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 811-21805
---------------------------------------------
SunAmerica Focused Alpha Large-Cap Fund, Inc.
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(Exact name of registrant as specified in charter)
Harborside Financial Center, 3200 Plaza 5 Jersey City, NJ 07311
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(Address of principal executive offices) (Zip code)
Vincent M. Marra
Senior Vice President
AIG SunAmerica Asset Management Corp.
Harborside Financial Center,
3200 Plaza 5
Jersey City, NJ 07311
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(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6464
-----------------------------
Date of fiscal year end: December 31
--------------------------
Date of reporting period: June 30, 2006
-------------------------
Item 1. Reports to Stockholders
SunAmerica Focused Alpha Large-Cap Fund, Inc. Semi-Annual Report at
June 30, 2006.
SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND (FGI)
ROBERT C. DOLL THOMAS F. MARSICO
[MERRILL LYNCH LOGO] INVESTMENT MANAGERS [MARSICO CAPITAL MANAGEMENT, LLC LOGO]
MERCURY ADVISORS
2006 SEMI-ANNUAL REPORT
[AIG SUNAMERICA MUTUAL FUNDS LOGO]
JUNE 30, 2006 SEMI-ANNUAL REPORT
SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND
SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND (FGI)
TABLE OF CONTENTS
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<Table>
SHAREHOLDERS' LETTER........................................ 1
STATEMENT OF ASSETS AND LIABILITIES......................... 3
STATEMENT OF OPERATIONS..................................... 4
STATEMENT OF CHANGES IN NET ASSETS.......................... 5
FINANCIAL HIGHLIGHTS........................................ 6
PORTFOLIO OF INVESTMENTS.................................... 7
NOTES TO FINANCIAL STATEMENTS............................... 9
APPROVAL OF ADVISORY AGREEMENTS............................. 14
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN................ 17
ANNUAL SHAREHOLDER MEETING.................................. 19
DIRECTORS AND OFFICERS INFORMATION.......................... 20
</Table>
June 30, 2006 SEMI-ANNUAL REPORT
SHAREHOLDERS' LETTER
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Dear Shareholders:
We are pleased to present the semi-annual report for the SunAmerica
Focused Alpha Large-Cap Fund and thank you for including this strategic
investment solution in your investment plan. In the period commencing
January 1, 2006 through June 30, 2006, the SunAmerica Focused Alpha
Large-Cap Fund's Net Asset Value (NAV) returned 2.4%, underperforming its
benchmark, the Russell 1000 Index,(1) which returned 2.8% for the same
period. The Fund's market price returned -16.1% during the same period. As
of June 30, 2006, the Fund's NAV was $18.91 and its market share price was
$16.20.
The past six months have been a volatile period for the equity markets.
The effects of higher interest rates, a weakening housing market, the drag
from higher energy prices and growing consumer debt -- all of which have
been present for some time now -- seem to be working their way through the
system.
At the start of the calendar year, equity markets were helped to some
extent by good economic news -- including generally stronger-than-expected
Gross Domestic Product (GDP) growth and corporate profits that were better
than the consensus forecast. However, challenges arose for investors as
the period progressed. The consumer price index rose more than expected in
May, fueled by evidence of slowing in the economy and unease about the
intentions of the new Chairman of the Federal Reserve Bank, Ben Bernanke.
For the first six months of 2006, large-cap value stocks, as measured by
the Russell 1000 Value Index,(2) advanced by over 6%; while large-cap
growth stocks, as measured by the Russell 1000 Growth Index,(3) declined
by 0.9%. From a broad sector standpoint, performance leaders included:
telecommunications and related services; materials, including energy and
commodities; and industrials while information technology and healthcare
stocks lagged.
What sets SunAmerica Focused Alpha Large-Cap Fund apart from its
competitors in the marketplace is its multi-managed, focused approach in a
closed-end fund structure. Two of Wall Street's best known large-cap
equity managers, Marsico Capital Management LLC and Mercury Advisors and
their respective teams each contribute 10-15 of their favorite stock
picks. Marsico emphasizes large growth investing while Mercury's Bob Doll
and his team favor a large-cap value investment style. Together, their
20-30 stock picks, blending large growth and large value, are designed to
generate Alpha through exposure to different styles of large-cap
investing.
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 and CEO
AIG SunAmerica Asset Management Corp.
------------------
Past performance is no guarantee of future results.
(1) The Russell 1000 Index offers investors access to the extensive
large-cap segment of the U.S. equity universe representing
approximately 92% of the U.S. market. The Russell 1000 is constructed
to provide a comprehensive and unbiased barometer for the large-cap
segment and is completely reconstituted annually to ensure new and
growing equities are reflected. The Russell 1000 includes the largest
1000 securities in the Russell 3000.
(2) The Russell 1000 Value Index offers investors access to the large-cap
value segment of the U.S. equity universe. The Russell 1000 Value is
constructed to provide a comprehensive and unbiased barometer of the
large-cap value market. Based on ongoing empirical research of
investment manager behavior, the methodology used to determine growth
probability approximates the aggregate large-cap value manager's
opportunity set.
(3) The Russell 1000 Growth Index offers investors access to the large-cap
growth segment of the U.S. equity universe. The Russell 1000 Growth is
constructed to provide a comprehensive and unbiased barometer of the
large-cap growth market. Based on ongoing empirical research of
investment manager behavior, the methodology used to determine growth
probability approximates the aggregate large-cap growth manager's
opportunity set.
1
June 30, 2006 SEMI-ANNUAL REPORT
SHAREHOLDERS' LETTER -- (continued)
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Investors should carefully consider the SunAmerica Focused Alpha Large-Cap
Fund's investment objective, strategies, risks, charges and expenses
before investing. The SunAmerica Focused Alpha Large-Cap Fund should be
considered as only one element of a complete investment program. The
Fund's equity exposure and derivative investments involve special risks.
An investment in this Fund should be considered speculative. There is no
assurance that the SunAmerica Focused Alpha Large-Cap Fund will achieve
its investment objectives. The Fund is actively managed and its portfolio
composition will vary. Investing in the Fund is subject to several risks,
including: Non-Diversified Status Risk, Growth and Value Stock Risk, Key
Adviser Personnel Risk, Investment and Market Risk, Issuer Risk, Foreign
Securities Risk, Emerging Markets Risk, Income Risk, Hedging Strategy
Risk, Derivatives Risk, Preferred Securities Risk, Debt Securities Risk,
Small and Medium Capitalization Company Risk, Leverage Risk, Liquidity
Risk, Market Price of Shares Risk, Management Risk, Anti-Takeover
Provisions Risk, Portfolio Turnover Risk and Non-Investment Grade
Securities Risk. The price of shares of the Fund traded on the New York
Stock Exchange will fluctuate with market conditions and may be worth more
or less than their original offering price. Shares of closed-end funds
often trade at a discount to their net asset value, but may also trade at
a premium.
