UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-3807
---------------------------------------------
SunAmerica Money Market Funds, Inc
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Harborside Financial Center, 3200 Plaza 5 Jersey City, NJ 07311
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Vincent M. Marra
Senior Vice President & Chief Operating Officer
AIG SunAmerica Asset Management Corp.
Harborside Financial Center,
3200 Plaza 5
Jersey City, NJ 07311
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6464
-----------------------------
Date of fiscal year end: December 31
--------------------------
Date of reporting period: December 31, 2005
-------------------------
Item 1. Reports to Stockholders
SunAmerica Money Market Funds, Inc., Annual Report at December 31,
2005.
2005
Annual
SunAmerica Report
- -------------------------
[PHOTO]
[GRAPHIC]
Money Market Funds
December 31, 2005 ANNUAL REPORT
SUNAMERICA MONEY MARKET FUNDS
SunAmerica Money Market Fund (SMAXX)
SunAmerica Municipal Money Market Fund (NMAXX)
Table of Contents
PRESIDENT'S LETTER..................................... 1
MONEY MARKET FUNDS REVIEW.............................. 2
EXPENSE EXAMPLE........................................ 4
STATEMENT OF ASSETS AND LIABILITIES.................... 6
STATEMENT OF OPERATIONS................................ 7
STATEMENT OF CHANGES IN NET ASSETS..................... 8
FINANCIAL HIGHLIGHTS................................... 9
PORTFOLIO OF INVESTMENTS............................... 11
NOTES TO FINANCIAL STATEMENTS.......................... 17
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 24
APPROVAL OF ADVISORY AGREEMENTS........................ 25
DIRECTORS AND OFFICERS INFORMATION..................... 29
SHAREHOLDER TAX INFORMATION............................ 31
December 31, 2005 ANNUAL REPORT
President's Letter
Dear Shareholder,
We are pleased to present you with the annual report for the SunAmerica
Money Market Fund and the SunAmerica Municipal Money Market Fund.
The year 2005 was one of conflicting events. The economy exhibited solid
growth, and corporate earnings growth exceeded expectations. However, this
occurred in the face of high energy prices, economic disruption caused in part
by the hurricanes last Fall and a Federal Reserve that continued to raise
interest rates. The Federal Funds rate was increased by two percentage points
during the year to reach its current level of 4.25%. Yet in the face of rising
short-term rates, 10-year Treasury rates remained relatively stable leading to
a flat yield curve, and a curve, which, at the end of the year, briefly
inverted. Historically, an inverted curve has been a forbearer of recession,
yet there is great debate about whether the U.S. is headed down that road.
In response to the annual period's challenges, both the SunAmerica Money
Market Fund and the SunAmerica Municipal Money Market Fund have actively
managed the weighted average maturity of securities held in these funds. As
always, the goal has been to capture higher yield when available while
maintaining their chief objective of principal preservation.
We thank you for your continued investment in our funds.
Sincerely,
/s/ Peter A. Harbeck
Peter A. Harbeck,
President and CEO
AIG SunAmerica Asset Management Corp.
- --------
Past performance is no guarantee of future results.
1
SunAmerica Municipal Money Market Fund
FUND REVIEW -- (unaudited)
Brian Wiese, Portfolio Manager
AIG SunAmerica Asset Management Corp.
The SunAmerica Money Market Fund, Class A returned 2.38% for the annual
period ending December 31, 2005.
The Federal Open Market Committee raised short-term interest rates by 25
basis points at each meeting this past year. The last 25 basis point increase
came in December, the thirteenth consecutive increase since the Federal Reserve
began raising rates from their all time low. This brought the target rate to
4.25%. Throughout the period, policy makers noted that longer-term inflation
expectations remained well contained and described monetary policy as
accommodating. At the December meeting, officials stated that a further
measured increase in the Federal Funds rate is likely.
Market conditions affected the Fund's performance during the period. Yields
on Money Market securities increased steadily throughout the period with
one-month CDs yielding approximately 4.40% at year-end, up by more than 200
basis points from the beginning of the year. In order to capture the rise in
yields, value was added through active management of the Fund's duration,
specifically by purchasing short-dated, fixed rate instruments as well as
floating rate notes. Given the outlook for continued increases in the Federal
Funds rate, we continued to emphasize short, fixed rate and floating rate
securities while selectively purchasing longer-dated securities when relative
value opportunities were discovered.
- --------
An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in the Fund.
Past performance is no guarantee of future results.
2
SunAmerica Municipal Money Market Fund
FUND REVIEW -- (unaudited) (continued)
Hutch Bryan, Portfolio Manager
AIG Global Investment Group
The SunAmerica Municipal Money Market Fund, Class A returned 1.62% for the
period ending December 31, 2005.
Market conditions affected the SunAmerica Municipal Money Market Fund during
the period. Municipal money market funds operate in a cyclical environment,
oscillating back and forth between large reinvestment periods which fuel demand
that drive yields lower (January, June, July, August) and periods where
divestment increases supply to cause a rise in yields (mid-April to mid-May,
September, and December). This relatively normal pattern occurred in 2005, but
was set against the backdrop of an overall rise in yields as the Federal Open
Market Committee (FOMC) raised the Federal Funds target rate from 2.25% to
4.25% over the course of eight meetings. A defensive posture in a rising rate
environment would be to remain invested at a relatively short weighted average
maturity, but in periods of peak demand this strategy forgoes extra yield
afforded by extension into longer maturities. Performance is the result of
proper execution of the balancing act between selective extension and defensive
posture which was successful for the Fund in the first and second quarters as a
declining weighted average maturity and steady reliance on variable-rate
securities coincided with an overall rise in the Bond Market Association (BMA)
Index* (proxy of weekly reset rate for municipal variable-rate demand notes)
through the end of tax season. However, a shorter weighted average maturity to
start the third quarter suffered as the BMA Index declined precipitously on
reinvestment pressures and was not easily rectified as note supply was limited
until August and September. By the beginning of the fourth quarter the weighted
average maturity of the Fund was increased to take advantage of yield
opportunities.
In past years, opportunistic investments were made in securities deemed both
liquid and creditworthy but undervalued by the market (California Revenue
Anticipation Warrants in 2004). This year in contrast, afforded little
opportunity as municipalities continued to rebound in credit quality and note
issuance declined. A pickup of par amount of $4 million North Carolina
Infrastructure bonds in July with a maturity of October 1st was at a wider
yield than available in the market at the time but had a relatively limited
effect as the maturity was less than three months away. Overall, the Fund
invested in sizable new-issue fixed-coupon note loans like Texas Tax and
Revenue Anticipation Notes, California Revenue Anticipation Notes, and Illinois
State General Obligation Notes and benefits from the continuous market interest
in these large and liquid issues.
- --------
*The Bond Market Association Municipal Swap (BMA) Index, produced by Municipal
Market Data (MMD), is a 7-day high-grade market index comprised of tax-exempt
variable rate demand obligations (VRDOs) from MMD's extensive database.
An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in the Fund.
Past performance is no guarantee of future results.
3
SunAmerica Money Market Funds
EXPENSE EXAMPLE -- December 31, 2005 -- (unaudited)
Disclosure of Portfolio Expenses in Shareholder Reports
As a shareholder of a Fund in the SunAmerica Money Market Funds, Inc. (the
"Corporation"), you may incur two types of costs: (1) transaction costs,
including sales charges on purchases and contingent deferred sales charges and
(2) ongoing costs, including management fees, distribution and service fees,
and other Fund expenses. This Example is intended to help you understand your
ongoing costs (in dollars) of investing in the Funds and to compare these costs
with the ongoing costs of investing in other mutual funds. The Example is based
on an investment of $1,000 invested at July 1, 2005 and held until December 31,
2005.
Actual Expenses
The "Actual" section of the table provides information about actual account
values and actual expenses. You may use the information in these columns,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the column under the heading entitled "Expenses Paid During the Six
Months Ended December 31, 2005" to estimate the expenses you paid on your
account during this period. For shareholder accounts in classes other than
Class I, the "Expenses Paid During the Six Months Ended December 31, 2005"
column does not include small account fees that may be charged if your account
balance is below $500 ($250 for retirement plan accounts). In addition, the
"Expenses Paid During the Six Months Ended December 31, 2005" column does not
include administrative fees that may apply to qualified retirement plan
accounts. See the Funds' prospectus and/or your retirement plan document for
full description of these fees. Had these fees been included, the "Expenses
Paid During the Six Months Ended December 31, 2005" column would have been
higher and the "Ending Account Value" column would have been lower.
Hypothetical Example for Comparison Purposes
The "Hypothetical" section of the table provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is
not the Fund's actual return. The hypothetical account values and expenses may
not be used to estimate the actual ending account balance or expenses you paid
for the period. You may use this information to compare the ongoing costs of
investing in the Portfolios of other funds. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of other funds. For shareholder accounts in classes other
than Class I, the "Expenses Paid During the Six Months Ended December 31, 2005"
column does not include small account fees that may be charged if your account
balance is below $500 ($250 for retirement plan accounts). In addition, the
"Expenses Paid During the Six Months Ended December 31, 2005" column does not
include administrative fees that may apply to qualified retirement plan
accounts. See the Fund's prospectus and/or your retirement plan document for
full description of these fees. Had these fees been included, the "Expenses
Paid During the Six Months Ended December 31, 2005" column would have been
higher and the "Ending Account Value" column would have been lower.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, including sales
charges on purchase payments, contingent deferred sales charges, small account
fees and administrative fees, if applicable to your account. Please refer to
your Prospectus and/or your qualified retirement plan document for more
information. Therefore, the "Hypothetical" example is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transaction costs and other fees
were included, your costs would have been higher.
4
SunAmerica Money Market Funds
EXPENSE EXAMPLE -- December 31, 2005 -- (unaudited) (continued)
Actual Hypothetical
--------------------------------------------------- ---------------------------------------------------
Ending Ending Account
Account Value Expenses Paid Value using Expenses Paid
Beginning Using Actual During the Beginning a Hypothetical 5% During the
Account Value Return at Six Months Ended Account Value Assumed Return at Six Months Ended
at July 1, 2005 December 31, 2005 December 31, 2005 at July 1, 2005 December 31, 2005 December 31, 2005
--------------- ----------------- ----------------- --------------- ----------------- -----------------
Money Market Fund
Class A....... $1,000.00 $1,014.61 $4.47 $1,000.00 $1,020.77 $4.48
Class B....... $1,000.00 $1,010.45 $8.67 $1,000.00 $1,016.59 $8.69
Class C ...... $1,000.00 $1,010.46 $8.61 $1,000.00 $1,016.64 $8.64
Class I #..... $1,000.00 $1,015.05 $4.06 $1,000.00 $1,021.17 $4.08
Municipal Money
Market Fund
Class A #..... $1,000.00 $1,009.15 $4.20 $1,000.00 $1,021.02 $4.23
Class B #..... $1,000.00 $1,005.13 $8.24 $1,000.00 $1,016.99 $8.29
Class C #..... $1,000.00 $1,005.13 $8.24 $1,000.00 $1,016.99 $8.29
Expense
Ratio
as of
December 31,
2005*
------------
Money Market Fund
Class A....... 0.88%
Class B....... 1.71%
Class C ...... 1.70%
Class I #..... 0.80%
Municipal Money
Market Fund
Class A #..... 0.83%
Class B #..... 1.63%
Class C #..... 1.63%
- --------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 184 days divided by 365
days. These ratios do not reflect transaction costs, including sales charges
on purchase payments, contingent deferred sales charges, small account fees
and administrative fees, if applicable to your account. Please refer to your
Prospectus and/or your qualified retirement plan document for more
information.
# During the stated period, the investment adviser and distributor either
waived a portion of or all of the fees and assumed a portion of or all
expenses for the Funds. As a result, if these fees and expenses had not been
waived, the "Actual/Hypothetical Ending Account Value" would have been lower
and the "Actual/Hypothetical Expenses Paid During the Six Months Ended
December 31, 2005" and the "Expense Ratios" would have been higher.
