UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-21746
Name of Fund: Small Cap Premium & Dividend Income Fund Inc. (RCC)
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Mitchell M. Cox, Chief Executive Officer,
Small Cap Premium & Dividend Income 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: 12/31/2007
Date of reporting period: 01/01/2007 - 12/31/2007
Item 1 - Report to Stockholders
Small Cap Premium &
Dividend Income Fund Inc.
Annual Report
December 31, 2007
[LOGO] IQ INVESTMENT BLACKROCK
ADVISORS
Small Cap Premium & Dividend Income Fund Inc.
Portfolio Information as of December 31, 2007
Percent of
Ten Largest Holdings Net Assets
--------------------------------------------------------------------------------
Hologic, Inc. ....................................................... 0.6%
CF Industries Holdings, Inc. ........................................ 0.4
Exterran Holdings, Inc. ............................................. 0.4
Terra Industries, Inc. .............................................. 0.3
Priceline.com, Inc. ................................................. 0.3
Flir Systems, Inc. .................................................. 0.3
Equinix, Inc. ....................................................... 0.3
Chipotle Mexican Grill, Inc. Class B ................................ 0.2
Inverness Medical Innovations, Inc. ................................. 0.2
Bucyrus International, Inc. ......................................... 0.2
--------------------------------------------------------------------------------
Percent of
Five Largest Industries Net Assets
--------------------------------------------------------------------------------
Computer Services Software & Systems ................................ 5.5%
Real Estate Investment Trusts (REITs) ............................... 5.0
Banks: Outside New York City ........................................ 4.8
Services: Commercial ................................................ 3.0
Drugs & Pharmaceuticals ............................................. 3.0
--------------------------------------------------------------------------------
Percent of
Sector Representation Long-Term Investments
--------------------------------------------------------------------------------
Financial Services .................................................. 20.4%
Consumer Discretionary .............................................. 17.1
Technology .......................................................... 14.2
Health Care ......................................................... 13.9
Materials & Processing .............................................. 10.0
Producer Durables ................................................... 7.6
Other Energy ........................................................ 6.0
Utilities ........................................................... 4.4
Auto & Transportation ............................................... 3.5
Consumer Staples .................................................... 2.3
Other ............................................................... 0.4
Integrated Oils ..................................................... 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
industry and sector sub-classifications for reporting ease.
2 SMALL CAP PREMIUM & DIVIDEND INCOME FUND INC. DECEMBER 31, 2007
A Summary From Your Fund's Portfolio Managers
We are pleased to provide you with this shareholder report for Small Cap
Premium & Dividend Income Fund Inc. While the Fund is advised by IQ Investment
Advisors LLC, the following is provided by BlackRock Investment Management, LLC,
the Fund's subadviser.
The investment objectives of Small Cap Premium & Dividend Income Fund Inc. (the
"Fund") are to provide shareholders with a high level of income, with a
secondary goal of capital appreciation. The Fund pursues its investment
objectives principally through a two-part strategy. First, the Fund will invest
in a statistically selected sample of stocks included in the Russell 2000(R)
Index (the "Index") and/or other investments that have economic characteristics
similar to the securities that comprise the Index, which may include futures,
forward, swap and option contracts based on the Index, as well as other
investment funds with a composition similar to that of the Index. Second, the
Fund will write (sell) call options on the Index or on exchange-traded funds
("ETFs") which seek to track the performance of the Index with respect to some
or all of the value of its assets. There can be no assurance that the Fund will
achieve its investment objectives.
For the annual period ended December 31, 2007, the Fund had a total investment
return as set forth in the table below, based on the change per share in net
asset value of $18.80 to $17.19. For the same period, the Fund's unmanaged
reference index, the Russell 2000 Index, had a total return as shown below. All
of the Fund and index information presented includes the reinvestment of any
dividends or distributions. Distribution information may be found in the Notes
to Financial Statements, Note 5.
--------------------------------------------------------------------------------
Russell 2000
Period Fund* Index** Difference
--------------------------------------------------------------------------------
Fiscal year ended
December 31, 2007 2.63% (1.57%) 4.20%
--------------------------------------------------------------------------------
Since inception
(July 29, 2005) 18.26% 16.01% 2.25%
--------------------------------------------------------------------------------
* Fund performance information is net of expenses.
** The reference index has no expenses associated with performance.
For more detail with regard to the Fund's total investment return based on a
change in the per share market value of the Fund's Common Stock (as measured by
the trading price of the Fund's shares on the New York Stock Exchange), please
refer to the Financial Highlights section of this report.
As a closed-end fund, the Fund's shares may trade in the secondary market at a
premium or discount to the Fund's net asset value. As a result, total investment
returns based on changes in the market value of the Fund's Common Stock can vary
significantly from total investment returns based on changes in the Fund's net
asset value.
Jonathan A. Clark
Portfolio Manager
Debra L. Jelilian
Portfolio Manager
Jeffrey L. Russo, CFA
Portfolio Manager
January 15, 2008
Russell 2000 is a registered trademark of the Frank Russell Company.
SMALL CAP PREMIUM & DIVIDEND INCOME FUND INC. DECEMBER 31, 2007 3
Summary Schedule of Investments as of December 31, 2007 (in U.S. dollars)
This summary schedule of investments is presented to help investors focus on the
Fund's principal holdings. It includes the Fund's 50 largest holdings and each
investment of any issuer that exceeds 1% of the Fund's net assets. "Other
Securities" represent all issues not required to be disclosed under the rules
adopted by the Securities and Exchange Commission. In addition, the summary
schedule of investments allows the adviser certain efficiencies. As such, any
cost savings in report production or printing are passed on to the Fund and,
ultimately to Fund shareholders. A complete schedule of investments is available
without charge, upon request, by calling 1-877-449-4742 or on the Securities and
Exchange Commission's website at http://www.sec.gov.
====================================================================================================================================
Shares Percent of
Industry Held Common Stocks Value Net Assets
====================================================================================================================================
Advertising Agencies Other Securities $ 929,519 0.4%
------------------------------------------------------------------------------------------------------------------------------------
Aerospace Other Securities 1,687,548 0.7
------------------------------------------------------------------------------------------------------------------------------------
Agriculture, Fishing & Ranching Other Securities 154,340 0.1
------------------------------------------------------------------------------------------------------------------------------------
Air Transport Other Securities 1,610,748 0.7
------------------------------------------------------------------------------------------------------------------------------------
Aluminum Other Securities 436,861 0.2
------------------------------------------------------------------------------------------------------------------------------------
Auto Parts: After Market Other Securities 218,269 0.1
------------------------------------------------------------------------------------------------------------------------------------
Auto Parts: Original Equipment Other Securities 1,110,374 0.5
------------------------------------------------------------------------------------------------------------------------------------
Auto, Trucks & Parts Other Securities 255,261 0.1
------------------------------------------------------------------------------------------------------------------------------------
Banks: New York City Other Securities 207,684 0.1
------------------------------------------------------------------------------------------------------------------------------------
Banks: Outside New York City Other Securities 11,204,040 4.8
------------------------------------------------------------------------------------------------------------------------------------
Beverage: Brewers (Wineries) Other Securities 60,240 0.0
------------------------------------------------------------------------------------------------------------------------------------
Beverage: Soft Drinks Other Securities 292,007 0.1
------------------------------------------------------------------------------------------------------------------------------------
Biotechnology Research & Production 5,900 Alexion Pharmaceuticals, Inc. (a) 442,677 0.2
9,500 OSI Pharmaceuticals, Inc. (a) 460,845 0.2
Other Securities 4,883,970 2.1
-----------------------------
5,787,492 2.5
------------------------------------------------------------------------------------------------------------------------------------
Building Materials Other Securities 1,105,757 0.5
------------------------------------------------------------------------------------------------------------------------------------
Building: Cement Other Securities 18,315 0.0
------------------------------------------------------------------------------------------------------------------------------------
Building: Heating & Plumbing Other Securities 134,271 0.1
------------------------------------------------------------------------------------------------------------------------------------
Building: Miscellaneous Other Securities 391,907 0.2
------------------------------------------------------------------------------------------------------------------------------------
Building: Roofing & Wallboard Other Securities 64,834 0.0
------------------------------------------------------------------------------------------------------------------------------------
Cable Television Services Other Securities 242,794 0.1
------------------------------------------------------------------------------------------------------------------------------------
Casinos & Gambling 8,700 Bally Technologies, Inc. (a) 432,564 0.2
Other Securities 1,001,723 0.4
-----------------------------
1,434,287 0.6
------------------------------------------------------------------------------------------------------------------------------------
Chemicals 8,900 CF Industries Holdings, Inc. 979,534 0.4
19,300 Hercules, Inc. 373,455 0.2
Other Securities 2,961,975 1.2
-----------------------------
4,314,964 1.8
------------------------------------------------------------------------------------------------------------------------------------
Coal Other Securities 454,989 0.2
------------------------------------------------------------------------------------------------------------------------------------
Commercial Information Services Other Securities 349,835 0.1
------------------------------------------------------------------------------------------------------------------------------------
Communications & Media Other Securities 328,695 0.1
------------------------------------------------------------------------------------------------------------------------------------
Communications Technology 23,500 Foundry Networks, Inc. (a) 411,720 0.2
Other Securities 5,315,087 2.2
-----------------------------
5,726,807 2.4
------------------------------------------------------------------------------------------------------------------------------------
Computer Services Software 12,600 Ansys, Inc. (a) 522,396 0.2
& Systems 5,800 Equinix, Inc. (a) 586,206 0.3
6,600 Micros Systems, Inc. (a) 463,056 0.2
23,500 Nuance Communications, Inc. (a) 438,980 0.2
26,140 SAIC, Inc. (a) 525,937 0.2
14,700 Sybase, Inc. (a) 383,523 0.2
Other Securities 9,896,680 4.2
-----------------------------
12,816,778 5.5
------------------------------------------------------------------------------------------------------------------------------------
4 SMALL CAP PREMIUM & DIVIDEND INCOME FUND INC. DECEMBER 31, 2007
Summary Schedule of Investments (continued) (in U.S. dollars)
====================================================================================================================================
Shares Percent of
Industry Held Common Stocks Value Net Assets
====================================================================================================================================
Computer Technology Other Securities $ 1,994,796 0.8%
------------------------------------------------------------------------------------------------------------------------------------
Construction Other Securities 681,646 0.3
------------------------------------------------------------------------------------------------------------------------------------
Consumer Electronics Other Securities 1,914,904 0.8
------------------------------------------------------------------------------------------------------------------------------------
Consumer Products Other Securities 1,194,466 0.5
------------------------------------------------------------------------------------------------------------------------------------
Containers & Packaging: Metals 11,200 AptarGroup, Inc. 458,192 0.2
& Glass Other Securities 662,632 0.3
-----------------------------
1,120,824 0.5
------------------------------------------------------------------------------------------------------------------------------------
Containers & Packaging: Paper & Plastic Other Securities 141,347 0.1
------------------------------------------------------------------------------------------------------------------------------------
Copper Other Securities 179,738 0.1
------------------------------------------------------------------------------------------------------------------------------------
Cosmetics Other Securities 394,484 0.2
------------------------------------------------------------------------------------------------------------------------------------
Diversified Financial Services Other Securities 1,510,993 0.6
------------------------------------------------------------------------------------------------------------------------------------
Diversified Materials & Processing 15,400 Hexcel Corp. (a) 373,912 0.1
Other Securities 1,574,857 0.7
-----------------------------
1,948,769 0.8
------------------------------------------------------------------------------------------------------------------------------------
Drug & Grocery Store Chains Other Securities 1,283,234 0.6
------------------------------------------------------------------------------------------------------------------------------------
Drugs & Pharmaceuticals 15,600 BioMarin Pharmaceuticals, Inc. (a) 552,240 0.3
13,000 MGI Pharma, Inc. (a) 526,890 0.2
8,920 Onyx Pharmaceuticals, Inc. (a) 496,130 0.2
12,600 Perrigo Co. 441,126 0.2
Other Securities 4,965,640 2.1
-----------------------------
6,982,026 3.0
------------------------------------------------------------------------------------------------------------------------------------
Education Services 9,800 DeVry, Inc. 509,208 0.2
2,400 Strayer Education, Inc. 409,392 0.2
Other Securities 584,498 0.2
-----------------------------
1,503,098 0.6
------------------------------------------------------------------------------------------------------------------------------------
Electrical & Electronics Other Securities 649,984 0.3
------------------------------------------------------------------------------------------------------------------------------------
Electrical Equipment & Components 4,500 Genlyte Group, Inc. (a) 428,400 0.2
Other Securities 1,789,131 0.8
-----------------------------
2,217,531 1.0
------------------------------------------------------------------------------------------------------------------------------------
Electrical: Household Appliance Other Securities 42,128 0.0
------------------------------------------------------------------------------------------------------------------------------------
Electronics 21,600 Flir Systems, Inc. (a) 676,080 0.3
Other Securities 1,006,126 0.4
-----------------------------
1,682,206 0.7
------------------------------------------------------------------------------------------------------------------------------------
Electronics: Instruments, Gauges 4,890 Itron, Inc. (a) 469,293 0.2
& Meters Other Securities 211,296 0.1
-----------------------------
680,589 0.3
------------------------------------------------------------------------------------------------------------------------------------
Electronics: Medical Systems 19,480 Hologic, Inc. (a) 1,337,107 0.6
8,707 Illumina, Inc. (a) 515,977 0.2
Other Securities 1,791,355 0.8
-----------------------------
3,644,439 1.6
------------------------------------------------------------------------------------------------------------------------------------
Electronics: Semi-Conductors/ Other Securities 4,419,387 1.9
Components
------------------------------------------------------------------------------------------------------------------------------------
Electronics: Technology Other Securities 1,103,003 0.5
------------------------------------------------------------------------------------------------------------------------------------
Energy Miscellaneous Other Securities 1,687,409 0.7
------------------------------------------------------------------------------------------------------------------------------------
Engineering & Contracting Services Other Securities 752,853 0.3
------------------------------------------------------------------------------------------------------------------------------------
Entertainment Other Securities 661,681 0.3
------------------------------------------------------------------------------------------------------------------------------------
Fertilizers 15,000 Terra Industries, Inc. (a) 716,400 0.3
------------------------------------------------------------------------------------------------------------------------------------
Finance Companies Other Securities 225,476 0.1
------------------------------------------------------------------------------------------------------------------------------------
Finance: Small Loan Other Securities 246,705 0.1
------------------------------------------------------------------------------------------------------------------------------------
Financial Data Processing Services Other Securities 1,683,357 0.7
& Systems
------------------------------------------------------------------------------------------------------------------------------------
SMALL CAP PREMIUM & DIVIDEND INCOME FUND INC. DECEMBER 31, 2007 5
Summary Schedule of Investments (continued) (in U.S. dollars)
====================================================================================================================================
Shares Percent of
Industry Held Common Stocks Value Net Assets
====================================================================================================================================
Financial Information Services Other Securities $ 749,313 0.3%
------------------------------------------------------------------------------------------------------------------------------------
Financial Miscellaneous 10,600 Sotheby's Holdings, Inc. Class A 403,860 0.2
Other Securities 1,026,891 0.4
-----------------------------
1,430,751 0.6
------------------------------------------------------------------------------------------------------------------------------------
Foods Other Securities 2,426,910 1.0
------------------------------------------------------------------------------------------------------------------------------------
Forest Products Other Securities 172,224 0.1
------------------------------------------------------------------------------------------------------------------------------------
Forms & Bulk Printing Services Other Securities 166,372 0.1
------------------------------------------------------------------------------------------------------------------------------------
Funeral Parlors & Cemeteries Other Securities 145,960 0.1
------------------------------------------------------------------------------------------------------------------------------------
Glass Other Securities 83,839 0.0
------------------------------------------------------------------------------------------------------------------------------------
Gold 75,700 Coeur d'Alene Mines Corp. (a) 373,958 0.1
Other Securities 149,812 0.1
-----------------------------
523,770 0.2
------------------------------------------------------------------------------------------------------------------------------------
Health Care Facilities Other Securities 1,274,179 0.5
------------------------------------------------------------------------------------------------------------------------------------
Health Care Management Services Other Securities 1,865,483 0.8
------------------------------------------------------------------------------------------------------------------------------------
Health Care Services Other Securities 1,688,476 0.7
------------------------------------------------------------------------------------------------------------------------------------
Homebuilding Other Securities 207,186 0.1
------------------------------------------------------------------------------------------------------------------------------------
Hotel/Motel Other Securities 149,132 0.1
------------------------------------------------------------------------------------------------------------------------------------
Household Furnishings Other Securities 859,058 0.4
------------------------------------------------------------------------------------------------------------------------------------
Identification Control & Filter Devices Other Securities 1,413,885 0.6
------------------------------------------------------------------------------------------------------------------------------------
Industrial Products Other Securities 61,479 0.0
------------------------------------------------------------------------------------------------------------------------------------
Insurance: Life Other Securities 929,233 0.4
------------------------------------------------------------------------------------------------------------------------------------
Insurance: Multi-Line Other Securities 2,475,207 1.1
------------------------------------------------------------------------------------------------------------------------------------
Insurance: Property-Casualty 14,200 Aspen Insurance Holdings Ltd. 409,528 0.2
Other Securities 3,383,322 1.4
-----------------------------
3,792,850 1.6
------------------------------------------------------------------------------------------------------------------------------------
Investment Management Companies 13,700 Waddell & Reed Financial, Inc. Class A 494,433 0.2
Other Securities 1,559,683 0.7
-----------------------------
2,054,116 0.9
------------------------------------------------------------------------------------------------------------------------------------
Jewelry, Watches & Gemstones Other Securities 378,892 0.2
------------------------------------------------------------------------------------------------------------------------------------
Leisure Time Other Securities 938,025 0.4
------------------------------------------------------------------------------------------------------------------------------------
Machine Tools Other Securities 48,015 0.0
------------------------------------------------------------------------------------------------------------------------------------
Machinery & Engineering Other Securities 210,395 0.1
------------------------------------------------------------------------------------------------------------------------------------
Machinery: Agricultural Other Securities 146,639 0.1
------------------------------------------------------------------------------------------------------------------------------------
Machinery: Construction & Handling Other Securities 252,536 0.1
------------------------------------------------------------------------------------------------------------------------------------
Machinery: Engines Other Securities 254,045 0.1
------------------------------------------------------------------------------------------------------------------------------------
Machinery: Industrial/Specialty Other Securities 1,746,210 0.7
------------------------------------------------------------------------------------------------------------------------------------
Machinery: Oil Well Equipment 9,707 Exterran Holdings, Inc. (a) 794,033 0.4
& Services Other Securities 2,658,839 1.1
-----------------------------
3,452,872 1.5
------------------------------------------------------------------------------------------------------------------------------------
Machinery: Specialty 5,850 Bucyrus International, Inc. 581,432 0.2
Other Securities 226,454 0.1
-----------------------------
807,886 0.3
------------------------------------------------------------------------------------------------------------------------------------
Manufactured Housing Other Securities 169,850 0.1
------------------------------------------------------------------------------------------------------------------------------------
Manufacturing Other Securities 127,028 0.1
------------------------------------------------------------------------------------------------------------------------------------
Medical & Dental Instruments 11,150 Immucor, Inc. (a) 378,989 0.2
& Supplies 10,620 Inverness Medical Innovations, Inc. (a) 596,632 0.2
4,400 Ventana Medical Systems, Inc. (a) 383,812 0.2
Other Securities 5,247,156 2.2
-----------------------------
6,606,589 2.8
------------------------------------------------------------------------------------------------------------------------------------
6 SMALL CAP PREMIUM & DIVIDEND INCOME FUND INC. DECEMBER 31, 2007
Summary Schedule of Investments (continued) (in U.S. dollars)
====================================================================================================================================
Shares Percent of
Industry Held Common Stocks Value Net Assets
====================================================================================================================================
Medical Services Other Securities $ 699,492 0.3%
------------------------------------------------------------------------------------------------------------------------------------
Metal Fabricating Other Securities 2,151,328 0.9
------------------------------------------------------------------------------------------------------------------------------------
Metals & Minerals Miscellaneous Other Securities 1,644,849 0.7
------------------------------------------------------------------------------------------------------------------------------------
Milling: Fruit & Grain Processing Other Securities 16,014 0.0
------------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Business & Other Securities 45,952 0.0
Consumer Discretionary
------------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Consumer Staples Other Securities 80,992 0.0
------------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Health Care Other Securities 15,990 0.0
------------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Materials Other Securities 361,917 0.2
& Commodities
------------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Materials & Processing Other Securities 540,446 0.2
------------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Producer Durables Other Securities 112,597 0.1
------------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Technology Other Securities 426,705 0.2
------------------------------------------------------------------------------------------------------------------------------------
Multi-Sector Companies Other Securities 908,453 0.4
------------------------------------------------------------------------------------------------------------------------------------
Office Furniture & Business Equipment Other Securities 648,291 0.3
------------------------------------------------------------------------------------------------------------------------------------
Offshore Drilling 4,400 Atwood Oceanics, Inc. (a) 441,056 0.2
Other Securities 361,929 0.1
-----------------------------
802,985 0.3
------------------------------------------------------------------------------------------------------------------------------------
Oil: Crude Producers 26,550 PetroHawk Energy Corp. (a) 459,581 0.2
6,500 Whiting Petroleum Corp. (a) 374,790 0.2
Other Securities 5,076,792 2.1
-----------------------------
5,911,163 2.5
------------------------------------------------------------------------------------------------------------------------------------
Oil: Integrated Domestic Other Securities 267,339 0.1
------------------------------------------------------------------------------------------------------------------------------------
Oil: Integrated International Other Securities 46,965 0.0
------------------------------------------------------------------------------------------------------------------------------------
Paints & Coatings Other Securities 375,730 0.2
------------------------------------------------------------------------------------------------------------------------------------
Paper Other Securities 894,268 0.4
------------------------------------------------------------------------------------------------------------------------------------
Photography Other Securities 14,130 0.0
------------------------------------------------------------------------------------------------------------------------------------
Plastics Other Securities 73,320 0.0
------------------------------------------------------------------------------------------------------------------------------------
Pollution Control & Other Securities 543,128 0.2
Environmental Services
------------------------------------------------------------------------------------------------------------------------------------
Power Transmission Equipment Other Securities 233,740 0.1
------------------------------------------------------------------------------------------------------------------------------------
Printing & Copying Services Other Securities 591,967 0.2
------------------------------------------------------------------------------------------------------------------------------------
Production Technology Equipment Other Securities 2,572,657 1.1
------------------------------------------------------------------------------------------------------------------------------------
Publishing: Miscellaneous Other Securities 448,056 0.2
------------------------------------------------------------------------------------------------------------------------------------
Publishing: Newspapers Other Securities 550,493 0.2
------------------------------------------------------------------------------------------------------------------------------------
Radio & TV Broadcasters Other Securities 704,734 0.3
------------------------------------------------------------------------------------------------------------------------------------
Railroad Equipment Other Securities 424,977 0.2
------------------------------------------------------------------------------------------------------------------------------------
Railroads Other Securities 109,973 0.0
------------------------------------------------------------------------------------------------------------------------------------
Real Estate Other Securities 616,531 0.3
------------------------------------------------------------------------------------------------------------------------------------
Real Estate Investment Trusts (REITs) 5,200 Alexandria Real Estate Equities, Inc. 528,684 0.2
10,300 Anthracite Capital, Inc. (b) 74,572 0.0
14,000 Nationwide Health Properties, Inc. 439,180 0.2
16,600 Realty Income Corp. 448,532 0.2
Other Securities 10,233,590 4.4
-----------------------------
11,724,558 5.0
------------------------------------------------------------------------------------------------------------------------------------
Recreational Vehicles & Boats Other Securities 524,446 0.2
------------------------------------------------------------------------------------------------------------------------------------
Rental & Leasing Services: Other Securities 187,317 0.1
------------------------------------------------------------------------------------------------------------------------------------
Commercial
Rental & Leasing Services: Consumer Other Securities 545,353 0.2
------------------------------------------------------------------------------------------------------------------------------------
SMALL CAP PREMIUM & DIVIDEND INCOME FUND INC. DECEMBER 31, 2007 7
Summary Schedule of Investments (continued) (in U.S. dollars)
====================================================================================================================================
Shares Percent of
Industry Held Common Stocks Value Net Assets
====================================================================================================================================
Restaurants 5,200 Chipotle Mexican Grill, Inc. Class B (a) $ 639,860 0.2%
Other Securities 2,291,662 1.0
-----------------------------
2,931,522 1.2
------------------------------------------------------------------------------------------------------------------------------------
Retail 6,000 Priceline.com, Inc. (a) 689,160 0.3
Other Securities 5,715,929 2.4
-----------------------------
6,405,089 2.7
------------------------------------------------------------------------------------------------------------------------------------
Savings & Loan Other Securities 2,327,921 1.0
------------------------------------------------------------------------------------------------------------------------------------
Scientific Equipment & Suppliers Other Securities 401,826 0.2
------------------------------------------------------------------------------------------------------------------------------------
Securities Brokerage & Services Other Securities 1,119,236 0.5
------------------------------------------------------------------------------------------------------------------------------------
Services: Commercial 7,400 FTI Consulting, Inc. (a) 456,136 0.2
Other Securities 6,696,900 2.8
-----------------------------
7,153,036 3.0
------------------------------------------------------------------------------------------------------------------------------------
Shipping Other Securities 1,446,105 0.6
------------------------------------------------------------------------------------------------------------------------------------
Shoes Other Securities 1,174,275 0.5
------------------------------------------------------------------------------------------------------------------------------------
Steel Other Securities 639,632 0.3
------------------------------------------------------------------------------------------------------------------------------------
Sugar Other Securities 35,663 0.0
------------------------------------------------------------------------------------------------------------------------------------
Telecommunications Equipment 14,300 Polycom, Inc. (a) 397,254 0.2
Other Securities 1,028,810 0.4
-----------------------------
1,426,064 0.6
------------------------------------------------------------------------------------------------------------------------------------
Textile Products Other Securities 145,248 0.1
------------------------------------------------------------------------------------------------------------------------------------
Textiles Apparel Manufacturers Other Securities 1,597,112 0.7
------------------------------------------------------------------------------------------------------------------------------------
Tires & Rubber Other Securities 278,336 0.1
------------------------------------------------------------------------------------------------------------------------------------
Tobacco Other Securities 464,753 0.2
------------------------------------------------------------------------------------------------------------------------------------
Toys Other Securities 370,348 0.2
------------------------------------------------------------------------------------------------------------------------------------
Transportation Miscellaneous Other Securities 429,722 0.2
------------------------------------------------------------------------------------------------------------------------------------
Truckers Other Securities 844,616 0.4
------------------------------------------------------------------------------------------------------------------------------------
Utilities: Cable TV & Radio Other Securities 40,392 0.0
------------------------------------------------------------------------------------------------------------------------------------
Utilities: Electrical 6,700 ITC Holdings Corp. 378,014 0.1
15,800 Westar Energy, Inc. 409,852 0.2
Other Securities 2,813,376 1.2
-----------------------------
3,601,242 1.5
------------------------------------------------------------------------------------------------------------------------------------
Utilities: Gas Distributors Other Securities 1,883,051 0.8
------------------------------------------------------------------------------------------------------------------------------------
Utilities: Miscellaneous Other Securities 227,530 0.1
------------------------------------------------------------------------------------------------------------------------------------
Utilities: Telecommunications 23,730 Time Warner Telecom, Inc. Class A (a) 481,482 0.2
Other Securities 2,276,451 1.0
-----------------------------
2,757,933 1.2
------------------------------------------------------------------------------------------------------------------------------------
Utilities: Water Other Securities 411,980 0.2
------------------------------------------------------------------------------------------------------------------------------------
Wholesale & International Trade Other Securities 336,864 0.1
------------------------------------------------------------------------------------------------------------------------------------
Wholesalers 18,200 LKQ Corp. (a) 382,564 0.1
Other Securities 430,259 0.2
-----------------------------
812,823 0.3
------------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks
(Cost -- $201,969,927) 205,289,669 87.5
====================================================================================================================================
8 SMALL CAP PREMIUM & DIVIDEND INCOME FUND INC. DECEMBER 31, 2007
Summary Schedule of Investments (concluded) (in U.S. dollars)
====================================================================================================================================
Shares Percent of
Held Investment Companies Value Net Assets
====================================================================================================================================
1,000 BlackRock Kelso Capital Corp. (b) $ 15,280 0.0%
Other Securities 254,233 0.1
------------------------------------------------------------------------------------------------------------------------------------
Total Investment Companies
(Cost -- $343,489) 269,513 0.1
====================================================================================================================================
====================================================================================================================================
Face
Amount Short-Term Securities
====================================================================================================================================
Time Deposits $32,181,442 State Street Bank & Trust Co., 3.25%
due 1/02/2008 32,181,442 13.7
------------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Securities
(Cost -- $32,181,442) 32,181,442 13.7
====================================================================================================================================
Total Investments Before Options Written
(Cost -- $234,494,858*) 237,740,624 101.3
====================================================================================================================================
====================================================================================================================================
Number of
Contracts Options Written
====================================================================================================================================
Call Options Written 750 Russell 2000 Index, expiring January 2008
at USD 770 (1,177,500) (0.5)
750 Russell 2000 Index, expiring January 2008
at USD 780 (836,250) (0.3)
------------------------------------------------------------------------------------------------------------------------------------
Total Options Written
(Premiums Received -- $3,235,500) (2,013,750) (0.8)
====================================================================================================================================
Total Investments, Net of Options Written (Cost -- $231,259,358) 235,726,874 100.5
Liabilities in Excess of Other Assets (1,174,454) (0.5)
-----------------------------
Net Assets $234,552,420 100.0%
=============================
* The cost and unrealized appreciation (depreciation) of investments, as of
December 31, 2007, as computed for federal income tax purposes, were as
follows:
Aggregate cost ......................................... $ 237,617,800
=============
Gross unrealized appreciation .......................... $ 4,448,732
Gross unrealized depreciation .......................... (4,325,908)
-------------
Net unrealized appreciation ............................ $ 122,824
=============
(a) Non-income producing security.
