UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-3807
---------------------------------------------
SunAmerica Money Market Funds, Inc.
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(Exact name of registrant as specified in charter)
Harborside Financial Center, 3200 Plaza 5 Jersey City, NJ 07311
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(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
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(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6363
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Date of fiscal year end: December 31, 2003
--------------------------
Date of reporting period: December 31, 2003
-------------------------
Item 1. Reports to Shareholders
SunAmerica Money Market Funds, Inc., Annual Report at December 31, 2003.
[GRAPHIC]
SunAmerica
THE RETIREMENT SPECIALIST
Money Market Funds
2003 ANNUAL REPORT
[LOGO] AIG SunAmerica
Mutual Funds
Table of Contents
PRESIDENT'S LETTER................... 1
MONEY MARKET FUNDS REVIEW AND OUTLOOK 2
STATEMENT OF ASSETS AND LIABILITIES.. 5
STATEMENT OF OPERATIONS.............. 6
STATEMENT OF CHANGES IN NET ASSETS... 7
FINANCIAL HIGHLIGHTS................. 8
PORTFOLIO OF INVESTMENTS............. 10
NOTES TO FINANCIAL STATEMENTS........ 15
REPORT OF INDEPENDENT AUDITORS....... 23
DIRECTORS INFORMATION................ 24
December 31, 2003 ANNUAL REPORT
Dear Shareholder,
In the pages that follow, we are pleased to present you with commentary from
the portfolio managers of the SunAmerica Money Market Fund and the SunAmerica
Municipal Money Market Fund. On December 31, 2003, the annual reporting period
for both Funds came to a close.
Over the past year, as expected, these Funds continued to be affected by
short-term interest rates, which currently are at their lowest level since
1958, with the federal funds rate now at 1%. Although low interest rates have
kept returns for both Funds within a narrow range, they remained invested in
the highest quality of money market and municipal money market instruments
available. The portfolio managers have also employed strategies to augment
yields when market conditions permit.
Despite recent improvements in the equities markets, employment growth, the
most telling indicator of a sustainable economic recovery, has not increased
commensurately. We therefore remain convinced that our priorities, which focus
first on the preservation of principal, in addition to the pursuit of liquidity
and current income, are well chosen. We will continue to pursue all of these
goals to the greatest extent possible, paying keen attention to yield enhancing
investment opportunities as they present themselves.
We thank you for your continued investment in our Funds.
Sincerely,
/s/ Peter A. Harbeck
Peter A. Harbeck
President
AIG SunAmerica Asset Management Corp.
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Pastperformance is no guarantee of future results.
SunAmerica Money Market Fund
Brian Wiese, Portfolio Manager
AIG SunAmerica Asset Management Corp.
In what ways did market conditions affect the Fund's performance during the
annual period?
In June, Federal Open Market Committee policy makers lowered the federal
funds rate by 25 basis points, to 1.00%. This decision was not welcomed by the
fixed income markets, as most participants were anticipating a 50 basis point
reduction. As a result, money market yields increased dramatically from late
June through early August. However, despite very strong economic growth,
inflationary pressures remained nonexistent. Thus, along with extremely
disappointing employment growth, money market yields declined, finishing the
year close to their multi-decade lows.
In response to these conditions, we have been using a barbell approach to
structure the portfolio, investing in first tier securities with maturities of
one year to 13 months in order to compensate for the current very low yields
and limited availability of short-term instruments. This strategy has performed
well over the past couple of years because it has enabled us to augment overall
returns by going further out on the yield curve while maintaining desired
levels of liquidity.
What role did sector selection play in the performance of the Fund this year?
Rather than sector allocation, which hasn't helped or hurt the Fund's
performance this year, value was added through our active management of the
Fund's duration. The Fund's weighted average to maturity has been consistently
longer than the Donoghue Average.
What role did individual securities selection play in terms of affecting the
Fund's performance over the past year?
Over the past year, the short end of the yield curve has been quite flat. By
purchasing the more attractive yields available further out on the curve,
specifically 12 and 13 month maturities, we compensated for low yields on the
short and intermediate segments of the curve, using, as previously noted, a
barbell strategy in structuring the portfolio. Specifically for the third and
fourth quarter, which were preceded by a Federal Funds rate reduction of 25
basis points on June 25, 2003, we used back-ups in short-term rates to extend
the duration of the portfolio via the purchase of highly rated one year bullet
and callable paper.
- --------
An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in the Fund.
Pastperformance is no guarantee of future results.
2
SunAmerica Municipal Money Market Fund
Hutch Bryan, Portfolio Manager
AIG Global Investment Corp.
In what ways did market conditions affect the Fund's performance during the
annual period?
In the bond markets in general, investors are normally rewarded with higher
yields by investing in bonds and other debt instruments with longer maturities.
Generally speaking, the longer the maturity, the higher the yield paid to the
investor. The dynamics governing these norms were not always present throughout
this past year, however. During three intervals over the last twelve months, we
actually had an inverted yield curve, which means that returns for short-term
instruments yielded more than longer-term instruments.
Short-term rates, those represented by the BMA Weekly, the Bond Market
Association Index for seven-day reset floating securities, were actually
resetting at a higher rate than the MMD, the Municipal Market Data One Year
Index. As a result, the traditional formula for extending maturities to pick up
additional yield was not always a viable option for the SunAmerica Municipal
Money Market Fund over the past year. As an alternative, we took advantage of
the inversions by investing a little bit more heavily in the shorter part of
the municipal money market yield curve.
In August and early September, this situation reversed to some extent, with
longer-term instruments yielding about 30 basis points more than their
shorter-term counterparts. At that time, we took advantage of this more
traditional dynamic to gain yield through investment in securities with
longer-term maturities.
With respect to some of the variable rate securities that the Fund holds, we
focused on purchasing securities that reset at yield spreads higher than those
of the BMA. Overall we ended the year with a weighted average maturity of about
45 days. Throughout the year, we maintained the Fund's high credit quality,
purchasing only the highest Moody's P1 rated securities.
What role did sector selection play in the performance of the Fund this year?
Sector selection did play an important role in the selection of our variable
rate securities, which comprised approximately 80% of the Fund as of December
31, 2003. Over the past year, we purchased more revenue bonds than general
obligation bonds, especially those in the health care and industrial
development sectors, along with certain lease revenue credits. We did so
because the interest rates at which they reset generally had more of a positive
spread than the BMA index. Although general obligation bonds are sometimes
perceived as safer, all of the securities in the Fund are Tier One securities,
meaning that they are of the highest quality.
- --------
An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in the Fund.
Pastperformance is no guarantee of future results.
3
SunAmerica Municipal Money Market Fund
On the fixed-rate side of the portfolio, which accounts for approximately
20% of the portfolio as of December 31, 2003, the securities we bought had
maturities of one year to 13 months. All of these securities trade within a
tight range. As a result, sector selection was often not as important as
specific credit selection. Over the past year, we had two methods by which we
were able to increase overall yield for the Fund with fixed-rate securities.
Our first method involved identifying general market issuers that came to
market cheaper than their specialty state competitors. This can occur when
sellers are placing very large issues with buyers, and therefore have a strong
incentive to sell their municipal money market securities at a slight discount.
We also sought out issues that came to market at times when the market could be
expected to be a little softer. This occurs when yields are seasonally higher,
in September, October and December.
What role did individual securities selection play in terms of affecting the
Fund's performance over the past year?
Generally speaking, the judicious selection of certain individual securities
helped us to increase the Fund's overall yield during the past year. Two
individual issues we recently purchased contributed to the portfolio in this
manner. In August, we purchased $5,000,000 worth of Michigan Municipal Bond
Authority. That same month, we also purchased $5,000,000 Texas State Tax and
Revenue Anticipation Notes. Both are examples of securities that we bought from
large issuances. The Michigan credit was bought as part of a transaction that
overall sold $700 million worth of municipal securities. We purchased the Texas
tranche from a transaction that totaled $7 billion overall. Both issuers came
to market at a time of year during which the market was slightly softer than
normal. Since there is a high volume of Michigan and Texas issuance at that
time of year, both timing as well as the size of these deals, made the yields
of these issues compelling.
- --------
An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in the Fund.
Pastperformance is no guarantee of future results.
