-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JBacsbttaRkniIoqlZTW/gQdI2lHv8H0j4QPh53/PgJBlKYnI7skEOOHK5bYMJVq sFRRX36Pd0GSnXkgB/hWtQ== 0000950124-06-005103.txt : 20060907 0000950124-06-005103.hdr.sgml : 20060907 20060907115606 ACCESSION NUMBER: 0000950124-06-005103 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20060630 FILED AS OF DATE: 20060907 DATE AS OF CHANGE: 20060907 EFFECTIVENESS DATE: 20060907 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SunAmerica Focused Alpha Growth Fund, Inc. CENTRAL INDEX KEY: 0001327129 IRS NUMBER: 000000000 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-21770 FILM NUMBER: 061078503 BUSINESS ADDRESS: STREET 1: HARBORSIDE FINANCIAL CENTER STREET 2: 3200 PLAZA 5 CITY: JERSEY CITY STATE: NJ ZIP: 07311 BUSINESS PHONE: 800-858-8850 MAIL ADDRESS: STREET 1: HARBORSIDE FINANCIAL CENTER STREET 2: 3200 PLAZA 5 CITY: JERSEY CITY STATE: NJ ZIP: 07311 N-CSRS 1 v22188nvcsrs.txt FORM N-CSRS 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 811-21770 --------------------------------------------- SunAmerica Focused Alpha Growth Fund, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) Harborside Financial Center, 3200 Plaza 5 Jersey City, NJ 07311 - -------------------------------------------------------------------------------- (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 - -------------------------------------------------------------------------------- (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 Growth Fund, Inc. Semiannual Report at June 30, 2006. SUNAMERICA FOCUSED ALPHA GROWTH FUND THOMAS F. MARSICO PHOTO RONALD BARON PHOTO [MARSICO CAPITAL MANAGEMENT, LLC LOGO] [BARON LOGO] 2006 SEMI-ANNUAL REPORT [AIG SUNAMERICA MUTUAL FUNDS LOGO] JUNE 30, 2006 SEMI-ANNUAL REPORT SUNAMERICA FOCUSED ALPHA GROWTH FUND SUNAMERICA FOCUSED ALPHA GROWTH FUND (FGF) TABLE OF CONTENTS - -------------------------------------------------------------------------------- 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 DIVIDEND REINVEST AND CASH PURCHASE PLAN.................... 14 ANNUAL SHAREHOLDER MEETING.................................. 16 DIRECTORS AND OFFICERS INFORMATION.......................... 17
June 30, 2006 SEMI-ANNUAL REPORT SHAREHOLDERS' LETTER - -------------------------------------------------------------------------------- Dear Shareholders: We are pleased to present this semi-annual report for the SunAmerica Focused Alpha Growth 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 Growth Fund's Net Asset Value (NAV) returned 4.8%, outperforming its benchmark, the Russell 3000 Growth Index,(1) which returned -0.3% for the same period. The Fund's market price returned 5.2% during the same period. As of June 30, 2006, the Fund's NAV was $19.92 and its market share price was $17.33. The past six months have been a volatile period for the equity markets. 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, small- and mid-cap growth stocks outperformed their large-cap counterparts. Small- and mid-cap stocks, as measured by the Russell 2500 Growth Index(2) advanced 4.7%, while large-cap growth stocks, as measured by the Russell 1000 Growth Index(3) fell -0.9%. From a broad sector standpoint, telecommunications and related services; materials, including energy and commodities; and industrials were performance leaders, while information technology and healthcare lagged. Focused Alpha Growth Fund invests in what its managers believe are well-managed companies with strong fundamentals, established business models and growth potential. What makes your Fund unique is that it brings together two renowned growth managers blending large- and small/mid-cap growth investing. Marsico Capital Management LLC selects their 10 favorite large-cap growth stocks while Ron Baron and his team at BAMCO, Inc. contribute 20 small/mid-cap growth stocks. The Fund is designed to capitalize on the underperformance of large-cap growth stocks in recent years and the anticipated asset class rotation. Our multi-managed, focused approach to investing in a closed-end fund sets SunAmerica Focused Alpha Growth Fund apart from its competitors. 