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
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SunAmerica Money Market Funds, Inc
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Harborside Financial Center, 3200 Plaza 5 Jersey City, NJ 07311
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(Address of principal executive offices) (Zip code)
Vincent M. Marra
Senior Vice President
AIG SunAmerica Asset Management Corp.
Harborside Financial Center,
3200 Plaza 5
Jersey City, NJ 07311
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(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6464
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Date of fiscal year end: December 31
--------------------------
Date of reporting period: December 31, 2006
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Item 1. Reports to Stockholders
2006
Annual
SunAmerica Report
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[PHOTO]
[GRAPHIC]
Money Market Funds
December 31, 2006 ANNUAL REPORT
SUNAMERICA MONEY MARKET FUNDS
SunAmerica Money Market Fund (SMAXX)
SunAmerica Municipal Money Market Fund (NMAXX)
Table of Contents
SHAREHOLDERS' LETTER................................... 1
FUND REVIEWS........................................... 2
EXPENSE EXAMPLE........................................ 4
STATEMENT OF ASSETS AND LIABILITIES.................... 6
STATEMENT OF OPERATIONS................................ 7
STATEMENT OF CHANGES IN NET ASSETS..................... 8
FINANCIAL HIGHLIGHTS................................... 9
PORTFOLIO OF INVESTMENTS............................... 12
NOTES TO FINANCIAL STATEMENTS.......................... 17
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 24
APPROVAL OF ADVISORY AGREEMENTS........................ 25
DIRECTORS AND OFFICERS INFORMATION..................... 29
SHAREHOLDER TAX INFORMATION............................ 32
December 31, 2006 ANNUAL REPORT
Shareholders' Letter
Dear Shareholder,
We are pleased to present you with the annual report for the SunAmerica
Money Market Fund and the SunAmerica Municipal Money Market Fund for the period
ending December 31, 2006.
The year began with a new Federal Reserve Chairman who was faced with the
challenge of earning his inflation-fighting credentials while maintaining
economic growth. Faced with rising energy prices, the Federal Reserve raised
the Fed Funds rate from 4.25% to 5.25% in the first half of the year before
pausing in August. The key monetary target remained at this level for the
duration of the fiscal year. Another important factor facing the bond markets
in 2006 was the inversion of the yield curve. The two-year U.S. Treasury note
began the year at 4.40% while the 10-year U.S. Treasury bond yielded 4.39%. The
annual period ended with the two-year note at 4.81%, 11 basis points higher
than the 10-year benchmark.
Both Funds continue to emphasize strong credit analysis in pursuit of total
return. While navigating the interest-rate environment, our managers focused on
fundamental analysis to identify credits which offer solid risk/reward
characteristics.
The detailed commentary, written by the Funds' portfolio management team,
offers specific insight on the challenges and opportunities the Funds faced in
2006. I urge you to read their remarks.
We thank you for your continued interest in the SunAmerica Money Market and
Municipal Money Market Funds. If you have any questions or require additional
information on these funds or other AIG SunAmerica mutual funds, we invite you
to visit www.sunamericafunds.com or call our Shareholder Services Department at
1-800-858-8850 x6010.
Sincerely,
/s/ Peter A. Harbeck
Peter A. Harbeck
President and CEO
AIG SunAmerica Asset Management Corp.
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Past performance is no guarantee of future results.
An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in the Fund.
1
SunAmerica Money Market Fund
FUND REVIEW -- (unaudited)
Andrew Doulos, Portfolio Manager
AIG SunAmerica Asset Management Corp.
The SunAmerica Money Market Fund, Class A returned 4.22% for the 12-month
period ending December 31, 2006, compared to a return of 5.02% for the 30-day
CD rate.
The Federal Open Market Committee raised short-term interest rates by 25
basis points at three meetings this past year. The last 25 basis points
increase occurred in June, resulting in the 17th consecutive increase which
brought the target rate to 5.25%. Throughout the period, policy makers
described monetary policy as balanced, in an effort to contain long-term
inflation pressures.
Sector selection had little impact on the portfolio. Instead value was added
through active management of the portfolio's duration. Given our outlook for a
pause in the Federal Funds rate, we continued to emphasize longer fixed-rate
and floating rate securities while selectively purchasing shorter-dated
securities when relative value opportunities were discovered.
For the first seven months of the fiscal period, up until the Fed's
cessation of its tightening cycle in August, the Fund invested in shorter-dated
maturities relative to its benchmark providing the maximum risk/return point.
Since then, the Fund has been buying longer-dated maturities, when possible, in
order to capture more yield, while still maintaining prudent high-quality
investments. At the close of the annual period, the portfolio had a seven-day
effective yield of 4.57% versus the average one-month CD rate of 5.30%.
- --------
Past performance is no guarantee of future results.
An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in the Fund.
2
SunAmerica Municipal Money Market Fund
FUND REVIEW -- (unaudited) (continued)
J. Hutchinson Bryan, Portfolio Manager
AIG Global Investment Corp.
The SunAmerica Municipal Money Market Fund Class A returned 2.69% for the
fiscal year ending December 31, 2006.
Two of the key factors affecting the economy and the stock market in 2006
were consumer spending and inflation. Housing starts and housing sales slowed
during the year. During the first half of 2006, rising interest rates and
increased commodity prices, particularly in the energy sector, impacted
consumers. Early in the year, Federal Reserve Chairman Ben Bernanke appeared to
be particularly vigilant with respect to price trends. The Federal Funds target
rate was raised from 4.25% to 5.25% in four successive meetings before pausing
in August for the remainder of the year. This was partly in an effort to
contain inflation. In the second half of 2006, inflation (as measured by the
Consumer Price Index) appeared to stabilize, monthly non-farm payroll
statistics averaged 160,000 job additions, and crude oil futures began to
decline after reaching an all-time high of nearly $78 a barrel. In mid-July,
the stock and bond markets simultaneously began a long rally. Finally, growth
appeared to slow from its earlier pace and inflation stabilized, leading the
market focus on the possibility and timing of cuts to the Federal Funds target
rate.
Market conditions relative to the Fund were primarily the resets of weekly
variable rate demand obligations (VRDOs) in relation to longer fixed-coupon
note maturities. The proxy for VRDOs is the Bond Market Association (BMA)
Index,* and, as taxable rates rose in the first half of the year, the BMA Index
followed suit, especially during the cyclically weak tax season months. The
Fund's performance benefited from yield increases during April and May because
VRDOs traded at a yield greater than longer fixed-coupon note structures. The
Fund saw continued volatility in the BMA Index during the summer months, which
is typically a better-performing period. The index continued to fluctuate
within a 30 to 40 basis points range, occasionally yielding more than six- and
12-month note structures. Consequently, our purchases of note structures in
these months did not provide much added value to the Fund.
With respect to VRDOs, the Fund's holdings were weighted toward sectors that
reset at a greater spread to BMA such as health care, industrial revenue,
utility and other revenue sectors, while still maintaining diversity
requirements. In addition, fixed-coupon note structures were concentrated in
well-regarded, liquid names from large issuers backed by strong revenue or
general obligation pledges, which tend to trade at a premium to smaller,
less-liquid issuers in the secondary market.
- --------
Past performance is no guarantee of future results.
*The Bond Market Association Municipal Swap (BMA) Index, produced by Municipal
Market Data (MMD), is a 7-day high-grade market index comprised of tax-exempt
variable-rate demand obligations (VRDOs) from MMD's extensive database. Indices
are not managed and an investor cannot invest directly into an index.
An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in the Fund.
3
SunAmerica Money Market Funds
EXPENSE EXAMPLE -- December 31, 2006 -- (unaudited)
Disclosure of Portfolio Expenses in Shareholder Reports
As a shareholder of a Fund in the SunAmerica Money Market Funds, Inc. (the
"Corporation"), you may incur two types of costs: (1) transaction costs,
including sales charges on purchase payments and contingent deferred sales
charges and (2) ongoing costs, including management fees, distribution and
service fees, and other Fund expenses. This Example set forth below is intended
to help you understand your ongoing costs (in dollars) of investing in the
Funds and to compare these costs with the ongoing costs of investing in other
mutual funds. The Example is based on an investment of $1,000 invested at July
1, 2006 and held until December 31, 2006.
Actual Expenses
The "Actual" section of the table provides information about actual account
values and actual expenses. You may use the information in these columns,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the column under the heading entitled "Expenses Paid During the Six
Months Ended December 31, 2006" to estimate the expenses you paid on your
account during this period. For shareholder accounts in classes other than
Class I, the "Expenses Paid During the Six Months Ended December 31, 2006"
column does not include small account fees that may be charged if your account
balance is below $500 ($250 for retirement plan accounts). In addition, the
"Expenses Paid During the Six Months Ended December 31, 2006" column does not
include administrative fees that may apply to qualified retirement plan
accounts. See the Funds' prospectus and/or your retirement plan documents for a
full description of these fees. Had these fees been included, the "Expenses
Paid During the Six Months Ended December 31, 2006" column would have been
higher and the "Ending Account Value" would have been lower.
Hypothetical Example for Comparison Purposes
The "Hypothetical" section of the table provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is
not the Fund's actual return. The hypothetical account values and expenses may
not be used to estimate the actual ending account balance or expenses you paid
for the period. You may use this information to compare the ongoing costs of
investing in the Portfolios and other funds. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of other funds. For shareholder accounts in classes other
than Class I, the "Expenses Paid During the Six Months Ended December 31, 2006"
column does not include small account fees that may be charged if your account
balance is below $500 ($250 for retirement plan accounts). In addition, the
"Expenses Paid During the Six Months Ended December 31, 2006" column does not
include administrative fees that may apply to qualified retirement plan
accounts. See the Funds' prospectus and/or your retirement plan documents for a
full description of these fees. Had these fees been included, the "Expenses
Paid During the Six Months Ended December 31, 2006" column would have been
higher and the "Ending Account Value" would have been lower.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, including sales
charges on purchase payments, contingent deferred sales charges, small account
fees and administrative fees, if applicable to your account. Please refer to
the Fund's prospectus and/or qualified retirement plan document for more
information. Therefore, the "Hypothetical" example is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transaction costs and other fees
were included, your costs would have been higher.
4
SunAmerica Money Market Funds
EXPENSE EXAMPLE -- December 31, 2006 -- (unaudited) (continued)
Actual Hypothetical
--------------------------------------------------- ---------------------------------
Ending Ending Account
Account Value Expenses Paid Value using
Beginning Using Actual During the Beginning a Hypothetical 5%
Account Value Returns at Six Months Ended Account Value Assumed Return at
at July 1, 2006 December 31, 2006 December 31, 2006 at July 1, 2006 December 31, 2006
--------------- ----------------- ----------------- --------------- -----------------
Money Market Fund
Class A................. $1,000.00 $1,022.52 $4.54 $1,000.00 $1,020.72
Class B................. $1,000.00 $1,018.02 $8.95 $1,000.00 $1,016.33
Class C ................ $1,000.00 $1,018.08 $8.85 $1,000.00 $1,016.43
Class I#................ $1,000.00 $1,022.97 $4.08 $1,000.00 $1,021.17
Municipal Money Market Fund
Class A#................ $1,000.00 $1,014.10 $3.96 $1,000.00 $1,021.27
Class B#................ $1,000.00 $1,009.41 $8.56 $1,000.00 $1,016.69
Class C#................ $1,000.00 $1,009.40 $8.41 $1,000.00 $1,016.84
------------------
Expense
Expenses Paid Ratio
During the as of
Six Months Ended December 31,
December 31, 2006 2006*
----------------- ------------
Money Market Fund
Class A................. $4.53 0.89%
Class B................. $8.94 1.76%
Class C ................ $8.84 1.74%
Class I#................ $4.08 0.80%
Municipal Money Market Fund
Class A#................ $3.97 0.78%
Class B#................ $8.59 1.69%
Class C#................ $8.44 1.66%
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* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 184 days divided by 365
days. These ratios do not reflect transaction costs, including sales charges
on purchase payments, contingent deferred sales charges, small account fees
and administrative fees, if applicable to your account. Please refer to your
Prospectus and/or your qualified retirement plan document for more
information.
# During the stated period, the investment adviser and distributor either
waived a portion of or all of the fees and assumed a portion of or all
expenses for the Funds. As a result, if these fees and expenses had not been
waived, the "Actual/Hypothetical Ending Account Value" would have been lower
and the "Actual/Hypothetical Expenses Paid During the Six Months Ended
December 31, 2006" and the "Expense Ratios" would have been higher.
