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 811-21983
Name of Fund: NASDAQ Premium Income & Growth Fund Inc. (QQQX)
Fund Address: 4 World Financial Center, 6 th Floor, New York, New York 10080
Name and address of agent for service: Justin C. Ferri, Chief Executive Officer, NASDAQ Premium Income & Growth Fund Inc., 4 World Financial Center, 6th Floor, New York, New York 10080.
Registrants telephone number, including area code: (877) 449-4742
Date of fiscal year end: 12/31/2009
Date of reporting period: 12/31/2009
Item 1 Report to Stockholders
NASDAQ Premium Income & Growth Fund Inc.
Annual Report
December 31, 2009
INVESTMENT ADVISORS
HYDEPARK
Fund Profile as of December 31, 2009
Fund Information |
Symbol on NASDAQ |
QQQX | |
Initial Offering Date |
January 30, 2007 | |
Yield on Closing Market Price as of December 31, 2009 $(14.40)* |
12.85% | |
Current Quarterly Distribution per share of Common Stock** |
$0.4625 | |
Current Annualized Distribution per share of Common Stock** |
$1.85 |
* | Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price as of December 31, 2009. Past performance does not guarantee future results. |
** | The distribution is not constant and is subject to change. A portion of the distribution may be deemed a tax return of capital at fiscal year end. The Fund has announced a reduction in the quarterly distribution beginning March 2010 to $0.316 per share. |
The table below summarizes the changes in the Funds market price and net asset value for the twelve-month period:
12/31/09 (a) | 12/31/08 | Change (b) | High | Low | |||||||||||
Market Price (c) |
$ | 14.40 | $ | 9.29 | 55.01 | % | $ | 15.74 | $ | 8.03 | |||||
Net Asset Value |
$ | 14.08 | $ | 11.28 | 24.82 | % | $ | 14.20 | $ | 9.80 |
(a) | For the twelve-month period, the Common Stock of the Fund had a total investment return of 44.32% based on net asset value per share and 79.21% based on market price per share, assuming reinvestment of distributions. For the same period, the performance of the NASDAQ 100 Index,® the Funds unmanaged reference index, had a total investment return of 54.63%. The reference index has no expenses associated with performance. |
(b) | Does not include reinvestment of dividends. |
(c) | Primary Exchange Price, NASDAQ. |
Portfolio Information |
2 | NASDAQ PREMIUM INCOME & GROWTH FUND INC. | DECEMBER 31, 2009 |
A Summary From Your Funds Portfolio Managers (unaudited)
We are pleased to provide you with this stockholder report for NASDAQ Premium Income & Growth Fund Inc.
The Fund is advised by IQ Investment Advisors LLC and sub-advised by Nuveen HydePark Group, LLC.
The investment objective of NASDAQ Premium Income & Growth Fund Inc. (the Fund) is to provide stockholders with premium income and capital appreciation. The Fund pursues its objective principally through a two-part strategy. First, the Fund will invest substantially all of its net assets in a portfolio of investments designed to closely track the performance of the NASDAQ 100 Index®. Second, the Fund will use certain option strategies primarily consisting of writing NASDAQ 100 Index® call options to generate premium income and reduce the volatility of the Funds returns, with the intent of improving the Funds risk adjusted returns. There can be no assurance that the Fund will achieve its investment objective.
For the annual period ended December 31, 2009, 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 $11.28 to $14.08. For the same period, the Funds unmanaged reference index, the NASDAQ 100 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.
Period | Fund* | NASDAQ 100 Index** |
Difference | ||||||
Fiscal year ended December 31, 2009 |
44.32 | % | 54.63 | % | (10.31 | %) | |||
Since inception (from 1/30/07) through December 31, 2009 |
7.12 | % | 6.45 | % | 0.67 | % |
* | Fund performance information is net of expenses. |
** | The reference index has no expenses associated with performance. |
The NASDAQ 100®, NASDAQ 100 Index®, and NASDAQ are trade or service marks of the NASDAQ Stock Market, Inc.
For more detail with regard to the Funds total investment return based on a change in the per share market value of the Funds Common Stock (as measured by the trading price of the Funds shares on the New York Stock Exchange), please refer to the Financial Highlights section of this report.
As a closed-end fund, the Funds shares may trade in the secondary market at a premium or discount to the Funds net asset value. As a result, total investment returns based on changes in the market value of the Funds Common Stock can vary significantly from total investment returns based on changes in the Funds net asset value.
Rob A. Guttschow, CFA
Portfolio Manager
John Gambla, CFA
Portfolio Manager
February 17, 2010
NASDAQ PREMIUM INCOME & GROWTH FUND INC. | DECEMBER 31, 2009 | 3 |
Schedule of Investments as of December 31, 2009 |
(Percentages shown are based on Net Assets) |
4 | NASDAQ PREMIUM INCOME & GROWTH FUND INC. | DECEMBER 31, 2009 |
Schedule of Investments (continued)
NASDAQ PREMIUM INCOME & GROWTH FUND INC. | DECEMBER 31, 2009 | 5 |
Schedule of Investments (concluded)
* | The cost and unrealized appreciation (depreciation) of investments as of December 31, 2009, as computed for federal income tax purposes, were as follows: |
Aggregate cost |
$ | 231,239,832 | ||
Gross unrealized appreciation |
$ | 56,070,226 | ||
Gross unrealized depreciation |
(24,529,399 | ) | ||
Net unrealized appreciation |
$ | 31,540,827 | ||
(a) | All or a portion of security held as collateral in connection with open option contracts. |
(b) | Non-income producing security. |
(c) | Depositary receipts. |
For Fund portfolio compliance purposes, the Funds 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.
