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PROSPECTUS
MARCH 30, 1999
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SUNAMERICA SERIES TRUST
-- Cash Management Portfolio
-- Corporate Bond Portfolio
-- Global Bond Portfolio
-- High-Yield Bond Portfolio
-- Worldwide High Income Portfolio
-- SunAmerica Balanced Portfolio
-- MFS Total Return Portfolio
-- Asset Allocation Portfolio
-- Utility Portfolio
-- Growth-Income Portfolio
-- Federated Value Portfolio
-- Venture Value Portfolio
-- "Dogs" of Wall Street Portfolio
-- Alliance Growth Portfolio
-- MFS Growth and Income Portfolio
-- Putnam Growth Portfolio
-- Real Estate Portfolio
-- MFS Mid-Cap Growth Portfolio
-- Aggressive Growth Portfolio
-- International Growth and Income Portfolio
-- Global Equities Portfolio
-- International Diversified Equities Portfolio
-- Emerging Markets Portfolio
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[ANCHOR NATIONAL LOGO]
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THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED THESE SECURITIES OR
PASSED UPON THE ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
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<TABLE>
<S> <C>
TRUST HIGHLIGHTS............................................ 3
Q&A....................................................... 3
ACCOUNT INFORMATION......................................... 29
ADDITIONAL INFORMATION ABOUT THE "DOGS" OF WALL STREET
PORTFOLIO................................................. 30
Investment Strategy for the "Dogs" of Wall Street
Portfolio.............................................. 30
MORE INFORMATION ABOUT THE PORTFOLIOS....................... 30
Investment Strategies..................................... 30
GLOSSARY.................................................... 42
Investment Terminology.................................... 42
Risk Terminology.......................................... 44
OTHER INFORMATION........................................... 46
Year 2000................................................. 46
MANAGEMENT.................................................. 47
Investment Adviser and Manager............................ 47
Information about the Subadvisers......................... 49
Portfolio Management...................................... 51
Custodian, Transfer and Dividend Paying Agent............. 62
FINANCIAL HIGHLIGHTS........................................ 62
FOR MORE INFORMATION........................................ 66
</TABLE>
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TRUST HIGHLIGHTS
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The following questions and answers are designed to give you an overview of
SunAmerica Series Trust (the "Trust") and to provide you with information about
twenty-three of the Trust's separate investment series ("Portfolios") and their
investment goals and principal strategies. More complete investment information
is provided in the chart, under "More Information About the Portfolios," which
is on page 30, and the glossary that follows on page 42.
Q&A
FIXED INCOME PORTFOLIOS typically seek to provide high current income consistent
with the preservation of capital by investing in fixed income securities.
YIELD is the annual dollar income received on an investment expressed as a
percentage of the current or average price.
INCOME is interest payments from bonds or dividends from stocks.
TOTAL RETURN is a measure of performance which combines all elements of return
including income and capital gain or loss; it represents the change in value of
an investment over a given period expressed as a percentage of the initial
investment.
"HIGH QUALITY" INSTRUMENTS have a very strong capacity to pay interest and repay
principal; they reflect the issuers' high creditworthiness and low risk of
default.
Q: WHAT ARE THE PORTFOLIOS' INVESTMENT GOALS AND PRINCIPAL INVESTMENT
STRATEGIES?
A: Each Portfolio operates as a separate mutual fund, with its own investment
goal and a principal strategy for pursuing it. A Portfolio's investment
goal may be changed without shareholder approval, but you will be notified
of any change. There can be no assurance that any Portfolio will meet its
investment goal or that the net return on an investment will exceed what
could have been obtained through other investment or savings vehicles.
FIXED INCOME PORTFOLIOS
<TABLE>
<CAPTION>
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PORTFOLIO INVESTMENT GOAL PRINCIPAL INVESTMENT STRATEGY
----------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Management high current yield while invests in a diversified selection
Portfolio preserving capital of money market instruments
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Corporate Bond high total return with invests primarily in investment
Portfolio only moderate price risk grade fixed income securities
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Global Bond Portfolio high total return, invests in high quality fixed
emphasizing current income securities of U.S. and
income and, to a lesser foreign issuers and transactions in
extent, capital foreign currencies
appreciation
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High-Yield Bond high current income and, invests primarily in intermediate
Portfolio secondarily, capital and long-term corporate
appreciation obligations, emphasizing
higher-yielding, higher-risk,
lower-rated or unrated securities
(junk bonds) with a primary focus
on "B" rated high-yield bonds
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Worldwide High Income high current income and, invests primarily in high-yielding
Portfolio secondarily, capital fixed income securities (junk
appreciation bonds) of issuers located
throughout the world
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</TABLE>
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<PAGE> 4
BALANCED PORTFOLIOS typically try to balance three different investment goals:
capital appreciation, income and capital preservation by investing in a mixture
of stocks, bonds and money market instruments.
ASSET ALLOCATION is a varying combination, depending on market conditions and
risk level, of stocks, bonds, money market instruments and other assets.
CAPITAL APPRECIATION/GROWTH is an increase in the market value of securities
held.
BALANCED OR ASSET ALLOCATION PORTFOLIOS
<TABLE>
<CAPTION>
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PORTFOLIO INVESTMENT GOAL PRINCIPAL INVESTMENT STRATEGY
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<S> <C> <C>
SunAmerica Balanced conservation of maintains at all times a balanced
Portfolio principal portfolio of stocks and bonds, with
at least 25% invested in fixed
income securities
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MFS Total Return reasonable current invests primarily in common stocks
Portfolio income, long-term and fixed income securities, with
capital growth and an emphasis on income-producing
conservation of capital securities that appear to have some
potential for capital enhancement
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Asset Allocation high total return invests in a diversified portfolio
Portfolio (including income and that may include common stocks and
capital gains) other securities with common stock
consistent with long- characteristics, bonds and other
term preservation of intermediate and long-term fixed
capital income securities and money market
instruments
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Utility Portfolio high current income and invests primarily in equity and
moderate capital debt securities of utility
appreciation companies
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</TABLE>
EQUITY PORTFOLIOS
<TABLE>
<CAPTION>
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PORTFOLIO INVESTMENT GOAL PRINCIPAL INVESTMENT STRATEGY
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<S> <C> <C>
Growth-Income growth of capital and invests primarily in common stocks
Portfolio income or securities that demonstrate the
potential for appreciation and/or
dividends
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Federated Value growth of capital and invests primarily in the securities
Portfolio income of high quality companies
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Venture Value growth of capital invests primarily in common stocks
Portfolio of companies with market
capitalizations of at least $5
billion
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"Dogs" of Wall Street total return (including invests in thirty high dividend
Portfolio capital appreciation and yielding common stocks selected
current income) annually from the Dow Jones
Industrial Average and the broader
market (see "Additional information
about the "Dogs" of Wall Street
Portfolio" for a detailed
description of the Portfolio's
Investment Strategy)
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Alliance Growth long-term growth of invests primarily in equity
Portfolio capital securities of a limited number of
large, carefully selected, high
quality U.S. companies that are
judged likely to achieve superior
earnings
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</TABLE>
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A "GROWTH" PHILOSOPHY -- that of investing in securities believed to offer the
potential for capital appreciation -- focuses on securities of companies that
are considered to have an historical record of above- average growth rate,
significant growth potential, above-average earnings growth or value, the
ability to sustain earnings growth, or that offer proven or unusual products or
services, or operate in industries experiencing increasing demand.
A "VALUE" PHILOSOPHY -- that of investing in securities that are believed to be
undervalued in the market -- often reflects a contrarian approach in that the
potential for superior relative performance is believed to be highest when
fundamentally solid companies are out of favor. The selection criteria is
usually calculated to identify stocks of companies with solid financial strength
and generous dividend yields that have low price- earnings ratios and have
generally been overlooked by the market, or companies undervalued within an
industry or market capitalization category.
MARKET CAPITALIZATION represents the total market value of the outstanding
securities of a corporation.
INTERNATIONAL PORTFOLIOS typically seek capital appreciation by investing
significantly in securities traded in markets outside the U.S.
AN "EMERGING MARKET" COUNTRY is generally a country with a low or middle income
economy or that is in the early stages of its industrialization cycle.
EQUITY PORTFOLIOS (CONT'D)
<TABLE>
<CAPTION>
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PORTFOLIO INVESTMENT GOAL PRINCIPAL INVESTMENT STRATEGY
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<S> <C> <C>
MFS Growth and Income reasonable current invests primarily in equity
Portfolio income and long-term securities
growth of capital and
income
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Putnam Growth long-term growth of invests primarily in common stocks
Portfolio capital or securities with common stock
characteristics that its Subadviser
believes have above-average growth
prospects
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Real Estate Portfolio total return through a invests primarily in securities of
combination of growth companies principally engaged in or
and income related to the real estate industry
or that own significant real estate
assets or that primarily invest in
real estate financial instruments
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MFS Mid-Cap Growth long-term growth of invests primarily in equity
Portfolio capital securities of medium-sized
companies, generally with market
capitalizations between $1 billion
and $5 billion, that its Subadviser
believes have above-average growth
potential
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Aggressive Growth capital appreciation invests primarily in equity
Portfolio securities of high growth companies
including small growth companies
with market capitalizations under
$1 billion
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</TABLE>
INTERNATIONAL PORTFOLIOS
<TABLE>
<CAPTION>
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PORTFOLIO INVESTMENT GOAL PRINCIPAL INVESTMENT STRATEGY
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<S> <C> <C>
International Growth growth of capital and, invests primarily in common stocks
and Income Portfolio secondarily, current traded on markets outside the U.S.
income
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Global Equities long-term growth of invests primarily in common stocks
Portfolio capital or securities with common stock
characteristics of U.S. and foreign
issuers that demonstrate the
potential for appreciation and
engages in transactions in foreign
currencies
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International long-term capital invests (in accordance with country
Diversified Equities appreciation and sector weightings determined by
Portfolio its Subadviser) in common stocks of
foreign issuers that, in the
aggregate, replicate broad country
and sector indices
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Emerging Markets long-term capital invests primarily in common stocks
Portfolio appreciation and other equity securities of
companies that its Subadviser
believes have above-average growth
prospects primarily in emerging
markets outside the U.S.
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</TABLE>
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<PAGE> 6
Q: WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIOS?
A: The following section describes the principal risks of each Portfolio, while
the chart on page 31 describes various additional risks.
Risks of Investing in Equity Securities
The GROWTH-INCOME, FEDERATED VALUE, VENTURE VALUE, "DOGS" OF WALL STREET,
ALLIANCE GROWTH, MFS GROWTH AND INCOME, PUTNAM GROWTH, REAL ESTATE, MFS
MID-CAP GROWTH, AGGRESSIVE GROWTH, INTERNATIONAL GROWTH AND INCOME, GLOBAL
EQUITIES, INTERNATIONAL DIVERSIFIED EQUITIES and EMERGING MARKETS PORTFOLIOS
invest primarily in equity securities. In addition, the SUNAMERICA BALANCED,
MFS TOTAL RETURN, ASSET ALLOCATION and UTILITY PORTFOLIOS invest
significantly in equities. As with any equity fund, the value of your
investment in any of these Portfolios may fluctuate in response to stock
market movements. Growth stocks are historically volatile, which will
particularly affect the GROWTH-INCOME, ALLIANCE GROWTH, MFS GROWTH AND
INCOME, PUTNAM GROWTH, MFS MID-CAP GROWTH, AGGRESSIVE GROWTH and
INTERNATIONAL GROWTH AND INCOME PORTFOLIOS. You should be aware that the
performance of different types of equity stocks may rise or decline under
varying market conditions -- for example, "value" stocks may perform well
under circumstances in which "growth" stocks in general have fallen. In
addition, individual stocks selected for any of these Portfolios may
underperform the market generally.
Risks of Investing in Bonds
The CORPORATE BOND, GLOBAL BOND, HIGH-YIELD BOND, and WORLDWIDE HIGH INCOME
PORTFOLIOS invest primarily in bonds. In addition, the SUNAMERICA BALANCED,
MFS TOTAL RETURN, ASSET ALLOCATION and UTILITY PORTFOLIOS invest
significantly in bonds. As with any bond fund, the value of your investment
in these Portfolios may go up or down in response to changes in interest
rates or defaults (or even the potential for future default) by bond
issuers. To the extent a Portfolio is invested in the bond market, movements
in the bond market generally may affect its performance.
Risks of Investing in Junk Bonds
The HIGH-YIELD BOND and WORLDWIDE HIGH INCOME PORTFOLIOS invest
predominantly in junk bonds, which are considered speculative. The CORPORATE
BOND, MFS TOTAL RETURN, ASSET ALLOCATION, ALLIANCE GROWTH, PUTNAM GROWTH,
REAL ESTATE, MFS MID-CAP, INTERNATIONAL GROWTH AND INCOME and EMERGING
MARKETS PORTFOLIOS may also invest in junk bonds. While the Adviser and
Subadvisers each tries to diversify its portfolio and to engage in a credit
analysis of each junk bond issuer in which it invests, junk bonds carry a
substantial risk of default or changes in the issuer's creditworthiness, or
they may already be in default. A junk bond's market price may fluctuate
more than higher-quality securities and may decline significantly. In
addition, it may be more difficult for a Portfolio to dispose of junk bonds
or to determine their value. Junk bonds may contain redemption or call
provisions that, if exercised during a period of declining interest rates,
may force a Portfolio to replace the security with a lower yielding
security. If this occurs, it will result in a decreased return for you.
Risks of Investing in Money Market Securities
While an investment in the CASH MANAGEMENT PORTFOLIO should present the
least market risk of any of the Portfolios since it invests only in
high-quality short-term debt obligations (money market securities), you
should be aware that an investment in the CASH MANAGEMENT PORTFOLIO is
subject to the risk that the value of its investments may be subject to
changes in interest rates. The CASH MANAGEMENT PORTFOLIO does not seek to
maintain a stable net asset value of $1.00.
Risks of Investing Internationally
Except for the Cash Management Portfolio, all of the Portfolios may invest
internationally, including in "emerging market" countries. While investing
internationally may reduce your risk by increasing the diversification of
your investment, the value of your investment may be affected by fluctuating
currency values, changing local and regional economic, political and social
conditions, and greater market volatility, and, in addition, foreign
securities may not be as liquid as domestic securities. These risks affect
all the Portfolios except for the Cash Management Portfolio and are primary
risks of the
6
<PAGE> 7
GLOBAL BOND, WORLDWIDE HIGH INCOME, INTERNATIONAL GROWTH AND INCOME, GLOBAL
EQUITIES, INTERNATIONAL DIVERSIFIED EQUITIES and EMERGING MARKETS
PORTFOLIOS.
Risks of Investing in Smaller Companies
Stocks of smaller companies may be more volatile than, and not as liquid as,
those of larger companies. This will particularly affect the GROWTH-INCOME,
ALLIANCE GROWTH, PUTNAM GROWTH, AGGRESSIVE GROWTH, INTERNATIONAL GROWTH AND
INCOME and EMERGING MARKETS PORTFOLIOS.
Risks of a "Passively Managed" Strategy
Each of the "DOGS" OF WALL STREET and INTERNATIONAL DIVERSIFIED EQUITIES
PORTFOLIOS will not deviate from its strategy (except to the extent
necessary to comply with federal tax laws). If a Portfolio is committed to a
strategy that is unsuccessful, the Portfolio will not meet its investment
goal. Because the Portfolios will not use certain techniques available to
other mutual funds to reduce stock market exposure, the Portfolios may be
more susceptible to general market declines than other Portfolios.
Risks of Investing in Utility Securities
The UTILITY PORTFOLIO invests primarily 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. Such utility securities entail
certain risks including: (i) utility companies' historic 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.
To attempt to reduce these risks, 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.
Risks of Investing in Real Estate Securities
The REAL ESTATE PORTFOLIO invests primarily in the real estate industry. A
Portfolio that invests primarily in the real estate industry is subject to
the risks associated with the direct ownership of real estate. The Portfolio
could also be subject to the risks 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. Most of the
Portfolio's investments are, and likely will continue to be, interests in
Real Estate Investment Trusts (REITs).
Risks of Investing in "Non-Diversified" Portfolios
The GLOBAL BOND, WORLDWIDE HIGH INCOME, "DOGS" OF WALL STREET, MFS MID-CAP
GROWTH and INTERNATIONAL DIVERSIFIED EQUITIES PORTFOLIOS are organized as
"non-diversified" Portfolios. A non-diversified Portfolio can invest a
larger portion of assets in the securities of a single company than can some
other mutual funds. By concentrating in a smaller number of securities, a
Portfolio's risk is increased because the effect of each security on the
Portfolio's performance is greater.
Additional Principal Risks
Shares of the Portfolios are not bank deposits and are not guaranteed or
insured by any bank, government entity or the Federal Deposit Insurance
Corporation. As with any mutual fund, there is no guarantee that a Portfolio
will be able to achieve its investment goals. If the value of the assets of
a Portfolio goes down, you could lose money.
7
<PAGE> 8
Q: HOW HAVE THE PORTFOLIOS PERFORMED HISTORICALLY?
A: The following Risk/Return Bar Charts and Tables illustrate the risks of
investing in the Portfolios by showing changes in the Portfolios'
performance from calendar year to calendar year, and comparing the
Portfolios' average annual returns to those of an appropriate market index.
Fees and expenses incurred at the contract level are not reflected in the
bar charts and tables. If these amounts were reflected, returns would be
less than those shown. Of course, past performance is not necessarily an
indication of how a Portfolio will perform in the future. The "DOGS" OF WALL
STREET and the MFS MID-CAP GROWTH PORTFOLIOS have not been in existence for
a full calendar year.
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CASH MANAGEMENT PORTFOLIO
- --------------------------------------------------------------------------------
[BAR GRAPH]
<TABLE>
<S> <C>
1994 3.80%
1995 5.48%
1996 4.91%
1997 5.22%
1998 5.05%
</TABLE>
During the period shown in the bar chart, the highest return for a quarter was
1.36% (quarter ended 06/30/95) and the lowest return for a quarter was 0.64%
(quarter ended 3/31/94).
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE PAST ONE PAST FIVE RETURN SINCE
CALENDAR YEAR ENDED DECEMBER 31, 1998) YEAR YEARS INCEPTION(1)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Management Portfolio 5.05% 4.89% 4.52%
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) Inception date for the Portfolio is February 9, 1993.