5
- -
SunAmerica Money Market Funds
STATEMENT OF ASSETS AND LIABILITIES -- December 31, 2006
Money Market Municipal Money
Fund Market Fund
-------------- ---------------
ASSETS:
Short-term investment securities, at value* (unaffiliated)........ $1,692,762,580 $ 98,834,357
Repurchase agreements (cost equals market value).................. 69,465,000 --
-------------- -------------
Total Investments............................................... $1,762,227,580 $ 98,834,357
-------------- -------------
Cash.............................................................. 43,004 2,521,643
Receivable for:
Fund shares sold................................................ 115,486
Dividends and interest.......................................... 5,823,342 510,896
Prepaid expenses and other assets................................. 12,648 976
Due from investment adviser for expense reimbursements/fee waivers 528 2,554
-------------- -------------
Total Assets.................................................... 1,768,222,588 101,870,426
-------------- -------------
LIABILITIES:
Payable for:
Fund shares redeemed............................................ 244,656 1,531
Investment advisory and management fees......................... 670,723 31,075
Distribution and service maintenance fees....................... 239,214 13,749
Transfer agent fees and expenses................................ 371,482 21,123
Dividends payable............................................... 100,327 2,299
Directors' fees and expenses.................................... 241,651 6,718
Other accrued expenses.......................................... 310,779 40,990
-------------- -------------
Total Liabilities............................................... 2,178,832 117,485
-------------- -------------
Net Assets..................................................... $1,766,043,756 $ 101,752,941
============== =============
NET ASSETS REPRESENTED BY:
Common stock, $.001 par value (10 billion shares authorized)...... $ 1,766,052 $ 101,753
Paid-in capital................................................... 1,764,191,453 101,650,608
-------------- -------------
1,765,957,505 101,752,361
Accumulated undistributed net investment income (loss)............ 86,251 580
-------------- -------------
Net assets..................................................... $1,766,043,756 $ 101,752,941
============== =============
Class A:
Net assets........................................................ $1,711,782,556 $ 101,083,311
Shares outstanding................................................ 1,711,787,291 101,082,605
Net asset value and redemption price per share
(excluding any applicable contingent deferred sales charge)...... $ 1.00 $ 1.00
============== =============
Class B:
Net assets........................................................ $ 23,805,871 $ 535,564
Shares outstanding................................................ 23,806,600 535,504
Net asset value and redemption price per share
(excluding any applicable contingent deferred sales charge)...... $ 1.00 $ 1.00
============== =============
Class C:
Net assets........................................................ $ 12,398,571 $ 134,066
Shares outstanding................................................ 12,399,554 134,078
Net asset value and redemption price per share
(excluding any applicable contingent deferred sales charge)...... $ 1.00 $ 1.00
============== =============
Class I:
Net assets........................................................ $ 18,056,758 $ --
Shares outstanding................................................ 18,059,038 --
Net asset value and redemption price per share.................... $ 1.00 $ --
============== =============
*Amortized cost of short-term investment securities (unaffiliated) $1,692,762,580 $ 98,834,357
============== =============
See Notes to Financial Statements
6
SunAmerica Money Market Funds
STATEMENT OF OPERATIONS -- For the year ended December 31, 2006
Money Market Municipal Money
Fund Market Fund
------------ ---------------
INVESTMENT INCOME:
Interest (unaffiliated)................................................................ $83,991,891 $3,405,991
Dividends (unaffiliated)............................................................... -- 2,886
----------- ----------
Total investment income............................................................. 83,991,891 3,408,877
----------- ----------
EXPENSES:
Investment advisory and management fees................................................ 7,722,938 345,413
Distribution and service maintenance fees
Class A.............................................................................. 2,407,320 146,413
Class B.............................................................................. 260,094 5,115
Class C.............................................................................. 167,310 4,614
Transfer agent fees and expenses
Class A.............................................................................. 3,608,555 217,299
Class B.............................................................................. 87,501 2,776
Class C.............................................................................. 50,192 1,405
Class I.............................................................................. 41,677 --
Registration fees
Class A.............................................................................. 38,651 20,525
Class B.............................................................................. 12,184 11,718
Class C.............................................................................. 11,644 11,390
Class I.............................................................................. 11,746 --
Custodian and accounting fees.......................................................... 316,710 27,690
Reports to shareholders................................................................ 344,342 7,552
Audit and tax fees..................................................................... 18,033 18,034
Legal fees............................................................................. 32,490 4,651
Directors' fees and expenses........................................................... 99,896 5,272
Other expenses......................................................................... 29,435 1,444
----------- ----------
Total expenses before fee waivers, expense reimbursements and custody credits....... 15,260,718 831,311
Fees waived and expenses reimbursed by investment adviser and distributor (Note 3).. (7,773) (26,774)
Custody credits earned on cash balances............................................. (15,780) (28,871)
----------- ----------
Net expenses........................................................................ 15,237,165 775,666
----------- ----------
Net investment income (loss)........................................................... 68,754,726 2,633,211
----------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ $68,754,726 $2,633,211
=========== ==========
See Notes to Financial Statements
7
SunAmerica Money Market Funds
STATEMENT OF CHANGES IN NET ASSETS
Money Market Fund
------------------------------
For the year For the year
ended ended
December 31, December 31,
2006 2005
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss).......................................................... $ 68,754,726 $ 39,505,841
-------------- --------------
Net increase (decrease) in net assets resulting from operations......................... $ 68,754,726 $ 39,505,841
Distributions to shareholders from:
Net investment income (Class A)....................................................... (66,523,360) (38,360,984)
Net investment income (Class B)....................................................... (942,063) (535,077)
Net investment income (Class C)....................................................... (615,060) (303,588)
Net investment income (Class I)....................................................... (675,707) (317,343)
-------------- --------------
Total distributions to shareholders..................................................... (68,756,190) (39,516,992)
-------------- --------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 5) 119,460,172 (55,074,247)
-------------- --------------
Total increase (decrease) in net assets................................................. 119,458,708 (55,085,398)
-------------- --------------
NET ASSETS:
Beginning of year....................................................................... 1,646,585,048 1,701,670,446
-------------- --------------
End of year*............................................................................ $1,766,043,756 $1,646,585,048
============== ==============
*Includes accumulated undistributed net investment income (loss)........................ $ 86,251 $ 87,715
============== ==============
Municipal Money Market Fund
--------------------------
For the year For the year
ended ended
December 31, December 31,
2006 2005
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss).......................................................... $ 2,633,211 $ 1,428,607
------------ ------------
Net increase (decrease) in net assets resulting from operations......................... $ 2,633,211 $ 1,428,607
Distributions to shareholders from:
Net investment income (Class A)....................................................... (2,614,881) (1,413,877)
Net investment income (Class B)....................................................... (10,057) (4,110)
Net investment income (Class C)....................................................... (8,273) (10,621)
Net investment income (Class I)....................................................... -- --
------------ ------------
Total distributions to shareholders..................................................... (2,633,211) (1,428,608)
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 5) 14,852,635 (11,193,701)
------------ ------------
Total increase (decrease) in net assets................................................. 14,852,635 (11,193,702)
------------ ------------
NET ASSETS:
Beginning of year....................................................................... 86,900,306 98,094,008
------------ ------------
End of year*............................................................................ $101,752,941 $ 86,900,306
============ ============
*Includes accumulated undistributed net investment income (loss)........................ $ 580 $ 580
============ ============
See Notes to Financial Statements
8
SunAmerica Money Market Funds
FINANCIAL HIGHLIGHTS
MONEY MARKET FUND
-----------------
Net Net Ratio of net
Asset Dividends Asset Net Assets Ratio of investment
Value Net from net Value end of expenses income to
beginning investment investment end of Total period to average average
Period Ended of period income(1) income period Return(2) (000's) net assets net assets
- ------------ --------- ---------- ---------- ------ --------- ---------- ---------- ------------
Class A
- -
12/31/02 $1.000 $0.010 $(0.010) $1.000 1.04%(4) $1,751,812 0.90% 0.99%
12/31/03 1.000 0.003 (0.003) 1.000 0.32 1,644,603 0.88 0.32
12/31/04 1.000 0.005 (0.005) 1.000 0.50 1,630,353 0.90 0.49
12/31/05 1.000 0.024 (0.024) 1.000 2.38 1,587,641 0.89 2.35
12/31/06 1.000 0.041 (0.041) 1.000 4.22 1,711,783 0.89 4.14
Class B
- -
12/31/02 $1.000 $0.003 $(0.003) $1.000 0.28%(4) $ 64,815 1.64%(3) 0.26%(3)
12/31/03 1.000 0.000 0.000 1.000 0.03 44,529 1.18(3) 0.03(3)
12/31/04 1.000 0.001 (0.001) 1.000 0.07 42,437 1.32(3) 0.06(3)
12/31/05 1.000 0.015 (0.015) 1.000 1.52 31,738 1.74 1.46
12/31/06 1.000 0.033 (0.033) 1.000 3.32 23,806 1.76 3.26
Class C+
- -
12/31/02 $1.000 $0.003 $(0.003) $1.000 0.27%(4) $ 30,285 1.66%(3) 0.26%(3)
12/31/03 1.000 0.000 0.000 1.000 0.03 20,290 1.18(3) 0.03(3)
12/31/04 1.000 0.001 (0.001) 1.000 0.07 16,985 1.33(3) 0.06(3)
12/31/05 1.000 0.015 (0.015) 1.000 1.54 13,497 1.71 1.59
12/31/06 1.000 0.033 (0.033) 1.000 3.33 12,399 1.74 3.31
Class I
- -
12/31/02 $1.000 $0.011 $(0.011) $1.000 1.13%(4) $ 9,195 0.80%(3) 1.12%(3)
12/31/03 1.000 0.004 (0.004) 1.000 0.43 9,636 0.77(3) 0.43(3)
12/31/04 1.000 0.006 (0.006) 1.000 0.58 11,895 0.80(3) 0.59(3)
12/31/05 1.000 0.025 (0.025) 1.000 2.49 13,708 0.80(3) 2.49(3)
12/31/06 1.000 0.042 (0.042) 1.000 4.31 18,057 0.80(3) 4.26(3)
- --------
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load but does
include expense reimbursements.
(3)Net of the following expense reimbursements/waivers (based on average net
assets):
12/31/02 12/31/03 12/31/04 12/31/05 12/31/06
-------- -------- -------- -------- --------
Class B. 0.04% 0.51% 0.39% -- % -- %
Class C+ 0.04 0.53 0.39 -- --
Class I. 0.14 0.02 0.09 0.05 0.05
(4)The total return for each class was increased by less than 0.01% from gains
realized on the disposal of investments in violation of investment
restrictions.
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
See Notes to Financial Statements
9
SunAmerica Money Market Funds
FINANCIAL HIGHLIGHTS -- (continued)
MUNICIPAL MONEY MARKET FUND
---------------------------
Net Net Net Ratio of net
Asset Dividends Asset Assets Ratio of investment
Value Net from net Value end of expenses income to
Period beginning investment investment end of Total period to average average
Ended of period income(1) income period Return(2) (000's) net assets(3) net assets(3)
- -------- --------- ---------- ---------- ------ --------- -------- ------------- -------------
Class A
- -
12/31/02 $1.000 $0.009 $(0.009) $1.000 0.92% $ 88,050 0.78% 0.71%
12/31/03 1.000 0.003 (0.003) 1.000 0.28 113,802 0.81 0.28
12/31/04 1.000 0.004 (0.004) 1.000 0.36 97,374 0.87 0.35
12/31/05 1.000 0.016 (0.016) 1.000 1.62 84,817 0.81 1.58
12/31/06 1.000 0.027 (0.027) 1.000 2.69 101,083 0.78 2.68
Class B
- -
12/31/02 1.000 0.002 (0.002) 1.000 0.24 3,714 1.39 0.16
12/31/03 1.000 0.001 (0.001) 1.000 0.10 3,168 0.98 0.11
12/31/04 1.000 0.001 (0.001) 1.000 0.10 497 1.02 0.10
12/31/05 1.000 0.008 (0.008) 1.000 0.81 520 1.62 0.80
12/31/06 1.000 0.018 (0.018) 1.000 1.77 536 1.69 1.77
Class C+
- -
12/31/02 1.000 0.002 (0.002) 1.000 0.24 170 1.39 0.19
12/31/03 1.000 0.001 (0.001) 1.000 0.10 258 1.00 0.11
12/31/04 1.000 0.001 (0.001) 1.000 0.10 223 1.18 0.10
12/31/05 1.000 0.008 (0.008) 1.000 0.82 1,563 1.59 1.02
12/31/06 1.000 0.018 (0.018) 1.000 1.77 134 1.66 1.61
- --------
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load but does
include expense reimbursements.
(3)Net of the following expense reimbursements/waivers (based on average net
assets):
12/31/02 12/31/03 12/31/04 12/31/05 12/31/06
-------- -------- -------- -------- --------
Class A. 0.20% 0.03% 0.00% 0.04% 0.00%
Class B. 1.25 1.03 0.87 1.44 2.15
Class C+ 9.68 7.45 4.20 0.47 2.14
+ Effective February 23, 2004, Class II shares were redesignated as Class C
shares
See Notes to Financial Statements
10
SunAmerica Money Market Fund
PORTFOLIO PROFILE -- December 31, 2006 -- (unaudited)
Industry Allocation*
Asset Backed/Securities.......... 15.4%
Asset Backed/Receivables......... 14.7
Finance.......................... 12.7
Foreign Bank..................... 10.3
Money Center Banks............... 9.8
Asset Backed/Multi-Asset......... 9.6
Diversified Financial Services... 6.7
Finance-Investment Bank/Brokerage 5.5
Commercial Banks................. 4.9
Regional Bank.................... 4.6
Asset Backed/Finance............. 2.1
Investment Bank/Brokerage........ 1.3
Sovereign Agency................. 1.2
Municipalities................... 0.6
Asset Backed/Loans............... 0.4
----
99.8%
====
Weighted average days to maturity 42.1
Credit Quality Allocation @#
A-1......................... 96.1%
Not rated................... 3.9
-----
100.0%
=====
- --------
* Calculated as a percentage of net assets.