(b) Investments in companies considered to be an affiliate of the Fund, for
purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as
follows:
--------------------------------------------------------------------------
Purchase Sales Realized Dividend
Affiliate Cost Cost Gain Income
--------------------------------------------------------------------------
Anthracite
Capital, Inc. $ 6,075 $6,012 $304 $11,690
BlackRock Kelso
Capital Corp. $15,419 -- -- --
--------------------------------------------------------------------------
o 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
industry sub-classifications for reporting ease. Industries are shown as a
percent of net assets. These industry classifications are unaudited.
o "Other Securities" represent issues that are not identified as the 50
largest holdings of the Fund and issues not exceeding 1% of net assets.
Some securities or a portion thereof, in this category are held as
collateral in connection with open financial futures contracts.
o Financial futures contracts purchased as of December 31, 2007 were as
follows:
--------------------------------------------------------------------------
Number of Expiration Face Unrealized
Contracts Issue Date Value Appreciation
--------------------------------------------------------------------------
75 Russell March
2000 Index 2008 $28,884,339 $73,161
--------------------------------------------------------------------------
See Notes to Financial Statements.
SMALL CAP PREMIUM & DIVIDEND INCOME FUND INC. DECEMBER 31, 2007 9
Statement of Assets, Liabilities and Capital
As of December 31, 2007
===================================================================================================================================
Assets
-----------------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value (identified cost -- $234,358,977) . $ 237,650,772
Investments in affiliated securities, at value (identified cost -- $135,881) ....... 89,852
Cash ............................................................................... 6,531
Receivables:
Securities sold ................................................................ $ 874,632
Options written ................................................................ 376,750
Dividends ...................................................................... 295,462
Interest ....................................................................... 2,905 1,549,749
-------------------------------
Total assets ....................................................................... 239,296,904
-------------
===================================================================================================================================
Liabilities
-----------------------------------------------------------------------------------------------------------------------------------
Options written, at value (premiums received -- $3,235,500) ........................ 2,013,750
Payables:
Dividends and distributions to shareholders .................................... 1,168,039
Securities purchased ........................................................... 681,594
Options written ................................................................ 515,750
Investment adviser ............................................................. 184,562
Variation margin ............................................................... 32,958 2,582,903
-------------
Accrued expenses ................................................................... 147,831
-------------
Total liabilities .................................................................. 4,744,484
-------------
===================================================================================================================================
Net Assets
-----------------------------------------------------------------------------------------------------------------------------------
Net assets ......................................................................... $ 234,552,420
=============
===================================================================================================================================
Capital
-----------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.001 per share, 100,000,000 shares authorized ............. $ 13,645
Paid-in capital in excess of par ................................................... 245,512,932
Undistributed investment income -- net ............................................. $ 732,199
Accumulated realized capital losses -- net ......................................... (16,247,033)
Unrealized appreciation -- net ..................................................... 4,540,677
-------------
Total accumulated losses -- net .................................................... (10,974,157)
-------------
Total capital -- Equivalent to $17.19 per share based on 13,644,510 shares
of Common Stock outstanding (market price -- $15.74) ............................. $ 234,552,420
=============
See Notes to Financial Statements.
10 SMALL CAP PREMIUM & DIVIDEND INCOME FUND INC. DECEMBER 31, 2007
Statement of Operations
For the Year Ended December 31, 2007
===================================================================================================================================
Investment Income
-----------------------------------------------------------------------------------------------------------------------------------
Dividends (including $11,690 from affiliates and net of $806 foreign
withholding tax) ................................................................. $ 2,694,140
Interest ........................................................................... 1,188,450
-------------
Total income ....................................................................... 3,882,590
-------------
===================================================================================================================================
Expenses
-----------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees ........................................................... $ 2,297,927
Accounting services ................................................................ 98,050
Professional fees .................................................................. 84,370
Directors' fees and expenses ....................................................... 59,391
Transfer agent fees ................................................................ 48,098
Repurchase offer ................................................................... 39,108
Listing fees ....................................................................... 23,750
Other .............................................................................. 19,780
-------------
Total expenses before reimbursement ................................................ 2,670,474
Reimbursement of expenses .......................................................... (33,667)
-------------
Total expenses after reimbursement ................................................. 2,636,807
-------------
Investment income -- net ........................................................... 1,245,783
-------------
===================================================================================================================================
Realized & Unrealized Gain (Loss) -- Net
-----------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on:
Investments (including $304 from affiliates) -- net ............................ 11,059,861
Financial futures contracts -- net ............................................. (736,829)
Options written -- net ......................................................... 9,869,168 20,192,200
-------------
Change in unrealized appreciation/depreciation on:
Investments -- net ............................................................. (16,144,275)
Financial futures contracts -- net ............................................. 176,931
Options written -- net ......................................................... (253,500) (16,220,844)
-------------------------------
Total realized and unrealized gain -- net .......................................... 3,971,356
-------------
Net Increase in Net Assets Resulting from Operations ............................... $ 5,217,139
=============
See Notes to Financial Statements.
SMALL CAP PREMIUM & DIVIDEND INCOME FUND INC. DECEMBER 31, 2007 11
Statements of Changes in Net Assets
For the Year Ended
December 31,
-------------------------------
Increase (Decrease) in Net Assets: 2007 2006
===================================================================================================================================
Operations
-----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ........................................................... $ 1,245,783 $ 1,228,837
Realized gain -- net ............................................................... 20,192,200 11,354,409
Unrealized appreciation/depreciation -- net ........................................ (16,220,844) 23,345,428
-------------------------------
Net increase in net assets resulting from operations ............................... 5,217,139 35,928,674
-------------------------------
===================================================================================================================================
Dividends & Distributions to Shareholders
-----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ........................................................... (1,099,977) (3,289,476)
Realized gain -- net ............................................................... (21,655,076) (26,589,848)
Tax return of capital .............................................................. (4,501,255) (1,629,839)
-------------------------------
Net decrease in net assets resulting from dividends and distributions
to shareholders .................................................................. (27,256,308) (31,509,163)
-------------------------------
===================================================================================================================================
Common Stock Transactions
-----------------------------------------------------------------------------------------------------------------------------------
Adjustment of offering costs resulting from the issuance of Common Stock ........... 135,048 --
Net redemption of Common Stock resulting from a repurchase offer
(includes $3,451 and $45,013 of repurchase fees, respectively) ................... (924,375) (77,602,567)
Value of shares issued to Common Stock shareholders in reinvestment of
dividends and distributions ...................................................... 1,527,886 2,027,985
-------------------------------
Net increase (decrease) in net assets resulting from Common Stock transactions ..... 738,559 (75,574,582)
-------------------------------
===================================================================================================================================
Net Assets
-----------------------------------------------------------------------------------------------------------------------------------
Total decrease in net assets ....................................................... (21,300,610) (71,155,071)
Beginning of year .................................................................. 255,853,030 327,008,101
-------------------------------
End of year* ....................................................................... $ 234,552,420 $ 255,853,030
===============================
* Undistributed investment income -- net ....................................... $ 732,199 $ 547,285
===============================
See Notes to Financial Statements.
12 SMALL CAP PREMIUM & DIVIDEND INCOME FUND INC. DECEMBER 31, 2007
Financial Highlights
For the Period
For the Year Ended July 29,
December 31, 2005+ to
The following per share data and ratios have been derived ----------------------------- December 31,
from information provided in the financial statements. 2007 2006 2005
===================================================================================================================================
Per Share Operating Performance
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ............................. $ 18.80 $ 18.16 $ 19.10
-------------------------------------------------
Investment income -- net*** ...................................... .09 .08 .04
Realized and unrealized gain (loss) -- net ....................... .29++ 2.56++ (.12)
-------------------------------------------------
Total from investment operations ................................. .38 2.64 (.08)
-------------------------------------------------
Less dividends and distributions:
Investment income -- net ..................................... (.08) (.23) (.03)
Realized gain -- net ......................................... (1.59) (1.67) --
Tax return of capital ........................................ (.33) (.10) (.80)
-------------------------------------------------
Total dividends and distributions ................................ (2.00) (2.00) (.83)
-------------------------------------------------
Offering costs and adjustments resulting from
the issuance of Common Stock ................................... .01 -- (.03)
-------------------------------------------------
Net asset value, end of period ................................... $ 17.19 $ 18.80 $ 18.16
=================================================
Market price per share, end of period ............................ $ 15.74 $ 19.49 $ 16.09
=================================================
===================================================================================================================================
Total Investment Return**
-----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ............................... 2.63% 15.40% (.14%)@
=================================================
Based on market price per share .................................. (9.36%) 35.03% (15.51%)@
=================================================
===================================================================================================================================
Ratios to Average Net Assets
-----------------------------------------------------------------------------------------------------------------------------------
Expenses ......................................................... 1.05% 1.09% 1.07%*
=================================================
Expenses, net of reimbursement ................................... 1.03% 1.09% 1.07%*
=================================================
Investment income -- net ......................................... .49% .41% .56%*
=================================================
===================================================================================================================================
Supplemental Data
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) ......................... $ 234,552 $ 255,853 $ 327,008
=================================================
Portfolio turnover ............................................... 15% 26% 3%
=================================================
* Annualized.
** Total investment returns based on market value, 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.
*** Based on average shares outstanding.
+ Commencement of operations.
++ Includes repurchase fees, which are less than $.01 per share.
@ Aggregate total investment return.
See Notes to Financial Statements.
SMALL CAP PREMIUM & DIVIDEND INCOME FUND INC. DECEMBER 31, 2007 13
Notes to Financial Statements
1. Significant Accounting Policies:
Small Cap Premium & Dividend Income Fund Inc. (the "Fund") is registered under
the Investment Company Act of 1940, as amended, as a diversified, closed-end
management investment company with a fixed term of existence of approximately
five years. 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. The Fund determines and makes available for publication the net asset
value of its Common Stock on a daily basis. The Fund's Common Stock shares are
listed on the New York Stock Exchange ("NYSE") under the symbol RCC. The
following is a summary of significant accounting policies followed by the Fund.
(a) Valuation of investments -- Equity securities 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 a stock exchange are valued according to the
broadest and most representative market.
Effective September 4, 2007, 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 and previously were valued at the last sales price. 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.
Repurchase agreements are valued at cost plus accrued interest. 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 NYSE.
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
generally will be determined as of the close of business on the NYSE.
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 NYSE 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) 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.
o Options -- The Fund purchases and writes 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. When a security is purchased or sold through
an exercise of an option, the related
14 SMALL CAP PREMIUM & DIVIDEND INCOME FUND INC. DECEMBER 31, 2007
Notes to Financial Statements (continued)
premium paid (or received) is added to (or deducted from) the basis of the
security acquired or deducted from (or added to) the proceeds of the
security sold. 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 paid (or gain or loss to the extent the cost
of the closing transaction exceeds the premium paid or received). Written
and purchased options are non-income producing investments.
o Financial futures contracts -- The Fund may purchase or sell financial
futures contracts and options on such financial futures contracts.
Financial futures contracts are contracts for delayed delivery of
securities at a specific future date and at a specific price or yield.
Upon entering into a contract, the Fund deposits, and maintains as
collateral, such initial margin as required by the exchange on which the
transaction is effected. Pursuant to the contract, the Fund agrees to
receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known
as variation margin and are recorded by the Fund as unrealized gains or
losses. When the contract is closed, the Fund records a realized gain or
loss equal to the difference between the value of the contract at the time
it was opened and the value at the time it was closed.
(c) Income taxes -- 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 shareholders.
Therefore, no federal income tax provision is required.
(d) 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 income is recognized on the accrual basis.
(e) Dividends and distributions -- Dividends and distributions paid by the Fund
are recorded on the ex-dividend dates. Portions of the distributions paid by the
Fund during the years ended December 31, 2007 and December 31, 2006 were
characterized as a tax return of capital.
(f) Offering expenses -- Direct expenses relating to the public offering of the
Fund's Common Stock were charged to capital at the time of issuance of the
shares. Any adjustments to estimates of offering costs were recorded to capital.
(g) Recent accounting pronouncements -- Effective June 29, 2007, the Fund
implemented Financial Accounting Standards Board ("FASB") Interpretation No. 48,
"Accounting for Uncertainty in Income Taxes -- an interpretation of FASB
Statement No. 109" ("FIN 48"). FIN 48 prescribes the minimum recognition
threshold a tax position must meet in connection with accounting for
uncertainties in income tax positions taken or expected to be taken by an
entity, including investment companies, before being measured and recognized in
the financial statements. Management has evaluated the application of FIN 48 to
the Fund, and has determined that the adoption of FIN 48 does not have a
material impact on the Fund's financial statements. The Fund files U.S. and
various state tax returns. No income tax returns are currently under
examination. All tax years of the Fund are open at this time.
In September 2006, Statement of Financial Accounting Standards No. 157, "Fair
Value Measurements" ("FAS 157"), was issued and is effective for fiscal years
beginning after November 15, 2007. FAS 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. The impact on the Fund's financial statement disclosures, if any,
is currently being assessed.
In addition, in February 2007, Statement of Financial Accounting Standards No.
159, "The Fair Value Option for Financial Assets and Financial Liabilities"
("FAS 159"), was issued and is effective for fiscal years beginning after
November 15, 2007. Early adoption is permitted as of the beginning of a fiscal
year that begins on or before November 15, 2007, provided the entity also elects
to apply the provisions of FAS 157. FAS 159 permits entities to choose to
measure many financial instruments and certain other items at fair value that
are not currently required to be measured at fair value. FAS 159 also
establishes presentation and disclosure requirements designed to facilitate
comparisons between entities that choose different measurement attributes for
similar types of assets and liabilities. The impact on the Fund's financial
statement disclosures, if any, is currently being assessed.
(h) Reclassification -- U.S. generally accepted accounting principles require
that certain components of net assets be adjusted to reflect permanent
differences between financial and tax reporting. Accordingly, during the current
year, $39,108 has been reclassified between paid-in capital in excess of par and
accumulated distributions in excess of net investment income as a result of a
permanent difference attributable to non-deductible expenses. This
reclassification has no effect on net assets or net asset values per share.
SMALL CAP PREMIUM & DIVIDEND INCOME FUND INC. DECEMBER 31, 2007 15
Notes to Financial Statements (continued)
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory and Management Agreement with
IQ Investment Advisors LLC ("IQ"), an indirect subsidiary of Merrill Lynch &
Co., Inc. ("ML & Co."). IQ is responsible for the investment advisory,
management and administrative services to the Fund. In addition, IQ 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. In addition, IQ has
entered into a Subadvisory Agreement with BlackRock Investment Management, LLC
(the "Subadviser"), an indirect, wholly owned subsidiary of BlackRock, Inc.
("BlackRock"), pursuant to which the Subadviser provides certain investment
advisory services to IQ with respect to the Fund. For such services, IQ pays the
Subadviser a monthly fee at an annual rate of .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 the aggregate fees paid by the Fund for these
services.
IQ has entered into an Administration Agreement with Princeton Administrators,
LLC (the "Administrator"). The Administration Agreement provides that IQ 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 subsidiary of BlackRock. ML & Co. is a principal owner of BlackRock.
Merrill Lynch, Pierce, Fenner & Smith Incorporated, an affiliate of IQ, received
$3,872 in commissions on the execution of portfolio security transactions for
the Fund for the year ended December 31, 2007.
Certain officers of the Fund are officers and/or directors of IQ, ML & Co.,
BlackRock or its affiliates.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended December 31, 2007 were $34,485,542 and $58,931,921, respectively.
Transactions in options written for the year ended December 31, 2007 were as
follows:
-------------------------------------------------------------------------------
Number of Premiums
Contracts Received
-------------------------------------------------------------------------------
Outstanding call options written,
at beginning of year ....................... 1,650 $ 2,422,350
Options written .............................. 23,290 38,925,940
Options expired .............................. (5,925) (8,552,214)
Options closed ............................... (17,515) (29,560,576)
------------------------
Outstanding call options written,
at end of year ............................. 1,500 $ 3,235,500
========================
4. Common Stock Transactions:
The Fund is authorized 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 year ended December 31, 2007 increased
by 82,012 as a result of dividend and distribution reinvestments and decreased
by 49,300 as a result of a repurchase offer. Shares issued and outstanding
during the year ended December 31, 2006 increased by 107,871 as a result of
dividend reinvestments and decreased by 4,501,309 as a result of a repurchase
offer.
Subject to the approval of the Board of Directors, the Fund will make offers to
repurchase its shares at annual (approximately 12-month) intervals. The shares
tendered in the repurchase offer will be subject to a repurchase fee retained by
the Fund to compensate the Fund for expenses directly related to the repurchase
offer.
With regard to repurchase fees, IQ will reimburse the Fund for the cost of
expenses paid in excess of 2% of the value of the shares that are repurchased.
16 SMALL CAP PREMIUM & DIVIDEND INCOME FUND INC. DECEMBER 31, 2007
Notes to Financial Statements (concluded)
5. Distributions to Shareholders:
The tax character of distributions paid during the years ended December 31, 2007
and December 31, 2006 was as follows:
--------------------------------------------------------------------------------
12/31/2007 12/31/2006
--------------------------------------------------------------------------------
Distributions paid from:
Ordinary income ................................ $18,128,392 $24,149,954
Long-term capital gains ........................ 4,626,661 5,729,370
Tax return of capital .......................... 4,501,255 1,629,839
--------------------------
Total distributions .............................. $27,256,308 $31,509,163
==========================
As of December 31, 2007 the components of accumulated losses on a tax basis were
as follows:
------------------------------------------------------------------------------
Undistributed ordinary income -- net ......................... --
Undistributed long-term capital gains -- net ................. --
------------
Total undistributed earnings -- net .......................... --
Capital loss carryforward .................................... --
Unrealized losses -- net ..................................... $(10,974,157)*
------------
Total accumulated losses -- net .............................. $(10,974,157)
============
* The difference between book-basis and tax-basis net unrealized losses is
attributable primarily to the tax deferral of losses on straddles, the
realization for tax purposes of unrealized gains (losses) on certain
financial futures contracts and options, the deferral of post-October
capital losses for tax purposes, the realization for tax purposes of
unrealized gains (losses) on certain securities that are part of a
straddle and other book/tax temporary differences.
SMALL CAP PREMIUM & DIVIDEND INCOME FUND INC. DECEMBER 31, 2007 17
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of Small Cap Premium & Dividend
Income Fund Inc.:
We have audited the accompanying statement of assets, liabilities and capital,
including the summary schedule of investments, of Small Cap Premium & Dividend
Income Fund Inc. as of December 31, 2007, and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the respective periods presented. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of December 31, 2007, by correspondence with the
custodian and brokers; where replies were not received from brokers, we
performed other auditing procedures. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Small
Cap Premium & Dividend Income Fund Inc. as of December 31, 2007, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and its financial highlights for each
of the respective periods presented, in conformity with accounting principles
generally accepted in the United States of America.
Deloitte & Touche LLP
Princeton, NJ
February 29, 2008
18 SMALL CAP PREMIUM & DIVIDEND INCOME FUND INC. DECEMBER 31, 2007
Fundamental Periodic Repurchase Policy
The Board of Directors approved a fundamental policy whereby the Fund would
adopt an "interval fund" structure pursuant to Rule 23c-3 under the Investment
Company Act of 1940, as amended (the "1940 Act"). As an interval fund, the Fund
will make annual repurchase offers at net asset value (less repurchase fee not
to exceed 2%) to all Fund shareholders. The percentage of outstanding shares
that the Fund can repurchase in each offer will be established by the Fund's
Board of Directors shortly before the commencement of each offer, and will be
between 5% and 25% of the Fund's then outstanding shares.
The Fund has adopted the following fundamental policy regarding periodic
repurchases:
a) The Fund will make offers to repurchase its shares at annual (approximately
12-month) intervals pursuant to Rule 23c-3 under the 1940 Act ("Offers"). The
Board of Directors may place such conditions and limitations on an Offer, as may
be permitted under Rule 23c-3.
b) The repurchase request deadline for each Offer, by which the Fund must
receive repurchase requests submitted by shareholders in response to the most
recent Offer, will be on approximately the anniversary of the prior year's
repurchase request deadline; and will be the fourteenth day prior to such
exercise date; provided, that in the event that such day is not a business day,
the repurchase request deadline will be the business day subsequent to the
fourteenth day prior to the exercise date of the call spreads and written call
options (the "Repurchase Request Deadline").
c) The maximum number of days between a Repurchase Request Deadline and the next
repurchase pricing date will be fourteen days; provided that if the fourteenth
day after a Repurchase Request Deadline is not a business day, the repurchase
pricing date shall be the next business day (the "Repurchase Pricing Date").
d) Offers may be suspended or postponed under certain circumstances, as provided
for in Rule 23c-3. (For further details, see Note 4 to the Financial
Statements.)
Under the terms of the Offer for the most recent annual period, the Fund offered
to purchase up to 684,690 shares from shareholders at an amount per share equal
to the Fund's net asset value per share calculated as of the close of business
of the New York Stock Exchange on July 20, 2007, ten business days after Friday,
July 6, 2007, the Repurchase Request Deadline. As of July 20, 2007, 49,300
shares, or .36% of the Fund's outstanding shares, were repurchased by the Fund
at $18.82 per share (subject to a repurchase fee of .38% of the net asset value
per share), the Fund's net asset value per share was determined as of 4:00 p.m.
EST, Friday, July 20, 2007.
Fund Certification
In May 2007, the Fund filed its Chief Executive Officer Certification for the
prior year with the New York Stock Exchange pursuant to Section 303A.12(a) of
the New York Stock Exchange Corporate Governance Listing Standards.
The Fund's Chief Executive Officer and Chief Financial Officer Certifications
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 were filed with the
Fund's Form N-CSR and are available on the Securities and Exchange Commission's
website at http://www.sec.gov.
Important Tax Information
The following information is provided with respect to the taxable ordinary
income portion of the distribution paid by Small Cap Premium & Dividend Income
Fund Inc. to shareholders of record on June 21, 2007 and December 20, 2007:
------------------------------------------------------------------------------------------
Qualified Dividend Income for Individuals .................................... .13%*
Dividends Qualifying for the Dividends Received Deduction for Corporations ... .12%*
Interest-Related Dividends for Non-U.S. Residents ............................ 5.73%**
Short-Term Capital Gain Dividends for Non-U.S. Residents ..................... 62.48%**
------------------------------------------------------------------------------------------
* The Fund hereby designates the percentage indicated above or the maximum
amount allowable by law.
