specialopps_nq.htm
 
As filed with the Securities and Exchange Commission on May 26, 2011
 


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


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



Investment Company Act file number 811-07528


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

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


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

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

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


Date of fiscal year end: 12/31/2011


Date of reporting period:  3/31/2011
 
 
 
 
 
 
Item 1. Schedule of Investments.
 
 
Special Opportunities Fund, Inc.
            
 
Portfolio of Investments
            
 
March 31, 2011 (Unaudited)
          
                 
           
Shares
  
Value
 
INVESTMENT COMPANIES - 70.13%
          
 
Closed-End Funds - 49.48%
          
 
Adams Express Company
    
276,839
$
3,144,891
 
Alpine Global Premier Properties Fund
    
128,616
  
901,598
 
American Strategic Income Portfolio II
    
30,640
  
276,986
 
American Strategic Income Portfolio III
    
24,405
  
186,454
 
Bancroft Fund, Ltd.
      
41,401
  
724,932
 
BlackRock Credit Allocation Income Trust II, Inc.
    
25,000
  
245,750
 
BlackRock Credit Allocation Income Trust IV
    
119,353
  
1,446,558
 
Boulder Growth & Income Fund, Inc.
    
316,668
  
2,090,009
 
Boulder Total Return Fund, Inc. (a)
    
184,149
  
3,086,337
 
DWS High Income Opportunities Fund, Inc.
    
38,130
  
558,605
 
DWS RREEF Real Estate Fund, Inc. (a)(c)(f)(g)
    
126,913
  
11,803
 
DWS RREEF Real Estate Fund II, Inc. (a)(c)(f)(g)
    
201,612
  
28,831
 
First Opportunity Fund, Inc. (a)
      
279,106
  
2,023,519
 
First Trust Strategic High Income Fund III
    
38,342
  
164,487
 
Gabelli Global Multimedia Trust, Inc.
    
220,929
  
1,725,455
 
The GDL Fund
        
52,932
  
716,170
 
H&Q Healthcare Investors
      
74,683
  
1,069,461
 
H&Q Life Sciences Investors
      
79,305
  
953,246
 
Korea Equity Fund, Inc. (a)
      
12,881
  
175,310
 
Liberty All-Star Equity Fund, Inc.
    
896,516
  
4,715,674
 
Liberty All-Star Growth Fund, Inc.
    
369,360
  
1,702,750
 
LMP Capital and Income Fund, Inc.
    
299,583
  
3,984,454
 
Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund
  
54,271
  
862,366
 
Macquarie Global Infrastructure Total Return Fund, Inc.
    
80,776
  
1,471,739
 
Morgan Stanley Asia Pacific Fund, Inc.
    
33,412
  
569,340
 
Neuberger Berman Real Estate Securities Income Fund, Inc.
    
6,520
  
26,862
 
The New Ireland Fund, Inc.
      
43,269
  
331,008
 
Nuveen Multi-Strategy Income and Growth Fund
    
85,000
  
721,650
 
Nuveen Multi-Strategy Income and Growth Fund 2
    
38,528
  
344,826
 
RiverSource LaSalle International Real Estate Fund, Inc.
    
163,406
  
1,616,085
 
Royce Focus Trust, Inc. (a)
      
17,500
  
146,125
 
Royce Micro-Cap Trust, Inc.
      
440,426
  
4,509,962
 
Royce Value Trust, Inc.
      
348,093
  
5,357,151
 
SunAmerica Focused Alpha Growth Fund, Inc.
    
171,990
  
3,441,520
 
Taiwan Greater China Fund (a)
      
44,009
  
317,309
 
Tri-Continental Corporation
      
387,319
  
5,662,604
 
TS&W/Claymore Tax-Advantaged Balanced Fund
    
18,029
  
198,499
 
The Zweig Total Return Fund, Inc.
    
