<Page>
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 811-07725
-----------------------
SunAmerica Focused Series, Inc.
- -------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Harborside Financial Center, 3200 Plaza 5 Jersey City, NJ 07311
- -------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Robert M. Zakem, ESQ.
Senior Vice President & General Counsel
AIG SunAmerica Asset Management Corp.
Harborside Financial Center,
3200 Plaza 5
Jersey City, NJ 07311
- -------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6363
---------------------
Date of fiscal year end: October 31
-------------------
Date of reporting period: April 30, 2004
<Page>
Item 1. Reports to Shareholders
SunAmerica Focused Series, Inc., Semiannual Report at April 30, 2004.
<Page>
AIG SUNAMERICA
FOCUSED PORTFOLIOS
2004 SEMIANNUAL REPORT
[GRAPHIC]
[AIG SUNAMERICA MUTUAL FUNDS LOGO]
<Page>
TABLE OF CONTENTS
<Table>
A MESSAGE FROM THE PRESIDENT 1
STATEMENT OF ASSETS AND LIABILITIES 2
STATEMENT OF OPERATIONS 8
STATEMENT OF CHANGES IN NET ASSETS 12
FINANCIAL HIGHLIGHTS 18
PORTFOLIO OF INVESTMENTS 30
NOTES TO FINANCIAL STATEMENTS 49
DIRECTOR INFORMATION 75
</Table>
<Page>
(This page intentionally left blank.)
<Page>
[AIG SUNAMERICA MUTUAL FUNDS LOGO]
A MESSAGE FROM THE PRESIDENT
DEAR SHAREHOLDERS:
We are pleased to present this semiannual update for the SunAmerica Focused
Portfolios for the period ended April 30, 2004. During this period, we welcomed
several new portfolio managers and are extremely proud that many world class
managers lend their stock-picking talents and market insights to our Focused
Portfolios.
SunAmerica Focused Large-Cap Growth Portfolio was the first multi-managed
focused mutual fund on Wall Street. Our family of Focused Portfolios now offers
an array of funds designed to help you build a well-constructed portfolio of
carefully selected securities. The SunAmerica Focused Portfolios generally
feature up to three world class managers, each of whom selects his or her ten
favorite stocks for the fund.(1) We believe that this focused investing
strategy, which is used by many institutional investors, offers efficient asset
allocation opportunities(2) and avoids portfolio dilution and
overdiversification. According to Modern Portfolio Theory, investors do not
receive any additional diversification benefits in any single asset class with
portfolios holding more than 20 to 30 stocks.(1),(3)
On the following pages, you will find the financial statements and
portfolio information for each of the SunAmerica Focused Portfolios for the
period ended April 30, 2004.
We thank you for being a part of the success of the SunAmerica Focused
Portfolios. We value your confidence in us and look forward to serving your
investment needs in the future.
Sincerely,
/s/ Peter A. Harbeck
Peter A. Harbeck
PRESIDENT & CEO
AIG SunAmerica Asset Management Corp.
(1) Because focused mutual funds are less diversified than typical mutual funds,
the performance of each holding in a focused fund has a greater impact upon the
overall portfolio, which increases risk. Due to potential overlap in each
manager's selection, some portfolios may hold less than 30 stocks. The managers
in the Focused 2000 Growth and Focused 2000 Value portfolios each select 20
stocks due to liquidity issues, so each of these portfolios may hold as many as
60 stocks. The Focused Asset Allocation Strategies are funds-of-funds, allocated
and monitored by AIG SunAmerica Asset Management Corp.
(2) Asset allocation does not guarantee profit, nor does it protect against
loss.
(3) Source: PORTFOLIO SELECTION, 2nd edition, 1991. As cited in A RANDOM WALK
DOWN WALL STREET, Malkiel, Burton. Norton and Company. 1999.
- ----------
Past performance is no guarantee of future results.
1
<Page>
STATEMENT OF ASSETS AND LIABILITIES -- APRIL 30, 2004 (UNAUDITED)
<Table>
<Caption>
FOCUSED FOCUSED FOCUSED FOCUSED FOCUSED
EQUITY MULTI-ASSET BALANCED FIXED INCOME AND FIXED INCOME
STRATEGY STRATEGY STRATEGY EQUITY STRATEGY STRATEGY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------------------------------------------------------------------------------
ASSETS:
Investment securities, at value* $ 448,759,567 $ 427,591,031 $ 407,195,739 $ 83,276,047 $ 29,708,692
Short-term securities* -- -- -- -- --
Repurchase agreements (cost equals
market) -- -- -- -- --
Cash -- -- -- -- --
Foreign cash* -- -- -- -- --
Receivables for--
Fund shares sold 5,209,965 6,036,552 3,285,288 336,263 141,241
Dividends and interest -- -- -- -- --
Investments sold -- -- -- -- --
Prepaid expenses and other assets -- -- -- -- --
Due from investment advisor 1,708 -- 27,071 7,217 30,835
Due from custodian -- -- -- -- --
--------------- --------------- --------------- ----------------- ---------------
Total assets 453,971,240 433,627,583 410,508,098 83,619,527 29,880,768
--------------- --------------- --------------- ----------------- ---------------
LIABILITIES:
Payables for--
Fund shares redeemed 630,566 473,706 296,479 214,669 81,354
Investments purchased -- -- -- -- --
Investment advisory and
management fees 85,327 102,849 75,266 35,365 35,544
Distribution and service
maintenance fees 164,057 162,861 147,693 25,475 11,984
Transfer agent fees and expenses 31,312 13,901 30,321 32,935 35,806
Variation margin on futures contracts -- -- -- -- --
Other accrued expenses 83,509 53,863 66,206 44,509 40,928
Unrealized depreciation on forward
currency contracts -- -- -- -- --
Dividends payable -- -- -- -- 78,438
--------------- --------------- --------------- ----------------- ---------------
Total liabilities 994,771 807,180 615,965 352,953 284,054
--------------- --------------- --------------- ----------------- ---------------
Net Assets $ 452,976,469 $ 432,820,403 $ 409,892,133 $ 83,266,574 $ 29,596,714
=============== =============== =============== ================= ===============
*Identified cost
Investment securities $ 426,324,813 $ 402,485,805 $ 391,904,537 $ 82,186,930 $ 30,263,818
=============== =============== =============== ================= ===============
Short-term securities $ -- $ -- $ -- $ -- $ --
=============== =============== =============== ================= ===============
Foreign cash $ -- $ -- $ -- $ -- $ --
=============== =============== =============== ================= ===============
</Table>
See Notes to Financial Statements
2
<Page>
<Table>
<Caption>
FOCUSED FOCUSED FOCUSED FOCUSED FOCUSED
EQUITY MULTI-ASSET BALANCED FIXED INCOME AND FIXED INCOME
STRATEGY STRATEGY STRATEGY EQUITY STRATEGY STRATEGY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Common Stock, $.0001 par value
(1 billion shares authorized) $ 2,726 $ 2,775 $ 2,677 $ 601 $ 232
Paid-in capital 431,508,946 407,436,024 391,710,471 80,648,515 29,835,817
--------------- --------------- --------------- ----------------- ---------------
431,511,672 407,438,799 391,713,148 80,649,116 29,836,049
Accumulated undistributed net
investment income (loss) (1,028,982) (250,054) (225,804) (122,152) (173,473)
Accumulated undistributed net realized
gain (loss) on investments, futures
contracts, options contracts, and
foreign exchange transactions 59,025 526,432 3,113,587 1,650,493 489,264
Unrealized appreciation (depreciation)
on investments 22,434,754 25,105,226 15,291,202 1,089,117 (555,126)
Unrealized foreign exchange gain (loss)
on other assets and liabilities -- -- -- -- --
Unrealized appreciation (depreciation) on
futures contracts and options contracts -- -- -- -- --
--------------- --------------- --------------- ----------------- ---------------
$ 452,976,469 $ 432,820,403 $ 409,892,133 $ 83,266,574 $ 29,596,714
=============== =============== =============== ================= ===============
CLASS A:
Net assets $ 135,241,846 $ 124,703,250 $ 114,153,611 $ 36,119,154 $ 8,596,070
Shares outstanding 8,085,527 7,965,540 7,450,970 2,606,115 673,607
Net asset value and redemption price per
share (excluding any applicable
contingent deferred sales charge) $ 16.73 $ 15.66 $ 15.32 $ 13.86 $ 12.76
Maximum sales charge (5.75% of
offering price) 1.02 0.96 0.93 0.85 0.78
--------------- --------------- --------------- ----------------- ---------------
Maximum offering price to public $ 17.75 $ 16.62 $ 16.25 $ 14.71 $ 13.54
=============== =============== =============== ================= ===============
CLASS B:
Net assets $ 80,674,084 $ 77,230,351 $ 100,422,611 $ 15,176,227 $ 7,358,711
Shares outstanding 4,866,966 4,958,986 6,564,123 1,096,344 577,203
Net asset value, offering and redemption
price per share (excluding any applicable
contingent deferred sales charge) $ 16.58 $ 15.57 $ 15.30 $ 13.84 $ 12.75
=============== =============== =============== ================= ===============
CLASS C+:
Net assets $ 228,842,790 $ 230,886,802 $ 177,524,042 $ 31,971,193 $ 13,641,933
Shares outstanding 13,812,303 14,828,038 11,591,430 2,309,658 1,070,075
Net asset value, offering and redemption
price per share (excluding any applicable
contingent deferred sales charge) $ 16.57 $ 15.57 $ 15.32 $ 13.84 $ 12.75
=============== =============== =============== ================= ===============
CLASS I:
Net assets $ 8,217,749 $ -- $ 17,791,869 $ -- $ --
Shares outstanding 491,253 -- 1,161,078 -- --
Net asset value, offering and
redemption price per share $ 16.73 $ -- $ 15.32 $ -- $ --
=============== =============== =============== ================= ===============
CLASS X:
Net assets $ -- $ -- $ -- $ -- $ --
Shares outstanding -- -- -- -- --
Net asset value, offering and redemption
price per share $ -- $ -- $ -- $ -- $ --
=============== =============== =============== ================= ===============
CLASS Z:
Net assets $ -- $ -- $ -- $ -- $ --
Shares outstanding -- -- -- -- --
Net asset value, offering and redemption
price per share $ -- $ -- $ -- $ -- $ --
=============== =============== =============== ================= ===============
</Table>
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
See Notes to Financial Statements
3
<Page>
<Table>
<Caption>
FOCUSED FOCUSED FOCUSED FOCUSED FOCUSED
LARGE-CAP MULTI-CAP 2000 LARGE-CAP MULTI-CAP
GROWTH GROWTH GROWTH VALUE VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------------------------------------------------------------------------------
ASSETS:
Investment securities, at value* $ 1,772,843,580 $ 287,850,082 $ 262,690,931 $ 416,338,734 $ 597,617,106
Short-term securities* 58,832,049 11,099,467 -- 22,198,000 --
Repurchase agreements (cost equals
market) 49,846,000 16,660,000 15,002,000 27,184,000 26,877,000
Cash 28,083 22,001 1,039 5,889 --
Foreign cash* -- -- -- -- --
Receivables for--
Fund shares sold 4,860,210 388,090 1,154,391 1,310,436 573,752
Dividends and interest 723,501 405,897 199 1,329,052 1,072,488
Investments sold 4,360,490 8,187,497 -- 3,954,064 2,505,098
Prepaid expenses and other assets 438,570 5,875 23,857 21,479 73,969
Due from investment advisor -- 111,590 82,537 9,513 189,006
Due from custodian -- -- -- -- 2,041
--------------- --------------- --------------- ----------------- ---------------
Total assets 1,891,932,483 324,730,499 278,954,954 472,351,167 628,910,460
--------------- --------------- --------------- ----------------- ---------------
LIABILITIES:
Payables for--
Fund shares redeemed 2,581,181 573,459 195,237 229,622 1,077,214
Investments purchased 6,383,425 3,147,441 2,098,841 23,407,893 6,696,686
Investment advisory and
management fees 1,352,270 268,098 231,458 363,438 537,648
Distribution and service
maintenance fees 1,122,369 187,568 136,698 192,203 414,436
Transfer agent fees and expenses 647,570 166,419 55,395 86,980 165,428
Variation margin on
futures contracts -- -- -- 33,754 --
Other accrued expenses 614,447 177,782 114,993 75,219 269,110
Unrealized depreciation on forward
currency contracts -- -- -- -- 448,434
Dividends payable -- -- -- -- --
--------------- --------------- --------------- ----------------- ---------------
Total liabilities 12,701,262 4,520,767 2,832,622 24,389,109 9,608,956
--------------- --------------- --------------- ----------------- ---------------
Net Assets $ 1,879,231,221 $ 320,209,732 $ 276,122,332 $ 447,962,058 $ 619,301,504
=============== =============== =============== ================= ===============
*Identified cost
Investment securities $ 1,419,862,994 $ 243,411,087 $ 238,697,448 $ 394,229,769 $ 551,626,549
=============== =============== =============== ================= ===============
Short-term securities $ 58,830,369 $ 11,099,467 $ -- $ 22,198,000 $ --
=============== =============== =============== ================= ===============
Foreign cash $ -- $ -- $ -- $ -- $ --
=============== =============== =============== ================= ===============
</Table>
See Notes to Financial Statements
4
<Page>
<Table>
<Caption>
FOCUSED FOCUSED FOCUSED FOCUSED FOCUSED
LARGE-CAP MULTI-CAP 2000 LARGE-CAP MULTI-CAP
GROWTH GROWTH GROWTH VALUE VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Common Stock, $.0001 par value
(1 billion shares authorized) $ 11,320 $ 1,947 $ 1,865 $ 3,070 $ 3,459
Paid-in capital 2,201,167,988 414,622,922 256,339,009 422,532,894 595,250,795
--------------- --------------- --------------- ----------------- ---------------
2,201,179,308 414,624,869 256,340,874 422,535,964 595,254,254
Accumulated undistributed net
investment income (loss) (12,164,255) (2,493,327) (2,112,211) 214,875 (602,317)
Accumulated undistributed net realized
gain (loss) on investments, futures
contracts, options contracts, and
foreign exchange transactions (662,753,771) (136,360,805) (2,099,814) 3,219,367 (20,887,448)
Unrealized appreciation (depreciation)
on investments 352,982,266 44,438,995 23,993,483 22,108,965 45,990,557
Unrealized foreign exchange gain (loss)
on other assets and liabilities (12,327) -- -- -- (453,542)
Unrealized appreciation (depreciation)
on futures contracts and options
contracts -- -- -- (117,113) --
--------------- --------------- --------------- ----------------- ---------------
$ 1,879,231,221 $ 320,209,732 $ 276,122,332 $ 447,962,058 $ 619,301,504
=============== =============== =============== ================= ===============
CLASS A:
Net assets $ 739,697,838 $ 159,908,064 $ 169,525,688 $ 326,556,408 $ 198,316,559
Shares outstanding 43,615,025 9,439,888 11,254,368 22,176,832 10,902,048
Net asset value and redemption price per
share (excluding any applicable
contingent deferred sales charge) $ 16.96 $ 16.94 $ 15.06 $ 14.73 $ 18.19
Maximum sales charge (5.75% of
offering price) 1.03 1.03 0.92 0.90 1.11
--------------- --------------- --------------- ----------------- ---------------
Maximum offering price to public $ 17.99 $ 17.97 $ 15.98 $ 15.63 $ 19.30
=============== =============== =============== ================= ===============
CLASS B:
Net assets $ 498,674,742 $ 112,772,768 $ 33,509,119 $ 46,453,026 $ 193,894,398
Shares outstanding 30,576,551 7,055,374 2,331,625 3,263,590 10,905,230
Net asset value, offering and redemption
price per share (excluding any applicable
contingent deferred sales charge) $ 16.31 $ 15.98 $ 14.37 $ 14.23 $ 17.78
=============== =============== =============== ================= ===============
CLASS C+:
Net assets $ 561,473,102 $ 46,803,446 $ 64,176,851 $ 74,952,624 $ 227,090,547
Shares outstanding 34,417,155 2,928,615 4,478,175 5,258,605 12,778,952
Net asset value, offering and redemption
price per share (excluding any applicable
contingent deferred sales charge) $ 16.31 $ 15.98 $ 14.33 $ 14.25 $ 17.77
=============== =============== =============== ================= ===============
CLASS I:
Net assets $ -- $ -- $ 8,910,674 $ -- $ --
Shares outstanding -- -- 585,364 -- --
Net asset value, offering and redemption
price per share $ -- $ -- $ 15.22 $ -- $ --
=============== =============== =============== ================= ===============
CLASS X:
Net assets $ -- $ 725,454 $ -- $ -- $ --
Shares outstanding -- 42,688 -- -- --
Net asset value, offering and redemption
price per share $ -- $ 16.99 $ -- $ -- $ --
=============== =============== =============== ================= ===============
CLASS Z:
Net assets $ 79,385,539 $ -- $ -- $ -- $ --
Shares outstanding 4,586,895 -- -- -- --
Net asset value, offering and redemption
price per share $ 17.31 $ -- $ -- $ -- $ --
=============== =============== =============== ================= ===============
</Table>
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
See Notes to Financial Statements
5
<Page>
<Table>
<Caption>
FOCUSED FOCUSED FOCUSED
2000 GROWTH INTERNATIONAL FOCUSED FOCUSED
VALUE AND INCOME EQUITY TECHNOLOGY DIVIDEND STRATEGY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------------------------------------------------------------------------------
ASSETS:
Investment securities, at value* $ 411,536,616 $ 410,633,154 $ 164,315,288 $ 87,445,501 $ 220,147,874
Short-term securities* 23,198,905 -- 2,839,858 -- --
Repurchase agreements (cost equals
market) 15,479,434 30,804,000 4,953,000 4,157,000 1,402,000
Cash 66,407 1,794 1,886 1,283 744
Foreign cash* -- -- 639,559 -- --
Receivables for--
Fund shares sold 1,320,015 1,178,313 623,998 144,657 1,105,726
Dividends and interest 241,783 677,474 373,564 49 567,775
Investments sold 4,988,075 960,461 1,337,192 -- --
Prepaid expenses and other assets 62,430 101,934 18,783 21,544 315
Due from investment advisor 67,879 48,863 74,838 119,801 69,416
Due from custodian -- -- -- -- --
--------------- --------------- --------------- --------------- -----------------
Total assets 456,961,544 444,405,993 175,177,966 91,889,835 223,293,850
--------------- --------------- --------------- --------------- -----------------
LIABILITIES:
Payables for--
Fund shares redeemed 996,720 468,496 73,436 150,207 296,470
Investments purchased 7,464,862 4,175,348 1,113,904 -- 1,698,621
Investment advisory and management fees 370,146 365,772 171,232 95,177 62,931
Distribution and service maintenance fees 222,482 254,959 69,990 59,604 146,413
Transfer agent fees and expenses 97,914 102,729 22,614 44,659 69,230
Variation margin on
futures contracts -- -- -- -- --
Other accrued expenses 196,980 117,127 61,036 108,474 50,378
Unrealized depreciation on forward
currency contracts -- -- -- -- --
Dividends payable -- -- -- -- --
--------------- --------------- --------------- --------------- -----------------
Total liabilities 9,349,104 5,484,431 1,512,212 458,121 2,324,043
--------------- --------------- --------------- --------------- -----------------
Net Assets $ 447,612,440 $ 438,921,562 $ 173,665,754 $ 91,431,714 $ 220,969,807
=============== =============== =============== =============== =================
*Identified cost
Investment securities $ 366,806,799 $ 352,662,665 $ 153,407,171 $ 78,683,584 $ 202,101,088
=============== =============== =============== =============== =================
Short-term securities $ 23,198,905 $ -- $ 2,839,858 $ -- $ --
=============== =============== =============== =============== =================
Foreign cash $ -- $ -- $ 638,902 $ -- $ --
=============== =============== =============== =============== =================
</Table>
See Notes to Financial Statements
6
<Page>
<Table>
<Caption>
FOCUSED FOCUSED FOCUSED
2000 GROWTH INTERNATIONAL FOCUSED FOCUSED
VALUE AND INCOME EQUITY TECHNOLOGY DIVIDEND STRATEGY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Common Stock, $.0001 par value
(1 billion shares authorized) $ 2,268 $ 2,896 $ 1,077 $ 1,842 $ 1,775
Paid-in capital 377,417,890 441,839,075 155,809,434 279,307,017 217,054,890
--------------- --------------- --------------- --------------- -----------------
377,420,158 441,841,971 155,810,511 279,308,859 217,056,665
Accumulated undistributed net
investment income (loss) (138,316) (1,599,527) (565,247) (1,013,401) 244,303
Accumulated undistributed net realized
gain (loss) on investments, futures
contracts, options contracts, and
foreign exchange transactions 25,600,781 (59,288,667) 7,518,628 (195,625,661) (14,377,947)
Unrealized appreciation (depreciation)
on investments 44,729,817 57,970,489 10,908,117 8,761,917 18,046,786
Unrealized foreign exchange gain (loss)
on other assets and liabilities -- (2,704) (6,255) -- --
Unrealized appreciation (depreciation) on
futures contracts and options contracts -- -- -- -- --
--------------- --------------- --------------- --------------- -----------------
$ 447,612,440 $ 438,921,562 $ 173,665,754 $ 91,431,714 $ 220,969,807
=============== =============== =============== =============== =================
CLASS A:
Net assets $ 275,818,127 $ 158,142,605 $ 137,247,505 $ 36,741,328 $ 63,323,692
Shares outstanding 13,731,636 10,178,041 8,484,005 7,300,421 5,072,207
Net asset value and redemption price per
share (excluding any applicable
contingent deferred sales charge) $ 20.09 $ 15.54 $ 16.18 $ 5.03 $ 12.48
Maximum sales0 charge (5.75% of
offering price) 1.23 0.95 0.99 0.31 0.76
--------------- --------------- --------------- --------------- -----------------
Maximum offering price to public $ 21.32 $ 16.49 $ 17.17 $ 5.34 $ 13.24
=============== =============== =============== =============== =================
CLASS B:
Net assets $ 71,304,109 $ 95,500,539 $ 10,320,959 $ 25,927,405 $ 57,979,925
Shares outstanding 3,717,418 6,422,219 647,945 5,273,181 4,660,797
Net asset value, offering and redemption
price per share (excluding any applicable
contingent deferred sales charge) $ 19.18 $ 14.87 $ 15.93 $ 4.92 $ 12.44
=============== =============== =============== =============== =================
CLASS C+:
Net assets $ 100,490,204 $ 153,277,497 $ 26,097,290 $ 28,762,981 $ 99,666,190
Shares outstanding 5,228,489 10,316,582 1,640,741 5,849,857 8,013,369
Net asset value, offering and redemption
price per share (excluding any applicable
contingent deferred sales charge) $ 19.22 $ 14.86 $ 15.91 $ 4.92 $ 12.44
=============== =============== =============== =============== =================
CLASS I:
Net assets $ -- $ -- $ -- $ -- $ --
Shares outstanding -- -- -- -- --
Net asset value, offering and redemption
price per share $ -- $ -- $ -- $ -- $ --
=============== =============== =============== =============== =================
CLASS X:
Net assets $ -- $ 32,000,921 $ -- $ -- $ --
Shares outstanding -- 2,046,476 -- -- --
Net asset value, offering and redemption
price per share $ -- $ 15.64 $ -- $ -- $ --
=============== =============== =============== =============== =================
CLASS Z:
Net assets $ -- $ -- $ -- $ -- $ --
Shares outstanding -- -- -- -- --
Net asset value, offering and redemption
price per share $ -- $ -- $ -- $ -- $ --
=============== =============== =============== =============== =================
</Table>
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
See Notes to Financial Statements
7
<Page>
STATEMENT OF OPERATIONS -- FOR THE PERIOD ENDED APRIL 30, 2004 (UNAUDITED)
<Table>
<Caption>
FOCUSED
FOCUSED FOCUSED FOCUSED FIXED INCOME
EQUITY MULTI-ASSET BALANCED AND EQUITY
STRATEGY STRATEGY STRATEGY STRATEGY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ -------------- -------------- --------------
INVESTMENT INCOME:
Interest $ -- $ -- $ -- $ --
Dividends 96,121 1,210,337 1,747,690 951,811
------------ -------------- -------------- --------------
Total investment income* 96,121 1,210,337 1,747,690 951,811
============ ============== ============== ==============
Expenses:
Investment advisory and management fees 246,425 271,151 233,149 41,910
Distribution and service maintenance fees
Class A -- -- -- --
Class B 184,016 195,920 235,101 44,287
Class C+ 555,212 577,881 461,094 90,924
Class X -- -- -- --
Class Z -- -- -- --
Service fees Class I -- -- -- --
Transfer agent fees and expenses
Class A 5,506 4,298 6,224 4,548
Class B 4,740 4,250 4,142 3,782
Class C+ 5,040 4,658 5,076 3,902
Class I 204 -- 224 --
Class X -- -- -- --
Class Z -- -- -- --
Registration fees
Class A 20,945 28,044 23,414 15,712
Class B 12,157 12,428 15,373 10,800
Class C+ 48,882 47,697 40,319 16,083
Class I 1,853 -- 1,307 --
Class X -- -- -- --
Class Z -- -- -- --
Custodian fees 5,886 5,886 5,886 5,886
Audit and tax fees 14,834 14,714 14,894 14,714
Reports to shareholders 11,660 2,087 18,355 1,211
Legal fees 2,634 2,646 2,622 2,430
Directors' fees and expenses 4,657 5,632 3,980 2,687
Interest expense -- -- -- --
Insurance expense 125 213 143 63
Other expenses 2,668 2,716 2,644 2,573
------------ -------------- -------------- --------------
Total expenses before reimbursements, custody credits, and
fees paid indirectly 1,127,444 1,180,221 1,073,947 261,512
Expenses waived/reimbursed by investment advisor (2,519) (27) (27,079) (33,981)
Custody credits earned on cash balances -- -- -- --
Fees paid indirectly (Note 8) -- -- -- --
------------ -------------- -------------- --------------
Net expenses 1,124,925 1,180,194 1,046,868 227,531
------------ -------------- -------------- --------------
Net investment income (loss) (1,028,804) 30,143 700,822 724,280
------------ -------------- -------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCIES:
Net realized gain (loss) on investments -- -- 2,416,803 1,353,762
Net realized gain (loss) from capital gain distributions from
underlying funds 123,860 544,963 758,792 305,804
Net realized foreign exchange gain (loss) on other assets and
liabilities -- -- -- --
Net realized gain (loss) on futures contracts and options
contracts -- -- -- --
Change in unrealized appreciation (depreciation) on investments 6,390,755 5,432,588 267,620 (1,388,556)
Change in unrealized foreign exchange gain (loss) on other assets
and liabilities -- -- -- --
Change in unrealized appreciation (depreciation) on futures
contracts and options contracts -- -- -- --
------------ -------------- -------------- --------------
Net realized and unrealized gain (loss) on investments, futures
contracts, options contracts, and foreign exchange gain (loss)
on other assets and liabilities 6,514,615 5,977,551 3,443,215 271,010
------------ -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS: $ 5,485,811 $ 6,007,694 $ 4,144,037 $ 995,290
============ ============== ============== ==============
*Net of foreign withholding taxes on interest and dividends of $ -- $ -- $ -- $ --
============ ============== ============== ==============
</Table>
- ----------
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares
See Notes to Financial Statements
8
<Page>
<Table>
<Caption>
FOCUSED FOCUSED FOCUSED FOCUSED
FIXED INCOME LARGE-CAP MULTI-CAP 2000
STRATEGY GROWTH GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ -------------- -------------- --------------
INVESTMENT INCOME:
Interest $ -- $ 231,869 $ 88,686 $ 35,951
Dividends 456,917 4,869,434 760,280 170,760
------------ -------------- -------------- --------------
Total investment income* 456,917 5,101,303 848,966 206,711
============ ============== ============== ==============
Expenses:
Investment advisory and management fees 17,265 7,656,248 1,612,272 1,184,559
Distribution and service maintenance fees
Class A -- 1,125,210 254,803 233,254
Class B 21,994 2,569,397 640,192 162,505
Class C+ 40,726 2,835,113 240,001 306,708
Class X -- -- -- --
Class Z -- -- -- --
Service fees Class I -- -- -- 11,041
Transfer agent fees and expenses
Class A 5,124 793,907 204,852 152,731
Class B 3,718 688,743 191,402 48,787
Class C+ 3,802 715,013 71,014 74,962
Class I -- -- -- 10,274
Class X -- -- 2,381 --
Class Z -- 6,130 -- --
Registration fees
Class A 13,739 112,088 20,948 67,074
Class B 12,015 21,880 11,271 5,342
Class C+ 17,681 42,699 8,940 9,748
Class I -- -- -- 152
Class X -- -- 2,419 --
Class Z -- 17,447 -- --
Custodian fees 5,886 157,936 81,089 71,415
Audit and tax fee 14,678 14,345 20,464 20,115
Reports to shareholders 976 707,299 148,030 56,179
Legal fees 2,368 21,230 6,180 1,234
Directors' fees and expenses 1,638 51,828 9,903 3,349
Interest expense -- 197 653 --
Insurance expense 55 14,166 2,809 778
Other expenses 2,650 590 3,456 16,833
------------ -------------- -------------- --------------
Total expenses before reimbursements, custody credits, and
fees paid indirectly 164,315 17,551,466 3,533,079 2,437,040
Expenses waived/reimbursed by investment advisor (66,732) -- (189,664) (106,329)
Custody credits earned on cash balances -- (636) (281) (851)
Fees paid indirectly (Note 8) -- (407,437) (37,050) (13,489)
------------ -------------- -------------- --------------
Net expenses 97,583 17,143,393 3,306,084 2,316,371
------------ -------------- -------------- --------------
Net investment income (loss) 359,334 (12,042,090) (2,457,118) (2,109,660)
------------ -------------- -------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCIES:
Net realized gain (loss) on investments 388,288 33,054,392 30,682,056 13,915,770
Net realized gain (loss) from capital gain distributions from
underlying funds 171,737 -- -- --
Net realized foreign exchange gain (loss) on other assets and
liabilities -- 44,005 -- 8
Net realized gain (loss) on futures contracts and options
contracts -- -- (32,039) --
Change in unrealized appreciation (depreciation) on investments (703,538) 1,473,538 (27,806,164) (13,564,229)
Change in unrealized foreign exchange gain (loss) on other assets
and liabilities -- (24,004) -- --
Change in unrealized appreciation (depreciation) on futures
contracts and options contracts -- -- -- --
------------ -------------- -------------- --------------
Net realized and unrealized gain (loss) on investments, futures
contracts, options contracts, and foreign exchange gain (loss)
on other assets and liabilities (143,513) 34,547,931 2,843,853 351,549
------------ -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS: $ 215,821 $ 22,505,841 $ 386,735 $ (1,758,111)
============ ============== ============== ==============
*Net of foreign withholding taxes on interest and dividends of $ -- $ 163,793 $ -- $ 157
============ ============== ============== ==============
</Table>
- ----------
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares
See Notes to Financial Statements
9
<Page>
<Table>
<Caption>
FOCUSED FOCUSED FOCUSED FOCUSED
LARGE-CAP MULTI-CAP 2000 GROWTH
VALUE VALUE VALUE AND INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ -------------- -------------- --------------
INVESTMENT INCOME:
Interest $ 104,798 $ 53,484 $ 140,994 $ 55,904
Dividends 3,783,260 6,203,185 3,396,767 2,510,079
------------ -------------- -------------- --------------
Total investment income* 3,888,058 6,256,669 3,537,761 2,565,983
============ ============== ============== ==============
Expenses:
Investment advisory and management fees 1,843,043 3,231,815 1,874,413 2,094,620
Distribution and service maintenance fees
Class A 436,901 327,726 370,569 248,055
Class B 228,341 996,808 339,513 467,808
Class C+ 345,804 1,166,515 459,023 749,256
Class X -- -- -- --
Class Z -- -- -- --
Service fees Class I -- 13,724 -- --
Transfer agent fees and expenses
Class A 282,013 233,647 245,733 171,586
Class B 59,569 252,198 88,819 121,718
Class C+ 84,391 292,573 114,565 183,730
Class I -- 12,077 -- --
Class X -- -- -- 31,091
Class Z -- -- -- --
Registration fees
Class A 95,654 20,197 51,595 28,019
Class B 3,306 8,681 1,511 6,117
Class C+ 5,795 8,623 3,171 3,804
Class I -- 10,738 -- --
Class X -- -- -- 834
Class Z -- -- -- --
Custodian fees 73,172 117,395 75,497 79,651
Audit and tax fees 18,803 17,492 20,771 20,398
Reports to shareholders 58,311 263,329 134,682 113,158
Legal fees 3,736 13,032 5,206 6,762
Directors' fees and expenses 5,094 21,876 7,365 10,254
Interest expense -- 3,548 -- --
Insurance expense 1,315 6,224 1,825 2,762
Other expenses 4,002 4,721 4,003 3,700
------------ -------------- -------------- --------------
Total expenses before reimbursements, custody credits, and
fees paid indirectly 3,549,250 7,022,939 3,798,261 4,343,323
Expenses waived/reimbursed by investment advisor (41,334) (196,226) (84,084) (53,235)
Custody credits earned on cash balances (148) (331) (567) (103)
Fees paid indirectly (Note 8) -- -- (49,079) (142,878)
------------ -------------- -------------- --------------
Net expenses 3,507,768 6,826,382 3,664,531 4,147,107
------------ -------------- -------------- --------------
Net investment income (loss) 380,290 (569,713) (126,770) (1,581,124)
------------ -------------- -------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCIES:
Net realized gain (loss) on investments 11,001,896 34,844,294 27,825,240 10,257,596
Net realized gain (loss) from capital gain distributions from
underlying funds -- -- -- --
Net realized foreign exchange gain (loss) on other assets and
liabilities -- 677,175 111 (56,468)
Net realized gain (loss) on futures contracts and options
contracts 810,954 -- -- --
Change in unrealized appreciation (depreciation) on investments (563,462) 7,396,857 11,438,917 5,449,067
Change in unrealized foreign exchange gain (loss) on other assets
and liabilities -- (453,241) -- (4,576)
Change in unrealized appreciation (depreciation) on futures
contracts and options contracts (200,630) -- -- --
------------ -------------- -------------- --------------
Net realized and unrealized gain (loss) on investments, futures
contracts, options contracts, and foreign exchange gain (loss)
on other assets and liabilities 11,048,758 42,465,085 39,264,268 15,645,619
------------ -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS: $ 11,429,048 $ 41,895,372 $ 39,137,498 $ 14,064,495
============ ============== ============== ==============
*Net of foreign withholding taxes on interest and dividends of $ 48,992 $ 117,287 $ 6,941 $ 58,330
============ ============== ============== ==============
</Table>
- ----------
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares
See Notes to Financial Statements
10
<Page>
<Table>
<Caption>
FOCUSED FOCUSED FOCUSED
INTERNATIONAL FOCUSED DIVIDEND DIVIDEND
EQUITY TECHNOLOGY STRATEGY STRATEGY
PORTFOLIO PORTFOLIO PORTFOLIO# PORTFOLIO##
------------ -------------- -------------- --------------
INVESTMENT INCOME:
Interest $ 23,943 $ 13,875 $ 12,300 $ 1,051
Dividends 861,925 30,674 2,913,607 458,122
------------ -------------- -------------- --------------
Total investment income* 885,868 44,549 2,925,907 459,173
============ ============== ============== ==============
Expenses:
Investment advisory and management fees 850,382 572,896 355,203 50,393
Distribution and service maintenance fees
Class A 181,560 64,722 100,673 14,197
Class B 47,364 126,125 277,287 41,920
Class C+ 114,197 147,272 449,944 61,497
Class X -- -- -- --
Class Z -- -- -- --
Service fees Class I -- -- -- --
Transfer agent fees and expenses
Class A 117,606 56,800 70,188 10,133
Class B 13,100 40,433 76,251 10,618
Class C+ 27,523 44,236 110,335 14,708
Class I -- -- -- --
Class X -- -- -- --
Class Z -- -- -- --
Registration fees
Class A 60,294 9,067 10,321 1,984
Class B 5,908 8,586 8,519 1,519
Class C+ 5,572 6,685 11,253 1,767
Class I -- -- -- --
Class X -- -- -- --
Class Z -- -- -- --
Custodian fees 97,332 67,648 37,480 6,200
Audit and tax fees 24,570 20,613 16,322 2,573
Reports to shareholders 35,183 106,626 36,939 2,697
Legal fees 294 918 2,429 496
Directors' fees and expenses 1,245 2,043 5,334 1,010
Interest expense 140 277 468 --
Insurance expense 475 818 1,276 --
Other expenses 3,142 4,003 3,245 786
------------ -------------- -------------- --------------
Total expenses before reimbursements, custody credits, and
fees paid indirectly 1,585,887 1,279,768 1,573,467 222,498
Expenses waived/reimbursed by investment advisor (153,681) (199,144) (136,645) (18,495)
Custody credits earned on cash balances (586) (30) -- --
Fees paid indirectly (Note 8) (6,683) (29,596) -- --
------------ -------------- -------------- --------------
Net expenses 1,424,937 1,050,998 1,436,822 204,003
------------ -------------- -------------- --------------
Net investment income (loss) (539,069) (1,006,449) 1,489,085 255,170
------------ -------------- -------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCIES:
Net realized gain (loss) on investments 7,627,355 18,043,606 9,057,973 --
Net realized gain (loss) from capital gain distributions from
underlying funds -- -- -- --
Net realized foreign exchange gain (loss) on other assets and
liabilities (22,223) 61,047 -- --
Net realized gain (loss) on futures contracts and options
contracts -- 82,689 -- --
Change in unrealized appreciation (depreciation) on investments 1,375,837 (15,370,091) 9,862,590 8,226,258
Change in unrealized foreign exchange gain (loss) on other assets
and liabilities 13,734 -- -- --
Change in unrealized appreciation (depreciation) on futures
contracts and options contracts -- -- -- --
------------ -------------- -------------- --------------
Net realized and unrealized gain (loss) on investments, futures
contracts, options contracts, and foreign exchange gain (loss)
