================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-CSR
---------
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-3807
SunAmerica Money Market Funds, Inc.
----------------------------------------------------
(Exact name of registrant as specified in charter)
Harborside 5, 185 Hudson Street, Suite 3300 Jersey City, NJ 07311
---------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
John T. Genoy
Senior Vice President
SunAmerica Asset Management, LLC
Harborside 5, 185 Hudson Street,
Suite 3300
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, 2017
================================================================================
Item 1. Reports to Stockholders
[PHOTO]
SEMI-ANNUAL REPORT 2017
AIG
Government Money Market Fund
[LOGO]
[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.......................................... 17
Shareholder Letter -- (unaudited)
Dear Shareholders,
We are pleased to present this semi-annual shareholder report for the AIG
Government Money Market Fund (the "Fund") for the six-month period ended
June 30, 2017. Please note that effective February 28, 2017, SunAmerica Mutual
Funds was rebranded as AIG Funds, and each Fund's name was changed accordingly.
SunAmerica Asset Management, LLC, the investment adviser to each Fund,
continues to serve as investment adviser of the Funds and retains its current
name. In addition, there was no change in the Funds' investment goals or
strategies, portfolio managers or ticker symbols in connection with the
rebranding.
The semi-annual period ended June 30, 2017 was one wherein money market yields
remained low throughout, but did move modestly higher as the Federal Reserve
(the "Fed") proceeded to raise the targeted federal funds rate twice, bringing
it to a range of 1.00% - 1.25% by the end of June 2017.
As the semi-annual period began, monetary policy developments pointed to
ongoing accommodation outside the U.S. and some tightening in the U.S.
following the Fed's December 2016 interest rate increase. Indeed, the Fed did
raise the targeted federal funds rate in March 2017 and proposed two possible
additional increases this year. Market participants judged the Fed's statement
after its March meeting as dovish, with one dissenting vote and no mention of
tapering mortgage reinvestments. (Dovish language tends to suggest lower
interest rates; opposite of hawkish.) Elsewhere, the minutes from the Bank of
Japan's January 2017 meeting revealed a commitment to maintain a zero-yield
policy on 10-year Japanese government bonds. Meanwhile the European Central
Bank (ECB) announced its intention to continue the pace of its bond purchases
through at least December 2017 and pushed back against the notion of initiating
rate hikes prior to the end of its quantitative easing.
During the second quarter of 2017, monetary policy developments turned
marginally more hawkish. The Fed raised interest rates another 0.25% in June
2017, proposed an additional increase later in 2017 and laid out a plan for
tapering its asset purchases. In making this and its earlier interest rate
increase during the semi-annual period, the Fed cited ongoing strength in the
U.S. labor market and a pick-up in household spending and business fixed
investment. Comments from Bank of England Governor Carney indicated rate hikes
may be looming in the U.K. However, even as it noted improved economic growth
in the region, the ECB lowered its inflation forecasts, triggering speculation
it might postpone the tapering of asset purchases that had been expected later
this year.
The U.S. Treasury money market yield curve, or spectrum of maturities,
flattened during the semi-annual period overall, meaning differentials between
yields on shorter-term maturities rose more than on longer-term maturities. In
turn, there was little difference in yields between maturities, and thus 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, 2017.
2
SHAREHOLDER LETTER -- (unaudited) (continued))
As always, we remain diligent in the management of your assets. If you have any
questions, or require additional information on this or other AIG Funds, we
invite you to contact your financial advisor or visit us at our new website,
www.aig.com/funds. We value your ongoing confidence in us and look forward to
serving your investment needs in the future.
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, 2017 -- (unaudited)
Disclosure of Portfolio Expenses in Shareholder Reports
As a shareholder in the AIG 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, 2017 and
held until June 30, 2017.
