-----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, JscOSlTSugV7RW0nPaOnTlu2KAvA+Vh/4heLC+BE3pbAa1nrpt2PSsiW8kVfE+WA w8ObqvK2qcYCXBeTOG/eYQ== 0001193125-07-050445.txt : 20070309 0001193125-07-050445.hdr.sgml : 20070309 20070309105215 ACCESSION NUMBER: 0001193125-07-050445 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20061231 FILED AS OF DATE: 20070309 DATE AS OF CHANGE: 20070309 EFFECTIVENESS DATE: 20070309 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: 07682929 BUSINESS ADDRESS: STREET 1: HARBORSIDE FINANCIAL CENTER STREET 2: 3200 PLAZA FIVE CITY: JERSEY CITY STATE: NJ ZIP: 07311-4992 BUSINESS PHONE: 2013246300 MAIL ADDRESS: STREET 1: HARBORSIDE FINANCIAL CENTER STREET 2: 3200 PLAZA FIVE CITY: JERSEY CITY STATE: NJ ZIP: 07311-4992 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 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, 2006 ------------------------- Item 1. Reports to Stockholders 2006 Annual SunAmerica Report - ---------------------
[PHOTO] [GRAPHIC] Money Market Funds December 31, 2006 ANNUAL REPORT SUNAMERICA MONEY MARKET FUNDS SunAmerica Money Market Fund (SMAXX) SunAmerica Municipal Money Market Fund (NMAXX) Table of Contents SHAREHOLDERS' LETTER................................... 1 FUND REVIEWS........................................... 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............................... 12 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............................ 32 December 31, 2006 ANNUAL REPORT Shareholders' 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 for the period ending December 31, 2006. The year began with a new Federal Reserve Chairman who was faced with the challenge of earning his inflation-fighting credentials while maintaining economic growth. Faced with rising energy prices, the Federal Reserve raised the Fed Funds rate from 4.25% to 5.25% in the first half of the year before pausing in August. The key monetary target remained at this level for the duration of the fiscal year. Another important factor facing the bond markets in 2006 was the inversion of the yield curve. The two-year U.S. Treasury note began the year at 4.40% while the 10-year U.S. Treasury bond yielded 4.39%. The annual period ended with the two-year note at 4.81%, 11 basis points higher than the 10-year benchmark. Both Funds continue to emphasize strong credit analysis in pursuit of total return. While navigating the interest-rate environment, our managers focused on fundamental analysis to identify credits which offer solid risk/reward characteristics. The detailed commentary, written by the Funds' portfolio management team, offers specific insight on the challenges and opportunities the Funds faced in 2006. I urge you to read their remarks. We thank you for your continued interest in the SunAmerica Money Market and Municipal Money Market Funds. If you have any questions or require additional information on these funds or other AIG SunAmerica mutual funds, we invite you to visit www.sunamericafunds.com or call our Shareholder Services Department at 1-800-858-8850 x6010. Sincerely, /s/ Peter A. Harbeck Peter A. Harbeck President and CEO AIG SunAmerica Asset Management Corp. - -------- Past performance is no guarantee of future results. 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. 1 SunAmerica Money Market Fund FUND REVIEW -- (unaudited) Andrew Doulos, Portfolio Manager AIG SunAmerica Asset Management Corp. The SunAmerica Money Market Fund, Class A returned 4.22% for the 12-month period ending December 31, 2006, compared to a return of 5.02% for the 30-day CD rate. The Federal Open Market Committee raised short-term interest rates by 25 basis points at three meetings this past year. The last 25 basis points increase occurred in June, resulting in the 17th consecutive increase which brought the target rate to 5.25%. Throughout the period, policy makers described monetary policy as balanced, in an effort to contain long-term inflation pressures. Sector selection had little impact on the portfolio. Instead value was added through active management of the portfolio's duration. Given our outlook for a pause in the Federal Funds rate, we continued to emphasize longer fixed-rate and floating rate securities while selectively purchasing shorter-dated securities when relative value opportunities were discovered. For the first seven months of the fiscal period, up until the Fed's cessation of its tightening cycle in August, the Fund invested in shorter-dated maturities relative to its benchmark providing the maximum risk/return point. Since then, the Fund has been buying longer-dated maturities, when possible, in order to capture more yield, while still maintaining prudent high-quality investments. At the close of the annual period, the portfolio had a seven-day effective yield of 4.57% versus the average one-month CD rate of 5.30%. - -------- Past performance is no guarantee of future results. 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. 2 SunAmerica Municipal Money Market Fund FUND REVIEW -- (unaudited) (continued) J. Hutchinson Bryan, Portfolio Manager AIG Global Investment Corp. The SunAmerica Municipal Money Market Fund Class A returned 2.69% for the fiscal year ending December 31, 2006. Two of the key factors affecting the economy and the stock market in 2006 were consumer spending and inflation. Housing starts and housing sales slowed during the year. During the first half of 2006, rising interest rates and increased commodity prices, particularly in the energy sector, impacted consumers. Early in the year, Federal Reserve Chairman Ben Bernanke appeared to be particularly vigilant with respect to price trends. The Federal Funds target rate was raised from 4.25% to 5.25% in four successive meetings before pausing in August for the remainder of the year. This was partly in an effort to contain inflation. In the second half of 2006, inflation (as measured by the Consumer Price Index) appeared to stabilize, monthly non-farm payroll statistics averaged 160,000 job additions, and crude oil futures began to decline after reaching an all-time high of nearly $78 a barrel. In mid-July, the stock and bond markets simultaneously began a long rally. Finally, growth appeared to slow from its earlier pace and inflation stabilized, leading the market focus on the possibility and timing of cuts to the Federal Funds target rate. Market conditions relative to the Fund were primarily the resets of weekly variable rate demand obligations (VRDOs) in relation to longer fixed-coupon note maturities. The proxy for VRDOs is the Bond Market Association (BMA) Index,* and, as taxable rates rose in the first half of the year, the BMA Index followed suit, especially during the cyclically weak tax season months. The Fund's performance benefited from yield increases during April and May because VRDOs traded at a yield greater than longer fixed-coupon note structures. The Fund saw continued volatility in the BMA Index during the summer months, which is typically a better-performing period. The index continued to fluctuate within a 30 to 40 basis points range, occasionally yielding more than six- and 12-month note structures. Consequently, our purchases of note structures in these months did not provide much added value to the Fund. With respect to VRDOs, the Fund's holdings were weighted toward sectors that reset at a greater spread to BMA such as health care, industrial revenue, utility and other revenue sectors, while still maintaining diversity requirements. In addition, fixed-coupon note structures were concentrated in well-regarded, liquid names from large issuers backed by strong revenue or general obligation pledges, which tend to trade at a premium to smaller, less-liquid issuers in the secondary market. - -------- Past performance is no guarantee of future results. *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. Indices are not managed and an investor cannot invest directly into an index. 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. 3 SunAmerica Money Market Funds EXPENSE EXAMPLE -- December 31, 2006 -- (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 purchase payments and contingent deferred sales charges and (2) ongoing costs, including management fees, distribution and service fees, and other Fund expenses. This Example set forth below 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, 2006 and held until December 31, 2006. 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, 2006" 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, 2006" 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, 2006" column does not include administrative fees that may apply to qualified retirement plan accounts. See the Funds' prospectus and/or your retirement plan documents for a full description of these fees. Had these fees been included, the "Expenses Paid During the Six Months Ended December 31, 2006" column would have been higher and the "Ending Account Value" 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 and 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, 2006" 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, 2006" column does not include administrative fees that may apply to qualified retirement plan accounts. See the Funds' prospectus and/or your retirement plan documents for a full description of these fees. Had these fees been included, the "Expenses Paid During the Six Months Ended December 31, 2006" column would have been higher and the "Ending Account Value" 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 the Fund's prospectus and/or 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, 2006 -- (unaudited) (continued)
Actual Hypothetical --------------------------------------------------- --------------------------------- Ending Ending Account Account Value Expenses Paid Value using Beginning Using Actual During the Beginning a Hypothetical 5% Account Value Returns at Six Months Ended Account Value Assumed Return at at July 1, 2006 December 31, 2006 December 31, 2006 at July 1, 2006 December 31, 2006 --------------- ----------------- ----------------- --------------- ----------------- Money Market Fund Class A................. $1,000.00 $1,022.52 $4.54 $1,000.00 $1,020.72 Class B................. $1,000.00 $1,018.02 $8.95 $1,000.00 $1,016.33 Class C ................ $1,000.00 $1,018.08 $8.85 $1,000.00 $1,016.43 Class I#................ $1,000.00 $1,022.97 $4.08 $1,000.00 $1,021.17 Municipal Money Market Fund Class A#................ $1,000.00 $1,014.10 $3.96 $1,000.00 $1,021.27 Class B#................ $1,000.00 $1,009.41 $8.56 $1,000.00 $1,016.69 Class C#................ $1,000.00 $1,009.40 $8.41 $1,000.00 $1,016.84
