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

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES

Investment Company Act file number 811-21611

Name of Fund: S&P 500(R) GEARED(SM) Fund 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(R) GEARED(SM) Fund Inc., 4 World Financial Center, 6th Floor, New York, New York 10080.

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

Date of fiscal year end: 12/31/2007

Date of reporting period: 01/01/2007 - 12/31/2007

Item 1 - Report to Stockholders 

S&P 500(R) GEARED(SM) Fund Inc.

Annual Report
December 31, 2007

[LOGO] IQ INVESTMENT BLACKROCK
 ADVISORS

S&P 500(R) GEARED(SM) Fund Inc.

Portfolio Information as of December 31, 2007

 Percent of
Ten Largest Equity Holdings Net Assets
--------------------------------------------------------------------------------
Exxon Mobil Corp. ................................................... 3.8%
General Electric Co. ................................................ 2.8
Microsoft Corp. ..................................................... 2.1
AT&T Inc. ........................................................... 1.9
The Procter & Gamble Co. ............................................ 1.7
Chevron Corp. ....................................................... 1.5
Johnson & Johnson ................................................... 1.4
Bank of America Corp. ............................................... 1.4
Apple Computer, Inc. ................................................ 1.3
Cisco Systems, Inc. ................................................. 1.2
--------------------------------------------------------------------------------

 Percent of
Five Largest Industries Net Assets
--------------------------------------------------------------------------------
Oil, Gas & Consumable Fuels ......................................... 9.6%
Pharmaceuticals ..................................................... 6.0
Computers & Peripherals ............................................. 4.3
Diversified Financial Services ...................................... 4.2
Insurance ........................................................... 4.1
--------------------------------------------------------------------------------

 Percent of
S&P 500(R) Index Sector Weightings Long-Term Investments*
--------------------------------------------------------------------------------
Financials ......................................................... 17.5%
Information Technology ............................................. 16.9
Energy ............................................................. 12.7
Health Care ........................................................ 11.9
Industrials ........................................................ 11.7
Consumer Staples ................................................... 10.3
Consumer Discretionary ............................................. 8.4
Utilities .......................................................... 3.7
Telecommunication Services ......................................... 3.6
Materials .......................................................... 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.

2 S&P 500(R) GEARED(SM) FUND INC. DECEMBER 31, 2007

A Summary From Your Fund's Portfolio Managers

We are pleased to provide you with this shareholder report for S&P 500(R) GEARED(SM) Fund Inc. While the Fund is advised by IQ Investment Advisors LLC, the following is provided by BlackRock Investment Management, LLC, the Fund's subadviser.

The investment objective of S&P 500(R) GEARED(SM) Fund Inc. (the "Fund") is to provide total returns, exclusive of fees and expenses, linked to the annual performance of the S&P 500(R) Composite Stock Price Index (the "Index"). When the Index has negative returns for an annual period, the Fund seeks to provide annual price returns that track the performance of the Index on a one-for-one basis over the annual period. Where the performance of the Index is positive for an annual period, the Fund seeks to deliver a "geared" return equal to approximately three times the annual price returns of the Index up to a maximum index participation level. There is no assurance that the Fund will meet its investment objectives.

For the annual period ended December 31, 2007, the Fund had a total investment return as set forth in the table below, based on the change per share in net asset value of $19.63 to $18.47. For the same period, the Fund's unmanaged reference index, the S&P 500 Index, had a total return as shown below. All of the Fund and index information presented includes the reinvestment of any dividends or distributions. Distribution information may be found in the Notes to Financial Statements, Note 5.

S&P 500 

Period Fund* Index** Difference
--------------------------------------------------------------------------------
Fiscal year ended
December 31, 2007 8.76% 5.49% 3.27%
--------------------------------------------------------------------------------
Since inception
(November 1, 2004) 44.39% 37.84% 6.55%
--------------------------------------------------------------------------------

* Fund performance information is net of expenses. ** The reference index has no expenses associated with performance.

For more detail with regard to the Fund's total investment return based on a change in the 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), 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 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.

Jonathan A. Clark
Portfolio Manager

Debra L. Jelilian
Portfolio Manager

Jeffrey L. Russo, CFA
Portfolio Manager

January 15, 2008

S&P 500(R) GEARED(SM) FUND INC. DECEMBER 31, 2007 3

Schedule of Investments as of December 31, 2007 

 Shares
Industry Common Stocks Held Value
========================================================================================
Aerospace & Defense -- 2.7%
 Boeing Co. 3,900 $ 341,094
 General Dynamics Corp. 2,100 186,879
 Goodrich Corp. 600 42,366
 Honeywell International, Inc. 3,800 233,966
 L-3 Communications Holdings, Inc. 678 71,827
 Lockheed Martin Corp. 1,800 189,468
 Northrop Grumman Corp. 1,700 133,688
 Precision Castparts Corp. 700 97,090
 Raytheon Co. 2,200 133,540
 Rockwell Collins, Inc. 800 57,576
 United Technologies Corp. 5,000 382,700
 -----------
 1,870,194
----------------------------------------------------------------------------------------
Air Freight & Logistics -- 0.9%
 C.H. Robinson Worldwide, Inc. 900 48,708
 Expeditors International Washington, Inc. 1,100 49,148
 FedEx Corp. 1,500 133,755
 United Parcel Service, Inc. Class B 5,300 374,816
 -----------
 606,427
----------------------------------------------------------------------------------------
Airlines -- 0.1%
 Southwest Airlines Co. 3,800 46,360
----------------------------------------------------------------------------------------
Auto Components -- 0.2%
 The Goodyear Tire & Rubber Co. (a) 1,100 31,042
 Johnson Controls, Inc. 3,000 108,120
 -----------
 139,162
----------------------------------------------------------------------------------------
Automobiles -- 0.3%
 Ford Motor Co. (a) 10,900 73,357
 General Motors Corp. 2,900 72,181
 Harley-Davidson, Inc. 1,300 60,723
 -----------
 206,261
----------------------------------------------------------------------------------------
Beverages -- 2.3%
 Anheuser-Busch Cos., Inc. 3,800 198,892
 Brown-Forman Corp. Class B 400 29,644
 The Coca-Cola Co. 10,100 619,837
 Coca-Cola Enterprises, Inc. 1,400 36,442
 Constellation Brands, Inc. Class A (a) 1,000 23,640
 Molson Coors Brewing Co. Class B 700 36,134
 Pepsi Bottling Group, Inc. 700 27,622
 PepsiCo, Inc. 8,200 622,380
 -----------
 1,594,591
----------------------------------------------------------------------------------------
Biotechnology -- 1.1%
 Amgen, Inc. (a) 5,500 255,420
 Biogen Idec, Inc. (a) 1,500 85,380
 Celgene Corp. (a) 1,900 87,799
 Genzyme Corp. (a) 1,300 96,772
 Gilead Sciences, Inc. (a) 4,700 216,247
 -----------
 741,618
----------------------------------------------------------------------------------------
Building Products -- 0.1%
 Masco Corp. 1,900 41,059
 Trane, Inc. 900 42,039
 -----------
 83,098
----------------------------------------------------------------------------------------
Capital Markets -- 3.2%
 American Capital Strategies Ltd. 900 29,664
 Ameriprise Financial, Inc. 1,220 67,234
 The Bank of New York Mellon Corp. 5,762 280,955
 The Bear Stearns Cos., Inc. 600 52,950
 The Charles Schwab Corp. 4,800 122,640
 E*Trade Financial Corp. (a) 2,400 8,520
 Federated Investors, Inc. Class B 400 16,464
 Franklin Resources, Inc. 800 91,544
 The Goldman Sachs Group, Inc. 2,040 438,702
 Janus Capital Group, Inc. 800 26,280
 Legg Mason, Inc. 700 51,205
 Lehman Brothers Holdings, Inc. 2,700 176,688
 Merrill Lynch & Co., Inc. (b) 4,400 236,192
 Morgan Stanley 5,400 286,794
 Northern Trust Corp. 1,000 76,580
 State Street Corp. 2,000 162,400
 T. Rowe Price Group, Inc. 1,300 79,144
 -----------
 2,203,956
----------------------------------------------------------------------------------------
Chemicals -- 1.7%
 Air Products & Chemicals, Inc. 1,100 108,493
 Ashland, Inc. 300 14,229
 The Dow Chemical Co. 4,800 189,216
 E.I. du Pont de Nemours & Co. 4,700 207,223
 Eastman Chemical Co. 400 24,436
 Ecolab, Inc. 900 46,089
 Hercules, Inc. 600 11,610
 International Flavors & Fragrances, Inc. 400 19,252
 Monsanto Co. 2,800 312,732
 PPG Industries, Inc. 800 56,184
 Praxair, Inc. 1,600 141,936
 Rohm & Haas Co. 600 31,842
 Sigma-Aldrich Corp. 700 38,220
 -----------
 1,201,462
----------------------------------------------------------------------------------------
Commercial Banks --2.8%
 BB&T Corp. 2,800 85,876
 Comerica, Inc. 800 34,824
 Commerce Bancorp, Inc. 1,000 38,140
 Fifth Third Bancorp 2,700 67,851
 First Horizon National Corp. 600 10,890
 Huntington Bancshares, Inc. 1,800 26,568
 KeyCorp 2,000 46,900
 M&T Bank Corp. 400 32,628
 Marshall & Ilsley Corp. 1,599 42,342
 National City Corp. 3,200 52,672
 The PNC Financial Services Group, Inc. 1,800 118,170
 Regions Financial Corp. 3,575 84,549
 SunTrust Banks, Inc. 1,800 112,482
 U.S. Bancorp 8,700 276,138
 Wachovia Corp. 10,012 380,756
 Wells Fargo & Co. 17,200 519,268
 Zions Bancorporation 500 23,345
 -----------
 1,953,399
----------------------------------------------------------------------------------------
Commercial Services & Supplies -- 0.4%
 Allied Waste Industries, Inc. (a) 1,500 16,530
 Avery Dennison Corp. 500 26,570
 Cintas Corp. 700 23,534
 Equifax, Inc. 700 25,452
 Monster Worldwide, Inc. (a) 700 22,680
 Pitney Bowes, Inc. 1,100 41,844
 R.R. Donnelley & Sons Co. 1,100 41,514
 Robert Half International, Inc. 800 21,632
 Waste Management, Inc. 2,600 84,942
 -----------
 304,698
----------------------------------------------------------------------------------------

4 S&P 500(R) GEARED(SM) FUND INC. DECEMBER 31, 2007

Schedule of Investments (continued) 

