NASDAQ Premium Income & Growth Fund Inc. (QQQX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21983
Name of Fund: NASDAQ Premium Income & Growth Fund Inc. (QQQX)
Fund Address: 4 World Financial Center,
6th Floor, New York, New York 10080.
Name and address of agent for service: Justin C. Ferri, Chief Executive Officer, NASDAQ Premium Income &
Growth Fund Inc., 4 World Financial Center, 6th Floor, New York, New York
10080.
Registrant’s telephone number, including area code: (877) 449-4742
Date of fiscal year end: December 31, 2010
Date of reporting period: June 30, 2010
Item 1 – Report to Stockholders
Fund Profile as of June 30, 2010
(unaudited)
|
|
|
| Symbol on NASDAQ |
|
QQQX |
| Initial Offering Date |
|
January 30, 2007 |
| Yield on Closing Market Price as of June 30, 2010 $(11.93)* |
|
10.60% |
| Current Quarterly Distribution per share of Common Stock** |
|
$0.316 |
| Current Annualized Distribution per share of Common Stock** |
|
$1.264 |
| |
* |
|
Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price as of June 30, 2010. Past performance does not
guarantee future results. |
| |
** |
|
The distribution is not constant and is subject to change. A portion of the distribution may be deemed a tax return of capital at fiscal year end. |
The table below summarizes the changes in the Fund’s market price and net asset value for the six-month period:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
6/30/10 (a) |
|
12/31/09 |
|
Change (b) |
|
|
High |
|
Low |
| Market Price (c) |
|
$ |
11.93 |
|
$ |
14.40 |
|
(17.15 |
%) |
|
$ |
14.68 |
|
$ |
11.93 |
| Net Asset Value |
|
$ |
12.57 |
|
$ |
14.08 |
|
(10.72 |
%) |
|
$ |
14.93 |
|
$ |
12.57 |
| |
(a) |
|
For the six-month period, the Common Stock of the Fund had a total investment return of (6.28%) based on net asset value per share and (13.03%) based
on market price per share, assuming reinvestment of distributions. For the same period, the performance of the NASDAQ 100 Index,® the Fund’s unmanaged reference
index, had a total investment return of (6.17%). The reference index has no expenses associated with performance. |
| |
(b) |
|
Does not include reinvestment of dividends. |
| |
(c) |
|
Primary Exchange Price, NASDAQ. |
|
|
|
|
| Ten Largest Equity Holdings |
|
Percent of
Net Assets |
|
| Apple, Inc. |
|
20.1 |
% |
| Microsoft Corp. |
|
4.3 |
|
| Google, Inc., Class A |
|
4.3 |
|
| QUALCOMM, Inc. |
|
4.2 |
|
| Intel Corp. |
|
3.3 |
|
| Oracle Corp. |
|
3.1 |
|
| Cisco Systems, Inc. |
|
2.7 |
|
| Gilead Sciences, Inc. |
|
2.7 |
|
| Teva Pharmaceutical Industries Ltd. |
|
2.3 |
|
| Comcast Corp., Class A |
|
2.2 |
|
|
|
| Five Largest Industries |
|
Percent of
Net Assets |
|
| Computers & Peripherals |
|
21.3 |
% |
| Software |
|
11.3 |
|
| Communications Equipment |
|
10.7 |
|
| Semiconductors & Semiconductor Equipment |
|
8.5 |
|
| Internet Software & Services |
|
8.2 |
|
The NASDAQ 100®, NASDAQ 100
index® and NASDAQ are trade or service marks of the NASDAQ Stock Market, Inc.
|
|
|
|
| Sector Representation |
|
Percent of
Long-Term Investments |
|
| Information Technology |
|
61.5 |
% |
| Consumer Discretionary |
|
17.2 |
|
| Health Care |
|
12.9 |
|
| Industrials |
|
4.5 |
|
| Financials |
|
1.6 |
|
| Materials |
|
1.1 |
|
| Telecommunication Services |
|
0.5 |
|
| Consumer Staples |
|
0.5 |
|
| Energy |
|
0.2 |
|
For
Fund portfolio compliance purposes, the Fund’s industry and sector classifications refer to any one or more of the industry and sector sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as
defined by Fund management. This definition may not apply for purposes of this report, which may combine such industry and sector sub-classifications for reporting ease.
|
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| 2 |
|
NASDAQ PREMIUM INCOME & GROWTH FUND INC. |
|
JUNE 30, 2010 |
|
|
|
|
|
| Schedule of Investments as of June 30, 2010
(unaudited) |
|
(Percentages shown are based on Net Assets) |
|
|
|
|
|
|
|
|
| Industry |
|
Common Stocks |
|
Shares
Held |
|
Value |
|
|
|
|
|
|
|
|
| Aerospace & Defense — 2.0% |
|
|
|
|
|
|
|
Boeing Co. (a) |
|
9,000 |
|
$ |
564,750 |
|
|
General Dynamics Corp. |
|
11,211 |
|
|
656,516 |
|
|
L-3 Communications Holdings, Inc. |
|
20,110 |
|
|
1,424,592 |
|
|
Lockheed Martin Corp. |
|
11,072 |
|
|
824,864 |
|
|
Precision Castparts Corp. |
|
4,795 |
|
|
493,501 |
|
|
United Technologies Corp. |
|
9,637 |
|
|
625,538 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
4,589,761 |
| Auto Components — 0.3% |
|
|
|
|
|
| |
|
Gentex Corp. |
|
44,174 |
|
|
794,249 |
| Beverages — 0.2% |
|
|
|
|
|
| |
|
Hansen Natural Corp. (b) |
|
13,479 |
|
|
527,164 |
| Biotechnology — 7.5% |
|
|
|
|
|
|
|
Amgen, Inc. (a)(b) |
|
92,526 |
|
|
4,866,868 |
|
|
Biogen Idec, Inc. (b) |
|
64,624 |
|
|
3,066,409 |
|
|
Celgene Corp. (a)(b) |
|
58,561 |
|
|
2,976,070 |
|
|
Gilead Sciences, Inc. (b) |
|
180,920 |
|
|
6,201,938 |
|
|
Incyte Corp. (b) |
|
27,769 |
|
|
307,403 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
17,418,688 |
| Capital Markets — 0.9% |
|
|
|
|
|
|
|
Affiliated Managers Group, Inc. (b) |
|
6,961 |
|
|
423,020 |
|
|
SEI Investments Co. |
|
46,623 |
|
|
949,244 |
|
|
T. Rowe Price Group, Inc. |
|
18,531 |
|
|
822,591 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
2,194,855 |
| Chemicals — 0.2% |
|
|
|
|
|
| |
|
Methanex Corp. |
|
18,677 |
|
|
367,750 |
| Commercial Services & Supplies — 0.4% |
|
|
|
|
|
|
|
RINO International Corp. (b) |
|
16,026 |
|
|
200,485 |
|
|
Tetra Tech, Inc. (b) |
|
21,804 |
|
|
427,576 |
|
|
United Stationers, Inc. (b) |
|
6,984 |
|
|
380,418 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
1,008,479 |
| Communications Equipment — 10.7% |
|
|
|
|
|
|
|
Adtran, Inc. |
|
44,693 |
|
|
1,218,778 |
|
|
Arris Group, Inc. (b) |
|
78,193 |
|
|
796,787 |
|
|
Blue Coat Systems, Inc. (b) |
|
11,704 |
|
|
239,113 |
|
|
Brocade Communications Systems, Inc. (b) |
|
64,033 |
|
|
330,410 |
|
|
Cisco Systems, Inc. (b) |
|
298,410 |
|
|
6,359,117 |
|
|
InterDigital, Inc. (b) |
|
38,054 |
|
|
939,553 |
|
|
QUALCOMM, Inc. |
|
297,458 |
|
|
9,768,521 |
|
|
Research In Motion Ltd. (b) |
|
87,611 |
|
|
4,315,718 |
|
|
Tellabs, Inc. |
|
148,173 |
|
|