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, 2017" 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, 2017" 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,
2017" 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, 2017" 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, 2017" 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,
2017" 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, 2017" 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, 2017 -- (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, 2017 June 30, 2017 June 30, 2017* as January 1, 2017 June 30, 2017 June 30, 2017*
------------------ ------------- ---------------- ------------------ ----------------- ----------------
AIG Government Money
Market Fund#+
Class A........... $1,000.00 $1,000.26 $3.47 $1,000.00 $1,021.32 $3.51
Class I........... $1,000.00 $1,000.29 $3.47 $1,000.00 $1,021.32 $3.51
Annualized
Expense
Ratio*
----------
AIG Government Money
Market Fund#+
Class A........... 0.70%
Class I........... 0.70%
--------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 181 days then divided
by 365 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, 2017" 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, 2017 -- (unaudited)
AIG Government
Money Market
Fund+
--------------
ASSETS:
Investments at value* (unaffiliated)............................... $115,485,040
Repurchase agreements (cost approximates value).................... 2,376,000
------------
Total Investments................................................ 117,861,040
------------
Cash............................................................... 749
Receivable for:
Fund shares sold................................................. 180,582
Dividends and interest........................................... 12,138
Prepaid expenses and other assets.................................. 20,381
Due from investment adviser for expense reimbursements/fee waivers. 15,999
Due from distributor for fee waivers............................... 12,123
------------
Total assets....................................................... 118,103,012
------------
LIABILITIES:
Payable for:
Fund shares redeemed............................................. 204,067
Investment advisory and management fees.......................... 45,678
Distribution and service maintenance fees........................ 12,123
Transfer agent fees and expenses................................. 31,087
Directors' fees and expenses..................................... 3,100
Other accrued expenses........................................... 123,510
Dividends payable.................................................. 2,147
------------
Total liabilities.................................................. 421,712
------------
Net Assets......................................................... $117,681,300
============
Common stock, $.001 par value (3.5 billion shares authorized)...... $ 117,539
Paid-in capital.................................................... 117,563,948
------------
117,681,487
Accumulated undistributed net investment income (loss)............. (74)
Accumulated undistributed realized gain (loss) on investment....... (113)
------------
Net assets...................................................... $117,681,300
============
Class A:
Net assets......................................................... 104,930,172
Shares outstanding................................................. 104,806,322
Net asset value and redemption price per share
(excluding any applicable contingent deferred sales charge)....... $ 1.00
============
Class I:
Net assets......................................................... 12,751,128
Shares outstanding................................................. 12,726,634
Net asset value and redemption price per share..................... $ 1.00
============
*Amortized cost of investment securities (unaffiliated)............ $115,485,040
============
--------
+ See Note 1
See Notes to Financial Statements
6
SunAmerica Money Market Funds, Inc.
STATEMENT OF OPERATIONS -- For the six months ended June 30,2017 --
(unaudited)
AIG
Government
Money Market
Fund+
------------
INVESTMENT INCOME:
Interest (unaffiliated).............................................................. $ 395,649
---------
Total investment income............................................................. 395,649
---------
EXPENSES:
Investment advisory and management fees.............................................. 277,833
Distribution and account maintenance fees
Class A............................................................................. 74,006
Transfer agent fees and expenses
Class A............................................................................. 149,559
Class I............................................................................. 14,295
Registration fees
Class A............................................................................. 24,143
Class I............................................................................. 8,109
Custodian and accounting fees........................................................ 1,124
Reports to shareholders.............................................................. 30,924
Audit and tax fees................................................................... 22,219
Legal fees........................................................................... 28,450
Directors' fees and expenses......................................................... 1,643
Other expenses....................................................................... 7,136
---------
Total expenses before fee waivers and expense reimbursements........................ 639,441
Fees waived and expenses reimbursed by investment adviser and distributor (Note 3).. (249,638)
---------
Net expenses........................................................................ 389,803
---------
Net investment income (loss)........................................................... 5,846
---------
Net realized gain (loss) on investments................................................ 69
---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 5,915
=========
--------
+ See Note 1
See Notes to Financial Statements
7
SunAmerica Money Market Funds, Inc.
STATEMENT OF CHANGES IN NET ASSETS
AIG
Government Money Market
Fund+
---------------------------
For the
six months
ended For the year
June 30, ended
2017 December 31,
(unaudited) 2016
------------ -------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss)........................................................... $ 5,846 $ 60,331
Net realized gain (loss) on investments................................................ 69 90,805
------------ -------------
Net increase (decrease) in net assets resulting from operations.......................... 5,915 151,136
------------ -------------
Distributions to shareholders from:
Net investment income (Class A)........................................................ (4,928) (56,354)
Net investment income (Class I)........................................................ (992) (890)
Net realized gains on securities (Class A)............................................. (20,809) --
Net realized gains on securities (Class I)............................................. (2,542) --
------------ -------------
Total distributions to shareholders...................................................... (29,271) (57,244)
------------ -------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 5). 2,118,191 (705,749,565)
------------ -------------
Total increase (decrease) in net assets.................................................. 2,094,835 (705,655,673)
NET ASSETS:
Beginning of period...................................................................... 115,586,465 821,242,138
------------ -------------
End of period*........................................................................... $117,681,300 $ 115,586,465
============ =============
*Includes accumulated undistributed net investment income (loss)......................... $ (74) --
============ =============
--------
+ See Note 1
See Notes to Financial Statements
8
SUNAMERICA MONEY MARKET FUNDS, INC.
