================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-CSR
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CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-3807
SunAmerica Money Market Funds, Inc.
----------------------------------------------------
(Exact name of registrant as specified in charter)
Harborside Financial Center, 3200 Plaza 5 Jersey City, NJ 07311
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(Address of principal executive offices) (Zip code)
John T. Genoy
Senior Vice President
SunAmerica Asset Management, LLC
Harborside Financial Center,
3200 Plaza 5
Jersey City, NJ 07311
-----------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6414
Date of fiscal year end: December 31
Date of reporting period: June 30, 2016
================================================================================
Item 1. Reports to Stockholders
[PHOTO]
SEMI-ANNUAL REPORT 2016
SUNAMERICA
Government Money Market Fund
[LOGO]
TABLE OF CONTENTS
SHAREHOLDERS' LETTER............................... 2
EXPENSE EXAMPLE.................................... 4
STATEMENT OF ASSETS AND LIABILITIES................ 6
STATEMENT OF OPERATIONS............................ 7
STATEMENT OF CHANGES IN NET ASSETS................. 8
FINANCIAL HIGHLIGHTS............................... 9
PORTFOLIO OF INVESTMENTS........................... 10
NOTES TO FINANCIAL STATEMENTS...................... 12
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT
AGREEMENT.......................................... 18
JUNE 30, 2016 SEMI-ANNUAL REPORT
SHAREHOLDERS' LETTER -- (unaudited)
Dear Shareholders,
We are pleased to present this semi-annual shareholder report for the
SunAmerica Government Money Market Fund (the "Fund") for the six months ended
June 30, 2016.
Effective April 29, 2016, the Fund, formerly the SunAmerica Money Market Fund,
converted from a prime money market fund to a government money market fund and
changed its name accordingly to the SunAmerica Government Money Market Fund. To
qualify as a government money market fund, the Fund must invest at least 99.5%
of its total assets in cash, U.S. government securities, and/or repurchase
agreements that are collateralized by cash and/or U.S. government securities.
Thus, during the first months of the semi-annual period, the Fund gradually was
repositioned, allocating a larger percentage of its assets to U.S. government
securities before reaching its new allocation on April 29, 2016. As a
government money market fund, the Fund seeks to maintain a stable $1.00 net
asset value per share and is not subject to liquidity fees and/or redemption
gates.
The six month period ended June 30, 2016 was one wherein money market yields
remained low throughout, as the Federal Reserve (the "Fed"), after making its
initial interest rate hike since 2006 in December 2015, kept interest rates
steady. Following the June 23, 2016 Brexit vote, or the U.K. referendum on
membership in the European Union, which ended in a surprise "leave" decision,
expectations for further Fed rate hikes reduced sharply.
Throughout the semi-annual period, the policy statements, economic projections
and press conferences of the Fed were the focus of the money markets. In March
2016, the Fed appeared surprisingly dovish as it indicated an even slower
tightening path, paring back its forecasts for interest rate increases in 2016
from the four projected in December 2015 to two. The Fed cited global
uncertainties and mentioned that inflation remained lower than it would like
(Dovish language tends to suggest lower interest rates). In April 2016, the Fed
left rates on hold as expected, citing a slowdown in U.S. economic growth. In
May 2016, the Fed signaled an increasing probability of a June 2016 interest
rate hike, and short-term yields increased as a result. As oil prices rose,
there were signs that inflation may have been picking up, supporting the more
hawkish rhetoric from the Fed (Hawkish language tends to suggest higher
interest rates; opposite of dovish). In June 2016, Britain's decision to leave
the European Union led to a spike in global financial market volatility and a
shift toward assets widely considered to be less risky. The Fed reverted to its
more dovish stance, reducing its long-term forecasts for growth and policy
rates, citing mixed U.S. economic data and uncertainty about global economic
and financial developments. Consequently, U.S. rate hike expectations were
pushed out to 2018.
Despite increasing concerns about the growth outlook, U.S. economic releases
actually held up relatively well during the semi-annual period. During the
first calendar quarter of 2016, the labor market showed resilience, as
evidenced by consistently low jobless claims and solid job growth. The
manufacturing sector showed signs of stabilizing, and the housing market posted
healthy price gains. However, activity in the services sector slowed, and
consumers reduced spending, turning cautious amid equity market turbulence and
weaker global conditions. Low oil prices dampened headline inflation, while
non-food and non-energy prices creeped higher. In April 2016, payroll data beat
expectations and jobless claims hit a new record low, suggesting continued
improvement in the labor market. On the other hand, the U.S. economy expanded
just 0.5% in the first quarter, below expectations, driven by a deceleration in
consumer spending and weaker business investments. In May 2016, employment data
disappointed, with nonfarm payroll numbers coming in below expectations and
jobless claims rising. In June 2016, job growth declined sharply with the
weakest payroll growth since 2010. Durable goods orders fell, led by a slump in
military aircraft orders. Manufacturing activity, however, surprised to the
upside, and retail sales beat expectations. Personal spending recorded its
biggest advance in more than six years, as consumers stepped up purchases of
automobiles.
2
JUNE 30, 2016 SEMI-ANNUAL REPORT
SHAREHOLDERS' LETTER -- (unaudited) (continued)
With the targeted federal funds rate within a range of 0.25% to 0.50%
throughout the semi-annual period, money market yields remained anchored near
the same level with little difference in maturities. Indeed, the money market
yield curve, or spectrum of maturities, flattened, as short-term rates rose
slightly while longer-term rates declined. In turn, the semi-annual period did
not provide many opportunities to add yield.
On the following pages, you will find financial statements and portfolio
information for the Fund for the semi-annual period ended June 30, 2016.
As always, we remain diligent in the management of your assets. We value your
ongoing confidence in us and look forward to serving your investment needs in
the future. If you have any questions, or require additional information on
this or other SunAmerica Mutual Funds, you may contact your financial advisor
or visit us at www.safunds.com.
Sincerely,
/s/ Peter A. Harbeck
Peter A. Harbeck
President & CEO
SunAmerica Asset Management, LLC
--------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation (FDIC) or any other government agency. Although the Fund
seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Fund.
3
SUNAMERICA MONEY MARKET FUNDS, INC.
EXPENSE EXAMPLE -- JUNE 30, 2016 -- (UNAUDITED)
DISCLOSURE OF PORTFOLIO EXPENSES IN SHAREHOLDER REPORTS
As a shareholder in the SunAmerica Government Money Market Fund (the "Fund"),
you may incur two types of costs: (1) transaction costs, including contingent
deferred sales charges, small account fees and administrative fees and
(2) ongoing costs, including management fees, distribution and account
maintenance fees, and other Fund expenses. This Example set forth below is
intended to help you understand your ongoing costs (in dollars) of investing in
the Fund and to compare these costs with the ongoing costs of investing in
other mutual funds. The Example is based on an investment of $1,000 invested at
January 1, 2016 and held until June 30, 2016.
ACTUAL EXPENSES
The "Actual" section of the table provides information about actual account
values and actual expenses. You may use the information in these columns,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the column under the heading entitled "Expenses Paid During the Six
Months Ended June 30, 2016" to estimate the expenses you paid on your account
during this period. For shareholder accounts in classes other than Class I, the
"Expenses Paid During the Six Months Ended June 30, 2016" column and the
"Annualized Expense Ratio" column do not include small account fees that may be
charged if your account balance is below $500 ($250 for retirement plan
accounts). In addition, the "Expenses Paid During the Six Months Ended June 30,
2016" column and the "Annualized Expense Ratio" column do not include
administrative or other fees that may apply to qualified retirement plan
accounts and accounts held through financial institutions. See the Fund's
prospectus, your retirement plan documents and/or materials from your financial
adviser for a full description of these fees. Had these fees been included, the
"Expenses Paid During the Six Months Ended June 30, 2016" column would have
been higher and the "Ending Account Value" column would have been lower.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The "Hypothetical" section of the table provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an annual rate of return of 5% before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare the ongoing costs of investing
in the Fund and other funds. To do so, compare this 5% hypothetical example
with the 5% hypothetical examples that appear in the shareholder reports of
other funds. For shareholder accounts in classes other than Class I, the
"Expenses Paid During the Six Months Ended June 30, 2016" column and the
"Annualized Expense Ratio" column do not include small account fees that may be
charged if your account balance is below $500 ($250 for retirement plan
accounts). In addition, the "Expenses Paid During the Six Months Ended June 30,
2016" column and the "Annualized Expense Ratio" column do not include
administrative fees that may apply to qualified retirement plan accounts and
accounts held through financial institutions. See the Fund's prospectus, your
retirement plan documents and/or materials from your financial adviser for a
full description of these fees. Had these fees been included, the "Expenses
Paid During the Six Months Ended June 30, 2016" column would have been higher
and the "Ending Account Value" column would have been lower.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, including
contingent deferred sales charges, small account fees and administrative fees,
if applicable to your account. Please refer to the Fund's prospectus, qualified
retirement plan document and/or materials from your financial adviser for more
information. Therefore, the "Hypothetical" example is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transaction costs and other fees
were included, your costs would have been higher.
