sof_nq.htm
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


 
FORM N-Q
 
 
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY
 



Investment Company Act file number 811-07528


Special Opportunities Fund, Inc.
(Exact name of registrant as specified in charter)

 
615 East Michigan Street
 
Milwaukee, WI 53202
(Address of principal executive offices) (Zip code)


Andrew Dakos
Bulldog Investors, LLC
Park 80 West
250 Pehle Avenue, Suite 708
Saddle Brook, NJ 07663
(Name and address of agent for service)

Copy to:
Thomas R. Westle, Esp.
Blank Rome LLP
The Chrysler Building
405 Lexington Avenue
New York, NY 10174

1-877-607-0414
Registrant's telephone number, including area code


Date of fiscal year end: December 31, 2013


Date of reporting period:  September 30, 2013

 
 
 
 
 
 
Item 1. Schedule of Investments.
 
Special Opportunities Fund, Inc.
            
Portfolio of Investments
            
September 30, 2013 (Unaudited)
            
             
INVESTMENT COMPANIES - 96.93%
  
Shares
    
Fair Value
  
Closed-End Funds - 77.30%
            
Aberdeen Israel Fund, Inc.
     74,611     $ 1,146,100  
Adams Express Co.
     351,652       4,356,968  
Advance Developing Markets Fund Ltd. (a)(h)
     187,317       1,273,646  
Advent Claymore Enhanced Growth & Income Fund
     23,295       227,825  
AllianceBernstein Income Fund, Inc.
     196,041       1,380,129  
AllianzGI International & Premium Strategy Fund (g)
     15,941       168,337  
Alpine Total Dynamic Dividend Fund
     654,931       2,632,823  
American Select Portfolio, Inc.
     76,753       737,596  
American Strategic Income Portfolio II
     229,651       1,862,470  
American Strategic Income Portfolio III
     562,207       3,890,472  
ARC Capital Holdings Ltd. (a)(h)
     726,356       355,914  
Asia Tigers Fund, Inc.
     3,970       46,008  
Bancroft Fund, Ltd.
     79,335       1,421,683  
Blackrock Latin American Investment Trust Plc (h)
     80,000       587,988  
BlackRock New Energy Investment Trust Plc (h)
     308,043       201,971  
Boulder Growth & Income Fund, Inc.
     428,406       3,268,738  
Boulder Total Return Fund, Inc. (a)
     184,149       4,014,448  
Central Europe, Russia, & Turkey Fund, Inc.
     16,229       526,144  
Central Securities Corp.
     123,123       2,884,772  
Clough Global Equity Fund
     199,856       3,002,836  
Clough Global Opportunities Fund
     29,681       381,994  
Dividend & Income Fund, Inc.
     4,060       58,302  
DPF India Opportunities Fund (h)
     432,505       1,310,049  
DWS Global High Income Fund, Inc.
     21,699       173,809  
DWS High Income Opportunities Fund, Inc.
     8,359       118,280  
DWS RREEF Real Estate Fund II, Inc. (a)(c)(f)(g)
     201,612       28,831  
DWS RREEF Real Estate Fund, Inc. (a)(c)(f)(g)
     126,913       11,803  
Eaton Vance Risk-Managed Diversified Equity Income Fund
     1,233,186       13,330,741  
Ellsworth Fund Ltd.
     55,094       433,595  
The European Equity Fund, Inc.
     5,430       44,135  
First Opportunity Fund, Inc. (a)
     279,106       2,310,998  
Gabelli Global Utility & Income Trust
     7,523       147,827  
Gabelli Healthcare & WellnessRx Trust
     2,925       29,981  
General American Investors Co., Inc.
     184,994       6,315,695  
Helios Strategic Income Fund, Inc.
     127,822       811,670  
The India Fund, Inc.
     79,347       1,519,495  
INVESCO Asia Trust Plc (h)
     191,737       482,679  
JP Morgan Asian Investment Trust Plc (h)
     31,111       102,495  
Juridica Investments Ltd. (h)
     495,258       1,186,631  
Kubera Cross-Border Fund Ltd. (h)
     380,604       177,742  
Liberty All-Star Equity Fund
     1,858,339       10,053,614  
Marwyn Value Invesors Ltd. (a)(h)
     165,122       458,449  
Montgomery Street Income Securities, Inc.
     1,555       24,429  
The New Ireland Fund, Inc. (a)
     13,574       159,902  
Nuveen Multi-Currency Short-Term Government Income Fund
     159,549       1,672,074  
Pacific Alliance Asia Opportunities Fund Ltd. (a)(h)
     170,108       218,589  
Royce Micro-Cap Trust, Inc.
     440,426       5,157,388  
Royce Value Trust, Inc.
     237,206       3,821,389  
Swiss Helvetia Fund, Inc.
     477,970       6,796,733  
Terra Catalyst Fund (h)
     29,028       23,144  
The Thai Capital Fund, Inc. (c)(f)
     106,942       126,192  
The Thai Fund, Inc.
     134,389       2,670,309  
Tri-Continental Corporation
     387,319       7,095,684  
Virtus Total Return Fund
     4,069       16,032  
Western Asset Inflation Management Fund, Inc.
     47,097       773,333  
The Zweig Total Return Fund, Inc.
     404,024       5,292,714  
              107,323,595  
Closed-End Funds - Preferred Shares - 3.32%
                
