UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-21983
Name of Fund: NASDAQ Premium Income & Growth Fund Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Mitchell M. Cox, Chief Executive Officer,
NASDAQ Premium Income & Growth Fund Inc., 4 World Financial Center, 6th
Floor, New York, New York 10080.
Registrant's telephone number, including area code: (212) 449-4742
Date of fiscal year end: 12/31/07
Date of reporting period: 01/01/07 - 06/30/07
Item 1 - Report to Stockholders
NASDAQ Premium
Income & Growth Fund Inc.
Semi-Annual Report
(Unaudited)
June 30, 2007
[LOGO] IQ INVESTMENT [LOGO] NUVEEN
ADVISORS INVESTMENTS
NASDAQ Premium Income & Growth Fund Inc.
Proxy Results
During the six-month period ended June 30, 2007, the shareholders of NASDAQ
Premium Income & Growth Fund Inc. voted on the following proposal, which was
approved at an annual shareholders' meeting on April 27, 2007. A description of
the proposal and number of shares voted are as follows:
- -------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
- -------------------------------------------------------------------------------------------------------
To elect the Fund's Board of Directors: Paul Glasserman 10,070,643 84,116
Steven W. Kohlhagen 10,079,383 75,376
William J. Rainer 10,079,483 75,276
- -------------------------------------------------------------------------------------------------------
Directors and Officers
William J. Rainer, Director and Chairman of the Board
Paul Glasserman, Director and Chairman of the Audit Committee
Steven W. Kohlhagen, Director and Chairman of the Nominating and Corporate
Governance Committee
Donald C. Burke, Vice President and Secretary
Martin G. Byrne, Chief Legal Officer
Mitchell M. Cox, President
Justin C. Ferri, Vice President
Jay M. Fife, Vice President
James E. Hillman, Vice President and Treasurer
Catherine A. Johnston, Chief Compliance Officer
Colleen R. Rusch, Vice President
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
The Bank of New York
101 Barclay Street -- 11 East
New York, NY 10286
NASDAQ Symbol
QQQX
2 NASDAQ PREMIUM INCOME & GROWTH FUND INC. JUNE 30, 2007
Portfolio Information
As of June 30, 2007
Percent of
Ten Largest Equity Holdings Net Assets
- --------------------------------------------------------------------------------
Apple Computer, Inc. .................................. 9.2%
Microsoft Corp. ....................................... 6.3
QUALCOMM, Inc. ........................................ 4.9
Google, Inc. Class A .................................. 4.7
Cisco Systems, Inc. ................................... 4.3
Intel Corp. ........................................... 3.6
Oracle Corp. .......................................... 3.1
Amgen, Inc. ........................................... 2.9
Gilead Sciences, Inc. ................................. 2.6
Comcast Corp. Class A ................................. 2.5
- --------------------------------------------------------------------------------
Percent of
Five Largest Industries Net Assets
- --------------------------------------------------------------------------------
Software .............................................. 15.5%
Communications Equipment .............................. 12.8
Semiconductors & Semiconductor Equipment .............. 12.8
Computers & Peripherals ............................... 11.4
Internet Software & Services .......................... 9.5
- --------------------------------------------------------------------------------
Percent of
Sector Representation Long-Term Investments
- --------------------------------------------------------------------------------
Information Technology ................................ 62.9%
Health Care ........................................... 13.2
Consumer Discretionary ................................ 12.7
Industrials ........................................... 5.3
Financials ............................................ 2.7
Energy ................................................ 1.3
Consumer Staples ...................................... 0.9
Telecommunication Services ............................ 0.7
Materials ............................................. 0.3
- --------------------------------------------------------------------------------
For Fund portfolio compliance purposes, the Fund's industry and sector
classifications refer to any one or more of the industry and sector
sub-classifications used by one or more widely recognized market indexes
or ratings group indexes, and/or as defined by Fund management. This
definition may not apply for purposes for this report, which may combine
such industry and sector sub-classifications for reporting ease.
NASDAQ PREMIUM INCOME & GROWTH FUND INC. JUNE 30, 2007 3
A Discussion With Your Fund's Portfolio Manager
We are pleased to provide you with this shareholder report for NASDAQ
Premium Income & Growth Fund Inc. (the "Fund"). While the Fund is advised by IQ
Investment Advisors LLC, the following discussion is provided by Nuveen Asset
Management, the Fund's subadviser.
The Fund's investment objective is to provide shareholders with premium income
and capital appreciation. The Fund pursues its investment objective principally
through a two-part strategy. First, the Fund will invest, under normal
circumstances, substantially all of its net assets in a portfolio of investments
(the "NASDAQ Investment Portfolio") designed to closely track the performance
over time, before fees and expenses, of the NASDAQ 100 Index(R) (the "Index").
The NASDAQ Investment Portfolio is expected to include approximately 60 to 150
securities and may include stocks that are members of the Index, stocks that are
not members of the Index, and other investments that have economic
characteristics similar to the securities that constitute the Index. Second, the
Fund will use certain option strategies, primarily consisting of writing
(selling) NASDAQ 100 Index(R) call options, to generate premium income and
reduce the volatility of the Fund's returns, with the intent of improving the
Fund's risk adjusted returns.
How did the Fund perform since inception?
Since the Fund's inception on January 30, 2007 through June 30, 2007, the Common
Stock of the Fund had a total investment return +8.39%, based on a change in per
share net asset value from $19.10 to $19.91, and assuming reinvestment of
distributions paid during the period ($.76661). For comparative purposes, the
total return of the unmanaged reference Index was +8.79% during the same period.