------------------ Expense Expenses Paid Ratio During the as of Six Months Ended December 31, December 31, 2006 2006* ----------------- ------------ Money Market Fund Class A................. $4.53 0.89% Class B................. $8.94 1.76% Class C ................ $8.84 1.74% Class I#................ $4.08 0.80% Municipal Money Market Fund Class A#................ $3.97 0.78% Class B#................ $8.59 1.69% Class C#................ $8.44 1.66%
- -------- * 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, 2006" and the "Expense Ratios" would have been higher. 5 - - SunAmerica Money Market Funds STATEMENT OF ASSETS AND LIABILITIES -- December 31, 2006
Money Market Municipal Money Fund Market Fund -------------- --------------- ASSETS: Short-term investment securities, at value* (unaffiliated)........ $1,692,762,580 $ 98,834,357 Repurchase agreements (cost equals market value).................. 69,465,000 -- -------------- ------------- Total Investments............................................... $1,762,227,580 $ 98,834,357 -------------- ------------- Cash.............................................................. 43,004 2,521,643 Receivable for: Fund shares sold................................................ 115,486 Dividends and interest.......................................... 5,823,342 510,896 Prepaid expenses and other assets................................. 12,648 976 Due from investment adviser for expense reimbursements/fee waivers 528 2,554 -------------- ------------- Total Assets.................................................... 1,768,222,588 101,870,426 -------------- ------------- LIABILITIES: Payable for: Fund shares redeemed............................................ 244,656 1,531 Investment advisory and management fees......................... 670,723 31,075 Distribution and service maintenance fees....................... 239,214 13,749 Transfer agent fees and expenses................................ 371,482 21,123 Dividends payable............................................... 100,327 2,299 Directors' fees and expenses.................................... 241,651 6,718 Other accrued expenses.......................................... 310,779 40,990 -------------- ------------- Total Liabilities............................................... 2,178,832 117,485 -------------- ------------- Net Assets..................................................... $1,766,043,756 $ 101,752,941 ============== ============= NET ASSETS REPRESENTED BY: Common stock, $.001 par value (10 billion shares authorized)...... $ 1,766,052 $ 101,753 Paid-in capital................................................... 1,764,191,453 101,650,608 -------------- ------------- 1,765,957,505 101,752,361 Accumulated undistributed net investment income (loss)............ 86,251 580 -------------- ------------- Net assets..................................................... $1,766,043,756 $ 101,752,941 ============== ============= Class A: Net assets........................................................ $1,711,782,556 $ 101,083,311 Shares outstanding................................................ 1,711,787,291 101,082,605 Net asset value and redemption price per share (excluding any applicable contingent deferred sales charge)...... $ 1.00 $ 1.00 ============== ============= Class B: Net assets........................................................ $ 23,805,871 $ 535,564 Shares outstanding................................................ 23,806,600 535,504 Net asset value and redemption price per share (excluding any applicable contingent deferred sales charge)...... $ 1.00 $ 1.00 ============== ============= Class C: Net assets........................................................ $ 12,398,571 $ 134,066 Shares outstanding................................................ 12,399,554 134,078 Net asset value and redemption price per share (excluding any applicable contingent deferred sales charge)...... $ 1.00 $ 1.00 ============== ============= Class I: Net assets........................................................ $ 18,056,758 $ -- Shares outstanding................................................ 18,059,038 -- Net asset value and redemption price per share.................... $ 1.00 $ -- ============== ============= *Amortized cost of short-term investment securities (unaffiliated) $1,692,762,580 $ 98,834,357 ============== =============
See Notes to Financial Statements 6 SunAmerica Money Market Funds STATEMENT OF OPERATIONS -- For the year ended December 31, 2006
Money Market Municipal Money Fund Market Fund ------------ --------------- INVESTMENT INCOME: Interest (unaffiliated)................................................................ $83,991,891 $3,405,991 Dividends (unaffiliated)............................................................... -- 2,886 ----------- ---------- Total investment income............................................................. 83,991,891 3,408,877 ----------- ---------- EXPENSES: Investment advisory and management fees................................................ 7,722,938 345,413 Distribution and service maintenance fees Class A.............................................................................. 2,407,320 146,413 Class B.............................................................................. 260,094 5,115 Class C.............................................................................. 167,310 4,614 Transfer agent fees and expenses Class A.............................................................................. 3,608,555 217,299 Class B.............................................................................. 87,501 2,776 Class C.............................................................................. 50,192 1,405 Class I.............................................................................. 41,677 -- Registration fees Class A.............................................................................. 38,651 20,525 Class B.............................................................................. 12,184 11,718 Class C.............................................................................. 11,644 11,390 Class I.............................................................................. 11,746 -- Custodian and accounting fees.......................................................... 316,710 27,690 Reports to shareholders................................................................ 344,342 7,552 Audit and tax fees..................................................................... 18,033 18,034 Legal fees............................................................................. 32,490 4,651 Directors' fees and expenses........................................................... 99,896 5,272 Other expenses......................................................................... 29,435 1,444 ----------- ---------- Total expenses before fee waivers, expense reimbursements and custody credits....... 15,260,718 831,311 Fees waived and expenses reimbursed by investment adviser and distributor (Note 3).. (7,773) (26,774) Custody credits earned on cash balances............................................. (15,780) (28,871) ----------- ---------- Net expenses........................................................................ 15,237,165 775,666 ----------- ---------- Net investment income (loss)........................................................... 68,754,726 2,633,211 ----------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ $68,754,726 $2,633,211 =========== ==========
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, 2006 2005 -------------- -------------- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss).......................................................... $ 68,754,726 $ 39,505,841 -------------- -------------- Net increase (decrease) in net assets resulting from operations......................... $ 68,754,726 $ 39,505,841 Distributions to shareholders from: Net investment income (Class A)....................................................... (66,523,360) (38,360,984) Net investment income (Class B)....................................................... (942,063) (535,077) Net investment income (Class C)....................................................... (615,060) (303,588) Net investment income (Class I)....................................................... (675,707) (317,343) -------------- -------------- Total distributions to shareholders..................................................... (68,756,190) (39,516,992) -------------- -------------- Net increase (decrease) in net assets resulting from capital share transactions (Note 5) 119,460,172 (55,074,247) -------------- -------------- Total increase (decrease) in net assets................................................. 119,458,708 (55,085,398) -------------- -------------- NET ASSETS: Beginning of year....................................................................... 1,646,585,048 1,701,670,446 -------------- -------------- End of year*............................................................................ $1,766,043,756 $1,646,585,048 ============== ============== *Includes accumulated undistributed net investment income (loss)........................ $ 86,251 $ 87,715 ============== ==============
