-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BgzKeKa58HF6MY+GzJYnK8bcmMFXuu5g98qRYdXhXPCfmpqj5+iQWpbQ2yXypRAN 5udIxW9zNbMUELfE1ItdCw== 0001193125-06-051114.txt : 20060310 0001193125-06-051114.hdr.sgml : 20060310 20060310163842 ACCESSION NUMBER: 0001193125-06-051114 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20051231 FILED AS OF DATE: 20060310 DATE AS OF CHANGE: 20060310 EFFECTIVENESS DATE: 20060310 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUNAMERICA MONEY MARKET FUNDS INC CENTRAL INDEX KEY: 0000724129 IRS NUMBER: 133234943 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-03807 FILM NUMBER: 06679808 BUSINESS ADDRESS: STREET 1: 733 THIRD AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2125515189 MAIL ADDRESS: STREET 1: 733 THIRD AVENUE STREET 2: THIRD FLOOR CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: SUNAMERICA MONEY MARKET SECURITIES INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: INTEGRATED MONEY MARKET SECURITIES INC DATE OF NAME CHANGE: 19900302 0000724129 S000007637 Money Market C000020840 Class A C000020841 Class B C000020842 Class C C000020843 Class I 0000724129 S000007638 Municipal Money Market C000020844 Class A C000020845 Class B C000020846 Class C N-CSR 1 dncsr.txt SUNAMERICA MONEY MARKET FUNDS, INC. 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 811-3807 --------------------------------------------- SunAmerica Money Market Funds, 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) Vincent M. Marra Senior Vice President & Chief Operating Officer 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) 324-6464 ----------------------------- Date of fiscal year end: December 31 -------------------------- Date of reporting period: December 31, 2005 ------------------------- Item 1. Reports to Stockholders SunAmerica Money Market Funds, Inc., Annual Report at December 31, 2005. 2005 Annual SunAmerica Report - -------------------------
[PHOTO] [GRAPHIC] Money Market Funds December 31, 2005 ANNUAL REPORT SUNAMERICA MONEY MARKET FUNDS SunAmerica Money Market Fund (SMAXX) SunAmerica Municipal Money Market Fund (NMAXX) Table of Contents PRESIDENT'S LETTER..................................... 1 MONEY MARKET FUNDS REVIEW.............................. 2 EXPENSE EXAMPLE........................................ 4 STATEMENT OF ASSETS AND LIABILITIES.................... 6 STATEMENT OF OPERATIONS................................ 7 STATEMENT OF CHANGES IN NET ASSETS..................... 8 FINANCIAL HIGHLIGHTS................................... 9 PORTFOLIO OF INVESTMENTS............................... 11 NOTES TO FINANCIAL STATEMENTS.......................... 17 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 24 APPROVAL OF ADVISORY AGREEMENTS........................ 25 DIRECTORS AND OFFICERS INFORMATION..................... 29 SHAREHOLDER TAX INFORMATION............................ 31 December 31, 2005 ANNUAL REPORT President's Letter Dear Shareholder, We are pleased to present you with the annual report for the SunAmerica Money Market Fund and the SunAmerica Municipal Money Market Fund. The year 2005 was one of conflicting events. The economy exhibited solid growth, and corporate earnings growth exceeded expectations. However, this occurred in the face of high energy prices, economic disruption caused in part by the hurricanes last Fall and a Federal Reserve that continued to raise interest rates. The Federal Funds rate was increased by two percentage points during the year to reach its current level of 4.25%. Yet in the face of rising short-term rates, 10-year Treasury rates remained relatively stable leading to a flat yield curve, and a curve, which, at the end of the year, briefly inverted. Historically, an inverted curve has been a forbearer of recession, yet there is great debate about whether the U.S. is headed down that road. In response to the annual period's challenges, both the SunAmerica Money Market Fund and the SunAmerica Municipal Money Market Fund have actively managed the weighted average maturity of securities held in these funds. As always, the goal has been to capture higher yield when available while maintaining their chief objective of principal preservation. We thank you for your continued investment in our funds. Sincerely, /s/ Peter A. Harbeck Peter A. Harbeck, President and CEO AIG SunAmerica Asset Management Corp. - -------- Past performance is no guarantee of future results. 1 SunAmerica Municipal Money Market Fund FUND REVIEW -- (unaudited) Brian Wiese, Portfolio Manager AIG SunAmerica Asset Management Corp. The SunAmerica Money Market Fund, Class A returned 2.38% for the annual period ending December 31, 2005. The Federal Open Market Committee raised short-term interest rates by 25 basis points at each meeting this past year. The last 25 basis point increase came in December, the thirteenth consecutive increase since the Federal Reserve began raising rates from their all time low. This brought the target rate to 4.25%. Throughout the period, policy makers noted that longer-term inflation expectations remained well contained and described monetary policy as accommodating. At the December meeting, officials stated that a further measured increase in the Federal Funds rate is likely. Market conditions affected the Fund's performance during the period. Yields on Money Market securities increased steadily throughout the period with one-month CDs yielding approximately 4.40% at year-end, up by more than 200 basis points from the beginning of the year. In order to capture the rise in yields, value was added through active management of the Fund's duration, specifically by purchasing short-dated, fixed rate instruments as well as floating rate notes. Given the outlook for continued increases in the Federal Funds rate, we continued to emphasize short, fixed rate and floating rate securities while selectively purchasing longer-dated securities when relative value opportunities were discovered. - -------- An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. Past performance is no guarantee of future results. 2 SunAmerica Municipal Money Market Fund FUND REVIEW -- (unaudited) (continued) Hutch Bryan, Portfolio Manager AIG Global Investment Group The SunAmerica Municipal Money Market Fund, Class A returned 1.62% for the period ending December 31, 2005. Market conditions affected the SunAmerica Municipal Money Market Fund during the period. Municipal money market funds operate in a cyclical environment, oscillating back and forth between large reinvestment periods which fuel demand that drive yields lower (January, June, July, August) and periods where divestment increases supply to cause a rise in yields (mid-April to mid-May, September, and December). This relatively normal pattern occurred in 2005, but was set against the backdrop of an overall rise in yields as the Federal Open Market Committee (FOMC) raised the Federal Funds target rate from 2.25% to 4.25% over the course of eight meetings. A defensive posture in a rising rate environment would be to remain invested at a relatively short weighted average maturity, but in periods of peak demand this strategy forgoes extra yield afforded by extension into longer maturities. Performance is the result of proper execution of the balancing act between selective extension and defensive posture which was successful for the Fund in the first and second quarters as a declining weighted average maturity and steady reliance on variable-rate securities coincided with an overall rise in the Bond Market Association (BMA) Index* (proxy of weekly reset rate for municipal variable-rate demand notes) through the end of tax season. However, a shorter weighted average maturity to start the third quarter suffered as the BMA Index declined precipitously on reinvestment pressures and was not easily rectified as note supply was limited until August and September. By the beginning of the fourth quarter the weighted average maturity of the Fund was increased to take advantage of yield opportunities. In past years, opportunistic investments were made in securities deemed both liquid and creditworthy but undervalued by the market (California Revenue Anticipation Warrants in 2004). This year in contrast, afforded little opportunity as municipalities continued to rebound in credit quality and note issuance declined. A pickup of par amount of $4 million North Carolina Infrastructure bonds in July with a maturity of October 1st was at a wider yield than available in the market at the time but had a relatively limited effect as the maturity was less than three months away. Overall, the Fund invested in sizable new-issue fixed-coupon note loans like Texas Tax and Revenue Anticipation Notes, California Revenue Anticipation Notes, and Illinois State General Obligation Notes and benefits from the continuous market interest in these large and liquid issues. - -------- *The Bond Market Association Municipal Swap (BMA) Index, produced by Municipal Market Data (MMD), is a 7-day high-grade market index comprised of tax-exempt variable rate demand obligations (VRDOs) from MMD's extensive database. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. Past performance is no guarantee of future results. 3 SunAmerica Money Market Funds EXPENSE EXAMPLE -- December 31, 2005 -- (unaudited) Disclosure of Portfolio Expenses in Shareholder Reports As a shareholder of a Fund in the SunAmerica Money Market Funds, Inc. (the "Corporation"), you may incur two types of costs: (1) transaction costs, including sales charges on purchases and contingent deferred sales charges and (2) ongoing costs, including management fees, distribution and service fees, and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at July 1, 2005 and held until December 31, 2005. Actual Expenses The "Actual" section of the table provides information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the column under the heading entitled "Expenses Paid During the Six Months Ended December 31, 2005" to estimate the expenses you paid on your account during this period. For shareholder accounts in classes other than Class I, the "Expenses Paid During the Six Months Ended December 31, 2005" column does not include small account fees that may be charged if your account balance is below $500 ($250 for retirement plan accounts). In addition, the "Expenses Paid During the Six Months Ended December 31, 2005" column does not include administrative fees that may apply to qualified retirement plan accounts. See the Funds' prospectus and/or your retirement plan document for full description of these fees. Had these fees been included, the "Expenses Paid During the Six Months Ended December 31, 2005" column would have been higher and the "Ending Account Value" column would have been lower. Hypothetical Example for Comparison Purposes The "Hypothetical" section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolios of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. For shareholder accounts in classes other than Class I, the "Expenses Paid During the Six Months Ended December 31, 2005" column does not include small account fees that may be charged if your account balance is below $500 ($250 for retirement plan accounts). In addition, the "Expenses Paid During the Six Months Ended December 31, 2005" column does not include administrative fees that may apply to qualified retirement plan accounts. See the Fund's prospectus and/or your retirement plan document for full description of these fees. Had these fees been included, the "Expenses Paid During the Six Months Ended December 31, 2005" column would have been higher and the "Ending Account Value" column would have been lower. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, including sales charges on purchase payments, contingent deferred sales charges, small account fees and administrative fees, if applicable to your account. Please refer to your Prospectus and/or your qualified retirement plan document for more information. Therefore, the "Hypothetical" example is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs and other fees were included, your costs would have been higher. 4 SunAmerica Money Market Funds EXPENSE EXAMPLE -- December 31, 2005 -- (unaudited) (continued)
Actual Hypothetical --------------------------------------------------- --------------------------------------------------- Ending Ending Account Account Value Expenses Paid Value using Expenses Paid Beginning Using Actual During the Beginning a Hypothetical 5% During the Account Value Return at Six Months Ended Account Value Assumed Return at Six Months Ended at July 1, 2005 December 31, 2005 December 31, 2005 at July 1, 2005 December 31, 2005 December 31, 2005 --------------- ----------------- ----------------- --------------- ----------------- ----------------- Money Market Fund Class A....... $1,000.00 $1,014.61 $4.47 $1,000.00 $1,020.77 $4.48 Class B....... $1,000.00 $1,010.45 $8.67 $1,000.00 $1,016.59 $8.69 Class C ...... $1,000.00 $1,010.46 $8.61 $1,000.00 $1,016.64 $8.64 Class I #..... $1,000.00 $1,015.05 $4.06 $1,000.00 $1,021.17 $4.08 Municipal Money Market Fund Class A #..... $1,000.00 $1,009.15 $4.20 $1,000.00 $1,021.02 $4.23 Class B #..... $1,000.00 $1,005.13 $8.24 $1,000.00 $1,016.99 $8.29 Class C #..... $1,000.00 $1,005.13 $8.24 $1,000.00 $1,016.99 $8.29
Expense Ratio as of December 31, 2005* ------------ Money Market Fund Class A....... 0.88% Class B....... 1.71% Class C ...... 1.70% Class I #..... 0.80% Municipal Money Market Fund Class A #..... 0.83% Class B #..... 1.63% Class C #..... 1.63%
- -------- * Expenses are equal to the Fund's annualized expense ratio multiplied by the average account value over the period, multiplied by 184 days divided by 365 days. These ratios do not reflect transaction costs, including sales charges on purchase payments, contingent deferred sales charges, small account fees and administrative fees, if applicable to your account. Please refer to your Prospectus and/or your qualified retirement plan document for more information. # During the stated period, the investment adviser and distributor either waived a portion of or all of the fees and assumed a portion of or all expenses for the Funds. As a result, if these fees and expenses had not been waived, the "Actual/Hypothetical Ending Account Value" would have been lower and the "Actual/Hypothetical Expenses Paid During the Six Months Ended December 31, 2005" and the "Expense Ratios" would have been higher. 5 SunAmerica Money Market Funds STATEMENT OF ASSETS AND LIABILITIES -- December 31, 2005