For more detail with regard to the Fund's total investment return based on a
change in per share market value of the Fund's Common Stock (as measured by the
trading price of the Fund's shares on the New York Stock Exchange), and assuming
reinvestment of dividends, please refer to the Financial Highlights section of
this report. As a closed-end fund, the Fund's shares may trade in the secondary
market at a premium or a discount to the Fund's net asset value. As a result,
total investment returns based on changes in the market value of the Fund's
Common Stock can vary significantly from total investment returns based on
changes in the Fund's net asset value.
How did you manage the portfolio since inception?
The Fund was launched on January 30, 2007, and began taking positions in
approximately 125 different equity securities in its NASDAQ Investment Portfolio
in order to closely replicate the Index. Additionally, the initial option
overlay was executed in mid-February using at-the-money exchange traded index
options with a one month maturity. The options are written on approximately 45%
of the gross assets of the Fund. This option overlay program generated cash flow
in support of the Fund's dividend and as a result, the Fund declared and paid
its first dividend during March 2007 with a subsequent dividend paid during June
2007. These distributions represent a dividend rate of 9.2% on initial market
price.
In addition, the overwrite percentage is slightly lower than originally
anticipated. Generally, higher implied volatility results in increased cash flow
generated for each option sold. Higher cash flows on the option portfolio allows
the Fund to write fewer options, providing the Fund with the potential to
participate more fully in any market rally.
How would you characterize the Fund's position at the close of the period?
The Fund is positioned to meet its stated objectives. The portfolio of stocks is
fully consistent with the weightings of the Index. Implied volatility for NASDAQ
100 Index options is higher than expected thereby allowing the Fund to overwrite
less than 50% of the Fund's assets while still meeting its dividend objectives.
As a result, lower overwrites may translate into greater capital appreciation
potential in a rising market environment.
Rob A. Guttschow
Portfolio Manager
July 13, 2007
The NASDAQ 100(R), NASDAQ 100 Index(R), and NASDAQ are trade or service marks of
the NASDAQ Stock Market, Inc.
4 NASDAQ PREMIUM INCOME & GROWTH FUND INC. JUNE 30, 2007
Schedule of Investments as of June 30, 2007 (Unaudited)
Shares
Industry Common Stocks Held Value
===============================================================================
Aerospace & Defense -- 0.2%
Boeing Co. 9,390 $ 902,942
- -------------------------------------------------------------------------------
Airlines -- 0.2%
AMR Corp. (b) 22,690 597,881
- -------------------------------------------------------------------------------
Biotechnology -- 9.2%
Amgen, Inc. (b) 190,461 10,530,589
Celgene Corp. (b) 74,172 4,252,281
Cephalon, Inc. (b) 11,678 938,794
Crucell NV (a)(b) 31,204 693,665
Genzyme Corp. (b) 115,918 7,465,119
Gilead Sciences, Inc. (b) 245,660 9,524,238
------------
33,404,686
- -------------------------------------------------------------------------------
Capital Markets -- 0.2%
American Capital Strategies Ltd. 17,691 752,221
- -------------------------------------------------------------------------------
Commercial Banks -- 1.9%
Alabama National Bancorp. 12,232 756,427
Associated Banc-Corp. 24,910 814,557
Compass Bancshares, Inc. 14,009 966,341
East-West Bancorp, Inc. 22,306 867,257
Huntington Bancshares, Inc. 36,901 839,129
The PNC Financial Services Group, Inc. 7,590 543,292
SVB Financial Group (b) 22,595 1,200,020
The South Financial Group, Inc. 33,325 754,478
------------
6,741,501
- -------------------------------------------------------------------------------
Commercial Services & Supplies -- 1.0%
The Advisory Board Co. (b) 24,285 1,349,275
ChoicePoint, Inc. (b) 22,151 940,310
Corporate Executive Board Co. 15,151 983,451
Steelcase, Inc. Class A 16,607 307,230
------------
3,580,266
- -------------------------------------------------------------------------------
Communications Equipment -- 12.8%
ADC Telecommunications, Inc. (b) 52,561 963,443
Cisco Systems, Inc. (b) 559,057 15,569,737
Comtech Telecommunications Corp. (b) 27,704 1,286,020
F5 Networks, Inc. (b) 11,898 958,979
JDS Uniphase Corp. (b) 84,477 1,134,526
QUALCOMM, Inc. 411,720 17,864,531
Research In Motion Ltd. (b) 44,571 8,913,754
------------
46,690,990
- -------------------------------------------------------------------------------