Fair Value Measurements Various inputs are used in determining the fair value of investments, which are as follows:
| Level 1 price quotations in active markets/exchanges for identical securities |
| Level 2 other observable inputs (including, but not limited to: quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs) |
| Level 3 unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Funds own assumptions used in determining the fair value of investments) |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For information about the Funds policy regarding valuation of investments and other significant accounting policies, please refer to the Note 1(a) of the Notes to Financial Statements.
The following table summarizes the inputs used as of December 31, 2009 in determining the fair valuation of the Funds investments:
Valuation Inputs | Investments in Securities |
Other Financial Instruments1 |
||||||
Assets | Liabilities | |||||||
Level 1 |
$ | 261,546,696 | 2 | $ | (2,812,000 | ) | ||
Level 2 |
1,233,963 | | ||||||
Level 3 |
| | ||||||
Total |
$ | 262,780,659 | $ | (2,812,000 | ) | |||
1 | Other financial instruments are options. |
2 | See above Schedule of Investments for values in each industry. |
See Notes to Financial Statements.
6 | NASDAQ PREMIUM INCOME & GROWTH FUND INC. | DECEMBER 31, 2009 |
Statement of Assets, Liabilities and Capital
As of December 31, 2009
Assets | |||||||
Investments in unaffiliated securities, at value (identified cost $231,076,823) |
$ | 262,780,659 | |||||
Dividends receivable |
41,779 | ||||||
Prepaid expenses and other assets |
32,188 | ||||||
Total assets |
262,854,626 | ||||||
Liabilities | |||||||
Options written, at value (premiums received $2,121,886) |
2,812,000 | ||||||
Investment advisory fees payable |
196,775 | ||||||
Accrued expenses |
118,102 | ||||||
Total liabilities |
3,126,877 | ||||||
Net Assets | |||||||
Net assets |
$ | 259,727,749 | |||||
Capital | |||||||
Common Stock, par value $.001,100,000,000 shares authorized |
$ | 18,445 | |||||
Paid-in capital in excess of par |
248,715,235 | ||||||
Accumulated investment loss net |
$ | (55,628 | ) | ||||
Accumulated realized capital losses net |
(19,964,025 | ) | |||||
Unrealized appreciation net |
31,013,722 | ||||||
Total accumulated gains net |
10,994,069 | ||||||
Total Capital Equivalent to $14.08 per share based on shares of |
$ | 259,727,749 | |||||
See Notes to Financial Statements.
NASDAQ PREMIUM INCOME & GROWTH FUND INC. | DECEMBER 31, 2009 | 7 |
Statement of Operations
For the Year Ended December 31, 2009
Investment Income | ||||||||
Dividends (net of $29,718 foreign withholding tax) |
$ | 1,683,481 | ||||||
Interest |
80 | |||||||
Total income |
1,683,561 | |||||||
Expenses | ||||||||
Investment advisory fees |
$ | 2,078,195 | ||||||
Licensing fees |
109,319 | |||||||
Professional fees |
103,403 | |||||||
Directors fees and expenses |
61,827 | |||||||
Accounting services |
52,066 | |||||||
Transfer agent fees |
48,569 | |||||||
Insurance |
34,625 | |||||||
Printing and stockholder reports |
26,389 | |||||||
Registration fees |
20,488 | |||||||
Custodian fees |
19,012 | |||||||
Other |
10,176 | |||||||
Total expenses |
2,564,069 | |||||||
Investment loss net |
(880,508 | ) | ||||||
Realized & Unrealized Gain (Loss) Net | ||||||||
Realized loss on: | ||||||||
Investments net |
(2,769,187 | ) | ||||||
Options written net |
(10,654,562 | ) | (13,423,749 | ) | ||||
Change in unrealized appreciation/depreciation on: | ||||||||
Investments net |
101,898,441 | |||||||
Options written net |
(2,457,314 | ) | 99,441,127 | |||||
Total realized and unrealized gain net |
86,017,378 | |||||||
Net Increase in Net Assets Resulting from Operations |
$ | 85,136,870 | ||||||
See Notes to Financial Statements.