946,825 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
24,914,822 |
| Computers & Peripherals — 21.3% |
|
|
|
|
|
|
|
Apple, Inc. (a)(b) |
|
185,689 |
|
|
46,706,354 |
|
|
Dell, Inc. (b) |
|
165,071 |
|
|
1,990,756 |
|
|
STEC, Inc. (b) |
|
27,145 |
|
|
340,941 |
|
|
Xyratex Ltd. (b) |
|
22,086 |
|
|
312,517 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
49,350,568 |
| Consumer Finance — 0.5% |
|
|
|
|
|
|
|
Ezcorp, Inc. (b) |
|
39,364 |
|
|
730,202 |
|
|
World Acceptance Corp. (b) |
|
12,284 |
|
|
470,600 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
1,200,802 |
| Containers & Packaging — 0.5% |
|
|
|
|
|
| |
|
Silgan Holdings, Inc. |
|
41,194 |
|
|
1,169,086 |
|
|
|
|
|
|
|
|
| Industry |
|
Common Stocks |
|
Shares
Held |
|
Value |
|
|
|
|
|
|
|
|
| Distributors — 0.2% |
|
|
|
|
|
| |
|
LKQ Corp. (b) |
|
22,113 |
|
$ |
426,339 |
| Diversified Consumer Services — 1.7% |
|
|
|
|
|
|
|
Career Education Corp. (b) |
|
49,347 |
|
|
1,135,968 |
|
|
Corinthian Colleges, Inc. (b) |
|
46,729 |
|
|
460,281 |
|
|
ITT Educational Services, Inc. (b) |
|
12,707 |
|
|
1,054,935 |
|
|
Strayer Education, Inc. |
|
5,671 |
|
|
1,178,944 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
3,830,128 |
| Diversified Telecommunication Services — 0.5% |
|
|
|
|
|
|
|
Neutral Tandem, Inc. (b) |
|
41,041 |
|
|
461,711 |
|
|
Windstream Corp. |
|
73,984 |
|
|
781,271 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
1,242,982 |
| Electrical Equipment — 0.3% |
|
|
|
|
|
|
|
Harbin Electric, Inc. (b) |
|
16,284 |
|
|
271,129 |
|
|
Woodward Governor Co. |
|
17,619 |
|
|
449,813 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
720,942 |
Electronic Equipment, Instruments &
Components — 0.1% |
|
|
|
|
|
| |
|
Plexus Corp. (b) |
|
9,569 |
|
|
255,875 |
| Energy Equipment & Services — 0.1% |
|
|
|
|
|
| |
|
Hercules Offshore, Inc. (a)(b) |
|
83,475 |
|
|
202,844 |
| Health Care Equipment & Supplies — 0.2% |
|
|
|
|
|
| |
|
Kinetic Concepts, Inc. (b) |
|
13,157 |
|
|
480,362 |
| Health Care Providers & Services — 1.5% |
|
|
|
|
|
|
|
Amedisys, Inc. (b) |
|
6,901 |
|
|
303,437 |
|
|
Express Scripts, Inc. (b) |
|
69,562 |
|
|
3,270,805 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
3,574,242 |
| Health Care Technology — 0.3% |
|
|
|
|
|
| |
|
Quality Systems, Inc. |
|
13,073 |
|
|
758,103 |
| Hotels, Restaurants & Leisure — 4.2% |
|
|
|
|
|
|
|
Bob Evans Farms, Inc. |
|
21,462 |
|
|
528,395 |
|
|
Cracker Barrel Old Country Store, Inc. |
|
14,899 |
|
|
693,698 |
|
|
Ctrip.com International Ltd. (b)(c) |
|
10,592 |
|
|
397,836 |
|
|
McDonald’s Corp. |
|
61,360 |
|
|
4,041,783 |
|
|
Starbucks Corp. |
|
163,994 |
|
|
3,985,054 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
9,646,766 |
| IT Services — 1.8% |
|
|
|
|
|
|
|
CSG Systems International, Inc. (a)(b) |
|
55,388 |
|
|
1,015,262 |
|
|
Computer Sciences Corp. (a) |
|
16,316 |
|
|
738,299 |
|
|
International Business Machines Corp. |
|
16,340 |
|
|
2,017,663 |
|
|
Mantech International Corp., Class A (b) |
|
9,447 |
|
|
402,159 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
4,173,383 |
| Insurance — 0.2% |
|
|
|
|
|
| |
|
CNA Financial Corp. (b) |
|
14,198 |
|
|
362,901 |
| Internet & Catalog Retail — 2.8% |
|
|
|
|
|
|
|
Amazon.com, Inc. (b) |
|
44,372 |
|
|
4,848,085 |
|
|
NetFlix, Inc. (b) |
|
9,818 |
|
|
1,066,726 |
|
|
PetMed Express, Inc. |
|
27,297 |
|
|
485,887 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
6,400,698 |
| Internet Software & Services — 8.2% |
|
|
|
|
|
|
|
Baidu.com, Inc. (b)(c) |
|
51,100 |
|
|
3,478,888 |
|
|
EarthLink, Inc. |
|
156,503 |
|
|
1,245,764 |
|
|
eBay, Inc. (a)(b) |
|
162,568 |
|
|
3,187,958 |
|
|
Google, Inc., Class A (b) |
|
22,221 |
|
|
9,887,234 |
See Notes to Financial Statements.
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|
NASDAQ PREMIUM INCOME & GROWTH FUND INC. |
|
JUNE 30, 2010 |
|
3 |
|
|
|
| Schedule of Investments (continued) |
|
(Percentages shown are based on Net Assets) |
|
|
|
|
|
|
|
|
| Industry |
|
Common Stocks |
|
Shares
Held |
|
Value |
|
|
|
|
|
|
|
|
| Internet Software & Services (concluded) |
|
|
|
|
|
|
|
Sohu.com, Inc. (b) |
|
14,540 |
|
$ |
597,449 |
|
|
ValueClick, Inc. (b) |
|
53,683 |
|
|
573,871 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
18,971,164 |
| Leisure Equipment & Products — 0.3% |
|
|
|
|
|
| |
|
Pool Corp. |
|
35,711 |
|
|
782,785 |
| Life Sciences Tools & Services — 0.5% |
|
|
|
|
|
|
|
Furiex Pharmaceuticals, Inc. (b) |
|
3,704 |
|
|
37,636 |
|
|
Pharmaceutical Product Development, Inc. |
|
44,452 |
|
|
1,129,525 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
1,167,161 |
| Machinery — 0.6% |
|
|
|
|
|
|
|
Bucyrus International, Inc. |
|
9,797 |
|
|
464,868 |
|
|
Eaton Corp. |
|
6,229 |
|
|
407,626 |
|
|
Nordson Corp. |
|
7,373 |
|
|
413,478 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
1,285,972 |
| Media — 6.0% |
|
|
|
|
|
|
|
Comcast Corp., Class A |
|
292,223 |
|
|
5,075,914 |
|
|
DIRECTV, Class A (b) |
|
116,031 |
|
|
3,935,772 |
|
|
Focus Media Holding Ltd. (b)(c) |
|
21,212 |
|
|
329,422 |
|
|
News Corp., Class A |
|
248,352 |
|
|
2,970,290 |
|
|
News Corp., Class B |
|
25,828 |
|
|
357,718 |
|
|
Omnicom Group, Inc. |
|
22,170 |
|
|
760,431 |
|
|
Scholastic Corp. |
|
15,800 |
|
|
381,096 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
13,810,643 |
| Metals & Mining — 0.5% |
|
|
|
|
|
|
|
Freeport-McMoRan Copper & Gold, Inc.,
Class B (a) |
|
12,338 |
|
|
729,546 |
|
|
Steel Dynamics, Inc. |
|
32,009 |
|
|
422,199 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
1,151,745 |
| Multiline Retail — 0.2% |
|
|
|
|
|
| |
|
Dollar Tree, Inc. (b) |
|
10,944 |
|
|
455,599 |
| Office Electronics — 0.4% |
|
|
|
|
|
| |
|
Xerox Corp. |
|
113,137 |
|
|
909,621 |
| Personal Products — 0.3% |
|
|
|
|
|
| |
|
USANA Health Sciences, Inc. (b) |
|
18,684 |
|
|
682,527 |
| Pharmaceuticals — 3.0% |
|
|
|
|
|
|
|
Endo Pharmaceuticals Holdings, Inc. (b) |
|
41,920 |
|
|
914,694 |
|
|
Perrigo Co. |
|
10,716 |
|
|
632,994 |
|
|
Teva Pharmaceutical Industries Ltd. (c) |
|
102,472 |
|
|
5,327,519 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
6,875,207 |
| Road & Rail — 1.1% |
|
|
|
|
|
|
|
CSX Corp. |
|
13,478 |
|
|
668,913 |
|
|
Heartland Express, Inc. |