4
SUNAMERICA MONEY MARKET FUNDS, INC.
EXPENSE EXAMPLE -- JUNE 30, 2016 -- (UNAUDITED) (CONTINUED)
ACTUAL HYPOTHETICAL
------------------------------------------------- -----------------------------------------------------
ENDING ENDING ACCOUNT
ACCOUNT VALUE EXPENSES PAID VALUE USING EXPENSES PAID
BEGINNING USING ACTUAL DURING THE BEGINNING A HYPOTHETICAL 5% DURING THE
ACCOUNT VALUE RETURN AT SIX MONTHS ENDED ACCOUNT VALUE ANNUAL RETURN AT SIX MONTHS ENDED
AS JANUARY 1, 2016 JUNE 30, 2016 JUNE 30, 2016* AS JANUARY 1, 2016 JUNE 30, 2016 JUNE 30, 2016*
------------------ ------------- ---------------- ------------------ ----------------- ----------------
Government Money
Market Fund#+
Class A....... $1,000.00 $1,000.05 $1.84 $1,000.00 $1,023.02 $1.86
Class I....... $1,000.00 $1,000.05 $1.84 $1,000.00 $1,023.02 $1.86
ANNUALIZED
EXPENSE
RATIO*
----------
Government Money
Market Fund#+
Class A....... 0.37%
Class I....... 0.37%
--------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 182 days then divided
by 366 days (to reflect the one-half year period). These ratios do not
reflect transaction costs, including contingent deferred sales charges,
small account fees and administrative fees, if applicable to your account.
Please refer to your Prospectus, your qualified retirement plan document
and/or materials from your financial adviser for more information.
# During the stated period, the investment adviser and distributor either
waived a portion of or all of the fees and assumed a portion of or all
expenses for the Fund. As a result, if these fees and expenses had not been
waived or assumed, the "Actual/Hypothetical Ending Account Value" would have
been lower and the "Actual/Hypothetical Expenses Paid During the Six Months
Ended June 30, 2016" and the "Annualized Expense Ratio" would have been
higher.
+ See Note 1
5
SUNAMERICA MONEY MARKET FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES -- JUNE 30, 2016 -- (UNAUDITED)
GOVERNMENT
MONEY MARKET
FUND+
------------
ASSETS:
Investments at value* (unaffiliated).......................................................... $695,264,509
Repurchase agreements (cost approximates value)............................................... 44,434,000
------------
Total Investments........................................................................... $739,698,509
------------
Cash.......................................................................................... 523
Receivable for:
Fund shares sold............................................................................ 274,562
Dividends and interest...................................................................... 224,750
Prepaid expenses and other assets............................................................. 15,215
Due from investment adviser for expense reimbursements/fee waivers............................ 276,104
Due from distributor for fee waivers.......................................................... 87,162
------------
Total assets................................................................................ 740,576,825
------------
LIABILITIES:
Payable for:
Fund shares redeemed........................................................................ 386,084
Investments purchased....................................................................... 27,987,095
Investment advisory and management fees..................................................... 290,345
Distribution and service maintenance fees................................................... 87,163
Transfer agent fees and expenses............................................................ 145,148
Directors' fees and expenses................................................................ 407
Other accrued expenses...................................................................... 126,782
Dividends payable............................................................................. 31,327
------------
Total liabilities........................................................................... 29,054,351
------------
Net Assets................................................................................. $711,522,474
============
Common stock, $.001 par value (3.5 billion shares authorized)................................. $ 711,453
Paid-in capital............................................................................... 710,816,608
------------
711,528,061
Accumulated undistributed net investment income (loss)........................................ (26,197)
Accumulated undistributed realized gain (loss) on investment.................................. 20,610
------------
Net assets................................................................................. $711,522,474
============
CLASS A:
Net assets.................................................................................... 699,661,781
Shares outstanding............................................................................ 699,612,048
Net asset value and redemption price per share
(excluding any applicable contingent deferred sales charge).................................. $ 1.00
============
CLASS I:
Net assets.................................................................................... 11,860,693
Shares outstanding............................................................................ 11,841,104
Net asset value and redemption price per share................................................ $ 1.00
============
*Amortized cost of investment securities (unaffiliated) ...................................... $695,264,509
============
--------
+ See Note 1
See Notes to Financial Statements
6
SUNAMERICA MONEY MARKET FUNDS, INC.
STATEMENT OF OPERATIONS -- FOR THE SIX MONTHS ENDED JUNE 30,2016 --
(UNAUDITED)
GOVERNMENT
MONEY MARKET
FUND+
------------
INVESTMENT INCOME:
Interest (unaffiliated)................................................................ $ 1,499,894
-----------
Total investment income............................................................. 1,499,894
-----------
EXPENSES:
Investment advisory and management fees................................................ 1,914,590
Distribution and account maintenance fees
Class A.............................................................................. 579,082
Transfer agent fees and expenses
Class A.............................................................................. 889,497
Class I.............................................................................. 14,799
Registration fees
Class A.............................................................................. 66,152
Class I.............................................................................. 6,114
Custodian and accounting fees.......................................................... 47,169
Reports to shareholders................................................................ 78,334
Audit and tax fees..................................................................... 28,121
Legal fees............................................................................. 36,045
Directors' fees and expenses........................................................... 24,206
Other expenses......................................................................... 9,040
-----------
Total expenses before fee waivers, expense reimbursements........................... 3,693,149
Fees waived and expenses reimbursed by investment adviser and distributor (Note 3).. (2,232,591)
-----------
Net expenses........................................................................ 1,460,558
-----------
Net investment income (loss)........................................................... 39,336
-----------
Net realized gain (loss) on investments................................................ 20,610
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 59,946
===========
--------
+ See Note 1
See Notes to Financial Statements
7
SUNAMERICA MONEY MARKET FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
GOVERNMENT MONEY MARKET
FUND+
---------------------------
FOR THE
SIX MONTHS
ENDED FOR THE YEAR
JUNE 30, ENDED
2016 DECEMBER 31,
(UNAUDITED) 2015
------------- ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 39,336 $ 72,785
Net realized gain (loss) on investments................................................ 20,610 1,145,974
------------- ------------
Net increase (decrease) in net assets resulting from operations.......................... 59,946 1,218,759
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (38,709) (71,367)
Net investment income (Class I)........................................................ (627) (1,418)
------------- ------------
Total distributions to shareholders...................................................... (39,336) (72,785)
------------- ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 5). (109,740,274) 83,893,269
------------- ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (109,719,664) 85,039,243
------------- ------------
NET ASSETS:
Beginning of period...................................................................... 821,242,138 736,202,895
------------- ------------
End of period*........................................................................... $ 711,522,474 $821,242,138
============= ============
*Includes accumulated undistributed net investment income (loss)......................... $ (26,197) $ (26,197)
============= ============
--------
+ See Note 1
See Notes to Financial Statements
8
SUNAMERICA MONEY MARKET FUNDS, INC.
FINANCIAL HIGHLIGHTS
GOVERNMENT MONEY MARKET FUND+
-
NET NET NET RATIO OF NET
ASSET DIVIDENDS ASSET ASSETS RATIO OF INVESTMENT
VALUE NET FROM NET VALUE END OF EXPENSES INCOME TO
BEGINNING INVESTMENT INVESTMENT END OF TOTAL PERIOD TO AVERAGE AVERAGE
PERIOD ENDED OF PERIOD INCOME(1) INCOME PERIOD RETURN(2) (000'S) NET ASSETS(3) NET ASSETS(3)
------------ --------- ---------- ---------- ------ --------- -------- ------------- -------------
CLASS A
-
12/31/11 $1.00 $0.00 $(0.00) $1.00 0.01% $692,515 0.17% 0.01%
12/31/12 1.00 0.00 (0.00) 1.00 0.01 768,644 0.22 0.01
12/31/13 1.00 0.00 (0.00) 1.00 0.01 736,942 0.18 0.01
12/31/14 1.00 0.00 (0.00) 1.00 0.01 720,356 0.14 0.01
12/31/15 1.00 0.00 (0.00) 1.00 0.01(4) 807,427 0.17 0.01
06/30/16(5) 1.00 0.00 (0.00) 1.00 0.00 699,662 0.37(6) 0.01(6)
CLASS I
-
12/31/11 $1.00 $0.00 $(0.00) $1.00 0.01% $ 15,625 0.18% 0.01%
12/31/12 1.00 0.00 (0.00) 1.00 0.01 15,765 0.22 0.01
12/31/13 1.00 0.00 (0.00) 1.00 0.01 13,360 0.18 0.01
12/31/14 1.00 0.00 (0.00) 1.00 0.01 15,847 0.14 0.01
12/31/15 1.00 0.00 (0.00) 1.00 0.01(4) 13,815 0.16 0.01
06/30/16(5) 1.00 0.00 (0.00) 1.00 0.00 11,861 0.37(6) 0.01(6)
--------
(1) Calculated based upon average shares outstanding.
