Closed-End Fund Weekly Update April 23, 2010

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1 Closed-End Fund Weekly Update April 23, 2010 U.S. Equity Funds With the broad U.S. stock market nearly flat for the five days ended at Thursday's close, it is not surprising that the one-week net asset value returns for U.S. equity funds are clustered around 0%. Of the 104 funds within the U.S. equity group, Kayne Anderson Energy KYE posted the highest NAV increase (2.8%), as energy prices crept higher over the course of the week. First Trust Specialty Finance FGB $ % -0.4% $ Tortoise Energy Capital TYY $ % 1.1% $ Kayne Anderson Energy TR KYE $ % 2.8% $ SunAmerica Foc Alpha LargeCap FGI $ % -0.6% $ Gabelli Utility Trust GUT $ % 0.4% $ Cornerstone Strategic Value CLM $ % -0.9% $ Gabelli Glb Gold Natural Res GGN $ % -1.5% $ ING Risk Mgt Natural Resources IRR $ % 0.1% $ Engex EGX $ % -0.3% $7.1 2 Nuveen Equity Prem Advantage JLA $ % 0.3% $ Tortoise Energy Capital TYY and SunAmerica Focused Alpha Large Cap FGI both had one-week price returns that outpaced their one-week NAV returns enough to land them among the funds, listed below. Engex, which invests primarily in the health and biotechnology sectors, saw its shares continue to decline on heavier-than-normal volume (though still anemic), after falling nearly 41% last week. The shares had risen strongly in March. Cohen & Steers Closed-End Opp FOF -8.6% -8.0% -4.8% 7.2% Tri-Continental Corporation TY -16.1% -16.2% -11.1% 1.4% Gabelli Equity Trust GAB -5.7% -1.2% 1.4% 8.3% Evergreen Utilities & High Inc ERH 1.7% 17.9% 14.3% 7.6% Royce Focus Trust FUND -9.3% -11.8% -3.0% 0.0% BlackRock Real Asset Equity BCF 0.6% -2.5% -11.5% 8.1% DWS Enhanced Commodity Strtgy GCS -3.7% -7.2% -11.7% 1.6% Tortoise Energy Capital TYY 19.6% 9.4% 1.1% 5.9% Tortoise North American Energy TYN 8.9% 2.7% -7.6% 6.0% SunAmerica Foc Alpha LargeCap FGI -6.2% -9.1% -13.1% 1.4% Exceptional discounts are virtually nonexistent these days, not just within U.S. equity funds but throughout the entire CEF universe. None of the funds here--or elsewhere in this update--are statistically undervalued enough to provide a suitable margin of safety, in our opinion. Four of the five funds listed as are either commodity- or energy-related funds. All four are more than two standard deviations above their three-year average discount, suggesting that investors are, at least for now, overanticipating increases in commodity and energy prices.

2 Morningstar Closed-End Fund Research 2 Global & International Equity Funds Global and international equity funds had a rough week, with nearly the entire group posting declining NAV returns. The Greek debt crisis worsened, and the U.S. dollar strengthened as forex traders sought shelter. ING Clarion Global Real Estate IGR $ % -0.7% $ Herzfeld Caribbean Basin CUBA $ % -1.0% $ Thai Capital Fund Inc TF $ % 0.9% $ Alpine Total Dynamic Dividend AOD $ % -2.6% $2, Korea Equity Fund KEF $ % 0.9% $ Ibero-America Fund SNF $ % -4.4% $ Templeton Russia & East Europe TRF $ % -3.1% $ MS China A Share CAF $ % -3.4% $ JF China Region JFC $ % -2.4% $ Central Europe and Russia Fund CEE $ % -3.5% $ Thai Capital TF remained relatively flat on both a price and NAV basis, after being last week's largest decliner. Political unrest in Thailand continues. Three of this week's largest decliners were included among last week's largest gainers, highlighting the volatility of the group. The Ibero-America Fund SNF, which invests in Spanish equities, Templeton Russia and East European TRF, and Central Europe and Russia Fund CEE were hampered by events related to the Greek debt crisis. Taiwan Fund TWN -13.5% -11.8% -9.0% 0.5% Korea Fund KF -11.0% -10.1% -7.8% 4.5% Greater China Fund GCH -15.9% -8.7% -8.9% 0.7% Thai Capital Fund Inc TF -15.7% -15.8% -7.8% 1.7% Herzfeld Caribbean Basin CUBA -4.9% -2.1% 9.9% 3.1% Alpine Global Dynamic Dividend AGD 56.3% 37.8% 14.6% 11.6% Japan Smaller Capitalization JOF 6.3% -7.9% -5.1% 0.6% Alpine Total Dynamic Dividend AOD 35.3% 29.1% 9.3% 15.7% EV Tax Adv Global Dividend Inc ETG -3.5% -6.6% -11.8% 8.4% EV Tax Advantage Dividend Inc EVT -5.1% -7.8% -12.3% 7.8% Lazard Asset Management announced that it owns 20% of Taiwan Fund's TWN shares. Apparently we are not the only ones who believe the fund is undervalued. Greater China Fund GCH completed a rights offering this week. Although the fund is not statistically cheap enough to warrant an investment, in our opinion, the oversubscribed rights offering gave existing fundholders the right to purchase shares at $ The fund's share price closed Thursday at $ Despite being relatively overvalued on a three-year basis, the source of Alpine Global Dynamic Dividend's AGD distribution is income, not return of capital. The fund could have more room to run. The 0.4% price increase relative to a 2.6% decline in NAV for Alpine Total Dynamic Dividend AOD was enough to land it among the funds.