 Shares
Industry Common Stocks Held Value
========================================================================================
Communications Equipment -- 2.4%
 Ciena Corp. (a) 428 $ 14,599
 Cisco Systems, Inc. (a) 30,900 836,463
 Corning, Inc. 8,000 191,920
 JDS Uniphase Corp. (a) 1,050 13,965
 Juniper Networks, Inc. (a) 2,600 86,320
 Motorola, Inc. 11,700 187,668
 QUALCOMM, Inc. 8,400 330,540
 Tellabs, Inc. (a) 2,200 14,388
 -----------
 1,675,863
----------------------------------------------------------------------------------------
Computers & Peripherals -- 4.3%
 Apple Computer, Inc. (a) 4,500 891,360
 Dell, Inc. (a) 11,400 279,414
 EMC Corp. 10,600 196,418
 Hewlett-Packard Co. 13,100 661,288
 International Business Machines Corp. 7,000 756,700
 Lexmark International, Inc. Class A (a) 500 17,430
 Network Appliance, Inc. (a) 1,800 44,928
 QLogic Corp. (a) 700 9,940
 SanDisk Corp. (a) 1,200 39,804
 Sun Microsystems, Inc. (a) 4,400 79,772
 Teradata Corp. (a) 900 24,669
 -----------
 3,001,723
----------------------------------------------------------------------------------------
Construction & Engineering -- 0.2%
 Fluor Corp. 400 58,288
 Jacobs Engineering Group, Inc. (a) 600 57,366
 -----------
 115,654
----------------------------------------------------------------------------------------
Construction Materials -- 0.1%
 Vulcan Materials Co. 500 39,545
----------------------------------------------------------------------------------------
Consumer Finance -- 0.7%
 American Express Co. 6,000 312,120
 Capital One Financial Corp. 2,000 94,520
 Discover Financial Services 2,400 36,192
 SLM Corp. 2,100 42,294
 -----------
 485,126
----------------------------------------------------------------------------------------
Containers & Packaging -- 0.1%
 Ball Corp. 500 22,500
 Bemis Co. 500 13,690
 Pactiv Corp. (a) 700 18,641
 Sealed Air Corp. 800 18,512
 Temple-Inland, Inc. 500 10,425
 -----------
 83,768
----------------------------------------------------------------------------------------
Distributors -- 0.1%
 Genuine Parts Co. 900 41,670
----------------------------------------------------------------------------------------
Diversified Consumer Services -- 0.1%
 Apollo Group, Inc. Class A (a) 700 49,105
 H&R Block, Inc. 1,600 29,712
 -----------
 78,817
----------------------------------------------------------------------------------------
Diversified Financial Services -- 4.2%
 Bank of America Corp. 22,559 930,784
 CIT Group, Inc. 1,000 24,030
 CME Group, Inc. 275 188,650
 Citigroup, Inc. 25,400 747,776
 Guaranty Financial Group, Inc. (a) 167 2,667
 IntercontinentalExchange, Inc. (a) 400 77,000
 JPMorgan Chase & Co. 17,100 746,415
 Leucadia National Corp. 800 37,680
 Moody's Corp. 1,100 39,270
 NYSE Euronext 1,300 114,101
 -----------
 2,908,373
----------------------------------------------------------------------------------------
Diversified Telecommunication Services -- 3.0%
 AT&T Inc. (c) 30,901 1,284,246
 CenturyTel, Inc. 600 24,876
 Citizens Communications Co. 1,700 21,641
 Embarq Corp. 782 38,732
 Qwest Communications International Inc. 8,200 57,482
 Verizon Communications, Inc. 14,700 642,243
 Windstream Corp. 2,408 31,352
 -----------
 2,100,572
----------------------------------------------------------------------------------------
Electric Utilities -- 2.0%
 Allegheny Energy, Inc. 800 50,888
 American Electric Power Co., Inc. 2,000 93,120
 Duke Energy Corp. 6,364 128,362
 Edison International 1,600 85,392
 Entergy Corp. 1,000 119,520
 Exelon Corp. 3,400 277,576
 FPL Group, Inc. 2,100 142,338
 FirstEnergy Corp. 1,500 108,510
 PPL Corp. 1,900 98,971
 Pepco Holdings, Inc. 1,100 32,263
 Pinnacle West Capital Corp. 500 21,205
 Progress Energy, Inc. 1,300 62,959
 The Southern Co. 3,800 147,250
 -----------
 1,368,354
----------------------------------------------------------------------------------------
Electrical Equipment -- 0.5%
 Cooper Industries Ltd. Class A 900 47,592
 Emerson Electric Co. 4,000 226,640
 Rockwell Automation, Inc. 800 55,168
 -----------
 329,400
----------------------------------------------------------------------------------------
Electronic Equipment & Instruments -- 0.3%
 Agilent Technologies, Inc. (a) 1,919 70,504
 Jabil Circuit, Inc. 1,000 15,270
 Molex, Inc. 700 19,110
 Tyco Electronics Ltd. 2,500 92,825
 -----------
 197,709
----------------------------------------------------------------------------------------
Energy Equipment & Services -- 2.4%
 BJ Services Co. 1,500 36,390
 Baker Hughes, Inc. 1,600 129,760
 ENSCO International, Inc. 700 41,734
 Halliburton Co. 4,500 170,595
 Nabors Industries Ltd. (a) 1,400 38,346
 National Oilwell Varco, Inc. (a) 1,814 133,256
 Noble Corp. 1,400 79,114
 Rowan Cos., Inc. 500 19,730
 Schlumberger Ltd. 6,100 600,057
 Smith International, Inc. 1,000 73,850
 Transocean, Inc. (a) 1,578 225,891
 Weatherford International Ltd. (a) 1,700 116,620
 -----------
 1,665,343
----------------------------------------------------------------------------------------

S&P 500(R) GEARED(SM) FUND INC. DECEMBER 31, 2007 5

Schedule of Investments (continued) 

 Shares
Industry Common Stocks Held Value
========================================================================================
Food & Staples Retailing -- 2.2%
 CVS/Caremark Corp. 7,475 $ 297,131
 Costco Wholesale Corp. 2,200 153,472
 The Kroger Co. 3,600 96,156
 SUPERVALU INC. 1,046 39,246
 SYSCO Corp. 3,100 96,751
 Safeway, Inc. 2,200 75,262
 Wal-Mart Stores, Inc. 12,000 570,360
 Walgreen Co. 5,000 190,400
 Whole Foods Market, Inc. 700 28,560
 -----------
 1,547,338
----------------------------------------------------------------------------------------
Food Products -- 1.4%
 Archer-Daniels-Midland Co. 3,300 153,219
 Campbell Soup Co. 1,100 39,303
 ConAgra Foods, Inc. 2,500 59,475
 Dean Foods Co. 700 18,102
 General Mills, Inc. 1,700 96,900
 H.J. Heinz Co. 1,600 74,688
 The Hershey Co. 900 35,460
 Kellogg Co. 1,300 68,159
 Kraft Foods, Inc. 7,735 252,393
 McCormick & Co., Inc. 700 26,537
 Sara Lee Corp. 3,700 59,422
 Tyson Foods, Inc. Class A 1,400 21,462
 Wm. Wrigley Jr. Co. 1,125 65,869
 -----------
 970,989
----------------------------------------------------------------------------------------
Gas Utilities -- 0.2%
 Nicor, Inc. 200 8,470
 Questar Corp. 900 48,690
 Spectra Energy Corp. 3,182 82,159
 -----------
 139,319
----------------------------------------------------------------------------------------
Health Care Equipment & Supplies -- 1.6%
 Baxter International, Inc. 3,300 191,565
 Becton Dickinson & Co. 1,200 100,296
 Boston Scientific Corp. (a) 6,771 78,747
 C.R. Bard, Inc. 500 47,400
 Covidien Ltd. 2,500 110,725
 Hospira, Inc. (a) 800 34,112
 Medtronic, Inc. 5,800 291,566
 St. Jude Medical, Inc. (a) 1,700 69,088
 Stryker Corp. 1,200 89,664
 Varian Medical Systems, Inc. (a) 600 31,296
 Zimmer Holdings, Inc. (a) 1,200 79,380
 -----------
 1,123,839
----------------------------------------------------------------------------------------
Health Care Providers & Services -- 2.3%
 Aetna, Inc. 2,600 150,098
 AmerisourceBergen Corp. 900 40,383
 Cardinal Health, Inc. 1,800 103,950
 Cigna Corp. 1,400 75,222
 Coventry Health Care, Inc. (a) 750 44,438
 Express Scripts, Inc. (a) 1,300 94,900
 Humana, Inc. (a) 900 67,779
 Laboratory Corp. of America Holdings (a) 600 45,318
 McKesson Corp. 1,500 98,265
 Medco Health Solutions, Inc. (a) 1,400 141,960
 Patterson Cos., Inc. (a) 700 23,765
 Quest Diagnostics, Inc. 800 42,320
 Tenet Healthcare Corp. (a) 2,500 12,700
 UnitedHealth Group, Inc. 6,600 384,120
 WellPoint, Inc. (a) 2,900 254,417
 -----------
 1,579,635
----------------------------------------------------------------------------------------
Health Care Technology -- 0.0%
 IMS Health, Inc. 1,000 23,040
----------------------------------------------------------------------------------------
Hotels, Restaurants & Leisure -- 1.4%
 Carnival Corp. 2,200 97,878
 Darden Restaurants, Inc. 700 19,397
 Harrah's Entertainment, Inc. 900 79,875
 International Game Technology 1,700 74,681
 Marriott International, Inc. Class A 1,600 54,688
 McDonald's Corp. 6,000 353,460
 Starbucks Corp. (a) 3,600 73,692
 Starwood Hotels & Resorts Worldwide, Inc. 1,100 48,433
 Wendy's International, Inc. 400 10,336
 Wyndham Worldwide Corp. 860 20,262
 Yum! Brands, Inc. 2,600 99,502
 -----------
 932,204
----------------------------------------------------------------------------------------
Household Durables -- 0.4%
 Black & Decker Corp. 300 20,895
 Centex Corp. 600 15,156
 D.R. Horton, Inc. 1,400 18,438
 Fortune Brands, Inc. 800 57,888
 Harman International Industries, Inc. 300 22,113
 KB Home 400 8,640
 Leggett & Platt, Inc. 900 15,696
 Lennar Corp. Class A 697 12,469
 Newell Rubbermaid, Inc. 1,400 36,232
 Pulte Homes, Inc. 1,100 11,594
 Snap-On, Inc. 300 14,472
 The Stanley Works 400 19,392
 Whirlpool Corp. 407 33,223
 -----------
 286,208
----------------------------------------------------------------------------------------
Household Products -- 2.3%
 Clorox Co. 700 45,619
 Colgate-Palmolive Co. 2,600 202,696
 Kimberly-Clark Corp. 2,100 145,614
 The Procter & Gamble Co. 15,802 1,160,183
 -----------
 1,554,112
----------------------------------------------------------------------------------------
IT Services -- 0.8%
 Affiliated Computer Services, Inc. Class A (a) 600 27,060
 Automatic Data Processing, Inc. 2,700 120,231
 Cognizant Technology Solutions Corp. (a) 1,500 50,910
 Computer Sciences Corp. (a) 900 44,523
 Convergys Corp. (a) 700 11,522
 Electronic Data Systems Corp. 2,600 53,898
 Fidelity National Information Services, Inc. 900 37,431
 Fiserv, Inc. (a) 800 44,392
 Paychex, Inc. 1,700 61,574
 Total System Services, Inc. 1,000 28,000
 Unisys Corp. (a) 1,900 8,987
 The Western Union Co. 3,900 94,692
 -----------
 583,220
----------------------------------------------------------------------------------------
Independent Power Producers &
Energy Traders -- 0.3%
 The AES Corp. (a) 3,400 72,726
 Constellation Energy Group, Inc. 900 92,277
 Dynegy, Inc. Class A (a) 2,500 17,850
 -----------
 182,853
----------------------------------------------------------------------------------------