245,749
  
852,749
               
56,363,075
 
Auction Rate Preferred Securities - 15.70% (b)(c)
          
 
BlackRock California Municipal 2018 Term Trust - Series M7, 0.396%
  
100
  
2,118,750
 
BlackRock Municipal 2018 Term Trust - Series W7, 0.381%
    
100
  
2,118,750
 
BlackRock Municipal Bond Trust - Series R7, 0.381%
    
75
  
1,593,750
 
BlackRock Municipal Bond Trust - Series T7, 0.381%
    
75
  
1,593,750
 
BlackRock Municipal Income Quality Trust - Series F7, 0.396%
  
60
  
1,275,000
 
BlackRock MuniHoldings Fund, Inc. - Series C, 1.460%
    
25
  
539,063
 
BlackRock MuniHoldings Fund II, Inc. - Series A, 0.381%
    
50
  
1,062,500
 
BlackRock MuniHoldings New York Quality Fund, Inc. - Series B, 0.381%
  
1
  
20,625
 
BlackRock MuniHoldings New York Quality Fund, Inc. - Series D, 0.396%
  
21
  
433,125
 
 
 
 
 
 
BlackRock MuniHoldings New York Quality Fund, Inc. - Series E, 0.381%
  
1
  
20,625
 
BlackRock New York Municipal Bond Trust - Series T7, 0.381%
  
52
  
1,040,000
 
Invesco Quality Municipal Investment Trust - Series A, 0.132%
  
53
  
2,226,000
 
Neuberger Berman Real Estate Securities Income Fund, Inc. - Series B, 1.478%
  
44
  
1,078,000
 
Neuberger Berman Real Estate Securities Income Fund, Inc. - Series D, 1.477%
  
42
  
1,029,000
 
Neuberger Berman Real Estate Securities Income Fund, Inc. - Series E, 1.474%
  
45
  
1,102,500
 
Neuberger Berman Real Estate Securities Income Fund, Inc. - Series F, 1.483%
  
10
  
245,000
 
Nuveen California Dividend Advantage Municipal Fund - Series TH, 0.381%
  
8
  
180,000
 
Nuveen Investment Quality Municipal Fund, Inc. - Series M, 0.396%
  
4
  
90,000
 
Western Asset Premier Bond Fund - Series M, 0.240%
    
6
  
120,000
               
17,886,438
 
Business Development Companies - 2.00%
          
 
Equus Total Return, Inc. (a)
    
45,592
  
118,539
 
MVC Capital, Inc.
      
157,806
  
2,165,098
               
2,283,637
 
Open-End Funds - 2.95%
            
 
Westcore Blue Chip Fund (c)
    
293,230
  
3,354,552
               
3,354,552
 
Total Investment Companies (Cost $68,643,488)
        
79,887,702
                 
 
COMMON STOCKS - 20.42%
            
 
Grocery Stores - 0.24%
            
 
Winn-Dixie Stores, Inc. (a)
      
37,703
  
269,199
 
Motor Vehicles & Passenger Car Bodies - 0.22%
          
 
General Motors Company (a)
    
8,193
  
254,229
 
Pharmaceuticals Preparations - 0.07%
          
 
Myrexis, Inc. (a)
      
19,896
  
76,799
 
Real Estate Investment Trusts - 0.84%
          
 
Agree Realty Corporation
      
21,186
  
475,626
 
Gyrodyne Company of America, Inc. (a)
    
6,500
  
477,750
               
953,376
 
Retail-Auto Dealers & Gasoline Stations - 4.65%
          
 
Casey's General Stores, Inc.
    
135,871
  
5,298,969
 
Special Purpose Acquisition Vehicle - 14.40%
          
 
57th Street General Acquisition Corporation (a)
    
106,525
  
1,059,924
 
Australia Acquisition Corporation (a)
    
250,000
  
2,410,000
 
Cazador Acquisition Corporation, Ltd. (a)
    
200,000
  
1,928,000
 
China VantagePoint Acquisition Company (a)(i)
    
27,130
  
161,423
 
FlatWorld Acquisition Corporation (a)(h)
    
105,702
  
1,055,963
 
Hicks Acquisition Company II, Inc. (a)
    
200,000
  
2,018,000
 
JWC Acquisition Corporation (a)(h)
    
300,000
  
3,084,000
 
L&L Acquisition Corporation (a)
      
100,000
  
1,003,000
 
Lone Oak Acquisition Corporation (a)
    
81,430
  
651,440
 
Prime Acquisition Corporation (a)(h)
    
51,442
  
514,420
 
RLJ Acquisition, Inc. (a)
      
251,000
  
2,515,020
               
16,401,190
 
Total Common Stocks (Cost $23,127,707)
        
23,253,762
                 
 
PREFERRED STOCKS - 1.05%
            
 
General Motors Corporation/Motors Liquidation Company, 7.250% (a)
22,969
  
156,189
 
General Motors Corporation/Motors Liquidation Company, 7.250% (a)
  
20,407
  
138,768
 
General Motors Corporation/Motors Liquidation Company, 7.250% (a)
  