Money Market Municipal Money Fund Market Fund -------------- --------------- ASSETS: Short-term investment securities, at value* (unaffiliated)........ $1,592,736,684 $ 88,386,194 Repurchase agreements (cost equals market value).................. 39,796,000 -- -------------- --------------- Total Investments............................................... $1,632,532,684 $ 88,386,194 -------------- --------------- Cash.............................................................. 608 -- Receivable for: Fund shares sold................................................ 16,837,814 2,644,731 Dividends and interest.......................................... 3,399,130 369,012 Prepaid expenses and other assets................................. 14,917 687 Due from investment adviser for expense reimbursements/fee waivers 1,487 6,238 -------------- --------------- Total Assets...................................................... 1,652,786,640 91,406,862 -------------- --------------- LIABILITIES: Payable for: Fund shares redeemed............................................ 4,435,067 4,382,581 Investment advisory and management fees......................... 652,499 25,517 Distribution and service maintenance fees....................... 242,524 12,376 Transfer agent fees and expenses................................ 343,896 18,111 Directors' fees and expenses.................................... 241,216 6,618 Other accrued expenses.......................................... 286,390 61,353 -------------- --------------- Total Liabilities................................................. 6,201,592 4,506,556 -------------- --------------- Net Assets..................................................... $1,646,585,048 $ 86,900,306 ============== =============== NET ASSETS REPRESENTED BY: Common stock, $.001 par value (10 billion shares authorized)...... $ 1,646,592 $ 86,900 Paid-in capital................................................... 1,644,850,741 86,812,826 -------------- --------------- 1,646,497,333 86,899,726 Accumulated undistributed net investment income (loss)............ 87,715 580 -------------- --------------- Net Assets........................................................ $1,646,585,048 $ 86,900,306 ============== =============== Class A: Net assets........................................................ $1,587,641,097 $ 84,816,823 Shares outstanding................................................ 1,587,644,411 84,816,117 Net asset value, offering and redemption price per share (excluding any applicable contingent deferred sales charge)...... $ 1.00 $ 1.00 ============== =============== Class B: Net assets........................................................ $ 31,738,378 $ 520,098 Shares outstanding................................................ 31,739,086 520,038 Net asset value, offering and redemption price per share (excluding any applicable contingent deferred sales charge)...... $ 1.00 $ 1.00 ============== =============== Class C: Net assets........................................................ $ 13,497,197 $ 1,563,385 Shares outstanding................................................ 13,498,169 1,563,397 Net asset value, offering and redemption price per share (excluding any applicable contingent deferred sales charge)...... $ 1.00 $ 1.00 ============== =============== Class I: Net assets........................................................ $ 13,708,376 $ -- Shares outstanding................................................ 13,710,641 -- Net asset value, offering and redemption price per share.......... $ 1.00 $ -- ============== =============== *Amortized cost of short-term investment securities (unaffiliated) $1,592,736,684 $ 88,386,194 ============== ===============
See Notes to Financial Statements 6 SunAmerica Money Market Funds STATEMENT OF OPERATIONS -- For the year ended December 31, 2005
Money Market Municipal Money Fund Market Fund ------------ --------------- INVESTMENT INCOME: Interest (unaffiliated)................................................................ $55,089,983 $2,176,795 Dividends (unaffiliated)............................................................... -- 2,112 ----------- ---------- Total investment income............................................................. 55,089,983 2,178,907 ----------- ---------- EXPENSES: Investment advisory and management fees................................................ 7,838,935 318,004 Distribution and service maintenance fees: Class A.............................................................................. 2,443,361 133,957 Class B.............................................................................. 328,707 4,646 Class C.............................................................................. 171,640 9,337 Transfer agent fees and expenses: Class A.............................................................................. 3,658,734 198,950 Class B.............................................................................. 107,218 1,811 Class C.............................................................................. 49,683 2,282 Class I.............................................................................. 33,917 -- Registration fees: Class A.............................................................................. 34,644 17,837 Class B.............................................................................. 11,830 6,967 Class C.............................................................................. 7,373 4,978 Class I.............................................................................. 9,015 -- Custodian and accounting fees.......................................................... 300,655 44,451 Reports to shareholders................................................................ 369,517 8,631 Audit and tax fees..................................................................... 43,952 43,947 Legal fees ............................................................................ 29,538 3,913 Directors' fees and expenses........................................................... 101,947 5,549 Other expenses......................................................................... 53,771 7,032 ----------- ---------- Total expenses before fee waivers, expense reimbursements and custody credits....... 15,594,437 812,292 Fees waived and expenses reimbursed by investment adviser and distributor (Note 3).. (6,936) (46,389) Custody credits earned on cash balances............................................. (3,359) (15,603) ----------- ---------- Net expenses........................................................................ 15,584,142 750,300 ----------- ---------- Net investment income (loss)........................................................... 39,505,841 1,428,607 ----------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ $39,505,841 $1,428,607 =========== ==========
- -------- See Notes to Financial Statements 7 SunAmerica Money Market Funds STATEMENT OF CHANGES IN NET ASSETS
Money Market Fund -------------------------------- For the year For the year ended ended December 31, December 31, 2005 2004 --------------- --------------- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss).......................................................... $ 39,505,841 $ 8,165,643 --------------- --------------- Net increase (decrease) in net assets resulting from operations......................... $ 39,505,841 $ 8,165,643 Distributions to shareholders from: Net investment income (Class A)....................................................... (38,360,984) (8,054,333) Net investment income (Class B)....................................................... (535,077) (30,639) Net investment income (Class C)+...................................................... (303,588) (14,024) Net investment income (Class I)....................................................... (317,343) (66,647) --------------- --------------- Total distributions to shareholders..................................................... (39,516,992) (8,165,643) --------------- --------------- Net increase (decrease) in net assets resulting from capital share transactions (Note 5) (55,074,247) (17,388,052) --------------- --------------- Total increase (decrease) in net assets................................................. (55,085,398) (17,388,052) =============== =============== Net Assets: Beginning of period..................................................................... 1,701,670,446 1,719,058,498 --------------- --------------- End of period*.......................................................................... $ 1,646,585,048 $ 1,701,670,446 =============== =============== *Includes accumulated undistributed net investment income (loss)........................ $ 87,715 $ 98,866 =============== ===============
Municipal Money Market Fund -------------------------------- For the year For the year ended ended December 31, December 31, 2005 2004 --------------- --------------- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss).......................................................... $ 1,428,607 $ 366,908 --------------- --------------- Net increase (decrease) in net assets resulting from operations......................... $ 1,428,607 $ 366,908 Distributions to shareholders from: Net investment income (Class A)....................................................... (1,413,877) (364,223) Net investment income (Class B)....................................................... (4,110) (2,471) Net investment income (Class C)+...................................................... (10,621) (214) Net investment income (Class I)....................................................... -- -- --------------- --------------- Total distributions to shareholders..................................................... (1,428,608) (366,908) --------------- --------------- Net increase (decrease) in net assets resulting from capital share transactions (Note 5) (11,193,701) (19,134,111) --------------- --------------- Total increase (decrease) in net assets................................................. (11,193,702) (19,134,111) =============== =============== Net Assets: Beginning of period..................................................................... 98,094,008 117,228,119 --------------- --------------- End of period*.......................................................................... $ 86,900,306 $ 98,094,008 =============== =============== *Includes accumulated undistributed net investment income (loss)........................ $ 580 $ 581 =============== ===============
- -------- + Effective February 23, 2004, Class II shares were redesignated to Class C shares See Notes to Financial Statements 8 SunAmerica Money Market Funds FINANCIAL HIGHLIGHTS
MONEY MARKET FUND ----------------- Ratio Net Net of net Asset Dividends Asset Net Assets Ratio of investment Value Net from net Value end of expenses income to beginning investment investment end of Total period to average average Period Ended of period income(1) income period Return(2) (000's) net assets net assets - -------------------- --------- ---------- ---------- ------ --------- ---------- ---------- ---------- Class A - - 12/31/01 $1.000 $0.034 $(0.034) $1.000 3.45% $1,087,329 0.93% 4.04% 12/31/02 1.000 0.010 (0.010) 1.000 1.04(6) 1,751,812 0.90 0.99 12/31/03 1.000 0.003 (0.003) 1.000 0.32 1,644,603 0.88 0.32 12/31/04 1.000 0.005 (0.005) 1.000 0.50 1,630,353 0.90 0.49 12/31/05 1.000 0.024 (0.024) 1.000 2.38 1,587,641 0.89 2.35 Class B - - 12/31/01 $1.000 $0.025 $(0.025) $1.000 2.57% $ 55,066 1.75% 3.76% 12/31/02 1.000 0.003 (0.003) 1.000 0.28(6) 64,815 1.64(4) 0.26(4) 12/31/03 1.000 0.000 0.000 1.000 0.03 44,529 1.18(4) 0.03(4) 12/31/04 1.000 0.001 (0.001) 1.000 0.07 42,437 1.32(4) 0.06(4) 12/31/05 1.000 0.015 (0.015) 1.000 1.52 31,738 1.74 1.46 Class C+ - - 12/31/01 $1.000 $0.026 $(0.026) $1.000 2.63% $ 33,644 1.69%(4) 3.51%(4) 12/31/02 1.000 0.003 (0.003) 1.000 0.27(6) 30,285 1.66(4) 0.26(4) 12/31/03 1.000 0.000 0.000 1.000 0.03 20,290 1.18(4) 0.03(4) 12/31/04 1.000 0.001 (0.001) 1.000 0.07 16,985 1.33(4) 0.06(4) 12/31/05 1.000 0.015 (0.015) 1.000 1.54 13,497 1.71 1.59 Class I - - 11/16/01-12/31/01(3) $1.000 $0.002 $(0.002) $1.000 0.20% $ 8,336 0.80%(4)(5) 0.84%(4)(5) 12/31/02 1.000 0.011 (0.011) 1.000 1.13(6) 9,195 0.80(4) 1.12(4) 12/31/03 1.000 0.004 (0.004) 1.000 0.43 9,636 0.77(4) 0.43(4) 12/31/04 1.000 0.006 (0.006) 1.000 0.58 11,895 0.80(4) 0.59(4) 12/31/05 1.000 0.025 (0.025) 1.000 2.49 13,708 0.80(4) 2.49(4)
- -------- (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 sales of respective class of shares. (4)Net of the following expense reimbursements/waivers (based on average net assets):
12/31/01 12/31/02 12/31/03 12/31/04 12/31/05 -------- -------- -------- -------- -------- Class B. -- % 0.04% 0.51% 0.39% -- % Class C+ 0.05 0.04 0.53 0.39 -- Class I. 0.24 0.14 0.02 0.09 0.05
(5)Annualized (6)The total return for each class was increased by less than 0.01% from gains realized on the disposal of investments in violation of investment restrictions. + Effective February 23, 2004, Class II shares were redesignated as Class C shares. See Notes to Financial Statements 9 SunAmerica Money Market Funds FINANCIAL HIGHLIGHTS -- (continued)