on other assets and liabilities 8,994,703 2,817,251 18,920,563 8,226,258
------------ -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS: $ 8,455,634 $ 1,810,802 $ 20,409,648 $ 8,481,428
============ ============== ============== ==============
*Net of foreign withholding taxes on interest and dividends of $ 104,754 $ 6,061 $ -- $ --
============ ============== ============== ==============
</Table>
- ----------
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares
# For the period November 1, 2003 through April 30, 2004
## For the period October 1, 2003 through October 31, 2003
See Notes to Financial Statements
11
<Page>
STATEMENT OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOCUSED EQUITY STRATEGY FOCUSED MULTI-ASSET
PORTFOLIO STRATEGY PORTFOLIO
----------------------------------- -----------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE PERIOD MONTHS ENDED FOR THE PERIOD
APRIL 30, ENDED APRIL 30, ENDED
2004 OCTOBER 31, 2004 OCTOBER 31,
(UNAUDITED) 2003# (UNAUDITED) 2003#
-------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income (loss) $ (1,028,804) $ (341,869) $ 30,143 $ (222,174)
Net realized gain (loss) on investments -- 296,379 -- 509
Net realized gain (loss) from capital gain
distributions from underlying funds 123,860 21,159 544,963 32,733
Net realized foreign exchange gain (loss)
on other assets and liabilities -- -- -- --
Net realized gain (loss) on futures
contracts and options contracts -- -- -- --
Change in unrealized appreciation
(depreciation) on investments 6,390,755 16,043,999 5,432,588 19,672,638
Change in unrealized foreign exchange
gain (loss) on other assets and liabilities -- -- -- --
Change in unrealized appreciation
(depreciation) on futures contracts
and options contracts -- -- -- --
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in net assets
resulting from operations 5,485,811 16,019,668 6,007,694 19,483,706
---------------- ---------------- ---------------- ----------------
DIVIDENDS AND DISTRIBUTIONS PAID TO
SHAREHOLDERS FROM:
Net investment income (Class A) -- (2,323) (280,124) (4,235)
Net investment income (Class B) -- (745) -- (1,800)
Net investment income (Class C+) -- (2,032) -- (9,262)
Net investment income (Class I) -- -- -- --
Net investment income (Class X) -- -- -- --
Net investment income (Class Z) -- -- -- --
Net realized gain on investments (Class A) (11,582) -- (5,158) --
Net realized gain on investments (Class B) (7,138) -- (3,400) --
Net realized gain on investments (Class C+) (22,608) -- (9,941) --
Net realized gain on investments (Class I) -- -- -- --
Net realized gain on investments (Class X) -- -- -- --
Net realized gain on investments (Class Z) -- -- -- --
---------------- ---------------- ---------------- ----------------
Total dividends and distributions to
shareholders (41,328) (5,100) (298,623) (15,297)
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in net assets
resulting from capital share transactions
(Note 9) 270,148,456 161,368,962 214,740,477 192,902,446
---------------- ---------------- ---------------- ----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 275,592,939 177,383,530 220,449,548 212,370,855
NET ASSETS:
Beginning of period 177,383,530 -- 212,370,855 --
---------------- ---------------- ---------------- ----------------
End of period* $ 452,976,469 $ 177,383,530 $ 432,820,403 $ 212,370,855
================ ================ ================ ================
* Includes accumulated undistributed
net investment income (loss) $ (1,028,982) $ (178) $ (250,054) $ (73)
================ ================ ================ ================
<Caption>
FOCUSED BALANCED
STRATEGY PORTFOLIO
-----------------------------------
FOR THE SIX
MONTHS ENDED FOR THE PERIOD
APRIL 30, ENDED
2004 OCTOBER 31,
(UNAUDITED) 2003#
-----------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income (loss) $ 700,822 $ (20,311)
Net realized gain (loss) on investments 2,416,803 (51,296)
Net realized gain (loss) from capital gain
distributions from underlying funds 758,792 17,075
Net realized foreign exchange gain (loss)
on other assets and liabilities -- --
Net realized gain (loss) on futures
contracts and options contracts -- --
Change in unrealized appreciation
(depreciation) on investments 267,620 15,023,582
Change in unrealized foreign exchange
gain (loss) on other assets and liabilities -- --
Change in unrealized appreciation
(depreciation) on futures contracts
and options contracts -- --
---------------- ----------------
Net increase (decrease) in net assets
resulting from operations 4,144,037 14,969,050
---------------- ----------------
DIVIDENDS AND DISTRIBUTIONS PAID TO
SHAREHOLDERS FROM:
Net investment income (Class A) (603,525) (9,827)
Net investment income (Class B) (92,643) (2,430)
Net investment income (Class C+) (199,626) (6,875)
Net investment income (Class I) (30,800) --
Net investment income (Class X) -- --
Net investment income (Class Z) -- --
Net realized gain on investments (Class A) (2,613) --
Net realized gain on investments (Class B) (2,093) --
Net realized gain on investments (Class C+) (4,626) --
Net realized gain on investments (Class I) -- --
Net realized gain on investments (Class X) -- --
Net realized gain on investments (Class Z) -- --
---------------- ----------------
Total dividends and distributions to
shareholders (935,926) (19,132)
---------------- ----------------
Net increase (decrease) in net assets
resulting from capital share transactions
(Note 9) 201,491,652 190,242,452
---------------- ----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 204,699,763 205,192,370
NET ASSETS:
Beginning of period 205,192,370 --
---------------- ----------------
End of period* $ 409,892,133 $ 205,192,370
================ ================
* Includes accumulated undistributed
net investment income (loss) $ (225,804) $ (32)
================ ================
</Table>
- ----------
# Commenced operation November 8, 2002
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares
See Notes to Financial Statements
12
<Page>
<Table>
<Caption>
FOCUSED FIXED INCOME FOCUSED FIXED INCOME
AND EQUITY STRATEGY STRATEGY
PORTFOLIO PORTFOLIO
----------------------------------- -----------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE PERIOD MONTHS ENDED FOR THE PERIOD
APRIL 30, ENDED APRIL 30, ENDED
2004 OCTOBER 31, 2004 OCTOBER 31,
(UNAUDITED) 2003# (UNAUDITED) 2003#
-------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income (loss) $ 724,280 $ 290,757 $ 359,334 $ 338,448
Net realized gain (loss) on investments 1,353,762 33,540 388,288 148,242
Net realized gain (loss) from capital gain
distributions from underlying funds 305,804 6,125 171,737 3,754
Net realized foreign exchange gain (loss)
on other assets and liabilities -- -- -- --
Net realized gain (loss) on futures
contracts and options contracts -- -- -- --
Change in unrealized appreciation
(depreciation) on investments (1,388,556) 2,477,673 (703,538) 148,412
Change in unrealized foreign exchange
gain (loss) on other assets and liabilities -- -- -- --
Change in unrealized appreciation
(depreciation) on futures contracts
and options contracts -- -- -- --
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in net assets
resulting from operations 995,290 2,808,095 215,821 638,856
---------------- ---------------- ---------------- ----------------
DIVIDENDS AND DISTRIBUTIONS PAID TO
SHAREHOLDERS FROM:
Net investment income (Class A) (453,876) (133,642) (181,364) (132,312)
Net investment income (Class B) (149,139) (35,495) (127,907) (64,248)
Net investment income (Class C+) (302,656) (71,489) (233,724) (137,414)
Net investment income (Class I) -- -- -- --
Net investment income (Class X) -- -- -- --
Net investment income (Class Z) -- -- -- --
Net realized gain on investments (Class A) (18,478) -- (66,667) --
Net realized gain on investments (Class B) (8,110) -- (55,320) --
Net realized gain on investments (Class C+) (16,025) -- (97,016) --
Net realized gain on investments (Class I) -- -- -- --
Net realized gain on investments (Class X) -- -- -- --
Net realized gain on investments (Class Z) -- -- -- --
---------------- ---------------- ---------------- ----------------
Total dividends and distributions to
shareholders (948,284) (240,626) (761,998) (333,974)
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in net assets
resulting from capital share
transactions (Note 9) 23,350,988 57,301,111 5,172,775 24,665,234
---------------- ---------------- ---------------- ----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 23,397,994 59,868,580 4,626,598 24,970,116
NET ASSETS:
Beginning of period 59,868,580 -- 24,970,116 --
---------------- ---------------- ---------------- ----------------
End of period* $ 83,266,574 $ 59,868,580 $ 29,596,714 $ 24,970,116
================ ================ ================ ================
* Includes accumulated undistributed
net investment income (loss) $ (122,152) $ 59,239 $ (173,473) $ 10,188
================ ================ ================ ================
<Caption>
FOCUSED LARGE-CAP GROWTH
PORTFOLIO
-----------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR
APRIL 30, ENDED
2004 OCTOBER 31,
(UNAUDITED) 2003
-----------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income (loss) $ (12,042,090) $ (15,528,630)
Net realized gain (loss) on investments 33,054,392 18,532,334
Net realized gain (loss) from capital gain
distributions from underlying funds -- --
Net realized foreign exchange gain (loss)
on other assets and liabilities 44,005 --
Net realized gain (loss) on futures
contracts and options contracts -- --
Change in unrealized appreciation
(depreciation) on investments 1,473,538 342,424,975
Change in unrealized foreign exchange
gain (loss) on other assets and liabilities (24,004) 8,400
Change in unrealized appreciation
(depreciation) on futures contracts
and options contracts -- --
---------------- ----------------
Net increase (decrease) in net assets
resulting from operations 22,505,841 345,437,079
---------------- ----------------
DIVIDENDS AND DISTRIBUTIONS PAID TO
SHAREHOLDERS FROM:
Net investment income (Class A) -- --
Net investment income (Class B) -- --
Net investment income (Class C+) -- --
Net investment income (Class I) -- --
Net investment income (Class X) -- --
Net investment income (Class Z) -- --
Net realized gain on investments (Class A) -- --
Net realized gain on investments (Class B) -- --
Net realized gain on investments (Class C+) -- --
Net realized gain on investments (Class I) -- --
Net realized gain on investments (Class X) -- --
Net realized gain on investments (Class Z) -- --
---------------- ----------------
Total dividends and distributions to
shareholders -- --
---------------- ----------------
Net increase (decrease) in net assets
resulting from capital share
transactions (Note 9) 227,521,043 128,709,672
---------------- ----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 250,026,884 474,146,751
NET ASSETS:
Beginning of period 1,629,204,337 1,155,057,586
---------------- ----------------
End of period* $ 1,879,231,221 $ 1,629,204,337
================ ================
* Includes accumulated undistributed
net investment income (loss) $ (12,164,255) $ (127,882)
================ ================
</Table>
- ----------
# Commenced operation November 8, 2002
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares
See Notes to Financial Statements
13
<Page>
<Table>
<Caption>
FOCUSED MULTI-CAP GROWTH FOCUSED 2000 GROWTH
PORTFOLIO PORTFOLIO
----------------------------------- -----------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE YEAR MONTHS ENDED FOR THE YEAR
APRIL 30, ENDED APRIL 30, ENDED
2004 OCTOBER 31, 2004 OCTOBER 31,
(UNAUDITED) 2003 (UNAUDITED) 2003
-------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income (loss) $ (2,457,118) $ (4,171,610) $ (2,109,660) $ (1,767,468)
Net realized gain (loss) on investments 30,682,056 (12,930,385) 13,915,770 2,618,307
Net realized gain (loss) from capital gain
distributions from underlying funds -- -- -- --
Net realized foreign exchange gain (loss)
on other assets and liabilities -- -- 8 --
Net realized gain (loss) on futures
contracts and options contracts (32,039) 244,661 -- --
Change in unrealized appreciation
(depreciation) on investments (27,806,164) 76,173,880 (13,564,229) 38,653,171
Change in unrealized foreign exchange
gain (loss) on other assets and liabilities -- -- -- --
Change in unrealized appreciation
(depreciation) on futures contracts
and options contracts -- -- -- --
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in net assets
resulting from operations 386,735 59,316,546 (1,758,111) 39,504,010
---------------- ---------------- ---------------- ----------------
DIVIDENDS AND DISTRIBUTIONS PAID TO
SHAREHOLDERS FROM:
Net investment income (Class A) -- -- -- --
Net investment income (Class B) -- -- -- --
Net investment income (Class C+) -- -- -- --
Net investment income (Class I) -- -- -- --
Net investment income (Class X) -- -- -- --
Net investment income (Class Z) -- -- -- --
Net realized gain on investments (Class A) -- -- -- --
Net realized gain on investments (Class B) -- -- -- --
Net realized gain on investments (Class C+) -- -- -- --
Net realized gain on investments (Class I) -- -- -- --
Net realized gain on investments (Class X) -- -- -- --
Net realized gain on investments (Class Z) -- -- -- --
---------------- ---------------- ---------------- ----------------
Total dividends and distributions to
shareholders -- -- -- --
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in net assets
resulting from capital share transactions
(Note 9) 14,951,493 1,833,392 99,793,976 86,468,246
---------------- ---------------- ---------------- ----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 15,338,228 61,149,938 98,035,865 125,972,256
NET ASSETS:
Beginning of period 304,871,504 243,721,566 178,086,467 52,114,211
---------------- ---------------- ---------------- ----------------
End of period* $ 320,209,732 $ 304,871,504 $ 276,122,332 $ 178,086,467
================ ================ ================ ================
* Includes accumulated undistributed
net investment income (loss) $ (2,493,327) $ (36,209) $ (2,112,211) $ (2,551)
================ ================ ================ ================
<Caption>
FOCUSED LARGE-CAP VALUE
PORTFOLIO
-----------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR
APRIL 30, ENDED
2004 OCTOBER 31,
(UNAUDITED) 2003
---------------- ----------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income (loss) $ 380,290 $ 134,738
Net realized gain (loss) on investments 11,001,896 550,997
Net realized gain (loss) from capital gain
distributions from underlying funds -- --
Net realized foreign exchange gain (loss)
on other assets and liabilities -- --
Net realized gain (loss) on futures
contracts and options contracts 810,954 94,610
Change in unrealized appreciation
(depreciation) on investments (563,462) 33,571,004
Change in unrealized foreign exchange
gain (loss) on other assets and liabilities -- --
Change in unrealized appreciation
(depreciation) on futures contracts
and options contracts (200,630) 83,517
---------------- ----------------
Net increase (decrease) in net assets
resulting from operations 11,429,048 34,434,866
---------------- ----------------
DIVIDENDS AND DISTRIBUTIONS PAID TO
SHAREHOLDERS FROM:
Net investment income (Class A) (293,906) --
Net investment income (Class B) -- --
Net investment income (Class C+) -- --
Net investment income (Class I) -- --
Net investment income (Class X) -- --
Net investment income (Class Z) -- --
Net realized gain on investments (Class A) -- --
Net realized gain on investments (Class B) -- --
Net realized gain on investments (Class C+) -- --
Net realized gain on investments (Class I) -- --
Net realized gain on investments (Class X) -- --
Net realized gain on investments (Class Z) -- --
---------------- ----------------
Total dividends and distributions to
shareholders (293,906) --
---------------- ----------------
Net increase (decrease) in net assets
resulting from capital share transactions
(Note 9) 169,758,737 140,033,420
---------------- ----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 180,893,879 174,468,286
NET ASSETS:
Beginning of period 267,068,179 92,599,893
---------------- ----------------
End of period* $ 447,962,058 $ 267,068,179
================ ================
* Includes accumulated undistributed
net investment income (loss) $ 214,875 $ 128,491
================ ================
</Table>
- ----------
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares
See Notes to Financial Statements
14
<Page>
<Table>
<Caption>
FOCUSED MULTI-CAP VALUE FOCUSED 2000 VALUE
PORTFOLIO PORTFOLIO
----------------------------------- ----------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE YEAR MONTHS ENDED FOR THE YEAR
APRIL 30, ENDED APRIL 30, ENDED
2004 OCTOBER 31, 2004 OCTOBER 31,
(UNAUDITED) 2003 (UNAUDITED) 2003
------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income (loss) $ (569,713) $ 2,812,508 $ (126,770) $ (1,013,159)
Net realized gain (loss) on investments 34,844,294 (35,798,528) 27,825,240 (2,014,768)
Net realized gain (loss) from capital gain
distributions from underlying funds -- -- -- --
Net realized foreign exchange gain (loss)
on other assets and liabilities 677,175 (788,720) 111 (34,716)
Net realized gain (loss) on futures
contracts and options contracts -- 3,757,024 -- --
Change in unrealized appreciation
(depreciation) on investments 7,396,857 155,097,530 11,438,917 66,911,227
Change in unrealized foreign exchange
gain (loss) on other assets and liabilities (453,241) (16,862) -- (93)
Change in unrealized appreciation
(depreciation) on futures contracts
and options contracts -- (6,639) -- --
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in net assets
resulting from operations 41,895,372 125,056,313 39,137,498 63,848,491
---------------- ---------------- ---------------- ----------------
DIVIDENDS AND DISTRIBUTIONS PAID TO
SHAREHOLDERS FROM:
Net investment income (Class A) (1,329,223) -- -- --
Net investment income (Class B) (262,410) -- -- --
Net investment income (Class C+) (305,894) -- -- --
Net investment income (Class I) (145,227) -- -- --
Net investment income (Class X) -- -- -- --
Net investment income (Class Z) -- -- -- --
Net realized gain on investments (Class A) -- -- -- (2,167,383)
Net realized gain on investments (Class B) -- -- -- (2,237,601)
Net realized gain on investments (Class C+) -- -- -- (2,595,342)
Net realized gain on investments (Class I) -- -- -- --
Net realized gain on investments (Class X) -- -- -- --
Net realized gain on investments (Class Z) -- -- -- (71,751)
---------------- ---------------- ---------------- ----------------
Total dividends and distributions to
shareholders (2,042,754) -- -- (7,072,077)
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in net assets
resulting from capital share transactions
(Note 9) (10,203,726) (55,363,574) 131,008,257 80,354,987
---------------- ---------------- ---------------- ----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 29,648,892 69,692,739 170,145,755 137,131,401
NET ASSETS:
Beginning of period 589,652,612 519,959,873 277,466,685 140,335,284
---------------- ---------------- ---------------- ----------------
End of period* $ 619,301,504 $ 589,652,612 $ 447,612,440 $ 277,466,685
================ ================ ================ ================
* Includes accumulated undistributed
net investment income (loss) $ (602,317) $ 2,010,150 $ (138,316) $ (11,546)
================ ================ ================ ================
<Caption>
FOCUSED GROWTH AND INCOME
PORTFOLIO
------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR
APRIL 30, ENDED
2004 OCTOBER 31,
(UNAUDITED) 2003
------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income (loss) $ (1,581,124) $ (2,599,645)
Net realized gain (loss) on investments 10,257,596 (1,849,272)
Net realized gain (loss) from capital gain
distributions from underlying funds -- --
Net realized foreign exchange gain (loss)
on other assets and liabilities (56,468) 197,683
Net realized gain (loss) on futures
contracts and options contracts -- --
Change in unrealized appreciation
(depreciation) on investments 5,449,067 63,325,553
Change in unrealized foreign exchange
gain (loss) on other assets and liabilities (4,576) 1,347
Change in unrealized appreciation
(depreciation) on futures contracts
and options contracts -- --
---------------- ----------------
Net increase (decrease) in net assets
resulting from operations 14,064,495 59,075,666
---------------- ----------------
DIVIDENDS AND DISTRIBUTIONS PAID TO
SHAREHOLDERS FROM:
Net investment income (Class A) -- --
Net investment income (Class B) -- --
Net investment income (Class C+) -- --
Net investment income (Class I) -- --
Net investment income (Class X) -- --
Net investment income (Class Z) -- --
Net realized gain on investments (Class A) -- --
Net realized gain on investments (Class B) -- --
Net realized gain on investments (Class C+) -- --
Net realized gain on investments (Class I) -- --
Net realized gain on investments (Class X) -- --
Net realized gain on investments (Class Z) -- --
---------------- ----------------
Total dividends and distributions to
shareholders -- --
---------------- ----------------
Net increase (decrease) in net assets
resulting from capital share transactions
(Note 9) 56,674,412 90,884,940
---------------- ----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 70,738,907 149,960,606
NET ASSETS:
Beginning of period 368,182,655 218,222,049
---------------- ----------------
End of period* $ 438,921,562 $ 368,182,655
================ ================
* Includes accumulated undistributed
net investment income (loss) $ (1,599,527) $ (18,403)
================ ================
</Table>
- ----------
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares
See Notes to Financial Statements
15
<Page>
<Table>
<Caption>
FOCUSED INTERNATIONAL EQUITY FOCUSED TECHNOLOGY
PORTFOLIO PORTFOLIO
----------------------------------- -----------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE YEAR MONTHS ENDED FOR THE YEAR
APRIL 30, ENDED APRIL 30, ENDED
2004 OCTOBER 31, 2004 OCTOBER 31,
(UNAUDITED) 2003 (UNAUDITED) 2003
-------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income (loss) $ (539,069) $ (43,005) $ (1,006,449) $ (1,299,212)
Net realized gain (loss) on investments 7,627,355 1,065,768 18,043,606 2,999,300
Net realized gain (loss) from capital gain
distributions from underlying funds -- -- -- --
Net realized foreign exchange gain (loss) on
other assets and liabilities (22,223) 11,415 61,047 206,511
Net realized gain (loss) on futures contracts and
options contracts -- -- 82,689 89,453
Change in unrealized appreciation (depreciation) on
investments 1,375,837 11,111,181 (15,370,091) 33,379,541
Change in unrealized foreign exchange gain
(loss) on other assets and liabilities 13,734 (26,238) -- --
Change in unrealized appreciation (depreciation) on
futures contracts and options contracts -- -- -- 148,855
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in net assets resulting from
operations 8,455,634 12,119,121 1,810,802 35,524,448
---------------- ---------------- ---------------- ----------------
DIVIDENDS AND DISTRIBUTIONS PAID TO
SHAREHOLDERS FROM:
Net investment income (Class A) -- -- -- --
Net investment income (Class B) -- -- -- --
Net investment income (Class C+) -- -- -- --
Net investment income (Class I) -- -- -- --
Net investment income (Class X) -- -- -- --
Net investment income (Class Z) -- -- -- --
Net realized gain on investments (Class A) (426,979) -- -- --
Net realized gain on investments (Class B) (44,930) -- -- --
Net realized gain on investments (Class C+) (103,380) -- -- --
Net realized gain on investments (Class I) -- -- -- --
Net realized gain on investments (Class X) -- -- -- --
Net realized gain on investments (Class Z) -- -- -- --
---------------- ---------------- ---------------- ----------------
Total dividends and distributions to shareholders (575,289) -- -- --
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in net assets resulting from
capital share transactions (Note 9) 77,159,951 43,834,368 3,434,376 1,574,035
---------------- ---------------- ---------------- ----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 85,040,296 55,953,489 5,245,178 37,098,483
---------------- ---------------- ---------------- ----------------
NET ASSETS:
Beginning of period 88,625,458 32,671,969 86,186,536 49,088,053
---------------- ---------------- ---------------- ----------------
End of period* $ 173,665,754 $ 88,625,458 $ 91,431,714 $ 86,186,536
================ ================ ================ ================
* Includes accumulated undistributed net investment
income (loss) $ (565,247) $ (26,178) $ (1,013,401) $ (6,952)
================ ================ ================ ================
</Table>
- ----------
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares
See Notes to Financial Statements
16
<Page>
<Table>
<Caption>
FOCUSED DIVIDEND STRATEGY
PORTFOLIO#
------------------------------------------------------
FOR THE SIX FOR THE ONE
MONTHS ENDED MONTH ENDED FOR THE YEAR
APRIL 30, OCTOBER 31, ENDED
2004 2003 SEPTEMBER 30,
(UNAUDITED) (UNAUDITED) 2003
------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income (loss) $ 1,489,085 $ 255,170 $ 1,954,367
Net realized gain (loss) on investments 9,057,973 -- (1,146,576)
Net realized gain (loss) from capital gain
distributions from underlying funds -- -- --
Net realized foreign exchange gain (loss) on other
assets and liabilities -- -- --
Net realized gain (loss) on futures contracts and
options contracts. -- -- --
Change in unrealized appreciation (depreciation) on
investments 9,862,590 8,226,258 10,231,551
Change in unrealized foreign exchange gain (loss) on
other assets and liabilities -- -- --
Change in unrealized appreciation (depreciation) on
futures contracts and options contracts -- -- --
---------------- ---------------- ----------------
Net increase (decrease) in net assets resulting from
operations 20,409,648 8,481,428 11,039,342
---------------- ---------------- ----------------
DIVIDENDS AND DISTRIBUTIONS PAID TO
SHAREHOLDERS FROM:
Net investment income (Class A) (548,860) -- (801,768)
Net investment income (Class B) (367,249) -- (800,184)
Net investment income (Class C+). (589,216) -- (926,034)
Net investment income (Class I). -- -- --
Net investment income (Class X) -- -- --
Net investment income (Class Z) -- -- --
Net realized gain on investments (Class A) -- -- --
Net realized gain on investments (Class B) -- -- --
Net realized gain on investments (Class C+) -- -- --
Net realized gain on investments (Class I). -- -- --
Net realized gain on investments (Class X) -- -- --
Net realized gain on investments (Class Z). -- -- --
---------------- ---------------- ----------------
Total dividends and distributions to shareholders (1,505,325) -- (2,527,986)
---------------- ---------------- ----------------
Net increase (decrease) in net assets resulting from
capital share transactions (Note 9) 26,082,015 5,435,977 103,943,412
---------------- ---------------- ----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 44,986,338 13,917,405 112,454,768
---------------- ---------------- ----------------
NET ASSETS:
Beginning of period 175,983,469 162,066,064 49,611,296
---------------- ---------------- ----------------
End of period* $ 220,969,807 $ 175,983,469 $ 162,066,064
================ ================ ================
* Includes accumulated undistributed net investment
income (loss) $ 244,303 $ 260,538 $ 5,373
================ ================ ================
</Table>
- ----------
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares
# See Note 2
See Notes to Financial Statements
17
<Page>
FINANCIAL HIGHLIGHTS
<Table>
<Caption>
NET GAIN
(LOSS)
ON INVEST- DIVIDENDS
NET MENTS TOTAL FROM
NET ASSET INVEST- (BOTH FROM NET
VALUE MENT REALIZED INVEST- INVEST-
PERIOD BEGINNING INCOME AND MENT MENT
ENDED OF PERIOD (LOSS)(1) UNREALIZED) OPERATIONS INCOME
- -------------------------------------------- --------- --------- ----------- ---------- ----------
FOCUSED EQUITY STRATEGY PORTFOLIO
CLASS A
11/08/02-10/31/03(5) $ 12.50 $ (0.03) $ 3.49 $ 3.46 $ (0.02)
04/30/04(7) 15.94 (0.01) 0.80 0.79 --
CLASS B
11/08/02-10/31/03(5) $ 12.50 $ (0.11) $ 3.46 $ 3.35 $ (0.01)
04/30/04(7) 15.84 (0.07) 0.81 0.74 --
CLASS C+
11/08/02-10/31/03(5) $ 12.50 $ (0.11) $ 3.45 $ 3.34 $ (0.01)
04/30/04(7) 15.83 (0.06) 0.80 0.74 --
CLASS I
02/23/04-04/30/04(6)(7) $ 17.20 $ (0.01) $ (0.46) $ (0.47) $ --
FOCUSED MULTI-ASSET STRATEGY PORTFOLIO
CLASS A
11/08/02-10/31/03(5) $ 12.50 $ 0.02 $ 2.58 $ 2.60 $ (0.03)
04/30/04(7) 15.07 0.04 0.60 0.64 (0.05)
CLASS B
11/08/02-10/31/03(5) $ 12.50 $ (0.06) $ 2.57 $ 2.51 $ (0.02)
04/30/04(7) 14.99 (0.01) 0.59 0.58 --
CLASS C+
11/08/02-10/31/03(5) $ 12.50 $ (0.06) $ 2.57 $ 2.51 $ (0.02)
04/30/04(7) 14.99 (0.01) 0.59 0.58 --
<Caption>
DISTRI- NET
BUTION ASSET NET
FROM TOTAL VALUE ASSETS
PERIOD CAPITAL DISTRI- END OF TOTAL END OF
ENDED GAINS BUTIONS PERIOD RETURN(2) PERIOD
- -------------------------------------------- --------- --------- --------- ---------- ----------
FOCUSED EQUITY STRATEGY PORTFOLIO
CLASS A
11/08/02-10/31/03(5) $ -- $ (0.02) $ 15.94 27.72% $ 50,347
04/30/04(7) 0.00 0.00 16.73 4.97 135,242
CLASS B
11/08/02-10/31/03(5) $ -- $ (0.01) $ 15.84 26.81% $ 30,942
04/30/04(7) 0.00 0.00 16.58 4.69 80,674
CLASS C+
11/08/02-10/31/03(5) $ -- $ (0.01) $ 15.83 26.73% $ 96,094
04/30/04(7) 0.00 0.00 16.57 4.69 228,843
CLASS I
02/23/04-04/30/04(6)(7) $ -- $ -- $ 16.73 (2.73)% $ 8,218
FOCUSED MULTI-ASSET STRATEGY PORTFOLIO
CLASS A
11/08/02-10/31/03(5) $ -- $ (0.03) $ 15.07 20.82% $ 57,362
04/30/04(7) 0.00 (0.05) 15.66 4.28 124,703
CLASS B
11/08/02-10/31/03(5) $ -- $ (0.02) $ 14.99 20.07% $ 41,762
04/30/04(7) 0.00 0.00 15.57 3.88 77,230
CLASS C+
11/08/02-10/31/03(5) $ -- $ (0.02) $ 14.99 20.07% $ 113,247
04/30/04(7) 0.00 0.00 15.57 3.88 230,887
<Caption>
RATIO OF
RATIO OF NET INVESTMENT
EXPENSES INCOME (LOSS)
PERIOD TO AVERAGE TO AVERAGE NET PORTFOLIO
ENDED NET ASSETS(3)(4) ASSETS(3)(4) TURNOVER
- -------------------------------------------- ---------------- --------------- ---------
FOCUSED EQUITY STRATEGY PORTFOLIO
CLASS A
11/08/02-10/31/03(5) 0.25% (0.25)% 7%
04/30/04(7) 0.25 (0.19) 0
CLASS B
11/08/02-10/31/03(5) 0.90% (0.90)% 7%
04/30/04(7) 0.90 (0.84) 0
CLASS C+
11/08/02-10/31/03(5) 0.90% (0.90)% 7%
04/30/04(7) 0.88 (0.82) 0
CLASS I
02/23/04-04/30/04(6)(7) 0.15% (0.35)% 0%
FOCUSED MULTI-ASSET STRATEGY PORTFOLIO
CLASS A
11/08/02-10/31/03(5) 0.25% 0.16% 0%
04/30/04(7) 0.25 0.47 0
CLASS B
11/08/02-10/31/03(5) 0.90% (0.50)% 0%
04/30/04(7) 0.90 (0.16) 0
CLASS C+
11/08/02-10/31/03(5) 0.90% (0.48)% 0%
04/30/04(7) 0.89 (0.16) 0
</Table>
(1) Calculated based upon average shares outstanding.
(2) Total return is not annualized and does not reflect sales load. It does
include expense reimbursements and expense reductions.
(3) Annualized
(4) Net of the following expense reimbursements (recoupments) (based on average
net assets):
<Table>
<Caption>
10/31/03 04/30/04(3)
-------- -----------
Focused Equity Strategy A 0.36% (0.07)%
Focused Equity Strategy B 0.42 (0.06)
Focused Equity Strategy C+ 0.18 (0.04)
Focused Equity Strategy I -- 0.07
Focused Multi-Asset Strategy A 0.25 (0.06)
Focused Multi-Asset Strategy B 0.27 (0.07)
Focused Multi-Asset Strategy C+ 0.12 (0.06)
</Table>
(5) Commencement of Operations
(6) Inception date of class.
(7) Unaudited
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
See Notes to Financial Statements
18
<Page>
<Table>
<Caption>
NET GAIN
(LOSS)
ON INVEST- DIVIDENDS
NET MENTS TOTAL FROM
NET ASSET INVEST- (BOTH FROM NET
VALUE MENT REALIZED INVEST- INVEST-
PERIOD BEGINNING INCOME AND MENT MENT
ENDED OF PERIOD (LOSS)(1) UNREALIZED) OPERATIONS INCOME
- -------------------------------------------- --------- --------- ----------- ---------- ----------
FOCUSED BALANCED STRATEGY PORTFOLIO
CLASS A
11/08/02-10/31/03(5) $ 12.50 $ 0.05 $ 2.41 $ 2.46 $ (0.06)(6)
04/30/04(8) 14.90 0.07 0.47 0.54 (0.12)
CLASS B
11/08/02-10/31/03(5) $ 12.50 $ (0.02) $ 2.39 $ 2.37 $ (0.03)(6)
04/30/04(8) 14.84 0.02 0.46 0.48 (0.02)
CLASS C+
11/08/02-10/31/03(5) $ 12.50 $ (0.02) $ 2.40 $ 2.38 $ (0.03)(6)
04/30/04(8) 14.85 0.02 0.47 0.49 (0.02)
CLASS I
02/23/04-04/30/04(7)(8) $ 15.72 $ (0.01) $ (0.36) $ (0.37) $ (0.03)
FOCUSED FIXED INCOME AND EQUITY STRATEGY PORTFOLIO
CLASS A
11/08/02-10/31/03(5) $ 12.50 $ 0.20 $ 1.23 $ 1.43 $ (0.18)
04/30/04(8) 13.75 0.16 0.15 0.31 (0.19)
CLASS B
11/08/02-10/31/03(5) $ 12.50 $ 0.12 $ 1.23 $ 1.35 $ (0.11)
04/30/04(8) 13.74 0.12 0.14 0.26 (0.15)
CLASS C+
11/08/02-10/31/03(5) $ 12.50 $ 0.13 $ 1.22 $ 1.35 $ (0.11)
04/30/04(8) 13.74 0.11 0.15 0.26 (0.15)
FOCUSED FIXED INCOME STRATEGY PORTFOLIO
CLASS A
11/08/02-10/31/03(5) $ 12.50 $ 0.30 $ 0.46 $ 0.76 $ (0.30)
04/30/04(8) 12.96 0.19 (0.21) (0.02) (0.07)
CLASS B
11/08/02-10/31/03(5) $ 12.50 $ 0.23 $ 0.46 $ 0.69 $ (0.23)
04/30/04(8) 12.96 0.16 (0.19) (0.03) (0.07)
CLASS C+
11/08/02-10/31/03(5) $ 12.50 $ 0.22 $ 0.47 $ 0.69 $ (0.23)
04/30/04(8) 12.96 0.14 (0.17) (0.03) (0.07)
<Caption>
DISTRI- NET
BUTION ASSET NET
FROM TOTAL VALUE ASSETS
PERIOD CAPITAL DISTRI- END OF TOTAL END OF
ENDED GAINS BUTIONS PERIOD RETURN(2) PERIOD
- -------------------------------------------- --------- --------- --------- ---------- ----------
FOCUSED BALANCED STRATEGY PORTFOLIO
CLASS A
11/08/02-10/31/03(5) $ -- $ (0.06)(6) $ 14.90 19.75% $ 54,459
04/30/04(8) 0.00 (0.12) 15.32 3.60 114,154
CLASS B
11/08/02-10/31/03(5) $ -- $ (0.03)(6) $ 14.84 18.98% $ 48,183
04/30/04(8) 0.00 (0.02) 15.30 3.26 100,423
CLASS C+
11/08/02-10/31/03(5) $ -- $ (0.03)(6) $ 14.85 19.06% $ 102,550
04/30/04(8) 0.00 (0.02) 15.32 3.33 177,524
CLASS I
02/23/04-04/30/04(7)(8) -- $ (0.03) $ 15.32 (2.38)% $ 17,792
FOCUSED FIXED INCOME AND EQUITY STRATEGY PORTFOLIO
CLASS A
11/08/02-10/31/03(5) $ -- $ (0.18) $ 13.75 11.57% $ 26,426
04/30/04(8) (0.01) (0.20) 13.86 2.25 36,119
CLASS B
11/08/02-10/31/03(5) $ -- $ (0.11) $ 13.74 10.88% $ 11,562
04/30/04(8) (0.01) (0.16) 13.84 1.87 15,176
CLASS C+
11/08/02-10/31/03(5) $ -- $ (0.11) $ 13.74 10.88% $ 21,880
04/30/04(8) (0.01) (0.16) 13.84 1.87 31,971
FOCUSED FIXED INCOME STRATEGY PORTFOLIO
CLASS A
11/08/02-10/31/03(5) $ -- $ (0.30) $ 12.96 6.35% $ 8,400
04/30/04(8) (0.11) (0.18) 12.76 1.47 8,596
CLASS B
11/08/02-10/31/03(5) $ -- $ (0.23) $ 12.96 5.69% $ 6,033
04/30/04(8) (0.11) (0.18) 12.75 1.15 7,359
CLASS C+
11/08/02-10/31/03(5) $ -- $ (0.23) $ 12.96 5.69% $ 10,537
04/30/04(8) (0.11) (0.18) 12.75 1.15 13,642
<Caption>
RATIO OF
RATIO OF NET INVESTMENT
EXPENSES INCOME (LOSS)
PERIOD TO AVERAGE TO AVERAGE NET PORTFOLIO
ENDED NET ASSETS(3)(4) ASSETS(3)(4) TURNOVER
- -------------------------------------------- ---------------- --------------- ---------
FOCUSED BALANCED STRATEGY PORTFOLIO
CLASS A
11/08/02-10/31/03(5) 0.25% 0.43% 2%
04/30/04(8) 0.25 0.91 4
CLASS B
11/08/02-10/31/03(5) 0.90% (0.20)% 2%
04/30/04(8) 0.90 0.24 4
CLASS C+
11/08/02-10/31/03(5) 0.90% 0.19% 2%
04/30/04(8) 0.86 0.33 4
CLASS I
02/23/04-04/30/04(7)(8) 0.15% (0.27)% 4%
FOCUSED FIXED INCOME AND EQUITY STRATEGY PORTFOLIO
CLASS A
11/08/02-10/31/03(5) 0.25% 1.64% 6%
04/30/04(8) 0.25 2.32 12
CLASS B
11/08/02-10/31/03(5) 0.90% 1.02% 6%
04/30/04(8) 0.90 1.68 12
CLASS C+
11/08/02-10/31/03(5) 0.90% 1.08% 6%
04/30/04(8) 0.90 1.68 12
FOCUSED FIXED INCOME STRATEGY PORTFOLIO
CLASS A
11/08/02-10/31/03(5) 0.25% 2.52% 66%
04/30/04(8) 0.25 3.01 44
CLASS B
11/08/02-10/31/03(5) 0.90% 1.94% 66%
04/30/04(8) 0.90 2.43 44
CLASS C+
11/08/02-10/31/03(5) 0.90% 1.89% 66%
04/30/04(8) 0.90 2.36 44
</Table>
(1) Calculated based upon average shares outstanding.
(2) Total return is not annualized and does not reflect sales load. It does
include expense reimbursements and expense reductions.
(3) Annualized
(4) Net of the following expense reimbursements (recoupments) (based on average
net assets):
<Table>
<Caption>
10/31/03 04/30/04(3)
-------- -----------
Focused Balanced Strategy A 0.21% (0.05)%
Focused Balanced Strategy B 0.18 (0.06)
Focused Balanced Strategy C+ 0.09 (0.01)
Focused Balanced Strategy I -- 0.00
Focused Fixed Income and Equity Strategy A 0.53 0.06
Focused Fixed Income and Equity Strategy B 0.71 0.14
Focused Fixed Income and Equity Strategy C+ 0.52 0.07
Focused Fixed Income Strategy A 0.90 0.53
Focused Fixed Income Strategy B 1.00 0.55
Focused Fixed Income Strategy C+ 0.60 0.42
</Table>
(5) Commencement of Operations
(6) Includes a tax return of capital of less than $.01 per share
(7) Inception date of class.