4
SunAmerica Money Market Funds
STATEMENT OF ASSETS AND LIABILITIES -- December 31, 2003
Money
Market Municipal Money
Fund Market Fund
-------------- ---------------
ASSETS:
Investment securities, at value*............................ $1,724,002,444 $ 113,625,070
Cash........................................................ 567 3,212,693
Receivables for --
Fund shares sold.......................................... 4,842,903 2,765,728
Accrued interest.......................................... 1,264,308 215,789
Due from advisor............................................ -- 3,814
Due from distributor........................................ 38,640 2,103
Prepaid expenses............................................ 9,403 350
-------------- --------------
Total assets............................................. 1,730,158,265 119,825,547
-------------- --------------
LIABILITIES:
Payables for --
Fund shares repurchased................................... 9,378,338 2,470,186
Investment advisory and management fees................... 678,025 33,275
Distribution and service maintenance fees................. 261,739 16,467
Transfer agent fees and expenses.......................... 390,495 17,024
Accrued expenses............................................ 391,170 60,476
-------------- --------------
Total liabilities........................................ 11,099,767 2,597,428
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Net assets.............................................. $1,719,058,498 $ 117,228,119
============== ==============
NET ASSETS WERE COMPOSED OF:
Common stock, $.001 par value (10 billion shares authorized) $ 1,719,059 $ 117,227
Paid-in capital............................................. 1,717,240,573 117,110,310
-------------- --------------
1,718,959,632 117,227,537
Undistributed net investment income......................... 98,866 582
-------------- --------------
Net assets.............................................. $1,719,058,498 $ 117,228,119
============== ==============
Class A:
Net assets.................................................. $1,644,603,468 $ 113,802,093
Shares outstanding.......................................... 1,644,600,090 113,801,394
Net asset value and redemption price per share
(excluding any applicable contingent deferred sales charge) $ 1.00 $ 1.00
============== ==============
Class B:
Net assets.................................................. $ 44,528,851 $ 3,167,738
Shares outstanding ......................................... 44,529,083 3,167,716
Net asset value and redemption price per share
(excluding any applicable contingent deferred sales charge) $ 1.00 $ 1.00
============== ==============
Class II
Net assets.................................................. $ 20,290,014 $ 258,288
Shares outstanding ......................................... 20,290,964 258,293
Net asset value and redemption price per share
(excluding any applicable contingent deferred sales charge) $ 1.00 $ 1.00
============== ==============
Class I
Net assets.................................................. $ 9,636,165 $ --
Shares outstanding.......................................... 9,638,430 --
Net asset value and redemption price per share.............. $ 1.00 $ --
============== ==============
*Amortized cost of investments.............................. $1,724,002,444 $ 113,625,070
============== ==============
See Notes to Financial Statements
5
SunAmerica Money Market Funds
STATEMENT OF OPERATIONS -- For the year ended December 31, 2003
Money Market Municipal Money
Fund Market Fund
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NET INVESTMENT INCOME:
Interest Income................................................ $21,954,003 $ 1,163,801
----------- -----------
EXPENSES:
Investment advisory and management fees........................ 8,343,367 373,819
Service fees -- Class A........................................ 2,592,201 154,583
Distribution and service fees -- Class B....................... 529,273 32,233
Distribution and service fees -- Class II...................... 244,264 1,518
Transfer agent fees and expenses -- Class A.................... 3,930,049 225,320
Transfer agent fees and expenses -- Class B.................... 165,333 13,216
Transfer agent fees and expenses -- Class II................... 77,506 4,627
Transfer agent fees and expenses -- Class I.................... 19,710 --
Registration fees -- Class A................................... 70,743 14,193
Registration fees -- Class B................................... 3,747 10,169
Registration fees -- Class II.................................. 7,205 7,339
Registration fees -- Class I................................... 6,778 --
Custodian fees................................................. 291,388 54,480
Printing expense............................................... 184,181 932
Audit and tax expenses......................................... 36,416 42,264
Legal fees..................................................... 19,779 4,908
Directors' fees and expenses................................... 187,458 10,032
Miscellaneous expenses......................................... 50,841 5,197
----------- -----------
Total expenses before reimbursements and custody credits.... 16,760,239 954,830
----------- -----------
Less: Expenses waived or reimbursed......................... (440,639) (82,069)
Custody credits earned on cash balances.................. (20,568) (2,409)
----------- -----------
Net expenses................................................ 16,299,032 870,352
----------- -----------
Net investment income.......................................... 5,654,971 293,449
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 5,654,971 $ 293,449
=========== ===========
See Notes to Financial Statements
6
SunAmerica Money Market Funds
STATEMENT OF CHANGES IN NET ASSETS
Money Market Fund Municipal Money Market Fund
------------------------------ -------------------------
For the year For the year For the year For the year
ended ended ended ended
December 31, December 31, December 31, December 31,
2003 2002 2003 2002
-------------- -------------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income.......................................... $ 5,654,971 $ 13,593,056 $ 293,449 $ 255,650
-------------- -------------- ------------ -----------
Net increase in net assets resulting from operations............. $ 5,654,971 $ 13,593,056 $ 293,449 $ 255,650
Dividends and distributions to shareholders from:
Net investment income (Class A)................................ (5,587,357) (13,331,197) (288,875) (254,054)
Net investment income (Class B)................................ (17,891) (156,928) (3,816) (7,293)
Net investment income (Class II)............................... (8,618) (82,581) (176) (403)
Net investment income (Class I)................................ (39,889) (92,863) -- --
-------------- -------------- ------------ -----------
Total dividends and distributions to shareholders................ (5,653,755) (13,663,569) (292,867) (261,750)
-------------- -------------- ------------ -----------
Increase (decrease) in net assets from capital share transactions
(Note 5)........................................................ (137,050,057) 671,802,549 25,292,765 85,299,083
-------------- -------------- ------------ -----------
Total increase (decrease) in net assets.......................... (137,048,841) 671,732,036 25,293,347 85,292,983
-------------- -------------- ------------ -----------
Net Assets:
Beginning of period.............................................. 1,856,107,339 1,184,375,303 91,934,772 6,641,789
-------------- -------------- ------------ -----------
End of period+................................................... $1,719,058,498 $1,856,107,339 $117,228,119 $91,934,772
============== ============== ============ ===========
+ Includes undistributed net investment income (loss)............ $ 98,866 $ 97,650 $ 582 $ --
============== ============== ============ ===========
See Notes to Financial Statements
7
SunAmerica Money Market Funds
FINANCIAL HIGHLIGHTS
MONEY MARKET FUND
-----------------
Ratio of Ratio of
Net expenses net
Asset Dividends Net Asset Net Assets to investment
Value Net from net Value end of average income to
Period beginning investment investment end of Total period net average
Ended of period income(1) income period Return(2) (000's) assets net assets
- -------------------- --------- ---------- ---------- --------- --------- ---------- -------- ----------
Class A
-------
12/31/99............ $1.000 $0.044 $(0.044) $1.000 4.44% $ 881,223 0.95%(3) 4.36%(3)
12/31/00............ 1.000 0.054 (0.054) 1.000 5.57 971,137 0.95 5.47
12/31/01............ 1.000 0.034 (0.034) 1.000 3.45 1,087,329 0.93 4.04
12/31/02............ 1.000 0.010 (0.010) 1.000 1.04(7) 1,751,812 0.90 0.99
12/31/03............ 1.000 0.003 (0.003) 1.000 0.32 1,644,603 0.88 0.32
Class B
-------
12/31/99............ $1.000 $0.035 $(0.035) $1.000 3.59% $ 35,103 1.75%(3) 3.53%(3)
12/31/00............ 1.000 0.046 (0.046) 1.000 4.72 24,090 1.76(5) 4.62(5)
12/31/01............ 1.000 0.025 (0.025) 1.000 2.57 55,066 1.75(5) 3.76(5)
12/31/02............ 1.000 0.003 (0.003) 1.000 0.28(7) 64,815 1.64(5) 0.26(5)
12/31/03............ 1.000 0.000 0.000 1.000 0.03 44,529 1.18(5) 0.03(5)
Class II
--------
12/31/99............ $1.000 $0.035 $(0.035) $1.000 3.57% $ 8,235 1.61% 3.59%
12/31/00............ 1.000 0.046 (0.046) 1.000 4.73 11,012 1.75(5) 4.67(5)
12/31/01............ 1.000 0.026 (0.026) 1.000 2.63 33,644 1.69(5) 3.51(5)
12/31/02............ 1.000 0.003 (0.003) 1.000 0.27(7) 30,285 1.66(5) 0.26(5)
12/31/03............ 1.000 0.000 0.000 1.000 0.03 20,290 1.18(5) 0.03(5)
Class I
-------
11/16/01-12/31/01(4) $1.000 $0.002 $(0.002) $1.000 0.20% $ 8,336 0.80%(5)(6) 0.84%(5)(6)
12/31/02............ 1.000 0.011 (0.011) 1.000 1.13(7) 9,195 0.80(5) 1.12(5)
12/31/03............ 1.000 0.004 (0.004) 1.000 0.43 9,636 0.77(5) 0.43(5)
- --------
(1) Calculated based upon average shares outstanding.