MUNICIPAL MONEY MARKET FUND --------------------------- Net Net Net Ratio of net Asset Dividends Asset Assets Ratio of investment Value Net from net Value end of expenses income to beginning investment investment end of Total period to average average Period Ended of period income(1) income period Return(2) (000's) net assets(4) net assets(4) - -------------------- --------- ---------- ---------- ------ --------- -------- ------------- ------------- Class A - - 10/31/01(5) $1.000 $0.020 $(0.020) $1.000 2.39% $ 3,972 0.78% 2.39% 11/01/01-12/31/01(5) 1.000 0.013 (0.013) 1.000 2.05 3,829 0.62(3) 1.71(3) 12/31/02 1.000 0.009 (0.009) 1.000 0.92 88,050 0.78 0.71 12/31/03 1.000 0.003 (0.003) 1.000 0.28 113,802 0.81 0.28 12/31/04 1.000 0.004 (0.004) 1.000 0.36 97,374 0.87 0.35 12/31/05 1.000 0.016 (0.016) 1.000 1.62 84,817 0.81 1.58 Class B - - 10/31/01(5) $1.000 $0.020 $(0.020) $1.000 2.39% $ 2,613 0.78% 2.38% 11/01/01-12/31/01(5) 1.000 0.008 (0.008) 1.000 1.97 2,618 1.13(3) 1.27(3) 12/31/02 1.000 0.002 (0.002) 1.000 0.24 3,714 1.39 0.16 12/31/03 1.000 0.001 (0.001) 1.000 0.10 3,168 0.98 0.11 12/31/04 1.000 0.001 (0.001) 1.000 0.10 497 1.02 0.10 12/31/05 1.000 0.008 (0.008) 1.000 0.81 520 1.62 0.80 Class C+ - - 10/31/01(5) $1.000 $0.020 $(0.020) $1.000 2.40% $ 136 0.78% 2.33% 11/01/01-12/31/01(5) 1.000 0.008 (0.008) 1.000 1.97 195 1.15(3) 1.14(3) 12/31/02 1.000 0.002 (0.002) 1.000 0.24 170 1.39 0.19 12/31/03 1.000 0.001 (0.001) 1.000 0.10 258 1.00 0.11 12/31/04 1.000 0.001 (0.001) 1.000 0.10 223 1.18 0.10 12/31/05 1.000 0.008 (0.008) 1.000 0.82 1,563 1.59 1.02
- -------- (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)Annualized (4)Net of the following expense reimbursements/waivers (based on average net assets):
10/31/01 12/31/01(3) 12/31/02 12/31/03 12/31/04 12/31/05 -------- ----------- -------- -------- -------- -------- Class A. 1.18% 2.51% 0.20% 0.03% 0.00% 0.04% Class B. 1.18 2.59 1.25 1.03 0.87 1.44 Class C+ 1.18 7.84 9.68 7.45 4.20 0.47
(5)The financial information for the periods prior to November 16, 2001 reflects the financial information for the North American Municipal Money Market Fund. + Effective February 23, 2004, Class II shares were redesignated as Class C shares See Notes to Financial Statements 10 SunAmerica Money Market Fund PORTFOLIO PROFILE -- December 31, 2005 -- (unaudited) Industry Allocation* Asset Backed/Securities.......... 19.6% Foreign Banks.................... 18.2 Asset Backed/Receivables......... 18.1 Asset Backed/Multi-Asset......... 16.4 Finance.......................... 15.8 Domestic Banks................... 5.1 Diversified Financial Services... 3.0 Sovereign Agency................. 2.3 Municipalities................... 0.6 ---- 99.1% ==== Weighted average days to maturity 30.3
Credit Quality Allocation @# A-1......................... 95.3% Government-Agency........... 4.7 ----- 100.0% =====
- -------- * Calculated as a percentage of net assets. @ Source: Standard and Poors # Calculated as a percentage of total debt issues. 11 SunAmerica Money Market Fund PORTFOLIO OF INVESTMENTS -- December 31, 2005
Principal Value Security Description Amount (Note 2) SHORT-TERM INVESTMENT SECURITIES -- 96.7% ASSET-BACKED COMMERCIAL PAPER -- 54.0% Amstel Funding Corp. 4.34% due 01/25/06*.................... $26,000,000 $25,924,773 4.35% due 03/01/06*................... 25,000,000 24,821,771 Amsterdam Funding Corp. 4.10% due 01/23/06*.................... 25,000,000 24,937,361 Apreco LLC 4.34% due 02/06/06*.................... 25,000,000 24,891,500 Atlantis One Funding 4.10% due 01/23/06*.................... 25,000,000 24,937,361 Barton Capital LLC 4.08% due 01/10/06*.................... 25,000,000 24,974,500 4.13% due 01/25/06*................... 25,000,000 24,931,167 CAFCO LLC 4.16% due 01/27/06*.................... 25,000,000 24,924,889 4.18% due 01/30/06*................... 25,000,000 24,915,920 CRC Funding LLC 4.27% due 02/07/06*.................... 25,000,000 24,890,285 4.37% due 03/06/06*................... 25,000,000 24,805,778 Cancara Asset Securitization, Ltd. 4.02% due 01/09/06*.................... 25,000,000 24,977,667 Charta LLC 4.11% due 01/13/06*.................... 25,000,000 24,965,750 Ciesco LLC 4.10% due 01/18/06*.................... 25,000,000 24,951,597 Clipper Receivables Co. LLC 4.30% due 01/27/06*.................... 25,000,000 24,922,361 Edison Asset Securitization LLC 4.28% due 02/03/06*.................... 25,000,000 24,901,917 4.30% due 02/07/06*................... 25,000,000 24,889,514 Falcon Asset Securitization Corp. 4.13% due 01/04/06*.................... 25,000,000 24,991,396 Galaxy Funding, Inc. 4.03% due 01/10/06*.................... 25,000,000 24,974,813 Giro Funding U.S. Corp. 4.35% due 01/26/06*.................... 25,000,000 24,924,479 Govco, Inc. 4.04% due 01/12/06*.................... 25,000,000 24,969,139 4.28% due 02/23/06*................... 25,000,000 24,842,472 Greyhawk Funding LLC 4.02% due 01/05/06*.................... 24,000,000 23,989,280 4.23% due 02/08/06*................... 25,000,000 24,888,375 Jupiter Securitization Corp. 4.29% due 02/01/06*.................... 25,000,000 24,907,646 Kitty Hawk Funding Corp. 4.30% due 01/23/06*.................... 25,000,000 24,934,306 Ranger Funding Co. LLC 4.30% due 01/27/06*.................... 25,000,000 24,922,361 Sheffield Receivables 4.13% due 01/04/06*.................... 24,000,000 23,991,740 4.30% due 01/17/06*................... 25,000,000 24,952,222 Surrey Funding Corp. 4.17% due 02/03/06*.................... 24,000,000 23,908,260 4.23% due 01/30/06*................... 24,000,000 23,918,220 Sydney Capital Corp 4.28% due 02/14/06*.................... 25,000,000 24,869,222 Thames Asset Global Securitization, Inc. 4.32% due 01/24/06*.................... 25,000,000 24,931,000
Principal Value Security Description Amount (Note 2) ------------------------------------------------------------ White Pine Finance LLC 4.32% due 01/17/06*+.............. $25,000,000 $ 24,999,610 Windmill Funding Corp. 4.20% due 01/03/06*............... 20,000,000 19,995,333 4.30% due 01/27/06*.............. 25,000,000 24,922,361 ------------ Total Asset-Backed Commercial Paper (amortized cost $889,396,346).... 889,396,346 ------------ CERTIFICATES OF DEPOSIT -- 22.8% ABN AMRO Bank NV 3.93% due 02/09/06................ 24,000,000 23,988,463 BNP Paribas 4.16% due 01/09/06................ 24,000,000 24,000,026 Citibank N.A. 4.02% due 01/05/06................ 25,000,000 25,000,000 4.47% due 03/29/06............... 25,000,000 25,000,000 Deutsche Bank 4.00% due 01/06/06 24,000,000 24,000,000 4.29% due 01/06/06............... 24,000,000 24,000,000 Dexia Credit Local 4.25% due 01/03/06+............... 24,000,000 23,997,288 Fortis Bank 4.26% due 01/31/06................ 24,000,000 24,000,099 HBOS Treasury Services 4.32% due 02/09/06................ 24,000,000 24,000,129 Lloyds TSB Bank PLC 4.13% due 01/23/06................ 30,000,000 30,000,091 Rabobank Nederland NV 4.29% due 04/18/06+............... 24,000,000 23,982,040 Royal Bank of Scotland 4.31% due 09/29/06................ 24,000,000 24,000,000 UBS AG 4.15% due 01/09/06................ 24,000,000 24,000,000 4.22% due 02/06/06............... 30,000,000 30,000,000 Wells Fargo Bank N.A. 4.31% due 02/01/06................ 25,000,000 25,000,000 ------------ Total Certificates of Deposit (amortized cost $374,968,136).... 374,968,136 ------------ COMMERCIAL PAPER -- 7.2% Bear Stearns Co., Inc. 4.11% due 01/23/06................ 25,000,000 24,937,208 4.29% due 01/09/06............... 24,000,000 23,977,120 General Electric Capital Corp. 4.17% due 02/01/06*............... 25,000,000 24,910,229 4.27% due 02/01/06*.............. 20,000,000 19,926,461 Goldman Sachs Group, Inc. 4.34% due 01/18/06+............... 24,000,000 24,000,000 ------------ Total Commercial Paper (amortized cost $117,751,018).... 117,751,018 ------------ MEDIUM TERM NOTES -- 9.8% Beta Finance, Inc. 4.32% due 01/04/06*+.............. 25,000,000 25,000,000 Merrill Lynch & Co., Series C 4.35% due 01/17/06+............... 21,000,000 21,000,000 Sedna Finance, Inc. 4.34% due 01/17/06*+.............. 22,000,000 22,000,000 4.34% due 01/25/06*+............. 25,000,000 25,000,000
12 SunAmerica Money Market Fund PORTFOLIO OF INVESTMENTS -- December 31, 2005 -- (continued)
Principal Value Security Description Amount (Note 2) MEDIUM TERM NOTES (continued) Sigma Finance, Inc. 4.28% due 01/06/06*+................. $25,000,000 $ 25,000,000 4.33% due 01/25/06*+................ 25,000,000 24,999,538 Wells Fargo & Co. 4.27% due 01/03/06+.................. 19,000,000 19,000,000 -------------- Total Medium Term Notes (amortized cost $161,999,538)....... 161,999,538 -------------- TAXABLE MUNICIPAL MEDIUM TERM NOTES -- 0.6% Illinois Student Assistance Commission 4.46% due 01/04/06+ (amortized cost $10,000,000)......... 10,000,000 10,000,000 -------------- U.S. GOVERNMENT AGENCIES -- 2.3% Agency for International Development Panama 4.74% due 01/03/06+.................. 2,613,745 2,622,067 -------------- Fannie Mae 4.00% due 08/08/06................... 24,000,000 24,000,000 4.20% due 01/03/06+................. 12,000,000 11,999,579 -------------- 35,999,579 -------------- Total U.S. Government Agencies (amortized cost $38,621,646)........ 38,621,646 -------------- Total Short-Term Investment Securities -- 96.7% (amortized cost $1,592,736,684)..... 1,592,736,684 --------------
Principal Value Security Description Amount (Note 2) -------------------------------------------------------------- REPURCHASE AGREEMENTS -- 2.4% State Street Bank & Trust Co. Joint Repurchase Agreement(1)..... $ 796,000 $ 796,000 UBS Securities LLC Joint Repurchase Agreement(1)..... 39,000,000 39,000,000 -------------- Total Repurchase Agreements (amortized cost $39,796,000)..... 39,796,000 -------------- TOTAL INVESTMENTS (amortized cost $1,632,532,684)#. 99.1% 1,632,532,684 Other assets less liabilities...... 0.9 14,052,364 ----------- -------------- NET ASSETS......................... 100.0% $1,646,585,048 =========== ==============
- -------- * Securities exempt from registration under Rule 144A of Securities Act of 1933. These securities may be sold in transactions exempt from registration, normally to qualified institutional buyers. The Fund has no rights to demand registration of these securities. At December 31, 2005, the aggregate value of these securities was $1,056,232,574, representing 64.1% of net assets. Unless otherwise indicated, these securities are not considered to be illiquid. # At December 31, 2005, the cost of securities for federal income tax purposes was the same for book purposes. + Variable rate security - the rate reflected is as of December 31, 2005; maturity date reflects next reset date. (1)See Note 2 for details of the Joint Repurchase Agreement See Notes to Financial Statements 13 SunAmerica Municipal Money Market Fund PORTFOLIO PROFILE -- December 31, 2005 -- (unaudited) State Allocation* North Carolina................... 11.8% Illinois......................... 8.9 Indiana.......................... 8.4 Ohio............................. 7.1 Missouri......................... 5.2 Arizona.......................... 4.8 Texas............................ 4.8 Michigan......................... 4.7 Pennsylvania..................... 4.7 Florida.......................... 4.6 New Mexico....................... 4.1 North Dakota..................... 3.9 Colorado......................... 3.7 Alabama.......................... 3.5 California....................... 2.9 South Carolina................... 2.7 Tennessee........................ 2.6 Kentucky......................... 2.4 Wisconsin........................ 2.3 Georgia.......................... 2.0 Iowa............................. 2.0 Nebraska......................... 1.7 Washington....................... 1.7 Nevada........................... 0.8 New York......................... 0.4 Registered Investment Companies.. 0.0 ----- 101.7% ===== Weighted average days to maturity 20.6
Credit Quality Allocation @ # A-1.......................... 74.8% Not Rated+................... 25.2 ----- 100.0% =====
- -------- * Calculated as a percentage of net assets. @ Source: Standard and Poors # Calculated as a percentage of total debt issues. + Represents debt issues that have either no rating, or the rating is unavailable for the data source. 14 SunAmerica Municipal Money Market Fund PORTFOLIO OF INVESTMENTS -- December 31, 2005
Value Security Description Principal (Note 2) SHORT-TERM INVESTMENT SECURITIES -- 101.7% Alabama -- 3.5% Stevenson, Alabama Industrial Development Board Environmental Improvement (LOC-JPMorgan Chase Bank) 3.63% due 01/04/06+............................ $3,000,000 $3,000,000 ---------- Arizona -- 4.8% Maricopa County, Arizona Industrial Development Authority (LOC-Harris Trust & Savings Bank) 3.62% due on 01/05/06+......................... 850,000 850,000 Maricopa County, Arizona Industrial Development Authority, Series A (LOC-Wells Fargo Bank N.A.) 3.63% due on 01/05/06+......................... 1,510,000 1,510,000 Mesa, Arizona Industrial Development Authority, Series B 3.52% due on 01/04/06+......................... 1,800,000 1,800,000 ---------- 4,160,000 ---------- California -- 2.9% California State Revenue Anticipation Notes 4.50% due 06/30/06............................. 2,500,000 2,518,136 ---------- Colorado -- 3.7% Colorado Springs, Colorado National Strength and Conditioning Assoc. (LOC-Wells Fargo Bank N.A.) 3.63% due 01/05/06+............................ 1,380,000 1,380,000 Crystal Valley, Colorado Metropolitan District No. 1 (LOC-Wells Fargo Bank N.A.) 3.53% due 01/05/06+............................ 1,000,000 1,000,000 Durango, Colorado Community Health & Human Services (LOC-Wells Fargo Bank N.A.) 3.63% due 01/05/06+............................ 835,000 835,000 ---------- 3,215,000 ---------- Florida -- 4.6% Lakeland, Florida Energy System 3.42% due 01/04/06+............................ 2,000,000 2,000,000 Lakeland, Florida Energy System, Series A 3.42% due 01/04/06+............................ 2,000,000 2,000,000 ---------- 4,000,000 ---------- Georgia -- 2.0% Fulton County, Georgia Development Authority (LOC-Wachovia Bank N.A.) 3.52% due 01/05/06+............................ 1,700,000 1,700,000 ---------- Illinois -- 8.9% Chicago, Illinois O'Hare International Airport, Series B (LOC-Societe Generale) 3.62% due 01/04/06+............................ 845,000 845,000 Chicago, Illinois Waterworks (LOC-Bank One N.A.) 3.55% due 01/04/06+............................ 500,000 500,000 Illinois Health Facilities Authority, Series B 3.58% due 01/05/06+............................ 3,600,000 3,600,000 Illinois State General Obligation 4.50% due 04/28/06............................. 1,000,000 1,004,330 Warren County, Illinois Community Medical Center (LOC-Wells Fargo Bank N.A.) 3.63% due 01/05/06+............................ 1,805,000 1,805,000 ---------- 7,754,330 ----------
