Shares of the AIG SunAmerica Funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risk, including the possible loss of principal amount invested.

AIG SunAmerica collects nonpublic personal information about you from the following sources:

• Information about your AIG SunAmerica Mutual Funds transactions with us or others, including your financial adviser.

AIG SunAmerica will not disclose any nonpublic personal information about you or your account(s) to anyone unless one of the following conditions is met:

• AIG SunAmerica is permitted by law to disclose the information to the recipient in order to service your account(s); or

If you decide to close your account(s) or become an inactive customer, AIG SunAmerica will adhere to the privacy policies and practices as described in this notice.

AIG SunAmerica restricts access to your personal and account information to those employees who need to know that information to provide products or services to you. We maintain physical, electronic, and procedural safeguards to guard your nonpublic personal information.

The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The Investment Period for Class A and Class C of each Fund commenced on June 25, 2004 and ends on that Fund's Protected Maturity Date, at which time the Fund will liquidate and cease operations. During its Investment Period, a Fund will make a continuous public offering of its shares. Under certain limited circumstances, a Fund may close to new investments or liquidate altogether prior to its scheduled Protected Maturity Date. Please see pages 25-27 of this Prospectus for further information.

Net Asset Value, or NAV is the value of a Fund's assets minus all liabilities divided by the number of shares outstanding. The Funds calculate their NAV each business day.

The Protected High Watermark Value for a Fund is the highest net asset value per share attained, (i) reduced by an amount that is proportionate to the sum of all dividends and distributions paid by the Fund subsequent to the time that the highest NAV was achieved, (ii) reduced by extraordinary expenses, if any, and (iii) increased by appreciation in share value to the extent such appreciation exceeds this adjusted share value subsequent to the last paid dividend or distribution.

Extraordinary Expenses means any Fund fees and expenses that are not incurred or accrued in the ordinary course of the Fund's business (including for example, all costs of defending or prosecuting any claim, or litigation, to which the Fund is a party, together with any amounts in judgment, settlement or indemnification expense incurred by the Fund or any other non-recurring, non-operating expenses).

The following questions and answers are designed to give you an overview of the three Funds of AIG Series Trust offered through this Prospectus — 2010 High Watermark Fund, 2015 High Watermark Fund and 2020 High Watermark Fund (each a "Fund," and collectively the "Funds") — and to provide you with information about the Funds' investment goals, principal investment strategies, and principal investment techniques. Each Fund has the same investment goals and investment strategy, but has a different Protected Maturity Date (e.g., 2010, 2015, 2020). Each Fund's goal may be changed without shareholder approval, although you will receive notice of any change. There can be no assurance that the investment goals of the Funds will be met or that the net return on an investment will exceed what could have been obtained through other investment or savings vehicles. More complete investment information is provided under "More Information About the Funds," on pages 23-30 and the glossary that follows on page 31.

A: Each Fund seeks capital appreciation to the extent consistent with preservation of capital investment gains in order to have a net asset value ("NAV") on its Protected Maturity Date at least equal to the Protected High Watermark Value (as defined below). Each Fund seeks high total return as a secondary objective.

A: The Funds are designed to return to shareholders on their Protected Maturity Dates the highest NAV attained during their existence, adjusted as a result of dividends, distributions and any extraordinary expenses. More specifically, each Fund undertakes (the "Payment Undertaking") that on its Protected Maturity Date, each shareholder in the Fund will be entitled to redeem his or her shares then outstanding for an amount no less than the highest NAV per share attained, (i) reduced by an amount that is proportionate to the sum of all dividends and distributions paid by the Fund subsequent to the time that the highest NAV was achieved, (ii) reduced by extraordinary expenses, if any, and (iii) increased by appreciation in share value to the extent such appreciation exceeds this adjusted share value subsequent to the last paid dividend or distribution ("Protected High Watermark Value"). Thus, after the payment of each dividend or distribution, a new Protected High Watermark Value is established to the extent of any subsequent appreciation and decreased in respect of subsequent dividends, distributions, and any extraordinary expenses. The proportionate adjustment owing to the dividends and distributions, and the reduction for any extraordinary expenses is discussed in detail under "More Information About the Funds —The Payment Undertaking," on page 23.

A: The Funds seek to generate capital appreciation by dynamically allocating their portfolio exposure to U.S. equity markets (consisting of exchange traded S&P 500 Index futures and options on these futures or options on the index) and to U.S. fixed income markets (consisting of U.S. government securities, primarily STRIPS and other zero-coupon securities, and high-grade money market instruments).

The Funds' adviser, Trajectory Asset Management LLC (the "Adviser"), implements the dynamic exposure allocation strategy through a disciplined quantitative investment approach that seeks to maximize prospects for capital appreciation while preserving investment gains and controlling investment risk, particularly the risk of a shortfall between the Protected High Watermark Value and the actual NAV per share of a Fund on its Protected Maturity Date.

S&P 500 Index Futures are legally binding agreements for the future sale by one party and purchase by another party of a specified amount of the S&P 500 Index for a specified price on a designated future date. A futures contract is part of a class of instruments called derivatives, so named because these instruments derive their value from the worth of the underlying investments.

Zero-Coupon Government Securities are debt obligations that are issued or purchased at a significant discount from face value and increase or accrete in value at maturity. Zero-coupon government securities do not require periodic payment of interest and are highly interest rate sensitive. The difference between what you pay for a zero-coupon government security and what it pays at maturity is the amount of interest earned, assuming the zero-coupon government security is held until maturity.

The Equity Risk Budget for a Fund defines its maximum permissible equity exposure as determined by the Adviser's proprietary exposure allocation formulae. The Equity Risk Budget sets the maximum permissible equity exposure for the Fund. It is determined mathematically by the Adviser, employing proprietary formulae that seek to limit the estimated maximum probable loss resulting from the Fund's exposure to equity markets to an amount which can be recouped by the future accretion of value in the Fund's fixed income portfolio, so that the Fund's expected NAV at maturity is greater than its Protected High Watermark Value. Generally, the Equity Risk Budget will drop to zero if the estimated future value of the Fund's fixed income portfolio (including margin deposits and other cash equivalent holdings) at the Fund's Protected Maturity Date, less an estimated probable maximum loss on the Fund's equity exposure, drops to a level that is equal to the Protected High Watermark Value of the Fund.

Simply put, this involves initially purchasing a portfolio of government securities with maturities approximating to a Fund's Protected Maturity Date and investing the balance of the Fund's assets in money market instruments. The estimated future value of these fixed-income investments, reflecting the anticipated accretion in value from the bonds, exceeds the Fund's initial net assets, and provides an expected surplus value which can offset estimated potential losses that may result, in the future, from the Fund's equity market exposures. The Adviser's proprietary exposure allocation formulae employ this expected surplus value along with other factors to determine an Equity Risk Budget, which sets the Fund's maximum permitted equity exposure. To the extent of its Equity Risk Budget, a Fund achieves exposure to the equity market by purchasing S&P 500 Index futures and, at times, options on those futures. As gains are earned, they are re-invested in money market instruments, government securities, index futures and options in direct proportion to the Fund's existing portfolio. Losses on S&P 500 Index futures may reduce the Fund's Equity Risk Budget. Proceeds from net new purchases of Fund shares are invested in government securities, money market instruments, and S&P 500 Index futures and options in direct proportion to the Fund's existing portfolio; net redemptions of Fund shares (expected to be minimal because they are inconsistent with the investment hypothesis of the Funds) are met through liquidation of each respective portion of the Fund's portfolio holdings. The Fund's Equity Risk Budget is recalculated daily and can lead to daily changes in the Fund's exposure to fixed-income and equity markets.

More information about the strategy for allocating exposure to U.S. equity markets and U.S. fixed income markets is provided on pages 24-27.

A: The Payment Undertaking is backed by a master agreement ("Master Agreement") between AIG Series Trust, on behalf of the Funds, and Prudential Global Funding, Inc. ("PGF"), under which PGF will pay to each Fund any shortfall between the Protected High Watermark Value and the actual NAV per share on the Fund's Protected Maturity Date, provided certain conditions are met. PGF's obligations are guaranteed by its parent, Prudential Financial, Inc. ("Prudential Financial"). Further information about PGF and Prudential Financial is provided below on pages 35-36 of this Prospectus.

The Protected High Watermark Value on a per share basis is reduced by dividends and distributions paid; a shareholder who reinvests dividends and distributions, however, receives additional shares that maintain his or her aggregate Protected High Watermark Value. A shareholder's aggregate Protected High Watermark Value may be reduced, as more fully explained in this Prospectus:

• If the shareholder takes any dividends or distribution in cash instead of reinvesting them in additional shares of the Funds;

• If the Funds' investment strategy otherwise is unsuccessful, or if the manager, the fund or the adviser fails to perform certain obligations under the Master Agreement;

• If both PGF and Prudential Financial fail to meet their obligations under the Master Agreement;

• If there is an automatic conversion from Class C Shares to Class A Shares.

See "More Information About the Funds — The Payment Undertaking" and "— Additional Information About the Funds' Risks."

An Early Closure Condition is a circumstance where the Adviser allocates all of a Fund's assets to fixed income securities and/or the yield on the fixed income portfolio is insufficient to cover the Fund's operating expenses in which case the Fund will close to new investments.

An Early Fund Termination is a circumstance where a Fund will terminate by accelerating its Protected Maturity Date and distribute liquidation proceeds to its shareholders if all of the following circumstances happen: (i) if the Fund's Equity Risk Budget has dropped to zero; (ii) the Fund is in the final three years prior to its Protected Maturity Date; and (iii) the Fund has a portfolio yield less than total Fund operating expenses. In the event of an Early Fund Termination, the Master Agreement with PGF will be accelerated so that the liquidation proceeds equal the Fund's protected High Watermark Value.

A: You could lose money on an investment in a Fund. All mutual funds have varying degrees of risk, depending on the securities they invest in. Please read this Prospectus carefully to be sure you understand the principal risks and strategies associated with the Funds.

The principal risks of an investment in the Funds involve opportunity costs, interim redemption risk (i.e., the risks associated with redemption prior to a Fund's Protected Maturity Date), and early termination risk, as well as the risks associated with exposure to the equity and fixed income markets. Opportunity costs involve the likelihood that a Fund's equity exposure drops to a low level or is eliminated altogether during periods of low interest rates or declining equity markets. This would reduce a Fund's ability to participate in upward equity market movements, and therefore, represents some loss of opportunity compared to a portfolio that is fully invested in equities. Investors can realize significant losses if they redeem their shares before a Fund's Protected Maturity Date due to the possibility of a shortfall between the Protected High Watermark Value that investors earn if shares are held to maturity and the actual NAV of Fund shares on the date of redemption. This shortfall could be more pronounced in an environment of rising interest rates or a declining stock market. If a Fund's portfolio were to terminate before the Fund's Protected Maturity Date, an investor would have to locate an alternative investment for his or her assets until the otherwise scheduled Protected Maturity Date, which could involve transaction expenses. In addition, because the Funds participate in both the equity and debt markets, a Fund may underperform stock funds when stocks are in favor and underperform bond funds when stocks are out of favor.

Non-principal risks of investing in the Funds include interest rate risk; the risk of the use of futures contracts; the risk that, under certain circumstances, the Master Agreement may require all of a Fund's assets to be invested in fixed income securities; the risk of an Early Closure Condition; the risk of termination of the Master Agreement; and the risk of default of PGF and Prudential Financial. These risks are described in detail below on pages 27-30 of this Prospectus.

Q: How do the Funds differ from ordinary principal protected or target maturity/lifecycle funds?

A: Ordinary principal protected funds only offer protection on an investor's initial investment and provide no assurance of preserving investment gains. Moreover, those funds only offer their shares for a limited period and then close to new investments.

In contrast, the High Watermark Funds Continuously Offer Their Shares and provide the flexibility to make systematic investments over time targeted to chosen Protected Maturity Dates. More importantly, the Funds seek to Preserve Investment Gains and return the Protected High Watermark Value at the Protected Maturity Date — even if it was attained before the investor was a shareholder of the Fund.

Ordinary target maturity or lifecycle funds seek to tailor their portfolios' risk levels to suit their time horizons. As maturity approaches, these funds generally reallocate their portfolios (e.g., by reducing their portfolios' allocation to stocks and increasing their fixed income exposure, but reducing the duration of their fixed income securities) so as to reduce expected risk and consequently expected return.

The High Watermark Funds generally tailor their portfolios' risk level over time in a manner similar to ordinary target maturity or lifecycle funds. In contrast to ordinary target maturity or lifecycle funds, however, the High Watermark Funds seek to preserve principal and investment gains at the Protected Maturity Date.

A: The Funds' Payment Undertaking can assist investor planning by assuring a certain minimum value of investment on a particular Protected Maturity Date. Generally, the Funds should be purchased only by investors who:

• have a long-term investment horizon compatible with the chosen Fund's Protected Maturity Date,

• seek potential for capital appreciation but place a premium on capital preservation,

• a means of "capturing" a Protected High Watermark Value that exceeds today's NAV. The protected "yield" that a new investor would earn would generally be inferior to Treasury bonds of like duration. If this were not the case, then the Early Closure Condition provision in the Master Agreement (as discussed below) would require that the Fund be closed to new investors. This is true even in periods of rising interest rates, when the disparity between current NAV and the Protected High Watermark Value may be pronounced.

• a short-term investment, despite the Funds' daily liquidity, since interim losses in value are not protected.

• an equity substitute, since the Funds' equity exposure is limited and generally declines over time.

A: The following terms will apply to each Fund upon the occurrence of an Early Closure Condition or an Early Fund Termination.

• If an Early Closure Condition occurs in the judgment of the Adviser, the Funds will close to new investments, though a new Fund with the same Protected Maturity Date may be established to accept new contributions.

An Early Fund Termination occurs when a Fund terminates by accelerating its Protected Maturity Date and distributes liquidation proceeds to its shareholders if ALL of the following circumstances happen:

• If a Fund has had its Equity Risk Budget drop to zero (generally, the Equity Risk Budget will drop to zero if the estimated future value of the Fund's fixed income portfolio (including margin deposits and other cash equivalent holdings) at the Fund's Protected Maturity Date, less an estimated probable maximum loss on the Fund's equity exposure, drops to a level that is equal to the Protected High Watermark Value of the Fund);

• The Fund is in the final three years prior to its Protected Maturity Date; and

In the event of an Early Fund Termination, the Master Agreement with PGF will be accelerated so that the liquidation proceeds equal the Fund's protected High Watermark Value.

