alliance Growth Portfolio......... 1.56% 0.96% 0.79% 0.71% 0.65% (0.13)% 0.23% 0.51% 0.51% 0.37%
Global Equities Portfolio......... 2.52 1.28 1.14 1.03 0.95 (0.64) 0.42 1.02 1.04 0.58
International Growth and Income
Portfolio+...................... -- -- -- -- 2.02 -- -- -- -- 0.19
International Diversified Equities
Portfolio....................... -- 3.50 2.09 1.59 1.35 -- (0.20) 0.37 0.47 0.82
Real Estate Portfolio+............ -- -- -- -- 1.36 -- -- -- -- 3.14
Aggressive Growth Portfolio....... -- -- -- 1.09 0.90 -- -- -- 0.42 (0.13)
Emerging Markets Portfolio+....... -- -- -- -- 2.60 -- -- -- -- 0.63
</TABLE>
See Notes to Financial Statements
- ---------------------
130
<PAGE> 126
- ---------------------
SUNAMERICA SERIES TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES AND SHAREHOLDERS OF SUNAMERICA SERIES TRUST
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolios, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Cash Management Portfolio, Global
Bond Portfolio, Corporate Bond Portfolio (formerly Fixed Income Portfolio),
High-Yield Bond Portfolio, Worldwide High Income Portfolio, SunAmerica Balanced
Portfolio, Balanced/Phoenix Investment Counsel Portfolio, Asset Allocation
Portfolio, Utility Portfolio, Growth-Income Portfolio, Federated Value
Portfolio, Venture Value Portfolio, Alliance Growth Portfolio, Growth/Phoenix
Investment Counsel Portfolio, Putnam Growth Portfolio (formerly Provident Growth
Portfolio), Global Equities Portfolio, International Growth and Income
Portfolio, International Diversified Equities Portfolio, Real Estate Portfolio,
Aggressive Growth Portfolio and Emerging Markets Portfolio (constituting the
twenty-one portfolios of SunAmerica Series Trust, hereafter referred to as the
"Fund") at November 30, 1997, and the results of each of their operations, the
changes in each of their net assets and the financial highlights for each of the
periods indicated, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
November 30, 1997 by correspondence with the custodian and brokers and the
application of alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
January 14, 1998
---------------------
131
<PAGE> 127
- ---------------------
SUNAMERICA SERIES TRUST
SHAREHOLDERS TAX INFORMATION (UNAUDITED)
Certain tax information regarding the SunAmerica Series Trust is required to
be provided to the shareholders based upon each Fund's income and distributions
for the year ended November 30, 1997.
During the year ended November 30, 1997 the Funds paid the following dividends
per share along with the percentage of ordinary income dividends that qualified
for the 70% dividends received deductions for corporations:
<TABLE>
<CAPTION>
QUALIFYING % FOR
NET NET NET THE
TOTAL INVESTMENT SHORT-TERM LONG-TERM 70% DIVIDENDS
DIVIDENDS INCOME CAPITAL GAINS CAPITAL GAINS RECEIVED DEDUCTION
--------- ---------- ------------- ------------- ------------------
<S> <C> <C> <C> <C> <C>
Cash Management Portfolio................. $0.56 $ 0.56 $ -- $ -- --%
Global Bond Portfolio..................... 0.79 0.74 0.03 0.02 --
Corporate Bond Portfolio.................. 0.53 0.53 -- -- 1.67
High-Yield Bond Portfolio................. 0.74 0.74 -- -- 10.52
Worldwide High Income Portfolio........... 1.81 0.90 0.84 0.07 0.35
SunAmerica Balanced Portfolio............. 0.06 0.04 0.02 -- 10.12
Balanced/Phoenix Investment Counsel
Portfolio............................... 0.64 0.23 0.29 0.12 11.37
Asset Allocation Portfolio................ 1.30 0.40 0.45 0.45 19.12
Utility Portfolio......................... 0.11 0.09 0.02 -- 42.08
Growth-Income Portfolio................... 0.86 0.13 0.27 0.46 42.64
Federated Value Portfolio................. 0.03 0.03 -- -- 33.24
Venture Value Portfolio................... 0.35 0.09 0.01 0.25 99.86