Municipal Money Market Fund -------------------------- For the year For the year ended ended December 31, December 31, 2006 2005 ------------ ------------ INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss).......................................................... $ 2,633,211 $ 1,428,607 ------------ ------------ Net increase (decrease) in net assets resulting from operations......................... $ 2,633,211 $ 1,428,607 Distributions to shareholders from: Net investment income (Class A)....................................................... (2,614,881) (1,413,877) Net investment income (Class B)....................................................... (10,057) (4,110) Net investment income (Class C)....................................................... (8,273) (10,621) Net investment income (Class I)....................................................... -- -- ------------ ------------ Total distributions to shareholders..................................................... (2,633,211) (1,428,608) ------------ ------------ Net increase (decrease) in net assets resulting from capital share transactions (Note 5) 14,852,635 (11,193,701) ------------ ------------ Total increase (decrease) in net assets................................................. 14,852,635 (11,193,702) ------------ ------------ NET ASSETS: Beginning of year....................................................................... 86,900,306 98,094,008 ------------ ------------ End of year*............................................................................ $101,752,941 $ 86,900,306 ============ ============ *Includes accumulated undistributed net investment income (loss)........................ $ 580 $ 580 ============ ============
See Notes to Financial Statements 8 SunAmerica Money Market Funds FINANCIAL HIGHLIGHTS
MONEY MARKET FUND ----------------- Net Net Ratio 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 - - 12/31/02 $1.000 $0.010 $(0.010) $1.000 1.04%(4) $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 12/31/06 1.000 0.041 (0.041) 1.000 4.22 1,711,783 0.89 4.14 Class B - - 12/31/02 $1.000 $0.003 $(0.003) $1.000 0.28%(4) $ 64,815 1.64%(3) 0.26%(3) 12/31/03 1.000 0.000 0.000 1.000 0.03 44,529 1.18(3) 0.03(3) 12/31/04 1.000 0.001 (0.001) 1.000 0.07 42,437 1.32(3) 0.06(3) 12/31/05 1.000 0.015 (0.015) 1.000 1.52 31,738 1.74 1.46 12/31/06 1.000 0.033 (0.033) 1.000 3.32 23,806 1.76 3.26 Class C+ - - 12/31/02 $1.000 $0.003 $(0.003) $1.000 0.27%(4) $ 30,285 1.66%(3) 0.26%(3) 12/31/03 1.000 0.000 0.000 1.000 0.03 20,290 1.18(3) 0.03(3) 12/31/04 1.000 0.001 (0.001) 1.000 0.07 16,985 1.33(3) 0.06(3) 12/31/05 1.000 0.015 (0.015) 1.000 1.54 13,497 1.71 1.59 12/31/06 1.000 0.033 (0.033) 1.000 3.33 12,399 1.74 3.31 Class I - - 12/31/02 $1.000 $0.011 $(0.011) $1.000 1.13%(4) $ 9,195 0.80%(3) 1.12%(3) 12/31/03 1.000 0.004 (0.004) 1.000 0.43 9,636 0.77(3) 0.43(3) 12/31/04 1.000 0.006 (0.006) 1.000 0.58 11,895 0.80(3) 0.59(3) 12/31/05 1.000 0.025 (0.025) 1.000 2.49 13,708 0.80(3) 2.49(3) 12/31/06 1.000 0.042 (0.042) 1.000 4.31 18,057 0.80(3) 4.26(3)
- -------- (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)Net of the following expense reimbursements/waivers (based on average net assets):
12/31/02 12/31/03 12/31/04 12/31/05 12/31/06 -------- -------- -------- -------- -------- Class B. 0.04% 0.51% 0.39% -- % -- % Class C+ 0.04 0.53 0.39 -- -- Class I. 0.14 0.02 0.09 0.05 0.05
(4)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 Period beginning investment investment end of Total period to average average Ended of period income(1) income period Return(2) (000's) net assets(3) net assets(3) - -------- --------- ---------- ---------- ------ --------- -------- ------------- ------------- Class A - - 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 12/31/06 1.000 0.027 (0.027) 1.000 2.69 101,083 0.78 2.68 Class B - - 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 12/31/06 1.000 0.018 (0.018) 1.000 1.77 536 1.69 1.77 Class C+ - - 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 12/31/06 1.000 0.018 (0.018) 1.000 1.77 134 1.66 1.61
- -------- (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)Net of the following expense reimbursements/waivers (based on average net assets):
12/31/02 12/31/03 12/31/04 12/31/05 12/31/06 -------- -------- -------- -------- -------- Class A. 0.20% 0.03% 0.00% 0.04% 0.00% Class B. 1.25 1.03 0.87 1.44 2.15 Class C+ 9.68 7.45 4.20 0.47 2.14
+ 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, 2006 -- (unaudited) Industry Allocation* Asset Backed/Securities.......... 15.4% Asset Backed/Receivables......... 14.7 Finance.......................... 12.7 Foreign Bank..................... 10.3 Money Center Banks............... 9.8 Asset Backed/Multi-Asset......... 9.6 Diversified Financial Services... 6.7 Finance-Investment Bank/Brokerage 5.5 Commercial Banks................. 4.9 Regional Bank.................... 4.6 Asset Backed/Finance............. 2.1 Investment Bank/Brokerage........ 1.3 Sovereign Agency................. 1.2 Municipalities................... 0.6 Asset Backed/Loans............... 0.4 ---- 99.8% ==== Weighted average days to maturity 42.1
Credit Quality Allocation @# A-1......................... 96.1% Not rated................... 3.9 ----- 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, 2006
Principal Value Security Description Amount (Note 2) SHORT-TERM INVESTMENT SECURITIES -- 95.9% ASSET-BACKED COMMERCIAL PAPER -- 44.5% Amstel Funding Corp 5.23% due 03/29/07*.................... $20,000,000 $ 19,927,361 5.24% due 03/29/07*................... 25,000,000 24,683,417 Atlantis One Funding Corp 5.24% due 02/20/07*.................... 18,000,000 17,869,000 5.32% due 01/04/07*................... 1,000,000 999,557 Cancara Asset Securitisation, Ltd. 5.24% due 01/05/07*.................... 33,605,000 33,585,453 5.27% due 01/16/07*+.................. 25,000,000 25,000,000 Chariot Funding LLC 5.36% due 01/05/07*.................... 10,475,000 10,468,762 Cheyne Finance LLC 5.32% due 03/06/07+.................... 37,000,000 36,996,867 CRC Funding LLC 5.26% due 01/23/07*.................... 25,000,000 24,919,639 Edison Asset Securitization LLC 5.17% due 04/03/07*.................... 16,000,000 15,788,604 Falcon Asset Securitization LLC 5.29% due 01/29/07*.................... 25,000,000 24,897,139 5.31% due 01/11/07*................... 25,000,000 24,963,125 Fountain Square Commercial Funding Corp. 5.23% due 01/08/07*.................... 3,160,000 3,156,743 5.25% due 01/18/07*................... 4,200,000 4,189,587 Galaxy Funding, Inc. 5.25% due 03/02/07*.................... 25,000,000 24,781,250 Giro Funding US Corp. 5.26% due 02/08/07*.................... 24,000,000 23,866,747 5.32% due 01/26/07*................... 27,000,000 26,900,250 Greyhawk Funding LLC 5.25% due 02/06/07*.................... 22,000,000 21,884,500 5.26% due 01/16/07*................... 25,447,000 25,391,229 Kitty Hawk Funding Corp. 5.26% due 01/29/07*................... 30,000,000 29,877,383 5.32% due 01/25/07*................... 30,000,000 29,893,600 Old Line Funding, LLC 5.32% due 01/04/07*................... 36,653,000 36,636,750 5.35% due 01/05/07*................... 31,740,000 31,721,132 Park Avenue Receivable Co., Ltd. 5.31% due 01/11/07*.................... 25,000,000 24,963,125 5.33% due 01/04/07*................... 25,000,000 24,988,896 Sedna Finance, Inc. 5.25% due 02/01/07*.................... 16,000,000 15,815,667 Surrey Funding Corp. 5.26% due 01/31/07*.................... 31,000,000 30,864,117 Sydney Capital Corp. 5.26% due 01/25/07*.................... 13,000,000 12,954,413 Thames Asset Global Securitization, Inc. 5.24% due 01/22/07*.................... 22,000,000 21,932,753 5.35% due 01/04/07.................... 1,907,000 1,906,150 5.35% due 01/16/07.................... 38,000,000 37,915,291 White Pine Finance LLC 5.28% due 01/22/07*.................... 30,556,000 30,461,888 5.28% due 01/23/07*................... 42,874,000 42,735,791 Windmill Funding Corp. 5.23% due 03/20/07*.................... 23,000,000 22,739,372 ------------ Total Asset-Backed Commercial Paper (amortized cost $785,675,558)......... 785,675,558 ------------
Principal Value Security Description Amount (Note 2) -------------------------------------------------------- CERTIFICATES OF DEPOSIT -- 16.6% ABN AMRO Bank NV 5.44% due 02/12/07+............ $10,000,000 $ 10,004,017 Barclays Bank PLC 5.31% due 04/19/07............. 200,000 199,900 BNP Paribas 5.30% due 02/28/07+............ 24,000,000 24,000,000 Citibank NY 5.30% due 03/08/07+............ 24,000,000 24,000,000 5.32% due 01/26/07............ 24,000,000 24,000,000 First Tennessee Bank NA 5.32% due 03/20/07............. 23,000,000 23,000,000 HBOS Treasury Services 5.22% due 04/03/07............. 200,000 199,864 Lloyds TSB Bank PLC 5.31% due 01/31/07............. 22,000,000 22,000,091 5.35% due 04/25/07............ 36,000,000 36,000,000 Nordea Bank Finland PLC 5.30% due 03/30/07+............ 24,000,000 24,000,000 Societe Generale 5.27% due 01/02/07+*........... 10,000,000 10,000,534 5.29% due 01/22/07+*.......... 20,000,000 19,997,855 Svenska Handelsbanken, Inc. 5.06% due 02/20/07+............ 23,000,000 22,985,253 5.65% due 07/20/07............ 29,000,000 29,025,573 UBS AG 5.32% due 01/29/07+............ 24,000,000 24,000,000 ------------ Total Certificates of Deposit (amortized cost $293,413,087). 293,413,087 ------------ COMMERCIAL PAPER -- 18.9% Bank of America Corp. 5.20% due 03/21/07............. 40,000,000 39,543,468 Bear Stearns Cos., Inc. 5.25% due 01/09/07*............ 23,000,000 22,973,167 Dorada Finance, Inc. 5.24% due 01/23/07............. 23,000,000 22,926,349 General Electric Capital Corp. 5.25% due 01/16/07*............ 27,000,000 26,940,938 HSBC Bank USA, Inc. 5.43% due 03/21/07+............ 16,000,000 16,014,981 Morgan Stanley Dean Witter Co. 5.30% due 01/10/07+*........... 37,000,000 37,000,000 Rabobank Nederland 5.30% due 03/30/07............. 24,000,000 24,000,000 Rabobank USA Financial Corp. 5.28% due 03/30/07+............ 43,000,000 42,993,693 Royal Bank of Canada 5.04% due 02/28/07............. 400,000 399,738 5.23% due 02/28/07............ 24,000,000 23,874,600 State Street Boston Corp. 5.27% due 01/04/07*............ 33,000,000 32,985,507 Svenska Handelsbank, Inc. 4.90% due 02/08/07............. 19,000,000 19,000,000 UBS Americas, Inc. 5.28% due 01/02/07*............ 24,000,000 23,996,480 ------------ Total Commercial Paper (amortized cost $332,648,921). 332,648,921 ------------
12 SunAmerica Money Market Fund PORTFOLIO OF INVESTMENTS -- December 31, 2006 -- (continued)