Oxford Lane Capital Corp., Series 2017
     140,000       3,674,986  
Oxford Lane Capital Corp., Series 2023
     15,222       350,258  
Saratoga Investment Corp.
     23,167       583,113  
              4,608,357  
Auction Rate Preferred Securities - 4.16% (b)(c)(f)
                
BlackRock California Municipal 2018 Term Trust - Series M7,  0.098%
     69       1,638,750  
BlackRock Municipal 2018 Term Trust - Series W7,  0.131%
     58       1,377,500  
DNP Select Income Fund, Inc. - Series D, 0.000%
     18       1,512,000  
Putnam Managed Municipal Income Trust - Series C, 0.000%
     6       225,000  
Putnam Municipal Opportunities Trust - Series C, 0.000%
     6       112,500  
Western Asset Premier Bond Fund - Series M, 0.100%
     46       914,250  
              5,780,000  
Business Development Company - 9.33%
                
Equus Total Return, Inc. (a)
     106,919       202,077  
Firsthand Technology Value Fund, Inc. (a)
     219,712       5,378,550  
Gladstone Investment Corp.
     319,755       2,254,273  
Monroe Capital Corp.
     15,944       207,113  
MVC Capital, Inc.
     358,872       4,686,868  
PennantPark Floating Rate Capital Ltd.
     15,944       219,708  
              12,948,589  
Business Development Company - Preferred Shares - 2.82%
                
MVC Capital, Inc.
     155,757       3,911,058  
Total Investment Companies (Cost $118,392,999)
             134,571,599  
                 
PREFERRED STOCKS - 5.20%
                
Capital Markets - 0.81%
                
INTL FCStone, Inc.
     3,690       94,095  
Ladenburg Thalman Financial Services, Inc.
     42,983       1,031,592  
              1,125,687  
Marine - 0.12%
                
Box Ships, Inc. (h)
     6,624       168,121  
Oil, Gas & Consumable Fuels - 0.17%
                
Miller Energy Resources, Inc.
     9,316       232,900  
Real Estate Investment Trusts - 4.10%
                
Preferred Apartment Communities - Series A (c)(f)
     6,083       5,699,710  
Total Preferred Stocks (Cost $7,215,831)
             7,226,418  
                 
COMMON STOCKS - 20.00%
                
Energy, Equipment & Services - 0.98%
                
Zedi, Inc. (a)(h)
     1,984,014       1,367,555  
Healthcare Providers & Services - 0.03%
                
Healthcare Corp. of America (Acquired 10/24/2012, Cost $0) (a)(c)(j)
     10,000       45,000  
IT Services - 0.10%
                
JetPay Corp. (a)
     39,596       137,002  
Life Insurance - 2.65%
                
Imperial Holdings, Inc. (a)
     581,622       3,681,667  
Marine - 0.59%
                
Box Ships, Inc. (h)
     56,012       228,529  
Paragon Shipping, Inc. - Class A (h)
     102,017       589,658  
              818,187  
Oil, Gas & Consumable Fuels - 0.45%
                
DCP Midstream Partners LP
     12,573       624,375  
Pharmaceuticals Preparations - 0.06%
                
Myrexis, Inc.
     857,013       81,502  
Real Estate - 0.59%
                
Gyrodyne Company of America, Inc.
     10,914       817,459  
Real Estate Investment Trusts - 3.11%
                
Brookfield Property Partners LP (h)
     3,204       62,094  
Gladstone Land Corp.
     3,382       51,609  
Independence Realty Trust, Inc.
     86,442       713,147  
JAVELIN Mortgage Investment Corp.
     288,904       3,417,734  
Wheeler Real Estate Investment Trust, Inc.
     15,717       67,269  
              4,311,853  
Software - 0.24%
                