(2) Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3) Net of transfer agent expense credits of:
12/31/99
-------
Class A........ 0.01%
Class B........ --
(4) Commencement of sales of respective class of shares
(5) Net of the following expense reimbursements (based on average net assets):
12/31/00 12/31/01 12/31/02 12/31/03
-------- -------- -------- --------
Class B...... -- -- 0.04% 0.51%
Class II..... 0.18% 0.05% 0.04 0.53
Class I...... -- 0.24 0.14 0.02
(6) Annualized
(7) The total return for each class was increased by less than 0.01% from gains
realized on the disposal of investments in violation of investment
restrictions.
See Notes to Financial Statements
8
SunAmerica Money Market Funds
FINANCIAL HIGHLIGHTS
MUNICIPAL MONEY MARKET FUND
---------------------------
Ratio of Ratio of
Net expenses net
Asset Dividends Net Asset Net Assets to investment
Value Net from net Value end of average income to
Period beginning investment investment end of Total period net average
Ended of period income(1) income period Return(2) (000's) assets(5) net assets(5)
- ----------------------- --------- ---------- ---------- --------- --------- ---------- --------- -------------
Class A
-------
10/31/99(6)............ $1.000 $0.020 $(0.020) $1.000 2.18% $ 3,651 1.05% 2.18%
10/31/00(6)............ 1.000 0.030 (0.030) 1.000 3.06 4,452 0.97 3.03
10/31/01(6)............ 1.000 0.020 (0.020) 1.000 2.39 3,972 0.78 2.39
11/01/01-12/31/01(6)... 1.000 0.013 (0.013) 1.000 2.05 3,829 0.62(3) 1.71(3)
12/31/02............... 1.000 0.009 (0.009) 1.000 0.92 88,050 0.78 0.71
12/31/03............... 1.000 0.003 (0.003) 1.000 0.28 113,802 0.81 0.28
Class B
-------
10/31/99(6)............ $1.000 $0.010 $(0.010) $1.000 1.42% $ 2,841 1.80% 1.42%
10//31/00(6)........... 1.000 0.030 (0.030) 1.000 2.48 2,777 1.54 2.44
10/31/01(6)............ 1.000 0.020 (0.020) 1.000 2.39 2,613 0.78 2.38
11/01/01-12/31/01(6)... 1.000 0.008 (0.008) 1.000 1.97 2,618 1.13(3) 1.27(3)
12/31/02............... 1.000 0.002 (0.002) 1.000 0.24 3,714 1.39 0.16
12/31/03............... 1.000 0.001 (0.001) 1.000 0.10 3,168 0.98 0.11
Class II
--------
08/10/00-10/31/00(4)(6) $1.000 $0.010 $(0.010) $1.000 0.71% $ 108 0.75%(3) 2.78%(3)
10/31/01(6)............ 1.000 0.020 (0.020) 1.000 2.40 136 0.78 2.33
11/01/01-12/31/01(6)... 1.000 0.008 (0.008) 1.000 1.97 195 1.15(3) 1.14(3)
12/31/02............... 1.000 0.002 (0.002) 1.000 0.24 170 1.39 0.19
12/31/03............... 1.000 0.001 (0.001) 1.000 0.10 258 1.00 0.11
- --------
(1) Calculated based upon average shares outstanding.
(2) Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3) Annualized
(4) Commencement of sales of respective class of shares
(5) Net of the following expense reimbursements (based on average net assets):
10/31/99 10/31/00 10/31/01 12/31/01(5) 12/31/02 12/31/03
-------- -------- -------- ----------- -------- --------
Class A.... 0.84% 0.47% 1.18% 2.51% 0.20% 0.03%
Class B.... 0.89 0.46 1.18 2.59 1.25 1.03
Class II... -- 0.41(2) 1.18 7.84 9.68 7.45
(6) The financial information for the periods prior to November 16, 2001
reflects the financial information for the North American Municipal Money
Market Fund.
See Notes to Financial Statements
9
SunAmerica Money Market Fund
PORTFOLIO OF INVESTMENTS -- December 31, 2003
Principal
Amount Value
Security Description (in thousands) Rate** Maturity (Note 2)
- ---------------------------------------------------------------------------------------------------------------
BANK NOTES -- 2.9%
Wells Fargo Bank NA+................................. $ 20,000 1.04% 01/06/04 $ 20,000,000
Wells Fargo Bank NA.................................. 30,000 1.05 01/26/04 30,000,000
--------------
Total Bank Notes
(amortized cost $50,000,000)....................... 50,000,000
--------------
COMMERCIAL PAPER -- 59.6%
Amstel Funding Corp.................................. 30,000 1.08 01/15/04 29,987,400
Apreco, Inc. (LOC -- Citibank N.A.).................. 80,000 1.06-1.09 01/08/04-02/11/04 79,936,461
Barton Capital Corp. (LOC -- Societe Generale)....... 80,000 1.08-1.09 01/09/04-01/21/04 79,963,522
Bear Stearns Co., Inc................................ 55,000 1.08 01/12/04-01/16/04 54,978,250
Ciesco, LP........................................... 30,000 1.07 01/23/04 29,980,383
Citicorp............................................. 30,000 1.06 01/16/04 29,986,750
CXC, Inc............................................. 60,000 1.08-1.09 01/20/04-01/21/04 59,964,733
Delaware Funding Corp. (LOC -- JP Morgan)............ 30,000 1.09 01/09/04 29,992,733
General Electric Capital Corp........................ 60,000 1.09 01/09/04-01/22/04 59,973,658
General Electric Capital Corp+....................... 20,000 1.29 01/12/04 20,011,545
Giro Funding U.S. Corp............................... 30,000 1.09 01/29/04 29,974,567
Govco, Inc........................................... 80,000 1.06-1.10 01/12/04-02/09/04 79,941,092
Greyhawk Capital Corp................................ 80,000 1.10-1.12 01/22/04-01/29/04 79,942,151
Kittyhawk Funding, LLC. (LOC -- Bank of America N.A.) 30,000 1.09 01/15/04 29,987,283
Surrey Funding Corp. (LOC -- Barclay Bank)........... 80,000 1.09-1.10 01/09/04-01/13/04 79,974,073
Sheffield Receivables Corp. (LOC -- Barclay Bank).... 80,000 1.08-1.09 01/09/04-01/26/04 79,962,428
Sydney Capital Corp.................................. 30,000 1.09 02/10/04 29,963,667
UBS Finance, LLC..................................... 60,000 1.03-1.05 01/06/04-01/23/04 59,976,550
Windmill Funding Corp. (LOC -- ABN AMRO)............. 80,000 1.08-1.09 01/05/04-01/23/04 79,973,539
--------------
Total Commercial Paper
(amortized cost $1,024,470,785).................... 1,024,470,785
--------------
GOVERNMENT AGENCIES -- 26.1%
Agency for International Development Panama+......... 3,164 1.50 01/06/04 3,176,234
Federal Farm Credit Bank............................. 25,000 1.00 07/02/04 24,995,625
Federal Home Loan Bank............................... 140,000 1.02-1.35 01/02/04-10/19/04 139,953,500
Federal Home Loan Mtg. Corp.......................... 20,000 1.50 11/16/04 20,000,000
Federal National Mtg. Assoc.......................... 240,000 1.05-1.65 01/15/04-12/30/04 239,538,800
Federal National Mtg. Assoc.+........................ 20,000 1.11 03/10/04 20,000,000
--------------
Total Government Agencies
(amortized cost $447,664,159)...................... 447,664,159
--------------
MEDIUM TERM NOTES -- 9.0%
Beta Finance, Inc.+.................................. 30,000 1.06 01/02/04 30,000,000
Dorada Corp.+........................................ 30,000 1.06 01/02/04 30,000,000
Sigma Finance Corp.+................................. 50,000 1.07-1.11 01/02/04-01/20/04 49,998,500
Sigma Finance Corp................................... 25,000 1.20 08/10/04 25,000,000
White Pine Finance, LLC+............................. 20,000 1.08 01/01/2004 20,000,000
--------------
Total Medium Term Notes
(amortized cost $154,998,500)...................... 154,998,500
--------------
See Notes to Financial Statements
10
SunAmerica Money Market Fund
PORTFOLIO OF INVESTMENTS -- December 31, 2003 -- (continued)
Principal
Amount Value
Security Description (in thousands) Rate** Maturity (Note 2)
- --------------------------------------------------------------------------------------------------------------------------------
TAXABLE MUNICIPAL MEDIUM TERM NOTES -- 1.0%
Illinois Student Assistance Corp.+................................... $10,000 1.12% 01/07/04 $ 10,000,000
Texas State Veterans Housing+........................................ 7,415 1.09-1.10 01/09/04-01/13/04 7,415,000
--------------
Total Taxable Municipal Medium Term Notes
(amortized cost $17,415,000)....................................... 17,415,000
--------------
REPURCHASE AGREEMENTS -- 1.7%
State Street Bank & Trust Co. Joint Repurchase Agreement (See Note 2) 6,454 0.72 01/02/04 6,454,000
UBS Warburg, LLC Joint Repurchase Agreement (See Note 2)............. 23,000 0.83 01/02/04 23,000,000
--------------
Total Repurchase Agreements
(amortized cost $29,454,000) 29,454,000
--------------
TOTAL INVESTMENTS
(amortized cost $1,724,002,444*)................................... 100.3% 1,724,002,444
Liabilities in excess of other assets................................ (0.3) (4,943,946)
------- --------------
NET ASSETS........................................................... 100.0% $1,719,058,498
======= ==============
- --------
+ Variable rate security; maturity date reflects the next reset date
* At December 31,2003, the cost of securities for Federal income tax purposes
was the same for book purposes.