8 | NASDAQ PREMIUM INCOME & GROWTH FUND INC. | DECEMBER 31, 2009 |
Statements of Changes in Net Assets
For the Year Ended December 31, |
||||||||
Increase (Decrease) in Net Assets: | 2009 |
2008 | ||||||
Operations | ||||||||
Investment loss net |
$ | (880,508 | ) | $ | (1,412,739 | ) | ||
Realized gain (loss) net |
(13,423,749 | ) | 5,824,547 | |||||
Change in unrealized appreciation/depreciation net |
99,441,127 | (141,533,637 | ) | |||||
Net increase (decrease) in net assets resulting from operations |
85,136,870 | (137,121,829 | ) | |||||
Dividends and Distributions to Stockholders | ||||||||
Investment income net |
| (4,974,856 | ) | |||||
Tax return of capital |
(33,880,983 | ) | (28,860,617 | ) | ||||
Net decrease in net assets resulting from dividends and distributions to stockholders |
(33,880,983 | ) | (33,835,473 | ) | ||||
Common Stock Transactions | ||||||||
Value of shares issued to stockholders in reinvestment of dividends and distributions |
2,181,331 | | ||||||
Net Assets | ||||||||
Total increase (decrease) in net assets |
53,437,218 | (170,957,302 | ) | |||||
Beginning of year |
206,290,531 | 377,247,833 | ||||||
End of year* |
$ | 259,727,749 | $ | 206,290,531 | ||||
*Accumulated investment loss net |
$ | (55,628 | ) | $ | (55,055 | ) | ||
See Notes to Financial Statements.
NASDAQ PREMIUM INCOME & GROWTH FUND INC. | DECEMBER 31, 2009 | 9 |
Financial Highlights
The following per share data and ratios have been derived from information provided in the financial statements. |
For the Year Ended December 31, |
For the period January 30, 2007 |
||||||||||
2009 | 2008 | |||||||||||
Per Share Operating Performance: | ||||||||||||
Net asset value, beginning of period |
$ | 11.28 | $ | 20.63 | $ | 19.10 | ||||||
Investment loss net(b) |
(.05 | ) | (.08 | ) | (.07 | ) | ||||||
Realized and unrealized gain (loss) net |
4.70 | (7.42 | ) | 3.34 | ||||||||
Total from investment operations |
4.65 | (7.50 | ) | 3.27 | ||||||||
Less dividends and distributions: | ||||||||||||
Investment income-net |
| (.27 | ) | | ||||||||
Tax return of capital |
(1.85 | ) | (1.58 | ) | (1.70 | ) | ||||||
Total dividends and distributions |
(1.85 | ) | (1.85 | ) | (1.70 | ) | ||||||
Offering costs resulting from the issuance of Common Stock |
| | (.04 | ) | ||||||||
Net asset value, end of period |
$ | 14.08 | $ | 11.28 | $ | 20.63 | ||||||
Market price per share, end of period |
$ | 14.40 | $ | 9.29 | $ | 18.26 | ||||||
Total Investment Return(c): | ||||||||||||
Based on net asset value per share |
44.32% | (37.07% | ) | 17.95% | (d) | |||||||
Based on market price per share |
79.21% | (41.45% | ) | (.30% | )(d) | |||||||
Ratios to Average Net Assets: | ||||||||||||
Expenses |
1.11% | 1.05% | 1.06% | (e) | ||||||||
Investment loss net |
(.38% | ) | (.47% | ) | (.36% | )(e) | ||||||
Supplemental Data: | ||||||||||||
Net assets, end of period (in thousands) |
$ | 259,728 | $ | 206,291 | $ | 377,248 | ||||||
Portfolio turnover |
0% | (f) | 19% | 31% | ||||||||
(a) | Commencement of operations. |
(b) | Based on average shares outstanding. |
(c) | Total investment returns based on market price, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Total investment returns exclude the effects of sales charges. |
(d) | Aggregate total investment return. |
(e) | Annualized. |
(f) | For purposes of calculating portfolio turnover of the Fund, there were no long-term purchases during the year, and therefore, the portfolio turnover is zero. |
See Notes to Financial Statements.
10 | NASDAQ PREMIUM INCOME & GROWTH FUND INC. | DECEMBER 31, 2009 |
Notes to Financial Statements
NASDAQ PREMIUM INCOME & GROWTH FUND INC. | DECEMBER 31, 2009 | 11 |
Notes to Financial Statements (continued)
12 | NASDAQ PREMIUM INCOME & GROWTH FUND INC. | DECEMBER 31, 2009 |
Notes to Financial Statements (continued)
NASDAQ PREMIUM INCOME & GROWTH FUND INC. | DECEMBER 31, 2009 | 13 |
Notes to Financial Statements (concluded)
5. Distributions to Stockholders:
The tax character of distributions paid during the fiscal years ended December 31, 2009 and December 31, 2008 was as follows:
12/31/2009 | 12/31/2008 | |||||
Distributions paid from: | ||||||
Ordinary income |
$ | | $ | 4,974,856 | ||
Tax return of capital |
33,880,983 | 28,860,617 | ||||
Total distributions |
$ | 33,880,983 | $ | 33,835,473 | ||
As of December 31, 2009, the components of accumulated net earnings on a tax basis were as follows:
Capital loss carryforward |
$ | (18,700,257 | )* | |
Unrealized gains net |
29,694,326 | ** | ||
Total |
$ | 10,994,069 | ||
* | As of December 31, 2009, the Fund had a capital loss carryforward of $18,700,257, of which $4,607,477 expires in 2015 and $14,092,780 expires in 2017. This amount will be available to offset like amounts of any future taxable gains. |
** | The difference between book-basis and tax-basis net unrealized gains is attributable primarily to the realization for tax purposes of unrealized gains (losses) on certain options contracts, the tax deferral of losses on wash sales, non-deductible expenses, and the deferral of post-October capital losses for tax purposes. |
6. Subsequent Event:
Management has evaluated all subsequent transactions and events after the balance sheet date through February 26, 2010, the date on which these financial statements were issued, and except as already included in the notes to these financial statements, has determined that no additional items require disclosure.