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CORPORATE BOND PORTFOLIO
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[BAR GRAPH]
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998
<S> <C> <C> <C> <C>
-3.19% 17.78% 4.49% 10.90% 6.05%
</TABLE>
During the period shown in the bar chart, the highest return for a quarter was
5.94% (quarter ended 06/30/95) and the lowest return for a quarter was -2.89%
(quarter ended 03/31/94).
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE PAST ONE PAST FIVE RETURN SINCE
CALENDAR YEAR ENDED DECEMBER 31, 1998) YEAR YEARS INCEPTION(1)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Corporate Bond Portfolio 6.05% 6.98% 6.78%
- ------------------------------------------------------------------------------------------------
Lipper Corporate BBB Rated Index(2) 6.41% 6.65% 6.82%
- ------------------------------------------------------------------------------------------------
Lehman Brothers Corporate Bond Index(3) 8.59% 7.74% 7.65%
- ------------------------------------------------------------------------------------------------
Lehman Brothers Aggregate Index(4) 8.67% 7.28% 7.10%
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) Inception date for the Portfolio is July 1, 1993. The since inception
returns for the comparative indices are as of the inception date month end.
(2) The Lipper Corporate BBB Rated Index is an average of variable annuity
accounts that include at least 65% of assets in corporate and government
debt issues in the top four grades.
(3) The Lehman Brothers Corporate Bond Index includes all publicly issued,
fixed rate, nonconvertible investment grade, dollar-denominated,
SEC-registered corporate debt.
(4) The Lehman Brothers Aggregate Index combines several Lehman Brothers
fixed-income indices to give a broad view of the bond market -- 70%
reflects the Government/Corporate Bond Index, 29% reflects the
Mortgage-Backed Securities Index and 1% reflects the Asset-Backed
Securities Index.
9
<PAGE> 10
- --------------------------------------------------------------------------------
GLOBAL BOND PORTFOLIO
- --------------------------------------------------------------------------------
[BAR GRAPH]
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998
<S> <C> <C> <C> <C>
-4.65% 17.64% 9.36% 10.03% 10.87%
</TABLE>
During the period shown in the bar chart, the highest return for a quarter was
5.66% (quarter ended 09/30/98) and the lowest return for a quarter was -3.97%
(quarter ended 03/31/94).
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE PAST ONE PAST FIVE RETURN SINCE
CALENDAR YEAR ENDED DECEMBER 31, 1998) YEAR YEARS INCEPTION(1)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Global Bond Portfolio 10.87% 8.40% 8.52%
- ------------------------------------------------------------------------------------------------
J.P. Morgan Global Government Bond Index(2) 11.41% 10.29% 10.15%
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) Inception date for the Portfolio is July 1, 1993. The since inception
return for the comparative index is as of the inception date month end.
(2) The J.P. Morgan Global Government Bond Index tracks the performance of
bonds throughout the world, including issues from Europe, Australia, the
Far East and the United States.
10
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- --------------------------------------------------------------------------------
HIGH-YIELD BOND PORTFOLIO
- --------------------------------------------------------------------------------
[BAR GRAPH]
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998
<S> <C> <C> <C> <C>
-5.52% 14.24% 14.57% 14.42% -2.95%
</TABLE>
During the period shown in the bar chart, the highest return for a quarter was
7.38% (quarter ended 09/30/97) and the lowest return for a quarter was -8.40%
(quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE PAST ONE PAST FIVE RETURN SINCE
CALENDAR YEAR ENDED DECEMBER 31, 1998) YEAR YEARS INCEPTION(1)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
High-Yield Bond Portfolio -2.95% 6.55% 7.73%
- ------------------------------------------------------------------------------------------------
Merrill Lynch High-Yield Master Index(2) 3.67% 9.40% 10.40%
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) Inception date for the Portfolio is February 9, 1993. The since inception
return for the comparative index is as of the inception date month end.
(2) The Merrill Lynch High-Yield Master Index includes publicly placed,
nonconvertible, coupon-bearing U.S. domestic debt with a maturity of at
least one year. Par amounts of all issues at the beginning and ending of
each reporting period must be at least $10,000. Issues included in the
index must have a rating that is less than investment grade but not in
default.
11
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- --------------------------------------------------------------------------------
WORLDWIDE HIGH INCOME PORTFOLIO
- --------------------------------------------------------------------------------
[BAR GRAPH]
<TABLE>
<CAPTION>
1995 1996 1997 1998
<S> <C> <C> <C>
-20.97% 25.32% 15.54% -17.07%
</TABLE>
During the period shown in the bar chart, the highest return for a quarter was
12.07% (quarter ended 06/30/95) and the lowest return for a quarter was -24.35%
(quarter ended 09/30/98).
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE PAST ONE RETURN SINCE
CALENDAR YEAR ENDED DECEMBER 31, 1998) YEAR INCEPTION(1)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Worldwide High Income Portfolio -17.07% 8.78%
- -----------------------------------------------------------------------------------------
First Boston High Yield Bond Index(2) 0.58% 10.07%
- -----------------------------------------------------------------------------------------
J.P. Morgan EMBI Plus(3) -11.05% 13.90%
- -----------------------------------------------------------------------------------------
Blended Index(4) -4.61% 12.33%
- -----------------------------------------------------------------------------------------
</TABLE>
(1) Inception date for the Portfolio is October 28, 1994. The since inception
returns for the comparative indices are as of the inception date month end.
(2) The First Boston High Yield Bond Index is a trader-priced portfolio
constructed to mirror the public high-yield debt market. Securities in the
index are rated B or lower.
(3) The J.P. Morgan Emerging Markets Bond Index (EMBI) Plus is a
market-weighted index composed of all Brady Bonds outstanding; it includes
Argentina, Brazil, Mexico, Nigeria, the Philippines, and Venezuela.
(4) The Blended Index combines 50% of the First Boston High Yield Index and 50%
of the J.P. Morgan Emerging Markets Bond Index Plus.
12
<PAGE> 13
- --------------------------------------------------------------------------------
SUNAMERICA BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
[BAR GRAPH]
<TABLE>
<CAPTION>
1997 1998
<S> <C>
24.48% 24.61%
</TABLE>
During the period shown in the bar chart, the highest return for a quarter was
15.55% (quarter ended 12/31/98) and the lowest return for a quarter was -5.24%
(quarter ended 09/30/98).
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE PAST ONE RETURN SINCE
CALENDAR YEAR ENDED DECEMBER 31, 1998) YEAR INCEPTION(1)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
SunAmerica Balanced Portfolio 24.61% 23.17%
- -----------------------------------------------------------------------------------------
S&P 500(R)(2) 28.58% 28.83%
- -----------------------------------------------------------------------------------------
Lehman Brothers Aggregate Index(3) 8.67% 9.61%
- -----------------------------------------------------------------------------------------
Blended Index(4) 19.57% 19.77%
- -----------------------------------------------------------------------------------------
</TABLE>
(1) Inception date for the Portfolio is June 3, 1996. The since inception
returns for the comparative indices are as of the inception date month end.
(2) The S&P 500(R) Index tracks the performance of 500 stocks representing a
sampling of the largest foreign and domestic stocks traded publicly in the
United States. Because it is market-weighted, the index will reflect
changes in larger companies more heavily than those in smaller companies.
(3) The Lehman Brothers Aggregate Index combines several Lehman Brothers
fixed-income indices to give a broad view of the bond market -- 70%
reflects the Government/Corporate Bond Index, 29% reflects the
Mortgage-Backed Securities Index and 1% reflects the Asset-Backed
Securities Index.
(4) The Blended Index consists of 55% S&P 500(R) Index, 35% Lehman Brothers
Aggregate Index, and 10% Treasury Bills. Treasury Bills are short-term
securities with maturities of one-year or less issued by the U.S.
Government.
13
<PAGE> 14
- --------------------------------------------------------------------------------
MFS TOTAL RETURN PORTFOLIO
- --------------------------------------------------------------------------------
[BAR GRAPH]
<TABLE>
<CAPTION>
1995 1996 1997 1998
<S> <C> <C> <C>
27.64% 9.94% 16.90% 19.53%
</TABLE>
During the period shown in the bar chart, the highest return for a quarter was
13.55% (quarter ended 12/31/98) and the lowest return for a quarter was -4.95%
(quarter ended 09/30/98).
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE PAST ONE RETURN SINCE
CALENDAR YEAR ENDED DECEMBER 31, 1998) YEAR INCEPTION(1)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
MFS Total Return Portfolio(2) 19.53% 17.42%
- -----------------------------------------------------------------------------------------
S&P 500(R)(3) 28.58% 28.35%
- -----------------------------------------------------------------------------------------
Lehman Brothers Aggregate Index(4) 8.67% 9.66%
- -----------------------------------------------------------------------------------------
Blended Index(5) 19.57% 19.41%
- -----------------------------------------------------------------------------------------
</TABLE>
(1) Inception date for the Portfolio is October 28, 1994. The since inception
returns for the comparative indices are as of the inception date month end.
(2) Prior to January 1, 1999, the MFS Total Return Portfolio was named the
Balanced Phoenix Investment Counsel Portfolio.
(3) The S&P 500(R) Index tracks the performance of 500 stocks representing a
sampling of the largest foreign and domestic stocks traded publicly in the
United States. Because it is market weighted, the index will reflect
changes in larger companies more heavily than those in smaller companies.
(4) The Lehman Brothers Aggregate Index combines several Lehman Brothers
fixed-income indices to give a broad view of the bond market -- 70%
reflects the Government/Corporate Bond Index, 29% reflects the
Mortgage-Backed Securities Index and 1% reflects the Asset-Backed
Securities Index.
(5) The Blended Index consists of 35% Lehman Brothers Aggregate Index, 55% S&P
500 Index, and 10% Treasury Bills. Treasury Bills are short-term securities
with maturities of one-year or less issued by the U.S. Government.
14
<PAGE> 15
- --------------------------------------------------------------------------------
ASSET ALLOCATION PORTFOLIO
- --------------------------------------------------------------------------------
[BAR GRAPH]
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998
<S> <C> <C> <C> <C>
-0.26% 26.29% 18.95% 21.81% 3.32%
</TABLE>
During the period shown in the bar chart, the highest return for a quarter was
11.05% (quarter ended 06/30/97) and the lowest return for a quarter was -8.76%
(quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE PAST ONE PAST FIVE RETURN SINCE
CALENDAR YEAR ENDED DECEMBER 31, 1998) YEAR YEARS INCEPTION(1)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Asset Allocation Portfolio 3.32% 13.53% 13.39%
- ------------------------------------------------------------------------------------------------
S&P 500(R)(2) 28.58% 24.07% 21.89%
- ------------------------------------------------------------------------------------------------
Lehman Brothers Aggregate Index(3) 8.67% 7.28% 7.10%
- ------------------------------------------------------------------------------------------------
Blended Index(4) 21.01% 17.32% 15.99%
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) Inception date for the Portfolio is July 1, 1993. The since inception
returns for the comparative indices are as of the inception date month end.
(2) The S&P 500(R) Index tracks the performance of 500 stocks representing a
sampling of the largest foreign and domestic stocks traded publicly in the
United States. Because it is market-weighted, the index will reflect
changes in larger companies more heavily than those in smaller companies.
(3) The Lehman Brothers Aggregate Index combines several Lehman Brothers
fixed-income indices to give a broad view of the bond market--70% reflects
the Government/Corporate Bond Index, 29% reflects the Mortgage-Backed
Securities Index and 1% reflects the Asset-Backed Securities Index.
(4) The Blended Index consists of 40% Lehman Brothers Aggregate Index and 60%
S&P 500 Index.
15
<PAGE> 16
- --------------------------------------------------------------------------------
UTILITY PORTFOLIO
- --------------------------------------------------------------------------------
[BAR GRAPH]
<TABLE>
<CAPTION>
1997 1998
<S> <C>
25.73% 14.04%
</TABLE>
During the period shown in the bar chart, the highest return for a quarter was
12.85% (quarter ended 12/31/97) and the lowest return for a quarter was -1.15%
(quarter ended 06/30/98).
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE PAST ONE RETURN SINCE
CALENDAR YEAR ENDED DECEMBER 31, 1998) YEAR INCEPTION(1)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Utility Portfolio 14.04% 19.02%
- -----------------------------------------------------------------------------------------
S&P 500(R)(2) 28.58% 28.83%
- -----------------------------------------------------------------------------------------
Blended Index(3) 42.31% 35.55%
- -----------------------------------------------------------------------------------------
</TABLE>
(1) Inception date for the Portfolio is June 3, 1996. The since inception
returns for the comparative indices are as of the inception date month end.
(2) The S&P 500(R) Index tracks the performance of 500 stocks representing a
sampling of the largest foreign and domestic stocks traded publicly in the
United States. Because it is market-weighted, the index will reflect
changes in larger companies more heavily than those in smaller companies.
(3) The Blended Index is comprised of 35% S&P Utility Index and 65% for the S&P
Communications Service Index, on a market capitalization weighted basis.
The S&P Utility Index is presently comprised of 40 stocks from the electric
and natural gas industries. The S&P Communications Service Index is
comprised of the companies listed in the telecommunications sectors of the
S&P 400, 500, and 600. Created in July of 1996, the S&P Communications
Service Index includes cellular and wireless service providers including
pagers, long distance providers and the telephone group companies (local
service providers).
16
<PAGE> 17
---------------------------------------------------------------------------
GROWTH-INCOME PORTFOLIO
-----------------------------------------------------------------------------
[BAR GRAPH]
<TABLE>
<S> <C> <C> <C> <C>
1994 1995 1996 1997 1998
- -2.61% 34.10% 24.06% 33.91% 30.74%
</TABLE>
During the period shown in the bar chart, the highest return for a quarter was
28.51% (quarter ended 12/31/98) and the lowest return for a quarter was -14.39%
(quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE PAST ONE PAST FIVE RETURN SINCE
CALENDAR YEAR ENDED DECEMBER 31, 1998) YEAR YEARS INCEPTION(1)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth-Income Portfolio 30.74% 23.18% 20.94%
- ------------------------------------------------------------------------------------------------
S&P 500(R)(2) 28.58% 24.07% 21.42%
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) Inception date for the Portfolio is February 9, 1993. The since inception
return for the comparative index is as of the inception date month end.
(2) The S&P 500(R) Index tracks the performance of 500 stocks representing a
sampling of the largest foreign and domestic stocks traded publicly in the
United States. Because it is market-weighted, the Index will reflect
changes in larger companies more heavily than those in smaller companies.
17
<PAGE> 18
- --------------------------------------------------------------------------------
FEDERATED VALUE PORTFOLIO
- --------------------------------------------------------------------------------
[BAR GRAPH]
<TABLE>
<S> <C>
1997 1998
31.43% 17.96%
</TABLE>
During the period shown in the bar chart, the highest return for a quarter was
16.10% (quarter ended 12/31/98) and the lowest return for a quarter was -11.49%
(quarter ended 09/30/98).
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE CALENDAR YEAR PAST ONE RETURN SINCE
ENDED DECEMBER 31, 1998) YEAR INCEPTION(1)
- --------------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------------
Federated Value Portfolio 17.96% 22.24%
- --------------------------------------------------------------------------------------
S&P 500(R)(2) 28.58% 28.83%
- --------------------------------------------------------------------------------------
</TABLE>
(1) Inception date for the Portfolio is June 3, 1996. The since inception
return for the comparative index is as of the inception date month end.
(2) The S&P 500(R) Index tracks the performance of 500 stocks representing a
sampling of the largest foreign and domestic stocks traded publicly in the
United States. Because it is market-weighted, the index will reflect
changes in larger companies more heavily than those in smaller companies.
18
<PAGE> 19
- --------------------------------------------------------------------------------
VENTURE VALUE PORTFOLIO
- --------------------------------------------------------------------------------
[BAR GRAPH]
<TABLE>
<CAPTION>
1995 1996 1997 1998
<S> <C> <C> <C>
37.45% 24.76% 34.32% 13.73%
</TABLE>
During the period shown in the bar chart, the highest return for a quarter was
21.07% (quarter ended 12/31/98) and the lowest return for a quarter was -14.87%
(quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
PAST ONE RETURN SINCE
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE CALENDAR YEAR ENDED DECEMBER 31, 1998) YEAR INCEPTION(1)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Venture Value Portfolio 13.73% 25.66%
- ----------------------------------------------------------------------------------------------------------
S&P 500(R)(2) 28.58% 28.35%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Inception date for the Portfolio is October 28, 1994. The since inception
return for the comparative index is as of the inception date month end.
(2) The S&P 500(R) Index tracks the performance of 500 stocks representing a
sampling of the largest foreign and domestic stocks traded publicly in the
United States. Because it is market-weighted, the index will reflect
changes in larger companies more heavily than those in smaller companies.
19
<PAGE> 20
- --------------------------------------------------------------------------------
ALLIANCE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
[BAR GRAPH]
<TABLE>
<S> <C> <C> <C> <C>
1994 1995 1996 1997 1998
- -2.16% 43.79% 29.11% 31.43% 52.23%
</TABLE>
During the period shown in the bar chart, the highest return for a quarter was
32.57% (quarter ended 12/31/98) and the lowest return for a quarter was -12.54%
(quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE CALENDAR YEAR ENDED DECEMBER PAST ONE PAST FIVE RETURN SINCE
31, 1998) YEAR YEARS INCEPTION(1)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alliance Growth Portfolio 52.23% 29.44% 26.80%
- ------------------------------------------------------------------------------------------------------------
Russell 1000 Growth Index(2) 38.70% 25.70% 22.22%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Inception date for the Portfolio is February 9, 1993. The since inception
return for the comparative index is as of the inception date month end.
(2) The Russell 1000 Growth Index consists of stocks with a
greater-than-average growth orientation. Companies in this index tend to
exhibit higher price-to-book and price-earnings ratios, lower dividend
yields and higher forecasted growth values.
20
<PAGE> 21
- --------------------------------------------------------------------------------
MFS GROWTH AND INCOME PORTFOLIO
- --------------------------------------------------------------------------------
[BAR GRAPH]
<TABLE>
<S> <C> <C> <C> <C>
1994 1995 1996 1997 1998
- -8.01% 32.10% 15.99% 23.22% 29.28%
</TABLE>
During the period shown in the bar chart, the highest return for a quarter was
22.03% (quarter ended 12/31/98) and the lowest return for a quarter was -8.93%
(quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE CALENDAR YEAR ENDED DECEMBER PAST ONE PAST FIVE RETURN SINCE
31, 1998) YEAR YEARS INCEPTION(1)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MFS Growth and Income Portfolio(2) 29.28% 17.56% 16.67%
- ------------------------------------------------------------------------------------------------------------
S&P 500(R)(3) 28.58% 24.07% 21.42%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Inception date for the Portfolio is February 9, 1993. The since inception
return for the comparative index is as of the inception date month end.