2
SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES -- JUNE 30, 2006 -- (UNAUDITED)
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<Table>
ASSETS:
Long-term investment securities, at value (unaffiliated)*... $178,125,836
Short-term investment securities, at value
(unaffiliated)*........................................... 6,513,000
------------
Total Investments......................................... 184,638,836
------------
Receivable for:
Dividends and interest.................................... 126,798
Investments sold.......................................... 3,918,299
Prepaid expenses and other assets........................... 3,306
------------
Total Assets.............................................. 188,687,239
------------
LIABILITIES:
Payable for:
Investments purchased..................................... 4,044,908
Investment advisory and management fees................... 148,402
Administration fees....................................... 5,937
Directors' fees and expenses.............................. 759
Other accrued expenses.................................... 75,064
Due to custodian............................................ 758,990
Dividends payable........................................... 1,087,343
------------
Total Liabilities......................................... 6,121,403
------------
Net Assets.............................................. $182,565,836
============
NET ASSETS REPRESENTED BY:
Common stock, $0.001 par value (200,000,000 shares
authorized)............................................... $ 9,655
Additional paid-in capital.................................. 184,019,345
------------
184,029,000
Accumulated undistributed net investment income (loss)...... (6,047,663)
Accumulated undistributed net realized gain (loss) on
investments............................................... 225,849
Unrealized appreciation (depreciation) on investments....... 4,358,650
------------
Net Assets.............................................. $182,565,836
============
NET ASSET VALUES:
Net assets.................................................. $182,565,836
Shares outstanding.......................................... 9,655,236
Net asset value per share................................... $ 18.91
============
*COST
Long-term investment securities (unaffiliated)............ $173,767,186
============
Short-term investment securities (unaffiliated)........... $ 6,513,000
============
</Table>
See Notes to Financial Statements
3
SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND, INC.
STATEMENT OF OPERATIONS -- FOR THE PERIOD ENDED JUNE 30, 2006 -- (UNAUDITED)
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<Table>
INVESTMENT INCOME:
Dividends (unaffiliated).................................... $ 566,672
Interest (unaffiliated)..................................... 328,167
----------
Total investment income*.................................. 894,839
----------
EXPENSES:
Investment advisory and management fees..................... 948,061
Administration fees......................................... 37,922
Transfer agent fees and expenses............................ 10,498
Custodian and accounting fees............................... 23,532
Reports to shareholders..................................... 44,949
Audit and tax fees.......................................... 13,756
Legal fees.................................................. 37,105
Directors' fees and expenses................................ 18,309
Other expenses.............................................. 23,647
----------
Total expenses before custody credits..................... 1,157,779
Custody credits earned on cash balances................... (726)
----------
Net expenses.............................................. 1,157,053
----------
Net investment income (loss)................................ (262,214)
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)...... 225,849
----------
Change in unrealized appreciation (depreciation) on
investments (unaffiliated)................................ 4,358,650
----------
Net realized and unrealized gain (loss) on investments and
foreign currencies........................................ 4,584,499
----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ $4,322,285
==========
</Table>
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<Table>
* Net of foreign withholding taxes on interest and dividends
of........................................................ $ 16,807
==========
</Table>
See Notes to Financial Statements
4
SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
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<Table>
<Caption>
FOR THE FOR THE PERIOD
SIX MONTHS ENDED DECEMBER 28, 2005@
JUNE 30, 2006 THROUGH
(UNAUDITED) DECEMBER 31, 2005
---------------- -------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss).............................. $ (262,214) $ 7,692
Net realized gain (loss) on investments and foreign
currencies.............................................. 225,849 --
Net unrealized gain (loss) on investments and foreign
currencies.............................................. 4,358,650 --
------------ -------------
Net increase (decrease) in net assets resulting from
operations................................................ 4,322,285 7,692
------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income*.................................... -- --
Net realized short-term gains on investments*............. -- --
Return of capital*........................................ (5,793,141) --
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Total distributions to shareholders......................... (5,793,141) --
------------ -------------
SHARE TRANSACTIONS (NOTE 6):
Proceeds from sales of shares issued in initial public
offering................................................ -- 184,315,000
Offering costs for common shares charged to additional
paid-in capital......................................... -- (386,000)
------------ -------------
Net increase in net assets from share transactions.......... -- 183,929,000
------------ -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS..................... (1,470,856) 183,936,692
NET ASSETS:
Beginning of period......................................... $184,036,692 $ 100,000
End of period+.............................................. $182,565,836 $184,036,692
============ =============
</Table>
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<Table>
+ Includes accumulated undistributed net investment income
(loss).................................................... $ (6,047,663) $ 7,692
============ =============
</Table>
@ Commencement of operations
* Amounts are estimated as of June 30, 2006, and are subject to change and
recharacterization at fiscal year end.
See Notes to Financial Statements
5
SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND, INC.
FINANCIAL HIGHLIGHTS
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<Table>
<Caption>
FOR THE
SIX MONTHS ENDED FOR THE PERIOD
JUNE 30, 2006 DECEMBER 28, 2005++
(UNAUDITED) TO DECEMBER 31, 2005
---------------- --------------------
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 19.06 $ 19.10(1)
INVESTMENT OPERATIONS:
Net investment income (loss)@............................... (0.03) 0.00
Net realized and unrealized gain (loss) on investments...... 0.48 --
-------- --------
Total from investment operations.......................... 0.45 --
-------- --------
DISTRIBUTIONS FROM:
Net investment income....................................... --* --
Net realized short-term gains on investments................ --* --
Return of capital........................................... (0.60)* --
-------- --------
Total distributions....................................... (0.60) --
CAPITAL SHARE TRANSACTIONS:
Offering costs for common shares charged to additional
paid-in capital........................................... -- (0.04)
-------- --------
NET ASSET VALUE, END OF PERIOD.............................. $ 18.91 $ 19.06
======== ========
NET ASSET VALUE TOTAL RETURN#(2)............................ 2.37% (0.21)%
MARKET VALUE, END OF PERIOD................................. $ 16.20 $ 20.00
MARKET VALUE TOTAL RETURN#(3)............................... (16.11)% 0.00%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period ($000's).......................... $182,566 $184,037
Ratio of expenses to average net assets..................... 1.25%sec. 0.03%+
Ratio of net investment income to average net assets........ (0.28)%sec. 0.00%+
Portfolio turnover rate..................................... 29% 0%
</Table>
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++ Commencement of operations
@ Calculated based upon average shares outstanding
# Total return is not annualized.
+ Due to commencing operations on December 28, 2005, the ratio of expenses and
ratio of net investment income are not annualized. If the ratios were
annualized, the ratio of expenses and the ratio of net investment income
would have been 3.07% and 0.38%, respectively. The ratios are not
representative of a full year of operations.
* Amounts are estimated as of June 30, 2006, and are subject to change and
recharacterization at fiscal year end.
sec.Annualized
(1) Net asset value, beginning of the period, reflects a deduction of $0.90 per
share sales change from the initial offering price of $20.00.
(2) Based on the net asset value per share, dividends and distributions, if any,
are assumed for purposes of this calculation to be reinvested at prices
obtained under the Fund's dividend reinvestment plan. NAV performance
reflects performance without imposition of initial sales charge in
connection with the initial public offering of the Fund and would be lower
if included.
(3) Based on market value per share, dividends and distributions, if any, are
assumed for purposes of this calculation to be reinvested at prices obtained
under the Fund's dividend reinvestment plan.
See Notes to Financial Statements
6
SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND, INC.