** Rates shown are rates in effect as of December 31, 2003.
LOC -- Letter of Credit
Portfolio breakdown as a percentage of net assets (excluding Repurchase
Agreements) by industry
Government Agencies 26.1% Banking 8.1%
Receivable Company 20.9 Loan Receivables 4.7
Securities Holding Company 18.3 Trade Receivables 3.5
Finance 16.0 Municipalities 1.0
----
98.6%
====
See Notes to Financial Statements
11
SunAmerica Municipal Money Market Fund
PORTFOLIO OF INVESTMENTS -- December 31, 2003
Principal
Amount Value
Security Description (in thousands) Rate** Maturity (Note 2)
- ------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 96.9%
Arizona -- 5.0%
Arizona Health Facilities Authority+... $ 200 1.15% 01/07/04 $ 200,000
Maricopa County, Arizona Industrial
Development Authority+ (LOC
-- Harris Trust & Savings Bank)...... 755 1.45 01/01/04 755,000
Maricopa County, Arizona Industrial
Development Authority+ (LOC -- Wells
Fargo Bank N.A.)..................... 1,590 1.40 01/01/04 1,590,000
Mesa, Arizona Industrial Development
Authority, Series B+................. 3,350 1.12 01/07/04 3,350,000
------------
5,895,000
------------
Colorado -- 0.9%
Colorado Springs, Colorado Revenue+
(LOC -- Wells Fargo Bank N.A.)....... 1,025 1.40 01/01/04 1,025,000
------------
Delaware -- 4.3%
Delaware Economic Development
Authority, Series A+................. 5,000 1.13 01/07/04 5,000,000
------------
District of Columbia -- 0.8%
District of Columbia Revenue+
(LOC -- Bank of America N.A.)........ 990 1.30 01/01/04 990,000
------------
Florida -- 6.8%
Dade County, Florida Water and Sewer
Systems+............................. 1,100 1.07 01/07/04 1,100,000
Jacksonville, Florida Health
Facilities Authority+................ 1,800 1.10 01/07/04 1,800,000
Lakeland, Florida Energy Systems+...... 2,000 1.10 01/07/04 2,000,000
Lakeland, Florida Energy Systems,
Series A+............................ 3,100 1.10 01/07/04 3,100,000
------------
8,000,000
------------
Illinois -- 5.3%
Chicago O'Hare International Airport,
Series B+ (LOC -- Societe Generale).. 845 1.25 01/07/04 845,000
Chicago, Illinois Water+ (LOC -- Bank
One N.A.)............................ 500 1.15 01/07/04 500,000
Chicago, Illinois Metropolitan Water
District, Series B+.................. 4,900 1.07 01/07/04 4,900,000
------------
6,245,000
------------
Indiana -- 0.3%
Indiana Secondary Market Educational
Loans, Inc., Series B+............... 300 1.15 01/07/04 300,000
------------
Iowa -- 0.2%
Storm Lake, Iowa Higher Education
Facilities+ (LOC -- Wells Fargo Bank
Northwest N.A.)...................... 215 1.40 01/01/04 215,000
------------
Kentucky -- 5.4%
Breckinridge County, Kentucky Lease
Program, Series A+ (LOC -- U.S. Bank
N.A.)................................ 1,935 1.15 01/07/04 1,935,000
Breckinridge County, Kentucky Lease
Program+ (LOC -- U.S. Bank N.A.)..... 215 1.15 01/07/04 215,238
Kentucky Property and Buildings
Commission Project Number 77......... 4,195 2.00 01/01/04 4,198,641
------------
6,348,879
------------
Massachusetts -- 2.5%
Massachusetts State Housing Financial
Agency, Series F+.................... 3,000 1.10 01/07/04 3,000,000
------------
Michigan -- 15.0%
Detroit, Michigan Sewage Disposal,
Series C-1+.......................... 1,700 1.22 01/01/04 1,700,000
Detroit, Michigan Sewage Disposal,
Series C-2+.......................... 3,000 1.22 01/01/04 3,000,000
Kent Hospital Financial Authority,
Series B+............................ 2,800 1.10 01/07/04 2,800,000
See Notes to Financial Statements
12
SunAmerica Municipal Money Market Fund
PORTFOLIO OF INVESTMENTS -- December 31, 2003 -- (continued)
Principal
Amount Value
Security Description (in thousands) Rate** Maturity (Note 2)
- -------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (continued)
Michigan (continued)
Michigan Municipal Bond Authority, Series B1..................................... $5,000 2.00% 08/20/04 $ 5,030,743
Michigan State Building Authority................................................ 5,000 2.00 10/15/04 5,035,120
------------
17,565,863
------------
Missouri -- 2.3%
Missouri State Health and Educational Facilities+................................ 2,300 1.32 01/02/04 2,300,000
St Louis, Missouri Planned Industrial Expansion Authority+
(LOC -- Bank of America N.A.)................................................... 400 1.40 01/01/04 400,000
------------
2,700,000
------------
Nebraska -- 1.3%
Douglas County, Nebraska Solid Waste, Series A+ (LOC -- Wachovia Bank N.A.)...... 1,500 1.30 01/01/04 1,500,000
------------
New York -- 0.9%
New York City, Municipal Water Financial Authority+.............................. 1,000 1.27 01/02/04 1,000,000
------------
North Carolina -- 9.6%
Charlotte, North Carolina Refunding Bond, Series B+.............................. 5,500 1.30 01/01/04 5,500,000
Durham, North Carolina General Obligation+....................................... 300 1.25 01/01/04 300,038
Guilford County, North Carolina General Obligation, Series C+.................... 2,650 1.15 01/07/04 2,650,000
Mecklenburg County Public Improvements+.......................................... 350 1.30 01/01/04 350,000
North Carolina Medical Care Commission, Series B+ (LOC -- Suntrust Bank)......... 2,500 1.10 01/07/04 2,500,000
------------
11,300,038
------------
Ohio -- 13.4%
Cleveland, Ohio Airport System Revenue, Series D+ (LOC -- WestLb AG)............. 4,100 1.11 01/07/04 4,100,000
Franklin County, Ohio Hospital Revenue, Series B+ (LOC -- Morgan Guaranty Trust). 4,640 1.18 01/01/04 4,640,000
Hamilton County, Ohio Health Care+ (LOC -- U.S. Bank N.A)........................ 3,000 1.29 01/02/04 3,000,000
Ohio State Air Quality Development Authority+ (LOC -- Westdeutsche Landesbank)... 4,000 1.13 01/07/04 4,000,000
------------
15,740,000
------------
Pennsylvania -- 1.9%
Delaware Valley, Pennsylvania Regional Financial Authority, Series A+
(LOC -- Toronto-Dominion Bank).................................................. 300 1.10 01/07/04 300,000
Delaware Valley, Pennsylvania Regional Financial Authority, Series C+
(LOC -- Toronto-Dominion Bank).................................................. 1,700 1.10 01/07/04 1,700,000
Philadelphia, Pennsylvania Authority for Industrial Development+
(LOC -- GE Capital Corp.)....................................................... 200 1.10 01/07/04 200,000
------------
2,200,000
------------
Tennessee -- 2.3%
Metropolitan Government Nashville and Davidson Counties Health and Education
Facilities+..................................................................... 500 1.15 01/07/04 500,000
Metropolitan Government Nashville and Davidson Counties Industrial Development+
(LOC -- Bank of America N.A.)................................................... 200 1.25 01/02/04 200,000
Montgomery County, Tennessee General Obligation.................................. 2,000 3.00 05/01/04 2,012,935
------------
2,712,935
------------
See Notes to Financial Statements
13
SunAmerica Municipal Money Market Fund
PORTFOLIO OF INVESTMENTS -- December 31, 2003 -- (continued)
Principal
Amount Value
Security Description (in thousands) Rate** Maturity (Note 2)
- -------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (continued)
Texas -- 11.9%
Arlington, Texas Independent School District..................................... $5,000 0.00% 02/25/04 $ 4,992,417
Gulf Coast Waste Disposal Authority, Series D+ (LOC -- Wachovia Bank N.A.)....... 2,750 1.30 01/01/04 2,750,000
North Texas Higher Education Authority, Series F+................................ 200 1.15 01/07/04 200,000
Northside Independent School District, Series A+................................. 1,000 1.00 08/02/04 1,000,000
Texas State Tax & Revenue Anticipation Notes..................................... 5,000 2.00 08/31/04 5,027,905
------------
13,970,322
------------
Utah -- 1.7%
Utah Transit Authority, Series B+ (LOC -- Bayerische Landesbank)................. 2,000 1.22 01/01/04 2,000,000
------------
Washington -- 0.3%
Port Seattle, Washington Industrial Development Corp.+ (LOC -- Citibank N.A.).... 300 1.15 01/07/04 300,000
------------
Wisconsin -- 3.7%