A: The Risk/Return Bar Chart and Table illustrates the risks of investing in the Fund by showing changes in the Funds' performance from calendar year to calendar year, and comparing the Funds' average annual returns, before and after taxes, to those of an appropriate market index. Sales charges are not reflected in the bar chart. If these amounts were reflected, returns would be less than those shown. Of course, past performance, before and after taxes, is not necessarily an indication of how the Fund will perform in the future.

During the 2-year period shown in the bar chart, the highest return for a quarter was 4.33% (quarter ended 9/30/06) and the lowest return for a quarter was -2.22% (quarter ended 03/31/05).

(2) When the return after taxes on distributions and sales of Fund shares is higher, it is because of realized losses. If realized losses occur upon the sale of Fund shares, the capital loss is recorded as a tax benefit, which increases the return.

(4) The Dow Jones Target Maturity 2010 Index is part of a series of balanced indexes with risk profiles that become more conservative over time. The index allocates among stocks, bonds and cash on a monthly basis to hit predefined risk levels. The U.S. Target index series consists of six Dow Jones equity indexes, three/AMBAC bond indexes and the one-to-three months T-bill index.

The after-tax returns shown were calculated using the historical highest individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. An investor's actual after-tax returns depend on the investor's tax situation and may differ from those shown in the above table. The after-tax returns shown are not relevant to investors who hold their shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.

After tax returns are shown for Class A only. After tax returns for other classes will vary.

During the 2-year period shown in the bar chart, the highest return for a quarter was 6.93% (quarter ended 9/30/06) and the lowest return for a quarter was -2.80% (quarter ended 3/31/05).

(4) The Dow Jones Target Maturity 2015 Index is part of a series of balanced indexes with risk profiles that become more conservative over time. The index allocates among stocks, bonds and cash on a monthly basis to hit predefined risk levels. The U.S. Target index series consists of six Dow Jones equity indexes, three/AMBAC bond indexes and the one-to-three months T-bill index.

After tax returns are shown for Class A only. After tax returns for other classes will vary.

During the 2-year period shown in the bar chart, the highest return for a quarter was 8.08% (quarter ended 9/30/06) and the lowest return for a quarter was -3.23% (quarter ended 6/30/06).

(4) The Dow Jones Target Maturity 2020 Index is part of a series of balanced indexes with risk profiles that become more conservative over time. The index allocates among stocks, bonds and cash on a monthly basis to hit predefined risk levels. The U.S. Target index series consists of six Dow Jones equity indexes, three/AMBAC bond indexes and the one-to-three months T-bill index.

After tax returns are shown for Class A only. After tax returns for other classes will vary.

A: The following tables describe the fees and expenses that you may pay if you buy and hold shares of the Funds.

(1) The front-end sales charge on Class A shares decreases with the size of the purchase to 0% for purchases of $1 million or more.

(2) Purchases of Class A shares of $1 million or more are subject to a contingent deferred sales charge ("CDSC") on redemptions made within two years of purchase. The CDSC on Class C shares applies only if shares are redeemed within twelve months of their purchase. Please see pages 11-13 for more information on the CDSCs.

(4) If the Fund becomes completely and irreversibly invested in fixed income securities, the Management Fees will be .40% for the remainder of the Investment Period.

(5) Because these fees are paid out of a Fund's assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying the Class A sales charge.

(6) The fee of 0.35% paid to PGF under the Master Agreement is included in Other Expenses. Since this fee rate is specific to the terms of the Master Agreement, if the Master Agreement was terminated and AIG Series Trust entered into a new master agreement, the fee payable under the new agreement may be higher than 0.35%. Any increase in the fee payable would be borne by the Fund.

(7) Pursuant to an Expense Limitation Agreement, AIG SunAmerica Asset Management Corp. ("AIG SunAmerica" or the "Adviser") is contractually obligated to waive its fees and reimburse expenses to the extent that the Total Annual Fund Operating Expenses exceed the following amounts in the table below:

These expense waivers and fee reimbursements will continue indefinitely, subject to termination by the Board of Trustees (the "Board"), including a majority of the trustees who are not deemed to be "interested persons" of the Trust, as defined under section 2 (a)(19) of the Investment Company Act of 1940 (the "1940 Act") (Disinterested Trustees).

This Example is intended to help you compare the cost of investing in the Funds with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in a Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Funds' operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions and the net expenses shown in the fee table your costs would be:

Each Fund offers two classes of shares through this Prospectus: Class A and Class C. Each class of shares has its own cost structure or requirements, so you can choose the one best suited to your investment needs. Your broker or financial adviser can help you determine which class is right for you.

* Because Class A shares ordinarily will have a higher NAV than Class C shares because of their lower expense ratio, it may be possible that, following the automatic conversion from Class C shares to Class A shares, the total Protected High Watermark Value of a shareholder's interest could decrease following the conversion.

An investor who exchanges out of one High Watermark Fund and into another High Watermark Fund does not "Import" the Protected High Watermark Value from the first Fund; rather, the redemption extinguishes any entitlement to the first Protected High Watermark Value and the purchase of the second Fund starts a new entitlement to the second Fund's Protected High Watermark Value if the shares are held to the Protected Maturity Date. An investor may exchange shares of a Fund for shares of the same class of any other fund distributed by AIG SunAmerica Capital Services, Inc. ("AIG SACS" or the "Distributor"), except for SunAmerica Senior Floating Rate Fund, Inc. (where the exchange privilege applies to Class A shares only. Certain conditions apply to the conversion feature in connection with exchanges, as described on page 18.

* Purchases of $1,000,000 or more are subject to a concession to dealers of up to 1.00%.

Investments of $1 million or more: Class A shares are available with no front-end sales charge. However, a 1% CDSC is imposed on shares you sell within one year of purchase and a 0.50% CDSC is charged on shares you sell after the first year and within the second year after purchase.

Determination of CDSC: Each CDSC is based on the original purchase cost or the current market value of the shares being sold, whichever is less. There is no CDSC on shares you purchase through reinvestment of dividends. To keep your CDSC as low as possible, each time you place a request to sell shares we will first sell any shares in your account that are not subject to a CDSC. If there are not enough of these shares available, we will sell shares that have the lowest CDSC.

For purposes of the CDSC, we count all purchases you make during a calendar month as having been made on the first day of that month.

To receive a waiver or reduction in sales charges under the programs described below, the shareholder must notify the Funds' transfer agent (the "Transfer Agent") (or the financial intermediary through which shares are being purchased) at the time of purchase or notify the Transfer Agent at the time of redeeming shares for those reductions or waivers that apply to contingent deferred sales charges. Such notification must be provided in writing by the shareholder (or other financial intermediary through which shares are being purchased). In addition, a shareholder must provide certain information and records to the Fund as described below under "Information and records to be provided to Fund."

Reduction for Certain Investors of Class A shares. Various individuals and institutions may be eligible to purchase Class A shares at reduced sales charge rates under the programs described below. The Funds reserve the right to modify or to cease offering these programs at any time.

• Rights of Accumulation. A purchaser of Fund shares may qualify for a reduced sales charge by combining a current purchase (or combined purchases as described below) with shares previously purchased and still owned; provided the cumulative value of such shares (valued at net asset value), amounts to $50,000 or more. In determining the shares of previously purchased, the calculation will include, in addition to other Class A shares of the particular Fund that were previously purchased, shares of the other classes of the same Fund, as well as shares of any class of any other Fund or of any of the other funds advised by AIG SunAmerica.

• Letter of Intent. A reduction of sales charges is also available to an investor who, pursuant to a written Letter of Intent, establishes a total investment goal in Class A shares of one or more eligible funds to be achieved through any number of investments over a thirteen-month period, of $50,000 or more. Each investment in such Funds made during the period will be subject to a reduced sales charge applicable to the goal amount. The initial purchase must be at least 5% of the stated investment goal and shares totaling 5% of the dollar amount of the Letter of Intent will be held in escrow by the Transfer Agent, in the name of the investor. Shares of any class of shares of any Fund, or of other funds advised by AIG SunAmerica, that impose a sales charge at the time of purchase, which the investor intends to purchase or has previously purchased during a 30-day period prior to the date of execution of the Letter of Intent and still owns, may also be included in determining the applicable reduction; provided, the dealer or shareholder notifies the Transfer Agent of such prior purchase(s).

• Combined Purchases. In order to take advantage of reductions in sales charges that may be available to you when you purchase fund shares, you must inform the Transfer Agent if you have entered into a letter of intent or right of accumulation and if there are other accounts in which there are holdings eligible to be aggregated with your purchase. To receive a reduced front-end sales charge, you or your financial intermediary must inform the Fund at the time of your purchase of Fund shares, that you believe you qualify for a discount. If you purchased shares through a financial intermediary, you may need to provide certain records, such as account statements for accounts held by family members or accounts you hold at another broker-dealer of financial intermediary, in order to verify your eligibility for reduced sales charges.

Waivers for Certain Investors for Class A shares. The following individuals and institutions may purchase Class A shares without a sales charge. The Funds reserve the right to modify or to cease offering these programs at any time.

• Financial planners, institutions, broker-dealer representatives or registered investment advisers utilizing fund shares in fee based investment products under an agreement with AIG SACS. The following conditions established by AIG SACS apply: (i) the financial planner, financial institution or broker-dealer has signed a supplemental selling agreement and charges its client(s) an advisory fee based on the assets under management on an annual basis, and (ii) such financial planner, financial institution or broker-dealer does not advertise that shares of the funds may be purchased by clients at net asset value.

• Participants in certain employer sponsored benefit plans. The sales charge is waived with respect to shares purchased by employer sponsored retirement plans whether or not subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), that offer the Fund(s) as an investment vehicle, where the trustee, fiduciary or administrator has entered into an agreement with the Distributor, a Fund or its agents with respect to such purchases, and where the trustee, fiduciary or administrator performs participant recordkeeping or other administrative services.

• Selling brokers and their employees and sales representatives and their families.

Waivers for Certain Investors for Class C shares. Under the following circumstances, the contingent deferred sales charge may be waived on redemption of Class C shares. The Funds reserve the right to modify or to cease offering these programs at any time.

• Within one year of the shareholder's death or becoming legally disabled (individually and spousal joint accounts only).

• Taxable distributions to participants made by qualified retirement plans or retirement accounts (not including rollovers) for which AIG SunAmerica Fund Services, Inc. ("AIG SAFS") serves as fiduciary and in which the plan participant or account holder has attained the age of 59¹/₂ at the time the redemption is made.

• To make payments through the Systematic Withdrawal Plan (subject to certain conditions).

• Eligible participant distributions from employer sponsored retirement plans that meet the eligibility criteria set forth above under "Waivers For Certain Investors for Class A Shares," such as distributions due to death, disability, financial hardship, loans, retirement and termination of employment, or any return of excess contributions.

• Involuntary redemptions (e.g., closing of small accounts described under Shareholder Account Information).

Other Sales Charge Arrangements and Waivers. The Funds and the Distributor offer other opportunities to purchase shares without sales charges under the programs described below. Each fund reserves the right to amend or discontinue these programs at any time without prior notice.

• Dividend Reinvestment. Dividends and/or capital gains distributions received by a shareholder from the Fund will automatically be reinvested in additional shares of the same Fund and share class without sales charge, at the net asset value per share in effect on the payable date. Alternatively, dividends and distributions may be reinvested in any fund distributed by AIG SACS. Or, you may receive amounts in excess of $10.00 in cash if you elect in writing not less than five business days prior to the payment date. You will need to complete the relevant part of the Account application to elect one of these other options.

• Exchange of shares. Shares of the Fund may be exchanged for the same class of shares of one or more other funds distributed by AIG SACS except SunAmerica Senior Floating Rate Fund, Inc. (where the exchange privilege applies to Class A shares only) at net asset value per share at the time of exchange. Please refer to the "Additional Investor Services" in this Prospectus for more details about this program.

• Reinstatement privilege. Within one year of a redemption of certain Class A and Class C shares, the proceeds of the sale may be invested in the same share class of the same fund without a sales charge. A shareholder may use the reinstatement privilege only one time after selling such shares. If you paid a contingent deferred sales charge when you sold your shares, we will credit your account with the dollar amount of the contingent deferred sales charge at the time of sale. This may impact the amount of gain or loss recognized on the previous sale, for tax purposes. All accounts involved must be registered in the same name(s).

Information and records to be provided to Fund. You may be asked to provide supporting account statements or other information to allow us to verify your eligibility to receive a reduction or waiver of sales charge.

For more information regarding the sales charge reductions and waivers described above, please visit our website at www.sunamericafunds.com, and select the "Additional Investor Services" hyperlink. The Funds' Statement of Additional Information also contains additional information about sales charges and certain reductions and waivers.

Each class of shares of each Fund has its own 12b-1 plan that provides for distribution and account maintenance fees (payable to the Distributor) based on a percentage of average daily net assets, as follows:

Because 12b-1 fees are paid out of a Fund's assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.

2. Determine how much you want to invest. The minimum initial investments for each class of the Funds are as follows:

The minimum initial and subsequent investments may be waived for certain-fee based programs and/or group plans held in omnibus accounts.

3. Complete the appropriate parts of the Account Application, carefully following the instructions. If you have questions, please contact your broker or financial adviser or call Shareholder/Dealer Services at 1-800-858-8850.

4. Complete the appropriate parts of the Supplemental Account Application. By applying for additional investor services now, you can avoid the delay and inconvenience of having to submit an additional application if you want to add services later.

5. Make your initial investment using the chart on the next page. You can initiate any purchase, exchange or sale of shares through your broker or financial adviser.

As part of your application, you are required to provide information regarding your personal identification that is required under anti-money laundering laws, including the USA PATRIOT Act of 2001, as amended (the "PATRIOT Act"). If we are unable to obtain the required information, your application will be considered to be not in good order, and it therefore cannot be processed. Your application and any check or other deposit that accompanied your application will be returned to you. Applications must be received in good order under the PATRIOT Act requirements and as otherwise required in this Prospectus in order to receive that day's net asset value. In addition, applications received in good order are nevertheless subject to customer identification verification procedures under the PATRIOT Act. We may ask to see your driver's license or other identifying documents. We may share identifying information with third parties for the purpose of verification. If your identifying information cannot be verified within a reasonable time receipt of your application, the account will not be processed or, if processed, the Funds reserve the right to redeem the shares purchased and close the account. If a Fund closes an account in this manner, the shares will be redeemed at the net asset value next calculated after the Fund decides to close the account. In these circumstances, the amount redeemed may be less than your original investment and may have tax implications. Consult with your tax adviser for details. Non-resident aliens will not be permitted to establish an account through the check and application process at the Transfer Agent.