PORTFOLIO PROFILE -- JUNE 30, 2006 -- (UNAUDITED)
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<Table>
INDUSTRY ALLOCATION*
Health Services........................ 20.0%
Energy Sources......................... 15.8
Telecommunications..................... 12.7
Leisure & Tourism...................... 11.6
Financial Services..................... 5.9
Pharmaceuticals........................ 5.9
Retail................................. 4.8
Computers & Business Equipment......... 4.7
Transportation......................... 4.2
Time Deposits.......................... 3.6
Automotive............................. 3.5
Aerospace & Military Technology........ 3.2
Machinery.............................. 3.0
Broadcasting & Media................... 2.2
----
101.1%
====
</Table>
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* Calculated as a percentage of net assets.
7
SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND, INC.
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2006 -- (UNAUDITED)
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<Table>
<Caption>
VALUE
SECURITY DESCRIPTION SHARES NOTE (2)
- --------------------------------------------------------------------
COMMON STOCK -- 97.5%
AEROSPACE & MILITARY TECHNOLOGY -- 3.2%
General Dynamics Corp. ................ 89,157 $ 5,836,217
------------
AUTOMOTIVE -- 3.5%
Toyota Motor Corp. Sponsored ADR....... 60,304 6,307,195
------------
BROADCASTING & MEDIA -- 2.2%
Comcast Corp., Class A+................ 125,057 4,094,366
------------
COMPUTERS & BUSINESS EQUIPMENT -- 4.7%
Hewlett-Packard Co. ................... 270,000 8,553,600
------------
ENERGY SOURCES -- 15.8%
Anadarko Petroleum Corp. .............. 200,000 9,538,000
Devon Energy Corp. .................... 160,000 9,665,600
Sunoco, Inc. .......................... 140,000 9,700,600
------------
28,904,200
------------
FINANCIAL SERVICES -- 5.9%
Chicago Mercantile Exchange Holdings,
Inc. ................................ 11,995 5,891,344
UBS AG................................. 44,538 4,885,819
------------
10,777,163
------------
HEALTH SERVICES -- 20.0%
Aetna, Inc. ........................... 230,000 9,183,900
Caremark Rx, Inc. ..................... 190,000 9,475,300
McKesson Corp. ........................ 180,000 8,510,400
UnitedHealth Group, Inc. .............. 208,633 9,342,586
------------
36,512,186
------------
LEISURE & TOURISM -- 11.6%
Las Vegas Sands Corp.+................. 135,723 10,567,393
Station Casinos, Inc. ................. 68,372 4,654,765
Wynn Resorts, Ltd.+.................... 81,413 5,967,573
------------
21,189,731
------------
MACHINERY -- 3.0%
Joy Global, Inc. ...................... 105,121 5,475,753
------------
</Table>
<Table>
- --------------------------------------------------------------------
<Caption>
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT NOTE (2)
PHARMACEUTICALS -- 5.9%
Genentech, Inc.+....................... 86,354 7,063,757
Genzyme Corp.+......................... 61,712 3,767,518
------------
10,831,275
------------
RETAIL -- 4.8%
J.C. Penney Co., Inc. ................. 130,000 8,776,300
------------
TELECOMMUNICATIONS -- 12.7%
America Movil SA de CV, Series L ADR... 148,721 4,946,460
Motorola, Inc. ........................ 440,000 8,866,000
Qwest Communications International,
Inc.+................................ 1,170,000 9,465,300
------------
23,277,760
------------
TRANSPORTATION -- 4.2%
Burlington Northern Santa Fe Corp. .... 95,774 7,590,090
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $173,767,186).................. 178,125,836
------------
SHORT-TERM INVESTMENT SECURITIES -- 3.6%
TIME DEPOSITS -- 3.6%
Euro Time Deposit with State Street
Bank & Trust Co. 4.05% due 07/03/06
(cost $6,513,000).................... $ 6,513,000 6,513,000
------------
TOTAL INVESTMENTS
(cost $180,280,186)(1)............... 101.1% 184,638,836
Liabilities in excess of other
assets............................... (1.1) (2,073,000)
------------ ------------
NET ASSETS............................. 100.0% $182,565,836
============ ============
</Table>
- ------------
+ Non-income producing securities
ADR American Depository Receipt
(1) See note 5 for cost of investment on a tax basis.
See Notes to Financial Statements
8
SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2006 -- (UNAUDITED)
- --------------------------------------------------------------------------------
Note 1. Organization of the Fund
SunAmerica Focused Alpha Large-Cap Fund, Inc. (the "Fund") is a
non-diversified closed-end management investment company. The Fund was
organized as a Maryland corporation on September 7, 2005 and is registered
under the Investment Company Act of 1940, as amended, (the "1940 Act"). The
Fund sold 5,236 of its common stock shares ("Shares") on November 14, 2005
to AIG SunAmerica Asset Management Corp. (the "Adviser" or "SAAMCo"), an
indirect wholly-owned subsidiary of America International Group, Inc.
("AIG"). Investment operations commenced on December 28, 2005 upon
settlement of the sale of 9,650,000 Shares in the amount of $184,315,000
(net of underwriting fees and expenses of $8,685,000). SAAMCo paid certain
organizational expenses of the Fund. SAAMCo has also paid offering costs of
the Fund to the extent they exceeded $.04 per share of the Fund's common
stock.
The Fund's investment objective is to provide growth of capital. The Fund
seeks to pursue this objective by employing a concentrated stock picking
strategy in which the Fund, through subadvisers selected by the Adviser,
actively invests primarily in a small number of equity securities (i.e.,
common stocks) of large-capitalization companies and to a lesser extent in
equity-related securities (i.e., preferred stocks, convertible securities,
warrants and rights) of large-capitalization companies primarily in the U.S.
markets. Under normal market conditions, the Fund will invest at least 80%
of its net assets, plus any borrowing for investment purposes, in
large-capitalization companies.
INDEMNIFICATIONS: Under the Fund's organizational documents, its officers
and directors are indemnified against certain liability arising out of the
performance of their duties to the Fund. In addition, in the normal course
of business the Fund enters into contracts that may contain the obligation
to indemnify others. The Fund's maximum exposure under these arrangements is
unknown. Currently, however, the Fund 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 requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from these estimates. The
following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements:
SECURITY VALUATION: Stocks are generally valued based upon closing sales
prices reported on recognized securities exchanges. Stocks listed on the
NASDAQ are valued using the NASDAQ Official Closing Price ("NOCP").
Generally, the NOCP will be the last sale price unless the reported trade
for the stock is outside the range of the bid/ask price. In such cases, the
NOCP will be normalized to the nearer of the bid or ask price. For listed
securities having no sales reported and for unlisted securities, such
securities will be valued based upon the last reported bid price.
