N-CSR 1 a2125532zn-csr.txt N-CSR UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-09169 -------------------------------------------- SunAmerica Strategic Investment Series, Inc. -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) Harborside Financial Center, 3200 Plaza 5 Jersey City, NJ 07311 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Robert M. Zakem, Esq. Senior Vice President & General Counsel AIG SunAmerica Asset Management Corp. Harborside Financial Center, 3200 Plaza 5 Jersey City, NJ 07311 -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (201) 324-6363 ---------------------------- Date of fiscal year end: October 31, 2003 -------------------------- Date of reporting period: October 31, 2003 ------------------------- Item 1. Reports to Shareholders [GRAPHIC] SUNAMERICA THE RETIREMENT SPECIALIST STRATEGIC INVESTMENT SERIES 2003 ANNUAL REPORT [AIG SUNAMERICA MUTUAL FUNDS LOGO] OCTOBER 31, 2003 ANNUAL REPORT SUNAMERICA STRATEGIC INVESTMENT SERIES, INC. SUNAMERICA BIOTECH/HEALTH FUND (SBHAX) TAX MANAGED EQUITY FUND (TXMAX) SUNAMERICA STOCK INDEX FUND (NBSKX) SUNAMERICA SCIENCE & TECHNOLOGY FUND (NSTAX) SUNAMERICA AGGRESSIVE GROWTH LIFESTAGE FUND (NKLAX) SUNAMERICA MODERATE GROWTH LIFESTAGE FUND (NLMAX) SUNAMERICA CONSERVATIVE GROWTH LIFESTAGE FUND (NCLAX) TABLE OF CONTENTS STATEMENT OF ASSETS AND LIABILITIES 1 STATEMENT OF OPERATIONS 3 STATEMENT OF CHANGES IN NET ASSETS 4 FINANCIAL HIGHLIGHTS 7 PORTFOLIO OF INVESTMENTS 14 NOTES TO FINANCIAL STATEMENTS 31 REPORT OF INDEPENDENT AUDITORS 52 DIRECTOR INFORMATION 53 SHAREHOLDER TAX INFORMATION 55
SUNAMERICA STRATEGIC INVESTMENT SERIES, INC. STATEMENT OF ASSETS AND LIABILITIES -- OCTOBER 31, 2003
TAX BIOTECH/ MANAGED STOCK SCIENCE & HEALTH EQUITY INDEX TECHNOLOGY FUND FUND FUND FUND ----------------------------------------------------------------- ASSETS: Investment securities, at value* $ 35,352,778 $ 59,980,518 $ 38,711,278 $ 13,767,783 Short-term securities (cost equals market) -- 756,000 129,929 226,534 Repurchase agreements (cost equals market) 13,337,000 -- 2,066,000 -- Foreign cash@ -- -- -- 33 Deposit with brokers for securities sold short 6,398,134 -- -- -- Cash 394 356 302 -- Receivable for investments sold 1,032,952 -- -- 11,395 Receivable for fund shares sold 102,860 49,169 36,941 10,660 Interest and dividends receivable 358 104,162 52,090 8,822 Receivable for variation margin on futures contracts -- -- 2,100 -- Receivable from investment adviser 7,845 12,650 37,694 35,823 Prepaid expenses 447 688 314 911 -------------- -------------- -------------- -------------- Total assets 56,232,768 60,903,543 41,036,648 14,061,961 -------------- -------------- -------------- -------------- LIABILITIES: Payable for investments purchased -- -- 10,076 31,203 Payable for fund shares redeemed 149,893 87,276 15,746 32,212 Accrued expenses 120,455 122,932 64,971 60,651 Investment advisory and management fees payable 31,908 43,396 9,204 10,333 Distribution and service maintenance fees payable 32,006 42,916 26,552 9,540 Securities sold short, at value# 6,470,650 -- -- -- -------------- -------------- -------------- -------------- Total liabilities 6,804,912 296,520 126,549 143,939 -------------- -------------- -------------- -------------- Net assets $ 49,427,856 $ 60,607,023 $ 40,910,099 $ 13,918,022 ============== ============== ============== ============== NET ASSETS WERE COMPOSED OF: Common Stock $.0001 par value $ 511 $ 591 $ 439 $ 454 Paid-in capital 78,393,205 97,064,042 48,423,439 32,964,909 -------------- -------------- -------------- -------------- 78,393,716 97,064,633 48,423,878 32,965,363 Accumulated undistributed net investment income (loss) (3,177) (8,076) 161,898 (341) Accumulated undistributed net realized gain (loss) on investments, futures contracts, securities sold short and foreign exchange transactions (36,097,343) (30,923,844) (2,407,209) (21,092,768) Net unrealized appreciation (depreciation) on: Investments 7,215,242 (5,525,690) (5,324,943) 2,045,766 Futures contracts -- -- 56,475 -- Foreign exchange transactions and other assets and liabilites -- -- -- 2 Securities sold short (80,582) -- -- -- -------------- -------------- -------------- -------------- Net assets $ 49,427,856 $ 60,607,023 $ 40,910,099 $ 13,918,022 ============== ============== ============== ============== *Identified cost of investment securities $ 28,137,536 $ 65,506,208 $ 44,036,221 $ 11,722,017 ============== ============== ============== ============== @Identified cost of foreign cash $ -- $ -- $ -- $ 31 ============== ============== ============== ============== #Proceeds from securities sold short $ 6,390,068 $ -- $ -- $ -- ============== ============== ============== ============== AGGRESSIVE MODERATE CONSERVATIVE GROWTH GROWTH GROWTH LIFESTAGE LIFESTAGE LIFESTAGE FUND FUND FUND ---------------------------------------------- ASSETS: Investment securities, at value* $ 24,512,283 $ 37,522,262 $ 21,752,627 Short-term securities (cost equals market) -- -- -- Repurchase agreements (cost equals market) -- -- -- Foreign cash@ -- -- -- Deposit with brokers for securities sold short -- -- -- Cash 12,267 81,472 16,072 Receivable for investments sold -- -- -- Receivable for fund shares sold 15,826 39,472 101,628 Interest and dividends receivable -- -- -- Receivable for variation margin on futures contracts -- -- -- Receivable from investment adviser 31,761 24,840 26,753 Prepaid expenses 185 279 182 -------------- -------------- -------------- Total assets 24,572,322 37,668,325 21,897,262 -------------- -------------- -------------- LIABILITIES: Payable for investments purchased -- -- -- Payable for fund shares redeemed 12,597 40,294 4,825 Accrued expenses 46,491 40,195 34,697 Investment advisory and management fees payable 2,058 3,141 1,827 Distribution and service maintenance fees payable 8,136 10,392 6,398 Securities sold short, at value# -- -- -- -------------- -------------- -------------- Total liabilities 69,282 94,022 47,747 -------------- -------------- -------------- Net assets $ 24,503,040 $ 37,574,303 $ 21,849,515 ============== ============== ============== NET ASSETS WERE COMPOSED OF: Common Stock $.0001 par value $ 315 $ 425 $ 234 Paid-in capital 33,162,625 42,621,432 24,670,194 -------------- -------------- -------------- 33,162,940 42,621,857 24,670,428 Accumulated undistributed net investment income (loss) (129) 12,298 108,039 Accumulated undistributed net realized gain (loss) on investments, futures contracts, securities sold short and foreign exchange transactions (10,829,107) (8,506,445) (4,910,855) Net unrealized appreciation (depreciation) on: Investments 2,169,336 3,446,593 1,981,903 Futures contracts -- -- -- Foreign exchange transactions and other assets and liabilites -- -- -- Securities sold short -- -- -- -------------- -------------- -------------- Net assets $ 24,503,040 $ 37,574,303 $ 21,849,515 ============== ============== ============== *Identified cost of investment securities $ 22,342,947 $ 34,075,669 $ 19,770,724 ============== ============== ============== @Identified cost of foreign cash $ -- $ -- $ -- ============== ============== ============== #Proceeds from securities sold short $ -- $ -- $ -- ============== ============== ==============
See Notes to Financial Statements 1
TAX BIOTECH/ MANAGED STOCK SCIENCE & HEALTH EQUITY INDEX TECHNOLOGY FUND FUND FUND FUND -------------------------------------------------------------- CLASS A (25 MILLION SHARES AUTHORIZED): Net assets $ 18,923,505 $ 14,877,044 $ 13,890,079 $ 3,392,761 Common Stock issued and outstanding 1,928,241 1,418,134 1,482,750 1,086,265 Net asset value and redemption price per share (excluding any applicable contingent deferred sales charge) $ 9.81 $ 10.49 $ 9.37 $ 3.12 Maximum sales charge (5.75% of offering price) 0.60 0.64 0.57 0.19 -------------- -------------- -------------- -------------- Maximum offering price to public $ 10.41 $ 11.13 $ 9.94 $ 3.31 ============== ============== ============== ============== CLASS B (25 MILLION SHARES AUTHORIZED): Net assets $ 17,842,584 $ 22,694,315 $ 23,601,415 $ 9,366,727 Common Stock issued and outstanding 1,859,626 2,230,837 2,537,180 3,069,134 Net asset value, offering and redemption price per share (excluding any applicable contingent deferred sales charge) $ 9.59 $ 10.17 $ 9.30 $ 3.05 ============== ============== ============== ============== CLASS II (25 MILLION SHARES AUTHORIZED): Net assets $ 12,661,767 $ 23,035,664 $ 3,418,605 $ 949,039 Common Stock issued and outstanding 1,317,416 2,261,317 369,327 319,652 Net asset value and redemption price per share (excluding any applicable contingent deferred sales charge) $ 9.61 $ 10.19 $ 9.26 $ 2.97 Maximum sales charge (1.00% of offering price) 0.10 0.10 0.09 0.03 -------------- -------------- -------------- -------------- Maximum offering price to public $ 9.71 $ 10.29 $ 9.35 $ 3.00 ============== ============== ============== ============== CLASS I (25 MILLION SHARES AUTHORIZED): Net assets $ -- $ -- $ -- $ 209,495 Common Stock issued and outstanding -- -- -- 66,700 Net asset value, offering and redemption price per share $ -- $ -- $ -- $ 3.14 ============== ============== ============== ============== AGGRESSIVE MODERATE CONSERVATIVE GROWTH GROWTH GROWTH LIFESTAGE LIFESTAGE LIFESTAGE FUND FUND FUND ---------------------------------------------- CLASS A (25 MILLION SHARES AUTHORIZED): Net assets $ 3,672,508 $ 5,819,520 $ 6,789,352 Common Stock issued and outstanding 472,660 658,051 727,298 Net asset value and redemption price per share (excluding any applicable contingent deferred sales charge) $ 7.77 $ 8.84 $ 9.34 Maximum sales charge (5.75% of offering price) 0.47 0.54 0.57 -------------- -------------- -------------- Maximum offering price to public $ 8.24 $ 9.38 $ 9.91 ============== ============== ============== CLASS B (25 MILLION SHARES AUTHORIZED): Net assets $ 11,818,419 $ 14,169,624 $ 7,567,461 Common Stock issued and outstanding 1,522,068 1,603,256 809,984 Net asset value, offering and redemption price per share (excluding any applicable contingent deferred sales charge) $ 7.76 $ 8.84 $ 9.34 ============== ============== ============== CLASS II (25 MILLION SHARES AUTHORIZED): Net assets $ 533,176 $ 1,601,141 $ 1,661,669 Common Stock issued and outstanding 68,028 180,940 177,353 Net asset value and redemption price per share (excluding any applicable contingent deferred sales charge) $ 7.84 $ 8.85 $ 9.37 Maximum sales charge (1.00% of offering price) 0.08 0.09 0.09 -------------- -------------- -------------- Maximum offering price to public $ 7.92 $ 8.94 $ 9.46 ============== ============== ============== CLASS I (25 MILLION SHARES AUTHORIZED): Net assets $ 8,478,937 $ 15,984,018 $ 5,831,033 Common Stock issued and outstanding 1,088,909 1,807,670 623,944 Net asset value, offering and redemption price per share $ 7.79 $ 8.84 $ 9.35 ============== ============== ==============
See Notes to Financial Statements 2 SUNAMERICA STRATEGIC INVESTMENT SERIES, INC. STATEMENT OF OPERATIONS -- FOR THE YEAR ENDED OCTOBER 31, 2003
TAX BIOTECH/ MANAGED STOCK SCIENCE & HEALTH EQUITY INDEX TECHNOLOGY FUND FUND FUND FUND -------------------------------------------------------------- INCOME: Income: Interest $ 77,241 $ 1,733 $ 19,569 $ 1,250 Dividends* 26,050 1,098,402 561,450 39,772 -------------- -------------- -------------- -------------- Total income 103,291 1,100,135 581,019 41,022 -------------- -------------- -------------- -------------- Expenses: Investment advisory and management fees 331,090 519,867 88,926 99,284 Distribution and service maintenance fees-Class A 57,668 52,568 33,994 8,990 Distribution and service maintenance fees-Class B 162,390 230,393 203,881 75,817 Distribution and service maintenance fees-Class II 114,299 231,020 28,349 7,111 Service fees-Class I -- -- -- 426 Transfer agent fees and expenses-Class A 50,186 40,285 27,761 14,389 Transfer agent fees and expenses-Class B 56,418 60,631 70,706 48,015 Transfer agent fees and expenses-Class II 42,251 59,631 9,325 6,653 Transfer agent fees and expenses-Class I -- -- -- 459 Registration fees-Class A 19,532 10,663 10,541 10,170 Registration fees-Class B 17,718 10,873 14,542 13,081 Registration fees-Class II 17,718 11,303 8,311 9,011 Registration fees-Class I -- -- -- 8,901 Printing expense 5,470 861 27,745 36,017 Custodian fees and expenses 52,446 54,232 48,813 54,817 Audit and tax fees 27,525 27,294 28,043 28,458 Legal fees and expenses 6,202 8,843 5,895 4,448 Directors' fees and expenses 3,897 6,152 2,299 183 Dividend expense on securities sold short 9,650 -- -- -- Miscellaneous expenses 7,914 9,187 12,589 3,687 -------------- -------------- -------------- -------------- Total expenses 982,374 1,333,803 621,720 429,917 Less: expenses waived/reimbursed by investment adviser (117,176) (146,883) (222,555) (210,685) Less: Fee paid indirectly (Note 9) -- -- -- (2,354) Less: custody credits earned on cash balances (1,098) (166) (1,199) (19) -------------- -------------- -------------- -------------- Net expenses 864,100 1,186,754 397,966 216,859 -------------- -------------- -------------- -------------- Net investment income (loss) (760,809) (86,619) 183,053 (175,837) -------------- -------------- -------------- -------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments ( 637,572) (4,260,050) (155,844) (1,390,002) Net realized gain (loss) on futures contracts -- -- 333,198 -- Net realized gain (loss) on securities sold short (244,929) -- -- -- Net realized gain (loss) on foreign exchange and other assets and liabilities -- -- -- (1,322) Net change in unrealized appreciation (depreciation) on investments 12,128,174 13,156,086 5,801,028 5,610,398 Net change in unrealized appreciation (depreciation) on futures contracts -- -- (27,113) -- Net change in unrealized appreciation (depreciation) on foreign exchange transactions and other assets and liabilities -- -- -- 2 Net change in unrealized appreciation (depreciation) on securities sold short 262,100 -- -- -- -------------- -------------- -------------- -------------- Net realized and unrealized gain (loss) on investments, futures contracts, securities sold short, foreign currencies and other assets and liabilities 11,507,773 8,896,036 5,951,269 4,219,076 -------------- -------------- -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 10,746,964 $ 8,809,417 $ 6,134,322 $ 4,043,239 ============== ============== ============== ============== *Net of foreign withholding taxes on dividends of $ -- $ 159 $ -- $ 1,370 ============== ============== ============== ============== AGGRESSIVE MODERATE CONSERVATIVE GROWTH GROWTH GROWTH LIFESTAGE LIFESTAGE LIFESTAGE FUND FUND FUND ---------------------------------------------- INCOME: Income: Interest $ -- $ -- $ -- Dividends* 43,975 255,732 287,035 -------------- -------------- -------------- Total income 43,975 255,732 287,035 -------------- -------------- -------------- Expenses: Investment advisory and management fees 21,041 31,516 19,372 Distribution and service maintenance fees-Class A 3,161 4,514 4,689 Distribution and service maintenance fees-Class B 79,008 94,144 53,216 Distribution and service maintenance fees-Class II 2,798 9,419 11,215 Service fees-Class I -- -- -- Transfer agent fees and expenses-Class A 5,705 4,670 3,790 Transfer agent fees and expenses-Class B 19,380 13,565 6,545 Transfer agent fees and expenses-Class II 3,350 3,350 3,190 Transfer agent fees and expenses-Class I 1,675 1,475 1,475 Registration fees-Class A 9,950 10,030 10,510 Registration fees-Class B 12,630 12,310 11,510 Registration fees-Class II 8,955 9,675 9,315 Registration fees-Class I 10,675 11,848 10,955 Printing expense 31,412 18,488 9,142 Custodian fees and expenses 12,185 12,140 12,193 Audit and tax fees 33,605 33,169 33,323 Legal fees and expenses 6,126 6,729 5,865 Directors' fees and expenses 1,764 2,589 1,690 Dividend expense on securities sold short -- -- -- Miscellaneous expenses 7,015 7,018 6,557 -------------- -------------- -------------- Total expenses 270,435 286,649 214,552 Less: expenses waived/reimbursed by investment adviser (106,118) (61,575) (72,528) Less: Fee paid indirectly (Note 9) -- -- -- Less: custody credits earned on cash balances -- -- -- -------------- -------------- -------------- Net expenses 164,317 225,074 142,024 -------------- -------------- -------------- Net investment income (loss) (120,342) 30,658 145,011 -------------- -------------- -------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments (1,018,539) (1,312,954) (743,235) Net realized gain (loss) on futures contracts -- -- -- Net realized gain (loss) on securities sold short -- -- -- Net realized gain (loss) on foreign exchange and other assets and liabilities -- -- -- Net change in unrealized appreciation (depreciation) on investments 5,444,669 6,539,464 3,033,761 Net change in unrealized appreciation (depreciation) on futures contracts -- -- -- Net change in unrealized appreciation (depreciation) on foreign exchange transactions and other assets and liabilities -- -- -- Net change in unrealized appreciation (depreciation) on securities sold short -- -- -- -------------- -------------- -------------- Net realized and unrealized gain (loss) on investments, futures contracts, securities sold short, foreign currencies and other assets and liabilities 4,426,130 5,226,510 2,290,526 -------------- -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 4,305,788 $ 5,257,168 $ 2,435,537 ============== ============== ============== *Net of foreign withholding taxes on dividends of $ -- $ -- $ -- ============== ============== ==============
See Notes to Financial Statements 3 SUNAMERICA STRATEGIC INVESTMENT SERIES, INC. STATEMENT OF CHANGES IN NET ASSETS