FINANCIAL HIGHLIGHTS
AIG GOVERNMENT MONEY MARKET FUND+
-
NET NET NET RATIO OF NET
ASSET DIVIDENDS DISTRIBUTIONS ASSET ASSETS RATIO OF INVESTMENT
VALUE NET FROM NET FROM NET VALUE END OF EXPENSES INCOME TO
BEGINNING INVESTMENT INVESTMENT REALIZED TOTAL END OF TOTAL PERIOD TO AVERAGE AVERAGE
PERIOD ENDED OF PERIOD INCOME(1) INCOME GAINS DISTRIBUTIONS PERIOD RETURN(2) (000'S) NET ASSETS(3) NET ASSETS(3)
------------ --------- ---------- ---------- ------------- ------------- ------ --------- -------- ------------- -------------
CLASS A
-
12/31/12 $1.00 $0.00 $(0.00) $ -- $(0.00) $1.00 0.01% $768,644 0.22% 0.01%
12/31/13 1.00 0.00 (0.00) -- (0.00) 1.00 0.01 736,942 0.18 0.01
12/31/14 1.00 0.00 (0.00) -- (0.00) 1.00 0.01 720,356 0.14 0.01
12/31/15 1.00 0.00 (0.00) -- (0.00) 1.00 0.01(4) 807,427 0.17 0.01
12/31/16 1.00 0.00 (0.00) -- (0.00) 1.00 0.01 102,735 0.38 0.01
06/30/17(5) 1.00 0.00 (0.00) (0.00) (0.00) 1.00 0.03 104,930 0.70(6) 0.01(6)
CLASS I
-
12/31/12 $1.00 $0.00 $(0.00) $ -- $(0.00) $1.00 0.01% $ 15,765 0.22% 0.01%
12/31/13 1.00 0.00 (0.00) -- (0.00) 1.00 0.01 13,360 0.18 0.01
12/31/14 1.00 0.00 (0.00) -- (0.00) 1.00 0.01 15,847 0.14 0.01
12/31/15 1.00 0.00 (0.00) -- (0.00) 1.00 0.01(4) 13,815 0.16 0.01
12/31/16 1.00 0.00 (0.00) -- (0.00) 1.00 0.01 12,851 0.39 0.01
06/30/17(5) 1.00 0.00 (0.00) (0.00) (0.00) 1.00 0.03 12,751 0.70(6) 0.02(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):
12/31/12 12/31/13 12/31/14 12/31/15 12/31/16 6/30/17(5)(6)
-------- -------- -------- -------- -------- -------------
Class A............. 0.72% 0.75% 0.79% 0.78% 0.57% 0.46%
Class I............. 0.62 0.68 0.69 0.71 0.56 0.33
(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
AIG GOVERNMENT MONEY MARKET FUND+
PORTFOLIO PROFILE -- JUNE 30, 2017 -- (UNAUDITED)
INDUSTRY ALLOCATION*
U.S. Government Agencies... 58.3%
U.S. Government Treasuries. 39.9
Repurchase Agreements...... 2.0
-----
100.2%
=====
Weighted average days to maturity. 37.4
CREDIT QUALITY ALLOCATION@#
A-1+. 98.0%
A-1.. 2.0
-----
100.0%
=====
--------
*Calculated as a percentage of net assets.
@Source: Standard & Poors.
#Calculated as a percentage of total debt issues.
