Edgar Filing: S&P 500 GEARED Fund Inc.

gre.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

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 811-21611

Name of Fund:	S&P 500^®GEARED ^SMFund Inc. (GRE)

Fund Address:	P.O. Box 9011
	Princeton, NJ 08543-9011

Name and address of agent for service: Mitchell M. Cox, Chief Executive Officer, S&P 500^®GEARED ^SM Fund Inc., 4 World Financial Center, 6^thFloor, New York, New York 10080.

Registrant’s telephone number, including area code: (877) 449-4742

Date of fiscal year end: 12/31/2008

Date of reporting period: 01/01/2008 – 06/30/2008

Item 1 – Report to Stockholders

(COVER PAGE)

S&P 500^®GEARED^SMFund Inc.

Semi-Annual Report

(Unaudited)

June 30, 2008

S&P 500^®GEARED^SMFund Inc.

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

Laura S. Unger, Director

Mitchell M. Cox, President

James E. Hillman, Vice President and Treasurer

Colleen R. Rusch, Vice President and Secretary

Donald C. Burke, Vice President and Assistant Treasurer

Martin G. Byrne, Chief Legal Officer

Michael J. Fuccile, Chief Compliance Officer

Justin C. Ferri, Vice President

Michael M. Higuchi, Vice President

Custodian

State Street Bank and Trust Company

P.O. Box 351

Boston, MA 02101

Transfer Agent

BNY Mellon Shareowner Services

480 Washington Boulevard

Jersey City, NJ 07310



2	S&P 500^®GEARED^SMFUND INC.	JUNE 30, 2008

Fund Summary as of June 30, 2008 (Unaudited)

Fund Information


Symbol on New York Stock Exchange	GRE
Initial Offering Date	November 1, 2004
Yield on Closing Market Price as of June 30, 2008 ($15.32)*	18.17%
Current Annual Distribution per share of Common Stock**	$2.784138


*	Yield on closing market price is calculated by dividing the current annual distribution per share by the closing market price. 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 or net realized gain at fiscal year end.

The table below summarizes the changes in the Fund’s market price and net asset value for the six-month period:



	6/30/08 (a)		12/31/07		Change†			High		Low

Market Price		$ 15.32		$ 17.21		(10.98	%)	$	17.44	$	14.94
Net Asset Value		$ 16.07		$ 18.47		(12.99	%)	$	18.47	$	16.05


(a)	For the six-month period, the Common Stock of the Fund had a total investment return of (12.99%) based on net asset value per share and (10.98%) based on market price per share, assuming reinvestment of dividends. For the same period, the Fund’s unmanaged reference Index, the S&P 500^®Composite Stock Price Index (“S&P 500 Index”), had a total investment return of (11.91%), assuming reinvestment of dividends. The reference index has no expenses associated with performance.

†	Does not include reinvestment of dividends.


Portfolio Information as of June 30, 2008


Ten Largest Equity Holdings	Percent of Net Assets

Exxon Mobil Corp.	4.0	%
General Electric Co.	2.3
Microsoft Corp.	1.9
Chevron Corp.	1.8
AT&T Inc.	1.8
The Procter & Gamble Co.	1.7
Johnson & Johnson	1.6
International Business Machines Corp.	1.5
Apple, Inc.	1.3
ConocoPhillips	1.3


Five Largest Industries	Percent of Net Assets

Oil, Gas & Consumable Fuels	12.0	%
Pharmaceuticals	5.9
Computers & Peripherals	4.5
Energy Equipment & Services	3.5
Software	3.4


Sector Representation	Percent of Long-Term Investments*

Information Technology	16.5	%
Energy	16.2
Financials	14.2
Health Care	11.9
Industrials	11.1
Consumer Staples	10.8
Consumer Discretionary	8.1
Utilities	4.0
Materials	3.9
Telecommunication Services	3.3


*	Excludes portfolio holdings in options purchased.

	For Fund portfolio compliance purposes, the Fund’s industry and sector classifications refer to any one or more of the industry and sector sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine industry and sector sub-classifications for reporting ease.

S&P 500 and Standard & Poor’s 500 are registered trademarks of the McGraw-Hill Companies.

GEARED and Geared-Equity Accelerated Return are service marks of Merrill Lynch & Co., Inc.



S&P 500^®GEARED^SMFUND INC.	JUNE 30, 2008	3

Schedule of Investments as of June 30, 2008 (Unaudited)


Industry	Common Stocks	Shares Held		Value

Aerospace & Defense — 2.5%
	Boeing Co.		3,868	$	254,205
	General Dynamics Corp.		2,054		172,947
	Goodrich Corp.		614		29,140
	Honeywell International, Inc.		3,800		191,064
	L-3 Communications Holdings, Inc.		647		58,793
	Lockheed Martin Corp.		1,741		171,767
	Northrop Grumman Corp.		1,735		116,072
	Precision Castparts Corp.		703		67,748
	Raytheon Co.		2,184		122,916
	Rockwell Collins, Inc.		805		38,608
	United Technologies Corp.		5,000		308,500

					1,531,760

Air Freight & Logistics — 0.9%
	C.H. Robinson Worldwide, Inc.		887		48,643
	Expeditors International Washington, Inc.		1,100		47,300
	FedEx Corp.		1,600		126,064
	United Parcel Service, Inc. Class B		5,254		322,963

					544,970

Airlines — 0.1%
	Southwest Airlines Co.		3,800		49,552

Auto Components — 0.2%
	The Goodyear Tire & Rubber Co. (a)		1,200		21,396
	Johnson Controls, Inc.		3,004		86,155

					107,551

Automobiles — 0.2%
	Ford Motor Co. (a)		11,367		54,675
	General Motors Corp.		2,974		34,201
	Harley-Davidson, Inc.		1,231		44,636

					133,512

Beverages — 2.4%
	Anheuser-Busch Cos., Inc.		3,673		228,167
	Brown-Forman Corp. Class B		412		31,135
	The Coca-Cola Co.		10,262		533,419
	Coca-Cola Enterprises, Inc.		1,407		24,341
	Constellation Brands, Inc. Class A (a)		1,000		19,860
	Molson Coors Brewing Co. Class B		700		38,031
	Pepsi Bottling Group, Inc.		700		19,544
	PepsiCo, Inc.		8,158		518,767

					1,413,264

Biotechnology — 1.4%
	Amgen, Inc. (a)		5,559		262,162
	Biogen Idec, Inc. (a)		1,500		83,835
	Celgene Corp. (a)		2,222		141,919
	Genzyme Corp. (a)		1,393		100,324
	Gilead Sciences, Inc. (a)		4,723		250,083

					838,323

Building Products — 0.0%
	Masco Corp.		1,896		29,824

Capital Markets — 2.7%
	American Capital Strategies Ltd.		1,000		23,770
	Ameriprise Financial, Inc.		1,155		46,974
	The Bank of New York Mellon Corp.		5,862		221,759
	The Charles Schwab Corp.		4,800		98,592
	E*Trade Financial Corp. (a)		2,400		7,536
	Federated Investors, Inc. Class B		413		14,215


Industry	Common Stocks	Shares Held		Value

Capital Markets (concluded)
	Franklin Resources, Inc.		800	$	73,320
	The Goldman Sachs Group, Inc.		2,030		355,047
	Janus Capital Group, Inc.		773		20,461
	Legg Mason, Inc.		706		30,760
	Lehman Brothers Holdings, Inc.		3,619		71,692
	Merrill Lynch & Co., Inc. (b)		5,064		160,579
	Morgan Stanley		5,661		204,192
	Northern Trust Corp.		1,000		68,570
	State Street Corp.		2,200		140,778
	T. Rowe Price Group, Inc.		1,321		74,597

					1,612,842

Chemicals — 2.0%
	Air Products & Chemicals, Inc.		1,088		107,560
	Ashland, Inc.		300		14,460
	The Dow Chemical Co.		4,796		167,428
	E.I. du Pont de Nemours & Co.		4,600		197,294
	Eastman Chemical Co.		400		27,544
	Ecolab, Inc.		900		38,691
	Hercules, Inc.		600		10,158
	International Flavors & Fragrances, Inc.		400		15,624
	Monsanto Co.		2,819		356,434
	PPG Industries, Inc.		816		46,814
	Praxair, Inc.		1,600		150,784
	Rohm & Haas Co.		612		28,421
	Sigma-Aldrich Corp.		673		36,248

					1,197,460

Commercial Banks — 2.1%
	BB&T Corp.		2,800		63,756
	Comerica, Inc.		800		20,504
	Fifth Third Bancorp		2,981		30,347
	First Horizon National Corp.		920		6,836
	Huntington Bancshares, Inc.		1,800		10,386
	KeyCorp		2,500		27,450
	M&T Bank Corp.		400		28,216
	Marshall & Ilsley Corp.		1,368		20,971
	National City Corp.		3,900		18,603
	The PNC Financial Services Group, Inc.		1,776		101,410
	Regions Financial Corp.		3,575		39,003
	SunTrust Banks, Inc.		1,800		65,196
	U.S. Bancorp		8,943		249,420
	Wachovia Corp.		11,051		171,622
	Wells Fargo & Co.		16,967		402,966
	Zions Bancorporation		508		15,997