Wisconsin State Health and Educational Facilities+ (LOC -- U.S. Bank Trust N.A.). 4,300 1.20 01/01/04 4,300,000
------------
Wyoming -- 0.4%
Wyoming Community Development Authority+........................................... 500 1.20 01/01/04 500,000
------------
Registered Investment Companies -- 0.7%
SSGA Tax Free Money Market -- Class A............................................ 817 0.55 01/02/04 817,033
------------
TOTAL INVESTMENTS
(cost $113,625,070*)............................................................. 96.9% 113,625,070
Assets in excess of other liabilities.............................................. 3.1 3,603,049
------ ------------
NET ASSETS......................................................................... 100.0% $117,228,119
====== ============
- --------
+ Variable rate security; maturity date reflects next reset date.
* At December 31, 2003, the cost of securities for Federal income tax purposes
was the same for book purposes.
** Rates shown are rates in effect as of December 31, 2003.
LOC -- Letter of Credit
See Notes to Financial Statements
14
SunAmerica Money Market Funds
NOTES TO FINANCIAL STATEMENTS -- December 31, 2003
Note 1. Organization
SunAmerica Money Market Funds, Inc. (the "Corporation") is an open-end
diversified management investment company organized as a Maryland
Corporation. The Corporation consists of two investment funds (each, a
"Fund" and collectively, the "Funds"). Each Fund is a separate series with a
distinct investment objective. Each Fund is advised by AIG SunAmerica Asset
Management Corp. ("SAAMCo" or "Advisor"), an indirect wholly-owned
subsidiary of American International Group, Inc. ("AIG"). The investment
objective for each of the Funds is as follows:
The SunAmerica Money Market Fund ("Money Market Fund") seeks as high a level
of current income as is consistent with liquidity and stability of capital
through investment primarily in high quality money market instruments
selected principally on the basis of quality and yield.
The SunAmerica Municipal Money Market Fund ("Municipal Money Market Fund")
seeks as high a level of current income as is consistent with liquidity and
stability of capital and that is exempt from regular federal income taxation
through investments selected primarily on the basis of quality and yield and
under normal market conditions invests at least 80% of its assets in
municipal securities that are exempt from regular federal income tax.
The Money Market Fund currently offers four classes of shares: Class A,
Class B, Class II and Class I. The Municipal Money Market Fund currently
offers three classes of shares: Class A, Class B, and Class II. The classes
within the Funds are presented in the Statement of Assets and Liabilities.
The cost structure for each class is as follows:
Class A shares-- Class A shares are sold with no front-end sales charges.
Contingent deferred sales charges ("CDSC") are imposed on
Class A shares when shares are sold within two years of
purchase. A 1.00% CDSC is imposed on shares sold within one
year of original purchase; a 0.50% CDSC is charged on
shares sold after the first year and within the second year
after purchase.
Class B shares-- Class B shares are offered at net asset value per share,
without any initial sales charge. A declining contingent
deferred sales charge ("CDSC") 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 are no longer
subject to a distribution fee.
Class II shares-- Class II shares are sold with a front-end sales charge of
1.00% at net asset value per share. Certain redemptions
made within 18 months of the date of purchase are subject
to a contingent deferred sales charge.
15
SunAmerica Money Market Funds
NOTES TO FINANCIAL STATEMENTS -- December 31, 2003 -- (continued)
Class I shares-- Class I shares are offered at net asset value per share
exclusively to certain institutions.
Each class of shares bears the same voting, dividend, liquidation and other
rights and conditions. Class A, Class B, and Class II shares of each Fund
has its own 12b-1 plan, which allows for distributions and account
maintenance and service fees.
Indemnifications: 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 Funds. In addition, in the normal course
of business the Funds enter into contracts that contain a variety of
representations and warranties which provide general indemnifications. The
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. Significant Accounting Policies
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could
differ from these estimates. The following is a summary of the significant
accounting policies followed by the Funds in the preparation of its
financial statements:
Security Valuations: Portfolio securities are valued at amortized cost,
which approximates market value. The amortized cost method involves valuing
a security at its cost on the date of purchase and thereafter assuming a
constant amortization/accretion to maturity of any discount or premium.
Repurchase Agreements: Pursuant to exemptive relief granted by the
Securities and Exchange Commission, the Funds are permitted to participate
in joint repurchase agreement transactions with other affiliated mutual
funds. The Funds, along with other affiliated registered investment
companies, may transfer uninvested cash balances into a single joint
account, the daily aggregate balance of which is invested in one or more
repurchase agreements collateralized by U.S. Treasury or federal agency
obligations. The Funds' custodian takes possession of the collateral pledged
for investments in such repurchase agreements. The underlying collateral is
valued daily on a mark to market basis to ensure that the value, at the time
the agreement is entered into, is equal to at least 102% of the repurchase
price, including accrued interest. In the event of default of the obligation
to repurchase, a Fund has the right to liquidate the collateral and apply
the proceeds in satisfaction of the obligation. If the seller defaults and
the value of the collateral declines or if bankruptcy proceedings are
commenced with respect to the seller of the security, realization of the
collateral by the Fund may be delayed or limited.
16
SunAmerica Money Market Funds
NOTES TO FINANCIAL STATEMENTS -- December 31, 2003 -- (continued)
As of December 31, 2003, the following Fund held an undivided interest in a
joint repurchase agreement with State Street Bank & Trust Co.:
Percentage Principal
Interest Amount
---------- ----------
Money Market Fund....................... 14.20% $6,454,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
State Street Bank & Trust Co., dated December 31, 2003, bearing interest at
a rate of 0.72% per annum, with a principal amount of $45,441,000, a
repurchase price of $45,442,818, and a maturity date of January 2, 2004. The
repurchase agreement is collateralized by the following:
Interest Maturity Principal Market
Type of Collateral Rate Date Amount Value
------------------ -------- -------- ----------- -----------
U.S. Treasury Notes... 7.50% 02/15/05 $ 5,065,000 $ 5,552,506
U.S. Treasury Bond.... 8.13 08/15/19 7,380,000 10,202,850
U.S. Treasury Bond.... 8.50 02/15/20 14,280,000 20,402,550
U.S. Treasury Bond.... 7.63 02/15/25 7,560,000 10,206,000
In addition, at December 31, 2003, the following Fund held an undivided
interest in a joint repurchase agreement with UBS Warburg, LLC:
Percentage Principal
Interest Amount
---------- -----------
Money Market Fund..... 15.33% $23,000,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
UBS Warburg, LLC, dated December 31, 2003, bearing interest at a rate of
0.83% per annum, with a principal amount of $150,000,000, a repurchase price
of $150,006,917, and a maturity date of January 2, 2004. The repurchase
agreement is collateralized by the following:
Interest Maturity Principal Market
Type of Collateral Rate Date Amount Value
------------------ -------- -------- ------------ ------------
U.S. Treasury Bonds... 8.875% 02/15/19 $104,795,000 $153,500,704
Securities Transactions, Investment Income and Distributions to
Shareholders: Security transactions are recorded as of the trade date.