** Represents the portion of the taxable ordinary income dividends eligible
for exemption from U.S. withholding tax for nonresident aliens and foreign
corporations.
Additionally, the Fund distributed long-term capital gains of $.169750 per share
to shareholders of record on June 21, 2007 and December 20, 2007.
SMALL CAP PREMIUM & DIVIDEND INCOME FUND INC. DECEMBER 31, 2007 19
Automatic Dividend Reinvestment Plan
How the Plan Works -- The Fund offers a Dividend Reinvestment Plan (the "Plan")
under which income and capital gains dividends paid by the Fund are
automatically reinvested in additional shares of Common Stock of the Fund. The
Plan is administered on behalf of the shareholders by The Bank of New York
Mellon (the "Plan Agent"). Under the Plan, whenever the Fund declares a
dividend, participants in the Plan will receive the equivalent in shares of
Common Stock of the Fund. The Plan Agent will acquire the shares for the
participant's account either (i) through receipt of additional unissued but
authorized shares of the Fund ("newly issued shares") or (ii) by purchase of
outstanding shares of Common Stock on the open market on the New York Stock
Exchange or elsewhere. If, on the dividend payment date, the Fund's net asset
value per share is equal to or less than the market price per share plus
estimated brokerage commissions (a condition often referred to as a "market
premium"), the Plan Agent will invest the dividend amount in newly issued
shares. If the Fund's net asset value per share is greater than the market price
per share (a condition often referred to as a "market discount"), the Plan Agent
will invest the dividend amount by purchasing on the open market additional
shares. If the Plan Agent is unable to invest the full dividend amount in open
market purchases, or if the market discount shifts to a market premium during
the purchase period, the Plan Agent will invest any uninvested portion in newly
issued shares. The shares acquired are credited to each shareholder's account.
The amount credited is determined by dividing the dollar amount of the dividend
by either (i) when the shares are newly issued, the net asset value per share on
the date the shares are issued or (ii) when shares are purchased in the open
market, the average purchase price per share.
Participation in the Plan -- Participation in the Plan is automatic, that is, a
shareholder is automatically enrolled in the Plan when he or she purchases
shares of Common Stock of the Fund unless the shareholder specifically elects
not to participate in the Plan. Shareholders who elect not to participate will
receive all dividend distributions in cash. Shareholders who do not wish to
participate in the Plan, must advise the Plan Agent in writing (at the address
set forth below) that they elect not to participate in the Plan. Participation
in the Plan is completely voluntary and may be terminated or resumed at any time
without penalty by writing to the Plan Agent.
Benefits of the Plan -- The Plan provides an easy, convenient way for
shareholders to make additional, regular investments in the Fund. The Plan
promotes a long-term strategy of investing at a lower cost. All shares acquired
pursuant to the Plan receive voting rights. In addition, if the market price
plus commissions of the Fund's shares is above the net asset value, participants
in the Plan will receive shares of the Fund for less than they could otherwise
purchase them and with a cash value greater than the value of any cash
distribution they would have received. However, there may not be enough shares
available in the market to make distributions in shares at prices below the net
asset value. Also, since the Fund does not redeem shares, the price on resale
may be more or less than the net asset value.
Plan Fees -- There are no enrollment fees or brokerage fees for participating in
the Plan. The Plan Agent's service fees for handling the reinvestment of
distributions are paid for by the Fund. However, brokerage commissions may be
incurred when the Fund purchases shares on the open market and shareholders will
pay a pro rata share of any such commissions.
Tax Implications -- The automatic reinvestment of dividends and distributions
will not relieve participants of any federal, state or local income tax that may
be payable (or required to be withheld) on such dividends. Therefore, income and
capital gains may still be realized even though shareholders do not receive
cash. Participation in the Plan generally will not affect the tax-exempt status
of exempt interest dividends paid by the Fund. If, when the Fund's shares are
trading at a market premium, the Fund issues shares pursuant to the Plan that
have a greater fair market value than the amount of cash reinvested, it is
possible that all or a portion of the discount from the market value (which may
not exceed 5% of the fair market value of the Fund's shares) could be viewed as
a taxable distribution. If the discount is viewed as a taxable distribution, it
is also possible that the taxable character of this discount would be allocable
to all the shareholders, including shareholders who do not participate in the
Plan. Thus, shareholders who do not participate in the Plan might be required to
report as ordinary income a portion of their distributions equal to their
allocable share of the discount.
Contact Information -- All correspondence concerning the Plan, including any
questions about the Plan, should be directed to the Plan Agent at BNY Mellon
Shareowner Services, P.O. Box 358035, Pittsburgh, PA 15252-8035, Telephone:
877-296-3711.
20 SMALL CAP PREMIUM & DIVIDEND INCOME FUND INC. DECEMBER 31, 2007
Directors and Officers
Number of
IQ Advisors-
Affiliate
Advised Funds Other Public
Position(s) Length of and Portfolios Directorships
Held with Time Overseen By Held by
Name Address & Age Fund Served** Principal Occupation(s) During Past 5 Years Director Director
====================================================================================================================================
Non-Interested Directors*
------------------------------------------------------------------------------------------------------------------------------------
Paul P.O. Box 9095 Director & 2005 to Professor, Columbia University Business School 11 None
Glasserman Princeton, NJ Chairman of present since 1991; Senior Vice Dean since July 2004.
08543-9095 the Audit
Age: 45 Committee
------------------------------------------------------------------------------------------------------------------------------------
Steven W. P.O. Box 9095 Director & 2005 to Retired since August 2002; Managing Director, 11 Ametek, Inc.
Kohlhagen Princeton, NJ Chairman of present Wachovia National Bank and its predecessors
08543-9095 Nominating (1992 - 2002).
Age: 60 & Corporate
Governance
Committee
------------------------------------------------------------------------------------------------------------------------------------
William J. P.O. Box 9095 Director & 2005 to Retired since November 2004; Chairman and 11 None
Rainer Princeton, NJ Chairman of present Chief Executive Officer, OneChicago, LLC, a
08543-9095 the Board designated contract market (2001 - 2004);
Age: 61 Chairman, U.S. Commodity Futures
Trading Commission (1999 - 2001).
------------------------------------------------------------------------------------------------------------------------------------
Laura S. P.O. Box 9095 Director 2007 to Independent Consultant; Commissioner of the 11 CA, Inc.
Unger Princeton, NJ present Securities and Exchange Commission (1997 - (software) and
08543-9095 2002), including Acting Chairperson of the SEC Ambac Financial
Age: 46 from February to August 2001; Regulatory Expert Group, Inc.
for CNBC (2002 - 2003).
------------------------------------------------------------------------------------------------------------------------
* Each of the Non-Interested Directors is a member of the Audit Committee and the Nominating and Corporate
Governance Committee.
** Each Director will serve for a term of one year and until his successor is elected and qualifies, or his earlier
death, resignation or removal as provided in the Fund's Bylaws, charter or by statute.
SMALL CAP PREMIUM & DIVIDEND INCOME FUND INC. DECEMBER 31, 2007 21
Directors and Officers (concluded)
Position(s) Length of
Held with Time
Name Address & Age Fund Served Principal Occupation(s) During Past 5 Years
====================================================================================================================================
Fund Officers*
------------------------------------------------------------------------------------------------------------------------------------
Mitchell P.O. Box 9011 President 2005 to IQ Investment Advisors LLC, President since April 2004; MLPF&S, Managing
M. Cox Princeton, NJ present Director, Head of Global Investments & Insurance Solutions and Head of Global
08543-9011 Alternative Investments since 2008; MLPF&S, Managing Director, Head of Financial
Age: 42 Products Group since 2007; Head of Global Wealth Management Market Investments &
Origination (2003 - 2007); MLPF&S, FAM Distributors ("FAMD"), Director since
2006; IQ Financial Products LLC, Director since 2006.
------------------------------------------------------------------------------------------------------------------------------------
Justin C. P.O. Box 9011 Vice 2005 to IQ Investment Advisors LLC, Vice President since 2005; MLPF&S, Managing
Ferri Princeton, NJ President present Director, Structured and Alternative Solutions since 2008; MLPF&S, Director,
08543-9011 Structured and Alternative Solutions in 2007; Director, Global Wealth Management
Age: 32 Market Investments & Origination (2005 - 2007); MLPF&S, Vice President, Global
Private Client Market Investments & Origination (2005); MLPF&S, Vice President,
Head of Global Private Client Rampart Equity Derivatives (2004 - 2005); MLPF&S,
Vice President, Co-Head Global Private Client Domestic Analytic Development
(2002 - 2004); mPower Advisors LLC, Vice President, Quantitative Development
(1999 - 2002).
------------------------------------------------------------------------------------------------------------------------------------
Donald C. P.O. Box 9011 Vice 2005 to IQ Investment Advisors LLC, Secretary and Treasurer (2004 - March 2007);
Burke Princeton, NJ President present BlackRock, Inc., Managing Director since 2006; Merrill Lynch Investment
08543-9011 and Managers, L.P. ("MLIM") and Fund Asset Management ("FAM") Managing Director
Age: 47 Secretary (2006); MLIM and FAM, First Vice President (1997 - 2005) and Treasurer (1999 -
2006); Princeton Services, Inc., Senior Vice President and Treasurer (1999 -
2006).
------------------------------------------------------------------------------------------------------------------------------------
James E. P.O. Box 9011 Vice 2007 to IQ Investment Advisors LLC, Treasurer since March 2007; MLPF&S, Director,
Hillman Princeton, NJ President present Structured and Alternative Solutions since 2007; Director, Global Wealth
08543-9011 and Management Market Investments & Origination (September 2006 - 2007); Managed
Age: 50 Treasurer Account Advisors LLC, Vice President and Treasurer since November 2006;
Director, Citigroup Alternative Investments Tax Advantaged Short Term Fund in
2006; Director, Korea Equity Inc. Fund in 2006; Independent Consultant, January
to September 2006; Managing Director, The Bank of New York, Inc. (1999 - 2006).
------------------------------------------------------------------------------------------------------------------------------------
Catherine P.O. Box 9011 Chief 2007 to IQ Investment Advisors LLC, Chief Compliance Officer since April 2007; Merrill
A. Princeton, NJ Compliance present Lynch & Co., Inc., Director, Corporate Compliance since September 2007;
Johnston 08543-9011 Officer BlackRock, Inc., Director (2006 - 2007); MLIM, Director (2003 - 2006), Vice
Age: 53 President (1998 - 2003).
------------------------------------------------------------------------------------------------------------------------------------
Martin G. P.O. Box 9011 Chief 2006 to IQ Investment Advisors LLC, Chief Legal Officer since June 2006; Merrill Lynch &
Byrne Princeton, NJ Legal present Co., Inc., Office of General Counsel, Managing Director since 2006, First Vice
08543-9011 Officer President (2002 - 2006), Director (2000 - 2002); Managed Account Advisors LLC,
Age: 45 Chief Legal Officer since November 2006; FAMD, Director since 2006.
------------------------------------------------------------------------------------------------------------------------------------
Jay M. P.O. Box 9011 Vice 2005 to IQ Investment Advisors LLC, Vice President (2005 - March 2007); BlackRock, Inc.,
Fife Princeton, NJ President present Managing Director since 2007; BlackRock, Inc., Director in 2006; MLIM, Director
08543-9011 (2000 - 2006); MLPF&S, Director (2000) and Vice President (1997 - 2000).
Age: 37
------------------------------------------------------------------------------------------------------------------------------------
Colleen R. P.O. Box 9011 Vice 2005 to IQ Investment Advisors LLC, Chief Administrative Officer and Secretary since
Rusch Princeton, NJ President present 2007, Vice President since 2005; MLPF&S, Director, Structured and Alternative
08543-9011 and Solutions since 2007; MLPF&S, Director, Global Wealth Management Market
Age: 40 Assistant Investments & Origination (2005 - 2007); MLIM, Director from January 2005 to
Secretary July 2005; Vice President of MLIM (1998 - 2004).
------------------------------------------------------------------------------------------------------------------------
* Officers of the Fund serve at the pleasure of the Board of Directors.
------------------------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
BNY Mellon Shareowner Services
480 Washington Boulevard
Jersey City, NJ 07310
NYSE Symbol
RCC
22 SMALL CAP PREMIUM & DIVIDEND INCOME FUND INC. DECEMBER 31, 2007
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 shareholders. 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.
SMALL CAP PREMIUM & DIVIDEND INCOME FUND INC. DECEMBER 31, 2007 23
[LOGO]
IQ
INVESTMENT
ADVISORS www.IQIAFunds.com
Small Cap Premium & Dividend Income Fund Inc. seeks to provide shareholders with
a high level of income, with a secondary goal of capital appreciation.
This report, including the financial information herein, is transmitted to
shareholders of Small Cap Premium & Dividend Income Fund Inc. for their
information. It is not a prospectus. Past performance results shown in this
report should not be considered a representation of future performance.
Statements and other information herein are as dated and are subject to change.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge at
www.IQIAFunds.com/proxyvoting.asp; or upon request by calling toll-free
1-877-449-4742 or through the Securities and Exchange Commission's website at
http://www.sec.gov. Information about how the Fund voted proxies relating to
securities held in the Fund's portfolio during the most recent 12-month period
ended June 30 is available (1) at www.IQIAFunds.com/proxyvoting.asp; and (2) on
the Securities and Exchange Commission's website at http://www.sec.gov.
Small Cap Premium & Dividend Income Fund Inc.
P.O. Box 9011
Princeton, NJ 08543-9011
#IQRCC -- 12/07
Item 2 - Code of Ethics - The registrant (or the "Fund") has adopted a code
of ethics, as of the end of the period covered by this report, that
applies to the registrant's principal executive officer, principal
financial officer and principal accounting officer, or persons
performing similar functions. During the period covered by this
report, there have been no amendments to or waivers granted under
the code of ethics. A copy of the code of ethics is available
without charge upon request by calling toll-free 1-877-449-4742.
Item 3 - Audit Committee Financial Expert - The registrant's board of
directors has determined that (i) the registrant has the following
audit committee financial experts serving on its audit committee and
(ii) each audit committee financial expert is independent: (1) Alan
R. Batkin (resigned as of February 22, 2007) and (2) Steven W.
Kohlhagen.
Under applicable securities laws, a person determined to be an audit
committee financial expert will not be deemed an "expert" for any
purpose, including without limitation for the purposes of Section 11
of the Securities Act of 1933, as a result of being designated or
identified as an audit committee financial expert. The designation
or identification as an audit committee financial expert does not
impose on such person any duties, obligations, or liabilities
greater than the duties, obligations, and liabilities imposed on
such person as a member of the audit committee and board of
directors in the absence of such designation or identification.
Item 4 - Principal Accountant Fees and Services
----------------------------------------------------------------------------------------------------------------------------------
(a) Audit Fees (b) Audit-Related Fees(1) (c) Tax Fees(2) (d) All Other Fees
----------------------------------------------------------------------------------------------------------------------------------
Current Previous Current Previous Current Previous Current Previous
Fiscal Year Fiscal Fiscal Year Fiscal Fiscal Year Fiscal Fiscal Year Fiscal
Registrant Name End Year End End Year End End Year End End Year End
----------------------------------------------------------------------------------------------------------------------------------
Small Cap Premium
& Dividend Income
Fund Inc. $33,000 $33,000 $0 $0 $8,500 $19,000 $0 $0
----------------------------------------------------------------------------------------------------------------------------------
1 The nature of the services include assurance and related services
reasonably related to the performance of the audit of financial statements
not included in Audit Fees.
2 The nature of the services include tax compliance, tax advice and tax
planning.
(e)(1) Audit Committee Pre-Approval Policies and Procedures:
The registrant's audit committee (the "Committee") has adopted
policies and procedures with regard to the pre-approval of services.
Audit, audit-related and tax compliance services provided to the
registrant on an annual basis require specific pre-approval by the
Committee. The Committee also must approve other non-audit services
provided to the registrant and those non-audit services provided to
the registrant's affiliated service providers that relate directly
to the operations and the financial reporting of the registrant.
Certain of these non-audit services that the Committee believes are
a) consistent with the SEC's auditor independence rules and b)
routine and recurring services that will not impair the independence
of the independent accountants may be approved by the Committee
without consideration on a specific case-by-case basis ("general
pre-approval"). However, such services will only be deemed
pre-approved provided that any individual project does not exceed
$5,000 attributable to the registrant or $50,000 for all of the
registrants the Committee oversees. Any proposed services exceeding
the pre-approved cost levels will require specific pre-approval by
the Committee, as will any other services not subject to general
pre-approval (e.g., unanticipated but permissible services). The
Committee is informed of each service approved subject to general
pre-approval at the next regularly scheduled in-person board
meeting.
(e)(2) None of the services described in each of Items 4(b) through
(d) were approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not Applicable
(g) Affiliates' Aggregate Non-Audit Fees:
--------------------------------------------------------------------
Current Fiscal Previous Fiscal
Registrant Name Year End Year End
--------------------------------------------------------------------
Small Cap Premium &
Dividend Income Fund Inc. $2,102,500 $1,980,000
--------------------------------------------------------------------
(h) The registrant's audit committee has considered and determined
that the provision of non-audit services that were rendered to the
registrant's investment adviser (not including any non-affiliated
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by the registrant's investment
adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services
to the registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal accountant's independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $0, 0%
Item 5 - Audit Committee of Listed Registrants - The following individuals
are members of the registrant's separately-designated standing audit
committee established in accordance with Section 3(a)(58)(A) of the
Exchange Act (15 U.S.C. 78c(a)(58)(A)):
Alan R. Batkin (resigned as of February 22, 2007)
Steven W. Kohlhagen
Paul Glasserman
William J. Rainer
Laura S. Unger (effective September 12, 2007)
Item 6 - Schedule of Investments - attached hereto.
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
Advertising Agencies - 0.4% 2,700 DG FastChannel, Inc. (a) $ 69,228
2,800 Greenfield Online, Inc. (a) 40,908
5,100 inVentiv Health, Inc. (a) 157,896
4,000 Marchex, Inc. Class B 43,440
6,800 National CineMedia, Inc. 171,428
7,800 Valassis Communications, Inc. (a) 91,182
16,230 ValueClick, Inc. (a) 355,437
-------------
929,519
---------------------------------------------------------------------------------------------------------------
Aerospace - 0.7% 800 AeroVironment, Inc. (a) 19,360
2,100 Argon ST, Inc. (a) 38,976
7,200 Curtiss-Wright Corp. 361,440
4,200 Heico Corp. 228,816
2,500 Ladish Co., Inc. (a) 107,975
1,500 MTC Technologies, Inc. (a) 35,250
6,300 Moog, Inc. Class A (a) 288,603
9,600 Orbital Sciences Corp. (a) 235,392
5,700 Teledyne Technologies, Inc. (a) 303,981
1,500 TransDigm Group, Inc. (a) 67,755
-------------
1,687,548
---------------------------------------------------------------------------------------------------------------
Agriculture, Fishing & 600 Alico, Inc. 21,900
Ranching - 0.1% 2,300 The Andersons, Inc. 103,040
1,400 Cadiz, Inc. (a) 29,400
-------------
154,340
---------------------------------------------------------------------------------------------------------------
Air Transport - 0.7% 6,300 AAR Corp. (a)(c) 239,589
9,600 ABX Holdings, Inc. (a) 40,128
14,900 AirTran Holdings, Inc. (a) 106,684
6,500 Alaska Air Group, Inc. (a) 162,565
500 Allegiant Travel Co. (a) 16,070
2,300 Atlas Air Worldwide Holdings, Inc. (a) 124,706
3,400 Bristow Group, Inc. (a) 192,610
8,600 ExpressJet Holdings, Inc. (a) 21,328
28,700 JetBlue Airways Corp. (a) 169,330
3,400 Midwest Air Group, Inc. (a) 50,320
2,500 PHI, Inc. (a) 77,550
2,300 Pinnacle Airlines Corp. (a) 35,075
5,700 Republic Airways Holdings, Inc. (a) 111,663
9,800 SkyWest, Inc. 263,130
-------------
1,610,748
---------------------------------------------------------------------------------------------------------------
Aluminum - 0.2% 4,710 Century Aluminum Co. (a) 254,057
2,300 Kaiser Aluminum Corp. 182,804
-------------
436,861
---------------------------------------------------------------------------------------------------------------
Auto Parts: After Market - 0.1% 3,600 Aftermarket Technology Corp. (a) 98,136
3,500 Commercial Vehicle Group, Inc. (a) 50,750
1,600 Standard Motor Products, Inc. 13,056
3,100 Superior Industries International, Inc. 56,327
-------------
218,269
---------------------------------------------------------------------------------------------------------------
Auto Parts: Original 6,600 American Axle & Manufacturing Holdings, Inc. 122,892
Equipment - 0.5% 3,000 Amerigon Inc. (a) 63,180
11,500 ArvinMeritor, Inc. 134,895
16,300 Hayes Lemmerz International, Inc. (a) 74,491
