specialopps_n-q.htm  
 



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


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


Investment Company Act file number 811-07528


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

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


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

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

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


Date of fiscal year end: December 31, 2015


Date of reporting period:  March 31, 2015

 
 
 
 
 
Item 1. Schedule of Investments.
 
Special Opportunities Fund, Inc.
            
Portfolio of Investments
            
March 31, 2015 (Unaudited)
            
             
INVESTMENT COMPANIES - 59.86%
  
Shares
    
Fair Value
  
Closed-End Funds - 53.13%
            
Adams Diversified Equity Fund (j)
     200,878     $ 2,804,257  
Advent/Claymore Enhanced Growth & Income Fund
     60,018       565,370  
Alliance New York Municipal Income Fund, Inc.
     138,901       1,937,669  
Bancroft Fund, Ltd.
     79,335       1,660,482  
Blackrock Latin American Investment Trust PLC (h)
     80,000       438,491  
Boulder Growth & Income Fund, Inc.
     1,313,456       11,256,318  
Central Securities Corp.
     136,479       2,975,242  
Clough Global Equity Fund
     311,843       4,687,000  
Delaware Investments Dividend & Income Fund, Inc.
     18,949       190,627  
Deutsche Global High Income Fund
     175,583       1,471,386  
Deutsche High Income Opportunities Fund, Inc.
     354,342       5,088,351  
Diversified Real Asset Income Fund
     465,045       8,417,314  
Ellsworth Growth and Income Fund Ltd.
     55,094       482,623  
The GDL Fund
     15,000       154,951  
General American Investors Co., Inc.
     408,024       14,272,680  
Global High Income Fund, Inc.
     160,454       1,403,973  
JP Morgan Asian Investment Trust PLC (h)
     28,426       105,207  
Juridica Investments Ltd. (h)
     495,258       880,566  
Kubera Cross-Border Fund Ltd. (a)(g)(h)
     380,604       93,248  
Liberty All Star Equity Fund
     1,551,018       9,057,945  
LMP Real Estate Income Fund, Inc.
     342,704       4,462,006  
Madison Strategic Sector Premium Fund
     1,041       12,534  
Marwyn Value Investors Ltd. (a)(h)
     155,571       497,314  
MFS Intermarket Income Trust I
     254,546       2,158,550  
MFS Intermediate High Income Fund
     26,598       73,144  
Millennium Investment & Acquisition Co., Inc. (a)
     112,276       76,337  
Morgan Stanley East Europe Fund Escrow (a)
     97,901       0  
Neuberger Berman Real Estate Securities Income Fund, Inc.
     179,037       970,381  
Nuveen Diversified Commodity Fund
     79,659       947,942  
Nuveen Global High Income Fund
     273,806       4,673,868  
Nuveen Long/Short Commodity Total Return Fund
     98,623       1,644,637  
The Prospect Japan Fund Ltd. (a)(h)
     240,144       249,149  
Swiss Helvetia Fund, Inc.
     280,925       3,241,874  
Terra Catalyst Fund (a)(h)
     20,319       28,935  
Tri-Continental Corp.
     387,319       8,400,949  
Virtus Total Return Fund
     1,610       7,293  
              95,388,613  
Closed End Funds - Preferred Shares - 0.42%
                
Oxford Lane Capital Corp. - Series 2017
     28,898       747,302  
                   
Auction Rate Preferred Securities - 1.86% (c)(f)
                
Alliance New York Municipal Income Fund, Inc.- Series T, 0.180% (b)
     61       1,277,188  
Alliance New York Municipal Income Fund, Inc. - Series M, 0.180% (b)
     82       1,716,875  
Putnam Managed Municipal Income Trust - Series C
     6       225,000  
Putnam Municipal Opportunities Trust - Series C
     6       112,500  
                3,331,563  
 
 
 
 
 
Business Development Company - 4.45%
                
BDCA Venture, Inc.
     266,822       1,339,446  
Equus Total Return, Inc. (a)
     106,919       208,492  
Firsthand Technology Value Fund, Inc.
     158,804       2,277,250  
Fifth Street Senior Floating Rate Corp.
     29,687       315,573  
Full Circle Capital Corp.
     8,800       30,976  
MVC Capital, Inc.
     403,584       3,825,976  
              7,997,713  
Total Investment Companies (Cost $98,607,686)
             107,465,191  
                 