|
21,622 |
|
|
313,951 |
|
|
Landstar System, Inc. |
|
18,931 |
|
|
738,120 |
|
|
Werner Enterprises, Inc. |
|
34,383 |
|
|
752,644 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
2,473,628 |
Semiconductors & Semiconductor
Equipment — 8.5% |
|
|
|
|
|
|
|
ASML Holding NV (a)(c) |
|
14,991 |
|
|
411,803 |
|
|
Aixtron AG (c) |
|
13,126 |
|
|
312,793 |
|
|
Amkor Technology, Inc. (b) |
|
64,222 |
|
|
353,863 |
|
|
Atheros Communications, Inc. (b) |
|
13,083 |
|
|
360,306 |
|
|
Canadian Solar, Inc. (b) |
|
16,700 |
|
|
163,326 |
|
|
Conexant Systems, Inc. (b) |
|
105,986 |
|
|
237,409 |
|
|
|
|
|
|
|
|
|
| Industry |
|
Common Stocks |
|
Shares
Held |
|
Value |
|
|
|
|
|
|
|
|
|
|
Semiconductors & Semiconductor
Equipment (concluded) |
|
|
|
|
|
|
|
|
Cree, Inc. (b) |
|
5,785 |
|
$ |
347,274 |
|
|
|
Intel Corp. |
|
394,525 |
|
|
7,673,511 |
|
|
|
Intersil Corp., Class A |
|
113,413 |
|
|
1,373,431 |
|
|
|
JA Solar Holdings Co. Ltd. (b)(c) |
|
68,549 |
|
|
318,753 |
|
|
|
Micron Technology, Inc. (b) |
|
41,154 |
|
|
349,397 |
|
|
|
ON Semiconductor Corp. (b) |
|
72,856 |
|
|
464,821 |
|
|
|
Power Integrations, Inc. |
|
24,937 |
|
|
802,847 |
|
|
|
Skyworks Solutions, Inc. (b) |
|
30,438 |
|
|
511,054 |
|
|
|
Tessera Technologies, Inc. (b) |
|
19,518 |
|
|
313,264 |
|
|
|
Texas Instruments, Inc. |
|
75,245 |
|
|
1,751,704 |
|
|
|
Xilinx, Inc. |
|
161,763 |
|
|
4,086,133 |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
19,831,689 |
|
| Software — 11.3% |
|
|
|
|
|
|
|
|
Adobe Systems, Inc. (b) |
|
89,889 |
|
|
2,375,766 |
|
|
|
CA, Inc. |
|
170,025 |
|
|
3,128,460 |
|
|
|
Jack Henry & Associates, Inc. |
|
29,898 |
|
|
713,964 |
|
|
|
Microsoft Corp. |
|
431,318 |
|
|
9,924,627 |
|
|
|
MicroStrategy, Inc., Class A (b) |
|
4,954 |
|
|
371,996 |
|
|
|
Oracle Corp. (a) |
|
339,640 |
|
|
7,288,674 |
|
|
|
SAP AG (c) |
|
8,069 |
|
|
357,457 |
|
|
|
Symantec Corp. (b) |
|
148,347 |
|
|
2,059,056 |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
26,220,000 |
|
| Specialty Retail — 1.4% |
|
|
|
|
|
|
|
|
Dress Barn, Inc. (b) |
|
14,977 |
|
|
356,602 |
|
|
|
Rent-A-Center, Inc. (b) |
|
84,148 |
|
|
1,704,838 |
|
|
|
Tiffany & Co. |
|
10,273 |
|
|
389,449 |
|
|
|
Tractor Supply Co. |
|
13,785 |
|
|
840,471 |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
3,291,360 |
|
| Textiles, Apparel & Luxury Goods — 0.4% |
|
|
|
|
|
|
|
|
Deckers Outdoor Corp. (b) |
|
3,986 |
|
|
569,480 |
|
|
|
Phillips-Van Heusen Corp. |
|
9,118 |
|
|
421,890 |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
991,370 |
|
| |
|
Total Investments before Options Written
(Cost — $221,436,248*) — 101.1% |
|
|
234,512,260 |
|
| |
|
|
|
|
|
|
|
|
| |
|
Options Written |
|
Number of
Contracts |
|
|
|
| Call Options Written |
|
|
|
|
|
|
|
|
NASDAQ Index 100, expiring
July 2010 at USD 1,950 |
|
150 |
|
|
(10,500 |
) |
|
|
NASDAQ Index 100, expiring
July 2010 at USD 1,975 |
|
150 |
|
|
(7,125 |
) |
|
|
NASDAQ Index 100, expiring
July 2010 at USD 2,000 |
|
100 |
|
|
(2,250 |
) |
|
|
NASDAQ Index 100, expiring
August 2010 at USD 1,950 |
|
150 |
|
|
(108,000 |
) |
| |
|
NASDAQ Index 100, expiring
August 2010 at USD 1,975 |
|
100 |
|
|
(50,000 |
) |
| |
|
Total Options Written
(Premiums Received — $2,118,222) — (0.1%) |
|
|
(177,875 |
) |
|
|
Total Investments, Net of Options Written
(Net Cost — $219,318,026) — 101.0% |
|
|
234,334,385 |
|
|
|
Liabilities in Excess of Other Assets — (1.0%) |
|
|
(2,428,307 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net Assets — 100.0% |
|
|
|
$ |
231,906,078 |
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
| 4 |
|
NASDAQ PREMIUM INCOME & GROWTH FUND INC. |
|
JUNE 30, 2010 |
|
|
Schedule of Investments (concluded)
| * |
|
The cost and unrealized appreciation (depreciation) of investments as of June 30, 2010, as computed for federal income tax purposes, were as follows: |
|
|
|
|
|
| Aggregate cost |
|
$ |
221,599,257 |
|
|
|
|
|
|
| Gross unrealized appreciation |
|
$ |
41,588,479 |
|
| Gross unrealized depreciation |
|
|
(28,675,476 |
) |
|
|
|
|
|
| Net unrealized appreciation |
|
$ |
12,913,003 |
|
|
|
|
|
|
| (a) |
|
All or a portion of security held as collateral in connection with open option contracts. |
| (b) |
|
Non-income producing security. |
For Fund portfolio compliance purposes, the
Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. This definition may not apply for
purposes of this report, which may combine such industry sub-classifications for reporting ease.
Fair Value Measurements — Various inputs are used
in determining the fair value of investments, which are as follows:
| • |
|
Level 1 — price quotations in active markets/exchanges for identical securities |
| • |
|
Level 2 — other observable inputs (including, but not limited to: quoted prices for identical or similar assets or liabilities in markets that are not
active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)
|
| • |
|
Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the
Fund’s own assumptions used in determining the fair value of investments) |
The inputs or methodology used for valuing securities
are not necessarily an indication of the risk associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1(a) of the
Notes to Financial Statements.
The following table summarizes the inputs used as of June 30, 2010 in determining the fair valuation of the Fund's
investments:
|
|
|
|
|
|
|
|
|
|
|
| Valuation Inputs |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
| Assets: |
|
|
|
|
|
|
|
|
|
|
| Investments in Securities: |
|
|
|
|
|
|
|
|
|
|
| Long-Term Securities1
|
|
$ |
234,512,260 |
|
— |
|
— |
|
$ |
234,512,260 |
| Total |
|
$ |
234,512,260 |
|
— |
|
— |
|
$ |
234,512,260 |
|
|
|
|
| 1 |
|
See above Schedule of Investments for values in each industry. |
|
|
|
|
|
|
|
|
|
|
|
| |
|
Derivative Financial
Instruments2 |
|
| Valuation Inputs |
|
Level 1 |
|
|
Level 2 |
|
Level 3 |
|
Total |
|
| Liabilities: |
|
|
|
|
|
|
|
|
|
|
| Equity contracts |
|
$(177,875 |
) |
|
— |
|
— |
|
$(177,875 |
) |
| Total |
|
$(177,875 |
) |
|
— |
|
— |
|
$(177,875 |
) |
|
|
|
|
| 2 |
|
Derivative financial instruments are options, which are shown at market value. |
See Notes to Financial Statements.