As of the close of regular trading on the New York Stock Exchange,
securities traded primarily on security exchanges outside the United States
are valued at the last sale price on such exchanges on the day of valuation,
or if there is no sale on the day of valuation, at the last-reported bid
price. If a security's price is available from more than one exchange, the
Fund uses the exchange that is the primary market for the security. However,
depending on the foreign market, closing prices may be up to 15 hours old
when they are used to price the Fund's shares, and the Fund may determine
that certain closing prices are unreliable. This determination will be based
on review of a number of factors, including developments in foreign markets,
the performance of U.S. securities markets, and the performance of
instruments trading in U.S. markets that represent foreign securities and
baskets of foreign securities. If the Fund determines that closing prices do
not reflect the fair value of the securities, the Fund will adjust the
previous closing prices in accordance with pricing procedures approved by
the Board of Directors to reflect what it believes to be the fair value of
the securities as of the close of regular trading on the New York Stock
Exchange. The Fund may also fair value securities in other situations, for
example, when a particular foreign market is closed but the Fund is open.
For foreign equity securities, the Fund uses an outside pricing service to
provide it with closing market prices and information used for adjusting
those prices.
9
SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2006 -- (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
Short-term securities with 60 days or less to maturity are amortized to
maturity based on their cost to the Fund if acquired within 60 days of
maturity or, if already held by the Fund on the 60th day, are amortized to
maturity based on the value determined on the 61st day.
Securities for which market quotations are not readily available or if a
development/significant event occurs that may significantly impact the value
of the security, then these securities are valued, as determined pursuant to
procedures adopted in good faith by the Board of Directors.
REPURCHASE AGREEMENTS: The Fund may enter into repurchase agreements. When
the Fund enters into a repurchase agreement the Fund's custodian takes
possession of the collateral pledged for investments in repurchase
agreements. The underlying collateral is valued daily on a mark to market
basis to ensure that the value, including accrued interest, is at least 102%
of the repurchase price. In the event of default of the obligation to
repurchase, a 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 portfolio may be delayed or limited. At June 30, 2006, the Fund did not
enter into any repurchase agreements.
SECURITIES TRANSACTIONS, INVESTMENT INCOME, EXPENSES, DIVIDENDS AND
DISTRIBUTIONS TO SHAREHOLDERS: Security transactions are recorded on a trade
date basis. Realized gains and losses on sales of investments are calculated
on the identified cost basis. Interest income is accrued daily except when
collection is not expected. Dividend income is recorded on the ex-dividend
date except for certain dividends from foreign securities, which are
recorded as soon as the Fund is informed after the ex-dividend date. Foreign
income and capital gains may be subject to foreign withholding taxes and
capital gains taxes at various rates. Under applicable foreign law, a
withholding of tax may be imposed on interest, dividends, and capital gains
at various rates. Interest earned on cash balances held at the custodian are
shown as custody credits on the Statement of Operations.
The Fund has adopted a distribution policy (the "Distribution Policy") under
which the Fund will pay level quarterly dividend distributions, subject to
an adjusting dividend distribution in the fourth quarter as described below.
The Distribution Policy and the dividend distribution rate may be terminated
or modified at any time. The Fund intends to pay a level quarterly amount in
each of the first three quarters of the calendar year and increase, if
necessary, the amount payable for the fourth quarter to an amount expected
to satisfy the minimum distribution requirements of the Internal Revenue
Code of 1986, as amended, or as necessary to distribute long-term capital
gains in a manner consistent with the requirements of the Investment Company
Act of 1940, as amended, whichever is greater. Each quarter the Board of
Directors will review the amount of any potential dividend distribution and
the income, capital gains and capital available. A portion of the dividend
distribution may be treated as ordinary income (derived from short-term
capital gains) and qualifying dividend income for individuals. If the Fund
does not generate earnings from dividends, interest and net realized capital
gains equal to or in excess of the aggregate dividend distributions paid by
the Fund for the year, then the amount distributed in excess of the Fund's
investment income and net realized capital gains will be deemed a return of
capital. The final determination of the source of all dividend distributions
will be made after year-end. The Distribution Policy may, under certain
circumstances, have certain adverse consequences to the Fund and its
shareholder because it may result in a return of capital resulting in less
of a shareholder's assets being invested in the Fund and, over time,
increase the Fund's expense ratio. The Distribution Policy also may cause
the Fund to sell a security at a time it would not otherwise do so in order
to manage the distribution of income and/or gains.
On July 13, 2006, the Financial Accounting Standards Board (FASB) released
FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN
48). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements.
FIN 48 requires the evaluation of tax positions taken or expected to be
taken in the course of preparing the fund's tax returns to determine whether
the tax positions are "more-likely-than-not" of being sustained by the
applicable tax authority. Adoption of FIN 48 is required
10
SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2006 -- (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
for fiscal years beginning after December 15, 2006 and is to be applied to
all open tax years as of the effective date. At this time, management is
evaluating the implications of FIN 48 and its impact in the financial
statements, if any, has not yet been determined.
The Fund intends to comply with the requirements of the Internal Revenue
Code, as amended, applicable to regulated investment companies and
distribute all of their taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal tax provisions are
required.
Note 3. Investment Advisory and Management Agreement
Pursuant to its investment advisory and management agreement ("Advisory
Agreement") with the Fund, SAAMCo manages the affairs of the Fund, and
selects, contracts with and compensates the Subadvisers to manage the Fund's
assets. SAAMCo monitors the compliance of the Subadvisers with the
investment objective and related policies of the Fund, reviews the
performance of the Subadvisers, and reports periodically on such performance
to the Board of Directors. Pursuant to the Advisory Agreement, the Fund will
pay SAAMCo a monthly fee at the annual rate of 1.00% of the average daily
total assets of the Fund.
Marsico Capital Management, LLC ("Marsico"), a wholly-owned subsidiary of
Bank of America, and Merrill Lynch Investment Managers L.P., doing business
as Mercury Advisors ("Mercury") have been retained by SAAMCo as the
Subadvisers to the Fund to manage the investment and reinvestment of the
Fund's assets. Pursuant to the investment subadvisory agreements
("Subadvisory Agreements") between SAAMCo and Marsico and Mercury,
respectively, Marsico and Mercury select the investments made by the Fund.
Marsico will manage the large-cap growth portion of the Fund and Mercury
will manage the large-cap value portion of the Fund. SAAMCo paid each of the
Subadvisers an annual percentage of the average daily total assets of 0.40%.
SAAMCo serves as administrator to the Fund. Under the Administrative
Services Agreement, SAAMCo is responsible for performing administrative
services in connection with the operations of the Fund, subject to the
supervision of the Fund's Board of Directors. SAAMCo will provide the Fund
with regulatory reporting, all necessary office space, equipment, personnel
and facilities for handling the affairs of the Fund. SAAMCo's administrative
services include recordkeeping, supervising the activities of the Fund's
custodian and transfer agent, providing assistance in connection with the
Directors' and shareholders' meetings and other administrative services
necessary to conduct the Fund's affairs. For its services as administrator,
SAAMCo is entitled to receive a monthly fee at the annual rate of 0.04% of
the Fund's average daily total assets.
Note 4. Purchase and Sales of Investment Securities
The cost of purchases and proceeds from sales and maturities of long-term
investments during the period ended June 30, 2006 were as follows:
<Table>
Purchases (excluding U.S. government securities)............ $217,127,577
Sales and maturities (excluding U.S. government
securities)............................................... 43,586,216
Purchases of U.S. government securities..................... --
Sales and maturities of U.S. government securities.......... --
</Table>
11
SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2006 -- (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
Note 5. Federal Income Taxes
For the fiscal year ended December 31, 2005, the tax character of
distributions and tax basis components of distributable earnings does not
differ from U.S. generally accepted accounting principles.