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 3000 Growth Index offers investors access to the broad growth segment of the U.S. equity universe. The Russell 3000 Growth Index is constructed to provide a comprehensive and unbiased barometer of the broad growth market. Based on ongoing empirical research of investment manager behavior, the methodology used to determine growth probability approximates the aggregate broad market growth manager's opportunity set. (2) The Russell 2500 Index offers investors access to the small to mid-cap segment of the U.S. equity universe, commonly referred to as "smid" cap. The Russell 2500 is constructed to provide a comprehensive and unbiased barometer for the small to mid-cap segment and is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true small to mid-cap opportunity set. The Russell 2500 includes the smallest 2500 securities in the Russell 3000. (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) - -------------------------------------------------------------------------------- Investors should carefully consider the SunAmerica Focused Alpha Growth Fund's investment objective, strategies, risks, charges and expenses before investing. The SunAmerica Focused Alpha Growth 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 Growth 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 GROWTH FUND, INC. STATEMENT OF ASSETS AND LIABILITIES -- JUNE 30, 2006 -- (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Long-term investment securities, at value (unaffiliated)*... $369,835,621 Short-term investment securities, at value (unaffiliated)*........................................... 72,334,000 ------------ Total investments......................................... 442,169,621 ------------ Cash........................................................ 1,260 Receivable for: Dividends and interest.................................... 155,688 Investments sold.......................................... 6,190,258 Prepaid expenses and other assets........................... 3,587 ------------ Total assets.............................................. 448,520,414 ------------ LIABILITIES: Payable for: Investments purchased..................................... 40,915,830 Investment advisory and management fees................... 332,462 Directors' fees and expenses.............................. 1,934 Administration fees....................................... 13,299 Other accrued expenses.................................... 110,227 Dividends payable........................................... 1,707,550 ------------ Total liabilities......................................... 43,081,302 ------------ Net Assets.............................................. $405,439,112 ============ NET ASSETS REPRESENTED BY: Common stock, $.001 par value (200,000,000 shares authorized)............................................... $ 20,355 Additional paid-in capital.................................. 377,320,721 ------------ 377,341,076 Accumulated undistributed net investment income (loss)...... (12,907,362) Accumulated undistributed net realized gain (loss) on investments............................................... 2,178,326 Unrealized appreciation (depreciation) on investments....... 38,827,018 Unrealized foreign exchange gain (loss) on other assets and liabilities............................................... 54 ------------ Net Assets.............................................. $405,439,112 ============ NET ASSET VALUES Net assets.................................................. $405,439,112 Shares outstanding.......................................... 20,355,236 Net asset value per share................................... $ 19.92 ============ *Cost Long-term investment securities (unaffiliated)............ $331,008,603 ============ Short-term investment securities (unaffiliated)........... $ 72,334,000 ============
See Notes to Financial Statements 3 SUNAMERICA FOCUSED ALPHA GROWTH FUND, INC. STATEMENT OF OPERATIONS -- FOR THE PERIOD ENDED JUNE 30, 2006 -- (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends (unaffiliated).................................... $ 1,018,599 Interest (unaffiliated)..................................... 679,506 ----------- Total investment income*................................ 1,698,105 ----------- EXPENSES: Investment advisory and management fees..................... 2,052,686 Administration fees......................................... 82,108 Transfer agent fees and expenses............................ 11,150 Custodian and accounting fees............................... 46,172 Reports to shareholders..................................... 90,863 Audit and tax fees.......................................... 14,368 Legal fees.................................................. 56,763 Directors' fees and expenses................................ 18,437 Other expenses.............................................. 21,102 ----------- Total expenses before custody credits................... 2,393,649 Custody credits earned on cash balances................. (1,324) ----------- Net expenses............................................ 2,392,325 ----------- Net investment income (loss)................................ (694,220) ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments (unaffiliated)...... 2,427,367 Net realized foreign exchange gain (loss) on other assets and liabilities........................................... (4) ----------- Net realized gain (loss) on investments and foreign currencies................................................ 2,427,363 ----------- Change in unrealized appreciation (depreciation) on investments (unaffiliated)................................ 17,112,266 Change in unrealized foreign exchange gain (loss) on other assets and liabilities.................................... 65 ----------- Net unrealized gain (loss) on investments and foreign currencies................................................ 17,112,331 ----------- Net realized and unrealized gain (loss) on investments and foreign currencies........................................ 19,539,694 ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................................ $18,845,474 =========== - ------------ * Net of foreign withholding taxes on interest and dividends of........................................................ $ 1,100 ===========
See Notes to Financial Statements 4 SUNAMERICA FOCUSED ALPHA GROWTH FUND, INC. STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
FOR THE FOR THE PERIOD SIX MONTHS ENDED JULY 29, 2005@ JUNE 30, 2006 THROUGH (UNAUDITED) DECEMBER 31, 2005 ---------------- ----------------- INCREASE (DECREASE) IN NET ASSETS OPERATIONS: Net investment income (loss).............................. $ (694,220) $ (452,306) Net realized gain (loss) on investments and foreign currencies.............................................. 2,427,363 (249,038) Net unrealized gain (loss) on investments and foreign currencies.............................................. 17,112,331 21,714,741 ------------ ------------ Net increase (decrease) in net assets resulting from operations................................................ 18,845,474 21,013,397 ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income*.................................... -- -- Net realized short-term gain on investments*.............. (1,733,143) -- Return of capital*........................................ (10,479,998) (10,177,618) ------------ ------------ Total distributions to shareholders......................... (12,213,141) (10,177,618) ------------ ------------ SHARE TRANSACTIONS (NOTE 7): Proceeds from sales of shares issued in initial public offering................................................ -- 353,350,000 Proceeds from the underwriters' over-allotment option of common shares exercised................................. -- 35,335,000 Offering costs for common shares charged to additional paid-in capital......................................... -- (814,000) ------------ ------------ Net increase in net assets from share transactions.......... -- 387,871,000 ------------ ------------ TOTAL INCREASE (DECREASE) IN NET ASSETS..................... 6,632,333 398,706,779 NET ASSETS: Beginning of period......................................... $398,806,779 $ 100,000 End of period+.............................................. $405,439,112 $398,806,779 ============ ============ - ------------ + Includes accumulated undistributed net investment income (loss).................................................. $(12,907,362) $ -- ============ ============
@ 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 GROWTH FUND, INC. FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
FOR THE FOR THE PERIOD SIX MONTHS ENDED JULY 29, 2005++ JUNE 30, 2006 THROUGH (UNAUDITED) DECEMBER 31, 2005 ---------------- ----------------- NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 19.59 $ 19.10(1) INVESTMENT OPERATIONS: Net investment income (loss)@............................... (0.03) (0.02) Net realized and unrealized gain (loss) on investments...... 0.96 1.05 -------- -------- Total from investment operations.......................... 0.93 1.03 -------- -------- DISTRIBUTIONS FROM: Net investment income....................................... --* -- Net realized short-term gains on investments................ (0.09)* -- Return of capital........................................... (0.51)* (0.50) -------- -------- Total distributions....................................... (0.60) (0.50) CAPITAL SHARE TRANSACTIONS: Offering costs for common shares charged to additional paid-in capital........................................... -- (0.04) -------- -------- NET ASSET VALUE, END OF PERIOD.............................. $ 19.92 $ 19.59 ======== ======== NET ASSET VALUE TOTAL RETURN(2)#............................ 4.77% 5.27% MARKET VALUE, END OF PERIOD................................. $ 17.33 $ 17.03 MARKET VALUE TOTAL RETURN(3)#............................... 5.20% (12.42)% RATIOS/SUPPLEMENTAL DATA: Net Assets, end of period ($000's).......................... $405,439 $398,807 Ratio of expenses to average net assets..................... 1.17%+ 1.17%+ Ratio of net investment income to average net assets........ (0.34)+ (0.28)+ Portfolio turnover rate..................................... 36% 28%