5
SunAmerica Money Market Funds
STATEMENT OF ASSETS AND LIABILITIES -- December 31, 2005
Money Market Municipal Money
Fund Market Fund
-------------- ---------------
ASSETS:
Short-term investment securities, at value* (unaffiliated)........ $1,592,736,684 $ 88,386,194
Repurchase agreements (cost equals market value).................. 39,796,000 --
-------------- ---------------
Total Investments............................................... $1,632,532,684 $ 88,386,194
-------------- ---------------
Cash.............................................................. 608 --
Receivable for:
Fund shares sold................................................ 16,837,814 2,644,731
Dividends and interest.......................................... 3,399,130 369,012
Prepaid expenses and other assets................................. 14,917 687
Due from investment adviser for expense reimbursements/fee waivers 1,487 6,238
-------------- ---------------
Total Assets...................................................... 1,652,786,640 91,406,862
-------------- ---------------
LIABILITIES:
Payable for:
Fund shares redeemed............................................ 4,435,067 4,382,581
Investment advisory and management fees......................... 652,499 25,517
Distribution and service maintenance fees....................... 242,524 12,376
Transfer agent fees and expenses................................ 343,896 18,111
Directors' fees and expenses.................................... 241,216 6,618
Other accrued expenses.......................................... 286,390 61,353
-------------- ---------------
Total Liabilities................................................. 6,201,592 4,506,556
-------------- ---------------
Net Assets..................................................... $1,646,585,048 $ 86,900,306
============== ===============
NET ASSETS REPRESENTED BY:
Common stock, $.001 par value (10 billion shares authorized)...... $ 1,646,592 $ 86,900
Paid-in capital................................................... 1,644,850,741 86,812,826
-------------- ---------------
1,646,497,333 86,899,726
Accumulated undistributed net investment income (loss)............ 87,715 580
-------------- ---------------
Net Assets........................................................ $1,646,585,048 $ 86,900,306
============== ===============
Class A:
Net assets........................................................ $1,587,641,097 $ 84,816,823
Shares outstanding................................................ 1,587,644,411 84,816,117
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charge)...... $ 1.00 $ 1.00
============== ===============
Class B:
Net assets........................................................ $ 31,738,378 $ 520,098
Shares outstanding................................................ 31,739,086 520,038
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charge)...... $ 1.00 $ 1.00
============== ===============
Class C:
Net assets........................................................ $ 13,497,197 $ 1,563,385
Shares outstanding................................................ 13,498,169 1,563,397
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charge)...... $ 1.00 $ 1.00
============== ===============
Class I:
Net assets........................................................ $ 13,708,376 $ --
Shares outstanding................................................ 13,710,641 --
Net asset value, offering and redemption price per share.......... $ 1.00 $ --
============== ===============
*Amortized cost of short-term investment securities (unaffiliated) $1,592,736,684 $ 88,386,194
============== ===============
See Notes to Financial Statements
6
SunAmerica Money Market Funds
STATEMENT OF OPERATIONS -- For the year ended December 31, 2005
Money Market Municipal Money
Fund Market Fund
------------ ---------------
INVESTMENT INCOME:
Interest (unaffiliated)................................................................ $55,089,983 $2,176,795
Dividends (unaffiliated)............................................................... -- 2,112
----------- ----------
Total investment income............................................................. 55,089,983 2,178,907
----------- ----------
EXPENSES:
Investment advisory and management fees................................................ 7,838,935 318,004
Distribution and service maintenance fees:
Class A.............................................................................. 2,443,361 133,957
Class B.............................................................................. 328,707 4,646
Class C.............................................................................. 171,640 9,337
Transfer agent fees and expenses:
Class A.............................................................................. 3,658,734 198,950
Class B.............................................................................. 107,218 1,811
Class C.............................................................................. 49,683 2,282
Class I.............................................................................. 33,917 --
Registration fees:
Class A.............................................................................. 34,644 17,837
Class B.............................................................................. 11,830 6,967
Class C.............................................................................. 7,373 4,978
Class I.............................................................................. 9,015 --
Custodian and accounting fees.......................................................... 300,655 44,451
Reports to shareholders................................................................ 369,517 8,631
Audit and tax fees..................................................................... 43,952 43,947
Legal fees ............................................................................ 29,538 3,913
Directors' fees and expenses........................................................... 101,947 5,549
Other expenses......................................................................... 53,771 7,032
----------- ----------
Total expenses before fee waivers, expense reimbursements and custody credits....... 15,594,437 812,292
Fees waived and expenses reimbursed by investment adviser and distributor (Note 3).. (6,936) (46,389)
Custody credits earned on cash balances............................................. (3,359) (15,603)
----------- ----------
Net expenses........................................................................ 15,584,142 750,300
----------- ----------
Net investment income (loss)........................................................... 39,505,841 1,428,607
----------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ $39,505,841 $1,428,607
=========== ==========
- --------
See Notes to Financial Statements
7
SunAmerica Money Market Funds
STATEMENT OF CHANGES IN NET ASSETS
Money Market Fund
--------------------------------
For the year For the year
ended ended
December 31, December 31,
2005 2004
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss).......................................................... $ 39,505,841 $ 8,165,643
--------------- ---------------
Net increase (decrease) in net assets resulting from operations......................... $ 39,505,841 $ 8,165,643
Distributions to shareholders from:
Net investment income (Class A)....................................................... (38,360,984) (8,054,333)
Net investment income (Class B)....................................................... (535,077) (30,639)
Net investment income (Class C)+...................................................... (303,588) (14,024)
Net investment income (Class I)....................................................... (317,343) (66,647)
--------------- ---------------
Total distributions to shareholders..................................................... (39,516,992) (8,165,643)
--------------- ---------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 5) (55,074,247) (17,388,052)
--------------- ---------------
Total increase (decrease) in net assets................................................. (55,085,398) (17,388,052)
=============== ===============
Net Assets:
Beginning of period..................................................................... 1,701,670,446 1,719,058,498
--------------- ---------------
End of period*.......................................................................... $ 1,646,585,048 $ 1,701,670,446
=============== ===============
*Includes accumulated undistributed net investment income (loss)........................ $ 87,715 $ 98,866
=============== ===============
Municipal Money
Market Fund
--------------------------------
For the year For the year
ended ended
December 31, December 31,
2005 2004
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss).......................................................... $ 1,428,607 $ 366,908
--------------- ---------------
Net increase (decrease) in net assets resulting from operations......................... $ 1,428,607 $ 366,908
Distributions to shareholders from:
Net investment income (Class A)....................................................... (1,413,877) (364,223)
Net investment income (Class B)....................................................... (4,110) (2,471)
Net investment income (Class C)+...................................................... (10,621) (214)
Net investment income (Class I)....................................................... -- --
--------------- ---------------
Total distributions to shareholders..................................................... (1,428,608) (366,908)
--------------- ---------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 5) (11,193,701) (19,134,111)
--------------- ---------------
Total increase (decrease) in net assets................................................. (11,193,702) (19,134,111)
=============== ===============
Net Assets:
Beginning of period..................................................................... 98,094,008 117,228,119
--------------- ---------------
End of period*.......................................................................... $ 86,900,306 $ 98,094,008
=============== ===============
*Includes accumulated undistributed net investment income (loss)........................ $ 580 $ 581
=============== ===============
- --------
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares
See Notes to Financial Statements
8
SunAmerica Money Market Funds
FINANCIAL HIGHLIGHTS
MONEY MARKET FUND
-----------------
Ratio
Net Net of net
Asset Dividends Asset Net Assets Ratio of investment
Value Net from net Value end of expenses income to
beginning investment investment end of Total period to average average
Period Ended of period income(1) income period Return(2) (000's) net assets net assets
- -------------------- --------- ---------- ---------- ------ --------- ---------- ---------- ----------
Class A
- -
12/31/01 $1.000 $0.034 $(0.034) $1.000 3.45% $1,087,329 0.93% 4.04%
12/31/02 1.000 0.010 (0.010) 1.000 1.04(6) 1,751,812 0.90 0.99
12/31/03 1.000 0.003 (0.003) 1.000 0.32 1,644,603 0.88 0.32
12/31/04 1.000 0.005 (0.005) 1.000 0.50 1,630,353 0.90 0.49
12/31/05 1.000 0.024 (0.024) 1.000 2.38 1,587,641 0.89 2.35
Class B
- -
12/31/01 $1.000 $0.025 $(0.025) $1.000 2.57% $ 55,066 1.75% 3.76%
12/31/02 1.000 0.003 (0.003) 1.000 0.28(6) 64,815 1.64(4) 0.26(4)
12/31/03 1.000 0.000 0.000 1.000 0.03 44,529 1.18(4) 0.03(4)
12/31/04 1.000 0.001 (0.001) 1.000 0.07 42,437 1.32(4) 0.06(4)
12/31/05 1.000 0.015 (0.015) 1.000 1.52 31,738 1.74 1.46
Class C+
- -
12/31/01 $1.000 $0.026 $(0.026) $1.000 2.63% $ 33,644 1.69%(4) 3.51%(4)
12/31/02 1.000 0.003 (0.003) 1.000 0.27(6) 30,285 1.66(4) 0.26(4)
12/31/03 1.000 0.000 0.000 1.000 0.03 20,290 1.18(4) 0.03(4)
12/31/04 1.000 0.001 (0.001) 1.000 0.07 16,985 1.33(4) 0.06(4)
12/31/05 1.000 0.015 (0.015) 1.000 1.54 13,497 1.71 1.59
Class I
- -
11/16/01-12/31/01(3) $1.000 $0.002 $(0.002) $1.000 0.20% $ 8,336 0.80%(4)(5) 0.84%(4)(5)
12/31/02 1.000 0.011 (0.011) 1.000 1.13(6) 9,195 0.80(4) 1.12(4)
12/31/03 1.000 0.004 (0.004) 1.000 0.43 9,636 0.77(4) 0.43(4)
12/31/04 1.000 0.006 (0.006) 1.000 0.58 11,895 0.80(4) 0.59(4)
12/31/05 1.000 0.025 (0.025) 1.000 2.49 13,708 0.80(4) 2.49(4)
- --------
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)Commencement of sales of respective class of shares.
(4)Net of the following expense reimbursements/waivers (based on average net
assets):
12/31/01 12/31/02 12/31/03 12/31/04 12/31/05
-------- -------- -------- -------- --------
Class B. -- % 0.04% 0.51% 0.39% -- %
Class C+ 0.05 0.04 0.53 0.39 --
Class I. 0.24 0.14 0.02 0.09 0.05
(5)Annualized
(6)The total return for each class was increased by less than 0.01% from gains
realized on the disposal of investments in violation of investment
restrictions.
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
See Notes to Financial Statements
9
SunAmerica Money Market Funds
FINANCIAL HIGHLIGHTS -- (continued)
MUNICIPAL MONEY MARKET FUND
---------------------------
Net Net Net Ratio of net
Asset Dividends Asset Assets Ratio of investment
Value Net from net Value end of expenses income to
beginning investment investment end of Total period to average average
Period Ended of period income(1) income period Return(2) (000's) net assets(4) net assets(4)
- -------------------- --------- ---------- ---------- ------ --------- -------- ------------- -------------
Class A
- -
10/31/01(5) $1.000 $0.020 $(0.020) $1.000 2.39% $ 3,972 0.78% 2.39%
11/01/01-12/31/01(5) 1.000 0.013 (0.013) 1.000 2.05 3,829 0.62(3) 1.71(3)
12/31/02 1.000 0.009 (0.009) 1.000 0.92 88,050 0.78 0.71
12/31/03 1.000 0.003 (0.003) 1.000 0.28 113,802 0.81 0.28
12/31/04 1.000 0.004 (0.004) 1.000 0.36 97,374 0.87 0.35
12/31/05 1.000 0.016 (0.016) 1.000 1.62 84,817 0.81 1.58
Class B
- -
10/31/01(5) $1.000 $0.020 $(0.020) $1.000 2.39% $ 2,613 0.78% 2.38%
11/01/01-12/31/01(5) 1.000 0.008 (0.008) 1.000 1.97 2,618 1.13(3) 1.27(3)
12/31/02 1.000 0.002 (0.002) 1.000 0.24 3,714 1.39 0.16
12/31/03 1.000 0.001 (0.001) 1.000 0.10 3,168 0.98 0.11
12/31/04 1.000 0.001 (0.001) 1.000 0.10 497 1.02 0.10
12/31/05 1.000 0.008 (0.008) 1.000 0.81 520 1.62 0.80
Class C+
- -
10/31/01(5) $1.000 $0.020 $(0.020) $1.000 2.40% $ 136 0.78% 2.33%
11/01/01-12/31/01(5) 1.000 0.008 (0.008) 1.000 1.97 195 1.15(3) 1.14(3)
12/31/02 1.000 0.002 (0.002) 1.000 0.24 170 1.39 0.19
12/31/03 1.000 0.001 (0.001) 1.000 0.10 258 1.00 0.11
12/31/04 1.000 0.001 (0.001) 1.000 0.10 223 1.18 0.10
12/31/05 1.000 0.008 (0.008) 1.000 0.82 1,563 1.59 1.02
- --------
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)Annualized
(4)Net of the following expense reimbursements/waivers (based on average net
assets):
10/31/01 12/31/01(3) 12/31/02 12/31/03 12/31/04 12/31/05
-------- ----------- -------- -------- -------- --------
Class A. 1.18% 2.51% 0.20% 0.03% 0.00% 0.04%
Class B. 1.18 2.59 1.25 1.03 0.87 1.44
Class C+ 1.18 7.84 9.68 7.45 4.20 0.47
(5)The financial information for the periods prior to November 16, 2001
reflects the financial information for the North American Municipal Money
Market Fund.