Single Touch Systems, Inc. (a)
     623,270       336,566  
Special Purpose Acquisition Vehicle - 11.20% (a)
                
Andina Acquisition Corp. (h)
     95,026       956,912  
Aquasition Corp. (h)(i)
     400,000       4,012,000  
BGS Acquisition Corp. (h)
     120,615       1,203,738  
Capitol Acquisition Corp. II
     1       10  
Capitol Acquisition Corp. II
     155,122       1,489,171  
Chart Acquisition Corp.
     124,265       1,236,437  
China VantagePoint Acquisition Co. (c)(f)(h)
     271       0  
CIS Acquisition Ltd. (h)
     144,147       1,455,885  
Collabrium Japan Acquisition Corp. (h)
     208,234       2,092,752  
Infinity Cross Border Acquisition Corp. (h)
     49,689       388,071  
Lone Oak Acquisition Corp. (c)(f)(h)
     112,297       924,204  
MedWorth Acquisition Corp.
     23,185       186,407  
Quinpario Acquisition Corp.
     91,455       933,755  
ROI Acquisition Corp. II
     57,484       578,289  
Silver Eagle Acquisition Corp.
     9,016       90,160  
              15,547,791  
Total Common Stocks (Cost $28,904,529)
             27,768,957  
                 
   
Principal
          
   
Amount
          
CORPORATE BONDS - 0.05% (b)
                
Washington Mutual Inc.
                
0.000%, 09/17/2012 (c)(d)(f)
     3,000,000       67,500  
Total Corporate Bonds (Cost $0)
             67,500  
                 
                 
PROMISSORY NOTES - 0.17% (b)
                
Symbios Holdings, Inc.
                
15.000%, 12/16/2013 (c)(f)
     450,000       –  
UBPS Secured Convertible Promissory Note
                
12.000%, 12/28/2014 (Acquired 12/28/2012, Cost $234,000) (c)(f)(j)
     234,000       234,000  
Total Promissory Notes (Cost $684,000)
             234,000  
                 
   
Shares
          
WARRANTS - 0.93% (a)
                
Andina Acquisition Corp.
                
Expiration: March 2016
     95,026       57,016  
Exercise Price: $8.00 (h)
                
Aquasition Corp.
                
Expiration: January 2018
     400,000       100,000  
Exercise Price: $11.50 (h)
                
BGS Acquisition Corp.
                
Expiration: March 2017
     120,615       25,329  
Exercise Price: $10.00 (h)
                
Capitol Acquisition Corp. II
                
Expiration: May 2016
     77,561       46,537  
Exercise Price: $11.50
                
Chart Acquisition Corp.
                
Expiration: December 2017
     124,265       65,860  
Exercise Price: $11.50
                
CIS Acquisition Ltd. - Class A
                
Expiration: December 2017
     144,147       50,451  
Exercise Price: $10.00 (h)
                
Collabrium Japan Acquisition Corp.
                
Expiration: December 2017
     208,234       58,305  
Exercise Price: $11.50 (h)
                
EveryWare Global, Inc.
                
Expiration: May 2018
     48,370       62,881  
Exercise Price: $6.00
                
Global Eagle Acquisition Corp.
                
Expiration: January 2018
     38,246       56,987  
Exercise Price: $11.50
                
Healthcare Corp. of America
                
Expiration: November 2016
     33,753       43,879  
Exercise Price: $7.50
                
Hemisphere Media Group, Inc.
                
Expiration: April 2018
     166,726       228,415  
Exercise Price: $12.00
                
Infinity Cross Border Acquisition Corp.
                
Expiration: July 2016
     301,149       180,689  
Exercise Price: $7.00 (h)
                
Integrated Drilling Equipment Holdings Corp.
                
Expiration: December 2017
     205,929       16,474  
Exercise Price: $11.50
                
Lone Oak Acquisition Corp.
                
Expiration: March 2016
     81,430       16,286  
Exercise Price: $5.00 (h)
                
Nautilus Marine Acquisition Corporation
                
Expiration: June 2016
     30,852       2,160  
Exercise Price: $11.50 (h)
                
Net Element International, Inc.
                