Value Security Description Principal (Note 2) ------------------------------------------------------------------------ Indiana -- 8.4% Indiana Health Facility Financing Authority, Series B 3.80% due 01/03/06+............................. $ 100,000 $ 100,000 Indiana Health Facility Financing Authority, Series I 3.54% due 01/04/06+............................. 3,925,000 3,925,000 Indianapolis, Indiana Local Public Improvement, Series E 4.00% due 01/06/06.............................. 1,600,000 1,600,303 Marion, Indiana Economic Development (LOC-Bank One Indiana N.A.) 3.55% due 01/04/06+............................. 1,100,000 1,100,000 Marion, Indiana Economic Development (LOC-Bank of America N.A.) 3.55% due 01/04/06+............................. 600,000 600,000 ---------- 7,325,303 ---------- Iowa -- 2.0% Iowa Finance Authority, Series F 3.45% due 01/05/06+............................. 1,100,000 1,100,000 Iowa Finance Authority Childrens Services, Series B (LOC-Wells Fargo Bank N.A.) 3.63% due 01/05/06+............................. 370,000 370,000 Iowa Higher Education Loan Authority (LOC-Wells Fargo Bank N.A.) 3.63% due 01/05/06+............................. 100,000 100,000 Storm Lake, Iowa Higher Education Facilities 3.68% due 01/05/06+............................. 185,000 185,000 ---------- 1,755,000 ---------- Kentucky -- 2.4% Breckinridge County, Kentucky Lease Program (LOC-U.S. Bank N.A.) 3.52% due 01/04/06+............................. 315,000 315,000 Breckinridge County, Kentucky Lease Program, Series A (LOC-U.S. Bank N.A.) 3.52% due 01/04/06+............................. 1,800,000 1,800,000 ---------- 2,115,000 ---------- Michigan -- 4.7% Detroit, Michigan Sewer Disposal System, Series C-1 3.40% due 01/05/06+............................. 975,000 975,000 Detroit, Michigan Sewer Disposal System, Series C-2 3.40% due 01/05/06+............................. 3,000,000 3,000,000 Michigan State Strategic Fund Ltd. Obligation (LOC-Fifth Third Bank) 3.60% due 01/04/06+............................. 145,000 145,000 ---------- 4,120,000 ---------- Missouri -- 5.2% Missouri Higher Education Student Loan Authority, Series B 3.62% due 01/04/06+............................. 1,500,000 1,500,000 Missouri State Health & Educational Facilities Authority 3.70% due 01/03/06+............................. 700,000 700,000 Missouri State Health & Educational Facilities Authority, Series C 3.70% due 01/03/06+............................. 600,000 600,000 St. Louis, Missouri Planned Industrial Expansion Authority (LOC-Bank of America N.A.) 3.59% due 01/04/06+............................. 1,700,000 1,700,000 ---------- 4,500,000 ----------
15 SunAmerica Municipal Money Market Fund PORTFOLIO OF INVESTMENTS -- December 31, 2005 -- (continued)
Value Security Description Principal (Note 2) SHORT-TERM INVESTMENT SECURITIES (continued) Nebraska -- 1.7% Douglas County, Nebraska Solid Waste Disposal, Series A (LOC-Wachovia Bank N.A.) 3.60% due 01/05/06+........................... $1,500,000 $ 1,500,000 ----------- Nevada -- 0.8% Washoe County, Nevada Economic Development 3.53% due 01/05/06+........................... 700,000 700,000 ----------- New Mexico -- 4.1% Albuquerque, New Mexico Educational Facilities 3.60% due 01/04/06+........................... 3,600,000 3,600,000 ----------- New York -- 0.4% New York, New York General Obligation, Series B-2 (LOC-Morgan Guaranty Trust) 3.77% due 01/03/06+........................... 100,000 100,000 New York City, New York Municipal Water Finance Authority, Series F-2 3.77% due 01/03/06+........................... 200,000 200,000 ----------- 300,000 ----------- North Carolina -- 11.8% Charlotte, North Carolina Certificates of Participation, Series B 3.60% due 01/05/06+........................... 3,000,000 3,000,000 Durham, North Carolina Public Improvement 3.51% due 01/05/06+........................... 300,000 300,023 Mecklenburg County, North Carolina Certificates of Participation 3.55% due 01/05/06+........................... 600,000 600,000 North Carolina Medical Care Community Hospital, Series B 3.51% due 01/05/06+........................... 2,400,000 2,400,000 Winston-Salem, North Carolina Certificates of Participation 3.55% due 01/05/06+........................... 1,825,000 1,825,000 Winston-Salem, North Carolina Water & Sewer System, Series C 3.50% due 01/04/06+........................... 2,150,000 2,150,000 ----------- 10,275,023 ----------- North Dakota -- 3.9% North Dakota State Housing Finance Agency, Series A 3.54% due 01/04/06+........................... 3,400,000 3,400,000 ----------- Ohio -- 7.1% Cleveland, Ohio Airport System, Series D (LOC-WestLb AG) 3.54% due 01/04/06+........................... 2,845,000 2,845,000 Franklin County, Ohio Hospital, Series B (LOC-Citibank N.A.) 3.49% due 01/05/06+........................... 3,320,000 3,320,000 ----------- 6,165,000 ----------- Pennsylvania -- 4.7% Delaware Valley, Pennsylvania Regional Financial Authority, Series A (LOC-National Australia Bank) 3.50% due 01/04/06+........................... 300,000 300,000 Delaware Valley, Pennsylvania Regional Financial Authority, Series C (LOC-National Australia Bank) 3.50% due 01/04/06+........................... 1,700,000 1,700,000
Value Security Description Principal (Note 2) ------------------------------------------------------------------------ Pennsylvania (continued) Pennsylvania State Turnpike Commission, Series A-1 3.58% due 01/04/06+.......................... $1,000,000 $ 1,000,000 Pennsylvania State Turnpike Commission, Series U 3.51% due 01/05/06+.......................... 900,000 900,000 Philadelphia, Pennsylvania Authority for Industrial Development (LOC-GE Capital Corp.) 3.40% due 01/04/06+.......................... 200,000 200,000 ----------- 4,100,000 ----------- South Carolina -- 2.7% Piedmont Municipal Power Agency, Series B-1 3.55% due 01/04/06+.......................... 1,200,000 1,200,000 South Carolina Jobs Economic Development Authority (LOC-Bank of America N.A.) 3.62% due 01/04/06+.......................... 1,100,000 1,100,000 ----------- 2,300,000 ----------- Tennessee -- 2.6% Montgomery County, Tennessee Public Building Authority (LOC-Bank of America N.A.) 3.55% due 01/05/06+.......................... 2,230,000 2,230,000 ----------- Texas -- 4.8% Gulf Coast Waste Disposal Authority, Series A (LOC-JPMorgan Chase Bank) 3.60% due 01/05/06+.......................... 100,000 100,000 Texas State Tax & Revenue Anticipation Notes 4.50% due 08/31/06........................... 4,000,000 4,038,613 ----------- 4,138,613 ----------- Washington -- 1.7% Port Seattle, Washington Industrial Development Corp. (LOC-Citibank N.A.) 3.55% due 01/04/06+.......................... 1,500,000 1,500,000 ----------- Wisconsin -- 2.3% Wisconsin State Health & Educational Facilities Authority (LOC-Citibank N.A.) 3.50% due 01/05/06+.......................... 2,000,000 2,000,000 ----------- Registered Investment Companies -- 0.0% SSGA Tax Free Money Market Fund............... 14,789 14,789 ----------- TOTAL SHORT-TERM INVESTMENT SECURITIES (amortized cost $88,386,194)# ................ 101.7% 88,386,194 Liabilities in excess of other assets ........ (1.7) (1,485,888) ---------- ----------- NET ASSETS...................................... 100.0% $86,900,306 ========== ===========
- -------- # At December 31, 2005, the cost of securities for federal income tax purposes was the same for book purposes. + Variable rate security - the rate reflected is as of December 31, 2005; maturity date reflects next reset date. LOC-- Letter of Credit See Notes to Financial Statements 16 SunAmerica Money Market Funds NOTES TO FINANCIAL STATEMENTS -- December 31, 2005 Note 1. Organization SunAmerica Money Market Funds, Inc. (the "Corporation") is an open-end diversified management investment company organized as a Maryland Corporation. The Corporation consists of two investment funds (each, a "Fund" and collectively, the "Funds"). Each Fund is a separate series with a distinct investment objective. Each Fund is advised by AIG SunAmerica Asset Management Corp. ("SAAMCo" or "Advisor"), an indirect wholly-owned subsidiary of American International Group, Inc. ("AIG"). The investment objective for each of the Funds is as follows: The SunAmerica Money Market Fund ("Money Market Fund") seeks as high a level of current income as is consistent with liquidity and stability of capital through investment primarily in high-quality money market instruments selected principally on the basis of quality and yield. The SunAmerica Municipal Money Market Fund ("Municipal Money Market Fund") seeks as high a level of current income as is consistent with liquidity and stability of capital and that is exempt from regular federal income taxation through investments selected primarily in high-quality money market instruments primarily on the basis of quality and yield, and under normal market conditions invests at least 80% of its assets in municipal securities that are exempt from regular federal income tax. The Money Market Fund currently offers four classes of shares: Class A, Class B, Class C and Class I. The Municipal Money Market Fund currently offers three classes of shares: Class A, Class B, and Class C. The classes within the Funds are presented in the Statement of Assets and Liabilities. The cost structure for each class is as follows: Class A shares-- Class A shares are available with no front-end sales charge. A 1.00% contingent deferred sales charge ("CDSC") is imposed on shares sold within one year of original purchase and a 0.50% CDSC is imposed on shares sold after the first year and within the second year after purchase. Class B shares-- Class B shares are offered at their net asset value per share, without any front-end sales charge. However, there is a declining contingent deferred sales charge ("CDSC") on shares sold within six years of purchase. Class B shares will convert automatically to Class A shares approximately eight years after the purchase of such shares and at such time are no longer subject to a distribution fee. Class C shares-- Class C shares are offered at their net asset value per share, without any front-end sales charge. However, there is a contingent deferred sales charge of 1.00% on shares sold within 12 months of purchase. Class I shares-- Class I shares are offered at net asset value per share without any sales charge, exclusively to certain institutions. Each class of shares bears the same voting, dividend, liquidation and other rights and conditions. Class A, Class B, and Class C shares of each Fund has its own 12b-1 plan, which allows for distributions and account maintenance and service fees payments, except Class B and Class C shares are subject to higher distribution fee rates. 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 may contain the obligation to indemnify others. The Funds' maximum exposure under these arrangements is unknown. Currently, however, the Funds expect the risk of loss to be remote. Note 2. Significant Accounting Policies The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates. The following is a summary of the significant accounting policies followed by the Funds in the preparation of its financial statements: Security Valuations: Portfolio securities are valued at amortized cost, which approximates market value. The amortized cost method involves valuing a security at its cost on the date of purchase and thereafter assuming a constant amortization/accretion to maturity of any discount or premium. 17 SunAmerica Money Market Funds NOTES TO FINANCIAL STATEMENTS -- December 31, 2005 -- (continued) Repurchase Agreements: The Funds, along with other affiliated registered investments companies, pursuant to exemptive relief granted by the Securities and Exchange Commission, may transfer uninvested cash balances onto 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. For repurchase agreements and joint repurchase agreements, 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, at the time the agreement is entered into, is equal to at least 102% of the repurchase price, including accrued interest. 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 December 31, 2005, the following Fund held an undivided interest in a joint repurchase agreement with State Street Bank & Trust Co.:
Percentage Principal Interest Amount ---------- --------- Money Market Fund 0.49% $796,000
As of such date, the repurchase agreement in that joint account and the collateral therefore were as follows: State Street Bank & Trust Co., dated December 30, 2005, bearing interest at a rate of 3.10% per annum, with a principal amount of $164,023,000, a repurchase price of $164,079,497, and a maturity date of January 3, 2006. The repurchase agreement is collateralized by the following:
Interest Maturity Type of Collateral Rate Date Principal Amount Market Value - ------------------ -------- -------- ---------------- ------------ U.S. Treasury Notes 2.38% 08/31/06 $ 2,880,000 $ 2,865,600 U.S. Treasury Notes 2.63 05/15/08 112,125,000 108,128,529 U.S. Treasury Notes 3.38 02/28/07 21,085,000 21,069,186 U.S. Treasury Notes 4.00 06/15/09 3,500,000 3,467,489 U.S. Treasury Notes 4.13 08/15/08 6,140,000 6,201,400 U.S. Treasury Notes 4.38 05/15/07 25,445,000 25,571,462
In addition, at December 31, 2005, the following Fund held an undivided interest in a joint repurchase agreement with UBS Securities LLC:
Percentage Principal Interest Amount ---------- ----------- Money Market Fund 13.00% $39,000,000