Putnam Growth Portfolio................... 0.52 -- -- 0.52 --
Growth/Phoenix Investment Counsel
Portfolio............................... 1.36 0.10 0.95 0.31 9.30
Alliance Growth Portfolio................. 1.09 0.05 0.60 0.44 17.04
Global Equities Portfolio................. 0.82 0.13 0.29 0.40 17.03
International Growth and Income
Portfolio............................... -- -- -- -- --
International Diversified Equities
Portfolio............................... 0.42 0.31 0.04 0.07 --
Real Estate Portfolio..................... -- -- -- -- --
Aggressive Growth Portfolio............... 0.01 0.01 -- -- --
Emerging Markets Portfolio................ -- -- -- -- --
</TABLE>
The Global Equities and International Diversified Equities Portfolios make an
election under Internal Revenue Code Section 853 to pass through foreign taxes
paid by the Portfolios to its shareholders. The total amount of foreign taxes
passed through to the shareholders for the fiscal year ended November 30, 1997
were $378,404 and $488,607 respectively. The gross foreign source income for
information reporting is $3,020,961 and $4,258,469 respectively.
- ---------------------
132
<PAGE> 99
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements.
Set forth in Part B of Registrant's Statement of Additional
Information are the audited financial statements of SunAmerica
Series Trust with respect to Registrant's fiscal year ended
November 30, 1997. The Financial Highlights are set forth in
Part A of the Prospectus under the caption "Financial
Highlights." No financial statements are included in Part C.
All other financial statements, schedules and historical
financial information are omitted because the conditions
requiring their filing do not exist.
(b) Exhibits.
(1) Declaration of Trust, as amended. Incorporated herein by
reference to Post-Effective Amendment No. 6 to the Registrant's
Registration Statement on Form N-1A (File No. 2-85370) filed on
February 29, 1996.
(2) By-Laws. Incorporated herein by reference to Post-Effective
Amendment No. 6 to the Registrant's Registration Statement on
Form N-1A (File No. 2-85370) filed on February 29, 1996.
(3) Voting Trust Agreement. Inapplicable.
(4) Share of Beneficial Interest. Inapplicable.
(5)(a) Investment Advisory and Management Agreement between
Registrant and SunAmerica Asset Management Corp. Incorporated
herein by reference to Post-Effective Amendment No. 12 to the
Registrant's Registration Statement on Form N-1A filed on May
7, 1997.
(5)(b) Subadvisory Agreements. Incorporated herein by
reference to Post-Effective Amendment No. 6 to the
Registrant's Registration Statement on Form N-1A (File No.
2-85370) filed on February 29, 1996 and also Incorporated
herein by reference to Post-Effective Amendment No. 12 to the
Registrant's Registration Statement on Form N-1A filed on May
7, 1997.
(6) Distribution Agreement. Inapplicable.
<PAGE> 100
(7) Bonus, Profit Sharing, Pension or Similar Contracts.
Inapplicable.
(8) Custodian Contract. Incorporated herein by reference to
Post-Effective Amendment No. 10 to the Registrant's
Registration Statement on Form N-1A (File No. 2-85370) filed on
February 28, 1997.
(9) Fund Participation Agreement between Registrant and Anchor
National Life Insurance Company, on behalf of itself and
Variable Separate Account. Incorporated herein by reference to
Post-Effective Amendment No. 6 to the Registrant's Registration
Statement on Form N-1A (File No. 2-85370) filed on February
29, 1996.
(9)(a) Transfer Agency and Service Agreement filed between the
Registrant and State Street Bank and Trust Company.
Incorporated herein by reference to Post-Effective Amendment
No. 12 to the Registrant's Registration Statement on Form N-1A
filed on May 7, 1997.
(10) Opinion and Consent of Counsel. Inapplicable
(11) Consent of Independent Accountants.