(8) Unaudited
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
See Notes to Financial Statements
19
<Page>
<Table>
<Caption>
NET GAIN
(LOSS)
ON INVEST- DIVIDENDS
NET MENTS TOTAL FROM
NET ASSET INVEST- (BOTH FROM NET
VALUE MENT REALIZED INVEST- INVEST-
PERIOD BEGINNING INCOME AND MENT MENT
ENDED OF PERIOD (LOSS)(1) UNREALIZED) OPERATIONS INCOME
- -------------------------------------------- --------- --------- ----------- ---------- ----------
FOCUSED LARGE-CAP GROWTH PORTFOLIO
CLASS A
10/31/99 $ 12.60 $ (0.12) $ 6.75 $ 6.63 $ --
10/31/00 19.23 (0.19) 2.54 2.35 --
10/31/01 21.49 (0.11) (6.16) (6.27) --
10/31/02 14.63 (0.11) (1.71) (1.82) --
10/31/03 12.81 (0.12) 3.97 3.85 --
04/30/04(7) 16.66 (0.08) 0.38 0.30 --
CLASS B
10/31/99 $ 12.56 $ (0.23) $ 6.72 $ 6.49 $ --
10/31/00 19.05 (0.34) 2.52 2.18 --
10/31/01 21.14 (0.22) (6.04) (6.26) --
10/31/02 14.29 (0.20) (1.65) (1.85) --
10/31/03 12.44 (0.20) 3.83 3.63 --
04/30/04(7) 16.07 (0.14) 0.38 0.24 --
CLASS C+
10/31/99 $ 12.56 $ (0.23) $ 6.72 $ 6.49 $ --
10/31/00 19.05 (0.35) 2.53 2.18 --
10/31/01 21.14 (0.22) (6.04) (6.26) --
10/31/02 14.29 (0.20) (1.65) (1.85) --
10/31/03 12.44 (0.20) 3.83 3.63 --
04/30/04(7) 16.07 (0.14) 0.38 0.24 --
CLASS Z
7/07/99-10/31/99(6) $ 18.18 $ -- $ 1.09 $ 1.09 $ --
10/31/00 19.27 (0.09) 2.53 2.44 --
10/31/01 21.62 (0.07) (6.20) (6.27) --
10/31/02 14.76 (0.05) (1.74) (1.79) --
10/31/03 12.97 (0.03) 4.01 3.98 --
04/30/04(7) 16.95 (0.04) 0.40 0.36 --
<Caption>
DISTRI- NET
BUTION ASSET NET
FROM TOTAL VALUE ASSETS
PERIOD CAPITAL DISTRI- END OF TOTAL END OF
ENDED GAINS BUTIONS PERIOD RETURN(2) PERIOD
- -------------------------------------------- --------- --------- --------- ---------- ----------
FOCUSED LARGE-CAP GROWTH PORTFOLIO
CLASS A
10/31/99 $ -- $ -- $ 19.23 52.62% $ 169,734
10/31/00 (0.09) (0.09) 21.49 12.23 401,754
10/31/01 (0.59) (0.59) 14.63 (29.87) 284,538
10/31/02 -- -- 12.81 (12.44) 273,034
10/31/03 -- -- 16.66 30.05 514,908
04/30/04(7) -- -- 16.96 1.80 739,698
CLASS B
10/31/99 $ -- $ -- $ 19.05 51.67% $ 271,531
10/31/00 (0.09) (0.09) 21.14 11.45 641,205
10/31/01 (0.59) (0.59) 14.29 (30.33) 475,315
10/31/02 -- -- 12.44 (12.95) 414,904
10/31/03 -- -- 16.07 29.18 502,311
04/30/04(7) -- -- 16.31 1.49 498,675
CLASS C+
10/31/99 $ -- $ -- $ 19.05 51.67% $ 261,536
10/31/00 (0.09) (0.09) 21.14 11.45 793,146
10/31/01 (0.59) (0.59) 14.29 (30.33) 544,620
10/31/02 -- -- 12.44 (12.95) 458,335
10/31/03 -- -- 16.07 29.18 539,786
04/30/04(7) -- -- 16.31 1.49 561,473
CLASS Z
7/07/99-10/31/99(6) $ -- $ -- $ 19.27 6.00% $ 2,522
10/31/00 (0.09) (0.09) 21.62 12.67 12,523
10/31/01 (0.59) (0.59) 14.76 (29.68) 9,321
10/31/02 -- -- 12.97 (12.13) 8,785
10/31/03 -- -- 16.95 30.69 72,196
04/30/04(7) -- -- 17.31 2.12 79,386
<Caption>
RATIO OF
RATIO OF NET INVESTMENT
EXPENSES INCOME (LOSS)
PERIOD TO AVERAGE TO AVERAGE NET PORTFOLIO
ENDED NET ASSETS ASSETS TURNOVER
- -------------------------------------------- ---------------- --------------- ---------
FOCUSED LARGE-CAP GROWTH PORTFOLIO
CLASS A
10/31/99 1.45%(4) (0.70)%(4) 161%
10/31/00 1.54(4) (0.81)(4) 228
10/31/01 1.56 (0.66) 178
10/31/02 1.57(5) (0.81)(5) 166
10/31/03 1.58(5) (0.83)(5) 81
04/30/04(7) 1.59(3)(5) (1.02)(3)(5) 42
CLASS B
10/31/99 2.10%(4) (1.34)%(4) 161%
10/31/00 2.19(4) (1.46)(4) 228
10/31/01 2.21 (1.31) 178
10/31/02 2.21(5) (1.45)(5) 166
10/31/03 2.22(5) (1.47)(5) 81
04/30/04(7) 2.23(3)(5) (1.67)(3)(5) 42
CLASS C+
10/31/99 2.10(4) (1.34)(4) 161%
10/31/00 2.20(4) (1.46)(4) 228
10/31/01 2.21 (1.30) 178
10/31/02 2.21(5) (1.45)(5) 166
10/31/03 2.21(5) (1.45)(5) 81
04/30/04(7) 2.22(3)(5) (1.66)(3)(5) 42
CLASS Z
7/07/99-10/31/99(6) 0.93%(3)(4) (0.09)%(3)(4) 161%
10/31/00 1.12(4) (0.38)(4) 228
10/31/01 1.27 (0.38) 178
10/31/02 1.21(5) (0.45)(5) 166
10/31/03 0.98(5) (0.22)(5) 81
04/30/04(7) 1.02(3)(5) (0.45)(3)(5) 42
</Table>
(1) Calculated based upon average shares outstanding.
(2) Total return is not annualized and does not reflect sales load. It does
include expense reimbursements and expense reductions.
(3) Annualized
(4) Net of the following expense reimbursements (recoupments) (based on average
net assets):
(5) Includes expense reimbursements, but excludes expense reductions. If the
expense reductions had been applied, the ratio of expenses to
<Table>
<Caption>
10/31/99 10/31/00
-------- --------
Focused Large-Cap Growth A 0.18% 0.05%
Focused Large-Cap Growth B 0.16 0.04
Focused Large-Cap Growth C+ 0.17 0.04
Focused Large-Cap Growth Z 2.23(3) 0.13
</Table>
average net assets would have been lower by:
(6) Inception date of class
<Table>
<Caption>
10/31/02 10/31/03 04/30/04(3)
-------- -------- -----------
Focused Large-Cap Growth A 0.09% 0.03% 0.04%
Focused Large-Cap Growth B 0.09 0.03 0.05
Focused Large-Cap Growth C+ 0.09 0.03 0.05
Focused Large-Cap Growth Z 0.09 0.03 0.05
</Table>
(7) Unaudited
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
See Notes to Financial Statements
20
<Page>
<Table>
<Caption>
NET GAIN
(LOSS)
ON INVEST- DIVIDENDS
NET MENTS TOTAL FROM
NET ASSET INVEST- (BOTH FROM NET
VALUE MENT REALIZED INVEST- INVEST-
PERIOD BEGINNING INCOME AND MENT MENT
ENDED OF PERIOD (LOSS)(1) UNREALIZED) OPERATIONS INCOME
- -------------------------------------------- --------- --------- ----------- ---------- ----------
FOCUSED MULTI-CAP GROWTH PORTFOLIO
CLASS A
10/31/99 $ 16.50 $ (0.23) $ 9.86 $ 9.63 $ --
10/31/00 26.13 (0.35) 8.65 8.30 --
10/31/01 31.19 (0.15) (11.07) (11.22) --
10/31/02 14.93 (0.16) (1.42) (1.58) --
10/31/03 13.35 (0.18) 3.69 3.51 --
04/30/04(7) 16.86 (0.10) 0.18 0.08 --
CLASS B
10/31/99 $ 16.29 $ (0.37) $ 9.69 $ 9.32 $ --
10/31/00 25.61 (0.56) 8.50 7.94 --
10/31/01 30.31 (0.27) (10.67) (10.94) --
10/31/02 14.33 (0.25) (1.36) (1.61) --
10/31/03 12.72 (0.26) 3.50 3.24 --
04/30/04(7) 15.96 (0.16) 0.18 0.02 --
CLASS C+
10/31/99 $ 16.30 $ (0.37) $ 9.67 $ 9.30 $ --
10/31/00 25.60 (0.56) 8.51 7.95 --
10/31/01 30.31 (0.27) (10.68) (10.95) --
10/31/02 14.32 (0.24) (1.36) (1.60) --
10/31/03 12.72 (0.26) 3.50 3.24 --
04/30/04(7) 15.96 (0.15) 0.17 0.02 --
CLASS X
8/01/02-10/31/02(6) $ 13.55 $ (0.10) $ (0.10) $ (0.20) $ --
10/31/03 $ 13.35 (0.15) 3.70 3.55 --
04/30/04(7) 16.90 (0.08) 0.17 0.09 --
<Caption>
DISTRI- NET
BUTION ASSET NET
FROM TOTAL VALUE ASSETS
PERIOD CAPITAL DISTRI- END OF TOTAL END OF
ENDED GAINS BUTIONS PERIOD RETURN(2) PERIOD
- -------------------------------------------- --------- --------- --------- ---------- ----------
FOCUSED MULTI-CAP GROWTH PORTFOLIO
CLASS A
10/31/99 $ -- $ -- $ 26.13 58.36% $ 100,468
10/31/00 (3.24) (3.24) 31.19 32.77 162,801
10/31/01 (5.04) (5.04) 14.93 (41.40) 77,975
10/31/02 -- -- 13.35 (10.58) 85,244
10/31/03 -- -- 16.86 26.29 127,425
04/30/04(7) -- -- 16.94 0.47 159,908
CLASS B
10/31/99 $ -- $ -- $ 25.61 57.21% $ 140,508
10/31/00 (3.24) (3.24) 30.31 31.95 217,963
10/31/01 (5.04) (5.04) 14.33 (41.73) 114,228
10/31/02 -- -- 12.72 (11.24) 118,177
10/31/03 -- -- 15.96 25.47 130,904
04/30/04(7) -- -- 15.98 0.13 112,773
CLASS C+
10/31/99 $ -- $ -- $ 25.60 57.06% $ 25,331
10/31/00 (3.24) (3.24) 30.31 32.01 71,127
10/31/01 (5.04) (5.04) 14.32 (41.77) 34,567
10/31/02 -- -- 12.72 (11.17) 38,884
10/31/03 -- -- 15.96 25.47 45,985
04/30/04(7) -- -- 15.98 0.13 46,803
CLASS X
8/01/02-10/31/02(6) $ -- $ -- $ 13.35 (1.48)% $ 169
10/31/03 -- -- 16.90 26.59 557
04/30/04(7) -- -- 16.99 0.53 725
<Caption>
RATIO OF
RATIO OF NET INVESTMENT
EXPENSES INCOME (LOSS)
PERIOD TO AVERAGE TO AVERAGE NET PORTFOLIO
ENDED NET ASSETS(4) ASSETS(4) TURNOVER
- -------------------------------------------- ---------------- --------------- ---------
FOCUSED MULTI-CAP GROWTH PORTFOLIO
CLASS A
10/31/99 1.76% (1.00)% 126%
10/31/00 1.78 (1.07) 134
10/31/01 1.78 (0.77) 176
10/31/02 1.76(5) (1.08)(5) 211
10/31/03 1.72(5) (1.30)(5) 100
04/30/04(7) 1.72(3)(5) (1.17)(3)(5) 70
CLASS B
10/31/99 2.39% (1.64)% 126%
10/31/00 2.43 (1.72) 134
10/31/01 2.43 (1.43) 176
10/31/02 2.41(5) (1.74)(5) 211
10/31/03 2.37(5) (1.94)(5) 100
04/30/04(7) 2.37(3)(5) (1.86)(5) 70
CLASS C+
10/31/99 2.41% (1.65)% 126%
10/31/00 2.43 (1.70) 134
10/31/01 2.43 (1.43) 176
10/31/02 2.41(5) (1.74)(5) 211
10/31/03 2.37(5) (1.94)(5) 100
04/30/04(7) 2.37(3)(5) (1.85)(3)(5) 70
CLASS X
8/01/02-10/31/02(6) 1.47%(3)(5) (0.80)%(3)(5) 211%
10/31/03 1.47(5) (0.80)(5) 100
04/30/04(7) 1.47(3)(5) (0.93)(3)(5) 70
</Table>
(1) Calculated based upon average shares outstanding.
(2) Total return is not annualized and does not reflect sales load. It does
include expense reimbursements and expense reductions.
(3) Annualized
<Table>
<Caption>
10/31/99 10/31/00 10/31/01 10/31/02 10/31/03 04/30/04(3)
-------- -------- -------- -------- -------- -----------
Focused Multi-Cap Growth A 0.08% --% 0.01% 0.05% 0.12% 0.11%
Focused Multi-Cap Growth B 0.06 -- -- 0.01 0.10 0.12
Focused Multi-Cap Growth C+ 0.10 -- 0.02 0.05 0.12 0.13
Focused Multi-Cap Growth X -- -- -- 6.36(3) (0.02) 1.29
</Table>
(4) Net of the following expense reimbursements (recoupments) (based on average
net assets):
(5) Includes expense reimbursements, but excludes expense reductions. If the
expense reductions had been applied, the ratio of expenses to average net
assets would have been lower by:
(6) Inception date of class
<Table>
<Caption>
10/31/02 10/31/03 04/30/04(3)
-------- -------- -----------
Focused Multi-Cap Growth A 0.03% --% 0.02%
Focused Multi-Cap Growth B 0.03 -- 0.02
Focused Multi-Cap Growth C+ 0.03 -- 0.02
Focused Multi-Cap Growth X -- -- 0.01
</Table>
(7) Unaudited
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
See Notes to Financial Statements
21
<Page>
<Table>
<Caption>
NET GAIN
(LOSS)
ON INVEST- DIVIDENDS
NET MENTS TOTAL FROM
NET ASSET INVEST- (BOTH FROM NET
VALUE MENT REALIZED INVEST- INVEST-
PERIOD BEGINNING INCOME AND MENT MENT
ENDED OF PERIOD (LOSS)(1) UNREALIZED) OPERATIONS INCOME
- -------------------------------------------- --------- --------- ----------- ---------- ----------
FOCUSED 2000 GROWTH PORTFOLIO
CLASS A
10/31/99 $ 8.88 $ (0.15) $ 4.08 $ 3.93 $ --
10/31/00 12.81 (0.12) 5.66 5.54 --
10/31/01 17.27 (0.14) (5.65) (5.79) --
10/31/02 11.47 (0.15) (1.11) (1.26) --
10/31/03 10.21 (0.18) 4.91 4.73 --
04/30/04(6) 14.94 (0.11) 0.23 0.12 --
CLASS B
10/31/99 $ 8.83 $ (0.21) $ 3.95 $ 3.74 $ --
10/31/00 12.57 (0.24) 5.55 5.31 --
10/31/01 16.80 (0.22) (5.46) (5.68) --
10/31/02 11.11 (0.23) (1.05) (1.28) --
10/31/03 9.83 (0.25) 4.72 4.47 --
04/30/04(6) 14.30 (0.16) 0.23 0.07 --
CLASS C+
10/31/99 $ 8.84 $ (0.21) $ 3.94 $ 3.73 $ --
10/31/00 12.57 (0.29) 5.59 5.30 --
10/31/01 16.79 (0.22) (5.45) (5.67) --
10/31/02 11.11 (0.20) (1.10) (1.30) --
10/31/03 9.81 (0.25) 4.70 4.45 --
04/30/04(6) 14.26 (0.16) 0.23 0.07 --
CLASS I
7/10/00-10/31/00(7) $ 19.82 $ (0.07) $ (1.42) $ (1.49) $ --
10/31/01 17.33 (0.13) (5.64) (5.77) --
10/31/02 11.55 (0.16) (1.09) (1.25) --
10/31/03 10.30 (0.17) 4.96 4.79 --
04/30/04(6) 15.09 (0.11) 0.24 0.13 --
<Caption>
DISTRI- NET
BUTION ASSET NET
FROM TOTAL VALUE ASSETS
PERIOD CAPITAL DISTRI- END OF TOTAL END OF
ENDED GAINS BUTIONS PERIOD RETURN(2) PERIOD
- -------------------------------------------- --------- --------- --------- ---------- ----------
FOCUSED 2000 GROWTH PORTFOLIO
CLASS A
10/31/99 $ -- $ -- $ 12.81 44.26% $ 224
10/31/00 (1.08) (1.08) 17.27 43.62 6,795
10/31/01 (0.01) (0.01) 11.47 (33.56) 4,512
10/31/02 -- -- 10.21 (10.99) 10,856
10/31/03 -- -- 14.94 46.33 89,176
04/30/04(6) -- -- 15.06 0.80 169,526
CLASS B
10/31/99 $ -- $ -- $ 12.57 42.36% $ 660
10/31/00 (1.08) (1.08) 16.80 42.62 14,554
10/31/01 (0.01) (0.01) 11.11 (33.84) 11,158
10/31/02 -- -- 9.83 (11.52) 14,375
10/31/03 -- -- 14.30 45.47 28,899
04/30/04(6) -- -- 14.37 0.49 33,509
CLASS C+
10/31/99 $ -- $ -- $ 12.57 42.19% $ 440
10/31/00 (1.08) (1.08) 16.79 42.54 3,337
10/31/01 (0.01) (0.01) 11.11 (33.80) 2,119
10/31/02 -- -- 9.81 (11.70) 22,029
10/31/03 -- -- 14.26 45.36 51,886
04/30/04(6) -- -- 14.33 0.49 64,177
CLASS I
7/10/00-10/31/00(7) $ (1.00) $ (1.00) $ 17.33 (7.34)% $ 14,154
10/31/01 (0.01) (0.01) 11.55 (33.33) 11,581
10/31/02 -- -- 10.30 (10.82) 4,854
10/31/03 -- -- 15.09 46.50 8,126
04/30/04(6) -- -- 15.22 0.86 8,911
<Caption>
RATIO OF
RATIO OF NET INVESTMENT
EXPENSES INCOME (LOSS)
PERIOD TO AVERAGE TO AVERAGE NET PORTFOLIO
ENDED NET ASSETS(4) ASSETS(4) TURNOVER
- -------------------------------------------- ---------------- --------------- ---------
FOCUSED 2000 GROWTH PORTFOLIO
CLASS A
10/31/99 1.70% (1.43)% 129%
10/31/00 1.35 (0.66) 222
10/31/01 1.47 (1.04) 91
10/31/02 1.74(5) (1.44)(5) 150
10/31/03 1.72(5) (1.57)(5) 68
04/30/04(6) 1.72(3)(5) (1.54)(3)(5) 50
CLASS B
10/31/99 2.35% (2.04)% 129%
10/31/00 2.00 (1.31) 222
10/31/01 2.11 (1.69) 91
10/31/02 2.40(5) (2.10)(5) 150
10/31/03 2.37(5) (2.21)(5) 68
04/30/04(6) 2.37(3)(5) (2.20)(3)(5) 50
CLASS C+
10/31/99 2.35% (2.03)% 129%
10/31/00 2.21 (1.56) 222
10/31/01 2.11 (1.67) 91
10/31/02 2.39(5) (2.08)(5) 150
10/31/03 2.37(5) 2.22(5) 68
04/30/04(6) 2.37(3)(5) (2.19)(3)(5) 50
CLASS I
7/10/00-10/31/00(7) 1.11%(3) (0.37)%(3) 222%
10/31/01 1.37 (0.94) 91
10/31/02 1.64(5) (1.35)(5) 150
10/31/03 1.62(5) 1.46(5) 68
04/30/04(6) 1.62(3)(5) (1.44)(3)(5) 50
</Table>
(1) Calculated based upon average shares outstanding.
(2) Total return is not annualized and does not reflect sales load. It does
include expense reimbursements and expense reductions.
(3) Annualized
(4) Net of the following expense reimbursements (recoupments) (based on average
net assets):
<Table>
<Caption>
10/31/99 10/31/00 10/31/01 10/31/02 10/31/03 04/30/04(3)
-------- -------- -------- -------- -------- -----------
Focused 2000 Growth A 5.26% 0.75% 1.34% 0.70% 0.18% 0.10%
Focused 2000 Growth B 5.23 0.75 1.35 0.72 0.28 0.11
Focused 2000 Growth C+ 5.25 0.96 1.34 0.59 0.17 0.05
Focused 2000 Growth I -- 0.58(3) 1.34 0.67 0.30 0.01
</Table>
(5) Includes expense reimbursements, but excludes expense reductions. If the
expense reductions had been applied, the ratio of expenses to average net
assets for would have been lower by:
<Table>
<Caption>
10/31/02 10/31/03 04/30/04(3)
-------- -------- -----------
Focused 2000 Growth A 0.07% 0.02% 0.01%
Focused 2000 Growth B 0.08 0.03 0.00
Focused 2000 Growth C+ 0.05 0.03 0.01
Focused 2000 Growth I 0.07 0.03 0.00
</Table>
(6) Unaudited
(7) Inception date of class.
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
See Notes to Financial Statements
22
<Page>
<Table>
<Caption>
NET GAIN
(LOSS)
ON INVEST- DIVIDENDS
NET MENTS TOTAL FROM
NET ASSET INVEST- (BOTH FROM NET
VALUE MENT REALIZED INVEST- INVEST-
PERIOD BEGINNING INCOME AND MENT MENT
ENDED OF PERIOD (LOSS)(1) UNREALIZED) OPERATIONS INCOME
- -------------------------------------------- --------- --------- ----------- ---------- ----------
FOCUSED LARGE-CAP VALUE PORTFOLIO
CLASS A
10/31/99 $ 12.59 $ 0.05 $ 1.49 $ 1.54 $ --
10/31/00 14.05 0.11 1.86 1.97 --
10/31/01 15.70 (0.03) (1.92) (1.95) (0.12)
10/31/02 13.06 0.04 (1.99) (1.95) --
10/31/03 11.11 0.04 2.87 2.91 --
04/30/04(7) 14.02 0.03 0.70 0.73 (0.02)
CLASS B
10/31/99 $ 12.51 $ (0.05) $ 1.49 $ 1.44 $ --
10/31/00 13.87 0.02 1.81 1.83 --
10/31/01 15.38 (0.12) (1.87) (1.99) (0.01)
10/31/02 12.81 (0.04) (1.94) (1.98) --
10/31/03 10.83 (0.04) 2.79 2.75 --
04/30/04(7) 13.58 (0.02) 0.67 0.65 --
CLASS C+
10/31/99 $ 12.51 $ (0.04) $ 1.48 $ 1.44 $ --
10/31/00 13.87 0.02 1.82 1.84 --
10/31/01 15.39 (0.13) (1.86) (1.99) (0.01)
10/31/02 12.82 (0.03) (1.94) (1.97) --
10/31/03 10.85 (0.04) 2.79 2.75 --
04/30/04(7) 13.60 (0.02) 0.67 0.65 --
<Caption>
DISTRI- NET
BUTION ASSET NET
FROM TOTAL VALUE ASSETS
PERIOD CAPITAL DISTRI- END OF TOTAL END OF
ENDED GAINS BUTIONS PERIOD RETURN(2) PERIOD
- -------------------------------------------- --------- --------- --------- ---------- ----------
FOCUSED LARGE-CAP VALUE PORTFOLIO
CLASS A
10/31/99 $ (0.08) $ (0.08) $ 14.05 12.28% $ 15,996
10/31/00 (0.32) (0.32) 15.70 14.36 19,500
10/31/01 (0.57) (0.69) 13.06 (12.91) 23,418
10/31/02 -- -- 11.11 (14.93) 26,269
10/31/03 -- -- 14.02 26.19 168,245
04/30/04(7) -- (0.02) 14.73 5.21(8) 326,556
CLASS B
10/31/99 $ (0.08) $ (0.08) $ 13.87 11.55% $ 31,422
10/31/00 (0.32) (0.32) 15.38 13.52 34,140
10/31/01 (0.57) (0.58) 12.81 (13.42) 36,816
10/31/02 -- -- 10.83 (15.46) 32,261
10/31/03 -- -- 13.58 25.39 41,887
04/30/04(7) -- -- 14.23 4.79(8) 46,453
CLASS C+
10/31/99 $ (0.08) $ (0.08) $ 13.87 11.55% $ 10,664
10/31/00 (0.32) (0.32) 15.39 13.59 19,717
10/31/01 (0.57) (0.58) 12.82 (13.41) 24,958
10/31/02 -- -- 10.85 (15.37) 33,297
10/31/03 -- -- 13.60 25.35 56,935
04/30/04(7) -- -- 14.25 4.78(8) 74,953
<Caption>
RATIO OF
RATIO OF NET INVESTMENT
EXPENSES INCOME (LOSS)
PERIOD TO AVERAGE TO AVERAGE NET PORTFOLIO
ENDED NET ASSETS(4) ASSETS(4) TURNOVER
- -------------------------------------------- ---------------- --------------- ---------
FOCUSED LARGE-CAP VALUE PORTFOLIO
CLASS A
10/31/99 1.78% 0.34% 42%
10/31/00 1.78(5) 0.76(5) 96
10/31/01 1.78 (0.21) 63
10/31/02 1.76(6) 0.12(6) 161
10/31/03 1.72(6) 0.30(6) 69
04/30/04(7) 1.72(3) 0.42(3) 27
CLASS B
10/31/99 2.43% (0.33)% 42%
10/31/00 2.43(5) 0.13(5) 96
10/31/01 2.43 (0.86) 63
10/31/02 2.41(6) (0.57)(6) 161
10/31/03 2.37(6) (0.35)(6) 69
04/30/04(7) 2.37(3) (0.27)(3) 27
CLASS C+
10/31/99 2.43% (0.28)% 42%
10/31/00 2.43(5) 0.12(5) 96
10/31/01 2.43 (0.86) 63
10/31/02 2.40(6) (0.50)(6) 161
10/31/03 2.37(6) (0.35)(6) 69
04/30/04(7) 2.37(3) (0.26)(3) 27
</Table>
(1) Calculated based upon average shares outstanding.
(2) Total return is not annualized and does not reflect sales load. It does
include expense reimbursements and expense reductions.
(3) Annualized
(4) Net of the following expense reimbursements (recoupments) (based on average
net assets):
<Table>
<Caption>
10/31/99 10/31/00 10/31/01 10/31/02 10/31/03 04/30/04(3)
-------- -------- -------- -------- -------- -----------
Focused Large-Cap Value A 0.17% 0.20% 0.09% 0.16% 0.09% 0.02%
Focused Large-Cap Value B 0.16 0.17 0.04 0.15 0.11 0.00
Focused Large-Cap Value C+ 0.22 0.25 0.09 0.15 0.08 (0.02)
</Table>
(5) The ratio reflects an expense cap which is net of custody credits of
(0.01%) or waiver/reimbursements is applicable.
(6) Includes expense reimbursements, but excludes expense reductions. If the
expense reductions had been applied, the ratio of expenses to average net
assets for would have been lower by:
<Table>
<Caption>
10/31/02 10/31/03
-------- --------
Focused Large-Cap Value A 0.22% 0.11%
Focused Large-Cap Value B 0.23 0.15
Focused Large-Cap Value C+ 0.21 0.14
</Table>
(7) Unaudited
(8) Total return for each class was increased by less than 0.01% from gains on
the disposal of investments in violation of investment restrictions (Note
4)
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
See Notes to Financial Statements
23
<Page>
<Table>
<Caption>
NET GAIN
(LOSS)
ON INVEST- DIVIDENDS
NET MENTS TOTAL FROM
NET ASSET INVEST- (BOTH FROM NET
VALUE MENT REALIZED INVEST- INVEST-
PERIOD BEGINNING INCOME AND MENT MENT
ENDED OF PERIOD (LOSS)(1) UNREALIZED) OPERATIONS INCOME
- -------------------------------------------- --------- --------- ----------- ---------- ----------
FOCUSED MULTI-CAP VALUE PORTFOLIO
CLASS A
1/01/99-10/31/00(6) $ 12.50 $ 0.03 $ 3.73 $ 3.76 $ --
10/31/01 16.26 0.02 1.10 1.12 --
10/31/02 16.67 (0.01) (2.73) (2.74) --
10/31/03 13.43 0.16 3.51 3.67 --
04/30/04(7) 17.10 0.02 1.21 1.23 (0.14)
CLASS B
1/01/99-10/31/00(6) $ 12.50 $ (0.07) $ 3.73 $ 3.66 $ --
10/31/01 16.16 (0.09) 1.11 1.02 --
10/31/02 16.47 (0.11) (2.69) (2.80) --
10/31/03 13.17 0.05 3.45 3.50 --
04/30/04(7) 16.67 (0.03) 1.16 1.13 (0.02)
CLASS C+
1/01/99-10/31/00(6) $ 12.50 $ (0.08) $ 3.74 $ 3.66 $ --
10/31/01 16.16 (0.09) 1.10 1.01 --
10/31/02 16.46 (0.11) (2.69) (2.80) --
10/31/03 13.16 0.04 3.46 3.50 --
04/30/04(7) 16.66 (0.03) 1.16 1.13 (0.02)
<Caption>
DISTRI- NET
BUTION ASSET NET
FROM TOTAL VALUE ASSETS
PERIOD CAPITAL DISTRI- END OF TOTAL END OF
ENDED GAINS BUTIONS PERIOD RETURN(2) PERIOD
- -------------------------------------------- --------- --------- --------- ---------- ----------
FOCUSED MULTI-CAP VALUE PORTFOLIO
CLASS A
1/01/99-10/31/00(6) $ -- $ -- $ 16.26 30.08% $ 40,755
10/31/01 (0.71) (0.71) 16.67 6.95 136,063
10/31/02 (0.50) (0.50) 13.43 (17.09) 128,255
10/31/03 -- -- 17.10 27.33 162,492
04/30/04(7) -- (0.14) 18.19 7.19 198,317
CLASS B
1/01/99-10/31/00(6) $ -- $ -- $ 16.16 29.28% $ 33,418
10/31/01 (0.71) (0.71) 16.47 6.35 190,304
10/31/02 (0.50) (0.50) 13.17 (17.67) 169,875
10/31/03 -- -- 16.67 26.58 189,432
04/30/04(7) -- (0.02) 17.78 6.80 193,894
CLASS C+
1/01/99-10/31/00(6) $ -- $ -- $ 16.16 29.28% $ 73,484
10/31/01 (0.71) (0.71) 16.46 6.29 213,088
10/31/02 (0.50) (0.50) 13.16 (17.68) 209,029
10/31/03 -- -- 16.66 26.60 220,776
04/30/04(7) -- (0.02) 17.77 6.81 227,091
<Caption>
RATIO OF
RATIO OF NET INVESTMENT
EXPENSES INCOME (LOSS)
PERIOD TO AVERAGE TO AVERAGE NET PORTFOLIO
ENDED NET ASSETS(4) ASSETS(4) TURNOVER
- -------------------------------------------- ---------------- --------------- ---------
FOCUSED MULTI-CAP VALUE PORTFOLIO
CLASS A
1/01/99-10/31/00(6) 1.55%(3)(5) 0.19%(3)(5) 220%
10/31/01 1.56 0.13 245
10/31/02 1.62 (0.07) 127
10/31/03 1.72 1.08 184
04/30/04(7) 1.72(3) 0.26(3) 93
CLASS B
1/01/99-10/31/00(6) 2.20%(3)(5) (0.52)%(3)(5) 220%
10/31/01 2.20 (0.51) 245
10/31/02 2.26 (0.72) 127
10/31/03 2.37 0.33 184
04/30/04(7) 2.37(3) (0.39)(3) 93
CLASS C+
1/01/99-10/31/00(6) 2.20%(3)(5) (0.53)%(3)(5) 220%
10/31/01 2.20 (0.52) 245
10/31/02 2.27 (0.72) 127
10/31/03 2.37 0.31 184
04/30/04(7) 2.37(3) (0.39)(3) 93
</Table>
(1) Calculated based upon average shares outstanding.
(2) Total return is not annualized and does not reflect sales load. It does
include expense reimbursements and expense reductions.
(3) Annualized
(4) Net of the following expense reimbursements (recoupments) (based on average
net assets):
<Table>
<Caption>
10/31/00 10/31/01 10/31/02 10/31/03 04/30/04(3)
-------- -------- -------- -------- -----------
Focused Multi-Cap Value A 0.50% 0.19% 0.11% 0.03% 0.04%
Focused Multi-Cap Value B 0.59 0.20 0.11 0.02 0.03
Focused Multi-Cap Value C+ 0.59 0.18 0.11 0.01 0.03
</Table>
(5) The ratio reflects an expense cap which is net of custody credits of
(0.01%) or waiver/reimbursements is applicable.
(6) Commencement of operations
(7) Unaudited
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
See Notes to Financial Statements
24
<Page>
<Table>
<Caption>
NET GAIN
(LOSS)
ON INVEST- DIVIDENDS
NET MENTS TOTAL FROM
NET ASSET INVEST- (BOTH FROM NET
VALUE MENT REALIZED INVEST- INVEST-
PERIOD BEGINNING INCOME AND MENT MENT
ENDED OF PERIOD (LOSS)(1) UNREALIZED) OPERATIONS INCOME
- -------------------------------------------- --------- --------- ----------- ---------- ----------
FOCUSED 2000 VALUE PORTFOLIO
CLASS A
10/31/99 $ 10.82 $ 0.05 $ 0.83 $ 0.88 $ --
10/31/00 11.70 0.07 2.15 2.22 --
10/31/01 13.92 (0.03) 1.66 1.63 --
10/31/02 15.55 (0.06) (1.16) (1.22) --
10/31/03 13.21 (0.03) 5.15 5.12 --
04/30/04(7) 17.70 0.01 2.38 2.39 --
CLASS B
10/31/99 $ 10.74 $ (0.03) $ 0.83 $ 0.80 $ --
10/31/00 11.54 (0.02) 2.13 2.11 --
10/31/01 13.65 (0.13) 1.63 1.50 --
10/31/02 15.15 (0.16) (1.12) (1.28) --
10/31/03 12.75 (0.12) 4.96 4.84 --
04/30/04(7) 16.96 (0.04) 2.26 2.22 --
CLASS C+
10/31/99 $ 10.74 $ (0.03) $ 0.84 $ 0.81 $ --
10/31/00 11.55 (0.02) 2.13 2.11 --
10/31/01 13.66 (0.13) 1.63 1.50 --
10/31/02 15.16 (0.14) (1.14) (1.28) --
10/31/03 12.76 (0.12) 4.98 4.86 --
04/30/04(7) 16.99 (0.04) 2.27 2.23 --
<Caption>
DISTRI- NET
BUTION ASSET NET
FROM TOTAL VALUE ASSETS
PERIOD CAPITAL DISTRI- END OF TOTAL END OF
ENDED GAINS BUTIONS PERIOD RETURN(2) PERIOD
- -------------------------------------------- --------- --------- --------- ---------- ----------
FOCUSED 2000 VALUE PORTFOLIO
CLASS A
10/31/99 $ -- $ -- $ 11.70 8.13% $ 15,473
10/31/00 -- -- 13.92 18.97 17,188
10/31/01 -- -- 15.55 11.71 29,772
10/31/02 (1.12) (1.12) 13.21 (9.13) 43,322
10/31/03 (0.63)(6) (0.63) 17.70 40.24 140,181
04/30/04(7) -- -- 20.09 13.50 275,818
CLASS B
10/31/99 $ -- $ -- $ 11.54 7.45% $ 22,601
10/31/00 -- -- 13.65 18.28 22,593
10/31/01 -- -- 15.15 10.99 37,205
10/31/02 (1.12) (1.12) 12.75 (9.80) 44,538
10/31/03 (0.63)(6) (0.63) 16.96 39.46 60,293
04/30/04(7) -- -- 19.18 13.09 71,304
CLASS C+
10/31/99 $ -- $ -- $ 11.55 7.54% $ 7,230
10/31/00 -- -- 13.66 18.27 12,195
10/31/01 -- -- 15.16 10.98 25,676
10/31/02 (1.12) (1.12) 12.76 (9.79) 50,881
10/31/03 (0.63)(6) (0.63) 16.99 39.59 76,993
04/30/04(7) -- -- 19.22 13.13 100,490
<Caption>
RATIO OF
RATIO OF NET INVESTMENT
EXPENSES INCOME (LOSS)
PERIOD TO AVERAGE TO AVERAGE NET PORTFOLIO
ENDED NET ASSETS(4) ASSETS(4) TURNOVER
- -------------------------------------------- ---------------- --------------- ---------
FOCUSED 2000 VALUE PORTFOLIO
CLASS A
10/31/99 1.78% 0.39% 102%
10/31/00 1.78 0.52 67
10/31/01 1.78 (0.19) 66
10/31/02 1.75(5) (0.49)(5) 123
10/31/03 1.72(5) (0.20)(5) 101
04/30/04(7) 1.72(3)(5) 0.16(3)(5) 42
CLASS B
10/31/99 2.43% (0.26)% 102%
10/31/00 2.43 (0.12) 67
10/31/01 2.43 (0.83) 66
10/31/02 2.40(5) (1.15)(5) 123
10/31/03 2.37(5) 0.84(5) 101
04/30/04(7) 2.37(3)(5) (0.42)(3)(5) 42
CLASS C+
10/31/99 2.43% (0.26)% 102%
10/31/00 2.43 (0.16) 67
10/31/01 2.43 (0.84) 66
10/31/02 2.40(5) (1.09)(5) 123
10/31/03 2.37(5) (0.84)(5) 101
04/30/04(7) 2.37(3)(5) (0.43)(3)(5) 42
</Table>
(1) Calculated based upon average shares outstanding.
(2) Total return is not annualized and does not reflect sales load. It does
include expense reimbursements and expense reductions.
(3) Annualized
(4) Net of the following expense reimbursements (recoupments) (based on average
net assets):
<Table>
<Caption>
10/31/99 10/31/00 10/31/01 10/31/02 10/31/03 04/30/04(3)
-------- -------- -------- -------- -------- -----------
Focused 2000 Value A 0.29% 0.25% 0.11% 0.08% 0.09% 0.04%
Focused 2000 Value B 0.31 0.25 0.07 0.07 0.09 0.03
Focused 2000 Value C+ 0.36 0.31 0.15 0.09 0.07 0.02
</Table>
(5) Includes expense reimbursements, but excludes expense reductions. If the
expense reductions had been applied, the ratio of expenses to average net
assets would have been lower by:
<Table>
<Caption>
10/31/02 10/31/03 04/30/04(3)
-------- -------- -----------
Focused 2000 Value A 0.08% 0.03% 0.03%
Focused 2000 Value B 0.08 0.03 0.03
Focused 2000 Value C+ 0.08 0.03 0.03
</Table>
(6) Includes a tax return of capital of less than $0.01 per share.