Computers & Peripherals -- 11.4%
Apple Computer, Inc. (b) 274,886 33,547,087
Dell, Inc. (b) 241,322 6,889,743
NCR Corp. (b) 18,125 952,288
------------
41,389,118
- -------------------------------------------------------------------------------
Construction & Engineering -- 0.5%
Foster Wheeler Ltd. (b) 16,290 1,742,867
- -------------------------------------------------------------------------------
Diversified Consumer Services -- 0.3%
Strayer Education, Inc. 9,548 1,257,567
- -------------------------------------------------------------------------------
Electrical Equipment -- 1.1%
First Solar, Inc. (b) 46,469 4,149,217
- -------------------------------------------------------------------------------
Electronic Equipment & Instruments -- 1.2%
Electro Scientific Industries, Inc. (b) 41,600 865,280
Flir Systems, Inc. (b) 14,286 660,728
National Instruments Corp. 28,938 942,511
Radisys Corp. (b) 86,466 1,072,178
Trimble Navigation Ltd. (b) 30,401 978,912
------------
4,519,609
- -------------------------------------------------------------------------------
Energy Equipment & Services -- 0.9%
Hercules Offshore, Inc. (b) 97,153 3,145,814
- -------------------------------------------------------------------------------
Food & Staples Retailing -- 0.5%
The Kroger Co. 21,058 592,362
Walgreen Co. 32,253 1,404,296
------------
1,996,658
- -------------------------------------------------------------------------------
Health Care Equipment & Supplies -- 1.0%
ArthroCare Corp. (b) 22,745 998,733
Hologic, Inc. (b) 15,862 877,327
Kinetic Concepts, Inc. (b) 17,427 905,681
Respironics, Inc. (b) 20,042 853,589
------------
3,635,330
- -------------------------------------------------------------------------------
Health Care Providers & Services -- 0.7%
Henry Schein, Inc. (b) 16,719 893,296
Lincare Holdings, Inc. (b) 43,766 1,744,075
------------
2,637,371
- -------------------------------------------------------------------------------
Hotels, Restaurants & Leisure -- 2.5%
Panera Bread Co. Class A (b) 13,749 633,279
Shuffle Master, Inc. (b) 32,528 539,965
Starbucks Corp. (b) 306,674 8,047,126
------------
9,220,370
- -------------------------------------------------------------------------------
Household Durables -- 1.4%
Garmin Ltd. 59,161 4,376,139
Mohawk Industries, Inc. (b) 6,757 681,038
------------
5,057,177
- -------------------------------------------------------------------------------
Household Products -- 0.2%
Kimberly-Clark Corp. 12,262 820,205
- -------------------------------------------------------------------------------
IT Services -- 1.1%
Acxiom Corp. 37,611 994,811
CSG Systems International, Inc. (b) 35,137 931,482
Computer Sciences Corp. (b) 32,129 1,900,430
------------
3,826,723
- -------------------------------------------------------------------------------
Insurance -- 0.7%
Arch Capital Group Ltd. (b) 13,079 948,751
CNA Financial Corp. 13,013 620,590
Erie Indemnity Co. Class A 15,474 836,215
------------
2,405,556
- -------------------------------------------------------------------------------
Internet & Catalog Retail -- 1.7%
Amazon.com, Inc. (b) 89,091 6,094,715
- -------------------------------------------------------------------------------
NASDAQ PREMIUM INCOME & GROWTH FUND INC. JUNE 30, 2007 5
Schedule of Investments (continued)
Shares
Industry Common Stocks Held Value
===============================================================================
Internet Software & Services -- 9.5%
Akamai Technologies, Inc. (b) 34,782 $ 1,691,796
DivX, Inc. (b) 40,486 607,290
eBay, Inc. (b) 263,936 8,493,460
Equinix, Inc. (b) 10,125 926,134
Google, Inc. Class A (b) 32,685 17,106,675
Sohu.com, Inc. (b) 31,515 1,008,165
Yahoo! Inc. (b) 178,519 4,843,220
------------
34,676,740
- -------------------------------------------------------------------------------
Life Sciences Tools & Services -- 0.4%
Invitrogen Corp. (b) 21,568 1,590,640
- -------------------------------------------------------------------------------
Machinery -- 1.8%
PACCAR, Inc. 69,868 6,081,311
Terex Corp. (b) 7,757 630,644
------------
6,711,955
- -------------------------------------------------------------------------------
Media -- 3.8%
Cablevision Systems Corp. Class A (b) 27,993 1,013,067
Central European Media Enterprises
Ltd. Class A (b) 12,630 1,232,435
Comcast Corp. Class A (b) 325,124 9,142,487
Liberty Media Holding Corp. --
Capital (b) 13,230 1,556,906
Scholastic Corp. (b) 24,202 869,820
------------
13,814,715
- -------------------------------------------------------------------------------
Metals & Mining -- 0.3%
Freeport-McMoRan Copper & Gold, Inc.