BIOTECH/HEALTH FUND TAX MANAGED EQUITY FUND ------------------------------ ------------------------------ FOR THE FOR THE FOR THE FOR THE YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002 2003 2002 -------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income (loss) $ (760,809) $ (1,116,235) $ (86,619) $ (393,346) Net realized gain (loss) on investments (637,572) (17,583,650) (4,260,050) (15,675,665) Net realized gain (loss) on capital gain distributions from underlying funds -- -- -- -- Net realized gain (loss) on futures contracts -- -- -- -- Net realized gain (loss) on securities sold short (244,929) -- -- -- Net realized gain (loss) on foreign exchange transactions and other assets and liabilities -- -- -- -- Net change in unrealized appreciation (depreciation) on investments 12,128,174 (5,200,198) 13,156,086 (2,347,140) Net change in unrealized appreciation (depreciation) on futures contracts -- -- -- -- Net change in unrealized appreciation (depreciation) on foreign exchange transactions and other assets and liabilities -- -- -- -- Net change in unrealized appreciation (depreciation) on securities sold short 262,100 422,091 -- -- -------------- -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations 10,746,964 (23,477,992) 8,809,417 (18,416,151) -------------- -------------- -------------- -------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (Class A) -- -- -- -- Net investment income (Class B) -- -- -- -- Net investment income (Class II) -- -- -- -- Net investment income (Class I) -- -- -- -- -------------- -------------- -------------- --------------- Total distributions to shareholders -- -- -- -- -------------- -------------- -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 8) (5,616,681) (9,222,459) (16,922,143) (25,890,226) -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 5,130,283 (32,700,451) (8,112,726) (44,306,377) NET ASSETS: Beginning of period 44,297,573 76,998,024 68,719,749 113,026,126 -------------- -------------- -------------- -------------- End of period $ 49,427,856 $ 44,297,573 $ 60,607,023 $ 68,719,749 ============== ============== ============== ============== Accumulated undistributed net investment income (loss) $ (3,177) $ (2,629) $ (8,076) $ (7,269) ============== ============== ============== ============== STOCK INDEX FUND ------------------------------ FOR THE FOR THE YEAR YEAR ENDED ENDED OCTOBER 31, OCTOBER 31, 2003 2002 ------------------------------ INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income (loss) $ 183,053 $ 101,290 Net realized gain (loss) on investments (155,844) (1,116,427) Net realized gain (loss) on capital gain distributions from underlying funds -- -- Net realized gain (loss) on futures contracts 333,198 (501,587) Net realized gain (loss) on securities sold short -- -- Net realized gain (loss) on foreign exchange transactions and other assets and liabilities -- -- Net change in unrealized appreciation (depreciation) on investments 5,801,028 (4,194,388) Net change in unrealized appreciation (depreciation) on futures contracts (27,113) 73,796 Net change in unrealized appreciation (depreciation) on foreign exchange transactions and other assets and liabilities -- -- Net change in unrealized appreciation (depreciation) on securities sold short -- -- -------------- -------------- Net increase (decrease) in net assets resulting from operations 6,134,322 (5,637,316) -------------- -------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (Class A) (69,075) (50,367) Net investment income (Class B) (33,854) (4,344) Net investment income (Class II) (5,066) (282) Net investment income (Class I) -- -- -------------- -------------- Total distributions to shareholders (107,995) (54,993) -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 8) 5,881,677 3,765,201 -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 11,908,004 (1,927,108) NET ASSETS: Beginning of period 29,002,095 30,929,203 -------------- -------------- End of period $ 40,910,099 $ 29,002,095 ============== ============== Accumulated undistributed net investment income (loss) $ 161,898 $ 87,654 ============== ==============
See Notes to Financial Statements 4
AGGRESSIVE GROWTH SCIENCE & TECHNOLOGY FUND LIFESTAGE FUND ------------------------------ ------------------------------ FOR THE FOR THE FOR THE FOR THE YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002 2003 2002 -------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income (loss) $ (175,837) $ (206,954) $ (120,342) $ 213,896 Net realized gain (loss) on investments (1,390,002) (5,035,553) (1,018,539) (4,812,315) Net realized gain (loss) on capital gain distributions from underlying funds -- -- -- 190,574 Net realized gain (loss) on futures contracts -- -- -- -- Net realized gain (loss) on securities sold short -- -- -- -- Net realized gain (loss) on foreign exchange transactions and other assets and liabilities (1,322) (1,525) -- -- Net change in unrealized appreciation (depreciation) on investments 5,610,398 886,939 5,444,669 471,977 Net change in unrealized appreciation (depreciation) on futures contracts -- -- -- -- Net change in unrealized appreciation (depreciation) on foreign exchange transactions and other assets and liabilities 2 -- -- -- Net change in unrealized appreciation (depreciation) on securities sold short -- -- -- -- -------------- -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations 4,043,239 (4,357,093) 4,305,788 (3,935,868) -------------- -------------- -------------- -------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (Class A) -- -- (38,873) (31,219) Net investment income (Class B) -- -- (59,391) (17,221) Net investment income (Class II) -- -- (1,665) (344) Net investment income (Class I) -- -- (87,062) (61,214) -------------- -------------- -------------- -------------- Total distributions to shareholders -- -- (186,991) (109,998) -------------- -------------- -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 8) 647,408 (257,676) 1,323,973 1,241,280 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 4,690,647 (4,614,769) 5,442,770 (2,804,586) NET ASSETS: Beginning of period 9,227,375 13,842,144 19,060,270 21,864,856 -------------- -------------- -------------- -------------- End of period $ 13,918,022 $ 9,227,375 $ 24,503,040 $ 19,060,270 ============== ============== ============== ============== Accumulated undistributed net investment income (loss) $ (341) $ (226) $ (129) $ 111,027 ============== ============== ============== ==============
See Notes to Financial Statements 5
MODERATE GROWTH CONSERVATIVE GROWTH LIFESTAGE FUND LIFESTAGE FUND ------------------------------ ------------------------------ FOR THE FOR THE FOR THE FOR THE YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002 2003 2002 -------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income (loss) $ 30,658 $ 492,973 $ 145,011 $ 467,516 Net realized gain (loss) on investments (1,312,954) (3,977,340) (743,235) (1,943,093) Net realized gain (loss) on capital gain distributions from underlying funds -- 206,108 -- 110,236 Net realized gain (loss) on futures contracts -- -- -- -- Net realized gain (loss) on securities sold short -- -- -- -- Net realized gain (loss) on foreign exchange transactions and other assets and liabilities -- -- -- -- Net change in unrealized appreciation (depreciation) on investments 6,539,464 (688,725) 3,033,761 (255,689) Net change in unrealized appreciation (depreciation) on futures contracts -- -- -- -- Net change in unrealized appreciation (depreciation) on foreign exchange transactions and other assets and liabilities -- -- -- -- Net change in unrealized appreciation (depreciation) on securities sold short -- -- -- -- -------------- -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations 5,257,168 (3,966,984) 2,435,537 (1,621,030) -------------- -------------- -------------- -------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (Class A) (59,132) (50,695) (99,551) (76,020) Net investment income (Class B) (105,333) (78,487) (122,535) (127,052) Net investment income (Class II) (9,927) (4,373) (22,240) (8,928) Net investment income (Class I) (193,593) (129,438) (150,668) (128,001) -------------- -------------- -------------- -------------- Total distributions to shareholders (367,985) (262,993) (394,994) (340,001) -------------- -------------- -------------- -------------- NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 8) 5,050,794 5,131,531 1,529,906 822,814 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 9,939,977 901,554 3,570,449 (1,138,217) NET ASSETS: Beginning of period 27,634,326 26,732,772 18,279,066 19,417,283 -------------- -------------- -------------- -------------- End of period $ 37,574,303 $ 27,634,326 $ 21,849,515 $ 18,279,066 ============== ============== ============== ============== Accumulated undistributed net investment income $ 12,298 $ 349,625 $ 108,039 $ 358,022 ============== ============== ============== ==============
See Notes to Financial Statements 6 SUNAMERICA STRATEGIC INVESTMENT SERIES, INC. FINANCIAL HIGHLIGHTS BIOTECH/HEALTH FUND
NET DIVIDENDS NET GAIN (LOSS) TOTAL FROM NET ASSET INVEST- ON INVEST- FROM NET VALUE, MENT MENTS (BOTH INVEST- INVEST- PERIOD BEGINNING INCOME REALIZED AND MENT MENT ENDED OF PERIOD (LOSS)(1) UNREALIZED) OPERATIONS INCOME ------------------- ---------- ---------- ------------ ---------- ---------- CLASS A 6/14/00-10/31/00(3) $ 12.50 $ (0.02) $ 3.48 $ 3.46 $ -- 10/31/01 15.96 (0.06) (4.32) (4.38) -- 10/31/02 11.03 (0.13) (3.28) (3.41) -- 10/31/03 7.62 (0.11) 2.30 2.19 -- CLASS B 6/14/00-10/31/00(3) $ 12.50 $ (0.05) $ 3.47 $ 3.42 $ -- 10/31/01 15.92 (0.14) (4.31) (4.45) -- 10/31/02 10.92 (0.19) (3.23) (3.42) -- 10/31/03 7.50 (0.16) 2.25 2.09 -- CLASS II 6/14/00-10/31/00(3) $ 12.50 $ (0.05) $ 3.48 $ 3.43 $ -- 10/31/01 15.93 (0.14) (4.31) (4.45) -- 10/31/02 10.93 (0.19) (3.23) (3.42) -- 10/31/03 7.51 (0.16) 2.26 2.10 -- RATIO OF NET DISTRI- NET NET INVESTMENT BUTIONS ASSET ASSETS RATIO OF INCOME (LOSS) FROM TOTAL VALUE, END OF EXPENSES TO PERIOD CAPITAL DISTRI- END OF TOTAL PERIOD TO AVERAGE AVERAGE PORTFOLIO ENDED GAINS BUTIONS PERIOD RETURN(2) (000'S) NET ASSETS NET ASSETS TURNOVER -------------------- ---------- ---------- ---------- ----------- --------- --------------- ---------------- --------- CLASS A 6/14/00-10/31/00(3) 10/31/01 $ -- $ -- $ 15.96 27.68% $ 30,489 1.55%(4)(5)(6) (0.28)%(4)(5)(6) 112% 10/31/02 (0.55) (0.55) 11.03 (27.92) 27,865 1.55(5)(6) (0.50)(5)(6) 333 10/31/03 -- -- 7.62 (30.92) 16,092 1.55(5) (1.38)(5) 340 -- -- 9.81 28.74 18,924 1.55(5) (1.32)(5) 236 CLASS B 6/14/00-10/31/00(3) $ -- $ -- $ 15.92 27.36% $ 23,457 2.20%(4)(5)(6) (1.08)%(4)(5)(6) 112% 10/31/01 (0.55) (0.55) 10.92 (28.45) 25,552 2.20(5)(6) (1.18)(5)(6) 333 10/31/02 -- -- 7.50 (31.32) 15,757 2.20(5) (2.03)(5) 340 10/31/03 -- -- 9.59 27.87 17,843 2.20(5) (1.97)(5) 236 CLASS II 6/14/00-10/31/00(3) $ -- $ -- $ 15.93 27.44% $ 20,386 2.20%(4)(5)(6) (1.07)%(4)(5)(6) 112% 10/31/01 (0.55) (0.55) 10.93 (28.43) 23,581 2.20(5)(6) (1.17)(5)(6) 333 10/31/02 -- -- 7.51 (31.29) 12,448 2.20(5) (2.03)(5) 340 10/31/03 -- -- 9.61 27.96 12,662 2.20(5) (1.97)(5) 236
(1) Calculated based upon average shares outstanding (2) Total return is not annualized and does not reflect sales load but does include expense reimbursements. (3) Commencement of operations (4) Annualized (5) Net of the following expense reimbursements (based on average net assets):
10/31/00(4) 10/31/01 10/31/02 10/31/03 ----------- --------- ----------- ----------- Biotech/Health Fund Class A 0.49% 0.19% 0.20% 0.23% Biotech/Health Fund Class B 0.96 0.21 0.20 0.26 Biotech/Health Fund Class II 1.09 0.20 0.21 0.33
(6) The ratio reflects an expense cap which is net of custody credits of less than 0.01% See Notes to Financial Statements 7 TAX MANAGED EQUITY FUND
NET DIVIDENDS NET GAIN (LOSS) TOTAL FROM NET ASSET INVEST- ON INVEST- FROM NET VALUE, MENT MENTS (BOTH INVEST- INVEST- PERIOD BEGINNING INCOME REALIZED AND MENT MENT ENDED OF PERIOD (LOSS)(1) UNREALIZED) OPERATIONS INCOME ------------------- ---------- --------- ----------- ----------------------- CLASS A 3/01/99-10/31/99(3) $ 12.50 $ -- $ 1.15 $ 1.15 $ -- 10/31/00 13.65 (0.02) 0.91 0.89 -- 10/31/01 14.54 -- (3.50) (3.50) -- 10/31/02 11.04 0.01 (2.05) (2.04) -- 10/31/03 9.00 0.03 1.46 1.49 -- CLASS B 3/01/99-10/31/99(3) $ 12.50 $ (0.06) $ 1.14 $ 1.08 $ -- 10/31/00 13.58 (0.11) 0.91 0.80 -- 10/31/01 14.38 (0.08) (3.45) (3.53) -- 10/31/02 10.85 (0.06) (2.00) (2.06) -- 10/31/03 8.79 (0.03) 1.41 1.38 -- CLASS II 3/01/99-10/31/99(3) $ 12.50 $ (0.06) $ 1.16 $ 1.10 $ -- 10/31/00 13.60 (0.11) 0.91 0.80 -- 10/31/01 14.40 (0.08) (3.46) (3.54) -- 10/31/02 10.86 (0.06) (2.00) (2.06) -- 10/31/03 8.80 (0.03) 1.42 1.39 -- RATIO OF NET DISTRI- NET NET INVESTMENT BUTIONS ASSET ASSETS RATIO OF INCOME (LOSS) FROM TOTAL VALUE, END OF EXPENSES TO PERIOD CAPITAL DISTRI- END OF TOTAL PERIOD TO AVERAGE AVERAGE PORTFOLIO ENDED GAINS BUTIONS PERIOD RETURN(2) (000'S) NET ASSETS NET ASSETS TURNOVER -------------------- --------- ---------- ---------- ---------- ----------- ---------------- ------------------- ----------- CLASS A 3/01/99-10/31/99(3) $ -- $ -- $ 13.65 9.20% $ 25,067 1.45%(4)(5)(6) (0.02)%(4)(5)(6) 9% 10/31/00 -- -- 14.54 6.52 38,802 1.45(5)(6) (0.14)(5)(6) 7 10/31/01 -- -- 11.04 (24.07) 28,739 1.45(5)(6) (0.03)(5)(6) 19 10/31/02 -- -- 9.00 (18.48) 16,587 1.45(5) 0.09(5) 16 10/31/03 -- -- 10.49 16.56 14,877 1.45(5) 0.35(5) 13 CLASS B 3/01/99-10/31/99(3) $ -- $ -- $ 13.58 8.64% $ 27,524 2.10%(4)(5)(6) (0.74)%(4)(5)(6) 9% 10/31/00 -- -- 14.38 5.89 47,972 2.10(5)(6) (0.79)(5)(6) 7 10/31/01 -- -- 10.85 (24.55) 40,677 2.10(5)(6) (0.68)(5)(6) 19 10/31/02 -- -- 8.79 (18.99) 25,703 2.10(5) (0.56)(5) 16 10/31/03 -- -- 10.17 15.70 22,694 2.10(5) (0.30)(5) 13 CLASS II 3/01/99-10/31/99(3) $ -- $ -- $ 13.60 8.80% $ 27,884 2.10%(4)(5)(6) (0.75)%(4)(5)(6) 9% 10/31/00 -- -- 14.40 5.88 51,348 2.10(5)(6) (0.79)(5)(6) 7 10/31/01 -- -- 10.86 (24.58) 43,610 2.10(5)(6) (0.68)(5)(6) 19 10/31/02 -- -- 8.80 (18.97) 26,430 2.10(5) (0.56)(5) 16 10/31/03 -- -- 10.19 15.80 23,036 2.10(5) (0.30)(5) 13
(1) Calculated based upon average shares outstanding (2) Total return is not annualized and does not reflect sales load but does include expense reimbursements. (3) Commencement of operations (4) Annualized (5) Net of the following expense reimbursements (based on average net assets):
10/31/99(4) 10/31/00 10/31/01 10/31/02 10/31/03 ----------- ---------- ----------- ----------- ---------- Tax Managed Equity Fund Class A 1.07% 0.23% 0.15% 0.21% 0.26% Tax Managed Equity Fund Class B 0.84 0.22 0.15 0.20 0.23 Tax Managed Equity Fund Class II 0.83 0.22 0.14 0.21 0.23
(6) The ratio reflects an expense cap which is net of custody credits of less than 0.01% or waiver/reimbursements if applicable See Notes to Financial Statements 8 STOCK INDEX FUND
DIVI- NET DENDS DIS- NET GAIN (LOSS) TOTAL FROM TRIBU- NET NET ASSET INVEST- ON INVEST- FROM NET TIONS ASSET VALUE, MENT MENTS (BOTH INVEST- INVEST- FROM TOTAL VALUE, PERIOD BEGINNING INCOME REALIZED AND MENT MENT CAPITAL DISTRI- END OF TOTAL ENDED OF PERIOD (LOSS)(1) UNREALIZED) OPERATIONS INCOME GAINS BUTIONS PERIOD RETURN(2) -------------------- --------- ---------- ------------ ----------- ---------- -------- -------- -------- --------- CLASS A 11/01/98-10/31/99(3) $ 10.00 $ 0.11 $ 2.32 $ 2.43 $ (0.11) $ -- $ (0.11) $ 12.32 24.36% 10/31/00 12.32 0.14 0.47 0.61 (0.10) (0.08) (0.18) 12.75 4.91 10/31/01 12.75 0.09 (3.32) (3.23) (0.13) -- (0.13) 9.39 (25.53) 10/31/02 9.39 0.07 (1.53) (1.46) (0.06) -- (0.06) 7.87 (15.67) 10/31/03 7.87 0.08 1.49 1.57 (0.07) -- (0.07) 9.37 20.09 CLASS B 11/01/98-10/31/99(3) $ 10.00 $ 0.02 $ 2.23 $ 2.25 $ (0.02) $ -- $ (0.02) $ 12.23 22.55% 10/31/00 12.23 0.05 0.46 0.51 (0.02) (0.08) (0.10) 12.64 4.21 10/31/01 12.64 0.02 (3.29) (3.27) (0.04) -- (0.04) 9.33 (25.97) 10/31/02 9.33 0.01 (1.53) (1.52) -- -- -- 7.81 (16.28) 10/31/03 7.81 0.03 1.47 1.50 (0.01) -- (0.01) 9.30 19.29 CLASS II* 7/17/00-10/31/00(3) $ 13.38 $ 0.01 $ (0.83) $ (0.82) $ (0.01) $ -- $ (0.01) $ 12.55 (5.21)% 10/31/01 12.55 0.02 (3.26) (3.24) (0.04) -- (0.04) 9.27 (25.92) 10/31/02 9.27 0.02 (1.51) (1.49) -- -- -- 7.78 (16.06) 10/31/03 7.78 0.03 1.46 1.49 (0.01) -- (0.01) 9.26 19.23 RATIO OF NET NET INVESTMENT ASSETS RATIO OF INCOME (LOSS) END OF EXPENSES TO PERIOD PERIOD TO AVERAGE AVERAGE PORTFOLIO ENDED (000'S) NET ASSETS NET ASSETS TURNOVER -------------------- -------- ------------- --------------- ------------- CLASS A 11/01/98-10/31/99(3) $ 5,634 0.82%(5) 1.08%(5) 14% 10/31/00 8,543 0.78(5) 1.12(5) 2 10/31/01 7,639 0.75(5) 0.85(5) 3 10/31/02 7,269 0.75(5) 0.80(5) 2 10/31/03 13,890 0.75(5) 1.01(5) 1 CLASS B 11/01/98-10/31/99(3) $ 15,040 1.57%(5) 0.37%(5) 14% 10/31/00 24,966 1.49(5) 0.42(5) 2 10/31/01 21,905 1.38(5) 0.22(5) 3 10/31/02 18,852 1.40(5) 0.15(5) 2 10/31/03 23,601 1.40(5) 0.36(5) 1 CLASS II* 7/17/00-10/31/00(3) $ 500 1.35%(4)(5) 0.30%(4)(5) 2% 10/31/01 1,385 1.39(5) 0.15(5) 3 10/31/02 2,882 1.40(5) 0.18(5) 2 10/31/03 3,419 1.40(5) 0.37(5) 1
(1) Calculated based upon average shares outstanding (2) Total return is not annualized and does not reflect sales load but does include expense reimbursements. (3) Commencement of operations (4) Annualized (5) Net of the following expense reimbursements (based on average net assets):
10/31/99 10/31/00 10/31/01 10/31/02 10/31/03 --------- -------- ---------- -------- --------- Stock Index Fund Class A 0.71% 0.34% 1.10% 0.67% 0.64% Stock Index Fund Class B 0.41 0.34 1.11 0.65 0.66 Stock Index Fund Class II* -- 0.40(4) 1.10 1.07 0.87
* In conjunction with the reorganization, Class C was redesignated as Class II. See Note 2 for further discussion. See Notes to Financial Statements 9 SCIENCE & TECHNOLOGY FUND