					1,272,683

Commercial Services & Supplies — 0.5%
	Allied Waste Industries, Inc. (a)		1,700		21,454
	Avery Dennison Corp.		513		22,536
	Cintas Corp.		700		18,557
	Equifax, Inc.		700		23,534
	Monster Worldwide, Inc. (a)		668		13,767
	Pitney Bowes, Inc.		1,084		36,964
	R.R. Donnelley & Sons Co.		1,100		32,659
	Robert Half International, Inc.		800		19,176
	Waste Management, Inc.		2,537		95,670

					284,317



4	S&P 500^®GEARED^SMFUND INC.	JUNE 30, 2008

Schedule of Investments (continued)


Industry	Common Stocks	Shares Held		Value

Communications Equipment — 2.4%
	Ciena Corp. (a)		428	$	9,917
	Cisco Systems, Inc. (a)		30,372		706,453
	Corning, Inc.		8,049		185,529
	JDS Uniphase Corp. (a)		1,150		13,064
	Juniper Networks, Inc. (a)		2,656		58,910
	Motorola, Inc.		11,700		85,878
	QUALCOMM, Inc.		8,316		368,981
	Tellabs, Inc. (a)		2,165		10,067

					1,438,799

Computers & Peripherals — 4.5%
	Apple, Inc. (a)		4,529		758,336
	Dell, Inc. (a)		10,400		227,552
	EMC Corp. (a)		10,658		156,566
	Hewlett-Packard Co.		12,700		561,467
	International Business Machines Corp.		7,061		836,940
	Lexmark International, Inc. Class A (a)		500		16,715
	NetApp, Inc. (a)		1,800		38,988
	QLogic Corp. (a)		700		10,213
	SanDisk Corp. (a)		1,182		22,103
	Sun Microsystems, Inc. (a)		4,071		44,292
	Teradata Corp. (a)		900		20,826

					2,693,998

Construction & Engineering — 0.2%
	Fluor Corp.		451		83,922
	Jacobs Engineering Group, Inc. (a)		615		49,631

					133,553

Construction Materials — 0.1%
	Vulcan Materials Co.		546		32,640

Consumer Finance — 0.6%
	American Express Co.		5,951		224,174
	Capital One Financial Corp.		1,950		74,120
	Discover Financial Services, Inc.		2,400		31,608
	SLM Corp. (a)		2,440		47,214

					377,116

Containers & Packaging — 0.1%
	Ball Corp.		500		23,870
	Bemis Co.		500		11,210
	Pactiv Corp. (a)		700		14,861
	Sealed Air Corp.		800		15,208

					65,149

Distributors — 0.1%
	Genuine Parts Co.		856		33,966

Diversified Consumer Services — 0.1%
	Apollo Group, Inc. Class A (a)		700		30,982
	H&R Block, Inc.		1,624		34,754

					65,736

Diversified Financial Services — 3.2%
	Bank of America Corp.		22,876		546,050
	CIT Group, Inc.		1,555		10,590
	CME Group, Inc.		277		106,144
	Citigroup, Inc.		27,981		468,962
	IntercontinentalExchange, Inc. (a)		370		42,180
	JPMorgan Chase & Co.		17,739		608,625
	Leucadia National Corp.		884		41,495
	Moody’s Corp.		1,060		36,506
	NYSE Euronext		1,344		68,087

					1,928,639


Industry	Common Stocks	Shares Held		Value

Diversified Telecommunication Services — 2.8%
	AT&T Inc. (c)		30,538	$	1,028,825
	CenturyTel, Inc.		561		19,966
	Citizens Communications Co.		1,700		19,278
	Embarq Corp.		772		36,492
	Qwest Communications International Inc.		7,970		31,322
	Verizon Communications, Inc.		14,661		518,999
	Windstream Corp.		2,346		28,950

					1,683,832

Electric Utilities — 2.2%
	Allegheny Energy, Inc.		833		41,742
	American Electric Power Co., Inc.		2,025		81,466
	Duke Energy Corp.		6,408		111,371
	Edison International		1,643		84,417
	Entergy Corp.		997		120,119
	Exelon Corp.		3,377		303,795
	FPL Group, Inc.		2,100		137,718
	FirstEnergy Corp.		1,546		127,282
	PPL Corp.		1,900		99,313
	Pepco Holdings, Inc.		1,097		28,138
	Pinnacle West Capital Corp.		500		15,385
	Progress Energy, Inc.		1,305		54,588
	The Southern Co.		3,900		136,188

					1,341,522

Electrical Equipment — 0.4%
	Cooper Industries Ltd. Class A		900		35,550
	Emerson Electric Co.		4,000		197,800
	Rockwell Automation, Inc.		765		33,453

					266,803

Electronic Equipment & Instruments — 0.3%
	Agilent Technologies, Inc. (a)		1,866		66,318
	Jabil Circuit, Inc.		1,012		16,607
	Molex, Inc.		700		17,087
	Tyco Electronics Ltd.		2,472		88,547

					188,559

Energy Equipment & Services — 3.5%
	BJ Services Co.		1,500		47,910
	Baker Hughes, Inc.		1,590		138,871
	Cameron International Corp. (a)		1,100		60,885
	ENSCO International, Inc.		723		58,375
	Halliburton Co.		4,494		238,497
	Nabors Industries Ltd. (a)		1,479		72,811
	National Oilwell Varco, Inc. (a)		2,119		187,998
	Noble Corp.		1,400		90,944
	Rowan Cos., Inc.		552		25,806
	Schlumberger Ltd.		6,119		657,364
	Smith International, Inc.		1,016		84,470
	Transocean, Inc.		1,628		248,091
	Weatherford International Ltd. (a)		3,458		171,482

					2,083,504

Food & Staples Retailing — 2.6%
	CVS Caremark Corp.		7,375		291,829
	Costco Wholesale Corp.		2,211		155,080
	The Kroger Co.		3,423		98,822
	SUPERVALU, Inc.		1,060		32,743
	SYSCO Corp.		3,100		85,281
	Safeway, Inc.		2,219		63,352
	Wal-Mart Stores, Inc.		11,964		672,377



S&P 500^® GEARED^SMFUND INC.	JUNE 30, 2008	5

Schedule of Investments (continued)


Industry	Common Stocks	Shares Held		Value

Food & Staples Retailing (concluded)
	Walgreen Co.		5,048	$	164,110
	Whole Foods Market, Inc.		700		16,583

					1,580,177

Food Products — 1.5%
	Archer-Daniels-Midland Co.		3,300		111,375
	Campbell Soup Co.		1,100		36,806
	ConAgra Foods, Inc.		2,500		48,200
	Dean Foods Co. (a)		730		14,323
	General Mills, Inc.		1,704		103,552
	H.J. Heinz Co.		1,600		76,560
	The Hershey Co.		900		29,502
	Kellogg Co.		1,300		62,426
	Kraft Foods, Inc.		7,810		222,195
	McCormick & Co., Inc.		700		24,962
	Sara Lee Corp.		3,678		45,056
	Tyson Foods, Inc. Class A		1,400		20,916
	Wm. Wrigley Jr. Co.		1,111		86,414

					882,287

Gas Utilities — 0.1%
	Nicor, Inc.		200		8,518
	Questar Corp.		900		63,936

					72,454

Health Care Equipment & Supplies — 2.0%
	Baxter International, Inc.		3,206		204,992
	Becton Dickinson & Co.		1,233		100,243
	Boston Scientific Corp. (a)		6,871		84,445
	C.R. Bard, Inc.		500		43,975
	Covidien Ltd.		2,535		121,401
	Hospira, Inc. (a)		800		32,088
	Intuitive Surgical, Inc. (a)		200		53,880
	Medtronic, Inc.		5,800		300,150
	St. Jude Medical, Inc. (a)		1,720		70,314
	Stryker Corp.		1,202		75,582
	Varian Medical Systems, Inc. (a)		621		32,199
	Zimmer Holdings, Inc. (a)		1,198		81,524

					1,200,793

Health Care Providers & Services — 1.7%
	Aetna, Inc.		2,505		101,528
	AmerisourceBergen Corp.		843		33,712
	Cardinal Health, Inc.		1,807		93,205
	Cigna Corp.		1,407		49,794
	Coventry Health Care, Inc. (a)		756		22,998
	Express Scripts, Inc. (a)		1,300		81,536
	Humana, Inc. (a)		884		35,157
	Laboratory Corp. of America Holdings (a)		592		41,221
	McKesson Corp.		1,436		80,287
	Medco Health Solutions, Inc. (a)		2,617		123,522
	Patterson Cos., Inc. (a)		700		20,573
	Quest Diagnostics, Inc.		800		38,776
	Tenet Healthcare Corp. (a)		2,500		13,900
	UnitedHealth Group, Inc.		6,335		166,294
	WellPoint, Inc. (a)		2,716		129,445

