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SunAmerica Specialty Series – ‘N-CSRS’ for 4/30/21

On:  Thursday, 7/8/21, at 9:49am ET   ·   Effective:  7/8/21   ·   For:  4/30/21   ·   Accession #:  1193125-21-210420   ·   File #:  811-21482

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 7/08/21  SunAmerica Specialty Series       N-CSRS      4/30/21    3:3.4M                                   Donnelley … Solutions/FA
          → AIG Commodity Strategy Fund ⇒ Class A (SUNAX) — Class C (SUNCX) — Class W (SUNWX)
          → AIG ESG Dividend Fund ⇒ A Shares (EDFAX) — C Shares (EDFCX) — W Shares (EDFWX)
          → AIG Focused Alpha Large-Cap Fund ⇒ Class A (SFLAX) — Class C (SFLCX) — Class W (SFLWX)
          → AIG Focused Growth Fund ⇒ Class A (FOCAX) — Class C (FOCCX) — Class W (FOCWX)
          → AIG Income Explorer Fund ⇒ Class A Shares (IEAAX) — Class C Shares (IEACX) — Class W Shares (IEAWX)
          → AIG Small-Cap Quality Fund ⇒ A Shares (SASAX) — C Shares (SASCX) — W Shares (SASWX)

Document/Exhibit                   Description                      Pages   Size 

 1: N-CSRS      Sunamerica Specialty Series                         HTML   2.08M 
 3: EX-99.906 CERT  Certification Pursuant to Section 906 of the    HTML      6K 
                Sarbanes-Oxley Act                                               
 2: EX-99.CERT  Certification Pursuant to Section 302 of the        HTML     13K 
                Sarbanes-Oxley Act                                               

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UNITED STATES  

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number  811-21482

SunAmerica Specialty Series

(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: October 31

Date of reporting period: April 30, 2021

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  2021 SEMI-ANNUAL REPORT

SunAmerica Specialty Series

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A Message from the President — (unaudited)

Dear Shareholders:

All of us at AIG and SunAmerica Asset Management, along with our Fund subadvisers, hope this semi-annual report finds you and yours safe and well during these persistently challenging times.

As the COVID-19 pandemic continues to evolve, know that we remain focused on continuing to serve our Fund shareholders. As such, we are pleased to present this semi-annual update for SunAmerica Specialty Series (the “Specialty Series”), including AIG Commodity Strategy Fund, AIG ESG Dividend Fund, AIG Focused Alpha Large-Cap Fund, AIG Focused Growth Fund, AIG Income Explorer Fund and AIG Small-Cap Quality Fund (the “Funds”), covering the six-month period ended April 30, 2021.

Overall, global equities and commodities advanced, while global bonds generated negative returns. Virtually all asset classes saw ongoing volatility during the semi-annual period.

As the semi-annual period began in November 2020, global equities rose. COVID-19 infections hit new highs in several countries, but equity markets gained in the last two months of the calendar year after two COVID-19 vaccines demonstrated high efficacy rates in Phase 3 trials and the U.S. government agreed on a pandemic relief plan that extended many of the CARES Act support measures. The European Central Bank (“ECB”) expanded its monetary stimulus program, and the European Union and China struck an agreement on an investment treaty even as the U.S. government strengthened its sanctions on companies with links to the Chinese military. The European Union and the U.K. also agreed to a trade deal, ending four years of political negotiations and setting the terms for a post-Brexit^† future. U.S. equities in particular were bolstered by better than expected third quarter 2020 corporate earnings, economic resilience, substantial monetary support from the Federal Reserve (the “Fed”), resolution of the U.S. presidential elections and optimism that COVID-19 vaccines would support a broad re-opening of the U.S. economy.

Due primarily to short-lived trading anomalies in certain stocks, global equities posted negative returns in January 2021 but then rose for a fourth straight quarter in the first quarter of 2021 overall. Markets, including U.S. equities, rallied amid the accelerating global rollout of COVID-19 vaccines, favorable outlook for global economic growth, substantial support from governments and central banks, and upbeat forecasts for corporate earnings. These positive drivers more than offset growing expectations for higher inflation and still-concerning trends in COVID-19 infections. The European Parliament approved the Recovery and Resilience Facility to provide €672.5 billion in grants and loans to help European Union countries alleviate the social and economic effects of the pandemic, while President Biden signed into law a U.S.$1.9 trillion COVID-19 relief bill aimed at individuals and small businesses.