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
NASDAQ PREMIUM INCOME & GROWTH FUND INC. |
|
JUNE 30, 2010 |
|
5 |
Statement of Assets, Liabilities and Capital
As of June 30, 2010 (unaudited)
|
|
|
|
|
|
|
|
|
| Assets |
|
|
|
|
|
|
|
|
|
| Investments in unaffiliated securities, at value (identified cost — $221,436,248) |
|
|
|
|
|
$ |
234,512,260 |
|
| Dividends receivable |
|
|
|
|
|
|
44,218 |
|
| Prepaid expenses |
|
|
|
|
|
|
29,245 |
|
|
|
|
|
|
|
|
|
|
| Total assets |
|
|
|
|
|
|
234,585,723 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities |
|
|
|
|
|
|
|
|
|
| Options written, at value (premiums received — $2,118,222) |
|
|
|
|
|
|
177,875 |
|
| Bank overdraft |
|
|
|
|
|
|
1,526,356 |
|
| Payables: |
|
|
|
|
|
|
|
|
| Dividends to stockholders |
|
$ |
659,935 |
|
|
|
|
|
| Investment advisory fees |
|
|
184,794 |
|
|
|
844,729 |
|
|
|
|
|
|
|
|
|
|
| Accrued expenses |
|
|
|
|
|
|
130,685 |
|
|
|
|
|
|
|
|
|
|
| Total liabilities |
|
|
|
|
|
|
2,679,645 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Assets |
|
|
|
|
|
|
|
|
|
| Net assets |
|
|
|
|
|
$ |
231,906,078 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Capital |
|
|
|
|
|
|
|
|
|
| Common Stock, par value $.001 per share, 100,000,000 shares authorized |
|
|
|
|
|
$ |
18,445 |
|
| Paid-in capital in excess of par |
|
|
|
|
|
|
248,715,235 |
|
| Accumulated distributions in excess of investment income — net |
|
$ |
(12,142,870 |
) |
|
|
|
|
| Accumulated realized capital losses — net |
|
|
(19,701,091 |
) |
|
|
|
|
| Unrealized appreciation — net |
|
|
15,016,359 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total accumulated losses — net |
|
|
|
|
|
|
(16,827,602 |
) |
|
|
|
|
|
|
|
|
|
| Total Capital — Equivalent to $12.57 per share based on shares of 18,445,346 shares
of Common Stock outstanding (market
price — $11.93) |
|
|
|
|
|
$ |
231,906,078 |
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
| 6 |
|
NASDAQ PREMIUM INCOME & GROWTH FUND INC. |
|
JUNE 30, 2010 |
|
|
Statement of Operations
For the Six-Months Ended June 30, 2010 (unaudited)
|
|
|
|
|
|
|
|
|
| Investment Income |
|
|
|
|
|
|
|
|
|
| Dividends (net of $12,082 foreign withholding tax) |
|
|
|
|
|
$ |
968,374 |
|
| Interest |
|
|
|
|
|
|
101 |
|
|
|
|
|
|
|
|
|
|
| Total income |
|
|
|
|
|
|
968,475 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Expenses |
|
|
|
|
|
|
|
|
|
| Investment advisory fees |
|
$ |
1,157,088 |
|
|
|
|
|
| Licensing fees |
|
|
64,989 |
|
|
|
|
|
| Directors’ fees and expenses |
|
|
35,570 |
|
|
|
|
|
| Professional fees |
|
|
34,374 |
|
|
|
|
|
| Accounting services |
|
|
29,986 |
|
|
|
|
|
| Transfer agent fees |
|
|
22,071 |
|
|
|
|
|
| Insurance |
|
|
18,627 |
|
|
|
|
|
| Printing and stockholder reports |
|
|
13,112 |
|
|
|
|
|
| Registration fees |
|
|
10,547 |
|
|
|
|
|
| Custodian fees |
|
|
7,246 |
|
|
|
|
|
| Other |
|
|
4,648 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total expenses |
|
|
|
|
|
|
1,398,258 |
|
|
|
|
|
|
|
|
|
|
| Investment loss — net |
|
|
|
|
|
|
(429,783 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Realized & Unrealized Gain (Loss) — Net |
|
|
|
|
|
|
|
|
|
| Realized gain (loss) on: |
|
|
|
|
|
|
|
|
| Investments — net |
|
|
942,507 |
|
|
|
|
|
| Options written — net |
|
|
(679,573 |
) |
|
|
262,934 |
|
|
|
|
|
|
|
|
|
|
| Change in unrealized appreciation/depreciation on: |
|
|
|
|
|
|
|
|
| Investments — net |
|
|
(18,627,824 |
) |
|
|
|
|
| Options written — net |
|
|
2,630,461 |
|
|
|
(15,997,363 |
) |
|
|
|
|
|
| Total realized and unrealized loss — net |
|
|
|
|
|
|
(15,734,429 |
) |
|
|
|
|
|
|
|
|
|
| Net Decrease in Net Assets Resulting from Operations |
|
|
|
|
|
$ |
(16,164,212 |
) |
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
NASDAQ PREMIUM INCOME & GROWTH FUND INC. |
|
JUNE 30, 2010 |
|
7 |
Statements of Changes in Net Assets
|
|
|
|
|
|
|
|
|
| Increase (Decrease) in Net Assets: |
|
For the Six
Months Ended
June 30, 2010
(unaudited) |
|
|
For the
Year Ended
December 31, 2009 |
|
| Operations |
|
|
|
|
|
|
|
|
|
| Investment loss — net |
|
$ |
(429,783 |
) |
|
$ |
(880,508 |
) |
| Realized gain (loss) — net |
|
|
262,934 |
|
|
|
(13,423,749 |
) |
| Change in unrealized appreciation/depreciation — net |
|
|
(15,997,363 |
) |
|
|
99,441,127 |
|
|
|
|
|
|
|
|
|
|
| Net increase (decrease) in net assets resulting from operations |
|
|
(16,164,212 |
) |
|
|
85,136,870 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Dividends and Distributions to Stockholders |
|
|
|
|
|
|
|
|
|
| Investment income — net |
|
|
(11,657,459 |
)** |
|
|
— |
|
| Tax return of capital |
|
|
— |
|
|
|
(33,880,983 |
) |
|
|
|
|
|
|
|
|
|
| Net decrease in net assets resulting from dividends and distributions to stockholders |
|
|
(11,657,459 |
) |
|
|
(33,880,983 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common Stock Transactions |
|
|
|
|
|
|
|
|
|
| Value of shares issued to stockholders in reinvestment of dividends and distributions |
|
|
— |
|
|
|
2,181,331 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Assets |
|
|
|
|
|
|
|
|
|
| Total increase (decrease) in net assets |
|
|
(27,821,671 |
) |
|
|
53,437,218 |
|
| Beginning of period |
|
|
259,727,749 |
|
|
|
206,290,531 |
|
|
|
|
|
|
|
|
|
|
| End of period* |
|
$ |
231,906,078 |
|
|
$ |
259,727,749 |
|
|
|
|
|
|
|
|
|
|
| * Accumulated distributions in excess of investment income (loss) — net |
|
$ |
(12,142,870 |
) |
|
$ |
(55,628 |
) |
|
|
|
|
|
|
|
|
|
| ** A substantial portion of the dividends from net investment income may be considered a tax return of capital
at fiscal year end. |
|
| See Notes to Financial Statements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
| 8 |
|
NASDAQ PREMIUM INCOME & GROWTH FUND INC. |
|
JUNE 30, 2010 |
|
|
Financial Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following per share data and ratios have been derived
from information provided in the financial statements. |
|
For the Six
Months Ended
June 30,
2010
(unaudited) |
|
|
For the Year Ended
December 31, |
|
|
For the Period
January 30,
2007(a) to
December
31,
2007 |
|
| |
|
2009 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Per Share Operating Performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net asset value, beginning of period |
|
$ |
14.08 |
|
|
$ |
11.28 |
|
|
$ |
20.63 |
|
|
$ |
19.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Investment loss — net(b) |
|
|
(.02 |
) |
|
|
(.05 |
) |
|
|
(.08 |
) |
|
|
(.07 |
) |
| Realized and unrealized gain (loss) — net |
|
|
(.86 |
) |
|
|
4.70 |
|
|
|
(7.42 |
) |
|
|
3.34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total from investment operations |
|
|
(.88 |
) |
|
|
4.65 |
|
|
|
(7.50 |
) |
|
|
3.27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less dividends and distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Investment income — net |
|
|
(.63 |
)(c) |
|
|
— |
|
|
|
(.27 |
) |
|
|
— |
|
| Tax return of capital |
|
|
— |
|
|
|
(1.85 |
) |
|
|
(1.58 |
) |
|
|
(1.70 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total dividends and distributions |
|
|
(.63 |
) |
|
|
(1.85 |
) |
|
|
(1.85 |
) |
|
|
(1.70 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Offering costs resulting from the issuance of Common Stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(.04 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net asset value, end of period |
|
$ |
12.57 |
|
|
$ |
14.08 |
|
|
$ |
11.28 |
|
|
$ |
20.63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Market price per share, end of period |
|
$ |
11.93 |
|
|
$ |
14.40 |
|
|
$ |
9.29 |
|
|
$ |
18.26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Investment
Return(d) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Based on net asset value per share |
|
|
(6.28% |
)(e) |
|
|
44.32% |
|
|
|
(37.07% |
) |
|
|
17.95% |
(e) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Based on market price per share |
|
|
(13.03% |
)(e) |
|
|
79.21% |
|
|
|
(41.45% |
) |
|
|
(.30% |
)(e) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ratios to Average Net Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Expenses |
|
|
1.09% |
(f) |
|
|
1.11% |
|
|
|
1.05% |
|
|
|
1.06% |
(f) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Investment loss — net |
|
|
(.33% |
)(f) |
|
|
(.38% |
) |
|
|
(.47% |
) |
|
|
(.36% |
)(f) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Supplemental Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net assets, end of period (in thousands) |
|
$ |
231,906 |
|
|
$ |
259,728 |
|
|
$ |
206,291 |
|
|
$ |
377,248 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Portfolio turnover |
|
|
35% |
|
|
|
0% |
(g) |
|
|
19% |
|
|
|
31% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
(a) |
|
Commencement of operations. |
| |
(b) |
|
Based on average shares outstanding. |
| |
(c) |
|
A portion of the distributions from net investment income may be deemed a tax return
of capital at fiscal year end. |
| |
(d) |
|
Total investment returns based on market price, which can be significantly greater or
lesser than the net asset value, may result in substantially different returns. Total investment returns exclude the effects of sales charges. |
| |
(e) |
|
Aggregate total investment return. |
| |
(g) |
|
For purposes of calculating portfolio turnover of the Fund, there were no long-term
purchases during the year, and therefore, the portfolio turnover is zero. |
See Notes to Financial Statements.
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
NASDAQ PREMIUM INCOME & GROWTH FUND INC. |
|
JUNE 30, 2010 |
|
9 |
Notes to Financial Statements (unaudited)
1. Significant Accounting Policies:
NASDAQ Premium Income & Growth Fund Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as amended, as a diversified,
closed-end management investment company. The Fund’s financial statements are prepared in conformity with U.S. generally accepted accounting principles, which may require the use of management accruals and estimates. Actual results may differ
from these estimates. These unaudited financial statements reflect all adjustments, which are, in the opinion of management, necessary to present a fair statement of the results for the interim period. All such adjustments are of a normal, recurring
nature. The Fund determines and makes available for publication the net asset value of its Common Stock on the last business day of each week. The Fund’s Common Stock shares are listed on the NASDAQ Stock Market LLC (“NASDAQ”) under
the symbol QQQX.