(2) Total return is not annualized and does not reflect sales load but does
include expense reimbursements.
(3) Net of the following expense reimbursements/waivers (based on average net
assets):
12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 6/30/16(5)(6)
-------- -------- -------- -------- -------- -------------
Class A............. 0.76% 0.72% 0.75% 0.79% 0.78% 0.57%
Class I............. 0.60 0.62 0.68 0.69 0.71% 0.51%
(4) The Fund's performance figure was increased by less than 0.01% from the
effect of payments by an affiliate.
(5) Unaudited
(6) Annualized
+ See Note 1
See Notes to Financial Statements
9
SUNAMERICA GOVERNMENT MONEY MARKET FUND+
PORTFOLIO PROFILE -- JUNE 30, 2016 -- (UNAUDITED)
INDUSTRY ALLOCATION*
U.S. Government Agencies . . . . . . . . . ..... 82.1%
U.S. Government Treasuries . . . . . . . . ..... 15.6
Repurchase Agreements . . . . . . . . . . . . .. 6.3
-----
104.0%
=====
Weighted average days to maturity............... 25.0
CREDIT QUALITY ALLOCATION@#
A-1......................... 100.0%
=====
--------
* Calculated as a percentage of net assets.
@ Source: Standard & Poors.
# Calculated as a percentage of total debt issues.
+ See Note 1
10
SUNAMERICA GOVERNMENT MONEY MARKET FUND+
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2016 -- (UNAUDITED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
SHORT-TERM INVESTMENT SECURITIES -- 97.7%
U.S. GOVERNMENT AGENCIES -- 82.1%
Federal Farm Credit Bank FRS
0.40% due 07/27/2016......... $21,555,000 $21,555,155
0.43% due 10/19/2016......... 15,100,000 15,099,802
0.44% due 11/09/2016......... 15,000,000 14,999,463
0.45% due 02/21/2017......... 14,000,000 13,994,820
0.46% due 09/19/2016......... 15,400,000 15,397,280
0.46% due 09/19/2016......... 14,500,000 14,500,333
0.46% due 10/20/2016......... 21,350,000 21,350,193
0.47% due 12/19/2016......... 1,735,000 1,734,969
0.48% due 03/27/2017......... 5,500,000 5,498,638
0.50% due 01/03/2017......... 3,575,000 3,574,280
0.50% due 02/13/2017......... 7,650,000 7,647,897
0.50% due 02/16/2017......... 16,000,000 16,001,024
0.51% due 05/24/2017......... 12,000,000 12,000,000
0.52% due 03/29/2017......... 25,300,000 25,290,368
Federal Home Loan Bank
0.25% due 08/05/2016......... 14,600,000 14,594,961
0.25% due 08/12/2016......... 14,700,000 14,694,512
0.17% due 07/06/2016......... 2,000,000 1,999,906
0.17% due 07/07/2016......... 21,000,000 20,999,160
0.17% due 07/19/2016......... 13,900,000 13,897,915
0.17% due 07/22/2016......... 8,100,000 8,098,299
0.17% due 07/27/2016......... 29,500,000 29,493,782
0.25% due 08/01/2016......... 19,000,000 18,994,764
0.25% due 08/03/2016......... 14,500,000 14,495,640
0.25% due 08/30/2016......... 10,000,000 9,990,833
0.28% due 09/02/2016......... 16,000,000 15,987,120
0.28% due 09/07/2016......... 15,400,000 15,385,165
0.37% due 10/03/2016......... 14,000,000 13,985,378
Federal Home Loan Bank FRS
0.43% due 08/26/2016......... 16,000,000 16,000,000
0.44% due 10/07/2016......... 1,300,000 1,300,128
0.45% due 10/26/2016......... 16,000,000 15,999,783
0.45% due 11/03/2016......... 14,550,000 14,550,000
0.46% due 11/16/2016......... 13,800,000 13,800,000
0.46% due 11/25/2016......... 13,800,000 13,800,000
0.47% due 09/16/2016......... 5,000,000 4,999,940
0.48% due 01/27/2017......... 14,000,000 14,000,099
0.50% due 02/27/2017......... 16,000,000 15,999,441
0.54% due 04/25/2017......... 14,850,000 14,851,348
Federal Home Loan Mtg. Corp.
0.25% due 08/04/2016......... 10,000,000 9,995,656
0.28% due 09/20/2016......... 15,300,000 15,283,132
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------
Federal Home Loan Mtg. Corp. FRS
0.48% due 01/13/2017............... $ 9,300,000 $ 9,297,442
Federal National Mtg. Assoc.
0.17% due 07/19/2016............... 13,000,000 12,997,400
0.48% due 08/26/2016............... 2,890,000 2,891,281
Federal National Mtg. Assoc. FRS
0.33% due 07/25/2016............... 3,200,000 3,200,001
0.40% due 08/15/2016............... 7,200,000 7,200,000
0.40% due 08/16/2016............... 6,050,000 6,050,000
0.41% due 08/12/2016............... 10,700,000 10,700,113
------------
TOTAL U.S. GOVERNMENT AGENCIES
(amortized cost $584,177,421)....... 584,177,421
------------
U.S. GOVERNMENT TREASURIES -- 15.6%
United States Treasury Bills
0.06% due 07/07/2016............... 8,000,000 7,999,675
0.13% due 07/14/2016............... 52,000,000 51,996,589
0.18% due 07/28/2016............... 35,000,000 34,993,175
United States Treasury Notes
0.35% due 09/30/2016............... 16,000,000 16,097,649
------------
TOTAL U.S. GOVERNMENT TREASURIES
(amortized cost $111,087,088)....... 111,087,088
------------
TOTAL SHORT-TERM INVESTMENT SECURITIES -- 97.7%
(amortized cost $695,264,509)....... 695,264,509
------------
REPURCHASE AGREEMENTS -- 6.3%
State Street Bank and Trust Co.
Joint Repurchase Agreement
(cost $44,434,000)(1).............. 44,434,000 44,434,000
------------
TOTAL INVESTMENTS --
(amortized cost $739,698,509)(2).... 104.0% 739,698,509
LIABILITIES IN EXCESS OF OTHER ASSETS. (4.0) (28,176,035)
----------- ------------
NET ASSETS............................ 100.0% $711,522,474
=========== ============
--------
+ See Note 1
(1)See Note 2 for details of Joint Repurchase Agreements.
(2)At June 30, 2016, the cost of securities for federal income tax purposes was
the same for book purposes.
FRS--Floating Rate Securities
The rates shown on FRS are the current interest rates at June 30, 2016 and
unless noted otherwise, the dates shown are the original maturity dates.
The following is a summary of the inputs used to value the Fund's net assets as
of June 30, 2016 (see Note 2):
LEVEL 1 -- UNADJUSTED LEVEL 2 -- OTHER LEVEL 3 -- SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
--------------------- ----------------- ---------------------- ------------
ASSETS:
Investment at Value*
Short-Term Investment Securities. $-- $695,264,509 $-- $695,264,509
Repurchase Agreements............ -- 44,434,000 -- 44,434,000
--- ------------ --- ------------
TOTAL INVESTMENTS AT VALUE....... $-- $739,698,509 $-- $739,698,509
=== ============ === ============
--------
* For a detailed presentation of investments, please refer to the Portfolio of
Investments.
The Fund's policy is to recognize transfers between Levels as of the end of the
reporting period. There were no transfers between Levels during the reporting
period.