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares
See Notes to Financial Statements
10
SunAmerica Money Market Fund
PORTFOLIO PROFILE -- December 31, 2005 -- (unaudited)
Industry Allocation*
Asset Backed/Securities.......... 19.6%
Foreign Banks.................... 18.2
Asset Backed/Receivables......... 18.1
Asset Backed/Multi-Asset......... 16.4
Finance.......................... 15.8
Domestic Banks................... 5.1
Diversified Financial Services... 3.0
Sovereign Agency................. 2.3
Municipalities................... 0.6
----
99.1%
====
Weighted average days to maturity 30.3
Credit Quality Allocation @#
A-1......................... 95.3%
Government-Agency........... 4.7
-----
100.0%
=====
- --------
* Calculated as a percentage of net assets.
@ Source: Standard and Poors
# Calculated as a percentage of total debt issues.
11
SunAmerica Money Market Fund
PORTFOLIO OF INVESTMENTS -- December 31, 2005
Principal Value
Security Description Amount (Note 2)
SHORT-TERM INVESTMENT SECURITIES -- 96.7%
ASSET-BACKED COMMERCIAL PAPER -- 54.0%
Amstel Funding Corp.
4.34% due 01/25/06*.................... $26,000,000 $25,924,773
4.35% due 03/01/06*................... 25,000,000 24,821,771
Amsterdam Funding Corp.
4.10% due 01/23/06*.................... 25,000,000 24,937,361
Apreco LLC
4.34% due 02/06/06*.................... 25,000,000 24,891,500
Atlantis One Funding
4.10% due 01/23/06*.................... 25,000,000 24,937,361
Barton Capital LLC
4.08% due 01/10/06*.................... 25,000,000 24,974,500
4.13% due 01/25/06*................... 25,000,000 24,931,167
CAFCO LLC
4.16% due 01/27/06*.................... 25,000,000 24,924,889
4.18% due 01/30/06*................... 25,000,000 24,915,920
CRC Funding LLC
4.27% due 02/07/06*.................... 25,000,000 24,890,285
4.37% due 03/06/06*................... 25,000,000 24,805,778
Cancara Asset Securitization, Ltd.
4.02% due 01/09/06*.................... 25,000,000 24,977,667
Charta LLC
4.11% due 01/13/06*.................... 25,000,000 24,965,750
Ciesco LLC
4.10% due 01/18/06*.................... 25,000,000 24,951,597
Clipper Receivables Co. LLC
4.30% due 01/27/06*.................... 25,000,000 24,922,361
Edison Asset Securitization LLC
4.28% due 02/03/06*.................... 25,000,000 24,901,917
4.30% due 02/07/06*................... 25,000,000 24,889,514
Falcon Asset Securitization Corp.
4.13% due 01/04/06*.................... 25,000,000 24,991,396
Galaxy Funding, Inc.
4.03% due 01/10/06*.................... 25,000,000 24,974,813
Giro Funding U.S. Corp.
4.35% due 01/26/06*.................... 25,000,000 24,924,479
Govco, Inc.
4.04% due 01/12/06*.................... 25,000,000 24,969,139
4.28% due 02/23/06*................... 25,000,000 24,842,472
Greyhawk Funding LLC
4.02% due 01/05/06*.................... 24,000,000 23,989,280
4.23% due 02/08/06*................... 25,000,000 24,888,375
Jupiter Securitization Corp.
4.29% due 02/01/06*.................... 25,000,000 24,907,646
Kitty Hawk Funding Corp.
4.30% due 01/23/06*.................... 25,000,000 24,934,306
Ranger Funding Co. LLC
4.30% due 01/27/06*.................... 25,000,000 24,922,361
Sheffield Receivables
4.13% due 01/04/06*.................... 24,000,000 23,991,740
4.30% due 01/17/06*................... 25,000,000 24,952,222
Surrey Funding Corp.
4.17% due 02/03/06*.................... 24,000,000 23,908,260
4.23% due 01/30/06*................... 24,000,000 23,918,220
Sydney Capital Corp
4.28% due 02/14/06*.................... 25,000,000 24,869,222
Thames Asset Global Securitization, Inc.
4.32% due 01/24/06*.................... 25,000,000 24,931,000
Principal Value
Security Description Amount (Note 2)
------------------------------------------------------------
White Pine Finance LLC
4.32% due 01/17/06*+.............. $25,000,000 $ 24,999,610
Windmill Funding Corp.
4.20% due 01/03/06*............... 20,000,000 19,995,333
4.30% due 01/27/06*.............. 25,000,000 24,922,361
------------
Total Asset-Backed Commercial Paper
(amortized cost $889,396,346).... 889,396,346
------------
CERTIFICATES OF DEPOSIT -- 22.8%
ABN AMRO Bank NV
3.93% due 02/09/06................ 24,000,000 23,988,463
BNP Paribas
4.16% due 01/09/06................ 24,000,000 24,000,026
Citibank N.A.
4.02% due 01/05/06................ 25,000,000 25,000,000
4.47% due 03/29/06............... 25,000,000 25,000,000
Deutsche Bank
4.00% due 01/06/06 24,000,000 24,000,000
4.29% due 01/06/06............... 24,000,000 24,000,000
Dexia Credit Local
4.25% due 01/03/06+............... 24,000,000 23,997,288
Fortis Bank
4.26% due 01/31/06................ 24,000,000 24,000,099
HBOS Treasury Services
4.32% due 02/09/06................ 24,000,000 24,000,129
Lloyds TSB Bank PLC
4.13% due 01/23/06................ 30,000,000 30,000,091
Rabobank Nederland NV
4.29% due 04/18/06+............... 24,000,000 23,982,040
Royal Bank of Scotland
4.31% due 09/29/06................ 24,000,000 24,000,000
UBS AG
4.15% due 01/09/06................ 24,000,000 24,000,000
4.22% due 02/06/06............... 30,000,000 30,000,000
Wells Fargo Bank N.A.
4.31% due 02/01/06................ 25,000,000 25,000,000
------------
Total Certificates of Deposit
(amortized cost $374,968,136).... 374,968,136
------------
COMMERCIAL PAPER -- 7.2%
Bear Stearns Co., Inc.
4.11% due 01/23/06................ 25,000,000 24,937,208
4.29% due 01/09/06............... 24,000,000 23,977,120
General Electric Capital Corp.
4.17% due 02/01/06*............... 25,000,000 24,910,229
4.27% due 02/01/06*.............. 20,000,000 19,926,461
Goldman Sachs Group, Inc.
4.34% due 01/18/06+............... 24,000,000 24,000,000
------------
Total Commercial Paper
(amortized cost $117,751,018).... 117,751,018
------------
MEDIUM TERM NOTES -- 9.8%
Beta Finance, Inc.
4.32% due 01/04/06*+.............. 25,000,000 25,000,000
Merrill Lynch & Co., Series C
4.35% due 01/17/06+............... 21,000,000 21,000,000
Sedna Finance, Inc.
4.34% due 01/17/06*+.............. 22,000,000 22,000,000
4.34% due 01/25/06*+............. 25,000,000 25,000,000
12
SunAmerica Money Market Fund
PORTFOLIO OF INVESTMENTS -- December 31, 2005 -- (continued)
Principal Value
Security Description Amount (Note 2)
MEDIUM TERM NOTES (continued)
Sigma Finance, Inc.
4.28% due 01/06/06*+................. $25,000,000 $ 25,000,000
4.33% due 01/25/06*+................ 25,000,000 24,999,538
Wells Fargo & Co.
4.27% due 01/03/06+.................. 19,000,000 19,000,000
--------------
Total Medium Term Notes
(amortized cost $161,999,538)....... 161,999,538
--------------
TAXABLE MUNICIPAL MEDIUM TERM NOTES -- 0.6%
Illinois Student Assistance Commission
4.46% due 01/04/06+
(amortized cost $10,000,000)......... 10,000,000 10,000,000
--------------
U.S. GOVERNMENT AGENCIES -- 2.3%
Agency for International Development
Panama
4.74% due 01/03/06+.................. 2,613,745 2,622,067
--------------
Fannie Mae
4.00% due 08/08/06................... 24,000,000 24,000,000
4.20% due 01/03/06+................. 12,000,000 11,999,579
--------------
35,999,579
--------------
Total U.S. Government Agencies
(amortized cost $38,621,646)........ 38,621,646
--------------
Total Short-Term Investment Securities -- 96.7%
(amortized cost $1,592,736,684)..... 1,592,736,684
--------------
Principal Value
Security Description Amount (Note 2)
--------------------------------------------------------------
REPURCHASE AGREEMENTS -- 2.4%
State Street Bank & Trust Co.
Joint Repurchase Agreement(1)..... $ 796,000 $ 796,000
UBS Securities LLC
Joint Repurchase Agreement(1)..... 39,000,000 39,000,000
--------------
Total Repurchase Agreements
(amortized cost $39,796,000)..... 39,796,000
--------------
TOTAL INVESTMENTS
(amortized cost $1,632,532,684)#. 99.1% 1,632,532,684
Other assets less liabilities...... 0.9 14,052,364
----------- --------------
NET ASSETS......................... 100.0% $1,646,585,048
=========== ==============
- --------
* Securities exempt from registration under Rule 144A of Securities Act of
1933. These securities may be sold in transactions exempt from registration,
normally to qualified institutional buyers. The Fund has no rights to demand
registration of these securities. At December 31, 2005, the aggregate value
of these securities was $1,056,232,574, representing 64.1% of net assets.
Unless otherwise indicated, these securities are not considered to be
illiquid.
# At December 31, 2005, the cost of securities for federal income tax purposes
was the same for book purposes.
+ Variable rate security - the rate reflected is as of December 31, 2005;
maturity date reflects next reset date.
(1)See Note 2 for details of the Joint Repurchase Agreement
See Notes to Financial Statements
13
SunAmerica Municipal Money Market Fund
PORTFOLIO PROFILE -- December 31, 2005 -- (unaudited)
State Allocation*
North Carolina................... 11.8%
Illinois......................... 8.9
Indiana.......................... 8.4
Ohio............................. 7.1
Missouri......................... 5.2
Arizona.......................... 4.8
Texas............................ 4.8
Michigan......................... 4.7
Pennsylvania..................... 4.7
Florida.......................... 4.6
New Mexico....................... 4.1
North Dakota..................... 3.9
Colorado......................... 3.7
Alabama.......................... 3.5
California....................... 2.9
South Carolina................... 2.7
Tennessee........................ 2.6
Kentucky......................... 2.4
Wisconsin........................ 2.3
Georgia.......................... 2.0
Iowa............................. 2.0
Nebraska......................... 1.7
Washington....................... 1.7
Nevada........................... 0.8
New York......................... 0.4
Registered Investment Companies.. 0.0
-----
101.7%
=====
Weighted average days to maturity 20.6
Credit Quality Allocation @ #
A-1.......................... 74.8%
Not Rated+................... 25.2
-----
100.0%
=====
- --------
* Calculated as a percentage of net assets.
@ Source: Standard and Poors
# Calculated as a percentage of total debt issues.
+ Represents debt issues that have either no rating, or the rating is
unavailable for the data source.
14
SunAmerica Municipal Money Market Fund
PORTFOLIO OF INVESTMENTS -- December 31, 2005
Value
Security Description Principal (Note 2)
SHORT-TERM INVESTMENT SECURITIES -- 101.7%
Alabama -- 3.5%
Stevenson, Alabama Industrial Development
Board Environmental Improvement
(LOC-JPMorgan Chase Bank)
3.63% due 01/04/06+............................ $3,000,000 $3,000,000
----------
Arizona -- 4.8%
Maricopa County, Arizona Industrial
Development Authority
(LOC-Harris Trust & Savings Bank)
3.62% due on 01/05/06+......................... 850,000 850,000
Maricopa County, Arizona Industrial
Development Authority, Series A
(LOC-Wells Fargo Bank N.A.)
3.63% due on 01/05/06+......................... 1,510,000 1,510,000
Mesa, Arizona Industrial Development Authority,
Series B
3.52% due on 01/04/06+......................... 1,800,000 1,800,000
----------
4,160,000
----------
California -- 2.9%
California State Revenue Anticipation Notes
4.50% due 06/30/06............................. 2,500,000 2,518,136
----------
Colorado -- 3.7%
Colorado Springs, Colorado National Strength
and Conditioning Assoc.