As of such date, the repurchase agreement in that joint account and the collateral therefore were as follows: UBS Securities LLC, dated December 30, 2005, bearing interest at a rate of 3.47% per annum, with a principal amount of $300,000,000, a repurchase price of $300,115,667, and a maturity date of January 3, 2006. The repurchase agreement is collateralized by the following:
Interest Maturity Type of Collateral Rate Date Principal Amount Market Value - ------------------ -------- -------- ---------------- ------------ U.S. Treasury Inflation Index Bonds 2.38% 01/15/25 $ 66,612,000 $ 75,188,295 U.S. Treasury Inflation Index Bonds 3.38 04/15/32 100,000,000 148,000,000 U.S. Treasury Inflation Index Bonds 3.88 04/15/29 50,000,000 82,812,500
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, including the accretion of discount and amortization of premium, is accrued daily; dividend income is recorded on the ex-dividend date. 18 SunAmerica Money Market Funds NOTES TO FINANCIAL STATEMENTS -- December 31, 2005 -- (continued) 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 shares 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 value or other appropriate methods. In all 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. Dividends from net investment income, if any, are normally declared daily and paid monthly. Capital gain distributions, if any, are paid annually. The Funds record dividends and distributions to their shareholders on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from U.S. generally accepted accounting principles. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts 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 by these reclassifications. The Funds intend to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and distribute all of their taxable income, including any net realized gain on investments, to its shareholders. Therefore, no federal tax provisions are required. Each Fund is considered a separate entity for tax purposes. Note 3. Investment Advisory and Management Agreement, Distribution and Service Agreement The Funds have an Investment Advisory and Management Agreement (the "Agreement") with SAAMCo. Under the Agreement, SAAMCo provides continuous supervision of the Funds and administers its corporate affairs, subject to general review by the Board of Directors. In connection therewith, SAAMCo furnishes the Funds with office facilities, maintains certain of its 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 Funds pay SAAMCo a monthly investment advisory and management fee calculated daily at the following annual percentages of each Fund's average daily net assets:
Management Assets Fees ---------------------------- ---------- Money Market Fund.......... $0 - $600 million 0.50% (greater than) $600 million 0.45% (greater than) $ 1.5 billion 0.40% Municipal Money Market Fund (greater than) $0 0.35%
The Municipal Money Market Fund is subadvised by AIG Global Investment Corp. ("AIGGIC") pursuant to a subadvisory agreement with SAAMCo. AIGGIC is an indirect wholly-owned subsidiary of AIG and an affiliate of SAAMCo. AIGGIC receives the following fees from SAAMCo, based upon the Fund's average daily net assets:
Sub-advisory Assets Fees --------------------------- ------------ Municipal Money Market Fund $0 - $200 million 0.25% (greater than) $200 million 0.20% (greater than) $500 million 0.15%
19 SunAmerica Money Market Funds NOTES TO FINANCIAL STATEMENTS -- December 31, 2005 -- (continued) SAAMCo has contractually agreed to waive fees or reimburse expenses, if necessary, at or below the following percentages of each Fund's average net assets.
Fund Percentage - ---- ---------- Money Market Class I.......... 0.80% Municipal Money Market Class A 0.95 Municipal Money Market Class B 1.70 Municipal Money Market Class C 1.70
SAAMCo has voluntarily agreed to waive fees or reimburse expenses for the period ended December 31, 2005 at the following percentages of each Fund's average net assets.
Fund Percentage - ---- ---------- Municipal Money Market Class A 0.04% Municipal Money Market Class B 0.08 Municipal Money Market Class C 0.11
For the period ended December 31, 2005, SAAMCo agreed to waive fees or reimburse expenses as follows:
Fund - ---- Money Market Class I.......... $ 6,936 Municipal Money Market Class A 34,099 Municipal Money Market Class B 7,402 Municipal Money Market Class C 4,846
The contractual expense waivers and fee reimbursements will continue indefinitely, subject to termination by the Directors, including a majority of the Independent Directors. The voluntary waivers and/or reimbursements are expected to continue but may be terminated at any time. The exact amount of the voluntary waivers and/or reimbursements may change on a day-to-day basis. The Funds have a distribution agreement with AIG SunAmerica Capital Services, Inc. ("SACS" or the "Distributor"), an affiliate of the Advisor. The Funds have 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 the shareholders of each class of shares of the Funds have adopted Distribution Plans hereinafter referred to as the "Class A Plan," the "Class B Plan," and the "Class C Plan." In adopting the Class A Plan, the Class B Plan, and the Class C Plan, the directors determined that there was a reasonable likelihood that each such Plan would benefit the Funds 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 B Plan and the Class C Plan, the Distributor receives payments from the Funds at the annual rate of up to 0.75% of the average daily net assets of the Fund's Class B and Class C shares, 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 compensated include distribution fees paid to broker-dealers that have sold Fund shares, commissions, and other expenses such as those incurred for sales literature, prospectus printing and distribution, and compensation to wholesalers. It is possible that in any given year the amount paid to the Distributor under the Class B and Class C Plans may exceed the Distributor's distribution costs as described above. The Class A Plan does not provide for a distribution fee. The Distribution Plans provide that each class of shares, other than Class I, of the Funds may also pay the Distributor an account maintenance and service fee of up to an annual rate of 0.15% of the aggregate average daily net assets of such class of shares for payments to broker-dealers for providing continuing account maintenance. In this regard, some payments are used to compensate broker-dealers with account maintenance and service fees in an amount up to 0.15% per year of the assets 20 SunAmerica Money Market Funds NOTES TO FINANCIAL STATEMENTS -- December 31, 2005 -- (continued) maintained in the Funds by their customers. Accordingly, for the period ended December 31, 2005, SACS received fees (see Statement of Operations) based upon the aforementioned rates. For the period ended December 31, 2005, SACS voluntarily reimbursed the following expenses:
Fund - ---- Municipal Money Market Class B $31 Municipal Money Market Class C 11
SACS receives the proceeds of contingent deferred sales charges paid by investors in connection with certain redemptions of each Fund's Class A, Class B and Class C shares. SACS has advised the Funds for the period ended December 31, 2005, the proceeds received from redemptions are as follows:
Contingent Deferred Sales Charges --------------------------------- Fund Class A Class B Class C - ---- ------- -------- ------- Money Market.......... $6,250 $225,099 $13,661 Municipal Money Market -- 1,797 3,248
The Funds entered into a Service Agreement with AIG SunAmerica Fund Services, Inc. ("SAFS"), an affiliate of the Advisor. 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 its shareholders. The Service Agreement permits the Funds to reimburse SAFS for the costs incurred in providing such services, based upon an annual rate of 0.22% of average daily net assets, which is approved annually by the Directors. For the period ended December 31, 2005, the Funds incurred the following expenses which are included in transfer agent fees and expenses in the Statement of Operations to compensate SAFS pursuant to the terms of the Service Agreement:
Payable at Fund Expenses December 31, 2005 - ---- ---------- ----------------- Money Market Class A.......... $3,568,307 $297,580 Money Market Class B.......... 75,938 6,038 Money Market Class C.......... 41,046 3,648 Money Market Class I.......... 28,012 2,549 Municipal Money Market Class A 196,253 15,623 Municipal Money Market Class B 1,136 102 Municipal Money Market Class C 2,282 320
Note 4. Federal Income Taxes The following details the tax basis distributions as well as the components of distributable earnings. 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 cumulative pension expenses.
Distributable Earnings Tax Distributions ------------------------------------------ --------------------------------- For the year ended December 31, 2005 ---------------------------------------------------------------------------- Long-term Gains/ Unrealized Long-Term Ordinary Capital Loss Appreciation Ordinary Capital Fund Income Carryover (Depreciation) Income Gains Tax Exempt - ---- --------- ---------------- -------------- ------------ --------- ---------- Money Market.......... $ 325,324 $ -- $ -- $ 39,516,992 $ -- $ -- Municipal Money Market 31,249* -- -- -- -- 1,428,608
Tax Distributions ---------------------------------------- For the year ended December 31, 2004 ---------------------------------------- Long-Term Fund Ordinary Income Capital Gains Tax Exempt - ---- --------------- ------------- ---------- Money Market.......... 8,165,643 -- -- Municipal Money Market -- -- 366,908
- -------- *Tax exempt distributable earnings 21 SunAmerica Money Market Funds NOTES TO FINANCIAL STATEMENTS -- December 31, 2005 -- (continued) At December 31, 2005, for Federal income tax purposes, the Municipal Money Market Fund had a capital loss carryforward of $8,072 and $16,252, which will expire in the years 2012 and 2013, respectively, which is available to offset future capital gains, if any. Note 5. Capital Share Transactions Transactions in each class of shares of the Funds, all at $1.00 per share, for the period ended December 31, 2005, and for the prior year were as follows:
Money Market Fund --------------------------------------------------------------------------------------------- Class A Class B Class C (1) -------------------------------- --------------------------- -------------------------- For the For the For the For the For the For the year year year year year year ended ended ended ended ended ended December 31, December 31, December 31, December 31, December 31, December 31, 2005 2004 2005 2004 2005 2004 --------------- --------------- ------------ ------------ ------------ ------------ Shares sold......... $ 1,113,494,682+ $ 1,032,086,849++ $ 21,586,531 $ 51,971,494 $ 39,075,804 $ 44,114,142 Reinvested dividends 38,099,932 8,038,526 502,145 27,583 270,694 12,541 Shares redeemed..... (1,194,296,786) (1,054,375,452) (32,786,885)+ (54,090,452)++ (42,833,919) (47,431,940) --------------- --------------- ------------ ------------ ------------ ------------ Net increase (decrease)......... $ (42,702,172) $ (14,250,077) $(10,698,209) $ (2,091,375) $ (3,487,421) $ (3,305,257) =============== =============== ============ ============ ============ ============
------------------------- Class I ------------------------ For the For the year year ended ended December 31, December 31, 2005 2004 ------------ ------------ Shares sold......... $ 7,693,470 $10,886,039 Reinvested dividends 316,345 66,605 Shares redeemed..... (6,196,260) (8,693,987) ----------- ----------- Net increase (decrease)......... $ 1,813,555 $ 2,258,657 =========== ===========
Municipal Money Market Fund -------------------------------------------------------------------------------- Class A Class B Class C (1) ---------------------------- ----------------------- ---------------------- For the For the For the For the For the For the year year year year year year ended ended ended ended ended ended December 31, December December December December December 2005 31, 2004 31, 2005 31, 2004 31, 2005 31, 2004 ------------- ------------- --------- ----------- ----------- --------- Shares sold............ $ 177,698,016# $ 129,348,654## $ 539,224 $ 279,737 $ 3,443,007 $ 783,160 Reinvested dividends... 1,410,098 364,275 3,761 2,416 2,287 170 Shares redeemed........ (191,665,171) (146,141,140) (519,766)# (2,953,009)## (2,105,157) (818,374) ------------- ------------- --------- ----------- ----------- --------- Net increase (decrease) $ (12,557,057) $ (16,428,211) $ 23,219 $(2,670,856) $ 1,340,137 $ (35,044) ============= ============= ========= =========== =========== =========
Note 6. Directors' Retirement Plan The Directors of the SunAmerica Money Market Funds, Inc. have adopted the AIG 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 AIG 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 AIG 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 AIG SunAmerica mutual fund for the calendar year in which such birthday occurs. In addition, an amount equal to 8.50% 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 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 8.50%. - -------- + Includes automatic conversion of Class B shares in the amount of $2,267,064 to Class A shares. ++ Includes automatic conversion of Class B shares in the amount of $2,916,293 to Class A shares. # Includes automatic conversion of Class B shares in the amount of $298,186 to Class A shares. ## Includes automatic conversion of Class B shares in the amount of $4,801 to Class A shares. (1)Effective February 23, 2004, Class II shares were redesignated as Class C shares. 22 SunAmerica Money Market Funds NOTES TO FINANCIAL STATEMENTS -- December 31, 2005 -- (continued) The following amounts for the Retirement Plan Liabilities are included in the Directors' fees and expense line on the Statement of Assets and Liabilities and the amounts for the Retirement Plan Expenses are included in the Director's fees and expenses line on the Statement of Operations.