Class B 14,825 1,227,807
- -------------------------------------------------------------------------------
Multiline Retail -- 2.2%
Dollar Tree Stores, Inc. (b) 26,981 1,175,023
Sears Holdings Corp. (b) 40,648 6,889,836
------------
8,064,859
- -------------------------------------------------------------------------------
Oil, Gas & Consumable Fuels -- 0.4%
Chevron Corp. 11,630 979,711
EOG Resources, Inc. 8,119 593,174
------------
1,572,885
- -------------------------------------------------------------------------------
Personal Products -- 0.2%
USANA Health Sciences, Inc. (b) 15,867 709,890
- -------------------------------------------------------------------------------
Pharmaceuticals -- 2.2%
Forest Laboratories, Inc. (b) 11,994 547,526
GlaxoSmithKline Plc (a) 10,798 565,491
Teva Pharmaceutical Industries Ltd. (a) 169,240 6,981,150
------------
8,094,167
- -------------------------------------------------------------------------------
Road & Rail -- 0.3%
Amerco, Inc. (b) 12,190 920,345
- -------------------------------------------------------------------------------
Semiconductors & Semiconductor
Equipment -- 12.8%
ASML Holding NV Registered
Shares (a)(b) 172,602 4,737,925
Broadcom Corp. Class A (b) 121,228 3,545,919
Cypress Semiconductor Corp. (b) 46,155 1,074,950
Integrated Device Technology, Inc. (b) 109,836 1,677,196
Intel Corp. 548,998 13,044,192
International Rectifier Corp. (b) 20,526 764,799
Intersil Corp. Class A 61,971 1,949,608
Marvell Technology Group Ltd. (a)(b) 163,816 2,983,089
Microsemi Corp. (b) 47,788 1,144,523
Novellus Systems, Inc. (b) 83,074 2,356,809
Nvidia Corp. (b) 102,697 4,242,413
Texas Instruments, Inc. 120,011 4,516,014
Trident Microsystems, Inc. (b) 40,305 739,597
Ultratech, Inc. (b) 69,047 920,397
Varian Semiconductor Equipment
Associates, Inc. (b) 31,302 1,253,958
Zoran Corp. (b) 76,272 1,528,491
------------
46,479,880
- -------------------------------------------------------------------------------
Software -- 15.5%
Adobe Systems, Inc. (b) 173,168 6,952,695
Advent Software, Inc. (b) 28,044 912,832
Ansys, Inc. (b) 35,680 945,520
Business Objects SA (a)(b) 22,571 876,658
CA, Inc. 42,938 1,109,089
Cognos, Inc. (b) 20,419 810,022
McAfee, Inc. (b) 29,127 1,025,270
Microsoft Corp. 776,513 22,883,838
Oracle Corp. (b) 564,015 11,116,736
Quality Systems, Inc. 20,947 795,358
SPSS, Inc. (b) 28,145 1,242,320
Symantec Corp. (b) 344,793 6,964,819
Synopsys, Inc. (b) 33,594 887,889
------------
56,523,046
- -------------------------------------------------------------------------------
Specialty Retail -- 1.1%
The Children's Place Retail
Stores, Inc. (b) 18,166 938,092
Hibbett Sports, Inc. (b) 27,034 740,191
Urban Outfitters, Inc. (b) 58,501 1,405,779
Williams-Sonoma, Inc. 24,825 783,974
------------
3,868,036
- -------------------------------------------------------------------------------
6 NASDAQ PREMIUM INCOME & GROWTH FUND INC. JUNE 30, 2007
Schedule of Investments (concluded)
Shares
Industry Common Stocks Held Value
===============================================================================
Trading Companies & Distributors -- 0.3%
Houston Wire & Cable Co. (b) 35,344 $ 1,004,123
- -------------------------------------------------------------------------------
Wireless Telecommunication
Services -- 0.7%
American Tower Corp. Class A (b) 50,550 2,123,100
iPCS, Inc. 14,599 494,468
------------
2,617,568
- -------------------------------------------------------------------------------
Total Common Stocks
(Cost -- $339,073,583) -- 102.2% 372,445,440
===============================================================================
Number of
Options Written Contracts Value
===============================================================================
Call Options Written
NASDAQ Index 100, expiring July 2007
at USD 1,900 425 $ (2,456,500)
NASDAQ Index 100, expiring July 2007
at USD 1,925 425 (1,683,000)
- -------------------------------------------------------------------------------
Total Options Written
(Premiums Received -- $2,929,950) -- (1.1%) (4,139,500)
===============================================================================
Total Investments, Net of Options Written
(Cost -- $336,143,633*) -- 101.1% 368,305,940
Liabilities in Excess of Other Assets -- (1.1%) (4,083,434)
------------
Net Assets -- 100.0% $364,222,506
============
* The cost and unrealized appreciation (depreciation) of investments, net of
options written, as of June 30, 2007, as computed for federal income tax
purposes, were as follows:
Aggregate cost ......................................... $ 336,143,633
=============
Gross unrealized appreciation .......................... $ 44,470,823
Gross unrealized depreciation .......................... (12,308,516)
-------------
Net unrealized appreciation ............................ $ 32,162,307
=============
(a) Depositary receipts.
(b) Non-income producing security.
o For Fund portfolio compliance purposes, the Fund's industry
classifications refer to any one or more of the industry
sub-classifications used by one or more widely recognized market indexes
or ratings group indexes, and/or as defined by Fund management. This
definition may not apply for purposes of this report, which may combine
industry sub-classifications for reporting ease. Industries are shown as a
percent of net assets.
See Notes to Financial Statements.
NASDAQ PREMIUM INCOME & GROWTH FUND INC. JUNE 30, 2007 7
Statement of Assets, Liabilities and Capital
As of June 30, 2007 (Unaudited)
===================================================================================================================================
Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value (identified cost -- $339,073,583) .. $ 372,445,440
Dividends receivable ................................................................ 48,652
-------------
Total assets ........................................................................ 372,494,092
-------------
===================================================================================================================================
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------------
Options written, at value (premiums received -- $2,929,950) ......................... 4,139,500
Bank overdraft ...................................................................... 1,316,916
Payables:
Dividends to shareholders ....................................................... $ 2,215,269
Investment adviser .............................................................. 253,224
Offering costs .................................................................. 159,354 2,627,847
-------------
Accrued expenses .................................................................... 187,323
-------------
Total liabilities ................................................................... 8,271,586
-------------
===================================================================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets .......................................................................... $ 364,222,506
=============
===================================================================================================================================
Capital
- -----------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.001, 100,000,000 shares authorized ........................ $ 18,289
Paid-in capital in excess of par .................................................... 348,739,198
Accumulated distributions in excess of investment income -- net ..................... $ (14,557,486)
Accumulated realized capital losses -- net .......................................... (2,139,802)
Unrealized appreciation -- net ...................................................... 32,162,307
-------------
Total accumulated earnings -- net ................................................... 15,465,019
-------------
Total capital -- Equivalent to $19.91 per share based on 18,289,445 shares of
Common Stock outstanding (market price $19.25) .................................... $ 364,222,506
=============
See Notes to Financial Statements.