The amounts of aggregate unrealized gain (loss) and the cost of investment
securities for federal tax purposes, including short-term securities were as
follows:
<Table>
Cost (tax basis)............................................ $180,280,186
============
Appreciation................................................ $ 13,625,136
Depreciation................................................ (9,266,486)
------------
Net unrealized appreciation (depreciation).............. $ 4,358,650
============
</Table>
Note 6. Capital Share Transactions
Transactions in capital shares of the Fund were as follows:
<Table>
<Caption>
FOR THE SIX MONTHS
ENDED FOR THE PERIOD
JUNE 30, 2006 DECEMBER 28, 2005* THROUGH
(UNAUDITED) DECEMBER 31, 2005
---------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ---------- ---------- -------------
Initial seed capital, November 14, 2005............... -- $ -- 5,236 $ 100,000
Common shares issued in connection with initial public
offering............................................ -- -- 9,650,000 183,929,000
--------- ---------- --------- ------------
Net increase...................................... -- $ -- 9,655,236 $184,029,000
========= ========== ========= ============
</Table>
- ---------------
<Table>
* Commencement of operations
</Table>
Note 7. Other Information
On February 9, 2006, American International Group, Inc. ("AIG"), the parent
company and an affiliated person of AIG SunAmerica Asset Management Corp.
("Adviser"), announced that it had consented to the settlement of an
injunctive action instituted by the Securities and Exchange Commission
("SEC"). In its complaint, the SEC alleged that AIG violated Section 17(a)
of the Securities Act of 1933, as amended, Sections 10(b), 13(a), 13(b)(2)
and 13(b)(5) of the Securities Exchange Act of 1934, as amended, and Rules
10b-5, 12b-20, 13a-1 and 13b2-1 promulgated thereunder, in connection with
AIG's accounting and public reporting practices. The conduct described in
the complaint did not involve any conduct of AIG or its subsidiaries related
to their investment advisory or distribution activities with respect to the
assets of the Fund.
AIG, without admitting or denying the allegations in the complaint (except
as to jurisdiction), consented to the entry of an injunction against further
violations of the statutes referred to above. Absent exemptive relief
granted by the SEC, the entry of such an injunction would prohibit AIG and
its affiliated persons from, among other things, serving as an investment
adviser of any registered investment management company or principal
underwriter for any registered open-end investment company pursuant to
Section 9(a) of the Investment Company Act of 1940, as amended ("1940 Act").
Certain affiliated persons of AIG, including the Adviser, received a
temporary order from the SEC pursuant to Section 9(c) of the 1940 Act with
respect to the entry of the injunction, granting exemptive relief from the
provisions of
12
SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2006 -- (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
Section 9(a) of the 1940 Act. The temporary order permits AIG and its
affiliated persons, including AIG's investment management subsidiaries, to
serve as investment adviser, sub-adviser, principal underwriter or sponsor
of the Fund. The Adviser expects that a permanent exemptive order will be
granted, although there is no assurance the SEC will issue the order.
Additionally, AIG and its subsidiaries reached a resolution of claims and
matters under investigation with the United State Department of Justice
("DOJ"), the Attorney General of the State of New York ("NYAG") and the New
York State Department of Insurance ("DOI"), regarding accounting, financial
reporting and insurance brokerage practices of AIG and its subsidiaries, as
well as claims relating to the underpayment of certain workers compensation
premium taxes and other assessments.
As a result of the settlements with the SEC, the DOJ, the NYAG and the DOI,
AIG will make payments totaling approximately $1.64 billion. In addition, as
part of its settlements, AIG has agreed to retain for a period of three
years an Independent Consultant who will conduct a review that will include
the adequacy of AIG's internal controls over financial reporting and the
remediation plan that AIG has implemented as a result of its own internal
review.
Subject to receipt of permanent relief, the Adviser believes that the
settlements are not likely to have a material adverse effect on its ability
to perform advisory services relating to the Fund.
13
SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND, INC.
APPROVAL OF ADVISORY AGREEMENTS -- JUNE 30, 2006 -- (UNAUDITED)
- --------------------------------------------------------------------------------
BOARD APPROVAL OF THE ADVISORY AGREEMENT AND SUBADVISORY AGREEMENTS
The Board of Directors (the "Board"), including the Directors that are not
interested persons of the Fund (the "Disinterested Directors"), approved a
new Subadvisory Agreement among SunAmerica Focused Alpha Large-Cap Fund,
Inc. (the "Fund"), SAAMCo and BlackRock Advisors, Inc. or its successor,
("BlackRock Advisers") (the "New Subadvisory Agreement") at a meeting held
on May 22, 2006. The Board's approval of the New Subadvisory Agreement was
in response to the anticipated termination of the existing Subadvisory
Agreement among the Fund, SAAMCo and Mercury Advisors (the "Current
Subadvisory Agreement"), as described below. At this same meeting, the Board
also approved the calling of a shareholder meeting and authorized the
preparation and filing of a proxy statement for purposes of soliciting
shareholder approval of the New Subadvisory Agreement. A proxy statement was
subsequently filed with the SEC on July 10, 2006.
Merrill Lynch & Co.("Merrill Lynch"), the parent company of Mercury
Advisors, and BlackRock, Inc. ("BlackRock") have agreed to a transaction to
combine Merrill Lynch's investment management business operated by Merrill
Lynch Investment Managers, L.P. and certain affiliates including Mercury,
with BlackRock to form a new asset management company (the "Transaction").
The Transaction, when it is consummated, will cause the Current Subadvisory
Agreement to terminate. As required by the Investment Company Act of 1940,
as amended (the "1940 Act"), the Current Subadvisory Agreement provides for
the automatic termination upon its "assignment." Under the 1940 Act, a
change in control of a subadviser constitutes an "assignment." The
consummation of the transaction will constitute a change in control of
Mercury and result in the assignment and therefore the termination, of the
Current Subadvisory Agreement.
In accordance with Section 15(c) of the 1940 Act, the Board received
materials for its consideration of the following: (1) the nature, extent and
quality of services to be provided by BlackRock Advisors; (2) the costs of
services to be provided and benefits realized by BlackRock Advisors,
including a comparison of subadvisory fees with those paid with respect to
other closed-end funds; (3) the terms of New Subadvisory Agreement; (4)
economies of scale; (5) BlackRock Advisors' new overall organization,
including the management personnel and operations. One factor not considered
by the Board was the investment performance of BlackRock Advisors. The
investment personnel that would be responsible for the daily management of
the Fund's assets allocated to BlackRock Advisors are expected to be the
same individuals who are currently responsible for the daily management of
the Fund's assets by Mercury. Therefore, the Board considered the investment
performance of the portfolio management team at Mercury who is currently
responsible for managing a portion of the Fund's assets. Experienced counsel
that is independent of SAAMCo provided guidance to the Disinterested
Directors. These factors, as described in more detail below were considered
by the Board.
A. Nature, Extent and Quality of Services
The Board, including the Disinterested Directors, considered the nature,
quality and extent of services to be provided by BlackRock Advisors. In
making its evaluation, the Board considered that BlackRock Advisors would be
responsible for providing investment management services, including
investment research, advice and supervision, and determining which
securities will be purchased or sold by the Fund.