- ------------ ++ Commencement of operations @ Calculated based upon average shares outstanding # Total return is not annualized. + Annualized * Amounts are estimated as of June 30, 2006, and are subject to change and recharacterization at fiscal year end. (1) Net asset value, beginning of period, reflects a deduction of $0.90 per share sales charge from the initial offering price of $20.00. (2) Based on 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 GROWTH FUND, INC. PORTFOLIO PROFILE -- JUNE 30, 2006 -- (UNAUDITED) - -------------------------------------------------------------------------------- INDUSTRY ALLOCATION* Time Deposit.............................................. 17.9% Leisure & Tourism......................................... 17.8 Financial Services........................................ 16.2 Health Services........................................... 11.4 Transportation............................................ 10.1 Pharmaceuticals........................................... 8.4 Broadcasting & Media...................................... 6.3 Aerospace & Military Technology........................... 4.6 Telecommunications........................................ 4.1 Business Services......................................... 3.0 Retail.................................................... 2.4 Education................................................. 1.9 Energy Sources............................................ 1.5 Utilities................................................. 1.4 Medical Products.......................................... 1.3 Insurance................................................. 0.8 ----- 109.1% =====
- ------------ * Calculated as a percentage of net assets 7 SUNAMERICA FOCUSED ALPHA GROWTH FUND, INC. PORTFOLIO OF INVESTMENTS -- JUNE 30, 2006 -- (UNAUDITED) - --------------------------------------------------------------------------------
VALUE SECURITY DESCRIPTION SHARES (NOTE 2) - --------------------------------------------------------------------- COMMON STOCK -- 91.2% AEROSPACE & MILITARY TECHNOLOGY -- 4.6% General Dynamics Corp. ........... 282,790 $ 18,511,433 ------------ BROADCASTING & MEDIA -- 6.3% Comcast Corp., Class A+........... 778,162 25,477,024 ------------ BUSINESS SERVICES -- 3.0% ChoicePoint, Inc.+................ 140,000 5,847,800 SEI Investments Co. .............. 130,000 6,354,400 ------------ 12,202,200 ------------ EDUCATION -- 1.9% DeVry, Inc.+...................... 350,000 7,689,500 ------------ ENERGY SOURCES -- 1.5% Encore Acquisition Co.+........... 220,000 5,902,600 ------------ FINANCIAL SERVICES -- 16.2% Chicago Mercantile Exchange Holdings, Inc. ................. 40,899 20,087,544 Jefferies Group, Inc. ............ 300,000 8,889,000 Nuveen Investments, Inc., Class A............................... 150,000 6,457,500 The First Marblehead Corp. ....... 65,000 3,701,100 The Goldman Sachs Group, Inc. .... 89,633 13,483,492 UBS AG............................ 118,000 12,944,600 ------------ 65,563,236 ------------ HEALTH SERVICES -- 11.4% Centene Corp.+.................... 200,000 4,706,000 Manor Care, Inc. ................. 160,000 7,507,200 UnitedHealth Group, Inc. ......... 761,268 34,089,581 ------------ 46,302,781 ------------ INSURANCE -- 0.8% Axis Capital Holdings, Ltd. ...... 120,000 3,433,200 ------------ LEISURE & TOURISM -- 17.8% Boyd Gaming Corp. ................ 250,000 10,090,000 Four Seasons Hotels, Inc. ........ 150,000 9,216,000 Las Vegas Sands Corp.+............ 384,330 29,923,934 Scientific Games Corp., Class A+.............................. 180,000 6,411,600 Wynn Resorts, Ltd.+............... 225,000 16,492,500 ------------ 72,134,034 ------------
- ---------------------------------------------------------------------