Retirement Plan Retirement Plan Retirement Plan Liability Expense Payments --------------- --------------- --------------- Fund As of December 31, 2005 - ---- ----------------------------------------------- Money Market.......... $237,609 $17,305 $14,246 Municipal Money Market 6,345 994 215
Note 7. Interfund Lending Agreement Pursuant to exemptive relief granted by the Securities and Exchange Commission, the Funds 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 the 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 period ended December 31, 2005, none of the Funds participated in the program. Note 8. Other Information On February 9, 2006, American International Group, Inc. ("AIG"), the parent company and an affiliated person of AIG SunAmerica Asset Management Corp. ("Adviser"), AIG SunAmerica Capital Services, Inc., the distributor of the Funds ("Distributor"), and AIG Global Investment Corp., a subadviser to a Fund, announced that it had consented to the settlement of an injunctive action instituted by the Securities and Exchange Commission ("SEC"). In its complaint, the SEC alleged that AIG violated Section 17(a) of the Securities Act of 1933, as amended, Sections 10(b), 13(a), 13(b)(2) and 13(b)(5) of the Securities Exchange Act of 1934, as amended, and Rules 10b-5, 12b-20, 13a-1 and 13b2-1 promulgated thereunder, in connection with AIG's accounting and public reporting practices. The conduct described in the complaint did not involve any conduct of AIG or its subsidiaries related to their investment advisory or distribution activities with respect to the assets of the Funds. AIG, without admitting or denying the allegations in the complaint (except as to jurisdiction), consented to the entry of an injunction against further violations of the statutes referred to above. Absent exemptive relief granted by the SEC, the entry of such an injunction would prohibit AIG and its affiliated persons from, among other things, serving as an investment adviser of any registered investment management company or principal underwriter for any registered open-end investment company pursuant to Section 9(a) of the Investment Company Act of 1940, as amended ("1940 Act"). Certain affiliated persons of AIG, including the Adviser, received a temporary order from the SEC pursuant to Section 9(c) of the 1940 Act with respect to the entry of the injunction, granting exemptive relief from the provisions of Section 9(a) of the 1940 Act. The temporary order permits AIG and its affiliated persons, including AIG's investment management subsidiaries, to serve as investment adviser, sub-adviser, principal underwriter or sponsor of the Funds. The Adviser expects that a permanent exemptive order will be granted, although there is no assurance the SEC will issue the order. Additionally, AIG and its subsidiaries reached a resolution of claims and matters under investigation with the United State Department of Justice ("DOJ"), the Attorney General of the State of New York ("NYAG") and the New York State Department of Insurance ("DOI"), regarding accounting, financial reporting and insurance brokerage practices of AIG and its subsidiaries, as well as claims relating to the underpayment of certain workers compensation premium taxes and other assessments. As a result of the settlements with the SEC, the DOJ, the NYAG and the DOI, AIG will make payments totaling approximately $1.64 billion. In addition, as part of its settlements, AIG has agreed to retain for a period of three years an Independent Consultant who will conduct a review that will include the adequacy of AIG's internal controls over financial reporting and the remediation plan that AIG has implemented as a result of its own internal review. Subject to receipt of permanent relief, the Adviser, Distributor and AIGGIC believe that the settlements are not likely to have a material adverse effect on their ability to perform their respective investment advisory or distribution services relating to the Funds. 23 SunAmerica Money Market Funds REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of SunAmerica Money Market Funds, 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 each of the two funds constituting SunAmerica Money Market Funds, Inc. (the "Funds") at December 31, 2005, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for 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 Funds' 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 December 31, 2005 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Houston, Texas February 17, 2006 24 SunAmerica Money Market Funds, Inc. APPROVAL OF ADVISORY AGREEMENTS -- December 31, 2005 -- (unaudited) Approval of the Advisory Agreement and Subadvisory Agreements: The Board of Directors (the "Board"), including the Directors that are not interested persons of the SunAmerica Money Market Funds, Inc. (the "Funds") (the "Disinterested Directors"), last approved the Investment Advisory and Management Agreement between the Funds and AIG SunAmerica Asset Management Corp. ("SAAMCo") (the "Advisory Agreement") for a period of one year, at a meeting held on August 31, 2005. At this same meeting, the Board also approved the renewal of the subadvisory agreement between SAAMCo and AIG Global Investment Company ("AIGGIC" or the "Subadviser") with respect to the SunAmerica Municipal Money Market Fund (the "Municipal Money Market Fund") (the "Subadvisory Agreement"). The Board noted that the discussion and approval of the Advisory Agreement and Subadvisory Agreement at the August 31, 2005 meeting was the culmination of numerous discussions and meetings that had taken place in recent months. The Board further noted that certain members of the Board had met with senior management on numerous occasions and had in-depth discussions regarding the Fund's performance, advisory expenses and other fees and negotiations with respect to advisory expenses. In accordance with Section 15(c) of the Investment Company Act of 1940, as amended (the "1940 Act"), the Board was provided with materials relating to its consideration of the Advisory Agreement. These materials assisted the Board in analyzing: (1) the nature, extent and quality of services to be provided by SAAMCo and the Subadviser, including administrative and shareholder services to be provided by SAAMCo and certain other affiliated companies; (2) the costs of services to be provided and benefits realized by SAAMCo and the Subadviser, including a comparison of fees and expense ratios of other similar funds, as well as SAAMCo's profitability and financial condition; (3) the terms of the Advisory Agreement and Subadvisory Agreement; (4) economies of scale and whether the fee levels reflect these economies of scale; (5) SAAMCo's overall organization, compliance policies and history, as well as the Subadviser's compliance policies and history; and (6) the investment performance of the Funds in their peer group ("Peer Group") as determined by Lipper, Inc. ("Lipper") and as compared to their relevant benchmarks and indices. Experienced counsel that is independent of SAAMCo provided advice to the Disinterested Directors ("Independent Counsel"). The Disinterested Directors considered additional information, such as expense and other comparative data from Lipper. In considering these factors, as described in more detail below, the Board did not identify any single factor or group of factors as being more important than the others, but considered all factors together. Nature, Extent and Quality of Services The Board, including the Disinterested Directors, considered the nature, quality and extent of services to be provided by SAAMCo. In making its evaluation, the Board considered that SAAMCo acts as investment manager and adviser to the Funds, manages the daily business affairs of the Funds, and obtains and evaluates economic, statistical and financial information to formulate and implement investment policies. Additionally, SAAMCo provides office space, accounting, legal, compliance, clerical and administrative services (exclusive of, and in addition to, overseeing of any such service provided by any others retained by the Funds), and has authorized its officers and employees, if elected, to serve as officers or directors of the Funds without compensation. Finally, SAAMCo is responsible for monitoring and reviewing the activities of third-party service providers. In making their determination regarding the nature and quality of SAAMCo's services, the Directors considered SAAMCo's responsibility to provide and supervise the activities of all administrative and clerical personnel required to provide effective administration of the Funds. The Board also reviewed the performance of the Funds, the details of which are described below. The Board also reviewed the compliance and administrative services of SAAMCo. The Board noted that SAAMCo provides and compensates a Chief Compliance Officer for the Funds, and that SAAMCo maintains a compliance staff of eight people. The Board analyzed the structure and duties of SAAMCo's accounting, legal and compliance departments and concluded that they were adequate to meet the needs of the Funds. SAAMCo has delegated daily investment management responsibilities to AIGGIC with regards to the Municipal Money Market Fund. Therefore, the Board also considered the nature, quality and extent of services to be provided by AIGGIC. 25 SunAmerica Money Market Funds, Inc. APPROVAL OF ADVISORY AGREEMENTS -- December 31, 2005 -- (unaudited) (continued) The Board considered that the Subadviser is responsible for providing investment management services, including investment research, advice and supervision, and determining which securities will be purchased or sold by the Municipal Money Market Fund. The Board reviewed each Subadviser's history, structure and size, visibility and resources, which are needed to attract and retain highly qualified investment professionals. With respect to administrative services to be provided by the Subadviser, the Board considered that each Subadviser provides assistance in general marketing assistance and has developed internal procedures for monitoring compliance with investment objectives, policies and restrictions of the Municipal Money Market Fund as set forth in the prospectus. The Board concluded that it was satisfied with the nature, quality and extent of the services provided by or to be provided by SAAMCo and the Subadviser and that there was a reasonable basis on which to conclude that SAAMCo and the Subadviser would continue to provide a high quality of investment management services. Fees and Expenses The Board, including the Disinterested Directors, reviewed information regarding the fees paid by each Fund to SAAMCo for investment advisory and management services. The Board examined this information in order to determine the reasonableness of the fees in light of the nature and quality of SAAMCo's services and any additional benefits received by SAAMCo or its affiliates in connection with providing such services to the Funds. To assist in analyzing the reasonableness of the fees, the Board received reports prepared independently by Lipper detailing comparative advisory fee and other information of each Fund's Peer Group as determined objectively by Lipper, and rankings within the relevant Lipper categories. The Board also received reports prepared by SAAMCo (including reports on investment management fees charged by SAAMCo to other funds it manages) and by the Board's Independent Counsel. In considering the reasonableness of the advisory fee, the Board reviewed a number of expense comparisons, including: (i) contractual management fees; (ii) actual total expenses; and (iii) actual and allowable Rule 12b-1 and non-12b-1 fees. Additionally, the Board reviewed each Fund's net expense ratios and analyzed the expense reimbursements and net expense ratio caps contractually agreed upon by SAAMCo. The Board compared each Fund's net expense ratios to those of other funds within its Peer Group. The Board further considered that the SunAmerica Money Market Fund's Advisory Agreement contained breakpoints in the fee schedule that would directly benefit shareholders if the fund reached certain asset levels. The Board also considered that while the Municipal Money Market Fund's Advisory Agreement did not contain breakpoints, SunAmerica had agreed to contractual expense caps which would benefit shareholders by keeping expenses set at certain levels. Based upon the reports prepared by Lipper and other information provided by SAAMCo and by counsel to the Disinterested Trustees, the Board was satisfied that the fee and expense ratios of each Fund was acceptable given the quality of services expected to be provided and were comparable to the fee and expense ratios of similar funds within the Peer Group. In considering the subadvisory fee, the Board, including the Disinterested Directors, considered that the Municipal Money Market Fund pays a fee to SAAMCo pursuant to the Advisory Agreement, and that, in turn, SAAMCo, rather than the Municipal Money Market Fund, pays a fee to the Subadviser. Therefore, the Board considered the amount retained by SAAMCo and the fee paid to the Subadviser, which is an affiliate of SAAMCo, with respect to the different services provided by the Subadviser. The Board also considered that the Subadvisory Agreement contained breakpoints in the fee schedule if the Municipal Money Market Fund reached certain asset levels. The Board noted that such breakpoints would not directly benefit the shareholders, but would result in SAAMCo retaining a larger portion of the advisory fee. The Board, however, was satisfied that SAAMCo had agreed to contractual expense caps which benefited shareholders, as described above. Costs of Services and Benefits Derived, as well as the Adviser's Profitability and Financial Condition. The Board, including the Disinterested Directors, considered the direct and indirect costs and benefits of SAAMCo providing services to the Funds. The Board reviewed financial statements relating to SAAMCo's profitability and financial condition with respect to the services it provided to the Funds, and considered how profit margins could affect SAAMCo's 26 SunAmerica Money Market Funds, Inc. APPROVAL OF ADVISORY AGREEMENTS -- December 31, 2005 -- (unaudited) (continued) ability to attract and retain qualified investment personnel. The Board concluded that SAAMCo had a satisfactory financial condition, and that their profitability was not excessive as compared to standards set forth in applicable Court cases and other available industry information. With respect to indirect costs and benefits, the Board was informed, based on management's judgment, that (1) any indirect costs incurred by SAAMCo in connection with rendering investment advisory services to the Funds are inconsequential to the analysis of the adequacy of the advisory fees, and (2) any collateral benefits derived as a result of providing advisory services to the Funds are de minimis and do not impact upon the reasonableness of the advisory fee. The Board also considered the reputational value to SAAMCo from serving as investment adviser. The Board also considered fees and, where applicable, profits earned by affiliates for providing other services to the Funds, and, as described above, research and other services SAAMCo obtained in connection with soft dollar commissions. The Board concluded that any benefits that SAAMCo and its affiliates could be expected to receive with regard to providing investment advisory and other services to the Funds were not excessive. Terms of the Advisory Agreement and Subadvisory Agreement The