The Board reviewed the details of the Transaction in order to evaluate
BlackRock Advisors' structure, size, visibility and resources to attract and
retain highly qualified investment professionals. The Board considered that
the Transaction will result in BlackRock Advisors being able to provide
better asset management services by enjoying benefits of a larger operating
and financial scale and increased access to state of the art technology and
risk management analytic tools, including the investment tools, outsourcing
and advisory services to institutional investors provided under the
BlackRock Solutions brand name.
Given that the Fund is a multi-managed fund, the Board also considered how
BlackRock Advisors' style would fit with and complement the other subadviser
to the Fund, Marsico Capital Management, LLC ("Marsico"). With respect to
administrative services to be provided by BlackRock Advisors, the Board
considered that it would provide general assistance in marketing and has
developed internal procedures for monitoring compliance with investment
objectives, policies and restrictions of the Fund as set forth in the
prospectus.
14
SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND, INC.
APPROVAL OF ADVISORY AGREEMENTS -- JUNE 30, 2006 -- (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
The Board concluded that it was satisfied with the nature, quality and
extent of the services to be provided by BlackRock Advisors and that there
was a reasonable basis on which to conclude that the Transaction would
likely increase the capability of the portfolio management team to provide
the high quality of investment management services expected by the Board and
currently provided by Mercury.
B. The Amount and Structure of the Subadvisory Fees
The Board, including the Disinterested Directors, received and reviewed
information regarding the subadvisory fees and considered any indirect costs
to the Fund and benefits realized by BlackRock Advisors by providing such
subadvisory services.
To assist in analyzing the reasonableness of the fees, the Board received
reports prepared independently by Lipper, Inc. ("Lipper") comparing
subadvisory fees paid out by SAAMCo, respectively, to subadvisory fees with
respect to other closed-end funds. The Board also considered that the fee
rate was the same as the subadvisory fee rate under the Current Subadvisory
Agreement.
The Board also considered that the subadvisory fee rate was negotiated at
arm's length based on the consideration of a variety of factors, including:
the value of the services provided, the competitive environment in which the
Fund is marketed: the investment characteristics of the Fund relative to
other similar funds in its category as tracked by Lipper; and fees charged
with respect to comparable funds.
In considering the subadvisory fees, the Board, including the Disinterested
Directors, considered that the Fund pays a fee to SAAMCo pursuant to the
Advisory Agreement, and that, in turn, SAAMCo rather than the Fund would pay
the subadvisory fee to BlackRock Advisors. Therefore, the Board considered
the amount retained by SAAMCo and the fee paid to BlackRock Advisors with
respect to the different services provided.
On the basis of the information considered, the Board was satisfied that the
advisory and subadvisory fees were fair in light of the usual and customary
charges made for services of similar nature and quality.
C. Terms of the Advisory Agreement
The Board, including the Disinterested Directors, received a draft of the
proposed New Subadvisory Agreement. The Board considered that the terms of
the New Subadvisory Agreement are substantially the same in all material
respects as the Current Subadvisory Agreement and that the only differences
were: (i) the effective and termination dates; (ii) the identity of the
Fund's subadviser; and (iii) certain nonmaterial changes.
Specifically, the Board considered that the New Subadvisory Agreement would
continue in effect for a period of two years from the date of execution,
unless terminated sooner. The Board further considered that the New
Subadvisory Agreement may be renewed from year to year, so long as their
continuance is specifically approved at least annually in accordance with
the requirements of the 1940 Act and that the New Subadvisory Agreement
provides that it will terminate in the event of an assignment (as defined in
the 1940 Act) or upon termination of the Advisory Agreement.
The Board further considered that under the terms of the New Subadvisory
Agreement, BlackRock Advisors would not be liable to the Fund, or its
shareholders, for any act or omission or for any losses sustained by the
Fund, or its shareholders, except in the case of willful misfeasance, bad
faith, gross negligence and reckless disregard of obligations or duties. The
Board considered that the New Subadvisory Agreements contained a provision
that would apportion liability between the Fund and SAAMCo for claims that
the underwriters might seek to bring against BlackRock Advisors under the
Purchase Agreement. The Board also considered that the New Subadvisory
Agreement provides that BlackRock Advisors will pay all of its own expenses
in connection with the performance of its duties as well as the cost of
maintaining the staff and personnel as necessary for it to perform its
obligations.
D. Economies of Scale
The Board, including the Disinterested Directors, considered whether the
shareholders would benefit from economies of scale and whether there is a
potential for future realization of economies of scale with respect to the
Fund.
15
SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND, INC.
APPROVAL OF ADVISORY AGREEMENTS -- JUNE 30, 2006 -- (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
E. Compliance
The Board, including the Disinterested Directors, considered BlackRock
Advisors' Code of Ethics, as well as their compliance and regulatory
history, including information concerning their involvement in any
regulatory actions or investigations. In addition, the Board considered the
manner in which the transaction would likely benefit BlackRock Advisors'
compliance staff by increasing resources available to it in performing its
duties.
F. Investment Performance
The Board, including the Disinterested Directors, received information
regarding the investment performance of Mercury. Furthermore, the Board
received a memorandum from Mercury which stated that Bob Doll, the lead
portfolio manager for the portion of assets managed by Mercury, and his
portfolio management team, will continue to manage the Fund upon the
commencement of the Transaction. Based on this information, the Board
considered that the quality of investment management services which Mercury
currently provides the Fund will likely improve as the result of the
Transaction as the current portfolio management ream will have increased
access to risk management and investment analytical tools that are
beneficial to providing asset management services.
16
SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND, INC.
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN -- JUNE 30, 2006 -- (UNAUDITED)
- --------------------------------------------------------------------------------
The Fund has adopted a Dividend Reinvestment and Cash Purchase Plan (the
"Plan"), through which all net investment income dividends and capital gains
distributions are paid to Common Stock Shareholders in the form of
additional shares of the Fund's Common Stock (plus cash in lieu of any
fractional shares which otherwise would have been issuable), unless a Common
Stock Shareholder elects to receive cash as provided below. In this way, a
Common Stock Shareholder can maintain an undiluted investment in the Fund
and still allow the Fund to pay out the required distributable income.
No action is required on the part of a registered Common Stock Shareholder
to receive a distribution in shares of Common Stock of the Fund. A
registered Common Stock Shareholder may elect to receive an entire
distribution in cash by notifying Computershare Trust Company, NA, Inc.
("Computershare"), P.O. Box 43010, Providence, RI 02940-3010, the Plan Agent
and the Fund's transfer agent and registrar, in writing so that such notice
is received by Computershare no later than 10 days prior to the record date
for distributions to Common Stock Shareholders. Computershare will set up an
account for shares acquired through the Plan for each Common Stock
Shareholder who has not elected to receive distributions in cash
("Participant") and hold such shares in non-certificated form.
Those Common Stock Shareholders whose shares are held by a broker or other
financial intermediary may receive distributions in cash by notifying their
broker or other financial intermediary.