(7) Unaudited
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
See Notes to Financial Statements
25
<Page>
<Table>
<Caption>
NET GAIN
(LOSS)
ON INVEST- DIVIDENDS
NET MENTS TOTAL FROM
NET ASSET INVEST- (BOTH FROM NET
VALUE MENT REALIZED INVEST- INVEST-
PERIOD BEGINNING INCOME AND MENT MENT
ENDED OF PERIOD (LOSS)(1) UNREALIZED) OPERATIONS INCOME
- -------------------------------------------- --------- --------- ----------- ---------- ----------
FOCUSED GROWTH AND INCOME PORTFOLIO
CLASS A
10/31/99 $ 13.04 $ (0.04) $ 4.30 $ 4.26 $ --
10/31/00 17.12 (0.13) 3.51 3.38 --
10/31/01 19.52 (0.05) (6.18) (6.23) --
10/31/02 12.85 (0.07) (0.74) (0.81) --
10/31/03 12.04 (0.08) 2.97 2.89 --
04/30/04(8) 14.93 (0.04) 0.65 0.61 --
CLASS B
10/31/99 $ 12.96 $ (0.13) $ 4.25 $ 4.12 $ --
10/31/00 16.90 (0.26) 3.46 3.20 --
10/31/01 19.12 (0.15) (6.03) (6.18) --
10/31/02 12.50 (0.16) (0.70) (0.86) --
10/31/03 11.64 (0.16) 2.85 2.69 --
04/30/04(8) 14.33 (0.08) 0.62 0.54 --
CLASS C+
10/31/99 $ 12.95 $ (0.14) $ 4.26 $ 4.12 $ --
10/31/00 16.89 (0.26) 3.46 3.20 --
10/31/01 19.11 (0.15) (6.03) (6.18) --
10/31/02 12.49 (0.15) (0.71) (0.86) --
10/31/03 11.63 (0.15) 2.84 2.69 --
04/30/04(8) 14.32 (0.08) 0.62 0.54 --
CLASS X
3/19/02-10/31/02(7) $ 14.55 $ (0.03) $ (2.46) $ (2.49) $ --
10/31/03 12.06 (0.03) 2.96 2.93 --
04/30/04(8) 14.99 0.01 0.66 0.65 --
<Caption>
DISTRI- NET
BUTION ASSET NET
FROM TOTAL VALUE ASSETS
PERIOD CAPITAL DISTRI- END OF TOTAL END OF
ENDED GAINS BUTIONS PERIOD RETURN(2) PERIOD
- -------------------------------------------- --------- --------- --------- ---------- ----------
FOCUSED GROWTH AND INCOME PORTFOLIO
CLASS A
10/31/99 $ (0.18) $ (0.18) $ 17.12 33.10% $ 29,281
10/31/00 (0.98) (0.98) 19.52 19.88 62,164
10/31/01 (0.44) (0.44) 12.85 (32.51) 39,280
10/31/02 -- -- 12.04 (6.30) 59,186
10/31/03 -- -- 14.93 24.00 119,353
04/30/04(8) -- -- 15.54 4.09 158,143
CLASS B
10/31/99 $ (0.18) $ (0.18) $ 16.90 32.21% $ 39,636
10/31/00 (0.98) (0.98) 19.12 19.03 83,480
10/31/01 (0.44) (0.44) 12.50 (32.94) 59,653
10/31/02 -- -- 11.64 (6.88) 65,825
10/31/03 -- -- 14.33 23.11 88,038
04/30/04(8) -- -- 14.87 3.77 95,501
CLASS C+
10/31/99 $ (0.18) $ (0.18) $ 16.89 32.24% $ 15,619
10/31/00 (0.98) (0.98) 19.11 19.04 69,826
10/31/01 (0.44) (0.44) 12.49 (32.96) 50,468
10/31/02 -- -- 11.63 (6.89) 85,094
10/31/03 -- -- 14.32 23.13 137,348
04/30/04(8) -- -- 14.86 3.77 153,277
CLASS X
3/19/02-10/31/02(7) $ -- $ -- $ 12.06 (17.11)% $ 7,782
10/31/03 -- -- 14.99 24.30 23,443
04/30/04(8) -- -- 15.64 4.34 32,001
<Caption>
RATIO OF
RATIO OF NET INVESTMENT
EXPENSES INCOME (LOSS)
PERIOD TO AVERAGE TO AVERAGE NET PORTFOLIO
ENDED NET ASSETS(4) ASSETS(4) TURNOVER
- -------------------------------------------- ---------------- --------------- ---------
FOCUSED GROWTH AND INCOME PORTFOLIO
CLASS A
10/31/99 1.54%(5) (0.26)%(5) 165%
10/31/00 1.45 (0.62) 121
10/31/01 1.45 (0.33) 203
10/31/02 1.57(6) (0.61)(6) 170
10/31/03 1.72(6) (0.58)(6) 103
04/30/04(8) 1.72(3)(6) (0.47)(3)(6) 37
CLASS B
10/31/99 2.20%(5) (0.87)%(5) 165
10/31/00 2.10 (1.27) 121
10/31/01 2.10 (0.99) 203
10/31/02 2.21(6) (1.27)(6) 170
10/31/03 2.21(6) (1.24)(6) 103
04/30/04(8) 2.37(3)(6) (1.14)(3)(6) 37
CLASS C+
10/31/99 2.16%(5) (0.97)%(5) 165%
10/31/00 2.10 (1.26) 121
10/31/01 2.10 (0.98) 203
10/31/02 2.23(6) (1.27)(6) 170
10/31/03 2.37(6) (1.24)(6) 103
04/30/04(8) 2.37(3)(6) (1.14)(3)(6) 37
CLASS X
3/19/02-10/31/02(7) 1.44%(3)(6) (0.29)%(3)(6) 170
10/31/03 1.40(6) (0.23)(6) 103
04/30/04(8) 1.33(3)(6) (0.07)(3)(6) 37
</Table>
(1) Calculated based upon average shares outstanding.
(2) Total return is not annualized and does not reflect sales load. It does
include expense reimbursements and expense reductions.
(3) Annualized
(4) Net of the following expense reimbursements (recoupments) (based on average
net assets):
<Table>
<Caption>
10/31/99 10/31/00 10/31/01 10/31/02 10/31/03 04/30/04(3)
-------- -------- -------- -------- -------- -----------
Focused Growth and Income A 0.37% 0.34% 0.30% 0.23% 0.04% 0.03%
Focused Growth and Income B 0.44 0.32 0.30 0.22 0.04 0.02
Focused Growth and Income C+ 0.60 0.35 0.30 0.20 0.03 (0.01)
Focused Growth and Income X -- -- -- 0.18(3) (0.02) --
</Table>
(5) The ratio reflects an expense cap which is net of custody credits of
(0.01%) or waiver/reimbursements is applicable.
(6) Includes expense reimbursements, but excludes expense reductions. If the
expense reductions had been applied, the ratio of expenses to average net
assets would have been lower by:
<Table>
<Caption>
10/31/02 10/31/03 04/30/04(3)
-------- -------- -----------
Focused Growth and Income A 0.04% 0.03% 0.06%
Focused Growth and Income B 0.05 0.04 0.08
Focused Growth and Income C+ 0.04 0.03 0.07
Focused Growth and Income X 0.01 0.03 0.06
</Table>
(7) Inception date of class
(8) Unaudited
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
See Notes to Financial Statements
26
<Page>
<Table>
<Caption>
NET GAIN
(LOSS)
ON INVEST- DIVIDENDS
NET MENTS TOTAL FROM
NET ASSET INVEST- (BOTH FROM NET
VALUE MENT REALIZED INVEST- INVEST-
PERIOD BEGINNING INCOME AND MENT MENT
ENDED OF PERIOD (LOSS)(1) UNREALIZED) OPERATIONS INCOME
- -------------------------------------------- --------- --------- ----------- ---------- ----------
FOCUSED INTERNATIONAL EQUITY PORTFOLIO
CLASS A
11/01/01-10/31/02(8) $ 12.50 $ (0.02) $ (0.47) $ (0.49) $ --
10/31/03 12.01 0.01 2.80 2.81 --
04/30/04(7) 14.82 (0.05) 1.49 1.44 --
CLASS B
11/01/01-10/31/02(8) $ 12.50 $ (0.10) $ (0.46) $ (0.56) $ --
10/31/03 11.94 (0.05) 2.75 2.70 --
04/30/04(7) 14.64 (0.11) 1.48 1.37 --
CLASS C+
11/01/01-10/31/02(8) $ 12.50 $ (0.11) $ (0.46) $ (0.57) $ --
10/31/03 11.93 (0.05) 2.75 2.70 --
04/30/04(7) 14.63 (0.10) 1.46 1.36 --
<Caption>
DISTRI- NET
BUTION ASSET NET
FROM TOTAL VALUE ASSETS
PERIOD CAPITAL DISTRI- END OF TOTAL END OF
ENDED GAINS BUTIONS PERIOD RETURN(2) PERIOD
- -------------------------------------------- --------- --------- --------- ---------- ----------
FOCUSED INTERNATIONAL EQUITY PORTFOLIO
CLASS A
11/01/01-10/31/02(8) $ -- $ -- $ 12.01 (3.92)% $ 17,225
10/31/03 -- -- 14.82 23.40 63,803
04/30/04(7) (0.08) (0.08) 16.18 9.73 137,248
CLASS B
11/01/01-10/31/02(8) $ -- $ -- $ 11.94 (4.48)% $ 5,097
10/31/03 -- -- 14.64 22.61 7,682
04/30/04(7) (0.08) (0.08) 15.93 9.37 10,321
CLASS C+
11/01/01-10/31/02(8) $ -- $ -- $ 11.93 (4.56)% $ 10,350
10/31/03 -- -- 14.63 22.63 17,141
04/30/04(7) (0.08) (0.08) 15.91 9.31 26,097
<Caption>
RATIO OF
RATIO OF NET INVESTMENT
EXPENSES INCOME (LOSS)
PERIOD TO AVERAGE TO AVERAGE NET PORTFOLIO
ENDED NET ASSETS(4) ASSETS(4) TURNOVER
- -------------------------------------------- ---------------- --------------- ---------
FOCUSED INTERNATIONAL EQUITY PORTFOLIO
CLASS A
11/01/01-10/31/02(8) 1.95%(3)(5)(6) (0.13)%(3)(5) 117%
10/31/03 1.95(6) 0.10(6) 103
04/30/04(7) 1.95(3)(6) (0.63)(3)(6) 74
CLASS B
11/01/01-10/31/02(8) 2.60%(3)(5)(6) (0.79)%(3)(5) 117%
10/31/03 2.60(6) (0.41)(6) 103
04/30/04(7) 2.60(3)(6) (1.38)(3)(6) 74
CLASS C+
11/01/01-10/31/02(8) 2.60%(3)(5)(6) (0.91)%(3)(5) 117%
10/31/03 2.60(6) (0.40)(6) 103
04/30/04(7) 2.60(3)(6) (1.35)(3)(6) 74
</Table>
(1) Calculated based upon average shares outstanding.
(2) Total return is not annualized and does not reflect sales load. It does
include expense reimbursements and expense reductions.
(3) Annualized
(4) Net of the following expense reimbursements (recoupments) (based on average
net assets):
<Table>
<Caption>
10/31/02(3) 10/31/03 04/30/04(3)
----------- -------- -----------
Focused International Equity A 0.62% 0.50% 0.23%
Focused International Equity B 1.19 0.69 0.29
Focused International Equity C+ 0.83 0.57 0.18
</Table>
(5) The ratio reflects an expense cap which is net of custody credits of
(0.01%) or waiver/reimbursements is applicable.
(6) Includes expense reimbursements, but excludes expense reductions. If the
expense reductions had been applied, the ratio of expenses to average net
assets would have been lower by:
<Table>
<Caption>
10/31/02 10/31/03 04/30/04(3)
-------- -------- -----------
Focused International Equity A 0.01% 0.01% 0.01%
Focused International Equity B 0.01 0.01 0.01
Focused International Equity C+ 0.01 0.01 0.01
</Table>
(7) Unaudited
(8) Commencement of operations
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
See Notes to Financial Statements
27
<Page>
<Table>
<Caption>
NET GAIN
(LOSS)
ON INVEST- DIVIDENDS
NET MENTS TOTAL FROM
NET ASSET INVEST- (BOTH FROM NET
VALUE MENT REALIZED INVEST- INVEST-
PERIOD BEGINNING INCOME AND MENT MENT
ENDED OF PERIOD (LOSS)(1) UNREALIZED) OPERATIONS INCOME
- -------------------------------------------- --------- --------- ----------- ---------- ----------
FOCUSED TECHNOLOGY PORTFOLIO
CLASS A
5/22/00-10/31/00(7) $ 12.50 $ (0.11) $ 3.13 $ 3.02 $ --
10/31/01 15.52 (0.08) (11.49) (11.57) --
10/31/02 3.95 (0.07) (1.09) (1.16) --
10/31/03 2.79 (0.07) 2.19 2.12 --
04/30/04(8) 4.91 (0.05) 0.17 0.12 --
CLASS B
5/22/00-10/31/00(7) $ 12.50 $ (0.17) $ 3.14 $ 2.97 $ --
10/31/01 15.47 (0.13) (11.41) (11.54) --
10/31/02 3.93 (0.09) (1.09) (1.18) --
10/31/03 2.75 (0.09) 2.15 2.06 --
04/30/04(8) 4.81 (0.06) 0.17 0.11 --
CLASS C+
5/22/00-10/31/00(7) $ 12.50 $ (0.17) $ 3.14 $ 2.97 $ --
10/31/01 15.47 (0.13) (11.42) (11.55) --
10/31/02 3.92 (0.09) (1.08) (1.17) --
10/31/03 2.75 (0.09) 2.15 2.06 --
04/30/04(8) 4.81 (0.06) 0.17 0.11 --
<Caption>
DISTRI- NET
BUTION ASSET NET
FROM TOTAL VALUE ASSETS
PERIOD CAPITAL DISTRI- END OF TOTAL END OF
ENDED GAINS BUTIONS PERIOD RETURN(2) PERIOD
- -------------------------------------------- --------- --------- --------- ---------- ----------
FOCUSED TECHNOLOGY PORTFOLIO
CLASS A
5/22/00-10/31/00(7) $ -- $ -- $ 15.52 24.16% $ 89,371
10/31/01 -- -- 3.95 (74.55) 28,327
10/31/02 -- -- 2.79 (29.37) 18,034
10/31/03 -- -- 4.91 75.99 34,846
04/30/04(8) -- -- 5.03 2.44 36,741
CLASS B
5/22/00-10/31/00(7) $ -- $ -- $ 15.47 23.76% $ 70,073
10/31/01 -- -- 3.93 (74.60) 20,658
10/31/02 -- -- 2.75 (30.03) 13,368
10/31/03 -- -- 4.81 74.91 22,851
04/30/04(8) -- -- 4.92 2.29 25,927
CLASS C+
5/22/00-10/31/00(7) $ -- $ -- $ 15.47 23.76% $ 86,105
10/31/01 -- -- 3.92 (74.66) 26,869
10/31/02 -- -- 2.75 (29.85) 17,137
10/31/03 -- -- 4.81 74.91 28,490
04/30/04(8) -- -- 4.92 2.29 28,763
<Caption>
RATIO OF
RATIO OF NET INVESTMENT
EXPENSES INCOME (LOSS)
PERIOD TO AVERAGE TO AVERAGE NET PORTFOLIO
ENDED NET ASSETS(4) ASSETS(4) TURNOVER
- -------------------------------------------- ---------------- --------------- ---------
FOCUSED TECHNOLOGY PORTFOLIO
CLASS A
5/22/00-10/31/00(7) 1.97%(3)(5) (1.30)%(3)(5) 176%
10/31/01 1.97 (1.12) 449
10/31/02 1.97(6) (1.77)(6) 262
10/31/03 1.97(6) (1.83)(6) 157
04/30/04(8) 1.97(3)(6) (1.87)(3)(6) 87
CLASS B
5/22/00-10/31/00(7) 2.62%(3)(5) (1.97)%(3)(5) 176%
10/31/01 2.62 (1.77) 449
10/31/02 2.62(6) (2.42)(6) 262
10/31/03 2.62(6) (2.48)(6) 157
04/30/04(8) 2.62(3)(6) (2.52)(3)(6) 87
CLASS C+
5/22/00-10/31/00(7) 2.62%(3)(5) (1.97)%(3)(5) 176%
10/31/01 2.62 (1.77) 449
10/31/02 2.62(6) (2.42)(6) 262
10/31/03 2.62(6) (2.48)(6) 157
04/30/04(8) 2.62(3)(6) (2.53)(3)(6) 87
</Table>
(1) Calculated based upon average shares outstanding.
(2) Total return is not annualized and does not reflect sales load. It does
include expense reimbursements and expense reductions.
(3) Annualized
(4) Net of the following expense reimbursements (based on average net assets):
<Table>
<Caption>
10/31/00 10/31/01 10/31/02 10/31/03 04/30/04(3)
-------- -------- -------- -------- -----------
Focused Technology A 0.30% 0.18% 0.39% 0.48% 0.43%
Focused Technology B 0.31 0.16 0.43 0.52 0.46
Focused Technology C+ 0.31 0.13 0.40 0.47 0.42
</Table>
(5) The ratio reflects an expense cap which is net of custody credits of 0.02%
or waiver/reimbursements is applicable.
(6) Includes expense reimbursements, but excludes expense reductions. If the
expense reductions had been applied, the ratio of expenses to average net
assets would have been lower by:
<Table>
<Caption>
10/31/02 10/31/03 04/30/04(3)
-------- -------- -----------
Focused Technology A --% 0.08% 0.06%
Focused Technology B -- 0.08 0.06
Focused Technology C+ -- 0.08 0.07
</Table>
(7) Commencement of operations
(8) Unaudited
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
See Notes to Financial Statements
28
<Page>
<Table>
<Caption>
NET GAIN
(LOSS)
ON INVEST- DIVIDENDS
NET MENTS TOTAL FROM
NET ASSET INVEST- (BOTH FROM NET
VALUE MENT REALIZED INVEST- INVEST-
PERIOD BEGINNING INCOME AND MENT MENT
ENDED OF PERIOD (LOSS)(1) UNREALIZED) OPERATIONS INCOME
- -------------------------------------------- --------- --------- ----------- ---------- ----------
FOCUSED DIVIDEND STRATEGY PORTFOLIO
CLASS A
9/30/99 $ 11.06 $ 0.21 $ 0.73 $ 0.94 $ (0.13)
9/30/00 11.87 0.23 (1.85) (1.62) (0.23)
9/30/01 9.67 0.23 0.73 0.96 (0.22)
9/30/02 10.41 0.22 (0.72) (0.50) (0.20)
9/30/03 9.71 0.24 1.17 1.41 (0.37)
10/01/03-10/31/03(4) 10.75 0.04 0.52 0.56 --
11/01/03-04/30/04(4)* 11.31 0.10 1.13 1.23 (0.06)
CLASS B
9/30/99 $ 11.03 $ 0.14 $ 0.72 $ 0.86 $ (0.08)
9/30/00 11.81 0.16 (1.84) (1.68) (0.16)
9/30/01 9.62 0.16 0.73 0.89 (0.16)
9/30/02 10.35 0.15 (0.74) (0.59) (0.13)
9/30/03 9.63 0.18 1.17 1.35 (0.26)
10/01/03-10/31/03(4) 10.72 0.03 0.52 0.55 --
11/01/03-04/30/04(4)* 11.27 0.06 1.16 1.22 (0.05)
CLASS C+
9/30/99 $ 11.03 $ 0.14 $ 0.72 $ 0.86 $ (0.08)
9/30/00 11.81 0.16 (1.84) (1.68) (0.16)
9/30/01 9.62 0.15 0.74 0.89 (0.16)
9/30/02 10.35 0.15 (0.74) (0.59) (0.13)
9/30/03 9.63 0.18 1.16 1.34 (0.26)
10/01/03-10/31/03(4) 10.71 0.03 0.53 0.56 --
11/01/03-04/30/04(4)* 11.27 0.06 1.16 1.22 (0.05)
<Caption>
DISTRI- NET
BUTION ASSET NET
FROM TOTAL VALUE ASSETS
PERIOD CAPITAL DISTRI- END OF TOTAL END OF
ENDED GAINS BUTIONS PERIOD RETURN(2) PERIOD
- -------------------------------------------- --------- --------- --------- ---------- ----------
FOCUSED DIVIDEND STRATEGY PORTFOLIO
CLASS A
9/30/99 $ -- $ (0.13) $ 11.87 8.47% $ 26,403
9/30/00 (0.35) (0.58) 9.67 (14.09) 8,732
9/30/01 -- (0.22) 10.41 10.04 7,983
9/30/02 -- (0.20) 9.71 (5.07) 9,372
9/30/03 -- (0.37) 10.75 14.69 45,639
10/01/03-10/31/03(4) -- -- 11.31 5.21 50,263
11/01/03-04/30/04(4)* -- (0.06) 12.48 11.42 63,324
CLASS B
9/30/99 $ -- $ (0.08) $ 11.81 7.82% $ 55,526
9/30/00 (0.35) (0.51) 9.62 (14.62) 21,221
9/30/01 -- (0.16) 10.35 9.30 21,674
9/30/02 -- (0.13) 9.63 (5.86) 20,670
9/30/03 -- (0.26) 10.72 14.07 47,369
10/01/03-10/31/03(4) -- -- 11.27 5.13 53,628
11/01/03-04/30/04(4)* -- (0.05) 12.44 11.12 57,980
CLASS C+
9/30/99 $ -- $ (0.08) $ 11.81 7.82% $ 94,065
9/30/00 (0.35) (0.51) 9.62 (14.62) 24,110
9/30/01 -- (0.16) 10.35 9.30 21,793
9/30/02 -- (0.13) 9.63 (5.86) 19,568
9/30/03 -- (0.26) 10.71 13.96 69,059
10/01/03-10/31/03(4) -- -- 11.27 5.23 79,071
11/01/03-04/30/04(4)* -- (0.05) 12.44 11.12 99,666
<Caption>
RATIO OF
RATIO OF NET INVESTMENT
EXPENSES INCOME (LOSS)
PERIOD TO AVERAGE TO AVERAGE NET PORTFOLIO
ENDED NET ASSETS(3) ASSETS(3) TURNOVER
- -------------------------------------------- ---------------- --------------- ---------
FOCUSED DIVIDEND STRATEGY PORTFOLIO
CLASS A
9/30/99 0.95% 1.69% 35%
9/30/00 0.95 2.20 57
9/30/01 0.95 2.10 59
9/30/02 0.95 1.96 37
9/30/03 0.95 2.41 20
10/01/03-10/31/03(4) 0.95(5) 2.24(5) 0
11/01/03-04/30/04(4)* 0.95(5) 1.97(5) 45
CLASS B
9/30/99 1.60% 1.08% 35%
9/30/00 1.60 1.56 57
9/30/01 1.60 1.45 59
9/30/02 1.60 1.31 37
9/30/03 1.60 1.79 20
10/01/03-10/31/03(4) 1.60(5) 1.59(5) 0
11/01/03-04/30/04(4)* 1.60(5) 1.33(5) 45
CLASS C+
9/30/99 1.60% 1.11% 35%
9/30/00 1.60 1.50 57
9/30/01 1.60 1.45 59
9/30/02 1.60 1.30 37
9/30/03 1.60 1.77 20
10/01/03-10/31/03(4) 1.60(5) 1.59(5) 0
11/01/03-04/30/04(4)* 1.60(5) 1.32(5) 45
</Table>
* The Portfolio changed its fiscal year end from September 30 to October 31.
(1) Calculated based upon average shares outstanding
(2) Total return is not annualized and does not reflect sales load. Total
return does not include expense reimbursements.
(3) Net of the following expense reimbursements (based on average net assets):
<Table>
<Caption>
9/30/99 9/30/00 9/30/01 9/30/02 9/30/03 04/30/04(5)
------- ------- ------- ------- ------- -----------
Focused Dividend Strategy Class A 0.23% 0.34% 0.36% 0.29% 0.16% 0.13%
Focused Dividend Strategy Class B 0.22 0.30 0.25 0.24 0.16 0.15
Focused Dividend Strategy Class C+ 0.19 0.27 0.27 0.23 0.14 0.12
</Table>
(4) Unaudited
(5) Annualized
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
See Notes to Financial Statements
29
<Page>
FOCUSED EQUITY STRATEGY PORTFOLIO
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED)
<Table>
<Caption>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- ----------------------------------------------------------------------------------------
AFFILIATED INVESTMENT COMPANIES#--99.1%
INTERNATIONAL EQUITY SECURITIES--9.9%
SunAmerica Focused Series, Inc.
Focused International Equity
Portfolio, Class A+
(cost $41,498,418) 2,756,005 $ 44,592,157
--------------
DOMESTIC EQUITY SECURITIES--89.2%
SunAmerica Focused Series, Inc.
Focused 2000 Growth
Portfolio, Class A+ 3,438,216 51,779,533
SunAmerica Focused Series, Inc.
Focused 2000 Value Portfolio,
Class A+ 3,853,283 77,412,446
SunAmerica Focused Series, Inc.
Focused Large-Cap Growth
Portfolio, Class A+ 8,388,413 142,267,484
SunAmerica Focused Series, Inc.
Focused Large-Cap Value
Portfolio, Class A 9,015,485 132,707,947
--------------
TOTAL DOMESTIC EQUITY SECURITIES
(cost $384,826,395) 404,167,410
--------------
TOTAL INVESTMENTS
(cost $426,324,813) (Note 7) 99.1% 448,759,567
Other assets less liabilities 0.9 4,216,902
----- --------------
NET ASSETS 100.0% $ 452,976,469
===== ==============
</Table>
- ----------
+ Non-income producing securities
# Note 6
See Notes to Financial Statements
30
<Page>
FOCUSED MULTI-ASSET STRATEGY PORTFOLIO
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED)
<Table>
<Caption>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- ----------------------------------------------------------------------------------------
AFFILIATED INVESTMENT COMPANIES#--98.8%
INTERNATIONAL EQUITY SECURITIES--10.3%
SunAmerica Focused Series, Inc.
Focused International Equity
Portfolio, Class A+
(cost $40,182,165) 2,747,566 $ 44,455,617
--------------
DOMESTIC EQUITY SECURITIES--70.0%
SunAmerica Focused Series, Inc.
Focused 2000 Growth Portfolio,
Class A+ 2,870,665 43,232,214
SunAmerica Focused Series, Inc.
Focused 2000 Value Portfolio,
Class A+ 2,306,096 46,329,474
SunAmerica Focused Series, Inc.
Focused Growth and Income
Portfolio, Class A+ 2,738,081 42,549,782
SunAmerica Focused Series, Inc.
Focused Large-Cap Growth
Portfolio, Class A+ 2,515,573 42,664,110
SunAmerica Focused Series, Inc.
Focused Large-Cap Value
Portfolio, Class A 2,895,071 42,615,443
SunAmerica Focused Series, Inc.
Focused Multi-Cap Growth
Portfolio, Class A+ 2,502,037 42,384,502
SunAmerica Focused Series, Inc.
Focused Multi-Cap Value
Portfolio, Class A 2,382,345 43,334,864
--------------
TOTAL DOMESTIC EQUITY SECURITIES
(cost $280,550,644) 303,110,389
--------------
FIXED INCOME SECURITIES--18.5%
SunAmerica Income Funds
SunAmerica Core Bond Fund,
Class A 3,929,709 40,043,732
SunAmerica Income Funds
SunAmerica GNMA Fund,
Class A 3,618,216 39,981,293
--------------
TOTAL FIXED INCOME SECURITIES
(cost $81,752,996) 80,025,025
--------------
TOTAL INVESTMENTS
(cost $402,485,805) (Note 7) 98.8% 427,591,031
Other assets less liabilities 1.2 5,229,372
----- --------------
NET ASSETS 100.0% $ 432,820,403
===== ==============
</Table>
- ----------
+ Non-income producing securities
# Note 6
See Notes to Financial Statements
31
<Page>
FOCUSED BALANCED STRATEGY PORTFOLIO
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED)
<Table>
<Caption>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- ----------------------------------------------------------------------------------------
AFFILIATED INVESTMENT COMPANIES#--99.3%
INTERNATIONAL EQUITY SECURITIES--5.9%
SunAmerica Focused Series, Inc.
Focused International Equity
Portfolio, Class A+
(cost $21,964,183) 1,488,676 $ 24,086,783
--------------
DOMESTIC EQUITY SECURITIES--58.6%
SunAmerica Focused Series, Inc.
Focused 2000 Growth Portfolio,
Class A+ 2,075,978 31,264,240
SunAmerica Focused Series, Inc.
Focused 2000 Value Portfolio,
Class A+ 2,215,494 44,509,282
SunAmerica Focused Series, Inc.
Focused Large-Cap Growth
Portfolio, Class A+ 5,168,616 87,659,736
SunAmerica Focused Series, Inc.
Focused Large-Cap Value
Portfolio, Class A 5,219,348 76,828,805
--------------
TOTAL DOMESTIC EQUITY SECURITIES
(cost $224,067,429) 240,262,063
--------------
FIXED INCOME SECURITIES--34.8%
SunAmerica Income Funds
SunAmerica Core Bond Fund,
Class A 7,214,548 73,516,244
SunAmerica Income Funds
SunAmerica GNMA Fund,
Class A 6,274,267 69,330,649
--------------
TOTAL FIXED INCOME SECURITIES
(cost $145,872,925) 142,846,893
--------------
TOTAL INVESTMENTS
(cost $391,904,537) (Note 7) 99.3% 407,195,739
Other assets less liabilities 0.7 2,696,394
----- --------------
NET ASSETS 100.0% $ 409,892,133
===== ==============
</Table>
- ----------
+ Non-income producing securities
# Note 6
See Notes to Financial Statements
32
<Page>
FOCUSED FIXED INCOME AND EQUITY STRATEGY PORTFOLIO
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED)
<Table>
<Caption>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- ----------------------------------------------------------------------------------------
AFFILIATED INVESTMENT COMPANIES#--100.0%
INTERNATIONAL EQUITY SECURITIES--4.0%
SunAmerica Focused Series, Inc.
Focused International Equity
Portfolio, Class A+
(cost $2,961,658) 206,882 $ 3,347,351
--------------
DOMESTIC EQUITY SECURITIES--29.5%
SunAmerica Focused Series, Inc.
Focused Large-Cap Growth
Portfolio, Class A+ 769,810 13,055,983
SunAmerica Focused Series, Inc.
Focused Large-Cap Value
Portfolio, Class A 780,852 11,494,139
--------------
TOTAL DOMESTIC EQUITY SECURITIES
(cost $22,738,372) 24,550,122
--------------
FIXED INCOME SECURITIES--66.5%
SunAmerica Income Funds
SunAmerica Core Bond Fund,
Class A 1,317,875 13,429,141
SunAmerica Income Funds
SunAmerica GNMA Fund,
Class A 2,048,637 22,637,442
SunAmerica Income Funds
SunAmerica High Yield
Bond Fund, Class A 1,403,231 5,907,600
SunAmerica Income Funds
SunAmerica U.S. Government
Securities Fund, Class A 1,441,332 13,404,391
--------------
TOTAL FIXED INCOME SECURITIES
(cost $56,486,900) 55,378,574
--------------
TOTAL INVESTMENTS
(cost $82,186,930) (Note 7) 100.0% 83,276,047
Liabilities in excess of other assets (0.0) (9,473)
----- --------------
NET ASSETS 100.0% $ 83,266,574
===== ==============
</Table>
- ----------
+ Non-income producing securities
# Note 6
See Notes to Financial Statements
33
<Page>
FOCUSED FIXED INCOME STRATEGY PORTFOLIO
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED)
<Table>
<Caption>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- ----------------------------------------------------------------------------------------
AFFILIATED INVESTMENT COMPANIES#--100.4%
DOMESTIC EQUITY SECURITIES--10.1%
SunAmerica Focused Series, Inc.
Focused Growth and Income
Portfolio, Class A+
(cost $2,867,252) 191,320 $ 2,973,117
--------------
FIXED INCOME SECURITIES--90.3%
SunAmerica Income Funds
SunAmerica Core Bond Fund,
Class A 582,987 5,940,636
SunAmerica Income Funds
SunAmerica GNMA Fund,
Class A 1,074,263 11,870,613
SunAmerica Income Funds
SunAmerica High Yield
Bond Fund, Class A 713,321 3,003,080
SunAmerica Income Funds
SunAmerica U.S. Government
Securities Fund, Class A 636,693 5,921,246
--------------
TOTAL FIXED INCOME SECURITIES
(cost $27,396,566) 26,735,575
--------------
TOTAL INVESTMENTS
(cost $30,263,818) (Note 7) 100.4% 29,708,692
Liabilities in excess of other assets (0.4) (111,978)
----- --------------
NET ASSETS 100.0% $ 29,596,714
===== ==============
</Table>
- ----------
+ Non-income producing securities
# Note 6
See Notes to Financial Statements
34
<Page>
FOCUSED LARGE-CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED)
<Table>
<Caption>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- ----------------------------------------------------------------------------------------
COMMON STOCK--94.3%
BROADCASTING & MEDIA--5.5%
Time Warner, Inc.+ 3,684,800 $ 61,978,336
XM Satellite Radio
Holdings, Inc., Class A+ 1,752,000 41,977,920
--------------
103,956,256
--------------
COMMUNICATION EQUIPMENT--3.8%
QUALCOMM, Inc. 1,137,987 71,078,668
--------------
COMPUTER SOFTWARE--13.5%
Electronic Arts, Inc.+ 1,548,105 78,365,075
Microsoft Corp. 4,924,500 127,889,265
PeopleSoft, Inc.+ 2,859,800 48,273,424
--------------
254,527,764
--------------
ELECTRONICS--9.9%
Intel Corp. 2,349,600 60,455,208
Sharp Corp.(1) 3,478,000 62,028,812
Texas Instruments, Inc. 2,510,000 63,001,000
--------------
185,485,020
--------------
FINANCIAL SERVICES--9.4%
Lehman Brothers
Holdings, Inc. 583,600 42,836,240
Merrill Lynch & Co., Inc. 941,600 51,062,968
SLM Corp. 2,184,197 83,676,587
--------------
177,575,795
--------------
FOOD, BEVERAGE & TOBACCO--3.1%
Coca-Cola Co. 1,161,500 58,737,055
--------------
HEALTH SERVICES--4.3%
UnitedHealth Group, Inc. 1,311,484 80,630,036
--------------
HOUSING & HOUSEHOLD DURABLES--3.8%
Lennar Corp., Class A 1,521,336 71,274,592
--------------
INSURANCE--3.5%
Berkshire Hathaway, Inc.,
Class A+ 705 65,839,950
--------------
INTERNET CONTENT--10.2%
Amazon.com, Inc.+ 706,000 30,682,760
eBay, Inc.+ 761,900 60,814,858
InterActiveCorp+ 1,970,000 62,783,900
NetFlix, Inc.+ 1,453,200 36,751,428
--------------
191,032,946
--------------
MACHINERY--3.6%
Caterpillar, Inc. 869,293 67,570,145
--------------
MEDICAL PRODUCTS--9.1%
Boston Scientific Corp.+ 2,757,144 113,566,761
Medtronic, Inc. 1,127,450 56,891,127
--------------
170,457,888
--------------
MULTI-INDUSTRY--2.9%
Tyco International, Ltd. 1,988,850 54,593,932
--------------
PHARMACEUTICALS--11.7%
Amgen, Inc.+ 911,400 51,284,478
Eli Lilly & Co. 812,500 59,970,625
Genentech, Inc.+ 886,225 108,828,430
--------------
220,083,533
--------------
TOTAL INVESTMENT SECURITIES--94.3%
(cost $1,419,862,994) 1,772,843,580
--------------
<Caption>
PRINCIPAL
AMOUNT VALUE
SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 3)
- ----------------------------------------------------------------------------------------
SHORT-TERM SECURITIES--3.1%
Federal Agricultural Mtg.
Corp. Disc. Notes
0.93% due 07/20/04 $ 2,000 $ 1,995,710
Federal Agricultural Mtg.
Corp. Disc. Notes
1.05% due 07/27/04 200 199,533
Federal Home Loan Bank
Consolidated Disc. Notes
0.90% due 06/02/04 400 399,680
Federal Home Loan Bank
Consolidated Disc. Notes
0.95% due 06/18/04 100 99,873
Federal Home Loan Bank
Consolidated Disc. Notes
0.98% due 06/04/04 100 99,907
Federal National Mtg.
Assoc. Disc. Notes
0.94% due 06/02/04 1,000 998,557
Federal National Mtg.
Assoc. Disc. Notes
0.98% due 06/23/04 1,000 999,164
Federal National Mtg.
Assoc. Disc. Notes
0.99% due 06/02/04 200 199,527
Federal National Mtg.
Assoc. Disc. Notes
1.00% due 06/23/04 500 499,264
Federal National Mtg.
Assoc. Disc. Notes
1.01% due 06/15/04 870 868,902
Federal National Mtg.
Assoc. Disc. Notes
1.04% due 07/21/04 7,000 6,984,796
Federal National Mtg.
