The SST annual cycle (red solid line) is characterized by warm biases during June--October and cold biases during the other months,  and dramatic transitions between the two phases. The latter is reflected by the historical$-$AMIP heat storage tendency ($\rho c_p h dT'/dt$) annual cycle (black solid line).  During the cold-to-warm transition from April to June, the heat storage tendency is dominated by insufficient upward latent flux, and insufficient ocean dynamical cooling. The latent heat flux is larger in magnitude than the ocean dynamical term in April but smaller in June. In May, the magnitudes of these two terms are comparable. The insufficient ocean dynamical cooling term maintains the warm SST bias until October when the SST bias decays close to zero. The second SST transition, from warm to cold, peaks in October and November and too little short wave radiation ($R'_s$, blue solid line) dominates the negative heat storage tendency, probably due to excess precipitation and clouds (Fig. \ref{fig:prMon}). The dominant term eventually shifts to the excess latent heat flux ($LH'$, green solid line) in January and February, perhaps arising from stronger  Asian winter monsoon northeasterlies over the Indian Ocean. Therefore, insufficient ocean dynamical cooling and latent flux both are responsible for the development of the warm SST bias, while insufficient short wave radiation and excess latent heat flux mainly contribute to the cold SST bias.