@ Source: Standard and Poors
# Calculated as a percentage of total debt issues.
11
SunAmerica Money Market Fund
PORTFOLIO OF INVESTMENTS -- December 31, 2006
Principal Value
Security Description Amount (Note 2)
SHORT-TERM INVESTMENT SECURITIES -- 95.9%
ASSET-BACKED COMMERCIAL PAPER -- 44.5%
Amstel Funding Corp
5.23% due 03/29/07*.................... $20,000,000 $ 19,927,361
5.24% due 03/29/07*................... 25,000,000 24,683,417
Atlantis One Funding Corp
5.24% due 02/20/07*.................... 18,000,000 17,869,000
5.32% due 01/04/07*................... 1,000,000 999,557
Cancara Asset Securitisation, Ltd.
5.24% due 01/05/07*.................... 33,605,000 33,585,453
5.27% due 01/16/07*+.................. 25,000,000 25,000,000
Chariot Funding LLC
5.36% due 01/05/07*.................... 10,475,000 10,468,762
Cheyne Finance LLC
5.32% due 03/06/07+.................... 37,000,000 36,996,867
CRC Funding LLC
5.26% due 01/23/07*.................... 25,000,000 24,919,639
Edison Asset Securitization LLC
5.17% due 04/03/07*.................... 16,000,000 15,788,604
Falcon Asset Securitization LLC
5.29% due 01/29/07*.................... 25,000,000 24,897,139
5.31% due 01/11/07*................... 25,000,000 24,963,125
Fountain Square Commercial Funding Corp.
5.23% due 01/08/07*.................... 3,160,000 3,156,743
5.25% due 01/18/07*................... 4,200,000 4,189,587
Galaxy Funding, Inc.
5.25% due 03/02/07*.................... 25,000,000 24,781,250
Giro Funding US Corp.
5.26% due 02/08/07*.................... 24,000,000 23,866,747
5.32% due 01/26/07*................... 27,000,000 26,900,250
Greyhawk Funding LLC
5.25% due 02/06/07*.................... 22,000,000 21,884,500
5.26% due 01/16/07*................... 25,447,000 25,391,229
Kitty Hawk Funding Corp.
5.26% due 01/29/07*................... 30,000,000 29,877,383
5.32% due 01/25/07*................... 30,000,000 29,893,600
Old Line Funding, LLC
5.32% due 01/04/07*................... 36,653,000 36,636,750
5.35% due 01/05/07*................... 31,740,000 31,721,132
Park Avenue Receivable Co., Ltd.
5.31% due 01/11/07*.................... 25,000,000 24,963,125
5.33% due 01/04/07*................... 25,000,000 24,988,896
Sedna Finance, Inc.
5.25% due 02/01/07*.................... 16,000,000 15,815,667
Surrey Funding Corp.
5.26% due 01/31/07*.................... 31,000,000 30,864,117
Sydney Capital Corp.
5.26% due 01/25/07*.................... 13,000,000 12,954,413
Thames Asset Global Securitization, Inc.
5.24% due 01/22/07*.................... 22,000,000 21,932,753
5.35% due 01/04/07.................... 1,907,000 1,906,150
5.35% due 01/16/07.................... 38,000,000 37,915,291
White Pine Finance LLC
5.28% due 01/22/07*.................... 30,556,000 30,461,888
5.28% due 01/23/07*................... 42,874,000 42,735,791
Windmill Funding Corp.
5.23% due 03/20/07*.................... 23,000,000 22,739,372
------------
Total Asset-Backed Commercial Paper
(amortized cost $785,675,558)......... 785,675,558
------------
Principal Value
Security Description Amount (Note 2)
--------------------------------------------------------
CERTIFICATES OF DEPOSIT -- 16.6%
ABN AMRO Bank NV
5.44% due 02/12/07+............ $10,000,000 $ 10,004,017
Barclays Bank PLC
5.31% due 04/19/07............. 200,000 199,900
BNP Paribas
5.30% due 02/28/07+............ 24,000,000 24,000,000
Citibank NY
5.30% due 03/08/07+............ 24,000,000 24,000,000
5.32% due 01/26/07............ 24,000,000 24,000,000
First Tennessee Bank NA
5.32% due 03/20/07............. 23,000,000 23,000,000
HBOS Treasury Services
5.22% due 04/03/07............. 200,000 199,864
Lloyds TSB Bank PLC
5.31% due 01/31/07............. 22,000,000 22,000,091
5.35% due 04/25/07............ 36,000,000 36,000,000
Nordea Bank Finland PLC
5.30% due 03/30/07+............ 24,000,000 24,000,000
Societe Generale
5.27% due 01/02/07+*........... 10,000,000 10,000,534
5.29% due 01/22/07+*.......... 20,000,000 19,997,855
Svenska Handelsbanken, Inc.
5.06% due 02/20/07+............ 23,000,000 22,985,253
5.65% due 07/20/07............ 29,000,000 29,025,573
UBS AG
5.32% due 01/29/07+............ 24,000,000 24,000,000
------------
Total Certificates of Deposit
(amortized cost $293,413,087). 293,413,087
------------
COMMERCIAL PAPER -- 18.9%
Bank of America Corp.
5.20% due 03/21/07............. 40,000,000 39,543,468
Bear Stearns Cos., Inc.
5.25% due 01/09/07*............ 23,000,000 22,973,167
Dorada Finance, Inc.
5.24% due 01/23/07............. 23,000,000 22,926,349
General Electric Capital Corp.
5.25% due 01/16/07*............ 27,000,000 26,940,938
HSBC Bank USA, Inc.
5.43% due 03/21/07+............ 16,000,000 16,014,981
Morgan Stanley Dean Witter Co.
5.30% due 01/10/07+*........... 37,000,000 37,000,000
Rabobank Nederland
5.30% due 03/30/07............. 24,000,000 24,000,000
Rabobank USA Financial Corp.
5.28% due 03/30/07+............ 43,000,000 42,993,693
Royal Bank of Canada
5.04% due 02/28/07............. 400,000 399,738
5.23% due 02/28/07............ 24,000,000 23,874,600
State Street Boston Corp.
5.27% due 01/04/07*............ 33,000,000 32,985,507
Svenska Handelsbank, Inc.
4.90% due 02/08/07............. 19,000,000 19,000,000
UBS Americas, Inc.
5.28% due 01/02/07*............ 24,000,000 23,996,480
------------
Total Commercial Paper
(amortized cost $332,648,921). 332,648,921
------------
12
SunAmerica Money Market Fund
PORTFOLIO OF INVESTMENTS -- December 31, 2006 -- (continued)
Principal Value
Security Description Amount (Note 2)
MEDIUM TERM NOTES -- 14.0%
Barclays Bank PLC
5.41% due 11/02/07................... $27,000,000 $ 27,000,000
Beta Finance, Inc.
5.36% due 01/16/07+.................. 36,000,000 36,008,579
HBOS PLC
3.13% due 01/12/07................... 25,000,000 24,982,624
Merrill Lynch & Co., Inc.
5.32% due 01/16/07+*................. 39,000,000 39,000,143
5.36% due 01/16/07+*................ 21,000,000 21,000,000
Sedna Finance, Inc.
5.31% due 02/01/07*+................. 19,000,000 18,999,919
Sigma Finance, Inc.
5.31% due 01/16/07+*................. 25,000,000 24,999,802
5.32% due 03/19/07+................. 37,000,000 36,998,682
Wells Fargo & Co.
5.34% due 01/03/07+*................. 19,000,000 19,000,000
--------------
Total Medium Term Notes
(amortized cost $247,989,749)....... 247,989,749
--------------
TAXABLE MUNICIPAL MEDIUM TERM NOTES -- 0.6%
Illinois Student Assistance Commission
(LOC-Bank of America)
5.37% due 01/03/07+
(amortized cost $10,000,000)......... 10,000,000 10,000,000
--------------
U.S. GOVERNMENT AGENCIES -- 1.3%
Agency for International Development
Panama
5.75% due 02/12/07+.................. 2,338,614 2,345,265
Federal Home Loan Bank
5.30% due 10/16/07................... 20,690,000 20,690,000
--------------
Total U.S. Government Agencies
(amortized cost $23,035,265)........ 23,035,265
--------------
Total Short-Term Investment Securities -- 95.9%
(amortized cost $1,692,762,580)..... 1,692,762,580
--------------
Principal Value
Security Description Amount (Note 2)
--------------------------------------------------------------
REPURCHASE AGREEMENTS -- 3.9%
UBS Securities, LLC
Joint Repurchase Agreement(1)..... $69,465,000 $ 69,465,000
--------------
TOTAL INVESTMENTS
(amortized cost $1,762,227,580)#. 99.8% 1,762,227,580
Other assets less liabilities...... 0.2 3,816,176
----------- --------------
NET ASSETS......................... 100.0% $1,766,043,756
=========== ==============
- --------
* Securities exempt from registration under Rule 144A of securities Act of
1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. The Fund has no
rights to demand registration of these securities. At December 31, 2006,
the aggregate value of these securities was $986,751,676, representing
55.0% of net assets. Unless otherwise indicated, these securities are not
considered to be illiquid.
# At December 31, 2006, the cost of securities for federal income tax
purposes was the same for book purposes.
+ Variable rate security - the rate reflected is as of December 31, 2006;
maturity date reflects next reset date.
(1) See Note 2 for details of Joint Repurchase Agreement
LOC --Letter of credit
See Notes to Financial Statements
13
SunAmerica Municipal Money Market Fund
PORTFOLIO PROFILE -- December 31, 2006 -- (unaudited)
State Allocation*
North Carolina................... 15.6%
Michigan......................... 7.6
Ohio............................. 5.8
Illinois......................... 5.7
New York......................... 5.5
Texas............................ 5.2
Kentucky......................... 5.0
Florida.......................... 4.7
Wyoming.......................... 4.5
Arizona.......................... 4.4
Pennsylvania..................... 4.0
Missouri......................... 3.7
Wisconsin........................ 3.7
New Mexico....................... 3.6
Alabama.......................... 3.0
North Dakota..................... 2.8
Washington....................... 2.7
Colorado......................... 2.1
Kansas........................... 1.7
Georgia.......................... 1.6
Iowa............................. 1.4
Indiana.......................... 1.1
South Carolina................... 0.8
Tennessee........................ 0.8
Registered Investment Companies.. 0.1
----
97.1%
====
Weighted average days to maturity 20.1
Credit Quality Allocation @#
A-1............. 72.4%
Not Rated+...... 20.5%
SP-1............ 7.1%
-----
100.0%
=====
- --------
* Calculate as a percentage of net assets.
@ Source: Standard and Poors
# Calculated as a percentage of total debt issues.
+ Represents debt issues that have either no rating, or the rating is
unavailable from the data source.
14
SunAmerica Municipal Money Market Fund
PORTFOLIO OF INVESTMENTS -- December 31, 2006
Principal Value
Security Description Amount (Note 2)
SHORT-TERM INVESTMENT SECURITIES -- 97.1%
Alabama -- 3.0%
Stevenson Alabama Industrial Development Board
Environmental Improvement Revenue
(LOC -- JPMorgan Chase Bank)
4.00% due 01/03/07+ $3,000,000 $3,000,000
Arizona -- 4.4%
Arizona Health Facilities Authority
3.84% due 01/03/07+ 2,200,000 2,200,000
Maricopa County, Arizona Industrial Development
Authority Multi Family Housing Revenue
Series A
(LOC -- Wells Fargo Bank N.A.)
4.01% due 01/04/07+ 1,510,000 1,510,000
Maricopa County, Arizona Industrial Development
Authority
(LOC -- Harris Trust & Savings Bank)
3.97% due 01/04/07+ 790,000 790,000
----------
4,500,000
----------
Colorado -- 2.1%
Colorado Springs, Colorado Revenue
(LOC -- Wells Fargo Bank N.A.)
4.01% due 01/04/07+ 1,345,000 1,345,000
Durango, Colorado Revenue
(LOC -- Wells Fargo Bank N.A.)
4.01% due 01/04/07+ 750,000 750,000
----------
2,095,000
----------
Florida -- 4.7%
County of Miami-Dade Florida
3.89% due 01/03/07+ 4,800,000 4,800,000
----------
Georgia -- 1.6%
Fulton County, Georgia Development Authority
Revenue
(LOC -- Wachovia Bank N.A.)
3.92% due 01/04/07+ 1,600,000 1,600,000
----------
Illinois -- 5.7%
Chicago Board of Education
Series C
3.90% due 01/04/07+ 180,000 180,000
Chicago Illinois O'Hare International Airport
Revenue Class B
(LOC -- Societe Generale)
3.95% due 01/03/07+ 845,000 845,000
Chicago, Illinois Water Revenue
(LOC -- Bank One N.A.)