					1,031,948

Health Care Technology — 0.0%
	IMS Health, Inc.		959		22,345


Industry	Common Stocks	Shares Held		Value

Hotels, Restaurants & Leisure — 1.2%
	Carnival Corp.		2,201	$	72,545
	Darden Restaurants, Inc.		700		22,358
	International Game Technology		1,600		39,968
	Marriott International, Inc. Class A		1,593		41,800
	McDonald’s Corp.		5,834		327,987
	Starbucks Corp. (a)		3,775		59,419
	Starwood Hotels & Resorts Worldwide, Inc.		973		38,988
	Wendy’s International, Inc.		413		11,242
	Wyndham Worldwide Corp.		860		15,403
	Yum! Brands, Inc.		2,450		85,971

					715,681

Household Durables — 0.4%
	Black & Decker Corp.		300		17,253
	Centex Corp.		600		8,022
	D.R. Horton, Inc.		1,400		15,190
	Fortune Brands, Inc.		800		49,928
	Harman International Industries, Inc.		300		12,417
	KB Home		400		6,772
	Leggett & Platt, Inc.		890		14,925
	Lennar Corp. Class A		697		8,601
	Newell Rubbermaid, Inc.		1,400		23,506
	Pulte Homes, Inc.		1,181		11,373
	Snap-On, Inc.		300		15,603
	The Stanley Works		400		17,932
	Whirlpool Corp.		395		24,383

					225,905

Household Products — 2.2%
	Clorox Co.		700		36,540
	Colgate-Palmolive Co.		2,600		179,660
	Kimberly-Clark Corp.		2,132		127,451
	The Procter & Gamble Co.		15,693		954,291

					1,297,942

IT Services — 0.9%
	Affiliated Computer Services, Inc. Class A (a)		500		26,745
	Automatic Data Processing, Inc.		2,638		110,532
	Cognizant Technology Solutions Corp. (a)		1,500		48,765
	Computer Sciences Corp. (a)		800		37,472
	Convergys Corp. (a)		676		10,045
	Electronic Data Systems Corp.		2,600		64,064
	Fidelity National Information Services, Inc.		900		33,219
	Fiserv, Inc. (a)		812		36,840
	Paychex, Inc.		1,666		52,112
	Total System Services, Inc.		1,000		22,220
	Unisys Corp. (a)		1,900		7,505
	The Western Union Co.		3,829		94,653

					544,172

Independent Power Producers & Energy Traders — 0.3%
	The AES Corp. (a)		3,400		65,314
	Constellation Energy Group, Inc.		924		75,860
	Dynegy, Inc. Class A (a)		2,500		21,375

					162,549



6	S&P 500^®GEARED^SMFUND INC.	JUNE 30, 2008

Schedule of Investments (continued)


Industry	Common Stocks	Shares Held		Value

Industrial Conglomerates — 3.0%
	3M Co.		3,604	$	250,802
	General Electric Co.		51,206		1,366,688
	Textron, Inc.		1,300		62,309
	Tyco International Ltd.		2,492		99,780

					1,779,579

Insurance — 3.4%
	ACE Ltd.		1,700		93,653
	AON Corp.		1,513		69,507
	Aflac, Inc.		2,466		154,865
	The Allstate Corp.		2,842		129,567
	American International Group, Inc.		13,814		365,518
	Assurant, Inc.		500		32,980
	Chubb Corp.		1,889		92,580
	Cincinnati Financial Corp.		861		21,869
	Genworth Financial, Inc. Class A		2,200		39,182
	Hartford Financial Services Group, Inc.		1,600		103,312
	Lincoln National Corp.		1,345		60,955
	Loews Corp.		1,828		85,733
	MBIA, Inc.		1,100		4,829
	Marsh & McLennan Cos., Inc.		2,652		70,411
	MetLife, Inc.		3,677		194,035
	Principal Financial Group, Inc.		1,300		54,561
	The Progressive Corp.		3,549		66,437
	Prudential Financial, Inc.		2,249		134,355
	Safeco Corp.		479		32,170
	Torchmark Corp.		472		27,683
	The Travelers Cos., Inc.		3,120		135,408
	UnumProvident Corp.		1,800		36,810
	XL Capital Ltd. Class A		900		18,504

					2,024,924

Internet & Catalog Retail — 0.3%
	Amazon.com, Inc. (a)		1,599		117,255
	Expedia, Inc. (a)		1,100		20,218
	IAC/InterActiveCorp (a)		977		18,837

					156,310

Internet Software & Services — 1.7%
	Akamai Technologies, Inc. (a)		838		29,154
	eBay, Inc. (a)		5,700		155,781
	Google, Inc. Class A (a)		1,190		626,440
	VeriSign, Inc. (a)		1,000		37,800
	Yahoo! Inc. (a)		7,044		145,529

					994,704

Leisure Equipment & Products — 0.1%
	Eastman Kodak Co.		1,500		21,645
	Hasbro, Inc.		729		26,040
	Mattel, Inc.		1,900		32,528

					80,213

Life Sciences Tools & Services — 0.4%
	Applera Corp. — Applied Biosystems Group (a)		900		30,132
	Millipore Corp. (a)		300		20,358
	PerkinElmer, Inc.		600		16,710
	Thermo Fisher Scientific, Inc. (a)		2,172		121,046
	Waters Corp. (a)		500		32,250

					220,496


Industry	Common Stocks	Shares Held		Value

Machinery — 1.8%
	Caterpillar, Inc.		3,166	$	233,714
	Cummins, Inc.		1,030		67,486
	Danaher Corp.		1,300		100,490
	Deere & Co.		2,204		158,975
	Dover Corp.		985		47,644
	Eaton Corp.		830		70,525
	ITT Corp.		909		57,567
	Illinois Tool Works, Inc.		2,054		97,586
	Ingersoll-Rand Co. Class A		1,607		60,150
	Manitowoc Co.		693		22,543
	PACCAR, Inc.		1,858		77,720
	Pall Corp.		600		23,808
	Parker Hannifin Corp.		870		62,048
	Terex Corp. (a)		505		25,942

					1,106,198

Media — 2.7%
	CBS Corp. Class B		3,450		67,240
	Clear Channel Communications, Inc.		2,596		91,379
	Comcast Corp. Class A		15,242		289,141
	The DIRECTV Group, Inc. (a)		3,673		95,167
	Gannett Co., Inc.		1,200		26,004
	Interpublic Group of Cos., Inc. (a)		2,400		20,640
	The McGraw-Hill Cos., Inc.		1,665		66,800
	Meredith Corp.		200		5,658
	The New York Times Co. Class A		700		10,773
	News Corp. Class A		11,737		176,524
	Omnicom Group Inc.		1,680		75,398
	Scripps Networks Interactive (a)		500		19,175
	Time Warner, Inc.		18,400		272,320
	Viacom, Inc. Class B (a)		3,270		99,866
	Walt Disney Co.		9,788		305,386
	The Washington Post Co. Class B		28		16,433

					1,637,904

Metals & Mining — 1.4%
	AK Steel Holding Corp.		600		41,400
	Alcoa, Inc.		4,217		150,210
	Allegheny Technologies, Inc.		504		29,877
	Freeport-McMoRan Copper & Gold, Inc. Class B		1,977		231,685
	Newmont Mining Corp.		2,305		120,229
	Nucor Corp.		1,626		121,413
	Titanium Metals Corp.		500		6,995
	United States Steel Corp.		610		112,716

					814,525

Multi-Utilities — 1.2%
	Ameren Corp.		1,039		43,877
	CMS Energy Corp.		1,100		16,390
	CenterPoint Energy, Inc.		1,600		25,680
	Consolidated Edison, Inc.		1,400		54,726
	DTE Energy Co.		875		37,135
	Dominion Resources, Inc.		3,000		142,470
	Integrys Energy Group, Inc.		365		18,553
	NiSource, Inc.		1,400		25,088
	PG&E Corp.		1,800		71,442
	Public Service Enterprise Group, Inc.		2,600		119,418
	Sempra Energy		1,297		73,216
	TECO Energy, Inc.		1,100		23,639
	Xcel Energy, Inc.		2,137		42,890

					694,524



S&P 500^®GEARED^SMFUND INC.	JUNE 30, 2008	7

Schedule of Investments (continued)


Industry	Common Stocks	Shares Held		Value

Multiline Retail — 0.7%
	Big Lots, Inc. (a)		447	$	13,964
	Dillard’s, Inc. Class A		300		3,471
	Family Dollar Stores, Inc.		700		13,958
	J.C. Penney Co., Inc.		1,114		40,427
	Kohl’s Corp. (a)		1,589		63,624
	Macy’s, Inc.		2,166		42,064
	Nordstrom, Inc.		900		27,270
	Sears Holdings Corp. (a)		367		27,033
	Target Corp.		4,011		186,471