(12) Financial Statements Omitted from Item 23. Inapplicable.
(13) Initial Capitalization Agreement. Inapplicable.
(14) Model Plan. Inapplicable.
(15) Rule 12b-1 Plan. Inapplicable.
(16) Performance Computations.
(17) Financial Data Schedules.
(18) Power of Attorney Incorporated herein by reference to
Post-Effective Amendment No. 6 to the Registrant's
Registration Statement on Form N-1A (File No. 2-85370) filed on
February 29, 1996.
Item 25. Persons Controlled by or Under Common Control with Registrant.
Incorporated herein by reference to Registrant's Registration Statement
on Form N-1A (File No. 2-85370) filed on November 3, 1992.
C-2
<PAGE> 101
Item 26. Number of Holders of Securities.
As of November 30, 1997, the number of record holders of SunAmerica
Series Trust was as follows:
Title of Class Number of Record Holders
Shares of Beneficial Interest 4*
* Held by Variable Separate Account and Variable Annuity Account Four
of Anchor National Life Insurance Company, FS Variable Separate
Account of First SunAmerica Life Insurance Company and SunAmerica Inc.
Item 27. Indemnification.
Article VI of the Registrant's By-Laws relating to the indemnification
of officers and trustees is quoted below:
ARTICLE VI
INDEMNIFICATION
The Trust shall provide any indemnification required by
applicable law and shall indemnify trustees, officers, agents and
employees as follows:
(a) the Trust shall indemnify any director or officer of the Trust who
was or is a party or is threatened to be made a party of any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than action by
or in the right of the Trust) by reason of the fact that such Person
is or was such Trustee or officer or an employee or agent of the
Trust, or is or was serving at the request of the Trust as a director,
officer, employee or agent of another corporation, partnership, joint
venture, Trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such Person in connection with
such action, suit or proceeding, provided such Person acted in good
faith an in a manner such Person reasonably believed to be in or not
opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such
Person's conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea
of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the Person did not reasonably believe his or her
actions to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had reasonable
cause to believe that such Person's conduct was unlawful.
C-3
<PAGE> 102
(b) The Trust shall indemnify any Trustee or officer of the Trust who
was or is a part or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the Trust to
procure a judgment in its favor by reason of the fact that such Person
is or was such Trustee or officer or an employee or agent of the Trust,
or is or was serving at the request of the Trust as a director,
officer, employee or agent of another corporation, partnership, joint
venture, Trust or other enterprise, against expenses (including
attorneys' fees), actually and reasonably incurred by such Person in
connection with the defense or settlement of such action or suit if
such Person acted in good faith and in a manner such Person reasonably
believed to be in or not opposed to the best interests of the Trust,
except that no indemnification shall be made in respect of any claim,
issue or matter as to which such Person shall have been adjudged to be
liable for negligence or misconduct in the performance of such Person's
duty to the Trust unless and only to the extent that the court in which
such action or suit was brought, or any other court having jurisdiction
in the premises, shall determine upon application that, despite the
adjudication of liability but in view of all circumstances of the case,
such Person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper.
(c) To the extent that a Trustee or officer of the Trust has been
successful on the merits or otherwise in defense of any action, suit
or proceeding referred to in subparagraphs (a) or (b) above or in
defense of any claim, issue or matter therein, such Person shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such Person in connection therewith, without
the necessity for the determination as to the standard of conduct as
provided in subparagraph (d).
(d) Any indemnification under subparagraph (a) or (b) (unless ordered
by a court) shall be made by the Trust only as authorized in the
specific case upon a determination that indemnification of the Trustee
or officer is proper in view of the standard of conduct set forth in
subparagraph (a) or (b). Such determination shall be made (i) by the
Board by a majority vote of a quorum consisting of Trustees who were
disinterested and not parties to such action, suit or proceedings, or
(ii) if such a quorum of disinterested Trustees so directs, by
independent legal counsel in a written opinion, and any determination
so made shall be conclusive and binding upon all parties.