DIVI- NET DENDS DIS- NET GAIN (LOSS) TOTAL FROM TRIBU- NET NET ASSET INVEST- ON INVEST- FROM NET TIONS ASSET VALUE, MENT MENTS (BOTH INVEST- INVEST- FROM TOTAL VALUE, PERIOD BEGINNING INCOME REALIZED AND MENT MENT CAPITAL DISTRI- END OF TOTAL ENDED OF PERIOD (LOSS)(1) UNREALIZED) OPERATIONS INCOME GAINS BUTIONS PERIOD RETURN(2) -------------------- --------- ---------- ------------ ----------- ---------- -------- -------- -------- --------- CLASS A 3/1/00-10/31/00(3) $ 10.00 $ (0.04) $ (1.88) $ (1.92) $ -- $ -- $ -- $ 8.08 (19.20)% 10/31/01 8.08 (0.04) (4.86) (4.90) -- -- -- 3.18 (60.64) 10/31/02 3.18 (0.03) (0.97) (1.00) -- -- -- 2.18 (31.45) 10/31/03 2.18 (0.03) 0.97 0.94 -- -- -- 3.12 43.12 CLASS B 3/1/00-10/31/00(3) $ 10.00 $ (0.07) $ (1.90) $ (1.97) $ -- $ -- $ -- $ 8.03 (19.70)% 10/31/01 8.03 (0.07) (4.82) (4.89) -- -- -- 3.14 (60.90) 10/31/02 3.14 (0.05) (0.95) (1.00) -- -- -- 2.14 (31.85) 10/31/03 2.14 (0.04) 0.95 0.91 -- -- -- 3.05 42.52 CLASS II* 7/12/00-10/31/00(3) $ 8.48 $ (0.03) $ (0.63) $ (0.66) $ -- $ -- $ -- $ 7.82 (7.78)% 10/31/01 7.82 (0.07) (4.69) (4.76) -- -- -- 3.06 (60.87) 10/31/02 3.06 (0.05) (0.93) (0.98) -- -- -- 2.08 (32.03) 10/31/03 2.08 (0.04) 0.93 0.89 -- -- -- 2.97 42.79 CLASS I 3/1/00-10/31/00(3) $ 10.00 $ (0.03) $ (1.89) $ (1.92) $ -- $ -- $ -- $ 8.08 (19.20)% 10/31/01 8.08 (0.04) (4.85) (4.89) -- -- -- 3.19 (60.52) 10/31/02 3.19 (0.03) (0.97) (1.00) -- -- -- 2.19 (31.35) 10/31/03 2.19 (0.03) 0.98 0.95 -- -- -- 3.14 43.38 RATIO OF NET NET INVESTMENT ASSETS RATIO OF INCOME (LOSS) END OF EXPENSES TO PERIOD PERIOD TO AVERAGE AVERAGE PORTFOLIO ENDED (000'S) NET ASSETS NET ASSETS TURNOVER -------------------- -------- ------------ -------------- --------- CLASS A 3/1/00-10/31/00(3) $ 4,623 1.24%(4)(5) (0.64)%(4)(5) 120% 10/31/01 2,673 1.34(5) (0.89)(5) 129 10/31/02 2,068 1.50(5)(6) (1.19)(5)(6) 82 10/31/03 3,393 1.50(5)(7) (1.13)(5)(7) 45 CLASS B 3/1/00-10/31/00(3) $ 15,840 1.91%(4)(5) (1.37)%(4)(5) 120% 10/31/01 9,408 1.99(5) (1.55)(5) 129 10/31/02 6,440 2.15(5)(6) (1.84)(5)(6) 82 10/31/03 9,367 2.15(5)(7) (1.78)(5)(7) 45 CLASS II* 7/12/00-10/31/00(3) $ 1,065 1.71%(4)(5) (1.11)%(4)(5) 120% 10/31/01 940 2.01(5) (1.57)(5) 129 10/31/02 574 2.15(5)(6) (1.84)(5)(6) 82 10/31/03 949 2.15(5)(7) (1.78)(5)(7) 45 CLASS I 3/1/00-10/31/00(3) $ 539 1.20%(4)(5) (0.48)%(4)(5) 120% 10/31/01 821 1.28(5) (0.85)(5) 129 10/31/02 146 1.40(5)(6) (1.08)(5)(6) 82 10/31/03 209 1.40(5)(7) (1.03)(5)(7) 45
(1) Calculated based upon average shares outstanding (2) Total return is not annualized and does not reflect sales load but does include expense reimbursements and expense reductions. (3) Commencement of operations (4) Annualized (5) Net of the following expense reimbursements (based on average net assets):
10/31/00(4) 10/31/01 10/31/02 10/31/03 ----------- -------- -------- -------- Science & Technology Fund Class A 0.68% 2.10% 1.38% 1.86% Science & Technology Fund Class B 0.68 2.11 1.21 1.71 Science & Technology Fund Class II* 0.66 2.10 1.81 3.11 Science & Technology Fund Class I 0.68 2.10 4.66 6.40
(6) Includes expense reimbursements, but excludes expense reductions. If the expense reductions had been applied, the ratio of expenses to average net assets would have been lower by 0.01% for Class A, B, II and 0.02% for Class I. (7) Includes expense reimbursements, but excludes expense reductions. If the expense reductions had been applied, the ratio of expenses to average net assets would have been lower by 0.02% for Class A, B, II and I. * In conjunction with the reorganization, Class C was redesignated as Class II. See Note 2 for further discussion. See Notes to Financial Statements 10
AGGRESSIVE GROWTH LIFESTAGE FUND DIVI- NET DENDS DIS- NET GAIN (LOSS) TOTAL FROM TRI- NET NET ASSET INVEST- ON INVEST- FROM NET BUTIONS ASSET VALUE, MENT MENTS (BOTH INVEST- INVEST- FROM TOTAL VALUE, PERIOD BEGINNING INCOME REALIZED AND MENT MENT CAPITAL DISTRI- END OF TOTAL ENDED OF PERIOD (LOSS)(1) UNREALIZED) OPERATIONS INCOME GAINS BUTIONS PERIOD RETURN(2) ------------------- --------- ---------- ------------ ----------- --------- -------- --------- ------- --------- CLASS A 11/1/98-10/31/99(3) $ 10.00 $ 0.07 $ 1.91 $ 1.98 $ (0.06) $ -- $ (0.06) $ 11.92 19.65% 10/31/00 11.92 1.39 0.53 1.92 (0.98) (0.15) (1.13) 12.71 16.27 10/31/01 12.71 0.51 (3.28) (2.77) (0.50) (1.62) (2.12) 7.82 (24.89) 10/31/02 7.82 0.10 (1.39) (1.29) (0.07) -- (0.07) 6.46 (16.68) 10/31/03 6.46 (0.02) 1.42 1.40 (0.09) -- (0.09) 7.77 21.91 CLASS B 11/1/98-10/31/99(3) $ 10.00 $ 0.06 $ 1.89 $ 1.95 $ (0.05) $ -- $ (0.05) $ 11.90 19.52% 10/31/00 11.90 1.46 0.48 1.94 (0.96) (0.15) (1.11) 12.73 16.30 10/31/01 12.73 0.44 (3.28) (2.84) (0.46) (1.62) (2.08) 7.81 (25.39) 10/31/02 7.81 0.05 (1.40) (1.35) (0.01) -- (0.01) 6.45 (17.31) 10/31/03 6.45 (0.06) 1.41 1.35 (0.04) -- (0.04) 7.76 21.04 CLASS II* 8/10/00-10/31/00(3) $ 13.03 $ 0.86 $ (1.09) $ (0.23) $ -- $ -- $ -- $ 12.80 (1.77)% 10/31/01 12.80 0.44 (3.29) (2.85) (0.46) (1.62) (2.08) 7.87 (25.33) 10/31/02 7.87 0.04 (1.39) (1.35) (0.01) -- (0.01) 6.51 (17.18) 10/31/03 6.51 (0.06) 1.43 1.37 (0.04) -- (0.04) 7.84 21.15 CLASS I 11/1/98-10/31/99(3) $ 10.00 $ 0.07(3) $ 1.90 $ 1.97 $ (0.06) $ -- $ (0.06) $ 11.91 19.71% 10/31/00 11.91 1.59 0.34 1.93 (0.96) (0.15) (1.11) 12.73 16.22 10/31/01 12.73 0.46 (3.23) (2.77) (0.50) (1.62) (2.12) 7.84 (24.81) 10/31/02 7.84 0.10 (1.38) (1.28) (0.08) -- (0.08) 6.48 (16.52) 10/31/03 6.48 (0.01) 1.41 1.40 (0.09) -- (0.09) 7.79 21.98 AGGRESSIVE GROWTH LIFESTAGE FUND RATIO OF NET NET RATIO OF INVESTMENT ASSETS EXPENSES INCOME (LOSS) END OF TO AVERAGE TO PERIOD PERIOD NET AVERAGE PORTFOLIO ENDED (000'S) ASSETS(5) NET ASSETS(5) TURNOVER -------------------- --------- ----------- -------------- --------- CLASS A 11/1/98-10/31/99(3) $ 1,929 0.10% 0.63% 9% 10/31/00 4,064 0.12 10.81 53 10/31/01 3,417 0.20 5.62 86 10/31/02 2,872 0.20 1.33 158 10/31/03 3,673 0.48(6) (0.27)(6) 24 CLASS B 11/1/98-10/31/99(3) $ 4,915 0.10% 0.66% 9% 10/31/00 13,450 0.24 11.51 53 10/31/01 12,695 0.85 4.82 86 10/31/02 9,992 0.85 0.70 158 10/31/03 11,818 1.13(6) (0.92)(6) 24 CLASS II* 8/10/00-10/31/00(3) $ 184 0.73%(4) 39.30%(4) 53% 10/31/01 235 0.85 4.82 86 10/31/02 286 0.85 0.56 158 10/31/03 533 1.13(6) (0.93)(6) 24 CLASS I 11/1/98-10/31/99(3) $ 1,547 0.10% 0.62% 9% 10/31/00 5,004 0.15 12.62 53 10/31/01 5,518 0.10 5.12 86 10/31/02 5,910 0.10 1.36 158 10/31/03 8,479 0.38(6) (0.17)(6) 24
(1) Calculated based upon average shares outstanding (2) Total return is not annualized and does not reflect sales load but does include expense reimbursements. (3) Commencement of operations (4) Annualized (5) Amounts do not include the expenses of the underlying funds (6) Net of the following expense reimbursements (based on average net assets):
10/31/03 ---------- Aggressive Growth LifeStage Fund Class A 0.66% Aggressive Growth LifeStage Fund Class B 0.47 Aggressive Growth LifeStage Fund Class II* 3.44 Aggressive Growth LifeStage Fund Class I 0.33
* In conjunction with the reorganization, Class C was redesignated as Class II. See Note 2 for further discussion. See Notes to Financial Statements 11
MODERATE GROWTH LIFESTAGE FUND DIVI- NET DENDS DIS- NET GAIN (LOSS) TOTAL FROM TRI- NET NET ASSET INVEST- ON INVEST- FROM NET BUTIONS ASSET VALUE, MENT MENTS (BOTH INVEST- INVEST- FROM TOTAL VALUE, PERIOD BEGINNING INCOME REALIZED AND MENT MENT CAPITAL DISTRI- END OF TOTAL ENDED OF PERIOD (LOSS)(1) UNREALIZED) OPERATIONS INCOME GAINS BUTIONS PERIOD RETURN(2) ------------------- --------- ---------- ------------ ----------- --------- --------- ---------- ------- --------- CLASS A 11/1/98-10/31/99(3) $ 10.00 $ 0.14 $ 1.39 $ 1.53 $ (0.13) $ -- $ (0.13) $ 11.40 15.20% 10/31/00 11.40 0.99 0.50 1.49 (0.73) (0.09) (0.82) 12.07 13.27 10/31/01 12.07 0.55 (2.21) (1.66) (0.38) (1.15) (1.53) 8.88 (15.06) 10/31/02 8.88 0.18 (1.30) (1.12) (0.11) -- (0.11) 7.65 (12.77) 10/31/03 7.65 0.03 1.28 1.31 (0.12) -- (0.12) 8.84 17.42 CLASS B 11/1/98-10/31/99(3) $ 10.00 $ 0.12 $ 1.41 $ 1.53 $ (0.11) $ -- $ (0.11) $ 11.42 15.26% 10/31/00 11.42 1.02 0.47 1.49 (0.74) (0.09) (0.83) 12.08 13.22 10/31/01 12.08 0.47 (2.19) (1.72) (0.34) (1.15) (1.49) 8.87 (15.56) 10/31/02 8.87 0.12 (1.30) (1.18) (0.05) -- (0.05) 7.64 (13.38) 10/31/03 7.64 (0.02) 1.29 1.27 (0.07) -- (0.07) 8.84 16.74 CLASS II* 7/12/00-10/31/00(3) $ 12.77 $ 0.73 $ (1.03) $ (0.30) $ (0.36) $ -- $ (0.36) $ 12.11 (2.30)% 10/31/01 12.11 0.28 (2.02) (1.74) (0.34) (1.15) (1.49) 8.88 (15.69) 10/31/02 8.88 0.10 (1.28) (1.18) (0.05) -- (0.05) 7.65 (13.37) 10/31/03 7.65 (0.03) 1.30 1.27 (0.07) -- (0.07) 8.85 16.72 CLASS I 11/1/98-10/31/99(3) $ 10.00 $ 0.15 $ 1.38 $ 1.53 $ (0.14) $ -- $ (0.14) $ 11.39 15.35% 10/31/00 11.39 1.16 0.32 1.48 (0.72) (0.09) (0.81) 12.06 13.10 10/31/01 12.06 0.47 (2.12) (1.65) (0.38) (1.15) (1.53) 8.88 (14.97) 10/31/02 8.88 0.17 (1.27) (1.10) (0.13) -- (0.13) 7.65 (12.66) 10/31/03 7.65 0.04 1.28 1.32 (0.13) -- (0.13) 8.84 17.55 MODERATE GROWTH LIFESTAGE FUND RATIO OF NET NET RATIO OF INVESTMENT ASSETS EXPENSES INCOME (LOSS) END OF TO AVERAGE TO PERIOD PERIOD NET AVERAGE PORTFOLIO ENDED (000'S) ASSETS(5) NET ASSETS(5) TURNOVER -------------------- --------- ----------- ------------- --------- CLASS A 11/1/98-10/31/99(3) $ 1,918 0.10% 1.33% 11% 10/31/00 3,396 0.12 8.27 47 10/31/01 3,876 0.20 5.68 79 10/31/02 3,697 0.20 2.10 156 10/31/03 5,820 0.48(6) 0.33(6) 30 CLASS B 11/1/98-10/31/99(3) $ 5,553 0.10% 1.40% 11% 10/31/00 11,843 0.23 8.53 47 10/31/01 13,412 0.85 4.83 79 10/31/02 12,036 0.85 1.44 156 10/31/03 14,170 1.13(6) (0.31)(6) 30 CLASS II* 7/12/00-10/31/00(3) $ 183 0.80%(4) 19.82%(4) 47% 10/31/01 738 0.85 2.96 79 10/31/02 970 0.85 1.22 156 10/31/03 1,601 1.13(6) (0.33)(6) 30 CLASS I 11/1/98-10/31/99(3) $ 1,537 0.10% 1.42% 11% 10/31/00 5,439 0.15 9.91 47 10/31/01 8,707 0.10 4.90 79 10/31/02 10,932 0.10 2.07 156 10/31/03 15,984 0.36(6) 0.44(6) 30
(1) Calculated based upon average shares outstanding (2) Total return is not annualized and does not reflect sales load but does include expense reimbursements. (3) Commencement of operations (4) Annualized (5) Amounts do not include the expenses of the underlying funds (6) Net of the following expense reimbursements (based on average net assets):
10/31/03 -------- Moderate Growth LifeStage Fund Class A 0.30% Moderate Growth LifeStage Fund Class B 0.19 Moderate Growth LifeStage Fund Class II* 1.01 Moderate Growth LifeStage Fund Class I 0.09
* In conjunction with the reorganization, Class C was redesignated as Class II. See Note 2 for further discussion. See Notes to Financial Statements 12
CONSERVATIVE GROWTH LIFESTAGE FUND DIVI- NET DENDS DIS- NET GAIN (LOSS) TOTAL FROM TRI- NET NET ASSET INVEST- ON INVEST- FROM NET BUTIONS ASSET VALUE, MENT MENTS (BOTH INVEST- INVEST- FROM TOTAL VALUE, PERIOD BEGINNING INCOME REALIZED AND MENT MENT CAPITAL DISTRI- END OF TOTAL ENDED OF PERIOD (LOSS)(1) UNREALIZED) OPERATIONS INCOME GAINS BUTIONS PERIOD RETURN(2) ------------------- --------- ---------- ------------ ----------- --------- -------- --------- ------- --------- CLASS A 11/1/98-10/31/99(3) $ 10.00 $ 0.21 $ 1.02 $ 1.23 $ (0.20) $ -- $ (0.20) $ 11.03 12.30% 10/31/00 11.03 0.87 0.39 1.26 (0.60) (0.10) (0.70) 11.59 11.61 10/31/01 11.59 0.55 (1.40) (0.85) (0.37) (0.99) (1.36) 9.38 (7.91) 10/31/02 9.38 0.25 (1.00) (0.75) (0.20) -- (0.20) 8.43 (8.18) 10/31/03 8.43 0.08 1.03 1.11 (0.20) -- (0.20) 9.34 13.53 CLASS B 11/1/98-10/31/99(3) $ 10.00 $ 0.18 $ 1.05 $ 1.23 $ (0.17) $ -- $ (0.17) $ 11.06 12.21% 10/31/00 11.06 0.81 0.45 1.26 (0.59) (0.10) (0.69) 11.63 11.66 10/31/01 11.63 0.50 (1.43) (0.93) (0.33) (0.99) (1.32) 9.38 (8.60) 10/31/02 9.38 0.20 (1.01) (0.81) (0.13) -- (0.13) 8.44 (8.80) 10/31/03 8.44 0.03 1.02 1.05 (0.15) -- (0.15) 9.34 12.62 CLASS II* 7/20/00-10/31/00(3) $ 11.95 $ 0.74 $ (0.73) $ 0.01 $ (0.27) $ -- $ (0.27) $ 11.69 0.06% 10/31/01 11.69 0.34 (1.31) (0.97) (0.33) (0.99) (1.32) 9.40 (8.93) 10/31/02 9.40 0.16 (0.97) (0.81) (0.13) -- (0.13) 8.46 (8.78) 10/31/03 8.46 0.03 1.03 1.06 (0.15) -- (0.15) 9.37 12.71 CLASS I 11/1/98-10/31/99(3) $ 10.00 $ 0.21 $ 1.02 $ 1.23 $ (0.20) $ -- $ (0.20) $ 11.03 12.24% 10/31/00 11.03 0.91 0.33 1.24 (0.58) (0.10) (0.68) 11.59 11.54 10/31/01 11.59 0.54 (1.38) (0.84) (0.37) (0.99) (1.36) 9.39 (7.80) 10/31/02 9.39 0.26 (0.99) (0.73) (0.22) -- (0.22) 8.44 (8.05) 10/31/03 8.44 0.10 1.02 1.12 (0.21) -- (0.21) 9.35 13.64 CONSERVATIVE GROWTH LIFESTAGE FUND RATIO OF NET NET RATIO OF INVESTMENT ASSETS EXPENSES INCOME (LOSS) END OF TO AVERAGE TO PERIOD PERIOD NET AVERAGE PORTFOLIO ENDED (000'S) ASSETS(5) NET ASSETS(5) TURNOVER -------------------- --------- ----------- ------------- --------- CLASS A 11/1/98-10/31/99(3) $ 1,790 0.10% 2.01% 10% 10/31/00 3,420 0.12 7.62 45 10/31/01 3,459 0.20 5.63 85 10/31/02 3,699 0.20 2.79 199 10/31/03 6,789 0.48(6) 0.97(6) 47 CLASS B 11/1/98-10/31/99(3) $ 5,880 0.10% 2.11% 10% 10/31/00 10,354 0.23 7.15 45 10/31/01 9,908 0.85 5.08 85 10/31/02 7,417 0.85 2.19 199 10/31/03 7,567 1.12(6) 0.37(6) 47 CLASS II* 7/20/00-10/31/00(3) $ 150 0.86%(4) 22.43%(4) 45% 10/31/01 642 0.85 3.43 85 10/31/02 1,223 0.85 1.88 199 10/31/03 1,662 1.13(6) 0.33(6) 47 CLASS I 11/1/98-10/31/99(3) $ 1,508 0.10% 2.01% 10% 10/31/00 4,484 0.15 8.15 45 10/31/01 5,409 0.10 5.46 85 10/31/02 5,941 0.10 2.87 199 10/31/03 5,831 0.38(6) 1.13(6) 47
(1) Calculated based upon average shares outstanding (2) Total return is not annualized and does not reflect sales load but does include expense reimbursements. (3) Commencement of operations (4) Annualized (5) Amounts do not include the expenses of the underlying funds (6) Net of the following expense reimbursements (based on average net assets):
10/31/03 -------- Conservative Growth LifeStage Fund Class A 0.37% Conservative Growth LifeStage Fund Class B 0.34 Conservative Growth LifeStage Fund Class II* 0.91 Conservative Growth LifeStage Fund Class I 0.29
* In conjunction with the reorganization, Class C was redesignated as Class II. See Note 2 for further discussion. See Notes to Financial Statements 13 SUNAMERICA BIOTECH/HEALTH FUND PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2003
VALUE SECURITY DESCRIPTION SHARES (NOTE 3) -------------------------------------------------------------------------------- COMMON STOCK -- 71.5% BIOMEDICAL -- 8.7% Amgen, Inc.+ 25,000 $ 1,544,000 Genzyme Corp.+ 60,000 2,754,000 -------------- 4,298,000 -------------- BIOTECHNOLOGY -- 4.1% Biomarin Pharmaceutical, Inc.+ 100,000 700,000 Medicines Co.+(1) 50,000 1,332,500 -------------- 2,032,500 -------------- DISTRIBUTION -- 1.5% Caremark Rx, Inc.+(1) 30,000 751,500 -------------- GENOMICS -- 3.8% Introgen Therapeutics, Inc.+ 75,000 618,000 Invitrogen Corp.+ 20,000 1,271,800 -------------- 1,889,800 -------------- HEALTH MAINTENANCE ORGANIZATIONS -- 6.0% Anthem, Inc.+ 30,000 2,052,900 Centene Corp.+ 30,000 918,300 -------------- 2,971,200 -------------- HEALTH SERVICES -- 4.8% Manor Care, Inc. 50,000 1,664,000 Medco Health Solutions, Inc.+ 2,412 80,078 United Surgical Partners International, Inc.+(1) 20,000 603,200 -------------- 2,347,278 -------------- MEDICAL DEVICES -- 4.4% Integra LifeSciences Holdings+ 65,000 2,193,100 -------------- MEDICAL DRUGS -- 17.3% Celgene Corp.+(1) 50,000 2,084,500 Cephalon, Inc.+(1) 50,000 2,348,000 Cubist Pharmaceuticals, Inc.+(1) 100,000 1,162,000 CVS Corp. 20,000 703,600 Pozen, Inc.+ 30,000 375,900 Sepracor, Inc.+ 40,000 1,065,200 Watson Pharmaceuticals, Inc.+ 20,000 785,400 -------------- 8,524,600 -------------- SHARES/ PRINCIPAL AMOUNT VALUE SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 3) -------------------------------------------------------------------------------- MEDICAL INFORMATION SYSTEMS -- 1.3% Covance, Inc.+ 25,000 $ 650,750 -------------- PHARMACEUTICALS -- 16.6% Eon Labs, Inc.+(1) 60,000 2,526,600 Ilex Oncology, Inc.+ 100,000 2,086,000 Pfizer, Inc.(1) 40,000 1,264,000 Pharmaceutical Resources, Inc.+(1) 20,000 1,445,600 Tanox, Inc.+ 50,000 897,500 -------------- 8,219,700 -------------- THERAPEUTICS -- 3.0% Nuvelo, Inc.+ 185,000 612,350 Serono SA ADR(1) 50,000 862,000 -------------- 1,474,350 -------------- TOTAL INVESTMENT SECURITIES (cost $28,137,536) 35,352,778 -------------- REPURCHASE AGREEMENTS -- 27.0% State Street Bank & Trust Co. Joint Repurchase Agreement (Note 3)(1) $ 6,337 6,337,000 UBS Warburg, LLC Joint Repurchase Agreement (Note 3)(1) 7,000 7,000,000 -------------- TOTAL REPURCHASE AGREEMENTS (cost $13,337,000) 13,337,000 -------------- TOTAL INVESTMENTS -- (cost $41,474,536*) 48,689,778 -------------- COMMON STOCK-SHORT POSITIONS -- (13.1%) BIOMEDICAL -- (0.7%) Decode Genetics, Inc.+ (50,000) (352,500) -------------- BIOTECHNOLOGY -- (0.6%) Corixa Corp.+ (50,000) (298,500) -------------- DISTRIBUTION -- (2.4%) Cardinal Health, Inc. (20,000) (1,186,800) -------------- GENOMICS -- (3.6%) Applera Corporation Celera Genomics Group+ (50,000) (668,500) Genencor International, Inc.+ (27,000) (413,100) Human Genome Sciences, Inc.+ (50,000) (695,500) -------------- (1,777,100) --------------
14
VALUE SECURITY DESCRIPTION SHARES (NOTE 3) -------------------------------------------------------------------------------- COMMON STOCK-SHORT POSITIONS -- (CONTINUED) MEDICAL DEVICES -- (2.6%) INAMED Corp.+ (15,000) $ (1,295,550) -------------- MEDICAL DRUGS -- (1.2%) OSI Pharmaceuticals, Inc.+ (20,000) (560,000) -------------- THERAPEUTICS -- (2.0%) Forest Laboratories, Inc.+ (20,000) (1,000,200) -------------- TOTAL COMMON STOCK-SHORT POSITIONS -- (13.1%) (proceeds $6,390,068) (6,470,650) -------------- Other assets less liabilities 14.6% 7,208,728 ------- -------------- NET ASSETS -- 100.0% $ 49,427,856 ======= ==============
---------- * See Note 7 + Non-income producing securities (1) The security or a portion thereof represents collateral for securities sold short. See Notes to Financial Statements 15 TAX MANAGED EQUITY FUND PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2003
VALUE SECURITY DESCRIPTION SHARES (NOTE 3) -------------------------------------------------------------------------------- COMMON STOCK -- 99.0% AEROSPACE & MILITARY TECHNOLOGY -- 2.6% Raytheon Co. 17,000 $ 450,160 United Technologies Corp. 13,000 1,100,970 -------------- 1,551,130 -------------- APPAREL & TEXTILES -- 0.7% Jones Apparel Group, Inc. 12,000 414,000 -------------- BANKS -- 5.4% Bank One Corp. 24,500 1,040,025 FleetBoston Financial Corp. 10,000 403,900 Mellon Financial Corp. 14,000 418,180 U.S. Bancorp 51,831 1,410,840 -------------- 3,272,945 -------------- BROADCASTING & MEDIA -- 3.8% E.W. Scripps Co., Class A 5,000 464,550 News Corp., Ltd. ADR 12,600 449,190 Tribune Co. 9,000 441,450 Viacom, Inc., Class B 23,000 917,010 -------------- 2,272,200 -------------- BUSINESS SERVICES -- 0.9% Accenture, Ltd., Class A+ 23,000 538,200 -------------- CHEMICALS -- 0.7% Air Products and Chemicals, Inc. 9,000 408,690 -------------- COMPUTER SOFTWARE -- 5.0% First Data Corp. 5,000 178,500 Microsoft Corp. 84,200 2,201,830 Oracle Corp.+ 30,000 358,800 SunGard Data Systems, Inc. 10,000 280,500 -------------- 3,019,630 -------------- COMPUTERS & BUSINESS EQUIPMENT -- 6.2% Dell, Inc.+ 19,000 686,280 Intel Corp. 46,700 1,543,435 International Business Machines Corp. 16,800 1,503,264 -------------- 3,732,979 -------------- CONGLOMERATE -- 4.6% General Electric Co. 70,300 $ 2,039,403 Tyco International, Ltd. 34,500 720,360 -------------- 2,759,763 -------------- ELECTRONICS -- 3.5% Altera Corp.+ 15,000 303,450 Applied Materials, Inc.+ 14,000 327,180 Johnson Controls, Inc. 11,300 1,215,089 Linear Technology Corp. 7,000 298,270 -------------- 2,143,989 -------------- ENERGY SERVICES -- 1.1% Baker Hughes, Inc. 23,000 649,980 -------------- ENERGY SOURCES -- 5.7% Anadarko Petroleum Corp. 7,000 305,340 ChevronTexaco Corp. 18,500 1,374,550 Exxon Mobil Corp. 49,120 1,796,810 -------------- 3,476,700 -------------- FINANCIAL SERVICES -- 10.9% Capital One Financial Corp. 7,500 456,000 CIT Group, Inc. 6,000 201,720 Citigroup, Inc. 51,333 2,433,184 Fannie Mae 9,000 645,210 Freddie Mac 11,000 617,430 Goldman Sachs Group, Inc. 12,002 1,126,988 Morgan Stanley 10,000 548,700 Washington Mutual, Inc. 13,350 584,062 -------------- 6,613,294 -------------- FOOD, BEVERAGE & TOBACCO -- 4.7% Altria Group, Inc. 18,800 874,200 Coca-Cola Co. 27,400 1,271,360 PepsiCo, Inc. 14,300 683,826 -------------- 2,829,386 -------------- FOREST PRODUCTS -- 1.1% Temple-Inland, Inc. 12,400 669,972 -------------- HOUSEHOLD PRODUCTS -- 3.8% Gillette Co. 25,200 803,880 Procter & Gamble Co. 15,300 1,503,837 -------------- 2,307,717 --------------