3.93% due 01/03/07+ 500,000 500,000
Illinois Health Facilities Authority Revenue,
Series B
3.95% due 01/04/07+ 2,700,000 2,700,000
Warren County Illinois Revenue
(LOC -- Well Fargo Bank N.A.)
4.01% due 01/04/07+ 1,555,000 1,555,000
----------
5,780,000
----------
Indiana -- 1.1%
Marion, Indiana Economic Development Revenue
(LOC -- Bank of America N.A.)
3.90% due 01/03/07+ 1,105,000 1,105,000
----------
Iowa -- 1.4%
Iowa Higher Education Loan Authority Revenue
American Institute Project
(LOC -- Well Fargo Bank N.A.)
4.01% due 01/04/07+........................... 100,000 100,000
Principal Value
Security Description Amount (Note 2)
Iowa (continued)
Iowa Finance Authority
Series F
3.98% due 01/04/07+............................. $1,100,000 $1,100,000
Storm Lake, Iowa Higher Education Facilities
Revenue
4.06% due 01/04/07+............................. 170,000 170,000
----------
1,370,000
----------
Kansas -- 1.7%
Shawnee, Kansas, Industrial Revenue,
Series B
(LOC -- JPMorgan Chase Bank)
3.90% due 01/02/07+............................. 1,725,000 1,725,000
----------
Kentucky -- 5.0%
Breckinridge County, Kentucky Lease Program
Revenue
(LOC -- U.S. Bank N.A.)
3.90% due 01/03/07+............................. 3,425,000 3,425,000
Breckinridge County, Kentucky, Breckinridge Lease
(LOC -- U.S. Bank N.A.)
3.90% due 01/03/07+............................. 1,270,000 1,270,000
Kentucky Economic Development Finance
Authority Hospital Facilities Rev.
Series C
3.89% due 01/03/07+............................. 400,000 400,000
----------
5,095,000
----------
Michigan -- 7.6%
Detroit Michigan Sewage Disposal Revenue
Series C-1
3.93% due 01/04/07+............................. 1,175,000 1,175,000
Holt Michigan Public Schools
3.93% due 01/04/07+............................. 4,000,000 4,000,000
Michigan Municipal Bond Authority Revenue
Series B2
(LOC -- Bank of Novia Scotia)
4.50% due 08/20/07.............................. 2,500,000 2,512,510
----------
7,687,510
----------
Missouri -- 3.7%
Missouri Higher Education Loan
Series B
3.94% due 01/03/07+............................. 1,800,000 1,800,000
Missouri Higher Education Loan Authority
Series C
3.94% due 01/04/07+............................. 2,000,000 2,000,000
----------
3,800,000
----------
New Mexico -- 3.6%
Albuquerque, New Mexico Educational Facilities
3.95% due 01/03/07+............................. 3,700,000 3,700,000
----------
New York -- 5.5%
Metropolitan Transportation Authority
Series G
4.00% due 01/02/07+............................. 200,000 200,000
Metropolitan Transportation Authority,
Series G2,
(LOC -- BNP Paribas)
3.86% due 01/04/07+............................. 400,000 400,000
New York, New York
Sub. Series F-4
(LOC -- Royal Bank of Scotland)
3.85% due 01/04/07+............................. 500,000 500,000
New York City Municipal Water Finance Authority
Series C
3.97% due 01/02/07+............................. 900,000 900,000
15
SunAmerica Municipal Money Market Fund
PORTFOLIO OF INVESTMENTS -- December 31, 2006 -- (continued)
Principal Value
Security Description Amount (Note 2)
SHORT-TERM INVESTMENT SECURITIES (continued)
New York (continued)
New York City Municipal Water Finance Authority
Series F, Subseries F2
3.97% due 01/02/07+........................... $1,640,000 $ 1,640,000
New York City Municipal Water Finance Authority
Series G
3.92% due 01/02/07+........................... 2,000,000 2,000,000
-----------
5,640,000
-----------
North Carolina -- 15.6%
Charlotte-Mecklenburg Hospital Authority
Series C
3.90% due 01/04/07+........................... 1,660,000 1,660,000
Charlotte North Carolina Certificates of
Participation Series F
3.90% due 01/04/07+........................... 1,240,000 1,240,000
County of Guilford North Carolina,
Series B
3.90% due 01/04/07+........................... 2,400,000 2,400,000
Durham, North Carolina Public Improvement
3.91% due 01/04/07+........................... 300,000 300,016
Mecklenburg County, North Carolina Certificates
Participation
3.90% due 01/04/07+........................... 2,215,000 2,215,000
North Carolina Medical Care Community Hospital
Rev. Northeast Medical Center, Series B
3.89% due 01/03/07+........................... 530,000 530,000
North Carolina Medical Care Community Hospital
Rev. Baptist Hospital, Series B
3.90% due 01/03/07+........................... 3,400,000 3,400,000
State of North Carolina, Series D
3.90% due 01/03/07+........................... 2,200,000 2,200,000
State of North Carolina Water and Sewer Systems
(LOC -- Bank of America N.A.)
3.95% due 01/03/07+........................... 985,000 985,000
Winston Salem North Carolina Certificates of
Participation
3.89% due 01/04/07+........................... 300,000 300,000
Winston Salem North Carolina Water and Sewer
Systems Revenue, Series C
3.95% due 01/03/07+........................... 595,000 595,000
-----------
15,825,016
-----------
North Dakota -- 2.8%
North Dakota State Housing Finance Agency
Revenue, Series A
3.97% due 01/03/07+........................... 2,835,000 2,835,000
-----------
Ohio -- 5.8%
Cleveland, Ohio Airport System Revenue
Series D
(LOC -- WestLB AG)
3.96% due 01/03/07+........................... 2,745,000 2,745,000
Franklin County, Ohio Hospital Revenue
Series B
(LOC -- Citibank N.A.)
3.89% due 01/04/07+........................... 3,165,000 3,165,000
-----------
5,910,000
-----------
Pennsylvania -- 4.0%
Delaware Valley Pennsylvania Regional Finance
Authority Series C
(LOC -- National Australia Bank)
3.91% due 01/03/07+........................... 1,700,000 1,700,000
Delaware Valley Pennsylvania Regional Finance
Authority Series C
3.91% due 01/03/07+........................... 300,000 300,000
Principal
Amount/ Value
Security Description Shares (Note 2)
Pennsylvania (continued)
Pennsylvania State Turnpike Commission
Series U
3.91% due 01/04/07+ $ 900,000 $ 900,000
Pennsylvania Turnpike Commission Class A1
3.95% due 01/03/07+ 1,000,000 1,000,000
Philadelphia, Pennsylvania Authority for
Industrial Development Revenue,
(LOC -- GE Capital Corp.)
3.93% due 01/03/07+ 200,000 200,000
------------
4,100,000
------------
South Carolina -- 0.8%
Piedmont Municipal Power Agency
Subseries B3
3.90% due 01/03/07+ 250,000 250,000
Piedmont Municipal Power Agency,
Subseries B
3.90% due 01/03/07+ 600,000 600,000
------------
850,000
------------
Tennessee -- 0.8%
Jackson Energy Authority
3.90% due 01/04/07+ 850,000 850,000
------------
Texas -- 5.2%
City of Brownsville Utility System Revenue
Series A
3.89% due 01/03/07+ 800,000 800,000
State of Texas Tax & Revenue Anticipation
Notes
4.50% due 08/31/07 4,500,000 4,527,220
------------
5,327,220
------------
Washington -- 2.7%
Port of Seattle, Washington Industrial
Development, (LOC -- Citibank N.A.)
3.97% due 01/03/07+ 1,500,000 1,500,000
State of Washington Series VR 96A
3.82% due 01/03/07+ 1,200,000 1,200,000
------------
2,700,000
------------
Wisconsin -- 3.7%
Wisconsin State Health and Educational
Facilities Authority
(LOC -- Citibank N.A.)
3.90% due 01/04/07+ 3,800,000 3,800,000
------------
Wyoming -- 4.5%
Wyoming Community Development Authority
Series A2
3.89% due 01/04/07+ 4,600,000 4,600,000
------------
Registered Investment Company -- 0.1%
SSgA Tax Free Money Market Fund 139,611 139,611
------------
TOTAL SHORT-TERM INVESTMENTS
(amortized cost $98,834,357)* 97.1% 98,834,357
Other assets less liabilities 2.9 2,918,584
---------- ------------
NET ASSETS 100.0% $101,752,941
========== ============
- --------
* At December 31, 2006. the cost of securities for federal income tax
purposes was the same for book purposes.
+ Variable rate security - the rate reflected is as of December 31, 2006;
maturity date reflects next reset date.
LOC --Letter of Credit
See Notes to Financial Statements
16
SunAmerica Money Market Funds
NOTES TO FINANCIAL STATEMENTS -- December 31, 2006
Note 1. Organization
SunAmerica Money Market Funds, Inc. (the "Corporation") is an open-end
diversified management investment company organized as a Maryland
Corporation. The Corporation consists of two investment funds (each, a
"Fund" and collectively, the "Funds"). Each Fund is a separate series with a
distinct investment objective. Each Fund is advised by AIG SunAmerica Asset
Management Corp. ("SAAMCo" or "Adviser"), an indirect wholly-owned
subsidiary of American International Group, Inc. ("AIG"). The investment
objective for each of the Funds is as follows:
The SunAmerica Money Market Fund ("Money Market Fund") seeks as high a level
of current income as is consistent with liquidity and stability of capital
through investment primarily in high-quality money market instruments
selected principally on the basis of quality and yield.
The SunAmerica Municipal Money Market Fund ("Municipal Money Market Fund")
seeks as high a level of current income as is consistent with liquidity and
stability of capital and that is exempt from regular federal income taxation
through investments selected primarily in high-quality money market
instruments primarily on the basis of quality and yield, and under normal
market conditions invests at least 80% of its assets in municipal securities
that are exempt from regular federal income tax.
The Money Market Fund currently offers four classes of shares: Class A,
Class B, Class C and Class I. The Municipal Money Market Fund currently
offers three classes of shares: Class A, Class B, and Class C. The classes
within the Funds are presented in the Statement of Assets and Liabilities.
The cost structure for each class is as follows:
Class A shares-- Class A shares are available with no front-end sales
charge. A 1.00% contingent deferred sales charge ("CDSC")
is imposed on shares sold within one year of original
purchase and a 0.50% CDSC is imposed on shares sold after
the first year and within the second year after purchase.
Class B shares-- Class B shares are offered at their net asset value per
share, without any front-end sales charge. However, there
is a declining contingent deferred sales charge ("CDSC") on
shares sold within six years of purchase. Class B shares
will convert automatically to Class A shares approximately
eight years after the purchase of such shares and at such
time are no longer subject to a distribution fee.
Class C shares-- Class C shares are offered at their net asset value per
share, without any front-end sales charge. However, there
is a contingent deferred sales charge of 1.00% on shares
sold within 12 months of purchase.
Class I shares-- Class I shares are offered at net asset value per share
without any sales charge, exclusively to certain
institutions.
Each class of shares bears the same voting, dividend, liquidation and other
rights and conditions, except as may otherwise be provided in the Funds'
registration statement. Class A, Class B, and Class C shares of each Fund
has its own 12b-1 plan.
Indemnifications: Under the Funds' organizational documents, its officers
and directors are indemnified against certain liability arising out of the
performance of their duties to the Funds. In addition, in the normal course
of business the Funds enter into contracts that may contain the obligation
to indemnify others. The Funds' maximum exposure under these arrangements is
unknown. Currently, however, the Funds expect the risk of loss to be remote.
Note 2. Significant Accounting Policies
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from these estimates. The
following is a summary of the significant accounting policies followed by
the Funds in the preparation of its financial statements:
Pursuant to each 12b-1 plan, the Fund pays the Fund's distributor (the
"Distributor") an account maintenance fee with respect to Class A, B & C
shares and pursuant to the 12b-1 plan for the Class B and Class C shares,
the Fund also pays the Distributor a distribution fee with respect to the
Class B and C shares. The Class A shares do not pay a distribution fee.
17
SunAmerica Money Market Funds
NOTES TO FINANCIAL STATEMENTS -- December 31, 2006 -- (continued)
Security Valuations: Portfolio securities are valued at amortized cost,
which approximates market value. The amortized cost method involves valuing
a security at its cost on the date of purchase and thereafter assuming a
constant amortization/accretion to maturity of any discount or premium.
Repurchase Agreements: The Funds, along with other affiliated registered
investments companies, pursuant to exemptive relief granted by the
Securities and Exchange Commission, may transfer uninvested cash balances
onto a single joint account, the daily aggregate balance of which is
invested in one or more repurchase agreements collateralized by U.S.
Treasury or federal agency obligations. For repurchase agreements and joint
repurchase agreements, the Funds' custodian takes possession of the
collateral pledged for investments in such repurchase agreements. The
underlying collateral is valued daily on a mark to market basis to ensure
that the value, at the time the agreement is entered into, is equal to at
least 102% of the repurchase price, including accrued interest. In the event
of default of the obligation to repurchase, a Fund has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. If the seller defaults and the value of the collateral declines
or if bankruptcy proceedings are commenced with respect to the seller of the
security, realization of the collateral by the Fund may be delayed or
limited.