(e) Expenses incurred in defending a civil or criminal action, writ
or proceeding may be paid by the Trust in advance
C-4
<PAGE> 103
of the final disposition of such action, suit or proceeding, as
authorized in the particular case, upon receipt of an undertaking by
or on behalf of the Trustee or officer to repay such amount unless it
shall ultimately be determined that such Person is entitled to be
indemnified by the Trust as authorized herein. Such determination
must be made by disinterested Trustees or independent legal counsel.
Prior to any payment being made pursuant to this paragraph, a majority
of quorum of disinterested, non-party Trustees of the Trust, or an
independent legal counsel in a written opinion, shall determine, based
on a review of readily available facts that there is reason to believe
that the indemnitee ultimately will be found entitled to
indemnification.
(f) Agents and employees of the Trust who are not Trustees or
officers of the Trust may be indemnified under the same standards and
procedures set forth above, in the discretion of the Board.
(g) Any indemnification pursuant to this Article shall not be deemed
exclusive of any other rights to which those indemnified may be
entitled and shall continue as to a Person who has ceased to be a
Trustee or officer and shall inure to the benefit of the heirs,
executors and administrators of such a Person.
(h) Nothing in the Declaration or in these By-Laws shall be deemed to
protect any Trustee or officer of the Trust against any liability to
the Trust or to its Shareholders to which such Person would otherwise
be subject by reason of willful malfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of such Person's office.
(i) The Trust shall have power to purchase and maintain insurance on
behalf of any Person against any liability asserted against or
incurred by such Person, whether or not the Trust would have the power
to indemnify such Person against such liability under the provisions
of this Article. Nevertheless, insurance will not be purchased or
maintained by the Trust if the purchase or maintenance of such
insurance would result in the indemnification of any Person in
contravention of any rule or regulation and/or interpretation of the
Securities and Exchange Commission.
* * * * * * * * * * * * * *
The Investment Advisory and Management Agreement provides that
in absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of office on
the part of the Investment Adviser (and
C-5
<PAGE> 104
its officers, directors, agents, employees, controlling persons,
shareholders and any other person or entity affiliated with the
Investment Adviser to perform or assist in the performance of its
obligations under each Agreement) the Investment Adviser shall not be
subject to liability to the Trust or to any shareholder of the Trust
for any act or omission in the course of, or connected with, rendering
services, including without limitation, any error of judgment or
mistake or law or for any loss suffered by any of them in connection
with the matters to which each Agreement relates, except to the extent
specified in Section 36(b) of the Investment Company Act of 1940
concerning loss resulting from a breach of fiduciary duty with respect
to the receipt of compensation for services. Certain of the
Subadvisory Agreements provide for similar indemnification of the
Subadviser by the Investment Adviser.
SunAmerica Inc., the parent of Anchor National Life Insurance
Company, provides, without cost to the Fund, indemnification of
individual trustees. By individual letter agreement, SunAmerica Inc.
indemnifies each trustee to the fullest extent permitted by law
against expenses and liabilities (including damages, judgments,
settlements, costs, attorney's fees, charges and expenses) actually
and reasonably incurred in connection with any action which is the
subject of any threatened, asserted, pending or completed action, suit
or proceeding, whether civil, criminal, administrative, investigative
or otherwise and whether formal or informal to which any trustee was,
is or is threatened to be made a party by reason of facts which
include his being or having been a trustee, but only to the extent
such expenses and liabilities are not covered by insurance.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to trustees,
officers and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is therefore unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a trustee, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such trustee, officer or
controlling person in connection with the securities being registered,
the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it
C-6
<PAGE> 105
is against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
Item 28. Business and other Connections of Investment Adviser.
SunAmerica Asset Management Corp. ("SAAMCo"), the Investment Adviser
of the Trust, is primarily in the business of providing investment
management, advisory and administrative services. Reference is made
to the most recent Form ADV and schedules thereto of SAAMCo on file
with the Commission (File No. 801-19813) for a description of the
names and employment of the directors and officers of SAAMCo and other
required information.