Investment Through Financial Institutions. Dealers, brokers, financial advisors or other financial institutions (collectively, "financial institutions" or "financial intermediaries") may impose charges, limitations, minimums and restrictions in addition to or different from those applicable to shareholders who invest in the Funds directly. Accordingly, the net yield and/or return to investors who invest through financial institutions may be less than an investor would receive by investing in the Funds directly. Financial institutions may also set deadlines for receipt of orders that are earlier than the order deadline of the Funds due to processing or other reasons. An investor purchasing through a financial institution should read this Prospectus in conjunction with the materials provided by the financial institution describing the procedures under which Fund shares may be purchased and redeemed through the financial institution. For any questions concerning the purchase or redemption of Fund shares through a financial institution please call your financial institution or the Funds (toll free) at (800) 858-8850.

You may generally open an account and buy Class A and C shares through any financial institution that is authorized to sell the Funds' shares. Your financial institution will place your order with the Fund on your behalf. You may purchase additional shares in a variety of ways, including through your financial institution or by sending your check or wire directly to the Fund or its agents as described below under "Adding to an Account." The Funds will generally not accept new accounts that are not opened through a financial institution except for accounts opened by current and former Trustees and other individuals who are affiliated with, or employed by an affiliate of, any Fund or any fund distributed by the Distributor, selling brokers and their employees and sales representatives, family members of these individuals and certain other individuals at the discretion of the Fund or its agents.

To open or add to an account using dollar cost averaging, see "Additional Investor Services."

You can sell shares through your financial institution or through the Fund as described below under "Selling Shares Through the Fund." Shares held for you in your financial institution's name must be sold through the financial institution.

To sell shares through a systematic withdrawal plan, see "Additional Investor Services."

Selling Shares in Writing. In certain circumstances, you will need to make your request to sell shares in writing. Corporations, executors, administrators, trustees or guardians may need to include additional items with a request to sell shares. You may also need to include a medallion guarantee, which protects you against fraudulent orders. You will need a medallion guarantee if:

• you are requesting payment other than by a check mailed to the address of record and payable to the registered owner(s).

To sell shares through a systematic withdrawal plan, see "Additional Investor Services."

Valuation of shares. Shares of the Funds are valued each Fund business day as of the close of regular trading on the New York Stock Exchange ("NYSE") (generally, 4:00 p.m. Eastern time). Each Fund calculates the net asset value of its shares by dividing the total value of its net assets by the number of shares outstanding. The days and times of such computation may, in the future, be changed by the Directors in the event that the portfolio securities are traded in significant amounts in markets other than the NYSE, or on days or at times other than those during which the NYSE is open for trading. Securities for which market quotations are not readily available or if a development/significant event occurs that may significantly impact the value of the security, then these securities are valued, as determined pursuant to procedures adopted in good faith by the Board of Directors. The fair value of all other assets is added to the value of securities to arrive at the Fund's total assets.

Buy and sell prices. When you buy Class A and Class C shares, you pay the NAV plus any applicable sales charges, as described earlier. When you sell Class A or Class C shares, you receive the NAV minus any applicable CDSCs (and less any applicable redemption fee).

Execution of requests. Each Fund is open on those days when the NYSE is open for regular trading ("Fund business day"). We execute buy and sell requests at the next NAV to be calculated after the Fund or its agents receives your request in good order. If the Fund or the Transfer Agent receives your order before the Fund's close of business (generally 4:00 p.m., Eastern time), you will receive that day's closing price. If the Fund or the Transfer Agent receives your order after that time, you will receive the next business day's closing price. If you place your order through a broker or financial adviser, you should make sure the order is transmitted to the Fund before its close of business. The Funds reserve the right to reject any order to buy shares.

Certain qualified financial institutions may transmit an investor's purchase or redemption order to the Funds' Transfer Agent after the close of regular trading on the NYSE on a Fund business day, on the day the order is received from the investor, as long as the investor has placed his order with the financial institution by the close of regular trading on the NYSE on that day. The investor will then receive the NAV of the Fund's shares determined by the close of regular trading on the NYSE on the day he placed his order with the qualified financial institution. Orders received after such time will not result in execution until the following Fund business day. Financial institutions are responsible for instituting procedures to insure that purchase and redemption orders by their respective clients are processed expeditiously.

During periods of extreme volatility or market crisis, a Fund may temporarily suspend the processing of sell requests, or may postpone payment of proceeds for up to three business days or longer, as allowed by federal securities laws. The Funds and their agents reserve the right to "freeze" or "block" (that is, disallow any further purchases or redemptions from any account) or suspend account services in certain instances as permitted or required by applicable laws and regulations, including applicable anti-money laundering regulations. Examples of such instances include, but are not limited to, (i) where an accountholder appears on the list of "blocked" entities and individuals maintained pursuant to OFAC (Office of Foreign Assets Control) regulations, (ii) where the Fund or its agents

detect suspicious activity or suspect fraudulent or illegal activity, or (iii) when certain notifications have been received by a Fund or its agents that there is a dispute between the registered or beneficial account owners.

If a Fund determines that it would be detrimental to the best interests of the remaining shareholders of the Fund to make payment of redemption proceeds wholly or partly in cash, the Fund may pay the redemption price by a distribution in kind of securities from the Fund in lieu of cash.

At various times, a Fund may be requested to redeem shares for which it has not yet received good payment. The Fund may delay or cause to be delayed the mailing of a redemption check until such time as good payment (e.g., cash or certified check drawn on a United States bank) has been collected for the purchase of such shares, which will not exceed 15 days from the date of receipt of payment.

Telephone transactions. For your protection, telephone requests are recorded in order to verify their accuracy. In addition, Shareholder/Dealer Services will take measures to verify the identity of the caller, such as asking for name, account number, social security or other taxpayer ID number and other relevant information. If appropriate measures are not taken, the applicable Fund is responsible for any losses that may occur to any account due to an unauthorized telephone call. Also for your protection, telephone transactions are not permitted on accounts whose names or addresses have changed within the past 30 days. At times of peak activity, it may be difficult to place requests by phone. During these times, consider sending your request in writing or, you may visit our website at www.sunamericafunds.com, or call FastFacts at 1-800-654-4760.

Exchanges. You may exchange shares of a Fund for shares of the same class of any other fund distributed by AIG SACS except for SunAmerica Senior Floating Rate Fund, Inc. (where the exchange privilege applies to Class A shares only). Before making an exchange, you should review a copy of the prospectus of the fund into which you would like to exchange. All exchanges are subject to applicable minimum investment requirements. A Systematic Exchange Program is described under "Additional Investor Services."

If you exchange shares that were purchased subject to a CDSC, the CDSC schedule will continue to apply following the exchange. In determining the CDSC applicable to shares being sold after an exchange, we will take into account the length of time you held those shares prior to the exchange. Your CDSC schedule will not change if you exchange Class B shares of a Fund that you purchased prior to January 2, 2002 for another fund's Class B shares (which currently have a longer CDSC schedule). Also, if you exchange shares acquired in connection with the reorganization of a North American Fund into your Fund for another fund's shares, the CDSC schedule applicable at the time you originally purchased the shares of the North American Fund will continue to apply.

A Fund may change or cancel its exchange privilege at any time, upon 60 days' written notice to its shareholders. The Funds at all times also reserve the right to restrict or reject any exchange transactions, for no reason or any reason, without notice. For example, the Funds may refuse any sale of Fund shares through an exchange by any investor or group if, in the Fund's judgment, the trade (1) may interfere with the efficient management of the Fund's portfolio, (2) may appear to be connected with a strategy of market timing (as described below in the "Market Timing Trading Policies and Procedures' section), or (3) may have the potential of otherwise adversely affecting the Fund. In making a decision to reject an exchange request, the fund may consider, among other factors, the investor's trading history in the fund and in other AIG SunAmerica funds.

Rejected exchanges. If a Fund rejects an exchange request involving the sale of Fund shares, the rejected exchange request will also mean rejection of the request to purchase shares of another fund with the proceeds of the sale. Of course, you may generally redeem shares of the Fund at any time, subject to any applicable redemption fees or CDSCs.

An investor who exchanges out of one Fund and into another Fund does not "Import" the Protected High Watermark Value from the first Fund; rather, the redemption extinguishes any entitlement to the first Fund's protected High Watermark Value and the purchase of the second Fund starts a new entitlement to the second Fund's protected High Watermark Value if the shares are held to the second Fund's Protected Maturity Date.

Effect of exchanges on Class C conversion feature. Class C shares of the Funds (other than the 2010 High Watermark Fund) automatically convert to Class A shares of the same Fund approximately eight years after purchase. If you exchange a High Watermark Fund's Class C shares directly for Class C shares of another High Watermark Fund, the Class C conversion schedule applicable at the time you originally purchased your shares will continue to apply and you will be credited with the time you held the first Fund's shares. However, if you exchange High Watermark Fund Class C shares for Class C shares of one or more different funds distributed by the Distributor, you will be subject to that new fund's Class C conversion feature, if any, and will not be credited with the time you held the High Watermark Fund shares.

Portfolio Holdings Disclosure Policies. A description of the Funds' policies and procedures with respect to the disclosure of the Funds' portfolio securities is available in the Statement of Additional Information.

Market timing policies. The Funds discourage excessive or short-term trading, often referred to as "market timing", and seek to restrict or reject such trading or take other action, as described below, if in the judgment of a Fund or any of its service providers, such trading may interfere with the efficient management of the Fund's portfolio, may materially increase the Fund's transaction costs, administrative costs or taxes, or may otherwise be detrimental to the interests of the Fund and its shareholders. The Funds' Board of Trustees has adopted policies and procedures with respect to such trading, which are described in this section.

All Fund shareholders are subject to these policies and procedures, regardless of how their shares were purchased or are otherwise registered with the Funds' transfer agent. While the Funds' expectation is that the market timing policies will be enforced by financial intermediaries pursuant to the funds' prospectuses, the Funds may be limited in their ability to monitor the trading activity or enforce the Funds' market timing trading policies and procedures with respect to certain customers of financial intermediaries. For example, should it occur, a Fund may not be able to detect market timing that may be facilitated by financial intermediaries or made difficult to identify in omnibus accounts used by those intermediaries for aggregated purchases, exchanges and redemptions on behalf of all their customers.

Risks from market timers. Depending on various factors, including the size of a Fund, the amount of assets the portfolio manager typically maintains in cash or cash equivalents an the dollar amount and number and frequency of trades, excessive or short-term trading may interfere with the efficient management of the Fund's portfolio, increase the Fund's transactions costs, administrative costs and taxes and/or impact Fund performance.

Market timing procedures. The Funds' procedures include committing staff of the Funds' shareholder services agent to monitor trading activity in the Funds on a regular basis by selectively reviewing transaction reports in an effort to identify trading activity that may be excessive or short-term and detrimental to a Fund. Factors considered in the monitoring process include, but may not be limited to, the frequency of transactions by the financial intermediary, the Fund's investment objective, the size of the fund and the dollar amount of the transaction. In the event that such trading activity is identified and based on the information the Fund and its service providers in their sole discretion conclude that the trading may be detrimental to the Fund, the Funds reserve the right to temporarily or permanently bar your future purchases into AIG SunAmerica funds or, alternatively, may limit the amount, number of frequency of any future purchases and/or the method by which you may request future purchases and redemptions (including purchases and/or redemptions by an exchange between funds).

Though the implementation of the Funds' procedures involve judgments that are inherently subjective and involve some selectivity in their application, the Funds and the Funds' service providers seek to make judgments that are consistent with the interests of the Funds' shareholders. There is no assurance that the Fund or its service providers will gain access to any or all information necessary to detect market timing. While the fund will seek to take actions (directly and with the assistance of financial intermediaries) that will detect market timing, the fund cannot represent that such trading activity can be completely eliminated.

Revocation of market timing trades. Transactions placed in violation of a Fund's market timing trading policies are not necessarily deemed accepted by the Fund and may be rejected or revoked by the Fund on the next Fund business day following receipt by the Fund.

To select one or more of these additional services, complete the relevant part(s) of the Supplemental Account Application. To add a service to an existing account, contact your broker or financial adviser, or call Shareholder/Dealer Services at 1-800-858-8850.

Dollar Cost Averaging lets you make regular investments from your bank account to any fund of your choice distributed by AIG SACS. You determine the frequency and amount of your investments, and you can terminate your participation at any time. Dollar cost averaging does not assure a profit or protect against loss in a declining market. Since this strategy involves continuous investments, regardless of fluctuating prices, investors should consider their financial ability to invest during periods of low price levels.

Systematic Exchange Program may be used to exchange shares periodically of one or more other funds distributed by the Distributor, for shares of the same class of a High Watermark Fund. Shares of the funds cannot be exchanged for shares of the SunAmerica Senior Floating Rate Fund, Inc. (where the exchange privilege applies to Class A shares only). To use:

• Specify the fund(s) from which you would like money withdrawn and into which you would like money invested.

• Determine the schedule: monthly, quarterly, semi-annually, annually or in certain selected months.

• Accounts must be registered identically; otherwise a signature guarantee will be required.

Retirement Plans. AIG SunAmerica Mutual Funds offer a range of qualified retirement plans, including IRAs, Simple IRAs, Roth IRAs, SEPs, SARSEPs, 401(k) plans, 403(b) plans, Individual (K) plans and other pension, educational and profit-sharing plans. Using these plans, you can invest in any fund distributed by AIG SACS with a low minimum investment of $250 or, for some group plans, no minimum investment at all. To find out more, call Retirement Plans at 1-800-858-8850, extension 6074.

Systematic Withdrawal Plan may be used for routine bill payment or periodic withdrawals from your account up to a maximum amount of 12% per year based on the value of the account at the time the Plan is established. To use:

• Make sure you are not planning to invest more money in this account (buying shares during a period when you are also selling shares of the same fund is not advantageous to you, because of sales charges and taxes).