8 NASDAQ PREMIUM INCOME & GROWTH FUND INC. JUNE 30, 2007
Statement of Operations
For the Period January 30, 2007* to June 30, 2007 (Unaudited)
===================================================================================================================================
Investment Income
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends (net of $5,037 foreign withholding tax) ................................... $ 664,946
Interest ............................................................................ 297,755
-------------
Total income ........................................................................ 962,701
-------------
===================================================================================================================================
Expenses
- -----------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees ............................................................ $ 1,293,011
Licensing fees ...................................................................... 67,885
Professional fees ................................................................... 45,433
Accounting services ................................................................. 29,683
Directors' fees and expenses ........................................................ 24,209
Custodian fees ...................................................................... 20,312
Printing and shareholder reports .................................................... 19,102
Transfer agent fees ................................................................. 14,892
Other ............................................................................... 10,397
-------------
Total expenses ...................................................................... 1,524,924
-------------
Investment loss -- net .............................................................. (562,223)
-------------
===================================================================================================================================
Realized & Unrealized Gain (Loss) -- Net
- -----------------------------------------------------------------------------------------------------------------------------------
Realized loss on:
Investments -- net .............................................................. (82,022)
Options written -- net .......................................................... (2,057,780) (2,139,802)
-------------
Unrealized appreciation/depreciation on:
Investments -- net .............................................................. 33,371,857
Options written -- net .......................................................... (1,209,550) 32,162,307
------------------------------
Total realized and unrealized gain -- net ........................................... 30,022,505
-------------
Net Increase in Net Assets Resulting from Operations ................................ $ 29,460,282
=============
* Commencement of operations.
See Notes to Financial Statements.
NASDAQ PREMIUM INCOME & GROWTH FUND INC. JUNE 30, 2007 9
Statement of Changes in Net Assets
For the Period
January 30,
2007** to
June 30,
2007
Increase (Decrease) in Net Assets: (Unaudited)
==================================================================================================================================
Operations
- ----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ............................................................................ $ (562,223)
Realized loss -- net ................................................................................ (2,139,802)
Unrealized appreciation/depreciation -- net ......................................................... 32,162,307
-------------
Net increase in net assets resulting from operations ................................................ 29,460,282
-------------
==================================================================================================================================
Dividends to Shareholders
- ----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ............................................................................ (13,995,263)+
-------------
Net decrease in net assets resulting from dividends to shareholders ................................. (13,995,263)
-------------
==================================================================================================================================
Common Stock Transactions
- ----------------------------------------------------------------------------------------------------------------------------------
Net proceeds from issuance of Common Stock .......................................................... 347,620,000
Value of shares issued to shareholders in reinvestment of dividends ................................. 1,587,353
Offering costs resulting from the issuance of Common Stock .......................................... (549,874)
-------------
Net increase in net assets resulting from Common Stock transactions ................................. 348,657,479
-------------
==================================================================================================================================
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets ........................................................................ 364,122,498
Beginning of period ................................................................................. 100,008
-------------
End of period* ...................................................................................... $ 364,222,506
=============
* Accumulated distributions in excess of investment income -- net ............................... $ (14,557,486)
=============
** Commencement of operations.
+ A portion of the dividends from net investment income may be deemed a tax
return of capital or net realized gain at fiscal year end.
See Notes to Financial Statements.
10 NASDAQ PREMIUM INCOME & GROWTH FUND INC. JUNE 30, 2007
Financial Highlights
For the Period
January 30,
2007+ to
June 30,
The following per share data and ratios have been derived 2007
from information provided in the financial statements. (Unaudited)
=================================================================================================================================
Per Share Operating Performance
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ................................................................ $ 19.10
------------
Investment loss -- net** ............................................................................ (.03)
------------
Realized and unrealized gain -- net ................................................................. 1.64
------------
Total from investment operations .................................................................... 1.61
------------
Less dividends from investment income -- net ........................................................ (.77)@@
------------
Offering costs resulting from the issuance of Common Stock .......................................... (.03)
------------
Net asset value, end of period ...................................................................... $ 19.91
------------
Market value, end of period ......................................................................... $ 19.25
------------
=================================================================================================================================
Total Investment Return++
- ---------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share .................................................................. 8.39%@
============
Based on market price per share ..................................................................... .08%@
============
=================================================================================================================================
Ratios to Average Net Assets
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses ............................................................................................ 1.06%*
============
Investment loss -- net .............................................................................. (.39%)*
============
=================================================================================================================================
Supplemental Data
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) ............................................................ $ 364,223
============
Portfolio turnover .................................................................................. 6%
============
* Annualized.
** Based on average shares outstanding.
+ Commencement of operations.
++ Total investment returns based on market value, which can be significantly
greater or lesser than the net asset value, may result in substantially
different returns. Total investment returns exclude the effects of sales
charges.
@ Aggregate total investment return.
@@ A portion of the dividends from net investment income may be deemed a tax
return of capital or net realized gain at fiscal year end.
See Notes to Financial Statements.