					418,282

Office Electronics — 0.1%
	Xerox Corp.		4,664		63,244

Oil, Gas & Consumable Fuels — 12.0%
	Anadarko Petroleum Corp.		2,400		179,616
	Apache Corp.		1,702		236,578
	Cabot Oil & Gas Corp. Class A		500		33,865
	Chesapeake Energy Corp.		2,492		164,372
	Chevron Corp.		10,632		1,053,950
	ConocoPhillips		7,931		748,607
	Consol Energy, Inc.		930		104,504
	Devon Energy Corp.		2,300		276,368
	EOG Resources, Inc.		1,286		168,723
	El Paso Corp.		3,551		77,199
	Exxon Mobil Corp.		27,151		2,392,818
	Hess Corp.		1,435		181,083
	Marathon Oil Corp.		3,615		187,510
	Massey Energy Co.		419		39,281
	Murphy Oil Corp.		991		97,168
	Noble Energy, Inc.		900		90,504
	Occidental Petroleum Corp.		4,216		378,850
	Peabody Energy Corp.		1,406		123,798
	Range Resources Corp.		800		52,432
	Southwestern Energy Co. (a)		1,779		84,698
	Spectra Energy Corp.		3,199		91,939
	Sunoco, Inc.		600		24,414
	Tesoro Corp.		754		14,907
	Valero Energy Corp.		2,729		112,380
	Williams Cos., Inc.		3,000		120,930
	XTO Energy, Inc.		2,616		179,222

					7,215,716

Paper & Forest Products — 0.2%
	International Paper Co.		2,200		51,260
	MeadWestvaco Corp.		900		21,456
	Weyerhaeuser Co.		1,100		56,254

					128,970

Personal Products — 0.2%
	Avon Products, Inc.		2,200		79,244
	The Estée Lauder Cos., Inc. Class A		600		27,870

					107,114

Pharmaceuticals — 5.9%
	Abbott Laboratories		7,928		419,946
	Allergan, Inc.		1,600		83,280
	Barr Pharmaceuticals, Inc. (a)		532		23,983
	Bristol-Myers Squibb Co.		10,102		207,394
	Eli Lilly & Co.		5,100		235,416
	Forest Laboratories, Inc. (a)		1,585		55,063
	Johnson & Johnson		14,487		932,094
	King Pharmaceuticals, Inc. (a)		1,200		12,564
	Merck & Co., Inc.		11,045		416,286


Industry	Common Stocks	Shares Held		Value

Pharmaceuticals (concluded)
	Mylan, Inc.		1,500	$	18,105
	Pfizer, Inc.		34,803		608,008
	Schering-Plough Corp.		8,300		163,427
	Watson Pharmaceuticals, Inc. (a)		502		13,639
	Wyeth		6,863		329,149

					3,518,354

Real Estate Investment Trusts (REITs) — 1.1%
	Apartment Investment & Management Co. Class A		478		16,281
	AvalonBay Communities, Inc.		400		35,664
	Boston Properties, Inc.		600		54,132
	Developers Diversified Realty Corp.		600		20,826
	Equity Residential		1,400		53,578
	General Growth Properties, Inc.		1,339		46,905
	HCP, Inc.		1,165		37,059
	Host Marriott Corp.		2,600		35,490
	Kimco Realty Corp.		1,300		44,876
	Plum Creek Timber Co., Inc.		900		38,439
	ProLogis		1,319		71,688
	Public Storage		621		50,171
	Simon Property Group, Inc.		1,138		102,295
	Vornado Realty Trust		700		61,600

					669,004

Real Estate Management & Development — 0.0%
	CB Richard Ellis Group, Inc. (a)		900		17,280

Road & Rail — 1.0%
	Burlington Northern Santa Fe Corp.		1,500		149,835
	CSX Corp.		2,100		131,901
	Norfolk Southern Corp.		1,955		122,520
	Ryder System, Inc.		300		20,664
	Union Pacific Corp.		2,641		199,396

					624,316

Semiconductors & Semiconductor Equipment — 2.5%
	Advanced Micro Devices, Inc. (a)		3,200		18,656
	Altera Corp.		1,569		32,478
	Analog Devices, Inc.		1,509		47,941
	Applied Materials, Inc.		7,035		134,298
	Broadcom Corp. Class A (a)		2,322		63,367
	Intel Corp.		29,454		632,672
	KLA-Tencor Corp.		900		36,639
	LSI Corp. (a)		3,363		20,649
	Linear Technology Corp.		1,100		35,827
	MEMC Electronic Materials, Inc. (a)		1,184		72,863
	Microchip Technology, Inc.		970		29,624
	Micron Technology, Inc. (a)		3,800		22,800
	National Semiconductor Corp.		1,137		23,354
	Novellus Systems, Inc. (a)		543		11,506
	Nvidia Corp. (a)		2,899		54,269
	Teradyne, Inc. (a)		900		9,963
	Texas Instruments, Inc.		6,748		190,024
	Xilinx, Inc.		1,458		36,815

					1,473,745

Software — 3.4%
	Adobe Systems, Inc. (a)		2,762		108,795
	Autodesk, Inc. (a)		1,167		39,456
	BMC Software, Inc. (a)		997		35,892
	CA, Inc.		2,000		46,180
	Citrix Systems, Inc. (a)		920		27,057



8	S&P 500^®GEARED^SMFUND INC.	JUNE 30, 2008

Schedule of Investments (continued)


Industry	Common Stocks	Shares Held		Value

Software (concluded)
	Compuware Corp. (a)		1,408	$	13,432
	Electronic Arts, Inc. (a)		1,611		71,577
	Intuit, Inc. (a)		1,671		46,069
	Microsoft Corp.		41,147		1,131,954
	Novell, Inc. (a)		1,800		10,602
	Oracle Corp. (a)		20,379		427,959
	Symantec Corp. (a)		4,348		84,134

					2,043,107

Specialty Retail — 1.4%
	Abercrombie & Fitch Co. Class A		430		26,952
	AutoNation, Inc. (a)		705		7,064
	AutoZone, Inc. (a)		209		25,291
	Bed Bath & Beyond, Inc. (a)		1,352		37,991
	Best Buy Co., Inc.		1,791		70,924
	GameStop Corp. Class A (a)		811		32,764
	The Gap, Inc.		2,342		39,041
	Home Depot, Inc.		8,669		203,028
	Limited Brands, Inc.		1,572		26,488
	Lowe’s Cos., Inc.		7,471		155,023
	Office Depot, Inc. (a)		1,400		15,316
	RadioShack Corp.		700		8,589
	The Sherwin-Williams Co.		500		22,965
	Staples, Inc.		3,650		86,688
	TJX Cos., Inc.		2,200		69,234
	Tiffany & Co.		660		26,895

					854,253

Textiles, Apparel & Luxury Goods — 0.4%
	Coach, Inc. (a)		1,773		51,204
	Jones Apparel Group, Inc.		500		6,875
	Liz Claiborne, Inc.		500		7,075
	Nike, Inc. Class B		1,958		116,716
	Polo Ralph Lauren Corp.		300		18,834
	VF Corp.		434		30,892

					231,596

Thrifts & Mortgage Finance — 0.4%
	Countrywide Financial Corp.		2,900		12,325
	Fannie Mae		5,507		107,442
	Freddie Mac		3,300		54,120
	Hudson City Bancorp, Inc.		2,700		45,036
	MGIC Investment Corp.		540		3,299
	Sovereign Bancorp, Inc.		2,370		17,443
	Washington Mutual, Inc.		5,361		26,430

					266,095

Tobacco — 1.5%
	Altria Group, Inc.		10,790		221,842
	Lorillard, Inc. (a)		914		63,212
	Philip Morris International, Inc.		10,836		535,190
	Reynolds American, Inc.		900		42,003
	UST, Inc.		771		42,104

					904,351

Trading Companies & Distributors — 0.0%
	W.W. Grainger, Inc.		341		27,895


Industry	Common Stocks	Shares Held		Value

Wireless Telecommunication Services — 0.4%
	American Tower Corp. Class A (a)		2,051	$	86,655
	Sprint Nextel Corp.		14,531		138,045

					224,700

	Total Common Stocks (Cost — $51,289,601) — 95.6%				57,383,526




	Short-Term Securities		Face Amount

Time Deposits — 6.4%
	State Street Bank & Trust Co.,1%, 7/01/08	$	3,858,683	3,858,683

	Total Short-Term Securities (Cost — $3,858,683) — 6.4%			3,858,683




	Options Purchased	Number of Contracts

Call Options Purchased
	S&P 500 Index, expiring November 2008 at USD 1,502.17, Deutsche Bank AG	59,587	192,893
	S&P 500 Index, expiring November 2008 at USD 1,502.17, HSBC Securities	33,285	115,150