Computershare will set up an account for shares acquired pursuant to the
Plan for Participants who have not so elected to receive dividends and
distributions in cash. The shares of Common Stock will be acquired by the
Plan Agent for the Participants' accounts, depending upon the circumstances
described below, either (i) through receipt of additional unissued but
authorized shares of Common Stock from the Fund ("Additional Common Stock")
or (ii) by purchase of outstanding shares of Common Stock on the open market
on the New York Stock Exchange or elsewhere. If on the payment date for a
dividend or distribution, the net asset value per share of Common Stock is
equal to or less than the market price per share of Common Stock plus
estimated brokerage commissions, Computershare shall receive Additional
Common Stock, including fractions, from the Fund for each Participant's
account. The number of shares of Additional Common Stock to be credited
shall be determined by dividing the dollar amount of the dividend or
distribution by the greater of (i) the net asset value per share of Common
Stock on the payment date, or (ii) 95% of the market price per share of the
Common Stock on the payment date. If the net asset value per share of Common
Stock exceeds the market price plus estimated brokerage commissions on the
payment date for a dividend or distribution, Computershare (or a
broker-dealer selected by Computershare) shall endeavor to apply the amount
of such dividend or distribution on each Participant's shares of Common
Stock to purchase shares of Common Stock on the open market. Such purchases
will be made on or shortly after the payment date for such dividend or
distribution but in no event will purchases be made on or after the
ex-dividend date for the next dividend or distribution. The weighted average
price (including brokerage commissions) of all shares of Common Stock
purchased by Computershare shall be the price per share of Common Stock
allocable to each Participant. If, before Computershare has completed its
purchases, the market price plus estimated brokerage commissions exceeds the
net asset value of the shares of Common Stock as of the payment date, the
purchase price paid by Computershare may exceed the net asset value of the
Common Stock, resulting in the acquisition of fewer shares of Common Stock
than if such dividend or distribution had been paid in shares of Common
Stock issued by the Fund. Participants should note that they will not be
able to instruct Computershare to purchase shares of Common Stock at a
specific time or at a specific price.
17
SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND, INC.
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN -- JUNE 30,
2006 -- (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
There is no charge to Common Stock Shareholders for receiving their
distributions in the form of additional shares of the Fund's Common Stock.
EquiServe's fees for handling distributions in stock are paid by the Fund.
There are no brokerage charges with respect to shares issued directly by the
Fund as a result of distributions payable in stock. If a Participant elects
by written notice to Computershare to have Computershare sell part or all of
the shares held by Computershare in the Participant's account and remit the
proceeds to the Participant, Computershare is authorized to deduct a $2.50
transaction fee plus brokerage commissions from the proceeds.
Common Stock Shareholders who receive distributions in the form of stock are
subject to the same Federal, state and local tax consequences as are Common
Stock Shareholder who elect to receive their distributions in cash. A Common
Stock Shareholder's basis for determining gain or loss upon the sale of
stock received in a distribution from the Fund will be equal to the total
dollar amount of the distribution paid to the Common Stock Shareholder in
the form of additional shares.
18
SUNAMERICA FOCUSED ALPHA LARGE CAP FUND, INC.
ANNUAL SHAREHOLDER MEETING -- JUNE 30, 2006 -- (UNAUDITED)
- --------------------------------------------------------------------------------
The Annual Meeting of the Shareholders of the Fund was held on April 19, 2006.
At this meeting Jeffrey S. Burum and William F. Devin were elected by
shareholders to serve as the Class I Directors of the Fund for three-year terms
and until their respective successors are duly elected and qualify.
The voting results of the shareholder meeting to elect Jeffrey S. Burum and
William F. Devin to the Board of Directors is as follows:
ELECTION OF JEFFREY S. BURUM TO THE BOARD OF DIRECTORS
<Table>
<Caption>
FOR WITHHELD TOTAL
--------- -------- ---------
Shares Voted................................................ 9,141,619 259,626 9,401,245
</Table>
ELECTION OF WILLIAM F. DEVIN TO THE BOARD OF DIRECTORS
<Table>
<Caption>
FOR WITHHELD TOTAL
--------- -------- ---------
Shares Voted................................................ 9,140,869 260,376 9,401,245
</Table>
19
SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND, INC.
DIRECTORS AND OFFICERS INFORMATION -- JUNE 30, 2006 -- (UNAUDITED)
- --------------------------------------------------------------------------------
The following table contains basic information regarding the Directors and
Officers that oversee operations of the Fund and other investment companies
within the Fund Complex.
<Table>
<Caption>
NUMBER OF
FUNDS
IN FUND
POSITION TERM OF COMPLEX
NAME, HELD WITH OFFICE AND OVERSEEN
ADDRESS AND SUNAMERICA LENGTH OF PRINCIPAL OCCUPATIONS BY OTHER DIRECTORSHIPS HELD
DATE OF BIRTH* COMPLEX TIME SERVED DURING PAST 5 YEARS DIRECTOR(1) BY DIRECTOR(2)
-------------- ---------- ----------- --------------------- ----------- ------------------------
DIRECTORS
Jeffrey S. Burum Director September 2005 Founder and CEO of 42 None
DOB: February 27, 1963 to present National Housing
Development
Corporation (January
2000 to present);
Founder, Owner and
Partner of Colonies
Crossroads, Inc.
(January 2000 to
present); Owner and
Managing Member of
Diversified Pacific
Development Group,
LLC (June 1990 to
present).
Judith L. Craven Director September 2005 Retired 90 Director. A.G. Belo
DOB: October 6, 1945 to present Corporation (1992 to
present); Director,
Sysco Corporation (1996
to present); Director,
Luby's Inc. (1998 to
present); Director,
University of Texas
Board of Regents (May
2001 to present)
William F. Devin Director September 2005 Retired 90 Member of the Board of
DOB: December 30, 1938 to present Governors, Boston Stock
Exchange (1985-
Present);
Samuel M. Eisenstat Chairman of September 2005 Attorney, solo 52 Director of North
DOB: March 7, 1940 the Board to present practitioner; European Oil Royalty
Trust.
Stephen J. Gutman Director September 2005 Senior Associate, 52 None
DOB: May 10, 1943 to present Corcoran Group (Real
Estate) (2003 to
present); Partner and
Member of Managing
Directors, Beau
Brummell -- Soho LLC
(Licensing of
menswear specialty
retailing and other
activities) (June
1988 to present)
Peter A. Harbeck(3) Director September 2005 President, CEO and 99 None
DOB: January 23, 1954 to present Director, SAAMCo.
(August 1995 to
present); Director,
AIG SunAmerica
Capital Services,
Inc. ("SACS") (August
1993 to present)
President and CEO,
AIG Advisor Group,
Inc. (June 2004 to
present)
William J. Shea Director September 2005 President and CEO, 52 Chairman of the Board,
DOB: February 9, 1948 to present Conseco, Inc. Royal and SunAlliance,
(Financial Services) U.S.A., Inc. (March 2005
(2001-2004); Chairman to present); Director,
of the Board of Boston Private Holdings
Centennial (October 2004 to
Technologies, Inc. present)
(1998 to 2001); Vice
Chairman, Bank Boston
Corporation
(1993-1998)
OFFICERS
Vincent M. Marra President September 2005 Senior Vice N/A N/A
DOB: May 28, 1950 to present President, SAAMCo
(February 2003 to
Present); Chief
Administrative
Officer, Chief
Operating Officer and
Chief Financial
Officer, Carret &
Co., LLC (June 2002
to February 2003);
President and Chief
Operating Officer,
Bowne Digital
Solutions (1999 to
May 2002)
Donna M. Handel Treasurer September 2005 Senior Vice N/A N/A
DOB: June 25, 1966 to present President, SAAMCo
(December 2004 to
Present); Vice
President, SAAMCo
(1997 to December
2004)
</Table>
20
SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND, INC.