14 | NASDAQ PREMIUM INCOME & GROWTH FUND INC. | DECEMBER 31, 2009 |
Report of Independent Registered Public Accounting Firm
NASDAQ PREMIUM INCOME & GROWTH FUND INC. | DECEMBER 31, 2009 | 15 |
Automatic Dividend Reinvestment Plan
16 | NASDAQ PREMIUM INCOME & GROWTH FUND INC. | DECEMBER 31, 2009 |
Directors and Officers
Name | Address & Year of Birth |
Position(s) Held With Fund**** |
Length of Time Served** |
Principal Occupation(s) During Past 5 Years | Number of IQ Advisors- Affiliate Advised Funds and Portfolios Overseen By Director |
Other Public Directorships Held By Director | ||||||
Non-Interested Directors* | ||||||||||||
Paul Glasserman | 4 World Financial Center, 6th Floor, New York, NY 10080 1962 |
Director & Chairman of the Board | 2007 to present | Professor, Columbia University Business School since 1991; Senior Vice Dean (July 2004 June 2008); Consultant and Visiting Scholar, Federal Reserve Bank of New York since June 2008. | 8 | None | ||||||
Steven W. Kohlhagen | 4 World Financial Center, 6th Floor, New York, NY 10080 1947 |
Director & Chairman of the Audit Committee | 2007 to present | Retired financial industry executive since August 2002. | 8 | Ametek, Inc. | ||||||
William J. Rainer | 4 World Financial Center, 6th Floor, New York, NY 10080 1946 |
Director | 2007 to present | Retired securities and futures industry executive; Chairman and Chief Executive Officer, OneChicago, LLC, a designated contract market (2001 November 2004); Former Chairman, Commodity Futures Trading Commission. | 8 | None | ||||||
Laura S. Unger | 4 World Financial Center, 6th Floor, New York, NY 10080 1961 |
Director & Chairperson of the Nominating & Corporate Governance Committee | 2007 to present | JPMorgan Independent Consultant for the Global Analyst Conflict Settlement (2003 2009); Commentator, Nightly Business Report since 2005; Senior Advisor, Marwood Group (2005 2007); Consultant, Nomura (2008); Regulatory Expert for CNBC (2002 2003). | 8 | CA, Inc. (software), Ambac Financial Group, Inc. and CIT Group Inc. (financial services)*** |
* | 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 Funds Bylaws, charter or by statute. |
*** | Ms. Unger became a Director of CIT Group Inc. effective as of January 12, 2010. |
**** | Chairperson titles are effectively January 1, 2009. Prior to this date, the chairpersons were as follows: Mr. William J. Rainer, Chairman of the Board, Mr. Steven W. Kohlhagen, Chairman of the Nominating & Corporate Governance Committee; and Mr. Paul Glasserman, Chairman of the Audit Committee. |
Name | Address & Year of Birth |
Position(s) Held with Fund |
Length of Time Served |
Principal Occupation(s) During Past 5 Years | ||||
Fund Officers | ||||||||
Justin C. Ferri | 4 World Financial Center, 6th Floor, New York, NY 10080 1975 |
President | 2009 to present | Justin C. Ferri has been President of IQ Investment Advisors LLC (IQ) since 2009 and serves as President of each of IQs publicly traded closed-end mutual fund companies. Prior to this role, Mr. Ferri was a Vice President of IQ from 2005 to 2009. In addition, Mr. Ferri has been the President of Merrill Lynch Alternative Investments (MLAI) since August 2009 and a Manager of MLAI since June 2008. Mr. Ferri has been registered with the National Futures Association as a principal of MLAI since July 2008. He also serves as Managing Director within the Merrill Lynch Pierce Fenner & Smith Incorporated Global Investment Solutions Group (MLPF&S & GIS respectively), responsible for heading Alternative Investments. Prior to his role in GIS, Mr. Ferri was a Director in the MLPF&S Global Private Client Market Investments & Origination (MI&O) Group, from 2005 to 2007, and before that, he served as a Vice President and Head of the MLPF&S Global Private Client Rampart Equity Derivatives team, from 2004 to 2005. He holds a B.A. degree from Loyola College in Maryland. | ||||
James E. Hillman | 4 World Financial Center, 6th Floor, New York, NY 10080 1957 |
Vice President and Treasurer | 2007 to present | James E. Hillman has been the Treasurer of IQ since March 2007, where he is also a Vice President. He also serves as the Vice President and Treasurer of each of IQs publicly traded closed-end mutual fund companies. He also serves as a Director within MLPF&S & GIS. In addition, Mr. Hillman has served as the Treasurer of Managed Account Advisors LLC since 2006 and as a Vice President of MLAI since 2008. Prior to his role in GIS, Mr. Hillman was a Director in the MLPF&S MI&O Group from September 2006 to 2007. Prior to joining Merrill Lynch, Mr. Hillman served as a Director of Citigroup Alternative Investments Tax Advantaged Short Term Fund, as well as the Korea Equity Fund Inc., in 2006. Prior to that, he was an Independent Consultant from January to September 2006 and prior to that, he was a Managing Director at The Bank of New York, Inc., from 1999 to 2006. He holds a B.S. degree from Fordham University in New York. |