	Total Options Purchased (Premiums Paid — $14,124,612) — 0.5%		308,043

	Total Investments Before Options Written (Cost — $69,272,896*) — 102.5%		61,550,252




	Options Written

Call Options Written
	S&P 500 Index, expiring November 2008 at USD 1,592.60, Deutsche Bank AG	89,380		(15,975)
	S&P 500 Index, expiring November 2008 at USD 1,592.30, HSBC Securities	49,928		(35,311)

	Total Options Written (Premiums Received — $14,124,612) — (0.1%)			(51,286)

Total Investments, Net of Options Written (Cost — $55,148,284) — 102.4%				61,498,966
Liabilities in Excess of Other Assets — (2.4%)				(1,434,688)

Net Assets — 100.0%			$	60,064,278



S&P 500^®GEARED^SMFUND INC.	JUNE 30, 2008	9

Schedule of Investments (concluded)


*	The cost and unrealized appreciation (depreciation) of investments as of June 30, 2008, as computed for federal income tax purposes, were as follows:


Aggregate cost	$	69,278,967

Gross unrealized appreciation	$	14,327,221
Gross unrealized depreciation		(22,055,936	)

Net unrealized depreciation	$	(7,728,715	)


(a)	Non-income producing security.

(b)	Investments in companies considered to be an affiliate of the Fund, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as follows:



Affiliate	Purchase Cost	Sales Cost	Realized Gain	Dividend Income

Merrill Lynch & Co., Inc.	$30,409	—	—	$3,290


(c)	All or a portion of security held as collateral in connection with open financial futures contracts.

•	Financial futures contracts purchased as of June 30, 2008 were as follows:

Number of
Contracts

Issue

Expiration
Date

Face
Value

Appreciation
(Depreciation)

S&P 500 Index

September 2008

$2,140,787

$(91,027)


•	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.

•	Effective January 1, 2008, the Fund adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). FAS 157 clarifies the definition of fair value, establishes a frame-work for measuring fair values and requires additional disclosures about the use of 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 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 circumstance, to the extent observable inputs are not available (including the Fund’s own assumption 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 Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1(a) of the Notes to Financial Statements.

The following table summarizes the inputs used as of June 30, 2008 in determining the fair valuation of the Fund’s investments:



Valuation Inputs		Investments in Securities		Other Financial Instruments†

Level 1	$	61,242,209	$	(91,027	)
Level 2		—		256,757
Level 3		—		—

Total	$	61,242,209	$	165,730


†	Other financial instruments are options and futures.

See Notes to Financial Statements.



10	S&P 500^®GEARED^SMFUND INC.	JUNE 30, 2008

Statement of Assets, Liabilities and Capital


As of June 30, 2008 (Unaudited)

Assets

Investments in unaffiliated securities, at value (identified cost — $54,879,681)				$	61,081,630
Investments in affiliated securities, at value (identified cost — $268,603)					160,579
Options purchased, at value (premiums paid — $14,124,612)					308,043
Cash					26,675
Receivables:
Dividends	$	76,376
Securities sold		20,645
Variation margin		1,760
Interest		107			98,888

Total assets					61,675,815



Liabilities

Collateral on options (including accrued interest of $2,331)					1,412,331
Options written, at value (premiums received — $14,124,612)					51,286
Payables:
Securities purchased		60,563
Investment advisory fees		44,298			104,861

Accrued expenses					43,059

Total liabilities					1,611,537



Net Assets

Net assets				$	60,064,278



Capital

Common Stock, par value $.001 per share, 100,000,000 shares authorized				$	3,738
Paid-in capital in excess of par					63,133,534
Undistributed investment income — net	$	1,015,114
Accumulated realized capital losses — net		(10,347,763	)
Unrealized appreciation — net		6,259,655

Total accumulated losses — net					(3,072,994	)

Total capital — Equivalent to $16.07 per share based on 3,738,080 shares of Common Stock outstanding (market price — $15.32)				$	60,064,278

See Notes to Financial Statements.



S&P 500^®GEARED^SMFUND INC.	JUNE 30, 2008	11

Statement of Operations


For the Six Months Ended June 30, 2008 (Unaudited)

Investment Income

Dividends (including $3,290 from affiliates)				$	611,264
Interest					35,379

Total income					646,643



Expenses

Investment advisory fees	$	263,591
Professional fees		33,565
Directors’ fees and expenses		32,078
Interest expense		19,180
Printing and shareholder reports		12,716
Listing fees		11,903
Transfer agent fees		10,532
Repurchase offer		10,329
Accounting services		9,907
Custodian fees		7,130
Other		9,828

Total expenses					420,759

Investment income — net					225,884



Realized & Unrealized Gain (Loss) — Net

Realized gain (loss) on:
Investments — net		15,252
Financial futures contracts — net		(389,725	)		(374,473	)

Change in unrealized appreciation/depreciation on:
Investments — net		(18,717,755	)
Financial futures contracts — net		12,604
Options written — net		9,892,304			(8,812,847	)

Total realized and unrealized loss — net					(9,187,320	)

Net Decrease in Net Assets Resulting from Operations				$	(8,961,436	)


See Notes to Financial Statements.


12	S&P 500^®GEARED^SMFUND INC.	JUNE 30, 2008

Statements of Changes in Net Assets


Increase (Decrease) in Net Assets:	For the Six Months Ended June 30, 2008 (Unaudited)			For the Year Ended December 31, 2007

Operations

Investment income — net	$	225,884		$	773,972
Realized gain (loss) — net		(374,473	)		4,254,855
Change in unrealized appreciation/depreciation — net		(8,812,847	)		1,365,611

Net increase (decrease) in net assets resulting from operations		(8,961,436	)		6,394,438



Dividends & Distributions to Shareholders

Investment income — net		—			(818,543	)
Realized gain — net		—			(9,588,789	)

Net decrease in net assets resulting from dividends and distributions to shareholders		—			(10,407,332	)



Common Stock Transactions

Net redemption of Common Stock resulting from a repurchase offer (including $29,511 of repurchase fees)		—			(4,188,616	)



Net Assets

Total decrease in net assets		(8,961,436	)		(8,201,510	)
Beginning of period		69,025,714			77,227,224

End of period*	$	60,064,278		$	69,025,714

* Undistributed investment income — net	$	1,015,114		$	789,230

See Notes to Financial Statements.



S&P 500^®GEARED^SMFUND INC.	JUNE 30, 2008	13

Financial Highlights


The following per share data and ratios have been derived from information provided in the financial statements.	For the Six Months Ended June 30, 2008 (Unaudited)			For the Year Ended December 31,						For the Period October 1, 2005 to December 31, 2005‡‡			For the Period November 1, 2004† to September 30, 2005



				2007			2006

Per Share Operating Performance

Net asset value, beginning of period	$	18.47		$	19.63		$	19.66		$	21.27		$	19.10

Investment income — net***		.06			.20			.16			.04			.20
Realized and unrealized gain — net		(2.46	)		1.42			2.45			.70			2.10

Total from investment operations		(2.40	)		1.62			2.61			.74			2.30

Less dividends and distributions:
Investment income — net		—			(.22	)		—			(.19	)		(.09	)
Realized gain — net		—			(2.56	)		(2.64	)		(2.16	)		—

Total dividends and distributions		—			(2.78	)		(2.64	)		(2.35	)		(.09	)

Offering costs resulting from the issuance of Common Stock		—			—			—			—			(.04	)

Net asset value, end of period	$	16.07		$	18.47		$	19.63		$	19.66		$	21.27

Market price per share, end of period	$	15.32		$	17.21		$	18.76		$	18.85		$	20.38



Total Investment Return**

Based on net asset value per share		(12.99	%)‡		8.76	%		13.88	%		4.18	%‡		11.90	%‡

Based on market price per share		(10.98	%)‡		6.04	%		13.51	%		4.25	%‡		2.39	%‡



Ratios to Average Net Assets

Expenses, excluding interest expense		1.25	%*		1.08	%		1.20	%		1.29	%*		1.07	%*

Expenses		1.31	%*		1.45	%		1.34	%		1.29	%*		1.13	%*

Investment income — net		.70	%*		.97	%		.78	%		.76	%*		1.10	%*



Supplemental Data

Net assets, end of period (in thousands)	$	60,064		$	69,026		$	77,227		$	103,142		$	148,787

Portfolio turnover		1	%		4	%		5	%		1	%		5	%


*	Annualized.

**	Total investment returns based on market value, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Total investment returns exclude the effects of sales charges.

***	Based on average shares outstanding.

†	Commencement of operations.

‡	Aggregate total investment return.

‡‡	Effective October 1, 2005, the Fund changed its year end date to December 31.

	See Notes to Financial Statements.