In April 2021, global equities advanced, fueled by optimism around a sharp increase in global economic growth, ongoing fiscal and monetary stimulus, strong corporate earnings and expanding COVID-19 vaccine rollouts—despite the pandemic’s case count worldwide reaching new highs. U.S. equities registered their best monthly performance since November 2020, with favorable sentiment overshadowing concerns about the risks of higher taxes, supply-chain disruptions, inflation pressures and signs of frothy valuations in some areas of the market.

The broad global fixed income market posted a negative return for the semi-annual period overall. Global government bond yields ended the fourth quarter of 2020 mixed. Yield curves in the dollar-bloc economies, including the U.S., Australia, Canada and New Zealand, steepened, while yields in the U.K. and Germany drifted lower. Then, in the first quarter of 2021, government bond yields moved sharply higher. U.S. Treasuries registered their worst quarterly return since 1980, driven by COVID-19 vaccine rollout progress, unprecedented fiscal stimulus and the Fed’s commitment to not preemptively hike rates in response to any transitory rise in inflation during the economic rebound. In turn, the U.S. Treasury yield curve steepened rapidly, which spilled over to other major markets, including the dollar-bloc economies. Chinese sovereign bonds represented the lone market among the 20 largest global debt markets to see yields decrease during the quarter. In April 2021, U.S. Treasury yields ended lower after four consecutive monthly increases. In Europe, German and Italian sovereign bond yields edged higher. Most non-government bond sectors outperformed the

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A Message from the President — (unaudited) (continued)

broad fixed income market for the semi-annual period as a whole but still posted negative absolute returns. However, high yield corporate bonds, emerging markets debt, U.S. Treasury inflation protected securities and asset-backed securities gained ground.

Commodities realized strong performance during the semi-annual period. Energy rallied most sharply, as positive COVID-19 vaccine developments boosted demand and supplies remained tight. Among industrial metals, copper similarly advanced on rising global demand. Precious metals ended higher, though both gold and silver had pulled back during the first quarter of 2021 on a brighter economic outlook and a stronger U.S. dollar. Agriculture and livestock produced strong results, with the prices of many commodities in the sub-sector reaching multi-year highs in April 2021.

Amid these conditions, developed market equities, as measured by the 29.10% return of the MSCI World Index^*, outperformed emerging market equities, as measured by the 22.95% return of the MSCI Emerging Markets Index^* for the semi-annual period overall. Among the developed markets, U.S. equities, as measured by the 28.85% return of the S&P 500 Index^*, performed in line with non-U.S. equities, as measured by the 28.84% return of the MSCI EAFE Index^*. Within the U.S. equity market, small-cap stocks performed best, followed at some distance by mid-cap and then large-cap stocks. Value stocks significantly outpaced growth stocks across the capitalization spectrum. U.S. bonds, as represented by the Bloomberg Barclays U.S. Aggregate Bond Index,^* and global bonds, as represented by the Bloomberg Barclays Global Aggregate Bond Index,^* posted returns of -1.52% and -0.17%, respectively, for the semi-annual period overall. The Bloomberg Barclays U.S. Treasury Index^* returned -3.42%, while international government bonds, as represented by the FTSE Non-U.S. WGBI (USD, hedged)^*, returned -2.40%. Commodities, as represented by the Bloomberg Commodity Index^*, returned 25.81% for the semi-annual period as a whole.

On the following pages, you will find the financial statements and portfolio information for each of the Specialty Series Funds for the six-month period ended April 30, 2021.

Thank you for being a part of the Specialty Series Funds. As always, if you have any questions regarding your investments, please contact your financial professional or get in touch with us directly at 800-858-8850 or at our website, www.aig.com/funds.

Sincerely,

Sharon French

President & CEO

SunAmerica Asset Management, LLC

Past performance is no guarantee of future results. Diversification and asset allocation do not guarantee a profit nor protect against a loss.

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A Message from the President — (unaudited) (continued)

The AIG Commodity Strategy Fund is not a complete investment program and should not be an investor’s sole investment because its performance is linked to the performance of highly volatile commodities. Investors should consider buying shares of the AIG Commodity Strategy Fund only as part of an overall portfolio strategy that includes other asset classes, such as fixed income and equity investments. Investors in the AIG Commodity Strategy Fund should be willing to assume greater risks of potentially significant short-term share price fluctuation because of the AIG Commodity Strategy Fund’s investments in commodity-linked derivative instruments.