• Specify the payee(s) and amount(s). The payee may be yourself or any other party (which may require a signature guarantee), and there is no limit to the number of payees you may have, as long as they are all on the same payment schedule. Each withdrawal must be at least $50.

• Determine the schedule: monthly, quarterly, semi-annually, annually or in certain selected months.

Investors who utilize the Systematic Withdrawal Plan will not be able to receive the benefit of the Protected High Watermark Value for amounts that are withdrawn prior to the protected maturity date.

Account Statements. In general, account statements are mailed to dealers and shareholders on a quarterly basis.

Transaction Confirmations. Generally, you will receive an account confirmation:

• After every transaction that affects your account balance (except a dividend reinvestment, automatic redemption or automatic purchase from your bank account).

• After any changes of name or address of the registered owner(s), or after certain account option changes.

IRS Tax Forms. Every year you should also receive, if applicable, an IRS Form 1099 tax information statement, mailed by January 31.

These mailings apply to accounts opened through the Fund. Accounts opened through a broker/dealer firm will receive statements from that financial institution.

Prospectuses, Annual, and Semi-Annual Reports. As an alternative to regular mail, you may elect to receive these reports via electronic delivery. To enroll for this option, visit our web site at www.sunamericafunds.com, and select the "Go Paperless" hyperlink. (Note: this option is only available to accounts opened through the Fund.) To establish electronic delivery for accounts held in a brokerage account, contact your broker/dealer.

Dividends. The Funds generally distribute most or all of their net earnings in the form of dividends. Income dividends and capital gains distributions, if any, are paid at least annually by the Funds.

Dividend Reinvestments. Your dividends and distributions, if any, will be automatically reinvested in additional shares of the same Fund and share class on which they were paid. Alternatively, dividends and distributions may be reinvested in any fund distributed by AIG SACS or, you may receive amounts in excess of $10.00 in cash if you elect in writing not less than five business days prior to the payment date. You will need to complete the relevant part of the Account Application to elect one of these other options. For existing accounts, contact your broker or financial adviser or call Shareholder Services at 1-800-858-8850, to change dividend and distribution payment options.

Unless otherwise specified, all dividends and distributions will be automatically reinvested in additional full and fractional shares of a Fund. If you do not reinvest all of your dividends and capital gains distribution in the Fund, your aggregate Protected High Watermark Value will be reduced.

Taxes. If your shares are not held in a tax-deferred retirement account, you should be aware of the following tax implications of investing in a Fund. Distributions are subject to federal income tax and may be subject to state or local taxes. Dividends paid from short-term capital gains and net investment income are taxable as ordinary income. Long-term capital gains are taxable as long-term capital gains when distributed to shareholders. It does not matter how long you have held your shares. Whether you reinvest your distributions in additional shares or take them in cash, the tax treatment is the same.

When you sell or exchange Fund shares you will generally recognize a capital gain or capital loss in an amount equal to the difference between the net amount of sale proceeds (or, in the case of an exchange, the fair market value of the shares) that you receive and your tax basis for the shares that you sell or exchange. In January of each year the Fund will mail to you information about your dividends, distributions and any shares you sold in the previous calendar year.

The dynamic exposure allocation process may increase turnover of a Fund's assets, which may result in the realization of additional gains by the Fund. It may also result in a larger portion of any net gains being treated as short-term capital gains, which would be taxed as ordinary income when distributed to shareholders. As noted above, distributions of any gains and income will be taxable to shareholders even if those distributions are reinvested in Fund shares. Any gains from the Fund's investments in futures contracts will generally be treated as long-term capital gain to the extent of 60% of the gain and the remainder will generally be treated as short-term capital gain. Shareholders will also receive taxable distributions of net income from investments in fixed income securities even in situations where a Fund has capital losses from investments in the U.S. equity markets.

The determination of the tax character of any payment under the Master Agreement to the Fund as capital gain or ordinary income is not free from doubt under federal tax law. Each Fund intends to take the position that its right to receive the payment under the Master Agreement is itself a capital asset, and that the payment in termination of this right gives rise to capital gain. Were the Internal Revenue Service to challenge this position, it is believed that at least the portion of the payment attributable to capital losses previously realized by the Fund, and perhaps attributable to the Fund's unrealized capital losses, should be treated as capital gain. Any such gain would be offset by otherwise allowable capital losses, if any. To the extent that a Fund distributes the payment to its shareholders, a portion of the payment may constitute ordinary income to the shareholders, provided, however, because each Fund will terminate at the Protected Maturity Date, it is anticipated that the shareholders receiving the payment in exchange for their shares would be treated as receiving a return of capital to the extent of their basis in the shares of the Fund, and to the extent the payment exceeds basis, as having capital gain.

The Funds will invest in zero-coupon government securities and other debt securities that are issued at a discount or provide for deferred interest. Even though the Funds receive no actual interest payments on these securities, the Funds will be deemed to receive income equal, generally, to a portion of the excess of the face value of the securities over their issue price ("original issue discount") each year that the securities are held. Since the original issue discount income earned by a Fund in a taxable year may not be represented by cash income, the Fund may have to dispose of securities, which it might otherwise have continued to hold, to generate cash in order to satisfy its distribution requirements if shareholders request cash distributions.

Remember, there may be Taxes on Transactions. Because the Funds' share prices fluctuate, you may have a capital gain or loss when you sell or exchange your shares. A capital gain or loss is the difference between the price you paid for the shares and the price you received when you sold them. Any capital gain is subject to capital gains tax.

Returns of Capital can occur. In certain cases, distributions made by a Fund may be considered a non-taxable return of capital to shareholders. If that occurs, it will be identified in notices to shareholders.

The IRS Form 1099 that is mailed to you every January details your dividends and their federal income tax category, although you should verify your tax liability with your tax professional. Individual participants in the plans should consult their plan documents and their own tax advisers for information on the tax consequences associated with participating in the plans.

"Buying into a Dividend." You should note that if you purchase shares just before a distribution, you will be taxed for that distribution like other shareholders, even though that distribution represents simply a return of part of your investment. You may wish to defer your purchase until after the record date for the distribution, so as to avoid this tax impact.

a Fund. In addition, distributions with respect to a Fund's taxable years before January 1, 2008, that qualify as "qualified net interest income" or as "qualified short-term capital gains" may not be subject to U.S. withholding tax.

By law, each Fund must withhold 28% of your distributions and redemption proceeds if you have not provided a taxpayer identification number or social security number.

This section summarizes some of the consequences under current U.S. federal income tax law of an investment in the Funds. It is not a substitute for professional tax advice. Consult your tax adviser about the potential tax consequences of an investment in the Funds under all applicable laws.

Small Accounts. If you draw down an account so that its total value is less than $500 ($250 for retirement plan accounts), you may be asked to purchase more shares within 60 days. If you do not take action, the Fund may close out your account and mail you the proceeds. Alternatively, you may be charged a $24.00 annual charge to maintain your account. Your account will not be closed if its drop in value is due to Fund performance or the effects of sales charges, or administrative fees (for retirement plans only).

Each Fund's Payment Undertaking provides that if you hold your Fund shares until the Protected Maturity Date, you will be entitled to redeem your shares for no less than the highest value previously attained by the Fund (minus a proportionate adjustment for all dividends and distributions paid subsequent to the Fund reaching this value, and any extraordinary expenses, and increased by appreciation in share value to the extent such appreciation exceeds this adjusted share value subsequent to the last paid dividend or distribution). This is known as the Protected High Watermark Value. Even if the Fund is itself unable to meet the Payment Undertaking on the Protected Maturity Date, the Fund can rely on the Master Agreement which provides that PGF will pay the amount of any shortfall between the Fund's Protected High Watermark Value and the actual NAV per share on the Fund's Protected Maturity Date, provided certain conditions are met.

More specifically, Protected High Watermark means, with respect to each share class, the higher of the initial NAV of a share and the NAV for a share on the date a share of that class is first issued. Thereafter, on each date on which NAV is calculated (a "Share Valuation Date"), the Protected High Watermark Value for a share of that class will be reset to equal the greater of (I) the NAV for a share on that Share Valuation Date or (II) the Protected High Watermark Value for a share for the immediately prior Share Valuation Date less the sum of (A) the product obtained by multiplying (i) the share distribution amount (recorded on that date if the Share Valuation Date is an ex-dividend date) for shares of that class, if any, by (ii) a ratio equal to the Protected High Watermark Value for a share on the immediately preceding Share Valuation Date divided by the sum of (a) NAV on that Share Valuation Date and (b) the share distribution amount, if any, declared on that Share Valuation Date, plus (B) extraordinary expenses per share, if any, accrued or paid on that Share Valuation Date (to the extent there was no prior accrual for this expense).

Below are several illustrations indicating how the Protected High Watermark Value would be calculated under different circumstances. These examples relate to Class A shares; examples for Class C shares can be found on AIG SunAmerica's website (www.sunamericafunds.com). These examples start with the following assumptions:

Total number of shares purchased: 1885 (20,000/$10.61 per share = 1885 shares)

Other Assumptions: You hold your shares until the Protected Maturity Date and if the Fund's investment strategy is otherwise unsuccessful, there is no default in connection with the Master Agreement by either the Fund or PGF (and Prudential Financial).

Example 1: The Fund's highest NAV attained is $11.00 per share and no dividends or distributions are paid after that value is reached.

You will receive $20,735.00, which is equal to the Protected High Watermark Value times the number of shares that you own ($11.00 x 1885 = $20,735.00). This amount would be paid whether the Fund's highest NAV (Protected High Watermark Value) is reached before or after you purchase your shares.

Example 2: Make the same assumptions as in example 1, except that the Fund's NAV reaches its highest point of $10 per share on the date of your purchase, then declines to $9.00 per share and no dividends or distributions are paid by the Fund after this date.

The amount payable to you upon redemption at the Protected Maturity Date would be $18,850 (1,885 x $10.00), the value of the shares you purchased, even though the Fund's NAV has gone down subsequently.

The following examples illustrate that if you reinvest your dividends and distributions in additional shares of the Fund, the Protected High Watermark Value per share will decline as dividends and distributions are paid out, but this decline will be offset by the increase in the number of shares you own as a result of your reinvestment. If you do not reinvest your dividends and distributions in additional shares of the Fund, your aggregate High Watermark Value will be reduced. If you redeem your shares prior to the Protected Maturity Date, you will not be entitled to receive the Protected High Watermark Value on those shares. If you redeem shares, you will then hold fewer shares at the then-current Protected High Watermark Value, thereby reducing your aggregate Protected High Watermark Value. A redemption made from the Fund prior to the Protected Maturity Date will be made at the Fund's then-current NAV, less any applicable CDSC, which may be lower than the Protected High Watermark Value.

Example 3: Same assumptions as above, except that the Fund's highest NAV reaches $12.50 per share. It subsequently declines to $12.00 per share and on the Share Valuation Date, a $1.00 dividend per share is declared, which you decide to reinvest. Thus, on the Share Valuation Date, the NAV per share is $11.00 (remember the dividend is paid out of Fund assets $12.00 - $1.00 = $11.00).

1. The new Protected High Watermark Value is the greater of $11.00 per share or the following:

3. Less the sum of (A) the product obtained by multiplying (i) the share distribution amount ($1.00) by (ii) a ratio equal to the Protected High Watermark Value per share immediately preceding the Share Valuation Date ($12.50) divided by a sum of (a) NAV on the Share Valuation Date ($11.00) and (b) the share distribution amount on the Share Valuation Date ($1.00) plus extraordinary expenses, if any ($0.00): $1.00 x $12.50/($11.00+$1.00) = $1.04167

Because $11.46 is greater than the NAV on the Share Valuation Date ($11.00), $11.46 becomes the new Protected High Watermark Value.

In addition, the reinvestment of the $1.00 dividend allows you to purchase an additional 171.364 shares: 1,885 (shares owned) x 1.00 per share dividend /$11 (NAV) = 171.364 (additional shares purchased) bringing your total shares owned to 1885 + 171.364 = 2,056.364.

Consequently, the new AGGREGATE Payment Undertaking Amount to you is now 2,056.364 x $11.46 = $23,565.93.

Example 4: You elect to receive Fund dividends and distributions in cash. We will use the same assumptions in Example 3 above, except that you elect to receive dividend in cash.

3. Recalculate the new AGGREGATE Payment Undertaking: $11.46 (new Protected High Watermark Value) x 1,885 (because you will receive the dividend in cash rather than additional shares, the number of Fund shares you own remains at 1,885.) = $21,602.10 (This amount is $1,963.88 less than the value of the AGGREGATE Payment Undertaking if you reinvested the dividend which accounts for the cash value that you chose to take currently, $1,885.00.) Thus if you do not reinvest dividends, the value of the AGGREGATE Payment Undertaking will be reduced by the an amount related to the amount that you remove from the Fund. If the Fund's NAV immediately prior to the dividend is less than the Protected High Watermark Value per share and you do not reinvest your dividend, the value of the dividend in cash would be less than the High Watermark value of the shares received through the reinvested dividends by an amount equal to the difference between the NAV and the Protected High Watermark Value per share.

Although you can perform this calculation yourself, the Fund will recalculate the Protected High Watermark Value for each share class on each Fund business day and will publish it on the SunAmerica website—www.sunamericafunds.com—together with the current NAV. It is possible that the Fund's calculations may differ from a shareholder's calculation, for example, because of rounding or the number of decimal places used. In each case, the Fund's calculations will control.

The Funds seek to generate capital appreciation by maintaining exposure to U.S. equity markets, while also being invested in fixed income securities. Exposures to both markets are managed to minimize the risk of loss of principal and investment gains over the Funds' respective maturities and to become generally more conservative (that is, less exposed to equity markets) as the Fund's Protected Maturity Date approaches. Under normal market conditions, the Funds will initially seek significant equity exposures and relatively long duration fixed income exposures and will be managed such that, as the Protected Maturity Date approaches, Fund holdings are increasingly devoted to high-grade, short-term fixed income securities. This reduction of investment risk exposure over

time is broadly typical of target maturity or lifecycle funds and is frequently considered to be appropriate for prudent investors who are investing to provide for retirement, education or other purposes that prescribe an investment time horizon.

The Funds may trade portfolio holdings actively, which could increase the Funds' transaction costs (thus affecting performance) and may increase your taxable distributions.