14	S&P 500^®GEARED^SMFUND INC.	JUNE 30, 2008

Notes to Financial Statements (Unaudited)

1. Significant Accounting Policies:

S&P 500^®GEARED^SMFund Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”), as a non-diversified, closed-end management investment company with a fixed term of approximately five years. The Fund’s termination date is on or after December 15, 2009. 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. 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 a daily basis. The Fund’s Common Stock shares are listed on the New York Stock Exchange (“NYSE”) under the symbol GRE. The following is a summary of significant accounting policies followed by the Fund.

(a) Valuation of investments — Equity securities held by the Fund that are traded on stock exchanges or the NASDAQ Global Market are valued at the last sale price or official close price on the exchange, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price for long positions, and at the last available asked price for short positions. In cases where equity securities are traded on more than one exchange, the securities are valued on the exchange designated as the primary market by or under the authority of the Board of Directors of the Fund. Long positions traded in 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.

Exchange-traded options are valued at the mean between the last bid and ask prices at the close of the options market in which the options trade. In the case of options traded in the OTC market, valuation is the last asked price (options written) or the last bid price (options purchased). Swap agreements are valued based upon quoted fair valuations received daily by the Fund from a pricing service or counterparty. Financial futures contracts and options thereon, which are traded on exchanges, are valued at their last sale price as of the close of such exchanges. Obligations with remaining maturities of 60 days or less are valued at amortized cost unless the investment adviser believes that this method no longer produces fair valuations.

Repurchase agreements are valued at cost plus accrued interest. The Fund employs pricing services to provide certain securities prices for the Fund. Securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Board of Directors of the Fund, including valuations furnished by the pricing services retained by the Fund, which may use a matrix system for valuations. The procedures of a pricing service and its valuations are reviewed by the officers of the Fund under the general supervision of the Fund’s Board of Directors. Such valuations and procedures will be reviewed periodically by the Board of Directors of the Fund.

Generally, trading in foreign securities, as well as U.S. government securities and money market instruments, is substantially completed each day at various times prior to the close of business on the NYSE. The values of such securities used in computing the net asset value of the Fund’s shares are determined as of such times. Foreign currency exchange rates will generally be determined as of the close of business on the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of business on the NYSE that may not be reflected in the computation of the Fund’s net asset value. If events (for example, a company announcement, market volatility or a natural disaster) occur during such periods that are expected to materially affect the value of such securities, those securities may be valued at their fair value as determined in good faith by the Fund’s Board of Directors or by the investment adviser using a pricing service and/or procedures approved by the Fund’s Board of Directors.

(b) Derivative financial instruments — The Fund will engage in various portfolio investment strategies both to enhance its returns or as a proxy for a direct investment in securities underlying the Fund’s index. Losses may arise due to changes in the value of the contract due to an unfavorable change in the price of the underlying security or index, or if the counterparty does not perform under the contract. The counterparty, for certain instruments, may pledge cash or securities as collateral.



S&P 500^®GEARED^SMFUND INC.	JUNE 30, 2008	15

Notes to Financial Statements (continued)


•	Options — The Fund will purchase and write call options. When the Fund writes an option, an amount equal to the premium received by the Fund is reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written. When a security is purchased or sold through an exercise of an option, the related premium paid (or received) is added to (or deducted from) the basis of the security acquired or deducted from (or added to) the proceeds of the security sold. When an option expires (or the Fund enters into a closing transaction), the Fund realizes a gain or loss on the option to the extent of the premiums received or paid (or gain or loss to the extent the cost of the closing transaction exceeds the premium paid or received). When cash is received as collateral for purchased options, the Fund may pay interest to the option writer. Alternatively, the counterparty may pledge securities as collateral. Written and purchased options are non-income producing investments.

•	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.

(f) 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. federal and various state tax returns. To the best of our knowledge, no income tax returns are currently under examination. All tax years of the Fund are open at this time.

2. Investment Advisory Agreement and Transactions with Affiliates:

The Fund has entered into an Investment Advisory and Management Agreement with IQ Investment Advisors LLC (“IQ Advisors”), an indirect, wholly owned subsidiary of Merrill Lynch & Co., Inc. (“ML & Co.”). IQ Advisors is responsible for the investment advisory, management and administrative services to the Fund. In addition, IQ Advisors provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of the Fund. For such services, the Fund pays a monthly fee at an annual rate equal to .82% of the average daily value of the Fund’s net assets plus borrowings for leverage and other investment purposes. In addition, IQ Advisors has entered into a Subadvisory Agreement with BlackRock Investment Management, LLC (the “Subadviser”), an indirect, wholly owned subsidiary of BlackRock, Inc. (“BlackRock”), pursuant to which the Subadviser provides certain investment advisory services to IQ Advisors with respect to the Fund. For such services, IQ Advisors pays the Subadviser a monthly fee at an annual rate equal to .35% 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.



16	S&P 500^®GEARED^SMFUND INC.	JUNE 30, 2008

Notes to Financial Statements (concluded)

IQ Advisors has entered into an Administration Agreement with Princeton Administrators, LLC (the “Administrator”). The Administration Agreement provides that IQ Advisors pays the Administrator a fee from its investment advisory fee at an annual rate equal to .12% of the average daily value of the Fund’s net assets plus borrowings for leverage and other investment purposes for the performance of administrative and other services necessary for the operation of the Fund. There is no increase in the aggregate fees paid by the Fund for these services. The Administrator is an indirect, wholly owned subsidiary of BlackRock. ML & Co. is a principal owner of BlackRock.

In addition, Merrill Lynch, Pierce, Fenner & Smith Incorporated, an affiliate of IQ Advisors, received $219 in commissions on the execution of portfolio security transactions for the Fund for the six months ended June 30, 2008.

Certain officers of the Fund are officers and/or directors of IQ Advisors, ML & Co. and/or BlackRock or their affiliates.

3. Investments:

Purchases and sales of investments, excluding short-term securities, for the six months ended June 30, 2008 were $1,262,156 and $895,048, respectively.

Transactions in options written outstanding for the six months ended June 30, 2008 were as follows:



	Number of Contracts		Premiums Paid

Outstanding call options written, beginning of period		139,308	$	14,124,612

Outstanding call options written, end of period		139,308	$	14,124,612

4. Common Stock Transactions:

The Fund is authorized to issue 100,000,000 shares of capital stock, par value $.001 per share, all of which were initially classified as Common Stock. The Board of Directors is authorized, however, to classify and reclassify any unissued shares of capital stock without approval of the holders of Common Stock.

Shares issued and outstanding during the six months ended June 30, 2008 remained constant. Shares issued and outstanding during the year ended December 31, 2007 decreased 196,741 as a result of a repurchase offer.

Subject to the approval of the Board of Directors, the Fund will make offers to repurchase shares at annual (approximately 12-month) intervals. The shares tendered in the repurchase offer will be subject to a repurchase fee retained by the Fund to compensate the Fund for expenses directly related to the repurchase offer.

With regard to repurchase fees, IQ Advisors will reimburse the Fund for the cost of expenses paid in excess of 2% of the value of the shares that are repurchased.



S&P 500^®GEARED^SMFUND INC.	JUNE 30, 2008	17

Proxy Results

During the six-month period ended June 30, 2008, the shareholders of S&P 500^®GEARED^SMFund Inc. voted on the following proposal, which was approved at the annual meeting of shareholders held on April 25, 2008. A description of the proposal and number of shares voted are as follows:



		Shares Voted For	Shares Withheld From Voting

To elect the Fund’s Board of Directors:	Paul Glasserman	3,186,761	192,434
	Steven W. Kohlhagen	3,186,005	193,190
	William J. Rainer	3,186,255	192,940
	Laura S. Unger	3,186,202	192,993




Fundamental Periodic Repurchase Policy

The Board of Directors approved a fundamental policy whereby the Fund would adopt an “interval fund” structure pursuant to Rule 23c-3 under the Investment Company Act of 1940, as amended (the “Investment Company Act”).As an interval fund, the Fund will make annual repurchase offers at net asset value (less repurchase fee not to exceed 2%) to all Fund shareholders. The percentage of outstanding shares that the Fund can repurchase in each offer will be established by the Fund’s Board of Directors shortly before the commencement of each offer, and will be between 5% and 25% of the Fund’s then outstanding shares.

The Fund has adopted the following fundamental policy regarding periodic repurchases:

a) The Fund will make offers to repurchase its shares at annual (approximately 12-month) intervals pursuant to Rule 23c-3 under the Investment Company Act (“Offers”). The Board of Directors may place such conditions and limitations on an Offer, as may be permitted under Rule 23c-3.

b) The repurchase request deadline for each Offer, by which the Fund must receive repurchase requests submitted by shareholders in response to the most recent Offer, will be determined by reference to the exercise date of the call spreads and written call options that comprise the Fund’s transactions (as described in the Fund’s prospectus) for an annual period; and will be the fourteenth day prior to such exercise date; provided that, in the event that such day is not a business day, the repurchase request deadline will be the business day subsequent to the fourteenth day prior to the exercise date of the call spreads and written call options (the “Repurchase Request Deadline”).

c) The maximum number of days between a Repurchase Request Deadline and the next repurchase pricing date will be fourteen days; provided that if the fourteenth day after a Repurchase Request Deadline is not a business day, the repurchase pricing date shall be the next business day (the “Repurchase Pricing Date”).

d) Offers may be suspended or postponed under certain circumstances, as provided for in Rule 23c-3. (For further details, see Note 4 to the Financial Statements.)