As of December 31, 2006, the following Fund held an undivided interest in a
joint repurchase agreement with UBS Securities LLC:
Percentage Principal
Fund Interest Amount
---- ---------- -----------
Money Market Fund................................. 27.79% $69,465,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
UBS Securities LLC, dated December 31, 2006, bearing interest at a rate of
4.80% per annum, with a principal amount of $250,000,000 a repurchase price
of $250,133,333, and a maturity date of January 2, 2007. The repurchase
agreement is collateralized by the following:
Interest Maturity
Type of Collateral Rate Date Principal Amount Market Value
------------------ -------- -------- ---------------- ------------
U.S. Treasury Inflation Index
Notes....................... 2.38% 04/15/11 $250,000,000 $255,000,499
Securities Transactions, Investment Income, Expenses, Dividends and
Distributions to Shareholders: Security transactions are recorded on a trade
date basis. Realized gains and losses on sales of investments are calculated
on the identified cost basis. Interest income, including the accretion of
discount and amortization of premium, is accrued daily; dividend income is
recorded on the ex-dividend date.
Net investment income, other than class specific expenses, and realized and
unrealized gains and losses, are allocated daily to each class of shares
based upon the relative net asset value of outstanding shares (or the value
of the dividend-eligible shares, as appropriate) of each class of shares at
the beginning of the day (after adjusting for the current capital shares
activity of the respective class).
Expenses common to all Funds, not directly related to individual Funds, are
allocated among the Funds based upon their relative net asset value or other
appropriate methods. In all respects, expenses are charged to each Fund as
incurred on a specific identification basis. Interest earned on cash
balances held at the custodian are shown as custody credits in the Statement
of Operations.
Dividends from net investment income, if any, are normally declared daily
and paid monthly. Capital gain distributions, if any, are paid annually. The
Funds record dividends and distributions to their shareholders on the
ex-dividend date. The amount of dividends and distributions from net
investment income and net realized capital gains are determined in
accordance with federal income tax regulations, which may differ from U.S.
generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within
the capital accounts at fiscal
18
SunAmerica Money Market Funds
NOTES TO FINANCIAL STATEMENTS -- December 31, 2006 -- (continued)
year end based on their federal tax-basis treatment; temporary differences
do not require reclassification. Net investment income (loss), net realized
gain (loss), and net assets are not affected by these reclassifications.
The Funds intend to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and distribute all of
their taxable income, including any net realized gain on investments, to its
shareholders. Therefore, no federal tax provisions are required. Each Fund
is considered a separate entity for tax purposes.
On July 13, 2006, the Financial Accounting Standards Board (FASB) released
FASB interpretation No. 48 "Accounting for Uncertainty in Income Taxes"
("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should
be recognized, measured, presented and disclosed in the financial
statements. FIN 48 requires the evaluation of tax positions taken or
expected to be taken in the course of preparing the Fund's tax returns to
determine whether the tax positions are "more-likely-than-not" of being
sustained by the applicable tax authority. Adoption of FIN 48 is required
for fiscal years beginning after December 15, 2006 and is to be applied to
all open tax years as of the effective date. However, Registered Investment
Companies are not required to implement FIN 48 until their last net asset
value calculation in the first required financial statement reporting period
for fiscal years beginning after December 15, 2006. At this time, management
is evaluating the implications of FIN 48 and its impact in the financial
statements, if any, has not yet been determined.
In September 2006, the FASB issued Statement on Financial Accounting
Standards No. 157, "Fair Value Measurements" (FAS 157). This standard
clarifies the definition of fair value for financial reporting, establishes
a framework for measuring fair value and requires additional disclosures
about the use of fair value measurements. FAS 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007 and
interim periods within those fiscal years. As of November 30, 2006, the Fund
does not believe the adoption of FAS 157 will impact the amounts reported in
the financial statements, however, additional disclosures will be required
about the inputs used to develop the measurements of fair value.
Note 3. Investment Advisory and Management Agreement, Distribution and Service
Agreement
The Funds have an Investment Advisory and Management Agreement (the
"Agreement") with AIG SunAmerica. Under the Agreement, AIG SunAmerica
provides continuous supervision of the Funds and administers its corporate
affairs, subject to general review by the Board of Directors (The "Board").
In connection therewith, AIG SunAmerica furnishes the Funds with office
facilities, maintains certain of its books and records, and pays the
salaries and expenses of all personnel, including officers of the Funds who
are employees of AIG SunAmerica and its affiliates.
The Funds pay AIG SunAmerica a monthly investment advisory and management
fee calculated daily at the following annual percentages of each Fund's
average daily net assets:
Management
Assets Fees
---------------------------- ----------
Money Market Fund............. $0 - $600 million 0.50%
next $900 million 0.45%
(greater than) $ 1.5 billion 0.40%
Municipal Money Market Fund... (greater than) $0 0.35%
The Municipal Money Market Fund is subadvised by AIG Global Investment Corp.
("AIGGIC") pursuant to a subadvisory agreement with AIG SunAmerica. AIGGIC
is an indirect wholly-owned subsidiary of AIG and an affiliate of AIG
SunAmerica. AIGGIC receives the following fees from AIG SunAmerica, based
upon the Fund's average daily net assets:
Sub-advisory
Assets Fees
--------------------------- ------------
Municipal Money Market Fund... $0 - $200 million 0.25%
next $300 million 0.20%
(greater than) $500 million 0.15%
19
SunAmerica Money Market Funds
NOTES TO FINANCIAL STATEMENTS -- December 31, 2006 -- (continued)
AIG SunAmerica has contractually agreed to waive fees and/or reimburse
expenses to the extent necessary to cap the Fund's annual fund operating
expenses at the following percentages of each Fund's average net assets.
Fund Percentage
---- ----------
Money Market Class I.............................. 0.80%
Municipal Money Market Class A.................... 0.95
Municipal Money Market Class B.................... 1.70
Municipal Money Market Class C.................... 1.70
AIG SunAmerica has voluntarily agreed to waive fees or reimburse expenses
for the year ended December 31, 2006 at the following percentages of each
Fund's average net assets: Municipal Money Market Class A 0.00%; Municipal
Money Market Class B 0.01%; Municipal Money Market Class C 0.04%.
For the year ended December 31, 2006, AIG SunAmerica agreed to waive fees or
reimburse expenses as follows:
Fund
----
Money Market Class I.............................. $ 7,773
Municipal Money Market Class A.................... 3,580
Municipal Money Market Class B.................... 12,224
Municipal Money Market Class C.................... 10,970
The contractual expense waivers and fee reimbursements will continue
indefinitely, subject to termination by the Directors, including a majority
of the Independent Directors. The voluntary waivers and/or reimbursements
may be terminated at any time. The exact amount of the voluntary waivers
and/or reimbursements may change on a day-to-day basis.
The Corporation on behalf of each, Fund, has entered into a Distribution
Agreement with AIG SunAmerica Capital Services, Inc. ("AIG SACS" or the
"Distributor"), an affiliate of the Adviser. The Funds have adopted a
Distribution Plan (the "Plan") on behalf of each class of shares (other then
Class I Shares (each a "Plan" or collectively the "Plans"), in accordance
with the provisions of Rule 12b-1 under the 1940 Act hereinafter referred to
as the "Class A Plan," the "Class B Plan," and the "Class C Plan." In
adopting the Plans, the directors determined that there was a reasonable
likelihood that each such Plan would benefit the Funds and the shareholders
of the respective class. The sales charge and distribution fees of a
particular class will not be used to subsidize the sale of shares of any
other class.
Both the Class B Plan and the Class C Plan, provide that the fund shall pay
the Distributor distribution fee at the annual rate of up to 0.75% of the
average daily net assets of the Fund's Class B and Class C shares
respectively, to compensate the Distributor and certain securities firms for
providing sales and promotional activities for distributing that class of
shares. The distribution costs for which the Distributor may be compensated
include distribution fees paid to broker-dealers that have sold Fund shares,
commissions, and other expenses such as those incurred for sales literature,
prospectus printing and distribution, and compensation to wholesalers. It is
possible that in any given year the amount paid to the Distributor under the
Class B and Class C Plans may exceed the Distributor's distribution costs as
described above. The Class A Plan does not provide for a distribution fee.
The Plans also provide that each class of shares of the Funds other than
Class I, shall pay the Distributor an account maintenance and service fee at
the annual rate of up to 0.15% of the aggregate average daily net assets of
such class of shares for payments to compensate the Distributor and certain
securities firms for account maintenance activities. In this regard, some
payments are used to compensate broker-dealers with account maintenance fees
in an amount up to 0.15% per year of the assets maintained in the Funds by
their customers. Accordingly, for the year ended December 31, 2006, AIG SACS
received fees (see Statement of Operations) based upon the aforementioned
rates.
20
SunAmerica Money Market Funds
NOTES TO FINANCIAL STATEMENTS -- December 31, 2006 -- (continued)
SACS receives the proceeds of contingent deferred sales charges paid by
investors in connection with certain redemptions of each Fund's Class A,
Class B and Class C shares. AIG SACS has advised the Funds for the year
ended December 31, 2006, the proceeds received from redemptions are as
follows:
Contingent Deferred Sales Charges
---------------------------------
Fund Class A Class B Class C
---- ------- -------- -------
Money Market....................... $9,748 $123,834 $8,187
Municipal Money Market............. -- (81) 4,127
The Funds have entered into a Service Agreement with AIG SunAmerica Fund
Services, Inc. ("AIG SAFS"), an affiliate of the Adviser. Under the Service
Agreement, AIG SAFS performs certain shareholder account functions by
assisting the Funds' transfer agent in connection with the services that it
offers to the shareholders of the Fund. The Service Agreement, which permits
the Funds to compensate AIG SAFS for services rendered based upon the annual
rate of 0.22% of average daily net assets, is approved annually by the
Trustees. For the year ended December 31, 2006, the Funds incurred the
following expenses which are included in transfer agent fees and expenses
payable line in the Statement of Asset and Liabilities and in transfer agent
fees and expenses in the Statement of Operations to compensate AIG SAFS
pursuant to the terms of the Service Agreement:
Payable at
Expenses December 31, 2006
- ---------- -----------------
Money Market Fund Class A.......... $3,530,736 $318,439
Money Market Fund Class B.......... 63,579 7,570
Money Market Fund Class C.......... 40,898 2,874
Money Market Fund Class I.......... 34,903 3,360
Municipal Money Market Fund Class A 214,738 19,692
Municipal Money Market Fund Class B 1,250 153
Municipal Money Market Fund Class C 1,128 73
Note 4. Federal Income Taxes
The following details the tax basis distributions as well as the components
of distributable earnings. The tax basis components of distributable
earnings differ from the amounts reflected in the Statement of Assets and
Liabilities by temporary book/tax differences primarily arising from
dividends payable and cumulative pension expenses.
Distributable Earnings Tax Distributions
----------------------------------------- --------------------------------
For the year ended December 31, 2006
--------------------------------------------------------------------------
Long-term Gains/ Unrealized Long-Term
Ordinary Capital Loss Appreciation Ordinary Capital
Fund Income Carryover (Depreciation) Income Gains Tax Exempt
- ---- -------- ---------------- -------------- ----------- --------- ----------
Money Market....................... $432,994 $ (318) $-- $68,756,190 $-- $ --
Municipal Money Market............. 34,495* (24,324) -- -- -- 2,633,211
- --------
* Tax exempt distributable earnings
Tax Distributions
----------------------------------------
For the year ended December 31, 2005
----------------------------------------
Long-Term
Fund Ordinary Income Capital Gains Tax-Exempt
---- --------------- ------------- ----------
Money Market.................. $39,516,992 $-- $ --
Municipal Money Market........ -- -- 1,428,608
For Federal income tax purposes, the Funds indicated below have capital loss
carryforwards, which expire in the year indicated, as of December 31, 2006,
which are available to offset future capital gains, if any:
Capital Loss Carryforward
-------------------------
Fund 2012 2013 2014
---- ------ ------- ----
Money Market.................. $ -- $ -- $318
Municipal Money Market........ 8,072 16,252 --
21
SunAmerica Money Market Funds
NOTES TO FINANCIAL STATEMENTS -- December 31, 2006 -- (continued)
Under the current law, capital losses related to securities and foreign
currency realized after October 31 and prior to the Fund's fiscal year end
may be deferred and treated as arising on the first day of the following
year. For fiscal year ended December 31, 2006, the Money Market Fund elected
to defer post October capital losses in the amount of $398.