Expiration: October 2017
     191,697       76,679  
Exercise Price: $7.50 (c)(f)
                
Preferred Apartment Communities
                
Expiration: March 2017
     6,083       61  
Exercise Price: $9.00 (c)(f)
                
Pingtan Marine Enterprise Ltd.
                
Expiration: February 2018
     52,798       3,168  
Exercise Price: $12.00 (h)
                
Prime Acquisition Corp.
                
Expiration: March 2016
     50,142       40,114  
Exercise Price: $7.50 (h)
                
RLJ Entertainment, Inc.
                
Expiration: October 2017
     436,744       161,595  
Exercise Price: $12.00
                
Selway Capital Acquisition Corp.
                
Expiration: November 2016
     5,000       4,875  
Exercise Price: $7.50 (Acquired 10/24/2012, Cost $0) (c)(j)
                
Total Warrants (Cost $907,075)
             1,297,761  
                 
                 
MONEY MARKET FUNDS - 3.76%
                
Fidelity Institutional Government Portfolio - Class I, 0.010% (e)
     2,851,154       2,851,154  
Fidelity Institutional Tax-Exempt Portfolio - Class I, 0.010% (e)
     2,362,895       2,362,895  
Total Money Market Funds (Cost $5,214,049)
             5,214,049  
                 
Total Investments (Cost $161,318,483) - 127.04%
             176,380,284  
Liabilities in Excess of Other Assets - (0.06)%
             (82,046 )
Preferred Stock - (26.98)%
             (37,454,300 )
TOTAL NET ASSETS - 100.00%
           $ 138,843,938  
 
Percenatge are stated as a percent of net assets.
 
(a)
Non-income producing security.
(b)
The coupon rates shown represent the rates at September 30, 2013.
(c)
Fair valued securities. The total market value of these securities was $12,998,855, representing 9.36% of net assets.
(d)
Default or other conditions exist and security is not presently accruing income.
(e)
The rate shown represents the 7-day yield at September 30, 2013.
(f)
Illiquid security. The total market value of these securities was $12,948,980, representing 9.33% of net assets.
(g)
Security undergoing full liquidation with all proceeds paid out to shareholders.
(h)
Foreign-issued security.
(i)
Affiliated security.
(j)
Restricted security.
 

 
 
 
 
 
Valuation of investments—The Fund calculates its net asset value based on the current market value for its portfolio securities. The Fund normally obtains market values for its securities from independent pricing sources and broker-dealers. Independent pricing sources may use last reported sale prices or if not available the most recent bid price, current market quotations or valuations from computerized “matrix” systems that derive values based on comparable securities. A matrix system incorporates parameters such as security quality, maturity and coupon, and/or research and evaluations by its staff, including review of broker-dealer market price quotations, if available, in determining the valuation of the portfolio securities. If a market value is not available from an independent pricing source or a broker-dealer for a particular security, that security is valued at fair value as determined in good faith by or under the direction of the Fund’s Board of Directors (the “Board”). Various factors may be reviewed in order to make a good faith determination of a security’s fair value. The auction rate preferred securities and the structured life settlement notes are valued at cost, unless other observable market events occur. The purchase price, or cost, of these securities is arrived at through an arms length transaction between a willing buyer and seller in the secondary market and is indicative of the value on the secondary market. Current transactions in similar securities in the marketplace are evaluated. Factors for other securities may include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; and changes in overall market conditions. If events occur that materially affect the value of securities between the close of trading in those securities and the close of regular trading on the New York Stock Exchange, the securities may be fair valued. The amortized cost method of valuation, which approximates market value, generally is used to value short-term debt instruments with sixty days or less remaining to maturity, unless the Board or its delegate determines that this does not represent fair value.

The Fund has adopted fair valuation accounting standards that establish an authoritative definition of fair value and set out a hierarchy for measuring fair value. These standards require additional disclosures about the various input and valuation techniques used in measuring fair value. Fair value inputs are summarized in the three broad levels listed below:

Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access.

Level 2—Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.

Level 3—Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

The Fund adopted Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2011-04 (“ASU 2011-04”), Fair Value Measurement: Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRS, which, among other things, clarifies existing disclosure requirements provided by ASC 820 regarding the level of disaggregation and the inputs and valuation techniques used to measure fair value.

The significant unobservable inputs used in fair value measurement of the Fund’s investment companies, corporate bonds, promissory notes, and structured finance notes are (1) cost and (2) indicative bids or price ranges from dealers, brokers, or market makers. Significant changes in any of these inputs in isolation may result in a change in higher fair value measurement.