Notional Exposure is the total value of a derivative's underlying assets. For example, one S&P 500 Index futures contract obligates the buyer to 250 units of the S&P 500 Index. If the index is trading at 1,000, then the futures contract is similar to investing $250,000 (250 x $1,000). Therefore, $250,000 is the notional exposure underlying the futures contract.

The Funds' Adviser, Trajectory Asset Management LLC, uses disciplined quantitative investment formulae that seek to maximize the Funds' prospects for capital appreciation while preserving investment gains and controlling investment risk, particularly the risk of a shortfall between the Protected High Watermark Value and the actual NAV per share of a Fund on the Protected Maturity Date.

The Adviser employs the disciplined quantitative approach through a proprietary, computer assisted methodology to construct and rebalance the Funds' portfolios. This construction and rebalancing process is similar to asset allocation except that it controls not only portfolio assets such as government securities, but also the portfolios' notional exposures to equity markets via futures contracts and from time to time options contracts. The quantitative methodology evaluates a number of factors including, but not limited to:

• The current value of S&P 500 Index futures compared to their previous high-water value

• The level of Fund holdings of money market instruments, including margin deposits

Through this quantitative methodology, the Adviser determines each Fund's initial portfolio holdings of S&P 500 Index futures, government securities and money market instruments, and determines portfolio rebalancing requirements thereafter.

Under certain market conditions, the Adviser may collar a portion of the S&P 500 Index exposure by writing calls and buying puts. A collar is a trade that establishes both a maximum profit (the ceiling) and maximum loss (the floor) when holding the underlying asset. The premium received from the sale of the ceiling reduces that due from the purchase of the floor. Strike prices are often chosen at the level at which the premiums net out or generate net positive premiums to the Fund. An example would be: owning 100 futures contracts, while simultaneously selling a call, and buying a put. Under most market conditions, the Funds are rebalanced daily on each business day. In volatile markets, however, the Adviser may rebalance the Funds' exposures more frequently and execute intra-day trades. By rebalancing daily, the Adviser seeks to reallocate each day's gains so as to protect them until the Protected Maturity Date, along with initial capital and prior days' gains, which are similarly protected by portfolio rebalancing.

The quantitative methodology is calibrated so as to control investment risk, particularly the risk of a shortfall between the Protected High Watermark Value and the actual NAV per share of a Fund on the Protected Maturity Date, while maintaining equity market exposure over a broad range of market conditions. Targeted persistence of equity exposures is generally consistent with a target maturity or lifecycle fund. However, in the event of a significant decline in interest rates, or equity market values, or both, the methodology may significantly reduce or eliminate a Fund's equity exposure well before the Fund's protected maturity date, which could constitute an early closure condition, discussed below.

fixed income securities, the Funds participate in equity market returns (gains or losses) that are roughly comparable to allocating a portion of portfolio assets directly to shares of stock comprising the S&P 500 Index. By holding futures contracts, rather than shares of stock, the Funds seek to generate diversified equity exposures that can be rebalanced daily without incurring excessive trading costs and related expenses.

The Funds intend to hold only S&P 500 Index futures that are listed and traded on the Chicago Mercantile Exchange. These contracts generally provide a high degree of liquidity and a low level of counterparty performance and settlement risk. The Funds do not intend to invest in swaps or over-the-counter derivative contracts to generate equity exposures.

The 2010 High Watermark Fund will cap its notional exposure to the equity markets at approximately 90% of current net assets. The 2015 High Watermark Fund and the 2020 High Watermark Fund will cap their notional exposure to the equity markets at approximately 95% of current assets. Under normal market conditions, the Funds (particularly the longer duration Funds such as High Watermark 2020 Fund) may maintain equity market notional exposures at levels of approximately 95% of net assets over a number of years.

The Funds' investments in S&P 500 Index futures are fully covered by high-grade fixed income securities. The Funds intend to maintain at least 100% coverage of notional equity exposures in the form of U.S. government securities and other high-grade fixed income securities.

Through the use of futures strategies, the Funds seek to contain trading costs and expenses related to dynamic rebalancing. In employing these strategies, the Funds also seek to earn higher aggregate cumulative interest income over the life of each Fund than would typically be available through a portfolio of comparable credit quality that generates its equity exposure through direct holdings of shares of stock.

Table 1 below shows the targeted notional equity exposure ranges, expressed as a percent of net assets, for each of the Funds. The Table includes an estimated range of the initial notional equity exposures that each Fund will target at inception as well as an estimated range of average notional equity exposures that the Funds might experience from inception to their Protected Maturity Dates on a time-weighted basis.

The target exposures shown in Table 1 are indicative only; actual exposures may differ significantly from these estimates. Initial notional exposures are highly sensitive to the level of interest rates, particularly for shorter duration Funds, such as 2010 High Watermark Fund, so that actual equity exposure may be below the indicated range if interest rates are low at time of inception. Similarly the average notional equity exposure that a Fund actually attains over time may be substantially lower than the range indicated in Table 1 if the Fund encounters significant equity market declines, low interest rates, or a combination of the two over its Investment Period. The Funds may collar the equity index futures position by purchasing puts and writing calls on a portion of the equity exposure.

Fixed Income Participation. Generally, all or nearly all of the assets in the fixed income portfolio will be invested in U.S. government securities and high-grade money market instruments. Initially the Funds will hold a fixed income portfolio composed of longer duration U.S. government securities and high-grade money market instruments, including U.S. Treasury bills and repurchase agreements.

The Funds' investment in U.S. government securities will generally, if not wholly, consist of zero-coupon government securities, which are debt obligations that are issued or purchased at a significant discount from face value. The discount approximates the total amount of interest the government security will accrue and compound over the period until the Protected Maturity Date or the particular interest payment date at a rate of interest reflecting the market rate of the securities at the time of issuance. Zero-coupon government securities do not make periodic payment of interest and are highly interest rate sensitive.

Zero-coupon government securities will include STRIPS (Separate Trading of Registered Interest and Principal of Securities). STRIPS are created by the Federal Reserve Bank by separating the interest and principal components of outstanding U.S. Treasury bonds and selling them as individual securities. Holdings of long-term securities issued by U.S. government-sponsored agencies and instrumentalities must be rated AAA by S&P and Aaa by Moody's Investors Service at the time of purchase and may not exceed 25% of the fixed income portfolio in the aggregate or 10% by issuer. Under the Master Agreement, PGF may permit a higher allocation to agency and instrumentality obligations if the Fund is in an Early Closure Condition, discussed below. The balance of the zero-coupon government securities will consist of direct obligations of the U.S. Treasury. Short-term securities held by the Fund will be issued by issuers rated in the highest rating categories by S&P or Moody's.

Table 2 below shows the ranges of targeted durations for the Funds' fixed income portfolios. The Table includes an estimated range of the initial fixed income portfolio duration that each Fund will target at inception, as well as an estimated range of average portfolio duration that the Fund might experience from inception to its Protected Maturity Date on a time-weighted basis.

The targeted initial and average durations shown in Table 2 are indicative only; actual durations may differ significantly from these estimates due to changes in market conditions, particularly interest rates at the time of Fund inception, and fixed income and equity market conditions over time.

A Fund's risk profile is largely a factor of the principal securities in which it invests and investment techniques that it uses. This section discusses the risks associated with certain types of securities in which the Funds may invest and certain investment practices that the Funds may use. For more information about these and other types of securities and investment techniques that may be used by the Funds, see the Statement of Additional Information.

The principal risks of an investment in a Fund involve opportunity costs, as well as the risks associated with exposure to the equities and fixed income markets. These risks are discussed in detail below.

Fund performance is significantly dependent upon the Adviser's skill in managing assets to implement the Funds' strategy. There is no assurance that a Fund's investment strategy alone will achieve its investment objective of fulfilling the Payment Undertaking.

If a Fund's investment strategy is unsuccessful, you can lose money if the financial condition of PGF and Prudential Financial deteriorates and they are unable to satisfy the Master Agreement with the Fund. It is also possible, though unlikely, that the Fund will not be able to satisfy its obligations under the Master Agreement and PGF and Prudential Financial are relieved of their obligations under the Master Agreement. As a result, the Fund may not be able to redeem your shares for the Protected High Watermark Value on the Protected Maturity Date. You also could lose money if, among other reasons, the Fund incurs extraordinary expenses, or if you redeem your shares prior to the Protected Maturity Date.

If at any time during the Investment Period interest rates are low, a Fund's exposure may be largely limited to fixed income securities in order to decrease the likelihood that a payment would be required under the Payment Undertaking. In addition, if the equity markets experience a major decline, the Fund's exposure may become largely limited to fixed income securities. In fact, if the value of the equity index futures portfolio were to decline by a significant amount, a complete allocation to fixed income exposure would likely occur. In the event of an allocation of 100% of the portfolio exposure to fixed income securities, the Fund would likely lose

exposure to the equity markets prior to the Protected Maturity Date. In this circumstance, the Fund may not participate meaningfully in any subsequent recovery in the equity markets.

In addition, the terms of the Master Agreement prescribe certain investment parameters within which a Fund must be managed during the Investment Period to preserve the benefit of the Master Agreement. Accordingly, the Master Agreement could limit the Adviser's ability to alter the allocation of Fund assets in response to changing market conditions. The terms of the Master Agreement could require the Fund to liquidate an equity index futures position when it otherwise would not be in the shareholders' best interests.

Use of fixed income securities reduces the Funds' ability to participate as fully in upward equity market movements, and therefore, represents some loss of opportunity compared to a portfolio that is fully invested in equities.

Investors can realize significant losses if they redeem their shares before a Fund's Protected Maturity Date due to the possibility of a shortfall between the Protected High Watermark Value that investors earn if shares are held to maturity and the actual NAV of Fund shares.

If a Fund's portfolio were to terminate before the Fund's Protected Maturity Date, an investor would have to locate an alternative investment for his or her assets until the otherwise scheduled Protected Maturity Date, which could involve transaction expenses.

Debt securities are subject to changes in value when prevailing interest rates change. When interest rates fall, the values of already-issued debt securities generally rise. When interest rates rise, the values of already-issued debt securities generally fall, and those securities may sell at a discount from their face amount. In addition, the market value of zero-coupon securities (which may include STRIPS) generally is more volatile than the market value of a portfolio of fixed income securities with similar maturities that pay interest periodically.

Federal tax law requires that a holder of a zero-coupon security accrue a portion of the discount at which the security was purchased as taxable income each year, even though the holder receives no interest payment on the security during the year. Because a Fund must distribute substantially all of its net income (including non-cash income attributable to the accretion of value of zero-coupon securities) to its shareholders each year for income and excise tax purposes, this accrued discount would also be taken into account in determining the amount of taxable distributions to shareholders.

Commercial paper and other high quality short-term notes held by the Funds are promissory notes of private issuers that depend solely on the credit of the issuing company. Securities directly issued by the U.S. Treasury and certain U.S. government agencies that are backed by the full faith and credit of the U.S. government have little credit risk. In the case of securities not backed by the full faith and credit of the United States, a Fund must look principally to the agency issuing or guaranteeing the obligation for ultimate repayment and may not be able to assert a claim against the United States if the agency or instrumentality does not meet its commitments. Credit risk is the risk that the issuer of a debt security might not make interest and principal payments on the security as they become due. All U.S. government securities may be subject to price declines due to changing interest rates.

While the use of futures contracts by the Funds can amplify a gain, it can also amplify a loss. This loss can be substantially more money than the initial margin. In addition, although the Funds intend to purchase or sell futures contracts on the Chicago Mercantile Exchange where there appears to be an active secondary market, there is no assurance of market liquidity such that there may be times where a Fund would not be able to close a futures investment position when it wanted to do so.

The dynamic exposure allocation process results in additional transaction costs such as dealer spreads and charges incurred from futures commission merchants. This process can have an adverse effect on the performance of the Funds during periods of increased equity market volatility. In addition, the dynamic exposure allocation strategy may require a Fund to have a higher portfolio turnover rate. Portfolio turnover refers to the frequency of portfolio transactions and the percentage of portfolio assets being bought and sold during the year.

Some U.S. government agency securities may be subject to varying degrees of credit risk particularly those not backed by the full faith and credit of the United States Government. All U.S. government securities may be subject to price declines due to changing interest rates.

If you may need access to your money at any point prior to the Protected Maturity Date or if you prefer to receive your dividends and distributions in cash, you should consider the appropriateness of investing in the Funds. Investors who redeem before the Protected Maturity Date will receive the current NAV of their investment, which may be less than either the Protected High Watermark Value or their initial investment.

While you may redeem your shares in accordance with the policies described under "Transaction Policies", shareholders who do not reinvest their distributions or dividends will reduce their aggregate Protected High Watermark Value and shareholders who redeem prior to the Protected Maturity Date will bear the cost of the Master Agreement without receiving any corresponding benefit. As explained in the examples on pages 23-24, if you reinvest your dividends and distributions, the number of shares you own in a Fund will increase at each date on which a dividend or distribution is paid and the Protected High Watermark Value will decrease so that your overall aggregate Protected High Watermark Value will not change. However, if you fail to reinvest dividends or distributions or you redeem Fund shares, your overall aggregate Protected High Watermark Value will decrease because you will have fewer shares multiplied by the applicable Protected High Watermark Value.

If the NAV of a Fund at its Protected Maturity Date is insufficient to satisfy the Payment Undertaking, a shareholder's ability to receive the Protected High Watermark Value will depend on the Fund's ability to collect the difference under the Master Agreement with PGF. A shareholder's ability to rely on the Master Agreement is subject to certain conditions and restrictions that may reduce, or eliminate, the Funds' ability to meet the Payment Undertaking.

The Funds are subject to conditions of the Master Agreement that require the Adviser to provide certain information to PGF on a daily basis and to follow certain parameters and proprietary mathematical formulae in making investment allocation decisions. These limitations are designed to reduce, but do not eliminate, the risk that the Funds' assets will be insufficient to allow a Fund to redeem shares at not less than the Protected High Watermark Value on its Protected Maturity Date. Accordingly, the Master Agreement could limit the Adviser's ability to respond to changing market conditions. If the Adviser fails to provide the required information to PGF or if the Adviser does not comply with the agreed-upon investment parameters or other requirements in the Master Agreement and fails to cure such deficiency within specified cure periods, PGF may terminate the Master Agreement (as described below) or exercise its right to instruct the Funds' custodian to immediately rebalance a Fund's portfolio so that it complies with the investment parameters. Compliance with these investment parameters may require that a Fund's assets be invested exclusively in fixed income securities, in which case a Fund's ability to participate in upward equity market movements could be eliminated.