16
VALUE SECURITY DESCRIPTION SHARES (NOTE 3) -------------------------------------------------------------------------------- COMMON STOCK (CONTINUED) INSURANCE -- 4.9% Allstate Corp. 17,000 $ 671,500 Ambac Financial Group, Inc. 16,400 1,160,136 American International Group, Inc.# 11,580 704,411 RenaissanceRe Holdings Ltd. 10,000 449,800 -------------- 2,985,847 -------------- MACHINERY -- 2.4% Danaher Corp. 8,000 662,800 Deere & Co. 13,400 812,308 -------------- 1,475,108 -------------- MEDICAL PRODUCTS -- 3.3% Guidant Corp. 18,000 918,180 Johnson & Johnson 21,944 1,104,442 -------------- 2,022,622 -------------- METALS & MINING -- 1.1% Alcoa, Inc. 21,928 692,267 -------------- PHARMACEUTICALS -- 8.9% Amgen, Inc.+ 12,000 741,120 Bristol-Myers Squibb Co. 19,100 484,567 Eli Lilly and Co. 17,400 1,159,188 Pfizer, Inc. 61,305 1,937,238 Schering-Plough Corp. 16,700 255,009 Wyeth 19,000 838,660 -------------- 5,415,782 -------------- RESTAURANTS -- 0.3% Yum! Brands, Inc. 5,000 170,700 -------------- RETAIL STORES -- 7.3% Home Depot, Inc. 26,550 984,208 Target Corp. 24,700 981,578 TJX Cos, Inc. 30,500 640,195 Wal-Mart Stores, Inc. 30,800 1,815,660 -------------- 4,421,641 -------------- SHARES/ PRINCIPAL AMOUNT VALUE SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 3) -------------------------------------------------------------------------------- TELECOMMUNICATIONS -- 7.2% Cisco Systems, Inc.+ 70,400 $ 1,476,992 Comcast Corp., Class A 30,700 1,001,434 QUALCOMM, Inc. 8,000 380,000 SBC Communications, Inc. 22,900 549,142 Verizon Communications, Inc. 28,230 948,528 -------------- 4,356,096 -------------- TRANSPORTATION -- 1.3% Union Pacific Corp. 13,000 813,800 -------------- UTILITIES -- 1.6% Dominion Resources, Inc. 5,000 308,000 Pinnacle West Capital Corp. 18,000 658,080 -------------- 966,080 -------------- TOTAL INVESTMENT SECURITIES (cost $65,506,208) 59,980,518 -------------- SHORT-TERM INVESTMENTS -- 1.2% Time Deposit with State Street Bank & Trust Co. 0.05% due 11/03/03 (cost: $756,000) 756 756,000 -------------- TOTAL INVESTMENTS -- (cost $66,262,208*) 100.2% 60,736,518 Liabilities in excess of other assets (0.2) (129,495) ------- -------------- NET ASSETS -- 100.0% $ 60,607,023 ======= ==============
---------- * See Note 7 + Non-income producing securities # Security represents an investment in an affiliated company. See Note 6. ADR American Depository Receipt See Notes to Financial Statements 17 SUNAMERICA STOCK INDEX FUND PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2003
VALUE SECURITY DESCRIPTION SHARES (NOTE 3) -------------------------------------------------------------------------------- COMMON STOCK -- 94.6% AEROSPACE & MILITARY TECHNOLOGY -- 1.7% Boeing Co. 3,350 $ 128,942 General Dynamics Corp. 790 66,123 Goodrich Corp. 470 12,981 Honeywell International, Inc. 3,430 104,992 Lockheed Martin Corp. 1,800 83,448 Northrop Grumman Corp. 730 65,262 Raytheon Co. 1,650 43,692 Rockwell Collins, Inc. 710 19,490 United Technologies Corp. 1,870 158,370 -------------- 683,300 -------------- APPAREL & TEXTILES -- 0.4% Cintas Corp. 680 29,009 Jones Apparel Group, Inc. 500 17,250 Liz Claiborne, Inc. 430 15,863 Nike, Inc., Class B 1,050 67,095 Reebok International, Ltd. 240 9,348 V.F. Corp. 430 18,253 -------------- 156,818 -------------- AUTOMOTIVE -- 0.8% AutoNation, Inc.+ 1,100 20,570 AutoZone, Inc.+ 360 34,596 Cooper Tire & Rubber Co. 290 5,702 Dana Corp. 590 9,605 Delphi Corp. 2,230 19,847 Ford Motor Co. 7,300 88,549 General Motors Corp. 2,230 95,154 Goodyear Tire & Rubber Co.+ 700 4,802 Harley Davidson, Inc. 1,210 57,366 Snap-on, Inc. 230 6,748 Visteon Corp. 520 3,359 -------------- 346,298 -------------- BANKS -- 5.6% AmSouth Bancorp. 1,400 33,068 Bank of America Corp. 5,950 450,594 Bank of New York Co., Inc. 3,070 95,753 Bank One Corp. 4,500 191,025 BB&T Corp. 2,150 83,141 Charter One Financial, Inc. 900 28,764 Comerica, Inc. 700 36,036 Fifth Third Bancorp 2,270 $ 131,569 First Tennessee National Corp. 500 22,680 FleetBoston Financial Corp. 4,190 169,234 Huntington Bancshares, Inc. 910 19,711 KeyCorp 1,680 47,460 Marshall & Ilsley Corp. 910 32,596 Mellon Financial Corp. 1,720 51,376 National City Corp. 2,450 80,017 North Fork Bancorp., Inc. 610 23,778 Northern Trust Corp. 880 40,876 PNC Financial Services Group, Inc. 1,120 59,998 Regions Financial Corp. 890 32,708 State Street Corp. 1,330 69,639 SunTrust Banks, Inc. 1,120 75,118 Synovus Financial Corp. 1,200 33,120 U.S. Bancorp 7,670 208,777 Union Planters Corp. 780 25,951 Wachovia Corp. 5,310 243,570 Zions Bancorp. 360 22,064 -------------- 2,308,623 -------------- BROADCASTING & MEDIA -- 3.1% Clear Channel Communications, Inc. 2,450 100,009 Dow Jones & Co., Inc. 320 16,630 Gannett Co., Inc. 1,070 89,998 Interpublic Group Cos., Inc.+ 1,560 23,213 Knight Ridder, Inc. 320 23,462 McGraw Hill Cos., Inc. 760 50,882 Meredith Corp. 200 9,704 Monster Worldwide, Inc.+ 450 11,462 New York Times Co., Class A 600 28,518 Omnicom Group, Inc. 760 60,648 Scientific Atlanta, Inc. 590 17,464 Time Warner, Inc.+ 17,970 274,761 Tribune Co. 1,250 61,313 Univision Communications, Inc., Class A+ 1,280 43,456 Viacom, Inc., Class B 6,990 278,691 Walt Disney Co. 8,140 184,290 -------------- 1,274,501 -------------- BUSINESS SERVICES -- 1.1% Allied Waste Industries, Inc.+ 830 9,362 Avery Dennison Corp. 440 23,135 Ball Corp. 230 12,926
18
VALUE SECURITY DESCRIPTION SHARES (NOTE 3) -------------------------------------------------------------------------------- COMMON STOCK -- (CONTINUED) BUSINESS SERVICES -- (CONTINUED) Bemis Co., Inc. 210 $ 9,710 Cendant Corp.+ 4,040 82,537 Convergys Corp.+ 570 9,154 Equifax, Inc. 560 13,687 Fluor Corp. 330 12,236 Genuine Parts Co. 690 21,956 Pactiv Corp.+ 630 13,892 Paychex, Inc. 1,500 58,380 Pitney Bowes, Inc. 930 38,223 Robert Half International, Inc.+ 680 16,055 RR Donnelley & Sons Co. 450 11,700 Sealed Air Corp.+ 340 18,098 W.W. Grainger, Inc. 360 16,481 Waste Management, Inc. 2,360 61,171 Waters Corp.+ 490 15,401 -------------- 444,104 -------------- CHEMICALS -- 1.4% Air Products and Chemicals, Inc. 910 41,323 Ashland, Inc. 270 10,055 Dow Chemical Co. 3,660 137,945 E.I. du Pont de Nemours & Co. 3,970 160,388 Eastman Chemical Co. 310 10,063 Ecolab, Inc. 1,030 27,697 Engelhard Corp. 500 14,290 Great Lakes Chemical Corp. 200 4,300 Hercules, Inc.+ 440 4,598 Monsanto Co. 1,040 26,052 PPG Industries, Inc. 680 39,202 Praxair, Inc. 650 45,227 Rohm and Haas Co. 890 34,977 Sigma-Aldrich Corp. 280 14,686 Vulcan Materials Co. 410 18,167 -------------- 588,970 -------------- COMMUNICATION EQUIPMENT -- 0.5% LSI Logic Corp.+ 1,510 13,953 Lucent Technologies, Inc.+ 16,570 53,024 Motorola, Inc. 9,270 125,423 Tellabs, Inc.+ 1,640 12,349 -------------- 204,749 -------------- COMPUTER SOFTWARE -- 5.1% Adobe Systems, Inc. 930 $ 40,771 Autodesk, Inc. 450 8,663 Automatic Data Processing, Inc. 2,380 89,821 BMC Software, Inc.+ 910 15,816 Citrix Systems, Inc.+ 660 16,685 Computer Associates International, Inc. 2,310 54,331 Computer Sciences Corp.+ 750 29,715 Compuware Corp.+ 1,520 8,542 Electronic Data Systems Corp. 1,910 40,969 First Data Corp. 2,950 105,315 Fiserv, Inc.+ 770 27,196 Intuit, Inc.+ 820 40,984 Mercury Interactive Corp.+ 340 15,790 Microsoft Corp.@ 43,060 1,126,019 NCR Corp.+ 380 13,657 Novell, Inc.+ 1,480 8,688 Nvidia Corp.+ 630 11,138 Oracle Corp.+ 20,840 249,246 Parametric Technology Corp.+ 1,060 3,297 PeopleSoft, Inc.+ 1,450 30,102 Siebel Systems, Inc.+ 1,970 24,802 SunGard Data Systems, Inc.+ 1,140 31,977 Unisys Corp.+ 1,310 20,122 VERITAS Software Corp.+ 1,700 61,455 -------------- 2,075,101 -------------- COMPUTERS & BUSINESS EQUIPMENT -- 5.9% Apple Computer, Inc.+ 1,440 32,962 Dell, Inc.+ 10,230 369,507 EMC Corp.+ 8,740 120,962 Gateway, Inc.+ 1,290 6,502 Hewlett-Packard Co. 12,160 271,289 Intel Corp. 25,920 856,656 International Business Machines Corp. 6,890 616,517 Lexmark International Group, Inc.+ 510 37,541 Network Appliance, Inc.+ 1,360 33,565 Sun Microsystems, Inc.+ 12,860 50,926 Xerox Corp.+ 3,150 33,075 -------------- 2,429,502 -------------- CONGLOMERATE -- 4.2% 3M Co. 3,120 246,075 General Electric Co.@ 39,890 1,157,209 ITT Industries, Inc. 370 25,156 Schlumberger Ltd. 2,320 108,970
19
VALUE SECURITY DESCRIPTION SHARES (NOTE 3) -------------------------------------------------------------------------------- COMMON STOCK -- (CONTINUED) CONGLOMERATE -- (CONTINUED) Textron, Inc. 540 $ 26,833 Tyco International, Ltd. 7,950 165,996 -------------- 1,730,239 -------------- EDUCATION -- 0.1% Apollo Group, Inc., Class A+ 700 44,471 -------------- ELECTRONICS -- 3.0% Advanced Micro Devices, Inc.+ 1,380 20,976 Agilent Technologies, Inc.+ 1,880 46,850 Altera Corp.+ 1,520 30,750 American Power Conversion Corp.+ 790 15,982 Analog Devices, Inc.+ 1,460 64,722 Applera Corp.-- Applied Biosystems Group 830 19,156 Applied Materials, Inc.+ 6,600 154,242 Applied Micro Circuits Corp.+ 1,210 7,042 Broadcom Corp., Class A+ 1,180 37,701 Emerson Electric Co. 1,680 95,340 Jabil Circuit, Inc.+ 790 22,001 Johnson Controls, Inc. 360 38,711 KLA-Tencor Corp.+ 760 43,571 Linear Technology Corp. 1,250 53,262 Maxim Integrated Products, Inc.+ 1,290 64,126 Micron Technology, Inc.+ 2,430 34,846 Millipore Corp.+ 190 8,331 Molex, Inc. 760 23,856 National Semiconductor Corp.+ 730 29,660 Novellus Systems, Inc.+ 600 24,774 PMC-Sierra, Inc.+ 680 12,356 Power-One, Inc.+ 330 2,990 QLogic Corp.+ 380 21,299 Rockwell Automation, Inc. 740 22,977 Sanmina-SCI Corp.+ 2,030 21,416 Solectron Corp.+ 3,300 18,282 Symbol Technologies, Inc. 920 11,491 Tektronix Inc. 340 8,728 Teradyne, Inc.+ 750 17,085 Texas Instruments, Inc. 6,890 199,259 Thomas & Betts Corp. 230 4,094 Xilinx, Inc.+ 1,360 43,112 -------------- 1,218,988 -------------- ENERGY SERVICES -- 0.5% Baker Hughes, Inc. 1,330 $ 37,586 BJ Services Co.+ 630 20,670 Devon Energy Corp. 920 44,620 Dynegy, Inc., Class A+ 1,490 5,975 Halliburton Co. 1,740 41,551 Nabors Industries, Ltd.+ 580 21,924 Rowan Cos., Inc.+ 370 8,862 Transocean Sedco Forex, Inc.+ 1,270 24,371 -------------- 205,559 -------------- ENERGY SOURCES -- 4.6% Amerada Hess Corp. 360 18,583 Anadarko Petroleum Corp. 990 43,184 Apache Corp. 640 44,621 Burlington Resources, Inc. 800 38,912 ChevronTexaco Corp. 4,260 316,518 ConocoPhillips 2,710 154,876 El Paso Corp. 2,390 17,543 EOG Resources, Inc. 460 19,384 Exxon Mobil Corp.@ 26,430 966,809 Kerr-Mcgee Corp. 400 16,600 Keyspan Corp. 630 22,031 Kinder Morgan, Inc. 490 26,239 Marathon Oil Corp. 1,240 36,667 Nicor, Inc. 180 6,169 NiSource, Inc. 1,050 21,746 Noble Corp.+ 530 18,195 Occidental Petroleum Corp. 1,520 53,595 Peoples Energy Corp. 150 6,068 Sempra Energy 890 24,742 Sunoco, Inc. 310 13,566 Unocal Corp. 1,030 32,630 -------------- 1,898,678 -------------- ENTERTAINMENT PRODUCTS -- 0.4% Brunswick Corp. 360 10,681 Eastman Kodak Co. 1,140 27,850 Electronic Arts, Inc.+ 590 58,434 Hasbro, Inc. 690 15,042 Mattel, Inc. 1,750 33,880 -------------- 145,887 -------------- FINANCIAL SERVICES -- 9.5% American Express Co. 5,130 240,751
20
VALUE SECURITY DESCRIPTION SHARES (NOTE 3) -------------------------------------------------------------------------------- COMMON STOCK -- (CONTINUED) FINANCIAL SERVICES -- (CONTINUED) Bear Stearns Cos., Inc. 400 $ 30,500 Capital One Financial Corp. 910 55,328 Charles Schwab & Co., Inc. 5,390 73,088 Citigroup, Inc. 20,510 972,174 Concord EFS, Inc.+ 1,940 20,739 Countrywide Credit Industries, Inc. 540 56,765 Deluxe Corp. 210 8,478 Fannie Mae 3,880 278,157 Federated Investors, Inc., Class B 430 11,890 Franklin Resources, Inc. 1,000 47,420 Freddie Mac 2,770 155,480 Golden West Financial Corp. 610 61,262 Goldman Sachs Group, Inc. 1,890 177,471 H & R Block, Inc. 720 33,905 J.P. Morgan Chase & Co. 8,110 291,149 Janus Capital Group, Inc. 950 13,433 Lehman Brothers Holdings, Inc. 1,100 79,200 MBNA Corp. 5,090 125,977 Merrill Lynch & Co., Inc. 3,720 220,224 Moodys Corp. 590 34,120 Morgan Stanley 4,330 237,587 Providian Financial Corp.+ 1,160 12,888 SLM Corp. 1,800 70,488 South Trust Corp. 1,340 42,679 T. Rowe Price Group, Inc. 490 20,163 Washington Mutual, Inc. 3,680 161,000 Wells Fargo & Co. 6,690 376,781 -------------- 3,909,097 -------------- FOOD, BEVERAGE & TOBACCO -- 4.7% Adolph Coors Co., Class B 150 8,408 Altria Group, Inc. 8,080 375,720 Anheuser-Busch Cos., Inc. 3,290 162,065 Archer-Daniels-Midland Co. 2,570 36,880 Brown-Forman Corp., Class B 240 20,251 Campbell Soup Co. 1,640 42,509 Coca-Cola Co. 9,790 454,256 Coca-Cola Enterprises, Inc. 1,800 36,288 ConAgra Foods, Inc. 2,140 51,018 General Mills, Inc. 1,480 66,378 H.J. Heinz & Co. 1,400 49,462 Hershey Foods Corp. 520 40,092 Kellogg Co. 1,630 54,002 McCormick & Co., Inc. 560 16,598 Pepsi Bottling Group, Inc. 1,070 $ 23,850 PepsiCo, Inc. 6,870 328,523 R.J. Reynolds Tobacco Holdings, Inc. 340 16,330 Sara Lee Corp. 3,090 61,584 UST, Inc. 660 22,453 Wm. Wrigley Jr. Co. 900 50,760 -------------- 1,917,427 -------------- FOREST PRODUCTS -- 0.5% Boise Cascade Corp. 230 6,452 Georgia-Pacific Corp. 1,010 26,543 International Paper Co. 1,910 75,158 Louisiana Pacific Corp.+ 420 7,988 MeadWestvaco Corp. 800 20,736 Plum Creek Timber Co., Inc. 730 19,235 Temple-Inland, Inc. 220 11,887 Weyerhaeuser Co. 870 52,400 -------------- 220,399 -------------- HEALTH SERVICES -- 1.2% Aetna, Inc. 610 35,020 Express Scripts, Inc+ 320 17,574 HCA, Inc. 1,990 76,117 Health Management Associates, Inc., Class A+ 960 21,264 Humana, Inc.+ 640 12,986 Manor Care, Inc. 360 11,981 McKesson, Inc. 1,160 35,113 Medco Health Solutions, Inc.+ 1,080 35,856 Quest Diagnostics, Inc.+ 420 28,413 Tenet Healthcare Corp.+ 1,850 25,530 UnitedHealth Group, Inc. 2,370 120,586 Wellpoint Health Networks, Inc.,Class A+ 590 52,451 -------------- 472,891 -------------- HOME BUILDING -- 0.1% Centex Corp. 250 24,375 KB Home 190 13,013 Pulte Homes, Inc. 250 21,628 -------------- 59,016 -------------- HOUSEHOLD PRODUCTS -- 2.5% Alberto-Culver Co., Class B 230 14,582 Avon Products, Inc. 940 63,882
21
VALUE SECURITY DESCRIPTION SHARES (NOTE 3) -------------------------------------------------------------------------------- COMMON STOCK -- (CONTINUED) HOUSEHOLD PRODUCTS -- (CONTINUED) Clorox Co. 860 $ 38,958 Colgate-Palmolive Co. 2,140 113,827 Gillette Co. 4,060 129,514 International Flavors & Fragrances, Inc. 380 12,578 Kimberly-Clark Corp. 2,020 106,676 Leggett & Platt, Inc. 770 16,085 Newell Rubbermaid, Inc. 1,090 24,852 Procter & Gamble Co. 5,160 507,176 Tupperware Corp. 230 3,462 -------------- 1,031,592 -------------- INSURANCE -- 4.6% ACE, Ltd. 1,110 39,960 AFLAC, Inc. 2,050 74,784 Allstate Corp. 2,800 110,600 Ambac Financial Group, Inc. 430 30,418 American International Group, Inc.# 10,390 632,024 Anthem, Inc.+ 550 37,637 Aon Corp. 1,250 27,375 Chubb Corp. 750 50,107 CIGNA Corp. 560 31,948 Cincinnati Financial Corp. 640 26,189 Hartford Financial Services Group, Inc. 1,120 61,488 Jefferson Pilot Corp. 570 27,212 John Hancock Financial Services, Inc. 1,150 40,652 Lincoln National Corp. 710 28,350 Loews Corp. 740 31,820 Marsh & McLennan Cos., Inc. 2,120 90,630 MBIA, Inc. 580 34,574 MetLife, Inc. 3,030 95,142 MGIC Investment Corp. 390 20,011 Principal Financial Group, Inc. 1,290 40,441 Progressive Corp. 870 64,206 Prudential Financial, Inc. 2,170 83,849 SAFECO Corp. 550 20,185 St. Paul Cos., Inc. 910 34,698 Torchmark Corp. 460 20,185 Travelers Property Casualty Corp., Class B 4,010 65,644 UnumProvident Corp. 1,180 19,317 XL Capital, Ltd., Class A 540 37,530 -------------- 1,876,976 -------------- INTERNET CONTENT -- 0.7% eBay, Inc.+ 2,560 $ 143,206 Sabre Holdings Corp. 570 12,489 Yahoo!, Inc.+ 2,590 113,183 -------------- 268,878 -------------- INTERNET SOFTWARE -- 0.1% Symantec Corp.+ 600 39,990 -------------- LEISURE & TOURISM -- 0.8% Carnival Corp. 2,510 87,624 Delta Air Lines, Inc. 490 6,380 Harrah's Entertainment, Inc. 440 19,140 Hilton Hotels Corp. 1,500 23,760 International Game Technology 1,370 44,867 Marriott International, Inc., Class A 930 40,176 Southwest Airlines Co. 3,120 60,528 Starwood Hotels & Resorts Worldwide, Inc. 800 26,984 -------------- 309,459 -------------- MACHINERY -- 1.3% Caterpillar, Inc. 1,370 100,394 Cooper Industries, Ltd., Class A 370 19,573 Crane Co. 240 6,744 Cummins, Inc. 170 8,058 Danaher Corp. 610 50,538 Deere & Co. 950 57,589 Dover Corp. 810 31,606 Eaton Corp. 300 30,072 Illinois Tool Works, Inc. 1,230 90,466 Ingersoll-Rand Co., Ltd., Class A 680 41,072 Navistar International Corp., Inc.+ 270 10,916 PACCAR, Inc. 460 36,322 Pall Corp. 490 11,466 Parker-Hannifin Corp. 470 23,956 Thermo Electron Corp.+ 650 14,287 -------------- 533,059 -------------- MEDICAL PRODUCTS -- 3.6% Bausch & Lomb, Inc. 210 10,114 Baxter International, Inc. 2,430 64,589 Becton, Dickinson and Co. 1,010 36,926 Biomet, Inc. 1,020 36,577 Boston Scientific Corp.+ 1,640 111,061
22