The risks associated with the use of futures contracts by the AIG Commodity Strategy Fund include the risk that: (i) changes in the price of a futures contract may not always track the changes in market value of the underlying reference assets; (ii) trading restrictions or limitations may be imposed by an exchange, and government regulations may restrict trading in futures contracts; and (iii) if the Fund has insufficient cash to meet margin requirements, the Fund may need to sell other investments, including at disadvantageous times. Forwards are not exchange-traded and therefore no clearing house or exchange stands ready to meet the obligations of the contracts. Thus, the Fund faces the risk that its counterparties may not perform their obligations. Investments that provide exposure to foreign markets involve special risks, such as currency fluctuations, differing financial reporting and regulatory standards, and economic and political instability. These risks are highlighted when the issuer is in an emerging market. Fixed income securities and currency and fixed income futures are subject to changes in their value when prevailing interest rates change. Adverse changes in currency exchange rates (relative to the U.S. dollar) may erode or reverse any potential gains from futures instruments that are tied to foreign instruments or currencies. The Fund also has exposure to the commodities markets, which may subject it to greater volatility than investments in traditional securities. The AIG Commodity Strategy Fund expects to invest a significant portion of its assets in repurchase agreements collateralized by the U.S. government and its agencies and may also invest in other high quality, short-term securities (“money market instruments”). The primary purpose of the repurchase agreements and other money market instruments held by the Fund will be to serve as collateral for the futures instruments. The Fund’s investments in repurchase agreements involve certain risks involving the default or insolvency of the seller and counterparty risk (i.e., the risk that the counterparty will not perform its obligations). The Fund’s returns are expected to be derived principally from changes in the value of the assets underlying the futures instruments held by the Fund. Active trading of the Fund’s portfolio may result in high portfolio turnover and correspondingly greater brokerage commissions and other transaction costs, which will be borne directly by the Fund and which will affect the Fund’s performance. Active trading may also result in increased tax liability for Fund shareholders. Investors should note that the ability of the subadviser to successfully implement the Fund’s strategies, including the proprietary investment processes used by the subadviser, will influence the performance of the Fund significantly.

Focused funds are less diversified than typical mutual funds; therefore, the performance of each holding in a focused fund has a greater impact upon the overall portfolio, which increases risk. Stocks of small-cap and mid-cap companies are generally more volatile than and not as readily marketable as those of larger companies and may have fewer resources and a greater risk of business failure than do large companies.

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SunAmerica Specialty Series

EXPENSE EXAMPLE — April 30, 2021 — (unaudited)

Disclosure of Fund Expenses in Shareholder Reports

As a shareholder of a Fund (each a “Fund” and collectively, the “Funds”) in the SunAmerica Specialty Series (the “Trust”), you may incur two types of costs: (1) transaction costs, including applicable sales charges (loads) on purchase payments and contingent deferred sales charges and (2) ongoing costs, including management fees; distribution and account maintenance fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at November 1, 2020 and held until April 30, 2021.

Actual Expenses

The “Actual” section of the table provides information about your 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 April 30, 2021” to estimate the expenses you paid on your account during this period. For shareholder accounts in classes other than Class W, the “Expenses Paid During the Six Months Ended April 30, 2021” 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 April 30, 2021” 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 Funds’ prospectuses, your retirement plan document and/or materials from your financial advisers for a full description of these fees. Had these fees been included, the “Expenses Paid During the Six Months Ended April 30, 2021” 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 each 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 Funds 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 W, the “Expenses Paid During the Six Months Ended April 30, 2021” 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 April 30, 2021” 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 Funds’ prospectuses, your retirement plan document and/or materials from your financial advisers for a full description of these fees. Had these fees been included, the “Expenses Paid During the Six Months Ended April 30, 2021” 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 sales charges on purchase payments, contingent deferred sales charges; small account fees and administrative fees, if applicable, to your account. Please refer to the Funds’ prospectus, your 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 transactional costs and other fees were included, your costs would have been higher.

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SunAmerica Specialty Series

EXPENSE EXAMPLE — April 30, 2021 — (unaudited) (continued)

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SunAmerica Specialty Series

STATEMENT OF ASSETS AND LIABILITIES — April 30, 2021 — (unaudited)

See Notes to Financial Statements

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SunAmerica Specialty Series

STATEMENT OF ASSETS AND LIABILITIES — April 30, 2021 — (unaudited) (continued)

See Notes to Financial Statements

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SunAmerica Specialty Series

STATEMENT OF OPERATIONS — For the period ended April 30, 2021 — (unaudited)