DIRECTORS AND OFFICERS INFORMATION -- JUNE 30,
2006 -- (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
NUMBER OF
FUNDS
IN FUND
POSITION TERM OF COMPLEX
NAME, HELD WITH OFFICE AND OVERSEEN
ADDRESS AND SUNAMERICA LENGTH OF PRINCIPAL OCCUPATIONS BY OTHER DIRECTORSHIPS HELD
DATE OF BIRTH* COMPLEX TIME SERVED DURING PAST 5 YEARS DIRECTOR(1) BY DIRECTOR(2)
-------------- ---------- ----------- --------------------- ----------- ------------------------
Gregory N. Bressler Secretary September 2005 Senior Vice President N/A N/A
DOB: November 17, 1966 to present and General Counsel,
SAAMCo (June 2005 to
present); Vice
President and
Director of U.S.
Asset Management
Compliance, Goldman
Sachs Asset
Management (June 2004
to June 2005); Deputy
General Counsel,
Credit Suisse Asset
Management (June 2002
to June 2004);
Counsel, Credit
Suisse Asset
Management (January
2000 to June 2002).
</Table>
- ---------------
<Table>
* The business address for each Director and Officer is the
Harborside Financial Center, 3200 Plaza 5, Jersey City, NJ
07311-4992.
(1) The "Fund Complex" consists of all registered investment
company portfolios for which SAAMCo serves as investment
adviser or administrator. The "Fund Complex" includes the
SunAmerica Money Market Funds (2 funds), SunAmerica Equity
Funds (10 funds), SunAmerica Income Funds (5 funds),
SunAmerica Focused Series, Inc. (17 portfolios), SunAmerica
Focused Alpha Growth Fund, Inc. (1 fund), SunAmerica Focused
Alpha Large-Cap Fund, Inc. (1 fund), Anchor Series Trust (9
portfolios), SunAmerica Senior Floating Rate Fund, Inc. (1
fund), SunAmerica Series Trust (32 portfolios), VALIC
Company I (32 portfolios), VALIC Company II (15 funds),
Seasons Series Trust (24 portfolios) and AIG Series Trust (6
portfolios).
(2) Directorships of companies required to report to the
Securities and Exchange Commission under the Securities
Exchange Act of 1934 (i.e. "public companies") or other
investment companies registered under the Investment Company
Act of 1940.
(3) Interested Director, as defined within the Investment
Company Act of 1940, because he is an officer and a director
of the advisor and the Trust.
- -----------------------------------------------------------------
</Table>
ADDITIONAL INFORMATION (UNAUDITED)
The Fund has filed with the NYSE its chief executive officer certification with
the NYSE's listing standards. The Fund has also filed with the Securities and
Exchange Commission the certification of its principal executive officer and
principal financial officer required by Section 302 of the Sarbanes-Oxley Act
with respect to the most recently completed fiscal year end.
During the period, there were no material changes to the Fund's investment
objective or policies or to the Fund's articles of incorporation or by-laws that
were not approved by the shareholders or in the principle risk factors
associated with investment in the Fund. There have been no changes in the
persons who are primarily responsible for the day-to-day management of the
Fund's portfolio.
21
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(AIG LOGO)
DIRECTORS/TRUSTEES
Samuel M. Eisenstat
Peter A. Harbeck
Dr. Judith L. Craven
William F. Devin
Stephen J. Gutman
Jeffrey S. Burum
William J. Shea
OFFICERS
Vincent M. Marra, President
Donna M. Handel, Treasurer
Cynthia Gibbons, Vice President
and Chief Compliance Officer
Gregory N. Bressler, Chief Legal Officer and
Secretary
Gregory R. Kingston, Vice President and Assistant
Treasurer
Corey A. Issing, Assistant Secretary
INVESTMENT ADVISER
AIG Sun America Asset Management Corp.
Harborside Financial Center
3200 Plaza 5
Jersey City, NJ 07311-4992
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 419572
Kansas City, MO 64141-6572
TRANSFER AGENT
Computershare Shareholder Services, Inc.
250 Royall Street
Canton, MA 02021
VOTING PROXIES ON FUND PORTFOLIO
SECURITIES
A description of the policies and procedures that the Fund uses to determine
how to vote proxies related to securities held in the Fund's portfolio, which
is available in the Fund's Form N-CSR, may be obtained without charge upon
request, by calling (800) 858-8850. This information is also available from
the EDGAR database on the U.S. Securities and Exchange Commission's website
at http://www.sec.gov.
DISCLOSURE OF QUARTERLY PORTFOLIO HOLDINGS
The Fund is required to file its complete schedule of portfolio holdings
with the U.S. Securities and Exchange Commission for its first and third
fiscal quarters on Form N-Q. The Fund's Forms N-Q are available on the
U.S. Securities and Exchange Commission's website at www.sec.gov. You can
also review and obtain copies of the Forms N-Q at the U.S. Securities and
Exchange Commission's Public Reference Room in Washington, DC (information
on the operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330).
PROXY VOTING RECORD ON FUND PORTFOLIO SECURITIES
Information regarding how the Fund voted proxies related to securities
held in the Fund's portfolio during the most recent twelve month period
ended June 30, is available, once filed with the U.S. Securities and
Exchange Commission (i) without charge, upon request, by calling (800)
858-8850 or (ii) on the U.S. Securities and Exchange Commission's website
at http://www.sec.gov.
This report is submitted solely for the general information of
shareholders of the Fund.
The accompanying report has not been audited by independent accountants
and accordingly no opinion has been expressed thereon.
22
[AIG SUNAMERICA MUTUAL FUNDS LOGO]
SunAmerica open-end funds distributed by:
AIG SunAmerica Capital Services, Inc., Harborside Financial Center,
3200 Plaza 5, Jersey City, NJ 07311
800-858-8850 x6003 www.sunamericafunds.com
FIANN-12/05
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. Schedule of 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.
None.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the policies by which
shareholders may recommend nominees to the Board of Directors.
Item 11. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures, as defined under Rule 30a-3(c)
under the Investment Company Act of 1940 (17 CFR 270.30a-3(c)). Based
on that evaluation, the registrant's management, including the
President and Treasurer, concluded that the registrant's disclosure
controls and procedures are effective.
(b) There was no change in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act of 1940 (17 CFR 270.30a-3(d))) that occurred during the
second 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 Focused Alpha Large-Cap Fund, Inc.
By: /s/ Vincent M. Marra
--------------------
Vincent M. Marra
President
Date: September 7, 2006
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/ Vincent M. Marra
--------------------
Vincent M. Marra
President
Date: September 7, 2006
By: /s/ Donna M. Handel
-------------------
Donna M. Handel
Treasurer
Date: September 7, 2006