VALUE SECURITY DESCRIPTION SHARES (NOTE 3) -------------------------------------------------------------------------------- COMMON STOCK -- (CONTINUED) MEDICAL PRODUCTS -- (CONTINUED) C.R. Bard, Inc. 210 $ 16,811 Chiron Corp.+ 740 40,426 Genzyme Corp.+ 880 40,392 Guidant Corp. 1,230 62,742 IMS Health, Inc. 950 22,353 Johnson & Johnson 11,820 594,901 MedImmune, Inc.+ 1,000 26,660 Medtronic, Inc. 4,850 221,014 PerkinElmer, Inc. 510 9,185 St. Jude Medical, Inc.+ 680 39,549 Stryker Corp. 790 64,077 Zimmer Holdings, Inc.+ 900 57,429 -------------- 1,454,806 -------------- METALS & MINING -- 0.6% Alcoa, Inc. 3,370 106,391 Allegheny Technologies, Inc. 320 2,448 Freeport-McMoRan Copper & Gold, Inc., Class B 670 25,963 Newmont Mining Corp. 1,630 71,361 Nucor Corp. 310 16,997 Phelps Dodge Corp.+ 360 22,226 United States Steel Corp. 410 9,697 Worthington Industries, Inc. 340 4,957 -------------- 260,040 -------------- PHARMACEUTICALS -- 7.5% Abbott Laboratories 6,220 265,096 Allergan, Inc. 520 39,322 AmerisourceBergen Corp. 450 25,547 Amgen, Inc.+ 5,140 317,447 Biogen, Inc.+ 600 24,282 Bristol-Myers Squibb Co. 7,720 195,856 Cardinal Health, Inc. 1,780 105,625 Eli Lilly and Co. 4,470 297,791 Forest Laboratories, Inc.+ 1,450 72,515 King Pharmaceuticals, Inc.+ 960 12,864 Merck & Co., Inc. 8,920 394,710 Pfizer, Inc.@ 31,000 979,600 Schering-Plough Corp. 5,850 89,330 Watson Pharmaceuticals, Inc.+ 430 16,886 Wyeth 5,300 233,942 -------------- 3,070,813 -------------- REAL ESTATE INVESTMENT TRUSTS -- 0.4% Apartment Investment & Management Co. 380 $ 15,542 Equity Office Properties Trust 1,590 44,536 Equity Residential 1,090 31,882 Prologis 710 20,973 Simon Property Group, Inc. 770 34,712 -------------- 147,645 -------------- RESTAURANTS -- 0.6% Darden Restaurants, Inc. 650 13,618 McDonald's Corp. 5,070 126,801 Starbucks Corp.+ 1,560 49,296 Wendys International, Inc. 450 16,672 Yum! Brands, Inc.+ 1,170 39,944 -------------- 246,331 -------------- RETAIL STORES -- 7.6% Albertson's, Inc. 1,460 29,623 American Greetings Corp., Class A+ 260 5,546 American Standard Cos., Inc.+ 290 27,753 Bed Bath & Beyond, Inc.+ 1,180 49,843 Best Buy Co., Inc.+ 1,280 74,637 Big Lots, Inc.+ 470 7,055 Black & Decker Corp. 310 14,821 Circuit City Stores-Circuit City Group 830 7,918 Costco Wholesale Corp.+ 1,820 64,373 CVS Corp. 1,570 55,233 Dillards, Inc., Class A 330 5,336 Dollar General Corp. 1,330 29,885 Family Dollar Stores, Inc. 690 30,091 Federated Department Stores, Inc.+ 740 35,187 Fortune Brands, Inc. 580 37,787 Gap, Inc. 3,560 67,925 Home Depot, Inc. 9,150 339,190 J.C. Penney Co., Inc. (Holding Co.) 1,080 25,542 Kohl's Corp.+ 1,350 75,694 Kroger Co.+ 2,990 52,295 Limited, Inc. 2,080 36,608 Lowe's Cos., Inc. 3,120 183,862 Masco Corp. 1,870 51,425 May Department Stores Co. 1,150 32,154 Maytag Corp. 310 7,874 Nordstrom, Inc. 540 16,465 Office Depot, Inc.+ 1,230 18,364
23
VALUE SECURITY DESCRIPTION SHARES (NOTE 3) -------------------------------------------------------------------------------- COMMON STOCK -- (CONTINUED) RETAIL STORES -- (CONTINUED) RadioShack Corp. 660 $ 19,793 Safeway, Inc.+ 1,760 37,136 Sears, Roebuck & Co. 1,130 59,472 Sherwin-Williams Co. 580 19,453 Stanley Works 340 11,336 Staples, Inc.+ 1,950 52,299 SUPERVALU, Inc. 530 13,367 Sysco Corp. 2,590 87,179 Target Corp. 3,630 144,256 Tiffany & Co. 580 27,521 TJX Cos, Inc. 2,030 42,610 Toys "R" Us, Inc.+ 850 11,050 Wal-Mart Stores, Inc.@ 17,400 1,025,730 Walgreen Co. 4,080 142,066 Whirlpool Corp. 270 19,027 Winn-Dixie Stores, Inc. 560 4,530 -------------- 3,099,311 -------------- TELECOMMUNICATIONS -- 5.5% ADC Telecommunications, Inc.+ 3,200 8,160 Alltel Corp. 1,240 58,615 Andrew Corp.+ 610 7,979 AT&T Wireless Services, Inc.+ 10,800 78,300 Avaya, Inc.+ 1,660 21,480 CenturyTel, Inc. 570 20,378 CIENA Corp.+ 1,880 12,051 Cisco Systems, Inc.+ 27,950 586,391 Citizens Communications Co.+ 1,130 14,069 Comcast Corp., Class A+ 8,960 303,923 Comverse Technology, Inc.+ 750 13,530 Corning, Inc.+ 5,300 58,194 JDS Uniphase Corp.+ 5,700 20,235 Nextel Communications, Inc., Class A+ 4,120 99,704 QUALCOMM, Inc. 3,160 150,100 Qwest Communications International, Inc.+ 6,750 23,827 SBC Communications, Inc. 13,230 317,255 Sprint Corp. (FON Group) 3,600 57,600 Sprint Corp. (PCS Group )+ 4,120 17,922 Verizon Communications, Inc. 10,980 368,928 -------------- 2,238,641 -------------- TRANSPORTATION -- 1.4% Burlington Northern Santa Fe Corp. 1,480 $ 42,831 CSX Corp. 850 27,047 FedEx Corp. 1,190 90,154 Norfolk Southern Corp. 1,550 31,233 Ryder System, Inc. 250 7,500 Union Pacific Corp. 1,010 63,226 United Parcel Service, Inc., Class B 4,480 324,890 -------------- 586,881 -------------- UTILITIES -- 3.0% AES Corp.+ 2,470 21,612 Allegheny Energy, Inc.+ 500 5,290 Ameren Corp. 640 28,576 American Electric Power Co., Inc. 1,570 44,258 AT&T Corp. 3,140 58,373 BellSouth Corp. 7,360 193,642 Calpine Corp.+ 1,530 7,053 CenterPoint Energy, Inc. 1,220 11,968 Cinergy Corp. 710 25,780 CMS Energy Corp.+ 570 4,628 Consolidated Edison, Inc. 900 36,423 Constellation Energy Group, Inc. 670 24,368 Dominion Resources, Inc. 1,290 79,464 DTE Energy Co. 670 24,710 Duke Energy Corp. 3,600 65,340 Edison International+ 1,300 25,623 Entergy Corp. 910 49,049 Exelon Corp. 1,300 82,485 FirstEnergy Corp. 1,300 44,707 FPL Group, Inc. 730 46,530 PG&E Corp.+ 1,640 40,098 innacle West Capital Corp. 360 13,162 PPL Corp. 700 27,944 Progress Energy, Inc. 970 41,807 Public Service Enterprise Group, Inc. 900 36,783 Southern Co. 2,900 86,420 TECO Energy, Inc. 750 9,847 TXU Corp. 1,280 29,210 Williams Cos., Inc. 2,060 21,012 Xcel Energy, Inc. 1,590 26,076 -------------- 1,212,238 -------------- TOTAL INVESTMENT SECURITIES (cost $44,036,221) $ 38,711,278 --------------
24
PRINCIPAL AMOUNT VALUE SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 3) -------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS -- 0.3% United States Treasury Bills 0.87% due 11/13/03@ $ 30 $ 29,991 United States Treasury Bills 0.84% due 11/20/03@ 60 59,973 United States Treasury Bills 0.86% due 12/04/03@ 10 9,992 United States Treasury Bills 0.82% due 12/04/03@ 10 9,993 United States Treasury Bills 0.90% due 12/11/03@ 20 19,980 -------------- TOTAL SHORT-TERM INVESTMENTS (cost $129,929) 129,929 -------------- REPURCHASE AGREEMENT -- 5.1% Agreement with State Street Bank & Trust Co., bearing interest at 0.92%, dated 10/31/03, to be repurchased 11/03/03 in the amount of $2,066,158 and collateralized by $2,125,000 of Federal Home Loan Bank Notes, bearing interest at 1.63%, due 06/17/05 and having an approximate value of $2,129,620 (cost $2,066,000)@ $ 2,066 $ 2,066,000 -------------- TOTAL INVESTMENTS -- (cost $46,232,150*) 100.0% 40,907,207 Other assets less liabilities 0.0 2,892 ---------- -------------- NET ASSETS -- 100.0% $ 40,910,099 ========== ==============
---------- * See Note 7 + Non-income producing securities # Security represents an investment in an affiliated company. See Note 6. @ The security or a portion thereof represents collateral for open futures contracts. OPEN FUTURES CONTRACTS
NUMBER OF VALUE AT VALUE AS OF UNREALIZED CONTRACT DESCRIPTION EXPIRATION DATE TRADE DATE OCTOBER 31, 2003 APPRECIATION ------------------------------------------------------------------------------------------------------------------- 42 Long S&P 500 Mini Index December 2003 $ 2,147,475 $ 2,203,950 $ 56,475 =========
See Notes to Financial Statements 25 SUNAMERICA SCIENCE & TECHNOLOGY FUND PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2003
VALUE SECURITY DESCRIPTION SHARES (NOTE 3) -------------------------------------------------------------------------------- COMMON STOCK -- 98.9% BROADCASTING & MEDIA -- 4.0% Clear Channel Communications, Inc. 4,100 $ 167,362 Time Warner, Inc.+ 12,900 197,241 Univision Communications, Inc., Class A+ 1,000 33,950 Viacom, Inc., Class B 4,000 159,480 -------------- 558,033 -------------- BUSINESS SERVICES -- 2.4% Accenture, Ltd., Class A+ 6,600 154,440 CDW Corp. 700 42,035 Paychex, Inc. 3,500 136,220 -------------- 332,695 -------------- CHEMICALS -- 0.2% Cabot Microelectronics Corp.+ 500 28,500 -------------- COMMUNICATION EQUIPMENT -- 1.2% Intersil Corp., Class A 2,900 74,791 Marvell Technology Group, Ltd.+ 600 26,322 Nortel Networks Corp.+ 15,800 70,310 -------------- 171,423 -------------- COMPUTER SOFTWARE -- 33.8% Adobe Systems, Inc. 6,600 289,344 BMC Software, Inc.+ 5,400 93,852 Cadence Design Systems, Inc.+ 9,800 150,822 Certegy, Inc. 4,000 134,640 DST Systems, Inc.+ 2,100 79,422 First Data Corp. 7,850 280,245 Fiserv, Inc.+ 7,200 254,304 Informatica Corp.+ 6,800 74,120 Intuit, Inc.+ 6,600 329,868 Mercury Interactive Corp.+ 8,200 380,808 Microsoft Corp. 46,800 1,223,820 Oracle Corp.+ 23,700 283,452 Red Hat, Inc.+ 4,600 69,184 SAP AG 800 116,244 SAP AG-Sponsored ADR 1,700 62,118 Siebel Systems, Inc.+ 16,600 208,994 SunGard Data Systems, Inc.+ 3,600 100,980 Synopsys, Inc.+ 4,300 136,396 VERITAS Software Corp.+ 12,200 441,030 -------------- 4,709,643 -------------- COMPUTERS & BUSINESS EQUIPMENT -- 10.9% Dell, Inc.+ 17,400 $ 628,488 Hewlett-Packard Co. 11,400 254,334 Intel Corp. 5,000 165,250 International Business Machines Corp. 2,400 214,752 Lexmark International Group, Inc.+ 2,100 154,581 Network Appliance, Inc.+ 2,100 51,828 Seagate Technology 2,200 50,556 -------------- 1,519,789 -------------- ELECTRONICS -- 24.3% Agere Systems, Inc.+ 12,000 41,760 Altera Corp.+ 3,200 64,736 Analog Devices, Inc.+ 9,200 407,836 Applied Materials, Inc.+ 17,400 406,638 ASML Holding NV+ 2,700 47,385 Flextronics International, Ltd.+ 5,500 77,000 KLA-Tencor Corp.+ 3,600 206,388 Linear Technology Corp. 2,300 98,003 Maxim Integrated Products, Inc.+ 9,400 467,274 Microchip Technology, Inc. 6,800 222,428 Novellus Systems, Inc.+ 7,200 297,288 QLogic Corp.+ 3,750 210,188 Samsung Electronics Co. Ltd. 400 158,851 Sanmina-SCI Corp.+ 4,300 45,365 Taiwan Semiconductor Manufacturing Co., Ltd. ADR+ 12,636 139,754 Texas Instruments, Inc. 10,700 309,444 Xilinx, Inc.+ 5,700 180,690 -------------- 3,381,028 -------------- ENTERTAINMENT PRODUCTS -- 0.6% Electronic Arts, Inc.+ 800 79,232 -------------- INTERNET CONTENT -- 1.9% eBay, Inc.+ 2,000 111,880 Yahoo!, Inc.+ 3,500 152,950 -------------- 264,830 -------------- INTERNET SOFTWARE -- 4.4% InterActiveCorp+ 3,700 135,827 Networks Associates, Inc.+ 8,900 123,977 Symantec Corp.+ 2,000 133,300 VeriSign, Inc.+ 13,450 213,451 -------------- 606,555 --------------
26
VALUE SECURITY DESCRIPTION SHARES (NOTE 3) -------------------------------------------------------------------------------- COMMON STOCK -- (CONTINUED) LEISURE & TOURISM -- 0.4% International Game Technology 1,700 $ 55,675 -------------- MACHINERY -- 0.1% Cognex Corp. 700 18,795 -------------- MEDICAL PRODUCTS -- 1.2% Johnson & Johnson 2,400 120,792 MedImmune, Inc.+ 1,900 50,654 -------------- 171,446 -------------- PHARMACEUTICALS -- 3.2% Bristol-Myers Squibb Co. 2,100 53,277 Cephalon, Inc.+ 1,400 65,744 Eli Lilly and Co. 650 43,303 Forest Laboratories, Inc.+ 1,700 85,017 Genentech, Inc.+ 400 32,788 Gilead Sciences, Inc.+ 600 32,748 IDEC Pharmaceuticals Corp.+ 1,500 52,695 Pfizer, Inc. 1,500 47,400 Wyeth 600 26,484 -------------- 439,456 -------------- TELECOMMUNICATIONS -- 10.3% CIENA Corp.+ 5,800 $ 37,178 Cisco Systems, Inc.+ 31,500 660,870 Comcast Corp., Class A 3,200 104,384 JDS Uniphase Corp.+ 7,800 27,690 Nokia Corp. ADR 13,900 236,161 QUALCOMM, Inc. 5,000 237,500 Vodafone Group, PLC ADR 6,000 126,900 -------------- 1,430,683 -------------- TOTAL INVESTMENT SECURITIES (cost $11,722,017) 13,767,783 -------------- SHORT-TERM INVESTMENTS -- 1.6% REGISTERED INVESTMENT FUND -- 1.6% T Rowe Price Reserve Investment Fund (cost: $226,534) 226,534 226,534 -------------- TOTAL INVESTMENTS -- (cost $11,948,551*) 100.5% 13,994,317 Liabilities in excess of other assets (0.5) (76,295) ------ -------------- NET ASSETS -- 100.0% $ 13,918,022 ====== ==============
---------- * See Note 7 + Non-income producing securities ADR American Depository Receipt See Notes to Financial Statements 27 SUNAMERICA AGGRESSIVE GROWTH LIFESTAGE FUND PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2003
VALUE SECURITY DESCRIPTION SHARES (NOTE 3) -------------------------------------------------------------------------------- AFFILIATED INVESTMENT COMPANIES# -- 100.0% INTERNATIONAL EQUITY SECURITIES -- 30.2% SunAmerica International Equity Fund Class I+ (Cost $6,430,946) 792,621 $ 7,403,076 -------------- DOMESTIC EQUITY SECURITIES -- 63.9% SunAmerica Blue Chip Growth Fund Class I+ 363,523 5,143,857 SunAmerica Focused Multi-Cap Value Portfolio Class I+ 338,934 5,805,932 SunAmerica Growth & Income Fund Class I+ 243,073 2,656,786 SunAmerica New Century Fund Class I+ 140,476 2,043,923 -------------- TOTAL DOMESTIC EQUITY SECURITIES (cost $14,460,533) 15,650,498 -------------- FIXED INCOME SECURITIES -- 5.9% SunAmerica Core Bond Fund Class I (cost $1,451,468) 141,898 1,458,709 -------------- TOTAL INVESTMENTS -- (cost $22,342,947*) 100.0% 24,512,283 Liabilities in excess of other assets (0.0) (9,243) ------ -------------- NET ASSETS -- 100.0% $ 24,503,040 ====== ==============
---------- * See Note 7 + Non-income producing securities # See Note 6 See Notes to Financial Statements 28 SUNAMERICA MODERATE GROWTH LIFESTAGE FUND PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2003
VALUE SECURITY DESCRIPTION SHARES (NOTE 3) -------------------------------------------------------------------------------- AFFILIATED INVESTMENT COMPANIES# -- 99.9% INTERNATIONAL EQUITY SECURITIES -- 16.2% SunAmerica International Equity Fund Class I+ (cost $5,140,196) 650,665 $ 6,077,211 -------------- DOMESTIC EQUITY SECURITIES -- 60.0% SunAmerica Blue Chip Growth Fund Class I+ 469,110 6,637,902 SunAmerica Focused Multi-Cap Value Portfolio Class I+ 449,360 7,697,530 SunAmerica Growth & Income Fund Class I+ 527,476 5,765,315 SunAmerica New Century Fund Class I+ 167,203 2,432,805 -------------- TOTAL DOMESTIC EQUITY SECURITIES (cost $20,080,464) 22,533,552 -------------- FIXED INCOME SECURITIES -- 23.7% SunAmerica Core Bond Fund Class I (cost $8,855,009) 866,877 8,911,499 -------------- TOTAL INVESTMENTS -- (cost $34,075,669*) 99.9% 37,522,262 Other assets less liabilities 0.1 52,041 ------ -------------- NET ASSETS -- 100.0% $ 37,574,303 ====== ==============
---------- * See Note 7 + Non-income producing securities # See Note 6 See Notes to Financial Statements 29 SUNAMERICA CONSERVATIVE GROWTH LIFESTAGE FUND PORTFOLIO OF INVESTMENTS -- OCTOBER 31, 2003
VALUE SECURITY DESCRIPTION SHARES (NOTE 3) -------------------------------------------------------------------------------- AFFILIATED INVESTMENT COMPANIES# -- 99.6% INTERNATIONAL EQUITY SECURITIES -- 8.8% SunAmerica International Equity Fund Class I+ (cost $1,578,806) 207,117 $ 1,934,475 -------------- DOMESTIC EQUITY SECURITIES -- 47.1% SunAmerica Blue Chip Growth Fund Class I+ 238,007 3,367,795 SunAmerica Focused Multi-Cap Value Portfolio Class I+ 201,054 3,444,061 SunAmerica Growth & Income Fund Class I+ 273,186 2,985,920 SunAmerica New Century Fund Class I+ 33,309 484,652 -------------- TOTAL DOMESTIC EQUITY SECURITIES (cost $8,731,687) 10,282,428 -------------- FIXED INCOME SECURITIES -- 43.7% SunAmerica Core Bond Fund Class I (cost $9,460,231) 927,600 9,535,724 -------------- TOTAL INVESTMENTS -- (cost $19,770,724*) 99.6% 21,752,627 Other assets less liabilities 0.4 96,888 ------ -------------- NET ASSETS -- 100.0% $ 21,849,515 ====== ==============
---------- * See Note 7 + Non-income producing securities # See Note 6 See Notes to Financial Statements 30 SUNAMERICA STRATEGIC INVESTMENT SERIES, INC. NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2003 NOTE 1. ORGANIZATION SunAmerica Strategic Investment Series, Inc. (the "Corporation") is an open-end investment company organized as a Maryland corporation on December 16, 1998. It currently consists of seven different investment funds (each, a "Fund" and collectively, the "Funds"). Each Fund is a separate series with a distinct investment objective and/or strategy. Each Fund is advised and/or managed by AIG SunAmerica Asset Management Corp. (the "Adviser" or "SAAMCo"), an indirect wholly-owned subsidiary of American International Group, Inc. ("AIG"). An investor may invest in one or more of the following Funds: SunAmerica Biotech/Health Fund ("Biotech/Health Fund") (formerly Biotech/Health 30 Fund), Tax Managed Equity Fund, SunAmerica Stock Index Fund ("Stock Index Fund"), SunAmerica Science & Technology Fund ("Science & Technology Fund"), SunAmerica Aggressive Growth LifeStage Fund ("Aggressive Growth LifeStage Fund"), SunAmerica Moderate Growth LifeStage Fund ("Moderate Growth LifeStage Fund") and SunAmerica Conservative Growth LifeStage Fund ("Conservative Growth LifeStage Fund"). The investment objective for each of the Funds is as follows: BIOTECH/HEALTH FUND seeks long-term growth of capital through active trading of equity securities of companies principally engaged in biotechnology or healthcare, without regard to market capitalization. Under normal market conditions this Fund invests at least 80% of the Fund's net assets plus any borrowing for investment purposes, in such securities. TAX MANAGED EQUITY FUND seeks high total return while minimizing the impact of capital gains through active trading of equity securities of large and medium-sized U.S. companies while attempting to minimize capital gain distributions to shareholders. Under normal market conditions this Fund invests at least 80% of the Fund's net assets plus any borrowing for investment purposes, in equity securities. STOCK INDEX FUND seeks returns that are similar to the total return of the S&P 500 Index by investing in equity securities of companies included in the S&P 500 Index. SCIENCE & TECHNOLOGY FUND seeks long-term growth of capital through active trading of equity securities of companies expected to benefit from the development, advancement and application of science and technology, without regard to market capitalization. Under normal market conditions this Fund invests at least 80% of the Fund's net assets plus any borrowing for investment purposes, in such securities. AGGRESSIVE GROWTH LIFESTAGE FUND seeks growth of capital by allocating assets among a combination of AIG SunAmerica Mutual Funds investing in equity and fixed income securities, with an emphasis on funds investing in equity securities. Under normal market conditions this Fund invests 45%-85% in domestic equity mutual funds, 10%-35% in foreign equity mutual funds and 10%-20% in bond funds. MODERATE GROWTH LIFESTAGE FUND seeks growth of capital and current income by allocating assets among a combination of AIG SunAmerica Mutual Funds investing in equity and fixed income securities, with an emphasis on funds investing in equity securities. Under normal market conditions the Fund invests 30%-75% in domestic equity mutual funds, 7%-25% in foreign equity mutual funds and 15%-45% in bond funds. 