Watermark Value but instead will receive the Fund's then-current net asset value when they redeem their shares, which may be lower than the Protected High Watermark Value and lower than the shareholder's initial investment.

If the Fund has irrevocably allocated its assets to the fixed income portfolio, it will close to new share issuances. A new Fund may be formed with the same Protected Maturity Date to accept new contributions. The Manager and the Adviser have contractually agreed to reduce their respective fees in the event that a Fund becomes completely invested in fixed income securities. However, if this reduction in fees is not sufficient to reduce total annual operating expenses to an extent that they are covered by the current yield on the Fund's fixed income securities, and the Fund is within three years of its Protected Maturity Date, that date will be accelerated and the Fund will liquidate as described below. PGF may, however, permit the Fund to hold a higher proportion of its assets in obligations of U.S. government agencies and instrumentalities (which generally pay higher rates of interest than direct obligations of the U.S. Treasury) in order to avoid this circumstance.

Under the Master Agreement, if certain low interest rate conditions occur and a Fund is within three years of its initial Protected Maturity Date, the Fund can terminate early. If a Fund terminates early under these circumstances, the Fund's Protected High Watermark Value will be accelerated and shareholders will receive the benefit of the Protected High Watermark Value.

Shareholders will receive 30 days' written notice of any shareholder distribution of liquidation proceeds.

A Derivative Instrument is a contract, such as an option or future, whose value is based on the performance of an underlying financial instrument.

An Early Fund Termination is a circumstance where a Fund will terminate by accelerating its Protected Maturity Date and distribute liquidation proceeds to its shareholders if ALL of the following circumstances happen: (i) if the Fund's Equity Risk Budget has dropped to zero; (ii) the Fund is in the final three years prior to its Protected Maturity Date; and (iii) the Fund has a portfolio yield less than total Fund operating expenses. Also, the Board of Trustees of the Trust or PGF can terminate the Fund under certain circumstances.

Equity Exposure means investing a portion of the Funds' assets in S&P 500 Index futures to generate equity market exposures. By buying these contracts, the Funds participate in equity market returns (gains or losses) that are roughly comparable to allocating a portion of portfolio assets directly to shares of stock comprising the S&P 500 Index.

Extraordinary Expenses means any Fund fees and expenses that are not incurred or accrued in the ordinary course of the Fund's business (including for example, all costs of defending or prosecuting any claim, or litigation, to which the Fund is a party, together with any amounts in judgment, settlement or indemnification expense incurred by the Fund) or any other non-recurring, non-operating expenses.

Fixed Income Participation means investing a portion of the Funds' assets in U.S. government securities and high-grade money market instruments, including zero-coupon government securities and STRIPS.

Fixed Income Securities provide consistent interest or dividend payments. They include U.S. government securities. A high-quality fixed income security is rated in the highest ratings category by a debt rating agency (or is considered of comparable quality by the Adviser).

Futures are contracts involving the right to receive or obligation to deliver assets or money depending on the performance of one or more underlying assets or a market or economic index.

The Investment Period for Class A and Class C of each Fund commenced on June 25, 2004 and ends on that Fund's Protected Maturity Date, at which time the Fund will liquidate and cease operations. During its Investment Period, a Fund will make continuous public offerings of its shares. Under certain limited circumstances, the Fund may close to new investments or liquidate altogether prior to its scheduled Protected Maturity Date.

The Master Agreements (the "Master Agreement") are the agreements between each of the Funds, and Prudential Global Funding, under which PGF will pay to each Fund any shortfall between the Protected High Watermark Value and the actual NAV per share of the Fund's Protected Maturity Date, provided certain conditions are met.

Money Market Instruments include high-quality, short-term securities, such as obligations of the U.S. government and its agencies, and certain short-term demand and time deposits, certificates of deposit and bankers' acceptances issued by certain U.S. depository institutions or trust companies, and certain commercial paper, which are short-term, negotiable promissory notes of companies.

Net Asset Value, or NAV, is the value of a Fund's assets minus all liabilities divided by the number of shares outstanding. The Funds calculate their NAV each business day.

Each Fund's Payment Undertaking is the undertaking by the Fund to pay the Protected High Watermark Value on the Protected Maturity Date.

Preservation of Principal means investing in a manner that tries to protect the value of an investment against market movements and other economic events.

The Protected Maturity Date is the date on which a Fund's shareholders are entitled to receive their aggregate Protected High Watermark Value.

Repurchase Agreements are agreements in which the seller agrees to repurchase the security at a mutually agreed-upon time and price. The period of maturity is usually quite short, either overnight or a few days, although it may extend over a number of months.

S&P 500 Index is a stock market index comprised of common stocks in the U.S. selected by S&P.

STRIPS are separately traded interest or principal components of securities issued or guaranteed by the U.S. government. Under the STRIPS program, the interest and principal components of these securities are individually numbered and separately issued by the U.S. government at the request of depository financial institutions, which then trade the component parts independently.

U.S. Government Securities are issued or guaranteed by the U.S. government, its agencies and instrumentalities. Some U.S. government securities are issued or unconditionally guaranteed by the U.S. Treasury. They are of the highest possible credit quality. While these securities are subject to variations in market value due to fluctuations in interest rates, they will be paid in full if held to maturity. Other U.S. government securities are neither direct obligations of, nor guaranteed by, the U.S. Treasury. However, they involve federal sponsorship in one way or another. For example, some are backed by specific types of collateral; some are supported by the issuer's right to borrow from the Treasury; some are supported by the discretionary authority of the Treasury to purchase certain obligations of the issuer; and others are supported only by the credit of the issuing government agency or instrumentality.

A Zero-Coupon Security is a security that makes no periodic interest payments but instead is sold at a deep discount from its face value.

Zero-Coupon Government Securities are: (i) U.S. Treasury notes and bonds that have been stripped of their unmatured interest coupons and receipts; or (ii) certificates representing interest in such stripped debt obligations or coupons.

Active Trading: A Fund may engage in frequent trading of portfolio holdings to achieve its investment goal. In addition, because a Fund may sell a security without regard to how long it has held the security, active trading may have tax consequences for certain shareholders, involving a possible increase in short-term capital gains or losses. Active trading may result in high portfolio turnover and correspondingly greater other transaction costs, which will be borne directly by a Fund and could affect your performance. During periods of increased market volatility, active trading may be more pronounced.

Bond Market Volatility: The bond markets as a whole could go up or down (sometimes dramatically). This could affect the value of the securities in a Fund's portfolio.

Credit Risk: The risk that the issuer in which a Fund invests will fail financially or otherwise fail to honor its obligations. An issuer with a lower credit rating will be more likely than a higher rated issuer to default or otherwise become unable to honor its financial obligations.

Default Risk: The risk that the financial position of PGF and Prudential Financial could deteriorate and they would be unable to satisfy their obligations under the Master Agreement. In these circumstances, Fund shareholders could receive an amount less than the Protected High Watermark Value.

Derivatives: Derivatives are subject to general risks relating to heightened sensitivity to market volatility, interest rate fluctuations, illiquidity and creditworthiness of the counterparty to the derivatives transactions.

Early Termination Risk. The principal risk of Early Fund Termination is that an investor will need to locate an alternative investment for his or her assets until the otherwise scheduled Protected Maturity Date, which may involve transaction expenses.

Equity Risk: The risk that the equity market may decline in value due to the activities and financial prospects of individual companies or to general market and economic conditions.

Interest Rate Risk: The market value of the interest-bearing debt securities held by the Funds are subject to changes in value when prevailing interest rates change. When interest rates fall, the values of already-issued debt securities generally rise. When interest rates rise, the values of already-issued debt securities generally fall, and those securities may sell at a discount from their face amount. Zero-coupon bonds, including STRIPS, longer term and lower coupon bonds tend to be more sensitive to changes in interest rates. As a result, an investment in the Funds is subject to risk even if all fixed income securities in a Fund's investment portfolio are paid in full at maturity.

Interim Redemption Risk: The risk that investors can realize significant losses if they redeem their shares before maturity, particularly if they need to sell their shares when a Fund's Protected Maturity Date is still a long way off.

Opportunity Cost: The difference in return between a chosen investment and one that is passed up. Investment in fixed income securities during the Investment Period reduces the Funds' ability to participate as fully in upward equity market movements, and therefore represents some loss of opportunity compared to a portfolio that invests principally in equity securities.

Securities Selection: A strategy used by a Fund, or securities selected by its Adviser, may fail to produce the intended return.

Yield Shortfall Risk: The risk that portfolio yield drops below a Fund's expense ratio and the Fund would have to use capital (i.e., NAV) to cover its expenses.

Manager. AIG SunAmerica Asset Management Corp. ("AIG SunAmerica" or "Manager") supervises the daily business affairs of each Fund and provides various administrative services to the Funds. AIG SunAmerica has delegated portfolio management responsibilities to the Adviser.

AIG SunAmerica was organized in 1982 under the laws of Delaware, and managed, advised or administered assets in excess of $52.5 billion as of December 31, 2006. In addition to managing the Funds, AIG SunAmerica serves as adviser, manager and/or administrator for Anchor Series Trust, SunAmerica Focused Series, Inc., Seasons Series Trust, SunAmerica Equity Funds, SunAmerica Income Funds, SunAmerica Money Market Funds, Inc., SunAmerica Focused Alpha Growth Fund, Inc., SunAmerica Focused Alpha Large-Cap Fund, Inc., SunAmerica Senior Floating Rate Fund, Inc., VALIC Company I, VALIC Company II and SunAmerica Series Trust. Pursuant to an Investment Advisory and Management Agreement each Fund will pay AIG SunAmerica a management fee at the annual fee of 0.65% of average daily net assets. If a Fund's portfolio becomes completely and irreversibly invested in fixed income securities, the management fees for the Fund will be reduced to 0.40% for the remainder of the Investment Period. For the fiscal year ended October 31, 2006, each Fund paid AIG SunAmerica a management fee of 0.65%.

A discussion regarding the basis for the Board of Trustees approving the Investment Advisory and Management Agreement and Subadvisory Agreement of the Funds is available in the Funds' Annual Report to shareholders for the period ending October 31, 2006.

Please see additional information on the distribution-related payments made by AIG SunAmerica under "Distributor" on page 35.

Adviser. Trajectory Asset Management LLC ("Trajectory") was organized in 2003 under the laws of Delaware and its principal offices are at 150 East 52nd Street, 7th Floor, New York, NY 10022. The Funds are managed by a team of investment professionals who are employed by the Adviser.

The Adviser is responsible for portfolio management for the Funds, selection of broker-dealers and negotiation of commission rates for the Funds. AIG SunAmerica may terminate any agreement with the Adviser without shareholder approval. Moreover, AIG SunAmerica has received an exemptive order from the Securities and Exchange Commission that permits AIG SunAmerica, subject to certain conditions, to enter into agreements relating to the Fund with unaffiliated advisers approved by the Board of Trustees without obtaining shareholder approval. The exemptive order also permits AIG SunAmerica, subject to the approval of the Board but without shareholder approval, to employ new unaffiliated advisers for new or existing Funds, change the terms of particular agreements with unaffiliated advisers or continue the employment of existing unaffiliated advisers after events that would otherwise cause an automatic termination of a subadvisory agreement. Shareholders of a Fund have the right to terminate an agreement with an adviser for that Fund at any time by a vote of the majority of the outstanding voting securities of the Fund. Shareholders will be notified of any adviser changes. The order also permits the Fund to disclose the Adviser's fees only in the aggregate for each Fund.

The Adviser's fee will be 43% of the net management fees after reimbursements paid to AIG SunAmerica. For the fiscal year ended October 31, 2006, the 2010 High Watermark Fund, 2015 High Watermark Fund and 2020 High Watermark Fund each paid Trajectory an adviser fee of 0.23%, 0.22% and 0.21%, respectively.

Payments to the Adviser for its services are made by AIG SunAmerica, not by the Funds.

The Funds are managed by the Adviser's team of portfolio managers led by Juan M. Ocampo. Additional Information about the portfolio managers' compensation, other accounts under management and ownership of the Fund's shares is contained in the Statement of Additional Information. The portfolio managers are described below:

Prior to founding Trajectory Asset Management LLC and its parent company Demand Insights LLC, Mr. Ocampo served as a Partner of McKinsey & Company, Mitchell Madison Group (and its successor, marchFIRST), and as a Managing Director of Securitas Capital, a private equity investment fund jointly funded by Credit Suisse and Swiss Re. Mr. Ocampo is co-author of the book Securitization of Credit, published by John Wiley and Sons, and author of articles published in the Journal of Applied Corporate Finance and the McKinsey Quarterly. Mr. Ocampo is a graduate of the Massachusetts Institute of Technology and he received an MBA from Harvard Business School.

Brothers. Ms. Erle is a graduate of the Operations Research and Industrial Engineering program at Cornell University (with honors). She holds an MA in International Affairs and Economics from the Johns Hopkins School of Advanced International Studies, and an MBA (with honors) in Finance from Columbia Business School.

Jiayi Li has nine years of experience in investment management, investment banking and management consulting. Before joining Demand Insights LLC, Trajectory Asset Management LLC's parent company, Ms. Li worked as an Associate in A.T. Kearney's Financial Institutions Group. Prior to A.T. Kearney, Ms. Li supervised a $10 billion portion of Prudential's general account as a Portfolio Manager in Prudential's Fixed Income Portfolio Management group, and held an Analyst position in the Portfolio Management group of MetLife Investments. Ms. Li graduated with highest honors in Economics from Rutgers. She received her MBA (with honors) in Finance from Columbia Business School.

Distributor. AIG SunAmerica Capital Services, Inc. distributes each Fund's shares. AIG SACS, an AIG SunAmerica company, receives the initial and deferred sales charges, all or a portion of which may be re-allowed to other broker-dealers. In addition, the Distributor receives fees under each Fund's Class A and Class C 12b-1 plans.