Interest income, including the accretion of discount and amortization of
premium, is accrued daily. Realized gains and losses on sales of investments
are calculated on the identified cost basis.
17
SunAmerica Money Market Funds
NOTES TO FINANCIAL STATEMENTS -- December 31, 2003 -- (continued)
Net investment income, other than class specific expenses, and realized and
unrealized gains and losses, are allocated daily to each class of shares
based upon the relative net asset value of outstanding shares (or the value
of the dividend-eligible shares, as appropriate) of each class of shares at
the beginning of the day (after adjusting for the current capital shares
activity of the respective class).
Expenses common to all Funds, not directly related to individual Funds, are
allocated among the Funds based upon their relative net asset value or other
appropriate methods. In all other respects, expenses are charged to each
Fund as incurred on a specific identification basis. Interest earned on cash
balances held at the custodian are shown as custody credits in the Statement
of Operations.
Dividends from net investment income, if any, are normally declared daily
and paid monthly. Capital gain distributions, if any, are paid annually. The
Funds record dividends and distributions to their shareholders on the
ex-dividend date. The amount of dividends and distributions from net
investment income and net realized capital gains are determined 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.
Note 3. Investment Advisory and Management Agreement, Distribution and Service
Agreement
The Funds have an Investment Advisory and Management Agreement (the
"Agreement") with SAAMCo. Under the Agreement, SAAMCo provides continuous
supervision of the Funds and administers its corporate affairs, subject to
general review by the Directors. In connection therewith, SAAMCo furnishes
the Funds with office facilities, maintains certain of its books and
records, and pays the salaries and expenses of all personnel, including
officers of the Funds who are employees of SAAMCo and its affiliates. The
investment advisory and management fee payable to SAAMCo is computed daily
and payable monthly, at an annual rate of 0.50% on the first $600 million of
daily net assets, 0.45% on the next $900 million of the assets and 0.40% on
net assets over $1.5 billion for the Money Market Fund and 0.35% of average
daily net assets of the Municipal Money Market Fund.
The Municipal Money Market Fund is sub-advised by AIG Global Investment
Corp. ("AIGGIC"). AIGGIC is an indirectly wholly-owned subsidiary of AIG and
receives fees at a rate of 0.25% of the Fund's first $200 million of net
assets, 0.20% on the next $300 million and 0.15% on net assets over $500
million.
18
SunAmerica Money Market Funds
NOTES TO FINANCIAL STATEMENTS -- December 31, 2003 -- (continued)
SAAMCo contractually agreed to waive fees or reimburse expenses, if
necessary, at or below the following percentages of each Fund's average net
assets: Money Market Fund 0.80% for Class I, Municipal Money Market Fund
0.95% for Class A, and 1.70% for Class B and Class II. Also, SAAMCo has
agreed to voluntarily waive fees or reimburse additional expenses for the
year ended December 31, 2003, for the Municipal Money Market Fund at the
following percentages of the Fund's average net assets: .03% for Class A,
0.11% for Class B and 0.10% for Class II. For the year ended December 31,
2003, SAAMCo reimbursed the Money Market Fund for expenses of $1,493 for
Class I and for the Municipal Money Market Fund $32,690, $15,076, and
$11,561 for Class A, Class B, and Class II, respectively.
The Funds have a distribution Agreement with AIG SunAmerica Capital
Services, Inc. ("SACS" or the "Distributor"), an affiliate of the Advisor.
The Funds have adopted a Distribution Plan (the "Plan") in accordance with
the provisions of Rule 12b-1 under the 1940 Act. Rule 12b-1 permits an
investment company directly or indirectly to pay expenses associated with
the distribution of its shares ("distribution expenses") in accordance with
a plan adopted by the investment company's Board of Directors and approved
by its shareholders. Pursuant to such rule, the Directors and the
shareholders of each class of shares of the Funds have adopted Distribution
Plans hereinafter referred to as the "Class A Plan," the "Class B Plan," and
the "Class II Plan." In adopting the Class A Plan, the Class B Plan, and the
Class II Plan, the directors determined that there was a reasonable
likelihood that each such Plan would benefit the Funds and the shareholders
of the respective class. The sales charge and distribution fees of the Class
B shares and Class II shares will not be used to subsidize the sale of Class
A shares.
Under the Class B Plan and the Class II Plan the Distributor receives
payments from the Funds at the annual rate of up to 0.75% of the average
daily net assets of the Fund's Class B and Class II shares, to compensate
the Distributor and certain securities firms for providing sales and
promotional activities for distributing that class of shares. The
distribution costs for which the Distributor may be compensated include
distribution fees paid to broker-dealers that have sold Fund shares,
commissions, and other expenses such as those incurred for sales literature,
prospectus printing and distribution, and compensation to wholesalers. It is
possible that in any given year the amount paid to the Distributor under the
Class B and Class II Plans may exceed the Distributor's distribution costs
as described above. The Class A Plan does not provide for a distribution
fee. The Distribution Plans provide that each class of shares of the Funds
may also pay the Distributor an account maintenance and service fee of up to
an annual rate of 0.15% of the aggregate average daily net assets of such
class of shares for payments to broker-dealers for providing continuing
account maintenance. In this regard, some payments are used to compensate
broker-dealers with account maintenance and service fees in an amount up to
0.15% per year of the assets maintained in the Funds by their customers.
Accordingly, for the year ended December 31, 2003, SACS received fees (see
Statement of Operations) based upon the aforementioned rates.
For the year ended December 31, 2003, SACS voluntarily reimbursed the Money
Market Fund for expenses of $296,120 and $143,026 for Class B and Class II,
respectively. For the Municipal Money Market Fund, expense reimbursements
were $21,743 and $999 for Class B and Class II, respectively.
19
SunAmerica Money Market Funds
NOTES TO FINANCIAL STATEMENTS -- December 31, 2003 -- (continued)
SACS receives sales charges on each Fund's Class II shares, portions of
which are reallowed to affiliated broker-dealer and non-affiliated
broker-dealers. SACS also receives the proceeds of CDSC paid by investors in
connection with certain redemptions of each Fund's Class A, Class B and
Class II shares. SACS has advised the Funds for the year ended December 31,
2003 the proceeds received from sales (and paid out to affiliated and
non-affiliated broker-dealers) and redemptions are as follows:
Class A Class B
------------------------------------- -------------
Contingent
Sales Affiliated Non-affiliated Deferred
Charges Broker-dealers Broker-dealers Sales Charges
------- -------------- -------------- -------------
Money Market Fund............. $ -- $ -- $ -- $482,921
Municipal Money Market Fund... -- -- -- 29,183
Class II Class II
------------------------------------- -------------
Contingent
Sales Affiliated Non-affiliated Deferred
Charges Broker-dealers Broker-dealers Sales Charges
------- -------------- -------------- -------------
Money Market Fund............. $76,763 $45,765 $30,998 $ 42,752
Municipal Money Market Fund... 739 373 366 346
The Funds entered into a Service Agreement with AIG SunAmerica Fund
Services, Inc. ("SAFS"), an affiliate of the Advisor. Under the Service
Agreement, SAFS performs certain shareholder account functions by assisting
the Funds' transfer agent in connection with the services that it offers to
its shareholders. The Service Agreement permits the Funds to reimburse SAFS
for the costs incurred in providing such services, based upon an annual rate
of 0.22% of average daily net assets, which is approved annually by the
Directors. For the year ended December 31, 2003, the Funds incurred the
following expenses which are included in transfer agent fees and expenses in
the Statement of Operations to compensate SAFS pursuant to the terms of the
Service Agreement:
Payable at
Expenses December 31, 2003
---------- -----------------
Money Market Fund Class A.............. $3,804,211 $309,729
Money Market Fund Class B.............. 126,709 8,544
Money Market Fund Class II............. 58,269 3,815
Money Market Fund Class I.............. 20,457 1,778
Municipal Money Market Fund Class A.... 226,722 20,270
Municipal Money Market Fund Class B.... 7,879 598
Municipal Money Market Fund Class II... 371 49
At December 31, 2003, the Variable Annuity and Life Insurance Company, an
indirect wholly-owned subsidiary of American International Group, Inc. owned
25% and 79% of the outstanding shares of Money Market Fund Class I shares
and Municipal Money Market Fund Class B shares, respectively.