Alliance Capital Management L.P., Federated Investment Counseling,
Goldman Sachs Asset Management, Goldman Sachs Asset Management
International, Phoenix Investment Counsel, Inc., Putnam Investment
Management, Inc., Davis Selected Advisers, L.P., Morgan Stanley Asset
Management Inc. and Federated Investment Counseling, the Subadvisers
of certain of the Portfolios of the Trust, are primarily engaged in
the business of rendering investment advisory services. Reference is
made to the most recent Form ADV and schedules thereto on file with
the Commission for a description of the names and employment of the
directors and officers of Alliance Capital Management L.P., Goldman
Sachs Asset Management, Goldman Sachs Asset Management International,
Phoenix Investment Counsel, Inc., Putnam Investment Management, Inc.,
Davis Selected Advisers, L.P. Morgan Stanley Asset Management Inc. and
Federated Investment Counseling, and other required information:
File No.
Alliance Capital Management L.P. 801-32361
Federated Investment Counseling 801-34611
Goldman Sachs Asset Management 801-16048
Goldman Sachs Asset Management Int'l. 801-38157
Phoenix Investment Counsel, Inc. 801-5995
Putnam Investment Management, Inc. 801-7974
Davis Selected Advisers, L.P. 801-31648
Morgan Stanley Asset Management Inc. 801-15757
Item 29. Principal Underwriters.
There is no Principal Underwriter for the Registrant.
Item 30. Location of Accounts and Records.
C-7
<PAGE> 106
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, acts as custodian, transfer agent and dividend
paying agent. It maintains books, records and accounts pursuant to
the instructions of the Trust.
SunAmerica Asset Management Corp., is located at The SunAmerica
Center, 733 Third Avenue, New York, New York 10017-3204. Alliance
Capital Management L.P. is located at 1345 Avenue of the Americas, New
York, New York 10105. Goldman Sachs Asset Management and Goldman
Sachs Asset Management International are located at 85 Broad Street,
12th Floor, New York, New York 10005. Morgan Stanley Asset Management
Inc., is located at 1221 Avenue of the Americas, 22nd Floor, New York,
New York 10020. Phoenix Investment Counsel, Inc. is located at One
American Row, Hartford, Connecticut 06115. Putnam Investment
Management, Inc., is located at One Post Office Square, Boston,
Massachusetts 02109. Davis Selected Advisers, L.P. is located at 124
East Marcy Street, Sante Fe, New Mexico 87501. Federated Investment
Counseling is located at Federated Investors Tower, 1001 Liberty
Avenue, Pittsburgh, Pennsylvania 15222-3779. Each of the Investment
Adviser and Subadvisers maintain the books, accounts and records
required to be maintained pursuant to Section 31(a) of the Investment
Company Act of 1940 and the rules promulgated thereunder.
Item 31. Management Services.
None.
Item 32. Undertakings.
Registrant hereby undertakes to:
(b) file a post-effective amendment, using financial statements which
need not be certified, within four to six months from the effective
date of Registrant's registration statement, with respect to the "Dogs"
of Wall Street Portfolio.
(c) furnish an investor to whom a prospectus is delivered with a copy
of Registrant's latest annual report to shareholders, upon request and
without charge.
C-8
<PAGE> 107
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, Registrant
certifies that it meets all of the requirements for effectiveness of the
Post-Effective Amendment No. 15 to the Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933, as amended, and has duly caused the
Post-Effective Amendment No. 15 to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of New
York, and State of New York, on the 26th day of March, 1998.