+See Note 1
10
AIG GOVERNMENT MONEY MARKET FUND+
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2017 (UNAUDITED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
SHORT-TERM INVESTMENT SECURITIES -- 98.2%
U.S. GOVERNMENT AGENCIES -- 58.3%
Federal Farm Credit Bank FRS
1.18% due 03/02/2018............. $ 255,000 $ 255,479
1.25% due 11/24/2017............. 4,750,000 4,753,241
1.26% due 08/29/2017............. 400,000 400,156
1.27% due 09/22/2017............. 2,000,000 2,000,622
1.35% due 08/01/2017............. 1,200,000 1,200,366
Federal Home Loan Bank
0.81% due 07/07/2017............. 3,000,000 2,999,600
0.91% due 09/06/2017............. 2,300,000 2,296,190
0.93% due 09/20/2017............. 2,000,000 1,995,874
0.95% due 08/09/2017............. 9,000,000 8,990,933
1.00% due 07/07/2017............. 12,000,000 11,998,030
1.02% due 07/26/2017............. 19,000,000 18,986,766
1.04% due 08/08/2017............. 5,000,000 4,994,617
Federal Home Loan Bank FRS
0.80% due 08/07/2017............. 250,000 250,000
0.99% due 07/17/2017............. 3,000,000 3,000,008
1.12% due 09/05/2017............. 80,000 80,006
1.15% due 12/05/2017............. 650,000 650,329
1.15% due 12/07/2017............. 1,250,000 1,250,590
Federal National Mtg. Assoc. FRS
1.09% due 10/05/2017............. 950,000 950,268
1.10% due 09/08/2017............. 500,000 500,232
1.23% due 07/20/2017............. 1,000,000 1,000,038
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(amortized cost $68,553,345)..... 68,553,345
-----------
U.S. GOVERNMENT TREASURIES -- 39.9%
United States Treasury Bills
0.80% due 08/03/2017............. 5,000,000 4,997,130
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE (NOTE 2)
0.82% due 08/03/2017........................ $10,000,000 $ 9,992,506
0.85% due 08/03/2017........................ 10,000,000 9,992,208
0.95% due 09/28/2017........................ 10,000,000 9,976,638
0.98% due 09/21/2017........................ 12,000,000 11,973,213
------------
TOTAL U.S. GOVERNMENT TREASURIES
(amortized cost $46,931,695)................ 46,931,695
------------
TOTAL SHORT-TERM INVESTMENT SECURITIES -- 98.2%
(amortized cost $115,485,040)............... 115,485,040
------------
REPURCHASE AGREEMENTS -- 2.0%
Agreement with Fixed Income Clearing
Corp., bearing interest at 0.12%, dated
06/30/2017, to be repurchased
07/03/2017 in the amount of $2,376,024,
collateralized by $2,330,000 of United
States Treasury Bonds, bearing interest at
3.00% due 11/15/2044 and
having an approximate value of
$2,423,953. (cost $2,376,000)............... 2,376,000 2,376,000
------------
TOTAL INVESTMENTS --
(amortized cost $117,861,040) (1)........... 100.2% 117,861,040
Liabilities in excess of other assets.......... (0.2) (179,740)
----------- ------------
NET ASSETS..................................... 100.0% $117,681,300
=========== ============
--------
+ See Note 1
(1)At June 30, 2017, the cost of securities for federal income tax purposes was
the same for book purposes.
FRS--Floating Rate Security
The rates shown on FRS are the current interest rates at June 30, 2017 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, 2017 (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. $-- $115,485,040 $-- $115,485,040
Repurchase Agreements............ -- 2,376,000 -- 2,376,000
--- ------------ --- ------------
TOTAL INVESTMENTS AT VALUE....... $-- $117,861,040 $-- $117,861,040
=== ============ === ============
--------
* 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, 2017 -- (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 -- AIG Government Money
Market Fund (the "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. It does this 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.
On November 18, 2016, the Board of Directors approved a change in the name
of the SunAmerica Government Money Market Fund to the AIG Government Money
Market Fund effective February 28, 2017. SunAmerica Asset Management, LLC
continues to serve as investment adviser of the Fund and retains its current
name. In addition, there was no change in the Fund's investment goals or
strategies, portfolio manager or ticker symbols in connection with the
rebranding.
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, 2017 -- (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, 2017, 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 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
13
SunAmerica Money Market Funds, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2017 -- (unaudited)
(continued)
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, 2017, the repurchase agreements held by the Fund are
subject to master netting agreements. 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.
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).