(LOC-Wells Fargo Bank N.A.)
3.63% due 01/05/06+............................ 1,380,000 1,380,000
Crystal Valley, Colorado Metropolitan District
No. 1 (LOC-Wells Fargo Bank N.A.)
3.53% due 01/05/06+............................ 1,000,000 1,000,000
Durango, Colorado Community Health & Human
Services (LOC-Wells Fargo Bank N.A.)
3.63% due 01/05/06+............................ 835,000 835,000
----------
3,215,000
----------
Florida -- 4.6%
Lakeland, Florida Energy System
3.42% due 01/04/06+............................ 2,000,000 2,000,000
Lakeland, Florida Energy System, Series A
3.42% due 01/04/06+............................ 2,000,000 2,000,000
----------
4,000,000
----------
Georgia -- 2.0%
Fulton County, Georgia Development Authority
(LOC-Wachovia Bank N.A.)
3.52% due 01/05/06+............................ 1,700,000 1,700,000
----------
Illinois -- 8.9%
Chicago, Illinois O'Hare International Airport,
Series B (LOC-Societe Generale)
3.62% due 01/04/06+............................ 845,000 845,000
Chicago, Illinois Waterworks
(LOC-Bank One N.A.)
3.55% due 01/04/06+............................ 500,000 500,000
Illinois Health Facilities Authority, Series B
3.58% due 01/05/06+............................ 3,600,000 3,600,000
Illinois State General Obligation
4.50% due 04/28/06............................. 1,000,000 1,004,330
Warren County, Illinois Community Medical
Center (LOC-Wells Fargo Bank N.A.)
3.63% due 01/05/06+............................ 1,805,000 1,805,000
----------
7,754,330
----------
Value
Security Description Principal (Note 2)
------------------------------------------------------------------------
Indiana -- 8.4%
Indiana Health Facility Financing Authority,
Series B
3.80% due 01/03/06+............................. $ 100,000 $ 100,000
Indiana Health Facility Financing Authority,
Series I
3.54% due 01/04/06+............................. 3,925,000 3,925,000
Indianapolis, Indiana Local Public Improvement,
Series E
4.00% due 01/06/06.............................. 1,600,000 1,600,303
Marion, Indiana Economic Development
(LOC-Bank One Indiana N.A.)
3.55% due 01/04/06+............................. 1,100,000 1,100,000
Marion, Indiana Economic Development
(LOC-Bank of America N.A.)
3.55% due 01/04/06+............................. 600,000 600,000
----------
7,325,303
----------
Iowa -- 2.0%
Iowa Finance Authority, Series F
3.45% due 01/05/06+............................. 1,100,000 1,100,000
Iowa Finance Authority Childrens Services,
Series B (LOC-Wells Fargo Bank N.A.)
3.63% due 01/05/06+............................. 370,000 370,000
Iowa Higher Education Loan Authority
(LOC-Wells Fargo Bank N.A.)
3.63% due 01/05/06+............................. 100,000 100,000
Storm Lake, Iowa Higher Education Facilities
3.68% due 01/05/06+............................. 185,000 185,000
----------
1,755,000
----------
Kentucky -- 2.4%
Breckinridge County, Kentucky Lease Program
(LOC-U.S. Bank N.A.)
3.52% due 01/04/06+............................. 315,000 315,000
Breckinridge County, Kentucky Lease Program,
Series A (LOC-U.S. Bank N.A.)
3.52% due 01/04/06+............................. 1,800,000 1,800,000
----------
2,115,000
----------
Michigan -- 4.7%
Detroit, Michigan Sewer Disposal System,
Series C-1
3.40% due 01/05/06+............................. 975,000 975,000
Detroit, Michigan Sewer Disposal System,
Series C-2
3.40% due 01/05/06+............................. 3,000,000 3,000,000
Michigan State Strategic Fund Ltd. Obligation
(LOC-Fifth Third Bank)
3.60% due 01/04/06+............................. 145,000 145,000
----------
4,120,000
----------
Missouri -- 5.2%
Missouri Higher Education Student Loan
Authority, Series B
3.62% due 01/04/06+............................. 1,500,000 1,500,000
Missouri State Health & Educational Facilities
Authority
3.70% due 01/03/06+............................. 700,000 700,000
Missouri State Health & Educational Facilities
Authority, Series C
3.70% due 01/03/06+............................. 600,000 600,000
St. Louis, Missouri Planned Industrial Expansion
Authority (LOC-Bank of America N.A.)
3.59% due 01/04/06+............................. 1,700,000 1,700,000
----------
4,500,000
----------
15
SunAmerica Municipal Money Market Fund
PORTFOLIO OF INVESTMENTS -- December 31, 2005 -- (continued)
Value
Security Description Principal (Note 2)
SHORT-TERM INVESTMENT SECURITIES (continued)
Nebraska -- 1.7%
Douglas County, Nebraska Solid Waste Disposal,
Series A (LOC-Wachovia Bank N.A.)
3.60% due 01/05/06+........................... $1,500,000 $ 1,500,000
-----------
Nevada -- 0.8%
Washoe County, Nevada Economic
Development
3.53% due 01/05/06+........................... 700,000 700,000
-----------
New Mexico -- 4.1%
Albuquerque, New Mexico Educational
Facilities
3.60% due 01/04/06+........................... 3,600,000 3,600,000
-----------
New York -- 0.4%
New York, New York General Obligation,
Series B-2 (LOC-Morgan Guaranty Trust)
3.77% due 01/03/06+........................... 100,000 100,000
New York City, New York Municipal Water
Finance Authority, Series F-2
3.77% due 01/03/06+........................... 200,000 200,000
-----------
300,000
-----------
North Carolina -- 11.8%
Charlotte, North Carolina Certificates of
Participation, Series B
3.60% due 01/05/06+........................... 3,000,000 3,000,000
Durham, North Carolina Public Improvement
3.51% due 01/05/06+........................... 300,000 300,023
Mecklenburg County, North Carolina
Certificates of Participation
3.55% due 01/05/06+........................... 600,000 600,000
North Carolina Medical Care Community
Hospital, Series B
3.51% due 01/05/06+........................... 2,400,000 2,400,000
Winston-Salem, North Carolina Certificates of
Participation
3.55% due 01/05/06+........................... 1,825,000 1,825,000
Winston-Salem, North Carolina Water & Sewer
System, Series C
3.50% due 01/04/06+........................... 2,150,000 2,150,000
-----------
10,275,023
-----------
North Dakota -- 3.9%
North Dakota State Housing Finance Agency,
Series A
3.54% due 01/04/06+........................... 3,400,000 3,400,000
-----------
Ohio -- 7.1%
Cleveland, Ohio Airport System, Series D
(LOC-WestLb AG)
3.54% due 01/04/06+........................... 2,845,000 2,845,000
Franklin County, Ohio Hospital, Series B
(LOC-Citibank N.A.)
3.49% due 01/05/06+........................... 3,320,000 3,320,000
-----------
6,165,000
-----------
Pennsylvania -- 4.7%
Delaware Valley, Pennsylvania Regional
Financial Authority, Series A
(LOC-National Australia Bank)
3.50% due 01/04/06+........................... 300,000 300,000
Delaware Valley, Pennsylvania Regional
Financial Authority, Series C
(LOC-National Australia Bank)
3.50% due 01/04/06+........................... 1,700,000 1,700,000
Value
Security Description Principal (Note 2)
------------------------------------------------------------------------
Pennsylvania (continued)
Pennsylvania State Turnpike Commission,
Series A-1
3.58% due 01/04/06+.......................... $1,000,000 $ 1,000,000
Pennsylvania State Turnpike Commission,
Series U
3.51% due 01/05/06+.......................... 900,000 900,000
Philadelphia, Pennsylvania Authority for
Industrial Development (LOC-GE Capital
Corp.)
3.40% due 01/04/06+.......................... 200,000 200,000
-----------
4,100,000
-----------
South Carolina -- 2.7%
Piedmont Municipal Power Agency, Series B-1
3.55% due 01/04/06+.......................... 1,200,000 1,200,000
South Carolina Jobs Economic Development
Authority (LOC-Bank of America N.A.)
3.62% due 01/04/06+.......................... 1,100,000 1,100,000
-----------
2,300,000
-----------
Tennessee -- 2.6%
Montgomery County, Tennessee Public
Building Authority (LOC-Bank of
America N.A.)
3.55% due 01/05/06+.......................... 2,230,000 2,230,000
-----------
Texas -- 4.8%
Gulf Coast Waste Disposal Authority, Series A
(LOC-JPMorgan Chase Bank)
3.60% due 01/05/06+.......................... 100,000 100,000
Texas State Tax & Revenue Anticipation Notes
4.50% due 08/31/06........................... 4,000,000 4,038,613
-----------
4,138,613
-----------
Washington -- 1.7%
Port Seattle, Washington Industrial
Development Corp. (LOC-Citibank N.A.)
3.55% due 01/04/06+.......................... 1,500,000 1,500,000
-----------
Wisconsin -- 2.3%
Wisconsin State Health & Educational
Facilities Authority (LOC-Citibank N.A.)
3.50% due 01/05/06+.......................... 2,000,000 2,000,000
-----------
Registered Investment Companies -- 0.0%
SSGA Tax Free Money Market Fund............... 14,789 14,789
-----------
TOTAL SHORT-TERM INVESTMENT SECURITIES
(amortized cost $88,386,194)# ................ 101.7% 88,386,194
Liabilities in excess of other assets ........ (1.7) (1,485,888)
---------- -----------
NET ASSETS...................................... 100.0% $86,900,306
========== ===========
- --------
# At December 31, 2005, the cost of securities for federal income tax
purposes was the same for book purposes.
+ Variable rate security - the rate reflected is as of December 31, 2005;
maturity date reflects next reset date.
LOC-- Letter of Credit
See Notes to Financial Statements
16
SunAmerica Money Market Funds
NOTES TO FINANCIAL STATEMENTS -- December 31, 2005
Note 1. Organization
SunAmerica Money Market Funds, Inc. (the "Corporation") is an open-end
diversified management investment company organized as a Maryland
Corporation. The Corporation consists of two investment funds (each, a
"Fund" and collectively, the "Funds"). Each Fund is a separate series with a
distinct investment objective. Each Fund is advised by AIG SunAmerica Asset
Management Corp. ("SAAMCo" or "Advisor"), an indirect wholly-owned
subsidiary of American International Group, Inc. ("AIG"). The investment
objective for each of the Funds is as follows:
The SunAmerica Money Market Fund ("Money Market Fund") seeks as high a level
of current income as is consistent with liquidity and stability of capital
through investment primarily in high-quality money market instruments
selected principally on the basis of quality and yield.
The SunAmerica Municipal Money Market Fund ("Municipal Money Market Fund")
seeks as high a level of current income as is consistent with liquidity and
stability of capital and that is exempt from regular federal income taxation
through investments selected primarily in high-quality money market
instruments primarily on the basis of quality and yield, and under normal
market conditions invests at least 80% of its assets in municipal securities
that are exempt from regular federal income tax.
The Money Market Fund currently offers four classes of shares: Class A,
Class B, Class C and Class I. The Municipal Money Market Fund currently
offers three classes of shares: Class A, Class B, and Class C. The classes
within the Funds are presented in the Statement of Assets and Liabilities.
The cost structure for each class is as follows:
Class A shares-- Class A shares are available with no front-end sales
charge. A 1.00% contingent deferred sales charge ("CDSC")
is imposed on shares sold within one year of original
purchase and a 0.50% CDSC is imposed on shares sold after
the first year and within the second year after purchase.
Class B shares-- Class B shares are offered at their net asset value per
share, without any front-end sales charge. However, there
is a declining contingent deferred sales charge ("CDSC") on
shares sold within six years of purchase. Class B shares
will convert automatically to Class A shares approximately
eight years after the purchase of such shares and at such
time are no longer subject to a distribution fee.
Class C shares-- Class C shares are offered at their net asset value per
share, without any front-end sales charge. However, there
is a contingent deferred sales charge of 1.00% on shares
sold within 12 months of purchase.
Class I shares-- Class I shares are offered at net asset value per share
without any sales charge, exclusively to certain
institutions.
Each class of shares bears the same voting, dividend, liquidation and other
rights and conditions. Class A, Class B, and Class C shares of each Fund has
its own 12b-1 plan, which allows for distributions and account maintenance
and service fees payments, except Class B and Class C shares are subject to
higher distribution fee rates.
Indemnifications: Under the Funds' organizational documents, its officers
and directors are indemnified against certain liability arising out of the
performance of their duties to the Funds. In addition, in the normal course
of business the Funds enter into contracts that may contain the obligation
to indemnify others. The Funds' maximum exposure under these arrangements is
unknown. Currently, however, the Funds expect the risk of loss to be remote.