Assoc. Disc. Notes
1.04% due 07/28/04 200 199,824
Federal Home Loan
Mtg. Disc. Notes
0.93% due 06/21/04 42,000 41,944,665
Federal Home Loan
Mtg. Disc. Notes
1.00% due 06/29/04 300 299,509
Federal Home Loan
Mtg. Disc. Notes
1.00% due 07/22/04 1,700 1,696,260
Federal Home Loan
Mtg. Disc. Notes
1.01% due 07/15/04 100 99,799
Federal Home Loan
Mtg. Disc. Notes
1.04% due 07/27/04 1,250 1,247,079
--------------
TOTAL SHORT-TERM SECURITIES
(cost $58,830,369) 58,832,049
--------------
</Table>
35
<Page>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 3)
- -----------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--2.7%
Agreement with State Street Bank & Trust Co.,
bearing interest at 0.35%, dated 04/30/04, to be
repurchased 05/03/04 in the amount of $42,493,239
and collateralized by $43,080,000 of United States
Treasury Notes, bearing interest at 2.00%, due
03/15/05 and having an approximate value of
$43,344,080 $ 42,492 $ 42,492,000
Agreement with State Street Bank & Trust Co.,
bearing interest at 0.35%, dated 04/30/04, to be
repurchased 05/03/04 in the amount of $7,354,214
and collateralized by $6,010,000 of United States
Treasury Bonds, bearing interest at 7.25%, due
05/15/16 and having an approximate value of
$7,504,988 7,354 7,354,000
---------------
TOTAL REPURCHASE AGREEMENTS
(cost $49,846,000) 49,846,000
---------------
TOTAL INVESTMENTS
(cost $1,528,539,363) (Note 7) 100.1% 1,881,521,629
Liabilities in excess of
other assets (0.1) (2,290,408)
----- ---------------
NET ASSETS 100.0% $ 1,879,231,221
===== ===============
</Table>
- ----------
+ Non-income producing securities
(1) Fair valued security (Note 3)
See Notes to Financial Statements
36
<Page>
FOCUSED MULTI-CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED)
<Table>
<Caption>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -----------------------------------------------------------------------------------------
COMMON STOCK--89.9%
AEROSPACE & MILITARY TECHNOLOGY--3.0%
United Technologies Corp. 110,000 $ 9,488,600
--------------
AUTOMOTIVE--4.7%
Advanced Auto Parts, Inc.+ 350,000 15,102,500
--------------
BANKS--2.4%
Bank of America Corp. 95,000 7,646,550
--------------
BROADCASTING & MEDIA--5.3%
Fox Entertainment Group, Inc.,
Class A+ 330,000 9,190,500
Radio One, Inc.+ 409,800 7,818,984
--------------
17,009,484
--------------
BUSINESS SERVICES--0.0%
FutureLink Corp.+(1) 1,785 0
--------------
CABLE--3.0%
Echostar Communications
Corp., Class A+ 285,000 9,459,150
--------------
COMMUNICATION EQUIPMENT--2.4%
Avaya, Inc.+ 570,000 7,797,600
--------------
COMPUTERS & BUSINESS EQUIPMENT--4.2%
Apple Computer, Inc.+ 528,000 13,585,440
--------------
COMPUTER SOFTWARE--6.2%
Cognos, Inc.+ 300,000 9,459,000
JDA Software Group, Inc.+ 787,700 10,342,501
--------------
19,801,501
--------------
ELECTRONICS--4.3%
Integrated Circuit
Systems, Inc.+ 253,800 6,012,522
Lam Research Corp.+ 350,000 7,749,000
--------------
13,761,522
--------------
FINANCIAL SERVICES--3.9%
E*TRADE Financial Corp.+ 793,800 9,017,568
SLM Corp. 90,250 3,457,478
--------------
12,475,046
--------------
FOREST PRODUCTS--3.2%
Aracruz Celulose
Sponsored ADR 325,000 10,120,500
--------------
HEALTH SERVICES--12.3%
Pediatrix Medical Group, Inc.+ 184,100 13,163,150
Triad Hospitals, Inc.+ 397,000 13,501,970
UnitedHealth Group, Inc. 204,680 12,583,726
--------------
39,248,846
--------------
HOUSEHOLD PRODUCTS--3.2%
Estee Lauder Cos., Class A 225,000 10,284,750
--------------
INTERNET CONTENT--6.1%
NetFlix, Inc.+ 404,700 10,234,863
Yahoo!, Inc.+ 185,200 9,345,192
--------------
19,580,055
--------------
MEDICAL PRODUCTS--2.8%
Guidant Corp. 140,000 8,821,400
--------------
<Caption>
SHARES/
PRINCIPAL
AMOUNT VALUE
SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 3)
- ----------------------------------------------------------------------------------------
PHARMACEUTICALS--6.3%
Celgene Corp.+ 204,120 $ 10,550,963
Pfizer, Inc. 270,000 9,655,200
--------------
20,206,163
--------------
RETAIL--8.8%
Aeropostale, Inc.+ 668,250 14,694,817
Kohl's Corp.+ 100,000 4,179,000
Wild Oats Markets, Inc.+ 685,300 9,457,140
--------------
28,330,957
--------------
TELECOMMUNICATIONS--7.8%
Amdocs, Ltd.+ 510,000 13,540,500
Nextel Communications, Inc.,
Class A+ 485,730 11,589,518
--------------
25,130,018
--------------
TOTAL INVESTMENT SECURITIES--89.9%
(cost $243,411,087) 287,850,082
--------------
SHORT-TERM SECURITIES--3.5%
Federal Home Loan Bank
Cons. Disc. Notes
0.85% due 05/03/04 $ 8,000 7,999,622
Student Loan Marketing
Disc. Notes
0.90% due 05/03/04 3,100 3,099,845
--------------
TOTAL SHORT-TERM SECURITIES
(cost $11,099,467) 11,099,467
--------------
REPURCHASE AGREEMENTS--5.2%
State Street Bank & Trust Co.
Joint Repurchase Agreement
(Note 3) 863 863,000
Agreement with State Street Bank & Trust Co.,
bearing interest at 0.25%, dated 04/30/04, to be
repurchased 05/03/04 in the amount of $15,797,329
and collateralized by $13,380,000 of United States
Treasury Bonds, bearing interest at 6.88%, due
08/15/25 and having an approximate value of
$16,118,003 15,797 15,797,000
--------------
TOTAL REPURCHASE AGREEMENTS
(cost $16,660,000) 16,660,000
--------------
TOTAL INVESTMENTS
(cost $271,170,554) (Note 7) 98.6% 315,609,549
Other assets less liabilities 1.4 4,600,183
----- --------------
NET ASSETS 100.0% $ 320,209,732
===== ==============
</Table>
- ----------
+ Non-income producing securities
ADR--American Depository Receipt
(1) Security obtained prior to Portfolio merger and change in investment
technique.
See Notes to Financial Statements
37
<Page>
FOCUSED 2000 GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED)
<Table>
<Caption>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -----------------------------------------------------------------------------------------
COMMON STOCK--95.2%
AUTOMOTIVE--1.7%
CarMax, Inc.+ 180,000 $ 4,665,600
--------------
BANKS--1.9%
Fidelity Bankshares, Inc. 80,200 2,666,650
Wintrust Financial Corp. 56,600 2,687,934
--------------
5,354,584
--------------
BROADCASTING & MEDIA--0.8%
Lin TV Corp., Class A+ 100,000 2,249,000
--------------
BUSINESS SERVICES--4.2%
Central European
Distribution Corp.+ 145,000 4,444,569
ChoicePoint, Inc.+ 160,000 7,027,200
--------------
11,471,769
--------------
EDUCATION--3.6%
Universal Technical
Institute, Inc.+ 223,600 9,947,964
--------------
ELECTRICAL EQUIPMENT--1.8%
General Cable Corp.+ 635,200 4,891,040
--------------
ELECTRONICS--6.7%
Cyberoptics Corp. 31,665 617,816
LTX Corp.+ 326,100 3,564,273
Omnivision Technologies, Inc.+ 178,000 3,969,756
Pixelworks, Inc.+ 295,210 5,278,355
Ultralife Batteries, Inc.+ 240,000 4,905,600
--------------
18,335,800
--------------
ENERGY SOURCES--5.3%
Pogo Producing Co. 100,000 4,932,000
Southwestern Energy Co.+ 194,500 4,891,675
Ultra Petroleum Corp.+ 147,700 4,850,468
--------------
14,674,143
--------------
FINANCIAL SERVICES--6.3%
Chicago Mercantile Exchange 60,000 7,038,000
Euronet Worldwide, Inc.+ 272,655 5,297,687
First Marblehead Corp.+ 99,500 2,951,170
Jeffries Group, Inc. 60,000 2,046,000
--------------
17,332,857
--------------
FOREST PRODUCTS--1.6%
Packaging Corp of America 200,500 4,406,990
--------------
HEALTH SERVICES--7.0%
AMERIGROUP Corp.+ 150,000 6,226,500
Connetics Corp.+ 253,200 4,924,740
LCA Vision, Inc.+ 225,320 5,675,811
Manor Care, Inc. 80,000 2,595,200
--------------
19,422,251
--------------
HOUSING & HOUSEHOLD DURABLES--1.5%
Furniture Brands
International, Inc. 144,100 4,054,974
--------------
INSURANCE--4.7%
Arch Capital Group, Ltd.+ 150,000 6,027,000
Axis Capital Holdings, Ltd. 250,000 6,812,500
--------------
12,839,500
--------------
INTERNET CONTENT--10.4%
aQuantive, Inc.+ 466,173 $ 4,685,039
Digitas, Inc.+ 463,100 4,589,321
Equinix, Inc.+ 150,400 4,420,256
Harris Interactive, Inc.+ 279,300 2,036,097
Modem Media, Inc.+ 763,300 3,953,894
NetFlix, Inc.+ 180,000 4,552,200
ValueClick, Inc.+ 428,400 4,438,224
--------------
28,675,031
--------------
INTERNET SOFTWARE--5.1%
eResearch Technology, Inc.+ 150,000 4,722,000
RSA Security, Inc.+ 305,800 4,898,916
WebEx Communications, Inc.+ 201,387 4,519,124
--------------
14,140,040
--------------
LEISURE & TOURISM--8.8%
Cheesecake Factory, Inc.+ 40,000 1,694,000
JetBlue Airways Corp.+ 125,000 3,460,000
Kerzner International, Ltd.+ 115,000 4,916,250
Krispy Kreme Doughnuts, Inc.+ 120,000 3,901,200
Skywest, Inc. 216,500 3,940,300
Wynn Resorts, Ltd.+ 160,000 6,388,800
--------------
24,300,550
--------------
MACHINERY--1.9%
Ceradyne, Inc.+ 184,500 5,265,630
--------------
MEDICAL PRODUCTS--5.9%
Cooper Cos., Inc. 95,500 5,157,000
Edwards Lifesciences Corp.+ 150,000 5,169,000
Kensey Nash Corp.+ 188,300 6,100,920
--------------
16,426,920
--------------
METALS & MINING--3.5%
NS Group, Inc.+ 372,800 4,805,392
Steel Dynamics, Inc.+ 202,200 4,866,954
--------------
9,672,346
--------------
PHARMACEUTICALS--3.3%
Kos Pharmaceuticals, Inc.+ 111,482 4,588,599
Martek Biosciences Corp.+ 72,758 4,619,405
--------------
9,208,004
--------------
RETAIL--2.9%
Select Comfort Corp.+ 100,000 2,424,000
Urban Outfitters, Inc.+ 120,000 5,540,400
--------------
7,964,400
--------------
TELECOMMUNICATIONS--5.3%
California Amplifier, Inc.+ 347,038 2,793,656
Carrier Access Corp.+ 413,224 4,396,703
Novatel Wireless, Inc.+ 282,658 4,166,379
UTStarcom, Inc.+ 120,000 3,162,000
--------------
14,518,738
--------------
TRANSPORTATION--1.0%
C.H. Robinson Worldwide, Inc. 70,000 2,872,800
--------------
TOTAL INVESTMENT SECURITIES--95.2%
(cost $238,697,448) 262,690,931
--------------
</Table>
38
<Page>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 3)
- ----------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--5.4%
Agreement with State Street Bank &
Trust Co., bearing interest at
0.35%, dated 04/30/04, to be
repurchased 05/03/04 in the amount
of $8,950,261 and collateralized by
$6,630,000 of United States Treasury
Bonds, bearing interest at 8.50%,
due 02/15/20 and having an
approximate value of $9,131,877 $ 8,950 $ 8,950,000
Agreement with State Street Bank &
Trust Co., bearing interest at
0.35%, dated 04/30/04, to be
repurchased 05/03/04 in the amount
of $2,674,078 and collateralized by
$2,195,000 of United States Treasury
Bonds, bearing interest at 7.25%,
due 08/15/22 and having an
approximate value of $2,729,210 2,674 2,674,000
Agreement with State Street Bank &
Trust Co., bearing interest at
0.92%, dated 04/30/04, to be
repurchased 05/03/04 in the amount
of $3,378,259 and collateralized by
$2,410,000 of United States Treasury
Bonds, bearing interest at 8.75%,
due 05/15/20 and having an
approximate value of $3,447,777 3,378 3,378,000
--------------
TOTAL REPURCHASE AGREEMENTS
(cost $15,002,000) 15,002,000
--------------
TOTAL INVESTMENTS
(cost $253,699,448) (Note 7) 100.6% 277,692,931
Liabilities in excess of
other assets (0.6) (1,570,599)
----- --------------
NET ASSETS 100.0% $ 276,122,332
===== ==============
</Table>
- ----------
+ Non-income producing securities
See Notes to Financial Statements
39
<Page>
FOCUSED LARGE-CAP VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED)
<Table>
<Caption>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -------------------------------------------------------------------------------------------------------
COMMON STOCK--92.9%
BANKS--12.1%
Bank of America Corp. 392,900 $ 31,624,521
Washington Mutual, Inc. 571,500 22,511,385
----------------
54,135,906
----------------
BROADCASTING & MEDIA--7.9%
Liberty Media Corp., Class A+ 1,262,000 13,806,280
Time Warner, Inc.+ 1,289,200 21,684,344
----------------
35,490,624
----------------
CABLE--3.6%
Comcast Corp., Class A+ 563,600 16,338,764
----------------
COMPUTERS & BUSINESS EQUIPMENT--1.6%
Hewlett-Packard Co. 356,300 7,019,110
----------------
COMPUTER SOFTWARE--3.2%
First Data Corp. 320,000 14,524,800
----------------
ELECTRONICS--5.5%
Applied Materials, Inc.+ 1,342,400 24,471,952
----------------
ENERGY SOURCES--7.1%
ConocoPhillips 204,800 14,602,240
Shell Transport & Trading Co.,
PLC Sponsored ADR 413,900 17,412,773
----------------
32,015,013
----------------
FINANCIAL SERVICES--11.7%
Fannie Mae 469,600 32,270,912
Freddie Mac 343,200 20,042,880
----------------
52,313,792
----------------
FOOD, BEVERAGE & TOBACCO--7.5%
Altria Group, Inc. 358,100 19,831,578
Anheuser-Busch Cos., Inc. 119,000 6,097,560
UST, Inc. 211,000 7,851,310
----------------
33,780,448
----------------
HEALTH SERVICES--2.6%
Quest Diagnostics, Inc. 138,020 11,641,987
----------------
MEDICAL PRODUCTS--2.9%
Baxter International, Inc. 414,700 13,125,255
----------------
MULTI-INDUSTRY--2.7%
Tyco International, Ltd. 433,400 11,896,830
----------------
PHARMACEUTICALS--15.0%
Bristol-Myers Squibb Co. 572,300 14,364,730
Medco Health Solutions Inc.+ 212,300 7,515,420
Merck & Co., Inc. 298,600 14,034,200
Pfizer, Inc. 877,000 31,361,520
----------------
67,275,870
----------------
<Caption>
SHARES/
PRINCIPAL
AMOUNT VALUE
SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 3)
- -------------------------------------------------------------------------------------------------------
RETAIL--5.7%
Gap, Inc. 620,300 $ 13,652,803
Home Depot, Inc. 334,000 11,753,460
----------------
25,406,263
----------------
TELECOMMUNICATIONS--3.8%
SBC Communications, Inc. 678,800 16,902,120
----------------
TOTAL INVESTMENT SECURITIES--92.9%
(cost $394,229,769) 416,338,734
----------------
SHORT-TERM SECURITIES--5.0%
Cayman Island Time Deposit with State Street Bank and
Trust Co. 0.50% due 05/03/04
(cost $22,198,000)@ $ 22,198 22,198,000
----------------
REPURCHASE AGREEMENTS--6.1%
UBS Warburg, LLC
Joint Repurchase Agreement
(See Note 3) 5,595 5,595,000
Agreement with State Street Bank & Trust Co., bearing
interest at 0.35%, dated 04/30/04, to be repurchased
05/03/04 in the amount of $21,589,630 and
collateralized by $15,395,000 of United States
Treasury Bonds, bearing interest at 8.75%, due
05/15/20 and having an approximate value of $22,024,287 21,589 21,589,000
----------------
TOTAL REPURCHASE AGREEMENTS
(cost $27,184,000) 27,184,000
----------------
TOTAL INVESTMENTS
(cost $443,611,769) (Note 7) 104.0% 465,720,734
Liabilities in excess of
other assets (4.0) (17,758,676)
----- ----------------
NET ASSETS 100.0% $ 447,962,058
===== ================
</Table>
- ----------
+ Non-income producing securities
ADR--American Depository Receipt
@ The security or a portion thereof represents collateral for the following
open futures contracts:
OPEN FUTURES CONTRACTS
<Table>
<Caption>
UNREALIZED
NUMBER VALUE AS OF APPRECIATION
OF CONTRACTS DESCRIPTION EXPIRATION DATE VALUE AT TRADE DATE APRIL 30, 2004 (DEPRECIATION)
- ----------------------------------------------------------------------------------------------------------------
17 Long S&P 500 June 2004 $ 4,818,038 $ 4,700,925 $ (117,113)
===========
</Table>
See Notes to Financial Statements
40
<Page>
FOCUSED MULTI-CAP VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED)
<Table>
<Caption>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -------------------------------------------------------------------------------------------------------
COMMON STOCK--96.5%
APPAREL & TEXTILES--3.4%
V. F. Corp 460,900 $ 21,275,144
----------------
AUTOMOTIVE--3.2%
AutoZone, Inc.+ 228,700 20,027,259
----------------
BANKS--8.2%
Golden West Financial Corp. 135,700 14,263,427
North Fork Bancorp., Inc. 305,300 11,332,736
SunTrust Banks, Inc. 366,200 24,919,910
----------------
50,516,073
----------------
BROADCASTING & MEDIA--6.0%
New York Times Co., Class A 547,600 25,085,556
Time Warner, Inc.+ 722,400 12,150,768
----------------
37,236,324
----------------
COMMUNICATION EQUIPMENT--2.9%
Nokia Oyj Sponsored ADR 1,287,500 18,037,875
----------------
ELECTRONICS--7.9%
AVX Corp. 1,502,800 21,324,732
Emerson Electric Co. 453,500 27,309,770
----------------
48,634,502
----------------
ENERGY SOURCES--9.2%
Devon Energy Corp. 288,900 17,680,680
Encana Corp. 428,400 16,801,848
Royal Dutch Petroleum Co. 459,900 22,378,734
----------------
56,861,262
----------------
FINANCIAL SERVICES--3.5%
CIT Group, Inc. 437,400 15,033,438
Instinet Group, Inc.+ 1,000,000 6,530,000
----------------
21,563,438
----------------
FOOD, BEVERAGE & TOBACCO--4.0%
Kraft Foods, Inc., Class A 753,700 24,804,267
----------------
INSURANCE--8.8%
Assurant, Inc.+ 500,000 12,180,000
Marsh & McLennan Cos., Inc. 646,300 29,148,130
MGIC Investment Corp. 175,900 12,949,758
----------------
54,277,888
----------------
LEISURE & TOURISM--2.2%
Outback Steakhouse, Inc. 312,100 13,710,553
----------------
MACHINERY--2.4%
Alamo Group, Inc. 897,509 14,871,724
----------------
METALS & MINING--4.6%
Martin Marietta Materials, Inc. 660,235 28,555,164
----------------
MULTI-INDUSTRY--4.7%
Hutchison Whampoa, Ltd.(1) 4,392,000 29,255,884
----------------
PHARMACEUTICALS--5.8%
Bristol-Myers Squibb Co. 830,600 20,848,060
Sankyo Co., Ltd.(1) 824,100 15,141,574
----------------
35,989,634
----------------
REAL ESTATE COMPANIES--8.9%
Forest City Enterprises, Inc.,
Class A 653,950 34,293,138
St. Joe Co. 531,600 20,838,720
----------------
55,131,858
----------------
<Caption>
SHARES/
PRINCIPAL
AMOUNT VALUE
SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 3)
- -------------------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS--4.3%
Catellus Development Corp. 1,248,966 $ 26,915,217
----------------
TELECOMMUNICATIONS--2.5%
ALLTEL Corp. 303,400 15,273,156
----------------
TRANSPORTATION--4.0%
Union Pacific Corp. 418,800 24,679,884
----------------
TOTAL INVESTMENT SECURITIES--96.5%
(cost $551,626,549) 597,617,106
----------------
REPURCHASE AGREEMENTS--4.3%
Agreement with State Street Bank & Trust Co., bearing
interest at 0.40%, dated 04/30/04, to be
repurchased 05/03/04 in the amount of $3,405,114
and collateralized by $3,400,000 of United States
Treasury Bonds, bearing interest at 5.38%, due
02/15/31 and having an approximate value of
$ 3,474,310 $ 3,405 3,405,000
Agreement with State Street Bank & Trust Co., bearing
interest at 0.40%, dated 04/30/04, to be
repurchased 05/03/04 in the amount of $415,014 and
collateralized by $390,000 of United States
Treasury Bonds, bearing interest at 6.00%, due
02/15/26 and having an approximate value of
$425,595 415 415,000
Agreement with State Street Bank & Trust Co., bearing
interest at 0.40%, dated 04/30/04, to be
repurchased 05/03/04 in the amount of $14,597,487
and collateralized by $13,890,000 of United States
Treasury Notes, bearing interest at 6.50%, due
08/15/05 and having an approximate value of
$14,892,066 14,597 14,597,000
</Table>
41
<Page>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 3)
- -------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (CONTINUED)
Agreement with State Street Bank & Trust Co., bearing
interest at 0.40%, dated 04/30/04, to be
repurchased 05/03/04 in the amount of $8,460,282
and collateralized by $7,960,000 of United States
Treasury Notes, bearing interest at 5.88%, due
11/15/05 and having an approximate value of $8,632,254 $ 8,460 $ 8,460,000
----------------
TOTAL REPURCHASE AGREEMENTS
(cost $26,877,000) 26,877,000
----------------
TOTAL INVESTMENTS
(cost $578,503,549)(Note 7) 100.8% 624,494,106
Liabilities in excess of other assets (0.8) (5,192,602)
----- ----------------
NET ASSETS 100.0% $ 619,301,504
===== ================
</Table>
- ----------
+ Non-income producing securities
(1) Fair valued security (Note 3)
ADR--American Depository Receipt
OPEN FORWARD FOREIGN CURRENCY CONTRACTS
<Table>
<Caption>
GROSS
CONTRACT IN EXCHANGE DELIVERY UNREALIZED
TO DELIVER FOR DATE (DEPRECIATION)
------------------------------------------------------------------------------
USD 9,147,872 EUR 7,726,471 05/28/2004 $ (101,705)
USD 12,136,809 EUR 10,255,360 05/28/2004 (140,173)
USD 18,578,704 EUR 15,691,937 05/28/2004 (206,556)
--------------
$ (448,434)
==============
</Table>
- ----------
EUR--Euro
USD--United States Dollar
See Notes to Financial Statements
42
<Page>
FOCUSED 2000 VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED)
<Table>
<Caption>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -------------------------------------------------------------------------------------------------------
COMMON STOCK--91.9%
APPAREL & TEXTILES--1.8%
Jones Apparel Group, Inc. 218,300 $ 7,989,780
----------------
AUTOMOTIVE--3.2%
Delphi Corp. 555,300 5,664,060
Superior Industries
International, Inc. 250,000 8,520,000
----------------
14,184,060
----------------
BANKS--3.2%
Brookline Bancorp, Inc. 450,000 6,372,000
Washington Federal, Inc. 350,000 8,176,000
----------------
14,548,000
----------------
BROADCASTING & MEDIA--3.3%
R.H. Donnelley Corp.+ 158,100 7,160,349
Valassis Communications,
Inc.+ 249,900 7,721,910
----------------
14,882,259
----------------
BUSINESS SERVICES--5.2%
BearingPoint, Inc.+ 707,900 7,093,158
Genuine Parts Co. 250,000 8,950,000
Viad Corp. 284,100 7,091,136
----------------
23,134,294
----------------
CHEMICALS--4.7%
Georgia Gulf Corp. 173,400 5,524,524
Lubrizol Corp. 250,000 7,950,000
Spartech Corp. 322,700 7,360,787
----------------
20,835,311
----------------
COMPUTER SOFTWARE--1.1%
Pinnacle Systems, Inc.+ 600,000 4,722,000
----------------
ENERGY SERVICES--4.0%
Alliant Energy Corp. 437,400 10,873,764
ENSCO International, Inc. 249,200 6,820,604
----------------
17,694,368
----------------
ENERGY SOURCES--4.6%
Forest Oil Corp.+ 250,000 6,562,500
Sunoco, Inc. 110,900 6,975,610
Tom Brown, Inc.+ 150,000 7,182,000
----------------
20,720,110
----------------
FINANCIAL SERVICES--3.5%
Apollo Investment Corp.+ 307,300 4,225,375
CIT Group, Inc. 151,000 5,189,870
Westcorp, Inc. 145,100 6,398,910
----------------
15,814,155
----------------
FOOD, BEVERAGE & TOBACCO--4.2%
American Italian Pasta Co., Class A 180,000 5,572,800
Loews Corp. - Carolina Group 211,400 5,547,136
Smithfield Foods, Inc.+ 296,500 7,886,900
----------------
19,006,836
----------------
FOREST PRODUCTS--1.6%
Rayonier, Inc. 187,838 7,325,682
----------------
HEALTH SERVICES--3.0%
Province Healthcare Co.+ 350,000 $ 5,596,500
Tenet Healthcare Corp.+ 663,300 7,800,408
----------------
13,396,908
----------------
HOUSING & HOUSEHOLD DURABLES--1.7%
Beazer Homes USA, Inc. 75,700 7,452,665
----------------
INSURANCE--9.3%
Allmerica Financial Corp.+ 220,200 7,654,152
Assured Guaranty, Ltd.+ 402,250 7,119,825
Mercury General Corp. 95,300 4,859,347
Old Republic International Corp. 310,000 7,198,200
Radian Group, Inc. 170,300 7,920,653
White Mountains Insurance Group, Ltd. 13,600 7,004,000
----------------
41,756,177
----------------
INTERNET CONTENT--1.8%
Earthlink, Inc.+ 874,800 8,056,908
----------------
INTERNET SOFTWARE--3.6%
Internet Security Systems, Inc.+ 370,000 4,917,300
Networks Associates, Inc.+ 410,785 6,441,109
Verity, Inc.+ 400,000 4,960,000
----------------
16,318,409
----------------
LEISURE & TOURISM--2.8%
AirTran Holdings, Inc.+ 361,300 4,411,473
Mandalay Resort Group 142,500 8,186,625
----------------
12,598,098
----------------
MACHINERY--2.5%
Global Power Equipment
Group, Inc.+ 675,000 4,887,000
Joy Global, Inc. 240,000 6,300,000
----------------
11,187,000
----------------
MEDICAL PRODUCTS--1.4%
Edwards Lifesciences Corp.+ 186,100 6,413,006
----------------
MULTI-INDUSTRY--1.8%
Federal Signal Corp. 435,600 7,927,920
----------------
PHARMACEUTICALS--1.7%
Express Scripts, Inc., Class A+ 100,700 7,788,138
----------------
REAL ESTATE COMPANIES--2.9%
LNR Property Corp. 114,800 5,765,256
MI Developments, Inc. 280,200 7,229,160
----------------
12,994,416
----------------
REAL ESTATE INVESTMENT TRUSTS--4.3%
American Financial Realty
Trust 430,000 6,364,000
Home Properties, Inc. 200,000 7,468,000
Ventas, Inc. 244,200 5,394,378
----------------
19,226,378
----------------
</Table>
43
<Page>
<Table>
<Caption>
SHARES/
PRINCIPAL
AMOUNT VALUE
SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 3)
- -------------------------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
RETAIL--8.1%
Big Lots, Inc.+ 450,000 $ 6,372,000
BJ's Wholesale Club, Inc.+ 311,600 7,550,068
Hollywood Entertainment Corp.+ 461,000 6,205,060
J. C. Penney Co., Inc. 281,200 9,521,432
SUPERVALU, Inc. 215,000 6,619,850
----------------
36,268,410
----------------
TELECOMMUNICATIONS--1.7%
CenturyTel, Inc. 262,200 7,572,336
----------------
TRANSPORTATION--4.9%
CSX Corp. 271,200 8,342,112
Laidlaw International, Inc.+ 500,000 6,930,000
Teekay Shipping Corp. 106,100 6,450,880
----------------
21,722,992
----------------
TOTAL INVESTMENT SECURITIES--91.9%
(cost $366,806,799) 411,536,616
----------------
SHORT-TERM SECURITIES--5.2%
Federal Home Loan Bank Cons. Disc. Notes
0.85% due 05/03/04 (cost $23,198,905) $ 23,200 23,198,905
----------------
<Caption>
PRINCIPAL
AMOUNT VALUE
SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 3)
- -------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--3.5%
Agreement with State Street Bank & Trust Co., bearing
interest at 0.35%, dated 04/30/04, to be
repurchased 05/03/04 in the amount of $8,760,690
and collateralized by $8,385,000 of United States
Treasury Notes, bearing interest at 4.63%, due
05/15/06 and having an approximate value of $8,936,314 $ 8,760 $ 8,760,434
Agreement with State Street Bank & Trust Co., bearing
interest at 0.85%, dated 04/30/04, to be
repurchased 05/03/04 in the amount of $6,719,476
and collateralized by $6,335,000 of United States
Treasury Notes, bearing interest at 5.75%, due
11/15/05 and having an approximate value of $6,855,496 6,719 6,719,000
----------------
TOTAL REPURCHASE AGREEMENTS
(cost $15,479,434) 15,479,434
----------------
TOTAL INVESTMENTS
(cost $405,485,138)(Note 7) 100.6% 450,214,955
Liabilities in excess of other
assets (0.6) (2,602,515)
----- ----------------
NET ASSETS 100.0% $ 447,612,440
===== ================
</Table>
- ----------
+ Non-income producing securities
See Notes to Financial Statements
44
<Page>
FOCUSED GROWTH AND INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED)
<Table>
<Caption>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -------------------------------------------------------------------------------------------------------
COMMON STOCK--93.6%
BANKS--2.9%
Washington Mutual, Inc. 327,500 $ 12,900,225
----------------
BROADCASTING & MEDIA--5.8%
Liberty Media Corp., Class A+ 1,049,000 11,476,060
Time Warner, Inc.+ 831,500 13,985,830
----------------
25,461,890
----------------
COMMUNICATION EQUIPMENT--4.0%
QUALCOMM, Inc. 282,908 17,670,434
----------------
COMPUTERS & BUSINESS EQUIPMENT--2.5%
Hewlett-Packard Co. 550,500 10,844,850
----------------
COMPUTER SOFTWARE--7.5%
Electronic Arts, Inc.+ 339,412 17,181,035
First Data Corp. 348,000 15,795,720
----------------
32,976,755
----------------
ELECTRONICS--6.6%
Samsung Electronics Co., Ltd. 33,000 15,557,233
Sharp Corp.(1) 763,000 13,607,816
----------------
29,165,049
----------------
ENERGY SOURCES--2.9%
Exxon Mobil Corp. 302,700 12,879,885
----------------
FINANCIAL SERVICES--12.1%
Citigroup, Inc. 280,200 13,474,818
E*TRADE Financial Corp.+ 1,063,600 12,082,496
Fannie Mae 196,700 13,517,224
SLM Corp. 360,285 13,802,518
----------------
52,877,056
----------------
FOOD, BEVERAGE & TOBACCO--1.5%
Anheuser-Busch Cos., Inc. 124,000 6,353,760
----------------
HEALTH SERVICES--4.2%
UnitedHealth Group, Inc. 297,732 18,304,563
----------------
HOUSING & HOUSEHOLD DURABLES--3.6%
Lennar Corp., Class A 333,628 15,630,472
----------------
INSURANCE--3.1%
Marsh & McLennan Cos., Inc. 304,700 13,741,970
----------------
INTERNET CONTENT--2.7%
InterActiveCorp+ 366,600 11,683,542
----------------
MACHINERY--3.4%
Caterpillar, Inc. 191,814 14,909,702
----------------
MEDICAL PRODUCTS--3.5%
Boston Scientific Corp.+ 372,608 15,347,724
----------------
PHARMACEUTICALS--14.5%
Bristol-Myers Squibb Co. 567,000 14,231,700
Genentech, Inc.+ 176,587 21,684,884
Merck & Co., Inc. 295,700 13,897,900
Pfizer, Inc. 392,300 14,028,648
----------------
63,843,132
----------------
RETAIL--6.5%
Gap, Inc. 723,000 15,913,230
Home Depot, Inc. 356,500 12,545,235
----------------
28,458,465
----------------
</Table>
<Table>
<Caption>
SHARES/
PRINCIPAL
AMOUNT VALUE
SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 3)
- -------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS--6.3%
ALLTEL Corp. 292,000 $ 14,699,280
Nextel Communications, Inc.,
Class A+ 540,000 12,884,400
----------------
27,583,680
----------------
TOTAL INVESTMENT SECURITIES--93.6%
(cost $352,662,665) 410,633,154
----------------
REPURCHASE AGREEMENTS--7.0%
Agreement with State Street Bank & Trust Co., bearing
interest at 0.35%, dated 04/30/04, to be repurchased
05/03/04 in the amount of $14,293,417 and collateralized
by $13,690,000 of United States Treasury Notes, bearing
interest at 5.50%, due 02/15/06 and having an approximate
value of $14,582,698 $ 14,293 14,293,000
Agreement with State Street Bank & Trust Co., bearing
interest at 0.35%, dated 04/30/04, to be repurchased
05/03/04 in the amount of $3,317,097 and collateralized
by $2,540,000 of United States Treasury Bonds, bearing
interest at 8.13%, due 08/15/19 and having an approximate
value of $3,383,813 3,317 3,317,000
Agreement with State Street Bank & Trust Co., bearing
interest at 0.35%, dated 04/30/04, to be repurchased
05/03/04 in the amount of $13,194,385 and collateralized
by $10,255,000 of United States Treasury Bonds, bearing
interest at 7.88%, due 02/15/21 and having an approximate
value of $13,461,041 13,194 13,194,000
----------------
TOTAL REPURCHASE AGREEMENTS
(cost $30,804,000) 30,804,000
----------------
TOTAL INVESTMENTS
(cost $383,466,665)(Note 7) 100.6% 441,437,154
Liabilities in excess of
other assets (0.6) (2,515,592)
--------------- ----------------
NET ASSETS 100.0% $ 438,921,562
=============== ================
</Table>
- ----------
+ Non-income producing securities
(1) Fair valued security (Note 3)
See Notes to Financial Statements
45
<Page>
FOCUSED INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED)
<Table>
<Caption>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -------------------------------------------------------------------------------------------------------
COMMON STOCK--94.6%
IRELAND--4.3%
Bank Of Ireland BN (Finance)(1) 618,500 $ 7,503,740
----------------
AUSTRALIA--3.7%
Australia & New Zealand Banking Group, Ltd. (Finance)(1) 482,800 6,457,811
----------------
CANADA--2.9%
Coolbrands International, Inc. (Consumer Staples)+ 301,900 4,963,252
----------------
FINLAND--2.8%
Metso Corp. (Industrial & Commercial)(1) 402,500 4,931,159
----------------
FRANCE--8.6%
Aventis SA (Healthcare)(1)+ 61,900 4,698,584
Societe Generale (Finance)(1) 66,000 5,468,449
Vivendi Universal SA (Information & Entertainment)(1)+ 191,900 4,765,988
----------------
14,933,021
----------------
GERMANY--10.5%
Pfeiffer Vacuum Technology AG (Industrial & Commercial)(1) 107,100 4,281,680
Siemens AG (Multi-industry)(1) 68,000 4,879,936
ThyssenKrupp AG (Materials)(1) 301,200 5,197,007
E.ON AG (Utilities)(1) 59,000 3,897,087
----------------
18,255,710
----------------
HUNGARY--3.6%
OTP Bank Rt. GDR (Finance)(1)+ 165,000 6,232,653
----------------
JAPAN--19.4%
Jaccs Co (Finance)(1) 1,000,000 6,181,916
Nissan Motor Co., Ltd. (Consumer Discretionary)(1) 572,300 6,280,935
Seiko Epson Corp. (Information Technology)(1) 138,100 5,350,606
Softbank Corp. (Information Technology)(1) 118,700 5,281,694
Takeda Chemical Industries, Ltd. (Healthcare)(1) 164,700 6,589,377
TDK Corp. (Information Technology)(1) 56,000 3,944,594
----------------
33,629,122
----------------
MEXICO--3.1%
Grupo Televisa SA de CV Sponsored ADR (Information &
Entertainment) 121,200 5,283,108
----------------
SPAIN--6.0%
Repsol YPF SA (Energy)(1) 244,800 5,132,254
Telefonica SA (Information Technology)(1) 361,400 5,339,611
----------------
10,471,865
----------------
SWEDEN--2.9%
Ericsson LM Telecommunications Co., Class B (Information
Technology)(1)+ 1,890,800 5,040,947
----------------
SWITZERLAND--3.3%
Novartis AG (Healthcare)(1)+ 130,100 5,779,605
----------------
</Table>
<Table>
<Caption>
SHARES/
PRINCIPAL
AMOUNT VALUE
SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 3)
- -------------------------------------------------------------------------------------------------------
UNITED KINGDOM--23.5%
Diageo, PLC (Consumer Staples)(1) 502,800 $ 6,743,912
Enodis, PLC (Industrial & Commercial)(1) 2,930,900 4,792,439
Galen Holdings PLC (Healthcare)(1) 351,600 4,970,632
GlaxoSmithKline, PLC (Healthcare)(1) 347,100 7,181,265
Kingfisher PLC (Consumer Discretionary)(1) 1,071,300 5,370,295
Royal Bank of Scotland Group, PLC (Finance)(1) 215,500 6,462,683
Vodafone Group, PLC (Information Technology)(1) 2,195,600 5,312,069
----------------
40,833,295
----------------
TOTAL INVESTMENT SECURITIES--94.6%
(cost $153,407,171) 164,315,288
----------------
SHORT-TERM SECURITIES--1.6%
Student Loan Marketing Disc. Notes 1.00% due 5/03/04
(cost $2,839,858) $ 2,840 2,839,858
----------------
REPURCHASE AGREEMENTS--2.9%
Agreement with State Street Bank & Trust Co., bearing
interest at 0.35%, dated 04/30/04, to be repurchased
05/03/04 in the amount of $3,676,107 and collateralized
by $2,625,000 of United States Treasury Bonds, bearing
interest at 8.75%, due 03/15/20 and having an approximate
value of $3,755,359 3,676 3,676,000
Agreement with State Street Bank & Trust Co., bearing
interest at 0.35%, dated 04/30/04, to be repurchased
05/03/04 in the amount of $1,277,037 and collateralized
by $1,215,000 of United States Treasury Notes, bearing
interest at 6.50%, due 08/15/05 and having an approximate
value of $1,302,654 1,277 1,277,000
----------------
TOTAL REPURCHASE AGREEMENTS
(Cost $4,953,000) 4,953,000
----------------
TOTAL INVESTMENTS
(cost $161,200,029)(Note 7) 99.1% 172,108,146
Other assets less liabilities 0.9 1,557,608
--------------- ----------------
NET ASSETS 100.0% $ 173,665,754
=============== ================
</Table>
- ----------
+ Non-income producing securities
(1) Fair valued securities (Note 3)
ADR--American Depository Receipt
GDR--Global Depository Receipt
See Notes to Financial Statements.