18	S&P 500^®GEARED^SMFUND INC.	JUNE 30, 2008

Renewal of Current Investment Advisory and Management Agreement

The Board of Directors of each of S&P 500^®GEARED^SMFund Inc. (“S&P GEARED”), Defined Strategy Fund Inc. (“Defined Strategy”), S&P 500^®Covered Call Fund Inc. (“Covered Call”), Dow 30^SMPremium & Dividend Income Fund Inc. (“Dow 30”), Small Cap Premium & Dividend Income Fund Inc. (“Small Cap”), Enhanced S&P 500^®Covered Call Fund Inc. (“Enhanced Covered Call”), Global Income & Currency Fund Inc. (“Global Income”), NASDAQ Premium Income & Growth Fund Inc. (“NASDAQ Premium”) and Dow 30^SMEnhanced Premium & Income Fund Inc. (“Dow 30 Enhanced”) (each, a “Fund” and collectively, the “Funds”), currently consisting solely of Independent Directors, as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), has the responsibility under the Investment Company Act to consider annually the Investment Advisory and Management Agreement of each Fund (each, a “Management Agreement” and together, the “Management Agreements”) with IQ Investment Advisors LLC (“IQ Advisors”).

At a Board meeting held on June 5, 2008, all of the Directors present at the meeting renewed the Management Agreement for each Fund for an additional one-year term. Each Management Agreement was considered separately by the relevant Fund’s Directors. In considering whether to approve the continuance of the Management Agreement, the Directors reviewed materials from counsel to the Funds and from IQ Advisors including: (i) information concerning the services rendered to the Funds by IQ Advisors and its affiliates; (ii) information concerning the revenues and expenses incurred by IQ Advisors and its affiliates from the operation of the Funds; (iii) a memorandum outlining the legal duties of the Directors under the Investment Company Act; and (iv) information from Lipper, Inc. (“Lipper”) comparing each Fund’s fee rate for advisory and administrative services to those of other closed-end funds chosen by Lipper. Each Management Agreement was considered separately by the relevant Fund’s Directors. The Directors were represented by independent legal counsel who assisted them in their deliberations. In voting to approve the continuation of each Fund’s Management Agreement, the Directors considered in particular the following factors:

(a) The nature, extent and quality of services provided by IQ Advisors and its affiliates — The Directors reviewed the services that IQ Advisors has provided to the Funds. They considered the size and experience of IQ Advisors’ staff, its use of technology, and the degree to which IQ Advisors exercises supervision over the actions of the Fund’s subadviser. In connection with the investment advisory services provided, the Directors took into account detailed discussions they had with officers of IQ Advisors regarding the management of each Fund’s investments in accordance with each Fund’s stated investment objective and policies and the types of transactions entered into on behalf of each Fund. During these discussions, the Directors asked detailed questions of, and received answers from, the officers of IQ Advisors regarding the implementation of each Fund’s investment strategy, its efficacy and risks.

In addition to the investment advisory services provided to the Funds, the Directors considered that IQ Advisors and its affiliates also provide administrative services, stockholder services, oversight of Fund accounting, marketing services, assistance in meeting legal and regulatory requirements and other services necessary for the operation of the Funds. In particular, the Directors reviewed the compliance and administrative services provided to the Funds by IQ Advisors, including its oversight of each Fund’s day-to-day operations and its oversight of Fund accounting. The Directors noted that IQ Advisors has access to administrative, legal and compliance resources that help ensure a high level of quality in the compliance and administrative services provided to the Funds. The Directors also considered each Fund’s compliance history. Following their consideration of this information, and based on the presentations at the Meeting and the Directors’ experience as Directors of other investment companies advised by IQ Advisors, the Directors concluded that the services provided to each Fund by IQ Advisors under the respective Management Agreement were of a high quality and benefited the Fund.

(b) Investment performance of each Fund and IQ Advisors — The Directors considered the history, experience, resources and strengths of IQ Advisors and its affiliates in developing and implementing the investment strategies used by each Fund. The Directors also considered the innovative nature of each Fund. The Directors noted the specialized nature of each Fund’s investment strategy and the inherent limitations in comparing a Fund’s investment performance to that of another investment company. The Directors reviewed each Fund’s investment performance and, where applicable, compared such performance to the performance of a relevant reference index. The Directors discussed the degree to which each Fund was achieving its investment objective. In particular, the Directors noted that the Funds generally performed as expected and met their respective investment objectives. As a result of their discussions and review, the Directors concluded that each Fund’s performance was satisfactory. Based on



S&P 500^®GEARED^SMFUND INC.	JUNE 30, 2008	19

Renewal of Current Investment Advisory and Management Agreement (continued)

these factors, the Directors determined that IQ Advisors continued to be an appropriate investment adviser for the Funds.

(c) Cost of services provided and profits realized by IQ Advisors and its affiliates from the relationship with each of the Funds — The Directors reviewed and considered a memorandum from IQ Advisors regarding the methodology used by IQ Advisors in allocating its costs regarding the operations of the Funds and calculating each Fund’s profitability to IQ Advisors and its affiliates. The Directors also reviewed a report detailing IQ Advisors’ profitability. After considering their discussion with IQ Advisors and reviewing its memorandum and report, the Directors concluded that there was a reasonable basis for the allocation of costs and the determination of profitability. The Directors considered the cost of the services provided by IQ Advisors to each Fund and the revenue derived by IQ Advisors and its affiliates. The Directors took into account discussions that they had with representatives of IQ Advisors regarding its general level of profitability (if any), and the profits derived by its affiliate, BlackRock, Inc. (“BlackRock”) from operating the Funds. The Directors also considered the direct and indirect benefits derived by other IQ Advisors affiliates, including Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”), from the establishment of the Funds, including the underwriting arrangements relating to the initial distribution of Fund shares. The Directors considered federal court decisions discussing an investment adviser’s profitability and profitability levels considered to be reasonable in those decisions. The Directors concluded that any profits made by IQ Advisors and its affiliates (including BlackRock and MLPF&S) are acceptable in relation to the nature, extent and quality of services provided. The Directors also concluded that each Fund benefited from such services provided by IQ Advisors’ affiliates.

(d) The extent to which economies of scale would be realized as a Fund grows and whether fee levels would reflect such economies of scale — The Directors considered the extent to which economies of scale might be realized if the assets of a Fund were to increase and whether there should be changes in the management fee rate or structure in order to enable a Fund to participate in these economies of scale. The Directors noted that, because each Fund is a closed-end fund, any increase in asset levels generally would have to come from appreciation through investment performance. The Directors also noted that each Fund, other than Dow 30, NASDAQ Premium, Dow 30 Enhanced and Covered Call, is an interval fund that periodically allows stockholders to tender their shares to the Fund and that such tender offers reduce the amount of Fund assets. In consideration of these and other factors, the Directors determined that no changes were currently necessary to each Fund’s fee structure. The Directors also discussed the renewal requirements for investment advisory agreements, and determined that they would revisit this issue no later than when they next review the investment advisory fees.

(e) Comparison of services rendered and fees paid to those under other investment advisory contracts, such as contracts of the same and other investment advisers or other clients — The Directors compared both the services rendered and the fees paid under the Management Agreements to the contracts of other investment advisers with respect to other closed-end registered investment companies. In particular, the Directors evaluated each Fund’s contractual fee rate for advisory and administrative services as compared to the contractual fee rate of other closed-end funds chosen by Lipper. In considering this information, the Directors took into account the nature of the investment strategies of the Funds and the fact that the relevant peer group of funds provided by Lipper for comparison have investment strategies and restrictions different from those of the Funds. The Directors did not consider compensation paid to IQ Advisors with respect to accounts other than registered investment companies because IQ Advisors utilizes each Fund’s strategy in connection with only registered funds. In particular, the Directors noted that each Fund’s contractual advisory fee rate at a common asset level was equal to or lower than the median fee rate of its Lipper comparison funds. The Directors concluded that the advisory fee rates were reasonable in comparison to the data reflected in the Lipper materials.