6 S&P 500(R) GEARED(SM) FUND INC. DECEMBER 31, 2007

Schedule of Investments (continued) 

 Shares
Industry Common Stocks Held Value
========================================================================================
Industrial Conglomerates -- 3.5%
 3M Co. 3,600 $ 303,552
 General Electric Co. 51,400 1,905,398
 Textron, Inc. 1,300 92,690
 Tyco International Ltd. 2,500 99,125
 -----------
 2,400,765
----------------------------------------------------------------------------------------
Insurance -- 4.1%
 ACE Ltd. 1,700 105,026
 AMBAC Financial Group, Inc. 500 12,885
 AON Corp. 1,500 71,535
 Aflac, Inc. 2,500 156,575
 The Allstate Corp. 2,800 146,244
 American International Group, Inc. 12,900 752,070
 Assurant, Inc. 500 33,450
 Chubb Corp. 2,000 109,160
 Cincinnati Financial Corp. 890 35,191
 Genworth Financial, Inc. Class A 2,200 55,990
 Hartford Financial Services Group, Inc. 1,600 139,504
 Lincoln National Corp. 1,368 79,645
 Loews Corp. 2,200 110,748
 MBIA, Inc. 600 11,178
 Marsh & McLennan Cos., Inc. 2,700 71,469
 MetLife, Inc. 3,800 234,156
 Principal Financial Group, Inc. 1,300 89,492
 The Progressive Corp. 3,700 70,892
 Prudential Financial, Inc. 2,300 213,992
 Safeco Corp. 500 27,840
 Torchmark Corp. 500 30,265
 The Travelers Cos., Inc. 3,300 177,540
 UnumProvident Corp. 1,800 42,822
 XL Capital Ltd. Class A 900 45,279
 -----------
 2,822,948
----------------------------------------------------------------------------------------
Internet & Catalog Retail -- 0.3%
 Amazon.com, Inc. (a) 1,500 138,960
 Expedia, Inc. (a) 1,100 34,782
 IAC/InterActiveCorp (a) 1,000 26,920
 -----------
 200,662
----------------------------------------------------------------------------------------
Internet Software & Services -- 1.8%
 Akamai Technologies, Inc. (a) 800 27,680
 eBay, Inc. (a) 5,800 192,502
 Google, Inc. Class A (a) 1,180 815,946
 VeriSign, Inc. (a) 1,200 45,132
 Yahoo! Inc. (a) 6,800 158,168
 -----------
 1,239,428
----------------------------------------------------------------------------------------
Leisure Equipment & Products -- 0.1%
 Brunswick Corp. 400 6,820
 Eastman Kodak Co. 1,500 32,805
 Hasbro, Inc. 800 20,464
 Mattel, Inc. 2,100 39,984
 -----------
 100,073
----------------------------------------------------------------------------------------
Life Sciences Tools & Services -- 0.3%
 Applera Corp. -- Applied Biosystems Group 900 30,528
 Millipore Corp. (a) 300 21,954
 PerkinElmer, Inc. 600 15,612
 Thermo Fisher Scientific, Inc. (a) 2,200 126,896
 Waters Corp. (a) 500 39,535
 -----------
 234,525
----------------------------------------------------------------------------------------
Machinery -- 1.8%
 Caterpillar, Inc. 3,200 232,192
 Cummins, Inc. 500 63,685
 Danaher Corp. 1,200 105,288
 Deere & Co. 2,200 204,864
 Dover Corp. 1,000 46,090
 Eaton Corp. 700 67,865
 ITT Corp. 900 59,436
 Illinois Tool Works, Inc. 2,100 112,434
 Ingersoll-Rand Co. Class A 1,400 65,058
 Manitowoc Co. 700 34,181
 PACCAR, Inc. 1,850 100,788
 Pall Corp. 600 24,192
 Parker Hannifin Corp. 900 67,779
 Terex Corp. (a) 500 32,785
 -----------
 1,216,637
----------------------------------------------------------------------------------------
Media -- 2.7%
 CBS Corp. Class B 3,450 94,013
 Clear Channel Communications, Inc. 2,600 89,752
 Comcast Corp. Class A (a) 15,750 287,595
 The DIRECTV Group, Inc. (a) 3,700 85,544
 The E.W. Scripps Co. Class A 500 22,505
 Gannett Co., Inc. 1,200 46,800
 Interpublic Group of Cos., Inc. (a) 2,400 19,464
 The McGraw-Hill Cos., Inc. 1,700 74,477
 Meredith Corp. 200 10,996
 The New York Times Co. Class A 600 10,518
 News Corp. Class A 11,700 239,733
 Omnicom Group Inc. 1,700 80,801
 Time Warner, Inc. 18,700 308,737
 Viacom, Inc. Class B (a) 3,450 151,524
 Walt Disney Co. 9,700 313,116
 -----------
 1,835,575
----------------------------------------------------------------------------------------
Metals & Mining -- 1.0%
 Alcoa, Inc. 4,400 160,820
 Allegheny Technologies, Inc. 500 43,200
 Freeport-McMoRan Copper & Gold, Inc.
 Class B 1,937 198,426
 Newmont Mining Corp. 2,300 112,309
 Nucor Corp. 1,500 88,830
 Titanium Metals Corp. 400 10,580
 United States Steel Corp. 600 72,546
 -----------
 686,711
----------------------------------------------------------------------------------------
Multi-Utilities -- 1.1%
 Ameren Corp. 1,000 54,210
 CMS Energy Corp. 1,100 19,118
 CenterPoint Energy, Inc. 1,600 27,408
 Consolidated Edison, Inc. 1,400 68,390
 DTE Energy Co. 900 39,564
 Dominion Resources, Inc. 3,000 142,350
 Integrys Energy Group, Inc. 365 18,867
 NiSource, Inc. 1,400 26,446
 PG&E Corp. 1,800 77,562
 Public Service Enterprise Group, Inc. 1,300 127,712
 Sempra Energy 1,300 80,444
 TECO Energy, Inc. 1,100 18,931
 Xcel Energy, Inc. 2,100 47,397
 -----------
 748,399
----------------------------------------------------------------------------------------

S&P 500(R) GEARED(SM) FUND INC. DECEMBER 31, 2007 7

Schedule of Investments (continued) 