46
<Page>
FOCUSED TECHNOLOGY PORTFOLIO
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED)
<Table>
<Caption>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -------------------------------------------------------------------------------------------------------
COMMON STOCK--95.6%
BROADCASTING & MEDIA--6.6%
Getty Images, Inc.+ 59,500 $ 3,248,700
Time Warner, Inc.+ 168,100 2,827,442
----------------
6,076,142
----------------
COMMUNICATION EQUIPMENT--10.3%
Andrew Corp.+ 142,000 2,406,900
Avaya, Inc.+ 190,000 2,599,200
Comverse Technology, Inc.+ 135,400 2,215,144
Scientific-Atlanta, Inc. 67,000 2,170,130
----------------
9,391,374
----------------
COMPUTERS & BUSINESS EQUIPMENT--3.5%
Dell, Inc.+ 91,000 3,158,610
----------------
COMPUTER SOFTWARE--26.5%
Cisco Systems, Inc.+ 120,000 2,504,400
Cognos, Inc.+ 100,000 3,153,000
Electronic Arts, Inc.+ 61,500 3,113,130
EMC Corp.+ 230,000 2,566,800
Microsoft Corp. 69,300 1,799,721
NCR Corp.+ 95,600 4,272,364
Red Hat, Inc.+ 185,000 4,201,350
Siebel Systems, Inc.+ 259,300 2,665,604
----------------
24,276,369
----------------
EDUCATION--3.8%
Career Education Corp.+ 55,000 3,520,000
----------------
ELECTRONICS--8.5%
Flextronics International, Ltd.+ 192,000 3,091,200
Samsung Electronics Co., Ltd. GDR+* 11,510 2,707,728
Xilinx, Inc.+ 58,000 1,950,540
----------------
7,749,468
----------------
FINANCIAL SERVICES--3.4%
E*TRADE Financial Corp.+ 273,000 3,101,280
----------------
INTERNET CONTENT--20.4%
eBay, Inc.+ 45,000 3,591,900
Equinix, Inc.+ 109,000 3,203,510
HomeStore, Inc.+ 627,300 3,011,040
Sina Corp.+ 74,800 2,131,800
Yahoo!, Inc.+ 132,520 6,686,959
----------------
18,625,209
----------------
INTERNET SOFTWARE--6.5%
Networks Associates, Inc.+ 189,190 2,966,499
Symantec Corp.+ 66,000 2,973,300
----------------
5,939,799
----------------
TELECOMMUNICATIONS--6.1%
Motorola, Inc. 173,000 3,157,250
NII Holdings, Inc.+ 70,000 2,450,000
----------------
5,607,250
----------------
TOTAL INVESTMENT SECURITIES--95.6%
(cost $78,683,584) 87,445,501
----------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 3)
- -------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--4.6%
State Street Bank & Trust Co., Joint Repurchase Agreement
(See Note 3) $ 221 $ 221,000
Agreement with State Street Bank & Trust Co., bearing
interest at 0.40%, dated 04/30/04, to be repurchased
05/03/04 in the amount of $3,531,118 and collateralized
by $2,990,000 of United States Treasury Bonds, bearing
interest at 6.88%, due 08/15/25 and having an
approximate value of $3,601,856 3,531 3,531,000
Agreement with State Street Bank & Trust Co., bearing
interest at 0.40%, dated 04/30/04, to be repurchased
05/03/04 in the amount of $405,014 and collateralized by
$390,000 of United States Treasury Notes, bearing interest
at 4.63%, due 05/15/06 and having an approximate value of
$415,643 405 405,000
----------------
TOTAL REPURCHASE AGREEMENTS
(cost $4,157,000) 4,157,000
----------------
TOTAL INVESTMENTS
(cost $82,840,584)(Note 7) 100.2% 91,602,501
Liabilities in excess of other assets (0.2) (170,787)
----- ----------------
NET ASSETS 100.0% $ 91,431,714
===== ================
</Table>
- ----------
+ Non-income producing securities
* Securities exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from registration,
normally to qualified institutional buyers. At April 30, 2004, the aggregate
value of these securities was $2,707,728, representing 3.0% of net assets.
GDR--Global Depository Receipt
See Notes to Financial Statements
47
<Page>
FOCUSED DIVIDEND STRATEGY PORTFOLIO
PORTFOLIO OF INVESTMENTS -- APRIL 30, 2004 (UNAUDITED)
<Table>
<Caption>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
- -------------------------------------------------------------------------------------------------------
COMMON STOCK--99.7%
AUTOMOTIVE--5.9%
General Motors Corp. 133,578 $ 6,334,269
Johnson Controls, Inc. 124,131 6,809,827
----------------
13,144,096
----------------
BUSINESS SERVICES--10.8%
Avery Dennison Corp. 128,735 8,268,649
Bemis Co., Inc. 290,962 7,858,884
Genuine Parts Co. 216,502 7,750,771
----------------
23,878,304
----------------
CHEMICALS--6.0%
du pont (E.I.) de Nemours & Co. 156,318 6,713,858
Rohm and Haas Co. 168,231 6,523,998
----------------
13,237,856
----------------
COMPUTER SOFTWARE--3.6%
Automatic Data Processing, Inc. 182,523 7,996,333
----------------
CONGLOMERATE--3.2%
General Electric Co. 232,854 6,973,977
----------------
ELECTRONICS--3.0%
Emerson Electric Co. 110,365 6,646,180
----------------
ENERGY SOURCES--3.4%
Exxon Mobil Corp. 175,841 7,482,035
----------------
FINANCIAL SERVICES--6.5%
Citigroup, Inc. 147,700 7,102,893
J.P. Morgan Chase & Co. 195,444 7,348,694
----------------
14,451,587
----------------
FOOD, BEVERAGE & TOBACCO--20.6%
Altria Group, Inc. 132,391 7,331,813
Anheuser-Busch Cos., Inc. 136,690 7,003,996
Brown-Forman Corp., Class B 153,236 7,180,639
ConAgra Foods, Inc. 272,818 7,881,712
McCormick & Co., Inc. 241,419 8,246,873
Wm. Wrigley Jr. Co. 128,651 7,937,767
----------------
45,582,800
----------------
HOUSEHOLD PRODUCTS--7.2%
Clorox Co. 147,120 7,617,874
Colgate-Palmolive Co. 143,317 8,295,188
----------------
15,913,062
----------------
MEDICAL PRODUCTS--4.0%
Becton Dickinson & Co. 172,576 8,723,717
----------------
PHARMACEUTICALS--12.6%
Abbott Laboratories 153,599 6,761,428
Bristol-Myers Squibb Co. 251,699 6,317,645
Merck & Co., Inc. 157,211 7,388,917
Pfizer, Inc. 203,969 7,293,931
----------------
27,761,921
----------------
RETAIL STORES--7.0%
Albertson's, Inc. 318,496 7,440,066
Sherwin-Williams Co. 209,097 7,956,141
----------------
15,396,207
----------------
</Table>
<Table>
<Caption>
SHARES/
PRINCIPAL
AMOUNT VALUE
SECURITY DESCRIPTION (IN THOUSANDS) (NOTE 3)
- -------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS--5.9%
AT&T Corp 357,134 $ 6,124,848
SBC Communications, Inc. 274,496 6,834,951
----------------
12,959,799
----------------
TOTAL INVESTMENT SECURITIES--99.7%
(cost $202,101,088) 220,147,874
----------------
REPURCHASE AGREEMENTS--0.6%
State Street Bank & Trust Co. Joint Repurchase Agreement
(Note 3)(cost $1,402,000) $ 1,402 1,402,000
----------------
TOTAL INVESTMENTS
(cost $203,503,088)(Note 7) 100.3% 221,549,874
Liabilities in excess of other assets (0.3) (580,067)
--------------- ----------------
NET ASSETS 100.0% $ 220,969,807
=============== ================
</Table>
See Notes to Financial Statements
48
<Page>
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2004 (UNAUDITED)
NOTE 1. ORGANIZATION
SunAmerica Focused Series, Inc., formerly SunAmerica Style Select, Inc. (the
"Fund"), is an open-end management investment company organized as a Maryland
corporation on July 3, 1996. The Fund is managed by AIG SunAmerica Asset
Management Corp. ("SunAmerica"), an indirect wholly-owned subsidiary of American
International Group, Inc. ("AIG"). The Fund issues separate series of shares
(each, a "Portfolio"). The assets of each Portfolio are normally allocated among
at least three investment advisors (each, an "Advisor"), each of which will be
independently responsible for advising its respective portion of the Portfolio's
assets.
Effective November 8, 2002, the following Asset Allocation Strategy Portfolios
("Strategy Portfolios") were added to the Fund: Focused Equity Strategy, Focused
Multi-Asset Strategy, Focused Balanced Strategy, Focused Fixed Income and Equity
Strategy, and Focused Fixed Income Strategy.
The investment objective for each of the Portfolios is as follows:
FOCUSED EQUITY STRATEGY PORTFOLIO seeks growth of capital through allocation of
assets among a combination of funds within SunAmerica Focused Series, Inc. and
SunAmerica Income Funds, investing in equity and fixed income securities. Under
normal market conditions this Portfolio invests 80% - 100% in domestic equity
mutual funds, up to 20% in foreign equity mutual funds and up to 5% in bond
funds.
FOCUSED MULTI-ASSET STRATEGY PORTFOLIO seeks growth of capital through
allocation of assets among a combination of funds within SunAmerica Focused
Series, Inc. and SunAmerica Income Funds, investing in equity and fixed income
securities. Under normal market conditions this Portfolio invests 70% in
domestic equity mutual funds, 10% in foreign equity mutual funds and 20% in bond
funds.
FOCUSED BALANCED STRATEGY PORTFOLIO seeks growth of capital and conservation of
principal through allocation of assets among a combination of funds within
SunAmerica Focused Series, Inc. and SunAmerica Income Funds, investing in equity
and fixed income securities. Under normal market conditions this Portfolio
invests 35% - 75% in domestic equity mutual funds, up to 15% in foreign equity
mutual funds and 25% - 50% in bond funds.
FOCUSED FIXED INCOME AND EQUITY STRATEGY PORTFOLIO seeks current income with
growth of capital as a secondary objective through allocation of assets among a
combination of funds within SunAmerica Focused Series, Inc. and SunAmerica
Income Funds, investing in equity and fixed income securities. Under normal
market conditions this Portfolio invests 15% - 50% in domestic equity mutual
funds, up to 10% in foreign equity mutual funds and 50% - 80% in bond funds.
FOCUSED FIXED INCOME STRATEGY PORTFOLIO seeks current income through allocation
of assets among a combination of funds within SunAmerica Focused Series, Inc.
and SunAmerica Income Funds, investing in equity and fixed income securities.
Under normal market conditions this Portfolio invests up to 20% in domestic
equity mutual funds, up to 5% in foreign equity mutual funds and 80% - 100% in
bond funds.
FOCUSED LARGE-CAP GROWTH PORTFOLIO seeks long-term growth of capital through
active trading of equity securities selected on the basis of growth criteria. At
least 80% of the Portfolio's net assets plus any borrowing for investment
purposes will be invested in large-cap companies.
FOCUSED MULTI-CAP GROWTH PORTFOLIO seeks long-term growth of capital through
active trading of equity securities selected on the basis of growth criteria,
without regard to market capitalization.
FOCUSED 2000 GROWTH PORTFOLIO seeks long-term growth of capital through active
trading of equity securities selected on the basis of growth criteria, issued by
companies with characteristics similar to those contained in the Russell 2000
Growth Index.
49
<Page>
FOCUSED LARGE-CAP VALUE PORTFOLIO seeks long-term growth of capital through
active trading of equity securities selected on the basis of value criteria. At
least 80% of the Portfolio's net assets plus any borrowing for investment
purposes will be invested in large-cap companies.
FOCUSED MULTI-CAP VALUE PORTFOLIO seeks long-term growth of capital through
active trading of equity securities selected on the basis of value criteria,
without regard to market capitalization.
FOCUSED 2000 VALUE PORTFOLIO seeks long-term growth of capital through active
trading of equity securities selected on the basis of value criteria, issued by
companies with characteristics similar to those contained in the Russell 2000
Value Index.
FOCUSED GROWTH AND INCOME PORTFOLIO seeks long-term growth of capital and
current income through active trading of equity securities selected to achieve a
blend of growth companies, value companies and companies that the Advisors
believe have elements of growth and value, issued by large-cap companies,
including those that offer the potential for a reasonable level of current
income. Each Advisor may emphasize either a growth orientation or a value
orientation at any particular time.
FOCUSED INTERNATIONAL EQUITY PORTFOLIO seeks long-term growth of capital through
active trading of equity securities and other securities with equity
characteristics of non-U.S. issuers located in countries throughout the world
and selected without regard to market capitalization at the time of purchase. At
least 80% of the Portfolio's net assets plus any borrowing for investment
purposes will be invested in equity securities.
FOCUSED TECHNOLOGY PORTFOLIO seeks long-term growth of capital through active
trading of equity securities of companies that demonstrate the potential for
long-term growth of capital and that the Advisors believe will benefit
significantly from technological advances or improvements, without regard to
market capitalization. At least 80% of the Portfolio's net assets plus any
borrowing for investment purposes will be invested in such securities.
FOCUSED DIVIDEND STRATEGY PORTFOLIO seeks total return (including capital
appreciation and current income) by employing a "buy and hold" strategy with
thirty high dividend yielding equity securities selected annually from the Dow
Jones Industrial Average and the broader market.
The Strategy Portfolios invest in various SunAmerica mutual funds, some of which
are not presented in this report. Additional information on the underlying funds
is available at our website, www.sunamericafunds.com.
CLASSES OF SHARES: Each Portfolio offers multiple classes of shares. The classes
within each Portfolio are presented in the Statement of Assets and Liabilities.
The cost structure for each class is as follows:
Class A shares-- Offered at net asset value per share plus an initial sales
charge. Any purchases of Class A shares in excess of
$1,000,000 will be subject to a contingent deferred sales
charge on redemptions made within two years of purchase. With
respect to Class A shares of the Focused International Equity
Portfolio, a redemption fee of 2% will be assessed on the
proceeds of any redemption of shares that were purchased
within ninety (90) days prior to the date of such redemption.
An exchange fee of 2% will be assessed on the amount of any
exchange of Class A shares of the Focused International
Equity Portfolio that were purchased within ninety (90) days
prior to the date of such exchange.
Class B shares-- Offered at net asset value per share without an initial sales
charge, although a declining contingent deferred sales charge
may be imposed on redemptions made within six years of
purchase. Class B shares will convert automatically to Class
A shares on the first business day of the month after eight
years from the issuance of such shares and at such time will
be subject to the lower distribution fee applicable to Class
A shares.
Class C shares-- Offered at net asset value per share without an initial sales
charge and may be subject to a contingent deferred sales
charge on redemptions made within 12 months of purchase.
Effective February 23, 2004, Class II shares were
redesignated as Class C shares.
50
<Page>
Class I shares-- Offered at net asset value per share exclusively for sale to
certain institutions.
Class X shares-- Offered at net asset value per share exclusively to certain
group plans.
Class Z shares-- Offered at net asset value per share exclusively for sale to
SunAmerica affiliated companies' retirement plans.
As of August 1, 2003, Class Z shares of Focused Multi-Cap Growth Portfolio,
Focused Large-Cap Value Portfolio, Focused 2000 Value Portfolio, Focused Growth
and Income Portfolio and Focused Technology Portfolio are no longer being
offered for sale.
As of February 23, 2004, Class I shares of the Multi-Cap Value Fund are no
longer being offered for sale.
Each class of shares bears the same voting, dividend, liquidation and other
rights and conditions. Class A, Class B and Class C shares each make
distribution and account maintenance and service fee payments under the
distribution plans pursuant to Rule 12b-1 under the Investment Company Act of
1940 (the "Act"), except that Class B and Class C shares are subject to higher
distribution fee rates. There are no distribution payments applicable to Class I
and no distribution or service fee payments applicable to Class X and Class Z.
Only Class B shares and Class C shares of the Strategy Portfolios make
distribution fee payments.
INDEMNIFICATION: Under the Fund's organizational documents, its officers and
directors are indemnified against certain liability arising out of the
performance of their duties to the Fund. In addition, in the normal course of
business the Fund enters into contracts that contain a variety of
representations and warranties, which provide general indemnification. The
Fund's maximum exposure under these arrangements is unknown as this would
involve future claims that may be made against the Fund that have not yet
occurred. However, the Fund expects the risk of loss to be remote.
NOTE 2. FUND MERGERS
Pursuant to a plan of reorganization approved by the shareholders of the
SunAmerica Strategic Investment Series, Inc. SunAmerica Aggressive Growth
LifeStage Fund, SunAmerica Moderate Growth LifeStage Fund, SunAmerica
Conservative Growth LifeStage Fund and SunAmerica Equity Funds Focused Dividend
Strategy Portfolio (referred to herein as the "Prior Focused Dividend Strategy
Portfolio) on January 30, 2004 all the assets and liabilities of the determined
SunAmerica Strategic Investment Series, Inc. and SunAmerica Equity Funds were
transferred in a tax-free exchange to a determined SunAmerica Focused Series,
Inc. Portfolio. Except for the Focused Dividend Strategy Portfolio, the
SunAmerica Focused Portfolios are the surviving entities in conjunction with the
reorganizations. The Focused Dividend Strategy Portfolio adopted the prior
financial and performance record of the prior Focused Dividend Strategy
Portfolio. The details of the reorganizations, which were consummated on
February 23, 2004, are set forth below.
The Focused Equity Strategy Portfolio acquired all of the assets and liabilities
of the SunAmerica Aggressive Growth LifeStage Fund. Class A, Class B, Class C
and Class I shares of the SunAmerica Aggressive Growth LifeStage Fund were
exchanged, tax free for Class A, Class B, Class C and Class I shares of Focused
Equity Strategy Portfolio, respectively. The Focused Balanced Strategy Portfolio
acquired all of the assets and liabilities of the SunAmerica Moderate Growth
LifeStage Fund and the SunAmerica Conservative Growth LifeStage Fund. Class A,
Class B, Class C and Class I shares of the SunAmerica Moderate Growth LifeStage
Fund and SunAmerica Conservative Growth Lifestage Fund were exchanged, tax free
for Class A, Class B, Class C and Class I shares of Focused Balanced Strategy
Portfolio, respectively.
51
<Page>
Net assets and unrealized appreciation (depreciation) as of the merger date were
as follows:
<Table>
Net assets of Focused Equity Strategy Portfolio prior to merger $ 354,084,991
Net assets of SunAmerica Aggressive Growth LifeStage Fund prior to merger $ 26,230,199
-------------
Aggregate net assets of Focused Equity Strategy Portfolio following acquisition $ 380,315,190
-------------
Unrealized appreciation (depreciation) in SunAmerica Aggressive Growth LifeStage Fund --
Net assets of Focused Balanced Strategy Portfolio prior to merger $ 307,179,095
Net assets of SunAmerica Moderate Growth LifeStage Fund prior to merger $ 40,081,061
Net assets of SunAmerica Conservative Growth LifeStage Fund prior to merger $ 24,946,412
-------------
Aggregate net assets of Focused Balanced Strategy Portfolio following acquisition $ 372,206,568
-------------
Unrealized appreciation (depreciation)in SunAmerica Moderate Growth LifeStage Fund --
Unrealized appreciation (depreciation)in SunAmerica Conservative Growth LifeStage Fund $ 188,747
</Table>
Effective February 23, 2004, the SunAmerica Equity Funds Focused Dividend
Strategy Portfolio was reorganized into SunAmerica Focused Series, Inc. Focused
Dividend Strategy Portfolio, a newly created Portfolio in the SunAmerica Focused
Series, Inc. The Focused Dividend Strategy Portfolio changed its fiscal year end
from September 30 to October 31.
NOTE 3. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from these estimates. The
following is a summary of the significant accounting policies followed by the
Portfolios in the preparation of their financial statements:
SECURITY VALUATIONS: Stocks are generally valued based upon closing sales prices
reported on recognized securities exchanges. Securities listed on the NASDAQ
exchange are valued using the NASDAQ Official Closing Price ("NOCP"). Generally,
the NOCP will be the last sale price unless the reported trade for the
securities is outside the range of the bid/ask price. In such cases, the NOCP
will be normalized to the nearer of the bid or ask price. For listed securities
having no sales reported and for unlisted securities, such securities will be
valued based upon the last reported bid price. Nonconvertible bonds, debentures,
other long-term debt securities, and short-term securities with original or
remaining maturities in excess of 60 days are valued at prices obtained for the
day of valuation from a bond pricing service of a major dealer in bonds when
such prices are available; however, in circumstances where the investment
adviser deems it appropriate to do so, an over-the-counter or exchange quotation
at the mean of representative bid or asked prices may be used. The investments
of the Strategy Portfolios and other mutual funds held are valued at the closing
net asset value per share of each underlying Fund. Options traded on national
securities exchanges are valued as of the close of the exchange on which they
are traded. As of the close of regular trading on the New York Stock Exchange,
securities traded primarily on securities exchanges outside the United States
are valued at the last sale price on such exchanges on the day of valuation, or
if there is no sale on the day of valuation, at the last-reported bid price.
However, depending on the foreign market, closing prices may be up to 15 hours
old when they are used to price the Fund's shares, and the Fund may determine
that certain closing prices are unreliable. This determination will be based on
review of a number of factors, including developments in foreign markets, the
performance of U.S. securities markets, and the performance of instruments
trading in U.S. markets that represent foreign securities and baskets of foreign
securities. If the Fund determines that closing prices do not reflect the fair
value of the securities, the Fund will adjust the previous closing prices in
accordance with pricing procedures approved by the Board of Directors to reflect
what it believes to be the fair value of the securities as of the close of
regular trading on the New York Stock Exchange. A Fund may also fair value
securities in other situations, for example, when a particular foreign market is
closed but the Fund is open. For equity securities, the Fund uses an outsides
pricing service to provide it with closing market prices and information used
for adjusting those prices. Futures contracts and options traded on national
securities exchanges are valued as of the close of the exchange on which they
are traded. Short-term securities with 60 days or less to maturity are amortized
to maturity based on their cost to the Fund if acquired within 60 days of
maturity or, if already held by the Fund on the 60th day, are amortized to
maturity based on the value determined on the 61st day.
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<Page>
REPURCHASE AGREEMENTS: Pursuant to exemptive relief granted by the Securities
and Exchange Commission, the Portfolios are permitted to participate in joint
repurchase agreement transactions with other affiliated investment companies.
The Portfolios, along with other affiliated registered investment companies,
transfer uninvested cash balances into a single joint account, the daily
aggregate balance of which is invested in one or more repurchase agreements
collateralized by U.S. Treasury or federal agency obligations. The Portfolios'
custodian takes possession of the collateral pledged for investments in
repurchase agreements. The underlying collateral is valued daily on a mark to
market basis to ensure that the value, including accrued interest, is at least
102% of the repurchase price. In the event of default of the obligation to
repurchase, a Portfolio 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
Portfolio may be delayed or limited.
As of April 30, 2004, the following Portfolios held an undivided interest in a
joint repurchase agreement with State Street Bank & Trust Co.:
<Table>
<Caption>
PERCENTAGE PRINCIPAL
PORTFOLIO INTEREST AMOUNT
- --------- ------------ ------------
Focused Multi-Cap Growth Portfolio 0.80% $ 863,000
Focused Technology Portfolio 0.20 221,000
Focused Dividend Strategy Portfolio 1.30 1,402,000
</Table>
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
State Street Bank & Trust Co., dated April 30, 2004, bearing interest at a rate
of 0.88% per annum, with a principal amount of $107,969,000, a repurchase price
of $107,976,918 and a maturity date of May 3, 2004. The repurchase agreement is
collateralized by the following:
<Table>
<Caption>
INTEREST RATE/ MATURITY PRINCIPAL MARKET
TYPE OF COLLATERAL DISCOUNT YIELD DATE AMOUNT VALUE
- --------------------------------------------------------- -------------- -------- ------------ ------------
U.S. Treasury Note 10.38% 11/15/09 $ 7,440,000 $ 8,133,594
U.S. Treasury Note 1.88 12/31/05 20,365,000 20,402,838
U.S. Treasury Bill 2.00 11/30/04 60,450,000 61,207,137
U.S. Treasury Note 1.88 12/31/05 20,365,000 20,402,838
</Table>
In addition, at April 30, 2004, the following Portfolio held an undivided
interest in a joint repurchase aggreement with UBS Warburg, LLC:
<Table>
<Caption>
PERCENTAGE PRINCIPAL
INTEREST AMOUNT
------------ ------------
Focused Large-Cap Value Portfolio 3.65% $ 5,595,000
</Table>
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
UBS Warburg, LLC, dated April 30, 2004, bearing interest at a rate of 0.92% per
annum, with a principal amount of $153,145,000 a repurchase price of
$153,156,741, and a maturity date of May 3, 2004. The repurchase agreement is
collateralized by the following:
<Table>
<Caption>
MATURITY PRINCIPAL MARKET
TYPE OF COLLATERAL INTEREST RATE DATE AMOUNT VALUE
- --------------------------------------------------------- -------------- -------- ------------ ------------
U.S. Treasury Bond 8.13% 08/15/21 $ 50,000,000 $ 67,151,786
U.S. Treasury Bond 7.13 02/15/23 50,000,000 61,450,893
U.S. Treasury Bond 7.50 11/15/24 21,178,000 27,687,940
</Table>
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
53
<Page>
the identified cost basis. Interest income is recorded on the accrual basis;
dividend income is recorded on the ex-dividend date except for certain dividends
from foreign securities, which are recorded as soon as the Portfolio is informed
after ex-dividend date. The Strategy Portfolios invest in a combination of AIG
SunAmerica Mutual Funds including Funds investing in fixed income securities.
Distributions from income from underlying funds, if any, are recorded to income
on ex-dividend date. Distributions from net realized capital gains from
underlying funds, if any, are recorded to realized gains on ex-dividend date.
For financial statement purposes, the Fund amortizes all premiums and accrete
all discounts on fixed income securities. Portfolios investing in foreign
securities may be subject to taxes imposed by countries in which they invest.
Such taxes are generally based on either income or capital gains earned or
repatriated.
Net investment income, other than class specific expenses, and realized and
unrealized gains and losses, are allocated daily to each class of shares based
upon the relative net asset value of outstanding shares (or the value of the
dividend-eligible shares, as appropriate) of each class of shares at the
beginning of the day (after adjusting for the current capital shares activity of
the respective class).
Expenses common to all Portfolios, not directly related to individual
Portfolios, are allocated among the Portfolios based upon their relative net
asset value or other appropriate methods. In all respects, expenses are charged
to each Portfolio 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. For the Strategy Portfolios, the expenses included
in the accompanying financial statements reflect the expenses of the Strategy
Portfolios and do not include indirect expenses borne by each Strategy Portfolio
in connection with its investment in the underlying Funds.
Dividends from net investment income, if any, are normally paid quarterly for
the Focused Balanced Strategy Portfolio, Focused Fixed Income and Equity
Strategy Portfolio, Focused Fixed Income Strategy Portfolio, Focused Growth and
Income Portfolio and Focused Dividend Strategy Portfolio. All other Portfolios
pay annually. Capital gain distributions, if any, are paid annually. Each of the
Strategy Portfolios reserve the right to declare and pay dividends less
frequently than disclosed above, provided that the net realized capital gains
and net investment income, if any, are paid at least annually. The Portfolios
record dividends and distributions to their shareholders on the ex-dividend
date. The amount of dividends and distributions from net investment income and
net realized capital gains are determined and presented in accordance with
federal income tax regulations, which may differ from accounting principles
generally accepted in the United States of America. These "book/tax" differences
are either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts at fiscal year end based on their federal tax-basis treatment;
temporary differences do not require reclassification. Net investment income
(loss), net realized gain (loss), and net assets are not affected by these
reclassifications.
The Portfolios 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 Portfolio
is considered a separate entity for tax purposes.
FOREIGN CURRENCY TRANSLATION: The books and records of the Fund are maintained
in U.S. dollars. Assets and liabilities denominated in foreign currencies and
commitments under forward foreign currency contracts are translated into U.S.
dollars based on the exchange rate of such currencies against U.S. dollars on
the date of the valuation.
The Fund does not isolate that portion of the results of operations arising as a
result of changes in the foreign exchange rates from the changes in the market
prices of securities held at fiscal year-end. Similarly, the Fund does not
isolate the effect of changes in foreign exchange rates from the changes in the
market prices of Portfolio securities sold during the year.
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<Page>
Realized foreign exchange gains and losses on other assets and liabilities and
change in unrealized foreign exchange gains and losses on other assets and
liabilities include foreign exchange gains and losses from currency gains or
losses between the trade and settlement dates of securities transactions, the
difference between the amounts of interest, dividends and foreign withholding
taxes recorded on a Portfolio's books and the U.S. dollar equivalent amounts
actually received or paid and changes in the unrealized foreign exchange gains
and losses relating to other assets and liabilities arising as a result of
changes in the exchange rate.
FORWARD FOREIGN CURRENCY CONTRACTS: Certain Portfolios may enter into forward
foreign currency contracts ("forward contracts") to attempt to protect
securities and related receivables and payables against changes in future
foreign exchange rates or to enhance return. A forward contract is an agreement
between two parties to buy or sell currency at a set price on a future date. The
market value of the contract will fluctuate with changes in currency exchange
rates. The contract is marked to market daily using the forward rate and the
change in market value is recorded by the Portfolio as an unrealized gain or
loss. On settlement date, the Portfolio records realized foreign exchange gains
or losses when the contract is closed equal to the difference between the value
of the contract at the time it was opened and the value at the time it was
closed. Risks may arise upon entering into these contracts from the potential
inability of counter-parties to meet the terms of their contracts and from
unanticipated movements in the value of a foreign currency relative to the U.S.
dollar. Forward contracts involve elements of risk in excess of the amounts
reflected in the Statement of Assets and Liabilities. The Fund bears the risk of
an unfavorable change in the foreign exchange rate underlying the forward
contract.
FUTURES CONTRACTS: A futures contract is an agreement between two parties to buy
and sell a financial instrument at a set price on a future date. Upon entering
into such a contract the Portfolios are required to pledge to the broker an
amount of cash or U.S. government securities equal to the minimum "initial
margin" requirements of the exchange on which the futures contract is traded.
The Portfolios' activities in futures contracts are for hedging purposes and are
conducted through regulated exchanges that do not result in counter-party credit
risks. A Portfolio's participation in the futures markets involves certain
risks, including imperfect correlation between movements in the price of futures
contracts and movements in the price of the securities hedged or used for cover.
Pursuant to a contract the Portfolios agree to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the contract. Such
receipts or payments are known as "variation margin" and are recorded by the
Portfolios as unrealized appreciation or depreciation. Futures contracts involve
elements of risk in excess of the amount reflected in the Statement of Assets
and Liabilities. When a contract is closed, the Portfolios record a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
OPTIONS: An option is a contract conveying a right to buy or sell a financial
instrument at a specified price during a stipulated period. The premium paid by
a Portfolio for the purchase of a call or a put option is included in the
Portfolio's Statement of Assets and Liabilities as an investment and
subsequently marked to market to reflect the current market value of the option.
When a Portfolio writes a call or a put option, an amount equal to the premium
received by the Portfolio is included in the Portfolio's Statement of Assets and
Liabilities as a liability and is subsequently marked to market to reflect the
current market value of the option written. If an option which the Portfolio has
written either expires on its stipulated expiration date, or if the Portfolio
enters into a closing purchase transaction the Portfolio realizes a gain (or
loss if the cost of a closing purchase transaction exceeds the premium received
when the option was written) without regard to any unrealized gain or loss on
the underlying security, and the liability related to such option is
extinguished. If a call option which the Portfolio has written is exercised, the
Portfolio realizes a capital gain or loss from the sale of the underlying
security and the proceeds from such sale are increased by the premium originally
received. If a put option which the Portfolio has written is exercised, the
amount of the premium originally received reduces the cost basis of the security
which the Portfolio purchased upon exercise of the option.
55
<Page>
For the period ended April 30, 2004, transactions in written option contracts
were as follows:
<Table>
<Caption>
FOCUSED MULTI-CAP GROWTH FOCUSED TECHNOLOGY
PORTFOLIO PORTFOLIO
--------------------------- ---------------------------
CONTRACTS AMOUNT CONTRACTS AMOUNT
------------ ------------ ------------ ------------
Written option contracts as of 10/31/03 -- $ -- -- $ --
Options written during the period (4,220) (868,876) (1,880) (401,862)
Written options closed during the period 4,220 900,915 1,880 342,764
Net realized gain (loss) on written options closed -- (32,039) -- 59,098
------------ ------------ ------------ ------------
Written option contracts as of 04/30/04 -- -- -- --
============ ============ ============ ============
</Table>
NOTE 4. INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT, DISTRIBUTION AGREEMENT AND
SERVICE AGREEMENT
The Fund, on behalf of each Portfolio, has entered into an Investment Advisory
and Management Agreement (the "Agreement") with SunAmerica. Under the Agreement,
SunAmerica provides continuous supervision of the respective Portfolios and
administers their corporate affairs, subject to general review by the Board of
Directors. In connection therewith, SunAmerica furnishes the Fund with office
facilities, maintains certain of the Fund's books and records, and pays for the
salaries and expenses of all personnel, including officers of the Fund who are
employees of SunAmerica and its affiliates. The annual rate of the investment
advisory and management fee payable by each Portfolio to SunAmerica as full
compensation for services and facilities furnished to the Fund is as follows:
1.00% of the average daily net assets of the Focused Multi-Cap Growth, Focused
2000 Growth, Focused Large-Cap Value, Focused Multi-Cap Value, Focused 2000
Value, Focused Growth and Income Portfolios; 0.85% of the average daily net
assets of the Focused Large-Cap Growth Portfolio; 1.25% of the average daily net
assets of the Focused International Equity Portfolio and the Focused Technology
Portfolio; 0.75% of the daily net assets of the Focused Dividend Strategy
Portfolio; and 0.10% for the Strategy Portfolios.
Except for the Strategy Portfolios which are advised by SunAmerica, the
organizations described below act as Investment Advisors to the Fund, pursuant
to Subadvisory Agreements with SunAmerica. Under the Subadvisory Agreements, the
Subadvisors manage the investment and reinvestment of the assets of the
respective Portfolios for which they are responsible. Each of the following
Subadvisors are independent of SunAmerica (with the exception of the Focused
Multi-Cap Growth and Focused Technology for which SunAmerica acts as an Advisor)
and discharges its responsibilities subject to the policies of the Board of
Directors and the oversight and supervision of SunAmerica, which pays the
Subadvisors' fees.
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<Page>
Focused Large-Cap Growth Portfolio
Fred Alger Management, Inc.
Salomon Brothers Asset Management, Inc.
Marsico Capital Management LLC
Focused Multi-Cap Growth Portfolio
Credit Suisse Asset Management, LLC
Janus Capital Management LLC
AIG SunAmerica Asset Management Corp.
Focused 2000 Growth Portfolio
BAMCO, Inc.
Deutsche Asset Management, Inc.
Oberweis Asset Management, Inc.
Focused Large-Cap Value Portfolio
Dreman Value Management, LLC
Harris Associates L.P.
Wellington Management Company LLP
Focused Multi-Cap Value Portfolio
American Century Investment Management, Inc.
Third Avenue Management, LLC
JP Morgan Fleming Asset Management, Inc.
Focused 2000 Value Portfolio
Janus Capital Management LLC (subcontracted
to Perkins, Wolf, McDonnell & Company)
Hotchkis and Wiley Capital Management, Inc.
Boston Partners Asset Management L.P.
Focused Growth and Income Portfolio
Thornburg Investment Management, Inc.
Marsico Capital Management, LLC
Harris Associates L.P.
Focused International Equity Portfolio
Massachusetts Financial Services Company
Harris Associates L.P.
The Boston Company Asset Management, LLC
Focused Technology Portfolio
Dresdner RCM Global Investors LLC
AIG SunAmerica Asset Management Corp.
BAMCO, Inc.
Each Advisor is paid monthly by SunAmerica a fee equal to a percentage of the
average daily net assets of the Portfolio allocated to the Advisor. For the six
months ended April 30, 2004, SunAmerica paid the Advisors for each Portfolio the
following, expressed as an annual percentage of the average daily net assets of
each Portfolio:
<Table>
<Caption>
PORTFOLIO
- ---------
Focused Large-Cap Growth 0.40%
Focused Multi-Cap Growth 0.37%
Focused 2000 Growth 0.57%
Focused Large-Cap Value 0.47%
Focused Multi-Cap Value 0.47%
Focused 2000 Value 0.48%
Focused Growth and Income 0.46%
Focused International Equity 0.54%
Focused Technology 0.45%
</Table>
SunAmerica contractually agreed to waive fees or reimburse expenses, if
necessary, at or below the following percentages of each Portfolio's average net
assets: Focused Multi-Cap Growth Portfolio, Focused 2000 Growth Portfolio,
Focused Large-Cap Value Portfolio, Focused Multi-Cap Value Portfolio, Focused
2000 Value Portfolio, and Focused Growth and Income Portfolio 1.72% for Class A
shares, 2.37% for Class B shares and Class C shares. Focused 2000 Growth
Portfolio and Focused Multi-Cap Value Portfolio 1.62% for Class I shares.
Focused Multi-Cap Growth Portfolio and Focused Growth and Income Portfolio 1.47%
for Class X shares. Focused International Equity Portfolio 1.95% for Class A
shares, and 2.60% for Class B shares and Class C shares. Focused Technology
Portfolio 1.97% for Class A shares, 2.62% for Class B shares and Class C shares.
Focused Dividend Strategy Portfolio 0.95% for Class A shares, 1.60% for Class B
shares and Class C shares.
SunAmerica voluntarily agreed to waive fees or reimburse expenses, if necessary,
for the Strategy Portfolios, at or below the following percentages of each
Portfolio's average net assets: 0.25% for Class A, 0.90% for Class B and Class C
and 0.15% for Class I shares.
57
<Page>
Any waivers or reimbursements made by SunAmerica are subject to recoupment from
the Portfolios within the following two years of such waivers or reimbursements,
provided that the Portfolios are able to effect such payment to SunAmerica and
remain in compliance with the foregoing expense limitations.