NASDAQ PREMIUM INCOME & GROWTH FUND INC. | DECEMBER 31, 2009 | 17 |
Directors and Officers (concluded)
Name | Address & Year of Birth |
Position(s) Held with Fund |
Length of Time Served |
Principal Occupation(s) During Past 5 Years | ||||
Fund Officers | ||||||||
Colleen R. Rusch | 4 World Financial Center, 6th Floor, New York, NY 10080 1967 |
Vice President and Secretary | 2007 to present | Colleen R. Rusch has been the Chief Administrative Officer and Vice President of IQ since 2007, and serves as Vice President and Secretary of each of IQs publicly traded closed-end mutual fund companies. In addition, Mrs. Rusch is a Vice President of MLAI. She also serves as a Director within the Merrill Lynch Pierce Fenner & Smith Incorporated Global Investment Solutions Group, responsible for overseeing the Alternative Investments product and trading platform. Prior to her role in GIS, Mrs. Rusch was a Director in the MLPF&S MI&O Group from 2005 to 2007. Prior to this, Mrs. Rusch was a Director of Merrill Lynch Investment Managers, L.P. from January 2005 to July 2005 and a Vice President from 1998 to 2004. Mrs. Rusch holds a B.S. degree in Business Administration from Saint Peters College in New Jersey. | ||||
Michelle H. Rhee | 4 World Financial Center, 6th Floor, New York, NY 10080 1966 |
Chief Legal Officer | 2009 to present | Michelle H. Rhee has been the Chief Legal Officer of IQ since June 2009. She also serves as the Chief Legal Officer of each of IQs publicly traded closed-end mutual fund companies. She has also served as an Associate General Counsel for the Bank of America Corporation since 2004. She holds a B.A. from Smith College and a J.D. from Boston University in Massachusetts. | ||||
Robert M. Zakem | 2 World Financial Center, 37th Floor, New York, NY 10080 1958 |
Chief Compliance Officer and Anti-Money Laundering Officer | 2009 to present | Robert M. Zakem has been the Chief Compliance Officer (CCO) of IQ since June 2009 and CCO of MLAI since April 2009. He also serves as the CCO of each of IQs publicly traded closed-end mutual fund companies. He is also a Managing Director within Compliance since March 2009. Prior to his role in Compliance, he was the Head of Products and Platform Supervision and Global Wealth Management - Business Risk Management from 2006 to 2009. Prior to joining Merrill Lynch, Mr. Zakem was an Executive Director at UBS Financial Services, Inc., where he was the Head of Funds Services-US Investment Solutions (2006), an Executive Director, Provider Management - Fund and Annuity Solutions from 2005 to 2006, and Senior Vice President and Chief Administrative Officer, Investment Product Solutions, from 2004 to 2005. He holds a B.S. from the University of Detroit in Michigan, and a J.D. from the University of Wisconsin Law School in Wisconsin. | ||||
Jeff E. McGoey | 4 World Financial Center, 6th Floor, New York, NY 10080 1976 |
Vice President | 2009 to present | Jeff E. McGoey serves as a Vice President of each of IQs publicly traded closed-end mutual fund companies. He also serves as Vice President within MLPF&S & GIS since 2008. Prior to his role in GIS, Mr. McGoey served as a Vice President in Merrill Lynch & Co.s Corporate Audit Group responsible for coverage of the MLPF&S MI&O Group from 2004 to 2008. He holds a B.A. degree from Rutgers College in New Jersey. | ||||
Officers of the Fund serve at the pleasure of the Board of Directors. | ||||||||
Custodian | Transfer Agent | |||||||
State Street Bank and Trust Company | BNY Mellon Shareowner Services | |||||||
P.O. Box 351 | 480 Washington Boulevard | |||||||
Boston, MA 02101 | Jersey City, NJ 07310 |
18 | NASDAQ PREMIUM INCOME & GROWTH FUND INC. | DECEMBER 31, 2009 |
Privacy Policy
IQ Investment Advisors is a subsidiary of Bank of America and implements the Privacy Policy of Bank of America for the IQ Funds. A copy of the policy is available at www.iqiafunds.com or upon request by calling 1-877-449-4742.
NASDAQ PREMIUM INCOME & GROWTH FUND INC. | DECEMBER 31, 2009 | 19 |
Privacy Policy (continued)
20 | NASDAQ PREMIUM INCOME & GROWTH FUND INC. | DECEMBER 31, 2009 |
Privacy Policy (continued)
NASDAQ PREMIUM INCOME & GROWTH FUND INC. | DECEMBER 31, 2009 | 21 |
Privacy Policy (continued)
22 | NASDAQ PREMIUM INCOME & GROWTH FUND INC. | DECEMBER 31, 2009 |
Privacy Policy (concluded)
NASDAQ PREMIUM INCOME & GROWTH FUND INC. | DECEMBER 31, 2009 | 23 |
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 Funds Forms N-Q are available on the SECs website at http://www.sec.gov. The Funds Forms N-Q may also be reviewed and copied at the SECs Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Electronic Delivery
The Fund offers electronic delivery of communications to its stockholders. In order to receive this service, you must register your account and provide us with e-mail information. To sign up for this service, simply access this website at http://www.icsdelivery.com/live and follow the instructions.