SHARES/PRINCIPAL VALUE SECURITY DESCRIPTION AMOUNT (NOTE 2) MEDICAL PRODUCTS -- 1.3% Edwards Lifesciences Corp.+....... 120,000 $ 5,451,600 ------------ PHARMACEUTICALS -- 8.4% Genentech, Inc.+.................. 414,675 33,920,415 ------------ RETAIL -- 2.4% Dick's Sporting Goods, Inc.+...... 250,000 9,900,000 ------------ TELECOMMUNICATIONS -- 4.1% QUALCOMM, Inc. ................... 413,108 16,553,238 ------------ TRANSPORTATION -- 10.1% Burlington Northern Santa Fe Corp. .......................... 405,946 32,171,220 Expeditors International of Washington, Inc. ............... 160,000 8,961,600 ------------ 41,132,820 ------------ UTILITIES -- 1.4% ITC Holdings Corp. ............... 213,000 5,661,540 ------------ TOTAL LONG-TERM INVESTMENT SECURITIES (cost $331,008,603)............. 369,835,621 ------------ SHORT-TERM INVESTMENT SECURITIES -- 17.9% TIME DEPOSITS -- 17.9% Euro Time Deposit with State Street Bank & Trust Co. 4.05% due 07/03/06 (cost $72,334,000).............. $72,334,000 72,334,000 ------------ TOTAL INVESTMENTS (cost $403,342,603)(1).......... 109.1% 442,169,621 LIABILITIES IN EXCESS OF OTHER ASSETS............................ (9.1) (36,730,509) ----------- ------------ NET ASSETS.......................... 100.0% $405,439,112 =========== ============
- ------------ + Non-income producing securities (1) See Note 5 for cost of investments on a tax basis See Notes to Financial Statements 8 SUNAMERICA FOCUSED ALPHA GROWTH FUND, INC. NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2006 -- (UNAUDITED) - -------------------------------------------------------------------------------- Note 1. Organization of the Fund SunAmerica Focused Alpha Growth Fund, Inc. (the "Fund") is a non-diversified closed-end management investment company. The Fund was organized as a Maryland corporation on May 18, 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 July 18, 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 July 29, 2005 upon settlement of the sale of 18,500,000 shares in the amount of $353,350,000 (net of underwriting fees and expenses of $16,650,000). In addition, on August 25, 2005 and September 13, 2005, the Fund issued 1,200,000 and 650,000 shares in the amount of $22,920,000 and $12,415,000 (net of underwriting fees and expenses of $1,080,000 and $585,000) in conjunction with the exercise of the underwriters' over-allotment option. SAAMCo paid certain organizational expenses of the Fund and then 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) and to a lesser extent equity-related securities (i.e., preferred stocks, convertible securities, warrants and rights) primarily in the U.S. markets. 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 9 SUNAMERICA FOCUSED ALPHA GROWTH FUND, INC. NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2006 -- (UNAUDITED) -- (CONTINUED) - -------------------------------------------------------------------------------- equity securities, the Fund uses an outside pricing service to provide it with closing market prices and information used for adjusting those prices. 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: For repurchase agreements, 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 Fund 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 10 SUNAMERICA FOCUSED ALPHA GROWTH FUND, INC. NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2006 -- (UNAUDITED) -- (CONTINUED) - -------------------------------------------------------------------------------- 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 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. FOREIGN CURRENCY TRANSLATION: The books and records of the Fund are maintained in U.S. dollars. Assets and liabilities denominated in foreign currencies and commitments under forward foreign currency contracts are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of the valuation. The Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of securities held at the end of the period. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the changes in the market prices of Fund securities sold during the year. Change in unrealized foreign exchange gains and losses on other assets and liabilities located in the Statement of Operations include foreign exchange gains and losses from currency gains or losses between the trade and settlement dates of securities transactions, the difference between the amounts of interest, dividends and foreign withholding taxes recorded on a Fund's books and the U.S. dollar equivalent amounts actually received or paid and changes in the unrealized foreign exchange gains and losses relating to other assets and liabilities arising as a result of changes in the exchange rate. 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 BAMCO, Inc., a wholly-owned subsidiary of Baron Capital Group, Inc. ("Baron") 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 Baron, respectively, Marsico and Baron select the investments made by the Fund. Marsico will manage the large-cap portion of the Fund and is entitled to receive a fee at the annual rate of 0.40% of the Fund's average daily total assets managed in the large-cap portion of the Fund. Baron will manage the small-and mid-cap portion of the Fund and is entitled to receive a fee at the annual rate of 0.60% of the Fund's average daily total assets managed in the small- and mid-cap portion of the Fund. Each Subadviser is paid by SAAMCo. 