51,549
  
350,533
 
General Motors Corporation/Motors Liquidation Company, 7.375% (a)
  
41,920
  
285,056
 
General Motors Corporation/Motors Liquidation Company, 7.375% (a)
  
8,412
  
57,202
 
General Motors Corporation/Motors Liquidation Company, 7.500% (a)
  
29,694
  
201,919
 
Total Preferred Stocks (Cost $1,282,354)
        
1,189,667
                 
 
CONVERTIBLE PREFERRED STOCKS - 0.66%
          
 
General Motors Corporation/Motors Liquidation Company - Series B, 5.250% (a)
15,351
  
111,295
 
General Motors Corporation/Motors Liquidation Company - Series C, 6.250% (a)
  
88,211
  
644,822
 
Total Convertible Preferred Stocks (Cost $792,154)
        
756,117
                 
 
 
 
 
 
           
Principal
    
           
Amount
    
 
CORPORATE BONDS - 5.34%
            
 
The Rouse Company LP
    
$
      
 
    6.750%, 11/09/2015
      
1,550,000
  
1,612,000
 
Washington Mutual, Inc.
            
 
    0.000%, 09/17/2012 (d)
      
3,000,000
  
3,015,000
 
    5.250%, 09/15/2017 (d)
      
1,300,000
  
1,452,750
 
Total Corporate Bonds (Cost $6,096,095)
        
6,079,750
                 
 
ESCROW NOTES - 0.00%
            
 
GGP LP (c)(d)
      
1,800,000
  
0
 
Total Escrow Notes (Cost $0)
          
0
                 
 
STRUCTURED LIFE SETTLEMENT NOTES - 1.11%
          
 
Cedar Lane Series A-2 Notes (a)(c)(f)
    
1,260,000
  
1,260,000
 
Total Structured Life Settlement Notes (Cost $1,260,000)
        
1,260,000
                 
           
Shares
    
 
WARRANTS - 0.19%
            
 
57th Street General Acquisition Corporation
          
 
    Expiration: August 2016,
            
 
    Exercise Price: $11.50 (a)
    
70,277
  
56,222
 
Australia Acquisition Corporation
            
 
    Expiration: October 2015,
            
 
    Exercise Price: $11.50 (a)
    
250,000
  
73,750
 
Cazador Acquisition Corporation, Ltd.
          
 
    Expiration: October 2015,
            
 
    Exercise Price: $7.50 (a)
      
200,000
  
90,000
 
Total Warrants (Cost $168,417)
          
219,972
                 
 
RIGHTS - 0.05%
            
 
Gabelli Global Multimedia Trust, Inc. (a)
    
220,929
  
58,546
 
Total Rights (Cost $72,400)
          
58,546
                 
 
MONEY MARKET FUNDS - 0.97%
          
 
Fidelity Institutional Government Portfolio - Class I, 0.014% (e)
  
553,485
  
553,485
 
Fidelity Institutional Tax-Exempt Portfolio - Class I, 0.063% (e)
  
555,465
  
555,465
 
Total Money Market Funds (Cost $1,108,950)
        
1,108,950
 
Total Investments (Cost $102,551,565) - 99.92%
        
113,814,466
 
Other Assets in Excess of Liabilities - 0.08%
        
95,437
 
TOTAL NET ASSETS - 100.00%
      
$
113,909,903
                 
                 
Percentages are stated as a percent of net assets.
          
                 
(a)
Non-income producing security.
          
(b)
The coupon rates shown represent the rates at March 31, 2011.
        
(c)
Fair valued securities. The total market value of these securities was $22,541,624, representing 19.79% of net assets.
(d)
Default or other conditions exist and security is not presently accruing income.
    
(e)
The rate shown represents the 7-day yield at March 31, 2011.
        
(f)
Illiquid security.
            
(g)
Security currently undergoing a full liquidation with all proceeds paid out to shareholders.
    
(h)
Each unit consists of one share of common stock and one warrant.
        
(i)
Each unit consists of one share of common stock, one half of a non-transferrable warrant and one half of a transferrable warrant.
 