Board, including the Disinterested Directors, received a draft of the proposed Advisory Agreement and Subadvisory Agreement. The Board considered that they may be renewed from year to year, so long as their continuance is specifically approved at least annually in accordance with the requirements of the 1940 Act and that the Agreements provide that they will terminate in the event of an assignment (as defined in the 1940 Act) or upon termination of the agreement. In reviewing the terms of the Advisory Agreement, the Board considered that SAAMCo pays all of its own expenses in connection with the performance of its duties, as well as the salaries, fees and expenses of the Directors and Officers who are employees of SAAMCo. The Board noted, however, that the Funds bear certain proxy-related expenses. The Board also considered the termination and liability provisions of the Advisory Agreement. With respect to the Subadvisory Agreement, the Board further considered, that under the terms of the Subadvisory Agreement, the Subadviser is not liable to the Funds, or their shareholders, for any act or omission by the Subadviser or for any losses sustained by the Fund, or its shareholders, except in the case of willful misfeasance, bad faith, gross negligence and reckless disregard of obligations or duties. The Board also considered that the Subadvisory Agreement provides that the Subadviser will pay all of its own expenses in connection with the performance of its duties as well as the cost of maintaining the staff and personnel as necessary for it to perform its obligations. Economies of Scale The Board, including the Disinterested Directors, considered whether the Funds have benefited from economies of scale and whether there is potential for future realization of economies with respect to the Funds. The Board concluded that any potential economies of scale are being shared between shareholders and SAAMCo in an appropriate manner. The Board considered that the funds in the AIG SunAmerica complex share common resources and as a result, an increase in the overall size of the complex could permit each fund to incur lower expenses than they otherwise would achieve as stand-alone entities. The Board also considered the anticipated efficiencies in the processes of SAAMCo as it adds labor and capital to expand the scale of operations. The Board concluded that the advisory fee structure was reasonable and that no changes were currently necessary to further reflect economies of scale. The Board noted that it will continue to review fees, including breakpoints and expense caps in connection with contract renewals. The Overall Organization of SAAMCo The Directors considered the benefit to shareholders of investing in a fund that is part of a family of funds offering a variety of types of mutual funds and shareholder services. The Directors also considered SAAMCo's experience in providing management and investment advisory services to advisory clients, and the fact that SAAMCo currently managed, advised and/or administered approximately $42 billion of assets. The Directors also considered SAAMCo's 27 SunAmerica Money Market Funds, Inc. APPROVAL OF ADVISORY AGREEMENTS -- December 31, 2005 -- (unaudited) (continued) record of compliance with the Funds' objectives, strategies and restrictions and its positive regulatory and compliance history. The Directors also considered SAAMCo's relationships with its affiliates and the resources available to them. Compliance The Board considered SAAMCo's and AIGGIC's compliance and regulatory history, and inquired whether SAAMCo or AIGGIC had been the target of any regulatory actions or investigations. In addition, the Board reviewed information concerning SAAMCo's compliance staff that would be responsible for providing compliance functions on behalf of the Fund. Finally, the Board reviewed the Code of Ethics of SAAMCo and AIGGIC, and determined that they contain provisions reasonably necessary to prevent fraudulent, deceptive or manipulative acts by personnel in connection with their personal transactions in securities held or to be acquired by the Fund. Investment Performance The Board regularly reviews the performance of the Funds over various periods of time. At the Board meeting held on August 31, 2005, in connection with the approval of the continuation of the Advisory Agreement and the Subadvisory Agreement, the Board reviewed each Fund's annualized total return for the one-, two-, three-, four- and five-year periods. The Board, including the Disinterested Directors, received and reviewed information regarding the investment performance of each Fund as compared to its respective benchmarks, the performance of the Fund's Peer Group, and to an appropriate index or combination of indices. In preparation for the August 31, 2005 meeting, the Board was provided with performance reports independently prepared by Lipper. Based on the Lipper reports, the Board reviewed the Fund's annualized total return for the prior one-, two-, three-, four- and five-year periods ending on June 30, 2005. The Board also received reports prepared by SAAMCo's management which detailed each Fund's performance with respect to 2005. The Board considered that while each Fund's performance still lagged its relevant benchmark and peer group each Fund had demonstrated increased total returns over each of the past three years. Conclusion After a full and complete discussion, and following negotiations with SAAMCo's management, the Board renewed the Advisory and Subadvisory Agreement with respect to the Funds for a period of one year. The Board indicated that it would carefully monitor the performance of the Funds and that the Board would take appropriate action, as necessary, in an effort to enhance performance Based on their evaluation of all material factors and assisted by the advice of independent counsel, the Board, including the Disinterested Directors, were satisfied that the terms of the Advisory Agreement and Subadvisory Agreement were fair, and in the best interest of the Funds and its shareholders, and that the advisory fee rates provided in the Advisory Agreement are acceptable in light of the usual and customary charges made for services of similar nature and quality. In arriving at a decision to approve the continuation of the Advisory Agreement and Subadvisory Agreement, the Board did not single out any one factor or group of factors as being more important than other factors, but considered all factors together. 28 SunAmerica Money Market Funds DIRECTORS AND OFFICERS INFORMATION -- December 31, 2005 -- (unaudited) The following table contains basic information regarding the Directors and Officers that oversee operations of the Funds and other investment companies within the Fund Complex.
Number of Position Term of Funds in Held With Office and Principal Fund Complex Other Name, Address SunAmerica Length of Occupations During Overseen by Directorships Held and Date of Birth* Complex Time Served(4) Past 5 years Director(1) by Director(2) - -------------------- ---------- -------------- ------------------- ------------ ------------------- Directors Jeffrey S. Burum Director 2004- Founder and CEO of 42 None DOB: February 27, present National Housing 1963 Development Corporation (January 2000 to present); Founder, Owner and Partner of Colonies Crossroads, Inc. (January 2000 to present); Owner and Managing Member of Diversified Pacific Development Group, LLC (June 1990 to present). Judith L. Craven Director 2001- Retired 91 Director. A.G. Belo DOB: October 6, 1945 present Corporation (1992 to present); Director, Sysco Corporation (1996 to present); Director, Luby's Inc. (1998 to present); Director, University of Texas Board of Regents (May 2001 to present) William F. Devin Director 2001- Retired 91 Member of the Board DOB: December 30, present of Governors, 1938 Boston Stock Exchange (1985-Present); Samuel M. Eisenstat Chairman 1985- Attorney, solo 52 Director of North DOB: March 7, 1940 of the present practitioner; European Oil Board Royalty Trust. Stephen J. Gutman Director 1984- Associate, Corcoran 52 None DOB: May 10, 1943 present Group (Real Estate) (2003 to present); Partner and Member of Managing Directors, Beau Brummell -- Soho LLC (Licensing of menswear specialty retailing and other activities) (June 1988-present) Peter A. Harbeck(3) Director 1994- President, CEO and 100 None DOB: January 23, present Director, SAAMCo. 1954 (August 1995 to present); Director, AIG SunAmerica Capital Services, Inc. ("SACS") (August 1993 to present) President and CEO, AIG Advisor Group, Inc. (June 2004 to present) William J. Shea Director 2004- President and CEO, 52 Chairman of the DOB: February 9, present Conseco, Inc. Board, Royal and 1948 (Financial SunAlliance, Services) U.S.A., Inc. (March (2001-2004); 2005 to present); Chairman of the Director, Boston Board of Centennial Private Holdings Technologies, Inc. (October 2004 to (1998 to 2001); present) Vice Chairman, Bank Boston Corporation (1993-1998)
29 SunAmerica Money Market Funds DIRECTORS AND OFFICERS INFORMATION -- December 31, 2005 -- (unaudited) (continued)
Number of Position Term of Funds in Held With Office and Principal Fund Complex Other Name, Address SunAmerica Length of Occupations During Overseen by Directorships Held and Date of Birth* Complex Time Served(4) Past 5 years Director(1) by Director(2) - ------------------- ---------- -------------- ------------------- ------------ ------------------- Officers Vincent M. Marra President 2004- Senior Vice N/A N/A DOB: May 28, 1950 present President and Chief Operating Officer, SAAMCo (February 2003 to Present); Chief Administrative Officer, Chief Operating Officer and Chief Financial Officer, Carret & Co., LLC (June 2002 to February 2003); President and Chief Operating Officer, Bowne Digital Solutions (1999 to May 2002) Donna M. Handel Treasurer 2002- Senior Vice N/A N/A DOB: June 25, 1966 present President, SAAMCo (December 2004 to Present); Vice President, SAAMCo (1997 to December 2004), Assistant Treasurer (1993 to 2002) Gregory N. Bressler Secretary September Senior Vice N/A N/A DOB: November 17, and 2005 to President and 1966 Chief Present General Counsel, Legal SAAMCo (June 2005 Officer to present); Vice President and Director of U.S. Asset Management Compliance, Goldman Sachs Asset Management (June 2004 to June 2005); Deputy General Counsel, Credit Suisse Asset Management (June 2002 to June 2004); Counsel, Credit Suisse Asset Management (January 2000 to June 2002).
- -------- * The business address for each Director and Officer is the Harborside 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, Inc. (2 funds), SunAmerica Equity Funds (9 funds), SunAmerica Income Funds (6 funds), SunAmerica Focused Series, Inc. (17 portfolios), SunAmerica Focused Alpha Growth Fund, Inc. (1 fund), SunAmerica Focused Alpha Large-Cap Fund, Inc. (1 fund), Anchor Series Trust (9 portfolios), SunAmerica Senior Floating Rate Fund, Inc. (1 fund), SunAmerica Series Trust (32 portfolios), VALIC Company I (33 portfolios), VALIC Company II (15 funds), Seasons Series Trust (24 portfolios) and AIG Series Trust (6 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 within the Investment Company Act of 1940, because he is an officer and a director of the advisor and a director of the principal underwriter of, the Trust. (4) Directors serve until their successors are duly elected and qualified, subject to the Director's retirement plan as discussed in Note 6 of the financial statements. Additional information concerning the Directors and Officers is contained in the Statement of Additional Information and is available without charge by calling (800) 858-8850. 30 SunAmerica Money Market Funds SHAREHOLDER TAX INFORMATION -- (unaudited) Certain tax information regarding the SunAmerica Money Market Funds is required to be provided to shareholders based upon the Fund's income and distributions for the taxable year ended December 31, 2005. The information necessary to complete your income tax returns is included with your Form 1099-DIV mailed to you in January 2006. During the year ended December 31, 2005, 100% of the distributions paid by the SunAmerica Municipal Money Market Fund are exempt from federal income taxes. 31 SunAmerica Money Market Funds If you would like additional information: [_] Call FastFacts -- our 24-hour, automated account and fund information hotline at 800-654-4760. [_] Visit www.sunamericafunds.com for more up-to-date information. AIG SunAmerica Mutual Funds thank you for your continued support. 32 [LOGO] AIG Sun America Mutual Funds Harborside Financial Center 3200 Plaza 5 Jersey City, NJ 07311-4992 Directors/Trustees Investment Adviser DISCLOSURE OF QUARTERLY Samuel M. Eisenstat AIG SunAmerica Asset PORTFOLIO HOLDINGS Peter A. Harbeck Management Corp. The Fund is required to Dr. Judith L. Craven Harborside Financial file its com-plete William F. Devin Center schedule of portfolio Stephen J. Gutman 3200 Plaza 5 holdings with the U.S. Jeffrey S. Burum Jersey City, NJ Securities and Exchange William J. Shea 07311-4992 Commission for its first and third fiscal quarters Officers Distributor on Form N-Q. Once filed, Vincent M. Marra, AIG SunAmerica Capital the Fund's Form N-Q will President Services, Inc. be available without Donna M. Handel, Harborside Financial charge on the U.S. Treasurer Center Securities and Exchange J. Steven Neamtz, Vice 3200 Plaza 5 Commission's website at President Jersey City, NJ www.sec.gov. You can also Timothy P. Pettee, Vice 07311-4992 obtain cop-ies of Form President N-Q by (i) visiting the Brian Wiese, Vice Shareholder Servicing U.S. Securities and President Agent Exchange Commis-sion's Cynthia Gibbons, Vice AIG SunAmerica Fund Public Reference Room in President and Chief Services, Inc. Washington, DC Compliance Officer Harborside Financial (information on the Gregory N. Bressler, Center operation of the Public Chief Legal Officer 3200 Plaza 5 Reference Room may be and Secretary Jersey City, NJ obtained by calling Gregory R. Kingston, 07311-4992 1-800-SEC-0330); (ii) Vice President and sending your request and Assistant Treasurer Custodian and Transfer a duplicating fee to the Corey A. Issing, Agent U.S. Securities and Assistant Secretary State Street Bank and Exchange Commis-sion's Shawn Parry, Assistant Trust Company Public Reference Room, Treasurer P.O. Box 419572 Washington, DC 20549-0102 Kansas City, MO or (iii) sending your 64141-6572 request electronically to publicinfo@sec.gov. VOTING PROXIES ON FUND PORTFOLIO SECURITIES This report is submitted A description of the solely for the general policies and proce-dures information of that the Fund uses to shareholders of the Fund. determine how to vote Distribution of this proxies relating to report to persons other secu-rities held in the than shareholders of the Fund's portfolios which Fund is authorized only is available in the in connection with a Fund's State-ment of currently effective Additional Information, prospectus, setting forth may be obtained without details of the Fund, charge upon re-quest, by which must precede or calling (800) 858-8850. accompany this report. This information is also available from the EDGAR database on the U.S. Secu-rities and Exchange Commission's website at http://www.sec.gov. PROXY VOTING RECORD ON SUNAMERICA MONEY MARKET FUNDS Information regarding how SunAmerica Money Market Funds voted proxies relating to securities held in SunAmerica Money Market Funds during the twelve month period ended June 30, 2005 is available without charge, upon request, by calling (800) 858-8850 or on the U.S. Secu-rities and Exchange Commission's website at http://www.sec.gov.