See Notes to Financial Statements
11
SUNAMERICA MONEY MARKET FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2016 -- (UNAUDITED)
Note 1. Organization
SunAmerica Money Market Funds, Inc. (the "Corporation") is an open-end
diversified management investment company organized as a Maryland
corporation. The Corporation consists of one series -- SunAmerica Government
Money Market Fund (the "Fund"). Effective April 29, 2016, the Fund, formerly
the SunAmerica Money Market Fund, converted from a prime money market fund
to a government money market fund and changed its name accordingly to the
SunAmerica Government Money Market Fund. The Fund is advised by SunAmerica
Asset Management, LLC ("SunAmerica" or "Adviser"), an indirect wholly-owned
subsidiary of American International Group, Inc. ("AIG"). The investment
objective of the Fund is to seek as high a level of current income as is
consistent with liquidity and stability of capital by investing at least
99.5% of its total assets in cash, U.S. government securities, and/or
repurchase agreements that are collateralized by U.S. government securities.
The Fund currently offers two classes of shares: Class A and Class I. These
classes within the Fund are presented in the Statement of Assets and
Liabilities. The cost structure for each class is as follows:
Class A shares-- Class A shares are available with no front-end sales
charge. A 1.00% contingent deferred sales charge ("CDSC")
is imposed on certain shares sold within one year of
original purchase and a 0.50% CDSC is imposed on certain
shares sold after the first year and within the second year
after purchase, as described in the Fund's Prospectus.
Class I shares-- Class I shares are offered at net asset value per share
without any sales charge, exclusively to certain
institutions.
Each class of shares bears the same voting, dividend, liquidation and other
rights and conditions, except as may otherwise be provided in the Fund's
registration statement.
INDEMNIFICATIONS: The Corporation's organizational documents provide current
and former officers and directors with a limited indemnification against
liabilities arising out of the performance of their duties to the
Corporation. In addition, pursuant to Indemnification Agreements between the
Corporation and each of the current directors who is not an "interested
person," as defined in Section 2(a)(19) of the Investment Company Act of
1940, as amended (the "1940 Act"), of the Corporation (collectively, the
"Disinterested Directors"), the Corporation provides the Disinterested
Directors with a limited indemnification against liabilities arising out of
the performance of their duties to the Corporation, whether such liabilities
are asserted during or after their service as directors. In addition, in the
normal course of business, the Corporation enters into contracts that
contain the obligation to indemnify others. The Corporation's maximum
exposure under these arrangements is unknown. Currently, however, the
Corporation expects the risk of loss to be remote.
Note 2. Significant Accounting Policies
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles ("GAAP") requires management to make
estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those
estimates and those differences could be significant. The following is a
summary of significant accounting policies consistently followed by the Fund
in the preparation of its financial statements:
SECURITY VALUATION: In accordance with the authoritative guidance on fair
value measurements and disclosures under GAAP, the Fund discloses the fair
value of its investments in a hierarchy that prioritizes the inputs to
valuation techniques used to measure the fair value. In accordance with
GAAP, fair value is defined as the price that the Fund would receive upon
selling an asset or transferring a liability in a timely transaction to an
independent third party in the principal or most advantageous market. GAAP
establishes a three-tier hierarchy to provide more transparency around the
inputs used to measure fair value and to establish classification of fair
value measurements for disclosure purposes. Inputs refer broadly to the
assumptions that market participants would use in pricing the asset or
liability, including assumptions about risk. Inputs may be observable or
unobservable. Observable inputs are inputs that reflect the assumptions
market participants would use in pricing the asset or liability developed
based on market data obtained from sources independent of the reporting
entity. Unobservable inputs are inputs that reflect the
12
SUNAMERICA MONEY MARKET FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2016 -- (UNAUDITED)
(CONTINUED)
reporting entity's own assumptions about the assumptions market participants
would use in pricing the asset or liability developed based on the best
information available in the circumstances. The three-tiers are as follows:
Level 1 -- Unadjusted quoted prices in active markets for identical
securities
Level 2 -- Other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
referenced indices, quoted prices in inactive markets, adjusted quoted
prices in active markets, adjusted quoted prices on foreign equity
securities that were adjusted in accordance with pricing procedures approved
by the Board of Directors (the "Board"), etc.)
Level 3 -- Significant unobservable inputs (includes inputs that reflect the
Fund's own assumptions about the assumptions market participants would use
in pricing the security, developed based on the best information available
under the circumstances)
Changes in valuation techniques may result in transfers in or out of an
investment's assigned Level within the hierarchy. The methodology used for
valuing investments is not necessarily an indication of the risk associated
with investing in those investments and the determination of the
significance of a particular input to the fair value measurement in its
entirety requires judgment and consideration of factors specific to each
security.
The availability of observable inputs can vary from security to security and
is affected by a wide variety of factors, including, for example, the type
of security, whether the security is recently issued and not yet established
in the marketplace, the liquidity of markets, and other characteristics
particular to the security. To the extent that valuation is based on models
or inputs that are less observable or unobservable in the market, the
determination of fair value requires more judgment. Accordingly, the degree
of judgment exercised in determining fair value is greatest for instruments
categorized in Level 3.
The summary of the Fund's assets and liabilities classified in the fair
value hierarchy as of June 30, 2016, is reported on a schedule following the
Portfolio of Investments.
Portfolio securities are valued at amortized cost, which approximates market
value, and are generally categorized as Level 2. The amortized cost method
involves valuing a security at its cost on the date of purchase and
thereafter assuming a constant amortization to maturity of any discount or
premium. In accordance with Rule 2a-7 under the 1940 Act, the Board has
adopted procedures intended to stabilize the Fund's net asset value per
share at $1.00. These procedures include the determination, at such
intervals as the Board deems appropriate and reasonable in light of current
market conditions, of the extent, if any, to which the Fund's market-based
net asset value per share deviates from the Fund's amortized cost per share.
The calculation of such deviation is referred to as "Shadow Pricing." For
purposes of these market-based valuations, securities for which market
quotations are not readily available are fair valued, as determined pursuant
to procedures adopted in good faith by the Board.
The Board is responsible for the share valuation process and has adopted
policies and procedures (the "PRC Procedures") for valuing the securities
and other assets held by the Fund, including procedures for the fair
valuation of securities and other assets for which market quotations are not
readily available or are unreliable. The PRC Procedures provide for the
establishment of a pricing review committee, which is responsible for, among
other things, making certain determinations in connection with the Fund's
fair valuation procedures. Securities for which market quotations are not
readily available or the values of which may be significantly impacted by
the occurrence of developments or significant events are generally
categorized as Level 3. There is no single standard for making fair value
determinations, which may result in prices that vary from those of other
funds.
MASTER AGREEMENTS: The Fund has entered into Master Repurchase Agreements
("Master Agreements") with certain counterparties that govern repurchase
agreement transactions. The Master Agreements may contain provisions
regarding, among other things, the parties' general obligations,
representations, agreements, collateral requirements and events of default.
Collateral can be in the form of cash or securities as agreed to by the Fund
and applicable
13
SUNAMERICA MONEY MARKET FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2016 -- (UNAUDITED)
(CONTINUED)
counterparty. The Master Agreements typically specify certain standard
termination events, such as failure of a party to pay or deliver, credit
support defaults and other events of default. Upon the occurrence of an
event of default, the other party may elect to terminate early and cause
settlement of all repurchase agreement transactions outstanding pursuant to
a particular Master Agreement, including the payment of any losses and costs
resulting from such early termination, as reasonably determined by the
terminating party. Any decision by one or more of the Fund's counterparties
to elect early termination could cause the Fund to accelerate the payment of
liabilities. Typically, the Master Agreement will permit a single net
payment in the event of default. Note, however, that bankruptcy or
insolvency laws of a particular jurisdiction may impose restrictions on or
prohibitions against the right of offset in bankruptcy, insolvency or other
events. As of June 30, 2016, the repurchase agreements held by the Fund are
subject to master netting provisions. See the Portfolio of Investments and
the Notes to Financial Statements for more information about the Fund's
holdings in repurchase agreements.
REPURCHASE AGREEMENTS: The Fund, along with other affiliated registered
investment companies, pursuant to procedures adopted by the Board and
applicable guidance from the Securities and Exchange Commission ("SEC"), may
transfer uninvested cash balances into a single joint account, the daily
aggregate balance of which is invested in one or more repurchase agreements
collateralized by U.S. Treasury or federal agency obligations. In a
repurchase agreement, the seller of a security agrees to repurchase the
security at a mutually agreed-upon time and price, which reflects the
effective rate of return for the term of the agreement. For repurchase
agreements and joint repurchase agreements, the Fund's custodian takes
possession of the collateral pledged for investments in such repurchase
agreements. The underlying collateral is valued daily on a mark to market
basis, plus accrued interest to ensure that the value, at the time the
agreement is entered into, is equal to at least 102% of the repurchase
price, including accrued interest. In the event of default of the obligation
to repurchase, the Fund has the right to liquidate the collateral and apply
the proceeds in satisfaction of the obligation. If the seller defaults and
the value of the collateral declines or if bankruptcy proceedings are
commenced with respect to the seller of the security, realization of the
collateral by the Fund may be delayed or limited.