NASDAQ PREMIUM INCOME & GROWTH FUND INC. JUNE 30, 2007 11
Notes to Financial Statements (Unaudited)
1. Significant Accounting Policies:
NASDAQ Premium Income & Growth Fund Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as a diversified, closed-end
management investment company. Prior to commencement of operations on January
30, 2007, the Fund had no operations other than those relating to organizational
matters and the sale of 5,236 shares of Common Stock on December 18, 2006 to IQ
Investments Advisors LLC ("IQ"), an indirect subsidiary of Merrill Lynch & Co.,
Inc. ("ML & Co.") for $100,008. The Fund's financial statements are prepared in
conformity with U.S. generally accepted accounting principles, which may require
the use of management accruals and estimates. Actual results may differ from
these estimates. These unaudited financial statements reflect all adjustments,
which are, in the opinion of management, necessary to present a fair statement
of the results for the interim period. All such adjustments are of a normal,
recurring nature. The Fund determines and makes available for publication the
net asset value of its Common Stock on the last business day of each week. The
Fund's Common Stock shares are listed on the NASDAQ Stock Market LLC ("NASDAQ")
under the symbol QQQX. The following is a summary of significant accounting
policies followed by the Fund.
(a) Valuation of investments -- Equity securities held by the Fund that are
traded on stock exchanges or NASDAQ Global Market are valued at the last sale
price or official close price on the exchange, as of the close of business on
the day the securities are being valued or, lacking any sales, at the last
available bid price for long positions, and at the last available asked price
for short positions. In cases where equity securities are traded on more than
one exchange, the securities are valued on the exchange designated as the
primary market by or under the authority of the Board of Directors of the Fund.
Long positions traded in the over-the-counter ("OTC") markets, NASDAQ Capital
Market or Bulletin Board are valued at the last available bid price or yield
equivalent obtained from one or more dealers or pricing services approved by the
Board of Directors of the Fund. Short positions traded in the OTC markets are
valued at the last available asked price. Portfolio securities that are traded
both in the OTC markets and on a stock exchange are valued according to the
broadest and most representative market.
Options written or purchased are valued at the last sale price in the case of
exchange-traded options. Options traded in the OTC market are valued at the last
asked price (options written) or the last bid price (options purchased). Swap
agreements are valued based upon quoted fair valuations received daily by the
Fund from a pricing service or counterparty. Financial futures contracts and
options thereon, which are traded on exchanges, are valued at their last sale
price as of the close of such exchanges. Obligations with remaining maturities
of 60 days or less are valued at amortized cost unless the investment adviser
believes this method no longer produces fair valuations.
Repurchase agreements are valued at cost plus accrued interest. The Fund employs
pricing services to provide certain securities prices for the Fund. Securities
and assets for which market quotations are not readily available are valued at
fair value as determined in good faith by or under the direction of the Board of
Directors of the Fund, including valuations furnished by the pricing services
retained by the Fund, which may use a matrix system for valuations. The
procedures of a pricing service and its valuations are reviewed by the officers
of the Fund under the general supervision of the Fund's Board of Directors. Such
valuations and procedures will be reviewed periodically by the Board of
Directors of the Fund.
Generally, trading in foreign securities, as well as U.S. government securities,
money market instruments and certain fixed income securities, is substantially
completed each day at various times prior to the close of business on the
NASDAQ. The values of such securities used in computing the net asset value of
the Fund's shares are determined as of such times. Foreign currency exchange
rates will generally be determined as of the close of business on the NASDAQ.
Occasionally, events affecting the values of such securities and such exchange
rates may occur between the times at which they are determined and the close of
business on the NASDAQ that may not be reflected in the computation of the
Fund's net asset value. If events (for example, a company announcement, market
volatility or a natural disaster) occur during such periods that are expected to
materially affect the value of such securities, those securities may be valued
at their fair value as determined in good faith by the Fund's Board of Directors
or by the investment adviser using a pricing service and/or procedures approved
by the Fund's Board of Directors.
(b) Derivative financial instruments -- The Fund may engage in various portfolio
investment strategies both to increase the return of the Fund and to hedge, or
protect, its exposure to interest rate movements and movements in the securities
markets. Losses may arise due to changes in the value of the contract due to an
unfavorable change in the price of the underlying security or index, or if the
counterparty does not perform under the contract. The counterparty for certain
instruments may pledge cash or securities as collateral.
12 NASDAQ PREMIUM INCOME & GROWTH FUND INC. JUNE 30, 2007
Notes to Financial Statements (continued)
o Options -- The Fund writes covered call options. When the Fund writes an
option, an amount equal to the premium received by the Fund is reflected
as an asset and an equivalent liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value of the
option written. The Fund provides the purchaser with the right to
potentially receive a cash payment from the Fund equal to any appreciation
in the cash value of the index over the strike price on the expiration
date of the option written. When an option expires (or the Fund enters
into a closing transaction), the Fund realizes a gain or loss on the
option to the extent of the premiums received (or gain or loss to the
extent the cost of the closing transaction exceeds the premium received).
Written options are non-income producing investments.
o Financial futures contracts -- The Fund may purchase or sell financial
futures contracts and options on such financial futures contracts.
Financial futures contracts are contracts for delayed delivery of
securities at a specific future date and at a specific price or yield.
Upon entering into a contract, the Fund deposits and maintains as
collateral such initial margin as required by the exchange on which the
transaction is effected. Pursuant to the contract, the Fund agrees to
receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known
as variation margin and are recorded by the Fund as unrealized gains or
losses. When the contract is closed, the Fund records a realized gain or
loss equal to the difference between the value of the contract at the time
it was opened and the value at the time it was closed.
(c) Income taxes -- It is the Fund's policy to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
(d) Security transactions and investment income -- Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Interest income is recognized on the accrual basis.