3 Morningstar Closed-End Fund Research 3 Hybrid Funds The hybrid funds group was, as it should be, a middle-of-the-road performer. This group, consisting of growth-and-income funds, convertible-bond funds, and preferred-share funds, should--by definition--be the steadiest overall group over time. Gabelli Convertible & Income GCV $ % -0.3% $ Chartwell Dividend & Income CWF $ % -0.1% $ MFS Special Value Trust MFV $ % 1.0% $ Advent Claymore Conv & Income AVK $ % 0.0% $ Advent Claymore Enh Grth & Inc LCM $ % -0.2% $ Clough Global Allocation GLV $ % -0.9% $ Flah&Crum Preferred Income PFD $ % 1.7% $ DNP Select Income DNP $ % 0.6% $2, Nuveen Tax-Adv Floating Rate JFP $ % -0.4% $ Evergreen Intl Balanced Income EBI $ % -1.4% $ NAV one-week performance for the group was in a narrow range from F&C-Claymore Preferred Securities' FFC 2.2% gain to the 1.8% decline posted by Lazard World Dividend & Income LOR. Flaherty & Crumrine Preferred Income PFD announced a 14.6% increase in its monthly distribution, but shares declined on the week. Management attributed the boost to increased leverage, which remains extremely cheap and is allowing the fund to take advantage of continuing investment opportunities among preferred shares. Nuveen Tax-Advantaged Floating Rate JFP gave back 1.9% this week, after being last week's largest gainer with a 12.8% advance. Despite its decline, the fund remains the most overvalued in the group on a three-year view. JH Preferred Income II HPF -6.9% -6.4% -2.6% 8.3% JH Preferred Income HPI -7.2% -6.2% -1.9% 8.3% Evergreen Intl Balanced Income EBI -13.6% -14.3% -10.4% 5.5% Bancroft Fund BCV -13.3% -13.8% -12.3% 3.7% Nuveen Quality Preferred Inc 2 JPS -5.9% -5.7% -4.1% 8.3% Nuveen Tax-Adv Floating Rate JFP 13.3% -3.1% -6.6% 7.0% JH Patriot Premium Dividend II PDT -6.9% -7.2% -13.2% 7.8% First Trust/Aberdeen Emerging FEO -8.9% -9.3% -14.1% 7.2% Delaware Inv Div & Inc DDF -0.9% -1.8% -7.7% 9.0% MFS Special Value Trust MFV 3.3% -2.9% -7.4% 9.3%

4 Morningstar Closed-End Fund Research 4 Taxable Fixed-Income Funds 10-year Treasury yields were flat on the week, while the two-year yield increased slightly to 1.02% from 0.95%. Early in the week, investors expressed risk aversion to Goldman Sachs fraud allegations and to the Greek debt crisis. By Thursday, investors were turning their attention to next week's U.S. Treasury auction sales. Russia sold $5.5 billion of bonds on Thursday, its first international issuance since the country's 1998 default. Despite concerns about Greece and upcoming U.S. financial reforms, investors are becoming more interested in corporate bonds due to strong corporate earnings. Corporate-bond spreads have narrowed to levels last seen prior to the credit crisis, in the summer of TCW Strategic Income TSI $ % -1.2% $ Putnam High Income Securities PCF $ % 0.1% $ American Income Fund MRF $ % 0.6% $ Franklin Limited Duration Inc FTF $ % 0.4% $ MassMutual Corporate Investors MCI $ % 0.0% $ Pioneer High Income Trust PHT $ % 0.9% $ PIMCO Income Strategy Fund PFL $ % 0.8% $ VK Senior Income Trust VVR $ % 0.6% $ BlackRock Debt Strategies Fund DSU $ % 0.7% $ PCM Fund PCM $ % 1.3% $ TCW Strategic Income TSI gained 3% on the week, even as its NAV declined 1.2%. Investors may be betting that the week's positive existing home sales figure bodes well for the fund's heavy exposure to collateralized mortgage obligations. Shares of Van Kampen Senior Income Trust VVR lost 5.5% on the week, adding to last week's 2.8% decline. The NAV remained relatively flat. BlackRock Credit AllocationIII BPP -10.9% -8.4% -4.4% 8.2% Hartford Income Shares Fund HSF -9.8% -7.8% -6.0% 6.4% PIMCO Strategic Global Govt RCS 5.7% 15.3% 12.0% 7.8% First Trust Strategic HighInc3 FHO -10.5% -6.4% -0.2% 8.6% AllianceBernstein Income Fund ACG -6.1% -4.2% -4.1% 6.4% VK High Income II VLT 8.3% -3.1% -10.1% 10.3% BlackRock Float Rate Strat FRA 11.4% 4.3% -5.2% 5.9% Dreyfus High Yield Strategies DHF 3.4% -3.9% -12.1% 11.9% MS High Yield MSY -1.0% -4.7% -11.9% 9.2% BlackRock Float Rate Strat II FRB 9.4% 5.8% -5.5% 6.1% The funds are all trading above levels that make them, we believe, statistically overvalued. In their search for yield, investors are betting that the discounts and premiums won't revert to their three-year averages. While the interest-rate and macro-economic environments have certainly changed significantly over the past three years, we would not dismiss the pull that average discounts and premiums possess.