Investing in the Fund involves certain risks and the Fund may not be able to achieve its intended results for a variety of reasons,
including, among others, the possibility that the Fund may not be able to structure derivative investments as defined below as anticipated. Because the value of your investment in the Fund will fluctuate, there is a risk that you will lose money.
The following is a summary of significant accounting policies followed by the Fund.
(a) Valuation of investments — Equity securities that are held by the Fund that are traded on stock exchanges or the NASDAQ Global Market are valued at the
last sale price or official close price on the exchange, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price for long positions, and at the last available asked price for
short positions. In cases where equity securities are traded on more than one exchange, the securities are valued on the exchange designated as the primary market by or under the authority of the Board of Directors of the Fund. Long positions traded
in the over-the-counter (“OTC”) market, NASDAQ Capital Market or Bulletin Board are valued at the last available bid price or yield equivalent obtained from one or more dealers or pricing services approved by the Board of Directors of the
Fund. Short positions traded in the OTC market are valued at the last available asked price. Portfolio securities that are traded both in the OTC market and on an exchange are valued according to the broadest and most representative market. Other
investments are valued at market value.
Exchange-traded options are valued at the mean between the last bid and ask prices at the close of the options
market in
which the options trade. Options traded in the OTC market are valued at the last asked price (options written) or the last bid price (options purchased). Swap agreements are valued based upon
quoted fair valuations received daily by the Fund from a pricing service or counterparty. Financial futures contracts and options thereon, which are traded on exchanges, are valued at their last sale price as of the close of such exchanges.
Obligations with remaining maturities of 60 days or less are valued at amortized cost unless the investment adviser believes that this method no longer produces fair valuations.
The Fund employs pricing services to provide certain securities prices for the Fund. Securities and assets for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the direction of the Board of Directors of the Fund, including valuations furnished by the pricing services retained by the Fund, which may use a matrix system for valuations. The
procedures of a pricing service and its valuations are reviewed by the officers of the Fund under the general supervision of the Fund’s Board of Directors. Such valuations and procedures will be reviewed periodically by the Board of Directors
of the Fund.
Generally, trading in foreign securities, as well as U.S. government securities, money market instruments and certain fixed income
securities, is substantially completed each day at various times prior to the close of business on the NASDAQ. The values of such securities used in computing the net asset value of the Fund’s shares are determined as of such times. Foreign
currency exchange rates will generally be determined as of the close of business on the NASDAQ. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the
close of business on the NASDAQ that may not be reflected in the computation of the Fund’s net asset value. If events (for example, a company announcement, market volatility or a natural disaster) occur during such periods that are expected to
materially affect the value of such securities, those securities may be valued at their fair value as determined in good faith by the Fund’s Board of Directors or by the investment adviser using a pricing service and/or procedures approved by
the Fund’s Board of Directors.
(b) Real Estate Investment Trusts (“REITs”) — A portion of distributions received from REITs may
constitute a return of capital. During the year an amount, based upon prior experience and guidance from the REITs, is reclassified from dividend income and recorded as an adjustment to basis of the REIT holdings. The adjustment is a reduction in
basis and is reflected in either unrealized appreciation (depreciation) or realized gain (loss).
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
| 10 |
|
NASDAQ PREMIUM INCOME & GROWTH FUND INC. |
|
JUNE 30, 2010 |
|
|
Notes to Financial Statements (unaudited) (continued)
(c) Derivative financial instruments — The Fund will engage in various portfolio investment strategies both to
enhance its returns or as a proxy for a direct investment in securities underlying the Fund’s index. Losses may arise due to changes in the value of the contract due to an unfavorable change in the price of the underlying security or index, or
if the counterparty does not perform under the contract. The counterparty, for certain instruments, may pledge cash or securities as collateral.
The
Fund utilizes derivatives to enhance return and management has determined the use of derivative instruments is not designed to hedge security positions. The Fund’s use of derivatives involves risks different from, and possibly greater than, the
risks associated with investing directly in the investments underlying these derivatives.
Derivatives may be volatile and involve significant risk, such
as, among other things, credit risk, currency risk, leverage risk and liquidity risk. They also involve the risk of mispricing or improper valuation and correlation risk (i.e., the risk that changes in the value of the derivative may not correlate
perfectly, or to any degree, with the underlying asset, interest rate or index). Using derivatives can disproportionately increase losses and reduce opportunities for gains when security prices, indices, currency rates or interest rates are changing
in unexpected ways. The Fund may suffer disproportionately heavy losses relative to the amount of its investments in derivative contracts.
Derivative
instruments utilized by the Fund are defined below and delineated in the Statement of Assets, Liabilities and Capital and Statement of Operations of the Fund.
|
|
|
|
|
|
| Statement of Assets, Liabilities and Capital as of June 30, 2010 |
Derivatives not accounted for as
hedging instruments |
|
Liabilities |
|
Amount |
| Equity Options |
|
Options
written, at
value |
|
$ |
177,875 |
|
|
|
|
|
|
|
|
Statement of Operations for the six months ended
June 30, 2010 |
Derivatives not accounted for as
hedging instruments |
|
Realized
loss |
|
|
Change in
unrealized
appreciation
(depreciation) |
| Written Equity Options |
|
$ |
(679,573 |
) |
|
$ |
2,630,461 |
For the six-months June 30, 2010, the average quarterly balance of outstanding derivative financial instruments
was as follows:
|
|
|
|
| Options: |
|
|
|
| Average number of contracts written |
|
|
650 |
| Average notional value of contracts written |
|
$ |
65,000 |
| • |
|
Options — The Fund writes covered call options. When the Fund writes an option, an amount equal to the premium received by the Fund is reflected as an asset
and an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written. The Fund provides the purchaser with the right to potentially receive a cash payment from the Fund
equal to any appreciation in the cash value of the index over the strike price on the expiration date of the written option. When an option expires (or the Fund enters into a closing transaction), the Fund realizes a gain or loss on the option to
the extent of the premiums received (or gain or loss to the extent the cost of the closing transaction exceeds the premium received). Written options are non-income producing investments. |
Writing (selling) covered call options subjects the Fund to certain additional risks. The Fund, by writing covered call options, will forgo the
opportunity to benefit from potential increases in the value of the equity investments above the exercise prices of the options, but will continue to bear the risk of declines in the value of the equity investments. The premiums received from the
options may not be sufficient to offset any losses sustained from the volatility of the equity securities over time.
The premium
received from writing options and amounts available for distribution from the Fund’s options may decrease in declining interest rate environments. The value of the equity investments also may be influenced by changes in interest rates. Higher
yielding equity investments and those issuers whose businesses are substantially affected by changes in interest rates may be particularly sensitive to interest rate risk. A summary of option transactions is found in Note 3, Investments.
(d) Income taxation — It is the Fund’s policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies
and to distribute substantially all of its taxable income to its stockholders. Therefore, no federal income tax provision is required.
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
NASDAQ PREMIUM INCOME & GROWTH FUND INC. |
|
JUNE 30, 2010 |
|
11 |
Notes to Financial Statements (unaudited) (continued)
Management has evaluated the tax status of the Fund, and has determined that taxes do not have a material impact on
the Fund’s financial statements. The Fund files U.S. and various state tax returns. To the best of the Fund’s knowledge, no income tax returns are currently under examination. All tax years of the Fund are open at this time.
(e) Security transactions and investment income — Security transactions are recorded on the dates the transactions are entered into (the trade dates). Realized
gains and losses on security transactions are determined on the identified cost basis. Dividend income is recorded on the ex-dividend dates. Interest is recognized on the accrual basis.
(f) Dividends and distributions — Dividends and distributions paid by the Fund are recorded on the ex-dividend dates. For the current period ended June 30,
2010, Fund management believes it is likely total distributions may exceed net investment income and accumulated realized capital gains, resulting in a portion of the total distribution treated as a tax return of capital. Portions of the
distributions paid by the Fund during the current period ended June 30, 2010 and the year ended December 31, 2009 were characterized as a tax return of capital.
(g) Bank overdraft – The Fund recorded a bank overdraft, which resulted from management estimates of available cash.
2. Investment Advisory and Management Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory and Management Agreement with IQ Investment Advisors LLC (“IQ Advisors”), an indirect, wholly owned
subsidiary of Merrill Lynch & Co., Inc. (“ML & Co.”), which is a wholly owned subsidiary of Bank of America Corporation (“Bank of America”). IQ Advisors is responsible for the investment advisory, management and
administrative services to the Fund. In addition, IQ Advisors provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of the Fund. For such services, the Fund pays a monthly fee at an annual
rate equal to .90% of the average daily value of the Fund’s net assets plus borrowings for leverage and other investment purposes.
IQ Advisors has
entered into a Subadvisory Agreement with Nuveen HydePark Group, LLC (“Nuveen HydePark”). Pursuant to the agreement, Nuveen HydePark provides certain investment advisory services to IQ Advisors with respect to the Fund. For such services,
IQ Advisors pays Nuveen HydePark a monthly fee at an annual rate equal to .39% of the average
daily value of the Fund’s net assets plus borrowings for leverage and other investment purposes. There is no increase in aggregate fees paid by the Fund for these services.