 Shares
Industry Common Stocks Held Value
========================================================================================
Multiline Retail -- 0.7%
 Big Lots, Inc. (a) 500 $ 7,995
 Dillard's, Inc. Class A 300 5,634
 Family Dollar Stores, Inc. 700 13,461
 J.C. Penney Co., Inc. 1,100 48,389
 Kohl's Corp. (a) 1,500 68,700
 Macy's, Inc. 2,166 56,034
 Nordstrom, Inc. 1,000 36,730
 Sears Holdings Corp. (a) 381 38,881
 Target Corp. 4,200 210,000
 -----------
 485,824
----------------------------------------------------------------------------------------
Office Electronics -- 0.1%
 Xerox Corp. 4,700 76,093
----------------------------------------------------------------------------------------
Oil, Gas & Consumable Fuels --9.6%
 Anadarko Petroleum Corp. 2,300 151,087
 Apache Corp. 1,700 182,818
 Chesapeake Energy Corp. 2,200 86,240
 Chevron Corp. 10,791 1,007,124
 ConocoPhillips 8,208 724,766
 Consol Energy, Inc. 900 64,368
 Devon Energy Corp. 2,300 204,493
 EOG Resources, Inc. 1,200 107,100
 El Paso Corp. 3,500 60,340
 Exxon Mobil Corp. 27,800 2,604,582
 Hess Corp. 1,400 141,204
 Marathon Oil Corp. 3,572 217,392
 Murphy Oil Corp. 1,000 84,840
 Noble Energy, Inc. 900 71,568
 Occidental Petroleum Corp. 4,200 323,358
 Peabody Energy Corp. 1,300 80,132
 Range Resources Corp. 800 41,088
 Sunoco, Inc. 600 43,464
 Tesoro Corp. 700 33,390
 Valero Energy Corp. 2,800 196,084
 Williams Cos., Inc. 3,000 107,340
 XTO Energy, Inc. 2,416 124,086
 -----------
 6,656,864
----------------------------------------------------------------------------------------
Paper & Forest Products -- 0.3%
 International Paper Co. 2,200 71,236
 MeadWestvaco Corp. 900 28,170
 Weyerhaeuser Co. 1,100 81,114
 -----------
 180,520
----------------------------------------------------------------------------------------
Personal Products -- 0.2%
 Avon Products, Inc. 2,200 86,966
 The Estee Lauder Cos., Inc. Class A 600 26,166
 -----------
 113,132
----------------------------------------------------------------------------------------
Pharmaceuticals --6.0%
 Abbott Laboratories 7,900 443,585
 Allergan, Inc. 1,600 102,784
 Barr Pharmaceuticals, Inc. (a) 500 26,550
 Bristol-Myers Squibb Co. 10,100 267,852
 Eli Lilly & Co. 5,000 266,950
 Forest Laboratories, Inc. (a) 1,600 58,320
 Johnson & Johnson 14,600 973,820
 King Pharmaceuticals, Inc. (a) 1,200 12,288
 Merck & Co., Inc. 11,100 645,021
 Mylan, Inc. 1,500 21,090
 Pfizer, Inc. 34,800 791,004
 Schering-Plough Corp. 8,200 218,448
 Watson Pharmaceuticals, Inc. (a) 500 13,570
 Wyeth 6,800 300,492
 -----------
 4,141,774
----------------------------------------------------------------------------------------
Real Estate Investment Trusts (REITs) --0.9%
 Apartment Investment & Management Co.
 Class A 500 17,365
 AvalonBay Communities, Inc. 400 37,656
 Boston Properties, Inc. 600 55,086
 Developers Diversified Realty Corp. 600 22,974
 Equity Residential 1,400 51,058
 General Growth Properties, Inc. 1,200 49,416
 Host Marriott Corp. 2,600 44,304
 Kimco Realty Corp. 1,300 47,320
 Plum Creek Timber Co., Inc. 900 41,436
 ProLogis 1,300 82,394
 Public Storage 600 44,046
 Simon Property Group, Inc. 1,100 95,546
 Vornado Realty Trust 700 61,565
 -----------
 650,166
----------------------------------------------------------------------------------------
Real Estate Management & Development -- 0.0%
 CB Richard Ellis Group, Inc. (a) 1,000 21,550
 Forestar Real Estate Group, Inc. (a) 167 3,932
 -----------
 25,482
----------------------------------------------------------------------------------------
Road & Rail -- 0.7%
 Burlington Northern Santa Fe Corp. 1,500 124,845
 CSX Corp. 2,200 96,756
 Norfolk Southern Corp. 2,000 100,880
 Ryder System, Inc. 300 14,103
 Union Pacific Corp. 1,300 163,306
 -----------
 499,890
----------------------------------------------------------------------------------------
Semiconductors & Semiconductor
Equipment -- 2.6%
 Advanced Micro Devices, Inc. (a) 3,000 22,500
 Altera Corp. 1,800 34,776
 Analog Devices, Inc. 1,600 50,720
 Applied Materials, Inc. 7,000 124,320
 Broadcom Corp. Class A (a) 2,350 61,429
 Intel Corp. 29,800 794,468
 KLA-Tencor Corp. 1,000 48,160
 LSI Logic Corp. (a) 3,700 19,647
 Linear Technology Corp. 1,100 35,013
 MEMC Electronic Materials, Inc. (a) 1,100 97,339
 Microchip Technology, Inc. 1,100 34,562
 Micron Technology, Inc. (a) 3,800 27,550
 National Semiconductor Corp. 1,200 27,168
 Novellus Systems, Inc. (a) 600 16,542
 Nvidia Corp. (a) 2,750 93,555
 Teradyne, Inc. (a) 800 8,272
 Texas Instruments, Inc. 7,200 240,480
 Xilinx, Inc. 1,500 32,805
 -----------
 1,769,306
----------------------------------------------------------------------------------------

8 S&P 500(R) GEARED(SM) FUND INC. DECEMBER 31, 2007

Schedule of Investments (continued) 

 Shares
Industry Common Stocks Held Value
========================================================================================
Software -- 3.6%
 Adobe Systems, Inc. (a) 3,000 $ 128,190
 Autodesk, Inc. (a) 1,200 59,712
 BMC Software, Inc. (a) 1,000 35,640
 CA, Inc. 2,000 49,900
 Citrix Systems, Inc. (a) 900 34,209
 Compuware Corp. (a) 1,500 13,320
 Electronic Arts, Inc. (a) 1,600 93,456
 Intuit, Inc. (a) 1,700 53,737
 Microsoft Corp. 40,900 1,456,040
 Novell, Inc. (a) 1,800 12,366
 Oracle Corp. (a) 20,200 456,116
 Symantec Corp. (a) 4,683 75,584
 -----------
 2,468,270
----------------------------------------------------------------------------------------
Specialty Retail -- 1.4%
 Abercrombie & Fitch Co. Class A 400 31,988
 AutoNation, Inc. (a) 705 11,040
 AutoZone, Inc. (a) 200 23,982
 Bed Bath & Beyond, Inc. (a) 1,400 41,146
 Best Buy Co., Inc. 1,800 94,770
 Circuit City Stores, Inc. 900 3,780
 GameStop Corp. Class A (a) 800 49,688
 The Gap, Inc. 2,500 53,200
 Home Depot, Inc. 8,500 228,990
 Limited Brands, Inc. 1,600 30,288
 Lowe's Cos., Inc. 7,300 165,126
 Office Depot, Inc. (a) 1,400 19,474
 OfficeMax, Inc. 400 8,264
 RadioShack Corp. 700 11,802
 The Sherwin-Williams Co. 500 29,020
 Staples, Inc. 3,650 84,206
 TJX Cos., Inc. 2,200 63,206
 Tiffany & Co. 700 32,221
 -----------
 982,191
----------------------------------------------------------------------------------------
Textiles, Apparel & Luxury Goods -- 0.4%
 Coach, Inc. (a) 1,900 58,102
 Jones Apparel Group, Inc. 500 7,995
 Liz Claiborne, Inc. 500 10,175
 Nike, Inc. Class B 2,000 128,480
 Polo Ralph Lauren Corp. 300 18,537
 VF Corp. 400 27,464
 -----------
 250,753
----------------------------------------------------------------------------------------
Thrifts & Mortgage Finance -- 0.7%
 Countrywide Financial Corp. 2,900 25,926
 Fannie Mae 4,900 195,902
 Freddie Mac 3,400 115,838
 Hudson City Bancorp, Inc. 2,700 40,554
 MGIC Investment Corp. 400 8,972
 Sovereign Bancorp, Inc. 1,770 20,178
 Washington Mutual, Inc. 4,461 60,714
 -----------
 468,084
----------------------------------------------------------------------------------------
Tobacco -- 1.3%
 Altria Group, Inc. 10,700 808,706
 Reynolds American, Inc. 900 59,364
 UST, Inc. 800 43,840
 -----------
 911,910
----------------------------------------------------------------------------------------
Trading Companies & Distributors -- 0.1%
 W.W. Grainger, Inc. 400 35,008
----------------------------------------------------------------------------------------
Wireless Telecommunication Services -- 0.4%
 American Tower Corp. Class A (a) 2,100 89,460
 Sprint Nextel Corp. 14,352 188,442
 -----------
 277,902
----------------------------------------------------------------------------------------
 Total Common Stocks
 (Cost -- $50,933,414) -- 94.8% 65,444,792
========================================================================================

========================================================================================

 Face
 Short-Term Securities Amount
========================================================================================
Time Deposits -- 7.1%
 State Street Bank & Trust Co., 3.25%
 due 1/02/2008 $4,904,855 4,904,855
----------------------------------------------------------------------------------------
 Total Short-Term Securities
 (Cost -- $4,904,855) -- 7.1% 4,904,855
========================================================================================

========================================================================================

 Number of
 Options Purchased Contracts
========================================================================================
Call Options Purchased
 S&P 500 Index, expiring November 2008
 at USD 1,502.17, Deutsche Bank AG 59,587 6,856,868
 S&P 500 Index, expiring November 2008
 at USD 1,502.17, HSBC Securities 33,285 3,751,477
----------------------------------------------------------------------------------------
 Total Options Purchased
 (Premiums Paid -- $14,124,612) -- 15.4% 10,608,345
========================================================================================
 Total Investments Before Options Written
 (Cost -- $69,962,881*) -- 117.3% 80,957,992
========================================================================================

========================================================================================

 Options Written
========================================================================================
Call Options Written
 S&P 500 Index, expiring November 2008
 at USD 1,592.60, Deutsche Bank AG 89,380 (6,423,025)
 S&P 500 Index, expiring November 2008
 at USD 1,592.30, HSBC Securities 49,928 (3,520,565)
----------------------------------------------------------------------------------------
 Total Options Written (Premiums
 Received -- $14,124,612) -- (14.4%) (9,943,590)
========================================================================================
Total Investments, Net of Options Written
(Cost -- $55,838,269) -- 102.9% 71,014,402

Liabilities in Excess of Other Assets -- (2.9%) (1,988,688)
 -----------
Net Assets -- 100.0% $69,025,714
 ===========

S&P 500(R) GEARED(SM) FUND INC. DECEMBER 31, 2007 9

Schedule of Investments (concluded)

* The cost and unrealized appreciation (depreciation) of investments, as of December 31, 2007, as computed for federal income tax purposes, were as follows: 

 Aggregate cost .......................................... $ 55,844,340
 ============
 Gross unrealized appreciation ........................... $ 28,937,725
 Gross unrealized depreciation ........................... (3,824,073)
 ------------
 Net unrealized appreciation ............................. $ 25,113,652
 ============

(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: 

--------------------------------------------------------------------------
 Purchase Sales Realized Dividend
Affiliate Cost Cost Gain Income
--------------------------------------------------------------------------
Merrill Lynch & Co., Inc. -- $37,895 $3,100 $7,105
--------------------------------------------------------------------------

(c) All or a portion of security held as collateral in connection with open financial futures contracts.
o Financial futures contracts purchased as of December 31, 2007 were as follows: 

--------------------------------------------------------------------------
Number of Expiration Face Unrealized
Contracts Issue Date Value Depreciation
--------------------------------------------------------------------------
 8 S&P 500 Index March 2008 $3,058,031 $(103,631)
--------------------------------------------------------------------------

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. These industry classifications are unaudited.

See Notes to Financial Statements.