When you visit this site, you will obtain a personal identification number (PIN). You will need this PIN should you wish to update your e-mail address, choose to discontinue this service and/or make any other changes to the service. This service is not available for certain retirement accounts at this time.
Contact Information
For more information regarding the Fund, please visit www.IQIAFunds.com or contact us at 1-877-449-4742.
24 | NASDAQ PREMIUM INCOME & GROWTH FUND INC. | DECEMBER 31, 2009 |
www.IQIAFunds.com
NASDAQ Premium Income & Growth Fund Inc. seeks to provide stockholders with premium income and capital appreciation.
This report, including the financial information herein, is transmitted to stockholders of NASDAQ Premium Income & Growth 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 Commissions website at http://www.sec.gov. Information about how the Fund voted proxies relating to securities held in the Funds 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 Commissions website at http://www.sec.gov.
NASDAQ Premium Income & Growth Fund Inc.
4 World Financial Ctr., 6th Fl
New York, NY 10080
#IQQQQXD 12/09
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 registrants 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 registrants board of directors has determined that (i) the registrant has the following audit committee financial expert serving on its audit committee and (ii) the audit committee financial expert is independent: (1) 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 Fees1 | (c) Tax Fees2 | (d) All Other Fees | |||||||||||||
Entity Name | Current Fiscal Year End |
Previous Fiscal Year End |
Current Fiscal Year |
Previous Fiscal Year End |
Current Fiscal Year |
Previous Fiscal Year End |
Current Fiscal Year End |
Previous Fiscal Year End | ||||||||
NASDAQ Premium Income & Growth Fund Inc. | $31,000 | $31,500 | $0 | $0 | $8,500 | $8,500 | $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 registrants 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 registrants 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 SECs 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:
Entity Name | Current Fiscal Year End |
Previous Fiscal Year End |
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NASDAQ Premium Income & Growth Fund Inc. | $8,500 | $8,500 |
(h) The registrants audit committee has considered and determined that the provision of non-audit services that were rendered to the registrants investment adviser (not including any non-affiliated sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by the registrants 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 accountants 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 registrants separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(58)(A)): | |
Paul Glasserman Steven W. Kohlhagen William J. Rainer Laura S. Unger | ||
Item 6 | Investments | |
(a) The registrants Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this form. | ||
(b) Not Applicable due to no such divestments during the semi-annual period covered since the previous Form N-CSR filing. | ||
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, Nuveen HydePark Group, LLC (the Sub-adviser or HydePark). The Proxy Voting Policies and Procedures of the Sub-adviser (the Proxy Voting Policies) are attached as an Exhibit 99.PROXYPOL hereto. |
Exhibit 99.PROXYPOL
PROXY VOTING POLICIES AND PROCEDURES
Introduction
Nuveen HydePark Group, LLC (NHP) provides investment management services in equity strategies to institutional accounts, which may include registered and unregistered investment companies.
NHP has engaged RiskMetrics Group (RMG), (f/k/a Institutional Shareholder Services, Inc. (ISS) to vote proxies for securities held in client accounts. A member of NHPs compliance department will monitor the administration of the voting, ensure that records were maintained in accordance with Rule 206(4)-6, and ensure that records of proxy voting information were made available to the accounts. Based on the information provided, each registered fund would be responsible for preparing and making any required filings (e.g., Form N-PX).
Exceptions to Voting Securities
NHP may instruct RMG not to vote proxies in respect of securities of any issuer if it determines it would be in its clients overall best interests not to vote. Such determination may apply in respect of all client holdings of the securities or only certain specified clients, as NHP deems appropriate under the circumstances.
Generally, NHP would instruct RMG not to vote proxies associated with the securities of any issuer if as a result of voting, subsequent purchases or sales of such securities would be blocked. However, NHP may decide, on an individual security basis that it is in the best interests of its clients for RMG to vote the proxy associated with such a security, taking into account the loss of liquidity. In addition, NHP may instruct RMG not to vote proxies where the voting would in NHPs judgment result in some other financial, legal, regulatory disability or burden to NHP or the client (such as imputing control with respect to the issuer).
To the extent that NHP receives proxies for securities that are transferred into a clients portfolio that were not recommended or selected by NHP and are sold or expected to be sold promptly in an orderly manner (legacy securities), NHP will generally instruct RMG to refrain from voting such proxies. In such circumstances, since legacy securities are expected to be sold promptly, voting proxies on such securities would not further NHPs interest in maximizing the value of client investments. NHP may agree to an institutional clients special request to vote a legacy security proxy, and would instruct RMG to vote such proxy in accordance with its guidelines.
In addition, NHP may determine: (a) not to recall securities on loan if, in its judgment, the negative consequences to clients of disrupting the securities lending program would outweigh the benefits of voting in the particular instance or, (b) not to vote a proxy if, in its judgment, the expense and administrative inconvenience outweighs the benefits to clients of voting the securities.
Exceptions to RMG voting of proxies
If NHP determines that it wishes to override RMGs recommendations and vote the proxy, it must first determine whether voting the proxy would present it with a material conflict of interest. If voting the proxy would present NHP with a material conflict of interest, then NHP may not override RMGs recommendation.