Note 5. Capital Share Transactions
Transactions in each class of shares of the Funds, all at $1.00 per share,
for the year ended December 31, 2006 and for the prior year were as follows:
Money Market Fund
-------------------------------------------------------------------------------------------------
Class A Class B Class C
-------------------------------- --------------------------- --------------------------
For the For the For the For the For the For the
year year year year year year
ended ended ended ended ended ended
December 31, December 31, December 31, December 31, December 31, December 31,
2006 2005 2006 2005 2006 2005
--------------- --------------- ------------ ------------ ------------ ------------
Shares sold......... $ 1,067,246,832+ $ 1,113,494,682++ $ 21,345,812 $ 21,586,531 $ 35,756,424 $ 39,075,804
Reinvested dividends 65,808,620 38,099,932 876,052 502,145 556,078 270,694
Shares redeemed..... (1,008,912,573) (1,194,296,786) (30,154,351)+ (32,786,885)++ (37,411,117) (42,833,919)
--------------- --------------- ------------ ------------ ------------ ------------
Net increase
(decrease)......... $ 124,142,878 $ (42,702,172) $ (7,932,487) $(10,698,209) $ (1,098,616) $ (3,487,421)
=============== =============== ============ ============ ============ ============
---------------------
Class I
------------------------
For the For the
year year
ended ended
December 31, December 31,
2006 2005
------------ ------------
Shares sold......... $10,490,556 $ 7,693,470
Reinvested dividends 672,568 316,345
Shares redeemed..... (6,814,727) (6,196,260)
----------- -----------
Net increase
(decrease)......... $ 4,348,397 $ 1,813,555
=========== ===========
- --------
+ Includes automatic conversion of Class B shares in the amount of $2,136,800
to Class A shares
++ Includes automatic conversion of Class B shares in the amount of $2,267,064
to Class A shares
Municipal Money Market Fund
----------------------------------------------------------------------------------------
Class A Class B Class C
---------------------------- --------------------------- --------------------------
For the For the For the For the For the For the
year year year year year year
ended ended ended ended ended ended
December 31, December 31, December 31, December 31, December 31, December 31,
2006 2005 2006 2005 2006 2005
------------- ------------- ------------ ------------ ------------ ------------
Shares sold............ $ 253,437,415# $ 177,698,016## $ 421,681 $ 539,224 $ 535,044 $ 3,443,007
Reinvested dividends... 2,607,633 1,410,098 10,009 3,761 3,913 2,287
Shares redeemed........ (239,778,560) (191,665,171) (416,224)# (519,766)## (1,968,276) (2,105,157)
------------- ------------- ------------ ------------ ------------ ------------
Net increase (decrease) $ 16,266,488 $ (12,557,057) $ 15,466 $ 23,219 $ (1,429,319) $ 1,340,137
============= ============= ============ ============ ============ ============
- --------
# Includes automatic conversion of Class B shares in the amount of $25,660 to
Class A shares
## Includes automatic conversion of Class B shares in the amount of $298,186 to
Class A shares
Note 6. Directors' Retirement Plan
The Directors of the SunAmerica Money Market Funds, Inc. have adopted the
AIG SunAmerica Disinterested Trustees' and Directors' Retirement Plan (the
"Retirement Plan") effective January 1, 1993 for the unaffiliated Directors.
The Retirement Plan provides generally that an unaffiliated Director may
become a participant ("Participant") in the Retirement Plan if he or she has
at least 10 years of consecutive service as a Disinterested Director of any
of the adopting AIG SunAmerica mutual funds (the "Adopting Funds") or has
attained the age of 60 while a Director and completed five (5) consecutive
years of service as a Director of any Adopting Fund (an "Eligible
Director"). Pursuant to the Retirement Plan, an Eligible Director may
receive benefits upon (i) his or her death or disability while a Director or
(ii) the termination of his or her tenure as a Director, other than removal
for cause from each of the Adopting Funds with respect to which he or she is
an Eligible Director.
As of each of the first 10 birthdays after becoming a Participant and on
which he or she is both a Director and Participant, each Eligible Director
will be credited with an amount equal to 50% of his or her regular fees
(excluding committee fees) for services as a Disinterested Director of each
Adopting Fund for the calendar year in which such birthday occurs. In
addition, an amount equal to 8.50% of any amounts credited under the
preceding statement during prior years is added to each Eligible Director's
account. The rights of any Participant to benefits under the Retirement Plan
shall be an unsecured claim against the assets of the Adopting Funds.
22
SunAmerica Money Market Funds
NOTES TO FINANCIAL STATEMENTS -- December 31, 2006 -- (continued)
An Eligible Director may receive any benefits payable under the Retirement
Plan, at his or her election, either in one lump sum or in up to 15 annual
installments. Any undistributed amounts shall continue to accrue interest at
8.50%.
The following amounts for the Retirement Plan Liabilities are included in
the Directors' fees and expenses line on the Statement of Assets and
Liabilities and the amounts for the Retirement Plan Expenses are included in
the Director's fees and expenses line on the Statement of Operations.
Retirement Plan Retirement Plan Retirement Plan
Liability Expense Payments
- --------------- --------------- ---------------
Fund As of December 31, 2006
---- -----------------------------------------------
Money Market.................. $245,700 $22,101 $14,010
Municipal Money Market........ 7,292 1,194 247
Note 7. Interfund Lending Agreement
Pursuant to exemptive relief granted by the Securities and Exchange
Commission, the Funds are permitted to participate in an interfund lending
program among investment companies advised by AIG SunAmerica or an
affiliate. The interfund lending program allows the participating Funds to
borrow money from and loan money to each other for the temporary or
emergency purposes. An interfund loan will be made under this facility only
if the participating Funds receive a more favorable interest rate than would
otherwise be available from a typical bank for a comparable transaction. For
the year ended December 31, 2006, none of the Funds participated in the
program.
Note 8. Other Information
On February 9, 2006, "AIG", the parent company and an affiliated person of
AIG SunAmerica, AIG SACS and AICGIC, announced that it had consented to the
settlement of an injunctive action instituted by the Securities and Exchange
Commission ("SEC"). In its complaint, the SEC alleged that AIG violated
Section 17(a) of the Securities Act of 1933, as amended, Sections 10(b),
13(a), 13(b)(2) and 13(b)(5) of the Securities Exchange Act of 1934, as
amended, and Rules 10b-5, 12b-20, 13a-1 and 13b2-1 promulgated thereunder,
in connection with AIG's accounting and public reporting practices. The
conduct described in the complaint did not involve any conduct of AIG or its
subsidiaries related to their investment advisory or distribution activities
with respect to the assets of the Funds.
AIG, without admitting or denying the allegations in the complaint (except
as to jurisdiction), consented to the entry of an injunction against further
violations of the statutes referred to above. Absent exemptive relief
granted by the SEC, the entry of such an injunction would prohibit AIG and
its affiliated persons from, among other things, serving as an investment
adviser of any registered investment management company or principal
underwriter for any registered open-end investment company pursuant to
Section 9(a) of the "1940 Act". Certain affiliated persons of AIG, including
the Adviser, received a temporary order from the SEC pursuant to Section
9(c) of the 1940 Act with respect to the entry of the injunction, granting
exemptive relief from the provisions of Section 9(a) of the 1940 Act. The
temporary order permits AIG and its affiliated persons, including AIG's
investment management subsidiaries, to serve as investment adviser,
sub-adviser, principal underwriter or sponsor of the Funds. The Adviser
expects that a permanent exemptive order will be granted, although there is
no assurance the SEC will issue the order.
Additionally, AIG and its subsidiaries reached a resolution of claims and
matters under investigation with the United State Department of Justice
("DOJ"), the Attorney General of the State of New York ("NYAG") and the New
York State Department of Insurance ("DOI"), regarding accounting, financial
reporting and insurance brokerage practices of AIG and its subsidiaries, as
well as claims relating to the underpayment of certain workers compensation
premium taxes and other assessments.
As a result of the settlements with the SEC, the DOJ, the NYAG and the DOI,
AIG will make payments totaling approximately $1.64 billion. In addition, as
part of its settlements, AIG has agreed to retain for a period of three
years an Independent Consultant who will conduct a review that will include
the adequacy of AIG's internal controls over financial reporting and the
remediation plan that AIG has implemented as a result of its own internal
review.
Subject to receipt of permanent relief, the Adviser, Distributor and AIGGIC
believe that the settlements are not likely to have a material adverse
effect on their ability to perform their respective investment advisory or
distribution services relating to the Funds.
23
SunAmerica Money Market Funds
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of SunAmerica Money Market Funds,
Inc.:
In our opinion, the accompanying statements of assets and liabilities,
including the portfolios of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of each of the two
funds constituting SunAmerica Money Market Funds, Inc. (the "Funds") at
December 31, 2006, the results of each of their operations for the year then
ended, the changes in each of their net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in
the period then ended, in conformity with accounting principles generally
accepted in the United States of America. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 2006 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Houston, Texas
February 20, 2007
24
SunAmerica Money Market Funds
APPROVAL OF ADVISORY AGREEMENTS -- December 31, 2006 -- (unaudited)
Approval of the Investment Advisory and Management Agreement and Subadvisory
Agreement
The Board, including the Directors that are not interested persons of the
Corporation, AIG SunAmerica or AIG Global Investment Corp., ("AIGGIC" or the
"Subadviser"), within the meaning of the 1940 Act, (the "Disinterested
Directors"), approved the continuation of the Investment Advisory and
Management Agreement between the Corporation on behalf of the Funds, and AIG
SunAmerica (the "Advisory Agreement") for a one-year period ending August 31,
2007, at a meeting held on August 29, 2006. At this same meeting, the Board
also approved the continuation of the Subadvisory Agreement between AIG
SunAmerica and AIGGIC with respect to the Municipal Money Market Fund for a
one-year period ending August 31, 2007.
In accordance with Section 15(c) of the 1940 Act, the Board requested and the
Adviser provided materials relating to the Board's consideration of whether to
approve the continuation of the Advisory Agreement and Subadvisory Agreement.
In determining whether to approve the continuation of the Advisory Agreement
and Subadvisory Agreement, the Board, including the Disinterested Directors,
considered the following information:
Nature, Extent and Quality of Services Provided by the Adviser and Subadviser
The Board, including the Disinterested Directors, considered the nature,
quality and extent of services to be provided by AIG SunAmerica and AIGGIC. The
Board noted that the services include acting as investment manager and adviser
to the Funds, managing the daily business affairs of the Funds, and obtaining
and evaluating economic, statistical and financial information to formulate and
implement investment policies. Additionally, the Board observed that AIG
SunAmerica provides office space, accounting, legal, compliance, clerical and
administrative services (exclusive of, and in addition to, overseeing any such
service provided by any others retained by the Funds, including the
Subadviser), and has authorized any of its officers and employees, if elected,
to serve as officers or directors of the Funds without compensation. Finally,
the Board noted that AIG SunAmerica is responsible for monitoring and reviewing
the activities of affiliated and unaffiliated third-party service providers,
including the Subadviser.
In connection with the services provided by AIG SunAmerica, the Board analyzed
the structure and duties of AIG SunAmerica's fund administration, accounting,
legal and compliance departments and concluded that they were adequate to meet
the needs of the Funds. The Board further noted that AIG SunAmerica provides
and compensates a Chief Compliance Officer for the Funds and reviewed
information concerning AIG SunAmerica's compliance staff. The Board also
reviewed the personnel responsible for providing advisory services to the
Funds, and the level and process of monitoring the portfolio managers, and
concluded, based on their experience and interaction with the Adviser, that (i)
the Adviser was able to retain quality portfolio managers and other personnel;
(ii) the Adviser exhibited a high level of diligence and attention to detail in
carrying out its advisory responsibilities under the Advisory Agreement; (iii)
the Adviser was responsive to requests of the Board; and (iv) the Adviser had
kept the Board apprised of developments relating to the Funds and the industry
in general. The Board concluded that the nature and extent of services provided
under the Advisory Agreement were reasonable and appropriate in relation to the
management fee and that the quality of services continues to be high.
The Board also considered AIG SunAmerica's reputation and long-standing
relationship with the Funds and considered the benefit to shareholders of
investing in funds that are part of a family of funds offering a variety of
types of mutual fund and shareholder services. The Board considered AIG
SunAmerica's experience in providing management and investment advisory and
administrative services to advisory clients, including approximately 154
registered mutual funds and the fact that as of June 30, 2006 AIG SunAmerica
managed, advised an/or administered approximately $48.6 billion of assets.
With respect to the Municipal Money Market Fund, for which AIG SunAmerica has
delegated daily investment management responsibilities to AIGGIC, the Board
also considered the nature, quality and extent of services provided by AIGGIC.
The Board observed that AIGGIC is responsible for providing investment
management services, including investment research, advice and supervision, and
determining which securities will be purchased or sold by the Fund. The Board
reviewed AIGGIC's history, structure, size, visibility and resources, which are
needed to attract and retain highly qualified investment professionals. The
Board reviewed the personnel responsible for providing subadvisory services to
the Municipal Money Market Fund and concluded, based on their experience with
AIGGIC, that (i) AIGGIC was able to
25
SunAmerica Money Market Funds
APPROVAL OF ADVISORY AGREEMENTS -- December 31, 2006 -- (unaudited)
(continued)
retain high quality portfolio managers and other investment personnel; (ii)
AIGGIC exhibited a high level of diligence and attention to detail in carrying
out its responsibilities under the Subadvisory Agreement; and (iii) AIGGIC was
responsive to requests of the Board and of AIG SunAmerica. With respect to the
administrative services provided by AIGGIC, the Board considered that AIGGIC
provides general marketing assistance and has developed internal policies and
procedures for monitoring compliance with the investment objectives, policies
and restrictions of the Municipal Money Market Fund as set forth in the Fund's
prospectus. The Board concluded that the nature and extent of services provided
by AIGGIC under the Subadvisory Agreement were reasonable and appropriate in
relation to the subadvisory fee and that the quality of services continues to
be high.