At a meeting held on June 18, 2010, the Board of Directors of the Fund approved a new investment advisory agreement between the Fund and Nuveen Asset
Management (“NAM”) and a new subadvisory agreement between NAM and Nuveen HydePark. The Board also nominated a new slate of directors (the “Director Nominees”). In connection with these actions, the Board called two special
meetings of stockholders of the Fund. The first special meeting is called to seek approval of the new investment advisory agreement and new subadvisory agreement. The second special meeting is called for the election of the Director Nominees. More
information regarding these actions will be available in the Fund’s proxy statement that will be filed with the Securities and Exchange Commission.
IQ Advisors has entered into an Administration Agreement
with
Princeton Administrators, LLC (the “Administrator”). The Administration Agreement provides that IQ Advisors pays the Administrator a fee from its investment advisory fee at an annual rate equal to .12% of the average daily value of the
Fund’s net assets plus borrowings for leverage and other investment purposes, for the performance of administrative and other services necessary for the operation of the Fund. There is no increase in the aggregate fees paid by the Fund for
these services. The Administrator is an indirect, wholly owned subsidiary of BlackRock, Inc. (“BlackRock”). ML & Co. has a substantial financial interest in BlackRock.
Certain officers of the Fund are officers and/or directors of IQ Advisors, Bank of America and/or ML & Co. or their affiliates.
3. Investments:
Purchases and sales of investments,
excluding short-term securities, for the six months ended June 30, 2010 were $84,876,965 and $94,224,293, respectively.
Transactions in options for
the six months ended June 30, 2010 were as follows:
|
|
|
|
|
|
|
|
| Call Options Written |
|
Number of
Contracts |
|
|
Premiums
Received |
|
| Outstanding call options written, at beginning of period |
|
650 |
|
|
$ |
2,121,886 |
|
| Options written |
|
1,950 |
|
|
|
7,055,490 |
|
| Options closed |
|
(1,725 |
) |
|
|
(6,147,104 |
) |
| Options expired |
|
(225 |
) |
|
|
(912,050 |
) |
|
|
|
|
|
|
|
|
| Outstanding call options written, at end of period |
|
650 |
|
|
$ |
2,118,222 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
| 12 |
|
NASDAQ PREMIUM INCOME & GROWTH FUND INC. |
|
JUNE 30, 2010 |
|
|
Notes to Financial Statements (unaudited) (concluded)
4. Common Stock Transactions:
The Fund’s Board of Directors has authorized the Fund to issue 100,000,000 shares of stock par value $.001 per share, all of which were initially classified as
Common Stock. The Board of Directors is authorized, however, to classify and reclassify any unissued shares of Common Stock without approval of the holders of Common Stock.
Shares issued and outstanding during the six months ended June 30, 2010 remained constant. Shares issued and outstanding during year ended December 31,
2009 increased $155,901 from dividend reinvestments.
5. Capital Loss Carryforward:
As of December 31, 2009, the Fund had net capital loss carryforward of $18,700,257, of which $4,607,477 expires in 2015 and $14,092,780 expires in 2017. This
amount will be available to offset like amounts of any future taxable gains.
6. Other Matters:
At a meeting held on March 16, 2010, the board of the Fund amended and restated the Fund’s bylaws to provide the board with greater discretion in setting
the date of the Fund’s annual meeting. As a result of this change, the board has the flexibility to set the annual meeting date in any month of the year. Previously, the bylaws required the Fund to hold its annual meeting in April of each year.
The amended bylaws also clarify the board’s ability to postpone or cancel a meeting of stockholders.
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
NASDAQ PREMIUM INCOME & GROWTH FUND INC. |
|
JUNE 30, 2010 |
|
13 |
Approval of New Management Agreement and New Subadvisory Agreement
IQ Investment Advisers LLC (“IQ Advisors”), the investment adviser to the Fund, has determined to
discontinue the portion of its business involving the provision of investment management services to registered investment companies, such as the Fund. In light of this decision, IQ Advisors reviewed different options for the ongoing management of
the Fund and, at the request of the Fund’s Board of Directors (the “Board”), evaluated several investment advisers as potential managers for the Fund. Upon careful review, IQ Advisors recommended that the Board consider Nuveen Asset
Management (“NAM” or “Nuveen”) as a candidate to assume the role of investment adviser to the Fund.
At an in-person meeting held on
June 18, 2010, the members of the Board, all of whom are not “interested persons,” as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended (the “1940 Act”), of the Fund (the “Independent
Directors”), approved an investment management agreement between the Fund and Nuveen (the “New Management Agreement”). The members of the Board have also approved for the Fund a subadvisory agreement between Nuveen and Nuveen HydePark
Group, LLC (“Nuveen HydePark”), the Fund’s current subadviser (the “New Subadvisory Agreement”).
Board Considerations in
Approving the New Management Agreement
The New Management Agreement was approved by the Board on behalf of the Fund after consideration of all
factors determined to be relevant to its deliberations, including those discussed below. The Board authorized the submission of the New Management Agreement for consideration by the Fund’s stockholders.
The Approval Process — At telephonic and in-person meetings held in April, May and June of this year, the Board discussed the possible transition of services
from IQ Advisors to Nuveen and information regarding the services to be provided by Nuveen under the proposed New Management Agreement for the Fund. During these meetings, the Board discussed aspects of the proposal with senior Nuveen
representatives and independent board members of funds in the Nuveen registered fund complex.
In preparation for their consideration of the New
Management Agreement, the Board received, in response to a written due diligence request prepared by the Board and its independent legal counsel and provided to Nuveen and IQ Advisors, a significant amount of information covering a range of issues
and received, in response to their additional
requests, further information in advance of and at the June 18, 2010 in-person Board meeting. To assist the Board in its consideration of the New Management Agreement, Nuveen provided
materials and information about itself, including its history, management, investment, risk management and compliance capabilities and processes, and financial condition. In addition, the Board consulted with its independent legal counsel and Fund
counsel on numerous occasions, discussing, among other things, the legal standards and certain other considerations relevant to the Board’s deliberations.
In considering whether to approve the New Management Agreement, the Board reviewed materials from counsel to the Fund and from Nuveen and IQ Advisors and its
affiliates, including: (i) information concerning the services rendered to the Fund by IQ Advisors and its affiliates and information concerning the services to be rendered to the Fund by Nuveen and its affiliates; (ii) a report by
management regarding the due diligence IQ Advisors and its affiliates conducted on Nuveen; (iii) information regarding the sharing of potential economies of scale; (iv) a memorandum outlining the legal duties of the Board under the 1940
Act; and (v) information from Lipper, Inc. (“Lipper”) comparing the Fund’s fee rate for advisory and administrative services to those of other closed-end funds selected by Lipper.
The Board did not identify any particular information that was all-important or controlling, and each Director may have attributed different weights to the various
factors discussed below. The Directors, all of whom are Independent Directors, concluded that the terms of the New Management Agreement are appropriate, that the fee rates to be paid are reasonable in light of the services to be provided to the
Fund, and that the New Management Agreement should be approved and recommended to Fund stockholders. In voting to approve the New Management Agreement, the Board considered in particular the following factors:
The nature, extent and quality of services to be provided by Nuveen and its affiliates — In connection with their consideration of the New Management
Agreement, the Board considered representations by Nuveen that there would be no diminution in the scope of services required of or provided by Nuveen under the New Management Agreement for the Fund as compared to the scope of services provided by
IQ Advisors under the Fund’s current investment management agreement with IQ Advisors (the “Current Management Agreement”). In reviewing the scope of these services at the May and June 2010 Board meetings, the Board considered
Nuveen’s
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
| 14 |
|
NASDAQ PREMIUM INCOME & GROWTH FUND INC. |
|
JUNE 30, 2010 |
|
|
Approval of New Management Agreement and New Subadvisory Agreement (continued)
investment philosophy and experience, noting that Nuveen is a well-recognized closed-end fund sponsor. The Board also considered Nuveen’s investment processes and strategies, matters related
to Nuveen’s portfolio transaction policies and procedures, and Nuveen’s compliance program and its compliance record with respect to the funds in the IQ Advisors fund complex for which it or its affiliate serves as subadviser. The Board
noted representations by Nuveen that it reports to its funds’ boards of directors about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the boards, and has made appropriate
officers available as needed to provide further assistance with these matters. The Board noted that it expects that Nuveen will make these reports and have these discussions with respect to the Fund if it were to assume management of the Fund. The
Board also reviewed information regarding Nuveen sponsored closed-end funds, to the extent such funds had similar investment objectives and strategies to the Fund. The Board noted that, except for the Nuveen-sponsored closed-end funds identified to
the Board, Nuveen does not operate or manage any other accounts that are similar to the Fund. In addition to the investment management services to be provided to the Fund, the Board, at the June 18, 2010 Board meeting, considered that Nuveen
also will provide certain non-management services to the Fund (such as marketing services and assistance in meeting legal and regulatory requirements) and other services necessary for the operation of the Fund.