(2) Prior to January 1, 1999 the MFS Growth and Income Portfolio was named the
Growth Phoenix Investment Counsel Portfolio.
(3) The S&P 500(R) Index tracks the performance of 500 stocks representing a
sampling of the largest foreign and domestic stocks traded publicly in the
United States. Because it is market-weighted, the index will reflect
changes in larger companies more heavily than those in smaller companies.
21
<PAGE> 22
- --------------------------------------------------------------------------------
PUTNAM GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
[BAR GRAPH]
<TABLE>
<S> <C> <C> <C> <C>
1994 1995 1996 1997 1998
- -1.57% 24.75% 20.37% 32.48% 34.76%
</TABLE>
During the period shown in the bar chart, the highest return for a quarter was
25.28% (quarter ended 12/31/98) and the lowest return for a quarter was -12.26%
(quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE CALENDAR YEAR ENDED DECEMBER PAST ONE PAST FIVE RETURN SINCE
31, 1998) YEAR YEARS INCEPTION(1)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Putnam Growth Portfolio 34.76% 21.42% 18.43%
- ------------------------------------------------------------------------------------------------------------
S&P 500(R)(2) 28.58% 24.07% 21.42%
- ------------------------------------------------------------------------------------------------------------
Russell 1000 Growth Index(3) 38.70% 25.70% 22.22%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Inception date for the Portfolio is February 9, 1993. The since inception
returns for the comparative indices are as of the inception date month end.
(2) The S&P 500(R) Index tracks the performance of 500 stocks representing a
sampling of the largest foreign and domestic stocks traded publicly in the
United States. Because it is market-weighted, the index will reflect
changes in larger companies more heavily than those in smaller companies.
(3) The Russell 1000 Growth Index consists of stocks with a
greater-than-average growth orientation. Companies in this index tend to
exhibit higher price-to-book and price-earnings ratios, lower dividend
yields and higher forecasted growth values.
22
<PAGE> 23
- --------------------------------------------------------------------------------
REAL ESTATE PORTFOLIO
- --------------------------------------------------------------------------------
[BAR GRAPH]
<TABLE>
<S> <C>
1998
-14.11%
</TABLE>
During the period shown in the bar chart, the highest return for a quarter was
1.44% (quarter ended 12/31/98) and the lowest return for a quarter was -11.07%
(quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
PAST ONE RETURN SINCE
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE CALENDAR YEAR ENDED DECEMBER 31, 1998) YEAR INCEPTION(1)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Real Estate Portfolio -14.11% 0.04%
- ----------------------------------------------------------------------------------------------------------
Morgan Stanley REIT Index(2) -16.90% -0.85%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Inception date for the Portfolio is June 2, 1997. The since inception
return for the comparative index is as of the inception date month end.
(2) The Morgan Stanley Real Estate Investment Trust (REIT) Index is a
capitalization-weighted index with dividends reinvested of mostly actively
traded real estate investment trusts and is designed to be a measure of
real estate equity performance. The index was developed with a base value
of 200 as of December 31, 1994.
23
<PAGE> 24
- --------------------------------------------------------------------------------
AGGRESSIVE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
[BAR GRAPH]
<TABLE>
<S> <C>
1997 1998
12.35 17.43
</TABLE>
During the period shown in the bar chart, the highest return for a quarter was
32.06% (quarter ended 12/31/98) and the lowest return for a quarter was -17.31%
(quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
PAST ONE RETURN SINCE
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE CALENDAR YEAR ENDED DECEMBER 31, 1998) YEAR INCEPTION(1)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Aggressive Growth Portfolio 17.43% 13.59%
- ----------------------------------------------------------------------------------------------------------
Russell 2000 Index(2) -2.56% 7.47%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Inception date for the Portfolio is June 3, 1996. The since inception
return for the comparative index is as of the inception date month end.
(2) The Russell 2000 Index is comprised of the smallest 2000 companies in the
Russell 3000 Index, representing approximately 11% of the Russell 3000
total market capitalization. The Index was developed with a base value of
$135,000 as of December 31, 1986.
24
<PAGE> 25
- --------------------------------------------------------------------------------
INTERNATIONAL GROWTH AND INCOME PORTFOLIO
- --------------------------------------------------------------------------------
[BAR GRAPH]
<TABLE>
<S> <C>
1998
10.83%
</TABLE>
During the period shown in the bar chart, the highest return for a quarter was
14.81% (quarter ended 12/31/98) and the lowest return for a quarter was -17.57%
(quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
PAST ONE RETURN SINCE
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE CALENDAR YEAR ENDED DECEMBER 31, 1998) YEAR INCEPTION(1)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
International Growth and Income Portfolio 10.83% 10.91%
- ----------------------------------------------------------------------------------------------------------
MSCI EAFE Index(2) 20.34% 10.06%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Inception date for the Portfolio is June 2, 1997. The since inception
return for the comparative index is as of the inception date month end.
(2) The Morgan Stanley Capital International (MSCI) Europe, Australia, and Far
East (EAFE) Index represents the foreign stocks of 19 countries in Europe,
Australia and the Far East.
25
<PAGE> 26
- --------------------------------------------------------------------------------
GLOBAL EQUITIES PORTFOLIO
- --------------------------------------------------------------------------------
[BAR GRAPH]
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
-0.3% 19.16% 14.18% 15.06% 22.86%
</TABLE>
During the period shown in the bar chart, the highest return for a quarter was
25.50% (quarter ended 12/31/98) and the lowest return for a quarter was -18.20%
(quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE CALENDAR YEAR ENDED DECEMBER PAST ONE PAST FIVE RETURN SINCE
31, 1998) YEAR YEARS INCEPTION(1)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Global Equities Portfolio 22.86% 13.91% 14.78%
- ------------------------------------------------------------------------------------------------------------
MSCI World Index(2) 24.79% 16.19% 17.25%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Inception date for the Portfolio is February 9, 1993. The since inception
return for the comparative index is as of the inception date month end.
(2) The Morgan Stanley Capital International (MSCI) World Index is one of the
Morgan Stanley Capital International indexes and measures stock market
performance in the U.S., Europe, Canada, Australia, New Zealand, the Far
East and emerging markets.
26
<PAGE> 27
- --------------------------------------------------------------------------------
INTERNATIONAL DIVERSIFIED EQUITIES PORTFOLIO
- --------------------------------------------------------------------------------
[BAR GRAPH]
<TABLE>
<S> <C> <C> <C>
1995 1996 1997 1998
10.34% 9.31% 6.37% 18.53%
</TABLE>
During the period shown in the bar chart, the highest return for a quarter was
15.91% (quarter ended 03/31/98) and the lowest return for a quarter was -12.33%
(quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
PAST ONE RETURN SINCE
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE CALENDAR YEAR ENDED DECEMBER 31, 1998) YEAR INCEPTION(1)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
International Diversified Equities Portfolio 18.53% 9.63%
- ----------------------------------------------------------------------------------------------------------
MSCI EAFE Index(2) 20.34% 10.13%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Inception date for the Portfolio is October 28, 1994. The since inception
return for the comparative index is as of the inception date month end.
(2) The Morgan Stanley Capital International (MSCI) Europe, Australia, and Far
East (EAFE) Index represents the foreign stocks of 19 countries in Europe,
Australia and the Far East.
27
<PAGE> 28
- --------------------------------------------------------------------------------
EMERGING MARKETS PORTFOLIO
- --------------------------------------------------------------------------------
[BAR GRAPH]
<TABLE>
<S> <C>
1998
-24.27%
</TABLE>
During the period shown in the bar chart, the highest return for a quarter was
16.39% (quarter ended 12/31/98) and the lowest return for a quarter was -22.17%
(quarter ended 09/30/98).
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
PAST ONE RETURN SINCE
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE CALENDAR YEAR ENDED DECEMBER 31, 1998) YEAR INCEPTION(1)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Emerging Markets Portfolio -24.27% -25.17%
- ----------------------------------------------------------------------------------------------------------
MSCI Emerging Markets Free Index(2) -25.33% -28.28%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Inception date for the Portfolio is June 2, 1997. The since inception
return for the comparative index is as of the inception date month end.
(2) The Morgan Stanley Capital International (MSCI) Emerging Markets--Free
Index is a capitalization-weighted equity index composed of companies that
are representative of the market structure of the following countries:
Argentina, Brazil, Chile, China, Colombia, Czech Republic, Greece, Hungary,
India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Pakistan, Peru,
Philippines, Poland, Portugal, South Africa, Sri Lanka, Taiwan, Thailand,
Turkey, and Venezuela.
28
<PAGE> 29
- --------------------------------------------------------------------------------
ACCOUNT INFORMATION
- --------------------------------------------------------------------------------
Shares of the Portfolios are not offered directly to the public. Instead, shares
are currently offered only to certain Separate Accounts of Anchor National Life
Insurance Company and First SunAmerica Life Insurance Company. So if you would
like to invest in a Portfolio, you must purchase a variable annuity contract
from either Anchor National Life Insurance Company or First SunAmerica Life
Insurance Company. You should be aware that the contracts involve fees and
expenses that are not described in this Prospectus and that the contracts also
may involve certain restrictions and limitations. Certain Portfolios may not be
available in connection with a particular contract. You will find information
about purchasing a variable annuity contract and the Portfolios available to you
in the prospectus that offers the contracts, which accompanies this Prospectus.
TRANSACTION POLICIES
VALUATION OF SHARES The net asset value per share (NAV) for each Portfolio is
determined each business day at the close of regular trading on the New York
Stock Exchange (generally 4:00 p.m., Eastern time) by dividing its net assets by
the number of its shares outstanding. Investments for which market quotations
are readily available are valued at market. All other securities and assets are
valued at "fair value" following procedures approved by the Trustees.
Certain of the Portfolios may invest to a large extent in securities that are
primarily listed on foreign exchanges that trade on weekends or other days when
the Trust does not price its shares. As a result, the value of these Portfolios'
shares may change on days when the Trust is not open for purchases or
redemptions.
BUY AND SELL PRICES The Separate Accounts buy and sell shares of a Portfolio at
NAV, without any sales or other charges.
EXECUTION OF REQUESTS The Trust is open on those days when the New York Stock
Exchange is open for regular trading. Buy and sell requests are executed at the
next NAV to be calculated after the request is accepted by the Trust. If the
order is received by the Trust before the Trust's close of business (generally
4:00 p.m., Eastern time), the order will receive that day's closing price. If
the order is received after that time, it will receive the next business day's
closing price.
During periods of extreme volatility or market crisis, a Portfolio may
temporarily suspend the processing of sell requests, or may postpone payment of
proceeds for up to seven business days or longer, as allowed by federal
securities laws.
DIVIDEND POLICIES AND TAXES
DISTRIBUTIONS Each Portfolio annually declares and distributes substantially all
of its net investment income in the form of dividends and capital gains
distributions.
DISTRIBUTION REINVESTMENT The dividends and distributions will be reinvested
automatically in additional shares of the same Portfolio on which they were
paid.
TAXABILITY OF A PORTFOLIO Each Portfolio intends to continue to qualify as a
regulated investment company under the Internal Revenue Code of 1986, as
amended. As long as each Portfolio is qualified as a regulated investment
company, it will not be subject to federal income tax on the earnings that it
distributes to its shareholders.
29
<PAGE> 30
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE "DOGS" OF WALL STREET PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT STRATEGY FOR THE "DOGS" OF WALL STREET PORTFOLIO
The "DOGS" OF WALL STREET PORTFOLIO employs a passively managed "buy and hold"
strategy that annually selects the following 30 stocks: (1) the 10 highest
yielding common stocks in the Dow Jones Industrial Average and (2) the 20 other
highest yielding stocks of the 400 largest industrial companies in the U.S.
markets that have capitalizations of at least $1 billion and have received one
of the two highest rankings from an independently published common stock ranking
service on the basis of growth and stability of earnings and dividends. The
stocks in the Portfolio will not change over the course of the year, even if
there are adverse developments concerning a particular stock, an industry, the
economy or the stock market generally. The annual selection of the thirty stocks
that meet these criteria takes place no later than January 15th, on the basis of
information as of the preceding December 31st. Immediately after the Portfolio
buys and sells stocks, it will hold an equal value of each of the thirty stocks.
In other words, the Portfolio will invest 1/30 of its assets in each of the
stocks that make up its portfolio. Thereafter, when an investor purchases shares
of the Portfolio, the Adviser invests the additional funds in the selected
stocks based on each stock's respective percentage of the Portfolio's assets.
Due to purchases and redemptions of Portfolio shares during the year and changes
in the market value of the stocks held by the Portfolio, it is likely that the
weightings of the stocks in the Portfolio will fluctuate throughout the course
of the year. This may result in the Portfolio investing more than 25% of its
assets in the securities of issuers in the same industry, to the extent such
investments are selected according to the Portfolio's stock selection criteria.
- --------------------------------------------------------------------------------
MORE INFORMATION ABOUT THE PORTFOLIOS
- --------------------------------------------------------------------------------
INVESTMENT STRATEGIES
Each Portfolio has its own investment goal and strategy for pursuing it. The
charts below summarize information about each Portfolio's investment strategy.
We have included a glossary to define the investment terminology used in the
charts throughout this Prospectus.
30
<PAGE> 31
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
FIXED INCOME PORTFOLIOS
- -----------------------------------------------------------------------------------------------------------------------------
CASH HIGH-YIELD WORLDWIDE HIGH
MANAGEMENT CORPORATE BOND GLOBAL BOND BOND INCOME
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
What is the high current yield high total return high total return, high current high current
Portfolio's while preserving with only moderate emphasizing income and, income and,
investment goal? capital price risk current income secondarily, secondarily,
and, to a lesser capital capital
extent, capital appreciation appreciation
appreciation
- -----------------------------------------------------------------------------------------------------------------------------
What are the a diversified investment grade high quality fixed intermediate and high-yielding
Portfolios' selection of money fixed income income securities long-term fixed income
principal market instruments securities of U.S. and corporate securities (junk
investments (under foreign issuers obligations, bonds) of issuers
normal market and transactions emphasizing located throughout
conditions)? in foreign higher- yielding, the world
currencies higher- risk,
lower-rated or
unrated securities
(junk bonds) with
a primary focus on
"B" rated high-
yield bonds
- -----------------------------------------------------------------------------------------------------------------------------
What are the - securities - bond market - bond market - bond market - bond market
Portfolio's selection volatility volatility volatility volatility
principal risks? - interest rate - securities - securities - securities - securities
fluctuations selection selection selection selection
- credit quality - interest rate - interest rate - interest rate - interest rate
fluctuations fluctuations fluctuations fluctuations
- credit quality - credit quality - credit quality - credit quality
- foreign exposure - junk bonds - junk bonds
- non- - foreign exposure
diversification - non-
- euro conversion diversification
- emerging markets - euro conversion
- emerging markets
- -----------------------------------------------------------------------------------------------------------------------------
What other
investment
strategies can the
Portfolio use?
-----------------------------------------------------------------------------------------------
- Active trading Yes Yes Yes Yes Yes
-----------------------------------------------------------------------------------------------
- Borrowing for Yes Yes Yes Yes Yes
temporary or (up to 5%) (up to 33 1/3%) (up to 33 1/3%) (up to 33 1/3%) (up to 33 1/3%)
emergency
purposes
-----------------------------------------------------------------------------------------------
- Types of fixed
income
securities:
-----------------------------------------------------------------------------------------------
U.S. government Yes Yes Yes Yes Yes
securities
-----------------------------------------------------------------------------------------------
Investment grade Yes See principal Yes Yes No
corporate bonds investments
section
above
-----------------------------------------------------------------------------------------------
Junk bonds No Yes No See principal See principal
(up to 35%) investments investments
section section
above above
-----------------------------------------------------------------------------------------------
Pass-through No Yes Yes Yes No
securities
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
31
<PAGE> 32
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
FIXED INCOME PORTFOLIOS (continued)
- -----------------------------------------------------------------------------------------------------------------------------
CASH HIGH-YIELD WORLDWIDE HIGH
MANAGEMENT CORPORATE BOND GLOBAL BOND BOND INCOME
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
What other
investment
strategies can the
Portfolio use?
----------------------------------------------------------------------------------------------
- Convertible No Yes No Yes Yes
securities
----------------------------------------------------------------------------------------------
- Preferred stocks No Yes No Yes No
(up to 35%)
----------------------------------------------------------------------------------------------
- Structured No No Yes No Yes
securities
----------------------------------------------------------------------------------------------
- Warrants No Yes No Yes No
(up to 10%)
----------------------------------------------------------------------------------------------
- Rights No Yes No Yes Yes
(up to 10%)
----------------------------------------------------------------------------------------------
- Short-term See principal Yes Yes Yes Yes
investments investments
section
above
----------------------------------------------------------------------------------------------
- Defensive No Yes Yes No Yes
investments
----------------------------------------------------------------------------------------------
- Foreign No Yes See principal Yes See principal
securities investments (up to 25%) investments
section section
above above
----------------------------------------------------------------------------------------------
- Currency No No Yes Yes Yes
transactions
----------------------------------------------------------------------------------------------
- Illiquid Yes Yes Yes Yes Yes
securities (up to 10%) (up to 15%) (up to 15%) (up to 15%) (up to 15%)
----------------------------------------------------------------------------------------------
- Options and No Yes Yes Yes Yes
futures (up to 10%)
----------------------------------------------------------------------------------------------
- Forward No No Yes Yes Yes
commitments
----------------------------------------------------------------------------------------------
- Dollar rolls No Yes Yes Yes No
----------------------------------------------------------------------------------------------
- Zero-coupon bonds No Yes Yes Yes Yes
(up to 35%)
----------------------------------------------------------------------------------------------
- Pay-in-kind bonds No Yes Yes Yes Yes
(up to 35%)
----------------------------------------------------------------------------------------------
- Deferred interest No Yes Yes Yes Yes
bonds
----------------------------------------------------------------------------------------------
- Firm commitment Yes Yes Yes Yes Yes
agreements
----------------------------------------------------------------------------------------------
- When-issued/ Yes Yes Yes Yes Yes
delayed delivery
transactions
----------------------------------------------------------------------------------------------
- Interest rate No No Yes No Yes
swaps, caps,
floors and
collars
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE> 33
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
FIXED INCOME PORTFOLIOS (continued)
- -----------------------------------------------------------------------------------------------------------------------------
CASH HIGH-YIELD WORLDWIDE HIGH
MANAGEMENT CORPORATE BOND GLOBAL BOND BOND INCOME
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
What other
investment
strategies can the
Portfolio use?