SUNAMERICA SERIES TRUST
By: /s/ Peter C. Sutton
------------------------
Peter C. Sutton
Vice President
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Post-Effective Amendment No. 15 to Registrant's Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:
<TABLE>
<S> <C> <C>
* Trustee, Chairman and
- ------------------------------ President
James K. Hunt (Principal Executive Officer) March 26, 1998
* Senior Vice President,
- ------------------------------ Treasurer and Controller
Scott L. Robinson (Principal Financial
and Accounting Officer) March 26, 1998
* Trustee March 26, 1998
- ------------------------------
Richards D. Barger
* Trustee March 26, 1998
- ------------------------------
Norman J. Metcalfe
* Trustee March 26, 1998
- ------------------------------
Allan L. Sher
* Trustee March 26, 1998
- ------------------------------
William M. Wardlaw
*By: /s/ Robert M. Zakem March 26, 1998
-------------------------
Robert M. Zakem
Attorney-in-Fact
</TABLE>
<PAGE> 108
SUNAMERICA SERIES TRUST
EXHIBIT INDEX
Exhibit No. Name
- ----------- ----
11 Consent of Independent Accountants
16 Performance Computations
17 Financial Data Schedules
<PAGE> 1
Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 15 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
January 14, 1998, relating to the financial statements and financial highlights
of SunAmerica Series Trust, which appears in such Statement of Additional
Information, and to the incorporation by reference of our report into the
Prospectus which constitutes part of this Registration Statement. We also
consent to the reference to us under the heading "General Information -
Independent Accountants and Legal Counsel" in such Statement of Additional
Information and to the references to us under the headings "Financial
Highlights" and "Independent Accountants" in such Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
March 20, 1998
<PAGE> 1
EXHIBIT 16
The information contained in the Annual Results for the Hypothetical
Performance of the Strategy for the "Dogs" of Wall Street Portfolio was
calculated by linking, on a market-weighted basis, the annual total returns,
including dividend reinvestment, for each of the 30 securities that would have
been selected in the year listed using the Portfolio's selection criteria as
set forth in the Prospectus. A security's individual annual total return was
calculated by subtracting the security's market price on January 1 of that year
from the security's market price on December 31 of that year, and then dividing
that figure by the security's market price on January 1 of that year.
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<NAME> SUNAMERICA SERIES TRUST
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<NUMBER> 001
<NAME> SUNAMERICA SERIES TRUST GLOBAL EQUITIES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 301,786,616
<INVESTMENTS-AT-VALUE> 339,260,768
<RECEIVABLES> 1,183,964
<ASSETS-OTHER> 1,480,278
<OTHER-ITEMS-ASSETS> 731,035
<TOTAL-ASSETS> 342,656,045
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,016,851
<TOTAL-LIABILITIES> 1,016,851
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 275,796,920
<SHARES-COMMON-STOCK> 21,381,428
<SHARES-COMMON-PRIOR> 16,515,390
<ACCUMULATED-NII-CURRENT> 1,870,601
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 25,413,638
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 38,558,035
<NET-ASSETS> 341,639,194
<DIVIDEND-INCOME> 4,033,068
<INTEREST-INCOME> 659,468
<OTHER-INCOME> 0
<EXPENSES-NET> 2,908,631
<NET-INVESTMENT-INCOME> 1,783,905
<REALIZED-GAINS-CURRENT> 26,171,128
<APPREC-INCREASE-CURRENT> 8,166,402
<NET-CHANGE-FROM-OPS> 36,121,435
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,305,000)
<DISTRIBUTIONS-OF-GAINS> (12,550,000)
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<NUMBER-OF-SHARES-SOLD> 9,425,673
<NUMBER-OF-SHARES-REDEEMED> (5,605,026)
<SHARES-REINVESTED> 1,045,391
<NET-CHANGE-IN-ASSETS> 95,157,188
<ACCUMULATED-NII-PRIOR> 2,209,001