(e) Dividends and distributions -- Dividends and distributions paid by the Fund
are recorded on the ex-dividend dates. For the current period ended June 30,
2007, Fund management believes it is likely total dividends and distributions
may exceed net investment income and accumulated realized capital gains,
resulting in a portion of the total distribution treated as a tax return of
capital.
(f) Offering expenses -- Direct expenses relating to the public offering of the
Fund's Common Stock were charged to capital at the time of issuance of the
shares.
(g) Bank overdraft -- The Fund recorded a bank overdraft which resulted from
Management estimates of available cash.
(h) Recent accounting pronouncements -- Effective June 29, 2007, the Fund
implemented Financial Accounting Standards Board ("FASB") Interpretation No. 48,
"Accounting for Uncertainty in Income Taxes -- an interpretation of FASB
Statement No. 109" ("FIN 48"). FIN 48 prescribes the minimum recognition
threshold a tax position must meet in connection with accounting for
uncertainties in income tax positions taken or expected to be taken by an
entity, including investment companies, before being measured and recognized in
the financial statements. Management has evaluated the application of FIN 48 to
the Fund, and has determined that the adoption of FIN 48 does not have a
material impact on the Fund's financial statements. The Fund files U.S. and
various state tax returns. No income tax returns are currently under
examination.
In September 2006, Statement of Financial Accounting Standards No. 157, "Fair
Value Measurements" ("FAS 157"), was issued and is effective for fiscal years
beginning after November 15, 2007. FAS 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. At this time, management is evaluating the implications of FAS 157
and its impact on the Fund's financial statements, if any, has not been
determined.
In addition, in February 2007, Statement of Financial Accounting Standards No.
159, "The Fair Value Option for Financial Assets and Financial Liabilities"
("FAS 159"), was issued and is effective for fiscal years beginning after
November 15, 2007. Early adoption is permitted as of the beginning of a fiscal
year that begins on or before November 15, 2007, provided the entity also elects
to apply the provisions of FAS 157. FAS 159 permits entities to choose to
measure many financial instruments and certain other items at fair value that
are not currently required to be measured at fair value. FAS 159 also
establishes presentation and disclosure requirements designed to facilitate
comparisons between entities
NASDAQ PREMIUM INCOME & GROWTH FUND INC. JUNE 30, 2007 13
Notes to Financial Statements (continued)
that choose different measurement attributes for similar types of assets and
liabilities. At this time, management is evaluating the implications of FAS 159
and its impact on the Fund's financial statements, if any, has not been
determined.
2. Investment Advisory and Management Agreement and Transactions with
Affiliates:
The Fund has entered into an Investment Advisory and Management Agreement with
IQ. IQ is responsible for the investment advisory, management and administrative
services to the Fund. In addition, IQ provides the necessary personnel,
facilities, equipment and certain other services necessary to the operations of
the Fund. For such services, the Fund will pay a monthly fee at an annual rate
equal to .90% of the average daily value of the Fund's net assets plus
borrowings for leverage and other investment purposes. In addition, IQ has
entered into a Subadvisory Agreement with Nuveen Asset Management ("Nuveen")
pursuant to which Nuveen provides certain investment advisory services to IQ
with respect to the Fund. For such services, IQ will pay Nuveen a monthly fee at
an annual rate equal to .39% of the average daily value of the Fund's net assets
plus borrowings for leverage and other investment purposes. There is no increase
in the aggregate fees paid by the Fund for these services.
IQ has entered into an Administration Agreement with Princeton Administrators,
LLC (the "Administrator"). The Administration Agreement provides that IQ will
pay the Administrator a fee from its investment advisory fee at an annual rate
equal to .12% of the average daily value of the Fund's net assets plus
borrowings for leverage and other investment purposes for the performance of
administrative and other services necessary for the operation of the Fund. There
is no increase in the aggregate fees paid by the Fund for these services. The
Administrator is an indirect subsidiary of BlackRock, Inc. ML & Co. is a
principal owner of BlackRock, Inc.
For the period January 30, 2007 to June 30, 2007, Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("MLPF&S"), an affiliate of IQ, received gross fees from
underwriting of $9,623,690 in connection with the issuance of the Fund's Common
Stock. In addition, the Fund reimbursed MLPF&S $121,394 as a partial
reimbursement of expenses incurred in connection with the issuance of the Fund's
Common Stock.
Certain officers of the Fund are officers of IQ, ML & Co., BlackRock, Inc. or
its affiliates.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
period January 30, 2007 to June 30, 2007 were $360,449,923 and $21,135,312,
respectively.
Transactions in options written for the period January 30, 2007 to June 30, 2007
were as follows:
- -------------------------------------------------------------------------------
Number of Premiums
Contracts Received
- -------------------------------------------------------------------------------
Outstanding call options written,
at beginning of period ..................... -- --
Options written .............................. 4,340 $ 12,838,730
Options closed ............................... (3,490) (9,908,780)
-----------------------
Outstanding call options written,
at end of period ........................... 850 $ 2,929,950
=======================
4. Common Stock Transactions:
The Fund is authorized to issue 100,000,000 shares of stock, all of which are
initially classified as Common Stock, par value $.001. The Board of Directors is
authorized, however, to classify and reclassify any unissued shares of Common
Stock without approval of the holders of Common Stock.
Shares issued and outstanding during the period January 30, 2007 to June 30,
2007 increased 18,200,000 from shares sold and 84,209 from dividend
reinvestments.