Principal Value Security Description Amount (Note 2) MEDIUM TERM NOTES -- 14.0% Barclays Bank PLC 5.41% due 11/02/07................... $27,000,000 $ 27,000,000 Beta Finance, Inc. 5.36% due 01/16/07+.................. 36,000,000 36,008,579 HBOS PLC 3.13% due 01/12/07................... 25,000,000 24,982,624 Merrill Lynch & Co., Inc. 5.32% due 01/16/07+*................. 39,000,000 39,000,143 5.36% due 01/16/07+*................ 21,000,000 21,000,000 Sedna Finance, Inc. 5.31% due 02/01/07*+................. 19,000,000 18,999,919 Sigma Finance, Inc. 5.31% due 01/16/07+*................. 25,000,000 24,999,802 5.32% due 03/19/07+................. 37,000,000 36,998,682 Wells Fargo & Co. 5.34% due 01/03/07+*................. 19,000,000 19,000,000 -------------- Total Medium Term Notes (amortized cost $247,989,749)....... 247,989,749 -------------- TAXABLE MUNICIPAL MEDIUM TERM NOTES -- 0.6% Illinois Student Assistance Commission (LOC-Bank of America) 5.37% due 01/03/07+ (amortized cost $10,000,000)......... 10,000,000 10,000,000 -------------- U.S. GOVERNMENT AGENCIES -- 1.3% Agency for International Development Panama 5.75% due 02/12/07+.................. 2,338,614 2,345,265 Federal Home Loan Bank 5.30% due 10/16/07................... 20,690,000 20,690,000 -------------- Total U.S. Government Agencies (amortized cost $23,035,265)........ 23,035,265 -------------- Total Short-Term Investment Securities -- 95.9% (amortized cost $1,692,762,580)..... 1,692,762,580 --------------
Principal Value Security Description Amount (Note 2) -------------------------------------------------------------- REPURCHASE AGREEMENTS -- 3.9% UBS Securities, LLC Joint Repurchase Agreement(1)..... $69,465,000 $ 69,465,000 -------------- TOTAL INVESTMENTS (amortized cost $1,762,227,580)#. 99.8% 1,762,227,580 Other assets less liabilities...... 0.2 3,816,176 ----------- -------------- NET ASSETS......................... 100.0% $1,766,043,756 =========== ==============
- -------- * 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, 2006, the aggregate value of these securities was $986,751,676, representing 55.0% of net assets. Unless otherwise indicated, these securities are not considered to be illiquid. # At December 31, 2006, 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, 2006; maturity date reflects next reset date. (1) See Note 2 for details of Joint Repurchase Agreement LOC --Letter of credit See Notes to Financial Statements 13 SunAmerica Municipal Money Market Fund PORTFOLIO PROFILE -- December 31, 2006 -- (unaudited) State Allocation* North Carolina................... 15.6% Michigan......................... 7.6 Ohio............................. 5.8 Illinois......................... 5.7 New York......................... 5.5 Texas............................ 5.2 Kentucky......................... 5.0 Florida.......................... 4.7 Wyoming.......................... 4.5 Arizona.......................... 4.4 Pennsylvania..................... 4.0 Missouri......................... 3.7 Wisconsin........................ 3.7 New Mexico....................... 3.6 Alabama.......................... 3.0 North Dakota..................... 2.8 Washington....................... 2.7 Colorado......................... 2.1 Kansas........................... 1.7 Georgia.......................... 1.6 Iowa............................. 1.4 Indiana.......................... 1.1 South Carolina................... 0.8 Tennessee........................ 0.8 Registered Investment Companies.. 0.1 ---- 97.1% ==== Weighted average days to maturity 20.1
Credit Quality Allocation @# A-1............. 72.4% Not Rated+...... 20.5% SP-1............ 7.1% ----- 100.0% =====
- -------- * Calculate 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 from the data source. 14 SunAmerica Municipal Money Market Fund PORTFOLIO OF INVESTMENTS -- December 31, 2006
Principal Value Security Description Amount (Note 2) SHORT-TERM INVESTMENT SECURITIES -- 97.1% Alabama -- 3.0% Stevenson Alabama Industrial Development Board Environmental Improvement Revenue (LOC -- JPMorgan Chase Bank) 4.00% due 01/03/07+ $3,000,000 $3,000,000 Arizona -- 4.4% Arizona Health Facilities Authority 3.84% due 01/03/07+ 2,200,000 2,200,000 Maricopa County, Arizona Industrial Development Authority Multi Family Housing Revenue Series A (LOC -- Wells Fargo Bank N.A.) 4.01% due 01/04/07+ 1,510,000 1,510,000 Maricopa County, Arizona Industrial Development Authority (LOC -- Harris Trust & Savings Bank) 3.97% due 01/04/07+ 790,000 790,000 ---------- 4,500,000 ---------- Colorado -- 2.1% Colorado Springs, Colorado Revenue (LOC -- Wells Fargo Bank N.A.) 4.01% due 01/04/07+ 1,345,000 1,345,000 Durango, Colorado Revenue (LOC -- Wells Fargo Bank N.A.) 4.01% due 01/04/07+ 750,000 750,000 ---------- 2,095,000 ---------- Florida -- 4.7% County of Miami-Dade Florida 3.89% due 01/03/07+ 4,800,000 4,800,000 ---------- Georgia -- 1.6% Fulton County, Georgia Development Authority Revenue (LOC -- Wachovia Bank N.A.) 3.92% due 01/04/07+ 1,600,000 1,600,000 ---------- Illinois -- 5.7% Chicago Board of Education Series C 3.90% due 01/04/07+ 180,000 180,000 Chicago Illinois O'Hare International Airport Revenue Class B (LOC -- Societe Generale) 3.95% due 01/03/07+ 845,000 845,000 Chicago, Illinois Water Revenue (LOC -- Bank One N.A.) 3.93% due 01/03/07+ 500,000 500,000 Illinois Health Facilities Authority Revenue, Series B 3.95% due 01/04/07+ 2,700,000 2,700,000 Warren County Illinois Revenue (LOC -- Well Fargo Bank N.A.) 4.01% due 01/04/07+ 1,555,000 1,555,000 ---------- 5,780,000 ---------- Indiana -- 1.1% Marion, Indiana Economic Development Revenue (LOC -- Bank of America N.A.) 3.90% due 01/03/07+ 1,105,000 1,105,000 ---------- Iowa -- 1.4% Iowa Higher Education Loan Authority Revenue American Institute Project (LOC -- Well Fargo Bank N.A.) 4.01% due 01/04/07+........................... 100,000 100,000
Principal Value Security Description Amount (Note 2) Iowa (continued) Iowa Finance Authority Series F 3.98% due 01/04/07+............................. $1,100,000 $1,100,000 Storm Lake, Iowa Higher Education Facilities Revenue 4.06% due 01/04/07+............................. 170,000 170,000 ---------- 1,370,000 ---------- Kansas -- 1.7% Shawnee, Kansas, Industrial Revenue, Series B (LOC -- JPMorgan Chase Bank) 3.90% due 01/02/07+............................. 1,725,000 1,725,000 ---------- Kentucky -- 5.0% Breckinridge County, Kentucky Lease Program Revenue (LOC -- U.S. Bank N.A.) 3.90% due 01/03/07+............................. 3,425,000 3,425,000 Breckinridge County, Kentucky, Breckinridge Lease (LOC -- U.S. Bank N.A.) 3.90% due 01/03/07+............................. 1,270,000 1,270,000 Kentucky Economic Development Finance Authority Hospital Facilities Rev. Series C 3.89% due 01/03/07+............................. 400,000 400,000 ---------- 5,095,000 ---------- Michigan -- 7.6% Detroit Michigan Sewage Disposal Revenue Series C-1 3.93% due 01/04/07+............................. 1,175,000 1,175,000 Holt Michigan Public Schools 3.93% due 01/04/07+............................. 4,000,000 4,000,000 Michigan Municipal Bond Authority Revenue Series B2 (LOC -- Bank of Novia Scotia) 4.50% due 08/20/07.............................. 2,500,000 2,512,510 ---------- 7,687,510 ---------- Missouri -- 3.7% Missouri Higher Education Loan Series B 3.94% due 01/03/07+............................. 1,800,000 1,800,000 Missouri Higher Education Loan Authority Series C 3.94% due 01/04/07+............................. 2,000,000 2,000,000 ---------- 3,800,000 ---------- New Mexico -- 3.6% Albuquerque, New Mexico Educational Facilities 3.95% due 01/03/07+............................. 3,700,000 3,700,000 ---------- New York -- 5.5% Metropolitan Transportation Authority Series G 4.00% due 01/02/07+............................. 200,000 200,000 Metropolitan Transportation Authority, Series G2, (LOC -- BNP Paribas) 3.86% due 01/04/07+............................. 400,000 400,000 New York, New York Sub. Series F-4 (LOC -- Royal Bank of Scotland) 3.85% due 01/04/07+............................. 500,000 500,000 New York City Municipal Water Finance Authority Series C 3.97% due 01/02/07+............................. 900,000 900,000
15 SunAmerica Municipal Money Market Fund PORTFOLIO OF INVESTMENTS -- December 31, 2006 -- (continued)
Principal Value Security Description Amount (Note 2) SHORT-TERM INVESTMENT SECURITIES (continued) New York (continued) New York City Municipal Water Finance Authority Series F, Subseries F2 3.97% due 01/02/07+........................... $1,640,000 $ 1,640,000 New York City Municipal Water Finance Authority Series G 3.92% due 01/02/07+........................... 2,000,000 2,000,000 ----------- 5,640,000 ----------- North Carolina -- 15.6% Charlotte-Mecklenburg Hospital Authority Series C 3.90% due 01/04/07+........................... 1,660,000 1,660,000 Charlotte North Carolina Certificates of Participation Series F 3.90% due 01/04/07+........................... 1,240,000 1,240,000 County of Guilford North Carolina, Series B 3.90% due 01/04/07+........................... 2,400,000 2,400,000 Durham, North Carolina Public Improvement 3.91% due 01/04/07+........................... 300,000 300,016 Mecklenburg County, North Carolina Certificates Participation 3.90% due 01/04/07+........................... 2,215,000 2,215,000 North Carolina Medical Care Community Hospital Rev. Northeast Medical Center, Series B 3.89% due 01/03/07+........................... 530,000 530,000 North Carolina Medical Care Community Hospital Rev. Baptist Hospital, Series B 3.90% due 01/03/07+........................... 3,400,000 3,400,000 State of North Carolina, Series D 3.90% due 01/03/07+........................... 2,200,000 2,200,000 State of North Carolina Water and Sewer Systems (LOC -- Bank of America N.A.) 3.95% due 01/03/07+........................... 985,000 985,000 Winston Salem North Carolina Certificates of Participation 3.89% due 01/04/07+........................... 300,000 300,000 Winston Salem North Carolina Water and Sewer Systems Revenue, Series C 3.95% due 01/03/07+........................... 595,000 595,000 ----------- 15,825,016 ----------- North Dakota -- 2.8% North Dakota State Housing Finance Agency Revenue, Series A 3.97% due 01/03/07+........................... 2,835,000 2,835,000 ----------- Ohio -- 5.8% Cleveland, Ohio Airport System Revenue Series D (LOC -- WestLB AG) 3.96% due 01/03/07+........................... 2,745,000 2,745,000 Franklin County, Ohio Hospital Revenue Series B (LOC -- Citibank N.A.) 3.89% due 01/04/07+........................... 3,165,000 3,165,000 ----------- 5,910,000 ----------- Pennsylvania -- 4.0% Delaware Valley Pennsylvania Regional Finance Authority Series C (LOC -- National Australia Bank) 3.91% due 01/03/07+........................... 1,700,000 1,700,000 Delaware Valley Pennsylvania Regional Finance Authority Series C 3.91% due 01/03/07+........................... 300,000 300,000