5 Morningstar Closed-End Fund Research 5 Municipal Funds This week's Performance Standouts table, below, serves to highlight the effect that illiquidity can have on weekly price returns. Of the 10 funds listed, only one has a three-month average daily trading volume above 7,000 shares. None of the funds' NAVs registered more than a 1.0% total return for the week, yet the oneweek total price return ranged from 4.1% to negative 6.7%. While the issue of illiquidity dogs many closedend funds, it most often appears among municipal funds. BlackRock VA Municipal Bond BHV $ % 0.3% $ MA Health & Education MHE $ % 0.7% $ Nuveen GA Div Adv Muni Fund 2 NKG $ % 0.4% $ EV NJ Municipal Bond EMJ $ % 0.8% $ BlackRock PA Strategic Muni BPS $ % 0.7% $ Nuveen OH Div Adv Muni 3 NVJ $ % 0.7% $ VK MA Value Municipal Income VMV $ % 0.8% $ Nuveen VA Div Adv Muni Fund NGB $ % 0.5% $ Nuveen MA Div Adv Muni Fund NMB $ % -0.4% $ VK Municipal Trust VKQ $ % 0.9% $ As usual, it is important to bear in mind that the trading volume of this week's performance standouts is anemic. One sizable buyer or seller can affect the price significantly. BlackRock MD Muni Bond BZM 4.0% 2.9% 8.5% 5.5% PIMCO CA Municipal Income PCQ 2.8% 3.4% 8.3% 7.1% MS Insured CA Muni Securities ICS -9.8% -9.9% -7.5% 4.4% Nuveen CA Select Tax-Free NXC -6.2% -6.4% -4.0% 5.1% MS Municipal Income Opps OIA -3.9% -5.0% 0.5% 6.4% Nuveen NC Div Adv Muni Fund 2 NNO 12.4% 3.4% -3.6% 4.9% Putnam Managed Muni Income PMM 0.1% -5.3% -7.3% 7.2% Nuveen NC Premium Income Muni NNC 8.3% 2.6% -4.5% 4.7% Nuveen NC Div Adv Muni Fund 3 NII 9.4% 3.5% -1.6% 5.0% Neuberger Berman NY Inter Muni NBO 1.9% -5.4% -9.4% 5.3% Three California municipal-bond funds remain on the list, as investors continue to heavily discount the state's precarious financial condition. However, we do not believe any of the funds provide enough margin of safety to warrant investment currently. As a group, the funds are significantly overvalued, statistically speaking. In fact, the three most expensive municipal funds are also the most expensive funds within the entire CEF universe. It is interesting to note that three of the most overvalued funds are both managed by Nuveen and invested in bonds issued by North Carolina entities.

6 Morningstar Closed-End Fund Research 6 * All data in the accompanying tables is as of the market close on Thursday, April 22, One-week total return percentages are calculated from the prior Thursday's market close. ** The funds listed in the tables are ranked according to their one-week price total return. *** The funds listed in the tables are ranked using three-year z-scores that are not shown. This statistic measures how many standard deviations a fund's discount/premium is from its three-year average discount/premium. For instance, in these tables, a fund with a z-score of -2 would be two standard deviations below its three-year average discount/premium. Over a long period of time, a fund would be expected, statistically speaking, to have a z-score of -2 or lower only 2.14% of the time. Funds with the lowest z-scores are considered to be relatively cheap, while those with the highest z- scores are considered to be relatively expensive.