12,370 Lear Corp. (a) 342,154
2,550 Noble International Ltd. 41,591
1,300 Sauer-Danfoss, Inc. 32,565
1,300 Stoneridge, Inc. (a) 10,452
7,500 Tenneco, Inc. (a) 195,525
21,100 Visteon Corp. (a) 92,629
-------------
1,110,374
---------------------------------------------------------------------------------------------------------------
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
Auto, Trucks & Parts - 0.1% 3,300 Accuride Corp. (a) $ 25,938
10,400 Force Protection, Inc. (a) 48,568
1,500 Miller Industries, Inc. (a) 20,535
5,200 Modine Manufacturing Co. 85,852
4,500 Spartan Motors, Inc. 34,380
5,200 Wabash National Corp. 39,988
-------------
255,261
---------------------------------------------------------------------------------------------------------------
Banks: New York City - 0.1% 4,700 Beneficial Mutual Bancorp, Inc. (a) 45,684
4,800 Signature Bank (a) 162,000
-------------
207,684
---------------------------------------------------------------------------------------------------------------
Banks: Outside New York City 2,100 1st Source Corp. 36,351
- 4.8% 700 Abington Bancorp, Inc. 6,580
2,600 Alabama National Bancorp. 202,306
3,800 Amcore Financial, Inc. 86,260
2,800 AmericanWest Bancorp 49,364
2,200 Ameris Bancorp 37,070
1,200 Bancfirst Corp. 51,420
3,700 Banco Latinoamericano de Exportaciones, SA 'E' 60,347
2,000 The Bancorp, Inc. (a) 26,920
2,000 Bank of the Ozarks, Inc. 52,400
3,800 BankFinancial Corp. 60,116
2,100 Banner Corp. 60,333
6,200 Boston Private Financial Holdings, Inc. 167,896
10,842 CVB Financial Corp. 112,106
2,100 Capital City Bank Group, Inc. 59,262
1,600 Capital Corp. of the West 31,088
2,300 Capitol Bancorp Ltd. 46,276
4,400 Cascade Bancorp 61,248
8,300 Cathay General Bancorp 219,867
9,000 Centennial Bank Holdings, Inc. (a) 52,020
2,100 Center Financial Corp. 25,872
5,000 Central Pacific Financial Corp. 92,300
4,000 Chemical Financial Corp. 95,160
7,500 Chittenden Corp. 267,150
12,100 Citizens Banking Corp. 175,571
3,100 City Holding Co. 104,904
2,100 CityBank 46,830
800 Clifton Savings Bancorp, Inc. 7,840
2,600 CoBiz Financial, Inc. 38,662
2,700 Columbia Banking System, Inc. 80,271
1,700 Community Bancorp (a) 29,529
4,900 Community Bank System, Inc. 97,363
2,600 Community Trust Bancorp, Inc. 71,578
6,300 Corus Bankshares, Inc. 67,221
1,700 Enterprise Financial Services Corp. 40,477
13,700 First BanCorp 99,873
1,600 First Bancorp 30,224
3,600 First Busey Corp. 71,496
5,500 First Charter Corp. 164,230
12,000 First Commonwealth Financial Corp. 127,800
3,929 First Community Bancorp, Inc. 162,032
1,600 First Community Bancshares, Inc. 51,024
5,400 First Financial Bancorp 61,560
3,400 First Financial Bankshares, Inc. 128,010
2,500 First Financial Corp. 70,850
3,000 First Merchants Corp. 65,520
7,800 First Midwest Bancorp, Inc. 238,680
1,400 First Regional Bancorp (a) 26,446
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
1,350 First South Bancorp, Inc. $ 29,957
3,300 First State Bancorp. 45,870
13,000 FirstMerit Corp. 260,130
4,100 Franklin Bank Corp. (a) 17,671
6,350 Frontier Financial Corp. 117,919
8,550 Glacier Bancorp, Inc. 160,227
1,400 Greene County Bancshares, Inc. 26,880
4,400 Hancock Holding Co. 168,080
6,800 Hanmi Financial Corp. 58,616
5,103 Harleysville National Corp. 74,351
2,100 Heartland Financial USA, Inc. 38,997
1,900 Heritage Commerce Corp. 34,941
1,391 Home Bancshares, Inc. 29,169
2,600 Independent Bank Corp./MA 70,772
4,005 Independent Bank Corp./MI 38,048
3,400 Integra Bank Corp. 47,974
8,326 International Bancshares Corp. 174,346
8,300 Investors Bancorp, Inc. (a) 117,362
3,600 Irwin Financial Corp. 26,460
2,866 Lakeland Bancorp, Inc. 33,217
2,000 Lakeland Financial Corp. 41,800
5,477 MB Financial, Inc. 168,856
2,477 Macatawa Bank Corp. 21,277
3,080 MainSource Financial Group, Inc. 47,925
2,900 Midwest Banc Holdings, Inc. 36,018
5,500 NBT Bancorp, Inc. 125,510
3,700 Nara Bancorp, Inc. 43,179
7,951 National Penn Bancshares, Inc. 120,378
2,200 Northfield Bancorp, Inc. (a) 23,804
11,400 Old National Bancorp 170,544
2,253 Old Second Bancorp, Inc. 60,358
2,100 Omega Financial Corp. 61,446
3,700 Oriental Financial Group 49,617
7,900 Pacific Capital Bancorp 159,027
2,000 Park National Corp. 129,000
1,700 Peoples Bancorp, Inc. 42,313
2,700 Pinnacle Financial Partners, Inc. (a) 68,634
2,800 Piper Jaffray Cos. (a) 129,696
1,450 Preferred Bank 37,729
3,100 PrivateBancorp, Inc. 101,215
5,800 Prosperity Bancshares, Inc. 170,462
5,700 Provident Bankshares Corp. 121,923
2,850 Renasant Corp. 61,474
1,511 Republic Bancorp, Inc. Class A 24,977
100 Royal Bancshares of Pennsylvania Class A 1,100
4,000 S&T Bancorp, Inc. 110,560
1,260 SCBT Financial Corp. 39,904
5,500 SVB Financial Group (a) 277,200
1,785 SY Bancorp, Inc. 42,733
2,600 Sandy Spring Bancorp, Inc. 72,332
200 Santander BanCorp 1,732
2,400 Seacoast Banking Corp. of Florida 24,672
2,500 Security Bank Corp. 22,850
800 Sierra Bancorp 19,912
2,300 Simmons First National Corp. Class A 60,950
11,200 The South Financial Group, Inc. 175,056
1,782 Southside Bancshares, Inc. 36,460
2,500 Southwest Bancorp, Inc. 45,825
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
12,100 Sterling Bancshares, Inc. $ 135,036
4,500 Sterling Financial Corp. 73,890
1,800 Suffolk Bancorp 55,278
2,390 Sun Bancorp, Inc. (a) 37,714
4,800 Superior Bancorp (a) 25,776
13,174 Susquehanna Bancshares, Inc. 242,929
900 Taylor Capital Group, Inc. 18,360
4,100 Texas Capital Bancshares, Inc. (a) 74,825
1,290 Tompkins Trustco, Inc. 50,052
2,300 Trico Bancshares 44,390
13,100 TrustCo Bank Corp. NY 129,952
8,200 Trustmark Corp. 207,952
16,300 UCBH Holdings, Inc. 230,808
4,800 UMB Financial Corp. 184,128
9,888 Umpqua Holdings Corp. 151,682
2,150 Union Bankshares Corp. 45,451
6,500 United Bankshares, Inc. 182,130
6,000 United Community Banks, Inc. 94,800
700 United Security Bancshares 10,696
2,000 Univest Corp. of Pennsylvania 42,220
2,970 Virginia Commerce Bancorp (a) 34,838
2,300 Washington Trust Bancorp, Inc. 58,029
3,900 WesBanco, Inc. 80,340
2,600 West Coast Bancorp 48,100
5,100 Westamerica Bancorp. 227,205
2,300 Western Alliance Bancorp (a) 43,171
2,700 Wilshire Bancorp, Inc. 21,195
3,500 Wintrust Financial Corp. 115,955
-------------
11,204,040
---------------------------------------------------------------------------------------------------------------
Beverage: Brewers (Wineries) 1,600 Boston Beer Co., Inc. Class A (a) 60,240
- 0.0%
---------------------------------------------------------------------------------------------------------------
Beverage: Soft Drinks - 0.1% 800 Coca-Cola Bottling Co. Consolidated 47,104
600 Farmer Bros. Co. 13,794
2,700 Green Mountain Coffee Roasters, Inc. (a) 109,890
5,100 Jones Soda Co. (a) 37,944
1,680 National Beverage Corp. 13,507
2,400 Peet's Coffee & Tea, Inc. (a) 69,768
-------------
292,007
---------------------------------------------------------------------------------------------------------------
Biotechnology Research & 2,790 AMAG Pharmaceuticals, Inc. (a) 167,763
Production - 2.5% 5,600 Acadia Pharmaceuticals, Inc. (a)(c) 61,992
4,300 Acorda Therapeutics, Inc. (a) 94,428
4,400 Albany Molecular Research, Inc. (a) 63,272
5,900 Alexion Pharmaceuticals, Inc. (a) 442,677
7,800 Allos Therapeutics, Inc. (a) 49,062
5,900 Alnylam Pharmaceuticals, Inc. (a) 171,572
2,200 Altus Pharmaceuticals, Inc. (a) 11,396
7,900 American Oriental Bioengineering, Inc. (a) 87,532
1,000 Amicus Therapeutics, Inc. (a) 10,750
12,700 Applera Corp. - Celera Genomics Group (a) 201,549
12,000 Arena Pharmaceuticals, Inc. (a) 93,960
12,700 Ariad Pharmaceuticals, Inc. (a) 53,975
5,000 Arqule, Inc. (a) 29,000
6,900 Array Biopharma, Inc. (a) 58,098
4,200 ArthroCare Corp. (a) 201,810
500 Biodel, Inc. (a) 11,615
4,300 Bionovo, Inc. (a) 7,353
11,900 Cell Genesys, Inc. (a) 27,370
9,300 Cubist Pharmaceuticals, Inc. (a)(c) 190,743
6,400 Cypress Bioscience, Inc. (a) 70,656
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
4,100 Cytokinetics, Inc. (a) $ 19,393
16,700 Discovery Laboratories, Inc. (a) 35,905
17,200 Encysive Pharmaceuticals, Inc. (a) 14,620
7,600 Enzon Pharmaceuticals, Inc. (a) 72,428
15,900 Exelixis, Inc. (a) 137,217
15,200 GenVec, Inc. (a) 22,344
1,800 Genomic Health, Inc. (a) 40,752
11,900 Geron Corp. (a) 67,592
9,300 Halozyme Therapeutics, Inc. (a) 66,123
21,900 Human Genome Sciences, Inc. (a) 228,636
4,100 Idenix Pharmaceuticals, Inc. (a) 11,070
12,400 Immunomedics, Inc. (a) 28,768
14,200 Incyte Corp. (a) 142,710
2,900 Integra LifeSciences Holdings Corp. (a) 121,597
4,600 InterMune, Inc. (a) 61,318
2,200 Kendle International, Inc. (a) 107,624
2,200 Kensey Nash Corp. (a) 65,824
7,100 Keryx Biopharmaceuticals, Inc. (a) 59,640
4,900 Kosan Biosciences, Inc. (a) 17,640
8,500 MannKind Corp. (a) 67,660
4,900 Martek Biosciences Corp. (a) 144,942
4,000 Maxygen, Inc. (a) 32,120
3,900 Medivation, Inc. 56,160
2,000 Metabolix, Inc. (a) 47,600
3,800 Momenta Pharmaceuticals, Inc. (a) 27,132
6,900 Myriad Genetics, Inc. (a) 320,298
9,900 Nabi Biopharmaceuticals (a) 35,739
600 Nanosphere, Inc. (a) 8,394
5,200 Nastech Pharmaceutical Co., Inc. (a) 19,760
6,600 Neurocrine Biosciences, Inc. (a) 29,964
3,000 Neurogen Corp. (a) 10,350
2,500 Novacea, Inc. (a) 7,450
9,500 OSI Pharmaceuticals, Inc. (a) 460,845
2,400 Omrix Biopharmaceuticals, Inc. (a) 83,376
700 Orexigen Therapeutics, Inc. (a) 9,975
2,800 Osiris Therapeutics, Inc. (a) 33,656
2,800 PharmaNet Development Group, Inc. (a) 109,788
5,200 Poniard Pharmaceuticals, Inc. (a) 22,932
3,900 Progenics Pharmaceuticals, Inc. (a) 70,473
1,860 Protalix BioTherapeutics, Inc. (a) 6,324
3,800 Regeneration Technologies, Inc. (a) 32,984
4,500 Rigel Pharmaceuticals, Inc. (a) 114,255
8,204 Savient Pharmaceuticals, Inc. (a) 188,446
7,100 Seattle Genetics, Inc. (a) 80,940
300 Sucampo Pharmaceuticals, Inc. Class A (a) 5,502
1,200 Synta Pharmaceuticals Corp. (a) 8,040
9,200 Telik, Inc. (a) 31,924
4,300 Tercica, Inc. (a) 29,154
5,100 Vanda Pharmaceuticals, Inc. (a) 35,088
11,400 ViroPharma, Inc. (a) 90,516
19,000 XOMA Ltd. (a) 64,410
6,300 ZymoGenetics, Inc. (a) 73,521
-------------
5,787,492
---------------------------------------------------------------------------------------------------------------
Building Materials - 0.5% 1,500 Ameron International Corp. 138,225
1,900 BlueLinx Holdings, Inc. 7,467
4,600 Building Material Holding Corp. 25,438
3,000 LSI Industries, Inc. 54,600
3,300 NCI Building Systems, Inc. (a) 95,007
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
200 PGT, Inc. (a) $ 952
6,000 Simpson Manufacturing Co., Inc. 159,540
4,390 Texas Industries, Inc. 307,739
2,100 Trex Co., Inc. (a) 17,871
3,700 Watsco, Inc. 136,012
3,800 Zoltek Cos., Inc. (a) 162,906
-------------
1,105,757
---------------------------------------------------------------------------------------------------------------
Building: Cement - 0.0% 5,500 U.S. Concrete, Inc. (a) 18,315
---------------------------------------------------------------------------------------------------------------
Building: Heating & Plumbing 1,800 Aaon, Inc. (c) 35,676
- 0.1% 4,500 Interline Brands, Inc. (a) 98,595
-------------
134,271
---------------------------------------------------------------------------------------------------------------
Building: Miscellaneous - 0.2% 2,500 Builders FirstSource, Inc. (a) 18,050
7,100 Comfort Systems USA, Inc. 90,738
3,000 Drew Industries, Inc. (a) 82,200
5,600 Goodman Global, Inc. (a) 137,424
5,100 Griffon Corp. (a) 63,495
-------------
391,907
---------------------------------------------------------------------------------------------------------------
Building: Roofing & Wallboard 7,700 Beacon Roofing Supply, Inc. (a) 64,834
- 0.0%
---------------------------------------------------------------------------------------------------------------
Cable Television Services - 0.1% 71,400 Charter Communications, Inc. Class A (a) 83,538
4,100 Crown Media Holdings, Inc. Class A (a) 26,650
15,900 TiVo, Inc. (a) 132,606
-------------
242,794
---------------------------------------------------------------------------------------------------------------
Casinos & Gambling - 0.6% 4,300 Ameristar Casinos, Inc. 118,422
8,700 Bally Technologies, Inc. (a) 432,564
1,300 Churchill Downs, Inc. 70,161
2,550 Dover Downs Gaming & Entertainment, Inc. 28,687
2,600 Isle of Capri Casinos, Inc. (a) 35,802
3,500 Lakes Entertainment, Inc. (a) 24,255
4,000 MTR Gaming Group, Inc. (a) 27,160
8,500 Magna Entertainment Corp. Class A (a) 8,245
1,600 Monarch Casino & Resort, Inc. (a) 38,528
4,600 Multimedia Games, Inc. (a) 38,364
9,740 Pinnacle Entertainment, Inc. (a) 229,474
1,700 Riviera Holdings Corp. (a) 52,360
5,700 Shuffle Master, Inc. (a) 68,343
5,100 Trump Entertainment Resorts, Inc. (a) 21,930
6,550 WMS Industries, Inc. (a) 239,992
-------------
1,434,287
---------------------------------------------------------------------------------------------------------------
Chemicals - 1.8% 3,000 American Vanguard Corp. 52,050
3,800 Arch Chemicals, Inc. 139,650
2,900 Balchem Corp. 64,902
8,900 CF Industries Holdings, Inc. 979,534
3,500 Cabot Microelectronics Corp. (a) 125,685
5,900 Calgon Carbon Corp. (a) 93,751
4,700 Cambrex Corp. 39,386
3,000 EnerSys (a) 74,880
6,100 Energy Conversion Devices, Inc. (a) 205,265
11,100 Exide Technologies (a) 88,800
5,600 Georgia Gulf Corp. 37,072
19,300 Hercules, Inc. 373,455
2,700 Innophos Holdings, Inc. 40,176
4,000 Innospec, Inc. 68,640
2,800 LSB Industries, Inc. (a) 79,016
2,800 Landec Corp. (a) 37,520
3,600 Medis Technologies Ltd. (a) 55,548
1,300 NL Industries, Inc. 14,859
2,100 NewMarket Corp. 116,949
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
2,500 Nuco2, Inc. (a) $ 62,250
4,600 OM Group, Inc. (a) 264,684
15,100 PolyOne Corp. (a) 99,358
1,900 Polypore International, Inc. (a) 33,250
5,700 Rockwood Holdings, Inc. (a) 189,354
4,800 Schulman A, Inc. 103,440
5,800 Senomyx, Inc. (a) 43,442
4,000 ShengdaTech, Inc. (a) 57,800
1,000 Stepan Co. 32,530
5,000 Tronox, Inc. Class A 44,500
2,300 Tronox, Inc. Class B 19,895
8,400 UAP Holding Corp. 324,240
11,500 W.R. Grace & Co. (a) 301,070
3,750 Zep, Inc. (a) 52,013
-------------
4,314,964
---------------------------------------------------------------------------------------------------------------
Coal - 0.2% 10,200 Alpha Natural Resources, Inc. (a) 331,296
19,800 International Coal Group, Inc. (a) 106,128
1,500 US BioEnergy Corp. (a) 17,565
-------------
454,989
---------------------------------------------------------------------------------------------------------------
Commercial Information 4,300 Arbitron, Inc. 178,751
Services - 0.1% 900 HSW International, Inc. (a) 5,607
5,300 infoUSA, Inc. 47,329
4,300 LECG Corp. (a) 64,758
3,800 LoopNet, Inc. (a) 53,390
-------------
349,835
---------------------------------------------------------------------------------------------------------------
Communications & Media - 0.1% 11,300 Entravision Communications Corp. Class A (a) 88,479
40,800 Gemstar-TV Guide International, Inc. (a) 194,208
3,600 Knology, Inc. (a) 46,008
-------------
328,695
---------------------------------------------------------------------------------------------------------------
Communications Technology - 2.4% 63,300 3Com Corp. (a) 286,116
2,900 Acme Packet, Inc. (a) 36,511
9,500 Adtran, Inc. 203,110
3,000 Anaren, Inc. (a) 49,470
5,000 Anixter International, Inc. (a)(c) 311,350
800 Aruba Networks, Inc. (a) 11,928
9,000 Atheros Communications, Inc. (a) 274,860
28,800 Avanex Corp. (a) 28,800
8,180 Avocent Corp. (a) 190,676
1,800 Bel Fuse, Inc. 52,686
1,000 BigBand Networks, Inc. (a) 5,140
3,000 Black Box Corp. 108,510
600 CPI International, Inc. (a) 10,260
6,500 CSG Systems International, Inc. (a) 95,680
3,100 Cbeyond Communications, Inc. (a) 120,869
8,200 Cogent Communications Group, Inc. (a)(c) 194,422
2,800 Comtech Group, Inc. (a) 45,108
3,500 Comtech Telecommunications Corp. (a) 189,035
4,100 Digi International, Inc. (a) 58,179
5,400 Ditech Networks, Inc. (a) 18,738
2,400 EMS Technologies, Inc. (a) 72,576
5,100 Echelon Corp. (a) 105,264
20,500 Extreme Networks, Inc. (a) 72,570
39,900 Finisar Corp. (a) 57,855
23,500 Foundry Networks, Inc. (a) 411,720
2,600 GeoEye, Inc. (a) 87,490
14,200 Harmonic, Inc. (a) 148,816
4,100 Harris Stratex Networks, Inc. Class A (a) 68,470
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
800 Hughes Communications, Inc. (a) $ 43,688
2,100 Infinera Corp. (a) 31,164
7,600 InterDigital, Inc. (a) 177,308
6,700 InterVoice, Inc. (a) 53,533
7,100 Ixia (a) 67,308
8,000 j2 Global Communications, Inc. (a) 169,360
1,900 Loral Space & Communications Ltd. (a) 65,075
5,600 NETGEAR, Inc. (a) 199,752
3,400 Network Equipment Technologies, Inc. (a) 28,628
3,400 Nextwave Wireless, Inc. (a) 18,292
5,600 Novatel Wireless, Inc. (a) 90,720
3,428 Oplink Communications, Inc. (a) 52,620
2,900 Optium Corp. (a) 22,852
3,800 SeaChange International, Inc. (a) 27,474
7,750 Secure Computing Corp. (a) 74,400
900 Shoretel, Inc. (a) 12,573
42,900 Sonus Networks, Inc. (a) 250,107
3,900 Standard Microsystems Corp. (a) 152,373
1,700 Starent Networks Corp. (a) 31,025
2,600 Switch and Data Facilities Co., Inc. (a) 41,652
29,700 Sycamore Networks, Inc. (a) 114,048
4,100 Syniverse Holdings, Inc. (a) 63,878
30,800 TIBCO Software, Inc. (a) 248,556
10,100 Tekelec (a) 126,250
7,800 Terremark Worldwide, Inc. (a) 50,700
17,300 UTStarcom, Inc. (a) 47,575
3,900 Viasat, Inc. (a) 134,277
6,700 Vonage Holdings Corp. (a) 15,410
-------------
5,726,807
---------------------------------------------------------------------------------------------------------------
Computer Services Software & 600 3PAR, Inc. (a) 7,680
Systems - 5.5% 6,000 ACI Worldwide, Inc. (a)(c) 114,240
9,900 Actuate Corp. (a) 76,923
4,600 American Reprographics Co. (a) 75,808
2,800 Ansoft Corp. (a) 72,380
12,600 Ansys, Inc. (a) 522,396
13,000 Ariba, Inc. (a) 144,950
20,800 Art Technology Group, Inc. (a) 89,856
4,400 AsiaInfo Holdings, Inc. (a) 48,400
13,740 Aspen Technology, Inc. (a) 222,863
34,000 BearingPoint, Inc. (a) 96,220
7,200 Blackbaud, Inc. 201,888
4,800 Blackboard, Inc. (a) 193,200
600 BladeLogic, Inc. (a) 17,742
5,000 Blue Coat Systems, Inc. (a) 164,350
13,600 Borland Software Corp. (a) 40,936
3,500 Bottomline Technologies, Inc. (a) 49,000
5,000 CACI International, Inc. Class A (a) 223,850
8,100 CMGI, Inc. (a) 106,029
2,900 COMSYS IT Partners, Inc. (a) 45,762
5,360 Chordiant Software, Inc. (a) 45,828
9,500 Ciber, Inc. (a) 58,045
1,200 ComScore, Inc. (a) 39,156
6,200 Commvault Systems, Inc. (a) 131,316
500 Compellent Technologies, Inc. (a) 6,015
700 Comverge, Inc. (a) 22,043
6,600 Concur Technologies, Inc. (a) 238,986
800 Constant Contact, Inc. (a) 17,200
5,400 DealerTrack Holdings, Inc. (a) 180,738
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
800 Delrek, Inc. (a) $ 12,184
6,700 Digital River, Inc. (a) 221,569
3,200 DivX, Inc. (a) 44,800
1,700 Double-Take Software, Inc. (a) 36,924
4,400 EPIQ Systems, Inc. (a) 76,604
9,200 Electronics for Imaging, Inc. (a) 206,816
9,600 Epicor Software Corp. (a) 113,088
5,800 Equinix, Inc. (a) 586,206
11,200 Gartner, Inc. Class A (a) 196,672
2,300 i2 Technologies, Inc. (a) 28,980
2,600 iGate Corp. (a) 22,022
2,600 Imergent, Inc. 27,534
14,600 Informatica Corp. (a) 263,092
3,700 Information Services Group, Inc. (a) 25,345
1,621 Integral Systems, Inc. 37,704
1,800 Interactive Intelligence, Inc. (a) 47,430
6,300 Internet Capital Group, Inc. (a) 73,962
7,500 Interwoven, Inc. (a) 106,650
4,500 JDA Software Group, Inc. (a) 92,070
4,400 Kenexa Corp. (a) 85,448
1,700 Keynote Systems, Inc. (a) 23,885
20,900 Lawson Software, Inc. (a) 214,016
2,000 Limelight Networks, Inc. (a) 13,780
9,800 Lionbridge Technologies, Inc. (a) 34,790
7,800 LivePerson, Inc. (a) 41,574
6,200 MSC.Software Corp. (a) 80,538
8,600 Macrovision Corp. (a) 157,638
6,100 Magma Design Automation, Inc. (a) 74,481
4,500 Manhattan Associates, Inc. (a) 118,620
3,100 Mantech International Corp. Class A (a) 135,842
13,900 Mentor Graphics Corp. (a) 149,842
2,500 Mercadolibre, Inc. (a) 184,700
3,700 Mercury Computer Systems, Inc. (a) 59,607
1,600 MicroStrategy, Inc. Class A (a) 152,160
6,600 Micros Systems, Inc. (a) 463,056
1,200 Monotype Imaging Holdings, Inc. (a) 18,204
5,200 Ness Technologies, Inc. (a) 47,996
1,100 Netezza Corp. (a) 15,180
23,500 Nuance Communications, Inc. (a) 438,980
5,400 Omniture, Inc. (a) 179,766
23,600 On2 Technologies, Inc. (a) 24,072
9,700 OpenTV Corp. (a) 12,804
13,500 Openwave Systems, Inc. 35,100
3,500 PDF Solutions, Inc. (a) 31,535
800 PROS Holdings, Inc. (a) 15,696
6,100 Packeteer, Inc. (a) 37,576
19,020 Parametric Technology Corp. (a) 339,507
1,300 Pegasystems, Inc. 15,509
6,900 Progress Software Corp. (a) 232,392
1,200 QAD, Inc. 11,208
11,100 Quest Software, Inc. (a) 204,684
16,600 RealNetworks, Inc. (a) 101,094
2,700 RightNow Technologies, Inc. (a) 42,795
26,140 SAIC, Inc. (a) 525,937
4,450 SAVVIS, Inc. (a) 124,021
2,100 SI International, Inc. (a) 57,687
3,000 SPSS, Inc. (a) 107,730
6,700 SRA International, Inc. Class A (a) 197,315
5,100 SYKES Enterprises, Inc. (a) 91,800
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
2,000 SYNNEX Corp. (a) $ 39,200
14,200 Sapient Corp. (a) 125,102
4,600 Sigma Designs, Inc. (a) 253,920
5,600 Smith Micro Software, Inc. (a) 47,432
3,800 Solera Holdings, Inc. (a) 94,164
10,500 SonicWALL, Inc. (a) 112,560
200 Sourcefire, Inc. (a) 1,668
14,000 Sourceforge, Inc. (a) 34,300
1,000 Stanley, Inc. (a) 32,020
900 SuccessFactors, Inc. (a) 10,638
14,700 Sybase, Inc. (a) 383,523
2,800 Synchronoss Technologies, Inc. (a) 99,232
1,800 Syntel, Inc. 69,336
2,700 Taleo Corp. Class A (a) 80,406
700 TechTarget, Inc. (a) 10,346
7,400 The TriZetto Group, Inc. (a) 128,538
6,900 Tyler Technologies, Inc. (a) 88,941
4,200 Ultimate Software Group, Inc. (a) 132,174
800 Unica Corp. (a) 7,400
4,500 VASCO Data Security International, Inc. (a) 125,640
4,900 Vignette Corp. (a) 71,589
200 Virtusa Corp. (a) 3,466
3,700 Visual Sciences, Inc. (a) 68,376
7,600 Websense, Inc. (a) 129,048
12,700 Wind River Systems, Inc. (a) 113,411
8,100 Zoran Corp. (a) 182,331
-------------
12,816,778
---------------------------------------------------------------------------------------------------------------
Computer Technology - 0.8% 19,500 Adaptec, Inc. (a) 65,910
6,200 Advanced Analogic Technologies, Inc. (a) 69,936
6,600 Cray, Inc. (a) 39,534
1,100 Data Domain, Inc. (a) 28,974
13,800 Emulex Corp. (a) 225,216
5,900 FalconStor Software, Inc. (a) 66,434
3,800 Hutchinson Technology, Inc. (a) 100,016
5,700 Imation Corp. 119,700
5,400 Immersion Corp. (a) 69,930
9,300 Intermec, Inc. (a) 188,883
300 Isilon Systems, Inc. (a) 1,524
15,500 Palm, Inc. 98,270
14,100 Perot Systems Corp. Class A (a) 190,350
31,900 Quantum Corp. (a) 85,811
4,900 Rackable Systems, Inc. (a) 49,000
4,400 Radiant Systems, Inc. (a) 75,812
3,700 Radisys Corp. (a) 49,580
2,000 Rimage Corp. (a) 51,900
6,000 STEC, Inc. (a) 52,440
19,700 Safeguard Scientifics, Inc. (a) 35,460
600 Silicon Graphics, Inc. (a) 10,968
3,600 Stratasys, Inc. (a) 93,024
3,900 Synaptics, Inc. (a) 160,524
10,000 Trident Microsystems, Inc. (a) 65,600
-------------
1,994,796
---------------------------------------------------------------------------------------------------------------
Construction - 0.3% 2,163 Brookfield Homes Corp. 34,175
10,300 EMCOR Group, Inc. (a) 243,389
5,800 Granite Construction, Inc. 209,844
2,800 Great Lakes Dredge & Dock Corp. 24,416
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
4,100 Perini Corp. (a) $ 169,822
-------------
681,646
---------------------------------------------------------------------------------------------------------------
Consumer Electronics - 0.8% 24,600 CNET Networks, Inc. (a) 224,844
3,000 DTS, Inc. (a) 76,710
20,100 EarthLink, Inc. (a) 142,107
100 Glu Mobile, Inc. (a) 522
5,500 InfoSpace, Inc. 103,400
7,010 Internap Network Services Corp. (a) 58,393
8,200 Ipass, Inc. (a) 33,292
3,100 LoJack Corp. (a) 52,111