Principal Amount/ Value Security Description Shares (Note 2) Pennsylvania (continued) Pennsylvania State Turnpike Commission Series U 3.91% due 01/04/07+ $ 900,000 $ 900,000 Pennsylvania Turnpike Commission Class A1 3.95% due 01/03/07+ 1,000,000 1,000,000 Philadelphia, Pennsylvania Authority for Industrial Development Revenue, (LOC -- GE Capital Corp.) 3.93% due 01/03/07+ 200,000 200,000 ------------ 4,100,000 ------------ South Carolina -- 0.8% Piedmont Municipal Power Agency Subseries B3 3.90% due 01/03/07+ 250,000 250,000 Piedmont Municipal Power Agency, Subseries B 3.90% due 01/03/07+ 600,000 600,000 ------------ 850,000 ------------ Tennessee -- 0.8% Jackson Energy Authority 3.90% due 01/04/07+ 850,000 850,000 ------------ Texas -- 5.2% City of Brownsville Utility System Revenue Series A 3.89% due 01/03/07+ 800,000 800,000 State of Texas Tax & Revenue Anticipation Notes 4.50% due 08/31/07 4,500,000 4,527,220 ------------ 5,327,220 ------------ Washington -- 2.7% Port of Seattle, Washington Industrial Development, (LOC -- Citibank N.A.) 3.97% due 01/03/07+ 1,500,000 1,500,000 State of Washington Series VR 96A 3.82% due 01/03/07+ 1,200,000 1,200,000 ------------ 2,700,000 ------------ Wisconsin -- 3.7% Wisconsin State Health and Educational Facilities Authority (LOC -- Citibank N.A.) 3.90% due 01/04/07+ 3,800,000 3,800,000 ------------ Wyoming -- 4.5% Wyoming Community Development Authority Series A2 3.89% due 01/04/07+ 4,600,000 4,600,000 ------------ Registered Investment Company -- 0.1% SSgA Tax Free Money Market Fund 139,611 139,611 ------------ TOTAL SHORT-TERM INVESTMENTS (amortized cost $98,834,357)* 97.1% 98,834,357 Other assets less liabilities 2.9 2,918,584 ---------- ------------ NET ASSETS 100.0% $101,752,941 ========== ============
- -------- * At December 31, 2006. 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, 2006; 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, 2006 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 "Adviser"), 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, except as may otherwise be provided in the Funds' registration statement. Class A, Class B, and Class C shares of each Fund has its own 12b-1 plan. 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: Pursuant to each 12b-1 plan, the Fund pays the Fund's distributor (the "Distributor") an account maintenance fee with respect to Class A, B & C shares and pursuant to the 12b-1 plan for the Class B and Class C shares, the Fund also pays the Distributor a distribution fee with respect to the Class B and C shares. The Class A shares do not pay a distribution fee. 17 SunAmerica Money Market Funds NOTES TO FINANCIAL STATEMENTS -- December 31, 2006 -- (continued) 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. 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, 2006, the following Fund held an undivided interest in a joint repurchase agreement with UBS Securities LLC:
Percentage Principal Fund Interest Amount ---- ---------- ----------- Money Market Fund................................. 27.79% $69,465,000
As of such date, the repurchase agreement in that joint account and the collateral therefore were as follows: UBS Securities LLC, dated December 31, 2006, bearing interest at a rate of 4.80% per annum, with a principal amount of $250,000,000 a repurchase price of $250,133,333, and a maturity date of January 2, 2007. The repurchase agreement is collateralized by the following:
Interest Maturity Type of Collateral Rate Date Principal Amount Market Value ------------------ -------- -------- ---------------- ------------ U.S. Treasury Inflation Index Notes....................... 2.38% 04/15/11 $250,000,000 $255,000,499
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. 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 18 SunAmerica Money Market Funds NOTES TO FINANCIAL STATEMENTS -- December 31, 2006 -- (continued) 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. On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. However, Registered Investment Companies are not required to implement FIN 48 until their last net asset value calculation in the first required financial statement reporting period for fiscal years beginning after December 15, 2006. At this time, management is evaluating the implications of FIN 48 and its impact in the financial statements, if any, has not yet been determined. In September 2006, the FASB issued Statement on Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. As of November 30, 2006, the Fund does not believe the adoption of FAS 157 will impact the amounts reported in the financial statements, however, additional disclosures will be required about the inputs used to develop the measurements of fair value. Note 3. Investment Advisory and Management Agreement, Distribution and Service Agreement The Funds have an Investment Advisory and Management Agreement (the "Agreement") with AIG SunAmerica. Under the Agreement, AIG SunAmerica provides continuous supervision of the Funds and administers its corporate affairs, subject to general review by the Board of Directors (The "Board"). In connection therewith, AIG SunAmerica 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 AIG SunAmerica and its affiliates. The Funds pay AIG SunAmerica 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% next $900 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 AIG SunAmerica. AIGGIC is an indirect wholly-owned subsidiary of AIG and an affiliate of AIG SunAmerica. AIGGIC receives the following fees from AIG SunAmerica, based upon the Fund's average daily net assets:
Sub-advisory Assets Fees --------------------------- ------------ Municipal Money Market Fund... $0 - $200 million 0.25% next $300 million 0.20% (greater than) $500 million 0.15%
19 SunAmerica Money Market Funds NOTES TO FINANCIAL STATEMENTS -- December 31, 2006 -- (continued) AIG SunAmerica has contractually agreed to waive fees and/or reimburse expenses to the extent necessary to cap the Fund's annual fund operating expenses at 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
AIG SunAmerica has voluntarily agreed to waive fees or reimburse expenses for the year ended December 31, 2006 at the following percentages of each Fund's average net assets: Municipal Money Market Class A 0.00%; Municipal Money Market Class B 0.01%; Municipal Money Market Class C 0.04%. For the year ended December 31, 2006, AIG SunAmerica agreed to waive fees or reimburse expenses as follows:
Fund ---- Money Market Class I.............................. $ 7,773 Municipal Money Market Class A.................... 3,580 Municipal Money Market Class B.................... 12,224 Municipal Money Market Class C.................... 10,970
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 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 Corporation on behalf of each, Fund, has entered into a Distribution Agreement with AIG SunAmerica Capital Services, Inc. ("AIG SACS" or the "Distributor"), an affiliate of the Adviser. The Funds have adopted a Distribution Plan (the "Plan") on behalf of each class of shares (other then Class I Shares (each a "Plan" or collectively the "Plans"), in accordance with the provisions of Rule 12b-1 under the 1940 Act hereinafter referred to as the "Class A Plan," the "Class B Plan," and the "Class C Plan." In adopting the Plans, 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. Both the Class B Plan and the Class C Plan, provide that the fund shall pay the Distributor distribution fee 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 respectively, to compensate the Distributor and certain securities firms for providing sales and promotional activities for distributing that class of shares. The distribution costs for which the Distributor may be 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 Plans also provide that each class of shares of the Funds other than Class I, shall pay the Distributor an account maintenance and service fee at the annual rate of up to 0.15% of the aggregate average daily net assets of such class of shares for payments to compensate the Distributor and certain securities firms for account maintenance activities. In this regard, some payments are used to compensate broker-dealers with account maintenance fees in an amount up to 0.15% per year of the assets maintained in the Funds by their customers. Accordingly, for the year ended December 31, 2006, AIG SACS received fees (see Statement of Operations) based upon the aforementioned rates. 20 SunAmerica Money Market Funds NOTES TO FINANCIAL STATEMENTS -- December 31, 2006 -- (continued) 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. AIG SACS has advised the Funds for the year ended December 31, 2006, the proceeds received from redemptions are as follows:
Contingent Deferred Sales Charges --------------------------------- Fund Class A Class B Class C ---- ------- -------- ------- Money Market....................... $9,748 $123,834 $8,187 Municipal Money Market............. -- (81) 4,127
The Funds have entered into a Service Agreement with AIG SunAmerica Fund Services, Inc. ("AIG SAFS"), an affiliate of the Adviser. Under the Service Agreement, AIG SAFS performs certain shareholder account functions by assisting the Funds' transfer agent in connection with the services that it offers to the shareholders of the Fund. The Service Agreement, which permits the Funds to compensate AIG SAFS for services rendered based upon the annual rate of 0.22% of average daily net assets, is approved annually by the Trustees. For the year ended December 31, 2006, the Funds incurred the following expenses which are included in transfer agent fees and expenses payable line in the Statement of Asset and Liabilities and in transfer agent fees and expenses in the Statement of Operations to compensate AIG SAFS pursuant to the terms of the Service Agreement:
Payable at Expenses December 31, 2006 - ---------- ----------------- Money Market Fund Class A.......... $3,530,736 $318,439 Money Market Fund Class B.......... 63,579 7,570 Money Market Fund Class C.......... 40,898 2,874 Money Market Fund Class I.......... 34,903 3,360 Municipal Money Market Fund Class A 214,738 19,692 Municipal Money Market Fund Class B 1,250 153 Municipal Money Market Fund Class C 1,128 73
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 dividends payable and cumulative pension expenses.