5. Subsequent Event:
On June 20, 2007, Nuveen Investments Inc. ("Nuveen Investments"), the parent
company of Nuveen, the Fund's subadviser, announced that it had entered into a
definitive Agreement and Plan of Merger (the "Merger Agreement") to be acquired
by an investor group majority-led by Madison Dearborn Partners, LLC. Madison
Dearborn Partners, LLC is a private equity investment firm based in Chicago,
Illinois. The investor group's financial advisors and investors include ML & Co.
and Merrill Lynch Global Private Equity (both affiliates of IQ), Wachovia and
Wachovia Capital Partners, LLC, Citi, Deutsche Bank and Deutsche Bank Investment
Partners and Morgan Stanley.
The merger is expected to be completed by the end of the year, subject to
customary conditions, including obtaining the approval of Nuveen Investments'
stockholders, obtaining necessary fund and client consents sufficient to satisfy
the terms of the Merger Agreement and the expiration of certain regulatory
waiting periods. There can be no assurance that the merger will be consummated
as contemplated or that necessary shareholder approvals will be obtained.
14 NASDAQ PREMIUM INCOME & GROWTH FUND INC. JUNE 30, 2007
Notes to Financial Statements (concluded)
Nuveen does not anticipate any change to the portfolio management team or other
key personnel of Nuveen that currently provide services to the Fund as a result
of the merger.
The consummation of the merger will be deemed to be an "assignment" (as defined
in the Investment Company Act of 1940) of the current investment subadvisory
agreement (the"Subadvisory Agreement") between IQ and Nuveen. Under the terms of
the Subadvisory Agreement, an assignment will result in its automatic
termination. It is anticipated that the Board of Directors of the Fund will
consider a new investment subadvisory agreement between IQ and Nuveen prior to
the consummation of the merger. The new subadvisory agreement is expected to be
substantially the same as the Subadvisory Agreement, including providing for the
same subadvisory fee. If approved by the Board, the new agreement would be
presented to the Fund's shareholders for approval, and, if so approved by
shareholders, would take effect upon consummation of the merger. If the merger
is not consummated, then Nuveen will continue to operate in its current form. If
the merger is consummated prior to the shareholder vote, the Fund may rely on
Rule 15a-4 under the Investment Company Act of 1940 to operate under an interim
subadvisory agreement for up to 150 days pending shareholder approval of the new
subadvisory agreement.
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available on the SEC's Web site at
http://www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the
SEC's Public Reference Room in Washington, DC. Information on the operation of
the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Electronic Delivery
The Fund offers electronic delivery of communications to its shareholders. In
order to receive this service, you must register your account and provide us
with e-mail information. To sign up for this service, simply access this Web
site 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.
NASDAQ PREMIUM INCOME & GROWTH FUND INC. JUNE 30, 2007 15
[LOGO] IQ
INVESTMENT
ADVISORS www.IQIAFunds.com
NASDAQ Premium Income & Growth Fund Inc. seeks to provide shareholders with
premium income and capital appreciation.
This report, including the financial information herein, is transmitted to
shareholders 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 Commission's Web site at
http://www.sec.gov. Information about how the Fund voted proxies relating to
securities held in the Fund's portfolio during the most recent 12-month period
ended June 30 is available (1) at www.IQIAFunds.com/proxyvoting.asp; and (2) on
the Securities and Exchange Commission's Web site at http://www.sec.gov.
NASDAQ Premium Income & Growth Fund Inc.
P.O. Box 9011
Princeton, NJ 08543-9011
#IQQQQXD -- 6/07
Item 2 - Code of Ethics - Not Applicable to this semi-annual report
Item 3 - Audit Committee Financial Expert - Not Applicable to this
semi-annual report
Item 4 - Principal Accountant Fees and Services - Not Applicable to this
semi-annual report
Item 5 - Audit Committee of Listed Registrants - Not Applicable to this
semi-annual report
Item 6 - Schedule of Investments - The registrant's Schedule of Investments
is included as part of the Report to Stockholders filed under Item 1
of this form.
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable to this semi-annual
report
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
Not Applicable to this semi-annual report
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - The
registrant's Nominating Committee will consider nominees to the
Board recommended by shareholders when a vacancy becomes available.
Shareholders who wish to recommend a nominee should send nominations
which include biographical information and set forth the
qualifications of the proposed nominee to the registrant's
Secretary. There have been no material changes to these procedures.
Item 11 - Controls and Procedures
11(a) - The registrant's principal executive and principal financial
officers or persons performing similar functions have concluded that
the registrant's disclosure controls and procedures (as defined in
Rule 30a-3(c) under the Investment Company Act of 1940, as amended
(the "1940 Act")) are effective as of a date within 90 days of the
filing of this report based on the evaluation of these controls and
procedures required by Rule 30a-3(b) under the 1940 Act and Rule
13a-15(b) under the Securities and Exchange Act of 1934, as amended.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter
of the period covered by this report that have materially affected,
or are reasonably likely to materially affect, the registrant's
internal control over financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - Not Applicable to this semi-annual report
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/ Mitchell M. Cox
----------------------------------------
Mitchell M. Cox,
Chief Executive Officer of
NASDAQ Premium Income & Growth Fund Inc.
Date: August 28, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Mitchell M. Cox
----------------------------------------
Mitchell M. Cox,
Chief Executive Officer of
NASDAQ Premium Income & Growth Fund Inc.
Date: August 28, 2007
By: /s/ James E. Hillman
----------------------------------------
James E. Hillman,
Chief Financial Officer of
NASDAQ Premium Income & Growth Fund Inc.
Date: August 28, 2007