As of June 30, 2016, the Fund held an undivided interest in the joint
repurchase agreement with State Street Bank and Trust Co.:
PERCENTAGE PRINCIPAL
OWNERSHIP AMOUNT
- ---------- -----------
Government Money Market Fund...................... 17.60% $44,434,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
State Street Bank and Trust Co., dated June 30, 2016, bearing interest at a
rate of 0.01% per annum, with a principal amount of $252,517,000, a
repurchase price of $252,517,070, and a maturity date of July 1, 2016. The
repurchase agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- --------- ------------ ------------
U.S. Treasury Notes........... 2.13% 8/15/2021 $195,355,000 $207,223,207
U.S. Treasury Notes........... 2.25 7/31/2021 47,135,000 50,344,139
SECURITIES TRANSACTIONS, INVESTMENT INCOME, EXPENSES, DIVIDENDS AND
DISTRIBUTIONS TO SHAREHOLDERS: Security transactions are recorded on a trade
date basis. Interest income, including the accretion of discount and
amortization of premium, is accrued daily from settlement date, except when
collection is not expected; dividend income is recorded on the ex-dividend
date.
Net investment income, other than class specific expenses, and realized and
unrealized gains and losses are allocated daily to each class of shares
based upon the relative net asset value of outstanding shares (or the value
of the dividend-eligible shares, as appropriate) of each class of shares at
the beginning of the day (after adjusting for current capital share activity
of the respective class).
14
SUNAMERICA MONEY MARKET FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2016 -- (UNAUDITED)
(CONTINUED)
Dividends from net investment income, if any, are normally declared daily
and paid monthly. Capital gain distributions, if any, are paid annually. The
Fund records dividends and distributions to its shareholders on the
ex-dividend date. The amount of dividends and distributions from net
investment income and net realized capital gains are determined in
accordance with federal income tax regulations, which may differ from GAAP.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such
amounts are reclassified within the capital accounts at fiscal year end
based on their federal tax-basis treatment; temporary differences do not
require reclassification. Net assets are not affected by these
reclassifications.
The Fund is considered a separate entity for tax purposes and intends to
comply with the requirements of the Internal Revenue Code, as amended,
applicable to regulated investment companies and distribute all of its
taxable income, including any net capital gains on investments, to its
shareholders. The Fund also intends to distribute sufficient net investment
income and net capital gains, if any, so that the Fund will not be subject
to excise tax on undistributed income and gains. Therefore, no federal
income tax or excise tax provision is required.
The Fund recognizes the tax benefits of uncertain tax positions only when
the position is more likely than not to be sustained, assuming examination
by tax authorities. Management has analyzed the Fund's tax positions and
concluded that no liability for unrecognized tax benefits should be recorded
related to uncertain tax positions taken on returns filed for open tax years
2012 - 2014 or expected to be taken in the Fund's 2015 tax return. The Fund
is not aware of any tax provisions for which it is reasonably possible that
the total amounts of unrecognized tax benefits will change materially in the
next twelve months. The Fund files U.S. federal and certain state income tax
returns. With few exceptions, the Fund is no longer subject to U.S. federal
and state tax examinations by tax authorities for tax returns ending before
2012.
Note 3. Investment Advisory and Management Agreement, Distribution and Service
Agreement and Other Transactions With Affiliates
The Fund has entered into an Investment Advisory and Management Agreement
(the "Advisory Agreement") with SunAmerica. Under the Advisory Agreement,
SunAmerica provides continuous supervision of the Fund and administers its
corporate affairs, subject to general review by the Board. In connection
therewith, SunAmerica furnishes the Fund with office facilities, maintains
certain of its books and records, and pays the salaries and expenses of all
personnel, including officers of the Fund who are employees of SunAmerica
and its affiliates.
The Fund will pay SunAmerica a monthly management fee at the following
annual percentages, based on the average daily net assets of the Fund: 0.50%
on the first $600 million; 0.45% on the next $900 million; and 0.40% over
$1.5 billion.
SunAmerica has contractually agreed to waive fees and/or reimburse expenses
to the extent necessary to cap the Fund's annual fund operating expenses at
0.80% for Class I, of average net assets. For purposes of waived fee and/or
reimbursed expense calculations, annual Fund operating expenses shall not
include extraordinary expenses (i.e., expenses that are unusual in nature
and/or infrequent in occurrence, such as litigation), or acquired fund fees
and expenses, brokerage commissions and other transactional expenses
relating to the purchase and sale of portfolio securities, interest, taxes
and governmental fees, and other expenses not incurred in the ordinary
course of the Fund's business. This fee waiver and expense reimbursement
will continue in effect indefinitely, unless terminated by the Board,
including a majority of the Disinterested Directors. For the six months
ended June 30, 2016, pursuant to the contractual expense limitations,
SunAmerica waived fees and/or reimbursed expenses of $9,349 for Class I.
SunAmerica may also voluntarily waive fees and/or reimburse expenses,
including to avoid a negative yield on any class of the Fund. The voluntary
waivers and/or reimbursements may be terminated at any time at the option of
SunAmerica. The exact amount of the voluntary waivers and/or reimbursements
may change on a day-to-day basis. There is no guarantee that the Fund will
be able to avoid a negative yield. For the six months ended June 30, 2016,
SunAmerica voluntarily waived fees and/or reimbursed expenses of $1,621,788
and $22,372 for Class A and Class I, respectively.
15
SUNAMERICA MONEY MARKET FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2016 -- (UNAUDITED)
(CONTINUED)
The Fund has entered into a Distribution Agreement with AIG Capital
Services, Inc. ("ACS" or the "Distributor"), an affiliate of the Adviser.
The Fund has adopted a Distribution Plan on behalf of its Class A shares
(the "Plan") in accordance with the provisions of Rule 12b-1 under the 1940
Act. In adopting the Plan, the Board determined that there was a reasonable
likelihood that the Plan would benefit the Fund and the shareholders of the
respective class. The sales charge and distribution fees of a particular
class will not be used to subsidize the sale of shares of any other class.
The Plan provides that the Class A shares of the Fund shall pay the
Distributor an account maintenance fee at the annual rate of up to 0.15% of
the aggregate average daily net assets of such class of shares for payments
to compensate the Distributor and certain securities firms for account
maintenance activities. In this regard, some payments are used to compensate
broker-dealers with account maintenance fees in an amount up to 0.15% per
year of the assets maintained in the Fund by its customers. Accordingly, ACS
received fees (see Statement of Operations) based upon the aforementioned
rates. In addition, in light of current market conditions, and in order to
avoid a negative yield on Class A shares of the Fund, ACS has agreed to
waive up to 0.15% of the fees it receives under the Plan. This voluntary
waiver may be terminated at any time at the option of the Distributor
without notice to shareholders. For the six months ended June 30, 2016, ACS
voluntarily waived $579,082 in account maintenance fees for Class A shares.
ACS receives the proceeds of contingent deferred sales charges paid by
investors in connection with certain redemptions of the Fund's Class A
shares. ACS has advised the Fund that for the six months ended June 30,
2016, the proceeds received from redemptions are as follows:
Class A........................................... $51
The Fund has entered into a Service Agreement with SunAmerica Fund Services,
Inc. ("SAFS"), an affiliate of the Adviser. Under the Service Agreement,
SAFS performs certain shareholder account functions by assisting the Fund's
transfer agent in connection with the services that it offers to the
shareholders of the Fund. The Service Agreement, which permits the Fund to
compensate SAFS for services rendered based upon the annual rate of 0.22% of
average daily net assets, is approved annually by the Board. For the six
months ended June 30, 2016, the Fund incurred the following expenses which
are included in transfer agent fees and expenses payable line in the
Statement of Assets and Liabilities and in transfer agent fees and expenses
in the Statement of Operations to compensate SAFS pursuant to the terms of
the Service Agreement:
PAYABLE AT
EXPENSES JUNE 30, 2016
-------- -------------
Class A........................................... $849,321 $127,838
Class I........................................... 13,768 2,089
As of result of losses on medium-term notes issued by Cheyne Finance LLC,
that were previously held by the Money Market Fund, SunAmerica made capital
contributions to the Money Market Fund of $0 and $1,136,168 for the periods
ended June 30, 2016 and December 31, 2015, respectively.