6,300 Midway Games, Inc. (a) 17,388
6,400 NIC, Inc. 54,016
7,600 NetFlix, Inc. (a) 202,312
300 Protection One, Inc. (a) 3,567
4,500 Sohu.com, Inc. (a) 245,340
10,300 THQ, Inc. (a) 290,357
11,100 Take-Two Interactive Software, Inc. (a) 204,795
10,900 United Online, Inc. 128,838
2,300 Universal Electronics, Inc. (a) 76,912
-------------
1,914,904
---------------------------------------------------------------------------------------------------------------
Consumer Products - 0.5% 8,300 American Greetings Corp. Class A 168,490
4,400 Blyth, Inc. 96,536
1,300 CSS Industries, Inc. 47,710
2,700 Citi Trends, Inc. (a) 41,688
2,700 Mannatech, Inc. 17,064
5,100 Matthews International Corp. Class A 239,037
5,000 Nautilus, Inc. 24,250
3,400 RC2 Corp. (a) 95,438
6,100 Smith & Wesson Holding Corp. (a) 37,210
6,400 Spectrum Brands, Inc. (a) 34,112
10,100 Tupperware Corp. 333,603
1,600 USANA Health Sciences, Inc. (a) 59,328
-------------
1,194,466
---------------------------------------------------------------------------------------------------------------
Containers & Packaging: Metals 11,200 AptarGroup, Inc. 458,192
& Glass - 0.5% 5,200 Greif, Inc. 339,924
6,200 Mobile Mini, Inc. (a) 114,948
4,000 Silgan Holdings, Inc. 207,760
-------------
1,120,824
---------------------------------------------------------------------------------------------------------------
Containers & Packaging: Paper 1,000 AEP Industries, Inc. (a) 32,010
& Plastic - 0.1% 11,200 Graphic Packaging Corp. (a) 41,328
4,700 Myers Industries, Inc. 68,009
-------------
141,347
---------------------------------------------------------------------------------------------------------------
Copper - 0.1% 6,200 Mueller Industries, Inc. 179,738
---------------------------------------------------------------------------------------------------------------
Cosmetics - 0.2% 4,400 Elizabeth Arden, Inc. (a) 89,540
4,600 Helen of Troy Ltd. (a) 78,844
1,000 Inter Parfums, Inc. 17,970
8,700 Nu Skin Enterprises, Inc. Class A 142,941
31,991 Revlon, Inc. Class A (a) 37,749
1,600 Ulta Salon Cosmetics & Fragrance, Inc. (a) 27,440
-------------
394,484
---------------------------------------------------------------------------------------------------------------
Diversified Financial Services 100 ACA Capital Holdings, Inc. (a) 85
- 0.6% 7,800 Aldabra 2 Acquisition Corp. (a) 75,972
800 Clayton Holdings, Inc. (a) 4,136
1,100 Duff & Phelps Corp. (a) 21,648
7,500 Euronet Worldwide, Inc. (a) 225,000
1,800 Evercore Partners, Inc. Class A 38,790
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
1,350 FCStone Group, Inc. (a) $ 62,141
9,800 F.N.B. Corp. 144,060
3,000 Greenhill & Co., Inc. 199,440
8,400 Heckmann Corp. (a) 61,740
7,600 Hicks Acquisition Co. I, Inc. (a) 69,844
3,100 Huron Consulting Group, Inc. (a) 249,953
6,100 Interactive Brokers Group, Inc. Class A (a) 197,152
4,800 Marathon Acquisition Corp. (a) 37,344
5,400 NRDC Acquisition Corp. (a) 49,518
1,200 Oritani Financial Corp. (a) 14,760
6,500 Triplecrown Acquisition Corp. (a) 59,410
-------------
1,510,993
---------------------------------------------------------------------------------------------------------------
Diversified Materials & 6,700 Acuity Brands, Inc. 301,500
Processing - 0.8% 7,100 Barnes Group, Inc. 237,069
7,900 Brady Corp. 277,211
8,300 Clarcor, Inc. 315,151
15,400 Hexcel Corp. (a) 373,912
2,600 Koppers Holdings, Inc. 112,424
12,000 Olin Corp. 231,960
5,100 Tredegar Corp. 82,008
1,100 Valhi, Inc. 17,534
-------------
1,948,769
---------------------------------------------------------------------------------------------------------------
Drug & Grocery Store Chains 100 Arden Group, Inc. Class A 15,469
- 0.6% 8,500 Casey's General Stores, Inc. 251,685
4,107 The Great Atlantic & Pacific Tea Co., Inc. (a) 128,672
2,100 Ingles Markets, Inc. Class A 53,319
5,300 Longs Drug Stores Corp. 249,100
2,400 Nash Finch Co. 84,672
6,800 Ruddick Corp. 235,756
3,500 Spartan Stores, Inc. 79,975
400 Village Super Market, Inc. Class A 20,356
2,000 Weis Markets, Inc. 79,880
5,000 Winn-Dixie Stores, Inc. (a) 84,350
-------------
1,283,234
---------------------------------------------------------------------------------------------------------------
Drugs & Pharmaceuticals - 3.0% 5,500 Adams Respiratory Therapeutics, Inc. (a) 328,570
400 Affymax, Inc. (a) 8,944
7,800 Akorn, Inc. (a) 57,252
2,400 Alexza Pharmaceuticals, Inc. (a) 19,416
15,700 Alkermes, Inc. (a) 244,763
6,500 Alpharma, Inc. Class A (a) 130,975
4,700 Auxilium Pharmaceuticals, Inc. (a) 140,953
5,600 Beijing Med-Pharm Corp. (a) 61,488
3,100 Bentley Pharmaceuticals, Inc. (a) 46,779
700 BioForm Medical, Inc. (a) 4,781
15,600 BioMarin Pharmaceuticals, Inc. (a) 552,240
2,100 Bradley Pharmaceuticals, Inc. (a) 41,370
9,700 CV Therapeutics, Inc. (a) 87,785
2,000 Cadence Pharmaceuticals, Inc. (a) 29,720
1,200 Caraco Pharmaceutical Laboratories Ltd. (a) 20,580
2,900 Chattem, Inc. (a) 219,066
13,000 CytRx Corp. (a) 36,790
13,600 Dendreon Corp. (a) 84,592
10,800 Durect Corp. (a) 69,444
100 Emergent Biosolutions, Inc. (a) 506
4,800 Enzo Biochem, Inc. (a) 61,152
2,200 GTx, Inc. (a) 31,570
11,000 Indevus Pharmaceuticals, Inc. (a) 76,450
13,400 Isis Pharmaceuticals, Inc. (a) 211,050
8,600 Javelin Pharmaceuticals, Inc. (a) 32,164
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
1,400 Jazz Pharmaceuticals, Inc. (a) $ 20,580
5,800 K-V Pharmaceutical Co. Class A (a) 165,532
12,300 Ligand Pharmaceuticals, Inc. Class B 59,409
500 MAP Pharmaceuticals, Inc. (a) 8,755
13,000 MGI Pharma, Inc. (a) 526,890
20,500 Medarex, Inc. (a) 213,610
8,400 Medicines Co. (a) 160,944
8,500 Medicis Pharmaceutical Corp. Class A 220,745
14,900 Nektar Therapeutics (a) 99,979
4,200 Noven Pharmaceuticals, Inc. (a) 58,296
500 Obagi Medical Products, Inc. (a) 9,145
8,920 Onyx Pharmaceuticals, Inc. (a) 496,130
6,200 Pain Therapeutics, Inc. (a) 65,720
5,700 Par Pharmaceutical Cos., Inc. (a) 136,800
4,800 Penwest Pharmaceuticals Co. (a) 28,080
12,600 Perrigo Co. 441,126
4,200 Pharmion Corp. (a) 264,012
4,300 Pozen, Inc. (a) 51,600
4,700 Quidel Corp. (a) 91,509
9,900 Regeneron Pharmaceuticals, Inc. (a) 239,085
8,200 Salix Pharmaceuticals Ltd. (a) 64,616
11,200 Santarus, Inc. (a) 30,800
5,500 Sciele Pharma, Inc. (a) 112,475
1,500 Sirtris Pharmaceuticals, Inc. (a) 20,535
2,900 Somaxon Pharmaceuticals, Inc. (a) 15,109
8,700 SuperGen, Inc. (a) 31,755
700 Trubion Pharmaceuticals, Inc. (a) 7,000
3,400 United Therapeutics Corp. (a) 332,010
15,500 Valeant Pharmaceuticals International (a) 185,535
8,000 Vivus, Inc. (a) 41,440
3,300 Xenoport, Inc. (a) 184,404
-------------
6,982,026
---------------------------------------------------------------------------------------------------------------
Education Services - 0.6% 600 American Public Education, Inc. (a) 25,068
4,300 Bright Horizons Family Solutions, Inc. (a) 148,522
1,600 Capella Education Co. (a) 104,736
14,500 Corinthian Colleges, Inc. (a)(c) 223,300
9,800 DeVry, Inc. 509,208
100 Lincoln Educational Services Corp. (a) 1,472
1,200 Renaissance Learning, Inc. 16,800
2,400 Strayer Education, Inc. 409,392
3,800 Universal Technical Institute, Inc. (a) 64,600
-------------
1,503,098
---------------------------------------------------------------------------------------------------------------
Electrical & Electronics - 0.3% 11,300 Benchmark Electronics, Inc. (a) 200,349
1,700 Coleman Cable, Inc. (a) 16,065
2,600 OSI Systems, Inc. (a) 68,822
7,500 Plexus Corp. (a) 196,950
7,300 TTM Technologies, Inc. (a) 85,118
4,000 Universal Display Corp. (a) 82,680
-------------
649,984
---------------------------------------------------------------------------------------------------------------
Electrical Equipment & 3,300 A.O. Smith Corp. 115,665
Components - 1.0% 1,600 AZZ Inc. (a) 45,360
6,200 American Superconductor Corp. (a) 169,508
7,470 Baldor Electric Co. 251,440
5,800 CTS Corp. 57,594
4,000 Cohu, Inc. 61,200
3,100 Franklin Electric Co., Inc. 118,637
4,500 Genlyte Group, Inc. (a) 428,400
3,900 Littelfuse, Inc. (a) 128,544
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
7,600 MKS Instruments, Inc. (a) $ 145,464
1,300 Powell Industries, Inc. (a) 57,291
12,200 Power-One, Inc. (a) 48,678
4,300 Sonic Solutions, Inc. (a) 44,677
10,500 Taser International, Inc. (a) 150,570
6,600 Technitrol, Inc. 188,628
2,500 Triumph Group, Inc. 205,875
-------------
2,217,531
---------------------------------------------------------------------------------------------------------------
Electrical: Household 800 National Presto Industries, Inc. 42,128
Appliance - 0.0%
---------------------------------------------------------------------------------------------------------------
Electronics - 0.7% 4,000 Agilysys, Inc. 60,480
7,300 Arrowhead Research Corp. (a) 27,594
6,700 Avid Technology, Inc. (a) 189,878
5,200 Daktronics, Inc. 117,364
21,600 Flir Systems, Inc. (a) 676,080
3,900 II-VI, Inc. (a) 119,145
22,300 MRV Communications, Inc. (a) 51,736
6,400 Methode Electronics, Inc. 105,216
1,400 Multi-Fineline Electronix, Inc. (a) 24,276
3,500 Park Electrochemical Corp. 98,840
9,400 Semtech Corp. (a) 145,888
2,100 Supertex, Inc. (a) 65,709
-------------
1,682,206
---------------------------------------------------------------------------------------------------------------
Electronics: Instruments, 2,400 Faro Technologies, Inc. (a) 65,232
Gauges & Meters - 0.3% 4,890 Itron, Inc. (a) 469,293
2,700 Measurement Specialties, Inc. (a) 59,670
700 OYO Geospace Corp. (a) 52,752
2,700 Zygo Corp. (a) 33,642
-------------
680,589
---------------------------------------------------------------------------------------------------------------
Electronics: Medical Systems 2,100 Accuray, Inc. (a) 31,962
- 1.6% 10,600 Affymetrix, Inc. (a)(c) 245,284
2,000 Analogic Corp. 135,440
2,700 Aspect Medical Systems, Inc. (a) 37,800
9,800 Bruker BioSciences Corp. (a) 130,340
1,600 Cynosure, Inc. Class A (a) 42,336
2,300 Datascope Corp. 83,720
7,000 eResearch Technology, Inc. (a) 82,740
3,600 Greatbatch, Inc. (a) 71,964
4,300 Haemonetics Corp. (a) 270,986
19,480 Hologic, Inc. (a) 1,337,107
8,707 Illumina, Inc. (a) 515,977
5,600 Luminex Corp. (a) 90,944
2,000 Masimo Corp. (a) 78,900
9,700 Minrad International, Inc. (a) 31,525
4,000 Natus Medical, Inc. (a) 77,400
3,300 NxStage Medical, Inc. (a) 50,061
2,800 Quality Systems, Inc. 85,372
2,900 Sirona Dental Systems, Inc. (a) 97,092
1,500 Tomotherapy, Inc. (a) 29,340
2,300 Visicu, Inc. (a) 27,301
3,400 Zoll Medical Corp. (a) 90,848
-------------
3,644,439
---------------------------------------------------------------------------------------------------------------
Electronics: Semi-Conductors/ 9,700 AMIS Holdings, Inc. (a) 97,194
Components - 1.9% 4,500 Actel Corp. (a) 61,470
17,000 Amkor Technology, Inc. (a) 145,010
9,600 Anadigics, Inc. (a) 111,072
11,675 Applied Micro Circuits Corp. (a) 102,040
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
700 AuthenTec, Inc. (a) $ 10,171
700 Cavium Networks, Inc. (a) 16,114
14,400 Cirrus Logic, Inc. (a) 76,032
79,800 Conexant Systems, Inc. (a) 66,234
5,300 DSP Group, Inc. (a) 64,660
4,800 Diodes, Inc. (a) 144,336
5,900 Exar Corp. (a) 47,023
2,300 Excel Technology, Inc. (a) 62,330
7,800 Formfactor, Inc. (a) 258,180
6,200 Genesis Microchip, Inc. (a) 53,134
2,400 Hittite Microwave Corp. (a) 114,624
1,100 IPG Photonics Corp. (a) 21,989
4,200 IXYS Corp. (a) 33,684
19,900 Lattice Semiconductor Corp. (a) 64,675
7,100 MIPS Technologies, Inc. (a) 35,216
9,000 Micrel, Inc. 76,050
12,400 Microsemi Corp. (a) 274,536
8,700 Microtune, Inc. (a) 56,811
3,600 Monolithic Power Systems, Inc. (a) 77,292
2,800 Netlogic Microsystems, Inc. (a) 90,160
37,900 ON Semiconductor Corp. (a) 336,552
8,300 Omnivision Technologies, Inc. (a) 129,895
4,400 PLX Technology, Inc. (a) 40,920
32,900 PMC-Sierra, Inc. (a) 215,166
4,200 Pericom Semiconductor Corp. (a) 78,540
41,037 RF Micro Devices, Inc. (a) 234,321
700 Rubicon Technology, Inc. (a) 16,625
9,800 SiRF Technology Holdings, Inc. (a) 246,274
14,300 Silicon Image, Inc. (a) 64,636
15,400 Silicon Storage Technology, Inc. (a) 46,046
24,800 Skyworks Solutions, Inc. (a) 210,800
13,000 Spansion LLC Class A (a) 51,090
11,800 Syntax-Brillian Corp. (a) 36,344
3,100 Techwell, Inc. (a) 34,131
7,800 Tessera Technologies, Inc. (a) 324,480
23,700 TriQuint Semiconductor, Inc. (a) 157,131
3,300 Volterra Semiconductor Corp. (a) 36,399
-------------
4,419,387
---------------------------------------------------------------------------------------------------------------
Electronics: Technology - 0.5% 2,300 3D Systems Corp. (a) 35,512
4,600 Acacia Research - Acacia Technologies (a)(c) 41,308
1,500 American Science & Engineering, Inc. 85,125
6,700 Checkpoint Systems, Inc. (a) 174,066
7,100 Cogent, Inc. (a) 79,165
2,500 Cubic Corp. 98,000
1,300 Eagle Test Systems, Inc. (a) 16,614
3,300 Gerber Scientific, Inc. (a) 35,640
12,600 ION Geophysical Corp. (a) 198,828
2,100 Innovative Solutions & Support, Inc. (a) 20,349
5,200 Ionatron, Inc. (a) 14,872
13,500 Kemet Corp. (a) 89,505
4,200 ScanSource, Inc. (a) 135,870
7,300 Smart Modular Technologies WWH, Inc. (a) 74,314
500 Super Micro Computer, Inc. (a) 3,835
-------------
1,103,003
---------------------------------------------------------------------------------------------------------------
Energy Miscellaneous - 0.7% 2,100 Alon USA Energy, Inc. 57,078
600 Approach Resources, Inc. (a) 7,716
4,930 Aventine Renewable Energy Holdings, Inc. (a) 62,907
2,800 CVR Energy, Inc. (a) 69,832
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
2,100 Clean Energy Fuels Corp. (a) $ 31,794
3,200 Concho Resources, Inc. (a) 65,952
5,600 Crosstex Energy, Inc. 208,544
1,400 Dawson Geophysical Co. (a) 100,044
500 EnerNOC, Inc. (a) 24,550
12,500 Evergreen Energy, Inc. (a) 27,875
14,100 Evergreen Solar, Inc. (a) 243,507
10,800 FuelCell Energy, Inc. (a) 107,136
1,267 GeoMet, Inc. (a) 6,588
820 MarkWest Hydrocarbon, Inc. 51,373
4,500 Matrix Service Co. (a) 98,190
2,400 Nova Biosource Fuels, Inc. (a) 6,960
2,100 Ormat Technologies, Inc. 115,521
5,600 Pacific Ethanol, Inc. (a) 45,864
6,300 Penn Virginia Corp. 274,869
30,200 Rentech, Inc. (a) 54,662
5,300 Verenium Corp. (a) 26,447
-------------
1,687,409
---------------------------------------------------------------------------------------------------------------
Engineering & Contracting 6,800 Aecom Technology Corp. (a)(c) 194,276
Services - 0.3% 2,500 Clean Harbors, Inc. (a) 129,250
6,600 Dycom Industries, Inc. (a) 175,890
3,300 ENGlobal Corp. (a) 37,488
2,100 Integrated Electrical Services, Inc. (a) 39,459
2,500 Layne Christensen Co. (a) 123,025
1,300 Michael Baker Corp. (a) 53,430
1 URS Corp. (a) 35
-------------
752,853
---------------------------------------------------------------------------------------------------------------
Entertainment - 0.3% 2,200 Carmike Cinemas, Inc. 15,972
3,800 Cinemark Holdings, Inc. 64,600
6,700 Gaylord Entertainment Co. (a) 271,149
12,100 Live Nation, Inc. (a) 175,692
3,600 Lodgenet Entertainment Corp. (a) 62,784
2,300 Speedway Motorsports, Inc. 71,484
-------------
661,681
---------------------------------------------------------------------------------------------------------------
Fertilizers - 0.3% 15,000 Terra Industries, Inc. (a) 716,400
---------------------------------------------------------------------------------------------------------------
Finance Companies - 0.1% 2,100 Asta Funding, Inc. 55,524
878 Credit Acceptance Corp. (a) 18,148
3,300 MVC Capital, Inc. 53,262
1,800 NewStar Financial, Inc. (a) 14,904
3,100 World Acceptance Corp. (a) 83,638
-------------
225,476
---------------------------------------------------------------------------------------------------------------
Finance: Small Loan - 0.1% 10,900 Advance America, Cash Advance Centers, Inc. 110,744
2,300 Dollar Financial Corp. (a) 70,587
3,400 Encore Capital Group, Inc. (a) 32,912
2,200 Nelnet, Inc. Class A 27,962
400 QC Holdings, Inc. 4,500
-------------
246,705
---------------------------------------------------------------------------------------------------------------
Financial Data Processing 3,000 Advent Software, Inc. (a)(c) 162,300
Services & Systems - 0.7% 860 Cass Information Systems, Inc. 28,733
3,300 CompuCredit Corp. (a) 32,934
10,441 CyberSource Corp. (a) 185,537
8,700 Deluxe Corp. 286,143
4,100 eSpeed, Inc. Class A (a) 46,330
3,300 ExlService Holdings, Inc. (a) 76,164
2,400 Heartland Payment Systems, Inc. 64,320
9,400 Hypercom Corp. (a) 46,812
12,800 Jack Henry & Associates, Inc. 311,552
5,200 Online Resources Corp. (a) 61,984
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
4,200 TNS, Inc. $ 74,550
5,300 TradeStation Group, Inc. (a) 75,313
6,500 Wright Express Corp. (a) 230,685
-------------
1,683,357
---------------------------------------------------------------------------------------------------------------
Financial Information Services 1,600 Bankrate, Inc. (a) 76,944
- 0.3% 8,780 INVESTools, Inc. (a) 155,757
5,900 Interactive Data Corp. 194,759
2,000 Morningstar, Inc. (a) 155,500
17,500 Move, Inc. (a) 42,875
9,500 S1 Corp. (a) 69,350
3,400 TheStreet.com, Inc. 54,128
-------------
749,313
---------------------------------------------------------------------------------------------------------------
Financial Miscellaneous - 0.6% 5,700 Advanta Corp. Class B 45,999
2,800 Asset Acceptance Capital Corp. 29,148
4,800 Cash America International, Inc. 155,040
1,900 Federal Agricultural Mortgage Corp. Class B 50,008
4,700 Financial Federal Corp. 104,763
4,600 First Cash Financial Services, Inc. (a) 67,528
6,000 Global Cash Access, Inc. (a) 36,360
2,700 LandAmerica Financial Group, Inc. 90,315
2,700 Portfolio Recovery Associates, Inc. 107,109
1,500 RAM Holdings Ltd. (a) 7,410
3,000 Sanders Morris Harris Group, Inc. 30,750
10,600 Sotheby's Holdings, Inc. Class A 403,860
3,260 Sterling Bancorp 44,466
2,500 Stewart Information Services Corp. 65,225
2,200 Stifel Financial Corp. (a) 115,654
1,700 Triad Guaranty, Inc. (a) 16,660
1,000 WSFS Financial Corp. 50,200
800 Wauwatosa Holdings, Inc. (a) 10,256
-------------
1,430,751
---------------------------------------------------------------------------------------------------------------
Foods - 1.0% 600 American Dairy, Inc. (a) 7,770
2,300 Cal-Maine Foods, Inc. 61,019
6,300 Chiquita Brands International, Inc. (a) 115,857
12,600 Flowers Foods, Inc. 294,966
4,600 Fresh Del Monte Produce, Inc. (a) 154,468
6,000 Hain Celestial Group, Inc. (a) 192,000
2,300 J&J Snack Foods Corp. 71,944
5,100 Lance, Inc. 104,142
2,000 M&F Worldwide Corp. (a) 107,700
700 Maui Land & Pineapple Co., Inc. (a) 20,377
5,700 Performance Food Group Co. (a) 153,159
6,100 Pilgrim's Pride Corp. 176,595
4,300 Ralcorp Holdings, Inc. (a) 261,397
3,000 Sanderson Farms, Inc. 101,340
60 Seaboard Corp. 88,200
7,900 Sensient Technologies Corp. 223,412
500 Synutra International, Inc. (a) 15,100
5,843 Tootsie Roll Industries, Inc. 160,215
5,100 TreeHouse Foods, Inc. (a) 117,249
-------------
2,426,910
---------------------------------------------------------------------------------------------------------------
Forest Products - 0.1% 1,800 Deltic Timber Corp. 92,682
2,700 Universal Forest Products, Inc. 79,542
-------------
172,224
---------------------------------------------------------------------------------------------------------------
Forms & Bulk Printing 4,200 Ennis, Inc. 75,600
Services - 0.1% 3,300 Innerworkings, Inc. (a) 56,958
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
2,900 The Standard Register Co. $ 33,814
-------------
166,372
---------------------------------------------------------------------------------------------------------------
Funeral Parlors & Cemeteries 16,400 Stewart Enterprises, Inc. Class A 145,960
- 0.1%
---------------------------------------------------------------------------------------------------------------
Glass - 0.0% 4,900 Apogee Enterprises, Inc. 83,839
---------------------------------------------------------------------------------------------------------------
Gold - 0.2% 75,700 Coeur d'Alene Mines Corp. (a) 373,958
3,900 Royal Gold, Inc. 119,028
10,400 US Gold Corp. (a) 30,784
-------------
523,770
---------------------------------------------------------------------------------------------------------------
Health Care Facilities - 0.5% 8,600 Assisted Living Concepts, Inc. (a) 64,500
4,300 Capital Senior Living Corp. (a) 42,699
1,600 Emeritus Corp. (a) 40,240
100 The Ensign Group, Inc. 1,440
4,280 Kindred Healthcare, Inc. (a) 106,914
3,400 LCA-Vision, Inc. 67,898
1,400 MedCath Corp. (a) 34,384
1,100 National Healthcare Corp. 56,870
8,800 Psychiatric Solutions, Inc. (a) 286,000
2,100 Radiation Therapy Services, Inc. (a) 64,911
4,000 Res-Care, Inc. (a) 100,640
4,200 Skilled Healthcare Group, Inc. Class A (a) 61,446
7,300 Sun Healthcare Group, Inc. (a) 125,341
7,200 Sunrise Senior Living, Inc. (a) 220,896
-------------
1,274,179
---------------------------------------------------------------------------------------------------------------
Health Care Management 8,200 AMERIGROUP Corp. (a) 298,890
Services - 0.8% 8,500 Allscripts Healthcare Solutions, Inc. (a) 165,070
1,300 American Dental Partners, Inc. (a) 13,039
5,200 Amsurg Corp. (a) 140,712
900 athenahealth, Inc. (a) 32,400
7,000 Centene Corp. (a) 192,080
1,600 Computer Programs & Systems, Inc. 36,384
1,550 Corvel Corp. (a) 35,681
7,400 Eclipsys Corp. (a) 187,294
3,100 HMS Holdings Corp. (a) 102,951
4,800 HealthExtras, Inc. (a) 125,184
7,200 HealthSpring, Inc. (a) 137,160
2,100 Molina Healthcare, Inc. (a) 81,270
5,100 Omnicell, Inc. (a) 137,343
6,200 Phase Forward, Inc. (a) 134,850
2,500 Vital Images, Inc. (a) 45,175
-------------
1,865,483
---------------------------------------------------------------------------------------------------------------
Health Care Services - 0.7% 5,100 Alliance Imaging, Inc. (a) 49,062
4,033 Amedisys, Inc. (a) 195,681
7,000 Apria Healthcare Group, Inc. (a) 150,990
1,800 Bio-Reference Labs, Inc. (a) 58,824
1,200 Emergency Medical Services Corp. (a) 35,136
4,700 Gentiva Health Services, Inc. (a) 89,488
13,000 HealthSouth Corp. (a) 273,000
7,200 Healthcare Services Group, Inc. 152,496
5,700 Healthways, Inc. (a) 333,108
6,800 Hythiam, Inc. (a) 19,924
2,200 LHC Group, Inc. (a) 54,956
3,700 Matria Healthcare, Inc. (a) 87,949
3,000 Nighthawk Radiology Holdings, Inc. (a) 63,150
6,100 Odyssey HealthCare, Inc. (a) 67,466
3,686 PharMerica Corp. (a) 51,162
300 Virtual Radiologic Corp. (a) 6,084
-------------
1,688,476
---------------------------------------------------------------------------------------------------------------
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
Homebuilding - 0.1% 5,800 Beazer Homes USA, Inc. $ 43,094
5,000 Hovnanian Enterprises, Inc. Class A (a) 35,850
1,900 M/I Homes, Inc. 19,950
4,000 Meritage Homes Corp. (a) 58,280
9,400 Standard-Pacific Corp. 31,490
4,900 WCI Communities, Inc. (a) 18,522
-------------
207,186
---------------------------------------------------------------------------------------------------------------
Hotel/Motel - 0.1% 3,100 Lodgian, Inc. (a) 34,906
3,400 Marcus Corp. 52,530
3,200 Morgans Hotel Group Co. (a) 61,696
-------------
149,132
---------------------------------------------------------------------------------------------------------------
Household Furnishings - 0.4% 2,100 American Woodmark Corp. 38,178
4,200 Ethan Allen Interiors, Inc. 119,700
7,000 Furniture Brands International, Inc. 70,420
3,100 Haverty Furniture Cos., Inc. 27,869
1,000 hhgregg, Inc. (a) 13,760
1,700 Hooker Furniture Corp. 34,170
8,400 La-Z-Boy, Inc. 66,612
1,800 Libbey, Inc. 28,512
2,000 Lifetime Brands, Inc. 25,960
6,200 Sealy Corp. 69,378
8,600 Select Comfort Corp. (a) 60,286
11,714 Tempur-Pedic International, Inc. 304,213
-------------
859,058
---------------------------------------------------------------------------------------------------------------
Identification Control & Filter 5,800 Advanced Energy Industries, Inc. (a) 75,864