Distributable Earnings Tax Distributions ----------------------------------------- -------------------------------- For the year ended December 31, 2006 -------------------------------------------------------------------------- Long-term Gains/ Unrealized Long-Term Ordinary Capital Loss Appreciation Ordinary Capital Fund Income Carryover (Depreciation) Income Gains Tax Exempt - ---- -------- ---------------- -------------- ----------- --------- ---------- Money Market....................... $432,994 $ (318) $-- $68,756,190 $-- $ -- Municipal Money Market............. 34,495* (24,324) -- -- -- 2,633,211
- -------- * Tax exempt distributable earnings
Tax Distributions ---------------------------------------- For the year ended December 31, 2005 ---------------------------------------- Long-Term Fund Ordinary Income Capital Gains Tax-Exempt ---- --------------- ------------- ---------- Money Market.................. $39,516,992 $-- $ -- Municipal Money Market........ -- -- 1,428,608
For Federal income tax purposes, the Funds indicated below have capital loss carryforwards, which expire in the year indicated, as of December 31, 2006, which are available to offset future capital gains, if any:
Capital Loss Carryforward ------------------------- Fund 2012 2013 2014 ---- ------ ------- ---- Money Market.................. $ -- $ -- $318 Municipal Money Market........ 8,072 16,252 --
21 SunAmerica Money Market Funds NOTES TO FINANCIAL STATEMENTS -- December 31, 2006 -- (continued) Under the current law, capital losses related to securities and foreign currency realized after October 31 and prior to the Fund's fiscal year end may be deferred and treated as arising on the first day of the following year. For fiscal year ended December 31, 2006, the Money Market Fund elected to defer post October capital losses in the amount of $398. Note 5. Capital Share Transactions Transactions in each class of shares of the Funds, all at $1.00 per share, for the year ended December 31, 2006 and for the prior year were as follows:
Money Market Fund ------------------------------------------------------------------------------------------------- Class A Class B Class C -------------------------------- --------------------------- -------------------------- 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, 2006 2005 2006 2005 2006 2005 --------------- --------------- ------------ ------------ ------------ ------------ Shares sold......... $ 1,067,246,832+ $ 1,113,494,682++ $ 21,345,812 $ 21,586,531 $ 35,756,424 $ 39,075,804 Reinvested dividends 65,808,620 38,099,932 876,052 502,145 556,078 270,694 Shares redeemed..... (1,008,912,573) (1,194,296,786) (30,154,351)+ (32,786,885)++ (37,411,117) (42,833,919) --------------- --------------- ------------ ------------ ------------ ------------ Net increase (decrease)......... $ 124,142,878 $ (42,702,172) $ (7,932,487) $(10,698,209) $ (1,098,616) $ (3,487,421) =============== =============== ============ ============ ============ ============
--------------------- Class I ------------------------ For the For the year year ended ended December 31, December 31, 2006 2005 ------------ ------------ Shares sold......... $10,490,556 $ 7,693,470 Reinvested dividends 672,568 316,345 Shares redeemed..... (6,814,727) (6,196,260) ----------- ----------- Net increase (decrease)......... $ 4,348,397 $ 1,813,555 =========== ===========
- -------- + Includes automatic conversion of Class B shares in the amount of $2,136,800 to Class A shares ++ Includes automatic conversion of Class B shares in the amount of $2,267,064 to Class A shares
Municipal Money Market Fund ---------------------------------------------------------------------------------------- Class A Class B Class C ---------------------------- --------------------------- -------------------------- 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, 2006 2005 2006 2005 2006 2005 ------------- ------------- ------------ ------------ ------------ ------------ Shares sold............ $ 253,437,415# $ 177,698,016## $ 421,681 $ 539,224 $ 535,044 $ 3,443,007 Reinvested dividends... 2,607,633 1,410,098 10,009 3,761 3,913 2,287 Shares redeemed........ (239,778,560) (191,665,171) (416,224)# (519,766)## (1,968,276) (2,105,157) ------------- ------------- ------------ ------------ ------------ ------------ Net increase (decrease) $ 16,266,488 $ (12,557,057) $ 15,466 $ 23,219 $ (1,429,319) $ 1,340,137 ============= ============= ============ ============ ============ ============
- -------- # Includes automatic conversion of Class B shares in the amount of $25,660 to Class A shares ## Includes automatic conversion of Class B shares in the amount of $298,186 to Class A shares 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 an unaffiliated Director may become a participant ("Participant") in the Retirement Plan if he or she has at least 10 years of consecutive service as a Disinterested Director of any of the adopting AIG SunAmerica mutual funds (the "Adopting Funds") or has attained the age of 60 while a Director and completed five (5) consecutive years of service as a Director of any Adopting Fund (an "Eligible Director"). Pursuant to the Retirement Plan, an Eligible Director may receive benefits upon (i) his or her death or disability while a Director or (ii) the termination of his or her tenure as a Director, other than removal for cause from each of the Adopting Funds with respect to which he or she is an Eligible Director. As of each of the first 10 birthdays after becoming a Participant and on which he or she is both a Director and Participant, 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 Adopting 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 statement during prior years is added to each Eligible Director's account. The rights of any Participant to benefits under the Retirement Plan shall be an unsecured claim against the assets of the Adopting Funds. 22 SunAmerica Money Market Funds NOTES TO FINANCIAL STATEMENTS -- December 31, 2006 -- (continued) An Eligible Director may receive any benefits payable under the Retirement Plan, at his or her election, either in one lump sum or in up to 15 annual installments. Any undistributed amounts shall continue to accrue interest at 8.50%. The following amounts for the Retirement Plan Liabilities are included in the Directors' fees and expenses 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, 2006 ---- ----------------------------------------------- Money Market.................. $245,700 $22,101 $14,010 Municipal Money Market........ 7,292 1,194 247
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 AIG SunAmerica 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 year ended December 31, 2006, none of the Funds participated in the program. Note 8. Other Information On February 9, 2006, "AIG", the parent company and an affiliated person of AIG SunAmerica, AIG SACS and AICGIC, 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 "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, 2006, 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 each of the five years in the period then ended, 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, 2006 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Houston, Texas February 20, 2007 24 SunAmerica Money Market Funds APPROVAL OF ADVISORY AGREEMENTS -- December 31, 2006 -- (unaudited) Approval of the Investment Advisory and Management Agreement and Subadvisory Agreement The Board, including the Directors that are not interested persons of the Corporation, AIG SunAmerica or AIG Global Investment Corp., ("AIGGIC" or the "Subadviser"), within the meaning of the 1940 Act, (the "Disinterested Directors"), approved the continuation of the Investment Advisory and Management Agreement between the Corporation on behalf of the Funds, and AIG SunAmerica (the "Advisory Agreement") for a one-year period ending August 31, 2007, at a meeting held on August 29, 2006. At this same meeting, the Board also approved the continuation of the Subadvisory Agreement between AIG SunAmerica and AIGGIC with respect to the Municipal Money Market Fund for a one-year period ending August 31, 2007. In accordance with Section 15(c) of the 1940 Act, the Board requested and the Adviser provided materials relating to the Board's consideration of whether to approve the continuation of the Advisory Agreement and Subadvisory Agreement. In determining whether to approve the continuation of the Advisory Agreement and Subadvisory Agreement, the Board, including the Disinterested Directors, considered the following information: Nature, Extent and Quality of Services Provided by the Adviser and Subadviser The Board, including the Disinterested Directors, considered the nature, quality and extent of services to be provided by AIG SunAmerica and AIGGIC. The Board noted that the services include acting as investment manager and adviser to the Funds, managing the daily business affairs of the Funds, and obtaining and evaluating economic, statistical and financial information to formulate and implement investment policies. Additionally, the Board observed that AIG SunAmerica provides office space, accounting, legal, compliance, clerical and administrative services (exclusive of, and in addition to, overseeing any such service provided by any others retained by the Funds, including the Subadviser), and has authorized any of its officers and employees, if elected, to serve as officers or directors of the Funds without compensation. Finally, the Board noted that AIG SunAmerica is responsible for monitoring and reviewing the activities of affiliated and unaffiliated third-party service providers, including the Subadviser. In connection with the services provided by AIG SunAmerica, the Board analyzed the structure and duties of AIG SunAmerica's fund administration, accounting, legal and compliance departments and concluded that they were adequate to meet the needs of the Funds. The Board further noted that AIG SunAmerica provides and compensates a Chief Compliance Officer for the Funds and reviewed information concerning AIG SunAmerica's compliance staff. The Board also reviewed the personnel responsible for providing advisory services to the Funds, and the level and process of monitoring the portfolio managers, and concluded, based on their experience and interaction with the Adviser, that (i) the Adviser was able to retain quality portfolio managers and other personnel; (ii) the Adviser exhibited a high level of diligence and attention to detail in carrying out its advisory responsibilities under the Advisory Agreement; (iii) the Adviser was responsive to requests of the Board; and (iv) the Adviser had kept the Board apprised of developments relating to the Funds and the industry in general. The Board concluded that the nature and extent of services provided under the Advisory Agreement were reasonable and appropriate in relation to the management fee and that the quality of services continues to be high. The Board also considered AIG SunAmerica's reputation and long-standing relationship with the Funds and considered the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of types of mutual fund and shareholder services. The Board considered AIG SunAmerica's experience in providing management and investment advisory and administrative services to advisory clients, including approximately 154 registered mutual funds and the fact that as of June 30, 2006 AIG SunAmerica managed, advised an/or administered approximately $48.6 billion of assets. With respect to the Municipal Money Market Fund, for which AIG SunAmerica has delegated daily investment management responsibilities to AIGGIC, the Board also considered the nature, quality and extent of services provided by AIGGIC. The Board observed that AIGGIC is responsible for providing investment management services, including investment research, advice and supervision, and determining which securities will be purchased or sold by the Fund. The Board reviewed AIGGIC's history, structure, size, visibility and resources, which are needed to attract and retain highly qualified investment professionals. The Board reviewed the personnel responsible for providing subadvisory services to the Municipal Money Market Fund and concluded, based on their experience with AIGGIC, that (i) AIGGIC was able to 25 SunAmerica Money Market Funds APPROVAL OF ADVISORY AGREEMENTS -- December 31, 2006 -- (unaudited) (continued) retain high quality portfolio managers and other investment personnel; (ii) AIGGIC exhibited a high level of diligence and attention to detail in carrying out its responsibilities under the Subadvisory Agreement; and (iii) AIGGIC was responsive to requests of the Board and of AIG SunAmerica. With respect to the administrative services provided by AIGGIC, the Board considered that AIGGIC provides general marketing assistance and has developed internal policies and procedures for monitoring compliance with the investment objectives, policies and restrictions of the Municipal Money Market Fund as set forth in the Fund's prospectus. The Board concluded that the nature and extent of services provided by AIGGIC under the Subadvisory Agreement were reasonable and appropriate in relation to the subadvisory fee and that the quality of services continues to be high. The Board also considered AIG SunAmerica's and AIGGIC's compliance and regulatory history, and noted that neither AIG SunAmerica nor AIGGIC had been the target of any regulatory actions or investigations that could potentially