Note 4. Federal Income Taxes
The following details the tax basis of distributions as well as the
components of distributable earnings. The tax basis components of
distributable earnings differ from the amounts reflected in the Statement of
Assets and Liabilities by temporary book/tax differences primarily arising
from dividends payable.
DISTRIBUTABLE EARNINGS TAX DISTRIBUTIONS
----------------------------------------- -------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 2015 FOR THE YEAR ENDED DECEMBER 31, 2015
----------------------------------------- -------------------------------------
LONG-TERM GAINS/ UNREALIZED LONG-TERM
ORDINARY CAPITAL AND OTHER APPRECIATION ORDINARY CAPITAL
INCOME LOSSES (DEPRECIATION) INCOME GAINS
-------- ----------------- -------------- -------- ---------
$ -- $ -- $ -- $72,785 $ --
16
SUNAMERICA MONEY MARKET FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2016 -- (UNAUDITED)
(CONTINUED)
During the year ended December 31, 2015, the Fund utilized $1,143,793 of
capital loss carryforwards to offset current year capital gains.+
-----
+ On December 22, 2010, the Regulated Investment Company Modernization Act
of 2010 (the "Act") was enacted which changed various technical rules
governing the tax treatment of regulated investment companies. The
changes are generally effective taxable years beginning after the date of
enactment. Under the Act, the Fund will be permitted to carry forward
capital losses incurred in taxable years beginning after the date of
enactment for an unlimited period. However, any losses incurred during
those future taxable years will be required to be utilized prior to the
losses incurred in pre-enactment taxable years, which carry an expiration
date. As a result of this ordering rule, pre-enactment capital loss
carryforwards may be more likely to expire unused. Additionally,
post-enactment capital losses that are carried forward will retain their
character as either short-term or long-term losses rather than being
considered all short-term as under previous law.
Note 5. Capital Share Transactions
Transactions in each class of shares of the Fund (at $1.00 per share) were
as follows:
CLASS A CLASS I
---------------------------- -------------------------
FOR THE FOR THE
SIX MONTHS FOR THE SIX MONTHS FOR THE
ENDED YEAR ENDED YEAR
JUNE 30, ENDED JUNE 30, ENDED
2016 DECEMBER 31, 2016 DECEMBER 31,
(UNAUDITED) 2015 (UNAUDITED) 2015
------------- ------------- ----------- ------------
Shares sold............. $ 124,620,398 $ 574,424,150 $ 5,127,749 $ 12,456,914
Reinvested dividends.... 37,090 68,295 620 1,401
Shares redeemed......... (232,442,963) (488,545,609) (7,083,168) (14,511,882)
------------- ------------- ----------- ------------
Net increase (decrease). $(107,785,475) $ 85,946,836 $(1,954,799) $ (2,053,567)
============= ============= =========== ============
Note 6. Interfund Lending Agreement
Pursuant to the exemptive relief granted by the SEC, the Fund is permitted
to participate in an interfund lending program among investment companies
advised by SunAmerica or an affiliate. The interfund lending program allows
the participating Funds to borrow money from and lend money to each other
for temporary or emergency purposes. An interfund loan will be made under
this facility only if the participating Funds receive a more favorable
interest rate than would otherwise be available from a typical bank for a
comparable transaction. For the six months ended June 30, 2016, the Fund did
not participate in this program.
17
SUNAMERICA MONEY MARKET FUNDS, INC.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT -- JUNE
30, 2016 -- (UNAUDITED)
The Board of Directors (the "Board," the members of which are referred to as
"Directors") of SunAmerica Money Market Funds, Inc. (the "Corporation"),
including the Directors who are not "interested persons," as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended (the "1940
Act") (the "Independent Directors"), of the Corporation or its separate series
or SunAmerica Asset Management, LLC ("SunAmerica"), approved the continuation
of the Investment Advisory and Management Agreement between the Corporation, on
behalf of the SunAmerica Government Money Market Fund (the "Fund"), and
SunAmerica (the "Advisory Agreement") for a one-year period ending June 30,
2017 at an in-person meeting held on June 7-8, 2016 (the "Meeting"). The Fund
is the only current series of the Corporation.
In accordance with Section 15(c) of the 1940 Act, the Board requested and
SunAmerica provided materials relating to the Board's consideration of whether
to approve the continuation of the Advisory Agreement. These materials
included: (a) a summary of the services provided to the Fund by SunAmerica and
its affiliates; (b) information independently compiled and prepared by
Broadridge Financial Solutions, Inc. ("Broadridge"), an independent third-party
provider of mutual fund data, on fees and expenses of the Fund, and the
investment performance of the Fund as compared with a peer group of funds,
along with fee and performance data with respect to the Fund and any other
mutual funds or other accounts advised or subadvised by SunAmerica with similar
investment objectives and/or strategies, as applicable; (c) information on the
profitability of SunAmerica, and its affiliates, and a discussion relating to
indirect benefits; (d) information relating to economies of scale;
(e) information about SunAmerica's general compliance policies and procedures;
(f) information about SunAmerica's risk management processes; (g) information
about brokerage and soft dollar practices; and (h) information about the key
personnel of SunAmerica, and its affiliates, that are involved in the
investment management, administration, compliance and risk management
activities with respect to the Fund, as well as current and projected staffing
levels and compensation practices.
In determining whether to approve the continuation of the Advisory Agreement,
the Board, including the Independent Directors, considered at the Meeting, and
from time to time as appropriate, factors that it deemed relevant, including
the following information:
NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY SUNAMERICA
The Board, including the Independent Directors, considered the nature, extent
and quality of services provided by SunAmerica. The Board noted that the
services include acting as investment manager and adviser to the Fund, managing
the daily business affairs of the Fund, and obtaining and evaluating economic,
statistical and financial information to formulate and implement investment
policies. Additionally, the Board observed that SunAmerica provides office
space, bookkeeping, accounting, legal and compliance, clerical and
administrative services and has authorized its officers and employees, if
elected, to serve as officers or Directors of the Corporation without
compensation. The Board noted that SunAmerica is responsible for monitoring and
reviewing the activities of affiliated and unaffiliated third-party service
providers. In addition to the quality of the advisory services provided by
SunAmerica, the Board considered the quality of the administrative and other
services provided by SunAmerica to the Fund pursuant to the Advisory Agreement.
In connection with the services provided by SunAmerica, the Board analyzed the
structure and duties of SunAmerica's fund administration, accounting,
operations, legal and compliance departments and concluded that they were
adequate to meet the needs of the Fund. The Board also reviewed the personnel
responsible for providing advisory services to the Fund and other key personnel
of SunAmerica in addition to current and projected staffing levels and
compensation practices and concluded, based on its experience and interaction
with SunAmerica, that: (i) SunAmerica has been able to retain quality
investment and other personnel; (ii) SunAmerica has exhibited a high level of
diligence and attention to detail in carrying out its advisory and other
responsibilities under the Advisory Agreement; (iii) SunAmerica has been
responsive to requests of the Board; and (iv) SunAmerica has kept the Board
apprised of developments relating to the Fund and the industry in general. The
Board concluded that the nature and extent of services provided under the
Advisory Agreement were reasonable and appropriate in relation to the
management fee and that the quality of services continues to be high.
The Board also considered SunAmerica's reputation and long-standing
relationship with the Fund and considered the benefit to shareholders of
investing in funds that are part of a family of funds offering a variety of
types of mutual funds
18
SUNAMERICA MONEY MARKET FUNDS, INC.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT -- JUNE
30, 2016 -- (UNAUDITED) (CONTINUED)
and shareholder services. The Board considered SunAmerica's experience in
providing management and investment advisory and administrative services to
advisory clients and noted that as of March 31, 2016, SunAmerica managed,
advised and/or administered approximately $79.5 billion in assets. In addition,
the Board considered SunAmerica's code of ethics and its commitment to
compliance generally and with respect to its management and administration of
the Fund. The Board also considered SunAmerica's risk management processes. The
Board further observed that SunAmerica has developed internal procedures for
monitoring compliance with the investment objectives, policies and restrictions
of the Fund as set forth in the Fund's prospectus. The Board also reviewed
SunAmerica's compliance and regulatory history and noted that there were no
material legal, regulatory or compliance issues that would potentially impact
SunAmerica from effectively serving as the investment adviser to the Fund.