Voting the securities of an issuer where the following relationships or circumstances exist is deemed to give rise to a material conflict of interest for purposes of these Policies and Procedures:
1. | The issuer is an investment advisory client of NHP that pays (or is expected to pay) fees to NHP in excess of 1% of NHPs annual revenue in the year in which the proxy is to be voted. |
2. | The issuer is an entity in which an executive officer of NHP or a relative1 of any such person is or was (within the past three years of the proxy vote) an executive officer or director or employee. |
3. | The issuer is a registered or unregistered fund for which NHP or another Nuveen adviser serves as investment adviser or sub-adviser. |
4. | Any other circumstance that NHP is aware of where NHPs duty to serve its clients interests, typically referred to as its duty of loyalty, could be materially compromised. |
A conflict of interest shall not be considered material for the purposes of these Policies and Procedures in respect of a specific vote or circumstance if the matter to be voted on relates to a restructuring of the terms of existing securities or the issuance of new securities or a similar matter arising out of the holding of securities, other than common equity, in the context of a bankruptcy or threatened bankruptcy of the issuer, even if a conflict described in numbers 1, 2 or 4 above is present.
In its process of determining whether there are material conflicts of interest, NHP does not consider nonpublic information about the business arrangements of its affiliates or their officers and directors. Business arrangements that NHP is not actively involved in shall not be deemed to raise a material conflict of interest for NHP.
NHP must document its reason(s) for voting the proxy in a manner contrary to RMGs recommendations.
Recordkeeping and Retention
NHP shall retain records relating to the voting of proxies, including:
Copies of these Policies and Procedures and any amendments thereto.
A copy of each proxy ballot and proxy statement filed by the issuer with the Securities and Exchange Commission (Proxy Statement) that NHP receives regarding client securities.
Records of each vote cast on behalf of clients; these records may be maintained on an aggregate basis.
A copy of any documents created by NHP that were material to making a decision on how to vote or that memorializes the basis for that decision.
A copy of each written request for information on how NHP voted proxies on behalf of the client, and a copy of any written response by NHP to any (oral or written) request for information on how NHP voted.
These records shall be maintained and preserved in an easily accessible place for a period of not less than five years from the end of NHPs fiscal year during which the last entry was made in the records, the first two years in an appropriate office of NHP.
NHP may rely on proxy statements filed on the SECs EDGAR system or on proxy statements and records of votes maintained by RMG or another third party service provider.
Adopted: October 29, 2007 AND AMENDED 9/2008 (changes implemented 10/2008)
1 | For the purposes of these Guidelines, relative includes the following family members: spouse, non-minor children or stepchildren living in the same household. |
Item 8 Portfolio Managers of Closed-End Management Investment Companies as of December 31, 2009.
(a)(1) Messrs. Rob A. Guttschow, CFA and John Gambla, CFA are primarily responsible for the day-to-day management of the registrants portfolio (Portfolio Manager) since 2007.
Mr. Guttschow is a Managing Director of Nuveen HydePark Group, LLC (HydePark) and Nuveen Asset Management (NAM). Mr. Guttschow joined NAM in May 2004 to develop and implement a derivative overlay capability. Mr. Guttschow then joined Nuveen HydePark Group LLC in September 2007, while retaining his Managing Director status with Nuveen Asset Management. Mr. Guttschow was a Managing Director and Senior Portfolio Manager at Lotsoff Capital Management (LCM) from 1993 until 2004. While at LCM, Mr. Guttschow managed a variety of taxable fixed income portfolios and enhanced equity index products totaling $1.5 billion. Mr. Guttschow is a Chartered Financial Analyst (CFA) and a member of the Association for Investment Management Research. He has served as a member of the TRIAD group for the Investment Analyst Society of Chicago. Education: University of Illinois at Urbana/Champaign, B.S., M.B.A., CFA.
Mr. Gambla is a Managing Director of Nuveen HydePark Group LLC and a Managing Director at NAM, since 2007. He is responsible for designing and maintaining equity and alternative investment portfolios. Prior to this, he was a Senior Trader and Quantitative Specialist for NAM (since 2003), and a Portfolio Manager for Nuveens closed-end fund managed account. Additional responsibilities included quantitative research and product development. Mr. Gambla joined Nuveen in 1992 as an Assistant Portfolio Manager. In 1993, he became a lead Portfolio Manager responsible for seven closed-end and open-end bond funds totaling $1.5 billion. In 1998, he became Manager of Defined Portfolio Advisory which provided fundamental research, quantitative research and trading for Nuveens $11 billion of equity and fixed-income Unit Trusts. Prior to his career with Nuveen, he was a Financial Analyst with Abbott Laboratories. He is a Chartered Financial Analyst, Certified Financial Risk Manager, Phi Beta Kappa Education: University of Illinois, B.A., B.S., University of Chicago, M.B.A.
The information provided in the paragraph above pursuant to this Item 8(a)(1) is as of March 8, 2010.