In connection with the investment management services to be provided under the New Management Agreement, the Board took into account detailed discussions with
representatives of Nuveen at the April and May 2010 Board meetings regarding the management of the Fund.
The Board noted the representations of IQ
Advisors and Nuveen that the transition was not expected to have any adverse effect on the operations of the Fund. The Board also considered that the Fund and its stockholders may benefit from association with Nuveen, a well-recognized closed-end
fund sponsor, and Nuveen’s closed-end fund market support program as well as Nuveen’s financial advisor and shareholder service platform. The Board discussed Nuveen’s current financial condition and ownership structure.
Based on the discussions held and the materials presented at the April, May and June 2010 Board meetings, the Board determined that the nature, extent and quality
of the services to be provided by Nuveen under the New Management Agreement was comparable to the services provided by IQ
Advisors under the Current Management Agreement and that the Board expects that the quality of such services will continue to be appropriate.
Investment performance of the Fund and Nuveen — The Board considered that if Nuveen is approved by stockholders as the investment adviser to the Fund, the
investment operations of the Fund were expected to continue to be conducted by the same portfolio management teams as are currently in place. The Board also noted that the investment operations of the Fund, including its investment objective and
investment strategies, are not expected to change as a result of the transition from IQ Advisors to Nuveen.
The Board considered the investment
strategies used by the Fund. The Board also considered the innovative nature of the Fund. The Board, taking into account information it received regarding Nuveen-sponsored closed-end funds with similar investment objectives and strategies, noted the
specialized nature of the Fund’s investment strategy and the inherent limitations in comparing the Fund’s investment performance to that of another investment company. The Board reviewed the Fund’s investment performance and compared
such performance to the performance of a relevant reference index. The Board discussed the degree to which the Fund was achieving its investment objective. In particular, the Board noted that the Fund generally has performed as expected. As a result
of their discussions and review, the Board concluded that the Fund’s performance was satisfactory.
The Board considered the history, experience,
resources and strengths of Nuveen and its affiliates in managing its own closed-end fund complex and noted the historical performance of Nuveen or its affiliate as a subadviser to certain funds in the IQ Advisors fund complex. The Board noted that
Nuveen’s experience in managing its existing closed-end funds would translate to its management role for the Fund. The Board further noted that Nuveen is well positioned to assume management of the Fund given its current and historical
relationship with the Fund and other funds in the IQ Advisors fund complex.
Cost of services provided and profits to be realized by Nuveen and its
affiliates from the relationship with the Fund — The Board discussed the potential for Nuveen to realize a profit from management of the Fund based on the proposed fees payable to Nuveen and its affiliates, and other sources of potential
revenue and expense to Nuveen and its affiliates from the Fund’s operations. The Board also discussed with Fund management and representatives of Nuveen the
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NASDAQ PREMIUM INCOME & GROWTH FUND INC. |
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JUNE 30, 2010 |
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15 |
Approval of New Management Agreement and New Subadvisory Agreement (continued)
potential ancillary benefits Nuveen might receive by managing the Fund. The Board reviewed information regarding potential economies of scale (as discussed below). It was noted that it was not
possible to accurately predict the degree of profitability Nuveen might gain from its relationship with the Fund. The Board also noted that the new directors will be in a better position to evaluate the benefits Nuveen will receive from association
with the Fund following the transition.
In evaluating the costs of the services to be provided by Nuveen under the New Management Agreement, the Board
considered, among other things, whether advisory fee rates or other expenses would change as a result of Nuveen serving as investment adviser to the Fund. The Board noted that the New Management Agreements are similar to the Current Management
Agreements. The Board also considered that the maximum fee rate payable to Nuveen under the New Management Agreements would be the same or lower than the fee rate payable to IQ Advisors under the Current Management Agreements. In addition, the Board
further noted that Nuveen has agreed, through the earlier of August 1, 2012 or the termination of the New Management Agreement, to reimburse expenses (including management fees and other expenses) so that the Fund’s total operating expense
ratio does not exceed the Fund’s total operating expense ratio for its 2009 fiscal year.
The extent to which economies of scale would be realized
as the Fund grows and whether fee levels would reflect such economies of scale — The Board reviewed information regarding potential economies of scale or other efficiencies that may result from the Fund’s potential association with
Nuveen’s large closed-end fund complex. The Board noted that the New Management Agreements provide for breakpoints in the Fund’s investment management fee rates as the assets of the Fund and the assets held by the funds in the Nuveen
registered fund complex increase. The Board also noted that the Fund, as a closed-end fund, generally does not gain additional assets through sales of Fund shares. The Board concluded that the structure of the investment management fee rates, with
the breakpoints for the Fund under the New Management Agreements, reflected appropriate sharing of potential economies of scale with the Fund’s stockholders.
Comparison of services rendered and fees paid to those under other investment advisory contracts, such as contracts of the same and other investment advisers or
other clients — The Board considered representations by IQ Advisors and Nuveen that the maximum fee rate payable to
Nuveen under the New Management Agreement would be the same or lower than the fee rate payable to IQ Advisors under the Current Management Agreement. In addition, the Board noted that Nuveen
agreed, through the earlier of August 1, 2012 or the termination of the New Management Agreement, to reimburse expenses (including management fees and other expenses) so that the Fund’s total operating expense ratio does not exceed the
Fund’s total operating expense ratio for its 2009 fiscal year. The Board also considered that the New Management Agreement contained breakpoints in the fee schedule, allowing for the possibility that the advisory fee rate paid by the Fund may
decline in the future.
In considering the compensation to be paid to Nuveen, the Board referred to the materials presented and discussions held in
connection with their considerations at the May 14, 2010 and June 18, 2010 Board meetings in connection with the New Management Agreement. The Board noted that in connection with such considerations it had received and reviewed a
comparison of the fees paid under the New Management Agreement to the contracts of other investment advisers with respect to other closed-end investment companies. In particular, the Board noted that it evaluated the Fund’s contractual fee rate
for advisory and administrative services as compared to the contractual fee rate of other closed-end funds selected by Lipper. The Board was provided information from Lipper that showed that the maximum contractual management fee rate to be paid
under the New Management Agreement is lower than the median contractual management fee rate charged by the Fund’s peers, as identified by Lipper. The Board also reviewed information regarding Nuveen-sponsored closed-end funds, to the extent
such funds had similar investment objectives and strategies to the Fund. The Board reviewed information received from Nuveen regarding similar funds managed by Nuveen and noted that the fee rates payable by these funds were generally comparable to
the fee rates proposed for the Fund.
Taking into account the totality of the information and materials provided to it at the May 14, 2010,
June 18, 2010 and other prior meetings, the Board concluded that the management fee rates proposed under the New Management Agreement were reasonable for the services being rendered and in comparison to the data reflected in the Lipper
materials.
Conclusion — The Board examined the totality of the information provided and did not identify any single factor discussed previously as
controlling. After deliberating in executive session, the Board, which consists solely of
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| 16 |
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NASDAQ PREMIUM INCOME & GROWTH FUND INC. |
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JUNE 30, 2010 |
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Approval of New Management Agreement and New Subadvisory Agreement (continued)
Independent Directors, approved the New Management Agreement, concluding that the advisory fee rate was reasonable in relation to the services to be provided and that the New Management Agreement
was in the best interests of the stockholders.
Board Considerations in Approving the New Subadvisory Agreement
In preparation for its consideration of the New Subadvisory Agreement, the Board received, in response to a written due diligence request prepared by the Board and
its independent legal counsel and provided to Nuveen and IQ Advisors, a significant amount of information covering a range of issues and received, in response to its additional requests, further information in advance of and at the June 18,
2010 in-person Board meeting. In addition to the information it received regarding the New Management Agreement, in considering whether to approve the New Subadvisory Agreement, the Board reviewed materials from counsel to the Fund and from Nuveen
HydePark and IQ Advisors and its affiliates, including: (i) information concerning the services currently rendered to the Fund by the subadviser and information concerning the services to be rendered to the Fund by Nuveen and its affiliates,
which are expected to be substantially similar to those services currently provided; (ii) reports by management regarding the due diligence IQ Advisors and its affiliates conducted on Nuveen HydePark; and (iii) a memorandum outlining the
legal duties of the Board under the 1940 Act.