31 CONSERVATIVE GROWTH LIFESTAGE FUND seeks current income and growth of capital, with reduced volatility by allocating assets among a combination of AIG SunAmerica Mutual Funds investing in equity and fixed income securities, with an emphasis on funds investing in fixed income securities. Under normal market conditions the Fund invests 20%-65% in domestic equity mutual funds, 5%-15% in foreign equity mutual funds and 25%-75% in bond funds. The LifeStage Funds invest in various AIG SunAmerica Mutual Funds, some of which are not presented in this report. Additional information on the underlying funds is available at our website, www.sunamericafunds.com. CLASSES OF SHARES: Each Fund currently offers multiple classes of shares. The classes within each Fund are presented in the Statement of Assets and Liabilities. The cost structure for each class is as follows: Class A shares-- Offered at net asset value per share plus an initial sales charge. Any purchases of Class A shares in excess of $1,000,000 will be subject to a contingent deferred sales charge on redemptions made within two years of purchase. Class B shares-- Offered at net asset value per share without an initial sales charge, although a declining contingent deferred sales charge may be imposed on redemptions made within six years of purchase. Class B shares will convert automatically to Class A shares on the first business day of the month after eight years from the issuance of such shares and at such time will be subject to the lower distribution fee applicable to Class A shares. Class II shares-- Offered at net asset value per share plus an initial sales charge. Certain redemptions made within the first 18 months of the date of purchase are subject to a contingent deferred sales charge. Class I shares-- Offered at net asset value per share. This class is offered exclusively to participants in certain employee retirement plans and other programs. Each class of shares bears the same voting, dividend, liquidation and other rights and conditions and each makes distribution and account maintenance and service fee payments under the distribution plans pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act"), except that Class B shares and Class II shares are subject to higher distribution fee rates. There are no distribution or service fee payments applicable to Class I. The LifeStage Funds only make distribution fee payments. INDEMNIFICATIONS: Under the Funds' organizational documents, its officers and directors are indemnified against certain liability arising out of the performance of their duties to the Funds. In addition, in the normal course of business the Funds enter into contracts that contain a variety of representations and warranties which provide general indemnifications. The Funds' maximum exposure under these arrangements are unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds expect the risk of loss to be remote. 32 NOTE 2. FUND MERGERS Pursuant to a plan of reorganization approved by shareholders of the North American Funds ("NA Funds") on November 7, 2001, all the assets and liabilities of the determined NA Funds were transferred in a tax-free exchange to a determined SunAmerica Mutual Funds ("SA Funds"). The details of the reorganization transactions, which were consummated on November 16, 2001, are set forth below. The SunAmerica Stock Index Fund, SunAmerica Science & Technology Fund, SunAmerica Aggressive Growth LifeStage Fund, SunAmerica Moderate Growth LifeStage Fund, and SunAmerica Conservative Growth LifeStage Fund, respectively, newly created portfolios of the Corporation acquired all of the assets and liabilities of the North American Stock Index Fund, North American Science & Technology Fund, North American Aggressive Growth LifeStyle Fund, North American Moderate Growth LifeStyle Fund, and North American Conservative Growth LifeStyle Fund, respectively. In conjunction with the reoganization, for each of the listed Funds above, Class C shares of each of the NA Funds were redesignated as Class II shares of the SA Funds. NOTE 3. SIGNIFICANT ACCOUNTING POLICIES The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates. The following is a summary of the significant accounting policies followed by the Funds in the preparation of their financial statements: SECURITY VALUATIONS: Securities that are actively traded in the over-the-counter market, including listed securities for which the primary market is believed by the Adviser to be over-the-counter, are valued at the quoted bid price provided by principal market makers. Securities listed on the New York Stock Exchange ("NYSE") or other national securities exchanges are valued on the basis of the last sale price on the exchange on which they are primarily traded. If there is no sale on that day, then securities are valued at the closing bid price on the NYSE or other primary exchange for that day. However, if the last sale price on the NYSE is different than the last sale price on any other exchange, the NYSE price is used. Securities listed on the NASDAQ exchange will be valued using the NASDAQ Official Closing Price ("NOCP"). Generally, the NOCP will be the last sale price unless the reported trade for the security is outside the range of the bid/ask price. In such cases, the NOCP will be normalized to the nearer of the bid or ask price. Securities that are traded on foreign exchanges are ordinarily valued at the last quoted sales price available before the time when the assets are valued. If a security's price is available from more than one foreign exchange, a Fund uses the exchange that is the primary market for the security. The investments of the LifeStage Funds and other mutual funds held are valued at the closing net asset value per share of each underlying fund. Options traded on national securities exchanges are valued as of the close of the exchange on which they are traded. The Funds may make use of a pricing service in the determination of their net asset values. Securities for which market quotations are not readily available or if a development/event occurs that may significantly impact the value of a security, then these securities may be fair valued as determined pursuant to procedures adopted in good faith by the Board of Directors (the "Directors"). Short-term investments 33 which mature in less than 60 days are valued at amortized cost, if their original maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if their original term to maturity exceeded 60 days. REPURCHASE AGREEMENTS: Pursuant to exemptive relief granted by the Securities and Exchange Commission, the Funds are permitted to participate in joint repurchase agreement transactions with other affiliated mutual funds. The Funds, along with other affiliated registered investment companies, may transfer uninvested cash balances into a single joint account, the daily aggregate balance of which is invested in one or more repurchase agreements collateralized by U.S. Treasury or federal agency obligations. The Funds' custodian takes possession of the collateral pledged for investments in such repurchase agreements. The underlying collateral is valued daily on a mark to market basis to ensure that the value, including accrued interest, is at least 102% of the repurchase price. In the event of default of the obligation to repurchase, a Fund has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Fund may be delayed or limited. As of October 31, 2003, Biotech/Health Fund had a 6.4% undivided interest which represented $6,337,000 in principal amount in a joint repurchase agreement with State Street Bank & Trust Co. As of such date, the repurchase agreement in the joint account and the collateral thereof are as follows: State Street Bank & Trust Co. Repurchase Agreement, 0.94% dated 10/31/03 in the principal amount of $99,505,000, repurchase price $99,512,745 due 11/03/03, collateralized by the following:
INTEREST MATURITY PRINCIPAL MARKET TYPE OF COLLATERAL RATE DATE AMOUNT VALUE ------------------ -------- -------- ------------- ------------- U.S. Treasury Bond 6.25% 8/15/23 $ 79,505,000 $ 81,101,425 U.S. Treasury Bill 0.94 1/29/04 20,455,000 20,403,862
In addition, as of October, 31, 2003, Biotech/Health Fund has a 4.7% undivided interest which represented $7,000,000 in principal amount in a joint repurchase agreement with UBS Warburg, LLC. As of such date, the repurchase agreement in the joint account and the collateral thereof are as follows: UBS Warburg, LLC Repurchase Agreement, 0.99% dated 10/31/03, in principal amount of $150,000,000, repurchase price $150,012,375 due 11/03/03, collateralized by the following:
INTEREST MATURITY PRINCIPAL MARKET TYPE OF COLLATERAL RATE DATE AMOUNT VALUE ------------------ -------- -------- ------------- ------------- U.S. Treasury Notes-TIPS 1.87% 7/15/13 $ 150,000,000 $ 153,576,408
SECURITIES TRANSACTIONS, INVESTMENT INCOME, EXPENSES, DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Security transactions are recorded on a trade date basis. Realized gains and losses on sales of investments are calculated on the identified cost basis. Interest income is recorded on the accrual basis; dividend income is recorded on the ex-dividend date. The LifeStage Funds invest in a combination of AIG SunAmerica Mutual Funds including funds investing in fixed income securities. For financial statement purposes, funds amortize all premiums and accrete all discounts on fixed income securities. Funds 34 investing in foreign securities may be subject to taxes imposed by countries in which they invest. Such taxes are generally based on either income or gains earned or repatriated. Net investment income, other than class-specific expenses, and realized and unrealized gains and losses, are allocated daily to each class of shares based upon the relative net asset value of outstanding shares (or the value of the dividend-eligible shares, as appropriate) of each class of shares at the beginning of the day (after adjusting for the current capital share activity of the respective class). Expenses common to all Funds, not directly related to individual Funds, are allocated among the Funds based upon their relative net asset values or other appropriate methods. In all other respects, expenses are charged to each Fund as incurred on a specific identification basis. Interest earned on cash balances held at the custodian are shown as custody credits in the Statement of Operations. Effective December 2, 2002, the Board of Directors approved a change in the accounting of expenses for the LifeStage Funds based on current industry practice. Accordingly, the expenses included in the accompanying financial statements reflect the expenses of the LifeStage Funds and does not include indirect expenses borne by each LifeStage Fund in connection with its investment in the underlying funds. Dividends from net investment income, if any, are paid at least annually. Capital gain distributions, if any, are paid at least annually. The Funds record dividends and distributions to their respective shareholders on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains are determined and presented in accordance with federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts at fiscal year end based on their federal tax-basis treatment; temporary differences do not require reclassification. Net investment income/loss, net realized gain/loss, and net assets are not affected. The Funds intend to comply with the requirements of the Internal Revenue Code, as amended, applicable to regulated investment companies and distribute all of their taxable income, including any net realized gain on investments, to their shareholders. Therefore, no federal tax provision is required. Each Fund is considered a separate entity for tax purposes. FOREIGN CURRENCY TRANSLATION: The books and records of the Funds are maintained in U.S. dollars. Assets and liabilities denominated in foreign currencies and commitments under forward foreign currency contracts are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Funds do not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of securities held at fiscal year-end. Similarly, the Funds do not isolate the effect of changes in foreign exchange rates from the changes in the market prices of portfolio securities sold during the year. Realized foreign exchange gains and losses on other assets and liabilities and change in unrealized foreign exchange gains and losses on other assets and liabilities include foreign exchange gains and losses from currency gains or losses between the trade and settlement dates of securities transactions, the 35 difference between the amounts of interest, dividends and foreign withholding taxes recorded on a Fund's books and the U.S. dollar equivalent amounts actually received or paid and changes in the unrealized foreign exchange gains and losses relating to other assets and liabilities arising as a result of changes in the exchange rate. FUTURES CONTRACTS: A futures contract is an agreement between two parties to buy and sell a financial instrument at a set price on a future date. Upon entering into such a contract the Funds are required to pledge to the broker an amount of cash or U.S. government securities equal to the minimum "initial margin" requirements of the exchange on which the futures contract is traded. The Funds' activities in futures contracts are for hedging purposes and are conducted through regulated exchanges which do not result in counterparty credit risks. A Fund's participation in the futures markets involves certain risks, including imperfect correlation between movements in the price of futures contracts and movements in the price of the securities hedged or used for cover. Pursuant to a contract the Funds agree to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as "variation margin" and are recorded by the Funds as unrealized appreciation or depreciation. Futures contracts involve elements of risk in excess of the amount reflected in the Statement of Assets and Liabilities. When a contract is closed, the Funds record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. SHORT SALES: The Funds may sell a security it does not own in anticipation of a decline in the market value of that security (short sales). To complete such a transaction, the Fund must borrow the security to make delivery to the buyer. The Fund then is obligated to replace the security borrowed by purchasing it at market price at the time of replacement. The price at such time may be more or less than the price at which the security was sold by the Fund. Until the security is replaced, the Fund is required to pay to the lender any dividends or interest that accrue during the period of the loan. To borrow the security, the Fund also may be required to pay a premium, which would increase the cost of the security sold. The proceeds of the short sale will be retained by the broker, to the extent necessary to meet margin requirements, until the short position is closed out. Until the Fund replaces a borrowed security, the Fund will maintain daily a segregated account, containing cash or liquid securities, at such a level that (i) the amount deposited in the account plus the amount deposited with the broker as collateral will equal the current value of the security sold short and (ii) the amount deposited in the segregated account plus the amount deposited with the broker as collateral will not be less than the market value of the security at the time it was sold short. Liabilities for securities sold short are reported at market value in the financial statements. Such liabilities are subject to off balance sheet risk to the extent of any future increases in market value of the securities sold short. The future settlement of a liability for securities sold short could exceed the liabilities recorded in the Statement of Assets and Liabilities. The Fund bears the risk of potential inability of the broker to meet their obligation to perform. NOTE 4. INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT, DISTRIBUTION AGREEMENT AND SERVICE AGREEMENT The Corporation, on behalf of each Fund, has entered into an Investment Advisory and Management Agreement (the "Agreement") with SAAMCo. Under the Agreement, SAAMCo provides continuous supervision of each respective Fund and administers its corporate affairs, subject to general review by the 36 Directors. In connection therewith, SAAMCo furnishes the Funds with office facilities, maintains certain of the Funds' books and records, and pays the salaries and expenses of all personnel, including officers of the Funds who are employees of SAAMCo and its affiliates. The investment advisory and management fee payable by the Funds to SAAMCo is computed daily and payable monthly, at an annual rate based on the average daily net assets as follows:
EXCESS FIRST OVER $500 MILLION $500 MILLION ------------ ------------ Biotech/Health Fund 0.75% same Tax Managed Equity Fund 0.85% same Stock Index Fund 0.27% 0.26% Science & Technology Fund 0.90% same Aggressive Growth LifeStage Fund 0.10% same Moderate Growth LifeStage Fund 0.10% same Conservative Growth LifeStage Fund 0.10% same
Prior to November 16, 2001, American General Asset Management ("AGAM") was the advisor for the Stock Index Fund, Science & Technology Fund, Aggressive Growth LifeStage Fund, Moderate Growth LifeStage Fund and Conservative Growth LifeStage Fund. The annual investment advisory and management fee percentages payable to AGAM prior to November 16, 2001, are the same as those payable under the current investment advisory agreement with SAAMCo. The Tax Managed Equity Fund, Stock Index Fund and Science & Technology Fund are subadvised by J.P. Morgan Fleming Asset Management, Inc., AIG Global Investment Corp. ("AIGGIC") and T. Rowe Price & Associates, Inc., respectively. AIGGIC is an indirect wholly-owned subsidiary of AIG and an affiliate of SAAMCo. Under the Subadvisory Agreements, the subadvisors manage the investment and reinvestment of the assets of the respective Fund for which they are responsible. Each of the subadvisors is independent of SAAMCo except for AIGGIC and discharges its responsibilities subject to the polices of the Corporation's Directors and the oversight and supervision of SAAMCo. All Subadvisory fees are paid by SAAMCo and do not increase Fund expenses. The Subadvisory fees paid by SAAMCo are computed at an annual rate based upon the average daily net assets as follows:
SUBADVISORY ASSETS FEES --------------- ------------ Tax Managed Equity Fund $0-$200 million 0.45% >$200 million 0.40 >$400 million 0.35 Stock Index Fund $0-$2 billion 0.20 >$2 billion 0.10 Science & Technology Fund >$0 0.60
37 Prior to November 16, 2001, the Stock Index Fund, Aggressive Growth LifeStage Fund, Moderate Growth LifeStage Fund, and Conservative Growth LifeStage Fund (all operating as the North American Funds) were sub-advised by American General Investment Management, L.P. ("AGIM"). AGIM was an indirect wholly-owned subsidiary of AIG and received the same fee rate as the current subadvisor, which was paid by AGAM. SAAMCo has contractually agreed to waive fees or reimburse expenses, if necessary to keep the annual expenses at or below an annual rate of 1.55% of the assets of Class A shares and 2.20% of the assets of Class B and Class II shares for the Biotech/Health Fund; 1.45% of the assets of Class A shares and 2.10% of the assets of Class B and Class II shares for the Tax Managed Equity Fund; 0.75% of the assets of Class A shares, and 1.40% of the assets of Class B and Class II shares for the Stock Index Fund; and 1.50% of the assets of Class A shares, 2.15% of the assets of Class B and Class II shares and 1.40% of the assets of Class I shares of the Science & Technology Fund. Effective December 1, 2002 SAAMCo voluntarily agreed to waive fees or reimburse expenses, if necessary to keep the annual expenses at or below an annual rate of 0.50% of the assets of Class A shares and 1.15% of the assets of Class B shares and Class II shares and 0.40% of Class I shares of the LifeStage Funds. SAAMCo also may voluntarily waive or reimburse additional amounts to increase the investment return to the Funds' investors. Further, any waivers or reimbursements made by SAAMCo are subject to recoupment from the Funds within the following two years of such waivers or reimbursements, provided that the Funds are able to effect such payment to SAAMCo and remain in compliance with the foregoing expense limitations. 38 For the year ended October 31, 2003, expenses were reimbursed to the Funds as follows: Biotech/Health Fund -- Class A $ 37,299 Biotech/Health Fund -- Class B 42,140 Biotech/Health Fund -- Class II 37,737 Tax Managed Equity Fund -- Class A 39,521 Tax Managed Equity Fund -- Class B 53,982 Tax Managed Equity Fund -- Class II 53,380 Stock Index Fund -- Class A 62,622 Stock Index Fund -- Class B 135,295 Stock Index Fund -- Class II 24,638 Science & Technology Fund -- Class A 47,857 Science & Technology Fund -- Class B 129,821 Science & Technology Fund -- Class II 22,105 Science & Technology Fund -- Class I 10,902 Aggressive Growth Lifestage Fund A 20,770 Aggressive Growth Lifestage Fund B 49,281 Aggressive Growth Lifestage Fund II 12,818 Aggressive Growth Lifestage Fund I 23,249 Moderate Growth Lifestage Fund A 13,479 Moderate Growth Lifestage Fund B 23,292 Moderate Growth Lifestage Fund II 12,678 Moderate Growth Lifestage Fund I 12,126 Conservative Growth Lifestage Fund A 17,517 Conservative Growth Lifestage Fund B 23,860 Conservative Growth Lifestage Fund II 13,624 Conservative Growth Lifestage Fund I 17,527
For the year ended October 31, 2003, none of the previously reimbursed expenses have been repaid to the Adviser by the Funds. At October 31, 2003, expenses previously waived or reimbursed by SAAMCo that are subject to recoupment are as follows:
OTHER EXPENSES REIMBURSED -------------- Biotech/Health Fund $ -- Tax Managed Equity Fund -- Stock Index Fund 156,909 Science & Technology Fund 169,773 Aggressive Growth LifeStage Fund 40,127 Moderate Growth LifeStage Fund 12,491 Conservative Growth LifeStage Fund 18,119
39
CLASS SPECIFIC EXPENSES REIMBURSED -------------- Biotech/Health Fund Class A $ 82,959 Biotech/Health Fund Class B 85,107 Biotech/Health Fund Class II 75,714 Tax Managed Equity Fund Class A 91,348 Tax Managed Equity Fund Class B 127,188 Tax Managed Equity Fund Class II 129,505 Stock Index Fund Class A 71,521 Stock Index Fund Class B 168,929 Stock Index Fund Class II 35,313 Science & Technology Fund Class A 44,829 Science & Technology Fund Class B 115,037 Science & Technology Fund Class II 26,159 Science & Technology Fund Class I 18,156 Aggressive Growth LifeStage Fund Class A 14,723 Aggressive Growth LifeStage Fund Class B 29,064 Aggressive Growth LifeStage Fund Class II 12,152 Aggressive Growth LifeStage Fund Class I 10,051 Moderate Growth LifeStage Fund Class A 11,715 Moderate Growth LifeStage Fund Class B 18,323 Moderate Growth LifeStage Fund Class II 12,183 Moderate Growth LifeStage Fund Class I 6,923 Conservative Growth LifeStage Fund Class A 12,770 Conservative Growth LifeStage Fund Class B 17,309 Conservative Growth LifeStage Fund Class II 12,163 Conservative Growth LifeStage Fund Class I 11,547
The Corporation, on behalf of each Fund, has entered into a Distribution Agreement with AIG SunAmerica Capital Services, Inc. ("SACS" or the "Distributor"), an affiliate of SAAMCo. Each Fund has adopted a Distribution Plan (the "Plan") in accordance with the provisions of Rule 12b-1 under the 1940 Act. Rule 12b-1 permits an investment company directly or indirectly to pay expenses associated with the distribution of its shares ("distribution expenses") in accordance with a plan adopted by the investment company's Board of Directors and approved by its shareholders. Pursuant to such rule, the Directors and shareholders of each class of shares of each Fund have adopted Distribution Plans hereinafter referred to as the "Class A Plan," the "Class B Plan" and the "Class II Plan." In adopting the Class A Plan, the Class B Plan and the Class II Plan, the Directors determined that there was a reasonable likelihood that each such Plan would benefit the Fund and the shareholders of the respective class. The sales charge and distribution fees of a particular class will not be used to subsidize the sale of shares of any other class. Under the Class A Plan, Class B Plan and Class II Plan, the Distributor receives payments from a Fund at an annual rate of up to 0.10%, 0.75% and 0.75%, respectively, of average daily net assets of such Fund's 40 Class to compensate the Distributor and certain securities firms for providing sales and promotional activities for distributing that class of shares. The distribution costs for which the Distributor may be reimbursed out of such distribution fees include fees paid to broker-dealers that have sold Fund shares, commissions, and other expenses such as those incurred for sales literature, prospectus printing and distribution and compensation to wholesalers. It is possible that in any given year the amount paid to the Distributor under each Class' Plan may exceed the Distributor's distribution costs as described above. Except for the three LifeStage Funds, the Distribution Plans also provide that each class of shares of each Fund may also pay the Distributor an account maintenance and service fee up to an annual rate of 0.25% of the aggregate average daily net assets of such class of shares for payments to broker-dealers for providing continuing account maintenance. Accordingly, for the year ended October 31, 2003, SACS received fees (see Statement of Operations) based upon the aforementioned rates. Prior to November 16, 2001, the Stock Index Fund, Science & Technology Fund, Aggressive Growth LifeStage Fund, Moderate Growth LifeStage Fund and Conservative Growth LifeStage Fund were subject to a different Distribution Agreement with American General Fund Distributor, Inc. ("AGFD"). Under this agreement, AGFD received fees from the Stock Index Fund and Science & Technology Fund at an annual rate of 0.35% for the Class A shares and 1.00% for Class B and II shares based on average daily net assets of each class. For the LifeStage Funds, AGFD received fees at an annual rate of 0.10% for the Class A shares and 0.75% for Class B and II shares based on average daily assets of each class. In addition, except for the LifeStage Funds, SACS is paid a fee of 0.25% of average daily net assets of Class I shares as compensation for providing additional shareholder services to Class I shareholders. SACS receives sales charges on the Fund's Class A and Class II shares, portions of which are paid to affiliated broker-dealers and non-affiliated broker-dealers. SACS also receives the proceeds of contingent deferred sales charges paid by investors in connection with certain redemptions of the Fund's Class A, Class B and Class II shares. SACS has advised the Funds that for the year ended October 31, 2003 the proceeds received from sales (and paid out to affiliated and non-affiliated broker-dealers) and redemptions are as follows:
CLASS A CLASS B ----------------------------------------------------------- ------------- CONTINGENT CONTINGENT SALES AFFILIATED NON-AFFILIATED DEFERRED DEFERRED CHARGES BROKER-DEALERS BROKER-DEALERS SALES CHARGES SALES CHARGES ---------- -------------- -------------- -------------- ------------- Biotech/Health Fund $ 52,737 $ 21,993 $ 23,883 $ 162 $ 64,361 Tax Managed Equity Fund 23,374 12,569 6,239 -- 109,910 Stock Index Fund 63,494 41,329 13,934 -- 64,667 Science & Technology Fund 22,069 9,095 9,559 -- 21,520 Aggressive Growth LifeStage Fund 11,354 9,028 862 -- 21,736 Moderate Growth LifeStage Fund 40,180 29,885 5,040 -- 15,215 Conservative Growth LifeStage Fund 30,464 18,775 6,825 -- 19,071
41
CLASS II -------------------------------------------------------- CONTINGENT SALES AFFILIATED NON-AFFILIATED DEFERRED CHARGES BROKER-DEALERS BROKER-DEALERS SALES CHARGES --------- -------------- -------------- ------------- Biotech/Health Fund $ 10,740 $ 5,174 $ 5,566 $ 3,195 Tax Managed Equity Fund 10,667 2,482 8,185 5,136 Stock Index Fund 6,671 2,638 4,033 1,200 Science & Technology Fund 1,911 1,177 734 222 Aggressive Growth LifeStage Fund 2,203 1,186 1,017 196 Moderate Growth LifeStage Fund 4,704 2,043 2,661 621 Conservative Growth LifeStage Fund 3,365 815 2,550 808
The LifeStage Funds do not invest in underlying SunAmerica Mutual Funds for the purpose of exercising management or control; however, investments by the LifeStage Funds within the set limits may represent a significant portion of an underlying SunAmerica Mutual Fund's net assets. At October 31, 2003, each LifeStage Fund held less than 10% of the outstanding shares of any underlying SunAmerica Mutual Fund. In addition, the LifeStage Funds, in the aggregate, held less than 16% of the outstanding shares of any underlying SunAmerica Mutual Funds. The Corporation, except for the LifeStage Funds, has entered into a Service Agreement with AIG SunAmerica Fund Services, Inc. ("SAFS"), an affiliate of SAAMCo. Under the Service Agreement, SAFS performs certain shareholder account functions by assisting the Funds' transfer agent in connection with the services that it offers to the shareholders of the Funds. The Service Agreement, which permits the Funds to compensate SAFS for services rendered based upon an annual rate of 0.22% of average daily net assets, is approved annually by the Directors. For the year ended October 31, 2003, the Funds incurred the following expenses which are included in transfer agent fees in the Statement of Operations to compensate SAFS pursuant to the terms of the Service Agreement.
PAYABLE AT EXPENSES OCTOBER 31, 2003 ------------------------------------------ ---------------------------------------- CLASS A CLASS B CLASS II CLASS I CLASS A CLASS B CLASS II CLASS I --------- --------- --------- ------- --------- -------- --------- -------- Biotech/Health Fund $ 36,248 $ 35,726 $ 25,146 $ -- $ 3,567 $ 3,395 $ 2,398 $ -- Tax Managed Equity Fund 33,043 50,687 50,824 -- 2,754 4,227 4,251 -- Stock Index Fund 21,368 44,854 6,237 -- 2,551 4,323 625 -- Science & Technology Fund 5,651 16,680 1,564 375 613 1,708 167 38
42 As of October 31, 2003, The Variable Annuity Life Insurance Company ("VALIC"), an indirect wholly owned subsidiary of AIG, held five percent or more of the outstanding shares of the indicated Funds' classes:
PERCENT OWNED ------- Stock Index Fund Class A 14% Science & Technology Fund Class A 5 Class I 100 Aggressive Growth LifeStage Fund Class A 34 Class B 9 Class I 30 Moderate Growth LifeStage Fund Class A 23 Class B 8 Class I 17 Conservative Growth LifeStage Fund Class A 21 Class B 16 Class I 50
In addition, SAAMCo owns 6% of the Class A outstanding shares of the Biotech/Health Fund. 43 NOTE 5. PURCHASES AND SALES OF INVESTMENT SECURITIES The aggregate cost of purchases and proceeds from sales and maturities of long-term investments during the year ended October 31, 2003 were as follows:
AGGRESSIVE MODERATE CONSERVATIVE SCIENCE & GROWTH GROWTH GROWTH BIOTECH/ TAX MANAGED STOCK INDEX TECHNOLOGY LIFESTAGE LIFESTAGE LIFESTAGE HEALTH FUND FUND FUND FUND FUND FUND FUND ------------- ------------- ------------ ------------ ------------ ------------ ------------- Purchases (excluding U.S. government securities) $ 76,922,282 $ 7,645,579 $ 6,014,456 $ 6,064,606 $ 6,072,344 $ 13,735,516 $ 9,830,391 Sales (excluding U.S. government securities) 91,438,016 23,964,812 359,279 4,662,373 5,099,599 9,324,453 9,031,471 Purchases of U.S. government securities) -- -- -- -- -- -- -- Sales of U.S. government securities -- -- -- -- -- -- --
NOTE 6. TRANSACTIONS WITH AFFILIATES As disclosed in the investment portfolios, certain Funds own securities issued by AIG or an affiliate thereof. For the year ended October 31, 2003, the Funds recorded realized gain (losses) and income on security transactions of AIG and subsidiaries of AIG as follows:
REALIZED SECURITY GAIN (LOSS) INCOME ----------------------- ------------- ---------- Tax Managed Fund AIG $ -- $ 2,385 Stock Index Fund AIG -- 1,942 Various SunAmerica Aggressive Growth LifeStage Fund Mutual Funds* (1,018,539) 43,975 Various SunAmerica Moderate Growth LifeStage Fund Mutual Funds* (1,312,954) 255,732 Various SunAmerica Conservative Growth LifeStage Fund Mutual Funds* (743,235) 287,035
---------- * See Portfolio of Investments for details. The following Funds incurred brokerage commissions with affiliated brokers which are affiliates of a sub-adviser:
AGGRESSIVE MODERATE CONSERVATIVE SCIENCE & GROWTH GROWTH GROWTH BIOTECH/ TAX MANAGED STOCK INDEX TECHNOLOGY LIFESTAGE LIFESTAGE LIFESTAGE HEALTH FUND FUND FUND FUND FUND FUND FUND ----------- ----------- ----------- ---------- ------------ --------- ------------ J.P. Morgan Securities, Inc. $ 25,062 -- -- $ 421 -- -- --
44 NOTE 7. FEDERAL INCOME TAXES The following details the tax basis distributions as well as the components of distributable earnings. As of October 31, 2003, the tax basis components of distributable earnings differ from the amounts reflected in the Statement of Assets and Liabilities by temporary book/tax differences primarily arising from wash sales and Fund mergers.
DISTRIBUTABLE EARNINGS TAX DISTRIBUTIONS ----------------------------------------------- ---------------------- FOR THE YEAR ENDED OCTOBER 31, 2003 ----------------------------------------------------------------------- LONG-TERM GAINS/ UNREALIZED LONG-TERM ORDINARY CAPITAL LOSS APPRECIATION ORDINARY CAPITAL INCOME CARRYOVER (DEPRECIATION) INCOME GAINS ---------- ----------------- -------------- --------- ---------- Biotech/Health Fund $ -- $ (36,097,343) $ 7,134,660 $ -- $ -- Tax Managed Equity Fund -- (30,923,844) (5,525,690) -- -- Stock Index Fund 162,334 (2,350,475) (5,324,834) 107,995 -- Science & Technology Fund -- (19,713,302) 666,302 -- -- Aggressive Growth LifeStage Fund -- (7,821,143) (838,628) 186,991 -- Moderate Growth LifeStage Fund 12,488 (4,513,456) (546,396) 367,985 -- Conservative Growth LifeStage Fund 108,161 (3,206,189) 277,237 394,994 -- TAX DISTRIBUTIONS ---------------------- FOR THE YEAR ENDED OCTOBER 31, 2002 ---------------------- LONG-TERM ORDINARY CAPITAL INCOME GAINS --------- ---------- Biotech/Health Fund $ -- $ -- Tax Managed Equity Fund -- -- Stock Index Fund 54,993 -- Science & Technology Fund -- -- Aggressive Growth LifeStage Fund 109,998 -- Moderate Growth LifeStage Fund 262,993 -- Conservative Growth LifeStage Fund 340,001 --
As of October 31, 2003, the following Funds have capital loss carryforwards which will be available to the extent provided in regulations and which will expire between 2007-2011. To the extent that these carryover losses are used to offset future capital gains, it is probable that the gains so offset will not be distributed to shareholders.
CAPITAL LOSS CAPITAL LOSS CARRYFORWARDS CARRYFORWARDS AMOUNT UTILIZED ------------- ------------- Biotech/Health Fund $ 36,097,343 $ -- Tax Managed Equity Fund 30,923,844 -- Stock Index Fund 2,350,475 151,901 Science & Technology Fund 19,713,302 -- Aggressive Growth LifeStage Fund 7,821,143 -- Moderate Growth LifeStage Fund 4,513,456 -- Conservative Growth LifeStage Fund 3,206,189 --
45 The amounts of aggregate unrealized gain (loss) and the cost of investment securities for federal tax purposes, including short-term securities and repurchase agreements as of October 31, 2003, were as follows:
AGGRESSIVE MODERATE CONSERVATIVE SCIENCE & GROWTH GROWTH GROWTH BIOTECH/ TAX MANAGED STOCK INDEX TECHNOLOGY LIFESTAGE LIFESTAGE LIFESTAGE HEALTH FUND FUND FUND FUND FUND FUND FUND ------------- -------------- ------------- ------------- ------------- ------------- ------------- Cost (tax basis) $ 41,474,536 $ 66,262,208 $ 46,232,041 $ 13,328,017 $ 25,350,911 $ 38,068,658 $ 21,475,390 ============= ============== ============= ============= ============= ============= ============= Appreciation $ 7,525,422 $ 5,756,287 $ 3,383,436 $ 2,565,569 $ 2,169,336 $ 3,446,593 $ 1,981,903 Depreciation (310,180) (11,281,977) (8,708,270) (1,899,269) (3,007,964) (3,992,989) (1,704,666) ------------- -------------- ------------- ------------- ------------- ------------- ------------- Net unrealized appreciation (depreciaiton) $ 7,215,242 $ (5,525,690) $ (5,324,834) $ 666,300 $ (838,628) $ (546,396) $ 277,237 ============= ============== ============= ============= ============= ============= =============
For the year ended October 31, 2003, the following reclassifications arising from book/tax differences were primarily the result of reclassifications due to net operating losses.