Devices - 0.6% 8,400 Asyst Technologies, Inc. (a) 27,384
2,300 Badger Meter, Inc. 103,385
4,200 ESCO Technologies, Inc. (a) 167,748
2,019 The Gorman-Rupp Co. 62,985
9,998 L-1 Identity Solutions, Inc. (a) 179,464
4,500 Mine Safety Appliances Co. 233,415
2,300 Robbins & Myers, Inc. 173,949
2,100 Sun Hydraulics, Inc. 52,983
5,300 Veeco Instruments, Inc. (a) 88,510
3,200 Vicor Corp. 49,888
4,900 Watts Water Technologies, Inc. Class A 146,020
4,500 X-Rite, Inc. (a) 52,290
-------------
1,413,885
---------------------------------------------------------------------------------------------------------------
Industrial Products - 0.0% 2,700 TAL International Group, Inc. 61,479
---------------------------------------------------------------------------------------------------------------
Insurance: Life - 0.4% 9,800 American Equity Investment Life Holding Co. 81,242
4,700 Citizens, Inc. (a) 25,991
7,250 Delphi Financial Group, Inc. Class A 255,780
500 Kansas City Life Insurance Co. 21,615
400 National Western Life Insurance Co. Class A 82,948
17,300 The Phoenix Cos., Inc. 205,351
3,500 Presidential Life Corp. 61,285
7,800 Scottish Re Group Ltd. (a) 5,655
7,400 Universal American Financial Corp. (a) 189,366
-------------
929,233
---------------------------------------------------------------------------------------------------------------
Insurance: Multi-Line - 1.1% 5,300 Alfa Corp. 114,851
12,400 Assured Guaranty Ltd. 329,096
2,100 CNA Surety Corp. (a) 41,559
300 CastlePoint Holdings, Ltd. 3,600
5,200 Crawford & Co. Class B 21,580
1,000 EMC Insurance Group, Inc. 23,670
2,000 eHealth, Inc. (a) 64,220
2,300 FBL Financial Group, Inc. Class A 79,419
1,400 Flagstone Reinsurance Holdings Ltd. 19,460
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
200 Hallmark Financial Services, Inc. (a) $ 3,172
5,900 Hilb Rogal & Hobbs Co. 239,363
7,500 Horace Mann Educators Corp. 142,050
300 Independence Holding Co. 3,795
9,900 Max Capital Group Ltd. 277,101
4,300 Meadowbrook Insurance Group, Inc. (a) 40,463
16,900 Montpelier Re Holdings Ltd. 287,469
2,100 Pico Holdings, Inc. (a) 70,602
9,300 Platinum Underwriters Holdings Ltd. 330,708
6,200 Primus Guaranty Ltd. (a) 43,462
3,700 Security Capital Assurance Ltd. 14,393
2,100 Validus Holdings Ltd. (a) 54,558
6,050 Zenith National Insurance Corp. 270,616
-------------
2,475,207
---------------------------------------------------------------------------------------------------------------
Insurance: Property-Casualty 3,500 AmTrust Financial Services, Inc. 48,195
- 1.6% 1,700 American Physicians Capital, Inc. 70,482
3,700 Amerisafe, Inc. (a)(c) 57,387
4,466 Argo Group International Holdings Ltd. (a) 188,153
14,200 Aspen Insurance Holdings Ltd. 409,528
1,700 Baldwin & Lyons, Inc. Class B 46,682
8,100 Commerce Group, Inc. 291,438
1,200 Darwin Professional Underwriters, Inc. (a) 29,004
1,600 Donegal Group, Inc. Class A 27,472
7,910 Employers Holdings, Inc. 132,176
1,000 Enstar Group Ltd. (a) 122,420
1,700 FPIC Insurance Group, Inc. (a) 73,066
2,800 First Acceptance Corp. (a) 11,816
2,400 First Mercury Financial Corp. (a) 58,560
11,000 Fremont General Corp. 38,500
1,200 Greenlight Capital Re Ltd. (a) 24,948
2,400 Harleysville Group, Inc. 84,912
9,600 IPC Holdings, Ltd. 277,152
2,300 Infinity Property & Casualty Corp. 83,099
1,600 The Midland Co. 103,504
900 NYMAGIC, Inc. 20,817
1,200 National Interstate Corp. 39,720
2,100 Navigators Group, Inc. (a) 136,500
4,200 Odyssey Re Holdings Corp. 154,182
6,200 PMA Capital Corp. Class A (a) 50,964
5,500 ProAssurance Corp. (a) 302,060
3,400 RLI Corp. 193,086
2,500 Safety Insurance Group, Inc. 91,550
4,100 SeaBright Insurance Holdings, Inc. (a) 61,828
9,300 Selective Insurance Group, Inc. 213,807
2,300 State Auto Financial Corp. 60,490
3,500 Tower Group, Inc. 116,900
3,400 United America Indemnity, Ltd. (a) 67,728
3,600 United Fire & Casualty Co. 104,724
-------------
3,792,850
---------------------------------------------------------------------------------------------------------------
Investment Management 7,800 Alternative Asset Management Acquisition Corp. (a) 71,370
Companies - 0.9% 2,100 Ampal-American Israel Corp. Class A (a) 15,519
19,776 Apollo Investment Corp. 337,181
10,432 Ares Capital Corp. 152,620
3,700 Calamos Asset Management, Inc. Class A 110,186
400 Capital Southwest Corp. 47,360
2,500 Cohen & Steers, Inc. 74,925
3,300 Cowen Group, Inc. (a) 31,383
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
2,000 Epoch Holding Corp. $ 29,280
4,100 FBR Capital Markets Corp. (a) 39,278
1,000 GAMCO Investors, Inc. Class A 69,200
2,200 Kohlberg Capital Corp. 26,400
10,000 MCG Capital Corp. 115,900
3,100 NGP Capital Resources Co. 48,453
6,100 National Financial Partners Corp. 278,221
5,900 NexCen Brands, Inc. (a) 28,556
300 Pzena Investment Management, Inc. Class A 3,420
3,400 TICC Capital Corp. 31,382
2,300 U.S. Global Investors, Inc. 38,318
2,100 W.P. Stewart & Co. Ltd. 10,731
13,700 Waddell & Reed Financial, Inc. Class A 494,433
-------------
2,054,116
---------------------------------------------------------------------------------------------------------------
Jewelry, Watches & 1,200 FGX International Holdings Ltd. (a) 14,220
Gemstones - 0.2% 7,000 Fossil, Inc. (a) 293,860
2,800 Movado Group, Inc. 70,812
-------------
378,892
---------------------------------------------------------------------------------------------------------------
Leisure Time - 0.4% 10,500 Callaway Golf Co. 183,015
4,700 Great Wolf Resorts, Inc. (a) 46,107
5,100 Life Time Fitness, Inc. (a) 253,368
5,400 Premier Exhibitions, Inc. (a) 59,076
11,500 Six Flags, Inc. (a) 23,345
1,300 Steinway Musical Instruments, Inc. 35,841
2,800 Sturm Ruger & Co., Inc. (a) 23,184
1,800 Town Sports International Holdings, Inc. (a) 17,208
5,100 Vail Resorts, Inc. (a) 274,431
2,500 West Marine, Inc. (a) 22,450
-------------
938,025
---------------------------------------------------------------------------------------------------------------
Machine Tools - 0.0% 1,100 Hurco Companies, Inc. (a) 48,015
---------------------------------------------------------------------------------------------------------------
Machinery & Engineering - 0.1% 7,250 Applied Industrial Technologies, Inc. 210,395
---------------------------------------------------------------------------------------------------------------
Machinery: Agricultural - 0.1% 1,650 Gehl Co. (a) 26,466
1,700 Lindsay Manufacturing Co. 120,173
-------------
146,639
---------------------------------------------------------------------------------------------------------------
Machinery: Construction & 3,700 ASV, Inc. (a) 51,245
Handling - 0.1% 3,000 Astec Industries, Inc. (a) 111,570
900 NACCO Industries, Inc. Class A 89,721
-------------
252,536
---------------------------------------------------------------------------------------------------------------
Machinery: Engines - 0.1% 8,000 Briggs & Stratton Corp. 181,280
4,900 Raser Technologies, Inc. (a) 72,765
-------------
254,045
---------------------------------------------------------------------------------------------------------------
Machinery: Industrial/ 8,800 Actuant Corp. Class A 299,288
Specialty - 0.7% 1,200 Altra Holdings, Inc. (a) 19,956
1,900 Chart Industries, Inc. (a) 58,710
3,100 Columbus McKinnon Corp. (a) 101,122
3,500 EnPro Industries, Inc. (a) 107,275
2,200 Hardinge, Inc. 36,916
2,400 Kadant, Inc. (a) 71,208
2,200 Middleby Corp. (a) 168,564
5,200 Nordson Corp. 301,392
2,800 Tecumseh Products Co. Class A (a) 65,548
2,700 Tennant Co. 119,583
900 Twin Disc, Inc. 63,693
4,900 Woodward Governor Co. 332,955
-------------
1,746,210
---------------------------------------------------------------------------------------------------------------
Machinery: Oil Well Equipment 4,500 Allis-Chalmers Energy, Inc. (a) 66,375
& Services - 1.5% 6,000 Basic Energy Services, Inc. (a)(c) 131,700
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
3,250 CARBO Ceramics, Inc. $ 120,900
6,013 Cal Dive International, Inc. (a) 79,606
6,300 Complete Production Services, Inc. (a) 113,211
4,100 Dril-Quip, Inc. (a) 228,206
9,707 Exterran Holdings, Inc. (a) 794,033
3,100 Flotek Industries, Inc. (a) 111,724
2,100 Gulf Island Fabrication, Inc. 66,591
3,700 Hornbeck Offshore Services, Inc. (a) 166,315
2,400 Lufkin Industries, Inc. 137,496
2,800 NATCO Group, Inc. Class A (a) 151,620
15,600 Newpark Resources, Inc. (a) 85,020
7,900 Oil States International, Inc. (a) 269,548
18,900 Parker Drilling Co. (a) 142,695
5,625 RPC, Inc. 65,869
7,600 Sulphco, Inc. 39,672
800 Superior Offshore International, Inc. (a) 4,016
2,200 Superior Well Services, Inc. (a) 46,684
800 T-3 Energy Services, Inc. (a) 37,608
1,900 Trico Marine Services, Inc. (a) 70,338
1,900 Union Drilling, Inc. (a) 29,963
4,900 W-H Energy Services, Inc. (a) 275,429
5,700 Willbros Group, Inc. (a) 218,253
-------------
3,452,872
---------------------------------------------------------------------------------------------------------------
Machinery: Specialty - 0.3% 5,850 Bucyrus International, Inc. 581,432
1,900 Cascade Corp. 88,274
5,100 Flow International Corp. (a) 47,532
3,600 Semitool, Inc. (a) 31,248
3,600 TurboChef Technologies, Inc. (a) 59,400
-------------
807,886
---------------------------------------------------------------------------------------------------------------
Manufactured Housing - 0.1% 12,500 Champion Enterprises, Inc. (a) 117,750
1,600 Palm Harbor Homes, Inc. (a) 16,880
1,200 Skyline Corp. 35,220
-------------
169,850
---------------------------------------------------------------------------------------------------------------
Manufacturing - 0.1% 7,900 Federal Signal Corp. 88,638
2,200 Standex International Corp. 38,390
-------------
127,028
---------------------------------------------------------------------------------------------------------------
Medical & Dental Instruments 3,500 Abaxis, Inc. (a) 125,510
& Supplies - 2.8% 4,700 Abiomed, Inc. (a) 73,038
9,700 Align Technology, Inc. (a) 161,796
12,100 American Medical Systems Holdings, Inc. (a)(c) 174,966
3,800 AngioDynamics, Inc. (a) 72,352
3,000 Bio-Rad Laboratories, Inc. Class A (a) 310,860
2,200 BioMimetic Therapeutics, Inc. (a) 38,214
4,600 CONMED Corp. (a) 106,306
1,300 Cantel Medical Corp. (a) 18,954
9,100 Cepheid, Inc. (a) 239,785
4,300 Conceptus, Inc. (a) 82,732
3,100 CryoLife, Inc. (a) 24,645
2,500 Cutera, Inc. (a) 39,250
3,800 Cyberonics, Inc. (a) 50,008
7,746 ev3, Inc. (a) 98,452
1,400 Hansen Medical, Inc. (a) 41,916
3,300 I-Flow Corp. (a) 52,074
2,400 ICU Medical, Inc. (a) 86,424
11,150 Immucor, Inc. (a) 378,989
900 Insulet Corp. (a) 21,132
4,200 Invacare Corp. 105,840
10,620 Inverness Medical Innovations, Inc. (a) 596,632
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
1,500 Landauer, Inc. $ 77,775
5,200 LifeCell Corp. (a) 224,172
1,900 Medical Action Industries, Inc. (a) 39,615
5,100 Mentor Corp. 199,410
5,975 Meridian Bioscience, Inc. 179,728
4,500 Merit Medical Systems, Inc. (a) 62,550
2,800 Micrus Endovascular Corp. (a) 55,104
2,300 Northstar Neuroscience, Inc. (a) 21,390
5,800 NuVasive, Inc. (a) 229,216
8,100 OraSure Technologies, Inc. (a) 72,009
2,500 Orthofix International NV (a) 144,925
6,500 Owens & Minor, Inc. 275,795
10,800 PSS World Medical, Inc. (a) 211,356
3,100 Palomar Medical Technologies, Inc. (a) 47,492
5,300 Sonic Innovations, Inc. (a) 40,916
2,900 SonoSite, Inc. (a) 97,643
5,600 Spectranetic Corp. (a) 85,848
4,100 Stereotaxis, Inc. (a) 50,102
10,500 Steris Corp. 302,820
2,600 SurModics, Inc. (a) 141,102
5,700 Symmetry Medical, Inc. (a) 99,351
8,700 Thoratec Corp. (a) 158,253
600 Trans1, Inc (a) 9,882
4,400 Ventana Medical Systems, Inc. (a) 383,812
1,500 Vital Signs, Inc. 76,680
4,000 Volcano Corp. (a) 50,040
5,300 West Pharmaceutical Services, Inc. 215,127
5,300 Wright Medical Group, Inc. (a) 154,601
-------------
6,606,589
---------------------------------------------------------------------------------------------------------------
Medical Services - 0.3% 1,900 Air Methods Corp. (a) 94,373
700 Genoptix, Inc. (a) 21,490
6,300 Magellan Health Services, Inc. (a) 293,769
4,600 Parexel International Corp. (a) 222,180
3,000 RehabCare Group, Inc. (a) 67,680
-------------
699,492
---------------------------------------------------------------------------------------------------------------
Metal Fabricating - 0.9% 1,100 Ampco-Pittsburgh Corp. 41,943
2,700 CIRCOR International, Inc. 125,172
2,000 Dynamic Materials Corp. 117,920
4,100 Encore Wire Corp. 65,272
1,700 Haynes International, Inc. (a) 118,150
2,800 Insteel Industries, Inc. 32,844
4,600 Kaydon Corp. 250,884
1,800 L.B. Foster Co. Class A (a) 93,114
18,480 Mueller Water Products, Inc. Series A 175,930
1,100 Northwest Pipe Co. (a) 43,054
5,900 Quanex Corp. 306,210
3,600 RBC Bearings, Inc. (a) 156,456
3,800 RTI International Metals, Inc. (a) 261,934
3,300 Superior Essex, Inc. (a) 79,200
1,500 Trimas Corp. (a) 15,885
3,000 Valmont Industries, Inc. 267,360
-------------
2,151,328
---------------------------------------------------------------------------------------------------------------
Metals & Minerals 1,900 A.M. Castle & Co. 51,661
Miscellaneous - 0.7% 3,900 AMCOL International Corp. 140,517
9,400 Apex Silver Mines Ltd. (a) 143,256
3,300 Brush Engineered Materials, Inc. (a) 122,166
5,200 Compass Minerals International, Inc. 213,200
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
8,400 General Moly, Inc. (a) $ 98,028
17,100 GrafTech International Ltd. (a) 303,525
19,200 Hecla Mining Co. (a) 179,520
1,300 Horsehead Holding Corp. (a) 22,061
2,900 Minerals Technologies, Inc. 194,155
6,800 Stillwater Mining Co. (a) 65,688
8,900 Uranium Resources, Inc. (a) 111,072
-------------
1,644,849
---------------------------------------------------------------------------------------------------------------
Milling: Fruit & Grain 1,700 MGP Ingredients, Inc. 16,014
Processing - 0.0%
---------------------------------------------------------------------------------------------------------------
Miscellaneous Business & 1,600 Core-Mark Holdings Co., Inc. (a) 45,952
Consumer Discretionary - 0.0%
---------------------------------------------------------------------------------------------------------------
Miscellaneous Consumer 3,200 Reddy Ice Holdings, Inc. 80,992
Staples - 0.0%
---------------------------------------------------------------------------------------------------------------
Miscellaneous Health Care - 0.0% 1,300 Animal Health International, Inc. (a) 15,990
---------------------------------------------------------------------------------------------------------------
Miscellaneous Materials & 4,400 Ceradyne, Inc. (a) 206,492
Commodities - 0.2% 5,900 Symyx Technologies Inc. (a) 45,312
2,900 WD-40 Co. 110,113
-------------
361,917
---------------------------------------------------------------------------------------------------------------
Miscellaneous Materials & 4,800 Insituform Technologies, Inc. Class A (a) 71,040
Processing - 0.2% 4,100 Metal Management, Inc. 186,673
2,900 Rogers Corp. (a) 125,773
16,400 USEC, Inc. (a) 147,600
1,800 Xerium Technologies, Inc. 9,360
-------------
540,446
---------------------------------------------------------------------------------------------------------------
Miscellaneous Producer 6,700 Blount International, Inc. (a) 82,477
Durables - 0.1% 1,200 Park-Ohio Holdings Corp. (a) 30,120
-------------
112,597
---------------------------------------------------------------------------------------------------------------
Miscellaneous Technology - 0.2% 1,800 Dice Holdings, Inc. (a) 14,382
4,900 IHS, Inc. Class A (a) 296,744
2,000 iRobot Corp. (a) 36,160
2,300 Vocus, Inc. (a) 79,419
-------------
426,705
---------------------------------------------------------------------------------------------------------------
Multi-Sector Companies - 0.4% 4,100 Compass Diversified Holdings 61,090
9,100 GenCorp, Inc. (a) 106,106
1,400 GenTek Inc. (a) 40,978
4,200 Kaman Corp. Class A 154,602
3,900 Lancaster Colony Corp. 154,830
2,600 Raven Industries, Inc. 99,814
8,100 Walter Industries, Inc. 291,033
-------------
908,453
---------------------------------------------------------------------------------------------------------------
Office Furniture & Business 8,064 ACCO Brands Corp. (a) 129,347
Equipment - 0.3%
10,500 Herman Miller, Inc. 340,095
4,300 Kimball International, Inc. Class B 58,910
7,300 Knoll, Inc. 119,939
-------------
648,291
---------------------------------------------------------------------------------------------------------------
Offshore Drilling - 0.3% 4,400 Atwood Oceanics, Inc. (a) 441,056
2,300 Bois d'Arc Energy, Inc. (a) 45,655
13,300 Hercules Offshore, Inc. (a) 316,274
-------------
802,985
---------------------------------------------------------------------------------------------------------------
Oil: Crude Producers - 2.5% 554 APCO Argentina, Inc. 15,202
4,100 ATP Oil & Gas Corp. (a) 207,214
5,100 Arena Resources, Inc. (a) 212,721
3,800 Atlas America, Inc. 224,884
8,900 BPZ Resources, Inc. (a) 99,502
6,200 Berry Petroleum Co. Class A 275,590
5,000 Bill Barrett Corp. (a) 209,350
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
7,400 Brigham Exploration Co. (a) $ 55,648
4,900 Bronco Drilling Co., Inc. (a) 72,765
3,600 Callon Petroleum Co. (a) 59,220
4,100 Carrizo Oil & Gas, Inc. (a) 224,475
900 Clayton Williams Energy, Inc. (a) 28,044
7,200 Comstock Resources, Inc. (a) 244,800
2,300 Contango Oil & Gas Co. (a) 117,047
1,400 Delek US Holdings, Inc. 28,322
9,200 EXCO Resources, Inc. (a) 142,416
5,800 Edge Petroleum Corp. (a) 34,394
8,600 Encore Acquisition Co. (a) 286,982
2,600 Energy Infrastructure Acquisition Corp. (a) 26,364
5,285 Energy Partners Ltd. (a) 62,416
7,200 FX Energy, Inc. (a) 40,896
6,900 GeoGlobal Resources, Inc. (a) 34,155
1,500 Geokinetics, Inc. (a) 29,175
2,700 Goodrich Petroleum Corp. (a) 61,074
29,700 Grey Wolf, Inc. (a) 158,301
3,100 Gulfport Energy Corp. (a) 56,606
6,400 Harvest Natural Resources, Inc. (a) 80,000
13,500 Mariner Energy, Inc. (a) 308,880
7,600 McMoRan Exploration Co. (a) 99,484
15,200 Meridian Resource Corp. (a) 27,512
2,939 NTR Acquisition Co. (a) 27,920
20,700 Oilsands Quest, Inc. (a) 84,456
6,100 Parallel Petroleum Corp. (a) 107,543
26,550 PetroHawk Energy Corp. (a) 459,581
2,600 Petroleum Development Corp. (a) 153,738
7,200 Petroquest Energy, Inc. (a) 102,960
8,100 Pioneer Drilling Co. (a) 96,228
2,100 Resource America, Inc. Class A 30,807
1,500 Rex Energy Corp. (a) 17,895
8,300 Rosetta Resources, Inc. (a) 164,589
4,300 Stone Energy Corp. (a) 201,713
4,900 Swift Energy Co. (a) 215,747
5,200 TXCO Resources, Inc. (a) 62,712
3,400 Toreador Resources Corp. (a) 23,766
1,800 Venoco, Inc. (a) 35,874
6,190 VeraSun Energy Corp. (a) 94,583
9,400 Warren Resources, Inc. (a) 132,822
6,500 Whiting Petroleum Corp. (a) 374,790
-------------
5,911,163
---------------------------------------------------------------------------------------------------------------
Oil: Integrated Domestic - 0.1% 11,100 Delta Petroleum Corp. (a) 209,235
1,800 GMX Resources Inc. (a) 58,104
-------------
267,339
---------------------------------------------------------------------------------------------------------------
Oil: Integrated International 10,100 Vaalco Energy, Inc. (a) 46,965
- 0.0%
---------------------------------------------------------------------------------------------------------------
Paints & Coatings - 0.2% 7,500 Ferro Corp. 155,475
9,500 H.B. Fuller Co. 213,275
400 Kronos Worldwide, Inc. 6,980
-------------
375,730
---------------------------------------------------------------------------------------------------------------
Paper - 0.4% 8,752 AbitibiBowater, Inc. 180,379
4,700 Albany International Corp. Class A 174,370
5,900 Buckeye Technologies, Inc. (a) 73,750
3,100 Chesapeake Corp. 16,089
4,800 Mercer International, Inc.-Sbi (a) 37,584
850 Multi-Color Corp. 23,349
2,400 Neenah Paper, Inc. 69,960
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
7,300 P.H. Glatfelter Co. $ 111,763
5,600 Rock-Tenn Co. Class A 142,296
7,200 Wausau Paper Corp. 64,728
-------------
894,268
---------------------------------------------------------------------------------------------------------------
Photography - 0.0% 600 CPI Corp. 14,130
---------------------------------------------------------------------------------------------------------------
Plastics - 0.0% 5,200 Spartech Corp. 73,320
---------------------------------------------------------------------------------------------------------------
Pollution Control & 2,600 American Ecology Corp. 61,048
Environmental Services - 0.2% 12,000 Darling International, Inc. (a) 138,720
4,400 EnergySolutions, Inc. (a) 118,756
2,400 Fuel Tech, Inc. (a) 54,360
6,400 Headwaters, Inc. (a) 75,136
2,600 Team, Inc. (a) 95,108
-------------
543,128
---------------------------------------------------------------------------------------------------------------
Power Transmission Equipment 5,200 Regal-Beloit Corp. 233,740
- 0.1%
---------------------------------------------------------------------------------------------------------------
Printing & Copying Services 5,100 Bowne & Co., Inc. 89,760
- 0.2% 9,200 Cenveo, Inc. (a) 160,724
2,400 Schawk, Inc. 37,248
7,100 VistaPrint Ltd. (a) 304,235
-------------
591,967
---------------------------------------------------------------------------------------------------------------
Production Technology 5,600 ATMI, Inc. (a) 180,600
Equipment - 1.1% 16,500 Axcelis Technologies, Inc. (a) 75,900
11,983 Brooks Automation, Inc. (a) 158,295
7,600 Cognex Corp. 153,140
16,500 Credence Systems Corp. (a) 39,930
5,200 Cymer, Inc. (a) 202,436
3,200 Dionex Corp. (a) 265,152
5,100 Electro Scientific Industries, Inc. (a) 101,235
19,795 Entegris, Inc. (a) 170,831
4,500 Esterline Technologies Corp. (a) 232,875
5,900 FEI Co. (a) 146,497
3,700 Intevac, Inc. (a) 53,798
9,900 Kulicke & Soffa Industries, Inc. (a) 67,914
10,700 LTX Corp. (a) 34,026
3,100 MTS Systems Corp. 132,277
9,200 Mattson Technology, Inc. (a) 78,752
6,800 Photronics, Inc. (a) 84,796
5,200 Rofin-Sinar Technologies, Inc. (a) 250,172
4,313 Rudolph Technologies, Inc. (a) 48,823
3,900 Ultra Clean Holdings, Inc. (a) 47,580
4,200 Ultratech, Inc. (a) 47,628
-------------
2,572,657
---------------------------------------------------------------------------------------------------------------
Publishing: Miscellaneous - 0.2% 1,500 Consolidated Graphics, Inc. (a) 71,730
1,700 Courier Corp. 56,117
2,780 GateHouse Media, Inc. 24,408
4,400 Martha Stewart Living Omnimedia, Inc. Class A (a) 40,788
3,700 Playboy Enterprises, Inc. Class B (a) 33,744
7,150 Primedia, Inc. 60,775
4,600 Scholastic Corp. (a) 160,494
-------------
448,056
---------------------------------------------------------------------------------------------------------------
Publishing: Newspapers - 0.2% 13,700 Belo Corp. Class A 238,928
1,500 Dolan Media Co. (a) 43,755
7,500 Journal Communications, Inc. Class A 67,050
7,400 Lee Enterprises, Inc. 108,410
3,000 Media General, Inc. Class A 63,750
13,000 Sun-Times Media Group, Inc. (a) 28,600
-------------
550,493
---------------------------------------------------------------------------------------------------------------
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
Radio & TV Broadcasters - 0.3% 6,800 CKX, Inc. (a) $ 81,600
32,850 Citadel Broadcasting Corp. 67,671
4,900 Cox Radio, Inc. Class A (a) 59,535
5,200 Cumulus Media, Inc. Class A (a) 41,808
6,700 Emmis Communications Corp. Class A (a) 25,795
5,300 Entercom Communications Corp. 72,557
1,000 Fisher Communications, Inc. (a) 37,960
6,800 Gray Television, Inc. 54,536
4,400 Lin TV Corp. Class A (a) 53,548
1,600 Nexstar Broadcasting Group, Inc. Class A (a) 14,624
12,500 Radio One, Inc. Class D (a) 29,625
1,500 Salem Communications Corp. Class A 9,885
8,000 Sinclair Broadcast Group, Inc. Class A 65,680
7,400 Spanish Broadcasting System, Inc. Class A (a) 13,690
11,600 Westwood One, Inc. 23,084