The Board also considered AIG SunAmerica's and AIGGIC's compliance and
regulatory history, and noted that neither AIG SunAmerica nor AIGGIC had been
the target of any regulatory actions or investigations that could potentially
affect its ability to provide investment management and advisory services to
the Funds.
Investment Performance of the Funds and the Adviser and Subadviser
The Board also reviewed and considered the performance of the Funds. In
preparation for the August 29, 2006 meeting, the Board was provided with
reports independently prepared by Lipper, Inc. ("Lipper"). In connection with
its review, the Board received and reviewed information regarding the
investment performance of the Funds as compared to each Fund's peer group
("Peer Group") and peer universe ("Peer Universe"), as determined by Lipper,
and to an appropriate index or combination of indices. The Board also noted
that it regularly reviews the performance of the Funds periodically throughout
the year.
Based on the Lipper reports, the Board reviewed each Fund's annualized total
return, as applicable, for the prior one-, two-, three-, four-, five- and
ten-year periods ended June 30, 2006. The Board also received a report prepared
by AIG SunAmerica that detailed the Funds performance for the one-, three-,
six-, and nine-month periods ended July 31, 2006. Specifically, the Board noted
that the Money Market Fund ranked in the third quintile of its Peer Universe
for the one-, two- and three-year period ending June 30, 2006 and in fourth
quintile for the one-year period ending July 31, 2006.
In considering the performance of AIGGIC, the Board noted that while the
Municipal Money Market Fund's performance ranked in the fourth quintile of its
Peer Universe for the one-, two-, three- and five-year periods ended June 30,
2006, the Fund's performance had improved over recent periods and it currently
ranked in the third quintile for the one- and three-month periods ending July
31, 2006.
In considering AIG SunAmerica's performance as investment adviser, the Board
was provided with a presentation that compared the present and historical
staffing levels and annual budget of the Investments Department. Based on this
presentation, the Board noted that AIG SunAmerica had made significant
enhancements to the Investments Department in an effort to improve Fund
performance. In considering the performance of AIG SunAmerica and AIGGIC, the
Board did not rely upon comparisons of AIG SunAmerica's performance with
respect to its other advisory clients.
Consideration of the Management Fee and Subadvisory Fee and the Cost of the
Services and Profits Realized by the Investment Adviser, Subadviser and their
Affiliates from the Relationship with the Funds
The Board, including the Disinterested Directors, received and reviewed
information regarding the fees paid by the Funds to AIG SunAmerica for
investment advisory and management services and the fees paid by AIG SunAmerica
to AIGGIC pursuant to the Subadvisory Agreement. The Board examined this
information in order to determine the reasonableness of the fees in light of
the nature and quality of services provided and any potential additional
benefits received by AIG SunAmerica, the Subadviser or their affiliates in
connection with providing such services to the Funds.
To assist in analyzing the reasonableness of the fees, the Board received
reports prepared independently by Lipper. The reports showed comparative fee
information of the Funds' Peer Groups and Peer Universes, including rankings
within the categories, as well as reports prepared by AIG SunAmerica. In
considering the reasonableness of the management fee, the Board reviewed a
number of expense comparisons, including: (i) contractual advisory and
subadvisory fees; and (ii) actual total operating expenses. The Board also
received information on fees charged by the Subadviser for management
26
SunAmerica Money Market Funds
APPROVAL OF ADVISORY AGREEMENTS -- December 31, 2006 -- (unaudited)
(continued)
of funds similar to the Municipal Money Market Fund. This information assisted
the Board in considering what other clients pay AIGGIC for similar services.
The Board did not rely upon comparisons of the fees earned by AIG SunAmerica
with respect to other investment advisory contracts. In considering the Funds'
total operating expenses, the Board analyzed the level of fee waivers and
expense reimbursements and the net expense caps contractually agreed upon by
AIG SunAmerica with respect to the Municipal Money Market Fund and Class I
shares of the Money Market Fund. The Board compared the Funds' net expense
ratios to those of other funds within the Funds' respective Peer Groups as a
guide to help assess the reasonableness of the Funds' management fee. The Board
acknowledged that it was difficult to make precise comparisons with other funds
in the Peer Groups since the exact nature of services provided under the Peer
Groups' fund agreements is often not apparent. The Board noted that the Peer
Group fee information as a whole was useful in assessing whether the Adviser
was providing services at a cost that was competitive with other, similar
funds. The Board also took into account that the management fee arrangement for
the Money Market Fund included breakpoints that will adjust the fee downward as
the size of Fund increases, thereby allowing the shareholders to participate in
economies of scale.
In considering the subadvisory fees, the Board, including the Disinterested
Directors, considered that the Municipal Money Market Fund pays a fee to AIG
SunAmerica pursuant to the Advisory Agreement, and that, in turn, AIG
SunAmerica and not the Fund, pays a fee to AIGGIC. Therefore, the Board
considered the amount of the advisory fee retained by AIG SunAmerica and the
fee paid to AIGGIC in connection with the services provided. The Board also
considered that the Subadvisory Agreement contained breakpoints in the fee
schedule that would adjust the subadvisory fee downward if the Fund increased
its assets to certain levels. The Board noted that such breakpoints would not
directly benefit the shareholders, but would result in AIG SunAmerica retaining
a larger portion of the advisory fee.
The Board also considered AIG SunAmerica's profitability and the benefits AIG
SunAmerica and its affiliates received from its relationship with the Funds.
The Board reviewed financial statements relating to AIG SunAmerica's
profitability and financial condition with respect to the services it provided
the Funds and considered how profit margins could affect AIG SunAmerica's
ability to attract and retain high quality investment professionals. The Board
was also provided with a profitability analysis that detailed the revenues
earned and the expenses incurred on a fund by fund basis by AIG SunAmerica and
its affiliates in providing services to the Funds. Based on this information,
the Board considered the revenues received by AIG SunAmerica under the Advisory
Agreement, and where applicable, the Administrative Agreement. The Board also
considered revenues received by AIG SunAmerica's affiliates under the Rule
12b-1 Plans, Service Agreement, and Administrative and Shareholder Service
Agreement. Additionally, the Board reviewed AIGGIC's financial statements and
considered whether AIGGIC had the financial resources necessary to attract and
retain high quality investment management personnel, continue to perform its
obligations under the Subadvisory Agreement and to continue to provide the high
quality of services that it had provided to Municipal Money Market Fund to date.
With respect to indirect costs and benefits, the Board considered that (1) any
indirect costs incurred by AIG SunAmerica in connection with rendering
investment advisory services to the Funds are inconsequential based on
management's judgment on the analysis of the adequacy of the advisory fees, and
(2) any collateral benefits derived as a result of providing advisory services
to the Funds are de minimis according to management and do not impact upon the
reasonableness of the advisory fee. The Board did, however, consider the
reputational value to AIG SunAmerica from serving as investment adviser.
The Board concluded that AIG SunAmerica had the financial resources necessary
to perform its obligations under the Advisory Agreement and to continue to
provide the high quality of services that it had provided to the Funds to date
and that the profitability of the Adviser and its affiliates as a result of
their relationships with the Funds was reasonable. The Board also concluded
that the level of the management fee was reasonable in light of the factors
discussed above.
Economies of Scale
The Board, including the Disinterested Directors, considered whether the Funds
have benefited from economies of scale and whether there is potential for
future realization of economies with respect to the Funds. Based on the current
management fee levels, the Board concluded that any potential economies of
scale will be shared between shareholders
27
SunAmerica Money Market Funds
APPROVAL OF ADVISORY AGREEMENTS -- December 31, 2006 -- (unaudited)
and AIG SunAmerica in an appropriate manner. The Board considered that the
funds in the AIG SunAmerica complex share common resources and as a result, an
increase in the overall size of the complex could permit each fund to incur
lower expenses than they otherwise would achieve as stand-alone entities. The
Board also considered the anticipated efficiencies in the processes of AIG
SunAmerica as it adds labor and capital to expand the scale of operations.
The Board concluded that the management fee structure was reasonable and that
no changes were currently necessary to further reflect economies of scale. The
Board noted that it will continue to review fees, including breakpoints and
expense caps in connection with contract renewals.
Conclusion
After a full and complete discussion, the Board approved the continuation of
the Advisory Agreement for the Funds, and the Subadvisory Agreement with
respect to the Municipal Money Market Fund, for a one-year period ending August
31, 2007. Based upon their evaluation of all these factors in their totality,
the Board, including the Disinterested Directors, was satisfied that the terms
of the Advisory Agreement and Subadvisory Agreement were fair and reasonable
and in the best interests of the Funds and the Funds' shareholders. In arriving
at a decision to approve the continuation of the Advisory Agreement and
Subadvisory Agreement, the Board did not identify any single factor or group of
factors as all-important or controlling, but considered all factors together.
The Disinterested Directors were also assisted by the advice of independent
counsel in making this determination.
28
SunAmerica Money Market Funds, Inc.
DIRECTORS AND OFFICERS INFORMATION -- (unaudited) -- December 31, 2006
The following table contains basic information regarding the Directors and
Officers that oversee operations of the Funds and other investment companies
within the Fund Complex.
Number of
Position Term of Funds in
Held With Office and Fund Complex
Name, Address SunAmerica Length of Principal Occupations Overseen by Other Directorships
and Date of Birth* Complex Time Served(4) During Past 5 years Director(1) Held by Director(2)
- -------------------- ---------- -------------- ---------------------------- ------------ -----------------------------
Disinterested
Directors
Jeffrey S. Burum Director 2004- Founder, Chairman and 42 None
DOB: February 27, present CEO of Southern California
1963 Development Corporation/
National Housing
Development Corporation
(1992 to present); Founder,
Owner and Partner of
Colonies Crossroads, Inc.
(1999 to present); Owner
and Managing Member of
Diversified Pacific
Development Group, LLC
(1998 to present).
Judith L. Craven Director 2001- Retired 90 Director, Belo Corporation
DOB: October 6, 1945 present (1992 to present); Director,
Sysco Corporation (1996 to
present); Director, Luby's
Inc. (1998 to present);
Director, University of Texas
Board of Regents (2001 to
present).
William F. Devin Director 2001- Retired 90 Director, Boston Options
DOB: December 30, present Exchange (1985-Present);
1938
Samuel M. Eisenstat Chairman 1985- Attorney, solo practitioner; 52 Director, North European Oil
DOB: March 7, 1940 of the present Royalty Trust.
Board
Stephen J. Gutman Director 1984- Senior Associate, Corcoran 52 None
DOB: May 10, 1943 present Group (Real Estate) (2003
to present); President and
Member of Managing
Directors, Beau Brummell --
Soho LLC (Licensing of
menswear specialty retailing
and other activities) (June
1988-present)
William J. Shea Director 2004- President and CEO, 52 Director, Boston Private
DOB: February 9, present Conseco, Inc. (Financial Financial Holdings (October
1948 Services) (2001-2004); 2004 to present)
Chairman of the Board of
Centennial Technologies,
Inc. (1998 to 2001).
Interested Director
Peter A. Harbeck(3) Director 1994- President, CEO and 99 None
DOB: January 23, present Director, AIG SunAmerica,
1954 (August 1995 to present);
Director, AIG SunAmerica
Capital Services, Inc. ("AIG
SACS") (August 1993 to
present); President and
CEO, AIG adviser Group,
Inc. (June 2004 to present)
29
SunAmerica Money Market Funds
DIRECTORS AND OFFICERS INFORMATION -- December 31, 2006 -- (unaudited)
(continued)
Number of
Position Term of Funds in
Held With Office and Fund Complex
Name, Address SunAmerica Length of Principal Occupations Overseen by Other Directorships
and Date of Birth* Complex Time Served(4) During Past 5 years Director(1) Held by Director(2)
- ------------------- ---------- -------------- ----------------------------- ------------ -------------------
Officers
Vincent M. Marra President 2004- Senior Vice President, AIG N/A N/A
DOB: May 28, 1950 present SunAmerica (February 2003
to present); Chief
Administrative Officer, Chief
Operating Officer and Chief
Financial Officer, Carret &
Co., LLC (June 2002 to
February 2003); President
and Chief Operating Officer,
Bowne Digital Solutions
(1999 to May 2002).
Donna M. Handel Treasurer 2002- Senior Vice President, AIG N/A N/A
DOB: June 25, 1966 present SunAmerica (December
2004 to present); Vice
President, AIG SunAmerica
(1997 to December 2004),
Assistant Treasurer (1993 to
2002).
Gregory N. Bressler Secretary September Senior Vice President and N/A N/A
DOB: November 17, and Chief 2005 to General Counsel, AIG Sun
1966 Legal Present America (June 2005 to
Officer present); Vice President and
Director of U.S. Asset
Management Compliance,
Goldman Sachs Asset
Management (June 2004 to
June 2005); Deputy General
Counsel, Credit Suisse
Asset Management (June
2002 to June 2004);
Counsel, Credit Suisse
Asset Management (January
2000 to June 2002).