In accordance with procedures established by the Fund’s Board of Directors, the Adviser shall initially value non-publicly-traded securities (for which a current market value is not readily available) at their acquisition cost less related expenses, where identifiable, unless and until the Adviser determines that such value does not represent fair value.

The Adviser sends a memorandum to the Chairman of the Valuation Committee with respect to any non-publicly-traded securities that are valued using a method other than cost detailing the reason, factors considered, and impact on the Fund’s NAV. If the Chairman determines that such fair valuation(s) require the involvement of the Valuation Committee, a special meeting of the Valuation Committee is called as soon as practicable to discuss such fair valuation(s). The Valuation Committee of the Board consists of at least two non-interested Directors, as defined by the Investment Company Act of 1940.

At each regular quarterly Board meeting, the Adviser delivers a written report (the “Quarterly Report”) to the Board regarding any recommendations of fair valuation during the past quarter, including fair valuations which have not changed. The Board reviews the Quarterly Report and discusses the valuation of the fair valued securities.

The Valuation Committee reviews all Quarterly Reports and any other interim reports, and reviews and approves the valuation of all fair valued securities. This review includes a review and discussion of an updated fair valuation summary with appropriate levels of representatives of the Adviser’s management.
 

 
 
 
 
 
The following is a summary of the fair valuations according to the inputs used as of September 30, 2013 (Unaudited) in valuing the Fund's investments:
                         
   
Quoted Prices in Active Markets for Identical Investments (Level 1)
    
Significant Other Observable Inputs Investments
(Level 2)
    
Unobservable Inputs (Level 3)
    
Total
  
 
 
Investment Companies
   $ 128,423,888     $ 200,885     $ 5,946,826     $ 134,571,599  
Preferred Stocks
     1,432,613       94,095       5,699,710       7,226,418  
Common Stocks
     21,131,297       5,668,456       969,204       27,768,957  
Corporate Bonds
     -       -       67,500       67,500  
Promissory Notes
     -       -       234,000       234,000  
Warrants
     771,639       521,186       4,936       1,297,761  
Money Market Funds
     5,214,049       -       -       5,214,049  
Total
   $ 156,973,486     $ 6,484,622     $ 12,922,176     $ 176,380,284  
 
 
Level 3 Reconciliation Disclosure
The following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
 
Category
  
Balance
as of 12/31/2012
    
Acquisitions
    
Dispositions
    
Realized Gain
    
Change
in unrealized appreciation (depreciation)
    
Transfers into
Level 3
    
Balance
as of
9/30/2013
  
Closed End Funds
   $ 40,633     $ -     $ (1,065,569 )   $ -     $ (103,306 )   $ 1,295,068     $ 166,826  
Auction Rate Preferred Securities
     5,876,750       1,512,000       (1,825,000 )     278,313       (62,063 )     -       5,780,000  
Preferred Stock
     -       5,657,129       -       -       42,581       -       5,699,710  
Common Stock
     20,101       45,000       (20,101 )     -       -       -       45,000  
Special Purpose Acquisition Vehicles
     -       250,331       -       -       (138,177 )     812,050       924,204  
Corporate Bonds
     15,000       -       -       -       52,500       -       67,500  
Convertible Notes
     100,000       -       (100,000 )     -       -       -       -  
Promissory Notes
     459,000       -       -       -       (225,000 )     -       234,000  
Structured Life Settlement Notes
     188,321       -       (188,321 )     -       -       -       -  
Warrants
     -       4,936       -       -       -       -       4,936  
    $ 6,699,805     $ 7,469,396     $ (3,198,991 )   $ 278,313     $ (433,465 )   $ 2,107,118     $ 12,922,176  
 
 
The following table presents additional information about valuation methodologies and inputs used for investments that are measured at fair value and categorized within Level 3 as of September 30, 2013:
 
   
Fair Value
September 30, 2013
  
Valuation
Methodologies
  
Unobservable
Input(1)
  
Impact to Valuation
from an increase in Input(2)
Closed End Funds
   $ 166,826  
Market Transactions Approach
  
Discount to Last Reported
Net Asset Value
  
Decrease
Auction Rate Preferred Securities
     5,780,000  
Market Comparables
  
Comparability Adjustments/ Broker Indications/ Company Announcements
  
Increase
Preferred Stock
     5,699,710  
Cost
  
Market Assessments/
Financial Assessments
  
Increase
Common Stock
     45,000  
Market Transactions Approach
  
Discount to Market Price for
Share Restrictions
  
Decrease
Special Purpose Acquisition Vehicles
     924,204  
Market Transactions Approach
  