Note 2. Significant Accounting Policies
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from these estimates. The
following is a summary of the significant accounting policies followed by
the Funds in the preparation of its financial statements:
Security Valuations: Portfolio securities are valued at amortized cost,
which approximates market value. The amortized cost method involves valuing
a security at its cost on the date of purchase and thereafter assuming a
constant amortization/accretion to maturity of any discount or premium.
17
SunAmerica Money Market Funds
NOTES TO FINANCIAL STATEMENTS -- December 31, 2005 -- (continued)
Repurchase Agreements: The Funds, along with other affiliated registered
investments companies, pursuant to exemptive relief granted by the
Securities and Exchange Commission, may transfer uninvested cash balances
onto a single joint account, the daily aggregate balance of which is
invested in one or more repurchase agreements collateralized by U.S.
Treasury or federal agency obligations. For repurchase agreements and joint
repurchase agreements, the Funds' custodian takes possession of the
collateral pledged for investments in such repurchase agreements. The
underlying collateral is valued daily on a mark to market basis to ensure
that the value, at the time the agreement is entered into, is equal to at
least 102% of the repurchase price, including accrued interest. In the event
of default of the obligation to repurchase, a Fund has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. If the seller defaults and the value of the collateral declines
or if bankruptcy proceedings are commenced with respect to the seller of the
security, realization of the collateral by the Fund may be delayed or
limited.
As of December 31, 2005, the following Fund held an undivided interest in a
joint repurchase agreement with State Street Bank & Trust Co.:
Percentage Principal
Interest Amount
---------- ---------
Money Market Fund 0.49% $796,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
State Street Bank & Trust Co., dated December 30, 2005, bearing interest at
a rate of 3.10% per annum, with a principal amount of $164,023,000, a
repurchase price of $164,079,497, and a maturity date of January 3, 2006.
The repurchase agreement is collateralized by the following:
Interest Maturity
Type of Collateral Rate Date Principal Amount Market Value
- ------------------ -------- -------- ---------------- ------------
U.S. Treasury Notes 2.38% 08/31/06 $ 2,880,000 $ 2,865,600
U.S. Treasury Notes 2.63 05/15/08 112,125,000 108,128,529
U.S. Treasury Notes 3.38 02/28/07 21,085,000 21,069,186
U.S. Treasury Notes 4.00 06/15/09 3,500,000 3,467,489
U.S. Treasury Notes 4.13 08/15/08 6,140,000 6,201,400
U.S. Treasury Notes 4.38 05/15/07 25,445,000 25,571,462
In addition, at December 31, 2005, the following Fund held an undivided
interest in a joint repurchase agreement with UBS Securities LLC:
Percentage Principal
Interest Amount
---------- -----------
Money Market Fund 13.00% $39,000,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
UBS Securities LLC, dated December 30, 2005, bearing interest at a rate of
3.47% per annum, with a principal amount of $300,000,000, a repurchase price
of $300,115,667, and a maturity date of January 3, 2006. The repurchase
agreement is collateralized by the following:
Interest Maturity
Type of Collateral Rate Date Principal Amount Market Value
- ------------------ -------- -------- ---------------- ------------
U.S. Treasury Inflation Index Bonds 2.38% 01/15/25 $ 66,612,000 $ 75,188,295
U.S. Treasury Inflation Index Bonds 3.38 04/15/32 100,000,000 148,000,000
U.S. Treasury Inflation Index Bonds 3.88 04/15/29 50,000,000 82,812,500
Securities Transactions, Investment Income, Expenses, Dividends and
Distributions to Shareholders: Security transactions are recorded on a trade
date basis. Realized gains and losses on sales of investments are calculated
on the identified cost basis. Interest income, including the accretion of
discount and amortization of premium, is accrued daily; dividend income is
recorded on the ex-dividend date.
18
SunAmerica Money Market Funds
NOTES TO FINANCIAL STATEMENTS -- December 31, 2005 -- (continued)
Net investment income, other than class specific expenses, and realized and
unrealized gains and losses, are allocated daily to each class of shares
based upon the relative net asset value of outstanding shares (or the value
of the dividend-eligible shares, as appropriate) of each class of shares at
the beginning of the day (after adjusting for the current capital shares
activity of the respective class).
Expenses common to all Funds, not directly related to individual Funds, are
allocated among the Funds based upon their relative net asset value or other
appropriate methods. In all respects, expenses are charged to each Fund as
incurred on a specific identification basis. Interest earned on cash
balances held at the custodian are shown as custody credits in the Statement
of Operations.
Dividends from net investment income, if any, are normally declared daily
and paid monthly. Capital gain distributions, if any, are paid annually. The
Funds record dividends and distributions to their shareholders on the
ex-dividend date. The amount of dividends and distributions from net
investment income and net realized capital gains are determined in
accordance with federal income tax regulations, which may differ from U.S.
generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within
the capital accounts at fiscal year end based on their federal tax-basis
treatment; temporary differences do not require reclassification. Net
investment income (loss), net realized gain (loss), and net assets are not
affected by these reclassifications.
The Funds intend to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and distribute all of
their taxable income, including any net realized gain on investments, to its
shareholders. Therefore, no federal tax provisions are required. Each Fund
is considered a separate entity for tax purposes.
Note 3. Investment Advisory and Management Agreement, Distribution and Service
Agreement
The Funds have an Investment Advisory and Management Agreement (the
"Agreement") with SAAMCo. Under the Agreement, SAAMCo provides continuous
supervision of the Funds and administers its corporate affairs, subject to
general review by the Board of Directors. In connection therewith, SAAMCo
furnishes the Funds with office facilities, maintains certain of its books
and records, and pays the salaries and expenses of all personnel, including
officers of the Funds who are employees of SAAMCo and its affiliates.
The Funds pay SAAMCo a monthly investment advisory and management fee
calculated daily at the following annual percentages of each Fund's average
daily net assets:
Management
Assets Fees
---------------------------- ----------
Money Market Fund.......... $0 - $600 million 0.50%
(greater than) $600 million 0.45%
(greater than) $ 1.5 billion 0.40%
Municipal Money Market Fund (greater than) $0 0.35%
The Municipal Money Market Fund is subadvised by AIG Global Investment Corp.
("AIGGIC") pursuant to a subadvisory agreement with SAAMCo. AIGGIC is an
indirect wholly-owned subsidiary of AIG and an affiliate of SAAMCo. AIGGIC
receives the following fees from SAAMCo, based upon the Fund's average daily
net assets:
Sub-advisory
Assets Fees
--------------------------- ------------
Municipal Money Market Fund $0 - $200 million 0.25%
(greater than) $200 million 0.20%
(greater than) $500 million 0.15%
19
SunAmerica Money Market Funds
NOTES TO FINANCIAL STATEMENTS -- December 31, 2005 -- (continued)
SAAMCo has contractually agreed to waive fees or reimburse expenses, if
necessary, at or below the following percentages of each Fund's average net
assets.
Fund Percentage
- ---- ----------
Money Market Class I.......... 0.80%
Municipal Money Market Class A 0.95
Municipal Money Market Class B 1.70
Municipal Money Market Class C 1.70
SAAMCo has voluntarily agreed to waive fees or reimburse expenses for the
period ended December 31, 2005 at the following percentages of each Fund's
average net assets.
Fund Percentage
- ---- ----------
Municipal Money Market Class A 0.04%
Municipal Money Market Class B 0.08
Municipal Money Market Class C 0.11
For the period ended December 31, 2005, SAAMCo agreed to waive fees or
reimburse expenses as follows:
Fund
- ----
Money Market Class I.......... $ 6,936
Municipal Money Market Class A 34,099
Municipal Money Market Class B 7,402
Municipal Money Market Class C 4,846
The contractual expense waivers and fee reimbursements will continue
indefinitely, subject to termination by the Directors, including a majority
of the Independent Directors. The voluntary waivers and/or reimbursements
are expected to continue but may be terminated at any time. The exact amount
of the voluntary waivers and/or reimbursements may change on a day-to-day
basis.
The Funds have a distribution agreement with AIG SunAmerica Capital
Services, Inc. ("SACS" or the "Distributor"), an affiliate of the Advisor.
The Funds have adopted a Distribution Plan (the "Plan") in accordance with
the provisions of Rule 12b-1 under the 1940 Act. Rule 12b-1 permits an
investment company directly or indirectly to pay expenses associated with
the distribution of its shares ("distribution expenses") in accordance with
a plan adopted by the investment company's Board of Directors and approved
by its shareholders. Pursuant to such rule, the directors and the
shareholders of each class of shares of the Funds have adopted Distribution
Plans hereinafter referred to as the "Class A Plan," the "Class B Plan," and
the "Class C Plan." In adopting the Class A Plan, the Class B Plan, and the
Class C Plan, the directors determined that there was a reasonable
likelihood that each such Plan would benefit the Funds and the shareholders
of the respective class. The sales charge and distribution fees of a
particular class will not be used to subsidize the sale of shares of any
other class.
Under the Class B Plan and the Class C Plan, the Distributor receives
payments from the Funds at the annual rate of up to 0.75% of the average
daily net assets of the Fund's Class B and Class C shares, to compensate the
Distributor and certain securities firms for providing sales and promotional
activities for distributing that class of shares. The distribution costs for
which the Distributor may be compensated include distribution fees paid to
broker-dealers that have sold Fund shares, commissions, and other expenses
such as those incurred for sales literature, prospectus printing and
distribution, and compensation to wholesalers. It is possible that in any
given year the amount paid to the Distributor under the Class B and Class C
Plans may exceed the Distributor's distribution costs as described above.
The Class A Plan does not provide for a distribution fee. The Distribution
Plans provide that each class of shares, other than Class I, of the Funds
may also pay the Distributor an account maintenance and service fee of up to
an annual rate of 0.15% of the aggregate average daily net assets of such
class of shares for payments to broker-dealers for providing continuing
account maintenance. In this regard, some payments are used to compensate
broker-dealers with account maintenance and service fees in an amount up to
0.15% per year of the assets
20
SunAmerica Money Market Funds
NOTES TO FINANCIAL STATEMENTS -- December 31, 2005 -- (continued)
maintained in the Funds by their customers. Accordingly, for the period
ended December 31, 2005, SACS received fees (see Statement of Operations)
based upon the aforementioned rates.
For the period ended December 31, 2005, SACS voluntarily reimbursed the
following expenses:
Fund
- ----
Municipal Money Market Class B $31
Municipal Money Market Class C 11
SACS receives the proceeds of contingent deferred sales charges paid by
investors in connection with certain redemptions of each Fund's Class A,
Class B and Class C shares. SACS has advised the Funds for the period ended
December 31, 2005, the proceeds received from redemptions are as follows:
Contingent Deferred Sales Charges
---------------------------------
Fund Class A Class B Class C
- ---- ------- -------- -------
Money Market.......... $6,250 $225,099 $13,661
Municipal Money Market -- 1,797 3,248
The Funds entered into a Service Agreement with AIG SunAmerica Fund
Services, Inc. ("SAFS"), an affiliate of the Advisor. Under the Service
Agreement, SAFS performs certain shareholder account functions by assisting
the Funds' transfer agent in connection with the services that it offers to
its shareholders. The Service Agreement permits the Funds to reimburse SAFS
for the costs incurred in providing such services, based upon an annual rate
of 0.22% of average daily net assets, which is approved annually by the
Directors. For the period ended December 31, 2005, the Funds incurred the
following expenses which are included in transfer agent fees and expenses in
the Statement of Operations to compensate SAFS pursuant to the terms of the
Service Agreement:
Payable at
Fund Expenses December 31, 2005
- ---- ---------- -----------------
Money Market Class A.......... $3,568,307 $297,580
Money Market Class B.......... 75,938 6,038
Money Market Class C.......... 41,046 3,648
Money Market Class I.......... 28,012 2,549
Municipal Money Market Class A 196,253 15,623
Municipal Money Market Class B 1,136 102
Municipal Money Market Class C 2,282 320
Note 4. Federal Income Taxes
The following details the tax basis distributions as well as the components
of distributable earnings. The tax basis components of distributable
earnings differ from the amounts reflected in the Statement of Assets and
Liabilities by temporary book/tax differences primarily arising from
cumulative pension expenses.
