Strategy. The Portfolio seeks to achieve its goals by investing under normal conditions approximately 70% to 90% of its assets in Class 1 shares of Underlying Portfolios that invest primarily in equity securities or fixed income securities and which are portfolios of SunAmerica Series Trust (the Trust) and Seasons Series Trust (collectively, the Underlying Trusts) (the Fund-of-Funds Component) and 10% to 30% of its assets in a portfolio of derivative instruments, fixed income securities and short-term investments (the Overlay Component). SunAmerica Asset Management, LLC (SunAmerica or the Adviser) is the Adviser to the Portfolio and will determine the allocation between the Fund-of-Funds Component and the Overlay Component. SunAmerica is also responsible for managing the Fund-of-Funds Components investment in Underlying Portfolios, so … Show more… The Portfolio seeks to achieve its goals by investing under normal conditions approximately 70% to 90% of its assets in Class 1 shares of Underlying Portfolios that invest primarily in equity securities or fixed income securities and which are portfolios of SunAmerica Series Trust (the Trust) and Seasons Series Trust (collectively, the Underlying Trusts) (the Fund-of-Funds Component) and 10% to 30% of its assets in a portfolio of derivative instruments, fixed income securities and short-term investments (the Overlay Component). SunAmerica Asset Management, LLC (SunAmerica or the Adviser) is the Adviser to the Portfolio and will determine the allocation between the Fund-of-Funds Component and the Overlay Component. SunAmerica is also responsible for managing the Fund-of-Funds Components investment in Underlying Portfolios, so it will determine the target allocation between Underlying Portfolios that invest primarily in equity securities and Underlying Portfolios that invest primarily in fixed income securities. SunAmerica performs an investment analysis of possible investments for the Portfolio and selects the universe of permitted Underlying Portfolios as well as the allocation to each Underlying Portfolio. SunAmerica reserves the right to change the Portfolios asset allocation between the Fund-of-Funds Component and the Overlay Component and the Fund-of-Funds Components allocation among the Underlying Portfolios, and to invest in other funds not currently among the Underlying Portfolios, from time to time without notice to investors. The Fund-of-Funds Component will allocate approximately 50% to 80% of its assets to Underlying Portfolios investing primarily in equity securities and 20% to 50% of its assets to Underlying Portfolios investing primarily in fixed income securities and short-term investments, which may include mortgage- and asset-backed securities, to seek capital appreciation and generate income. The Fund-of-Funds Component seeks to achieve capital appreciation primarily through its investments in Underlying Portfolios that invest in equity securities of both U.S. and non-U.S. companies of all market capitalizations, but expects to invest to a lesser extent in Underlying Portfolios that invest primarily in small- and mid-cap U.S. companies and foreign companies. The Portfolio normally does not expect to have more than 25% of its total assets allocated to Underlying Portfolios investing primarily in foreign securities, and no more than 5% of its total assets to Underlying Portfolios investing primarily in emerging markets. The Fund-of-Funds Component seeks to achieve current income through its investments in Underlying Portfolios that primarily invest in fixed income securities, including both U.S. and foreign investment grade securities, but the Portfolio normally does not expect to have more than 5% of total assets allocated to Underlying Portfolios investing primarily in high-yield, high-risk bonds (commonly known as junk bonds), which are considered speculative. Portfolio cash flows are expected to be used to maintain or move Underlying Portfolio exposures close to target allocations, but sales and purchases of Underlying Portfolios may also be used to change or remain near target allocations. The Overlay Component comprises the remaining 10% - 30% of the Portfolios total assets. AllianceBernstein L.P. (the Subadviser or AllianceBernstein) is responsible for managing the Overlay Component, which includes management of the derivative instruments, fixed income securities and short-term investments. The Subadviser may invest the Overlay Component in derivative instruments to increase or decrease the Portfolios overall net equity exposure and, therefore, its volatility and return potential. Volatility is a statistical measurement of the magnitude of up and down fluctuations in the value of a financial instrument or index over time. High levels of volatility may result from rapid and dramatic price swings. Through its use of derivative instruments, the Subadviser may adjust the Portfolios net equity exposure down to a minimum of 25% or up to a maximum of 100%, although the Portfolios average net equity exposure over long-term periods is expected to be approximately 60%-65%. The Portfolios net equity exposure is primarily adjusted through the use of derivative instruments, such as stock index futures and stock index options; however, it may be adjusted through the use of options on stock index futures and stock index swaps, as the allocation among Underlying Portfolios in the Fund-of-Funds Component is expected to remain fairly stable. For example, when the market is in a state of higher volatility, the Subadviser may decrease the Portfolios net equity exposure by taking a short position in derivative instruments. A short sale involves the sale by the Portfolio of a security or instrument it does not own with the expectation of purchasing the same security or instrument at a later date at a lower price. The operation of the Overlay Component may therefore expose the Portfolio to leverage. Because derivative instruments may be purchased with a fraction of the assets that would be needed to purchase the equity securities directly, the remainder of the assets in the Overlay Component will be invested in a variety of fixed income securities. In addition to managing the Portfolios overall net equity exposure as described above, the Subadviser will, within established guidelines, manage the Overlay Component in an attempt to generate income, manage Portfolio cash flows and liquidity needs, and manage collateral for the derivative instruments. The Subadviser will manage the fixed income investments of the Overlay Component by investing in securities rated investment grade or higher by a nationally recognized statistical ratings organization, or, if unrated, determined by the Subadviser to be of comparable quality. At least 50% of the Overlay Components fixed income investments will be invested in U.S. Government securities, cash, repurchase agreements, and money market securities. A portion of the Overlay Component may be held in short-term investments as needed, in order to manage daily cash flows to or from the Portfolio or to serve as collateral. The Subadviser may also invest the Overlay Component in derivative instruments to generate income and manage Portfolio cash flows and liquidity needs. Efforts to manage the Portfolios volatility may also expose the Portfolio to additional costs. In addition, the Subadviser will seek to reduce exposure to certain downside risks by purchasing equity index put options that aim to reduce the Portfolios exposure to certain severe and unanticipated market events that could significantly detract from returns. The following chart sets forth the target allocations of the Portfolio set by SunAmerica on January 31, 2025, to equity and fixed income Underlying Portfolios and securities. These target allocations represent SunAmericas current goal for the allocation of the Portfolios assets and do not take into account any change in net equity exposure from use of derivatives in the Overlay Component. The Portfolios actual allocations could vary substantially from the target allocations due to market valuation changes, changes in the target allocations and the Subadvisers management of the Overlay Component in response to volatility changes. Asset Class % of Total Portfolio Equity 56.00% U.S. Large Cap 41.33% U.S. Small and Mid-Cap 7.20% Foreign Equity 7.47% Fixed Income 44.00% U.S. Investment Grade 43.11% U.S. High Yield 0.69% Foreign Fixed Income 0.20% Show less