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 11 SUNAMERICA FOCUSED ALPHA GROWTH FUND, INC. NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2006 -- (UNAUDITED) -- (CONTINUED) - -------------------------------------------------------------------------------- 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. Purchases 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: Purchases (excluding U.S. government securities)............ $139,046,998 Sales and maturities (excluding U.S. government securities)............................................... 182,602,166 Purchases of U.S. government securities..................... -- Sales and maturities of U.S. government securities.......... --
Note 5. Federal Income Taxes The following details the tax basis distributions as well as the components of distributable earnings. The tax basis components of distributable earnings differ from the amounts reflected in the Statement of Assets and Liabilities due to temporary book/tax differences primarily arising from wash sales.
DISTRIBUTABLE EARNINGS TAX DISTRIBUTIONS - -------------------------------------------- ---------------------------------- FOR THE PERIOD ENDED DECEMBER 31, 2005 - --------------------------------------------------------------------------------- LONG-TERM GAINS/ UNREALIZED LONG-TERM ORDINARY CAPITAL LOSS APPRECIATION ORDINARY CAPITAL RETURN OF INCOME CARRYOVER (DEPRECIATION) INCOME GAINS CAPITAL - -------- ---------------- -------------- -------- --------- ----------- $ -- $(225,073) $21,690,776 $ -- $ -- $10,177,618
At December 31, 2005, for Federal income tax purposes, the Fund had a capital loss carryforward of $225,073, which will expire in the year 2013, and is available to offset future capital gains, if any. The amounts of aggregate unrealized gain (loss) and the cost of investment securities for federal tax purposes, including short-term securities were as follows: Cost (tax basis)............................................ $403,366,568 ============ Appreciation................................................ $ 50,249,982 Depreciation................................................ (11,446,929) ------------ Net unrealized appreciation (depreciation).................. $ 38,803,053 ============
Note 6. Transactions with Affiliates For the period ended June 30, 2006 the Fund incurred brokerage commissions with Banc of America Securities LLC, an affiliated broker, of $165. 12 SUNAMERICA FOCUSED ALPHA GROWTH FUND, INC. NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2006 -- (UNAUDITED) -- (CONTINUED) - -------------------------------------------------------------------------------- Note 7. Capital Share Transactions Transactions in capital shares of the Fund were as follows:
FOR THE SIX MONTHS ENDED FOR THE PERIOD JUNE 30, 2006 JULY 29, 2005* THROUGH (UNAUDITED) DECEMBER 31, 2005 ------------------------- ------------------------- SHARES AMOUNT SHARES AMOUNT ---------- ------------ ---------- ------------ Initial seed capital, July 18, 2005....................... -- $ -- 5,236 $ 100,000 Common shares issued in connection with initial public offering................................................ -- -- 18,500,000 353,350,000 Common shares issued from underwriters' over-allotment option exercised........................................ -- -- 1,850,000 35,335,000 ---------- ------------ ---------- ------------ Net increase............................................ -- $ -- 20,355,236 $388,785,000 ========== ============ ========== ============
- ------------ * Commencement of operations Note 8. 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 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 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 investment advisory services relating to the Fund. 13 SUNAMERICA FOCUSED ALPHA GROWTH 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 Co., N.A. ("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. 14 SUNAMERICA FOCUSED ALPHA GROWTH 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. Computershare'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. 15 SUNAMERICA FOCUSED ALPHA GROWTH 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
FOR WITHHELD TOTAL ---------- -------- ---------- Shares Voted................................................ 19,139,453 433,452 19,572,905
ELECTION OF WILLIAM F. DEVIN TO THE BOARD OF DIRECTORS
FOR WITHHELD TOTAL ---------- -------- ---------- Shares Voted................................................ 19,135,800 437,105 19,572,905