(a)(2) As of December 31, 2009:
(ii) Number of Other Accounts Managed and Assets by Account Type |
(iii) Number of Other Accounts and Assets for Which Advisory Fee is Performance-Based | ||||||||||||||||||
(i) Name of Portfolio Manager |
Other Registered Investment Companies |
Other Pooled Investment Vehicles |
Other Accounts |
Other Registered Investment Companies |
Other Pooled Investment Vehicles |
Other Accounts | |||||||||||||
Rob A. Guttschow, CFA |
8 | * | 1 | 20 | * | 1 | |||||||||||||
$ | 580mm | $ | 1mm | $ | 539mm | $ | 16mm | ||||||||||||
John Gambla, CFA |
8 | * | 1 | * | 20 | * | 1 | ||||||||||||
$ | 580mm | $ | 1mm | $ | 539mm | $ | 16mm |
* Indicates accounts managed by the Investment Management Team of Messrs R. Guttschow & J. Gambla
(iv) Potential Material Conflicts of Interest
HydePark may have arrangements with its affiliates under which it provides certain investment advisory (as adviser or sub-adviser), analytical, administrative, marketing or educational services for such affiliated adviser or its clients. HydeParks affiliates may provide HydePark with certain services including sales and marketing, client service, administration and operations, legal and compliance, finance, corporate and other support services.
The simultaneous management of the Fund and the other registered investment companies noted above by the Portfolio Managers may present actual or apparent conflicts of interest with respect to the allocation and aggregation of securities orders placed on behalf of the Fund and the other accounts.
The Subadviser has adopted several policies that address potential conflicts of interest, including best execution and trade allocation policies that are designed to ensure (1) that portfolio management is seeking the best price for portfolio securities under the circumstances, (2) fair and equitable allocation of investment opportunities among accounts over time and (3) compliance with applicable regulatory requirements. All accounts are to be treated in a non-preferential manner, such that allocations are not based upon account performance, fee structure or preference of the portfolio manager. In addition, the Subadviser has adopted a Code of Conduct that sets forth policies regarding conflicts of interest.
(a)(3) As of December 31, 2009:
Compensation. Each Portfolio Managers compensation consists of three basic elementsbase salary, cash bonus and long-term incentive compensation. The Subadvisers compensation strategy is to annually compare overall compensation, including these three elements, to the market in order to create a compensation structure that is competitive and consistent with similar
financial services companies. As discussed below, several factors are considered in determining each Portfolio Managers total compensation. In any year these factors may include, among others, the effectiveness of the investment strategies recommended by the Portfolio Managers investment team, the investment performance of the accounts managed by the Portfolio Managers, and the overall performance of Nuveen Investments, Inc. (the parent company of the Subadviser). Although investment performance is a factor in determining each Portfolio Managers compensation, it is not necessarily a decisive factor.
Base salary. Each Portfolio Manager is paid a base salary that is set at a level determined by the Subadviser in accordance with its overall compensation strategy discussed above. The Subadviser is not under any current contractual obligation to increase a Portfolio Managers base salary.
Cash bonus. Each Portfolio Manager is also eligible to receive an annual cash bonus. The level of this bonus is based upon evaluations and determinations made by each Portfolio Managers supervisors. These reviews and evaluations often take into account a number of factors, including the effectiveness of the investment strategies recommended to the Subadvisers investment team, the performance of the accounts for which he serves as portfolio manager relative to any benchmarks established for those accounts, his effectiveness in communicating investment performance to stockholders and their representatives, and his contribution to the Subadvisers investment process and to the execution of investment strategies. The cash bonus component is also impacted by the overall performance of Nuveen Investments, Inc. in achieving its business objectives.
Long-term incentive compensation. Each Portfolio Manager is eligible to receive two forms of long term incentive compensation. One form is tied to the successful revenue growth of the Nuveen HydePark Group LLC. The second form of long term compensation is tied to the success of Nuveen Investments Inc. and its ability to grow its business as a private company.
(a)(4) Beneficial Ownership of Securities. As of December 31, 2009, each Portfolio Manager does not beneficially own any stock issued by the Fund.
Item 9 |
Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers Not Applicable due to no such purchases during the period covered by this report. | |
Item 10 |
Submission of Matters to a Vote of Security Holders The registrants Nominating and Corporate Governance Committee will consider nominees to the board of directors recommended by shareholders when a vacancy becomes available. Shareholders who wish to recommend a nominee should send nominations that include biographical information and set forth the qualifications of the proposed nominee to the registrants Secretary. There have been no material changes to these procedures. | |
Item 11 |
Controls and Procedures | |
11(a) |
The registrants principal executive and principal financial officers or persons performing similar functions have concluded that the registrants disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the 1940 Act)) are effective as |
of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended. | ||
11(b) | There were no changes in the registrants 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 registrants 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.
NASDAQ Premium Income & Growth Fund Inc. | ||||||||
By: | /s/ Justin C. Ferri |
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Justin C. Ferri |
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Chief Executive Officer of NASDAQ Premium Income & Growth Fund Inc. |
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Date: February 24, 2010 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Justin C. Ferri |
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Justin C. Ferri | ||||||||
Chief Executive Officer (principal executive officer) of NASDAQ Premium Income & Growth Fund Inc. |
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Date: February 24, 2010 | ||||||||
By: | /s/ James E. Hillman |
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James E. Hillman | ||||||||
Chief Financial Officer (principal financial officer) of NASDAQ Premium Income & Growth Fund Inc. |
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Date: February 24, 2010 |