33 [LOGO] Distributed by: AIG SunAmerica Capital Services, Inc. Harborside Financial Center 3200 Plaza 5 Jersey City, NJ 07311-4992 Investors should carefully consider the investment objectives, risks, charges and expenses of any mutual fund before investing. This and other important information is contained in the prospectus, which can be obtained from your financial adviser or from the AIG SunAmerica Sales Desk at 800-858-8850, ext. 6003. Read the prospectus carefully before you invest. Funds distributed by AIG SunAmerica Capital Services, Inc. www.sunamericafunds.com MMANN-12/05 Item 2. Code of Ethics The SunAmerica Money Market Funds, Inc. (the "registrant") 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. The registrant's Board of Directors has determined that William J. Shea, the Chairman of the registrant's Audit Committee, qualifies as an audit committee financial expert, as defined in the instructions to Item 3(a) of Form N-CSR. Mr. Shea is considered to be "independent" for purposes of Item 3(a)(2) of Form N-CSR. Item 4. Principal Accountant Fees and Services. (a)--(d) Aggregate fees billed to the registrant for the last two fiscal years for professional services rendered by the registrant's principal accountant were as follows: 2004 2005 Audit Fees ....................$ 45,290 $ 46,127 Audit-Related Fees ............$ 15,266 $ 14,735 Tax Fees ......................$ 15,800 $ 16,050 All Other Fees ................$ 0 $ 0 Audit Fees include amounts related to the audit of the registrant's annual financial statements and services normally provided by the principal accountant in connection with statutory and regulatory filings. Tax Fees principally include tax compliance, tax advice, tax planning and preparation of tax returns. (e) (1) The registrant's audit committee pre-approves all audit services provided by the registrant's principal accountant for the Registrant and all non-audit services provided by the registrant's principal accountant for the registrant, its investment adviser and any entity controlling, controlled by, or under common control with the investment adviser ("Adviser Affiliate") that provides ongoing services to the registrant, if the engagement by the investment adviser or Adviser Affiliate relates directly to the operations and financial reporting of the registrant. (2) No services included in (b)-(d) above were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. (f) Not Applicable. (g) The aggregate fees billed for the most recent fiscal year and the preceding fiscal year by the registrant's principal accountant for non-audit services rendered to the registrant, its investment adviser, and Adviser Affiliate that provides ongoing services to the registrant for 2005 and 2004 were $298,099 and $1,651,669, respectively. (h) Non-audit services rendered to the registrant's investment adviser and any Adviser Affiliate that were not pre-approved pursuant to Paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X were considered by the registrant's audit committee as to whether they were compatible with maintaining the principal accountant's independence. Item 5. Audit Committee of Listed Registrants. Not applicable. Item 6. Schedule of Investments. Included in Item 1 to the Form. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not applicable. Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not applicable. Item 10. Submission of Matters to a Vote of Security Holders. Not applicable. Item 11. 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 of 1940 (17 CFR 270.30a-3(d))) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal contro1 over financial reporting. Item 12. Exhibits. (a) (1) Code of Ethics applicable to its Principal Executive and Principle Accounting Officers pursuant to Section 406 of the Sarbanes-Oxley Act of 2002 attached hereto as Exhibit 99.406. Code of Ethics. (2) Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT. (3) Not applicable. (b) 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 Money Market Funds, Inc. By: /s/ Vincent M. Marra ------------------- Vincent M. Marra President Date: March 10, 2006 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/ Vincent M. Marra ------------------- Vincent M. Marra President Date: March 10, 2006 By: /s/ Donna M. Handel ------------------- Donna M. Handel Treasurer Date: March 10, 2006 EX-99.406CERT 2 dex99406cert.txt CERTIFICATION PURSUANT TO SECTION 406 Exhibit 99.406.Code of Ethics ANCHOR SERIES TRUST AIG SERIES TRUST SUNAMERICA EQUITY FUNDS SUNAMERICA FOCUSED ALPHA GROWTH FUND, INC. SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND, INC. SUNAMERICA FOCUSED SERIES, INC. SUNAMERICA INCOME FUNDS SUNAMERICA MONEY MARKET FUNDS, INC. SUNAMERICA SENIOR FLOATING RATE FUND, INC. (collectively, the "Funds") CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND PRINCIPAL ACCOUNTING OFFICERS I. Introduction The Boards of Directors/Trustees of the Funds (the "Boards") have adopted this Code of Ethics (this "Code") pursuant to Section 406 of the Sarbanes-Oxley Act applicable to the Funds' Principal Executive Officer and Principal Accounting Officer (the "Covered Officers" each of whom is set forth in Exhibit A) for the purpose of promoting: . Honest and ethical conduct, including the ethical handling of conflicts of interest between personal and professional relationships; . Full, fair, accurate, timely and understandable disclosure; . Compliance with applicable laws and governmental rules and regulations; . The prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and . Accountability for adherence to the Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. II. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest A "conflict of interest" occurs when a Covered Officer's private interest improperly interferes with the interests of, or his or her service to, a Trust. For example, a conflict of interest would arise if a Covered Officer, or a member of his or her family, receives improper personal benefits as a result of his or her position with the Trust. Certain conflicts of interest arise out of the relationships between Covered Officers and the Funds and already are subject to conflict of interest provisions in the Investment Company Act of 1940, as amended (the "Investment Company Act") and the Investment Advisers Act of 1940, as amended (the "Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Funds because of their status as "affiliated persons" of the Funds. The compliance programs and procedures of the Funds and the Funds' investment adviser, AIG SunAmerica Asset Management Corp. ("SAAMCo"), are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts may arise from, or as a result of, the contractual relationship between, the Funds and SAAMCo, of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Funds or for SAAMCo, or for both), be involved in establishing policies and implementing decisions that will have different effects on the Funds and SAAMCo. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Funds and SAAMCo and is consistent with the performance by the Covered Officers of their duties as officers of the Funds. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Boards that the Covered Officers may also be officers or employees of other investment companies advised by SAAMCo. In particular, each Covered Officer must: . Not use his or her personal influence or personal relationships to influence investment decisions or financial reporting by a Trust whereby the Covered Officer would benefit personally to the detriment of the Trust; . Not cause a Trust to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of the Trust; and . Report at least annually to the Ethics Committee any material transaction or relationship that could reasonably be expected to give rise to a conflict of interest. There are certain potential conflict of interest situations that should be discussed with the Ethics Committee if material. Examples of these include: . Service as a director on the board of any company; . The receipt of any non-nominal gifts; . The receipt of any entertainment from any company with which a Trust has current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; 2 . Any ownership interest in, or any consulting or employment relationship with, any of the Funds' service providers, other than SAAMCo, the Funds' principal underwriter or any affiliated person thereof; . A direct or indirect financial interest in commissions, transaction charges or spreads paid by a Trust for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. III. Disclosure and Compliance . Each Covered Officer should familiarize himself or herself with the disclosure requirements generally applicable to the Funds; . Each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Funds to others, whether within or outside the Funds, including to the Boards and auditors, or to governmental regulators and self-regulatory organizations; . Each Covered Officer should, to the extent appropriate within his or her area of responsibility, consult with other officers and employees of the Funds and SAAMCo with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents that the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and . It is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. IV. Reporting and Accountability Each Covered Officer must: . Upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Boards that he or she has received, read and understands the Code; . Annually thereafter affirm to the Boards that he or she has complied with the requirements of the Code; . Not retaliate against any other Covered Officer or affiliated person of the Funds for reports of potential violations of this Code that are made in good faith; and . Notify the Ethics Committee promptly if he or she knows of any violation of this Code. Failure to do so is itself a violation of this Code. 3 The Ethics Committee is responsible for applying this Code to specific situations in which questions are presented to it and has the authority to interpret this Code in any particular situation. The Ethics Committee will also consider waivers sought by the Covered Officers. The Funds will act according to the following procedures in investigating and enforcing this Code: . The Ethics Committee will take all appropriate action to investigate any potential violations reported to it; . If, after such investigation, the Ethics Committee believes that no violation has occurred, the Ethics Committee is not required to take any further action; . If the Ethics Committee determines that a violation has occurred, it will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of SAAMCo or its board; or a recommendation to dismiss the Covered Officer; . The Ethics Committee will be responsible for granting waivers, as appropriate; . The Ethics Committee will inform the Boards of violations or waivers of this Code; and . Any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. V. Other Policies and Procedures This Code shall be the sole Code of Ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to investment companies thereunder. Insofar as other policies or procedures of the Funds, SAAMCo, the Funds' principal underwriter or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Code of Ethics of the Funds, SAAMCo and the Funds' principal underwriter, under Rule 17j-1 of the Investment Company Act, and SAAMCo's more detailed policies and procedures set forth in the SAAMCo Compliance Procedures Manual are separate requirements applying to Covered Officers and others, and are not part of this Code. VI. Amendments Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Boards. VII. Confidentiality 4 All reports and records prepared or maintained pursuant to this Code shall be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Funds, the Ethics Committee, SAAMCo and the Boards and their independent counsel. VIII. Internal Use The Code is intended solely for internal use by the Funds and does not constitute an admission, by or on behalf of the Funds, as to any fact, circumstance or legal conclusion. Date: August 7, 2003 5 Exhibit A* Vincent Marra, as President of the Funds Donna M. Handel, as Treasurer of the Funds * Exhibit A was amended as follows, effective December 1, 2004 Robert M. Zakem resigned as President of the Funds. 6 EX-99.CERT 3 dex99cert.txt CERTIFICATION PURSUANT TO SECTION 302 Exhibit 99. CERT CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT I, Vincent M. Marra, certify that: 1. I have reviewed this report on Form N-CSR of SunAmerica Money Market Funds, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 15, 2006 /s/ Vincent M. Marra ------------------- Vincent M. Marra President CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT I, Donna M. Handel, certify that: 1. I have reviewed this report on Form N-CSR of SunAmerica Money Market Funds, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 15, 2006 /s/ Donna M. Handel ------------------- Donna M. Handel Treasurer EX-99.906CERT 4 dex99906cert.txt CERTIFICATION PURSUANT TO SECTION 906 Exhibit 99.906.CERT CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT Vincent M. Marra, President, and Donna M. Handel, Treasurer of SunAmerica Money Market Funds, Inc., (the "registrant"), each certify to the best of his or her knowledge that: 1. The attached Form N-CSR report of the registrant fully complies with the requirements of Sections 13(a) and 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in such N-CSR report fairly represents, in all material respects, the financial conditions and results of operations of the registrant as of, and for, the periods presented in the report. Dated: February 15, 2006 /s/ Vincent M. Marra --------------- Vincent M. Marra President /s/ Donna M. Handel --------------- Donna M. Handel Treasurer A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----