----------------------------------------------------------------------------------------------
- Securities No Yes Yes Yes Yes
lending (up to 33 1/3%) (up to 33 1/3%) (up to 33 1/3%) (up to 33 1/3%)
----------------------------------------------------------------------------------------------
- Loan No No Yes No Yes
participations
- -----------------------------------------------------------------------------------------------------------------------------
What other - junk bonds - prepayment - prepayment - illiquidity
potential risks can - prepayment - illiquidity - foreign exposure - derivatives
affect the - foreign exposure - derivatives - euro conversion - hedging
Portfolio? - euro conversion - hedging - emerging markets
- emerging markets - illiquidity
- illiquidity - derivatives
- derivatives - hedging
- hedging
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
BALANCED OR ASSET ALLOCATION PORTFOLIOS
- ----------------------------------------------------------------------------------------------------------------------
SUNAMERICA
BALANCED MFS TOTAL RETURN ASSET ALLOCATION UTILITY
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
What is the conservation of reasonable current high total return high current income
Portfolio's principal income, long-term (including income and and moderate capital
investment goal? capital growth and capital gains) appreciation
conservation of consistent with
capital preservation of
capital over the
long-term
- ----------------------------------------------------------------------------------------------------------------------
What are the a balanced portfolio common stocks and a diversified equity and debt
Portfolio's of stocks and bonds, fixed-income portfolio that may securities of utility
principal with at least 25% securities, with an include common stocks companies
investments (under invested in fixed emphasis on and other securities
normal market income securities income-producing with common stock
conditions)? securities that appear characteristics, bonds
to have some potential and other intermediate
for capital and long-term fixed
enhancement income securities and
money market
instruments
- ----------------------------------------------------------------------------------------------------------------------
What are the - stock and bond - stock and bond - stock and bond - stock and bond
Portfolio's market volatility market volatility market volatility market volatility
principal risks? - securities selection - securities selection - securities selection - securities selection
- interest rate - interest rate - interest rate - utility industry
fluctuations fluctuations fluctuations
- credit quality - credit quality - credit quality
- junk bonds - junk bonds
- foreign exposure
- illiquidity
- derivatives
- hedging
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
33
<PAGE> 34
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
BALANCED OR ASSET ALLOCATION PORTFOLIOS (continued)
- ----------------------------------------------------------------------------------------------------------------------
SUNAMERICA
BALANCED MFS TOTAL RETURN ASSET ALLOCATION UTILITY
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
What other
investment
strategies can the
Portfolio use?
------------------------------------------------------------------------------------------
- Active trading Yes Yes Yes Yes
------------------------------------------------------------------------------------------
- Borrowing for Yes (up to 33 1/3%) Yes (up to 5%) Yes (up to 33 1/3%) Yes (up to 33 1/3%)
temporary or
emergency purposes
------------------------------------------------------------------------------------------
- Types of fixed
income securities:
------------------------------------------------------------------------------------------
U.S. government Yes Yes Yes Yes
securities
------------------------------------------------------------------------------------------
Investment grade Yes Yes Yes Yes
corporate bonds
------------------------------------------------------------------------------------------
Junk bonds Yes Yes (up to 20%) Yes (up to 25% of Yes
Portfolio's
fixed income
investments)
------------------------------------------------------------------------------------------
Senior securities Yes (at least 25%) Yes Yes No
------------------------------------------------------------------------------------------
Pass-through Yes Yes Yes No
securities
------------------------------------------------------------------------------------------
- Convertible Yes Yes Yes Yes
securities
------------------------------------------------------------------------------------------
- Preferred stocks Yes Yes Yes Yes
------------------------------------------------------------------------------------------
- Small company Yes (up to 20%) Yes Yes Yes
stocks
------------------------------------------------------------------------------------------
- Hybrid instruments No Yes Yes No
------------------------------------------------------------------------------------------
- Structured No Yes Yes No
securities
------------------------------------------------------------------------------------------
- Indexed securities No Yes Yes No
------------------------------------------------------------------------------------------
- Warrants Yes Yes Yes Yes
------------------------------------------------------------------------------------------
- Rights Yes Yes Yes No
------------------------------------------------------------------------------------------
- Short-term Yes Yes Yes Yes
investments
------------------------------------------------------------------------------------------
- Defensive Yes Yes Yes Yes
investments
------------------------------------------------------------------------------------------
- Equity swaps Yes Yes Yes No
------------------------------------------------------------------------------------------
- Foreign securities Yes Yes (up to 20%) Yes Yes
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
34
<PAGE> 35
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
BALANCED OR ASSET ALLOCATION PORTFOLIOS (continued)
- ----------------------------------------------------------------------------------------------------------------------
SUNAMERICA
BALANCED MFS TOTAL RETURN ASSET ALLOCATION UTILITY
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
What other
investment
strategies can the
Portfolio use?
------------------------------------------------------------------------------------------
- Currency Yes Yes Yes No
transactions
------------------------------------------------------------------------------------------
- Illiquid Yes (up to 15%) Yes (up to 15%) Yes (up to 15%) Yes (up to 15%)
securities
------------------------------------------------------------------------------------------
- Options and Yes Yes Yes Yes
futures
------------------------------------------------------------------------------------------
- Forward Yes Yes Yes No
commitments
------------------------------------------------------------------------------------------
- REITs Yes Yes Yes Yes
------------------------------------------------------------------------------------------
- Dollar rolls Yes Yes Yes No
------------------------------------------------------------------------------------------
- Zero-coupon bonds Yes Yes Yes No
------------------------------------------------------------------------------------------
- Pay-in-kind bonds No Yes No No
------------------------------------------------------------------------------------------
- Deferred interest Yes Yes Yes No
bonds
------------------------------------------------------------------------------------------
- Firm commitment Yes Yes Yes Yes
agreements
------------------------------------------------------------------------------------------
- When-issued/ Yes Yes Yes Yes
delayed-delivery
transactions
------------------------------------------------------------------------------------------
- Interest rate Yes Yes Yes No
swaps, caps,
floors and collars
------------------------------------------------------------------------------------------
- Securities lending Yes (up to 33 1/3%) Yes (up to 33 1/3%) Yes (up to 33 1/3%) Yes (up to 33 1/3%)
------------------------------------------------------------------------------------------
- Loan No Yes Yes No
participations
- ----------------------------------------------------------------------------------------------------------------------
What other potential - prepayment - credit quality - prepayment - interest rate
risks can affect the - foreign exposure - junk bonds - euro conversion fluctuations
Portfolio? - euro conversion - prepayment - emerging markets - credit quality
- emerging markets - euro conversion - foreign exposure
- illiquidity - emerging markets - euro conversion
- derivatives - illiquidity - emerging markets
- hedging - derivatives - illiquidity
- hedging - real estate industry
- derivatives
- hedging
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
35
<PAGE> 36
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
EQUITY PORTFOLIOS
------------------------------------------------------------------------------------------------------------------
GROWTH- FEDERATED "DOGS" OF
INCOME VALUE VENTURE VALUE WALL STREET ALLIANCE GROWTH
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
What is the growth of capital growth of capital growth of capital total return long-term growth of
Portfolio's and and income (including capital capital
investment goal? income appreciation and
current income)
- -----------------------------------------------------------------------------------------------------------------------------------
What are the common stocks or securities of high common stocks 30 high dividend equity securities of
Portfolio's securities that quality companies generally issued by yielding stocks a limited number of
principal demonstrate the companies with through a passively large, carefully
investments (under potential for market managed strategy selected, high
normal market appreciation and/or capitalizations of quality U.S.
conditions)? dividends at least $5 billion companies that are
judged likely to
achieve superior
earnings
- -----------------------------------------------------------------------------------------------------------------------------------
What are the - stock market - stock market - stock market - stock market - stock market
Portfolio's volatility volatility volatility volatility volatility
principal risks? - securities - securities - securities - passively managed - securities
selection selection selection strategy selection
- - small market
non-diversification capitalization
- -----------------------------------------------------------------------------------------------------------------------------------
What other
investment
strategies can the
Portfolio use?
----------------------------------------------------------------------------------------------
- Active trading Yes Yes Yes Yes Yes
----------------------------------------------------------------------------------------------
- Borrowing for Yes Yes Yes Yes Yes
temporary or (up to 33 1/3%) (up to 33 1/3%) (up to 33 1/3%) (up to 33 1/3%) (up to 33 1/3%)
emergency purposes
----------------------------------------------------------------------------------------------
- Types of fixed
income securities:
----------------------------------------------------------------------------------------------
U.S. government Yes Yes Yes Yes Yes
securities
----------------------------------------------------------------------------------------------
Investment grade Yes Yes Yes No Yes
corporate bonds
----------------------------------------------------------------------------------------------
Junk bonds No No No No Yes
----------------------------------------------------------------------------------------------
- Convertible Yes Yes Yes No Yes
securities
----------------------------------------------------------------------------------------------
- Preferred stocks Yes Yes Yes No Yes
----------------------------------------------------------------------------------------------
- Small company Yes Yes Yes Yes Yes
stocks
----------------------------------------------------------------------------------------------
- Warrants Yes Yes No No Yes
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
36
<PAGE> 37
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
EQUITY PORTFOLIOS (continued)
------------------------------------------------------------------------------------------------------------------
GROWTH- FEDERATED "DOGS" OF
INCOME VALUE VENTURE VALUE WALL STREET ALLIANCE GROWTH
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
What other
investment
strategies can the
Portfolio use?
----------------------------------------------------------------------------------------------
- Short-term Yes Yes Yes Yes Yes
investments
----------------------------------------------------------------------------------------------
- Defensive Yes Yes Yes Yes Yes
investments
----------------------------------------------------------------------------------------------
- Foreign securities Yes Yes Yes Yes Yes
(up to 25%)
----------------------------------------------------------------------------------------------
- Currency Yes No Yes No Yes
transactions
----------------------------------------------------------------------------------------------
- Illiquid Yes Yes Yes Yes Yes
securities (up to 15%) (up to 15%) (up to 15%) (up to 15%) (up to 15%)
----------------------------------------------------------------------------------------------
- Options and Yes Yes Yes Yes Yes
futures
----------------------------------------------------------------------------------------------
- Forward Yes No Yes Yes Yes
commitments
----------------------------------------------------------------------------------------------
- Other registered No Yes Yes No Yes
investment (up to 10%)
companies
----------------------------------------------------------------------------------------------
- Zero-coupon bonds No No Yes No Yes
----------------------------------------------------------------------------------------------
- Deferred interest No No Yes No No
bonds
----------------------------------------------------------------------------------------------
- Firm commitment Yes Yes Yes Yes Yes
agreements
----------------------------------------------------------------------------------------------
- When-issued/ Yes Yes Yes Yes Yes
delayed-delivery
transactions
----------------------------------------------------------------------------------------------
- Securities lending Yes Yes Yes Yes Yes
(up to 33 1/3%) (up to 33 1/3%) (up to 33 1/3%) (up to 33 1/3%) (up to 33 1/3%)
- -----------------------------------------------------------------------------------------------------------------------------------
What other potential - credit quality - credit quality - credit quality - foreign exposure - credit quality
risks can affect the - foreign exposure - foreign exposure - foreign exposure - euro conversion - foreign exposure
Portfolio? - euro conversion - euro conversion - euro conversion - emerging markets - euro conversion
- emerging markets - emerging markets - emerging markets - illiquidity - emerging markets
- illiquidity - illiquidity - illiquidity - derivatives - illiquidity
- derivatives - derivatives - derivatives - hedging - derivatives
- hedging - hedging - hedging - hedging
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
37
<PAGE> 38
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
EQUITY PORTFOLIOS (continued)
------------------------------------------------------------------------------------------------------------------
MFS GROWTH PUTNAM AGGRESSIVE
AND INCOME GROWTH REAL ESTATE GROWTH
MFS MID-CAP
GROWTH
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
What is the reasonable current long-term growth of total return through long-term growth of capital appreciation
Portfolio's income and capital a combination of capital
investment goal? long-term growth of growth and income
capital and income
- -----------------------------------------------------------------------------------------------------------------------------------
What are the equity securities common stocks or securities of equity securities of equity securities of
Portfolios' securities with companies companies with high growth
principal common stock principally engaged medium market companies including
investments (under characteristics that in or related to the capitalization, small growth
normal market its Subadviser real estate industry generally with companies with
conditions)? believes have above- or that own market market
average growth significant real capitalizations capitalizations
prospects estate assets or between $1 billion under $1 billion
that primarily and $5 billion, that
invest in real its Subadviser
estate financial believes to have
instruments above-average growth
potential
- -----------------------------------------------------------------------------------------------------------------------------------
What are the - stock market - stock market - stock market - stock market - stock market
Portfolio's volatility volatility volatility volatility volatility
principal risks? - securities - securities - securities - securities - securities
selection selection selection selection selection
- small market - real estate - - small market
capitalization industry non-diversification capitalization
- -----------------------------------------------------------------------------------------------------------------------------------
What other
investment
strategies can the
Portfolio use?
----------------------------------------------------------------------------------------------
- Active trading Yes Yes Yes Yes Yes
----------------------------------------------------------------------------------------------
- Borrowing for Yes Yes Yes Yes Yes
temporary or (up to 33 1/3%) (up to 33 1/3%) (up to 33 1/3%) (up to 33 1/3%) (up to 33 1/3%)
emergency purposes
----------------------------------------------------------------------------------------------
- Types of fixed
income securities:
----------------------------------------------------------------------------------------------
U.S. government Yes Yes Yes Yes Yes
securities
----------------------------------------------------------------------------------------------
Investment grade Yes No Yes Yes Yes
corporate bonds
----------------------------------------------------------------------------------------------
Junk bonds No Yes Yes Yes No
(up to 5%) (up to 20%)
----------------------------------------------------------------------------------------------
- Convertible Yes Yes Yes Yes Yes
securities
----------------------------------------------------------------------------------------------
- Preferred stocks Yes Yes Yes Yes Yes
----------------------------------------------------------------------------------------------
- Small company Yes Yes Yes Yes Yes
stocks
----------------------------------------------------------------------------------------------
- Warrants Yes Yes Yes Yes Yes
----------------------------------------------------------------------------------------------
- Rights Yes Yes Yes Yes Yes
----------------------------------------------------------------------------------------------
- Short-term Yes Yes Yes Yes Yes
investments
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
38
<PAGE> 39
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
EQUITY PORTFOLIOS (continued)
------------------------------------------------------------------------------------------------------------------
MFS GROWTH PUTNAM AGGRESSIVE
AND INCOME GROWTH REAL ESTATE GROWTH
MFS MID-CAP
GROWTH
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
What other
investment
strategies can the
Portfolio use?
----------------------------------------------------------------------------------------------
- Defensive Yes Yes Yes Yes Yes
investments
---------------------------------------------------------------------------------------------
- Foreign securities Yes Yes Yes Yes Yes
(up to 20%) (up to 25%) (up to 20%)
----------------------------------------------------------------------------------------------
- Currency Yes Yes Yes Yes Yes
transactions
----------------------------------------------------------------------------------------------
- Illiquid Yes Yes Yes Yes Yes
securities (up to 15%) (up to 15%) (up to 15%) (up to 15%) (up to 15%)
----------------------------------------------------------------------------------------------
- Options and Yes Yes Yes Yes Yes
futures
----------------------------------------------------------------------------------------------
- Forward Yes Yes Yes Yes Yes
commitments
----------------------------------------------------------------------------------------------
- REITs No Yes Yes No Yes
----------------------------------------------------------------------------------------------
- Other registered Yes Yes Yes Yes Yes
investment
companies
----------------------------------------------------------------------------------------------
- Dollar rolls No No No No No
----------------------------------------------------------------------------------------------
- Zero-coupon bonds Yes No No Yes No
----------------------------------------------------------------------------------------------
- Pay-in-kind bonds No No No Yes No
----------------------------------------------------------------------------------------------
- Deferred interest No No No Yes Yes
bonds
----------------------------------------------------------------------------------------------
- Firm commitment Yes Yes Yes Yes Yes
agreements
----------------------------------------------------------------------------------------------
- When-issued/ Yes Yes Yes Yes Yes
delayed-delivery
transactions
----------------------------------------------------------------------------------------------
- Securities lending Yes Yes Yes Yes Yes
(up to 33 1/3%) (up to 33 1/3%) (up to 33 1/3%) (up to 33 1/3%) (up to 33 1/3%)
- -----------------------------------------------------------------------------------------------------------------------------------
- What other - credit quality - credit quality - credit quality - credit quality - credit quality
potential risks can - junk bonds - junk bonds - junk bonds - junk bonds - emerging markets
affect the Portfolio? - foreign exposure - foreign exposure - prepayment - foreign exposure - illiquidity
- euro conversion - euro conversion - foreign exposure - euro conversion - derivatives
- emerging markets - emerging markets - euro conversion - emerging markets - hedging
- illiquidity - illiquidity - emerging markets - derivatives
- derivatives - derivatives - illiquidity - hedging
- hedging - hedging - derivatives
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
39
<PAGE> 40
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL PORTFOLIOS
- ----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL
GROWTH AND INCOME GLOBAL EQUITIES EMERGING MARKETS
INTERNATIONAL
DIVERSIFIED
EQUITIES
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
What is the growth of capital and long-term growth of long-term capital long-term capital
Portfolio's (secondarily) current capital appreciation appreciation
investment goal? income
- ----------------------------------------------------------------------------------------------------------------------
What are the common stocks traded common stocks or common stocks of common stocks and
Portfolios' on markets outside securities of U.S. and foreign issuers that, other equity
principal the U.S. foreign issuers with in the aggregate, securities of
investments (under common stock replicate broad companies that its
normal market characteristics that country and sector Subadviser believes
conditions)? demonstrate the indices have above-average
potential for growth prospects
appreciation and primarily in emerging
transactions in markets outside the
foreign currencies United States.
- ----------------------------------------------------------------------------------------------------------------------
What are the - stock market - stock market - stock market - stock market
Portfolio's volatility volatility volatility volatility
principal risks? - securities selection - securities selection - foreign exposure - securities selection
- foreign exposure - foreign exposure - non-diversification - foreign exposure
- emerging markets - emerging markets - emerging markets - emerging markets
- small market - passively managed
capitalization strategy
- ----------------------------------------------------------------------------------------------------------------------
What other
investment
strategies can the
Portfolio use?