At April 30, 2004, expenses previously waived or reimbursed by SunAmerica that
are subject to recoupment are as follows:
<Table>
<Caption>
OTHER
EXPENSES
PORTFOLIO REIMBURSED
- --------- ----------
Focused Equity Strategy $ 30,887
Focused Multi-Asset Strategy 20,430
Focused Balanced Strategy 40,191
Focused Fixed Income and Equity
Strategy 64,920
Focused Fixed Income Strategy 104,618
Focused Multi-Cap Growth 93,348
Focused 2000 Growth 52,238
Focused Large-Cap Value $ 63,665
Focused Multi-Cap Value 66,364
Focused 2000 Value 52,439
Focused Growth and Income 73,992
Focused International Equity 172,921
Focused Technology 258,475
Focused Dividend Strategy --
<Caption>
CLASS
SPECIFIC
EXPENSES
PORTFOLIO REIMBURSED
- --------- ----------
Focused Equity Strategy Class A $ 3,453
Focused Equity Strategy Class B 8,331
Focused Equity Strategy Class C+ --
Focused Equity Strategy Class I 1,109
Focused Multi-Asset Strategy Class A 5,292
Focused Multi-Asset Strategy Class B 6,452
Focused Multi-Asset Strategy Class C+ --
Focused Balanced Strategy Class A 7,823
Focused Balanced Strategy Class B --
Focused Balanced Strategy Class C+ --
Focused Balanced Strategy Class I 10
Focused Fixed Income and Equity
Strategy Class A 35,960
Focused Fixed Income and Equity
Strategy Class B 30,933
Focused Fixed Income and Equity
Strategy Class C+ 26,040
Focused Fixed Income Strategy Class A 39,809
Focused Fixed Income Strategy Class B 27,448
Focused Fixed Income Strategy Class C+ 21,777
Focused Multi-Cap Growth Class A 196,491
Focused Multi-Cap Growth Class B 174,313
Focused Multi-Cap Growth Class C+ 76,835
Focused Multi-Cap Growth Class X 1,793
Focused 2000 Growth Class A 159,639
Focused 2000 Growth Class B 120,722
Focused 2000 Growth Class C+ $ 105,122
Focused 2000 Growth Class I 38,795
Focused Large Cap Value Class A 100,962
Focused Large Cap Value Class B 52,524
Focused Large Cap Value Class C+ 38,926
Focused Multi-Cap Value Class A 191,520
Focused Multi-Cap Value Class B 225,261
Focused Multi-Cap Value Class C+ 252,391
Focused Multi-Cap Value Class I 40,454
Focused 2000 Value Class A 127,021
Focused 2000 Value Class B 70,717
Focused 2000 Value Class C+ 67,745
Focused Growth and Income Class A 67,172
Focused Growth and Income Class B 58,118
Focused Growth and Income Class C+ 56,459
Focused Growth and Income Class X --
Focused International Equity Class A 221,868
Focused International Equity Class B 57,918
Focused International Equity Class C+ 76,423
Focused Technology Class A 143,769
Focused Technology Class B 114,218
Focused Technology Class C+ 121,412
Focused Dividend Strategy Class A 83,687
Focused Dividend Strategy Class B 103,716
Focused Dividend Strategy Class C+ 117,976
</Table>
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
58
<Page>
For the period ended April 30, 2004, the amounts repaid to SunAmerica which are
included in the Investment advisory and management fees on the Statement of
Operations are as follows:
<Table>
<Caption>
AMOUNT
PORTFOLIO RECOUPED
- --------- ------------
Focused Equity Strategy Class A $ 30,805
Focused Equity Strategy Class B 18,738
Focused Equity Strategy Class C+ 49,230
Focused Equity Strategy Class I 599
Focused Multi-Asset Strategy Class A 28,015
Focused Multi-Asset Strategy Class B 22,286
Focused Multi-Asset Strategy Class C+ 55,278
Focused Balanced Strategy Class A 20,432
Focused Balanced Strategy Class B 23,325
Focused Balanced Strategy Class C+ 33,033
Focused Balanced Strategy Class I 3,289
Focused Fixed Income and Equity Strategy Class A 3,264
Focused Multi-Cap Growth Class X 142
Focused 2000 Growth Class C+ 4,744
Focused Large-Cap Value Class A 3,874
Focused Large-Cap Value Class B 4,362
Focused Large-Cap Value Class C+ 12,385
Focused Multi-Cap Value Class A 16,946
Focused Multi-Cap Value Class B 28,403
Focused Multi-Cap Value Class C+ 31,909
Focused 2000 Value Class A 4,345
Focused 2000 Value Class B 5,403
Focused 2000 Value Class C+ 7,363
Focused Growth and Income Class A 3,754
Focused Growth and Income Class B 7,998
Focused Growth and Income Class C+ 16,590
</Table>
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
The Fund, on behalf of each Portfolio, has entered into a Distribution Agreement
with AIG SunAmerica Capital Services, Inc. ("SACS" or the "Distributor"), an
indirect wholly-owned subsidiary of AIG SunAmerica Inc. Each Portfolio has
adopted a Distribution Plan (the "Plan") in accordance with the provisions of
Rule 12b-1 under the Act. Rule 12b-1 under the Act permits an investment company
directly or indirectly to pay expenses associated with the distribution of its
shares ("distribution expenses") in accordance with a plan adopted by the
investment company's Board of Directors. Pursuant to such rule, the Board of
Directors and the shareholders of each class of shares of each Portfolio have
adopted Distribution Plans hereinafter referred to as the "Class A Plan", "Class
B Plan", and "Class C Plan". In adopting the Distribution Plans, the Board of
Directors determined that there was a reasonable likelihood that each such Plan
would benefit the Fund and the shareholders of the respective class. The sales
charge and distribution fees of a particular class will not be used to subsidize
the sale of shares of any other class.
Under the Class A Plan, Class B Plan, and Class C Plan, the Distributor receives
payments from each Portfolio, except for the Strategy Portfolios, at an annual
rate of up to 0.10%, 0.75% and 0.75%, respectively, of average daily net assets
of such Portfolio's Class to compensate the Distributor and certain securities
firms for providing sales and promotional activities for distributing that class
of shares. For the Strategy Portfolios, the Distributor receives payments at an
annual rate of up to 0.65% of average daily net assets for both Class B and
Class C. The distribution costs for which the Distributor may be reimbursed out
of such distribution fees include fees paid to broker-dealers that have sold
Fund shares, commissions and other expenses such as those incurred for sales
literature, prospectus printing and distribution and compensation to
wholesalers. It is possible that in any given year the amount paid to the
distributor under each Class' Plan may exceed the Distributor's distribution
costs as described above. Except for the Strategy Portfolios, the Distribution
Plans provide that each class of shares of each Portfolio may also pay the
Distributor an account maintenance and service fee up to an annual rate of 0.25%
of the aggregate average daily net assets of such class of shares for payments
to broker-dealers for providing continuing account maintenance. Accordingly, for
the period ended April 30, 2004, SACS received fees, as reflected in the
Statement of Operations, based upon the aforementioned rates.
59
<Page>
Except for the Strategy Portfolios, SACS is paid a fee of 0.25% of average daily
net assets of Class I shares as compensation for providing additional
shareholder services to Class I shareholders.
SACS receives sales charges on each Portfolio's Class A and Class C shares,
portions of which are reallocated to affiliated broker-dealers and
non-affiliated broker-dealers. Effective February 23, 2004, the front-end sales
charge for Class C is no longer in effect. SACS also receives the proceeds of
contingent deferred sales charges paid by investors in connection with certain
redemptions of each Portfolio's Class A, Class B and Class C shares. SACS has
advised the Portfolios that for the period ended April 30, 2004, the proceeds
received from sales (and paid out to affiliated and non-affiliated
broker-dealers) and redemptions are as follows:
<Table>
<Caption>
CLASS A CLASS B
------------------------------------------------------------------ ---------------
CONTINGENT CONTINGENT
AFFILIATED NON-AFFILIATE DEFERRED DEFERRED
SALES CHARGES BROKER-DEALERS BROKER-DEALERS SALES CHARGES SALES CHARGES
--------------- --------------- --------------- --------------- ---------------
Focused Equity Strategy $ 2,131,838 $ 349,371 $ 1,454,430 $ -- $ 48,012
Focused Multi-Asset Strategy 2,060,838 555,811 1,185,247 -- 55,344
Focused Balanced Strategy 1,363,798 344,272 798,760 -- 55,851
Focused Fixed Income and Equity Strategy 194,181 67,702 94,483 -- 15,877
Focused Fixed Income Strategy 78,597 25,525 40,889 -- 15,961
Focused Large-Cap Growth 1,413,493 497,316 699,432 -- 633,265
Focused Multi-Cap Growth 240,372 122,962 81,113 95 89,432
Focused 2000 Growth 274,709 107,742 123,980 -- 24,452
Focused Large-Cap Value 274,781 112,338 116,993 40 47,291
Focused Multi-Cap Value 343,737 148,049 144,686 160 301,699
Focused 2000 Value 260,989 106,873 114,441 -- 67,169
Focused Growth & Income 478,592 131,869 271,279 45 121,988
Focused International Equity 156,783 67,902 62,618 -- 7,280
Focused Technology 127,739 60,537 47,279 -- 41,639
Focused Dividend Strategy 57,461 -- -- -- 71,219
<Caption>
CLASS C+
------------------------------------------------------------------
CONTINGENT
SALES AFFILIATED NON-AFFILIATED DEFERRED
CHARGES BROKER-DEALERS BROKER-DEALERS SALES CHARGES
--------------- --------------- --------------- ---------------
Focused Equity Strategy $ 267,526 $ 58,565 $ 208,961 $ 37,062
Focused Multi-Asset Strategy 505,562 116,502 389,060 36,802
Focused Balanced Strategy 485,104 69,132 415,972 43,717
Focused Fixed Income and Equity Strategy 38,819 10,394 28,425 6,521
Focused Fixed Income Strategy 11,911 4,927 6,984 7,939
Focused Large-Cap Growth 366,732 67,731 299,001 36,942
Focused Multi-Cap Growth 35,171 11,747 23,424 3,868
Focused 2000 Growth 87,433 15,463 71,970 8,986
Focused Large-Cap Value 122,244 17,987 104,257 6,891
Focused Multi-Cap Value 80,021 15,896 64,125 15,866
Focused 2000 Value 84,212 11,745 72,467 5,869
Focused Growth & Income 124,178 17,412 106,766 26,621
Focused International Equity 51,877 5,189 46,688 6,065
Focused Technology 24,196 4,676 19,520 4,412
Focused Dividend Strategy 88,743 3,556 85,187 26,763
</Table>
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
The Strategy Portfolios do not invest in underlying SunAmerica Funds for the
purpose of exercising management or control; however, investments by the
Strategy Portfolios within the set limits may represent a significant portion of
an underlying SunAmerica Fund's net assets. At April 30, 2004, each Strategy
Portfolio held less than 34% of the outstanding shares of any underlying
SunAmerica Fund. In addition, the Strategy Portfolios, in the aggregate, held
less than 61% of the outstanding shares of any underlying SunAmerica Funds.
60
<Page>
The Fund, on behalf of each Portfolio, except for the Strategy Portfolios, has
entered into a Service Agreement with AIG SunAmerica Fund Services, Inc.
("SAFS"), an indirect wholly-owned subsidiary of AIG SunAmerica, Inc. Under the
Service Agreement, SAFS performs certain shareholder account functions by
assisting the Portfolios' transfer agent in connection with the services that it
offers to the shareholders of the Portfolios. The Service Agreement, which
permits the Portfolios to compensate SAFS for services rendered based upon an
annual rate of 0.22% of average daily net assets, is approved annually by the
Board of Directors. For the period ended April 30, 2004, the Portfolios incurred
the following expenses, which are included in transfer agent fees in the
Statement of Operations, to compensate SAFS pursuant to the terms of the Service
Agreement.
<Table>
<Caption>
EXPENSE
------------------------------------------------------------------------
PORTFOLIO CLASS A CLASS B CLASS C+ CLASS I CLASS X
- ---------- ------------ ------------ ------------ ------------ ------------
Focused Large-Cap
Growth $ 572,467 $ 472,160 $ 519,027 $ -- $ --
Focused Multi-Cap
Growth 130,854 118,981 43,997 -- 594
Focused 2000 Growth 115,408 29,409 55,285 8,031 --
Focused Large-Cap
Value 217,459 41,813 62,497 -- --
Focused Multi-Cap
Value 169,832 183,464 214,690 12,104
Focused 2000 Value 183,547 61,666 82,671 -- --
Focused Growth and
Income 127,284 85,369 136,746 -- 25,121
Focused International
Equity 89,563 8,524 20,310 -- --
Focused Technology 33,546 22,745 26,886 -- --
Focused Dividend
Strategy 60,928 59,823 94,726 -- --
<Caption>
PAYABLE AT
APRIL 30, 2004
------------------------------------------------------------------------
PORTFOLIO CLASS A CLASS B CLASS C+ CLASS I CLASS X
- ---------- ------------ ------------ ------------ ------------ ------------
Focused Large-Cap
Growth $ 135,688 $ 93,886 $ 105,545 $ -- $ --
Focused Multi-Cap
Growth 29,514 22,061 8,875 -- 137
Focused 2000 Growth 31,375 6,390 12,278 1,698
Focused Large-Cap
Value 57,479 8,490 13,677 -- --
Focused Multi-Cap
Value 36,437 36,132 42,291 -- --
Focused 2000 Value 49,648 13,126 18,444 -- --
Focused Growth and
Income 28,836 17,687 28,312 -- 5,826
Focused International
Equity 24,694 1,909 4,846 -- --
Focused Technology 7,191 5,039 5,557 -- --
Focused Dividend
Strategy 11,300 10,427 17,828 -- --
</Table>
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
At April 30, 2004, the following affiliates owned outstanding shares of the
following Portfolios:
<Table>
<Caption>
PORTFOLIO HOLDER PERCENTAGE
- --------- ------ ----------
Focused Large-Cap Growth Class A Focused Equity Strategy Portfolio 19%
Focused Multi-Asset Strategy Portfolio 6
Focused Balanced Strategy Portfolio 12
Focused Multi-Cap Growth Class A Focused Multi-Asset Strategy Portfolio 26
Focused Multi-Cap Growth Class X SunAmerica 18
Focused 2000 Growth Class A Focused Equity Strategy Portfolio 31
Focused Multi-Asset Strategy Portfolio 26
Focused Balanced Strategy Portfolio 18
Focused 2000 Growth Class I VALIC (Indirect wholly owned subsidiary of AIG) 32
Focused Large-Cap Value Class A Focused Equity Strategy Portfolio 41
Focused Balanced Strategy Portfolio 24
Focused Multi-Asset Strategy Portfolio 13
Focused Multi-Cap Value Class A Focused Multi-Asset Strategy Portfolio 22
Focused 2000 Value Class A Focused Equity Strategy Portfolio 28
Focused Multi-Asset Strategy Portfolio 17
Focused Balanced Strategy Portfolio 16
Focused Growth and Income Class A Focused Multi-Asset Strategy Portfolio 27
Focused International Equity Class A Focused Equity Strategy Portfolio 33
Focused Multi-Asset Strategy Portfolio 32
Focused Balanced Strategy Portfolio 18
</Table>
61
<Page>
On March 15, 2004, Dreman Value Management, LLC, a sub-advisor for the Large-Cap
Value Portfolio purchased 114,200 shares of American International Group, Inc.
The Portfolio has an investment restriction that states the Portfolio may not
invest in issuers in SunAmerica's restricted list. On March 22, 2004, the
American International Group, Inc. shares were sold, resulting in a realized
gain to the Portfolio of $2,805 which is included in the Statement of
Operations.
NOTE 5. PURCHASE AND SALES OF INVESTMENT SECURITIES
The cost of purchases and proceeds from sales and maturities of long-term
investments during the period ended April 30, 2004 were as follows:
<Table>
<Caption>
FOCUSED FOCUSED MULTI- FOCUSED
EQUITY STRATEGY ASSET BALANCED
PORTFOLIO STRATEGY PORTFOLIO STRATEGY PORTFOLIO
--------------- ------------------- --------------------
Purchases (excluding U.S. government
securities) $ 271,029,236 $ 213,671,144 $ 204,064,159
Sales (excluding U.S. government
securities) -- -- 12,988,794
Purchase of U.S. government securities -- -- --
Sales of U.S. government securities -- -- --
<Caption>
FOCUSED FIXED
INCOME AND FOCUSED FIXED
EQUITY STRATEGY INCOME STRATEGY
PORTFOLIO PORTFOLIO
--------------- ---------------
Purchases (excluding U.S. government
securities) $ 31,225,167 $ 17,143,691
Sales (excluding U.S. government
securities) 8,406,537 12,641,100
Purchase of U.S. government securities -- --
Sales of U.S. government securities -- --
<Caption>
FOCUSED
FOCUSED LARGE-CAP MULTI-CAP FOCUSED 2000
GROWTH PORTFOLIO GROWTH PORTFOLIO GROWTH PORTFOLIO
------------------ ---------------- ------------------
Purchases (excluding U.S. government
securities) $ 878,313,413 $ 208,619,893 $ 207,035,948
Sales (excluding U.S. government
securities) 724,424,543 216,638,382 110,969,483
Purchase of U.S. government securities -- -- --
Sales of U.S. government securities -- -- --
<Caption>
FOCUSED FOCUSED
LARGE-CAP MULTI-CAP
VALUE PORTFOLIO VALUE PORTFOLIO
--------------- ---------------
Purchases (excluding U.S. government
securities) $ 258,000,829 $ 557,016,866
Sales (excluding U.S. government
securities) 89,743,453 559,601,512
Purchase of U.S. government securities -- --
Sales of U.S. government securities -- --
<Caption>
FOCUSED GROWTH FOCUSED
FOCUSED 2000 AND INCOME INTERNATIONAL FOCUSED TECHNOLOGY
VALUE PORTFOLIO PORTFOLIO EQUITY PORTFOLIO PORTFOLIO
---------------- -------------- ----------------- --------------------
Purchases (excluding U.S. government
securities) $ 258,780,816 $ 188,017,594 $ 167,774,120 $ 75,858,048
Sales (excluding U.S. government
securities) 142,828,539 144,080,579 94,349,183 75,648,932
Purchase of U.S. government securities -- -- -- --
Sales of U.S. government securities -- -- -- --
<Caption>
FOCUSED DIVIDEND FOCUSED DIVIDEND
STRATEGY PORTFOLIO STRATEGY PORTFOLIO
FOR THE PERIOD FOR THE PERIOD
OCTOBER 1, 2003 NOVEMBER 1, 2003
THROUGH THROUGH
OCTOBER 31, 2003 APRIL 30, 2004
------------------ ------------------
Purchases (excluding U.S. government
securities) $ 6,062,572 $ 112,138,869
Sales (excluding U.S. government
securities) -- 85,451,523
Purchase of U.S. government securities -- --
Sales of U.S. government securities -- --
</Table>
62
<Page>
NOTE 6. TRANSACTIONS WITH AFFILIATES
As disclosed in the investment portfolios, the Portfolios owned securities
issued by AIG or an affiliate thereof. For the period ended April 30, 2004,
transactions in securities of AIG were as follows:
<Table>
<Caption>
CAPITAL GAIN
DISTRIBUTION MARKET VALUE AT
PORTFOLIO SECURITY INCOME RECEIVED OCTOBER 31, 2003
- ----------------------------------- ----------------------------------- --------------- --------------- ----------------
Focused Equity Strategy Various AIG SunAmerica Funds* $ 96,121 $ 123,860 $ 171,339,576
Focused Multi-Asset Strategy Various AIG SunAmerica Funds* 1,210,337 544,963 207,521,129
Focused Balanced Strategy Various AIG SunAmerica Funds* 1,747,690 758,792 201,108,364
Focused Fixed Income and
Equity Strategy Various AIG SunAmerica Funds* 951,811 305,804 59,554,724
Focused Fixed Income Strategy Various AIG SunAmerica Funds* 456,917 171,737 25,064,441
Focused Large-Cap Value American International Group, Inc. -- -- --
<Caption>
PORTFOLIO SECURITY PURCHASES SALES
- ----------------------------------- ----------------------------------- ------------------ ------------------
Focused Equity Strategy Various AIG SunAmerica Funds* $ 271,029,236 $ --
Focused Multi-Asset Strategy Various AIG SunAmerica Funds* 213,671,144 --
Focused Balanced Strategy Various AIG SunAmerica Funds* 204,064,159 12,988,794
Focused Fixed Income and
Equity Strategy Various AIG SunAmerica Funds* 31,225,167 8,406,537
Focused Fixed Income Strategy Various AIG SunAmerica Funds* 17,143,691 12,641,100
Focused Large-Cap Value American International Group, Inc 8,024,000 8,026,805
<Caption>
REALIZED UNREALIZED MARKET VALUE AT
PORTFOLIO GAIN (LOSS) GAIN (LOSS) APRIL 30, 2004
- ----------------------------------- ------------------ ------------------ ------------------
Focused Equity Strategy $ -- $ 22,434,754 $ 448,759,567
Focused Multi-Asset Strategy -- 25,105,226 427,591,031
Focused Balanced Strategy 2,416,803 15,291,202 407,195,739
Focused Fixed Income and
Equity Strategy 1,353,762 1,089,117 83,276,047
Focused Fixed Income Strategy 388,288 (555,126) 29,708,692
Focused Large-Cap Value 2,805 -- --
</Table>
* See Portfolio of Investments for details.
The following Portfolios incurred brokerage commissions with affiliated brokers:
<Table>
<Caption>
FOCUSED FOCUSED FOCUSED FOCUSED FOCUSED
LARGE-CAP MULTI-CAP 2000 LARGE- MULTI-CAP
GROWTH GROWTH GROWTH CAP VALUE VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- --------------- --------------- --------------- ---------------
Banc of America Securities LLC $ 26,895 $ 42,500 $ 7,118 $ 45,075 $ 17,068
Baron Capital Partners, LLC -- -- 41,570 -- --
Citigroup Global Markets, Inc. 15,000 2,550 1,780 54,650 78,636
Credit Suisse First Boston Corp. 48,119 19,440 14,445 8,520 80,353
Deutsche Bank Securities, Inc. 3,769 -- 500 3,280 12,564
Dresdner RCM Global Investors, LLC -- -- -- -- --
Fred Alger Company, Inc. 225,789 -- -- -- --
Harris Associates L.P. -- -- 20,756 --
JP Morgan Securities, Inc. 32,605 60,850 70 12,025 19,268
Salomon Smith Barney, Inc. -- -- 5,000 -- --
<Caption>
FOCUSED FOCUSED FOCUSED FOCUSED
2000 GROWTH INTERNATIONAL FOCUSED DIVIDEND
VALUE AND INCOME EQUITY TECHNOLOGY STRATEGY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- --------------- --------------- --------------- ---------------
Banc of America Securities LLC $ 19,398 $ 13,554 $ -- $ 18,385 $ 14,319
Baron Capital Partners, LLC -- -- -- 15,109 --
Citigroup Global Markets, Inc. 4,024 32,120 8,074 4,449
Credit Suisse First Boston Corp. 35,222 23,968 31,999 9,219 1,200
Deutsche Bank Securities, Inc. 16,039 972 56,154 -- --
Dresdner RCM Global Investors, LLC -- -- 27,611 -- --
Fred Alger Company, Inc. -- -- -- -- --
Harris Associates L.P. -- 8,156 -- -- --
JP Morgan Securities, Inc. 15,365 55,523 8,901 13,635 24,861
Salomon Smith Barney, Inc. -- -- 1,302 864 --
</Table>
63
<Page>
NOTE 7. 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 wash sales, and Fund
mergers.
<Table>
<Caption>
DISTRIBUTABLE EARNINGS TAX DISTRIBUTIONS
----------------------------------------------------- -----------------------------------
FOR THE YEAR ENDED OCTOBER 31, 2003
-------------------------------------------------------------------------------------------
LONG-TERM GAINS/ UNREALIZED LONG-TERM
ORDINARY CAPITAL LOSS APPRECIATION/ ORDINARY CAPITAL
PORTFOLIO INCOME CARRYOVER (DEPRECIATION) INCOME GAINS
- --------- ---------------- ---------------- ---------------- ---------------- ----------------
Focused Equity Strategy $ 41,270 $ -- $ 15,979,222 $ 5,100 $ --
Focused Multi-Asset Strategy -- -- 19,672,606 15,297 --
Focused Balanced Strategy -- -- 14,970,906 19,132* --
Focused Fixed Income and Equity
Strategy 59,258 42,586 2,468,627 240,626 --
Focused Fixed Income Strategy 229,225 -- 77,657 333,974 --
Focused Large-Cap Growth -- (692,678,820) 348,346,371 -- --
Focused Multi-Cap Growth -- (166,658,651) 71,892,988 -- --
Focused 2000 Growth -- (16,015,592) 37,557,712 -- --
Focused Large-Cap Value 138,450 (7,476,931) 21,639,392 -- --
Focused Multi-Cap Value 2,042,637 (52,562,021) 34,746,504 -- --
Focused 2000 Value -- (2,224,570) 33,290,900 1,278,040 5,794,037*
Focused Growth and Income -- (69,340,296) 52,373,795 -- --
Focused International Equity -- 575,290 9,401,285 -- --
Focused Technology -- (212,889,616) 23,208,621 -- --
Focused Dividend Strategy** 15,756 (19,903,717) (3,574,265) 2,527,986 --
</Table>
* Includes a tax return of capital of $7,598 and $10,794 for the Focused
Balanced Strategy Portfolio and Focused 2000 Value Portfolio, respectively.
** For the period October 1, 2002 through September 30, 2003
As of October 31, 2003, the following Portfolios have capital loss carryforwards
which will be available to the extent provided in regulations and which will
expire between 2008-2011. To the extent that these carryover losses are used to
offset future gains, it is probable that the gains so offset will not be
distributed to shareholders.
<Table>
<Caption>
CAPITAL LOSS
CARRYFORWARDS CAPITAL LOSS
PORTFOLIO AMOUNT UTILIZED
- --------- ------------------ ------------------
Focused Equity Strategy $ -- $ --
Focused Multi-Asset Strategy -- --
Focused Balanced Strategy -- --
Focused Fixed Income and Equity Strategy -- --
Focused Fixed Income Strategy -- --
Focused Large-Cap Growth 692,678,820 6,232,400
Focused Multi-Cap Growth 166,658,651 --
Focused 2000 Growth 16,015,592 2,618,307
Focused Large-Cap Value 7,476,931 850,909
Focused Multi-Cap Value 52,562,021 --
Focused 2000 Value 2,224,570 10,794
Focused Growth and Income 69,340,297 --
Focused International Equity -- 542,586
Focused Technology 212,889,616 773,730
Focused Dividend Strategy* 18,490,937 --
</Table>
* For the period October 1, 2002 through September 30, 2003
64
<Page>
As of April 30, 2004, the amounts of aggregate unrealized gain (loss) and the
cost of investment securities for federal tax purposes, including short-term
securities and repurchase agreements, were as follows:
<Table>
<Caption>
FOCUSED FOCUSED MULTI- FOCUSED FOCUSED FIXED FOCUSED
EQUITY STRATEGY ASSET STRATEGY BALANCED STRATEGY INCOME AND EQUITY FIXED INCOME
PORTFOLIO PORTFOLIO PORTFOLIO STRATEGY PORTFOLIO STRATEGY PORTFOLIO
----------------- --------------- ------------------ ------------------ ------------------
Cost $ 426,389,590 $ 402,485,837 $ 391,957,213 $ 82,195,976 $ 30,334,573
================= =============== ================== ================== ==================
Appreciation 22,434,754 26,833,197 18,317,235 2,405,487 160,562
Depreciation (64,777) (1,728,003) (3,078,709) (1,325,416) (786,443)
----------------- --------------- ------------------ ------------------ ------------------
Net unrealized appreciation
(depreciation) $ 22,369,977 $ 25,105,194 $ 15,238,526 $ 1,080,071 $ (625,881)
================= =============== ================== ================== ==================
<Caption>
FOCUSED MULTI- FOCUSED LARGE- FOCUSED MULTI-
FOCUSED LARGE-CAP CAP GROWTH FOCUSED 2000 CAP VALUE CAP VALUE
GROWTH PORTFOLIO PORTFOLIO GROWTH PORTFOLIO PORTFOLIO PORTFOLIO
----------------- --------------- ------------------ ------------------ ------------------
Cost $ 1,423,036,342 $ 243,763,258 $ 238,697,448 $ 395,262,804 $ 555,473,444
================= =============== ================== ================== ==================
Appreciation 374,222,024 53,952,935 39,506,014 30,459,520 67,735,487
Depreciation (24,413,106) (9,866,111) (15,512,531) (9,383,590) (25,591,825)
----------------- --------------- ------------------ ------------------ ------------------
Net unrealized appreciation
(depreciation) $ 349,808,918 $ 44,086,824 $ 23,993,483 $ 21,075,930 $ 42,143,662
================= =============== ================== ================== ==================
<Caption>
FOCUSED GROWTH FOCUSED FOCUSED
FOCUSED 2000 AND INCOME INTERNATIONAL TECHNOLOGY FOCUSED DIVIDEND
VALUE PORTFOLIO PORTFOLIO EQUITY PORTFOLIO PORTFOLIO STRATEGY PORTFOLIO
----------------- --------------- ------------------ ----------------- ------------------
Cost $ 366,806,798 $ 352,812,164 $ 153,493,676 $ 79,606,971 $ 205,633,291
================= =============== ================== ================== ==================
Appreciation 49,987,115 60,372,411 14,532,383 13,137,709 21,801,929
Depreciation (5,257,298) (2,551,421) (3,710,771) (5,299,179) (7,287,346)
----------------- --------------- ------------------ ------------------ ------------------
Net unrealized appreciation
(depreciation) $ 44,729,817 $ 57,820,990 $ 10,821,612 $ 7,838,530 $ 14,514,583
================= =============== ================== ================== ==================
</Table>
NOTE 8. EXPENSE REDUCTIONS
Through expense offset arrangements resulting from broker commission recapture,
a portion of the Portfolio's expenses have been reduced. For the period ended
April 30, 2004, the amount of expense reductions received by each Portfolio,
were as follows:
<Table>
<Caption>
TOTAL EXPENSE
PORTFOLIO REDUCTIONS
- --------- ------------------
Focused Large-Cap Growth $ 407,437
Focused Multi-Cap Growth 37,050
Focused 2000 Growth 13,489
Focused 2000 Value 49,079
Focused Growth and Income 142,878
Focused International Equity 6,683
Focused Technology 29,596
</Table>
65
<Page>
NOTE 9. CAPITAL SHARE TRANSACTIONS
Transactions in shares of each class of each series were as follows:
<Table>
<Caption>
FOCUSED EQUITY STRATEGY PORTFOLIO
----------------------------------------------------------------------------
CLASS A
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD
APRIL 30, 2004 NOVEMBER 8, 2002+
(UNAUDITED) THROUGH OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 5,201,677* $ 87,957,178* 3,514,721** $ 50,861,719**
Shares issued
by merger 239,692 4,122,703 -- --
Reinvested dividends 599 10,113 189 2,315
Shares redeemed (515,182) (8,718,683) (356,169) (5,299,297)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 4,926,786 $ 83,371,311 3,158,741 $ 45,564,737
=============== =============== =============== ===============
<Caption>
FOCUSED EQUITY STRATEGY PORTFOLIO
----------------------------------------------------------------------------
CLASS B
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD
APRIL 30, 2004 NOVEMBER 8, 2002+
(UNAUDITED) THROUGH OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 2,329,967 $ 38,929,424 2,048,034 $ 29,264,489
Shares issued
by merger 767,778 13,100,103 -- --
Reinvested dividends 377 6,317 60 733
Shares redeemed (184,631)* (3,121,854)* (94,619)** (1,367,760)**
--------------- --------------- --------------- ---------------
Net increase
(decrease) 2,913,491 $ 48,913,990 1,953,475 $ 27,897,462
=============== =============== =============== ===============
<Caption>
CLASS C (1)
------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD
APRIL 30, 2004 NOVEMBER 8, 2002+
(UNAUDITED) THROUGH OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 8,233,422 $ 137,631,575 6,346,104 $ 91,750,064
Shares issued
by merger 48,156 821,051 -- --
Reinvested dividends 1,058 17,715 165 2,020
Shares redeemed (540,541) (9,055,234) (276,061) (3,845,321)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 7,742,095 $ 129,415,107 6,070,208 $ 87,906,763
=============== =============== =============== ===============
<Caption>
CLASS I
-----------------------------------
FOR THE PERIOD FEBRUARY 23, 2004+
THROUGH APRIL 30, 2004
(UNAUDITED)
-----------------------------------
SHARES AMOUNT
--------------- ---------------
Shares sold 25,382 $ 436,059
Shares issued
by merger 475,950 8,186,342
Reinvested dividends -- --
Shares redeemed (10,079) (174,353)
--------------- ---------------
Net increase
(decrease) 491,253 $ 8,448,048
=============== ==============
<Caption>
FOCUSED MULTI-ASSET STRATEGY PORTFOLIO
----------------------------------------------------------------------------
CLASS A
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD
APRIL 30, 2004 NOVEMBER 8, 2002+
(UNAUDITED) THROUGH OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 4,609,975# $ 73,026,381# 4,035,526## $ 55,470,342##
Reinvested dividends 16,322 256,249 346 4,218
Shares redeemed (466,000) (7,408,115) (230,629) (3,210,380)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 4,160,297 $ 65,874,515 3,805,243 $ 52,264,180
=============== =============== =============== ===============
<Caption>
FOCUSED MULTI-ASSET STRATEGY PORTFOLIO
----------------------------------------------------------------------------
CLASS B
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD
APRIL 30, 2004 NOVEMBER 8, 2002+
(UNAUDITED) THROUGH OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 2,375,303 $ 37,513,520 2,871,983 $ 38,981,048
Reinvested dividends 181 2,841 144 1,750
Shares redeemed (202,448)# (3,205,395)# (86,177)## (1,211,238)##
--------------- --------------- --------------- ---------------
Net increase
(decrease) 2,173,036 $ 34,310,966 2,785,950 $ 37,771,560
=============== =============== =============== ===============
<Caption>
CLASS C (1)
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD
APRIL 30, 2004 NOVEMBER 8, 2002+
(UNAUDITED) THROUGH OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 7,829,519 $ 123,364,614 7,898,177 $ 107,433,513
Reinvested dividends 575 8,998 694 8,456
Shares redeemed (557,199) (8,818,616) (343,728) (4,575,263)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 7,272,895 $ 114,554,996 7,555,143 $ 102,866,706
=============== =============== =============== ===============
</Table>
+ Commencement of Operations
* Includes automatic conversion of 11,417 shares of Class B shares in the
amount of $191,986 to 11,324 shares of Class A shares in the amount of
$191,986
** Includes automatic conversion of 11,973 shares of Class B shares in the
amount of $162,791 to 11,897 shares of Class A shares in the amount of
$162,791
# Includes automatic conversion of 25,895 shares of Class B shares in the
amount of $407,847 to 25,836 shares of Class A shares in the amount of
$407,847
## Includes automatic conversion of 5,997 shares of Class B shares in the
amount of $83,059 to 5,997 shares of Class A shares in the amount of
$83,059
(1) Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
66
<Page>
<Table>
<Caption>
FOCUSED BALANCED STRATEGY PORTFOLIO
----------------------------------------------------------------------------
CLASS A
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD
APRIL 30, 2004 NOVEMBER 8, 2002+
(UNAUDITED) THROUGH OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 3,446,413* $ 53,351,169* 3,824,647** $ 52,952,139**
Shares issued
by merger 845,475 13,290,867 -- --
Reinvested dividends 31,946 496,405 696 8,645
Shares redeemed (527,721) (8,231,044) (170,486) (2,361,549)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 3,796,113 $ 58,907,397 3,654,857 $ 50,599,235
=============== =============== =============== ===============
<Caption>
FOCUSED BALANCED STRATEGY PORTFOLIO
----------------------------------------------------------------------------
CLASS B
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD
APRIL 30, 2004 NOVEMBER 8, 2002+
(UNAUDITED) THROUGH OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 2,098,661 $ 33,255,945 3,400,297 $ 46,340,179
Shares issued
by merger 1,510,040 23,691,809 -- --
Reinvested dividends 4,659 72,101 186 2,300
Shares redeemed (296,027)* (4,597,072)* (153,693)** (2,153,409)**
--------------- --------------- --------------- ---------------
Net increase
(decrease) 3,317,333 $ 52,422,783 3,246,790 $ 44,189,070
=============== =============== =============== ===============
<Caption>
CLASS C (1)
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD
APRIL 30, 2004 NOVEMBER 8, 2002+
(UNAUDITED) THROUGH OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 5,800,927 $ 89,912,316 7,201,430 $ 99,563,901
Shares issued
by merger 255,038 4,006,646 -- --
Reinvested dividends 10,419 161,270 473 5,860
Shares redeemed (1,379,419) (21,380,820) (297,438) (4,115,614)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 4,686,965 $ 72,699,412 6,904,465 $ 95,454,147
=============== =============== =============== ===============
<Caption>
CLASS I
-----------------------------------
FOR THE PERIOD
FEBRUARY 23, 2004+
THROUGH APRIL 30, 2004
(UNAUDITED)
-----------------------------------
SHARES AMOUNT
--------------- ---------------
Shares sold 63,529 $ 243,753
Shares issued
by merger 1,529,144 24,038,151
Reinvested dividends 1,960 30,800
Shares redeemed (433,555) (6,850,644)
--------------- ---------------
Net increase
(decrease) 1,161,078 $ 17,462,060
=============== ===============
<Caption>
FOCUSED FIXED INCOME AND EQUITY STRATEGY PORTFOLIO
----------------------------------------------------------------------------
CLASS A
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD
APRIL 30, 2004 NOVEMBER 8, 2002+
(UNAUDITED) THROUGH OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 1,157,823# $ 16,357,530# 2,076,727## $ 27,566,010##
Reinvested dividends 16,329 230,364 5,405 72,076
Shares redeemed (490,038) (6,908,364) (160,131) (2,158,062)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 684,114 $ 9,679,530 1,922,001 $ 25,480,024
=============== =============== =============== ===============
<Caption>
FOCUSED FIXED INCOME AND EQUITY STRATEGY PORTFOLIO
----------------------------------------------------------------------------
CLASS B
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD
APRIL 30, 2004 NOVEMBER 8, 2002+
(UNAUDITED) THROUGH OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 396,303 $ 5,587,205 1,000,019 $ 13,076,063
Reinvested dividends 7,337 103,415 1,763 23,425
Shares redeemed (149,013)# (2,105,380)# (160,065)## (2,125,395)##
--------------- --------------- --------------- ---------------
Net increase
(decrease) 254,627 $ 3,585,240 841,717 $ 10,974,093
=============== =============== =============== ===============
<Caption>
CLASS C (1)
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD
APRIL 30, 2004 NOVEMBER 8, 2002+
(UNAUDITED) THROUGH OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 989,055 $ 13,926,148 1,836,632 $ 24,029,826
Reinvested dividends 16,251 228,997 4,635 61,263
Shares redeemed (288,556) (4,068,927) (248,359) (3,244,095)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 716,750 $ 10,086,218 1,592,908 $ 20,846,994
=============== =============== =============== ===============
</Table>
+ Commencement of Operations
* Includes automatic conversion of 33,115 shares of Class B shares in the
amount of $515,176 to 33,041 shares of Class A shares in the amount of
$515,176
** Includes automatic conversion of 377 shares of Class B shares in the amount
of $4,674 to 379 shares of Class A shares in the amount of $4,674
# Includes automatic conversion of 5,291 shares of Class B shares in the
amount of $74,816 to 5,281 shares of Class A shares in the amount of
$74,816
## Includes automatic conversion of 5,665 shares of Class B shares in the
amount of $70,902 to 5,670 shares of Class A shares in the amount of
$70,902
(1) Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
67
<Page>
<Table>
<Caption>
FOCUSED FIXED INCOME STRATEGY PORTFOLIO
----------------------------------------------------------------------------
CLASS A
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD
APRIL 30, 2004 NOVEMBER 8, 2002+
(UNAUDITED) THROUGH OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 333,229* $ 4,357,199* 1,037,949** $ 13,374,276**
Reinvested dividends 12,805 166,669 7,003 90,613
Shares redeemed (320,463) (4,172,946) (396,916) (5,070,969)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 25,571 $ 350,922 648,036 $ 8,393,920
=============== =============== =============== ===============
<Caption>
FOCUSED FIXED INCOME STRATEGY PORTFOLIO
----------------------------------------------------------------------------
CLASS B
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD
APRIL 30, 2004 NOVEMBER 8, 2002+
(UNAUDITED) THROUGH OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 198,356 $ 2,585,641 682,543 $ 8,721,963
Reinvested dividends 7,600 98,733 2,631 34,018
Shares redeemed (94,257)* (1,230,508)* (219,670)** (2,843,855)**
--------------- --------------- --------------- ---------------
Net increase
(decrease) 111,699 $ 1,453,866 465,504 $ 5,912,126
=============== =============== =============== ===============
<Caption>
CLASS C (1)