PREFERRED STOCKS - 3.25%
                
Real Estate Investment Trusts - 3.25%
                
Preferred Apartment Communities, Inc. (c)(f)
     6,083       5,827,453  
Total Preferred Stocks (Cost $5,657,129)
             5,827,453  
                 
CONVERTIBLE PREFERRED STOCKS - 0.85%
                
Real Estate Investment Trusts - 0.85%
                
Wheeler Real Estate Investment Trust, Inc. - Series C (c)(f)
     880       880,000  
Wheeler Real Estate Investment Trust, Inc. - Series B
     27,270       651,750  
Total Convertible Preferred Stocks (Cost $1,545,904)
             1,531,750  
                   
COMMON STOCKS - 23.28%
                
Construction Materials - 0.01%
                
Tecnoglass, Inc. (a)(h)
     2,437       22,664  
Consumer Finance - 2.26%
                
Imperial Holdings, Inc. (a)
     581,622       4,053,905  
Health Care Providers & Services - 0.00%
                
Healthcare Corp. of America (Acquired 10/24/2012, Cost $0) (a)(c)(i)
     10,000       41  
Insurance - 7.83%
                
Stewart Information Services Corp.
     345,661       14,047,663  
IT Services - 0.06%
                
JetPay Corp. (a)
     39,596       108,889  
Marine - 0.02%
                
Pangaea Logistics Solutions Ltd. (a)(h)
     13,255       36,266  
Professional Services - 0.83%
                
Hill International, Inc. (a)
     415,513       1,491,692  
Real Estate Investment Trusts - 6.72%
                
Associated Estates Realty Corp.
     23,767       586,570  
Five Oaks Investment Corp.
     15,791       168,174  
Gladstone Land Corp.
     2,582       31,113  
Gyrodyne Company of America, Inc.
     3,819       15,392  
Gyrodyne Dividend Notes (c)
     11,391       79,398  
Gyrodyne Special Distribution LLC (c)
     10,914       144,829  
Trade Street Residential, Inc.
     234,287       1,677,495  
Winthrop Realty Trust
     573,454       9,358,769  
              12,061,740  
Software - 0.03%
                
SITO Mobile Ltd. (a)
     158,498       47,549  
Special Purpose Acquisition Vehicle - 5.52% (a)
                
1347 Capital Corp.
     76,600       767,532  
AR Capital Acquisition Corp.
     99,994       984,941  
 
 
 
 
 
Barington/Hilco Acquisition Corp.
     15,611       155,329  
DT Asia Investments Ltd. (h)
     79,818       795,786  
Capitol Acquisition Corp. II
     143,385       1,449,623  
Garnero Group Acquisition Co. (h)
     153,199       1,472,242  
Global Defense & National Security Systems, Inc.
     142,712       1,478,496  
FinTech Acquisition Corp.
     48,085       497,680  
Harmony Merger Corp.
     62,937       629,370  
Quinpario Acquisition Corp. 2
     15,611       157,983  
ROI Acquisition Corp II
     57,484       566,218  
Sino Mercury Acquisition Corp.
     33,634       336,340  
Terrapin 3 Acquisition Corp.
     62,138       626,351  
              9,917,891  
Total Common Stocks (Cost $35,956,761)
             41,788,300  
                 
LIQUIDATION CLAIMS - 1.56% (a)(c)(f)
                
The Home Insurance Company in Liquidation
     1       1,228,503  
The Home Insurance Company in Liquidation
     1       1,574,994  
Total Liquidation Claims (Cost $2,569,880)
             2,803,497  
                   
     
Principal
          
     
Amount
          
CONVERTIBLE BONDS - 2.01% (b)
                
Imperial Holdings, Inc.
                
8.500%, 02/15/2019
   $ 2,941,000       3,617,430  
Total Convertible Bonds (Cost $2,941,000)
             3,617,430  
                   
CORPORATE BONDS - 0.02% (b)
                
Washington Mutual Inc.
                
0.000%, 09/17/2012 (d)(f)
     3,000,000       37,500  
WMI Holdings Corp.
                