The Distributor, at its expense, may from time to time provide additional compensation to broker-dealers (including in some instances, affiliates of the Distributor) in connection with sales of shares of a Fund. This compensation may include (i) full re-allowance of the front-end sales charge on Class A shares; (ii) additional compensation with respect to the sale of Class A or Class C shares; or (iii) financial assistance to broker-dealers in connection with conferences, sales or training programs for their employees, seminars for the public, advertising campaigns regarding the Funds, and/or other broker-dealer sponsored special events. In some instances, this compensation will be made available only to certain broker-dealers that have sold a significant number of shares of the Funds. Compensation may also include payment for travel expenses, including lodging, incurred in connection with trips taken by invited registered representatives for meetings or seminars of a business nature. Compensation may also include various forms of non-cash compensation offered through permissible sales contests or otherwise. Broker-dealers may not use sales of the Portfolios' shares to qualify for this compensation to the extent receipt of such compensation may be prohibited by applicable law or the rules of any self-regulatory agency, such as the National Association of Securities Dealers. Broker-dealers may not use sales of the Funds' shares to qualify for this compensation to the extent receipt of such compensation may be prohibited by applicable law or the rules of any self-regulatory agency, such as the National Association of Securities Dealers, Inc. Dealers who receive bonuses or other incentives may be deemed to be underwriters under the Securities Act of 1933, as amended.

In certain instances, AIG SunAmerica or its affiliates may pay distribution-related expenses, including providing the additional compensation to broker-dealers or other financial intermediaries described above. In addition, AIG SunAmerica, the Distributor or their affiliates (including the Administrator) may make substantial payments to broker-dealers or other financial intermediaries and service providers for distribution and/or shareholder servicing activities. Some of these distribution-related payments may be made to dealers or financial intermediaries for marketing, promotional, administrative and/or recordkeeping services that may promote sales of Fund shares; these payments are often referred to as "revenue sharing." Such payments may be based on various factors, including levels of assets and/or sales (based on gross or net sales or some other criteria) of one or more Funds managed and/or administered by AIG SunAmerica. In some circumstances, those types of payments may relate to one or more Funds' inclusion on a financial intermediary's preferred list of funds offered to its clients or may create an incentive for a broker-dealer or other financial intermediary or its representatives to recommend or offer shares of the Funds to its customers over other funds that do not have sponsors making similar payments. You should ask your broker-dealer or financial intermediary for more details about any such payments it receives.

Payments by AIG SunAmerica are out of its own resources, including the profits from its advisory fees. Payments by the Distributor may be out of its own resources or fees it receives under the Funds' Class A and Class C 12b-1 plans. Payments by other affiliates are out of their own resources.

Administrator. AIG SunAmerica Fund Services, Inc. (the "Administrator") assists the Funds' transfer agent in providing shareholder services. The Administrator, a SunAmerica company, is paid a monthly fee by each Fund for its services at the annual rate of .22% of average daily net assets of Class A and Class C shares.

AIG SunAmerica, the Distributor and Administrator are all located in Harborside Financial Center, 3200 Plaza 5, Jersey City, NJ 07311-4992 and 2929 Allen Parkway, Houston, Texas 77019.

Prudential Financial and PGF. Prudential Financial is one of the largest financial services institutions in the United States. Prudential Financial provides a wide range of insurance, investment management and other financial products and services and have more than 15 million individual and institutional customers in the United States and over 30 other countries.

PGF was established in 1985 and is an indirect wholly owned subsidiary of Prudential Financial. PGF serves as a central processing point for all proprietary over-the-counter derivative transactions within the Prudential Financial family and enters into a wide range of derivative instruments. Given the breadth of Prudential Financial's activities domestically and internationally, PGF interfaces frequently with the numerous business units within the firm to facilitate business. The many functions of PGF include:

• Providing derivative strategies to enhance product line sales and investments.

• Centralizing all over-the-counter derivative trading, credit and operational risk.

• Engineering new products for Prudential Financial's retail and institutional client base.

• Providing structured notes to qualified institutional buyers via Prudential Funding Corporation's Medium Term Note Program.

• Hedging, within prescribed limits, Prudential Financial's foreign currency risk arising from investments in foreign subsidiaries.

The performance of PGF's obligations with respect to the master agreement issued to each High Watermark Fund is guaranteed by Prudential Financial. Prudential Financial's long-term senior debt is rated A3 (Moody's)/A- (S&P).

Legal Proceedings. On February 9, 2006, American International Group, Inc. ("AIG"), the parent company and an affiliated person of AIG SunAmerica and AIG SACS, 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, 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 Manager and the Distributor, 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 the Manager and Distributor to continue to serve as investment adviser, sub-adviser, principal underwriter of the Funds. The Manager and Distributor expect 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 States 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 Manager and the Distributor 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.

The Financial Highlights table for each Fund is intended to help you understand the Fund's financial performance since inception. Certain information reflects financial results for a single Fund share. The total returns in each table represent the rate that an investor would have earned (or lost) on an investment in a Fund (assuming reinvestment of all dividends and distributions). The information has been audited by Ernst & Young LLP, whose report, along with each Fund's financial statements, are incorporated by reference in the Statement of Additional Information (SAI), which is available upon request.

(2) Total return is not annualized and does not reflect sales load, but does include expense reimbursements.

(4) Net of following expense reimbursements and custody credits, if applicable (based on average net assets):

The following documents contain more information about the Funds and are available free of charge upon request:

Annual and Semi-annual Reports. Contain financial statements, performance data and information on portfolio holdings. The reports also contain a written analysis of market conditions and investment strategies that significantly affected a Fund's performance during the last applicable period.

Statement of Additional Information (SAI). Contains additional information about the Trust's policies, investment restrictions and business structure. This Prospectus incorporates the SAI by reference, which means it is legally part of this document.

You may obtain copies of these documents or ask questions about the Funds by contacting AIG SunAmerica Fund Services, Inc. at 1-800-858-8850, by visiting our website at www sunamericafunds.com, or by calling your broker or financial adviser.

Visit our web site at www.sunamericafunds.com and click on "Shareholder Services and Account Information."

For Broker/Dealers: You can view your clients' account information on line by visiting our web site at www.sunamericafunds.com and clicking on the "Financial Professionals" link. Please call 800-858-8850, x6003 to obtain a password.

Enroll for electronic delivery of prospectuses and annual reports by visiting our web site at www.sunamericafunds.com and clicking on "Shareholder Services and Account Information," and then the "Go Paperless" option to complete the consent form. Why Go Paperless?

Once enrolled, paper copies of these documents will be replaced with an e-mail notification that they are available on the Internet. You can even notify us on line if your e-mail address changes. You may cancel your enrollment at any time. Please note that the e-mail address you provide will be kept confidential and will only be used for purposes related to the funds. All personal information is encrypted and is completely secure.

Information about the Funds (including the SAI) can be reviewed and copied at the Public Reference Room of the Securities and Exchange Commission, Washington, D.C. Call 1-202-942-8090 for information on the operation of the Public Reference Room. Reports and other information about the Funds are available on the EDGAR Database on the Securities and Exchange Commission's web-site at http://www sec.gov and copies may be obtained, upon payment of a duplicating fee, by electronic request at the following E-mail address: publicinfo@sec.gov, or by writing the Public Reference Section of the Securities and Exchange Commission, Washington, D.C. 20549-0102.

You should rely only on the information contained in this Prospectus. No one is authorized to provide you with any different information.

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 investing.

AIG SunAmerica collects nonpublic personal information about you from the following sources:

• Information about your AIG SunAmerica Mutual Funds transactions with us or others, including your financial adviser.

AIG SunAmerica will not disclose any nonpublic personal information about you or your account(s) to anyone unless one of the following conditions is met:

• AIG SunAmerica is permitted by law to disclose the information to the recipient in order to service your account(s); or

If you decide to close your account(s) or become an inactive customer, AIG SunAmerica will adhere to the privacy policies and practices as described in this notice.

The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The Investment Period for Class I of each Fund commenced on February 17, 2005 and ends on that Fund's Protected Maturity Date, at which time the Fund will liquidate and cease operations. During its Investment Period, a Fund will make a continuous public offering of its shares. Under certain limited circumstances, a Fund may close to new investments or liquidate altogether prior to its scheduled Protected Maturity Date. Please see pages 18-20 of this Prospectus for further information.

Net Asset Value, or NAV is the value of a Fund's assets minus all liabilities divided by the number of shares outstanding. The Funds calculate their NAV each business day.

More information about the strategy for allocating exposure to U.S. equity markets and U.S. fixed income markets is provided on pages 17-20.

• If the shareholder takes any dividends or distribution in cash instead of reinvesting them in additional shares of the Funds;

• If the Funds' investment strategy otherwise is unsuccessful, or if the manager, the fund or the adviser fails to perform certain obligations under the Master Agreement;

• If both PGF and Prudential Financial fail to meet their obligations under the Master Agreement;

See "More Information About the Funds — The Payment Undertaking" and "— Additional Information About the Funds' Risks."

Q: How do the Funds differ from ordinary principal protected or target
maturity/lifestyle funds?

Ordinary target maturity or lifestyle funds seek to tailor their portfolios' risk levels to suit their time horizons. As maturity approaches, these funds generally reallocate their portfolios (e.g., by reducing their portfolios' allocation to stocks and increasing their fixed income exposure, but reducing the duration of their fixed income securities) so as to reduce expected risk and consequently expected return.

The High Watermark Funds generally tailor their portfolios' risk level over time in a manner similar to ordinary target maturity or lifestyle funds. In contrast to ordinary target maturity or lifestyle funds, however, the High Watermark Funds seek to preserve principal and investment gains at the Protected Maturity Date.

• have a long-term investment horizon compatible with the chosen Fund's Protected Maturity Date,

• seek potential for capital appreciation but place a premium on capital preservation,

• a short-term investment, despite the Funds' daily liquidity, since interim losses in value are not protected.

• an equity substitute, since the Funds' equity exposure is limited and generally declines over time.

A: The following terms will apply to each Fund upon the occurrence of an Early Closure Condition or an Early Fund Termination.

• The Fund is in the final three years prior to its Protected Maturity Date; and

In the event of an Early Fund Termination, the Master Agreement with PGF will be accelerated so that the liquidation proceeds equal the Fund's protected High Watermark Value.

A: The Risk/Return Bar Chart and Table illustrates the risks of investing in the Fund by showing the Funds' performance from the previous calendar year, and comparing the Funds' average annual returns, before and after taxes, to those of an appropriate market index. Sales charges are not reflected in the bar chart. If these amounts were reflected, returns would be less than those shown. Of course, past performance, before and after taxes, is not necessarily an indication of how the Fund will perform in the future.

During the 1-year period shown in the bar chart, the highest return for a quarter was 4.41% (quarter ended 9/30/06) and the lowest return for a quarter was -1.54% (quarter ended 6/30/06).

After tax returns are shown for Class I only. After tax returns for other classes will vary.

During the 1-year period shown in the bar chart, the highest return for a quarter was 7.00% (quarter ended 9/30/06) and the lowest return for a quarter was -2.55% (quarter ended 6/30/06).

After tax returns are shown for Class I only. After tax returns for other classes will vary.

During the 1-year period shown in the bar chart, the highest return for a quarter was 8.15% (quarter ended 9/30/06) and the lowest return for a quarter was -3.14% (quarter ended 6/30/06).

After tax returns are shown for Class I only. After tax returns for other classes will vary.

A: The following tables describe the fees and expenses that you may pay if you buy and hold shares of the Funds.

(1) If the Fund becomes completely and irreversibly invested in fixed income securities, the Management Fees will be .40% for the remainder of the Investment Period.

(2) The fee of 0.35% paid to PGF under the Master Agreement is included in Other Expenses. Since this fee rate is specific to the terms of the Master Agreement, if the Master Agreement was terminated and AIG Series Trust entered into a new master agreement, the fee payable under the new agreement may be higher than 0.35%. Any increase in the fee payable would be borne by the Fund.

(3) Class I shares are offered to certain group plans including, but not limited to, employee retirement plans. See page 18 for more information regarding Class I shares.

(4) Pursuant to an Expense Limitation Agreement, AIG SunAmerica Asset Management Corp. ("AIG SunAmerica" or the "Adviser") is contractually obligated to waive its fees and reimburse expenses to the extent that the Total Annual Fund Operating Expenses exceed the following amounts in the table below:

These expense waivers and fee reimbursements will continue indefinitely, subject to termination by the Board of Trustees (the "Board"), including a majority of the trustees who are not deemed to be "interested persons" of the Trust, as defined under section 2(a)(19) of the Investment Company Act of 1940 ("the 1940 Act") ("Disinterested Trustees").

Class I Shares are not subject to distribution and account maintenance fees. However, AIG SunAmerica Capital Services, Inc., is paid a fee of 0.25% of average daily net assets of Class I shares in compensation for providing additional shareholder services to Class I shareholders.

• A retirement plan (or the custodian for such plan) with aggregate fund assets of at least $5 million within the first 13 months;

• A client of a broker-dealer or registered investment adviser that both recommend the purchase of fund shares and charge such client an asset-based fee with fund assets of at least $5 million within the first 13 months;

• An investor who invests at least $5 million in one Fund within the first 13 months; and

• An investor that participates through an annuity contract or variable life policy with an insurance company with aggregate fund assets of at least $5 million within the first 13 months.

Inquiries regarding the purchase, redemption or exchange of Class I shares or making or changing of investment choices should be directed to your financial advisor or plan administrator. As part of your application, you are required to provide information regarding your personal identification that is required under anti-money laundering laws, including the USA PATRIOT Act of 2001, as amended ("the PATRIOT Act"). If we are unable to obtain the required information, your application will be considered to be not in good order and it therefore cannot be processed. Your application and any check or other deposit that accompanied will be returned to you. Applications must be received in good order under the PATRIOT Act requirements and as otherwise required in this Prospectus in order to receive that day's net asset value. In addition, applications received in good order are nevertheless subject to customer identification verification procedures under the PATRIOT Act. We may ask to see your driver's license or other identifying documents. We may share identifying information with third parties for the purpose of verification. If your identifying information cannot be verified within a reasonable time of receipt of your application, the account will not be processed or, if processed, the Fund reserves the right to redeem the shares purchased and close the account. If the Fund closes an account in this manner, the shares will be redeemed at the net asset value next calculated after the Fund decides to close the account redeemed at the net asset value next calculated after the fund decides to close the account. In these circumstances, the amount redeemed may be less than your original investment and may have tax implications. Consult with you tax adviser for details. Non-resident aliens will not be permitted to establish an account through the check and application process at the Transfer Agent.

Buy and sell prices. When you buy Class I shares, you pay NAV. When you sell Class I shares, you receive the NAV.