affect its ability to provide investment management and advisory services to the Funds. Investment Performance of the Funds and the Adviser and Subadviser The Board also reviewed and considered the performance of the Funds. In preparation for the August 29, 2006 meeting, the Board was provided with reports independently prepared by Lipper, Inc. ("Lipper"). In connection with its review, the Board received and reviewed information regarding the investment performance of the Funds as compared to each Fund's peer group ("Peer Group") and peer universe ("Peer Universe"), as determined by Lipper, and to an appropriate index or combination of indices. The Board also noted that it regularly reviews the performance of the Funds periodically throughout the year. Based on the Lipper reports, the Board reviewed each Fund's annualized total return, as applicable, for the prior one-, two-, three-, four-, five- and ten-year periods ended June 30, 2006. The Board also received a report prepared by AIG SunAmerica that detailed the Funds performance for the one-, three-, six-, and nine-month periods ended July 31, 2006. Specifically, the Board noted that the Money Market Fund ranked in the third quintile of its Peer Universe for the one-, two- and three-year period ending June 30, 2006 and in fourth quintile for the one-year period ending July 31, 2006. In considering the performance of AIGGIC, the Board noted that while the Municipal Money Market Fund's performance ranked in the fourth quintile of its Peer Universe for the one-, two-, three- and five-year periods ended June 30, 2006, the Fund's performance had improved over recent periods and it currently ranked in the third quintile for the one- and three-month periods ending July 31, 2006. In considering AIG SunAmerica's performance as investment adviser, the Board was provided with a presentation that compared the present and historical staffing levels and annual budget of the Investments Department. Based on this presentation, the Board noted that AIG SunAmerica had made significant enhancements to the Investments Department in an effort to improve Fund performance. In considering the performance of AIG SunAmerica and AIGGIC, the Board did not rely upon comparisons of AIG SunAmerica's performance with respect to its other advisory clients. Consideration of the Management Fee and Subadvisory Fee and the Cost of the Services and Profits Realized by the Investment Adviser, Subadviser and their Affiliates from the Relationship with the Funds The Board, including the Disinterested Directors, received and reviewed information regarding the fees paid by the Funds to AIG SunAmerica for investment advisory and management services and the fees paid by AIG SunAmerica to AIGGIC pursuant to the Subadvisory Agreement. The Board examined this information in order to determine the reasonableness of the fees in light of the nature and quality of services provided and any potential additional benefits received by AIG SunAmerica, the Subadviser or their 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. The reports showed comparative fee information of the Funds' Peer Groups and Peer Universes, including rankings within the categories, as well as reports prepared by AIG SunAmerica. In considering the reasonableness of the management fee, the Board reviewed a number of expense comparisons, including: (i) contractual advisory and subadvisory fees; and (ii) actual total operating expenses. The Board also received information on fees charged by the Subadviser for management 26 SunAmerica Money Market Funds APPROVAL OF ADVISORY AGREEMENTS -- December 31, 2006 -- (unaudited) (continued) of funds similar to the Municipal Money Market Fund. This information assisted the Board in considering what other clients pay AIGGIC for similar services. The Board did not rely upon comparisons of the fees earned by AIG SunAmerica with respect to other investment advisory contracts. In considering the Funds' total operating expenses, the Board analyzed the level of fee waivers and expense reimbursements and the net expense caps contractually agreed upon by AIG SunAmerica with respect to the Municipal Money Market Fund and Class I shares of the Money Market Fund. The Board compared the Funds' net expense ratios to those of other funds within the Funds' respective Peer Groups as a guide to help assess the reasonableness of the Funds' management fee. The Board acknowledged that it was difficult to make precise comparisons with other funds in the Peer Groups since the exact nature of services provided under the Peer Groups' fund agreements is often not apparent. The Board noted that the Peer Group fee information as a whole was useful in assessing whether the Adviser was providing services at a cost that was competitive with other, similar funds. The Board also took into account that the management fee arrangement for the Money Market Fund included breakpoints that will adjust the fee downward as the size of Fund increases, thereby allowing the shareholders to participate in economies of scale. In considering the subadvisory fees, the Board, including the Disinterested Directors, considered that the Municipal Money Market Fund pays a fee to AIG SunAmerica pursuant to the Advisory Agreement, and that, in turn, AIG SunAmerica and not the Fund, pays a fee to AIGGIC. Therefore, the Board considered the amount of the advisory fee retained by AIG SunAmerica and the fee paid to AIGGIC in connection with the services provided. The Board also considered that the Subadvisory Agreement contained breakpoints in the fee schedule that would adjust the subadvisory fee downward if the Fund increased its assets to certain levels. The Board noted that such breakpoints would not directly benefit the shareholders, but would result in AIG SunAmerica retaining a larger portion of the advisory fee. The Board also considered AIG SunAmerica's profitability and the benefits AIG SunAmerica and its affiliates received from its relationship with the Funds. The Board reviewed financial statements relating to AIG SunAmerica's profitability and financial condition with respect to the services it provided the Funds and considered how profit margins could affect AIG SunAmerica's ability to attract and retain high quality investment professionals. The Board was also provided with a profitability analysis that detailed the revenues earned and the expenses incurred on a fund by fund basis by AIG SunAmerica and its affiliates in providing services to the Funds. Based on this information, the Board considered the revenues received by AIG SunAmerica under the Advisory Agreement, and where applicable, the Administrative Agreement. The Board also considered revenues received by AIG SunAmerica's affiliates under the Rule 12b-1 Plans, Service Agreement, and Administrative and Shareholder Service Agreement. Additionally, the Board reviewed AIGGIC's financial statements and considered whether AIGGIC had the financial resources necessary to attract and retain high quality investment management personnel, continue to perform its obligations under the Subadvisory Agreement and to continue to provide the high quality of services that it had provided to Municipal Money Market Fund to date. With respect to indirect costs and benefits, the Board considered that (1) any indirect costs incurred by AIG SunAmerica in connection with rendering investment advisory services to the Funds are inconsequential based on management's judgment on 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 according to management and do not impact upon the reasonableness of the advisory fee. The Board did, however, consider the reputational value to AIG SunAmerica from serving as investment adviser. The Board concluded that AIG SunAmerica had the financial resources necessary to perform its obligations under the Advisory Agreement and to continue to provide the high quality of services that it had provided to the Funds to date and that the profitability of the Adviser and its affiliates as a result of their relationships with the Funds was reasonable. The Board also concluded that the level of the management fee was reasonable in light of the factors discussed above. 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. Based on the current management fee levels, the Board concluded that any potential economies of scale will be shared between shareholders 27 SunAmerica Money Market Funds APPROVAL OF ADVISORY AGREEMENTS -- December 31, 2006 -- (unaudited) and AIG SunAmerica 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 AIG SunAmerica as it adds labor and capital to expand the scale of operations. The Board concluded that the management 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. Conclusion After a full and complete discussion, the Board approved the continuation of the Advisory Agreement for the Funds, and the Subadvisory Agreement with respect to the Municipal Money Market Fund, for a one-year period ending August 31, 2007. Based upon their evaluation of all these factors in their totality, the Board, including the Disinterested Directors, was satisfied that the terms of the Advisory Agreement and Subadvisory Agreement were fair and reasonable and in the best interests of the Funds and the Funds' shareholders. In arriving at a decision to approve the continuation of the Advisory Agreement and Subadvisory Agreement, the Board did not identify any single factor or group of factors as all-important or controlling, but considered all factors together. The Disinterested Directors were also assisted by the advice of independent counsel in making this determination. 28 SunAmerica Money Market Funds, Inc. DIRECTORS AND OFFICERS INFORMATION -- (unaudited) -- December 31, 2006 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 Fund Complex Name, Address SunAmerica Length of Principal Occupations Overseen by Other Directorships and Date of Birth* Complex Time Served(4) During Past 5 years Director(1) Held by Director(2) - -------------------- ---------- -------------- ---------------------------- ------------ ----------------------------- Disinterested Directors Jeffrey S. Burum Director 2004- Founder, Chairman and 42 None DOB: February 27, present CEO of Southern California 1963 Development Corporation/ National Housing Development Corporation (1992 to present); Founder, Owner and Partner of Colonies Crossroads, Inc. (1999 to present); Owner and Managing Member of Diversified Pacific Development Group, LLC (1998 to present). Judith L. Craven Director 2001- Retired 90 Director, Belo Corporation DOB: October 6, 1945 present (1992 to present); Director, Sysco Corporation (1996 to present); Director, Luby's Inc. (1998 to present); Director, University of Texas Board of Regents (2001 to present). William F. Devin Director 2001- Retired 90 Director, Boston Options DOB: December 30, present Exchange (1985-Present); 1938 Samuel M. Eisenstat Chairman 1985- Attorney, solo practitioner; 52 Director, North European Oil DOB: March 7, 1940 of the present Royalty Trust. Board Stephen J. Gutman Director 1984- Senior Associate, Corcoran 52 None DOB: May 10, 1943 present Group (Real Estate) (2003 to present); President and Member of Managing Directors, Beau Brummell -- Soho LLC (Licensing of menswear specialty retailing and other activities) (June 1988-present) William J. Shea Director 2004- President and CEO, 52 Director, Boston Private DOB: February 9, present Conseco, Inc. (Financial Financial Holdings (October 1948 Services) (2001-2004); 2004 to present) Chairman of the Board of Centennial Technologies, Inc. (1998 to 2001). Interested Director Peter A. Harbeck(3) Director 1994- President, CEO and 99 None DOB: January 23, present Director, AIG SunAmerica, 1954 (August 1995 to present); Director, AIG SunAmerica Capital Services, Inc. ("AIG SACS") (August 1993 to present); President and CEO, AIG adviser Group, Inc. (June 2004 to present)
29 SunAmerica Money Market Funds DIRECTORS AND OFFICERS INFORMATION -- December 31, 2006 -- (unaudited) (continued)
Number of Position Term of Funds in Held With Office and Fund Complex Name, Address SunAmerica Length of Principal Occupations Overseen by Other Directorships and Date of Birth* Complex Time Served(4) During Past 5 years Director(1) Held by Director(2) - ------------------- ---------- -------------- ----------------------------- ------------ ------------------- Officers Vincent M. Marra President 2004- Senior Vice President, AIG N/A N/A DOB: May 28, 1950 present SunAmerica (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 President, AIG N/A N/A DOB: June 25, 1966 present SunAmerica (December 2004 to present); Vice President, AIG SunAmerica (1997 to December 2004), Assistant Treasurer (1993 to 2002). Gregory N. Bressler Secretary September Senior Vice President and N/A N/A DOB: November 17, and Chief 2005 to General Counsel, AIG Sun 1966 Legal Present America (June 2005 to Officer 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). Timothy Pettee Vice August Chief Investment Officer, N/A N/A DOB: April 7, 1958 President 2004 to AIG SunAmerica (January Present 2003-Present); Executive Vice President and Global Director of Research Schroder Investment Management (2000-2002); Director of Research U.S. Trust Co. (1998-2000). James Nichols Vice 2006 to Director, President and N/A N/A DOB: April 7, 1966 President Present CEO, AIG SACS (July 2006 to Present); Senior Vice President, AIG SACS (March 2002 to July 2006); Vice President, AIG SunAmerica (1995 to March 2002).