Adjustments for Dividends and
Announcements by Company
  
Increase
Corporate Bonds
     67,500  
Market Transactions Approach
  
Broker Bids
  
Increase
Promissory Notes
     234,000  
Cost
  
Terms of the Note/ Financial Assessments/ Company Announcements
  
Increase
Warrants
     4,936  
Market Transactions Approach
  
Discount to Market Price for
Share Restrictions
  
Decrease
 
(1)
In determining certain of these inputs, management evaluates a variety of factors including economic conditions, foreign exchange rates, industry and market developments, market valuations of comparable companies and company specific developments includin
   
(2)
This column represents the directional change in the fair value of the Level 3 investments that would result from an increase to the corresponding unobservable input. A decrease to the unobservable input would have the opposite effect.
 
 

 
 
 
 
The cost basis of investments for federal income tax purposes at September 30, 2013 was as follows*:
 
Cost of investments
   $ 161,318,483  
Gross unrealized appreciation on
      investments   
     20,640,073  
Gross unrealized depreciation on
      investments 
     (5,578,272 )
Net unrealized appreciation  
   $ 15,061,801  
 
* Because tax adjustments are calculated annually, the above table reflects the tax adjustments outstanding at the Fund’s previous fiscal year end.  For the previous fiscal year’s federal income tax information, please refer to the Notes to Financial Statements section in the Fund’s most recent semi-annual or annual report.

 
 
 
 
 
 
Special Opportunities Fund
 
The fair value of derivative instruments as reported within this Schedule of Investments as of September 30, 2013:
 
Derivatives not accounted for
as hedging instruments
     Statement of Assets &
Liabilities Location
   Value  
Equity Contracts - Warrants   Investments, at value    $  1,297,761  
 
 
The effect of derivative instruments on income for the period ended September 30, 2013:
 
   
Amount of Realized Gain on Derivatives Recognized in Income
  
Derivatives not accounted for
as hedging instruments
  
Statement of Operations
Location
  Value  
Equity Contracts - Warrants  
Net Realized Gain
    $ 137,217  
   
on Investments
        
 
   
Change in Unrealized Appreciation on Derivatives Recognized in Income
  
Derivatives not accounted for
as hedging instruments
  
Statement of Operations
Location
  Value  
Equity Contracts - Warrants  
Net change in unrealized
    $ 484,712  
   
appreciation of investments
        
 
 
 
 
 
 
 
The following issuer is affiliated with the Fund; that is, the Fund held 5% or more of the outstanding Voting shares during the period ended December 31, 2012 through September 30, 2013.  As defined in Section (2)(a)(3) of the Investment Company Act of 1940, such issuers are:
                                 
Issuer Name
  
Share Balance
at
Dec. 31,
2012
  
Additions
  
Reductions
  
Share Balance
at
Sept. 30,
2013
  
Realized
Gain
  
Dividend
Income
  
Value
at
Sept. 30,
2013
  
Acquisition
Cost
Aquasition Corp.*
  
400,000
  
                    -
  
                         -
  
400,000
  
                   -
  
                   -
  
4,012,000
  
3,915,747
                                 
                                 
* Aquasition Corp. is a Special Purpose Acquisition Company (SPAC). A SPAC is a publicly-traded buyout company that raises money in order to pursue the acquisition of an existing company.
 
 
 
 
 
 
 
Item 2. Controls and Procedures.
 
(a)  
The Registrant’s President and Chief Financial Officer have concluded that the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “1940 Act”)) (17 CFR 270.30a-3(c)) are effective as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rule 13a-15(b) or Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(d)).

(b)  
There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) (17 CFR 270.30a-3(d)) that occurred during the Registrant's last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.

Item 3. Exhibits.
 
Separate certifications for each principal executive officer and principal financial officer of the Registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)).  Filed herewith.
 
 
 
 
 
 
 
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.


(Registrant) Special Opportunities Fund, Inc.                                                                                                                               

By (Signature and Title) /s/ Andrew Dakos                                                                                                                                             
 Andrew Dakos, President

Date  November 26, 2013                                                                              

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 (Signature and Title) /s/ Andrew Dakos                                             
 Andrew Dakos, President

Date  November 26, 2013                                                                             

 
By (Signature and Title) /s/ Gerald Hellerman                                                                                                                                       
 Gerald Hellerman, Chief Financial Officer

Date  November 24, 2013