------------------------------------------------------------------------------------------
- Active trading Yes Yes Yes Yes
------------------------------------------------------------------------------------------
- Borrowing for Yes (up to 33 1/3%) Yes (up to 33 1/3%) Yes (up to 33 1/3%) Yes (up to 33 1/3%)
temporary or
emergency purposes
------------------------------------------------------------------------------------------
- Types of fixed
income securities:
------------------------------------------------------------------------------------------
U.S. government Yes Yes Yes Yes
securities
------------------------------------------------------------------------------------------
Investment grade Yes Yes No Yes
corporate bonds
------------------------------------------------------------------------------------------
Junk bonds Yes No No Yes
------------------------------------------------------------------------------------------
- Convertible Yes Yes Yes Yes
securities
------------------------------------------------------------------------------------------
- Preferred stocks Yes Yes Yes Yes
------------------------------------------------------------------------------------------
- Small company Yes Yes Yes Yes
stocks
------------------------------------------------------------------------------------------
- Structured Yes No No Yes
securities
------------------------------------------------------------------------------------------
- Warrants Yes No Yes No
------------------------------------------------------------------------------------------
- Rights Yes Yes Yes Yes
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
40
<PAGE> 41
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL PORTFOLIOS (continued)
- ----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL
GROWTH AND INCOME GLOBAL EQUITIES EMERGING MARKETS
INTERNATIONAL
DIVERSIFIED
EQUITIES
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
What other
investment
strategies can the
Portfolio use?
------------------------------------------------------------------------------------------
- Short-term Yes Yes Yes Yes
investments
------------------------------------------------------------------------------------------
- Defensive Yes Yes Yes Yes
investments
------------------------------------------------------------------------------------------
- Foreign securities See principal See principal See principal See principal
investments investments investments investments
section above section above section above section above
------------------------------------------------------------------------------------------
- Currency Yes Yes Yes Yes
transactions
------------------------------------------------------------------------------------------
- Illiquid Yes (up to 15%) Yes (up to 15%) Yes (up to 15%) Yes (up to 15%)
securities
------------------------------------------------------------------------------------------
- Options and Yes Yes Yes Yes
futures
------------------------------------------------------------------------------------------
- Forward Yes Yes Yes Yes
commitments
------------------------------------------------------------------------------------------
- Other registered Yes No Yes Yes
investment
companies
------------------------------------------------------------------------------------------
- Firm commitment Yes Yes Yes Yes
agreements
------------------------------------------------------------------------------------------
- When-issued/ Yes Yes Yes Yes
delayed delivery
transactions
------------------------------------------------------------------------------------------
- Securities lending Yes (up to 33 1/3%) Yes (up to 33 1/3%) Yes (up to 33 1/3%) Yes (up to 33 1/3%)
- ----------------------------------------------------------------------------------------------------------------------
What other potential - credit quality - credit quality - credit quality - credit quality
risks can affect the - junk bonds - euro conversion - illiquidity - junk bonds
Portfolio? - euro conversion - illiquidity - derivatives - euro conversion
- illiquidity - derivatives - hedging - illiquidity
- derivatives - hedging - derivatives
- hedging - hedging
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
41
<PAGE> 42
- --------------------------------------------------------------------------------
GLOSSARY
- --------------------------------------------------------------------------------
INVESTMENT TERMINOLOGY
LARGE COMPANIES generally have market capitalizations of over $5 billion,
although there may be some overlap among capitalization categories.
MEDIUM SIZED COMPANIES generally have market capitalizations ranging from $1
billion to $5 billion, although there may be some overlap among capitalization
categories. With respect to the MFS MID-CAP GROWTH PORTFOLIO, the Subadviser
will consider companies with market capitalizations equaling or exceeding $250
million but not exceeding the top range of the Russell MidCap(TM) Growth Index
to be medium sized companies.
SMALL COMPANIES generally have market capitalizations of $1 billion or less,
although there may be some overlap among capitalization categories.
ACTIVE TRADING means that a Portfolio may engage in frequent trading of
portfolio securities to achieve its investment goal. In addition, because a
Portfolio may sell a security without regard to how long it has held the
security, active trading may have tax consequences for certain shareholders,
involving a possible increase in short-term capital gains or losses. Active
trading may result in high portfolio turnover and correspondingly greater
brokerage commissions and other transaction costs, which will be borne directly
by a Portfolio. During periods of increased market volatility, active trading
may be more pronounced. In the "Financial Highlights" section we provide each
Portfolio's portfolio turnover rate for each of the last five years.
The Fund may BORROW FOR TEMPORARY OR EMERGENCY PURPOSES including to meet
redemptions. Borrowing will cost the Fund interest expense and other fees.
FIXED INCOME SECURITIES provide consistent interest or dividend payments. They
include corporate bonds, notes, debentures, preferred stocks, convertible
securities, U.S. government securities and mortgage-backed and asset-backed
securities. The issuer of a SENIOR fixed income security is obligated to make
payments on this security ahead of other payments to security holders.
An INVESTMENT GRADE fixed income security is rated in one of the top four rating
categories by a debt rating agency (or is considered of comparable quality by
the Adviser or Subadviser). The two best-known debt rating agencies are Standard
& Poor's Rating Services, a Division of the McGraw-Hill Companies, Inc. and
Moody's Investors Service, Inc. INVESTMENT GRADE refers to any security rated
"BBB" or above by Standard & Poor's or "Baa" or above by Moody's.
A JUNK BOND is a high yield, high risk bond that does not meet the credit
quality standards of investment grade securities.
U.S. GOVERNMENT SECURITIES are issued or guaranteed by the U.S. government, its
agencies and instrumentalities. Some U.S. government securities are issued or
unconditionally guaranteed by the U.S. Treasury. They are of the highest
possible credit quality. While these securities are subject to variations in
market value due to fluctuations in interest rates, they will be paid in full if
held to maturity. Other U.S. government securities are neither direct
obligations of, nor 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.
PASS-THROUGH SECURITIES involve various debt obligations that are backed by a
pool of mortgages or other assets. Principal and interest payments made on the
underlying asset pools are typically passed through to investors. Types of
pass-through securities include "mortgage-backed securities," "collateralized
mortgage obligations," "commercial mortgage-backed securities," and
"asset-backed securities."
42
<PAGE> 43
CONVERTIBLE SECURITIES are securities (such as bonds or preferred stocks) that
may be converted into common stock of the same or a different company.
PREFERRED STOCK is a class of capital stock that pays dividends at a specified
rate and that has preference over common stock in the payment of dividends and
the liquidation of assets.
SMALL COMPANY STOCKS are stocks of companies that generally have a
capitalization of under $1 billion.
HYBRID INSTRUMENTS, such as INDEXED (i.e., Standard and Poor's Depositary
Receipts and World Equity Benchmark Shares) and STRUCTURED SECURITIES, can
combine the characteristics of securities, futures, and options. For example,
the principal amount, redemption, or conversion terms of a security could be
related to the market price of some commodity, currency, or securities index.
Such securities may bear interest or pay dividends at below market (or even
relatively nominal) rates. Under certain conditions, the redemption value of
such an investment could be zero.
WARRANTS are rights to buy common stock of a company at a specified price during
the life of the warrant. RIGHTS represent a preemptive right of stockholders to
purchase additional shares of a stock at the time of a new issuance before the
stock is offered to the general public.
SHORT-TERM INVESTMENTS include money market securities such as short-term U.S.
government obligations, repurchase agreements, commercial paper, bankers'
acceptances and certificates of deposit. These securities provide a Portfolio
with sufficient liquidity to meet redemptions and cover expenses.
DEFENSIVE INVESTMENTS include high quality fixed income securities, repurchase
agreements and other money market instruments. A Portfolio will make temporary
defensive investments in response to adverse market, economic, political or
other conditions. When a Portfolio takes a defensive position, it may miss out
on investment opportunities that could have resulted from investing in
accordance with its principal investment strategy. As a result, a Portfolio may
not achieve its investment goal.
EQUITY SWAPS are exchanges of the total return on a stock for the total return
on another asset, usually a diversified equity or fixed income index.
FOREIGN SECURITIES are issued by companies located outside of the United States,
including emerging markets. Foreign securities may include American Depositary
Receipts (ADRs) or other similar securities that convert into foreign
securities.
CURRENCY TRANSACTIONS include the purchase and sale of currencies to facilitate
securities transactions and forward currency contracts, which are used to hedge
against changes in currency exchange rates.
ILLIQUID SECURITIES are subject to legal or contractual restrictions that may
make them difficult to sell. A security that cannot easily be sold within seven
days will generally be considered illiquid. Certain restricted securities (such
as Rule 144A securities) are not generally considered illiquid because of their
established trading market.
OPTIONS AND FUTURES are contracts involving the right to receive or the
obligation to deliver assets or money depending on the performance of one or
more underlying assets or a market or economic index.
FORWARD COMMITMENTS are commitments to purchase or sell securities at a future
date. A Portfolio purchasing a forward commitment assumes the risk of any
decline in value of the securities beginning on the date of the agreement.
DOLLAR ROLLS are instruments in which a 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.
REITS (real estate investment trusts) are trusts that invest primarily in
commercial real estate or real estate related loans. The value of an interest in
a REIT may be affected by the value and the cash flows of the properties owned
or the quality of the mortgages held by the trust.
A Portfolio may invest in OTHER REGISTERED INVESTMENT COMPANIES, which are
registered in accordance with the federal securities laws.
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<PAGE> 44
ZERO-COUPON AND DEFERRED INTEREST BONDS are debt obligations that are issued or
purchased at a significant discount from face value. PAY-IN-KIND BONDS are debt
obligations that 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.
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. At the time of delivery of the securities, the value may be more or
less than the purchase price.
INTEREST RATE SWAPS, CAPS, FLOORS AND COLLARS Interest rate swaps involve the
exchange by a Portfolio with another party of their respective commitments to
pay or receive interest, such as an exchange of fixed-rate payments for floating
rate payments. The purchase of an interest rate cap entitles the purchaser, to
the extent that a specified index exceeds a predetermined interest rate, to
receive payment 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 the 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.
SECURITIES LENDING involves a loan of securities by a Portfolio in exchange for
cash or collateral. A Portfolio earns interest on the loan while retaining
ownership of the security.
By purchasing a LOAN PARTICIPATION, a Portfolio acquires some or all of the
interest of a bank or other lending institution in a loan to a corporate
borrower. The highly leveraged nature of many such loans may make such loans
especially vulnerable to adverse changes in economic or market conditions. As a
result, a Portfolio may be unable to sell such investments at an opportune time
or may have to resell them at less than fair market value.
RISK TERMINOLOGY
MARKET VOLATILITY: The stock and/or bond markets as a whole could go up or down
(sometimes dramatically). This could affect the value of the securities in a
Portfolio's portfolio.
SECURITIES SELECTION: A strategy used by a Portfolio, or securities selected by
its portfolio manager, may fail to produce the intended return.
PASSIVELY MANAGED STRATEGY: A Portfolio following a passively managed strategy
will not deviate from its investment strategy. In the case of "DOGS" OF WALL
STREET PORTFOLIO, this entails buying and holding thirty stocks selected through
objective selection criteria (except to the extent necessary to comply with
applicable federal tax laws). In other cases, it may involve a passively managed
strategy utilized to achieve investment results that correspond to a particular
market index. Such a Portfolio will not sell stocks in its portfolio and buy
different stocks over the course of a year, even if there are adverse
developments concerning a particular stock, company or industry. There can be no
assurance that the strategy will be successful.
INTEREST RATE FLUCTUATIONS: Volatility of the bond market is due principally to
changes in interest rates. As interest rates rise, bond prices typically fall;
and as interest rates fall, bond prices typically rise. Longer-term and lower
coupon bonds tend to be more sensitive to changes in interest rates.
CREDIT QUALITY: The creditworthiness of the issuer is always a factor in
analyzing fixed income securities. An issuer with a lower credit rating will be
more likely than a higher rated issuer to default or otherwise become unable to
honor its financial obligations. This type of issuer will typically issue JUNK
BONDS. In addition to the risk of default, junk bonds may be more volatile, less
liquid, more difficult to value and more susceptible to adverse economic
conditions or investor perceptions than other bonds.
PREPAYMENT: Prepayment risk is the possibility that the principal of the loans
underlying mortgage-backed or other pass-through securities may be prepaid at
any time. As a general rule, prepayments increase during a period of falling
interest rates and decrease during a period of rising interest rates. As a
44
<PAGE> 45
result of prepayments, in periods of declining interest rates a Portfolio may be
required to reinvest its assets in securities with lower interest rates. In
periods of increasing interest rates, prepayments generally may decline, with
the effect that the securities subject to prepayment risk held by a Portfolio
may exhibit price characteristics of longer-term debt securities.
FOREIGN EXPOSURE: Investors in foreign countries are subject to a number of
risks. A principal risk is that fluctuations in the exchange rates between the
U.S. dollar and foreign currencies may negatively affect an investment. In
addition, there may be less publicly available information about a foreign
company and it may not be subject to the same uniform accounting, auditing and
financial reporting standards as U.S. companies. Foreign governments may not
regulate securities markets and companies to the same degree as in the U.S.
Foreign investments will also be affected by local political or economic
developments and governmental actions. Consequently, foreign securities may be
less liquid, more volatile and more difficult to price than U.S. securities.
These risks are heightened when an issuer is in an EMERGING MARKET.
NON-DIVERSIFICATION: By concentrating in a smaller number of securities, a
Portfolio's risk is increased because the effect of each stock on the
Portfolio's performance is greater.
EURO CONVERSION: Effective January 1, 1999, several European countries
irrevocably fixed their existing national currencies to a new single European
currency unit, the "euro." Certain European investments may be subject to
additional risks as a result of this conversion. These risks include adverse tax
and accounting consequences, as well as difficulty in processing transactions.
SAAMCo is aware of such potential problems and is coordinating efforts to
prevent or alleviate their adverse impact on the Portfolios. There can be no
assurance that a Portfolio will not suffer any adverse consequences as a result
of the euro conversion.
EMERGING MARKETS: An emerging market country is generally a country with a low
or middle income economy or that is in the early stages of its industrialization
cycle. Emerging market countries may change over time depending on market and
economic conditions and the list may vary by advisor. The risks attendant to
foreign exposure are heightened in an emerging market country. Historical
experience indicates that the markets of emerging countries have been more
volatile than more developed markets; however, such markets can provide higher
rates of return to investors.
SMALL MARKET CAPITALIZATION: Companies with smaller market capitalizations
(particularly under $1 billion) tend to be at early stages of development with
limited product lines, market access for products, financial resources, access
to new capital, or depth in management. Consequently, the securities of smaller
companies may not be as readily marketable and may be subject to more abrupt or
erratic market movements.
ILLIQUIDITY: Certain securities may be difficult or impossible to sell at the
time and the price that the seller would like.
REAL ESTATE INDUSTRY: 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.
In addition, 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, and to maintain exemption from
registration under the laws governing mutual funds.
UTILITY INDUSTRY: Risks 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.
45
<PAGE> 46
DERIVATIVES: A derivative is any financial instrument whose value is based on,
and determined by, another security, index or benchmark (i.e., stock options,
futures, caps, floors, etc.). In recent years, derivative securities have become
increasingly important in the field of finance. Futures and options are now
actively traded on many different exchanges. Forward contracts, swaps, and many
different types of options are regularly traded outside of exchanges by
financial institutions in what are termed "over the counter" markets. Other more
specialized derivative securities often form part of a bond or stock issue. To
the extent a contract is used to hedge another position in the portfolio, there
is a risk that changes in the value of the contract will not match those of the
hedged position. Moreover, while hedging can reduce or eliminate losses, it can
also reduce or eliminate gains. To the extent an option or futures contract is
used to enhance return, rather than as a hedge, a Portfolio will be directly
exposed to the risks of the contract. Gains or losses from non-hedging positions
may be substantially greater than the cost of the position.
HEDGING: Hedging is a strategy in which a Portfolio uses a derivative security
to reduce certain risk characteristics of an underlying security or portfolio of
securities. While hedging strategies can be very useful and inexpensive ways of
reducing risk, they are sometimes ineffective due to unexpected changes in the
market. Hedging also involves the risk that changes in the value of the
derivative will not match those of the instruments being hedged as expected, in
which case any losses on the instruments being hedged may not be reduced.
Examples of hedging strategies are:
- Long Hedge -- Strategy in which an investor locks in a future price on a
security/index by buying a futures contract.
- Neutral Hedge -- Strategy that is designed to provide the highest
expected return on a portfolio of securities assuming that the price of a
particular investment in the portfolio remains constant.
- Perfect Hedge -- a hedge whose change in value is equal to the change in
value of the underlying security, positive or negative.
- Short Hedge -- Strategy designed to reduce the risk of a decline in value
of a security/index without requiring ownership of that security.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
YEAR 2000
Many computer and computer-based systems cannot distinguish the year 2000 from
the year 1900 because of the way they encode and calculate dates (commonly known
as the "Year 2000 Issue"). The Year 2000 Issue could potentially have an adverse
impact on the handling of security trades, the payment of interest and
dividends, pricing and account services. We recognize the importance of the Year
2000 Issue and are taking appropriate steps necessary in preparation for the
year 2000. The Trust's management fully anticipates that their systems will be
adapted in time for the year 2000, and to further this goal they have
coordinated a plan to repair, adapt or replace their systems as necessary. They
have also obtained representations from their outside service providers that
they are doing the same. The Trust's management completed their plan
significantly by the end of the 1998 calendar year and expects to perform
appropriate systems testing during the 1999 calendar year. If the problem has
not been fully addressed, however, the Trust could be negatively impacted. The
Year 2000 Issue could also have a negative impact on the companies in which the
Trust invests, which could hurt the Trust's investment returns.
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<PAGE> 47
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT ADVISER AND MANAGER
SunAmerica Asset Management Corp. (SAAMCo) serves as investment adviser and
manager for all the Portfolios of the Trust. SAAMCo selects the Subadvisers for
Portfolios, manages the investments for certain Portfolios, provides various
administrative services and supervises the daily business affairs of each
Portfolio.
SAAMCo has received an exemptive order from the Securities and Exchange
Commission that permits SAAMCo, subject to certain conditions, to enter into
agreements relating to the Trust with Subadvisers approved by the Board of
Trustees without obtaining shareholder approval. The exemptive order also
permits SAAMCo, subject to the approval of the Board but without shareholder
approval, to employ new Subadvisers for new or existing Portfolios, change the
terms of particular agreements with Subadvisers or continue the employment of
existing Subadvisers after events that would otherwise cause an automatic
termination of a subadvisory agreement. Shareholders will be notified of any
Subadviser changes. SAAMCo does not presently rely on this exemptive order.