Distributable Earnings Tax Distributions
------------------------------------------ ---------------------------------
For the year ended December 31, 2005
----------------------------------------------------------------------------
Long-term Gains/ Unrealized Long-Term
Ordinary Capital Loss Appreciation Ordinary Capital
Fund Income Carryover (Depreciation) Income Gains Tax Exempt
- ---- --------- ---------------- -------------- ------------ --------- ----------
Money Market.......... $ 325,324 $ -- $ -- $ 39,516,992 $ -- $ --
Municipal Money Market 31,249* -- -- -- -- 1,428,608
Tax Distributions
----------------------------------------
For the year ended December 31, 2004
----------------------------------------
Long-Term
Fund Ordinary Income Capital Gains Tax Exempt
- ---- --------------- ------------- ----------
Money Market.......... 8,165,643 -- --
Municipal Money Market -- -- 366,908
- --------
*Tax exempt distributable earnings
21
SunAmerica Money Market Funds
NOTES TO FINANCIAL STATEMENTS -- December 31, 2005 -- (continued)
At December 31, 2005, for Federal income tax purposes, the Municipal Money
Market Fund had a capital loss carryforward of $8,072 and $16,252, which
will expire in the years 2012 and 2013, respectively, which is available to
offset future capital gains, if any.
Note 5. Capital Share Transactions
Transactions in each class of shares of the Funds, all at $1.00 per share,
for the period ended December 31, 2005, and for the prior year were as
follows:
Money Market Fund
---------------------------------------------------------------------------------------------
Class A Class B Class C (1)
-------------------------------- --------------------------- --------------------------
For the For the For the For the For the For the
year year year year year year
ended ended ended ended ended ended
December 31, December 31, December 31, December 31, December 31, December 31,
2005 2004 2005 2004 2005 2004
--------------- --------------- ------------ ------------ ------------ ------------
Shares sold......... $ 1,113,494,682+ $ 1,032,086,849++ $ 21,586,531 $ 51,971,494 $ 39,075,804 $ 44,114,142
Reinvested dividends 38,099,932 8,038,526 502,145 27,583 270,694 12,541
Shares redeemed..... (1,194,296,786) (1,054,375,452) (32,786,885)+ (54,090,452)++ (42,833,919) (47,431,940)
--------------- --------------- ------------ ------------ ------------ ------------
Net increase
(decrease)......... $ (42,702,172) $ (14,250,077) $(10,698,209) $ (2,091,375) $ (3,487,421) $ (3,305,257)
=============== =============== ============ ============ ============ ============
-------------------------
Class I
------------------------
For the For the
year year
ended ended
December 31, December 31,
2005 2004
------------ ------------
Shares sold......... $ 7,693,470 $10,886,039
Reinvested dividends 316,345 66,605
Shares redeemed..... (6,196,260) (8,693,987)
----------- -----------
Net increase
(decrease)......... $ 1,813,555 $ 2,258,657
=========== ===========
Municipal Money Market Fund
--------------------------------------------------------------------------------
Class A Class B Class C (1)
---------------------------- ----------------------- ----------------------
For the For the For the For the For the For the
year year year year year year
ended ended ended ended ended ended
December 31, December December December December December
2005 31, 2004 31, 2005 31, 2004 31, 2005 31, 2004
------------- ------------- --------- ----------- ----------- ---------
Shares sold............ $ 177,698,016# $ 129,348,654## $ 539,224 $ 279,737 $ 3,443,007 $ 783,160
Reinvested dividends... 1,410,098 364,275 3,761 2,416 2,287 170
Shares redeemed........ (191,665,171) (146,141,140) (519,766)# (2,953,009)## (2,105,157) (818,374)
------------- ------------- --------- ----------- ----------- ---------
Net increase (decrease) $ (12,557,057) $ (16,428,211) $ 23,219 $(2,670,856) $ 1,340,137 $ (35,044)
============= ============= ========= =========== =========== =========
Note 6. Directors' Retirement Plan
The Directors of the SunAmerica Money Market Funds, Inc. have adopted the
AIG SunAmerica Disinterested Trustees' and Directors' Retirement Plan (the
"Retirement Plan") effective January 1, 1993 for the unaffiliated Directors.
The Retirement Plan provides generally that if an unaffiliated Director who
has at least 10 years of consecutive service as a Disinterested Director of
any of the AIG SunAmerica mutual funds (an "Eligible Director") retires
after reaching age 60 but before age 70, or who has at least 5 years of
consecutive service after reaching age 65 but before age 70, or dies while a
Director, such person will be eligible to receive a retirement or death
benefit from each AIG SunAmerica mutual fund with respect to which he or she
is an Eligible Director. As of each birthday, prior to the 70th birthday,
but in no event for a period greater than 10 years, each Eligible Director
will be credited with an amount equal to 50% of his or her regular fees
(excluding committee fees) for services as a Disinterested Director of each
AIG SunAmerica mutual fund for the calendar year in which such birthday
occurs. In addition, an amount equal to 8.50% of any amounts credited under
the preceding clause during prior years, is added to each Eligible
Director's account until such Eligible Director reaches his or her 70th
birthday. An Eligible Director may receive benefits payable under the
Retirement Plan, at his or her election, either in one lump sum or in up to
fifteen annual installments. Any undistributed amounts shall continue to
accrue interest at 8.50%.
- --------
+ Includes automatic conversion of Class B shares in the amount of $2,267,064
to Class A shares.
++ Includes automatic conversion of Class B shares in the amount of $2,916,293
to Class A shares.
# Includes automatic conversion of Class B shares in the amount of $298,186 to
Class A shares.
## Includes automatic conversion of Class B shares in the amount of $4,801 to
Class A shares.
(1)Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
22
SunAmerica Money Market Funds
NOTES TO FINANCIAL STATEMENTS -- December 31, 2005 -- (continued)
The following amounts for the Retirement Plan Liabilities are included in
the Directors' fees and expense line on the Statement of Assets and
Liabilities and the amounts for the Retirement Plan Expenses are included in
the Director's fees and expenses line on the Statement of Operations.
Retirement Plan Retirement Plan Retirement Plan
Liability Expense Payments
--------------- --------------- ---------------
Fund As of December 31, 2005
- ---- -----------------------------------------------
Money Market.......... $237,609 $17,305 $14,246
Municipal Money Market 6,345 994 215
Note 7. Interfund Lending Agreement
Pursuant to exemptive relief granted by the Securities and Exchange
Commission, the Funds are permitted to participate in an interfund lending
program among investment companies advised by SAAMCo or an affiliate. The
interfund lending program allows the participating Funds to borrow money
from and loan money to each other for the temporary or emergency purposes.
An interfund loan will be made under this facility only if the participating
Funds receive a more favorable interest rate than would otherwise be
available from a typical bank for a comparable transaction. For the period
ended December 31, 2005, none of the Funds participated in the program.
Note 8. Other Information
On February 9, 2006, American International Group, Inc. ("AIG"), the parent
company and an affiliated person of AIG SunAmerica Asset Management Corp.
("Adviser"), AIG SunAmerica Capital Services, Inc., the distributor of the
Funds ("Distributor"), and AIG Global Investment Corp., a subadviser to a
Fund, announced that it had consented to the settlement of an injunctive
action instituted by the Securities and Exchange Commission ("SEC"). In its
complaint, the SEC alleged that AIG violated Section 17(a) of the Securities
Act of 1933, as amended, Sections 10(b), 13(a), 13(b)(2) and 13(b)(5) of the
Securities Exchange Act of 1934, as amended, and Rules 10b-5, 12b-20, 13a-1
and 13b2-1 promulgated thereunder, in connection with AIG's accounting and
public reporting practices. The conduct described in the complaint did not
involve any conduct of AIG or its subsidiaries related to their investment
advisory or distribution activities with respect to the assets of the Funds.
AIG, without admitting or denying the allegations in the complaint (except
as to jurisdiction), consented to the entry of an injunction against further
violations of the statutes referred to above. Absent exemptive relief
granted by the SEC, the entry of such an injunction would prohibit AIG and
its affiliated persons from, among other things, serving as an investment
adviser of any registered investment management company or principal
underwriter for any registered open-end investment company pursuant to
Section 9(a) of the Investment Company Act of 1940, as amended ("1940 Act").
Certain affiliated persons of AIG, including the Adviser, received a
temporary order from the SEC pursuant to Section 9(c) of the 1940 Act with
respect to the entry of the injunction, granting exemptive relief from the
provisions of Section 9(a) of the 1940 Act. The temporary order permits AIG
and its affiliated persons, including AIG's investment management
subsidiaries, to serve as investment adviser, sub-adviser, principal
underwriter or sponsor of the Funds. The Adviser expects that a permanent
exemptive order will be granted, although there is no assurance the SEC will
issue the order.
Additionally, AIG and its subsidiaries reached a resolution of claims and
matters under investigation with the United State Department of Justice
("DOJ"), the Attorney General of the State of New York ("NYAG") and the New
York State Department of Insurance ("DOI"), regarding accounting, financial
reporting and insurance brokerage practices of AIG and its subsidiaries, as
well as claims relating to the underpayment of certain workers compensation
premium taxes and other assessments.
As a result of the settlements with the SEC, the DOJ, the NYAG and the DOI,
AIG will make payments totaling approximately $1.64 billion. In addition, as
part of its settlements, AIG has agreed to retain for a period of three
years an Independent Consultant who will conduct a review that will include
the adequacy of AIG's internal controls over financial reporting and the
remediation plan that AIG has implemented as a result of its own internal
review.
Subject to receipt of permanent relief, the Adviser, Distributor and AIGGIC
believe that the settlements are not likely to have a material adverse
effect on their ability to perform their respective investment advisory or
distribution services relating to the Funds.
23
SunAmerica Money Market Funds
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of SunAmerica Money Market Funds,
Inc.:
In our opinion, the accompanying statements of assets and liabilities,
including the portfolios of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of each of the two
funds constituting SunAmerica Money Market Funds, Inc. (the "Funds") at
December 31, 2005, the results of each of their operations for the year then
ended, the changes in each of their net assets for each of the two years in the
period then ended and the financial highlights for the periods indicated, in
conformity with accounting principles generally accepted in the United States
of America. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Funds'
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities at December 31, 2005 by correspondence with the custodian and
brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Houston, Texas
February 17, 2006
24
SunAmerica Money Market Funds, Inc.
APPROVAL OF ADVISORY AGREEMENTS -- December 31, 2005 -- (unaudited)
Approval of the Advisory Agreement and Subadvisory Agreements:
The Board of Directors (the "Board"), including the Directors that are not
interested persons of the SunAmerica Money Market Funds, Inc. (the "Funds")
(the "Disinterested Directors"), last approved the Investment Advisory and
Management Agreement between the Funds and AIG SunAmerica Asset Management
Corp. ("SAAMCo") (the "Advisory Agreement") for a period of one year, at a
meeting held on August 31, 2005. At this same meeting, the Board also approved
the renewal of the subadvisory agreement between SAAMCo and AIG Global
Investment Company ("AIGGIC" or the "Subadviser") with respect to the
SunAmerica Municipal Money Market Fund (the "Municipal Money Market Fund") (the
"Subadvisory Agreement").
The Board noted that the discussion and approval of the Advisory Agreement and
Subadvisory Agreement at the August 31, 2005 meeting was the culmination of
numerous discussions and meetings that had taken place in recent months. The
Board further noted that certain members of the Board had met with senior
management on numerous occasions and had in-depth discussions regarding the
Fund's performance, advisory expenses and other fees and negotiations with
respect to advisory expenses.
In accordance with Section 15(c) of the Investment Company Act of 1940, as
amended (the "1940 Act"), the Board was provided with materials relating to its
consideration of the Advisory Agreement. These materials assisted the Board in
analyzing: (1) the nature, extent and quality of services to be provided by
SAAMCo and the Subadviser, including administrative and shareholder services to
be provided by SAAMCo and certain other affiliated companies; (2) the costs of
services to be provided and benefits realized by SAAMCo and the Subadviser,
including a comparison of fees and expense ratios of other similar funds, as
well as SAAMCo's profitability and financial condition; (3) the terms of the
Advisory Agreement and Subadvisory Agreement; (4) economies of scale and
whether the fee levels reflect these economies of scale; (5) SAAMCo's overall
organization, compliance policies and history, as well as the Subadviser's
compliance policies and history; and (6) the investment performance of the
Funds in their peer group ("Peer Group") as determined by Lipper, Inc.
("Lipper") and as compared to their relevant benchmarks and indices.
Experienced counsel that is independent of SAAMCo provided advice to the
Disinterested Directors ("Independent Counsel"). The Disinterested Directors
considered additional information, such as expense and other comparative data
from Lipper. In considering these factors, as described in more detail below,
the Board did not identify any single factor or group of factors as being more
important than the others, but considered all factors together.