3,600 World Wrestling Entertainment, Inc. 53,136
-------------
704,734
---------------------------------------------------------------------------------------------------------------
Railroad Equipment - 0.2% 1,300 American Railcar Industries, Inc. 25,025
2,000 Freightcar America, Inc. 70,000
2,600 Greenbrier Cos., Inc. 57,876
7,900 Westinghouse Air Brake Technologies Corp. 272,076
-------------
424,977
---------------------------------------------------------------------------------------------------------------
Railroads - 0.0% 4,550 Genesee & Wyoming, Inc. Class A (a) 109,973
---------------------------------------------------------------------------------------------------------------
Real Estate - 0.3% 300 AMREP Corp. 9,165
1,000 Avatar Holdings, Inc. (a) 41,820
3,500 Bluegreen Corp. (a) 25,165
4,700 Chimera Investment Corp. 84,036
1,000 Consolidated-Tomoka Land Co. 62,680
5,100 Dupont Fabros Technology, Inc. 99,960
3,700 Grubb & Ellis Co. 23,717
3,607 HFF, Inc. Class A (a) 27,918
7,452 Hilltop Holdings, Inc. (a) 81,376
1,600 Quadra Realty Trust, Inc. 12,864
2,800 Resource Capital Corp. 26,068
500 Stratus Properties, Inc. (a) 16,970
1,800 Tejon Ranch Co. (a) 73,530
2,900 Thomas Properties Group, Inc. 31,262
-------------
616,531
---------------------------------------------------------------------------------------------------------------
Real Estate Investment Trusts 5,600 Acadia Realty Trust 143,416
(REITs) - 5.0% 1,600 Agree Realty Corp. 48,160
11,100 Alesco Financial, Inc. 36,408
300 Alexander's, Inc. (a) 105,975
5,200 Alexandria Real Estate Equities, Inc. 528,684
3,900 American Campus Communities, Inc. 104,715
22,400 American Financial Realty Trust (c) 179,648
10,300 Anthracite Capital, Inc. (e) 74,572
7,900 Anworth Mortgage Asset Corp. 65,254
2,800 Arbor Realty Trust, Inc. 45,108
17,250 Ashford Hospitality Trust, Inc. 124,028
3,500 Associated Estates Realty Corp. 33,040
500 BRT Realty Trust 7,650
10,400 BioMed Realty Trust, Inc. 240,968
3,500 CBRE Realty Finance, Inc. 18,690
6,200 CapLease, Inc. 52,204
1,900 Capital Trust, Inc. 58,235
7,200 Cedar Shopping Centers, Inc. 73,656
6,200 Corporate Office Properties Trust 195,300
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
6,600 Cousins Properties, Inc. $ 145,860
3,443 Crystal River Capital, Inc. 49,717
27,450 DCT Industrial Trust, Inc. 255,560
8,400 Deerfield Capital Corp. 67,200
14,440 DiamondRock Hospitality Co. 216,311
8,740 Digital Realty Trust, Inc. 335,354
3,900 Eastgroup Properties, Inc. 163,215
4,600 Education Realty Trust, Inc. 51,704
4,600 Entertainment Properties Trust 216,200
3,400 Equity Lifestyle Properties, Inc. 155,278
5,900 Equity One, Inc. 135,877
10,100 Extra Space Storage, Inc. 144,329
10,200 FelCor Lodging Trust, Inc. 159,018
7,600 First Industrial Realty Trust, Inc. 262,960
3,900 First Potomac Realty Trust 67,431
8,800 Franklin Street Properties Corp. 130,240
25,100 Friedman Billings Ramsey Group, Inc. Class A 78,814
6,600 GMH Communities Trust 36,432
2,800 Getty Realty Corp. 74,704
6,400 Glimcher Realty Trust 91,456
3,600 Gramercy Capital Corp. 87,516
8,400 Healthcare Realty Trust, Inc. 213,276
5,900 Hersha Hospitality Trust 56,050
9,300 Highwoods Properties, Inc. 273,234
5,400 Home Properties, Inc. 242,190
13,400 IMPAC Mortgage Holdings, Inc. 7,504
9,500 Inland Real Estate Corp. 134,520
8,200 Investors Real Estate Trust 73,554
4,200 JER Investors Trust, Inc. 45,234
4,100 Kite Realty Group Trust 62,607
3,900 LTC Properties, Inc. 97,695
6,800 LaSalle Hotel Properties 216,920
9,930 Lexington Corporate Properties Trust 144,382
7,600 Luminent Mortgage Capital, Inc. 5,928
18,300 MFA Mortgage Investments, Inc. 169,275
6,200 Maguire Properties, Inc. 182,714
8,100 Medical Properties Trust, Inc. 82,539
7,420 Meruelo Maddux Properties, Inc. (a) 29,680
4,100 Mid-America Apartment Communities, Inc. 175,275
2,100 Mission West Properties, Inc. 19,971
3,800 National Health Investors, Inc. 106,020
11,000 National Retail Properties, Inc. 257,180
14,000 Nationwide Health Properties, Inc. 439,180
7,300 Newcastle Investment Corp. 94,608
8,900 NorthStar Realty Finance Corp. 79,388
100 Novastar Financial, Inc. (a) 289
10,900 Omega Healthcare Investors, Inc. 174,945
2,600 PS Business Parks, Inc. 136,630
2,500 Parkway Properties, Inc. 92,450
5,300 Pennsylvania Real Estate Investment Trust 157,304
6,700 Post Properties, Inc. 235,304
6,339 Potlatch Corp. 281,705
10,840 RAIT Investment Trust 93,441
3,000 Ramco-Gershenson Properties Trust 64,110
16,600 Realty Income Corp. 448,532
3,700 Redwood Trust, Inc. 126,688
1,800 Saul Centers, Inc. 96,174
13,700 Senior Housing Properties Trust 310,716
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
3,200 Sovran Self Storage, Inc. $ 128,320
12,100 Strategic Hotel Capital, Inc. 202,433
3,100 Sun Communities, Inc. 65,317
10,200 Sunstone Hotel Investors, Inc. 186,558
5,300 Tanger Factory Outlet Centers, Inc. 199,863
7,500 U-Store-It Trust 68,700
1,900 Universal Health Realty Income Trust 67,336
3,400 Urstadt Biddle Properties, Inc. Class A 52,700
7,400 Washington Real Estate Investment Trust 232,434
6,200 Winthrop Realty Trust, Inc. 32,798
-------------
11,724,558
---------------------------------------------------------------------------------------------------------------
Recreational Vehicles & Boats 2,300 Arctic Cat, Inc. 27,462
- 0.2% 10,900 Fleetwood Enterprises, Inc. (a) 65,182
1,600 Marine Products Corp. 11,216
4,800 Monaco Coach Corp. 42,624
5,800 Polaris Industries, Inc. 277,066
4,800 Winnebago Industries, Inc. 100,896
-------------
524,446
---------------------------------------------------------------------------------------------------------------
Rental & Leasing Services: 2,800 Electro Rent Corp. 41,580
Commercial - 0.1% 2,400 H&E Equipment Services, Inc. (a) 45,312
3,900 McGrath RentCorp 100,425
-------------
187,317
---------------------------------------------------------------------------------------------------------------
Rental & Leasing Services: 7,500 Aaron Rents, Inc. 144,300
Consumer - 0.2%
1,700 Amerco, Inc. (a) 111,656
3,800 Dollar Thrifty Automotive Group, Inc. (a) 89,984
2,700 RSC Holdings, Inc. (a) 33,885
11,400 Rent-A-Center, Inc. (a) 165,528
-------------
545,353
---------------------------------------------------------------------------------------------------------------
Restaurants - 1.2% 4,500 AFC Enterprises, Inc. (a) 50,940
2,400 BJ's Restaurants, Inc. (a) 39,024
1,200 Benihana, Inc. Class A (a) 15,300
4,900 Bob Evans Farms, Inc. 131,957
2,600 Buffalo Wild Wings, Inc. (a) 60,372
4,058 CBRL Group, Inc. 131,439
4,100 CEC Entertainment, Inc. (a) 106,436
10,000 CKE Restaurants, Inc. 132,000
5,250 California Pizza Kitchen, Inc. (a) 81,742
2,500 Carrols Restaurant Group, Inc. (a) 23,950
5,200 Chipotle Mexican Grill, Inc. Class B (a) 639,860
16,900 Denny's Corp. (a) 63,375
6,700 Domino's Pizza, Inc. 88,641
2,500 IHOP Corp. 91,450
10,100 Jack in the Box, Inc. (a) 260,277
6,400 Jamba, Inc. (a) 23,680
10,500 Krispy Kreme Doughnuts, Inc. (a) 33,180
2,500 Landry's Restaurants, Inc. 49,250
1,800 McCormick & Schmick's Seafood Restaurants, Inc. (a) 21,474
700 Morton's Restaurant Group, Inc. (a) 6,531
4,100 O'Charleys, Inc. 61,418
4,200 P.F. Chang's China Bistro, Inc. (a) 95,928
3,900 Papa John's International, Inc. (a) 88,530
2,300 Red Robin Gourmet Burgers, Inc. (a) 73,577
8,800 Ruby Tuesday, Inc. 85,800
3,000 Ruth's Chris Steak House, Inc. (a) 26,820
9,770 Sonic Corp. (a) 213,963
4,600 The Steak n Shake Co. (a) 50,140
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
8,600 Texas Roadhouse, Inc. Class A (a) $ 95,116
10,200 Triarc Cos. 89,352
-------------
2,931,522
---------------------------------------------------------------------------------------------------------------
Retail - 2.7% 4,800 1-800-FLOWERS.COM, Inc. Class A (a) 41,904
7,500 99 Cents Only Stores (a) 59,700
3,200 A.C. Moore Arts & Crafts, Inc. (a) 44,000
3,400 Asbury Automotive Group, Inc. 51,170
11,000 Aeropostale, Inc. (a) 291,500
4,100 bebe Stores, Inc. 52,726
4,000 Big 5 Sporting Goods Corp. 57,680
30,900 Blockbuster, Inc. Class A (a) 120,510
2,300 Blue Nile, Inc. (a) 156,538
1,300 The Bon-Ton Stores, Inc. 12,337
3,100 Books-A-Million, Inc. 36,952
9,300 Borders Group, Inc. 99,045
7,125 Brown Shoe Co., Inc. 108,086
2,300 The Buckle, Inc. 75,900
2,500 Build-A-Bear Workshop, Inc. (a) 34,875
7,200 CSK Auto Corp. (a) 36,072
5,600 Cabela's, Inc. Class A (a) 84,392
2,600 Cache, Inc. (a) 24,284
6,700 Casual Male Retail Group, Inc. 34,706
5,300 The Cato Corp. Class A 82,998
11,369 Central Garden & Pet Co. Class A (a) 60,938
4,100 Charlotte Russe Holding, Inc. (a) 66,215
17,400 Charming Shoppes, Inc. (a) 94,134
3,300 The Children's Place Retail Stores, Inc. (a) 85,569
5,800 Christopher & Banks Corp. 66,410
10,000 Collective Brands, Inc. (a) 173,900
1,500 Conn's, Inc. (a) 25,665
7,600 Dress Barn, Inc. (a) 95,076
3,800 Eddie Bauer Holdings, Inc. (a) 24,130
6,300 Ezcorp, Inc. (a) 71,127
2,300 FTD Group, Inc. 29,624
6,500 Fred's, Inc. 62,595
3,600 GSI Commerce, Inc. (a) 70,200
2,800 Gaiam, Inc. (a) 83,104
500 Gander Mountain Co. (a) 2,465
3,800 Genesco, Inc. (a) 143,640
3,900 Group 1 Automotive, Inc. 92,625
4,900 Gymboree Corp. (a) 149,254
5,550 Hibbett Sports, Inc. (a) 110,889
7,800 Hot Topic, Inc. (a) 45,396
8,100 Insight Enterprises, Inc. (a) 147,744
4,000 Jo-Ann Stores, Inc. (a) 52,320
3,125 Jos. A. Bank Clothiers, Inc. (a) 88,906
979 Lawson Products, Inc. 37,124
2,600 Lithia Motors, Inc. Class A 35,698
2,600 MarineMax, Inc. (a) 40,300
8,400 Men's Wearhouse, Inc. 226,632
3,500 New York & Co. (a) 22,330
2,800 Overstock.com, Inc. (a) 43,484
900 PC Connection, Inc. (a) 10,215
10,600 Pacific Sunwear of California, Inc. (a) 149,566
3,700 The Pantry, Inc. (a) 96,681
7,100 The Pep Boys - Manny, Moe & Jack 81,508
4,100 PetMed Express, Inc. (a) 49,610
14,400 Pier 1 Imports, Inc. (a) 75,312
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
1,900 PriceSmart, Inc. $ 57,114
6,000 Priceline.com, Inc. (a) 689,160
3,500 Retail Ventures, Inc. (a) 17,815
5,400 Rush Enterprises, Inc. Class A (a) 98,172
2,700 Russ Berrie & Co., Inc. (a) 44,172
14,000 Sally Beauty Co., Inc. (a) 126,700
3,700 School Specialty, Inc. (a) 127,835
2,100 Shutterfly, Inc. (a) 53,802
5,000 Sonic Automotive, Inc. 96,800
7,050 Stage Stores, Inc. 104,340
3,300 Stamps.com, Inc. 40,194
4,400 Stein Mart, Inc. 20,856
500 Syms Corp. 7,550
1,300 Systemax, Inc. 26,416
3,700 The Talbots, Inc. 43,734
4,900 Tuesday Morning Corp. 24,843
3,700 Tween Brands, Inc. (a) 97,976
7,000 United Natural Foods, Inc. (a) 222,040
5,100 ValueVision Media, Inc. Class A (a) 32,079
2,200 Volcom, Inc. (a) 48,466
12,600 The Wet Seal, Inc. Class A (a) 29,358
6,500 Zale Corp. (a) 104,390
3,100 Zumiez, Inc. (a) 75,516
-------------
6,405,089
---------------------------------------------------------------------------------------------------------------
Savings & Loan - 1.0% 3,400 Anchor Bancorp Wisconsin, Inc. 79,968
9,900 Bank Mutual Corp. 104,643
8,100 BankAtlantic Bancorp, Inc. Class A 33,210
5,200 BankUnited Financial Corp. Class A 35,880
1,400 Berkshire Hills Bancorp, Inc. 36,400
10,200 Brookline Bancorp, Inc. 103,632
4,400 Dime Community Bancshares, Inc. 56,188
3,100 Downey Financial Corp. 96,441
2,300 First Financial Holdings, Inc. 63,066
2,225 First Indiana Corp. 71,200
15,300 First Niagara Financial Group, Inc. 184,212
2,300 First Place Financial Corp. 32,177
2,400 FirstFed Financial Corp. (a) 85,968
7,100 Flagstar Bancorp, Inc. 49,487
3,400 Flushing Financial Corp. 54,570
1,700 Great Southern Bancorp, Inc. 37,332
1,950 Horizon Financial Corp. 34,008
1,900 IBERIABANK Corp. 88,825
1,300 Imperial Capital Bancorp, Inc. 23,790
4,500 KNBT Bancorp, Inc. 69,390
3,500 Kearny Financial Corp. 41,685
200 NASB Financial, Inc. 5,204
18,500 NewAlliance Bancshares, Inc. 213,120
3,000 Northwest Bancorp, Inc. 79,710
5,800 Ocwen Financial Corp. (a) 32,132
3,600 PFF Bancorp, Inc. 43,344
10,700 Provident Financial Services, Inc. 154,294
6,900 Provident New York Bancorp 89,148
1,400 Rockville Financial, Inc. 17,080
900 Roma Financial Corp. 14,121
8,460 Sterling Financial Corp. 142,043
3,200 TierOne Corp. 70,880
4,400 United Community Financial Corp. 24,288
1,300 ViewPoint Financial Group 21,489
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
18,600 W Holding Co., Inc. $ 22,506
1,700 Westfield Financial, Inc. 16,490
-------------
2,327,921
---------------------------------------------------------------------------------------------------------------
Scientific Equipment & 6,400 Newport Corp. (a) 81,856
Suppliers - 0.2% 4,900 Varian, Inc. (a) 319,970
-------------
401,826
---------------------------------------------------------------------------------------------------------------
Securities Brokerage & 8,600 Centerline Holding Co. 65,532
Services - 0.5% 2,500 GFI Group, Inc. (a) 239,300
4,300 KBW, Inc. (a) 110,037
15,600 Knight Capital Group, Inc. Class A (a) 224,640
8,700 LaBranche & Co., Inc. (a) 43,848
12,300 Ladenburg Thalmann Financial Services, Inc. (a) 26,076
5,100 MarketAxess Holdings, Inc. (a) 65,433
6,700 optionsXpress Holdings, Inc. 226,594
1,800 Penson Worldwide, Inc. (a) 25,830
4,200 SWS Group, Inc. 53,214
2,821 Thomas Weisel Partners Group, Inc. (a) 38,732
-------------
1,119,236
---------------------------------------------------------------------------------------------------------------
Services: Commercial - 3.0% 7,200 ABM Industries, Inc. 146,808
5,600 AMN Healthcare Services, Inc. (a) 96,152
3,800 Administaff, Inc. 107,464
3,100 The Advisory Board Co. (a) 198,989
3,000 Ambassadors Group, Inc. 54,930
2,000 Ambassadors International, Inc. 29,160
700 Barrett Business Services, Inc. 12,607
7,700 CBIZ, Inc. (a) 75,537
2,200 CDI Corp. 53,372
2,000 CRA International, Inc. (a) 95,220
3,700 Casella Waste Systems, Inc. (a) 48,248
3,900 Chemed Corp. 217,932
3,100 CoStar Group, Inc. (a) 146,475
4,800 Coinstar, Inc. (a) 135,120
1,700 Cornell Cos., Inc. (a) 39,644
5,600 Cross Country Healthcare, Inc. (a) 79,744
4,600 Diamond Management & Technology Consultants, Inc. 33,442
4,100 DynCorp. International, Inc. (a) 110,208
2,800 Exponent, Inc. (a) 75,712
7,400 FTI Consulting, Inc. (a) 456,136
1,300 First Advantage Corp. Class A (a) 21,411
2,400 Forrester Research, Inc. (a) 67,248
3,600 G&K Services, Inc. Class A 135,072
8,200 The Geo Group, Inc. (a) 229,600
4,600 Gevity HR, Inc. 35,374
2,680 Global Sources Ltd. (a) 75,630
8,800 Harris Interactive, Inc. (a) 37,488
3,100 Heidrick & Struggles International, Inc. 115,041
5,900 Home Solutions of America, Inc. (a) 5,900
4,100 Hudson Highland Group, Inc. (a) 34,481
1,300 ICT Group, Inc. (a) 15,535
15,100 IKON Office Solutions, Inc. 196,602
4,900 Jackson Hewitt Tax Service, Inc. 155,575
3,800 Kelly Services, Inc. Class A 70,908
5,100 Kforce, Inc. (a) 49,725
4,900 The Knot, Inc. (a) 78,106
7,200 Korn/Ferry International (a) 135,504
1,700 Liquidity Services, Inc. (a) 21,930
2,700 MAXIMUS, Inc. 104,247
16,600 MPS Group, Inc. (a) 181,604
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
2,700 Midas, Inc. (a) $ 39,582
3,000 Monro Muffler, Inc. 58,470
7,900 Navigant Consulting, Inc. (a) 107,993
7,000 Net 1 UEPS Technologies, Inc. (a) 205,520
5,300 On Assignment, Inc. (a) 37,153
4,600 Orbitz Worldwide, Inc. (a) 39,100
8,700 PHH Corp. (a) 153,468
4,300 People Support, Inc. (a) 58,824
4,300 Perficient, Inc. (a) 67,682
1,600 Pre-Paid Legal Services, Inc. (a) 88,560
2,100 The Providence Service Corp. (a) 59,094
7,200 Regis Corp. 201,312
8,400 Resources Connection, Inc. 152,544
7,400 Rollins, Inc. 142,080
8,100 Source Interlink Cos., Inc. (a) 23,328
10,000 Spherion Corp. (a) 72,800
600 Standard Parking Corp. (a) 29,094
2,300 Steiner Leisure Ltd. (a) 101,568
6,300 TeleTech Holdings, Inc. (a) 134,001
9,800 Tetra Tech, Inc. (a) 210,700
600 Travelzoo, Inc. (a) 8,208
7,500 TrueBlue, Inc. (a) 108,600
2,000 Unifirst Corp. 76,000
3,400 Viad Corp. 107,372
2,250 Volt Information Sciences, Inc. (a) 41,085
11,100 Waste Connections, Inc. (a) 342,990
700 Waste Industries USA, Inc. 25,410
3,133 Waste Services, Inc. (a) 26,850
6,900 Watson Wyatt Worldwide, Inc. 320,229
4,600 World Fuel Services Corp. 133,538
-------------
7,153,036
---------------------------------------------------------------------------------------------------------------
Shipping - 0.6% 8,500 American Commercial Lines, Inc. (a) 138,040
1,600 Arlington Tankers Ltd 35,408
2,500 Double Hull Tankers, Inc. 30,600
7,100 Eagle Bulk Shipping, Inc. 188,505
3,100 Genco Shipping & Trading Ltd. 169,756
4,200 General Maritime Corp. 102,690
6,000 Golar LNG Ltd. 132,720
3,900 Gulfmark Offshore, Inc. (a) 182,481
5,000 Horizon Lines, Inc. Class A 93,200
2,300 Knightsbridge Tankers Ltd. 55,545
4,500 Nordic American Tanker Shipping Ltd. 147,690
5,400 Ship Finance International Ltd. 149,634
600 TBS International Ltd. (a) 19,836
-------------
1,446,105
---------------------------------------------------------------------------------------------------------------
Shoes - 0.5% 2,600 DSW, Inc. Class A (a) 48,776
2,000 Deckers Outdoor Corp. (a) 310,120
6,800 The Finish Line, Inc. Class A 16,456
1,000 Heelys, Inc. (a) 6,960
8,300 Iconix Brand Group, Inc. (a) 163,178
4,200 K-Swiss, Inc. Class A 76,020
1,600 Kenneth Cole Productions, Inc. Class A 27,984
1,500 Shoe Carnival, Inc. (a) 21,165
3,200 Skechers U.S.A., Inc. Class A (a) 62,432
3,300 Steven Madden Ltd. (a) 66,000
7,600 Timberland Co. Class A (a) 137,408
800 Weyco Group, Inc. 22,000
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
8,800 Wolverine World Wide, Inc. $ 215,776
-------------
1,174,275
---------------------------------------------------------------------------------------------------------------
Steel - 0.3% 958 Claymont Steel, Inc. (a) 22,369
1,500 Esmark, Inc. (a) 21,195
4,100 Gibraltar Industries, Inc. 63,222
1,400 Olympic Steel, Inc. 44,394
3,500 Schnitzer Steel Industries, Inc. Class A 241,955
1,300 Universal Stainless & Alloy Products, Inc. (a) 46,241
11,200 Worthington Industries, Inc. 200,256
-------------
639,632
---------------------------------------------------------------------------------------------------------------
Sugar - 0.0% 1,900 Imperial Sugar Co. New Shares 35,663
---------------------------------------------------------------------------------------------------------------
Telecommunications Equipment 100 Airvana, Inc. (a) 543
- 0.6% 24,544 Arris Group, Inc. (a) 244,944
2,800 Audiovox Corp. Class A (a) 34,720
7,300 Belden, Inc. 324,850
6,900 Mastec, Inc. (a) 70,173
2,100 OpNext, Inc. (a) 18,585
7,800 Plantronics, Inc. 202,800
14,300 Polycom, Inc. (a) 397,254
20,500 Powerwave Technologies, Inc. (a) 82,615
200 Preformed Line Products Co. 11,900
8,000 Symmetricom, Inc. (a) 37,680
-------------
1,426,064
---------------------------------------------------------------------------------------------------------------
Textile Products - 0.1% 8,900 Interface, Inc. Class A 145,248
---------------------------------------------------------------------------------------------------------------
Textiles Apparel 8,800 Carter's, Inc. (a) 170,280
Manufacturers - 0.7% 1,400 Cherokee, Inc. 45,178
2,200 Columbia Sportswear Co. 96,998
1,600 G-III Apparel Group, Ltd. (a) 23,632
6,070 J. Crew Group, Inc. (a) 292,635
4,200 Kellwood Co. 69,888
2,200 Lululemon Athletica, Inc. (a) 104,214
3,000 Maidenform Brands, Inc. (a) 40,590
2,500 Oxford Industries, Inc. 64,425
1,950 Perry Ellis International, Inc. (a) 29,991
20,100 Quiksilver, Inc. (a) 172,458
2,600 True Religion Apparel, Inc. (a) 55,510
3,900 Under Armour, Inc. Class A (a) 170,313
7,500 The Warnaco Group, Inc. (a) 261,000
-------------
1,597,112
---------------------------------------------------------------------------------------------------------------
Tires & Rubber - 0.1% 10,000 Cooper Tire & Rubber Co. 165,800
3,600 Titan International, Inc. 112,536
-------------
278,336
---------------------------------------------------------------------------------------------------------------
Tobacco - 0.2% 15,700 Alliance One International, Inc. (a) 63,899
2,500 Schweitzer-Mauduit International, Inc. 64,775
4,400 Universal Corp. 225,368
5,519 Vector Group Ltd. 110,711
-------------
464,753
---------------------------------------------------------------------------------------------------------------
Toys - 0.2% 4,700 Jakks Pacific, Inc. (a) 110,967
5,600 Leapfrog Enterprises, Inc. (a) 37,688
8,300 Marvel Entertainment, Inc. (a) 221,693
-------------
370,348
---------------------------------------------------------------------------------------------------------------
Transportation Miscellaneous 4,000 Celadon Group, Inc. (a) 36,640
- 0.2% 1,400 Dynamex, Inc. (a) 37,884
6,300 HUB Group, Inc. Class A (a) 167,454
7,900 Odyssey Marine Exploration, Inc. (a) 48,901
6,000 Pacer International, Inc. 87,600
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
600 Textainer Group Holdings Ltd. $ 8,718
2,500 Ultrapetrol Bahamas Ltd. (a) 42,525
-------------
429,722
---------------------------------------------------------------------------------------------------------------
Truckers - 0.4% 3,100 Arkansas Best Corp. 68,014
5,100 Forward Air Corp. 158,967
10,100 Heartland Express, Inc. 143,218
9,350 Knight Transportation, Inc. 138,473
2,500 Marten Transport Ltd. (a) 34,875
4,850 Old Dominion Freight Line, Inc. (a) 112,084
100 Patriot Transportation Holding, Inc. (a) 9,223
2,600 Saia, Inc. (a) 34,580
1,000 Universal Truckload Services, Inc. (a) 19,160
7,400 Werner Enterprises, Inc. 126,022
-------------
844,616
---------------------------------------------------------------------------------------------------------------
Utilities: Cable TV & Radio 8,800 Mediacom Communications Corp. Class A (a) 40,392
- 0.0%
---------------------------------------------------------------------------------------------------------------
Utilities: Electrical - 1.5% 4,100 Allete, Inc. 162,278
8,500 Avista Corp. 183,090
6,100 Black Hills Corp. 269,010
2,600 CH Energy Group, Inc. 115,804
1,300 Central Vermont Public Service Corp. 40,092
9,600 Cleco Corp. 266,880
7,800 El Paso Electric Co. (a) 199,446
5,300 The Empire District Electric Co. 120,734
6,700 IDACORP, Inc. 235,974
6,700 ITC Holdings Corp. 378,014
3,500 MGE Energy, Inc. 124,145
5,400 NorthWestern Corp. 159,300
4,800 Otter Tail Corp. 166,080
11,800 PNM Resources, Inc. 253,110
2,800 Pike Electric Corp. (a) 46,928
4,700 Portland General Electric Co. 130,566
4,333 UIL Holdings Corp. 160,104
5,700 Unisource Energy Corp. 179,835
15,800 Westar Energy, Inc. 409,852
-------------
3,601,242
---------------------------------------------------------------------------------------------------------------
Utilities: Gas Distributors 1,200 EnergySouth, Inc. 69,600
- 0.8% 3,500 The Laclede Group, Inc. 119,840
4,600 New Jersey Resources Corp. 230,092
7,000 Nicor, Inc. 296,450
4,500 Northwest Natural Gas Co. 218,970
12,100 Piedmont Natural Gas Co. 316,536
5,000 South Jersey Industries, Inc. 180,450
6,900 Southwest Gas Corp. 205,413
7,500 WGL Holdings, Inc. 245,700
-------------
1,883,051
---------------------------------------------------------------------------------------------------------------
Utilities: Miscellaneous - 0.1% 61,000 Aquila, Inc. (a) 227,530
---------------------------------------------------------------------------------------------------------------
Utilities: Telecommunications 7,400 Alaska Communications Systems Group, Inc. 111,000
- 1.2% 1,200 Atlantic Tele-Network, Inc. 40,536
4,800 Centennial Communications Corp. (a) 44,592
42,200 Cincinnati Bell, Inc. (a) 200,450
3,200 Consolidated Communications Holdings, Inc. 63,680
5,300 FairPoint Communications, Inc. 69,006
20,010 FiberTower Corp. (a) 45,623
8,700 General Communication, Inc. Class A (a) 76,125
6,000 Global Crossing Ltd. (a) 132,300
2,100 Globalstar, Inc. (a) 16,800
2,600 Golden Telecom, Inc. (a)(b) 262,470
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Shares