Shareholders of a Portfolio have the right to terminate an agreement with a
Subadviser for that Portfolio at any time by a vote of the majority of the
outstanding voting securities of such Portfolio.
SAAMCo, located at The SunAmerica Center, 733 Third Avenue, New York, New York,
10017, is a corporation organized under the laws of the state of Delaware. In
addition to serving as investment adviser and manager of the Trust, SAAMCo
serves as adviser, manager and/or administrator for Anchor Pathway Fund, Anchor
Series Trust, Seasons Series Trust, Style Select Series, Inc. SunAmerica Equity
Funds, SunAmerica Income Funds, SunAmerica Money Market Funds, Inc. and
SunAmerica Strategic Investment Series, Inc.
For the fiscal year ended November 30, 1998, each Portfolio paid SAAMCo a fee
equal to the following percentage of average daily net assets:
<TABLE>
<CAPTION>
PORTFOLIO FEE
--------- ---
<S> <C>
Cash Management Portfolio.................... 0.52%
Corporate Bond Portfolio..................... 0.65%
Global Bond Portfolio........................ 0.70%
High-Yield Bond Portfolio.................... 0.63%
Worldwide High Income Portfolio.............. 1.00%
SunAmerica Balanced Portfolio................ 0.68%
MFS Total Return Portfolio................... 0.67%
Asset Allocation Portfolio................... 0.59%
</TABLE>
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<PAGE> 48
<TABLE>
<CAPTION>
PORTFOLIO FEE
--------- ---
<S> <C>
Utility Portfolio............................ 0.75%
Growth-Income Portfolio...................... 0.56%
Federated Value Portfolio.................... 0.75%
Venture Value Portfolio...................... 0.72%
"Dogs" of Wall Street Portfolio.............. 0.60%
Alliance Growth Portfolio.................... 0.55%
MFS Growth and Income Portfolio.............. 0.64%
Putnam Growth Portfolio...................... 0.81%
Real Estate Portfolio........................ 0.80%
Aggressive Growth Portfolio.................. 0.74%
International Growth and Income Portfolio.... 1.00%
Global Equities Portfolio.................... 0.74%
International Diversified Equities
Portfolio.................................. 1.00%
Emerging Markets Portfolio................... 1.25%
</TABLE>
The Trust's fee rates changed with respect to ALLIANCE GROWTH PORTFOLIO, MFS
TOTAL RETURN PORTFOLIO and MFS GROWTH AND INCOME PORTFOLIO, effective January 1,
1999. As of that date, SAAMCo's fee with respect to such Portfolios and the MFS
MID-CAP GROWTH PORTFOLIO as a percentage of average daily net assets, including
breakpoints, is as follows:
<TABLE>
<CAPTION>
FEE
PORTFOLIO (INCLUDING BREAKPOINTS)
--------- -----------------------
<S> <C>
MFS Total Return Portfolio................... 0.70% to $50 million
0.65% thereafter
Alliance Growth Portfolio.................... 0.70% to $50 million
0.65% next $100 million
0.60% over $150 million
MFS Growth and Income Portfolio.............. 0.70% to $600 million
0.65% next $900 million
0.60% over $1.5 billion
MFS Mid-Cap Growth Portfolio................. 0.75% to $600 million
0.70% next $900 million
0.65% over $1.5 billion
</TABLE>
Effective January 1999, the Trust's fiscal year end changed from November 30 to
January 31. For the period December 1, 1998 through January 31, 1999 (new fiscal
year end), each Portfolio paid SAAMCo a fee equal to the following percentage of
average daily net assets:
<TABLE>
<CAPTION>
PORTFOLIO FEE
--------- ---
<S> <C>
Cash Management Portfolio.................... 0.52%
Corporate Bond Portfolio..................... 0.63%
Global Bond Portfolio........................ 0.69%
High-Yield Bond Portfolio.................... 0.62%
Worldwide High Income Portfolio.............. 1.00%
SunAmerica Balanced Portfolio................ 0.66%
MFS Total Return Portfolio................... 0.67%
Asset Allocation Portfolio................... 0.58%
</TABLE>
48
<PAGE> 49
<TABLE>
<CAPTION>
PORTFOLIO FEE
--------- ---
<S> <C>
Utility Portfolio............................ 0.75%
Growth-Income Portfolio...................... 0.55%
Federated Value Portfolio.................... 0.75%
Venture Value Portfolio...................... 0.72%
Alliance Growth Portfolio.................... 0.57%
MFS Growth and Income Portfolio.............. 0.67%
Putnam Growth Portfolio...................... 0.78%
Real Estate Portfolio........................ 0.80%
Aggressive Growth Portfolio.................. 0.72%
International Growth and Income Portfolio.... 1.00%
Global Equities Portfolio.................... 0.73%
International Diversified Equities
Portfolio.................................. 1.00%
Emerging Markets Portfolio................... 1.25%
"Dogs" of Wall Street Portfolio.............. 0.60%
</TABLE>
INFORMATION ABOUT THE SUBADVISERS
ALLIANCE CAPITAL MANAGEMENT L.P. (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 whose clients primarily are
major corporate employee benefit funds, investment companies, foundations,
endowment funds and public employee retirement systems. Alliance serves as
investment manager of employee benefit fund assets for 35 of the Fortune 100
companies.
DAVIS SELECTED ADVISERS, L.P. (Davis Selected) is located at 124 East Marcy
Street, Santa Fe, New Mexico 87501. Davis Selected provides advisory services to
other investment companies. 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.
FEDERATED INVESTMENT COUNSELING (Federated) is located at Federated Investors
Tower, 1001 Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779. Federated and
its affiliate companies serves as investment adviser to a number of investment
companies and private accounts.
GOLDMAN SACHS ASSET MANAGEMENT (GSAM) is a separate operating division of
Goldman, Sachs & Co., which registered as an investment adviser in 1981.
Goldman, Sachs & Co. is located at 1 New York Plaza, 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; institutional equity investment management; fund
management; money market mutual fund management and administration; and private
asset management.
GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL (GSAM-International), a member of
the Investment Management Regulatory Organization Limited, a United Kingdom
self-regulatory organization, since 1990 and a registered investment adviser
since 1991, is an affiliate of Goldman, Sachs & Co. 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. GSAM International is
located at Peterborough Court, 133 Fleet Street, London, EC4A 2BB, England.
MASSACHUSETTS FINANCIAL SERVICES COMPANY (MFS) is America's oldest mutual fund
organization and, with its predecessor organizations, has a history of money
management dating from 1924 and the founding
49
<PAGE> 50
of the first mutual fund in the United States. MFS is located at 500 Boylston
Street, Boston, Massachusetts, 02116.
MORGAN STANLEY DEAN WITTER INVESTMENT MANAGEMENT, D/B/A MORGAN STANLEY ASSET
MANAGEMENT (MSAM) offers investment management and fiduciary services to taxable
and tax-exempt funds and institutions, international organizations and
individuals investing in U.S. and international equity and fixed income
securities. MSAM is located at 1221 Avenue of the Americas, New York, New York
10020.
PUTNAM INVESTMENT MANAGEMENT, INC. (Putnam), is 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.
SAAMCo compensated the various Subadvisers out of the advisory fees that it
received from the respective Portfolios. SAAMCo may terminate any agreement with
another Subadviser without shareholder approval.
50
<PAGE> 51
PORTFOLIO MANAGEMENT
The primary investment manager(s) and/or management team(s) for each portfolio
is set forth in the following table.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME AND TITLE OF EXPERIENCE
ADVISER/ PORTFOLIO MANAGER (AND/
SUBADVISER OR MANAGEMENT TEAM)
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Management Portfolio SAAMCo - Fixed Income Investment The Fixed Income
Team Investment Team has
been responsible for
the management of this
portfolio since its
inception in 1993.
----------------------------------------------------------------------------------------------------------------
Corporate Bond Portfolio Federated - Joseph M. Balestrino Mr. Balestrino joined
Co-Portfolio Manager and Federated in 1986 as a
Senior Vice President Project Manager in the
Product Design
Department and became
an Assistant Vice
President and
Investment Analyst in
1991. He became a Vice
President and
portfolio manager in
1995 and a Senior Vice
President in 1998.
- Mark E. Durbiano Mr. Durbiano joined
Co-Portfolio Manager Federated in 1982 as
Senior Vice President an Investment Analyst
and became a Vice
President and
portfolio manager in
1988. He has been a
Senior Vice President
since 1996.
----------------------------------------------------------------------------------------------------------------
</TABLE>
51
<PAGE> 52
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME AND TITLE OF EXPERIENCE
ADVISER/ PORTFOLIO MANAGER (AND/
SUBADVISER OR MANAGEMENT TEAM)
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Global Bond Portfolio GSAM-International - Stephen C. Fitzgerald Mr. Fitzgerald,
Co-Portfolio Manager Managing Director and
Chief Investment
Officer for
international fixed
income in the London
office since November
1998, joined GSAM
International in 1992
as an Executive
Director and Portfolio
Manager.
- Andrew F. Wilson Mr. Wilson, an
Co-Portfolio Manager Executive Director and
portfolio manager for
international fixed
income in the London
office, joined GSAM
International in
December 1995 as an
Executive Director and
portfolio manager.
From 1993 to 1995, he
was 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.
----------------------------------------------------------------------------------------------------------------
High-Yield Bond Portfolio SAAMCo - John W. Risner Mr. Risner joined
Vice President and SAAMCo in 1997 as a
Portfolio Manager Vice President and
portfolio manager.
Prior to joining
SAAMCo, he served as
Senior Portfolio
Manager of the Value
Line Aggressive Income
Trust and the Value
Line Convertible Fund
from 1992 to 1997.
----------------------------------------------------------------------------------------------------------------
</TABLE>
52
<PAGE> 53
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME AND TITLE OF EXPERIENCE
ADVISER/ PORTFOLIO MANAGER (AND/
SUBADVISER OR MANAGEMENT TEAM)
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Worldwide High Income MSAM - Robert Angevine Mr. Angevine is a
Portfolio Co-Portfolio Manager principal of Morgan
Stanley & Co.
Incorporated and a
portfolio manager of
MSAM's high-yield
investments. He joined
the firm in 1988 as a
portfolio manager.
- Thomas L. Bennett Mr. Bennett is a
Managing Director and Managing Director of
Co-Portfolio MSAM and has been a
Manager portfolio manager with
MSAM's affiliate
Miller Anderson &
Sherrerd, LLP since
1984.
- Stephen F. Esser Mr. Esser is a
Managing Director and Managing Director of
Co-Portfolio MSAM and has been a
Manager portfolio manager with
MSAM's affiliate
Miller Anderson &
Sherrerd, LLP since
1988.
- Abigail McKenna Ms. McKenna is a Vice
Vice President and President and
Co-Portfolio Manager portfolio manager of
MSAM. She was a Senior
Portfolio Manager at
MetLife Investment
Management Corp. from
1995 to 1996 and a
Limited Partner at
Weiss Peck & Greer
from 1991 to 1995. Ms.
McKenna joined MSAM in
1996 as a Vice
President and
portfolio manager.
----------------------------------------------------------------------------------------------------------------
SunAmerica Balanced SAAMCo - Francis D. Gannon Mr. Gannon has been a
Portfolio Vice President and portfolio manager with
Portfolio Manager SAAMCo since 1996. He
joined SAAMCo in 1993
as an equity analyst.
----------------------------------------------------------------------------------------------------------------
</TABLE>
53
<PAGE> 54
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME AND TITLE OF EXPERIENCE
ADVISER/ PORTFOLIO MANAGER (AND/
SUBADVISER OR MANAGEMENT TEAM)
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MFS Total Return Portfolio MFS - David M. Calabro Mr. Calabro joined MFS
Senior Vice President and in 1992 as a Vice
Portfolio Manager President and equity
analyst. He became a
portfolio manager in
1993 and was promoted
to Senior Vice
President in 1998.
- Geoffrey L. Kurinsky Mr. Kurinsky, the
Senior Vice President and manager of the
Portfolio Manager Portfolio's fixed
income securities,
joined MFS in 1987 as
a research analyst. He
became a Vice
President and
portfolio manager in
1989. In 1993, he was
promoted to Senior
Vice President.
- Constantinos G. Mokas Mr. Mokas, manager of
Vice President and the Portfolio's
Portfolio Manager convertible
securities, joined MFS
in 1990 as a research
analyst. He was
promoted to Assistant
Vice President in
1994, Vice President
in 1996 and portfolio
manager in 1998.
- Lisa B. Nurme Ms. Nurme, a manager
Senior Vice President and of the Portfolio's
Portfolio Manager common stock
investments, joined
MFS in 1987 as a
research analyst and
became an Investment
Officer in 1990. She
was then promoted to
Assistant Vice
President in 1991,
Vice President in
1992, portfolio
manager in 1995 and
Senior Vice President
in 1998.
----------------------------------------------------------------------------------------------------------------
</TABLE>
54
<PAGE> 55
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME AND TITLE OF EXPERIENCE
ADVISER/ PORTFOLIO MANAGER (AND/
SUBADVISER OR MANAGEMENT TEAM)
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- Maura A. Shaughnessy Ms. Shaughnessy, a
Senior Vice President and manager of the
Portfolio Manager Portfolio's common
stock investments,
joined MFS in 1991 as
a research analyst and
became Vice President
and portfolio manager
in 1992. She was
promoted to Senior
Vice President in
1998.
- Kenneth J. Enright Mr. Enright, a manager
Vice President and of the Portfolio's
Portfolio Manager common stock portion,
joined MFS in 1986 as
a research analyst. He
became an Assistant
Vice President in
1987, Vice President
in 1988, and portfolio
manager in 1993.
----------------------------------------------------------------------------------------------------------------
Asset Allocation Portfolio GSAM - Paul D. Farrell Mr. Farrell joined
Vice President and Senior GSAM in 1991 as a Vice
Portfolio Manager President and has been
(equity portion) a Senior Portfolio
Manager since 1991.
- Karma Wilson Ms. Wilson joined GSAM
Co-Portfolio Manager and in 1994 as a Vice
Vice President President and
(equity portion) portfolio manager.
Prior to 1994, she was
an investment analyst
with Bankers Trust
Australia Ltd.
- George D. Adler Mr. Adler joined GSAM
Vice President and Senior in 1997 as a Vice
Portfolio Manager President and
(equity portion) portfolio manager.
From 1990 to 1997, he
was a portfolio
manager at Liberty
Investment Management,
Inc. ("Liberty").
- Robert G. Collins Mr. Collins joined
Vice President and Senior GSAM in 1997 as a Vice
Portfolio Manager President and
(equity portion) portfolio manager.
From 1991 to 1997, he
was a portfolio
manager at Liberty.
----------------------------------------------------------------------------------------------------------------
</TABLE>
55
<PAGE> 56
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME AND TITLE OF EXPERIENCE
ADVISER/ PORTFOLIO MANAGER (AND/
SUBADVISER OR MANAGEMENT TEAM)
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- Herbert E. Ehlers Mr. Ehlers joined GSAM
Managing Director and in 1997 as a Managing
Senior Portfolio Manager Director and portfolio
(equity portion) manager. From 1994 to
1997, he was the Chief
Investment Officer and
Chairman at Liberty.
He was a portfolio
manager and president
at Liberty's
predecessor firm,
Eagle Asset
Management, from 1984
to 1994.
- Gregory H. Ekizian Mr. Ekizian joined
Vice President and Senior GSAM in 1997 as a Vice
Portfolio Manager President and
(equity portion) portfolio manager.
From 1990 to 1997, he
was a portfolio
manager at Liberty and
its predecessor firm,
Eagle Asset
Management.
- David G. Shell Mr. Shell joined GSAM
Vice President and Senior in 1997 as a Vice
Portfolio Manager President and
(equity portion) portfolio manager.
From 1987 to 1997, he
was a portfolio
manager at Liberty and
its predecessor firm,
Eagle Asset
Management.
- Ernest C. Segundo, Jr. Mr. Segundo joined
Vice President and Senior GSAM in 1997 as a Vice
Portfolio Manager President and
(equity portion) portfolio manager.
From 1992 to 1997, he
was a portfolio
manager at Liberty.
- Jonathan A. Beinner Mr. Beinner has been
Co-Portfolio Manager and Managing Director of
Managing Director (fixed GSAM's U.S. Fixed
income portion) Income Department
since 1997. He joined
the Fixed Income Group
in 1990 as an
associate portfolio
manager.
----------------------------------------------------------------------------------------------------------------
</TABLE>
56
<PAGE> 57
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME AND TITLE OF EXPERIENCE
ADVISER/ PORTFOLIO MANAGER (AND/
SUBADVISER OR MANAGEMENT TEAM)
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- C. Richard Lucy Mr. Lucy has been Co-
Co-Portfolio Manager and Managing Director of
Managing Director (fixed GSAM's Fixed Income
income portion) Department since 1997.
He joined the Fixed
Income Group in 1992
as a Vice President
and portfolio manager.
----------------------------------------------------------------------------------------------------------------
Utility Portfolio Federated - Linda A. Duessel Ms. Duessel joined
Co-Portfolio Manager and Federated in 1991 as
Vice President an Investment Analyst
and Assistant Vice
President. She became
a Vice President and
portfolio manager in
1995.
- Steven J. Lehman Mr. Lehman joined
Co-Portfolio Manager and Federated in 1997 as a
Vice President Vice President and
portfolio manager.
From 1985 to 1997, he
served as a portfolio
manager and Vice
President at First
Chicago NBD.
----------------------------------------------------------------------------------------------------------------
Growth-Income Portfolio Alliance - Michael R. Baldwin Mr. Baldwin joined the
Portfolio Manager and company in 1989 as a
Senior Vice President research analyst. He
became a portfolio
manager in 1991 and
was promoted to Senior
Vice President and
Associate Director of
Research in 1996.
----------------------------------------------------------------------------------------------------------------
Federated Value Portfolio Federated - Arthur J. Barry Mr. Barry joined
Co-Portfolio Manager and Federated in 1994 as
Vice President an Investment Analyst
and was promoted to an
Assistant Vice
President and
portfolio manager in
April 1997. He was
then promoted to Vice
President in 1998.
----------------------------------------------------------------------------------------------------------------
</TABLE>
57
<PAGE> 58
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME AND TITLE OF EXPERIENCE
ADVISER/ PORTFOLIO MANAGER (AND/
SUBADVISER OR MANAGEMENT TEAM)
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- Michael P. Donnelly Mr. Donnelly joined
Co-Portfolio Manager and Federated in 1989 as
Vice President an Investment Analyst
and became an
Assistant Vice
President and
portfolio manager in
1992. He was then
promoted to Vice
President in 1994.