INVESTMENT PERFORMANCE
The Board, including the Independent Directors, also considered the investment
performance of SunAmerica with respect to the Fund. In connection with its
review, the Board received and reviewed information regarding the investment
performance of the Fund as compared to the Fund's peer group ("Peer Group")
and/or peer universe ("Peer Universe") as independently determined by
Broadridge and to an appropriate index or combination of indices. The Board was
provided with a description of the methodology used by Broadridge to select the
funds in the Peer Group and Peer Universe.
The Board noted that performance information was for the periods ended
March 31, 2016. The Board also noted that it regularly reviews the performance
of the Fund throughout the year. The Board further noted that, while it
monitors performance of the Fund closely, it generally attaches more importance
to performance over relatively long periods of time, typically three to five
years.
The Board considered that the Fund's performance was equal to the median of its
Peer Group and Peer Universe for the one-, three- and five-year periods. The
Board also considered that the Fund's underperformed its Broadridge Index for
the one-, three- and five-year periods. The Board further considered the narrow
range of returns among the funds in the Peer Group and Peer Universe. The Board
then noted management's discussion of the Fund's performance, including the
impact of the Fund's conversion to a government money market fund due to lower
yields on government securities generally compared to non-governmental
securities.
The Board further noted that money market funds, in general, have been
operating in a difficult and low-yielding market environment for an extended
period of time and recent regulatory reforms have affected money market funds'
performance. The Board also considered the voluntary fee waivers and/or expense
reimbursements being made by SunAmerica with respect to the Fund in order to
avoid a negative yield. The Board concluded that the Fund's performance was
satisfactory in light of all factors considered.
CONSIDERATION OF THE MANAGEMENT FEES AND THE COST OF THE SERVICES AND PROFITS
TO BE REALIZED BY SUNAMERICA AND ITS AFFILIATES FROM THE RELATIONSHIP WITH THE
FUND
The Board, including the Independent Directors, received and reviewed
information regarding the fees to be paid by the Fund to SunAmerica pursuant to
the Advisory Agreement. The Board examined this information in order to
determine the reasonableness of the fees in light of the nature and quality of
services to be provided and any potential additional benefits to be received by
SunAmerica or its affiliates in connection with providing such services to the
Fund.
To assist in analyzing the reasonableness of the management fee for the Fund,
the Board received reports independently prepared by Broadridge. The reports
showed comparative fee information for the Fund's Peer Group and/or Peer
Universe as determined by Broadridge, including rankings within each category.
In considering the reasonableness of the management fee to be paid by the Fund
to SunAmerica, the Board reviewed a number of expense comparisons, including:
(i) contractual and actual management fees; and (ii) actual total operating
expenses. In considering the Fund's total operating expenses, the Board
analyzed the level of fee waivers and/or expense reimbursements and the net
expense caps contractually agreed upon by SunAmerica with respect to Class I
shares of the Fund. The Board also considered the voluntary fee waivers and/or
expense reimbursements being made by SunAmerica with respect to the Fund in
order to avoid a negative yield. The Board further considered that, unlike the
funds in the Peer Group and Peer
19
SUNAMERICA MONEY MARKET FUNDS, INC.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT -- JUNE
30, 2016 -- (UNAUDITED) (CONTINUED)
Universe, the full amount of the fee waivers and/or reimbursements being made
by SunAmerica with respect to the Fund are not applied against the actual
management fees cited the Broadridge reports. As a result, the Board took into
account that the actual management fees presented by Broadridge for the funds
in the Peer Group and Peer Universe may appear lower on a relative basis. The
Board also considered the various expense components of the Fund and compared
the Fund's net expense ratio to those of other funds within its Peer Group
and/or Peer Universe as a guide to help assess the reasonableness of the
management fee for the Fund. The Board acknowledged that it was difficult to
make precise comparisons with other funds in the Peer Group and Peer Universe
since the exact nature of services provided under the various fund agreements
is often not apparent. The Board noted, however, that the comparative fee
information provided by Broadridge as a whole was useful in assessing whether
SunAmerica was providing services at a cost that was competitive with other,
similar funds.
The Board considered that the Fund's actual management fees were above the
median of its Peer Group and Peer Universe. The Board also considered that the
Fund's total expenses were below the median of its Peer Group and above the
median of its Peer Universe. The Board noted that the Fund's advisory fee
contains breakpoints and further noted management's discussion regarding the
Fund's expenses.
The Board further considered management fees received by SunAmerica with
respect to other mutual funds and accounts with similar investment strategies
to the Fund. The Board noted that the mutual funds identified as similar to the
Fund are sold only in the variable annuity market and, accordingly, are in
different Broadridge classifications, with peer groups consisting of funds
underlying variable insurance products. The Board further noted that SunAmerica
serves as subadviser to certain of these similar mutual funds and observed that
the services SunAmerica provides as subadviser are much more limited in scope
than in its role as investment manager and adviser to the Fund. The Board then
noted the management fee paid by the Fund was reasonable as compared to the
fees SunAmerica was receiving from other mutual funds and accounts for which it
serves as adviser or subadviser.
PROFITABILITY
The Board also considered SunAmerica's profitability and the benefits
SunAmerica and its affiliates received from its relationship with the Fund. The
Board received and reviewed financial statements relating to SunAmerica's
financial condition and profitability with respect to the services it provided
the Fund and considered how profit margins could affect SunAmerica's ability to
attract and retain high quality investment professionals and other key
personnel. The Board was also provided with a profitability analysis that
detailed the revenues earned and the expenses incurred by SunAmerica and its
affiliates that provide services to the Fund. In particular, the Board
considered the contractual fee waiver and/or expense reimbursements agreed to
by SunAmerica, as well as the voluntary fee waivers being made by SunAmerica to
avoid a negative yield.
The Board considered the profitability of SunAmerica under the Advisory
Agreement, and considered the profitability of SunAmerica's affiliates under
the Rule 12b-1 Plans, Service Agreement and Administrative and Shareholder
Services Agreements. Additionally, the Board considered whether SunAmerica and
its affiliates received any indirect benefits from the relationship with the
Fund. Specifically, the Board observed that AIG Federal Savings Bank, an
affiliate of SunAmerica, serves as custodian with respect to certain
shareholder retirement accounts that are administered by SunAmerica and
receives a fee payable by the qualifying shareholders. The Board further
considered whether there were any collateral or "fall-out" benefits that
SunAmerica and its affiliates may derive as a result of their relationship with
the Fund. The Board noted that SunAmerica believes that any such benefits are
de minimis and do not impact the reasonableness of the management fees.
The Board concluded that SunAmerica had the financial resources necessary to
perform its obligations under the Advisory Agreement and to continue to provide
the Fund with the high quality services that they had provided in the past. The
Board also concluded that the management fee was reasonable in light of the
factors discussed above.
ECONOMIES OF SCALE
The Board, including the Independent Directors, considered whether the
shareholders would benefit from economies of scale and whether there was
potential for future realization of economies with respect to the Fund. The
Board considered
20
SUNAMERICA MONEY MARKET FUNDS, INC.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT -- JUNE
30, 2016 -- (UNAUDITED) (CONTINUED)
that as a result of being part of the SunAmerica fund complex, the Fund shares
common resources and may share certain expenses, and if the size of the complex
increases, the Fund could incur lower expenses than it otherwise would achieve
as a stand-alone entity. The Board also took into account that the Fund had
management fee arrangements that included breakpoints that will adjust the fee
downward as the size of the Fund increases, thereby allowing the shareholders
to potentially participate in any economies of scale. The Board further noted
that SunAmerica has agreed to contractually cap the total annual operating
expenses of the Class I shares of the Fund at certain levels. The Board
observed that this expense cap benefited shareholders by limiting total fees
even in the absence of breakpoints or economies of scale. The Board concluded
that the Fund's management fee structures were reasonable and that it would
continue to review fees in connection with the renewal of the Advisory
Agreement, including whether the implementation of additional breakpoints would
be appropriate in the future due to an increase in asset size or otherwise.
OTHER FACTORS
In consideration of the Advisory Agreement, the Board also received information
regarding SunAmerica's brokerage and soft dollar practices. The Board
considered that SunAmerica is responsible for decisions to buy and sell
securities for the Fund, selection of broker-dealers and negotiation of
commission rates. The Board noted that it receives reports from SunAmerica and
from an independent third party which include information on brokerage
commissions and execution throughout the year. The Board also considered the
benefits SunAmerica derives from its soft dollar arrangements, including
arrangements under which brokers provide brokerage and/or research services to
SunAmerica in return for allocating brokerage; however, the Board noted that
the securities in which the Fund invests are traded primarily in the
over-the-counter market on a "net" basis with dealers acting as principal for
their own accounts without a stated commission (although the price of the
security usually includes a profit to the dealer) and, therefore, the Fund
generally does not incur brokerage commissions. Accordingly, the Board observed
that SunAmerica typically would not receive soft dollar benefits in return for
allocating the Funds' brokerage transactions. The Board further observed that
when making purchases of new issues with fixed underwriting fees, SunAmerica
may designate the use of broker dealers who have agreed to provide certain
statistical, research and other information.