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
2013 - 2015 or expected to be taken in the Fund's 2016 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
2013.
New Accounting Pronouncement
In October 2016, the SEC adopted amendments to rules under the 1940 Act
("final rules") intended to modernize the reporting and disclosure of
information by registered investment companies. The final rules amend
Regulation S-X and require funds to provide standardized, enhanced
derivative disclosure in fund financial statements in a format designed for
individual investors.
14
SunAmerica Money Market Funds, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2017 -- (unaudited)
(continued)
The amendments to Regulation S-X also update the disclosures for other
investments and investments in and advances to affiliates and amend the
rules regarding the general form and content of fund financial statements.
The compliance date for the amendments to Regulation S-X is August 1, 2017.
Management is currently evaluating the amendments and their impact, if any,
on the Fund's financial statements.
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, 2017, pursuant to the contractual expense limitations,
SunAmerica waived fees and/or reimbursed expenses of $18,451 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, 2017,
SunAmerica voluntarily waived fees and/or reimbursed expenses of $155,078
and $2,103 for Class A and Class I, respectively.
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, 2017, ACS
voluntarily waived $74,006 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,
2017, the proceeds received from redemptions are as follows:
Class A........................................... $209
15
SunAmerica Money Market Funds, Inc.
NOTES TO FINANCIAL STATEMENTS -- June 30, 2017 -- (unaudited)
(continued)
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, 2017, 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, 2017
-------- -------------
Class A........................................... $108,543 $20,503
Class I........................................... 13,702 2,588
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, 2016 For the year ended December 31, 2016
------------------------------------------ -------------------------------------
Long-term Gains/ Unrealized Long-Term
Ordinary Capital and Other Appreciation Ordinary Capital
Income Losses (Depreciation) Income Gains
--------- ----------------- -------------- --------- ---------
$ 23,170 $ -- $ -- $ 57,244 $ --
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
2017 December 31, 2017 December 31,
(unaudited) 2016 (unaudited) 2016
------------ ------------- ----------- ------------
Shares sold............. $ 25,190,357 $ 215,584,499 $ 5,400,702 $ 10,430,504
Reinvested dividends.... 23,862 55,878 3,534 1,219
Shares Redemed.......... (22,998,463) (920,421,483) (5,501,801) (11,400,182)
------------ ------------- ----------- ------------
Net increase (decrease). $ 2,215,756 $(704,781,106) $ (97,565) $ (968,459)
============ ============= =========== ============
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, 2017, the Fund did
not participate in this program.
16
SunAmerica Money Market Funds, Inc.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT -- June
30, 2017 -- (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 AIG Government Money Market Fund (the "Fund"), and SunAmerica
(the "Advisory Agreement") for a one-year period ending June 30, 2018 at an
in-person meeting held on June 6-7, 2017 (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 would continue to be 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 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,
2017, SunAmerica managed, advised and/or administered approximately $83.9
billion in assets. In addition, the Board considered SunAmerica's code of
ethics and its commitment to compliance generally
17
SunAmerica Money Market Funds, Inc.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT -- June
30, 2017 -- (unaudited) (continued)
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 in 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, 2017. 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 below the medians of its
Peer Group and Peer Universe for the one-year period and equal to the medians
of its Peer Group and Peer Universe for the 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 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 (taking into
account the contractual fee caps and waivers) 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
18
SunAmerica Money Market Funds, Inc.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT -- June
30, 2017 -- (unaudited) (continued)
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
medians of its Peer Group and Peer Universe. The Board also considered that the
Fund's total expenses were above the medians of its Peer Group and 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 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.
19
SunAmerica Money Market Funds, Inc.
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT -- June
30, 2017 -- (unaudited) (continued)
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 Fund's 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, 2018. 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.
20
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AIG Funds
Harborside 5
185 Hudson St., Suite 3300
Jersey City, NJ 07311
Directors/Trustees VOTING PROXIES ON FUND DISCLOSURE OF
Dr. Judith L. Craven PORTFOLIO SECURITIES QUARTERLY PORTFOLIO
William F. Devin A description of the HOLDINGS
Richard W. Grant policies and The Fund is required
Stephen J. Gutman procedures that the to file its complete
Peter A. Harbeck Fund use to determine schedule of portfolio
Officers how to vote proxies holdings with the U.S.