13.000%, 03/19/2030 - 1st Lien
     80       80  
13.000%, 03/19/2030 - 2nd Lien
     4,023       3,822  
Total Corporate Bonds (Cost $520)
             41,402  
                 
CORPORATE NOTES - 1.87% (b)
                
MVC Capital, Inc.
                
7.250%, 01/15/2023
     133,384       3,356,717  
Total Corporate Notes (Cost $3,349,349)
             3,356,717  
                   
PROMISSORY NOTES - 0.78% (b)(c)(f)
                
Wheeler Real Estate Investment Trust Convertible
                
9.000%, 12/15/2018 (Acquired 12/16/2013, Cost $600,000)
     600,000       600,000  
Wheeler Real Estate Investment Trust Non-Convertible
                
9.000%, 12/15/2015 (Acquired 12/16/2013, Cost $800,000)
     800,000       800,000  
Total Promissory Notes (Cost $1,400,000)
             1,400,000  
                   
   
Shares
          
WARRANTS - 0.28% (a)
                
AR Capital Acquisition Corp.
                
Expiration: October 2019
     49,997       22,499  
Exercise Price: $11.50
                
Arabella Exploration, Inc.
                
 
 
 
 
 
Expiration: December 2016
     25,448       7,380  
Exercise Price: $5.00 (h)
                
Capitol Acquisition Corp. II
                
Expiration: May 2016
     58,823       58,823  
Exercise Price: $11.50
                
CB Pharma Acquisition Corp.
                
Expiration: December 2021
     23,814       5,715  
Exercise Price: $5.75 (h)
                
Chart Acquisition Corp.
                
Expiration: December 2017
     124,265       34,794  
Exercise Price: $11.50
                
CIS Acquisition Ltd.
                
Expiration: December 2017
     61,826       14,745  
Exercise Price: $10.00 (h)
                
EveryWare Global, Inc.
                
Expiration: May 2018
     48,370       1,209  
Exercise Price: $6.00
                
Garnero Group Acquisition Co.
                
Expiration: June 2019
     153,199       16,852  
Exercise Price: $11.50 (h)
                
Healthcare Corp. of America
                
Expiration: November 2016
     5,000       8  
Exercise Price: $7.50 (Acquired 10/24/2012, Cost $0) (c)(i)
                
Expiration: November 2016
     33,753       71  
Exercise Price:  $7.50
                
Hemisphere Media Group, Inc.
                
Expiration: April 2018
     137,024       164,429  
Exercise Price: $6.00
                
Imperial Holdings, Inc.
                
Expiration: October 2019
     8       0  
Exercise Price: $10.75 (c)(f)
                
Integrated Drilling Equipment Holdings Corp.
                
Expiration: December 2017
     205,929       412  
Exercise Price: $11.50
                
KBS Fashion Group Ltd.
                
Expiration: July 2019
     400,000       6,800  
Exercise Price: $11.50  (h)
                
Net Element, Inc.
                
Expiration: October 2017
     159,476       3,189  
Exercise Price:  $7.50
                
Preferred Apartment Communities, Inc.
                
Expiration: March 2017
     6,083       61  
Exercise Price: $9.00 (c)(f)
                
Pingtan Marine Enterprise Ltd.
                
Expiration: February 2018
     52,798       5,808  
Exercise Price:  $12.00  (h)
                
Prime Acquisition Corp.
                
Expiration: March 2016
     50,142       4,262  
Exercise Price: $5.00 (h)
                
RLJ Entertainment, Inc.
                
Expiration: October 2017
     436,744       30,572  
 
 
 
 
 
Exercise Price:  $12.00  (c)
                
ROI Acquisition Corp II
                
Expiration: September 2018
     57,484       12,072  
Exercise Price: $11.50
                
Tecnoglass, Inc.
                
Expiration: December 2016
     45,477       111,419  
Exercise Price: $8.00 (h)
                
Wheeler Real Estate Investment Trust, Inc.
                