10 S&P 500(R) GEARED(SM) FUND INC. DECEMBER 31, 2007

Statement of Assets, Liabilities and Capital 

As of December 31, 2007
===================================================================================================================================
Assets
-----------------------------------------------------------------------------------------------------------------------------------
 Investments in unaffiliated securities, at value
 (identified cost -- $55,600,075) ................................................. $ 70,113,455
 Investments in affiliated securities, at value (identified cost -- $238,194) ....... 236,192
 Options purchased, at value (premiums paid -- $14,124,612) ......................... 10,608,345
 Receivables:
 Dividends ...................................................................... $ 95,909
 Securities sold ................................................................ 40,927
 Interest ....................................................................... 443 137,279
 -------------------------------
 Total assets ....................................................................... 81,095,271
 -------------
===================================================================================================================================
Liabilities
-----------------------------------------------------------------------------------------------------------------------------------
 Collateral on options (including accrued interest of $4,723) ....................... 1,414,723
 Options written, at value (premiums received -- $ 14,124,612) ...................... 9,943,590
 Payables:
 Dividends and distributions to Common Stock shareholders ....................... 537,037
 Investment adviser ............................................................. 48,906
 Securities purchased ........................................................... 28,850
 Variation margin ............................................................... 16,600 631,393
 -------------
 Accrued expenses ................................................................... 79,851
 -------------
 Total liabilities .................................................................. 12,069,557
 -------------
===================================================================================================================================
Net Assets
-----------------------------------------------------------------------------------------------------------------------------------
 Net assets ......................................................................... $ 69,025,714
 =============
===================================================================================================================================
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 ............................................. $ 789,230
 Accumulated realized capital losses -- net ......................................... (9,973,290)
 Unrealized appreciation -- net ..................................................... 15,072,502
 -------------
 Total accumulated earnings -- net .................................................. 5,888,442
 -------------
 Total capital -- Equivalent to $18.47 per share based on 3,738,080
 shares of Common Stock outstanding (market price -- $17.21) ...................... $ 69,025,714
 =============

See Notes to Financial Statements.

S&P 500(R) GEARED(SM) FUND INC. DECEMBER 31, 2007 11

Statement of Operations 

For the Year Ended December 31, 2007
===================================================================================================================================
Investment Income
-----------------------------------------------------------------------------------------------------------------------------------
 Dividends (including $7,105 from affiliates) ....................................... $ 1,424,965
 Interest ........................................................................... 499,747
 -------------
 Total income ....................................................................... 1,924,712
 -------------
===================================================================================================================================
Expenses
-----------------------------------------------------------------------------------------------------------------------------------
 Investment advisory fees ........................................................... $ 640,222
 Interest expense ................................................................... 295,707
 Directors' fees and expenses ....................................................... 59,391
 Professional fees .................................................................. 44,930
 Transfer agent fees ................................................................ 27,361
 Printing and shareholder reports ................................................... 24,842
 Accounting services ................................................................ 22,065
 Repurchase offer ................................................................... 15,258
 Custodian fees ..................................................................... 15,177
 Other .............................................................................. 5,787
 -------------
 Total expenses ..................................................................... 1,150,740
 -------------
 Investment income -- net ........................................................... 773,972
 -------------
===================================================================================================================================
Realized & Unrealized Gain (Loss) -- Net
-----------------------------------------------------------------------------------------------------------------------------------
 Realized gain (loss) on:
 Investments (including $3,100 from affiliates) -- net .......................... 18,374,182
 Financial futures contracts -- net ............................................. 120,833
 Options written -- net ......................................................... (14,240,160) 4,254,855
 -------------
 Change in unrealized appreciation/depreciation on:
 Investments -- net ............................................................. (3,681,510)
 Financial futures contracts -- net ............................................. (117,791)
 Options written -- net ......................................................... 5,164,912 1,365,611
 -------------------------------
 Total realized and unrealized gain -- net .......................................... 5,620,466
 -------------
 Net Increase in Net Assets Resulting from Operations ............................... $ 6,394,438
 =============

See Notes to Financial Statements.

12 S&P 500(R) GEARED(SM) FUND INC. DECEMBER 31, 2007

Statements of Changes in Net Assets 

 For the Year Ended
 December 31,
 -------------------------------
Increase (Decrease) in Net Assets: 2007 2006
===================================================================================================================================
Operations
-----------------------------------------------------------------------------------------------------------------------------------
 Investment income -- net ........................................................... $ 773,972 $ 808,456
 Realized gain -- net ............................................................... 4,254,855 7,656,239
 Change in unrealized appreciation/depreciation -- net .............................. 1,365,611 4,509,422
 -------------------------------
 Net increase in net assets resulting from operations ............................... 6,394,438 12,974,117
 -------------------------------
===================================================================================================================================
Dividends & Distributions to Shareholders
-----------------------------------------------------------------------------------------------------------------------------------
 Investment income -- net ........................................................... (818,543) --
 Realized gain -- net ............................................................... (9,588,789) (10,387,927)
 -------------------------------
 Net decrease in net assets resulting from dividends and distributions
 to shareholders .................................................................. (10,407,332) (10,387,927)
 -------------------------------
===================================================================================================================================
Common Stock Transactions
-----------------------------------------------------------------------------------------------------------------------------------
 Net redemption of Common Stock resulting from a repurchase offer
 (including $29,511 and $13,116 of repurchase fees, respectively) ................. (4,188,616) (28,501,198)
 -------------------------------
===================================================================================================================================
Assets
-----------------------------------------------------------------------------------------------------------------------------------
 Total decrease in net assets ....................................................... (8,201,510) (25,915,008)
 Beginning of year .................................................................. 77,227,224 103,142,232
 -------------------------------
 End of year* ....................................................................... $ 69,025,714 $ 77,227,224
 ===============================
 * Undistributed investment income -- net ......................................... $ 789,230 $ 818,543
 ===============================

See Notes to Financial Statements.

S&P 500(R) GEARED(SM) FUND INC. DECEMBER 31, 2007 13

Financial Highlights 

 For the Period For the Period
 For the Year Ended October 1, November 1,
 December 31, 2005 to 2004+ to
The following per share data and ratios have been derived ---------------------------- December 31, September 30,
from information provided in the financial statements. 2007 2006 2005@@ 2005
===================================================================================================================================
Per Share Operating Performance
-----------------------------------------------------------------------------------------------------------------------------------
 Net asset value, beginning of period ............. $ 19.63 $ 19.66 $ 21.27 $ 19.10
 -----------------------------------------------------------------
 Investment income -- net*** ...................... .20 .16 .04 .20
 Realized and unrealized gain -- net .............. 1.42 2.45 .70 2.10
 -----------------------------------------------------------------
 Total from investment operations ................. 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 ................... $ 18.47 $ 19.63 $ 19.66 $ 21.27
 =================================================================
 Market price per share, end of period ............ $ 17.21 $ 18.76 $ 18.85 $ 20.38
 =================================================================
===================================================================================================================================
Total Investment Return**
-----------------------------------------------------------------------------------------------------------------------------------
 Based on net asset value per share ............... 8.76% 13.88% 4.18%@ 11.90%@
 =================================================================
 Based on market price per share .................. 6.04% 13.51% 4.25%@ 2.39%@
 =================================================================
===================================================================================================================================
Ratios to Average Net Assets
-----------------------------------------------------------------------------------------------------------------------------------
 Expenses, excluding interest expense ............. 1.08% 1.20% 1.29%* 1.07%*
 =================================================================
 Expenses ......................................... 1.45% 1.34% 1.29%* 1.13%*
 =================================================================
 Investment income -- net ......................... .97% .78% .76%* 1.10%*
 =================================================================
===================================================================================================================================
Supplemental Data
-----------------------------------------------------------------------------------------------------------------------------------
 Net assets, end of period (in thousands) ......... $ 69,026 $ 77,227 $ 103,142 $ 148,787
 =================================================================
 Portfolio turnover ............................... 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(R) GEARED(SM) FUND INC. DECEMBER 31, 2007

Notes to Financial Statements

1. Significant Accounting Policies:

S&P 500(R) GEARED(SM) Fund Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended, 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. 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.

Effective September 4, 2007, 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 and previously were valued at the last sales price. 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.

o 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

S&P 500(R) GEARED(SM) FUND INC. DECEMBER 31, 2007 15

Notes to Financial Statements (continued)

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.

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.

(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. and various state tax returns. No income tax returns are currently under examination. All tax years of the Fund are open at this time.

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. The impact on the Fund's financial statement disclosures, if any, is currently being assessed.

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 that choose different measurement attributes for similar types of assets and liabilities. The impact of the Fund's financial statement disclosures, if any, is currently being assessed.

(g) Reclassification -- U.S. generally accepted accounting principles require that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. Accordingly, during the current year, $15,258 has been reclassified between paid in capital in excess of par and accumulated distributions in excess of net investment income as a result of permanent differences attributable to non-deductible expenses. This reclassification has no effect on net assets or net asset values per share.

2. Investment Advisory Agreement and Transactions with Affiliates:

The Fund has entered into an Investment Advisory and Management Agreement with IQ Investment Advisors LLC

16 S&P 500(R) GEARED(SM) FUND INC. DECEMBER 31, 2007

Notes to Financial Statements (concluded)

("IQ" or the "Advisor"), an indirect subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."). 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 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 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 with respect to the Fund. For such services, IQ 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.

IQ has entered into an Administration Agreement with Princeton Administrators, LLC (the "Administrator"). The Administration Agreement provides that IQ 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 subsidiary of BlackRock. ML & Co. is a principal owner of BlackRock.

In addition, Merrill Lynch, Pierce, Fenner & Smith Incorporated, an affiliate of IQ, received $445 in commissions on the execution of portfolio security transactions for the Fund for the year ended December 31, 2007.

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

3. Investments:

Purchases and sales of investments, excluding short-term securities, for the year ended December 31, 2007 were $3,032,011 and $13,236,336, respectively.

Transactions in options written for the year ended December 31, 2007 were as follows: 

--------------------------------------------------------------------------------
 Number of
 Contracts
--------------------------------------------------------------------------------
Outstanding call options written,
 beginning of year ............................................... 165,261
Options written ................................................... 142,588
Options closed .................................................... (168,541)
 --------
Outstanding call options written,
 end of year ..................................................... 139,308
 ========

4. Common Stock Transactions:

The Fund is authorized to issue 100,000,000 shares of 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 years ended December 31, 2007 and December 31, 2006 decreased by 196,741 and 1,311,606, respectively, as a result of repurchase offers.

Subject to the approval of the Board of Directors, the Fund will make offers to repurchase its 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 will reimburse the Fund for the cost of expenses paid in excess of 2% of the value of the shares that are repurchased.

5. Distributions to Shareholders:

The tax character of distributions paid during the fiscal years ended December 31, 2007 and December 31, 2006 was as follows: 

--------------------------------------------------------------------------------
 12/31/2007 12/31/2006
--------------------------------------------------------------------------------
Distributions paid from:
 Ordinary income ................................ $ 7,554,741 $ 2,459,562
 Long-term capital gains ........................ 2,852,591 7,928,365
 --------------------------
Total distributions .............................. $10,407,332 $10,387,927
 ==========================

As of December 31, 2007 the components of accumulated earnings on a tax basis were as follows: 

------------------------------------------------------------------------------
Undistributed ordinary income -- net .......................... $ 3,811,483
Undistributed long-term capital gains -- net .................. 4,073,338
 -----------
Total undistributed earnings -- net ........................... 7,884,821
Capital loss carryforward ..................................... --
Unrealized losses -- net ...................................... (1,996,379)*
 -----------
Total accumulated earnings -- net ............................. $ 5,888,442
 ===========

* The difference between book-basis and tax-basis net unrealized losses is attributable primarily to the tax deferral of losses on wash sales, the tax deferral of losses on straddles and the realization for tax purposes of unrealized gains (losses) on certain financial futures contracts.