ACCUMULATED ACCUMULATED UNDISTRIBUTED UNDISTRIBUTED NET REALIZED NET INVESTMENT PAID IN GAIN (LOSS) INCOME (LOSS) CAPITAL ------------- -------------- ------------- Biotech/Health Fund $ -- $ 760,261 $ (760,261) Tax Managed Equity Fund -- 85,812 (85,812) Stock Index Fund 1,401 (814) (587) Science & Technology Fund 1,322 175,722 (177,044) Aggressive Growth LifeStage Fund -- 196,177 (196,177) Moderate Growth LifeStage Fund -- -- -- Conservative Growth LifeStage Fund -- -- --
NOTE 8. CAPITAL SHARE TRANSACTIONS Transactions in capital shares of each class of each Fund were as follows:
BIOTECH/HEALTH FUND -------------------------------------------------------------------------------------------------------- CLASS A CLASS B -------------------------------------------------------------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2003 OCTOBER 31, 2002 OCTOBER 31, 2003 OCTOBER 31, 2002 ---------------------- ------------------------- ------------------------ ------------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT -------- ------------ ---------- ------------ -------- ------------ ---------- ------------ Shares sold 456,700* $ 3,940,808* 646,970 $ 6,336,427 504,910 $ 4,524,190 572,460 $ 5,712,976 Reinvested dividends -- -- -- -- -- -- -- -- Shares redeemed (639,968) (5,253,782) (1,062,148) (9,526,931) (746,314)* (6,389,961)* (810,536) (7,339,560) -------- ------------ ---------- ------------ -------- ------------ ---------- ------------ Net increase (decrease (183,268) $ (1,312,974) (415,178) $ (3,190,504) (241,404) $ (1,865,771) (238,076) $ (1,626,584) ======== ============ ========== ============ ======== ============ ========== ============ BIOTECH/HEALTH FUND ------------------------------------------------- CLASS II ------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2003 OCTOBER 31, 2002 ---------------------- ------------------------- SHARES AMOUNT SHARES AMOUNT -------- ------------ ---------- ------------ Shares sold 211,434 $ 1,825,147 339,378 $ 3,284,100 Reinvested dividends -- -- -- -- Shares redeemed (551,787) (4,263,083) (838,133) (7,689,471) -------- ------------ ---------- ------------ Net increase (decrease) (340,353) $ (2,437,936) (498,755) $ (4,405,371) ======== ============ ========== ============
---------- * Includes automatic conversion of 21,973 shares of Class B shares in the amount of $178,278 to 21,668 shares of Class A shares in the amount of $178,278. 46
TAX MANAGED EQUITY FUND -------------------------------------------------------------------------------------------------------- CLASS A CLASS B -------------------------------------------------------------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2003 OCTOBER 31, 2002 OCTOBER 31, 2003 OCTOBER 31, 2002 ---------------------- ------------------------- ------------------------ ------------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT -------- ------------ ---------- ------------ -------- ------------ ---------- ------------ Shares sold 70,444* $ 672,205* 255,825 $ 2,796,384 74,626 $ 688,358 341,922 $ 3,766,020 Reinvested dividends -- -- -- -- -- -- -- -- Shares redeemed (494,385) (4,600,304) (1,016,375) (10,481,262) (768,187)* (6,967,422)* (1,167,526) (11,638,648) -------- ------------ ---------- ------------ -------- ------------ ---------- ------------ Net increase (decrease) (423,941) $ (3,928,099) (760,550) $ (7,684,878) (693,561) $ (6,279,064) (825,604) $ (7,872,628) ======== ============ ========== ============ ======== ============ ========== ============
TAX MANAGED EQUITY FUND ------------------------------------------------- CLASS II ------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2003 OCTOBER 31, 2002 ---------------------- ------------------------- SHARES AMOUNT SHARES AMOUNT -------- ------------ ---------- ------------ Shares sold 168,595 $ 1,555,227 319,412 $ 3,458,869 Reinvested dividends -- -- -- -- Shares redeemed (910,268) (8,270,207) (1,331,221) (13,791,589) -------- ------------ ---------- ------------ Net increase (decrease) (741,673) $ (6,714,980) (1,011,809) $(10,332,720) ======== ============ ========== ============
STOCK INDEX FUND -------------------------------------------------------------------------------------------------------- CLASS A CLASS B -------------------------------------------------------------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2003 OCTOBER 31, 2002 OCTOBER 31, 2003 OCTOBER 31, 2002 ---------------------- ------------------------ ------------------------ ------------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT -------- ----------- ---------- ------------ -------- ------------ ---------- ------------ Shares sold 754,900** $ 6,353,597** 260,515 $ 2,428,245 600,336 $ 4,988,580 632,857 $ 5,906,314 Reinvested dividends. 7,985 63,642 5,044 49,982 4,165 33,152 431 4,268 Shares redeemed (203,235) (1,664,744) (155,624) (1,356,697) (479,600)** (3,946,924)** (568,750) (5,278,347) -------- ----------- ---------- ------------ -------- ------------ ---------- ------------ Net increase (decrease) 559,650 $ 4,752,495 109,935 $ 1,121,530 124,901 $ 1,074,808 64,538 $ 632,235 ======== =========== ========== ============ ======== ============ ========== ============
STOCK INDEX FUND ------------------------------------------------- CLASS II+ ------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2003 OCTOBER 31, 2002 ---------------------- ------------------------ SHARES AMOUNT SHARES AMOUNT -------- ----------- ---------- ------------ Shares sold 135,321 $ 1,146,041 292,752 $ 2,643,459 Reinvested dividends 624 4,942 29 282 Shares redeemed (137,165) (1,096,609) (71,600) (632,305) -------- ----------- ---------- ------------ Net increase (decrease) (1,220) $ 54,374 221,181 $ 2,011,436 ======== =========== ========== ============
---------- + See Note 2 * Includes automatic conversion of 5,175 shares of Class B shares in the amount of $49,538 to 5,051 shares of Class A shares in the amount of $49,538. ** Includes automatic conversion of 1,482 shares of Class B shares in the amount of $11,323 to 1,473 shares of Class A shares in the amount of $11,323. 47
SCIENCE & TECHNOLOGY FUND ------------------------------------------------------------------------------------------------------ CLASS A CLASS B ------------------------------------------------------------------------------------------------------ FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2003 OCTOBER 31, 2002 OCTOBER 31, 2003 OCTOBER 31, 2002 --------------------- ------------------------- ------------------------ ----------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT -------- ----------- ---------- ------------ -------- ------------ -------- ------------ Shares sold 420,152* $ 1,077,871* 244,541 $ 726,756 656,744 $ 1,646,747 559,269 $ 1,607,887 Reinvested dividends -- -- -- -- -- -- -- -- Shares redeemed (284,531) (700,590) (134,448) (384,113) (600,670)* (1,494,299)* (541,541) (1,479,868) -------- ----------- ---------- ------------ -------- ------------ -------- ------------ Net increase (decrease) 135,621 $ 377,281 110,093 $ 342,643 56,074 $ 152,448 17,728 $ 128,019 ======== =========== ========== ============ ======== ============ ======== ============ SCIENCE & TECHNOLOGY FUND ------------------------------------------------- -------------------------------------------------- CLASS II+ CLASS I ------------------------------------------------- -------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2003 OCTOBER 31, 2002 OCTOBER 31, 2003 OCTOBER 31, 2002 --------------------- ------------------------- ------------------------ ----------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT -------- ----------- ---------- ------------ -------- ------------ -------- ------------ Shares sold 166,548 $ 416,513 63,024 $ 193,961 -- $ -- 33,747 $ 116,738 Reinvested dividends -- -- -- -- -- -- -- -- Shares redeemed (122,433) (298,834) (94,353) (248,758) -- -- (224,586) (790,279) -------- ----------- ---------- ------------ -------- ------------ -------- ------------ Net increase (decrease) 44,115 $ 117,679 (31,329) $ (54,797) -- $ -- (190,839) $ (673,541) ======== =========== ========== ============ ======== ============ ======== ============ AGGRESSIVE GROWTH LIFESTAGE FUND ------------------------------------------------- -------------------------------------------------- CLASS A CLASS B ------------------------------------------------- -------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2003 OCTOBER 31, 2002 OCTOBER 31, 2003 OCTOBER 31, 2002 --------------------- ------------------------- ------------------------ ----------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT -------- ----------- ---------- ------------ -------- ------------ -------- ------------ Shares sold 58,064**$ 393,023** 93,914 $ 714,141 173,395 $ 1,169,909 193,588 $ 1,476,309 Reinvested dividends 6,081 38,374 4,135 34,526 9,328 59,139 2,073 17,106 Shares redeemed (35,804) (241,650) (90,472) (703,615) (209,485)** (1,423,777)**(272,106) (2,014,498) -------- ----------- ---------- ------------ -------- ------------ -------- ------------ Net increase (decrease) 28,341 $ 189,747 7,577 $ 45,052 (26,762) $ (194,729) (76,445) $ (521,083) ======== =========== ========== ============ ======== ============ ======== ============ AGGRESSIVE GROWTH LIFESTAGE FUND ------------------------------------------------- -------------------------------------------------- CLASS II+ CLASS I ------------------------------------------------- -------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2003 OCTOBER 31, 2002 OCTOBER 31, 2003 OCTOBER 31, 2002 --------------------- ------------------------- ------------------------ ----------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT -------- ----------- ---------- ------------ -------- ------------ -------- ------------ Shares sold 36,095 $ 248,046 45,563 $ 380,095 358,945 $ 2,441,733 280,983 $ 2,138,818 Reinvested dividends 257 1,644 41 344 13,775 87,062 7,447 61,214 Shares redeemed (12,298) (83,537) (31,487) (275,989) (196,222) (1,365,993) (79,390) (587,171) -------- ----------- ---------- ------------ -------- ------------ -------- ------------ Net increase (decrease) 24,054 $ 166,153 14,117 $ 104,450 176,498 $ 1,162,802 209,040 $ 1,612,861 ======== =========== ========== ============ ======== ============ ======== ============
---------- + See Note 2 * Includes automatic conversion of 13,086 shares of Class B shares in the amount of $30,684 to 13,064 shares of Class A shares in the amount of $30,684. ** Includes automatic conversion of 1,270 shares of Class B shares in the amount of $8,229 to 1,273 shares of Class A shares in the amount of $8,229. 48
MODERATE GROWTH LIFESTAGE FUND --------------------------------------------------------------------------------------------------------- CLASS A CLASS B -------------------------------------------------- ----------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2003 OCTOBER 31, 2002 OCTOBER 31, 2003 OCTOBER 31, 2002 ------------------------ ---------------------- -------------------------- ---------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT --------- ----------- -------- ----------- --------- ------------ -------- ------------ Shares sold 232,971* $ 1,886,344* 121,248 $ 997,231 249,860 $ 1,994,140 261,161 $ 2,203,318 Reinvested dividends 7,877 58,996 5,608 50,695 13,846 104,263 8,440 76,638 Shares redeemed (66,147) (523,944) (79,893) (691,063) (235,930)* (1,859,332)* (206,329) (1,753,040) --------- ----------- -------- ----------- --------- ------------ -------- ------------ Net increase (decrease) 174,701 $ 1,421,396 46,963 $ 356,863 27,776 $ 239,071 63,272 $ 526,916 ========= =========== ======== =========== ========= ============ ======== ============ MODERATE GROWTH LIFESTAGE FUND --------------------------------------------------------------------------------------------------------- CLASS II+ CLASS I -------------------------------------------------- ----------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2003 OCTOBER 31, 2002 OCTOBER 31, 2003 OCTOBER 31, 2002 ------------------------ ---------------------- -------------------------- ---------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT --------- ----------- -------- ----------- --------- ------------ -------- ------------ Shares sold 94,697 $ 753,188 67,822 $ 582,164 635,848 $ 5,055,913 672,505 $ 5,764,807 Reinvested dividends 1,166 8,792 481 4,379 25,881 193,593 14,350 129,438 Shares redeemed (41,656) (328,159) (24,662) (206,397) (283,315) (2,293,000) (238,088) (2,026,639) --------- ----------- -------- ----------- --------- ------------ -------- ------------ Net increase (decrease) 54,207 $ 433,821 43,641 $ 380,146 378,414 $ 2,956,506 448,767 $ 3,867,606 ========= =========== ======== =========== ========= ============ ======== ============ CONSERVATION GROWTH LIFESTAGE FUND --------------------------------------------------------------------------------------------------------- CLASS A CLASS B -------------------------------------------------- ----------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2003 OCTOBER 31, 2002 OCTOBER 31, 2003 OCTOBER 31, 2002 ------------------------ ---------------------- -------------------------- ---------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT --------- ----------- -------- ----------- --------- ------------ -------- ------------ Shares sold 333,339** $ 2,967,854** 151,857 $ 1,331,153 154,401 $ 1,357,475 152,122 $ 1,346,548 Reinvested dividends 12,002 98,893 8,165 76,020 13,832 114,663 13,082 127,052 Shares redeemed (56,752) (493,137) (89,989) (808,598) (237,425)** (2,033,959)** (342,458) (3,097,024) --------- ----------- -------- ----------- --------- ------------ -------- ------------ Net increase (decrease) 288,589 $ 2,573,610 70,033 $ 598,575 (69,192) $ (561,821) (177,254) $ (1,623,424) ========= =========== ======== =========== ========= ============ ======== ============ CONSERVATION GROWTH LIFESTAGE FUND --------------------------------------------------------------------------------------------------------- CLASS II+ CLASS I -------------------------------------------------- ----------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2003 OCTOBER 31, 2002 OCTOBER 31, 2003 OCTOBER 31, 2002 ------------------------ ---------------------- -------------------------- ---------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT --------- ----------- -------- ----------- --------- ------------ -------- ------------ Shares sold 63,905 $ 548,541 94,644 $ 839,800 172,901 $ 1,506,225 175,836 $ 1,599,196 Reinvested dividends 2,663 22,160 950 8,928 18,285 150,668 13,749 128,001 Shares redeemed (33,713) (299,557) (19,358) (170,559) (270,955) (2,409,920) (61,696) (557,703) --------- ----------- -------- ----------- --------- ------------ -------- ------------ Net increase (decrease) 32,855 $ 271,144 76,236 $ 678,169 (79,769) $ (753,027) 127,889 $ 1,169,494 ========= =========== ======== =========== ========= ============ ======== ============
---------- + See Note 2 * Includes automatic conversion of 392 shares of Class B shares in the amount of $3,278 to 392 shares of Class A shares in the amount of $3,278. ** Includes automatic conversion of 3,000 shares of Class B shares in the amount of $26,706 to 3,008 shares of Class A shares in the amount of $26,706. 49 NOTE 9. EXPENSE REDUCTIONS Through expense offset arrangements, resulting from broker commission recapture, a portion of the Fund's expenses have been reduced. For the period ended October 31, 2003, the Science & Technology Fund received expense reductions in the amount of $2,354. NOTE 10. DIRECTORS' RETIREMENT PLAN The Directors of the SunAmerica Strategic Investment Series, Inc. have adopted the SunAmerica Disinterested Trustees' and Directors' Retirement Plan (the "Retirement Plan") effective January 1, 1993 for the unaffiliated Directors. The Retirement Plan provides generally that if an unaffiliated Director who has at least 10 years of consecutive service as a Disinterested Director of any of the SunAmerica mutual funds (an "Eligible Director") retires after reaching age 60 but before age 70, or who has at least 5 years of consecutive service after reaching age 65 but before age 70, or dies while a Director, such person will be eligible to receive a retirement or death benefit from each SunAmerica mutual fund with respect to which he or she is an Eligible Director. As of each birthday, prior to the 70th birthday, but in no event for a period greater than 10 years, each Eligible Director will be credited with an amount equal to 50% of his or her regular fees (excluding committee fees) for services as a Disinterested Director of each SunAmerica mutual fund for the calendar year in which such birthday occurs. In addition, an amount equal to 8.5% of any amounts credited under the preceding clause during prior years, is added to each Eligible Director's account until such Eligible Director reaches his or her 70th birthday. An Eligible Director may receive any benefits payable under the Retirement Plan, at his or her election, either in one lump sum or in up to fifteen annual installments. Any undistributed amounts shall continue to accrue interest at 8.5%.
RETIREMENT PLAN RETIREMENT PLAN LIABILITY EXPENSE --------------- --------------- AS OF OCTOBER 31, 2003 --------------------------------- Biotech/Health Fund $ 4,276 $ 1,647 Tax Managed Equity Fund 9,757 2,487 Stock Index Fund 1,589 1,095 Science & Technology Fund 595 369 Aggressive Growth Lifestage Fund 634 634 Moderate Growth Lifestage Fund 934 934 Conservative Growth Lifestage Fund 608 608
NOTE 11. COMMITMENTS AND CONTINGENCIES The SunAmerica Family of Mutual Funds has established a $75 million committed and $50 million uncommitted lines of credit with State Street Bank & Trust Co., the Funds' custodian. Interest is currently payable at the Federal Funds Rate plus 50 basis points on the committed line and State Street's discretionary bid rate on the uncommitted line of credit. There is also a commitment fee of 10 basis points per annum on the daily unused portion of the committed line of credit, which is included in interest expense of the statement of operations. Borrowings under the line of credit will commence when the respective Fund's cash shortfall exceeds $100,000. During the year ended October 31, 2003, none of the Funds participated in the lines of credit agreement. 50 The Funds, pursuant to exemptive relief granted by the Securities and Exchange Commission are permitted to participate in an interfund lending program among investment companies advised by SAAMCo or an affiliate. The interfund lending program allows the participating Funds to borrow money from and loan money to each other for temporary or emergency purposes. An interfund loan will be made under this facility only if the participating Funds receive a more favorable interest rate than would otherwise be available from a typical bank for a comparable transaction. For the year ended October 31, 2003 none of the Funds participated in this program. NOTE 12. OTHER INFORMATION On October 30, 2003, the Board of Directors approved the liquidation of the Stock Index Fund and Science & Technology Fund. The Board of Directors also approved the reorganizations of the Aggressive Growth LifeStage Fund into the SunAmerica Style Select Series, Inc. Focused Equity Strategy Portfolio and Moderate and Conservative Growth LifeStage Funds into the SunAmerica Style Select Series, Inc. Focused Balanced Strategy Portfolio. In addition, the Board of Directors approved the reorganization of the Biotech/Health Fund and Tax Managed Equity Fund into newly created portfolios of SunAmerica Equity Funds. 51 REPORT OF INDEPENDENT AUDITORS To the Board of Directors and Shareholders of SunAmerica Strategic Investment Series, Inc. In our opinion, the accompanying statements of assets and liabilities, including the portfolios of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of SunAmerica Biotech/Health Fund, Tax Managed Equity Fund, SunAmerica Stock Index Fund, SunAmerica Science & Technology Fund, SunAmerica Aggressive Growth LifeStage Fund, SunAmerica Moderate Growth LifeStage Fund and SunAmerica Conservative Growth LifeStage Fund (seven of the portfolios constituting SunAmerica Strategic Investment Series, Inc., hereafter referred to as the "Fund") at October 31, 2003, the results of each of their operations for the year then ended and the changes in each of their net assets and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2003 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP New York, New York December 17, 2003 52 DIRECTOR INFORMATION -- (UNAUDITED) The following table contains basic information regarding the Directors that oversee operations of the Funds and other investment companies within the fund complex.
NUMBER OF TERM OF FUNDS IN POSITION OFFICE AND FUND OTHER NAME, HELD WITH LENGTH OF COMPLEX DIRECTORSHIPS ADDRESS AND SUNAMERICA TIME PRINCIPAL OCCUPATIONS OVERSEEN BY HELD BY DATE OF BIRTH* COMPLEX SERVED(4) DURING PAST 5 YEARS DIRECTOR(1) DIRECTOR(2) ---------------------- ---------- ---------- --------------------------- ------------ --------------------------------- S. James Coppersmith Director 1999- Retired. 46 Director of BJ's Wholesale DOB: February 21, 1933 present Club, Inc.; Director, Boston Stock Exchange. Judith L. Craven Director 2001- Retired Administrator. 75 Director, A.G. Belo Corporation DOB: October 6, 1945 present (1992 to present); Director, Sysco Corporation (1996 to present); Director, Luby's Inc. (1998 to present). William F. Devin Director 2001- Retired. 75 Member of the Board of Governors, DOB: December 30, 1938 present Boston Stock Exchange (1985-Present). Samuel M. Eisenstat Chairman 1999- Attorney, solo practitioner. 47 Director, North European Oil DOB: March 7, 1940 of the present Royalty Trust. Board Stephen J. Gutman Director 1999- President and Director, 47 None DOB: May 10, 1943 present Beau Brummel-Soho LCC (menswear specialty retailing and other activities) (June 1988 to present). Peter A. Harbeck(3) Director 1999- President, CEO and Director, 84 None DOB: January 23, 1954 present SAAMCo (August 1995 to present). Director, SACS (August 1993 to present).
53
NUMBER OF TERM OF FUNDS IN POSITION OFFICE AND FUND OTHER NAME, HELD WITH LENGTH OF COMPLEX DIRECTORSHIPS ADDRESS AND SUNAMERICA TIME PRINCIPAL OCCUPATIONS OVERSEEN BY HELD BY DATE OF BIRTH* COMPLEX SERVED(4) DURING PAST 5 YEARS DIRECTOR(1) DIRECTOR(2) ---------------------- ---------- ---------- --------------------------- ------------ --------------------------------- Sebastiano Sterpa Director 1999- Founder and Chairman of the 37 Director, Real Estate Business DOB: July 18, 1929 present Board of the Sterpa Group Service and Countrywide (real estate investment Financial. and management) (1962 to present).
---------- * The business address for each Director is the Haborside Financial Center, 3200 Plaza 5, Jersey City, NJ 07311-4992. (1) The "Fund Complex" consists of all registered investment company portfolios for which SAAMCo serves as investment adviser or business manager. The "Fund Complex" includes the SunAmerica Money Market Funds (2 funds), SunAmerica Equity Funds (7 funds), SunAmerica Income Funds (6 funds), SunAmerica Style Select Series, Inc. (15 portfolios), SunAmerica Strategic Investment Series, Inc. (7 funds), Anchor Series Trust (9 portfolios), SunAmerica Senior Floating Rate Fund, Inc. (1 fund), SunAmerica Series Trust (32 portfolios), VALIC Company I (22 portfolios), VALIC Company II (15 funds) Anchor Pathway Funds (7 series) and Seasons Series Trust (19 portfolios). (2) Directorships of companies required to report to the Securities and Exchange Commission under the Securities Exchange Act of 1934 (i.e. "public companies") or other investment companies registered under the Investment Company Act of 1940. (3) Interested Director, as defined in the Investment Company Act of 1940. (4) Directors serve until their successors are duly elected and qualified, subject to the Board's retirement plan discussed in Note 10 of the financial statements. Additional information concerning the Directors is contained in the Statement of Additional Information and is available without charge by calling (800) 858-8850. 54 SHAREHOLDER TAX INFORMATION -- (UNAUDITED) Certain tax information regarding the SunAmerica Strategic Investment Series, Inc. is required to be provided to shareholders based upon each Fund's income and distributions for the taxable year ended October 31, 2003. The information and distributions reported herein may differ from the information and distributions taxable to the shareholders for the calendar year ending December 31, 2003. The information necessary to complete your income tax returns will be included with your Form 1099-DIV which will be sent to you under separate cover in January 2004. During the year ended October 31, 2003 the Funds paid the following dividends:
NET LONG-TERM CAPITAL GAINS ------------- Biotech/Health Fund -- Tax Managed Equity Fund -- Stock Index Fund -- Science & Technology Fund -- Aggressive Growth LifeStage Fund -- Moderate Growth LifeStage Fund -- Conservative Growth LifeStage Fund --
For the year ended October 31, 2003, 100% of the dividends paid from ordinary income by Stock Index Fund, Aggressive Growth LifeStage Fund, Moderate Growth LifeStage Fund and Conservative Growth LifeStage Fund, qualified for the 70% dividends received deduction for corporations. 55 [AIG SUN AMERICA MUTUAL FUNDS LOGO] AIG SUNAMERICA ASSET MANAGEMENT CORP. HARBORSIDE FINANCIAL CENTER 3200 PLAZA 5 JERSEY CITY, NJ 07311-4992 DIRECTORS/TRUSTEES S. JAMES COPPERSMITH JUDITH L. CRAVEN WILLIAM F. DEVIN SAMUEL M. EISENSTAT STEPHEN J. GUTMAN PETER A. HARBECK SEBASTIANO STERPA OFFICERS ROBERT M. ZAKEM, PRESIDENT AND SECRETARY DONNA M. HANDEL, TREASURER BRIAN P. CLIFFORD, VICE PRESIDENT J. STEVEN NEAMTZ, VICE PRESIDENT STEVEN SCHOEPKE, VICE PRESIDENT ABBE P. STEIN, VICE PRESIDENT AND ASSISTANT SECRETARY JOSEPH P. KELLY, ASSISTANT SECRETARY THOMAS LYNCH, ASSISTANT SECRETARY STACEY V. MORRISON, ASSISTANT SECRETARY LAURA E. FILIPPONE, ASSISTANT TREASURER GREGORY R. KINGSTON, VICE PRESIDENT AND ASSISTANT TREASURER ROBERT CHOPYAK, ASSISTANT TREASURER INVESTMENT ADVISER AIG SUNAMERICA ASSET MANAGEMENT CORP. HARBORSIDE FINANCIAL CENTER 3200 PLAZA 5 JERSEY CITY, NJ 07311-4992 DISTRIBUTOR AIG SUNAMERICA CAPITAL SERVICES, INC. HARBORSIDE FINANCIAL CENTER 3200 PLAZA 5 JERSEY CITY, NJ 07311-4992 SHAREHOLDER SERVICING AGENT AIG SUNAMERICA FUND SERVICES, INC. HARBORSIDE FINANCIAL CENTER 3200 PLAZA 5 JERSEY CITY, NJ 07311-4992 CUSTODIAN AND TRANSFER AGENT STATE STREET BANK AND TRUST COMPANY P.O. BOX 219373 KANSAS CITY, MO 64121 This report is submitted solely for the general information of shareholders of the Fund. Distribution of this report to persons other than shareholders of the Fund is authorized only in connection with a currently effective prospectus, setting forth details of the Fund, which must precede or accompany this report. Distributed by: AIG SunAmerica Capital Services, Inc. SISAN-10/03 Item 2. Code of Ethics. The SunAmerica Strategic Investment Series, Inc. has adopted a Code of Ethics applicable to its Principal Executive and Principal Accounting Officers pursuant to Section 406 of the Sarbanes-Oxley Act of 2002. Item 3. Audit Committee Financial Expert. Currently, the SunAmerica Strategic Investment Series, Inc. does not have an Audit Committee member who possesses all of the attributes required to be an "audit committee financial expert" as defined in instruction 2(b)of Item 3 of Form N-CSR. However, the Board of Directors believes that each member of the Audit Committee has substantial experience relating to the review of financial statements and the operations of audit committees. Accordingly, the Board believes that the members are qualified to evaluate the Fund's financial statements, supervise the Fund's preparation of its financial statements, and oversee the work of the Fund's independent auditors. The Board of Directors is currently seeking an individual who will qualify as an audit committee financial expert. Item 4. Principal Accountant Fees and Services. Not applicable Item 5. Audit Committee of Listed Registrants. Not applicable Item 6. Reserved. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable Item 8. Reserved. Item 9. Controls and Procedures. (a) An evaluation was performed within 90 days of the filing of this report, under the supervision and with the participation of the registrant's management, including the President and Treasurer, of the effectiveness of the design and operation of the registrant's disclosure controls and procedures. Based on that evaluation, the registrant's management, including the President and Treasurer, concluded that the registrant's disclosure controls and procedures are effective. (b) There was no change in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the Registrant's second fiscal half-year that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting. However, a situation was discovered at the registrant's transfer agent which circumvented internal controls related to abandoned property procedures. The registrant has worked with the transfer agent to develop corrective actions to enhance the internal controls. Item 10. Exhibits. (a) (1) Code of Ethics applicable to its Principal Executive and Principal Accounting Officers pursuant to Section 406 of the Sarbanes-Oxley Act of 2002 attached hereto as Exhibit 99.406.Code of Ethics. (b) (1) Certification pursuant to Rule 30a-2 under the Investment Company Act of 1940 (17 CFR 270.30a-2) attached hereto as Exhibit 99.CERT. (2) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SunAmerica Strategic Investment Series, Inc. By: /s/ Robert M. Zakem Robert M. Zakem President Date: January 8, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Robert M. Zakem Robert M. Zakem President Date: January 8, 2004 By: /s/ Donna M. Handel Donna M. Handel Treasurer Date: January 8, 2004