John T. Genoy, President relating to securities Securities and
and Chief Executive held in the Fund's Exchange Commission
Officer portfolios which is for its first and
Gregory R. Kingston, available in the third fiscal quarters
Treasurer Fund's Statement of on Form N-Q. The
Kara Murphy, Vice Additional Information Fund's Forms N-Q are
President may be obtained available on the U.S.
James Nichols, Vice without charge upon Securities and
President request, by calling Exchange Commission's
Christopher C. Joe, (800) 858-8850. This website at
Chief Compliance information is also http://www.sec.gov.
Officer avail-able from the You can also review
Gregory N. Bressler, EDGAR database on the and obtain copies of
Secretary U.S. Securities and the Forms N-Q at the
Kathleen Fuentes, Chief Exchange Commission's U.S. Securities and
Legal Officer and website at Exchange Commission's
Assistant Secretary http://www.sec.gov. Public Reference Room
Donna McManus, Vice DELIVERY OF in Washington, DC
President and SHAREHOLDER DOCUMENTS (information on the
Assistant Treasurer The Fund has adopted a operation of the
Shawn Parry, Vice policy that al-lows Public Reference Room
President and them to send only one may be obtained by
Assistant Treasurer copy of a Fund's calling
Matthew J. Hackethal, prospectus, proxy 1-800-SEC-0330).
Anti-Money Laundering material, annual PROXY VOTING RECORD ON
Compliance Officer report and semi-annual FUND PORTFOLIO
Investment Adviser report (the SECURITIES
SunAmerica Asset "shareholder Information regarding
Management, LLC documents") to how the Fund voted
Harborside 5 shareholders with proxies relating to
185 Hudson St., Suite multiple accounts securities held in the
3300 residing at the same Fund's portfolio
Jersey City, NJ 07311 "household." This during the most recent
Distributor practice is called twelve month period
AIG Capital Services, householding and ended June 30 is
Inc. reduces Fund expenses, available, once filed
Harborside 5 which benefits you and with the U.S.
185 Hudson St., Suite other shareholders. Securities and
3300 Unless the Fund Exchange Commission,
Jersey City, NJ 07311 receives instructions without charge, upon
Shareholder Servicing to the contrary, you request, by calling
Agent will only receive one (800) 858-8850 or on
AIG Fund Services, Inc. copy of the the U.S. Securities
Harborside 5 shareholder documents. and Exchange
185 Hudson St., Suite The Fund will continue Commission's website
3300 to household the at http://www.sec.gov.
Jersey City, NJ 07311 shareholder documents This report is
Transfer Agent indefinitely, until we submitted solely for
State Street Bank and are instructed the general
Trust Company otherwise. If you do information of
P.O. Box 219373 not wish to shareholders of the
Kansas City, MO 64141 participate in Fund. Distribution of
Custodian householding, please this report to persons
State Street Bank and contact Shareholder other than
Trust Company Services at shareholders of the
One Lincoln St. (800) 858-8850 ext. Fund is authorized
Boston, MA 02111 6010 or send a written only in connection
request with your with a currently
name, the name of your effective prospectus,
fund(s) and your setting forth details
account member(s) to of the Fund, which
AIG Funds c/o BFDS, must precede or
P.O. Box 219186, accompany this report.
Kansas City MO, The accompanying
64121-9186. We will report has not been
resume individual audited by independent
mailings for your accountants and
ac-count within thirty accordingly no opinion
(30) days of receipt has been expressed
of your request. thereon.
[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.aig.com/funds
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.aig.com/funds 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.
AIG FUNDS ARE ADVISED BY SUNAMERICA ASSET MANAGEMENT, LLC (SAAMCO) AND
DISTRIBUTED BY AIG CAPITAL SERVICES, INC. (ACS), MEMBER FINRA. Harborside 5,
185 Hudson Street, Suite 3300, Jersey City, NJ 07311, 800-858-8850. SAAMCo and
ACS are members of American International Group, Inc. (AIG).
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
AIG Funds Sales Desk at 800-858-8850, ext. 6003, or at aig.com/funds. Read the
prospectus carefully before investing.
MMSAN - 6/17
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aig.com/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 Item 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 in 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 control 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, 2017
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, 2017
By: /s/ Gregory R. Kingston
--------------------------
Gregory R. Kingston
Treasurer
Date: September 7, 2017