20
SunAmerica Money Market Funds
NOTES TO FINANCIAL STATEMENTS -- December 31, 2003 -- (continued)
Note 4. Federal Income Taxes
It is the Funds' policy to meet the requirements of the Internal Revenue
Code of 1986, as amended, applicable to regulated investment companies and
to distribute all of its taxable net income to its shareholders. Therefore,
no federal income or excise tax provisions are required. Each Fund is
treated as a separate taxpayer for Federal Income Tax purposes.
All dividends paid by the Money Market Fund during the years ended December
31, 2003 and December 31, 2002 were taxable to shareholders as ordinary
dividends. Except for $414 and $137 for the years ended December 31, 2003
and December 31, 2002, respectively, all dividends paid by the Municipal
Money Market Fund were exempt from Federal Income Taxes. Additionally for
the year ended December 31, 2003, on a tax basis, distributable earnings of
$322,099 and $4,646 for the Money Market Fund and the Municipal Money Market
Fund, respectively, are undistributed ordinary income. For the year ended
December 31, 2002, on a tax basis, distributable earnings of $242,930 and
$112 for the Money Market Fund and the Municipal Money Market Fund,
respectively, are undistributed ordinary income. The tax basis components of
distributable earnings differ from the amounts reflected in the Statement of
Assets and Liabilities by temporary book/tax differences primarily arising
from cumulative pension expenses.
Note 5. Capital Share Transactions
Transactions in each class of shares of the Funds, all at $1.00 per share,
for the year ended December 31, 2003 and for the prior year were as follows:
Money Market Fund
------------------------------------------------------------------------------------------
Class A Class B Class II
-------------------------------- --------------------------- --------------------------
For the For the For the For the For the For the
year ended year ended year ended year ended year ended year ended
December 31, December 31, December 31, December 31, December 31, December 31,
2003 2002 2003 2002 2003 2002
--------------- --------------- ------------ ------------ ------------ ------------
Shares sold............ $ 1,050,689,073* $ 4,238,009,787 $ 56,471,807 $ 92,235,061 $ 41,305,272 $ 71,755,313
Reinvested dividends... 5,564,933 13,209,737 15,806 144,726 7,139 78,485
Shares redeemed........ (1,163,463,818) (3,586,667,134) (76,773,842)* (82,630,016) (51,307,759) (75,192,597)
--------------- --------------- ------------ ------------ ------------ ------------
Net increase
(decrease)............ $ (107,209,812) $ 664,552,390 $(20,286,229) $ 9,749,771 $ (9,995,348) $ (3,358,799)
=============== =============== ============ ============ ============ ============
-------------------------
Class I
------------------------
For the For the
year ended year ended
December 31, December 31,
2003 2002
------------ ------------
Shares sold............ $ 7,049,963 $ 5,527,417
Reinvested dividends... 39,889 92,936
Shares redeemed........ (6,648,520) (4,761,166)
----------- -----------
Net increase
(decrease)............ $ 441,332 $ 859,187
=========== ===========
- --------
* Includes automatic conversion of Class B shares in the amount of $1,350,441 to
Class A shares.
Municipal Money Market Fund
--------------------------------------------------------------------------------
Class A Class B Class II
--------------------------- ------------------------- ------------------------
For the For the For the For the For the For the
year ended year ended year ended year ended year ended year ended
December 31, December 31, December 31, December 31, December 31, December 31,
2003 2002 2003 2002 2003 2002
------------- ------------ ------------ ------------ ------------ ------------
Shares sold............... $ 175,185,271* $150,624,322 $ 1,513,161 $2,004,052 $ 416,187 $ 255,078
Reinvested dividends...... 284,529 257,388 3,555 7,255 161 392
Shares redeemed........... (149,718,411) (66,656,439) (2,063,313)* (912,543) (328,375) (280,422)
------------- ------------ ----------- ---------- --------- ---------
Net increase (decrease)... $ 25,751,389 $ 84,225,271 $ (546,597) $1,098,764 $ 87,973 $ (24,952)
============= ============ =========== ========== ========= =========
- --------
* Includes automatic conversion of Class B shares in the amount of $21,376 to
Class A shares.
21
SunAmerica Money Market Funds
NOTES TO FINANCIAL STATEMENTS -- December 31, 2003 -- (continued)
Note 6. Directors' Retirement Plan
The Directors of the SunAmerica Money Market Funds, Inc. have adopted the
AIG SunAmerica Disinterested Trustees' and Directors' Retirement Plan (the
"Retirement Plan") effective January 1, 1993 for the unaffiliated Directors.
The Retirement Plan provides generally that if an unaffiliated Director who
has at least 10 years of consecutive service as a Disinterested Director of
any of the SunAmerica mutual funds (an "Eligible Director") retires after
reaching age 60 but before age 70, or who has at least 5 years of
consecutive service after reaching age 65 but before age 70, or dies while a
Director, such person will be eligible to receive a retirement or death
benefit from each SunAmerica mutual fund with respect to which he or she is
an Eligible Director. As of each birthday, prior to the 70th birthday, but
in no event for a person greater than 10 years, each Eligible Director will
be credited with an amount equal to 50% of his or her regular fees
(excluding committee fees) for services as a Disinterested Director of each
SunAmerica mutual fund for the calendar year in which such birthday occurs.
In addition, an amount equal to 8.5% of any amounts credited under the
preceding clause during prior years, is added to each Eligible Director's
account until such Eligible Director reaches his or her 70/th/ birthday. An
Eligible Director may receive benefits payable under the Retirement Plan, at
his or her election, either in one lump sum or in up to fifteen annual
installments. As of December 31, 2003, the Money Market Fund and Municipal
Money Market Fund had accrued $223,233 and $4,064, respectively, for the
Retirement Plan, which is included in accrued expenses on the Statement of
Assets and Liabilities. For the year ended December 31, 2003, the Money
Market Fund and the Municipal Money Market Fund expensed $77,953 and $3,952,
respectively, for the Retirement Plan, which is included in Directors' fees
and expenses on the Statement of Operations.
Note 7. Commitments and Contingencies
Pursuant to exemptive relief granted by the Securities and Exchange
Commission, the Funds are permitted to participate in an interfund lending
program among investment companies advised by SunAmerica or an affiliate.
The interfund lending program allows the participating Funds to borrow money
from and loan money to each other for the temporary or emergency purposes.
An interfund loan will be made under this facility only if the participating
Funds receive a more favorable interest rate than would otherwise be
available from a typical bank for a comparable transaction. For the year
ended December 31, 2003, none of the Funds participated in the program.
Note 8. Subsequent Events
Effective on February 20, 2004, Class II shares will be redesignated as
"Class C" shares. The shares will no longer be subject to a 1% initial sales
load, and the contingent deferred sales charge period applicable to the
shares will be shortened from eighteen months to twelve months for purchases
made after the effective date of this change.
22
SunAmerica Money Market Funds
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders of SunAmerica Money Market Funds,
Inc.
In our opinion, the accompanying statements of assets and liabilities,
including the portfolios of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of SunAmerica Money
Market Fund and SunAmerica Municipal Money Market Fund (constituting the two
funds in SunAmerica Money Market Funds, Inc., hereafter referred to as the
"Corporation") at December 31, 2003, the results of each of their operations
for the year then ended, the changes in each of their net assets for each of
the two years in the period then ended and the financial highlights for each of
the periods indicated, in conformity with accounting principles generally
accepted in the United States of America. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Corporation's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with auditing
standards generally accepted in the United States of America, which require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at December 31, 2003 by correspondence with the custodian and
brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 18, 2004
23
SunAmerica Money Market Funds
DIRECTORS INFORMATION -- December 31, 2003 -- (unaudited)
The following table contains basic information regarding the Directors that
oversee operations of the Funds and other investment companies within the
Fund Complex.
Number of
Term of Portfolios in
Position Office and Fund Other
Name, Held With Length of Complex Directorships
Address and SunAmerica Time Principal Occupations Overseen by Held by
Date of Birth* Fund Served(4) During Past 5 Years Director(1) Director(2)
-------------- ---------- ------------ -------------------------------------------- ------------- ------------------
Jeffrey S. Burum(5) Director N/A Founder and CEO of National Housing N/A None
DOB: February 27, 1963 Development Corp.
S. James Coppersmith(5) Director 1987-present Retired. 46 Director, BJ's
DOB: February 21, 1933 Wholesale Club,
Inc.; Member of
Board of
Trustees of the
Boston Stock
Exchange.