S&P 500(R) GEARED(SM) FUND INC. DECEMBER 31, 2007 17

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of S&P 500(R) GEARED(SM) Fund Inc.:

We have audited the accompanying statement of assets, liabilities and capital, including the schedule of investments, of S&P 500(R) GEARED(SM) Fund Inc. as of December 31, 2007, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the respective periods presented. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2007, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of S&P
500(R) GEARED(SM) Fund Inc. as of December 31, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and its financial highlights for each of the respective periods presented, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP
Princeton, NJ
February 29, 2008

Fund Certification (Unaudited)

In May 2007, the Fund filed its Chief Executive Officer Certification for the prior year with the New York Stock Exchange pursuant to Section 303A.12(a) of the New York Stock Exchange Corporate Governance Listing Standards.

The Fund's Chief Executive Officer and Chief Financial Officer Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 were filed with the Fund's Form N-CSR and are available on the Securities and Exchange Commission's website at http://www.sec.gov.

Important Tax Information (Unaudited)

The following information is provided with respect to the ordinary income distribution paid by S&P 500(R) GEARED(SM) Fund Inc. to shareholders of record on November 20, 2007:

Short-Term Capital Gain Dividends for Non-U.S. Residents .......... 89.16%*
* Represents the portion of the taxable ordinary income dividends eligible for exemption from U.S. withholding tax for nonresident aliens and foreign corporations.

Additionally, the Fund distributed long-term capital gains of $.318978 per share and $.444138 per share to shareholders of record on November 20, 2007 and December 20, 2007, respectively.

18 S&P 500(R) GEARED(SM) FUND INC. DECEMBER 31, 2007

Automatic Dividend Reinvestment Plan

How the Plan Works -- The Fund offers a Dividend Reinvestment Plan (the "Plan") under which income and capital gains dividends paid by the Fund are automatically reinvested in additional shares of Common Stock of the Fund. The Plan is administered on behalf of the shareholders by The Bank of New York Mellon (the "Plan Agent"). Under the Plan, whenever the Fund declares a dividend, participants in the Plan will receive the equivalent in shares of Common Stock of the Fund. The Plan Agent will acquire the shares for the participant's account either (i) through receipt of additional unissued but authorized shares of the Fund ("newly issued shares") or (ii) by purchase of outstanding shares of Common Stock on the open market on the New York Stock Exchange or elsewhere. If, on the dividend payment date, the Fund's net asset value per share is equal to or less than the market price per share plus estimated brokerage commissions (a condition often referred to as a "market premium"), the Plan Agent will invest the dividend amount in newly issued shares. If the Fund's net asset value per share is greater than the market price per share (a condition often referred to as a "market discount"), the Plan Agent will invest the dividend amount by purchasing on the open market additional shares. If the Plan Agent is unable to invest the full dividend amount in open market purchases, or if the market discount shifts to a market premium during the purchase period, the Plan Agent will invest any uninvested portion in newly issued shares. The shares acquired are credited to each shareholder's account. The amount credited is determined by dividing the dollar amount of the dividend by either (i) when the shares are newly issued, the net asset value per share on the date the shares are issued or (ii) when shares are purchased in the open market, the average purchase price per share.

Participation in the Plan -- Participation in the Plan is automatic, that is, a shareholder is automatically enrolled in the Plan when he or she purchases shares of Common Stock of the Fund unless the shareholder specifically elects not to participate in the Plan. Shareholders who elect not to participate will receive all dividend distributions in cash. Shareholders who do not wish to participate in the Plan must advise the Plan Agent in writing (at the address set forth below) that they elect not to participate in the Plan. Participation in the Plan is completely voluntary and may be terminated or resumed at any time without penalty by writing to the Plan Agent.

Benefits of the Plan -- The Plan provides an easy, convenient way for shareholders to make additional, regular investments in the Fund. The Plan promotes a long-term strategy of investing at a lower cost. All shares acquired pursuant to the Plan receive voting rights. In addition, if the market price plus commissions of the Fund's shares is above the net asset value, participants in the Plan will receive shares of the Fund for less than they could otherwise purchase them and with a cash value greater than the value of any cash distribution they would have received. However, there may not be enough shares available in the market to make distributions in shares at prices below the net asset value. Also, since the Fund does not redeem shares, the price on resale may be more or less than the net asset value.

Plan Fees -- There are no enrollment fees or brokerage fees for participating in the Plan. The Plan Agent's service fees for handling the reinvestment of distributions are paid for by the Fund. However, brokerage commissions may be incurred when the Fund purchases shares on the open market and shareholders will pay a pro rata share of any such commissions.

Tax Implications -- The automatic reinvestment of dividends and distributions will not relieve participants of any federal, state or local income tax that may be payable (or required to be withheld) on such dividends. Therefore, income and capital gains may still be realized even though shareholders do not receive cash. Participation in the Plan generally will not affect the tax-exempt status of exempt interest dividends paid by the Fund. If, when the Fund's shares are trading at a market premium, the Fund issues shares pursuant to the Plan that have a greater fair market value than the amount of cash reinvested, it is possible that all or a portion of the discount from the market value (which may not exceed 5% of the fair market value of the Fund's shares) could be viewed as a taxable distribution. If the discount is viewed as a taxable distribution, it is also possible that the taxable character of this discount would be allocable to all the shareholders, including shareholders who do not participate in the Plan. Thus, shareholders who do not participate in the Plan might be required to report as ordinary income a portion of their distributions equal to their allocable share of the discount.

Contact Information -- All correspondence concerning the Plan, including any questions about the Plan, should be directed to the Plan Agent at BNY Mellon Shareowner Services, P.O. Box 358035, Pittsburgh, PA 15252-8035, Telephone:
877-296-3711.

S&P 500(R) GEARED(SM) FUND INC. DECEMBER 31, 2007 19

Directors and Officers 

 Number of
 IQ Advisors-
 Affiliate
 Advised Funds Other Public
 Position(s) Length of and Portfolios Directorships
 Held with Time Overseen By Held by
Name Address & Age Fund Served** Principal Occupation(s) During Past 5 Years Director Director
====================================================================================================================================
Non-Interested Directors*
------------------------------------------------------------------------------------------------------------------------------------
Paul P.O. Box 9095 Director & 2004 to Professor, Columbia University Business School 11 None
Glasserman Princeton, NJ Chairman of present since 1991; Senior Vice Dean since July 2004.
 08543-9095 the Audit
 Age: 45 Committee
------------------------------------------------------------------------------------------------------------------------------------
Steven W. P.O. Box 9095 Director & 2005 to Retired since August 2002; Managing Director, 11 Ametek, Inc.
Kohlhagen Princeton, NJ Chairman of present Wachovia National Bank and its predecessors
 08543-9095 Nominating (1992 - 2002).
 Age: 60 & Corporate
 Governance
 Committee
------------------------------------------------------------------------------------------------------------------------------------
William J. P.O. Box 9095 Director & 2004 to Retired since November 2004; Chairman and 11 None
Rainer Princeton, NJ Chairman of present Chief Executive Officer, OneChicago, LLC, a
 08543-9095 the Board designated contract market (2001 - 2004);
 Age: 61 Chairman, U.S. Commodity Futures
 Trading Commission (1999 - 2001).
------------------------------------------------------------------------------------------------------------------------------------
Laura S. P.O. Box 9095 Director 2007 to Independent Consultant; Commissioner of the 11 CA, Inc.
Unger Princeton, NJ present Securities and Exchange Commission (1997 - (software) and
 08543-9095 2002), including Acting Chairperson of the SEC Ambac Financial
 Age: 46 from February to August 2001; Regulatory Expert Group, Inc.
 for CNBC (2002 - 2003).
 ------------------------------------------------------------------------------------------------------------------------
 * Each of the Non-Interested Directors is a member of the Audit Committee and the Nominating and Corporate
 Governance Committee.
 ** Each Director will serve for a term of one year and until his successor is elected and qualifies, or his earlier
 death, resignation or removal as provided in the Fund's Bylaws, charter or by statute.

20 S&P 500(R) GEARED(SM) FUND INC. DECEMBER 31, 2007

Directors and Officers (concluded) 