The Board did not identify any particular information that was all-important or controlling, and each
Director may have attributed different weights to the various factors discussed below. The Directors, all of whom are Independent Directors, concluded that the terms of the New Subadvisory Agreement are appropriate, that the fee rate to be paid is
reasonable in light of the services to be provided to the Fund, and that the New Subadvisory Agreement should be approved and recommended to Fund stockholders. In voting to approve the New Subadvisory Agreement, the Board considered in particular
the following factors:
The nature, extent and quality of services to be provided by the subadviser — In reviewing the New Subadvisory Agreement,
the Board referred to the materials presented and discussions held in various meetings in April, May and June 2010. The Board focused on the experience of the subadviser in managing registered funds, including the Fund. The Board considered the
reputation and investment experience of the subadviser and its investment professionals who have served as portfolio managers and would continue to serve as
portfolio managers. The Board noted that it had met with officers of IQ Advisors and members of the subadviser’s portfolio management team to discuss the management of the Fund’s
investments at recent Board meetings. The Board took into account the annual due diligence investment review of the subadviser. The Board noted that it had discussed the Fund’s investment strategy with representatives from the subadviser,
including discussions regarding the premises underlying the Fund’s investment strategy, its efficacy and potential risks. The Board also considered the favorable history, reputation and background of the subadviser and its personnel, and the
substantial experience of the subadviser’s portfolio management team. The Board considered the compliance program of the subadviser and the report of the chief compliance officer of the Fund. Following consideration of this information, and
based on management presentations during the April, May and June 2010 Board meetings, the Board concluded that the nature, extent and quality of services provided to the Fund by the subadviser under the Fund’s current investment subadvisory
agreement (the “Current Subadvisory Agreement”) were of a high quality and that substantially similar services would be provided by the same personnel pursuant to the New Subadvisory Agreement.
Investment performance of the Fund and the subadviser — The Board received and considered information about the Fund’s investment performance in light of
its stated investment objective. The Board noted that the services to be provided pursuant to the New Subadvisory Agreement would be performed by the same personnel as under the Current Subadvisory Agreement. In this regard, the Board noted that
they receive periodic reports regarding the investment performance of the Fund and discuss Fund performance with the portfolio management teams of each subadviser at various times throughout the year. The Board made the determinations discussed
above under “Board Considerations in Approving the New Management Agreement.” As a result of its discussions and review, the Board concluded that the Fund’s performance was satisfactory.
Cost of services to be provided and profits to be realized by the subadviser from the relationship with the Fund — Drawing on information received from, and
discussions held with, the subadviser at previous meetings, the Board discussed the potential for the subadviser to realize a profit as a result of serving as subadviser to the Fund. The Board noted that the fee rate under the New Subadvisory
Agreement was identical to the fee rate under the applicable Current Subadvisory Agreement and that the services to be provided
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NASDAQ PREMIUM INCOME & GROWTH FUND INC. |
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JUNE 30, 2010 |
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17 |
Approval of New Management Agreement and New Subadvisory Agreement (concluded)
under the New Subadvisory Agreement were expected to be substantially similar to the subadvisory services currently provided. The Board noted that it was not possible to accurately predict the
degree of profitability the subadviser might gain from its relationship with the Fund. The Board then considered the potential benefits to the subadviser and its affiliates from their relationship with the Fund, including the reputational benefits
from managing the Fund. The Board concluded that the potential benefits to the subadviser were consistent with those obtained by other subadvisers in similar types of arrangements.
The extent to which economies of scale would be realized as the Fund grows and whether fee levels would reflect such economies of scale — The Board noted
discussions at previous meetings regarding economies of scale and that the fee rate under the New Subadvisory Agreement is identical to the fee rate under the Current Subadvisory Agreement. The Board also took into account the discussion described
above under “Board Considerations in Approving the New Management Agreement — The extent to which economies of scale would be realized as the Fund grows and whether fee levels would reflect such economies of scale.”
After considering the totality of the information and materials provided to it at the June 18, 2010 meeting and prior meetings, the Board determined that no
changes were currently necessary to the Fund’s subadvisory fee structure.
Comparison of services rendered and fees paid to those under other
subadvisory contracts, such as contracts of the same and other investment advisers or other clients — The Board considered that the proposed fee rate under the New Subadvisory Agreement is identical to the fee rate payable to the subadviser
under the Current Subadvisory Agreement. In considering the compensation to be paid to the subadviser, noting that no changes to such compensation from that payable under the Current Subadvisory Agreement were proposed, the Board referred to the
materials presented and discussions held in connection with its consideration of the continuation of the Current Subadvisory Agreement at prior Board meetings and concluded that such information continued to be relevant to their current
deliberations. The Board also reviewed information regarding Nuveen sponsored closed-end funds, to the extent such funds had similar investment objectives and strategies to the Fund. The Board noted the earlier discussion regarding the fee rates of
similar finds managed by Nuveen. The Board noted that the subadvisory fee rate with respect to the Fund was at a level that continued to be reasonable.
The Board discussed the services rendered by the subadviser and determined that such services were consistent with
those provided by subadvisers generally and sufficient for the management of the Fund. Taking into account the totality of the information and materials provided to it at the June 18, 2010 meeting and prior meetings, the Board concluded that
the subadvisory fee proposed under the New Subadvisory Agreement is reasonable for the services to be rendered.
Conclusion — The Board examined the
totality of the information they were provided and did not identify any single factor discussed previously as controlling. After deliberating in executive session, the Board, which consists solely of the Independent Directors, approved the New
Subadvisory Agreement, concluding that the subadvisory fee rate was reasonable in relation to the services to be provided and that the New Subadvisory Agreement was in the best interests of the stockholders.
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| 18 |
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NASDAQ PREMIUM INCOME & GROWTH FUND INC. |
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JUNE 30, 2010 |
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NASDAQ PREMIUM INCOME & GROWTH FUND INC. |
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JUNE 30, 2010 |
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19 |
Directors and Officers
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Paul Glasserman, Director and Chairman of the Board |
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Custodian |
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Steven W. Kohlhagen, Director and Chairman of the Audit Committee |
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State Street Bank and Trust Company |
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Laura S. Unger, Director and Chairperson of the Nominating & Corporate
Governance Committee |
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P.O. Box 351 Boston, MA 02101 |
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William J. Rainer, Director |
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Justin C. Ferri, President |
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Transfer Agent |
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James E. Hillman, Vice President and Treasurer |
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BNY Mellon Shareowner Services |
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Colleen R. Rusch, Vice President and Secretary |
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480 Washington Boulevard |
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Michelle H. Rhee, Chief Legal Officer |
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Jersey City, NJ 07310 |
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Robert M. Zakem, Chief Compliance Officer |
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Jeff E. McGoey, Vice President |
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Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third
quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the SEC’s website at http://www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the SEC’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.
Electronic Delivery
The Fund offers electronic delivery of communications to its stockholders. In order to receive this service, you must register your account and
provide us with e-mail information. To sign up for this service, simply access this website at http://www.icsdelivery.com/live and follow the instructions.
When you visit this site, you will obtain a personal identification number (PIN). You will need this PIN should you wish to update your e-mail
address, choose to discontinue this service and/or make any other changes to the service. This service is not available for certain retirement accounts at this time.
Contact Information
For more information regarding the Fund, please visit www.IQIAFunds.com or contact us at 1-877-449-4742.
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| Item 2 – |
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Code of Ethics – Not Applicable to this semi-annual report |
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| Item 3 – |
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Audit Committee Financial Expert – Not Applicable to this semi-annual report |
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| Item 4 – |
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Principal Accountant Fees and Services – Not Applicable to this semi-annual report |
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| Item 5 – |
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Audit Committee of Listed Registrants – Not Applicable to this semi-annual report |
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| Item 6 – |
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Investments (a) The
registrant’s Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this form. (b) Not
Applicable since no such divestments occurred during the semi-annual period covered since the last report on Form N-CSR. |
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| Item 7 – |
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Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies –
Not Applicable to this semi-annual report |
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| Item 8 – |
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Portfolio Managers of Closed-End Management Investment Companies –
(a) Not Applicable to this semi-annual report
(b) Not Applicable |
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| Item 9 – |
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Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated
Purchasers – Not Applicable |
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| Item 10 – |
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Submission of Matters to a Vote of Security Holders – The registrant’s Nominating Committee will
consider nominees to the board of directors recommended by shareholders when a vacancy becomes
available. Shareholders who wish to recommend a nominee should send nominations that include
biographical information and set forth the qualifications of the proposed nominee to the registrant’s
Secretary. There have been no material changes to these procedures. |
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| Item 11 – |
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Controls and Procedures |
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| 11(a) – |
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The registrant’s principal executive and principal financial officers or persons performing similar functions
have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under
the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90
days of the filing of this report based on the evaluation of these controls and procedures required by Rule
30a-3(b) under the 1940 Act and Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended. |
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| 11(b) – |
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There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-
3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report
that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control
over financial reporting. |
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| Item 12 – |
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Exhibits attached hereto |
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| 12(a)(1) – |
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Code of Ethics – Not Applicable to this semi-annual report |
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| 12(a)(2) – |
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Certifications – Attached hereto |
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| 12(a)(3) – |
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Not Applicable |
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| 12(b) – Certifications – Attached hereto |
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.
NASDAQ Premium
Income & Growth Fund Inc.
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| By: |
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/s/ Justin C.
Ferri |
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Justin C. Ferri |
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Chief Executive Officer of |
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NASDAQ Premium Income & Growth Fund Inc. |
Date:
August 19, 2010
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.
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| By: |
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/s/ Justin C.
Ferri |
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Justin C. Ferri |
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Chief Executive Officer (principal executive officer) of |
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NASDAQ Premium Income & Growth Fund Inc. |
Date:
August 19, 2010
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| By: |
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/s/ James E.
Hillman |
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James E. Hillman |
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Chief Financial Officer (principal financial officer) of |
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NASDAQ Premium Income & Growth Fund Inc. |
Date:
August 19, 2010