Nature, Extent and Quality of Services
The Board, including the Disinterested Directors, considered the nature,
quality and extent of services to be provided by SAAMCo. In making its
evaluation, the Board considered that SAAMCo acts as investment manager and
adviser to the Funds, manages the daily business affairs of the Funds, and
obtains and evaluates economic, statistical and financial information to
formulate and implement investment policies. Additionally, SAAMCo provides
office space, accounting, legal, compliance, clerical and administrative
services (exclusive of, and in addition to, overseeing of any such service
provided by any others retained by the Funds), and has authorized its officers
and employees, if elected, to serve as officers or directors of the Funds
without compensation. Finally, SAAMCo is responsible for monitoring and
reviewing the activities of third-party service providers.
In making their determination regarding the nature and quality of SAAMCo's
services, the Directors considered SAAMCo's responsibility to provide and
supervise the activities of all administrative and clerical personnel required
to provide effective administration of the Funds. The Board also reviewed the
performance of the Funds, the details of which are described below.
The Board also reviewed the compliance and administrative services of SAAMCo.
The Board noted that SAAMCo provides and compensates a Chief Compliance Officer
for the Funds, and that SAAMCo maintains a compliance staff of eight people.
The Board analyzed the structure and duties of SAAMCo's accounting, legal and
compliance departments and concluded that they were adequate to meet the needs
of the Funds.
SAAMCo has delegated daily investment management responsibilities to AIGGIC
with regards to the Municipal Money Market Fund. Therefore, the Board also
considered the nature, quality and extent of services to be provided by AIGGIC.
25
SunAmerica Money Market Funds, Inc.
APPROVAL OF ADVISORY AGREEMENTS -- December 31, 2005 -- (unaudited)
(continued)
The Board considered that the Subadviser is responsible for providing
investment management services, including investment research, advice and
supervision, and determining which securities will be purchased or sold by the
Municipal Money Market Fund. The Board reviewed each Subadviser's history,
structure and size, visibility and resources, which are needed to attract and
retain highly qualified investment professionals. With respect to
administrative services to be provided by the Subadviser, the Board considered
that each Subadviser provides assistance in general marketing assistance and
has developed internal procedures for monitoring compliance with investment
objectives, policies and restrictions of the Municipal Money Market Fund as set
forth in the prospectus.
The Board concluded that it was satisfied with the nature, quality and extent
of the services provided by or to be provided by SAAMCo and the Subadviser and
that there was a reasonable basis on which to conclude that SAAMCo and the
Subadviser would continue to provide a high quality of investment management
services.
Fees and Expenses
The Board, including the Disinterested Directors, reviewed information
regarding the fees paid by each Fund to SAAMCo for investment advisory and
management services. The Board examined this information in order to determine
the reasonableness of the fees in light of the nature and quality of SAAMCo's
services and any additional benefits received by SAAMCo or its affiliates in
connection with providing such services to the Funds.
To assist in analyzing the reasonableness of the fees, the Board received
reports prepared independently by Lipper detailing comparative advisory fee and
other information of each Fund's Peer Group as determined objectively by
Lipper, and rankings within the relevant Lipper categories. The Board also
received reports prepared by SAAMCo (including reports on investment management
fees charged by SAAMCo to other funds it manages) and by the Board's
Independent Counsel. In considering the reasonableness of the advisory fee, the
Board reviewed a number of expense comparisons, including: (i) contractual
management fees; (ii) actual total expenses; and (iii) actual and allowable
Rule 12b-1 and non-12b-1 fees.
Additionally, the Board reviewed each Fund's net expense ratios and analyzed
the expense reimbursements and net expense ratio caps contractually agreed upon
by SAAMCo. The Board compared each Fund's net expense ratios to those of other
funds within its Peer Group. The Board further considered that the SunAmerica
Money Market Fund's Advisory Agreement contained breakpoints in the fee
schedule that would directly benefit shareholders if the fund reached certain
asset levels. The Board also considered that while the Municipal Money Market
Fund's Advisory Agreement did not contain breakpoints, SunAmerica had agreed to
contractual expense caps which would benefit shareholders by keeping expenses
set at certain levels. Based upon the reports prepared by Lipper and other
information provided by SAAMCo and by counsel to the Disinterested Trustees,
the Board was satisfied that the fee and expense ratios of each Fund was
acceptable given the quality of services expected to be provided and were
comparable to the fee and expense ratios of similar funds within the Peer Group.
In considering the subadvisory fee, the Board, including the Disinterested
Directors, considered that the Municipal Money Market Fund pays a fee to SAAMCo
pursuant to the Advisory Agreement, and that, in turn, SAAMCo, rather than the
Municipal Money Market Fund, pays a fee to the Subadviser. Therefore, the Board
considered the amount retained by SAAMCo and the fee paid to the Subadviser,
which is an affiliate of SAAMCo, with respect to the different services
provided by the Subadviser.
The Board also considered that the Subadvisory Agreement contained breakpoints
in the fee schedule if the Municipal Money Market Fund reached certain asset
levels. The Board noted that such breakpoints would not directly benefit the
shareholders, but would result in SAAMCo retaining a larger portion of the
advisory fee. The Board, however, was satisfied that SAAMCo had agreed to
contractual expense caps which benefited shareholders, as described above.
Costs of Services and Benefits Derived, as well as the Adviser's Profitability
and Financial Condition.
The Board, including the Disinterested Directors, considered the direct and
indirect costs and benefits of SAAMCo providing services to the Funds. The
Board reviewed financial statements relating to SAAMCo's profitability and
financial condition with respect to the services it provided to the Funds, and
considered how profit margins could affect SAAMCo's
26
SunAmerica Money Market Funds, Inc.
APPROVAL OF ADVISORY AGREEMENTS -- December 31, 2005 -- (unaudited)
(continued)
ability to attract and retain qualified investment personnel. The Board
concluded that SAAMCo had a satisfactory financial condition, and that their
profitability was not excessive as compared to standards set forth in
applicable Court cases and other available industry information.
With respect to indirect costs and benefits, the Board was informed, based on
management's judgment, that (1) any indirect costs incurred by SAAMCo in
connection with rendering investment advisory services to the Funds are
inconsequential to the analysis of the adequacy of the advisory fees, and (2)
any collateral benefits derived as a result of providing advisory services to
the Funds are de minimis and do not impact upon the reasonableness of the
advisory fee. The Board also considered the reputational value to SAAMCo from
serving as investment adviser.
The Board also considered fees and, where applicable, profits earned by
affiliates for providing other services to the Funds, and, as described above,
research and other services SAAMCo obtained in connection with soft dollar
commissions. The Board concluded that any benefits that SAAMCo and its
affiliates could be expected to receive with regard to providing investment
advisory and other services to the Funds were not excessive.
Terms of the Advisory Agreement and Subadvisory Agreement
The Board, including the Disinterested Directors, received a draft of the
proposed Advisory Agreement and Subadvisory Agreement. The Board considered
that they may be renewed from year to year, so long as their continuance is
specifically approved at least annually in accordance with the requirements of
the 1940 Act and that the Agreements provide that they will terminate in the
event of an assignment (as defined in the 1940 Act) or upon termination of the
agreement.
In reviewing the terms of the Advisory Agreement, the Board considered that
SAAMCo pays all of its own expenses in connection with the performance of its
duties, as well as the salaries, fees and expenses of the Directors and
Officers who are employees of SAAMCo. The Board noted, however, that the Funds
bear certain proxy-related expenses. The Board also considered the termination
and liability provisions of the Advisory Agreement.
With respect to the Subadvisory Agreement, the Board further considered, that
under the terms of the Subadvisory Agreement, the Subadviser is not liable to
the Funds, or their shareholders, for any act or omission by the Subadviser or
for any losses sustained by the Fund, or its shareholders, except in the case
of willful misfeasance, bad faith, gross negligence and reckless disregard of
obligations or duties. The Board also considered that the Subadvisory Agreement
provides that the Subadviser will pay all of its own expenses in connection
with the performance of its duties as well as the cost of maintaining the staff
and personnel as necessary for it to perform its obligations.
Economies of Scale
The Board, including the Disinterested Directors, considered whether the Funds
have benefited from economies of scale and whether there is potential for
future realization of economies with respect to the Funds. The Board concluded
that any potential economies of scale are being shared between shareholders and
SAAMCo in an appropriate manner. The Board considered that the funds in the AIG
SunAmerica complex share common resources and as a result, an increase in the
overall size of the complex could permit each fund to incur lower expenses than
they otherwise would achieve as stand-alone entities. The Board also considered
the anticipated efficiencies in the processes of SAAMCo as it adds labor and
capital to expand the scale of operations.
The Board concluded that the advisory fee structure was reasonable and that no
changes were currently necessary to further reflect economies of scale. The
Board noted that it will continue to review fees, including breakpoints and
expense caps in connection with contract renewals.
The Overall Organization of SAAMCo
The Directors considered the benefit to shareholders of investing in a fund
that is part of a family of funds offering a variety of types of mutual funds
and shareholder services. The Directors also considered SAAMCo's experience in
providing management and investment advisory services to advisory clients, and
the fact that SAAMCo currently managed, advised and/or administered
approximately $42 billion of assets. The Directors also considered SAAMCo's
27
SunAmerica Money Market Funds, Inc.
APPROVAL OF ADVISORY AGREEMENTS -- December 31, 2005 -- (unaudited)
(continued)
record of compliance with the Funds' objectives, strategies and restrictions
and its positive regulatory and compliance history. The Directors also
considered SAAMCo's relationships with its affiliates and the resources
available to them.
Compliance
The Board considered SAAMCo's and AIGGIC's compliance and regulatory history,
and inquired whether SAAMCo or AIGGIC had been the target of any regulatory
actions or investigations. In addition, the Board reviewed information
concerning SAAMCo's compliance staff that would be responsible for providing
compliance functions on behalf of the Fund. Finally, the Board reviewed the
Code of Ethics of SAAMCo and AIGGIC, and determined that they contain
provisions reasonably necessary to prevent fraudulent, deceptive or
manipulative acts by personnel in connection with their personal transactions
in securities held or to be acquired by the Fund.
Investment Performance
The Board regularly reviews the performance of the Funds over various periods
of time. At the Board meeting held on August 31, 2005, in connection with the
approval of the continuation of the Advisory Agreement and the Subadvisory
Agreement, the Board reviewed each Fund's annualized total return for the one-,
two-, three-, four- and five-year periods. The Board, including the
Disinterested Directors, received and reviewed information regarding the
investment performance of each Fund as compared to its respective benchmarks,
the performance of the Fund's Peer Group, and to an appropriate index or
combination of indices.
In preparation for the August 31, 2005 meeting, the Board was provided with
performance reports independently prepared by Lipper. Based on the Lipper
reports, the Board reviewed the Fund's annualized total return for the prior
one-, two-, three-, four- and five-year periods ending on June 30, 2005. The
Board also received reports prepared by SAAMCo's management which detailed each
Fund's performance with respect to 2005. The Board considered that while each
Fund's performance still lagged its relevant benchmark and peer group each Fund
had demonstrated increased total returns over each of the past three years.
Conclusion
After a full and complete discussion, and following negotiations with SAAMCo's
management, the Board renewed the Advisory and Subadvisory Agreement with
respect to the Funds for a period of one year. The Board indicated that it
would carefully monitor the performance of the Funds and that the Board would
take appropriate action, as necessary, in an effort to enhance performance
Based on their evaluation of all material factors and assisted by the advice of
independent counsel, the Board, including the Disinterested Directors, were
satisfied that the terms of the Advisory Agreement and Subadvisory Agreement
were fair, and in the best interest of the Funds and its shareholders, and that
the advisory fee rates provided in the Advisory Agreement are acceptable in
light of the usual and customary charges made for services of similar nature
and quality. In arriving at a decision to approve the continuation of the
Advisory Agreement and Subadvisory Agreement, the Board did not single out any
one factor or group of factors as being more important than other factors, but
considered all factors together.
28
SunAmerica Money Market Funds
DIRECTORS AND OFFICERS INFORMATION -- December 31, 2005 -- (unaudited)
The following table contains basic information regarding the Directors and
Officers that oversee operations of the Funds and other investment companies
within the Fund Complex.
Number of
Position Term of Funds in
Held With Office and Principal Fund Complex Other
Name, Address SunAmerica Length of Occupations During Overseen by Directorships Held
and Date of Birth* Complex Time Served(4) Past 5 years Director(1) by Director(2)
- -------------------- ---------- -------------- ------------------- ------------ -------------------
Directors
Jeffrey S. Burum Director 2004- Founder and CEO of 42 None
DOB: February 27, present National Housing
1963 Development
Corporation
(January 2000 to
present); Founder,
Owner and Partner
of Colonies
Crossroads, Inc.
(January 2000 to
present); Owner and
Managing Member of
Diversified Pacific
Development Group,
LLC (June 1990 to
present).