<ACCUMULATED-GAINS-PRIOR> 11,975,206
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 2,908,631
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<PER-SHARE-NII> 0.09
<PER-SHARE-GAIN-APPREC> 1.79
<PER-SHARE-DIVIDEND> (0.13)
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<PER-SHARE-NAV-END> 15.98
<EXPENSE-RATIO> 0.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
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<NAME> SUNAMERICA SERIES TRUST ALLIANCE GROWTH
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<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1997
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<INVESTMENTS-AT-VALUE> 707,268,748
<RECEIVABLES> 3,528,856
<ASSETS-OTHER> 18,608
<OTHER-ITEMS-ASSETS> 813
<TOTAL-ASSETS> 710,817,025
<PAYABLE-FOR-SECURITIES> 5,598,029
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 685,729
<TOTAL-LIABILITIES> 6,283,758
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 519,726,389
<SHARES-COMMON-STOCK> 31,224,923
<SHARES-COMMON-PRIOR> 20,365,649
<ACCUMULATED-NII-CURRENT> 1,954,191
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 81,181,841
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 101,670,846
<NET-ASSETS> 704,533,267
<DIVIDEND-INCOME> 5,137,345
<INTEREST-INCOME> 268,071
<OTHER-INCOME> 0
<EXPENSES-NET> 3,445,059
<NET-INVESTMENT-INCOME> 1,960,357
<REALIZED-GAINS-CURRENT> 82,904,495
<APPREC-INCREASE-CURRENT> 34,446,529
<NET-CHANGE-FROM-OPS> 119,311,381
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,200,000)
<DISTRIBUTIONS-OF-GAINS> (23,710,000)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 18,866,011
<NUMBER-OF-SHARES-REDEEMED> (9,403,821)
<SHARES-REINVESTED> 1,397,084
<NET-CHANGE-IN-ASSETS> 323,166,594
<ACCUMULATED-NII-PRIOR> 1,193,834
<ACCUMULATED-GAINS-PRIOR> 21,987,346
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,145,937
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,445,059
<AVERAGE-NET-ASSETS> 532,851,476
<PER-SHARE-NAV-BEGIN> 18.73
<PER-SHARE-NII> 0.16
<PER-SHARE-GAIN-APPREC> 4.76
<PER-SHARE-DIVIDEND> (0.05)
<PER-SHARE-DISTRIBUTIONS> (1.04)
<RETURNS-OF-CAPITAL> 0
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<EXPENSE-RATIO> 0.65
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<AVG-DEBT-PER-SHARE> 0
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<NAME> SUNAMERICA SERIES TRUST GROWTH PHOENIX
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 192,857,996
<INVESTMENTS-AT-VALUE> 217,620,733
<RECEIVABLES> 4,068,449
<ASSETS-OTHER> 8,619
<OTHER-ITEMS-ASSETS> 2,557
<TOTAL-ASSETS> 221,700,358
<PAYABLE-FOR-SECURITIES> 2,972,257
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 232,283
<TOTAL-LIABILITIES> 3,204,540
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 155,204,329
<SHARES-COMMON-STOCK> 13,988,236
<SHARES-COMMON-PRIOR> 12,955,501
<ACCUMULATED-NII-CURRENT> 1,533,739
<OVERDISTRIBUTION-NII> 0
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 24,762,737
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<INTEREST-INCOME> 1,002,234
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<EXPENSES-NET> 1,460,709
<NET-INVESTMENT-INCOME> 1,535,922
<REALIZED-GAINS-CURRENT> 37,146,021
<APPREC-INCREASE-CURRENT> (2,566,236)
<NET-CHANGE-FROM-OPS> 36,115,707
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,325,000)
<DISTRIBUTIONS-OF-GAINS> (16,255,000)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,470,784
<NUMBER-OF-SHARES-REDEEMED> (2,775,949)
<SHARES-REINVESTED> 1,337,900
<NET-CHANGE-IN-ASSETS> 32,128,240
<ACCUMULATED-NII-PRIOR> 1,332,795
<ACCUMULATED-GAINS-PRIOR> 16,104,014
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,299,894
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,460,709
<AVERAGE-NET-ASSETS> 199,982,369
<PER-SHARE-NAV-BEGIN> 14.39
<PER-SHARE-NII> 0.11
<PER-SHARE-GAIN-APPREC> 2.48
<PER-SHARE-DIVIDEND> (0.10)
<PER-SHARE-DISTRIBUTIONS> (1.26)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.62
<EXPENSE-RATIO> 0.73