30 SunAmerica Money Market Funds DIRECTORS AND OFFICERS INFORMATION -- December 31, 2006 -- (unaudited)
Number of Position Held Term of Funds in With Office and Fund Complex Name, Address SunAmerica Length of Principal Occupations Overseen by Other Directorships and Date of Birth* Complex Time Served(4) During Past 5 years Director(1) Held by Director(2) - -------------------- ------------- -------------- ------------------------------- ------------ ------------------- Cynthia Gibbons Vice 2002- Vice President, AIG N/A N/A DOB: December 6, President present SunAmerica (August 2002- 1967 and Chief Present); Securities Compliance Compliance Manager, Officer American General ("CCO") Investment Management (June 2000-August 2002). Gregory R. Kingston Vice 2002- Vice President, SAAMCo N/A N/A DOB: January 18, President present (2001-Present); Formerly, 1966 and Vice President, American Assistant General Investment Treasurer Management, L.P. (1999- 2001) Nori L. Gabert Vice 2002- Vice President and Deputy N/A N/A DOB: August 15, 1953 President present General Counsel, AIG and SunAmerica (2001- Assistant Present); Vice President and Secretary Secretary, VALIC Company I and VALIC Company II (2000-Present); formerly, Associate General Counsel, American General Corporation (1997 to 2001). Matthew J. Hackethal Anti-Money 2006- Senior Compliance N/A N/A DOB: December 31, Laundering present Manager, AIG SunAmerica 1971 Compliance (November 2006 to Officer Present); Vice President, Credits Suisse Asset Management (May, 2001 to October 2006); CCO, Credit Suisse Alternative Funds (November 2005 to October 2006); CCO, Credit Suisse Asset Management Securities, Inc. (April 2004 to August 2005)
- -------- * The business address for each Director and Officer is the Harborside Financial Center, 3200 Plaza 5, Jersey City, NJ 07311-4992. (1) The term "Fund Complex" means two or more registered investment companies that hold themselves out to investors as related companies for purposes of investment services or have a common investment adviser or an investment adviser that is an affiliated person of the adviser. The "Fund Complex" includes the Corporation (2 funds), SunAmerica Equity Funds (10 funds), SunAmerica Income Funds (5 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 (35 portfolios), VALIC Company I (32 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 SEC under the Securities Exchange Act of 1934 (i.e. "public companies") or other investment companies registered under the 1940 Act. (3) Interested Director, as defined within the 1940 Act, because he is an officer and a director of the Adviser and a director of the principal underwriter of, the Corporation. (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. Each officer will hold office for an indefinite term, until the date he or she resigns or retires or until his/her successor is duly elected and qualifies. 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. 31 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, 2006. The information necessary to complete your income tax returns is included with your Form 1099-DIV mailed to you in January 2007. During the year ended December 31, 2006, 100% of the distributions paid by the SunAmerica Municipal Money Market Fund are exempt from federal income taxes. 32 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. 33 [LOGO] AIG SunAmerica Mutual Funds Harborside Financial Center 3200 Plaza 5 Jersey City, NJ 07311-4992 Directors/Trustees Investment Adviser PROXY VOTING RECORD ON Samuel M. Eisenstat AIG SunAmerica Asset SUNAMERICA MONEY MARKET Peter A. Harbeck Management Corp. FUNDS Dr. Judith L. Craven Harborside Financial Information regarding how William F. Devin Center the SunAmerica Money Stephen J. Gutman 3200 Plaza 5 Market Funds voted Jeffrey S. Burum Jersey City, NJ proxies relating to William J. Shea 07311-4992 securities held in Officers Distributor SunAmerica Money Market Vincent M. Marra, AIG SunAmerica Capital Funds during the most President Services, Inc. recent twelve month Donna M. Handel, Harborside Financial period ended June 30 is Treasurer Center available, once filed Timothy P. Pettee, Vice 3200 Plaza 5 with the U.S. Securities President Jersey City, NJ and Ex-change Commission, Jim Nichols, Vice 07311-4992 without charge, upon President request, by calling (800) Cynthia Gibbons, Vice Shareholder Servicing 858-8850 or on the U.S. President and Chief Agent Secu-rities and Exchange Compliance Officer AIG SunAmerica Fund Commission's website at Gregory N. Bressler, Services, Inc. http://www.sec.gov. Chief Legal Officer Harborside Financial and Secretary Center DISCLOSURE OF QUARTERLY Gregory R. Kingston, 3200 Plaza 5 PORTFOLIO HOLDINGS Vice President and Jersey City, NJ The Fund is required to Assistant Treasurer 07311-4992 file its com-plete Corey A. Issing, schedule of portfolio Assistant Secretary Transfer Agent holdings with the U.S. Kathleen Fuentes, State Street Bank and Securities and Exchange Assistant Secretary Trust Company Commission for its first Nori Gabert, Vice P.O. Box 419572 and third fiscal quarters President and Kansas City, MO on Form N-Q. The Fund's Assistant Secretary 64141-6572 Forms N-Q are available Matthew J. Hackethal, on the U.S. Securities Anti-Money Laundering Custodian and Exchange Commission's Compliance Officer. State Street Bank and website at www.sec.gov. Trust Company You can also obtain P.O. Box 5607 copies of Form N-Q at the Boston, MA 02110 U.S. Securities and Exchange Commission's VOTING PROXIES ON FUND Public Reference Room in PORTFOLIO SECURITIES Wash-ington, DC A description of the (information on the policies and proce-dures oper-ation of the Public that the Fund uses to Reference Room may be determine how to vote obtained by proxies relating to calling 1-800-SEC-0330). secu-rities held in a Fund's portfolios which This report is submitted is available in the solely for the general Fund's Statement of information of Additional Information, shareholders of the Fund. may be ob-tained without Distribution of this charge upon request, by report to persons other calling (800) 858-8850. than shareholders of the This in-formation is also Fund is authorized only available from the EDGAR in connection with a database on the U.S. currently effective Secu-rities and Exchange prospectus, setting forth Commission's website at details of the Fund, http://www.sec.gov. which must precede or accompany this report.
34 [LOGO] AIG SunAmerica Mutual Funds 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-12/06 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: 2005 2006 (a) Audit Fees ....................$ 46,127 $ 48,662 (b) Audit-Related Fees ............$ 14,735 $ 0 (c) Tax Fees ......................$ 16,050 $ 16,086 (d) 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. Audit-Related Fees principally include a SAS No. 100 review of the registrant's Semiannual Shareholder Report. Tax Fees principally include tax compliance, tax advice, tax planning and preparation of tax returns. Aggregate fees billed to the investment adviser and Adviser Affiliates (as defined below in Item 4(e)) that are required to be pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X for the last two fiscal years for services rendered by the Registrant's principal accountant were as follows: 2005 2006 (b) Audit-Related Fees ............$ 0 $ 0 (c) Tax Fees ......................$ 0 $ 0 (d) All Other Fees ................$ 0 $ 0 (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. The audit committee has not presently established any pre-approval policies and procedures that permit the pre-approval of the above services other than by the full audit committee. Certain de minimis exceptions are allowed for non-audit services in accordance with Rule 2-01(c)(7)(i)(C) of Regulation S-X as set forth in the Registrant's audit committee charter. (2) No services included in (b)-(d) above in connection with fees billed to the registrant or the investment adviser or Adviser Affiliates 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 2006 and 2005 were 979,786 and $298,099, 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. There were no material changes to the procedures by which shareholders may recommend nominees to the Registrant's board of trustees that were implemented after the Registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by 22(b)(15)) of Schedule 14A (17 CFR 240.14a- 101), or this Item 10. 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 as defined under Rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR 270.3a-3(c)). 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) Certifications 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 Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) and 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 9, 2007 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 9, 2007 By: /s/ Donna M. Handel ------------------- Donna M. Handel Treasurer Date: March 9, 2007 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 Exhibit A Vincent Marra, as President of the Funds Donna M. Handel, as Treasurer of the Funds 5 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 16, 2007 /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 16, 2007 /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 16, 2007 /s/ Vincent M. Marra --------------- Vincent M. Marra President /s/ Donna M. Handel --------------- Donna M. Handel Treasurer -----END PRIVACY-ENHANCED MESSAGE-----