Industry Held Common Stocks Value
---------------------------------------------------------------------------------------------------------------
18,600 ICO Global Communications Holdings Ltd. (a) $ 59,148
8,100 IDT Corp. Class B 68,445
2,800 iPCS, Inc. 100,772
3,900 Ibasis, Inc. 20,007
5,100 Iowa Telecommunications Services, Inc. 82,926
4,100 NTELOS Holdings Corp. 121,729
700 Neutral Tandem, Inc. (a) 13,314
3,400 North Pittsburgh Systems, Inc. 83,957
3,300 ORBCOMM, Inc. (a) 20,757
11,470 PAETEC Holding Corp. (a) 111,833
10,500 Premiere Global Services, Inc. (a) 155,925
4,800 RCN Corp. 74,832
1,800 Rural Cellular Corp. Class A (a) 79,362
3,600 Shenandoah Telecom Co. 86,328
2,400 SureWest Communications 41,040
23,730 Time Warner Telecom, Inc. Class A (a) 481,482
4,300 USA Mobility, Inc. 61,490
3,600 Virgin Mobile USA, Inc. (a) 32,004
-------------
2,757,933
---------------------------------------------------------------------------------------------------------------
Utilities: Water - 0.2% 3,000 American States Water Co. 113,040
3,100 California Water Service Group 114,762
1,900 Consolidated Water Co., Inc. 47,861
2,500 SJW Corp. 86,675
3,965 Southwest Water Co. 49,642
-------------
411,980
---------------------------------------------------------------------------------------------------------------
Wholesale & International 5,800 Central European Distribution Corp. (a) 336,864
Trade - 0.1%
---------------------------------------------------------------------------------------------------------------
Wholesalers - 0.3% 8,230 Brightpoint, Inc. (a) 126,413
2,200 Houston Wire & Cable Co. 31,108
18,200 LKQ Corp. (a) 382,564
1,400 MWI Veterinary Supply, Inc. (a) 56,000
5,500 Prestige Brands Holdings, Inc. (a) 41,140
3,800 United Stationers, Inc. (a) 175,598
-------------
812,823
---------------------------------------------------------------------------------------------------------------
Total Common Stocks 205,289,669
(Cost - $201,969,927) - 87.5%
---------------------------------------------------------------------------------------------------------------
Investment Companies
---------------------------------------------------------------------------------------------------------------
1,000 BlackRock Kelso Capital Corp. (e) 15,280
2,300 Gladstone Capital Corp. 39,100
5,500 Hercules Technology Growth Capital, Inc. 68,310
1,100 Kayne Anderson Energy Development Co. 25,201
4,400 Patriot Capital Funding, Inc. 44,396
3,800 Pennantpark Investment Corp. 38,076
3,000 Prospect Capital Corp. 39,150
---------------------------------------------------------------------------------------------------------------
Total Investment Companies
(Cost - $343,489) - 0.1% 269,513
---------------------------------------------------------------------------------------------------------------
Rights
---------------------------------------------------------------------------------------------------------------
Chemicals - 0.0% 360 Medis Technologies Ltd. (a)(d) 0
---------------------------------------------------------------------------------------------------------------
Total Rights 0
(Cost - $0) - 0.0%
---------------------------------------------------------------------------------------------------------------
Face
Amount Short-Term Securities
---------------------------------------------------------------------------------------------------------------
Time Deposits - 13.7% $ 32,181,442 State Street Bank & Trust Co., 3.25% due 1/02/2008 32,181,442
---------------------------------------------------------------------------------------------------------------
Total Short-Term Securities
(Cost - $32,181,442) - 13.7% 32,181,442
---------------------------------------------------------------------------------------------------------------
Total Investments Before Options Written
(Cost - $234,494,858*) - 101.3% 237,740,624
---------------------------------------------------------------------------------------------------------------
Small Cap Premium & Dividend Income Fund Inc.
Schedule of Investments as of December 31, 2007 (in U.S. dollars)
Number of
Contracts Options Written Value
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Call Options Written 750 Russell 2000 Index, expiring January 2008 at USD 770 $ (1,177,500)
750 Russell 2000 Index, expiring January 2008 at USD 780 (836,250)
---------------------------------------------------------------------------------------------------------------
Total Options Written (2,013,750)
(Premiums Received - $3,235,500) - (0.8%)
---------------------------------------------------------------------------------------------------------------
Total Investments, Net of Options Written 235,726,874
(Cost - $231,259,358) - 100.5%
Liabilities in Excess of Other Assets - (0.5%) (1,174,454)
-------------
Net Assets - 100.0% $ 234,552,420
=============
* The cost and unrealized appreciation (depreciation) of investments, as of
December 31, 2007, as computed for federal income tax purposes, were as
follows:
Aggregate cost $ 237,617,800
=============
Gross unrealized appreciation $ 4,448,732
Gross unrealized depreciation (4,325,908)
-------------
Net unrealized appreciation $ 122,824
=============
(a) Non-income producing security.
(b) Depositary receipts.
(c) All or a portion of security held as collateral in connection with open
financial futures contracts.
(d) The rights may be exercised until January 7, 2008.
(e) Investments in companies considered to be an affiliate of the Fund, for
purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as
follows:
--------------------------------------------------------------------------
Purchase Sales Realized Dividend
Affiliate Cost Cost Gain Income
--------------------------------------------------------------------------
Anthracite Capital, $ 6,075 $ 6,012 $ 304 $ 11,690
Inc.
BlackRock Kelso Capital Corp. $ 15,419 -- -- --
--------------------------------------------------------------------------
o 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
industry sub-classifications for reporting ease. Industries are shown as a
percent of net assets. These industry classifications are unaudited.
o Financial futures contracts purchased as of December 31, 2007 were as
follows:
----------------------------------------------------------------------------------
Number of Expiration Face Unrealized
Contracts Issue Date Value Appreciation
----------------------------------------------------------------------------------
75 Russell 2000 Index March 2008 $ 28,884,339 $ 73,161
----------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON DETAILED
SCHEDULE OF INVESTMENTS
To the Shareholders and Board of Directors of
Small Cap Premium & Dividend Income Fund Inc:
We have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the financial statements of Small
Cap Premium & Dividend Income Fund Inc. (the "Fund") as of December 31, 2007,
and for the year then ended and have issued our report thereon dated February
29, 2008 which report and financial statements are included in Item 1 of this
Certified Shareholder Report on Form N-CSR. Our audit also included the Fund's
schedule of investments in securities (the "Schedule") as of December 31, 2007
appearing in Item 6 of this Form N-CSR. This Schedule is the responsibility of
the Fund's management. Our responsibility is to express an opinion based on our
audit. In our opinion, the Schedule referred to above, when considered in
relation to the basic financial statements taken as a whole of the Fund referred
to above, presents fairly, in all material respects, the information set forth
therein.
Deloitte & Touche LLP
Princeton, New Jersey
February 29, 2008
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - The registrant has delegated the
voting of proxies relating to its voting securities to its
investment sub-adviser, BlackRock Advisors, LLC (the "Sub-Adviser"
or "BlackRock"). The Proxy Voting Policies and Procedures of the
Sub-Adviser (the "Proxy Voting Policies") are attached as an Exhibit
hereto.
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
as of December 31, 2007.
(a)(1) Small Cap Premium & Dividend Income Fund Inc. is managed by
Jonathan A. Clark, Managing Director at BlackRock and Debra L.
Jelilian, Director at BlackRock. Each is a member of BlackRock's
Quantitative Investments team. Mr. Clark and Ms. Jelilian are
jointly responsible for the day-to-day management of the Fund's
portfolio and the selection of its investments. Mr. Clark and Ms.
Jelilian have been the Fund's portfolio managers since 2005.
Mr. Clark joined BlackRock in 2006. Mr. Clark was a Director at
BlackRock from 2006 to 2007. Prior to joining BlackRock, he was a
Director of Merrill Lynch Investment Managers, L.P. ("MLIM") from
1999 to 2006. At MLIM, he was a member of the Quantitative
Investments team, responsible for managing arbitrage and derivative
strategies for enhanced and structured portfolios. He also managed a
commodities futures portfolio, and was a member of the Quantitative
Investment Committee.
Ms. Jelilian joined BlackRock in 2006. Prior to joining BlackRock,
she was a Director at MLIM from 1999 to 2006. At MLIM, she was a
member of the Quantitative Investments team, responsible for the
management of MLIM's equity index portfolios and leading MLIM's
transition management efforts in the Americas. She was also a member
of the Quantitative Investment Committee.
(a)(2) As of December 31, 2007:
-----------------------------------------------------------------------------------------------------------------------
(iii) Number of Other Accounts and
(ii) Number of Other Accounts Managed Assets for Which Advisory Fee is
and Assets by Account Type Performance-Based
-----------------------------------------------------------------------------------------------------------------------
Other Other Other Other
(i) Name of Registered Pooled Registered Pooled
Portfolio Investment Investment Other Investment Investment Other
Manager Companies Vehicles Accounts Companies Vehicles Accounts
-----------------------------------------------------------------------------------------------------------------------
Jonathan A.
Clark 9 5 0 0 0 0
-----------------------------------------------------------------------------------------------------------------------
$3,200,240,495 $1,243,653,307 $0 $0 $0 $0
-----------------------------------------------------------------------------------------------------------------------
Debra L.
Jelilian 25 18 22 0 0 1
-----------------------------------------------------------------------------------------------------------------------
$24,550,722,411 $10,597,337,547 $35,513,726,340 $0 $0 $3,563,742,267
-----------------------------------------------------------------------------------------------------------------------
(iv) Potential Material Conflicts of Interest
BlackRock has built a professional working environment, firm-wide
compliance culture and compliance procedures and systems designed to
protect against potential incentives that may favor one account over
another. BlackRock has adopted policies and procedures that address
the allocation of investment opportunities, execution of portfolio
transactions, personal trading by employees and other potential
conflicts of interest that are designed to ensure that all client
accounts are treated equitably over time. Nevertheless, BlackRock
furnishes investment management and advisory services to numerous
clients in addition to the Fund, and BlackRock may, consistent with
applicable law, make investment recommendations to other clients or
accounts (including accounts which are hedge funds or have
performance or higher fees paid to BlackRock, or in which portfolio
managers have a personal interest in the receipt of such fees),
which may be the same as or different from those made to the Fund.
In addition, BlackRock, its affiliates and any officer, director,
stockholder or employee may or may not have an interest in the
securities whose purchase and sale BlackRock recommends to the Fund.
BlackRock, or any of its affiliates, or any officer, director,
stockholder, employee or any member of their families may take
different actions than those recommended to the Fund by BlackRock
with respect to the same securities. Moreover, BlackRock may refrain
from rendering any advice or services concerning securities of
companies of which any of BlackRock's (or its affiliates') officers,
directors or employees are directors or officers, or companies as to
which BlackRock or any of its affiliates or the officers, directors
and employees of any of them has any substantial economic interest
or possesses material non-public information. Each portfolio manager
also may manage accounts whose investment strategies may at times be
opposed to the strategy utilized for the Fund. In this connection,
it should be noted that Ms. Jelilian currently manages certain
accounts that are subject to performance fees. In addition, certain
portfolio managers may assist in managing certain hedge funds and
may be entitled to receive a portion of any incentive fees earned on
such funds and a portion of such incentive fees may be voluntarily
or involuntarily deferred. Additional portfolio managers may in the
future manage other such accounts or funds and may be entitled to
receive incentive fees.
As a fiduciary, BlackRock owes a duty of loyalty to its clients and
must treat each client fairly. When BlackRock purchases or sells
securities for more than one account, the trades must be allocated
in a manner consistent with its fiduciary duties. BlackRock attempts
to allocate investments in a fair and equitable manner among client
accounts, with no account receiving preferential treatment. To this
end, BlackRock has adopted a policy that is intended to ensure that
investment opportunities are allocated fairly and equitably among
client accounts over time. This policy also seeks to achieve
reasonable efficiency in client transactions and provide BlackRock
with sufficient flexibility to allocate investments in a manner that
is consistent with the particular investment discipline and client
base.
(a)(3) As of December 31, 2007:
Portfolio Manager Compensation Overview
BlackRock's financial arrangements with its portfolio managers, its
competitive compensation and its career path emphasis at all levels
reflect the value senior management places on key resources.
Compensation may include a variety of components and may vary from
year to year based on a number of factors. The principal components
of compensation include a base salary, a performance-based
discretionary bonus, participation in various benefits programs and
one or more of the incentive compensation programs established by
BlackRock such as its Long-Term Retention and Incentive Plan.
Base compensation. Generally, portfolio managers receive base
compensation based on their seniority and/or their position with the
firm. Senior portfolio managers who perform additional management
functions within the portfolio management group or within BlackRock
may receive additional compensation for serving in these other
capacities.
Discretionary Incentive Compensation
Discretionary incentive compensation is a function of several
components: the performance of BlackRock, Inc., the performance of
the portfolio manager's group within BlackRock, the investment
performance, including risk-adjusted returns, of the firm's assets
under management or supervision by that portfolio manager relative
to predetermined benchmarks, and the individual's seniority, role
within the portfolio management team, teamwork and contribution to
the overall performance of these portfolios and BlackRock. In most
cases, including for the portfolio managers of the Fund, these
benchmarks are the same as the benchmark or benchmarks against which
the performance of the Fund or other accounts managed by the
portfolio managers are measured. BlackRock's Chief Investment
Officers determine the benchmarks against which to compare the
performance of funds and other accounts managed by each portfolio
manager and the period of time over which performance is evaluated.
With respect to the portfolio managers, such benchmarks for the Fund
include the following:
--------------------------------------------------------------------
Portfolio Manager Benchmarks Applicable to Each Manager
--------------------------------------------------------------------
Jonathan A. Clark A combination of market-based indices (e.g.,
The S&P 500(R) Index, MSCI World Index),
certain customized indices and certain fund
industry peer groups.
--------------------------------------------------------------------
Debra L. Jelilian A combination of market-based indices (e.g.,
The S&P 500(R) Index), certain customized
indices and certain fund industry peer
groups.
--------------------------------------------------------------------
BlacBlackRock's Chief Investment Officers make a subjective
determination with respect to the portfolio manager's compensation
based on the performance of the funds and other accounts managed by
each portfolio manager relative to the various benchmarks noted
above. Performance is measured on both a pre-tax basis over various
time periods including 1, 3 and 5-year periods, as applicable.
Distribution of Discretionary Incentive Compensation
Discretionary incentive compensation is distributed to portfolio
managers in a combination of cash and BlackRock, Inc. restricted
stock units which vest ratably over a number of years. The
BlackRock, Inc. restricted stock units, if properly vested, will be
settled in BlackRock, Inc. common stock. Typically, the cash bonus,
when combined with base salary, represents more than 60% of total
compensation for the portfolio managers. Paying a portion of annual
bonuses in stock puts compensation earned by a portfolio manager for
a given year "at risk" based on the Company's ability to sustain and
improve its performance over future periods.
Other compensation benefits. In addition to base compensation and
discretionary incentive compensation, portfolio managers may be
eligible to receive or participate in one or more of the following:
Long-Term Retention and Incentive Plan ("LTIP") --The LTIP is
a long-term incentive plan that seeks to reward certain key
employees. Beginning in 2006, awards are granted under the LTIP in
the form of BlackRock, Inc. restricted stock units that, if properly
vested and subject to the attainment of certain performance goals,
will be settled in BlackRock, Inc. common stock. Mr. Clark and Ms.
Jelilian have each received awards under the LTIP.
Deferred Compensation Program --A portion of the compensation
paid to each portfolio manager may be voluntarily deferred by the
portfolio manager into an account that tracks the performance of
certain of the firm's investment products. Each portfolio manager is
permitted to allocate his deferred amounts among various options,
including to certain of the firm's hedge funds and other
unregistered products. Every portfolio manager is eligible to
participate in the deferred compensation program.
Incentive Savings Plans -- BlackRock, Inc. has created a
variety of incentive savings plans in which BlackRock employees are
eligible to participate, including a 401(k) plan, the BlackRock
Retirement Savings Plan (RSP) and the BlackRock Employee Stock
Purchase Plan (ESPP). The employer contribution components of the
RSP include a company match equal to 50% of the first 6% of eligible
pay contributed to the plan capped at $4,000 per year, and a company
retirement contribution equal to 3% of eligible compensation, plus
an additional contribution of 2% for any year in which BlackRock has
positive net operating income. The RSP offers a range of investment
options, including registered investment companies managed by the
firm. Company contributions follow the investment direction set by
participants for their own contributions or absent, employee
investment direction, are invested into a balanced portfolio. The
ESPP allows for investment in BlackRock common stock at a 5%
discount on the fair market value of the stock on the purchase date.
Annual participation in the ESPP is limited to the purchase of 1,000
shares or a dollar value of $25,000. Each portfolio manager is
eligible to participate in these plans.
(a)(4) Beneficial Ownership of Securities. As of December 31, 2007,
neither Mr. Clark nor Ms. Jelilian beneficially owned any
stock issued by the Fund.
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers -
------------------------------------------------------------------------------------------------------------------------
Period (a) Total (b) Average (c) Total Number of (d) Maximum Number (or
Number of Price Paid per Shares Purchased as Part Approx. Dollar Value) of
Shares Share of Publicly Announced Shares that May Yet Be
Purchased Plans or Programs Purchased Under the Plans
or Programs
------------------------------------------------------------------------------------------------------------------------
July 1-31, 2007 49,300 $18.82 (1) 49,300(2) 0
------------------------------------------------------------------------------------------------------------------------
August 1-31, 2007
------------------------------------------------------------------------------------------------------------------------
September 1-30, 2007
------------------------------------------------------------------------------------------------------------------------
October 1-31, 2007
------------------------------------------------------------------------------------------------------------------------
November 1-30, 2007
------------------------------------------------------------------------------------------------------------------------
December 1-31, 2007
------------------------------------------------------------------------------------------------------------------------
Total: 49,300 $18.82 (1) 49,300(2) 0
------------------------------------------------------------------------------------------------------------------------
(1) Subject to a repurchase fee of up to 0.38% of the net asset value per
share.
(2) On May 29, 2007, the repurchase offer was announced to repurchase up to 5%
of outstanding shares. The expiration date of the offer was July 6, 2007.
The registrant may conduct annual repurchases for between 5% and 25% of
its outstanding shares pursuant to Rule 23c-3 under the Investment Company
Act of 1940, as amended.
Item 10 - Submission of Matters to a Vote of Security Holders - The
registrant's Nominating and Corporate Governance Committee will
consider nominees to the Board recommended by shareholders when a
vacancy becomes available. Shareholders who wish to recommend a
nominee should send nominations which 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.
Item 11 - Controls and Procedures
11(a) - 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 and Exchange Act of 1934, as amended.
11(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)
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.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - See Item 2
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
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.
Small Cap Premium & Dividend Income Fund Inc.
By: /s/ Mitchell M. Cox
--------------------
Mitchell M. Cox
Chief Executive Officer (principal executive officer) of
Small Cap Premium & Dividend Income Fund Inc.
Date: February 20, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Mitchell M. Cox
--------------------
Mitchell M. Cox
Chief Executive Officer (principal executive officer) of
Small Cap Premium & Dividend Income Fund Inc.
Date: February 20, 2008
By: /s/ James E. Hillman
--------------------
James E. Hillman
Chief Financial Officer (principal financial officer) of
Small Cap Premium & Dividend Income Fund Inc.
Date: February 20, 2008