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<AVG-DEBT-PER-SHARE> 0
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<NAME> SUNAMERICA SERIES TRUST PUTNAM GROWTH
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 189,155,574
<INVESTMENTS-AT-VALUE> 234,769,578
<RECEIVABLES> 6,025,834
<ASSETS-OTHER> 7,515
<OTHER-ITEMS-ASSETS> 221
<TOTAL-ASSETS> 240,803,148
<PAYABLE-FOR-SECURITIES> 5,665,775
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 411,159
<TOTAL-LIABILITIES> 6,076,934
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 145,094,700
<SHARES-COMMON-STOCK> 12,258,209
<SHARES-COMMON-PRIOR> 10,189,121
<ACCUMULATED-NII-CURRENT> 333,117
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 43,684,393
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 45,614,004
<NET-ASSETS> 234,726,214
<DIVIDEND-INCOME> 1,612,893
<INTEREST-INCOME> 435,543
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<NAME> SUNAMERICA SERIES TRUST HIGH YIELD
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<NAME> SUNAMERICA SERIES TRUST CASH MANAGEMENT
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<NAME> SUNAMERICA SERIES TRUST ASSET ALLOCATION
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<CIK> 0000892538
<NAME> SUNAMERICA SERIES TRUST
<SERIES>
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<NAME> SUNAMERICA SERIES TRUST GLOBAL BOND
<S> <C>
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<CIK> 0000892538
<NAME> SUNAMERICA SERIES TRUST
<SERIES>
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<NAME> SUNAMERICA SERIES TRUST CORPORATE BOND
<S> <C>
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<CIK> 0000892538
<NAME> SUNAMERICA SERIES TRUST
<SERIES>
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<NAME> SUNAMERICA SERIES TRUST BALANCED PHOENIX
<S> <C>
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<CIK> 0000892538
<NAME> SUNAMERICA SERIES TRUST
<SERIES>
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<NAME> SUNAMERICA SERIES TRUST VENTURE VALUE
<S> <C>
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<CIK> 0000892538
<NAME> SUNAMERICA SERIES TRUST
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<NUMBER> 013
<NAME> SUNAMERICA SERIES TRUST WORLDWIDE HIGH VOLUME
<S> <C>
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<CIK> 0000892538
<NAME> SUNAMERICA SERIES TRUST
<SERIES>
<NUMBER> 014
<NAME> SUNAMERICA SERIES TRUST INTERNATIONAL DIVERSIFIED EQUITIES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1997
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<CIK> 0000892538
<NAME> SUNAMERICA SERIES TRUST
<SERIES>
<NUMBER> 015
<NAME> SUNAMERICA SERIES TRUST UTILITY
<S> <C>
<PERIOD-TYPE> 12-MOS
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</TABLE>
<TABLE> <S> <C>
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<CIK> 0000892538
<NAME> SUNAMERICA SERIES TRUST
<SERIES>
<NUMBER> 016
<NAME> SUNAMERICA SERIES TRUST SUNAMERICA BALANCED
<S> <C>
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000892538
<NAME> SUNAMERICA SERIES TRUST
<SERIES>
<NUMBER> 017
<NAME> SUNAMERICA SERIES TRUST FEDERATED VALUE
<S> <C>
<PERIOD-TYPE> 12-MOS
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000892538
<NAME> SUNAMERICA SERIES TRUST
<SERIES>
<NUMBER> 018
<NAME> SUNAMERICA SERIES TRUST AGGRESSIVE GROWTH
<S> <C>
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000892538
<NAME> SUNAMERICA SERIES TRUST
<SERIES>
<NUMBER> 019
<NAME> SUNAMERICA SERIES TRUST REAL ESTATE
<S> <C>
<PERIOD-TYPE> 12-MOS
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000892538
<NAME> SUNAMERICA SERIES TRUST
<SERIES>
<NUMBER> 020
<NAME> SUNAMERICA SERIES TRUST INTERNATIONAL GROWTH AND INCOME
<S> <C>
<PERIOD-TYPE> 12-MOS
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<CIK> 0000892538
<NAME> SUNAMERICA SERIES TRUST
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<NAME> SUNAMERICA SERIES TRUST EMERGING MARKETS
<S> <C>
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