16 SUNAMERICA FOCUSED ALPHA GROWTH 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.
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 June 2005 to Founder and CEO of 42 None DOB: February 27, 1963 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 June 2005 to Retired 90 Director. A.G. Belo DOB: October 6, 1945 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 June 2005 to Retired 90 Member of the Board of DOB: December 30, 1938 present Governors, Boston Stock Exchange (1985- Present); Samuel M. Eisenstat DOB: Chairman of June 2005 to Attorney, solo 52 Director of North March 7, 1940 the Board present practitioner; European Oil Royalty Trust. Stephen J. Gutman Director June 2005 to Senior Associate, 52 None DOB: May 10, 1943 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 May 2005 to President, CEO and 99 None DOB: January 23, 1954 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 June 2005 to President and CEO, 52 Chairman of the Board, DOB: February 9, 1948 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)
17 SUNAMERICA FOCUSED ALPHA GROWTH FUND, INC. DIRECTORS AND OFFICERS INFORMATION -- JUNE 30, 2006 -- (UNAUDITED) -- (CONTINUED) - --------------------------------------------------------------------------------
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) -------------- ---------- ----------- --------------------- ----------- ------------------------ OFFICERS Vincent M. Marra President May 2005 to Senior Vice N/A N/A DOB: May 28, 1950 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 May 2005 to Senior Vice N/A N/A DOB: June 25, 1966 present President, SAAMCo (December 2004 to Present); Vice President, SAAMCo (1997 to December 2004) Gregory N. Bressler Secretary August 2005 Senior Vice President N/A N/A DOB: November 17, 1966 and Chief to present and General Counsel, Legal SAAMCo (June 2005 to Officer 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)
- --------------- * 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, Inc. (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 of the Fund.
- -------------------------------------------------------------------------------- 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. 18 - -------------------------------------------------------------------------------- (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 Nori L. Gabert, Vice President and Assistant Secretary 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. 19 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 Growth 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 EX-99.CERT 2 v22188exv99wcert.txt EXHIBIT 99.CERT Exhibit 99.CERT CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT I, Vincent M. Marra, certify that: 1. I have reviewed this report on Form N-CSR of SunAmerica Focused Alpha Growth Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting 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; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 17, 2006 /s/ Vincent M. Marra ------------------- Vincent M. Marra President CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT I, Donna M. Handel, certify that: 1. I have reviewed this report on Form N-CSR of SunAmerica Focused Alpha Growth Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting 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; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 17, 2006 /s/ Donna M. Handel ------------------- Donna M. Handel Treasurer EX-99.906CERT 3 v22188exv99w906cert.txt EXHIBIT 99.906CERT Exhibit 99.906.CERT CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT Vincent M. Marra, President, and Donna M. Handel, Treasurer of SunAmerica Focused Alpha Growth Fund, Inc., (the "registrant"), each certify to the best of his or her knowledge that: 1. The attached Form N-CSR report of the registrant fully complies with the requirements of Sections 13(a) and 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in such N-CSR report fairly represents, in all material respects, the financial conditions and results of operations of the registrant as of, and for, the periods presented in the report. Dated: August 17, 2006 /s/ Vincent M. Marra --------------- Vincent M. Marra President /s/ Donna M. Handel --------------- Donna M. Handel Treasurer -----END PRIVACY-ENHANCED MESSAGE-----