(f) Conclusion — No single factor was determinative to the decision of the Directors. Based on the foregoing and such other matters as were deemed relevant, all of the Directors concluded that the advisory fee rate of each Fund was reasonable in relation to the services provided by IQ Advisors to the Funds, as well as the costs incurred and benefits gained by IQ Advisors and its affiliates in providing such services, including the investment advisory and administrative components. The Directors also found the investment advisory fees to be reasonable in comparison to the fees charged by advisers to other funds in the Lipper comparison. As a result, the Board of Directors of each Fund approved the continuation of the Management Agreement for each Fund. The Directors were represented by independent legal counsel who assisted them in their deliberations.



20	S&P 500^®GEARED^SMFUND INC.	JUNE 30, 2008

Renewal of Current Investment Advisory and Management Agreement (continued)

Continuation of Current Investment Subadvisory Agreements

In considering whether to approve the continuance of the current Investment Subadvisory Agreement of each Fund (each, a “Subadvisory Agreement” and, collectively, the “Subadvisory Agreements”) for an additional annual period, the Directors received, reviewed and evaluated information concerning the services and personnel of: BlackRock Investment Management, LLC, as subadviser to each of S&P GEARED and Small Cap; Oppenheimer Capital LLC, as subadviser to each of Covered Call and Enhanced Covered Call; Nuveen HydePark Group, LLC (“Nuveen HydePark”), as subadviser to Dow 30, Dow 30 Enhanced, NASDAQ Premium and Defined Strategy, and Nuveen Asset Management (“NAM”), as subadviser to Global Income (each, a “Subadviser” and, collectively, the “Subadvisers”). Each Subadvisory Agreement was considered separately by the relevant Fund’s Directors. In voting to approve the continuation of each Fund’s Subadvisory Agreement, the Directors considered in particular the following factors:

(a) The nature, extent and quality of services provided by each Subadviser — The Directors reviewed the services that each Subadviser provides to each of their respective Funds. The Directors considered their detailed discussions with officers of IQ Advisors and members of each Subadviser’s portfolio management team, the management of each Fund’s investments in accordance with the Fund’s stated investment objective and policies and the types of transactions that have been entered into on behalf of the Funds. The Directors took into account the annual due diligence investment review of each Subadviser and the report that concluded that each such Subadviser has thus far executed its respective Fund’s investment strategies in accordance with the Fund’s objectives and general expectations. Drawing on their collective industry experience, the Directors noted that they had discussed each Fund’s investment strategy with representatives from the respective Subadviser, including discussions regarding the premises underlying the Fund’s investment strategy, its efficacy and potential risks. The Directors also considered the favorable history, reputation and background of each Subadviser and its personnel, and the substantial experience of such Subadviser’s portfolio management team. The Directors discussed the compliance program of each Subadviser and the report of the chief compliance officer of the Funds. Following consideration of this information, and based on management presentations during the Board meeting and their discussions in Executive Session, the Directors concluded that the nature, extent and quality of services provided to each Fund by the applicable Subadviser under its Subadvisory Agreement were of a high quality and would continue to benefit the respective Fund.

(b) Investment performance of each Fund and each Subadviser — The Directors received and considered information about each Fund’s investment performance in light of its stated investment objective and made the determinations discussed above under “Continuation of Current Investment Advisory and Management Agreements.” Based on these factors, the Directors determined that each Subadviser continued to be appropriate for each of its respective Funds.

(c) Cost of services provided and profits realized by each Subadviser from the relationship with each respective Fund — The Directors considered the profitability to BlackRock of serving as investment subadviser to two Funds and from its relationship with IQ Advisors based on the information discussed above under “Continuation of Current Investment Advisory and Management Agreements.” Based on such information, the Directors concluded that BlackRock’s profits were acceptable in relation to the nature, extent and quality of services provided. The Directors noted that profitability data was not provided with respect to the other Subadvisers of the Funds and concluded that such data was unnecessary because such subadvisory arrangements were entered into at “arm’s length” between IQ Advisors and each such Subadviser (including NAM and Nuveen HydePark, with which subadvisory arrangements were originally negotiated prior to the investment in their parent company by an affiliate of IQ Advisors). The Directors then considered the potential direct and indirect benefits to each Subadviser and its affiliates from their relationship with each of their respective Funds, including the reputational benefits from managing the Funds. The Directors of each Fund concluded that the potential benefits to each Subadviser were consistent with those obtained by other subadvisers in similar types of arrangements.



S&P 500^®GEARED^SMFUND INC.	JUNE 30, 2008	21

Renewal of Current Investment Advisory and Management Agreement (concluded)

(d) The extent to which economies of scale would be realized as a Fund grows and whether fee levels would reflect such economies of scale — The Directors considered the extent to which economies of scale might be realized if the assets of a Fund were to increase and whether there should be changes in the subadvisory fee rate or structure in order to enable a Fund to participate in these economies of scale. The Directors noted that each Subadviser’s fees are paid by IQ Advisors out of its fees and not directly by the Funds. The Directors noted that, because each Fund is a closed-end fund, any increase in asset levels would have to come from appreciation due to investment performance. The Directors also noted that each Fund, other than Dow 30, NASDAQ Premium, Dow 30 Enhanced and Covered Call, is an interval fund that periodically allows stockholders to tender their shares to the Fund and that such tender offers reduce the amount of Fund assets. The Directors also discussed the renewal requirements for subadvisory agreements, and determined that they would revisit this issue no later than when they next review the subadvisory fee.

(e) Comparison of services rendered and fees paid to those under other subadvisory contracts, such as contracts of the same and other investment advisers or other clients — The Directors discussed the services rendered by each Subadviser and determined that such services were consistent with those provided by subadvisers generally and sufficient for the management of the Funds. Taking into account the totality of the information and materials provided to the Directors as noted above, including the fact that the subadvisory fee for each Fund was negotiated with IQ Advisors and not payable directly by the Fund, the Directors concluded that the subadvisory fee for each Fund was reasonable for the services being rendered.

Conclusion — No single factor was determinative to the decision of the Directors. Based on the foregoing and such other matters as were deemed relevant, all of the Directors concluded that the subadvisory fee rate of each Fund was reasonable in relation to the services provided by the respective Subadviser. As a result, all of the Directors approved the continuation of the Subadvisory Agreement for each Fund. The Directors were represented by independent legal counsel who assisted them in their deliberations.



22	S&P 500^®GEARED^SMFUND INC.	JUNE 30, 2008

Availability of Quarterly Schedule of Investments

The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the SEC’s website at http://www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

Electronic Delivery

The Fund offers electronic delivery of communications to its shareholders. In order to receive this service, you must register your account and provide us with e-mail information. To sign up for this service, simply access this website at http://www.icsdelivery.com/live and follow the instructions.

When you visit this site, you will obtain a personal identification number (PIN). You will need this PIN should you wish to update your e-mail address, choose to discontinue this service and/or make any other changes to the service. This service is not available for certain retirement accounts at this time.

Contact Information

For more information regarding the Fund, please visit www.IQIAFunds.com or contact us at 1-877-449-4742.



S&P 500^®GEARED^SMFUND INC.	JUNE 30, 2008	23


		www.IQIAFunds.com

S&P 500^®GEARED^SMFund Inc. seeks to provide total returns, exclusive of fees and expenses of the Fund, linked to the annual performance of the S&P 500^®Composite Stock Price Index.

This report, including the financial information herein, is transmitted to shareholders of S&P 500^®GEARED^SMFund Inc. for their information. It is not a prospectus. Past performance results shown in this report should not be considered a representation of future performance. Statements and other information herein are as dated and are subject to change.

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge at www.IQIAFunds.com/proxyvoting.asp or upon request by calling toll-free 1-877-449-4742 or through the Securities and Exchange Commission’s website at http://www.sec.gov. Information about how the Fund voted proxies relating to securities held in the Fund’s portfolio during the most recent 12-month period ended June 30 is available (1) at www.IQIAFunds.com/proxyvoting.asp; and (2) on the Securities and Exchange Commission’s website at http://www.sec.gov.

S&P 500^®GEARED^SMFund Inc. P.O. Box 9011 Princeton, NJ 08543-9011


		#IQGRE — 6/08

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 –	Investments
	(a) The registrant’s Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this form.
	(b) Not Applicable since no such divestments occurred during the semi-annual period covered since the last report on Form N-CSR.

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 of directors 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 Exchange Act of 1934, as amended.

11(b) –	There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12 –	Exhibits attached hereto

12(a)(1) –	Code of Ethics – 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.

	S&P 500^®GEARED ^SMFund Inc.

	By:	/s/ Mitchell M. Cox
		Mitchell M. Cox
		Chief Executive Officer of
		S&P 500^®GEARED ^SMFund Inc.

	Date: August 21, 2008

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

	By:	/s/ Mitchell M. Cox
		Mitchell M. Cox
		Chief Executive Officer (principal executive officer) of
		S&P 500^®GEARED ^SMFund Inc.

	Date: August 21, 2008

	By:	/s/ James E. Hillman
		James E. Hillman
		Chief Financial Officer (principal financial officer) of
		S&P 500^®GEARED ^SMFund Inc.

Date: August 21, 2008