 Position(s) Length of
 Held with Time
Name Address & Age Fund Served Principal Occupation(s) During Past 5 Years
====================================================================================================================================
Fund Officers*
------------------------------------------------------------------------------------------------------------------------------------
Mitchell P.O. Box 9011 President 2004 to IQ Investment Advisors LLC, President since April 2004; MLPF&S, Managing
M. Cox Princeton, NJ present Director, Head of Global Investments & Insurance Solutions and Head of Global
 08543-9011 Alternative Investments since 2008; MLPF&S, Managing Director, Head of Financial
 Age: 42 Products Group since 2007; Head of Global Wealth Management Market Investments &
 Origination (2003 - 2007); MLPF&S, FAM Distributors ("FAMD"), Director since
 2006; IQ Financial Products LLC, Director since 2006.
------------------------------------------------------------------------------------------------------------------------------------
Justin C. P.O. Box 9011 Vice 2005 to IQ Investment Advisors LLC, Vice President since 2005; MLPF&S, Managing
Ferri Princeton, NJ President present Director, Structured and Alternative Solutions since 2008; MLPF&S, Director,
 08543-9011 Structured and Alternative Solutions in 2007; Director, Global Wealth Management
 Age: 32 Market Investments & Origination (2005 - 2007); MLPF&S, Vice President, Global
 Private Client Market Investments & Origination (2005); MLPF&S, Vice President,
 Head of Global Private Client Rampart Equity Derivatives (2004 - 2005); MLPF&S,
 Vice President, Co-Head Global Private Client Domestic Analytic Development
 (2002 - 2004); mPower Advisors LLC, Vice President, Quantitative Development
 (1999 - 2002).
------------------------------------------------------------------------------------------------------------------------------------
Donald C. P.O. Box 9011 Vice 2004 to IQ Investment Advisors LLC, Secretary and Treasurer (2004 - March 2007);
Burke Princeton, NJ President present BlackRock, Inc., Managing Director since 2006; Merrill Lynch Investment
 08543-9011 and Managers, L.P. ("MLIM") and Fund Asset Management ("FAM") Managing Director
 Age: 47 Secretary (2006); MLIM and FAM, First Vice President (1997 - 2005) and Treasurer (1999 -
 2006); Princeton Services, Inc., Senior Vice President and Treasurer (1999 -
 2006).
------------------------------------------------------------------------------------------------------------------------------------
James E. P.O. Box 9011 Vice 2007 to IQ Investment Advisors LLC, Treasurer since March 2007; MLPF&S, Director,
Hillman Princeton, NJ President present Structured and Alternative Solutions since 2007; Director, Global Wealth
 08543-9011 and Management Market Investments & Origination (September 2006 - 2007); Managed
 Age: 50 Treasurer Account Advisors LLC, Vice President and Treasurer since November 2006;
 Director, Citigroup Alternative Investments Tax Advantaged Short Term Fund in
 2006; Director, Korea Equity Inc. Fund in 2006; Independent Consultant, January
 to September 2006; Managing Director, The Bank of New York, Inc. (1999 - 2006).
------------------------------------------------------------------------------------------------------------------------------------
Catherine P.O. Box 9011 Chief 2007 to IQ Investment Advisors LLC, Chief Compliance Officer since April 2007; Merrill
A. Princeton, NJ Compliance present Lynch & Co., Inc., Director, Corporate Compliance since September 2007;
Johnston 08543-9011 Officer BlackRock, Inc., Director (2006 - 2007); MLIM, Director (2003 - 2006), Vice
 Age: 53 President (1998 - 2003).
------------------------------------------------------------------------------------------------------------------------------------
Martin G. P.O. Box 9011 Chief 2006 to IQ Investment Advisors LLC, Chief Legal Officer since June 2006; Merrill Lynch &
Byrne Princeton, NJ Legal present Co., Inc., Office of General Counsel, Managing Director since 2006, First Vice
 08543-9011 Officer President (2002 - 2006), Director (2000 - 2002); Managed Account Advisors LLC,
 Age: 45 Chief Legal Officer since November 2006; FAMD, Director since 2006.
------------------------------------------------------------------------------------------------------------------------------------
Jay M. P.O. Box 9011 Vice 2005 to IQ Investment Advisors LLC, Vice President (2005 - March 2007); BlackRock, Inc.,
Fife Princeton, NJ President present Managing Director since 2007; BlackRock, Inc., Director in 2006; MLIM, Director
 08543-9011 (2000 - 2006); MLPF&S, Director (2000) and Vice President (1997 - 2000).
 Age: 37
------------------------------------------------------------------------------------------------------------------------------------
Colleen R. P.O. Box 9011 Vice 2005 to IQ Investment Advisors LLC, Chief Administrative Officer and Secretary since
Rusch Princeton, NJ President present 2007, Vice President since 2005; MLPF&S, Director, Structured and Alternative
 08543-9011 and Solutions since 2007; MLPF&S, Director, Global Wealth Management Market
 Age: 40 Assistant Investments & Origination (2005 - 2007); MLIM, Director from January 2005 to
 Secretary July 2005; Vice President of MLIM (1998 - 2004).
 ------------------------------------------------------------------------------------------------------------------------
 * Officers of the Fund serve at the pleasure of the Board of Directors.
------------------------------------------------------------------------------------------------------------------------------------

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

NYSE Symbol

GRE

S&P 500(R) GEARED(SM) FUND INC. DECEMBER 31, 2007 21

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 (the "1940 Act"), as amended. 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 1940 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.)

Under the terms of the Offer for the most recent annual period, the Fund offered to purchase up to 196,741 shares from shareholders at an amount per share equal to the Fund's net asset value per share calculated as of the close of business of the New York Stock Exchange on November 5, 2007, ten business days after Monday, October 22, 2007, the Repurchase Request Deadline. As of November 5, 2007, 196,741 shares, or 5% of the Fund's outstanding shares, were repurchased by the Fund at $21.44 per share (subject to a repurchase fee of 0.71% of the net asset value per share), the Fund's net asset value per share was determined as of 4:00 p.m. EST, Friday, November 5, 2007.

22 S&P 500(R) GEARED(SM) FUND INC. DECEMBER 31, 2007

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(R) GEARED(SM) FUND INC. DECEMBER 31, 2007 23

[LOGO]
IQ
INVESTMENT
ADVISORS www.IQIAFunds.com

S&P 500(R) GEARED(SM) Fund Inc. seeks to provide total returns, exclusive of fees and expenses of the Fund, linked to the annual performance of the S&P
500(R) Composite Stock Price Index.

This report, including the financial information herein, is transmitted to shareholders of S&P 500(R) GEARED(SM) 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 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(R) GEARED(SM) Fund Inc.
P.O. Box 9011
Princeton, NJ 08543-9011

#IQGRE -- 12/07

Item 2 - Code of Ethics - The registrant (or the "Fund") has adopted a code
of ethics, as of the end of the period covered by this report, that applies to the registrant's principal executive officer, principal financial officer and principal accounting officer, or persons performing similar functions. During the period covered by this report, there have been no amendments to or waivers granted under the code of ethics. A copy of the code of ethics is available without charge upon request by calling toll-free 1-877-449-4742.

Item 3 - Audit Committee Financial Expert - The registrant's board of
directors has determined that (i) the registrant has the following audit committee financial experts serving on its audit committee and
(ii) each audit committee financial expert is independent: (1) Alan R. Batkin (resigned as of February 22, 2007) and (2) Steven W. Kohlhagen.

Under applicable securities laws, a person determined to be an audit committee financial expert will not be deemed an "expert" for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and board of directors in the absence of such designation or identification.

Item 4 - Principal Accountant Fees and Services 

----------------------------------------------------------------------------------------------------------------------------------
 (a) Audit Fees (b) Audit-Related Fees(1) (c) Tax Fees(2) (d) All Other Fees
----------------------------------------------------------------------------------------------------------------------------------
 Current Previous Current Previous Current Previous Current Previous
 Fiscal Year Fiscal Fiscal Year Fiscal Fiscal Year Fiscal Fiscal Year Fiscal
Registrant Name End Year End End Year End End Year End End Year End
----------------------------------------------------------------------------------------------------------------------------------
S&P 500(R)
GEARED(SM)
Fund Inc. $29,100 $29,100 $0 $0 $8,500 $7,500 $0 $0
----------------------------------------------------------------------------------------------------------------------------------

1 The nature of the services include assurance and related services reasonably related to the performance of the audit of financial statements not included in Audit Fees.
2 The nature of the services include tax compliance, tax advice and tax planning.

(e)(1) Audit Committee Pre-Approval Policies and Procedures:

The registrant's audit committee (the "Committee") has adopted policies and procedures with regard to the pre-approval of services. Audit, audit-related and tax compliance services provided to the registrant on an annual basis require specific pre-approval by the Committee. The Committee also must approve other non-audit services provided to the registrant and those non-audit services provided to the registrant's affiliated service providers that relate directly to the operations and the financial reporting of the registrant. Certain of these non-audit services that the Committee believes are
a) consistent with the SEC's auditor independence rules and b) routine and recurring services that will not impair the independence of the independent accountants may be approved by the Committee without consideration on a specific case-by-case basis ("general pre-approval"). However, such services will only be deemed pre-approved provided that any individual project does not exceed $5,000 attributable to the registrant or $50,000 for all of the registrants the Committee oversees. Any proposed services exceeding the pre-approved cost levels will require specific pre-approval by the Committee, as will any other services not subject to general pre-approval (e.g., unanticipated but permissible services). The Committee is informed of each service approved subject to general pre-approval at the next regularly scheduled in-person board meeting.

(e)(2) None of the services described in each of Items 4(b) through
(d) were approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) Not Applicable

(g) Affiliates' Aggregate Non-Audit Fees: 

--------------------------------------------------------------------
 Current Fiscal Previous Fiscal
 Registrant Name Year End Year End
--------------------------------------------------------------------
S&P 500(R) GEARED(SM) Fund Inc. $2,102,500 $1,968,500
--------------------------------------------------------------------

(h) The registrant's audit committee has considered and determined that the provision of non-audit services that were rendered to the registrant's investment adviser (not including any non-affiliated sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by the registrant's investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence.

Regulation S-X Rule 2-01(c)(7)(ii) - $0, 0%

Item 5 - Audit Committee of Listed Registrants - The following individuals
are members of the registrant's separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)):

Alan R. Batkin (resigned as of February 22, 2007) Steven W. Kohlhagen
Paul Glasserman
William J. Rainer
Laura S. Unger (effective September 12, 2007)

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 - The registrant has delegated the voting of proxies relating to its voting securities to its investment sub-adviser, BlackRock Advisors, LLC (the "Sub-adviser" or "BlackRock"). The Proxy Voting Policies and Procedures of the Sub-adviser (the "Proxy Voting Policies") are attached as an Exhibit hereto.

Item 8 - Portfolio Managers of Closed-End Management Investment Companies - as of December 31, 2007.

(a)(1) S&P 500(R) GEARED(SM) Fund Inc. is managed by Jonathan A. Clark, Managing Director at BlackRock and Debra L. Jelilian, Director at BlackRock. Each is a member of BlackRock's Quantitative Investments team. Mr. Clark and Ms. Jelilian are jointly responsible for the day-to-day management of the Fund's portfolio and the selection of its investments. Mr. Clark has been one of the Fund's portfolio managers since 2005 and Ms. Jelilian has been one of the Fund's portfolio managers since 2004.

Mr. Clark joined BlackRock in 2006. Mr. Clark was a Director at BlackRock from 2006 to 2007. Prior to joining BlackRock, he was a Director of Merrill Lynch Investment Managers, L.P. ("MLIM") from 1999 to 2006. At MLIM, he was a member of the Quantitative Investments team, responsible for managing arbitrage and derivative strategies for enhanced and structured portfolios. He also managed a commodities futures portfolio, and was a member of the Quantitative Investment Committee.

Ms. Jelilian joined BlackRock in 2006. Prior to joining BlackRock, she was a Director at MLIM from 1999 to 2006. At MLIM, she was a member of the Quantitative Investments team, responsible for the management of MLIM's equity index portfolios and leading MLIM's transition management efforts in the Americas. She was also a member of the Quantitative Investment Committee.