 
 
 
 
 
Valuation of investments—The Fund calculates its net asset value based on the current market value for its portfolio securities.  The Fund normally obtains market values for its securities from independent pricing sources and broker-dealers.  Independent pricing sources may use last reported sale prices or if not available the most recent bid price, current market quotations or valuations from computerized “matrix” systems that derive values based on comparable securities.  A matrix system incorporates parameters such as security quality, maturity and coupon, and/or research and evaluations by its staff, including review of broker-dealer market price quotations, if available, in determining the valuation of the portfolio securities.  If a market value is not available from an independent pricing source or a broker-dealer for a particular security, that security is valued at fair value as determined in good faith by or under the direction of the Fund’s Board of Directors (the “Board”).  Various factors may be reviewed in order to make a good faith determination of a security’s fair value.  The auction rate preferred securities and the structured life settlement notes are valued at cost, unless other observable market events occur.  The purchase price, or cost, of these securities is arrived at through an arms length transaction between a willing buyer and seller in the secondary market and is indicative of the value on the secondary market.  Current transactions in similar securities in the marketplace are evaluated.  Factors for other securities may include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; and changes in overall market conditions.  If events occur that materially affect the value of securities between the close of trading in those securities and the close of regular trading on the New York Stock Exchange, the securities may be fair valued.  The amortized cost method of valuation, which approximates market value, generally is used to value short-term debt instruments with sixty days or less remaining to maturity, unless the Board or its delegate determines that this does not represent fair value.
 
The Fund has adopted fair valuation accounting standards that establish an authoritative definition of fair value and set out a hierarchy for measuring fair value.  These standards require additional disclosures about the various input and valuation techniques used in measuring fair value.  Fair value inputs are summarized into the three broad levels listed below:

Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access.
Level 2—Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.  These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
Level 3—Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

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

 
 
 
 
 
The inputs used to measure fair value may fall into different levels of the fair value hierarchy.  In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
 
                         
The following is a summary of the fair valuations according to the inputs used as of March 31, 2011 in valuing the Fund's investments:
  
                         
   
Quoted Prices in Active
    
Significant Other
              
   
Markets for Identical
    
Observable Inputs
    
Unobservable Inputs
        
   
Investments (Level 1)
    
(Level 2)
    
(Level 3)
    
Total
  
Investment Companies
   $ 58,606,078     $ 3,395,186     $ 17,886,438     $ 79,887,702  
Common Stocks
     11,649,779       11,603,983       -       23,253,762  
Preferred Stocks
     -       1,189,667       -       1,189,667  
Convertible Preferred Stocks
     -       756,117       -       756,117  
Corporate Bonds
     -       6,079,750       -       6,079,750  
Escrow Notes
     -       -       0       0  
Structured Life Settlement Notes
     -       -       1,260,000       1,260,000  
Warrants
     146,222       73,750       -       219,972  
Rights
     58,546       -       -       58,546  
Money Market Funds
     1,108,950       -       -       1,108,950  
Total
   $ 71,569,575     $ 23,098,453     $ 19,146,438     $ 113,814,466  
                                 
The following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
          
                                 
Balance as of December 31, 2010
                   $ 19,966,625          
Accrued discounts / premiums
                     -          
Realized gain (loss)
                     160,000          
Change in unrealized appreciation (depreciation)
               499,813          
Purchases
                     120,000          
Sales
                     (1,600,000 )        
Transfers in and / or out of Level 3
               -          
Balance as of March 31, 2011
                   $ 19,146,438          
                                 
There were transfers from Level 1 to Level 2 of $3,469,924 using market value as of March 31, 2011.  The transfers were due to lack of trading volume on March 31, 2011.  There were transfers from Level 2 to Level 1 of $3,130,185 using market value as of March 31, 2011.  The transfers were due to increased trading volume on March 31, 2011.
 
 
 
 
 
 
The cost basis of investments for federal income tax purposes at March 31, 2011 was as follows*:
 
Cost of investments
  $102,551,565
Gross unrealized appreciation 
11,805,411
Gross unrealized depreciation
(542,510)
Net unrealized appreciation             
 $11,262,901
 
*Because tax adjustments are calculated annually, the above table reflects the tax adjustments outstanding at the Fund’s previous fiscal year end.  For the previous fiscal year’s federal income tax information, please refer to the Notes to Financial Statements section in the Fund’s most recent semi-annual or annual report.

 
Item 2. Controls and Procedures.
 
(a)  
The Registrant’s President and Chief Financial Officer have concluded that the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “1940 Act”)) (17 CFR 270.30a-3(c)) are effective as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rule 13a-15(b) or Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(d)).

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


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

 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


(Registrant)         Special Opportunities Fund, Inc.                                                                                                                              

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

Date      May 26, 2011                                                                                                                          



Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

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

Date      May 26, 2011                                                                                                                   

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

Date      May 19, 2011