Execution of requests. Each Fund is open on those days when the NYSE is open for regular trading ("Fund business day"). We execute buy and sell requests at the next NAV to be calculated after the Fund receives your request in good order. If the Fund or the Transfer Agent receives your order before the Fund's close of business (generally 4:00 p.m., Eastern time), you will receive that day's closing price. If the Fund or the Transfer Agent receives your order after that time, you will receive the next business day's closing price. If you place your order through a broker or financial adviser, you should make sure the order is transmitted to the Fund before its close of business. The Fund and the Distributor reserve the right to reject any order to buy shares.

Each Fund may invest in securities that are primarily listed on foreign exchanges that trade on weekends or other days when the Fund does not price its shares. As a result, the value of a Fund's shares may change on days when you will not be able to purchase or redeem your shares.

If the Fund determines that it would be detrimental to the best interests of the remaining shareholders of the Fund to make payment of redemption proceeds wholly or partly in cash, the Fund may pay the redemption price by a distribution in kind of securities from the Fund in lieu of cash. However, each Fund has made an election that requires it to pay a certain portion of redemption proceeds in cash.

Telephone transactions. For your protection, telephone requests are recorded in order to verify their accuracy. In addition, Shareholder/Dealer Services will take measures to verify the identity of the caller, such as asking for name, account number, social security or other taxpayer ID number and other relevant information. If appropriate measures are not taken, the Fund is responsible for any losses that may occur to any account due to an unauthorized telephone call. Also for your protection, telephone transactions are not permitted on accounts whose names or addresses have changed within the past 30 days. At times of peak activity, it may be difficult to place requests by phone. During these times, consider sending your request in writing.

Exchanges. You may exchange shares of a Fund for shares of the same class of any other fund distributed by AIG SunAmerica Capital Services, Inc. ("AIG SACS"), except for SunAmerica Senior Floating Rate Fund, Inc. (where the exchange privilege applies to Class A shares only). Before making an exchange, you should review a copy of the prospectus of the fund into which you would like to exchange. All exchanges are subject to applicable minimum investment requirements. A Systematic Exchange Program is described under "Additional Investor Services."

Portfolio Holdings Disclosure Policies. The Funds' policies and procedures with respect to the disclosure of the Funds' portfolios securities are described in the Statement of Additional Information.

Market timing procedures. The Funds' procedures include committing staff of the Funds' shareholder services agent to monitor trading activity in the Funds on a regular basis by selectively reviewing transaction reports in an effort to identify trading activity that may be excessive or short-term and detrimental to a Fund. Factors considered in the monitoring process include, but may not be limited to, the frequency of transactions by the financial intermediary, the Fund's investment objective, the size of the fund and the dollar amount of the transaction. In the event that such trading activity is identified and based on the information the Fund and its service providers in their sole discretion conclude that the trading may be detrimental to the Fund, the Funds reserve the right to temporarily or permanently bar your future purchases into AIG SunAmerica mutual funds or, alternatively, may limit the amount, number of frequency of any future purchases and/or the method by which you may request future purchases and redemptions (including purchases and/or redemptions by an exchange between funds).

Though the implementation of the Funds' procedures involve judgments that are inherently subjective and involve some selectivity in their application, the Funds and the Funds' service providers seek to make judgments that are consistent with the interests of the Funds' shareholders. There is no assurance that the Fund or its service providers will gain access to any or all information necessary to detect market timing. While the Fund will seek to take actions (directly and with the assistance of financial intermediaries) that will detect market timing, the Fund cannot represent that such trading activity can be completely eliminated.

Dividend Reinvestments. Your dividends and distributions, if any, will be automatically reinvested in additional shares of the same Fund and share class on which they were paid. Alternatively, dividends and distributions may be reinvested in any fund distributed by the Distributor or, you may receive amounts in excess of $10.00 in cash if you elect in writing not less than five business days prior to the payment date. You will need to complete the relevant part of the Account Application to elect one of these other options. For

existing accounts, contact your broker or financial adviser or call Shareholder Services at 1-800-858-8850, to change dividend and distribution payment options.

The dynamic exposure allocation process may increase turnover of a Fund's assets, which may result in the realization of additional gains by the Fund. It may also result in a larger portion of any net gains being treated as short-term capital gains, which would be taxed as ordinary income when distributed to shareholders. As noted above, distributions of any gains and income will be taxable to shareholders even if those distributions are reinvested in Fund shares. Any gains from the Fund's investments in futures contracts will generally be treated as long-term capital gain to the extent of 60% of the gain and the remainder will generally be treated as short-term capital gain. Shareholders will also receive taxable distributions of net income from investments in fixed income securities even in situations where a Fund has capital losses from investments in the U.S. equity markets.

Other Tax Considerations. If you are not a resident or a citizen of the United States or if you are a foreign entity, ordinary income dividends paid to you (which include distributions of net short-term capital gains) will generally be subject to a 30% United States withholding tax, unless a lower treaty rate applies. However, withholding tax will generally not apply to any gain of income realized by a non-U.S. shareholder in respect of any distributions of long-term capital gains or upon the sale or other disposition of shares in a Fund. In addition, distributions with respect to a Fund's taxable years before January 1, 2008, that qualify as "qualified net interest income" or as "qualified short-term capital gains" may not be subject to U.S. withholding tax.

By law, each Fund must withhold 28% of your distributions and redemption proceeds if you have not provided a taxpayer identification number or social security number.

Below are several illustrations indicating how the Protected High Watermark Value would be calculated under different circumstances. These examples relate to Class I shares. These examples start with the following assumptions:

Total number of shares purchased: 2000 ($20,000/$10.00 per share = 2000 shares)

Example 1: The Fund's highest NAV attained is $11.00 per share and no dividends or distributions are paid after that value is reached.

You will receive $22,000.00, which is equal to the Protected High Watermark Value times the number of shares that you own ($11.00 x 2000 = $22,000). This amount would be paid whether the Fund's highest NAV (Protected High Watermark Value) is reached before or after you purchase your shares.

The amount payable to you upon redemption at the Protected Maturity Date would be $20,000 (2,000 x $10.00), the value of the shares you purchased, even though the Fund's NAV has gone down subsequently.

The following examples illustrate that if you reinvest your dividends and distributions in additional shares of the Fund, the Protected High Watermark Value per share will decline as dividends and distributions are paid out, but this decline will be offset by the increase in the number of shares you own as a result of your reinvestment. If you do not reinvest your dividends and distributions in additional shares of the Fund, your aggregate High Watermark Value will be reduced. If you redeem your shares prior to the Protected Maturity Date, you will not be entitled to receive the Protected High Watermark Value on those shares. If you redeem shares, you will then hold fewer shares at the then-current Protected High Watermark Value, thereby reducing your aggregate Protected High Watermark Value. A redemption made from the Fund prior to the Protected Maturity Date will be made at the Fund's then-current NAV, which may be lower than the Protected High Watermark Value.

1. The new Protected High Watermark Value is the greater of $11.00 per share or the following:

Because $11.46 is greater than the NAV on the Share Valuation Date ($11.00), $11.46 becomes the new Protected High Watermark Value.

In addition, the reinvestment of the $1.00 dividend allows you to purchase an additional 181.818 shares: 2,000 (shares owned) x 1.00 per share dividend /$11 (NAV) = 181.818 (additional shares purchased) bringing your total shares owned to 2000 + 181.818 = 2,181.818.

Consequently, the new AGGREGATE Payment Undertaking Amount to you is now 2,181.818 x $11.46 = $25,003.63.

Example 4: You elect to receive Fund dividends and distributions in cash. We will use the same assumptions in Example 3 above, except that you elect to receive dividend in cash.

3. Recalculate the new AGGREGATE Payment Undertaking: $11.46 (new Protected High Watermark Value) x 2,000 (because you will receive the dividend in cash rather than additional shares, the number of Fund shares you own remains at 2,000.) = $22,920.00 (This amount is $2,083.63 less than the value of the AGGREGATE Payment Undertaking if you reinvested the dividend which accounts for the cash value that you chose to take currently, $2,000.00.) Thus if you do not reinvest dividends, the value of the AGGREGATE Payment Undertaking will be reduced by the an amount related to the amount that you remove from the Fund. If the Fund's NAV immediately prior to the dividend is less than the Protected High Watermark Value per share and you do not reinvest your dividend, the value of the dividend in cash would be less than the High Watermark value of the shares received through the reinvested dividends by an amount equal to the difference between the NAV and the Protected High Watermark Value per share.

Although you can perform this calculation yourself, the Fund will recalculate the Protected High Watermark Value for each share class on each Fund business day and will publish it on the SunAmerica website —www.sunamericafunds.com—together with the current NAV. It is possible that the Fund's calculations may differ from a shareholder's calculation, for example, because of rounding or the number of decimal places used. In each case, the Fund's calculations will control.

The Funds seek to generate capital appreciation by maintaining exposure to U.S. equity markets, while also being invested in fixed income securities. Exposures to both markets are managed to minimize the risk of loss of principal and investment gains over the Funds' respective maturities and to become generally more conservative (that is, less exposed to equity markets) as the Fund's Protected Maturity Date approaches. Under normal market conditions, t0he Funds will initially seek significant equity exposures and relatively long duration fixed income exposures and will be managed such that, as the Protected Maturity Date approaches, Fund holdings are increasingly devoted to high-grade, short-term fixed income securities. This reduction of investment risk exposure over time is broadly typical of target maturity or lifecycle funds and is frequently considered to be appropriate for prudent investors who are investing to provide for retirement, education or other purposes that prescribe an investment time horizon.

The Funds may trade portfolio holdings actively, which could increase the Funds' transaction costs (thus affecting performance) and may increase your taxable distributions.

• The current value of S&P 500 Index futures compared to their previous high-water value

• The level of Fund holdings of money market instruments, including margin deposits

Equity Exposure. The Funds use S&P 500 Index futures to generate equity market exposures. The S&P 500 Index is a stock market index comprising common stocks in the U.S. selected by Standard and Poor's Corporation ("S&P"). By buying these contracts, the Funds participate in equity market returns (gains or losses) that are roughly comparable to allocating a portion of portfolio assets directly to shares of stock comprising the S&P 500 Index. By holding futures contracts and holding them together with high grade fixed income securities, rather than shares of stock, the Funds seek to generate diversified equity exposures that can be rebalanced daily without incurring excessive trading costs and related expenses.

The Funds intend to hold only S&P 500 Index futures that are listed and traded on the Chicago Mercantile Exchange. These contracts generally provide a high degree of liquidity and a low level of

counterparty performance and settlement risk. The Funds do not intend to invest in swaps or over-the-counter derivative contracts to generate equity exposures.

The 2010 High Watermark Fund will cap its notional exposure to the equity markets at approximately 90% of current net assets. The 2015 High Watermark Fund and the 2020 High Watermark Fund will cap their notional exposure to the equity markets at approximately 95% of current net assets. Under normal market conditions, the Funds (particularly the longer duration Funds such as High Watermark 2020 Fund) may maintain equity market notional exposures at levels of approximately 95% of net assets over a number of years.

the zero-coupon government securities will consist of direct obligations of the U.S. Treasury. Short-term securities held by the Fund will be issued by issuers rated in the highest rating categories by S&P or Moody's.

While you may redeem your shares in accordance with the policies described under "Transaction Policies," shareholders who do not reinvest their distributions or dividends will reduce their aggregate Protected High Watermark Value and shareholders who redeem prior to the Protected Maturity Date will bear the cost of the Master Agreement without receiving any corresponding benefit. As explained in the examples on pages 16-17, if you reinvest your dividends and distributions, the number of shares you own in a Fund will increase at each date on which a dividend or distribution is paid and the Protected High Watermark Value will decrease so that your overall aggregate Protected High Watermark Value will not change. However, if you fail to reinvest dividends or distributions or you redeem Fund shares, your overall aggregate Protected High Watermark Value will decrease because you will have fewer shares multiplied by the applicable Protected High Watermark Value.

While the Adviser intends to meet all obligations under the Master Agreement, a failure to meet the commercially negotiated terms could permit PGF to cancel the Master Agreement and thus terminate its obligations to make any payment to the Fund if a shortfall exists to the Payment Undertaking on the Protected Maturity Date. In this event, shareholders will not receive the Protected High Watermark Value but instead will receive the Fund's then-current net asset value when they redeem their shares, which may be lower than the Protected High Watermark Value and lower than the shareholder's initial investment.

However, if this reduction in fees is not sufficient to reduce total annual operating expenses to an extent that they are covered by the current yield on the Fund's fixed income securities, and the Fund is within three years of its Protected Maturity Date, that date will be accelerated and the Fund will liquidate as described below. PGF may, however, permit the Fund to hold a higher proportion of its assets in obligations of U.S. government agencies and instrumentalities (which generally pay higher rates of interest than direct obligations of the U.S. Treasury) in order to avoid this circumstance.

Shareholders will receive 30 days' written notice of any shareholder distribution of liquidation proceeds.

A Derivative Instrument is a contract, such as an option or future, whose value is based on the performance of an underlying financial instrument.

An Early Fund Termination is a circumstance where a Fund will terminate by accelerating its Protected Maturity Date and distribute liquidation proceeds to its shareholders if ALL of the following circumstances happen: (i) if the Fund's Equity Risk Budget has dropped to zero; (ii) the Fund is in the final three years prior to its Protected Maturity Date; and (iii) the Fund has a portfolio yield less than total Fund operating expenses. Also, the Board of Trustees of the Trust or PGF can terminate the Fund under certain circumstances.

Extraordinary Expenses means any Fund fees and expenses that are not incurred or accrued in the ordinary course of the Fund's business (including for example, all costs of defending or prosecuting any claim, or litigation, to which the Fund is a party, together with any amounts in judgment, settlement or indemnification expense incurred by the Fund) or any other non-recurring, non-operating expenses.

Futures are contracts involving the right to receive or obligation to deliver assets or money depending on the performance of one or more underlying assets or a market or economic index.

The Investment Period for Class I of each Fund commenced on February 17, 2005 and ends on that Fund's Protected Maturity Date, at which time the Fund will liquidate and cease operations. During its Investment Period, a Fund will make continuous public offerings of its shares. Under certain limited circumstances, the Fund may close to new investments or liquidate altogether prior to its scheduled Protected Maturity Date.

Net Asset Value, or NAV, is the value of a Fund's assets minus all liabilities divided by the number of shares outstanding. The Funds calculate their NAV each business day.