Dr. Judith L. Craven Director 2001-present Retired Administrator. 75 Director, A.G.
DOB: October 6, 1945 Belo Corporation
(1992 to present);
Director, Sysco
Corporation
(1996 to present);
Director, Luby's,
Inc. (1998 to
present).
William F. Devin Director 2001-present Retired. 75 Member of the
DOB: December 30, 1938 Board of
Governors,
Boston Stock
Exchange (1985-
Present);
formerly,
Director, Cypress
Tree Senior
Floating Rate
Fund, Inc.
(October 1997-
May 2001).
Samuel M. Eisenstat Chairman 1985-present Attorney, solo practitioner. 47 Director of North
DOB: March 7, 1940 of the European Oil
Board Royalty Trust.
Stephen J. Gutman Director 1984-present President and Director, Beau Brummel- 47 None
DOB: May 10, 1943 Soho LLC (menswear specialty retailing
and other activities) (June 1988 to present)
24
SunAmerica Money Market Funds
DIRECTORS INFORMATION -- December 31, 2003 -- (unaudited) (continued)
Number of
Term of Portfolios in
Position Office and Fund Other
Name, Held With Length of Complex Directorships
Address and SunAmerica Time Principal Occupations Overseen by Held by
Date of Birth* Fund Served(4) During Past 5 Years Director(1) Director(2)
-------------- ---------- ------------ ------------------------------------------ ------------- ---------------
Peter A. Harbeck(3) Director 1994-present President, CEO and Director, AIG 84 None
DOB: January 23, 1954 SunAmerica Asset Management Corp.
("SAAMCo.") (August 1995 to present);
Director, AIG SunAmerica Capital Services,
Inc. ("SACS") (August 1993 to present).
Sebastiano Sterpa (5) Director 1991-present Founder and Chairman of the Board of 37 Director, Real
DOB: July 18,1929 the Sterpa Group (real estate investment Estate Business
and management) (1962 to present); Service and
Director/Trustee of SAMF. Countrywide
Financial.
- --------
* 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
(7 funds), SunAmerica Income Funds (6 funds), SunAmerica Money Market
Funds (2 funds), SunAmerica Senior Floating Rate Fund, Inc. (1 fund),
SunAmerica Strategic Investment Series, Inc. (7 funds), SunAmerica Style
Select Series, Inc. (15 portfolios), Anchor Pathway Fund (7 funds), 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 6 of the
financial statements.
(5) Effective on or about February 23, 2004, it is expected that S. James
Coppersmith and Sebastiano Sterpa will retire as Directors and Jeffrey S.
Burum will begin 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.
25
SunAmerica Money Market Funds
If you would like additional information:
[_] Call FastFacts -- our 24-hour, automated account and fund information
hotline at 800-858-8850.
[_] Visit www.sunamericafunds.com for more up-to-date information.
AIG SunAmerica Mutual Funds
thank you for your continued support.
26
[LOGO] AIG SunAmerica
Mutual Funds
AIG SunAmerica Asset Management Corp.
Harborside Financial Center
3200 Plaza 5
Jersey City, NJ 07311-4992
Directors Investment Adviser This report is submitted solely for the
S. James Coppersmith AIG SunAmerica Asset Management Corp. general information of shareholders of the
Judith L. Craven Harborside Financial Center Fund. Distribution of this report to persons
William F. Devin 3200 Plaza 5 other than shareholders of the Fund is
Samuel M. Eisenstat Jersey City, NJ 07311-4992 authorized only in connection with a
Stephen J. Gutman currently effective prospectus, setting
Peter A. Harbeck Distributor forth details of the Fund, which must
Sebastiano Sterpa AIG SunAmerica Capital Services, Inc. precede or accompany this report.
Harborside Financial Center
Officers 3200 Plaza 5
Robert M. Zakem, President Jersey City, NJ 07311-4992
Donna M. Handel, Treasurer
J. Steven Neamtz, Vice President Shareholder Servicing Agent
Brian Wiese, Vice President AIG SunAmerica Fund Services, Inc.
Abbe P. Stein, Vice President Harborside Financial Center
and Assistant Secretary 3200 Plaza 5
Joseph P. Kelly, Secretary Jersey City, NJ 07311-4992
Thomas Lynch, Assistant Secretary
Stacey V. Morrison, Assistant Secretary Custodian and Transfer Agent
Gregory R. Kingston, Vice President and State Street Bank and Trust Company
Assistant Treasurer P.O. Box 219373
Laura E. Filippone, Assistant Treasurer Kansas City, MO 64121
Donald H. Guire, Assistant Treasurer
Distributed by: AIG SunAmerica Capital Services, Inc.
MMANN-12/03
Item 2. Code of Ethics
The SunAmerica Money Market Funds, Inc. ("the Fund") has adopted a Code of
Ethics applicable to its Principal Executive and Principal Accounting Officers
pursuant to Section 406 of the Sarbanes-Oxley Act of 2002.
Item 3. Audit Committee Financial Expert.
Currently, the SunAmerica Money Market Funds, Inc. does not have an Audit
Committee member who possesses all of the attributes required to be an "audit
committee financial expert" as defined in instruction 2(b) of Item 3 of Form
N-CSR. However, the Board of Directors believes that each member of the Audit
Committee has substantial experience relating to the review of financial
statements and the operations of audit committees. Accordingly, the Board
believes that the members are qualified to evaluate the Fund's financial
statements, supervise the Fund's preparation of its financial statements, and
oversee the work of the Fund's independent auditors. The Board of Directors is
currently seeking an individual who will qualify as an audit committee financial
expert.
Item 4. Principal Accountant Fees and Services.
(a)-(d) Aggregate fees billed to the Fund for the last two fiscal years for
professional services rendered by the Fund's principal accountant were
as follows:
2003 2002
Audit Fees $44,479 $41,029
Audit-Related Fees $19,440 $0
Tax Fees $18,810 $13,500
All Other Fees $0 $0
Audit Fees include amounts related to the audit of the Fund's annual
financial statements and services normally provided by the principal
accountant in connection with statutory and regulatory filings.
Audit-Related Fees principally include a SAS No. 100 review of the
Fund's Semiannual Shareholder Report. Tax Fees principally include tax
compliance, tax advice, tax planning and preparation of tax returns.
(e)
(1) The Fund's audit committee pre-approves all audit services
provided by the Fund's principal accountant for the Fund
and all non-audit services provided by the Fund's principal
accountant for the Fund, its investment adviser and any
entity controlling, controlled by, or under common control
with the investment adviser ("Adviser Affiliate") that
provides ongoing services to the Fund, if the engagement by
the investment adviser or Adviser Affiliate relates directly
to the operations and financial reporting of the Fund.
(2) No services included in (b)-(d) above were approved
pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of
Regulation S-X.
(f) Not Applicable.
(g) The aggregate fees billed for the most recent fiscal year and the
preceding fiscal year by the Fund's principal accountant for non-audit
services rendered to the Registrant, its investment adviser, and
Adviser Affiliate that provides ongoing services to the Fund for 2003
and 2002 were $1,513,312 and $801,305, respectively.
(h) Non-audit services rendered to the Registrant's investment adviser and
any Adviser Affiliate that were not pre-approved pursuant to Paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X were considered by the
Fund's audit committee as to whether they were compatible with
maintaining the principal accountant's independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable
Item 6. Reserved.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable
Item 8. Reserved.
Item 9. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures. Based on that evaluation, the
registrant's management, including the President and Treasurer,
concluded that the registrant's disclosure controls and procedures are
effective.
(b) There was no change in the Registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act) that occurred during the Registrant's second fiscal
half-year that has materially affected, or is reasonably likely to
materially affect, the Registrant's internal contro1 over financial
reporting.
Item 10. Exhibits.
(a) (1) Code of Ethics applicable to its Principal Executive and Principal
Accounting Officers pursuant to Section 406 of the Sarbanes-Oxley Act
of 2002 attached hereto as Exhibit 99.406.Code of Ethics.
(b) (1) Certification pursuant to Rule 30a-2 under the Investment Company
Act of 1940 (17 CFR 270.30a-2) attached hereto as Exhibit 99.CERT.
(2) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Money Market Funds, Inc.
By: /s/ Robert M. Zakem
-------------------
Robert M. Zakem
President
Date: March 9, 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: March 9, 2004
By: /s/ Donna M. Handel
-------------------
Donna M. Handel
Treasurer
Date: March 9, 2004