Judith L. Craven Director 2001- Retired 91 Director. A.G. Belo
DOB: October 6, 1945 present Corporation (1992
to present);
Director, Sysco
Corporation (1996
to present);
Director, Luby's
Inc. (1998 to
present); Director,
University of Texas
Board of Regents
(May 2001 to
present)
William F. Devin Director 2001- Retired 91 Member of the Board
DOB: December 30, present of Governors,
1938 Boston Stock
Exchange
(1985-Present);
Samuel M. Eisenstat Chairman 1985- Attorney, solo 52 Director of North
DOB: March 7, 1940 of the present practitioner; European Oil
Board Royalty Trust.
Stephen J. Gutman Director 1984- Associate, Corcoran 52 None
DOB: May 10, 1943 present Group (Real Estate)
(2003 to present);
Partner and Member
of Managing
Directors, Beau
Brummell -- Soho
LLC (Licensing of
menswear specialty
retailing and other
activities) (June
1988-present)
Peter A. Harbeck(3) Director 1994- President, CEO and 100 None
DOB: January 23, present Director, SAAMCo.
1954 (August 1995 to
present); Director,
AIG SunAmerica
Capital Services,
Inc. ("SACS")
(August 1993 to
present) President
and CEO, AIG
Advisor Group, Inc.
(June 2004 to
present)
William J. Shea Director 2004- President and CEO, 52 Chairman of the
DOB: February 9, present Conseco, Inc. Board, Royal and
1948 (Financial SunAlliance,
Services) U.S.A., Inc. (March
(2001-2004); 2005 to present);
Chairman of the Director, Boston
Board of Centennial Private Holdings
Technologies, Inc. (October 2004 to
(1998 to 2001); present)
Vice Chairman, Bank
Boston Corporation
(1993-1998)
29
SunAmerica Money Market Funds
DIRECTORS AND OFFICERS INFORMATION -- December 31, 2005 -- (unaudited)
(continued)
Number of
Position Term of Funds in
Held With Office and Principal Fund Complex Other
Name, Address SunAmerica Length of Occupations During Overseen by Directorships Held
and Date of Birth* Complex Time Served(4) Past 5 years Director(1) by Director(2)
- ------------------- ---------- -------------- ------------------- ------------ -------------------
Officers
Vincent M. Marra President 2004- Senior Vice N/A N/A
DOB: May 28, 1950 present President and Chief
Operating Officer,
SAAMCo (February
2003 to Present);
Chief
Administrative
Officer, Chief
Operating Officer
and Chief Financial
Officer, Carret &
Co., LLC (June 2002
to February 2003);
President and Chief
Operating Officer,
Bowne Digital
Solutions (1999 to
May 2002)
Donna M. Handel Treasurer 2002- Senior Vice N/A N/A
DOB: June 25, 1966 present President, SAAMCo
(December 2004 to
Present); Vice
President, SAAMCo
(1997 to December
2004), Assistant
Treasurer (1993 to
2002)
Gregory N. Bressler Secretary September Senior Vice N/A N/A
DOB: November 17, and 2005 to President and
1966 Chief Present General Counsel,
Legal SAAMCo (June 2005
Officer to present); Vice
President and
Director of U.S.
Asset Management
Compliance, Goldman
Sachs Asset
Management (June
2004 to June 2005);
Deputy General
Counsel, Credit
Suisse Asset
Management (June
2002 to June 2004);
Counsel, Credit
Suisse Asset
Management (January
2000 to June 2002).
- --------
* The business address for each Director and Officer is the Harborside
Financial Center, 3200 Plaza 5, Jersey City, NJ 07311-4992.
(1) The "Fund Complex" consists of all registered investment company portfolios
for which SAAMCo serves as investment adviser or business manager. The
"Fund Complex" includes the SunAmerica Money Market Funds, Inc. (2 funds),
SunAmerica Equity Funds (9 funds), SunAmerica Income Funds (6 funds),
SunAmerica Focused Series, Inc. (17 portfolios), SunAmerica Focused Alpha
Growth Fund, Inc. (1 fund), SunAmerica Focused Alpha Large-Cap Fund, Inc.
(1 fund), Anchor Series Trust (9 portfolios), SunAmerica Senior Floating
Rate Fund, Inc. (1 fund), SunAmerica Series Trust (32 portfolios), VALIC
Company I (33 portfolios), VALIC Company II (15 funds), Seasons Series
Trust (24 portfolios) and AIG Series Trust (6 portfolios).
(2) Directorships of companies required to report to the Securities and
Exchange Commission under the Securities Exchange Act of 1934 (i.e. "public
companies") or other investment companies registered under the Investment
Company Act of 1940.
(3) Interested Director, as defined within the Investment Company Act of 1940,
because he is an officer and a director of the advisor and a director of
the principal underwriter of, the Trust.
(4) Directors serve until their successors are duly elected and qualified,
subject to the Director's retirement plan as discussed in Note 6 of the
financial statements.
Additional information concerning the Directors and Officers is contained in
the Statement of Additional Information and is available without charge by
calling (800) 858-8850.
30
SunAmerica Money Market Funds
SHAREHOLDER TAX INFORMATION -- (unaudited)
Certain tax information regarding the SunAmerica Money Market Funds is required
to be provided to shareholders based upon the Fund's income and distributions
for the taxable year ended December 31, 2005. The information necessary to
complete your income tax returns is included with your Form 1099-DIV mailed to
you in January 2006.
During the year ended December 31, 2005, 100% of the distributions paid by the
SunAmerica Municipal Money Market Fund are exempt from federal income taxes.
31
SunAmerica Money Market Funds
If you would like additional information:
[_] Call FastFacts -- our 24-hour, automated account and fund information
hotline at 800-654-4760.
[_] Visit www.sunamericafunds.com for more up-to-date information.
AIG SunAmerica Mutual Funds
thank you for your continued support.
32
[LOGO] AIG Sun America
Mutual Funds
Harborside Financial Center
3200 Plaza 5
Jersey City, NJ 07311-4992
Directors/Trustees Investment Adviser DISCLOSURE OF QUARTERLY
Samuel M. Eisenstat AIG SunAmerica Asset PORTFOLIO HOLDINGS
Peter A. Harbeck Management Corp. The Fund is required to
Dr. Judith L. Craven Harborside Financial file its com-plete
William F. Devin Center schedule of portfolio
Stephen J. Gutman 3200 Plaza 5 holdings with the U.S.
Jeffrey S. Burum Jersey City, NJ Securities and Exchange
William J. Shea 07311-4992 Commission for its first
and third fiscal quarters
Officers Distributor on Form N-Q. Once filed,
Vincent M. Marra, AIG SunAmerica Capital the Fund's Form N-Q will
President Services, Inc. be available without
Donna M. Handel, Harborside Financial charge on the U.S.
Treasurer Center Securities and Exchange
J. Steven Neamtz, Vice 3200 Plaza 5 Commission's website at
President Jersey City, NJ www.sec.gov. You can also
Timothy P. Pettee, Vice 07311-4992 obtain cop-ies of Form
President N-Q by (i) visiting the
Brian Wiese, Vice Shareholder Servicing U.S. Securities and
President Agent Exchange Commis-sion's
Cynthia Gibbons, Vice AIG SunAmerica Fund Public Reference Room in
President and Chief Services, Inc. Washington, DC
Compliance Officer Harborside Financial (information on the
Gregory N. Bressler, Center operation of the Public
Chief Legal Officer 3200 Plaza 5 Reference Room may be
and Secretary Jersey City, NJ obtained by calling
Gregory R. Kingston, 07311-4992 1-800-SEC-0330); (ii)
Vice President and sending your request and
Assistant Treasurer Custodian and Transfer a duplicating fee to the
Corey A. Issing, Agent U.S. Securities and
Assistant Secretary State Street Bank and Exchange Commis-sion's
Shawn Parry, Assistant Trust Company Public Reference Room,
Treasurer P.O. Box 419572 Washington, DC 20549-0102
Kansas City, MO or (iii) sending your
64141-6572 request electronically to
publicinfo@sec.gov.
VOTING PROXIES ON FUND
PORTFOLIO SECURITIES This report is submitted
A description of the solely for the general
policies and proce-dures information of
that the Fund uses to shareholders of the Fund.
determine how to vote Distribution of this
proxies relating to report to persons other
secu-rities held in the than shareholders of the
Fund's portfolios which Fund is authorized only
is available in the in connection with a
Fund's State-ment of currently effective
Additional Information, prospectus, setting forth
may be obtained without details of the Fund,
charge upon re-quest, by which must precede or
calling (800) 858-8850. accompany this report.
This information is also
available from the EDGAR
database on the U.S.
Secu-rities and Exchange
Commission's website at
http://www.sec.gov.
PROXY VOTING RECORD ON
SUNAMERICA MONEY MARKET
FUNDS
Information regarding how
SunAmerica Money Market
Funds voted proxies
relating to securities
held in SunAmerica Money
Market Funds during the
twelve month period ended
June 30, 2005 is
available without charge,
upon request, by
calling (800) 858-8850 or
on the U.S. Secu-rities
and Exchange Commission's
website at
http://www.sec.gov.
33
[LOGO]
Distributed by:
AIG SunAmerica Capital Services, Inc.
Harborside Financial Center
3200 Plaza 5
Jersey City, NJ 07311-4992
Investors should carefully consider the investment objectives, risks, charges
and expenses of any mutual fund before investing. This and other important
information is contained in the prospectus, which can be obtained from your
financial adviser or from the AIG SunAmerica Sales Desk at 800-858-8850, ext.
6003. Read the prospectus carefully before you invest. Funds distributed by AIG
SunAmerica Capital Services, Inc.
www.sunamericafunds.com
MMANN-12/05
Item 2. Code of Ethics
The SunAmerica Money Market Funds, Inc. (the "registrant") has adopted
a Code of Ethics applicable to its Principal Executive and Principal
Accounting Officers pursuant to Section 406 of the Sarbanes-Oxley Act
of 2002.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Directors has determined that William J.
Shea, the Chairman of the registrant's Audit Committee, qualifies as an
audit committee financial expert, as defined in the instructions to
Item 3(a) of Form N-CSR. Mr. Shea is considered to be "independent" for
purposes of Item 3(a)(2) of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
(a)--(d) Aggregate fees billed to the registrant for the last two
fiscal years for professional services rendered by the registrant's
principal accountant were as follows:
2004 2005
Audit Fees ....................$ 45,290 $ 46,127
Audit-Related Fees ............$ 15,266 $ 14,735
Tax Fees ......................$ 15,800 $ 16,050
All Other Fees ................$ 0 $ 0
Audit Fees include amounts related to the audit of the registrant's
annual financial statements and services normally provided by the
principal accountant in connection with statutory and regulatory
filings. Tax Fees principally include tax compliance, tax advice, tax
planning and preparation of tax returns.
(e)
(1) The registrant's audit committee pre-approves all audit services
provided by the registrant's principal accountant for the Registrant
and all non-audit services provided by the registrant's principal
accountant for the registrant, its investment adviser and any entity
controlling, controlled by, or under common control with the
investment adviser ("Adviser Affiliate") that provides ongoing
services to the registrant, if the engagement by the investment
adviser or Adviser Affiliate relates directly to the operations and
financial reporting of the registrant.
(2) No services included in (b)-(d) above were approved pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not Applicable.
(g) The aggregate fees billed for the most recent fiscal year and the
preceding fiscal year by the registrant's principal accountant for
non-audit services rendered to the registrant, its investment adviser,
and Adviser Affiliate that provides ongoing services to the registrant
for 2005 and 2004 were $298,099 and $1,651,669, respectively.
(h) Non-audit services rendered to the registrant's investment adviser and
any Adviser Affiliate that were not pre-approved pursuant to Paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X were considered by the
registrant's audit committee as to whether they were compatible with
maintaining the principal accountant's independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
Included in Item 1 to the Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures. Based on that evaluation, the
registrant's management, including the President and Treasurer,
concluded that the registrant's disclosure controls and procedures are
effective.
(b) There was no change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act
of 1940 (17 CFR 270.30a-3(d))) that occurred during the second fiscal
quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal contro1 over financial reporting.
Item 12. Exhibits.
(a) (1) Code of Ethics applicable to its Principal Executive and
Principle Accounting Officers pursuant to Section 406 of the
Sarbanes-Oxley Act of 2002 attached hereto as Exhibit 99.406.
Code of Ethics.
(2) Certification pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit
99.CERT.
(3) Not applicable.
(b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Money Market Funds, Inc.
By: /s/ Vincent M. Marra
-------------------
Vincent M. Marra
President
Date: March 10, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Vincent M. Marra
-------------------
Vincent M. Marra
President
Date: March 10, 2006
By: /s/ Donna M. Handel
-------------------
Donna M. Handel
Treasurer
Date: March 10, 2006