----------------------------------------------------------------------------------------------------------------
Venture Value Portfolio Davis Selected - Christopher C. Davis Mr. Davis has been
Co-Portfolio Manager employed by Davis
Selected since 1989 as
a research analyst,
assistant portfolio
manager, co-portfolio
manager, and portfolio
manager.
- Kenneth C. Feinberg Mr. Feinberg has been
Co-Portfolio Manager employed by Davis
Selected since 1994 as
a research analyst,
assistant portfolio
manager, and portfolio
manager.
----------------------------------------------------------------------------------------------------------------
"Dogs" of Wall Street SAAMCo - Francis D. Gannon See above.
Portfolio Vice President and
Portfolio Manager
----------------------------------------------------------------------------------------------------------------
Alliance Growth Portfolio Alliance - James G. Reilly Mr. Reilly joined the
Executive Vice President company in 1984 as a
and Portfolio Manager research analyst. He
became a portfolio
manager in 1993 and
was promoted to an
Executive Vice
President in 1999.
----------------------------------------------------------------------------------------------------------------
MFS Growth and Income MFS - John D. Laupheimer, Jr. Mr. Laupheimer joined
Portfolio Senior Vice President and MFS in 1981 as a
Portfolio Manager research analyst. He
became an Investment
Officer in 1983,
Assistant Vice
President in 1984,
Vice President in
1986, portfolio
manager in 1987,
Senior Vice President
in 1995 and Director
of Equity Research in
1999.
- Mitchell D. Dynan Mr. Dynan joined MFS
Senior Vice President and in 1986 as a research
Portfolio Manager analyst. He became an
Assistant Vice
President in 1987,
Vice President in
1988, portfolio
manager in 1995 and
Senior Vice President
in 1999.
----------------------------------------------------------------------------------------------------------------
</TABLE>
58
<PAGE> 59
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME AND TITLE OF EXPERIENCE
ADVISER/ PORTFOLIO MANAGER (AND/
SUBADVISER OR MANAGEMENT TEAM)
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Putnam Growth Portfolio Putnam - C. Beth Cotner Ms. Cotner joined the
Managing Director and Chief company in 1995 as
Investment Officer Senior Vice President
and Senior Portfolio
Manager. Prior to that
time, she was an
Executive Vice
President of Kemper
Financial Services
from 1984 to 1995.
- Richard England Mr. England joined the
Senior Vice President and company in 1992 as a
Senior Portfolio Manager Global Equity Analyst.
In 1994, he was
promoted to Associate
Director of Research
and then joined the
Growth Equity Team in
1996 as a Senior
Portfolio Manager.
- Manuel H. Weiss Mr. Weiss joined the
Senior Vice President and company in 1987 as a
Senior Portfolio Manager portfolio manager to
head the quantitative
effort in the
development of the
Core Growth Equity
product.
- David J. Santos Mr. Santos joined the
Senior Vice President and company in 1986 as a
Portfolio Manager Pricing Operations
Manager and moved to
the investment
management side in
1991. He became a
portfolio manager in
1992.
----------------------------------------------------------------------------------------------------------------
Real Estate Portfolio Davis Selected - Andrew A. Davis Mr. Davis has been
Portfolio Manager employed by Davis
Selected since 1994 as
a research analyst,
assistant portfolio
manager, co-portfolio
manager and portfolio
manager.
----------------------------------------------------------------------------------------------------------------
</TABLE>
59
<PAGE> 60
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME AND TITLE OF EXPERIENCE
ADVISER/ PORTFOLIO MANAGER (AND/
SUBADVISER OR MANAGEMENT TEAM)
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MFS Mid-Cap Growth MFS - Mark Regan Mr. Regan joined MFS
Portfolio Vice President and as a research analyst
Portfolio Manager in 1989. He was named
investment officer in
1990, Assistant Vice
President in 1991,
Vice President in
1992, portfolio
manager in 1993 and
Senior Vice President
in 1999.
----------------------------------------------------------------------------------------------------------------
Aggressive Growth Portfolio SAAMCo - Donna M. Calder Ms. Calder joined the
Vice President and firm in 1998 as a Vice
Portfolio Manager President and
portfolio manager.
Prior to joining
SAAMCo, she was the
founder and General
Partner of Manhattan
Capital Partners, L.P.
(1991-1995).
----------------------------------------------------------------------------------------------------------------
International Growth and Putnam - Deborah F. Kuenstner Ms. Kuenster joined
Income Portfolio Chief Investment Officer Putnam as a Senior
and Senior Portfolio Vice President and
Manager Senior Portfolio
Manager in March 1997.
Ms. Kuenstner was
Senior Portfolio
Manager at Dupont
Pension Fund
Management from 1989
to 1997.
- George W. Stairs Mr. Stairs joined
Senior Vice President and Putnam as a Global
Portfolio Manager Equity research
analyst in 1994. In
1997, he became a
Senior Vice President
and Portfolio Manager.
Mr. Stairs was an
Associate at Value
Quest Ltd. from 1992
to 1994.
----------------------------------------------------------------------------------------------------------------
</TABLE>
60
<PAGE> 61
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME AND TITLE OF EXPERIENCE
ADVISER/ PORTFOLIO MANAGER (AND/
SUBADVISER OR MANAGEMENT TEAM)
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Global Equities Portfolio Alliance - Stephen Beinhacker Mr. Beinhacker joined
Portfolio Manager, Director the company in 1992 as
and Senior Vice President Director of
International
Quantitative Stock
Analysis and portfolio
manager. He was
promoted to Senior
Vice President in
1998.
----------------------------------------------------------------------------------------------------------------
International Diversified MSAM - Barton Biggs Mr. Biggs has been a
Equities Portfolio Chairman, Chief Chairman and a
Investment Officer and Director of MSAM since
Co-Portfolio Manager 1980 and a Managing
Director of Morgan
Stanley & Co.
Incorporated since
1975.
- Ann Thivierge Ms. Thivierge joined
Managing Director and MSAM in 1986 and is
Co-Portfolio Manager currently a Managing
Director.
----------------------------------------------------------------------------------------------------------------
Emerging Markets Portfolio Putnam - Thomas R. Haslett Mr. Haslett joined
Managing Director, Chief Putnam as Managing
Investment Officer and Co- Director, Chief
Portfolio Manager Investment Officer and
portfolio manager in
1996. He was a
Managing Director of
Montgomery Asset
Management, Ltd. from
1992 to 1996.
- J. Peter Grant Mr. Grant joined
Senior Vice President and Putnam in 1973 as a
Co-Portfolio Manager Vice President and
research analyst. He
became a portfolio
manager in 1974 and a
Senior Vice President
in 1997.
----------------------------------------------------------------------------------------------------------------
</TABLE>
61
<PAGE> 62
CUSTODIAN, TRANSFER AND DIVIDEND PAYING AGENT
State Street Bank and Trust Company, Boston, Massachusetts, acts as Custodian of
the Trust's assets as well as Transfer and Dividend Paying Agent and in so doing
performs certain bookkeeping, data processing and administrative services.
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following Financial Highlights tables for each Portfolio is intended to help
you understand the Portfolios' financial performance for the past 5 years.
Certain information reflects financial results for a single Portfolio share. The
total returns in each table represent the rate that an investor would have
earned on an investment in the Portfolio (assuming reinvestment of all dividends
and distributions). This information has been audited by PricewaterhouseCoopers
LLP, whose report, along with each Portfolio's financial statements, are
included in the Trust's annual report to shareholders, which is available upon
request.
62
<PAGE> 63
- --------------------------------------------------------------------------------
SUNAMERICA SERIES TRUST
FINANCIAL HIGHLIGHTS*
(SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
NET TOTAL
ASSET NET NET REALIZED FROM
VALUE INVEST- & UNREALIZED INVEST-
PERIOD BEGINNING MENT GAIN (LOSS) ON MENT
ENDED OF PERIOD INCOME** INVESTMENTS OPERATIONS
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash Management Portfolio
11/30/94 $10.20 $0.38 $(0.02) $ 0.36
11/30/95 10.47 0.56 0.01 0.57
11/30/96 10.70 0.53 (0.02) 0.51
11/30/97 10.76 0.53 0.01 0.54
11/30/98 10.74 0.54 (0.02) 0.52
1/31/99# 10.58 0.08 0.01 0.09
Global Bond Portfolio
11/30/94 10.30 0.53 (0.86) (0.33)
11/30/95 9.83 0.60 0.97 1.57
11/30/96 11.02 0.59 0.54 1.13
11/30/97 11.40 0.52 0.38 0.90
11/30/98 11.51 0.49 0.78 1.27
1/31/99# 11.77 0.07 0.11 0.18
Corporate Bond Portfolio
11/30/94 10.19 0.52 (0.87) (0.35)
11/30/95 9.75 0.60 1.00 1.60
11/30/96 10.82 0.65 0.03 0.68
11/30/97 11.09 0.77 0.21 0.98
11/30/98 11.54 0.77 (0.02) 0.75
1/31/99# 11.83 0.12 0.04 0.16
High-Yield Bond Portfolio
11/30/94 11.12 1.20 (1.65) (0.45)
11/30/95 10.32 1.11 0.12 1.23
11/30/96 10.53 0.98 0.48 1.46
11/30/97 11.04 1.04 0.48 1.52
11/30/98 11.82 1.14 (1.24) (0.10)
1/31/99# 10.98 0.18 (0.02) 0.16
Worldwide High Income Portfolio
10/28/94-
11/30/94 10.00 0.04 (0.09) (0.05)
11/30/95 9.95 1.10 0.47 1.57
11/30/96 11.42 1.25 1.60 2.85
11/30/97 13.35 0.98 0.68 1.66
11/30/98 13.20 1.07 (2.61) (1.54)
1/31/99# 10.31 0.16 (0.35) (0.19)
SunAmerica Balanced Portfolio
6/3/96-
11/30/96 10.00 0.10 1.03 1.13
11/30/97 11.13 0.23 2.15 2.38
11/30/98 13.45 0.30 2.33 2.63
1/31/99# 15.61 0.05 1.58 1.63
MFS Total Return Portfolio
10/28/94-
11/30/94 10.00 0.04 (0.08) (0.04)
11/30/95 9.96 0.34 2.23 2.57
11/30/96 12.48 0.34 1.31 1.65
11/30/97 13.63 0.37 1.39 1.76
11/30/98 14.75 0.36 1.56 1.92
1/31/99# 14.96 0.06 0.82 0.88
<CAPTION>
- -------------------------------------------------- -----------------------------------------------------------
DIVIDENDS DIVIDENDS NET NET
DECLARED FROM FROM NET ASSET ASSETS
NET REALIZED VALUE END OF
PERIOD INVESTMENT GAIN ON END OF TOTAL PERIOD
ENDED INCOME INVESTMENTS PERIOD RETURN*** (000'S)
- -------------------------------------------------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash Management Portfolio
11/30/94 $ (0.09) $ - $10.47 3.51% $ 89,098
11/30/95 (0.34) - 10.70 5.59 90,731
11/30/96 (0.45) - 10.76 4.92 91,247
11/30/97 (0.56) - 10.74 5.22 156,119
11/30/98 (0.68) - 10.58 5.05 223,640
1/31/99# - - 10.67 0.85 277,370
Global Bond Portfolio
11/30/94 (0.09) (0.05) 9.83 (3.18) 44,543
11/30/95 (0.38) - 11.02 16.40 59,759
11/30/96 (0.75) - 11.40 10.94 68,221
11/30/97 (0.75) (0.04) 11.51 8.43 89,043
11/30/98 (0.79) (0.22) 11.77 11.75 115,428
1/31/99# - - 11.95 1.53 122,306
Corporate Bond Portfolio
11/30/94 (0.05) (0.04) 9.75 (3.41) 15,869
11/30/95 (0.53) - 10.82 17.01 29,475
11/30/96 (0.41) - 11.09 6.51 37,207
11/30/97 (0.53) - 11.54 9.26 62,272
11/30/98 (0.46) - 11.83 6.61 143,561
1/31/99# - - 11.99 1.35 158,804
High-Yield Bond Portfolio
11/30/94 (0.29) (0.06) 10.32 (4.26) 55,803
11/30/95 (1.02) - 10.53 12.64 82,174
11/30/96 (0.95) - 11.04 14.86 113,229
11/30/97 (0.74) - 11.82 14.53 195,639
11/30/98 (0.66) (0.08) 10.98 (1.26) 284,580
1/31/99# - - 11.14 1.46 293,037
Worldwide High Income Portfolio
10/28/94-
11/30/94 - - 9.95 (0.50) 10.478
11/30/95 (0.10) - 11.42 16.02 21,515
11/30/96 (0.87) (0.05) 13.35 26.87 49,204
11/30/97 (0.90) (0.91) 13.20 14.17 125,224
11/30/98 (0.61) (0.74) 10.31 (13.74) 121,290
1/31/99# - - 10.12 (1.84) 116,977
SunAmerica Balanced Portfolio
6/3/96-
11/30/96 - - 11.13 11.30 10,224
11/30/97 (0.04) (0.02) 13.45 21.48 44,621
11/30/98 (0.11) (0.36) 15.61 19.81 149,242
1/31/99# - - 17.24 10.44 194,878
MFS Total Return Portfolio
10/28/94-
11/30/94 - - 9.96 (0.40) 1,516
11/30/95 (0.05) - 12.48 25.89 32,429
11/30/96 (0.19) (0.31) 13.63 13.75 70,021
11/30/97 (0.23) (0.41) 14.75 13.52 95,721
11/30/98 (0.31) (1.40) 14.96 13.54 131,440
1/31/99# - - 15.84 5.88 145,332
<CAPTION>
- -------------------------------------------------- ------------------------------------------
RATIO OF NET
RATIO OF INVESTMENT
EXPENSES TO INCOME TO
PERIOD AVERAGE NET AVERAGE PORTFOLIO
ENDED ASSETS NET ASSETS TURNOVER
- -------------------------------------------------- ------------------------------------------
<S> <C> <C> <C>
Cash Management Portfolio
11/30/94 0.70%++ 3.73%++ -%
11/30/95 0.67 5.32 -
11/30/96 0.62 4.90 -
11/30/97 0.63 5.06 -
11/30/98 0.58 4.97 -
1/31/99# 0.62+ 5.02+ -
Global Bond Portfolio
11/30/94 1.06 5.29 347
11/30/95 0.95 5.89 339
11/30/96 0.89 5.44 223
11/30/97 0.90 4.70 360
11/30/98 0.85 4.27 210
1/31/99# 0.97+ 3.65+ 30
Corporate Bond Portfolio
11/30/94 0.94++ 5.21++ 419
11/30/95 0.96++ 5.93++ 412
11/30/96 0.97 6.11 338
11/30/97 0.91 6.99 49
11/30/98 0.77 6.61 15
1/31/99# 0.80+ 6.16+ 4
High-Yield Bond Portfolio
11/30/94 0.92++ 11.07++ 225
11/30/95 0.80 10.80 174
11/30/96 0.77 9.41 107
11/30/97 0.75 9.26 243
11/30/98 0.69 9.75 128
1/31/99# 0.72+ 9.71+ 17
Worldwide High Income Portfolio
10/28/94-
11/30/94 1.60+++ 4.48+++ 2
11/30/95 1.30 10.46 176
11/30/96 1.18 10.45 177
11/30/97 1.10 7.58 146
11/30/98 1.08 8.90 158
1/31/99# 1.11+@ 9.57+@ 12
SunAmerica Balanced Portfolio
6/3/96-
11/30/96 1.00+++ 1.92+++ 40
11/30/97 1.00 1.82 143
11/30/98 0.78 2.10 111
1/31/99# 0.74+@ 1.73+@ 26
MFS Total Return Portfolio
10/28/94-
11/30/94 1.00+++ 4.25+++ 10
11/30/95 0.98++ 3.08++ 153
11/30/96 0.84 2.74 194
11/30/97 0.82 2.63 271
11/30/98 0.77 2.43 106
1/31/99# 0.81+ 2.40+ 86
</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.
# The Portfolio changed its fiscal year ended from November 30 to January
31.