(a)(2) As of December 31, 2007: 

-----------------------------------------------------------------------------------------------------------------------
 (iii) Number of Other Accounts and
 (ii) Number of Other Accounts Managed Assets for Which Advisory Fee is
 and Assets by Account Type Performance-Based
-----------------------------------------------------------------------------------------------------------------------
 Other Other Other Other
 (i) Name of Registered Pooled Registered Pooled
 Portfolio Investment Investment Other Investment Investment Other
 Manager Companies Vehicles Accounts Companies Vehicles Accounts
-----------------------------------------------------------------------------------------------------------------------
Jonathan A. Clark 9 5 0 0 0 0
-----------------------------------------------------------------------------------------------------------------------
 $3,365,772,590 $1,243,653,307 $0 $0 $0 $0
-----------------------------------------------------------------------------------------------------------------------
Debra L. Jelilian 25 18 22 0 0 1
-----------------------------------------------------------------------------------------------------------------------
 $24,716,254,507 $10,597,337,547 $35,513,726,340 $0 $0 $3,563,742,267
-----------------------------------------------------------------------------------------------------------------------

(iv) Potential Material Conflicts of Interest

BlackRock has built a professional working environment, firm-wide compliance culture and compliance procedures and systems designed to protect against potential incentives that may favor one account over another. BlackRock has adopted policies and procedures that address the allocation of investment opportunities, execution of portfolio transactions, personal trading by employees and other potential conflicts of interest that are designed to ensure that all client accounts are treated equitably over time. Nevertheless, BlackRock furnishes investment management and advisory services to numerous clients in addition to the Fund, and BlackRock may, consistent with applicable law, make investment recommendations to other clients or accounts (including accounts which are hedge funds or have performance or higher fees paid to BlackRock, or in which portfolio managers have a personal interest in the receipt of such fees), which may be the same as or different from those made to the Fund. In addition, BlackRock, its affiliates and any officer, director, stockholder or employee may or may not have an interest in the securities whose purchase and sale BlackRock recommends to the Fund. BlackRock, or any of its affiliates, or any officer, director, stockholder, employee or any member of their families may take different actions than those recommended to the Fund by BlackRock with respect to the same securities. Moreover, BlackRock may refrain from rendering any advice or services concerning securities of companies of which any of BlackRock's (or its affiliates') officers,

directors or employees are directors or officers, or companies as to which BlackRock or any of its affiliates or the officers, directors and employees of any of them has any substantial economic interest or possesses material non-public information. Each portfolio manager also may manage accounts whose investment strategies may at times be opposed to the strategy utilized for the Fund. In this connection, it should be noted that Ms. Jelilian currently manages certain accounts that are subject to performance fees. In addition, certain portfolio managers may assist in managing certain hedge funds and may be entitled to receive a portion of any incentive fees earned on such funds and a portion of such incentive fees may be voluntarily or involuntarily deferred. Additional portfolio managers may in the future manage other such accounts or funds and may be entitled to receive incentive fees.

As a fiduciary, BlackRock owes a duty of loyalty to its clients and must treat each client fairly. When BlackRock purchases or sells securities for more than one account, the trades must be allocated in a manner consistent with its fiduciary duties. BlackRock attempts to allocate investments in a fair and equitable manner among client accounts, with no account receiving preferential treatment. To this end, BlackRock has adopted a policy that is intended to ensure that investment opportunities are allocated fairly and equitably among client accounts over time. This policy also seeks to achieve reasonable efficiency in client transactions and provide BlackRock with sufficient flexibility to allocate investments in a manner that is consistent with the particular investment discipline and client base.

(a)(3) As of December 31, 2007:

Portfolio Manager Compensation Overview

BlackRock's financial arrangements with its portfolio managers, its competitive compensation and its career path emphasis at all levels reflect the value senior management places on key resources. Compensation may include a variety of components and may vary from year to year based on a number of factors. The principal components of compensation include a base salary, a performance-based discretionary bonus, participation in various benefits programs and one or more of the incentive compensation programs established by BlackRock such as its Long-Term Retention and Incentive Plan.

Base compensation. Generally, portfolio managers receive base compensation based on their seniority and/or their position with the firm. Senior portfolio managers who perform additional management functions within the portfolio management group or within BlackRock may receive additional compensation for serving in these other capacities.

Discretionary Incentive Compensation

Discretionary incentive compensation is a function of several components: the performance of BlackRock, Inc., the performance of the portfolio manager's group within BlackRock, the investment performance, including risk-adjusted returns, of the firm's assets under management or supervision by that portfolio manager relative to predetermined benchmarks, and the individual's seniority, role within the portfolio management team, teamwork and contribution to the overall performance of these portfolios and BlackRock. In most cases, including for the portfolio managers of the Fund, these benchmarks are the same as the benchmark or benchmarks against which the performance of the Fund or other accounts managed by the portfolio managers are measured. BlackRock's Chief Investment Officers determine the benchmarks against which to compare the

performance of funds and other accounts managed by each portfolio manager and the period of time over which performance is evaluated. With respect to the portfolio managers, such benchmarks for the Fund include the following: 

--------------------------------------------------------------------
Portfolio Manager Benchmarks Applicable to Each Manager
--------------------------------------------------------------------
Jonathan A. Clark A combination of market-based indices (e.g.,
 The S&P 500(R) Index, MSCI World Index),
 certain customized indices and certain fund
 industry peer groups.
--------------------------------------------------------------------
Debra L. Jelilian A combination of market-based indices (e.g.,
 The S&P 500(R) Index), certain customized
 indices and certain fund industry peer
 groups.
--------------------------------------------------------------------

BlackRock's Chief Investment Officers make a subjective determination with respect to the portfolio manager's compensation based on the performance of the funds and other accounts managed by each portfolio manager relative to the various benchmarks noted above. Performance is measured on both a pre-tax basis over various time periods including 1, 3 and 5-year periods, as applicable.

Distribution of Discretionary Incentive Compensation

Discretionary incentive compensation is distributed to portfolio managers in a combination of cash and BlackRock, Inc. restricted stock units which vest ratably over a number of years. The BlackRock, Inc. restricted stock units, if properly vested, will be settled in BlackRock, Inc. common stock. Typically, the cash bonus, when combined with base salary, represents more than 60% of total compensation for the portfolio managers. Paying a portion of annual bonuses in stock puts compensation earned by a portfolio manager for a given year "at risk" based on the Company's ability to sustain and improve its performance over future periods.

Other compensation benefits. In addition to base compensation and discretionary incentive compensation, portfolio managers may be eligible to receive or participate in one or more of the following:

Long-Term Retention and Incentive Plan ("LTIP") --The LTIP is a long-term incentive plan that seeks to reward certain key employees. Beginning in 2006, awards are granted under the LTIP in the form of BlackRock, Inc. restricted stock units that, if properly vested and subject to the attainment of certain performance goals, will be settled in BlackRock, Inc. common stock. Mr. Clark and Ms. Jelilian have each received awards under the LTIP.

Deferred Compensation Program --A portion of the compensation paid to each portfolio manager may be voluntarily deferred by the portfolio manager into an account that tracks the performance of certain of the firm's investment products. Each portfolio manager is permitted to allocate his deferred amounts among various options, including to certain of the firm's hedge funds and other unregistered products. Every portfolio manager is eligible to participate in the deferred compensation program.

Incentive Savings Plans -- BlackRock, Inc. has created a variety of incentive savings plans in which BlackRock employees are eligible to participate, including a 401(k) plan, the BlackRock Retirement Savings Plan (RSP) and the BlackRock Employee Stock Purchase Plan (ESPP). The employer contribution components of the RSP include a company match equal to 50% of the first 6% of eligible pay contributed to the plan capped at $4,000 per year, and a company retirement contribution equal to 3% of eligible compensation, plus an additional contribution of 2% for any year in which BlackRock has positive net operating income. The RSP offers a range of investment options, including registered investment companies managed by the firm. Company contributions follow the investment direction set by participants for their own contributions or absent, employee investment direction, are invested into a balanced portfolio. The ESPP allows for investment in BlackRock common stock at a 5% discount on the fair market value of the stock on the purchase date. Annual participation in the ESPP is limited to the purchase of 1,000 shares or a dollar value of $25,000. Each portfolio manager is eligible to participate in these plans.

(a)(4) Beneficial Ownership of Securities. As of December 31, 2007, neither Mr. Clark nor Ms. Jelilian beneficially owned any stock issued by the Fund.

Item 9 - Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers - 

------------------------------------------------------------------------------------------------------------------------
Period (a) Total (b) Average (c) Total Number of (d) Maximum Number (or
 Number of Price Paid per Shares Purchased as Part Approx. Dollar Value) of
 Shares Share of Publicly Announced Shares that May Yet Be
 Purchased Plans or Programs Purchased Under the Plans
 or Programs
------------------------------------------------------------------------------------------------------------------------
July 1-31, 2007
------------------------------------------------------------------------------------------------------------------------
August 1-31, 2007
------------------------------------------------------------------------------------------------------------------------
September 1-30, 2007
------------------------------------------------------------------------------------------------------------------------
October 1-31, 2007
------------------------------------------------------------------------------------------------------------------------
November 1-30, 2007 196,741 $21.44 (1) 196,741(2) 0
------------------------------------------------------------------------------------------------------------------------
December 1-31, 2007
------------------------------------------------------------------------------------------------------------------------
Total: 196,741 $21.44 (1) 196,741(2) 0
------------------------------------------------------------------------------------------------------------------------

(1) Subject to a repurchase fee of up to 0.71% of the net asset value per share.
(2) On September 12, 2007, the repurchase offer was announced to repurchase up to 5% of outstanding shares. The expiration date of the offer was October 22, 2007. The registrant may conduct annual repurchases for between 5% and 25% of its outstanding shares pursuant to Rule 23c-3 under the Investment Company Act of 1940, as amended.

Item 10 - Submission of Matters to a Vote of Security Holders - The
registrant's Nominating and Corporate Governance 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)
 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 - See Item 2

12(a)(2) - Certifications - Attached hereto

12(a)(3) - Not Applicable

12(b) - Certifications - Attached hereto

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

S&P 500(R) GEARED(SM) Fund Inc. 

By: /s/ Mitchell M. Cox
 ---------------------------------
 Mitchell M. Cox
 Chief Executive Officer (principal executive officer) of
 S&P 500(R) GEARED(SM) Fund Inc.

Date: February 20, 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(R) GEARED(SM) Fund Inc.

Date: February 20, 2008


By: /s/ James E. Hillman
 ---------------------------------
 James E. Hillman
 Chief Financial Officer (principal financial officer) of
 S&P 500(R) GEARED(SM) Fund Inc.

Date: February 20, 2008

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