Expiration: December 2018
     84,211       0  
Exercise Price: $4.75 (c)(f)
                
Expiration: April 2019
     15,702       2,198  
Exercise Price: $5.50
                
Total Warrants (Cost $666,902)
             503,318  
                 
RIGHTS - 0.02%
                
CB Pharma Acquisition Corp. (a)(h)
     23,814       6,930  
Garnero Group Acquisition Co. (a)(h)
     139,951       26,395  
Total Rights (Cost $58,839)
             33,325  
                 
MONEY MARKET FUNDS - 5.66%
                
Fidelity Institutional Government Portfolio - Class I, 0.010% (e)
     5,504,014       5,504,014  
Fidelity Institutional Tax-Exempt Portfolio - Class I, 0.010% (e)
     4,655,411       4,655,411  
Total Money Market Funds (Cost $10,159,425)
             10,159,425  
                   
Total Investments (Cost $162,913,395) - 99.44%
           $ 178,527,808  
Other Assets in Excess of Liabilities - 0.56%
             998,872  
TOTAL NET ASSETS - 100.00%
           $ 179,526,680  
                   
Percenatge are stated as a percent of net assets.
                
   
(a)
Non-income producing security.
                
(b)
The coupon rates shown represent the rates at March 31, 2015.
                
(c)
Fair valued securities. The total market value of these securities was $14,497,422, representing 8.08% 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, 2015.
                
(f)
Illiquid securities.  The total market value of these securities was $14,280,074, representing 7.95% of net assets.
                
(g)
Security currently undergoing a full liquidation with all proceeds paid out to shareholders.
                
(h)
Foreign-issued security.
                
(i)
Restricted security.
                
(j)
All or a portion of this security is pledged as collarteral for securities sold short.
                
                   
Schedule of Securities Sold Short
                
March 31, 2015 (Unaudited)
                
   
Shares
    
Value
  
First American Financial Corp.
     (21,681 )   $ (773,578 )
Total Securities Sold Short (Proceeds $581,691)
           $ (773,578 )
 
 
 
 
 
Valuation of investments—The Fund calculates its net asset value based on the current market value for its portfolio securities. The Fund normally obtains market values for its securities from independent pricing sources and broker-dealers. Independent pricing sources may use last reported sale prices or if not available the most recent bid price, current market quotations or valuations from computerized “matrix” systems that derive values based on comparable securities. A matrix system incorporates parameters such as security quality, maturity and coupon, and/or research and evaluations by its staff, including review of broker-dealer market price quotations, if available, in determining the valuation of the portfolio securities. If a market value is not available from an independent pricing source or a broker-dealer for a particular security, that security is valued at fair value as determined in good faith by or under the direction of the Fund’s Board of Directors (the “Board”). Various factors may be reviewed in order to make a good faith determination of a security’s fair value. The auction rate preferred securities and the structured life settlement notes are valued at cost, unless other observable market events occur. The purchase price, or cost, of these securities is arrived at through an arms length transaction between a willing buyer and seller in the secondary market and is indicative of the value on the secondary market. Current transactions in similar securities in the marketplace are evaluated. Factors for other securities may include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; and changes in overall market conditions. If events occur that materially affect the value of securities between the close of trading in those securities and the close of regular trading on the New York Stock Exchange, the securities may be fair valued. The amortized cost method of valuation, which approximates market value, generally is used to value short-term debt instruments with sixty days or less remaining to maturity, unless the Board or its delegate determines that this does not represent fair value.

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

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

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

Level 3—Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.
 
 
 
 
 
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.

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

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

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

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

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

At each regular quarterly Board meeting, the Adviser delivers a written report (the “Quarterly Report”) to the Board regarding any recommendations of fair valuation during the past quarter, including fair valuations which have not changed. The Board reviews the Quarterly Report and discusses the valuation of the fair valued securities.
 
 
 
 
 
The Valuation Committee reviews all Quarterly Reports and any other interim reports, and reviews and approves the valuation of all fair valued securities. This review includes a review and discussion of an updated fair valuation summary with appropriate levels of representatives of the Adviser’s management.
 