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD
APRIL 30, 2004 NOVEMBER 8, 2002+
(UNAUDITED) THROUGH OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 1,068,021 $ 13,985,925 1,623,990 $ 20,742,164
Reinvested dividends 16,877 219,273 7,922 102,585
Shares redeemed (827,867) (10,837,211) (818,868) (10,485,561)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 257,031 $ 3,367,987 813,044 $ 10,359,188
=============== =============== =============== ===============
<Caption>
FOCUSED LARGE-CAP GROWTH PORTFOLIO
----------------------------------------------------------------------------
CLASS A
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 15,826,671# $ 273,371,154# 15,692,195## $ 228,348,443##
Reinvested dividends -- -- -- --
Shares redeemed (3,126,021) (54,138,473) (6,085,458) (83,156,801)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 12,700,650 $ 219,232,681 9,606,737 $ 145,191,642
=============== =============== =============== ===============
<Caption>
FOCUSED LARGE-CAP GROWTH PORTFOLIO
----------------------------------------------------------------------------
CLASS B
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 2,004,715 $ 33,396,422 4,405,320 $ 59,990,061
Reinvested dividends -- -- -- --
Shares redeemed (2,689,157)# (44,757,492)# (6,491,464)## (85,144,539)##
--------------- --------------- --------------- ---------------
Net increase
(decrease) (684,442) $ (11,361,070) (2,086,144) $ (25,154,478)
=============== =============== =============== ===============
<Caption>
CLASS C (1)
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 4,252,292 $ 70,735,137 5,830,245 $ 80,856,420
Reinvested dividends -- -- -- --
Shares redeemed (3,421,043) (56,879,320) (9,083,434) (119,169,916)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 831,249 $ 13,855,817 (3,253,189) $ (38,313,496)
=============== =============== =============== ===============
<Caption>
CLASS Z
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 455,205 $ 8,038,129 3,934,608 $ 51,814,860
Reinvested dividends -- -- -- --
Shares redeemed (128,066) (2,244,514) (352,170) (4,828,856)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 327,139 $ 5,793,615 3,582,438 $ 46,986,004
=============== =============== =============== ===============
</Table>
* Includes automatic conversion of 4,742 shares of Class B shares in the
amount of $61,037 to 4,738 shares of Class A shares in the amount of
$61,037
** Includes automatic conversion of 155 shares of Class B shares in the amount
of $1,949 to 154 shares of Class A shares in the amount of $1,949
# Includes automatic conversion of 114,803 shares of Class B shares in the
amount of $1,922,513 to 111,140 shares of Class A shares in the amount of
$1,922,513
## Includes automatic conversion of 80,813 shares of Class B shares in the
amount of $1,091,930 to 78,858 shares of Class A shares in the amount of
$1,091,930
(1) Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
68
<Page>
<Table>
<Caption>
FOCUSED MULTI-CAP GROWTH PORTFOLIO
----------------------------------------------------------------------------
CLASS A
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 2,733,804* $ 47,712,691* 2,843,217** $ 40,881,505**
Reinvested dividends -- -- -- --
Shares redeemed (850,158) (14,836,806) (1,672,980) (22,933,437)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 1,883,646 $ 32,875,885 1,170,237 $ 17,948,068
=============== =============== =============== ===============
<Caption>
FOCUSED MULTI-CAP GROWTH PORTFOLIO
----------------------------------------------------------------------------
CLASS B
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 449,334 $ 7,392,482 992,352 $ 13,189,961
Reinvested dividends -- -- -- --
Shares redeemed (1,593,894)* (26,277,553)* (2,083,989)** (26,713,297)**
--------------- --------------- --------------- ---------------
Net increase
(decrease) (1,144,560) $ (18,885,071) (1,091,637) $ (13,523,336)
=============== =============== =============== ===============
<Caption>
CLASS C (1)
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 418,982 $ 6,906,977 798,397 $ 10,801,980
Reinvested dividends -- -- -- --
Shares redeemed (371,355) (6,116,909) (975,020) (12,501,767)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 47,627 $ 790,068 (176,623) $ (1,699,787)
=============== =============== =============== ===============
<Caption>
CLASS X
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 9,983 $ 175,232 20,564 $ 283,701
Reinvested dividends -- -- -- --
Shares redeemed (262) (4,621) (280) (3,866)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 9,721 $ 170,611 20,284 $ 279,835
=============== =============== =============== ===============
<Caption>
CLASS Z
-----------------------------------
FOR THE YEAR ENDED
OCTOBER 31, 2003
-----------------------------------
SHARES AMOUNT
--------------- ---------------
Shares sold 2,977 $ 39,125
Reinvested dividends -- --
Shares redeemed (93,388) (1,210,513)
--------------- ---------------
Net increase
(decrease) (90,411) $ (1,171,388)
=============== ===============
<Caption>
FOCUSED 2000 GROWTH PORTFOLIO
----------------------------------------------------------------------------
CLASS A
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 5,613,625# $ 87,172,739# 5,899,642## $ 73,057,334##
Reinvested dividends -- -- -- --
Shares redeemed (328,118) (5,107,709) (993,567) (11,192,322)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 5,285,507 $ 82,065,030 4,906,075 $ 61,865,012
=============== =============== =============== ===============
<Caption>
FOCUSED 2000 GROWTH PORTFOLIO
----------------------------------------------------------------------------
CLASS B
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 549,119 $ 8,133,571 885,258 $ 10,482,435
Reinvested dividends -- -- -- --
Shares redeemed (238,245)# (3,563,788)# (326,573)## (3,727,558)##
--------------- --------------- --------------- ---------------
Net increase
(decrease) 310,874 $ 4,569,783 558,685 $ 6,754,877
=============== =============== =============== ===============
<Caption>
CLASS C (1)
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 1,292,248 $ 19,116,097 1,979,501 $ 23,643,075
Reinvested dividends -- -- -- --
Shares redeemed (452,801) (6,679,126) (585,302) (6,611,402)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 839,447 $ 12,436,971 1,394,199 $ 17,031,673
=============== =============== =============== ===============
<Caption>
CLASS I
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 85,602 $ 1,340,004 114,663 $ 1,387,865
Reinvested dividends -- -- -- --
Shares redeemed (38,805) (617,812) (47,447) (571,181)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 46,797 $ 722,192 67,216 $ 816,684
=============== =============== =============== ===============
</Table>
* Includes automatic conversion of 586,133 shares of Class B shares in the
amount of $9,598,635 to 533,898 shares of Class A shares in the amount of
$9,598,635
** Includes automatic conversion of 96,052 shares of Class B shares in the
amount of $1,279,778 to 91,172 shares of Class A shares in the amount of
$1,279,778
# Includes automatic conversion of 11,046 shares of Class B shares in the
amount of $161,485 to 10,549 shares of Class A shares in the amount of
$161,485
## Includes automatic conversion of 12,763 shares of Class B shares in the
amount of $149,682 to 12,263 shares of Class A shares in the amount of
$149,682
(1) Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
69
<Page>
<Table>
<Caption>
FOCUSED LARGE-CAP VALUE PORTFOLIO
----------------------------------------------------------------------------
CLASS A
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 11,362,466* $ 169,261,356* 11,164,974** $ 143,778,745**
Reinvested dividends 19,611 284,555 -- --
Shares redeemed (1,205,116) (17,838,692) (1,528,895) (18,747,948)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 10,176,961 $ 151,707,219 9,636,079 $ 125,030,797
=============== =============== =============== ===============
<Caption>
FOCUSED LARGE-CAP VALUE PORTFOLIO
----------------------------------------------------------------------------
CLASS B
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 509,860 $ 7,341,939 1,152,169 $ 13,726,217
Reinvested dividends -- -- -- --
Shares redeemed (330,180)* (4,758,203)* (1,046,137)** (12,150,032)**
--------------- --------------- --------------- ---------------
Net increase
(decrease) 179,680 $ 2,583,736 106,032 $ 1,576,185
=============== =============== =============== ===============
<Caption>
CLASS C (1)
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 1,483,880 $ 21,399,318 2,030,935 $ 24,948,014
Reinvested dividends -- -- -- --
Shares redeemed (411,832) (5,931,536) (914,148) (10,749,784)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 1,072,048 $ 15,467,782 1,116,787 $ 14,198,230
=============== =============== =============== ===============
<Caption>
CLASS Z
-----------------------------------
FOR THE YEAR ENDED
OCTOBER 31, 2003
-----------------------------------
SHARES AMOUNT
--------------- ---------------
Shares sold 5,087 $ 58,213
Reinvested dividends -- --
Shares redeemed (73,294) (830,005)
--------------- ---------------
Net increase
(decrease) (68,207) $ (771,792)
=============== ===============
<Caption>
FOCUSED MULTI-CAP VALUE PORTFOLIO
----------------------------------------------------------------------------
CLASS A
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 2,303,247# $ 42,486,954# 3,401,901## $ 50,839,590##
Reinvested dividends 68,571 1,207,548 -- --
Shares redeemed (969,497) (17,921,299) (3,452,491) (49,271,624)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 1,402,321 $ 25,773,203 (50,590) $ 1,567,966
=============== =============== =============== ===============
<Caption>
FOCUSED MULTI-CAP VALUE PORTFOLIO
----------------------------------------------------------------------------
CLASS B
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 627,544 $ 11,323,880 1,446,047 $ 21,018,416
Reinvested dividends 12,892 222,518 -- --
Shares redeemed (1,101,181)# (19,823,573)# (2,979,186)## (42,182,230)##
--------------- --------------- --------------- ---------------
Net increase
(decrease) (460,745) $ (8,277,175) (1,533,139) $ (21,163,814)
=============== =============== =============== ===============
<Caption>
CLASS C (1)
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 997,794 $ 17,971,192 1,760,206 $ 25,539,776
Reinvested dividends 15,585 268,896 -- --
Shares redeemed (1,487,743) (26,745,925) (4,386,143) (61,820,236)
--------------- --------------- --------------- ---------------
Net increase
(decrease) (474,364) $ (8,505,837) (2,625,937) $ (36,280,460)
=============== =============== =============== ===============
<Caption>
CLASS I
----------------------------------------------------------------------------
FOR THE PERIOD ENDED
FEBRUARY 23, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 65,871 $ 1,231,063 311,347 $ 4,469,389
Reinvested dividends 8,233 145,227 -- --
Shares redeemed (1,063,459) (20,570,207) (274,719) (3,956,655)
--------------- --------------- --------------- ---------------
Net increase
(decrease) (989,355) $ (19,193,917) 36,628 $ 512,734
=============== =============== =============== ===============
</Table>
* Includes automatic conversion of 16,724 shares of Class B shares in the
amount of $241,712 to 16,200 shares of Class A shares in the amount of
$241,712
** Includes automatic conversion of 18,371 shares of Class B shares in the
amount of $220,181 to 17,990 shares of Class A shares in the amount of
$220,181
# Includes automatic conversion of 33,964 shares of Class B shares in the
amount of $618,492 to 33,239 shares of Class A shares in the amount of
$618,492
## Includes automatic conversion of 53,680 shares of Class B shares in the
amount of $777,457 to 52,630 shares of Class A shares in the amount of
$777,457
(1) Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
70
<Page>
<Table>
<Caption>
FOCUSED 2000 VALUE PORTFOLIO
----------------------------------------------------------------------------
CLASS A
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 6,754,244* $ 133,672,689* 6,156,504** $ 94,329,924**
Reinvested dividends -- -- 148,931 2,019,509
Shares redeemed (941,488) (18,853,250) (1,667,184) (23,769,217)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 5,812,756 $ 114,819,439 4,638,251 $ 72,580,216
=============== =============== =============== ===============
<Caption>
FOCUSED 2000 VALUE PORTFOLIO
----------------------------------------------------------------------------
CLASS B
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 546,694 $ 10,320,569 788,276 $ 11,337,972
Reinvested dividends -- -- 153,805 2,008,694
Shares redeemed (384,968)* (7,274,578)* (878,722)** (12,121,594)**
--------------- --------------- --------------- ---------------
Net increase
(decrease) 161,726 $ 3,045,991 63,359 $ 1,225,072
=============== =============== =============== ===============
<Caption>
CLASS C (1)
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 1,143,982 $ 21,583,740 1,487,928 $ 21,321,604
Reinvested dividends -- -- 183,343 2,398,130
Shares redeemed (446,478) (8,440,913) (1,126,602) (15,559,169)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 697,504 $ 13,142,827 544,669 $ 8,160,565
=============== =============== =============== ===============
<Caption>
CLASS Z
-----------------------------------
FOR THE YEAR ENDED
OCTOBER 31, 2003
-----------------------------------
SHARES AMOUNT
--------------- ---------------
Shares sold 19,487 $ 274,427
Reinvested dividends 5,144 71,807
Shares redeemed (142,181) (1,957,100)
--------------- ---------------
Net increase
(decrease) (117,550) $ (1,610,866)
=============== ===============
</Table>
<Table>
<Caption>
FOCUSED GROWTH AND INCOME PORTFOLIO
----------------------------------------------------------------------------
CLASS A
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 3,199,958# $ 49,981,981# 5,161,219## $ 68,951,887##
Reinvested dividends -- -- -- --
Shares redeemed (1,017,542) (15,930,641) (2,081,171) (26,598,768)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 2,182,416 $ 34,051,340 3,080,048 $ 42,353,119
=============== =============== =============== ===============
<Caption>
FOCUSED GROWTH AND INCOME PORTFOLIO
----------------------------------------------------------------------------
CLASS B
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 942,673 $ 14,214,815 1,886,148 $ 24,143,100
Reinvested dividends -- -- -- --
Shares redeemed (664,065)# (9,954,647)# (1,397,813)## (17,342,285)##
--------------- --------------- --------------- ---------------
Net increase
(decrease) 278,608 $ 4,260,168 488,335 $ 6,800,815
=============== =============== =============== ===============
<Caption>
CLASS C (1)
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 1,753,316 $ 26,174,415 4,143,039 $ 53,289,239
Reinvested dividends -- -- -- --
Shares redeemed (1,028,802) (15,408,118) (1,867,820) (23,015,446)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 724,514 $ 10,766,297 2,275,219 $ 30,273,793
=============== =============== =============== ===============
<Caption>
CLASS X
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 564,403 $ 8,875,828 1,070,566 $ 13,895,227
Reinvested dividends -- -- -- --
Shares redeemed (81,449) (1,279,221) (152,108) (2,098,143)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 482,954 $ 7,596,607 918,458 $ 11,797,084
=============== =============== =============== ===============
<Caption>
CLASS Z
-----------------------------------
FOR THE YEAR ENDED
OCTOBER 31, 2003
-----------------------------------
SHARES AMOUNT
--------------- ---------------
Shares sold 1,217 $ 14,955
Reinvested dividends -- --
Shares redeemed (28,814) (354,826)
--------------- ---------------
Net increase
(decrease) (27,597) $ (339,871)
=============== ===============
</Table>
* Includes automatic conversion of 24,460 shares of Class B shares in the
amount of $460,894 to 23,392 shares of Class A shares in the amount of
$460,894
** Includes automatic conversion of 40,690 shares of Class B shares in the
amount of $579,953 to 39,261 shares of Class A shares in the amount of
$579,953
# Includes automatic conversion of 37,112 shares of Class B shares in the
amount of $553,703 to 35,579 shares of Class A shares in the amount of
$553,703
## Includes automatic conversion of 43,998 shares of Class B shares in the
amount of $566,723 to 42,487 shares of Class A shares in the amount of
$566,723
(1) Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
71
<Page>
<Table>
<Caption>
FOCUSED INTERNATIONAL EQUITY PORTFOLIO
----------------------------------------------------------------------------
CLASS A
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 4,347,988* $ 70,513,646* 5,741,743** $ 74,258,563**
Reinvested dividends 27,068 422,536 -- --
Shares redeemed (195,287) (3,189,911) (2,871,746) (35,568,100)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 4,179,769 $ 67,746,271 2,869,997 $ 38,690,463
=============== =============== =============== ===============
<Caption>
FOCUSED INTERNATIONAL EQUITY PORTFOLIO
----------------------------------------------------------------------------
CLASS B
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 176,248 $ 2,819,523 230,031 $ 2,918,972
Reinvested dividends 2,586 39,817 -- --
Shares redeemed (55,646)* (899,118)* (132,214)** (1,628,224)**
--------------- --------------- --------------- ---------------
Net increase
(decrease) 123,188 $ 1,960,222 97,817 $ 1,290,748
=============== =============== =============== ===============
<Caption>
CLASS C (1)
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 578,380 $ 9,230,867 1,447,206 $ 18,322,401
Reinvested dividends 6,049 93,094 -- --
Shares redeemed (115,564) (1,870,503) (1,142,940) (14,469,244)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 468,865 $ 7,453,458 304,266 $ 3,853,157
=============== =============== =============== ===============
<Caption>
FOCUSED TECHNOLOGY PORTFOLIO
----------------------------------------------------------------------------
CLASS A
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 1,932,243# $ 9,829,652# 3,012,987## $ 11,599,707##
Reinvested dividends -- -- -- --
Shares redeemed (1,731,223) (8,756,896) (2,374,749) (8,735,244)
--------------- --------------- --------------- ---------------
Net increase
(decrease) 201,020 $ 1,072,756 638,238 $ 2,864,463
=============== =============== =============== ===============
<Caption>
FOCUSED TECHNOLOGY PORTFOLIO
----------------------------------------------------------------------------
CLASS B
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 1,090,730 $ 5,488,318 1,308,445 $ 4,820,897
Reinvested dividends -- -- -- --
Shares redeemed (567,973)# (2,857,009)# (1,410,577)## (5,065,370)##
--------------- --------------- --------------- ---------------
Net increase
(decrease) 522,757 $ 2,631,309 (102,132) $ (244,473)
=============== =============== =============== ===============
<Caption>
CLASS C (1)
----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
Shares sold 1,093,538 $ 5,482,196 1,698,507 $ 6,269,321
Reinvested dividends -- -- -- --
Shares redeemed (1,166,526) (5,751,885) (2,002,653) (6,759,199)
--------------- --------------- --------------- ---------------
Net increase
(decrease) (72,988) $ (269,689) (304,146) $ (489,878)
=============== =============== =============== ===============
<Caption>
CLASS Z
-----------------------------------
FOR THE YEAR ENDED
OCTOBER 31, 2003
-----------------------------------
SHARES AMOUNT
--------------- ---------------
Shares sold 222,161 $ 645,297
Reinvested dividends -- --
Shares redeemed (415,983) (1,201,374)
--------------- ---------------
Net increase
(decrease) (193,822) $ (556,077)
=============== ===============
</Table>
* Includes automatic conversion of 10,976 shares of Class B shares in the
amount of $178,004 to 10,823 shares of Class A shares in the amount of
$178,004
** Includes automatic conversion of 11,437 shares of Class B shares in the
amount of $143,793 to 11,317 shares of Class A shares in the amount of
$143,793
# Includes automatic conversion of 24,410 shares of Class B shares in the
amount of $121,468 to 23,875 shares of Class A shares in the amount of
$121,468
## Includes automatic conversion of 18,288 shares of Class B shares in the
amount of $59,953 to 17,999 shares of Class A shares in the amount of
$59,953
(1) Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
72
<Page>
<Table>
<Caption>
FOCUSED DIVIDEND STRATEGY PORTFOLIO
--------------------------------------------------------------------------------------------------
CLASS A
--------------------------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE ONE MONTH ENDED
APRIL 30, 2004 OCTOBER 31, 2003 FOR THE YEAR ENDED
(UNAUDITED) (UNAUDITED) SEPTEMBER 30, 2003
----------------------------- ------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ ------------ ------------ ------------ ------------ ------------
Shares sold 1,913,716* $ 23,361,691* 249,332** $ 2,768,281** 4,137,543*** $ 43,248,430***
Reinvested dividends 27,216 328,325 -- -- 50,994 536,198
Shares redeemed (1,276,683) (15,519,919) (87,852) (977,987) (907,701) (9,512,999)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) 664,249 $ 8,170,097 161,480 $ 1,790,294 3,280,836 $ 34,271,629
============ ============ ============ ============ ============ ============
<Caption>
CLASS B
--------------------------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE ONE MONTH ENDED
APRIL 30, 2004 OCTOBER 31, 2003 FOR THE YEAR ENDED
(UNAUDITED) (UNAUDITED) SEPTEMBER 30, 2003
----------------------------- ------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ ------------ ------------ ------------ ------------ ------------
Shares sold 530,270 $ 6,434,330 140,458 $ 1,557,946 2,939,297 $ 30,620,040
Reinvested dividends 20,225 242,554 -- -- 54,728 573,067
Shares redeemed (408,047)* (4,954,717)* (42,743)** (472,939)** (719,097)*** (7,433,983)***
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) 142,448 $ 1,722,167 97,715 $ 1,085,007 2,274,928 $ 23,759,124
============ ============ ============ ============ ============ ============
<Caption>
CLASS C (1)
--------------------------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE ONE MONTH ENDED
APRIL 30, 2004 OCTOBER 31, 2003 FOR THE YEAR ENDED
(UNAUDITED) (UNAUDITED) SEPTEMBER 30, 2003
----------------------------- ------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ ------------ ------------ ------------ ------------ ------------
Shares sold 1,858,770 $ 22,554,291 295,919 $ 3,281,679 5,206,591 $ 54,065,096
Reinvested dividends 31,301 375,654 -- -- 60,521 634,436
Shares redeemed (553,143) (6,740,194) (64,912) (721,003) (853,166) (8,786,873)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) 1,336,928 $ 16,189,751 231,007 $ 2,560,676 4,413,946 $ 45,912,659
============ ============ ============ ============ ============ ============
</Table>
- ----------
* Includes automatic conversion of 8,448 shares of Class B shares in the
amount of $103,929 to 8,415 shares of Class A shares in the amount of
$103,929
** Includes automatic conversion of 10 shares of Class B shares in
the amount of $110 to 10 shares of Class A shares in the amount of $110
*** Includes automatic conversion of 13,057 shares of Class B shares in the
amount of $147,446 to 12,997 shares of Class A shares in the amount of
$147,446
(1) Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
NOTE 10. DIRECTORS' RETIREMENT PLAN (UNAUDITED)
The Directors of the SunAmerica Focused Series, Inc. have adopted the AIG
SunAmerica Disinterested Trustees' and Directors' Retirement Plan (the
"Retirement Plan") effective January 1, 1993 for the unaffiliated Directors. The
Retirement Plan provides generally that if an unaffiliated Director who has at
least 10 years of consecutive service as a disinterested Director of any of the
AIG SunAmerica mutual funds (an "Eligible Director"), retires after reaching age
60 but before age 70, or who has at least 5 years of consecutive service after
reaching age 65 but before 70, or dies while a Director, such person will be
eligible to receive a retirement or death benefit from each AIG SunAmerica
mutual fund with respect to which he or she is an Eligible Director. As of each
birthday, prior to the 70th birthday, but in no event for a period greater than
10 years, each Eligible Director will be credited with an amount equal to 50% of
his or her regular fees (excluding committee fees) for services as a
Disinterested Director of each AIG SunAmerica mutual fund for the calendar year
in which such birthday occurs. In addition, an amount equal to 8.50% of any
amounts credited under the preceding clause during prior years, is added to each
Eligible Director's account until such Eligible Director reaches his or her 70th
birthday. An eligible Director may receive any benefits payable under the
Retirement Plan, at his or her election, either in one lump sum or in up to
fifteen annual installments. Any undistributed amounts shall continue to accrue
interest at 8.50%.
73
<Page>
<Table>
<Caption>
RETIREMENT PLAN RETIREMENT PLAN RETIREMENT PLAN
PORTFOLIO LIABILITY EXPENSE PAYMENTS
- --------- --------------- --------------- ---------------
AS OF APRIL 30, 2004
-------------------------------------------------
Focused Equity Strategy $ 2,324 $ 1,520 $ 8
Focused Multi-Asset Strategy 1,785 1,442 6
Focused Balanced Strategy 3,488 1,802 15
Focused Fixed Income and Equity Strategy 443 352 1
Focused Fixed Income Strategy 173 134 1
Focused Large-Cap Growth Fund 138,104 18,376 2,437
Focused Multi-Cap Growth Fund 49,820 3,559 1,077
Focused 2000 Growth Fund 4,052 1,544 43
Focused Large-Cap Value Fund 12,226 2,475 208
Focused Multi-Cap Value Fund 39,466 7,572 593
Focused 2000 Value Fund 14,302 2,990 234
Focused Growth and Income Fund 22,013 3,974 364
Focused International Equity Fund 2,494 847 30
Focused Technology Fund 7,669 855 138
Focused Dividend Strategy Fund 11,932 1,805 236
</Table>
NOTE 11. COMMITMENTS AND CONTINGENCIES
The AIG SunAmerica Family of Mutual Funds has established a $75 million
committed and $50 million uncommitted line of credit with State Street Bank &
Trust Co., the Portfolios' custodian. Interest is currently payable at the
Federal Funds Rate plus 50 basis points on the committed line and State Street's
discretionary bid rate on the uncommitted line of credit. There is also a
commitment fee of 10 basis points per annum for the daily unused portion of the
committed line of credit which is included in interest expense on the Statement
of Operations. Borrowings under the line of credit will commence when the
respective Portfolio's cash shortfall exceeds $100,000. During the period ending
April 30, 2004, the following Portfolios had borrowings:
<Table>
<Caption>
DAYS INTEREST AVERAGE DEBT WEIGHTED AVERAGE
OUTSTANDING CHARGES UTILIZED INTEREST
------------ ------------ ------------ ----------------
Focused Large-Cap Growth Portfolio 7 $ 197 $ 663,090 1.54%
Focused Multi-Cap Growth Portfolio 3 653 5,220,222 1.50
Focused Multi-Cap Value Portfolio 14 3,548 6,033,217 1.52
Focused International Equity Portfolio 3 140 1,116,654 1.50
Focused Technology Portfolio 15 277 440,698 1.54
Focused Dividend Strategy Portfolio 11 468 1,005,289 1.53
</Table>
At April 30, 2004, there were no borrowings outstanding.
Pursuant to exemptive relief granted by the Securities and Exchange Commission,
the Portfolios are permitted to participate in an inter-fund lending program
among investment companies advised by SunAmerica or an affiliate. The inter-fund
lending program allows the participating Portfolios to borrow money from and
loan money to each other for the temporary or emergency purposes. An inter-fund
loan will be made under this facility only if the participating Portfolios
receive a more favorable interest rate than would otherwise be available from a
typical bank for a comparable transaction. For the period ended April 30, 2004,
none of the Portfolios participated in the program.
NOTE 12. INVESTMENT CONCENTRATION
All Portfolios, except Focused Dividend Strategy Portfolio, may invest
internationally, including in "emerging market" countries. These securities may
be denominated in currencies other than U.S. dollars. While investing
internationally may reduce portfolio risk by increasing the diversification of
portfolio investment, the value of the investment may be affected by fluctuating
currency values, changing local and regional economic, political and social
conditions, and greater market volatility. In addition, foreign securities may
not be as liquid as domestic securities. These risks are primarily risks of the
Focused International Equity Portfolio. At April 30, 2004, the Focused
International Equity Portfolio had approximately 23.5% and 19.4% of its net
assets invested in equity securities of companies domiciled in United Kingdom
and Japan, respectively.
74
<Page>
SUNAMERICA FOCUSED PORTFOLIOS
DIRECTOR INFORMATION -- (UNAUDITED)
The following table contains basic information regarding the Directors that
oversee operations of the Funds and other investment companies within the Fund
Complex.
<Table>
<Caption>
NUMBER OF
TERM OF PORTFOLIOS IN
POSITION OFFICE AND FUND OTHER
NAME, HELD WITH LENGTH OF COMPLEX DIRECTORSHIPS
ADDRESS AND SUNAMERICA TIME PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
DATE OF BIRTH* FUND SERVED(4) DURING PAST 5 YEARS DIRECTOR(1) DIRECTOR(2)
- -------------- ------------- ------------ ------------------------------ -------------- ---------------------------
Jeffrey S. Burum(5) Director 2004- Founder and CEO of 32 None
DOB: February 27, 1963 present National Housing
Development Corp.
S. James Coppersmith (5) Director 1996-2004 Retired. 41 Director of BJ's Wholesale
DOB: February 21, 1933 Club, Inc., Director Boston
Stock Exchange.
Judith L. Craven Director 2001- Retired. 70 Director, A.G. Belo
DOB: October 6, 1945 present Corporation (1992 to
present); Director, Sysco
Corporation (1996 to
present); Director, Luby's,
Inc. (1998 to present).
William F. Devin Director 2001- Retired. 70 Member of the Board of
DOB: December 30, 1938 present Governors, Boston Stock
Exchange (1985-Present).
Samuel M. Eisenstat Chairman 1996- Attorney, solo practitioner. 42 Director of North European
DOB: March 7, 1940 of the present Oil Royalty Trust.
Board
Stephen J. Gutman Director 1996- Partner and Member of 42 None
DOB: May 10, 1943 present Managing Directors, Beau
Brummel-Soho LLC
(Licensing of menswear
specialty retailing and other
activities) (June 1988 to
present)
Peter A. Harbeck (3) Director 1996- President, CEO and Director, 79 None
DOB: January 23, 1954 present AIG SunAmerica Asset
Management Corp.
("SAAMCo.") (August 1995
to present); Director, AIG
SunAmerica Capital Services,
Inc. ("SACS") (August 1993
to present)
</Table>
75
<Page>
<Table>
<Caption>
NUMBER OF
TERM OF PORTFOLIOS IN
POSITION OFFICE AND FUND OTHER
NAME, HELD WITH LENGTH OF COMPLEX DIRECTORSHIPS
ADDRESS AND SUNAMERICA TIME PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
DATE OF BIRTH* FUND SERVED(4) DURING PAST 5 YEARS DIRECTOR(1) DIRECTOR(2)
- ------------------------ ----------------- ------------ --------------------------- ------------- ----------------------
Sebastiano Sterpa (5) Director 1996-2004 Founder and Chairman of the 32 Director, Real Estate
DOB: July 18, 1929 Board of the Sterpa Group Business Service and
(Real Estate Investment and Countrywide Financial.
Management) (1962 to
present)
</Table>
- ----------
* The business address for each Director is the Harborside Financial Center,
3200 Plaza 5, Jersey City, NJ 07311-4992.
(1) The "Fund Complex" consists of all registered investment company portfolios
for which the Business Manager serves as investment advisor or business
manager. The "Fund Complex" includes the SunAmerica Equity Funds (9 funds),
SunAmerica Income Funds (6 funds), SunAmerica Money Market Funds (2 funds),
SunAmerica Senior Floating Rate Fund, Inc. (1 fund), SunAmerica Focused
Series, Inc. (15 portfolios,) Anchor Series Trust (9 portfolios), Seasons
Series Trust (19 portfolios), SunAmerica Series Trust (32 portfolios),
VALIC Company I (22 portfolios), and VALIC Company II (15 funds).
(2) Directorships of companies required to report to the Securities and
Exchange Commission under the Securities Exchange Act of 1934 (I.e. "public
companies") or other investment companies registered under the Investment
Company Act of 1940.
(3) Interested Trustee, as defined within the Investment Company Act of 1940.
(4) Directors serve until their successors are duly elected and qualified,
subject to the Director's retirement plan discussed in Note 10 of the
financial statements.
(5) Effective on February 23, 2004, S. James Coppersmith and Sebastiano Sterpa
retired as directors and Jeffrey S. Burum began serving as director.
Additional information concerning the Directors is contained in the Statement of
Additional Information and is available without charge by calling (800)
858-8850.
VOTING PROXIES ON FUND PORTFOLIO SECURITIES.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies related to securities held in the Fund's Portfolios which is
available in the Fund's Statement of Additional Information, may be obtained
without charge upon request, by calling (800) 858-8850. This information is also
available from the EDGAR database on the Securities and Exchange Commission's
Internet site at http://www.sec.gov.
76
<Page>
SPECIAL MEETING OF SHAREHOLDERS
PROXY VOTING RESULTS -- APRIL 30, 2004 (UNAUDITED)
A special meeting of Shareholders of SunAmerica Focused Portfolios was held on
January 30, 2004. The Portfolio voted in favor of adopting the following
proposal.
1. To elect as Directors/Trustees the following nominees:
<Table>
Jeffrey S. Burum
Votes in favor 262,195,553
Votes withheld 2,892,701
Dr. Judith L. Craven
Votes in favor 262,243,920
Votes withheld 2,844,335
William F. Devin
Votes in favor 262,270,037
Votes withheld 2,818,218
Samuel M. Eisenstat
Votes in favor 262,301,021
Votes withheld 2,787,234
Stephen J. Gutman
Votes in favor 262,307,736
Votes withheld 2,780,519
Peter A. Harbeck
Votes in favor 262,235,863
Votes withheld 2,852,392
William J. Shea*
Votes in favor 262,216,703
Votes withheld 2,871,552
</Table>
A special meeting of Shareholders of SunAmerica Focused Portfolios was held on
February 13, 2004. The Portfolio voted in favor of adopting the following
proposals.
2(a) To approve an amendment to the Portfolio's Articles of Incorporation
with respect to its "redemption in kind" provisions.
<Table>
Votes in favor of the proposal 165,462,411
Votes Against the proposal 3,695,201
Votes Abstained 4,455,294
Broker Non-votes 97,456,180
</Table>
2(b) To approve an amendment to the Portfolio's Articles of Incorporation
with respect to its "winding up" provisions.
<Table>
Votes in favor of the proposal 165,879,073
Votes Against the proposal 3,118,486
Votes Abstained 4,615,347
Broker Non-votes 97,456,180
</Table>
* William Shea never assumed his position on the Board of Directors.
77
<Page>
3. To approve the Agreement and Plan of Reorganization, pursuant to which the
Focused Dividend Strategy Portfolio of SunAmerica Equity Funds will be
reorganized into newly created Focused Dividend Strategy Portfolio of
SunAmercia Focused Series, Inc.
<Table>
Votes in favor of the proposal 6,109,675
Votes Against the proposal 129,678
Votes Abstained 137,598
Broker Non-votes 2,259,219
</Table>
78
<Page>
THE SUNAMERICA FOCUSED PORTFOLIOS
FOCUSED LARGE-CAP VALUE
[DVM DREMAN VALUE MANAGEMENT, L.L.C. LOGO]
[OAKMARK FAMILY OF FUNDS LOGO]
[WELLINGTON (R) MANAGEMENT LOGO]
FOCUSED GROWTH AND INCOME
[MARSICO CAPITAL MANAGEMENT, L.L.C. LOGO]
[OAKMARK FAMILY OF FUNDS LOGO]
[THORNBURG INVESTMENT MANAGEMENT LOGO]
FOCUSED LARGE-CAP GROWTH
[ALGER LOGO]
[MARSICO CAPITAL MANAGEMENT, L.L.C. LOGO]
[SALOMON BROTHERS ASSET MANAGEMENT LOGO]
FOCUSED MULTI-CAP VALUE
[THIRD AVENUE FUNDS LOGO]
[AMERICAN CENTURY LOGO]
[JPMORGAN FLEMING ASSET MANAGEMENT LOGO]
FOCUSED MULTI-CAP GROWTH
[JANUS CAPITAL GROUP LOGO]
[CREDIT SUISSE ASSET MANAGEMENT LOGO]
[AIG SUNAMERICA ASSET MANAGEMENT LOGO]
FOCUSED 2000 VALUE
[BP BOSTON PARTNERS ASSET MANAGEMENT, L.P. LOGO]
[JANUS CAPITAL GROUP LOGO]
FOCUSED 2000 GROWTH
[BARON FUNDS LOGO]
[OBERWELS ASSET MANAGEMENT, INC. LOGO]
DEUTSCHE ASSET MANAGEMENT
[A MEMBER OF THE DEUTSCHE BANK GROUP LOGO]
FOCUSED DIVIDEND STRATEGY
[AIG SUNAMERICA ASSET MANAGEMENT LOGO]
FOCUSED INTERNATIONAL EQUITY
[THE BOSTON COMPANY ASSET MANAGEMENT, L.L.C. LOGO]
[OAKMARK FAMILY OF FUNDS LOGO]
[M F S (R) INVESTMENT MANAGEMENT LOGO]
FOCUSED TECHNOLOGY
[RCM LOGO]
[BARON FUNDS LOGO]
[AIG SUNAMERICA ASSET MANAGEMENT LOGO]
DISTRIBUTED BY:
AIG SUNAMERICA CAPITAL SERVICES, INC.
HARBORSIDE FINANCIAL CENTER
3200 PLAZA 5
JERSEY CITY, NJ 07311
800-858-8850 EXT. 6003
This report is submitted solely for the general information of shareholders of
the fund. Distribution of this report to persons other than shareholders of the
fund is authorized only in connection with a currently effective prospectus,
setting forth details of the Fund, which muse precede or accompany this report.
The accompanying report has not been audited by independent accountants and
accordingly no opinion has been expressed thereon.
www.sunamericafunds.com
FOSAN-4/04
[AIG SUNAMERICA MUTUAL FUNDS LOGO]
<Page>
Item 2. Code of Ethics
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 10. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures. Based on that evaluation, the
registrant's management, including the President and Treasurer,
concluded that the registrant's disclosure controls and procedures are
effective.
(b) There was no change in the Registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act) that occurred during the Registrant's first fiscal
half-year that has materially affected, or is reasonably likely to
materially affect, the Registrant's internal contro1 over financial
reporting.
Item 11. Exhibits.
(a) (1) Not applicable.
(2) Certification pursuant to Rule 30a-2 under the Investment Company
Act of 1940 (17 CFR 270.30a-2) attached hereto as Exhibit 99.CERT.
(3) Not applicable.
(b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 attached hereto as Exhibit 99.906.CERT.
1
<Page>
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 Focused Series, Inc.
By: /s/ Robert M. Zakem
-------------------
Robert M. Zakem
President
Date: June 23, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Robert M. Zakem
-------------------
Robert M. Zakem
President
Date: June 23, 2004
By: /s/ Donna M. Handel
-------------------
Donna M. Handel
Treasurer
Date: June 23, 2004
2