+ Annualized
@ Net of custody credits of 0.01%
++ During the below stated periods, 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
---------------------------------------- -------------------------------------------
1994 1995 1996 1997 1998 1999 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
---------------------------------------- -------------------------------------------
Cash Management Portfolio................ 0.78% 0.67% 0.62% 0.63% 0.58% 0.62% 3.65% 5.32% 4.90% 5.06% 4.97% 5.02%
Global Bond Portfolio.................... 1.06 0.95 0.89 0.90 0.85 0.97 5.29 5.89 5.44 4.70 4.27 3.65
Corporate Bond Portfolio................. 1.09 0.97 0.97 0.91 0.77 0.80 5.06 5.92 6.11 6.99 6.61 6.16
High-Yield Bond Portfolio................ 0.93 0.80 0.77 0.75 0.69 0.72 11.06 10.80 9.41 9.26 9.75 9.71
Worldwide High Income Portfolio.......... 2.26 1.30 1.18 1.10 1.08 1.11 3.82 10.46 10.45 7.58 8.90 9.57
SunAmerica Balanced Portfolio............ - - 1.43 1.00 0.78 0.74 - - 1.49 1.82 2.10 1.73
MFS Total Return Portfolio............... 6.82 1.11 0.84 0.82 0.77 0.81 (1.57) 2.95 2.74 2.63 2.43 2.40
</TABLE>
63
<PAGE> 64
- --------------------------------------------------------------------------------
SUNAMERICA SERIES TRUST
FINANCIAL HIGHLIGHTS* -- (CONTINUED)
(SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
NET TOTAL
ASSET NET NET REALIZED FROM
VALUE INVEST- & UNREALIZED INVEST-
PERIOD BEGINNING MENT GAIN (LOSS) ON MENT
ENDED OF PERIOD INCOME** INVESTMENTS OPERATIONS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset Allocation Portfolio
11/30/94 $10.36 $0.29 $(0.25) $ 0.04
11/30/95 10.32 0.42 2.24 2.66
11/30/96 12.74 0.48 2.00 2.48
11/30/97 14.52 0.44 2.55 2.99
11/30/98 16.21 0.48 0.08 0.56
1/31/99# 14.81 0.07 0.15 0.22
Utility Portfolio
6/3/96-
11/30/96 10.00 0.24 0.51 0.75
11/30/97 10.75 0.36 1.91 2.27
11/30/98 12.91 0.42 1.62 2.04
1/31/99# 14.46 0.08 0.03 0.11
Growth-Income Portfolio
11/30/94 10.61 0.13 (0.36) (0.23)
11/30/95 10.33 0.17 3.31 3.48
11/30/96 13.71 0.18 3.48 3.66
11/30/97 16.82 0.17 4.69 4.86
11/30/98 20.82 0.17 4.33 4.50
1/31/99# 24.23 0.02 3.63 3.65
Federated Value Portfolio
6/3/96-
11/30/96 10.00 0.07 1.01 1.08
11/30/97 11.08 0.13 2.72 2.85
11/30/98 13.90 0.17 2.35 2.52
1/31/99# 16.06 0.02 0.54 0.56
Venture Value Portfolio
10/28/94-
11/30/94 10.00 0.03 (0.25) (0.22)
11/30/95 9.78 0.17 3.55 3.72
11/30/96 13.47 0.18 3.46 3.64
11/30/97 16.90 0.19 4.73 4.92
11/30/98 21.47 0.20 2.23 2.43
1/31/99# 23.10 0.03 1.25 1.28
"Dogs" of Wall Street Portfolio
4/1/98-
11/30/98 10.00 0.11 (0.30) (0.19)
1/31/99# 9.81 0.02 (0.23) (0.21)
Putnam Growth Portfolio
11/30/94 10.04 0.03 (0.01) 0.02
11/30/95 10.05 (0.01) 3.09 3.08
11/30/96 13.10 - 2.61 2.61
11/30/97 15.71 0.03 3.93 3.96
11/30/98 19.15 0.01 4.15 4.16
1/31/99# 20.21 (0.01) 3.33 3.32
MFS Growth and Income Portfolio
11/30/94 10.78 0.16 (0.87) (0.71)
11/30/95 10.01 0.12 3.14 3.26
11/30/96 13.14 0.11 2.16 2.27
11/30/97 14.39 0.11 2.48 2.59
11/30/98 15.62 0.02 2.61 2.63
1/31/99# 15.37 0.01 1.60 1.61
<CAPTION>
- --------------------------------------------- --------------------------------------------------------------
DIVIDENDS DIVIDENDS NET NET
DECLARED FROM FROM NET ASSET ASSETS
NET REALIZED VALUE END OF
PERIOD INVESTMENT GAIN ON END OF TOTAL PERIOD
ENDED INCOME INVESTMENTS PERIOD RETURN*** (000'S)
- --------------------------------------------- --------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Asset Allocation Portfolio
11/30/94 $ (0.05) $(0.03) $10.32 0.30% $ 106,856
11/30/95 (0.20) (0.04) 12.74 26.10 199,836
11/30/96 (0.31) (0.39) 14.52 20.27 316,388
11/30/97 (0.40) (0.90) 16.21 21.97 526,585
11/30/98 (0.35) (1.61) 14.81 2.85 713,045
1/31/99# - - 15.03 1.49 724,516
Utility Portfolio
6/3/96-
11/30/96 - - 10.75 7.50 6,299
11/30/97 (0.09) (0.02) 12.91 21.26 24,366
11/30/98 (0.16) (0.33) 14.46 15.98 68,049
1/31/99# - - 14.57 0.76 77,323
Growth-Income Portfolio
11/30/94 (0.04) (0.01) 10.33 (2.20) 84,899
11/30/95 (0.10) - 13.71 33.89 171,281
11/30/96 (0.12) (0.43) 16.82 27.41 325,463
11/30/97 (0.13) (0.73) 20.82 30.11 622,062
11/30/98 (0.13) (0.96) 24.23 21.91 1,019,590
1/31/99# - - 27.88 15.06 1,206,113
Federated Value Portfolio
6/3/96-
11/30/96 - - 11.08 10.80 12,460
11/30/97 (0.03) - 13.90 25.75 59,024
11/30/98 (0.06) (0.30) 16.06 18.22 145,900
1/31/99# - - 16.62 3.49 159,176
Venture Value Portfolio
10/28/94-
11/30/94 - - 9.78 (2.20) 4,449
11/30/95 (0.03) - 13.47 38.17 154,908
11/30/96 (0.09) (0.12) 16.90 27.44 516,413
11/30/97 (0.09) (0.26) 21.47 29.62 1,140,053
11/30/98 (0.12) (0.68) 23.10 11.36 1,725,411
1/31/99# - - 24.38 5.54 1,840,354
"Dogs" of Wall Street Portfolio
4/1/98-
11/30/98 - - 9.81 (1.90) 65,283
1/31/99# - - 9.60 (2.14) 78,062
Putnam Growth Portfolio
11/30/94 (0.01) - 10.05 0.19 75,342
11/30/95 (0.03) - 13.10 30.66 115,276
11/30/96 - - 15.71 19.92 160,073
11/30/97 - (0.52) 19.15 26.01 234,726
11/30/98 (0.02) (3.08) 20.21 22.56 398,863
1/31/99# - - 23.53 16.43 494,813
MFS Growth and Income Portfolio
11/30/94 (0.06) - 10.01 (6.64) 104,194
11/30/95 (0.13) - 13.14 32.92 149,910
11/30/96 (0.11) (0.91) 14.39 18.40 186,368
11/30/97 (0.10) (1.26) 15.62 19.78 218,496
11/30/98 (0.12) (2.76) 15.37 17.82 238,298
1/31/99# - - 16.98 10.47 266,069
<CAPTION>
- --------------------------------------------- --------------------------------------
RATIO OF NET
RATIO OF INVESTMENT
EXPENSES TO INCOME TO
PERIOD AVERAGE NET AVERAGE PORTFOLIO
ENDED ASSETS NET ASSETS TURNOVER
- --------------------------------------------- --------------------------------------
<S> <C> <C> <C>
Asset Allocation Portfolio
11/30/94 0.94%++ 2.71%++ 152%
11/30/95 0.81 3.62 207
11/30/96 0.74 3.66 200
11/30/97 0.68 2.88 176
11/30/98 0.64 3.15 156
1/31/99# 0.66+ 2.60+ 30
Utility Portfolio
6/3/96-
11/30/96 1.05+++ 4.41+++ 24
11/30/97 1.05++ 3.15++ 77
11/30/98 1.01 3.04 72
1/31/99# 0.93+ 3.02+ 12
Growth-Income Portfolio
11/30/94 0.81++ 1.26++ 59
11/30/95 0.77 1.42 59
11/30/96 0.72 1.21 82
11/30/97 0.65 0.89 44
11/30/98 0.60 0.78 53
1/31/99# 0.60+ 0.35+ 16
Federated Value Portfolio
6/3/96-
11/30/96 1.05+++ 1.26+++ 30
11/30/97 1.03 1.03 46
11/30/98 0.83 1.13 51
1/31/99# 0.86+ 0.75+ 4
Venture Value Portfolio
10/28/94-
11/30/94 1.10+++ 3.93+++ -
11/30/95 1.00++ 1.43++ 18
11/30/96 0.85 1.21 22
11/30/97 0.79 0.98 22
11/30/98 0.75 0.89 25
1/31/99# 0.77+ 0.86+ 5
"Dogs" of Wall Street Portfolio
4/1/98-
11/30/98 0.85+++ 2.04+++ 0
1/31/99# 0.85+ 0.93+ 58
Putnam Growth Portfolio
11/30/94 0.96++ 0.31++ 54
11/30/95 0.93 (0.05) 52
11/30/96 0.90 (0.02) 63
11/30/97 0.91 0.18 125
11/30/98 0.86 0.09 75
1/31/99# 0.86+ (0.19)+ 10
MFS Growth and Income Portfolio
11/30/94 0.81++ 1.52++ 211
11/30/95 0.76 1.01 229
11/30/96 0.74 0.82 164
11/30/97 0.73 0.77 217
11/30/98 0.70 0.17 105
1/31/99# 0.75+ 0.38+ 76
</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.
# The Portfolio changed its fiscal year ended from November 30 to January
31.
+ Annualized
++ During the below stated periods, 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)
---------------------------------------- ---------------------------------------------
1994 1995 1996 1997 1998 1999 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
---------------------------------------- ---------------------------------------------
Asset Allocation Portfolio............ 0.94% 0.81% 0.74% 0.68% 0.64% 0.66% 2.71% 3.62% 3.66% 2.88% 3.15% 2.60%
Utility Portfolio..................... - - 1.93 1.24 1.01 0.93 - - 3.53 2.96 3.04 3.02
Growth-Income Portfolio............... 0.89 0.77 0.72 0.65 0.60 0.60 1.18 1.42 1.21 0.89 0.78 0.55
Federated Value Portfolio............. - - 1.57 1.03 0.83 0.86 - - 0.74 1.03 1.13 0.75
Venture Value Portfolio............... 3.89 1.02 0.85 0.79 0.75 0.77 1.14 1.41 1.21 0.98 0.89 0.86
"Dogs" of Wall Street Portfolio....... - - - - 0.92 0.85 - - - - 1.97 0.93
Putnam Growth Portfolio............... 1.05 0.93 0.90 0.91 0.86 0.86 0.22 (0.05) (0.02) 0.18 0.09 (0.19)
MFS Growth and Income Portfolio....... 0.87 0.76 0.74 0.73 0.70 0.75 1.46 1.01 0.82 0.77 0.17 0.38
</TABLE>
64
<PAGE> 65
- --------------------------------------------------------------------------------
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
ASSET INVEST- NET REALIZED FROM DECLARED FROM FROM NET
VALUE MENT & UNREALIZED INVEST- NET REALIZED
PERIOD BEGINNING INCOME GAIN (LOSS) ON MENT INVESTMENT GAIN ON
ENDED OF PERIOD (LOSS)** INVESTMENTS OPERATIONS INCOME INVESTMENTS
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alliance Growth Portfolio
11/30/94 $10.92 $0.04 $(0.14) $(0.10) $ (0.01) $(0.17)
11/30/95 10.64 0.07 5.08 5.15 (0.03) (0.13)
11/30/96 15.63 0.08 4.07 4.15 (0.04) (1.01)
11/30/97 18.73 0.16 4.76 4.92 (0.05) (1.04)
11/30/98 22.56 0.07 7.77 7.84 (0.06) (2.30)
1/31/99# 28.04 0.00 7.22 7.22 - -
Global Equities Portfolio
11/30/94 10.99 0.05 0.71 0.76 (0.01) (0.07)
11/30/95 11.67 0.12 1.64 1.76 (0.08) (0.29)
11/30/96 13.06 0.14 2.19 2.33 (0.14) (0.33)
11/30/97 14.92 0.09 1.79 1.88 (0.13) (0.69)
11/30/98 15.98 0.07 2.40 2.47 (0.19) (1.36)
1/31/99# 16.90 0.00 1.71 1.71 - -
International Growth and Income Portfolio
6/2/97-
11/30/97 10.00 0.03 0.38 0.41 - -
11/30/98 10.41 0.13 0.86 0.99 (0.03) (0.06)
1/31/99# 11.31 - 0.40 0.40 (0.02) (0.19)
International Diversified Equities Portfolio
10/28/94-11/30/94 10.00 0.01 (0.23) (0.22) - -
11/30/95 9.78 0.07 0.38 0.45 (0.08) -
11/30/96 10.15 0.05 1.43 1.48 (0.26) -
11/30/97 11.37 0.09 0.28 0.37 (0.31) (0.10)
11/30/98 11.33 0.15 1.93 2.08 (0.40) (0.15)
1/31/99# 12.86 (0.01) 0.22 0.21 - -
Real Estate Portfolio
6/2/97-
11/30/97 10.00 0.16 1.37 1.53 - -
11/30/98 11.53 0.45 (1.93) (1.48) (0.16) (0.01)
1/31/99# 9.88 0.09 (0.36) (0.27) - -
Aggressive Growth Portfolio
6/3/96-
11/30/96 10.00 0.02 0.34 0.36 - -
11/30/97 10.36 0.01 1.40 1.41 (0.01) -
11/30/98 11.76 0.04 0.52 0.56 - -
1/31/99# 12.32 - 3.20 3.20 - -
Emerging Markets Portfolio
6/2/97-
11/30/97 10.00 0.06 (2.03) (1.97) - -
11/30/98 8.03 0.04 (1.78) (1.74) (0.07) -
1/31/99# 6.22 0.01 - 0.01 (0.01) -
<CAPTION>
- ---------------------------------------------- --------------------------------------------------------------------------
NET NET RATIO OF NET
ASSET ASSETS RATIO OF INVESTMENT
VALUE END OF EXPENSES TO INCOME TO
PERIOD END OF TOTAL PERIOD AVERAGE NET AVERAGE PORTFOLIO
ENDED PERIOD RETURN*** (000'S) ASSETS NET ASSETS TURNOVER
- ---------------------------------------------- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alliance Growth Portfolio
11/30/94 $10.64 (0.93)% $ 53,213 0.82%++ 0.37%++ 146%
11/30/95 15.63 48.91 167,870 0.79 0.51 138
11/30/96 18.73 28.05 381,367 0.71 0.51 121
11/30/97 22.56 27.80 704,533 0.65 0.37 110
11/30/98 28.04 35.92 1,396,140 0.58 0.27 90
1/31/99# 35.26 25.75 1,864,924 0.63+ (0.01)+ 11
Global Equities Portfolio
11/30/94 11.67 6.87 136,758 1.28 0.42 67
11/30/95 13.06 15.58 165,752 1.14 1.02 106
11/30/96 14.92 18.21 246,482 1.03 1.04 70
11/30/97 15.98 13.30 341,639 0.95 0.58 115
11/30/98 16.90 15.34 420,358 0.88 0.46 92
1/31/99# 18.61 10.12 463,138 0.86+ (0.04)+ 12
International Growth and Income Portfolio
6/2/97-
11/30/97 10.41 4.10 42,844 1.60+++ 0.61+++ 19
11/30/98 11.31 9.58 128,344 1.46 1.12 51
1/31/99# 11.50 3.56 142,497 1.46+ (0.10) 10
International Diversified Equities Portfolio
10/28/94-11/30/94 9.78 (2.20) 12,438 1.70+++ 1.60+++ -
11/30/95 10.15 4.63 48,961 1.70++ 0.76++ 52
11/30/96 11.37 14.85 157,008 1.59 0.47 53
11/30/97 11.33 3.52 248,927 1.35 0.82 56
11/30/98 12.86 18.33 354,174 1.26 1.18 40
1/31/99# 13.07 1.63 373,785 1.26+ (0.43)+ 7
Real Estate Portfolio
6/2/97-
11/30/97 11.53 15.30 29,565 1.25+++ 3.25+++ 7
11/30/98 9.88 (13.04) 59,102 0.95 4.21 26
1/31/99# 9.61 (2.73) 58,504 1.01+ 5.63+ 6
Aggressive Growth Portfolio
6/3/96-
11/30/96 10.36 3.60 35,124 1.05+++ 0.46+++ 47
11/30/97 11.76 13.62 103,603 0.90 (0.13) 221
11/30/98 12.32 4.76 133,183 0.83 0.32 268
1/31/99# 15.52 25.97 182,313 0.82+ 0.13+ 29
Emerging Markets Portfolio
6/2/97-
11/30/97 8.03 (19.70) 19,979 1.90+++ 1.33+++ 49
11/30/98 6.22 (21.86) 31,685 1.90++ 0.61++ 96
1/31/99# 6.22 0.20 32,708 1.90+++ 0.60+++ 22
</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.
# The Portfolio changed its fiscal year ended from November 30 to January 31.
+ Annualized
++ During the below stated periods, 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)
---------------------------------------- ----------------------------------------------
1994 1995 1996 1997 1998 1999 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
---------------------------------------- ----------------------------------------------
Alliance Growth Portfolio............ 0.96% 0.79% 0.71% 0.65% 0.58% 0.63% 0.23% 0.51% 0.51% 0.37% 0.27% (0.01)%
Global Equities Portfolio............ 1.28 1.14 1.03 0.95 0.88 0.86 0.42 1.02 1.04 0.58 0.46 (0.04)
International Growth and Income
Portfolio........................... - - - 2.02 1.46 1.46 - - - 0.19 1.12 (0.10)
International Diversified Equities
Portfolio........................... 3.50 2.09 1.59 1.35 1.26 1.26 (0.20) 0.37 0.47 0.82 1.18 (0.43)
Real Estate Portfolio................ - - - 1.36 0.95 1.01 - - - 3.14 4.21 5.63
Aggressive Growth Portfolio.......... - - 1.09 0.90 0.83 0.82 - - 0.42 (0.13) 0.32 0.13
Emerging Markets Portfolio........... - - - 2.60 2.01 2.29 - - - 0.63 0.50 0.21
</TABLE>
65
<PAGE> 66
- --------------------------------------------------------------------------------
FOR MORE INFORMATION
- --------------------------------------------------------------------------------
The following documents contain more information about the Portfolios and are
available free of charge upon request:
ANNUAL/SEMI-ANNUAL REPORTS. Contain financial statements, performance
data and information on portfolio holdings. The annual report also
contains a written analysis of market conditions and investment
strategies that significantly affected a Portfolio's performance for the
most recently completed fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI). Contains additional
information about the Portfolios' policies, investment restrictions and
business structure. This prospectus incorporates the SAI by reference.
You may obtain copies of these documents or ask questions about the Portfolios
by contacting:
Anchor National Life Insurance Company
Annuity Service Center
P.O. Box 54299
Los Angeles, California 90054-0299
1-800-445-7862
-- or --
First SunAmerica Life Insurance Company
Service Center
P.O. Box 54299
Los Angeles, California 90054-0299
1-800-99-NYSUN (New York Shareholders)
1-800-445-SUN2 (all others)
Information about the Portfolios (including the SAI) can be reviewed and copied
at the Public Reference Room of the Securities and Exchange Commission,
Washington, D.C. Call (800) SEC-0330 for information on the operation of the
Public Reference Room. Information about the Portfolios is also available on the
Securities and Exchange Commission's web-site at http://www.sec.gov and copies
may be obtained upon payment of a duplicating fee by writing the Public
Reference Section of the Securities and Exchange Commission, Washington, D.C.
20549-6009.
You should rely only on the information contained in this prospectus. No one is
authorized to provide you with any different information.
[LOGO]
Anchor National Life Insurance Company
1 SunAmerica Center
Los Angeles, California 90067-6022
First SunAmerica Life Insurance Company
733 Third Avenue
New York, New York 10017
INVESTMENT COMPANY ACT
- - File No. 811-7238
66