             
The following is a summary of the fair valuations according to the inputs used as of March 31, 2015 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
 $                      104,040,380
 $                                93,248
 $                         3,331,563
 $        107,465,191
  
Preferred Stocks
            
Real Estate Investment Trusts
                                         -
                                           -
                            5,827,453
               5,827,453
  
Convertible Preferred Stocks
                                651,750
                                           -
                               880,000
               1,531,750
  
Common Stocks
            
Construction Materials
                                  22,664
                                           -
                                        -
                    22,664
  
Consumer Finance
  
                             4,053,905
                                           -
                                        -
               4,053,905
  
Health Care Providers & Services
                                         -
                                           -
                                        41
                           41
  
Insurance
  
                           14,047,663
                                           -
                                        -
             14,047,663
  
IT Services
  
                                108,889
                                           -
                                        -
                  108,889
  
Marine
  
                                  36,266
                                           -
                                        -
                    36,266
  
Professional Services
                             1,491,692
                                           -
                                        -
               1,491,692
  
Real Estate Investments Trusts
                           11,837,513
                                           -
                               224,227
             12,061,740
  
Software
  
                                  47,549
                                           -
                                        -
                    47,549
  
Special Purpose Acquisition Vehicle
                             5,268,809
                              4,649,082
                                        -
               9,917,891
  
Home Insurance Claims
                                         -
                                           -
                            2,803,497
               2,803,497
  
Convertible Bonds
  
                                         -
                              3,617,430
                                        -
               3,617,430
  
Corporate Bonds
  
                                         -
                                   41,402
                                        -
                    41,402
  
Corporate Notes
  
                             3,356,717
                                           -
                                        -
               3,356,717
  
Promissory Notes
  
                                         -
                                           -
                            1,400,000
               1,400,000
  
Warrants
  
                                357,906
                                 145,343
                                        69
                  503,318
  
Rights
  
                                  26,395
                                     6,930
                                        -
                    33,325
  
Money Market Funds
                           10,159,425
                                           -
                                        -
             10,159,425
  
Total
  
 $                      155,507,523
 $                           8,553,435
 $                       14,466,850
 $        178,527,808
  
             
             
Liabilities:
            
Securities Sold Short
  
 $                           (773,578)
 $                                        -
 $                                     -
 $             (773,578)
  
             
* Transfers between Levels are recognized at the end of the reporting period.
        
**The Fund measures Level 3 activity as of the beginning and end of each financial reporting period.
      
             
 Transfers between Level 1 and Level 2 securities as of March 31, 2015 resulted from securities priced previously with an official close price (Level 1 securities) or on days where there
is not an official close price the bid price is used (Level 2 securities).  Transfers as of March 31, 2015 are summarized in the table below:
    
             
 
 
 
 
 
       
Transfers into Level 1
      
Investment Companies
   $ 880,566  
Common Stock
        
Special Purpose Acquisition Vehicle
     2,378,824  
Warrants
     223,920  
Transfers out of Level 1
        
Common Stock
        
Special Purpose Acquisition Vehicle
     (2,038,460 )
Warrants
     (32,625 )
Net transfers in and/or out of Level 1
   $ 1,412,225  
         
Transfers into Level 2
        
Common Stock
        
Special Purpose Acquisition Vehicle
     2,038,460  
Warrants
     32,625  
Transfers out of Level 2
        
Investment Companies
   $ (880,566 )
Common Stock
        
Special Purpose Acquisition Vehicle
     (2,378,824 )
Warrants
     (223,920 )
Net transfers in and/or out of Level 2
   $ (1,412,225 )
         
 
 
 
 
 
Special Opportunities Fund
            
               
               
The fair value of derivative instruments as reported within the Statement of Assets and Liabilites as of March 31, 2015:
               
               
Derivatives not accounted for as hedging instruments
    
Statement of Assets & Liabilities Location
  
Value
    
Equity Contracts - Rights
    
Investments, at value
  
 $                                                  33,325
    
Equity Contracts - Warrants
    
Investments, at value
  
                                                   503,318
    
               
The effect of derivative instruments on the Statement of Operations for the year ended March 31, 2015:
        
               
   
Amount of Realized Gain on Derivatives Recognized in Income
    
Derivatives not accounted for as hedging instruments
    
Statement of Operations Location
  
Value
    
Equity Contracts - Rights
    
Net Realized Gain on Investments
  
 $                                                            -
    
Equity Contracts - Warrants
    
Net Realized Gain on Investments
  
                                                     38,516
    
               
               