CONCLUSION
After a full and complete discussion, the Board approved the Advisory Agreement
with respect to the Fund for a one-year period ending June 30, 2017. Based upon
its evaluation of all these factors in their totality, the Board, including the
Independent Directors, was satisfied that the terms of the Advisory Agreement
were fair and reasonable and in the best interests of the Fund and the Fund's
shareholders. In arriving at a decision to approve the Advisory Agreement, the
Board did not identify any single factor or group of factors as all-important
or controlling, but considered all factors together, and each Independent
Director may have attributed different weights to different factors. The
Independent Directors were also assisted by the advice of independent legal
counsel in making this determination.
21
[LOGO] AIG Sun America
Mutual Funds
HARBORSIDE FINANCIAL CENTER
3200 PLAZA 5
JERSEY CITY, NJ 07311-4992
DIRECTORS/TRUSTEES TRANSFER AGENT DISCLOSURE OF QUARTERLY
Dr. Judith L. Craven State Street Bank and PORTFOLIO HOLDINGS
William F. Devin Trust Company The Fund is required to
Richard W. Grant P.O. Box 219373 file its complete
Stephen J. Gutman Kansas City, MO 64141 schedule of portfolio
Peter A. Harbeck CUSTODIAN holdings with the U.S.
William J. Shea State Street Bank and Securities and Exchange
OFFICERS Trust Company Commission for its first
John T. Genoy, President One Lincoln St. and third fiscal quarters
and Chief Executive Boston, MA 02111 on Form N-Q. The Fund's
Officer VOTING PROXIES ON FUND Forms N-Q are available
Gregory R. Kingston, PORTFOLIO SECURITIES on the U.S. Securities
Treasurer A description of the and Exchange Commission's
James Nichols, Vice policies and procedures website at
President that the Funds use to http://www.sec.gov. You
Matthew Hackenthal, determine how to vote can also review and
Acting Chief proxies relating to obtain copies of the
Compliance Officer securities held in the Forms N-Q at the U.S.
Gregory N. Bressler, Funds' portfolios which Securities and Exchange
Secretary is available in the Commission's Public
Kathleen Fuentes, Chief Funds' Statement of Reference Room in
Legal Officer and Additional Information Washington, DC
Assistant Secretary may be obtained without (information on the
Donna McManus, Vice charge upon request, by operation of the Public
President and calling (800) 858-8850. Reference Room may be
Assistant Treasurer This information is also obtained by calling
Shawn Parry, Vice available from the EDGAR 1-800-SEC-0330).
President and database on the U.S. PROXY VOTING RECORD ON
Assistant Treasurer Securities and Exchange FUND PORTFOLIO SECURITIES
Matthew J. Hackethal, Commission's website at Information regarding how
Anti-Money Laundering http://www.sec.gov. the Funds voted proxies
Compliance Officer DELIVERY OF SHAREHOLDER relating to securities
INVESTMENT ADVISER DOCUMENTS held in the Fund's
SunAmerica Asset The Funds have adopted a portfolio during the most
Management, LLC policy that allows them recent twelve month
Harborside Financial to send only one copy of period ended June 30 is
Center a Fund's prospectus, available, once filed
3200 Plaza 5 proxy material, annual with the U.S. Securities
Jersey City, NJ report and semi-annual and Exchange Commission,
07311-4992 report (the "shareholder without charge, upon
DISTRIBUTOR documents") to request, by calling (800)
AIG Capital Services, shareholders with 858-8850 or on the U.S.
Inc. multiple accounts Securities and Exchange
Harborside Financial residing at the same Commission's website at
Center "household." This http://www.sec.gov.
3200 Plaza 5 practice is called This report is submitted
Jersey City, NJ householding and reduces solely for the general
07311-4992 Fund expenses, which information of
SHAREHOLDER SERVICING benefits you and other shareholders of the Fund.
AGENT shareholders. Unless the Distribution of this
SunAmerica Fund Funds receive report to persons other
Services, Inc. instructions to the than shareholders of the
Harborside Financial contrary, you will only Fund is authorized only
Center receive one copy of the in connection with a
3200 Plaza 5 shareholder documents. currently effective
Jersey City, NJ The Funds will continue prospectus, setting forth
07311-4992 to household the details of the Fund,
shareholder documents which must precede or
indefinitely, until we accompany this report.
are instructed otherwise. The accompanying report
If you do not wish to has not been audited by
participate in independent accountants
householding, please and accordingly no
contact Shareholder opinion has been
Services at expressed thereon.
(800) 858-8850 ext. 6010
or send a written request
with your name, the name
of your fund(s) and your
account member(s) to
SunAmerica Mutual Funds
c/o BFDS, P.O. Box
219186, Kansas City MO,
64121-9186. We will
resume individual
mailings for your account
within thirty (30) days
of receipt of your
request.
[GRAPHIC]
GO PAPERLESS!!
DID YOU KNOW THAT YOU HAVE THE OPTION TO
RECEIVE YOUR SHAREHOLDER REPORTS ONLINE?
By choosing this convenient service, you will no longer receive paper copies of
Fund documents such as annual reports, semi-annual reports, prospectuses and
proxy statements in the mail. Instead, you are provided with quick and easy
access to this information via the Internet.
Why Choose Electronic Delivery?
IT'S QUICK -- Fund documents will be received faster than via traditional mail.
IT'S CONVENIENT -- Elimination of bulky documents from personal files.
IT'S COST EFFECTIVE -- Reduction of your Fund's printing and mailing costs.
TO SIGN UP FOR ELECTRONIC DELIVERY, FOLLOW
THESE SIMPLE STEPS:
1 GO TO WWW.SAFUNDS.COM
2 CLICK ON THE LINK TO "GO PAPERLESS!!"
The email address you provide will be kept strictly confidential. Once your
enrollment has been processed, you will begin receiving email notifications
when anything you receive electronically is available online.
You can return to www.safunds.com at any time to change your email
address, edit your preferences or to cancel this service if you choose to
resume physical delivery of your Fund documents.
Please note - this option is only available to accounts opened through the
Funds.
FOR INFORMATION ON RECEIVING THIS REPORT ONLINE, SEE INSIDE BACK COVER.
DISTRIBUTED BY:
AIG CAPITAL SERVICES, INC.
This fund report must be preceded by or accompanied by a prospectus.
Investors should carefully consider a Fund's investment objectives, risks,
charges and expenses before investing. The prospectus, containing this and
other important information, can be obtained from your financial adviser, the
SunAmerica Sales Desk at 800-858-8850, ext. 6003, or at www.safunds.com. Read
the prospectus carefully before investing.
WWW.SAFUNDS.COM
MMSAN - 6/16
[LOGO]
AIG
Sun America
Mutual Funds
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
Included in Item 1 to the Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10.Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders may
recommend nominees to the registrant's Board of Directors that were
implemented after the registrant last provided disclosure in response to the
requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407), (as
required by 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item 10.
Item 11.Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this report,
under the supervision and with the participation of the registrant's
management, including the President and Treasurer, of the effectiveness of
the design and operation of the registrant's disclosure controls and
procedures (as defined under Rule 30a-3(c) under the Investment Company Act
of 1940 (17 CFR 270.30a-3(c))). Based on that evaluation, the registrant's
management, including the President and Treasurer, concluded that the
registrant's disclosure controls and procedures are effective.
(b) There was no change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act of
1940 (17 CFR 270.30a-3(d))) that occurred during the registrant's last
fiscal quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the registrant's
internal contro1 over financial reporting.
Item 12.Exhibits.
(a) (1) Not applicable.
(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT.
(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of
1940 (17 CFR 270.30a-2(a)) and Section 906 of the Sarbanes-Oxley Act of
2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Money Market Funds, Inc.
By: /s/ John T. Genoy
------------------------------
John T. Genoy
President
Date: September 7, 2016
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John T. Genoy
------------------------------
John T. Genoy
President
Date: September 7, 2016
By: /s/ Gregory R. Kingston
------------------------------
Gregory R. Kingston
Treasurer
Date: September 7, 2016