Timothy Pettee Vice August Chief Investment Officer, N/A N/A
DOB: April 7, 1958 President 2004 to AIG SunAmerica (January
Present 2003-Present); Executive
Vice President and Global
Director of Research
Schroder Investment
Management (2000-2002);
Director of Research U.S.
Trust Co. (1998-2000).
James Nichols Vice 2006 to Director, President and N/A N/A
DOB: April 7, 1966 President Present CEO, AIG SACS (July 2006
to Present); Senior Vice
President, AIG SACS
(March 2002 to July 2006);
Vice President, AIG
SunAmerica (1995 to March
2002).
30
SunAmerica Money Market Funds
DIRECTORS AND OFFICERS INFORMATION -- December 31, 2006 -- (unaudited)
Number of
Position Held Term of Funds in
With Office and Fund Complex
Name, Address SunAmerica Length of Principal Occupations Overseen by Other Directorships
and Date of Birth* Complex Time Served(4) During Past 5 years Director(1) Held by Director(2)
- -------------------- ------------- -------------- ------------------------------- ------------ -------------------
Cynthia Gibbons Vice 2002- Vice President, AIG N/A N/A
DOB: December 6, President present SunAmerica (August 2002-
1967 and Chief Present); Securities
Compliance Compliance Manager,
Officer American General
("CCO") Investment Management
(June 2000-August 2002).
Gregory R. Kingston Vice 2002- Vice President, SAAMCo N/A N/A
DOB: January 18, President present (2001-Present); Formerly,
1966 and Vice President, American
Assistant General Investment
Treasurer Management, L.P. (1999-
2001)
Nori L. Gabert Vice 2002- Vice President and Deputy N/A N/A
DOB: August 15, 1953 President present General Counsel, AIG
and SunAmerica (2001-
Assistant Present); Vice President and
Secretary Secretary, VALIC Company
I and VALIC Company II
(2000-Present); formerly,
Associate General Counsel,
American General
Corporation (1997 to 2001).
Matthew J. Hackethal Anti-Money 2006- Senior Compliance N/A N/A
DOB: December 31, Laundering present Manager, AIG SunAmerica
1971 Compliance (November 2006 to
Officer Present); Vice President,
Credits Suisse Asset
Management (May, 2001 to
October 2006); CCO, Credit
Suisse Alternative Funds
(November 2005 to October
2006); CCO, Credit Suisse
Asset Management
Securities, Inc. (April 2004 to
August 2005)
- --------
* The business address for each Director and Officer is the Harborside
Financial Center, 3200 Plaza 5, Jersey City, NJ 07311-4992.
(1) The term "Fund Complex" means two or more registered investment companies
that hold themselves out to investors as related companies for purposes of
investment services or have a common investment adviser or an investment
adviser that is an affiliated person of the adviser. The "Fund Complex"
includes the Corporation (2 funds), SunAmerica Equity Funds (10 funds),
SunAmerica Income Funds (5 funds), SunAmerica Focused Series, Inc.
(17 portfolios), SunAmerica Focused Alpha Growth Fund, Inc. (1 fund),
SunAmerica Focused Alpha Large-Cap Fund, Inc. (1 fund), Anchor Series Trust
(9 portfolios), SunAmerica Senior Floating Rate Fund, Inc. (1 fund),
SunAmerica Series Trust (35 portfolios), VALIC Company I (32 portfolios),
VALIC Company II (15 funds), Seasons Series Trust (24 portfolios) and AIG
Series Trust (6 portfolios).
(2) Directorships of companies required to report to the SEC under the
Securities Exchange Act of 1934 (i.e. "public companies") or other
investment companies registered under the 1940 Act.
(3) Interested Director, as defined within the 1940 Act, because he is an
officer and a director of the Adviser and a director of the principal
underwriter of, the Corporation.
(4) Directors serve until their successors are duly elected and qualified,
subject to the Director's retirement plan as discussed in Note 6 of the
financial statements. Each officer will hold office for an indefinite term,
until the date he or she resigns or retires or until his/her successor is
duly elected and qualifies.
Additional information concerning the Directors and Officers is contained in
the Statement of Additional Information and is available without charge by
calling (800) 858-8850.
31
SunAmerica Money Market Funds
SHAREHOLDER TAX INFORMATION -- (unaudited)
Certain tax information regarding the SunAmerica Money Market Funds is required
to be provided to shareholders based upon the Fund's income and distributions
for the taxable year ended December 31, 2006. The information necessary to
complete your income tax returns is included with your Form 1099-DIV mailed to
you in January 2007.
During the year ended December 31, 2006, 100% of the distributions paid by the
SunAmerica Municipal Money Market
Fund are exempt from federal income taxes.
32
SunAmerica Money Market Funds
If you would like additional information:
[_] Call FastFacts -- our 24-hour, automated account and fund information
hotline at 800-654-4760.
[_] Visit www.sunamericafunds.com for more up-to-date information.
AIG SunAmerica Mutual Funds
thank you for your continued support.
33
[LOGO] AIG SunAmerica
Mutual Funds
Harborside Financial Center
3200 Plaza 5
Jersey City, NJ 07311-4992
Directors/Trustees Investment Adviser PROXY VOTING RECORD ON
Samuel M. Eisenstat AIG SunAmerica Asset SUNAMERICA MONEY MARKET
Peter A. Harbeck Management Corp. FUNDS
Dr. Judith L. Craven Harborside Financial Information regarding how
William F. Devin Center the SunAmerica Money
Stephen J. Gutman 3200 Plaza 5 Market Funds voted
Jeffrey S. Burum Jersey City, NJ proxies relating to
William J. Shea 07311-4992 securities held in
Officers Distributor SunAmerica Money Market
Vincent M. Marra, AIG SunAmerica Capital Funds during the most
President Services, Inc. recent twelve month
Donna M. Handel, Harborside Financial period ended June 30 is
Treasurer Center available, once filed
Timothy P. Pettee, Vice 3200 Plaza 5 with the U.S. Securities
President Jersey City, NJ and Ex-change Commission,
Jim Nichols, Vice 07311-4992 without charge, upon
President request, by calling (800)
Cynthia Gibbons, Vice Shareholder Servicing 858-8850 or on the U.S.
President and Chief Agent Secu-rities and Exchange
Compliance Officer AIG SunAmerica Fund Commission's website at
Gregory N. Bressler, Services, Inc. http://www.sec.gov.
Chief Legal Officer Harborside Financial
and Secretary Center DISCLOSURE OF QUARTERLY
Gregory R. Kingston, 3200 Plaza 5 PORTFOLIO HOLDINGS
Vice President and Jersey City, NJ The Fund is required to
Assistant Treasurer 07311-4992 file its com-plete
Corey A. Issing, schedule of portfolio
Assistant Secretary Transfer Agent holdings with the U.S.
Kathleen Fuentes, State Street Bank and Securities and Exchange
Assistant Secretary Trust Company Commission for its first
Nori Gabert, Vice P.O. Box 419572 and third fiscal quarters
President and Kansas City, MO on Form N-Q. The Fund's
Assistant Secretary 64141-6572 Forms N-Q are available
Matthew J. Hackethal, on the U.S. Securities
Anti-Money Laundering Custodian and Exchange Commission's
Compliance Officer. State Street Bank and website at www.sec.gov.
Trust Company You can also obtain
P.O. Box 5607 copies of Form N-Q at the
Boston, MA 02110 U.S. Securities and
Exchange Commission's
VOTING PROXIES ON FUND Public Reference Room in
PORTFOLIO SECURITIES Wash-ington, DC
A description of the (information on the
policies and proce-dures oper-ation of the Public
that the Fund uses to Reference Room may be
determine how to vote obtained by
proxies relating to calling 1-800-SEC-0330).
secu-rities held in a
Fund's portfolios which This report is submitted
is available in the solely for the general
Fund's Statement of information of
Additional Information, shareholders of the Fund.
may be ob-tained without Distribution of this
charge upon request, by report to persons other
calling (800) 858-8850. than shareholders of the
This in-formation is also Fund is authorized only
available from the EDGAR in connection with a
database on the U.S. currently effective
Secu-rities and Exchange prospectus, setting forth
Commission's website at details of the Fund,
http://www.sec.gov. which must precede or
accompany this report.
34
[LOGO]
AIG
SunAmerica
Mutual Funds
Distributed by:
AIG SunAmerica Capital Services, Inc.
Harborside Financial Center
3200 Plaza 5
Jersey City, NJ 07311-4992
Investors should carefully consider the investment objectives, risks, charges
and expenses of any mutual fund before investing. This and other important
information is contained in the prospectus, which can be obtained from your
financial adviser or from the AIG SunAmerica Sales Desk at 800-858-8850, ext.
6003. Read the prospectus carefully before you invest. Funds distributed by AIG
SunAmerica Capital Services, Inc.
www.sunamericafunds.com
MMANN-12/06
Item 2. Code of Ethics
The SunAmerica Money Market Funds, Inc. (the "registrant") has adopted
a Code of Ethics applicable to its Principal Executive and Principal
Accounting Officers pursuant to Section 406 of the Sarbanes-Oxley Act
of 2002.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Directors has determined that William J.
Shea, the Chairman of the registrant's Audit Committee, qualifies as an
audit committee financial expert, as defined in the instructions to
Item 3(a) of Form N-CSR. Mr. Shea is considered to be "independent" for
purposes of Item 3(a)(2) of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
(a)--(d) Aggregate fees billed to the registrant for the last two
fiscal years for professional services rendered by the registrant's
principal accountant were as follows:
2005 2006
(a) Audit Fees ....................$ 46,127 $ 48,662
(b) Audit-Related Fees ............$ 14,735 $ 0
(c) Tax Fees ......................$ 16,050 $ 16,086
(d) All Other Fees ................$ 0 $ 0
Audit Fees include amounts related to the audit of the registrant's
annual financial statements and services normally provided by the
principal accountant in connection with statutory and regulatory
filings. Audit-Related Fees principally include a SAS No. 100 review
of the registrant's Semiannual Shareholder Report. Tax Fees
principally include tax compliance, tax advice, tax planning and
preparation of tax returns.
Aggregate fees billed to the investment adviser and Adviser Affiliates
(as defined below in Item 4(e)) that are required to be pre-approved
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X for
the last two fiscal years for services rendered by the Registrant's
principal accountant were as follows:
2005 2006
(b) Audit-Related Fees ............$ 0 $ 0
(c) Tax Fees ......................$ 0 $ 0
(d) All Other Fees ................$ 0 $ 0
(e)
(1) The registrant's audit committee pre-approves all audit services
provided by the registrant's principal accountant for the registrant
and all non-audit services provided by the registrant's principal
accountant for the registrant, its investment adviser and any entity
controlling, controlled by, or under common control with the investment
adviser ("Adviser Affiliate") that provides ongoing services to the
registrant, if the engagement by the investment adviser or Adviser
Affiliate relates directly to the operations and financial reporting of
the registrant. The audit committee has not presently established any
pre-approval policies and procedures that permit the pre-approval of
the above services other than by the full audit committee. Certain de
minimis exceptions are allowed for non-audit services in accordance
with Rule 2-01(c)(7)(i)(C) of Regulation S-X as set forth in the
Registrant's audit committee charter.
(2) No services included in (b)-(d) above in connection with fees
billed to the registrant or the investment adviser or Adviser
Affiliates were approved pursuant to paragraph (c)(7)(i)(C) of Rule
2-01 of Regulation S-X.
(f) Not Applicable.
(g) The aggregate fees billed for the most recent fiscal year and the
preceding fiscal year by the registrant's principal accountant for
non-audit services rendered to the registrant, its investment adviser,
and Adviser Affiliate that provides ongoing services to the registrant
for 2006 and 2005 were 979,786 and $298,099, respectively.
(h) Non-audit services rendered to the registrant's investment adviser and
any Adviser Affiliate that were not pre-approved pursuant to Paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X were considered by the
registrant's audit committee as to whether they were compatible with
maintaining the principal accountant's independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
Included in Item 1 to the Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders
may recommend nominees to the Registrant's board of trustees that were
implemented after the Registrant last provided disclosure in response
to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by 22(b)(15)) of Schedule 14A (17 CFR 240.14a-
101), or this Item 10.
Item 11. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures as defined under Rule 30a-3(c)
under the Investment Company Act of 1940 (17 CFR 270.3a-3(c)). Based
on that evaluation, the registrant's management, including the
President and Treasurer, concluded that the registrant's disclosure
controls and procedures are effective.
(b) There was no change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act
of 1940 (17 CFR 270.30a-3(d))) that occurred during the second fiscal
quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal contro1 over financial reporting.
Item 12. Exhibits.
(a) (1) Code of Ethics applicable to its Principal Executive and
Principle Accounting Officers pursuant to Section 406 of the
Sarbanes-Oxley Act of 2002 attached hereto as Exhibit 99.406.
Code of Ethics.
(2) Certifications pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit
99.CERT.
(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the Sarbanes-
Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Money Market Funds, Inc.
By: /s/ Vincent M. Marra
-------------------
Vincent M. Marra
President
Date: March 9, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Vincent M. Marra
-------------------
Vincent M. Marra
President
Date: March 9, 2007
By: /s/ Donna M. Handel
-------------------
Donna M. Handel
Treasurer
Date: March 9, 2007