   
Change in Unrealized Depreciation on Derivatives Recognized in Income
    
Derivatives not accounted for as hedging instruments
    
Statement of Operations Location
  
Total
    
Equity Contracts - Rights
    
Net change in unrealized
  
 $                                                 (15,078)
    
     
depreciation of investments
        
Equity Contracts - Warrants
    
Net change in unrealized
  
                                                    (42,089)
    
     
depreciation of investments
        
               
 
 
 
 
 
Level 3 Reconciliation Disclosure
            
The following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
    
                 
Category
  
Balance
as of 12/31/2014
Acquisitions
Dispositions
Realized Gain (Loss)
Change
in unrealized appreciation (depreciation)
Balance
as of
3/31/2015
  
Closed End Funds
  
 $            163,146
 $                                -
 $              (191,893)
 $         191,893
 $                        (163,146)
 $                           -
  
Auction Rate Preferred
  Securities
  
            6,381,563
                                   -
              (3,125,000)
            139,812
                             (64,812)
                3,331,563
  
Preferred Stocks
  
            5,806,162
                                   -
                              -
                       -
                              21,291
                5,827,453
  
Convertible Preferred Stocks
  
                           -
                       880,000
                              -
                       -
                                        -
                   880,000
  
Common Stocks
  
               228,146
                                   -
                              -
                       -
                               (3,878)
                   224,268
  
Liquidation Claims
  
            2,842,434
                                   -
                              -
                       -
                             (38,937)
                2,803,497
  
Promissory Notes
  
            2,000,000
                                   -
                 (600,000)
                       -
                                        -
                1,400,000
  
Warrants
  
                        69
                                   -
                              -
                       -
                                        -
                            69
  
   
 $       17,421,520
 $                    880,000
 $           (3,916,893)
 $         331,705
 $                        (249,482)
 $           14,466,850
  
                 
The following table presents additional information about valuation methodologies and inputs used for investments that are measured at fair value and
    
categorized within Level 3 as of March 31, 2015:
            
                 
   
Fair Value March
31, 2015
  
Valuation
Methodologies
  
Unobservable Input(1)
  
Impact
to Valuation
from an
 increase in
Input(2)
Auction Rate Preferred
  Securities
  
 $         3,331,563
  
Market Comparables/Cost
  
Comparability Adjustments/ Broker Indications/ Company Announcements
  
Increase
Preferred Stock
  
 $         5,827,453
  
Cost
  
 
Market Assessments/ Financial Assessements
  
Increase
Convertible Preferred Stocks
  
 $            880,000
  
Cost
  
 
Terms of the Preferred/Financial Assessements/ Company Announcements
  
Increase
Common Stocks
  
 $            224,268
  
 
Market Transactions Approach
  
Discount to Market Price for Share Restrictions
  
Decrease
Liquidation Claims
  
 $         2,803,497
  
 
Market Transactions Approach
  
Broker Bids
  
Increase
Promissory Notes
  
 $         1,400,000
  
Cost
  
Terms of the Note/ Financial Assessements/ Company Announcements
  
Increase
Warrants
  
 $                     69
  
Market Transactions Approach
  
Discount to Market Price for Share Restrictions
  
Decrease
                 
 
(1)
In determining certain of these inputs, management evaluates a variety of factors including economic conditions, foreign exchange rates, industry and market developments, market valuations of comparable companies and company specific developments including exit strategies and realization opportunities. Management has determined that market participants would take these inputs into account when valuing the investments.
                 
 
(2)
This column represents the directional change in the fair value of the Level 3 investments that would result from an increase to the corresponding unobservable input. A decrease to the unobservable input would have the opposite effect.
 
 
 
 
 
The cost basis of investments for federal income tax purposes at March 31, 2015 was as follows*:
 
Cost of investments
 $162,913,395
  
Gross unrealized appreciation on
      investments 
 
21,266,020
  
Gross unrealized depreciation  on
      investments
 
(5,651,607)
 
  
Gross unrealized depreciation on
      short sales
(191,887)
  
Net unrealized appreciation  
$15,422,526
  
 
*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 21, 2015                                                                                            



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 21, 2015                                                                                                 
 
 
By (Signature and Title) /s/ Thomas Antonucci                                                       
                                          Thomas Antonucci, Chief Financial Officer
 
 
Date May 21, 2015