Closed-End Fund AdvisorsDiversification, Income, & Tactical Management

“Why Hire CEFA as Your Portfolio Manager?”/

Last Updated: September 2, 2010

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Disclaimer

Important: The information in this presentation is not for general circulation and should not be considered an offer, or solicitation, to deal in any of the mentioned funds. The information is provided on a general basis for information purposes only, and is not to be relied on as advice, as it does not take into account the investment objectives, financial situation or particular needs of any specific investor.

Any research or analysis used to derive, or in relation to, the information herein has been procured by Closed-End Fund Advisors (“CEFA”) for its own use, and may have been acted on for its own purpose. The information herein, including any opinions or forecasts have been obtained from or is based on sources believed by CEFA to be reliable, but CEFA does not warrant the accuracy, adequacy or completeness of the same, and expressly disclaims liability for any errors or omissions. As such, any person acting upon or in reliance of these materials does so entirely at his or her own risk. Any projections or other forward-looking statements regarding future events or performance of countries, markets or companies are not necessarily indicative of, and may differ from, actual events or results. No warranty whatsoever is given and no liability whatsoever is accepted by CEFA or its affiliates, for any loss, arising directly or indirectly, as a result of any action or omission made in reliance of any information, opinion or projection made in this presentation.

The information herein shall not be disclosed, used or disseminated, in whole or part, and shall not be reproduced, copied or made available to others without CEFA expressed written permission. CEFA reserves the right to make changes and corrections to the information, including any opinions or forecasts expressed herein at any time, without notice.

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Today’s Goal

What is the value, or benefit from having our firm, Closed-End Fund Advisors, manage an income oriented account on your behalf?

What Are We Going to Cover?

Introduce

• Overview on CEFA • Crash Course in Closed-End Funds• Overview on Mutual Funds, ETFs & CEFs for Income

Educate

• Why CEFs for an Income or Total Return Investing?• Leverage Benefits w/ CEFs, CEF Evaluation & Process• Why Buy, When to Sell & CEF Risks

Execute & Evaluate

• Summary, CEFA Clients & Portfolio Models • CEFA Performance & Next Steps• Free CEF Web Resources & Manager Biographies

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What is CEFA?

• Investment Management Firm • 50 years Combined Manager Experience • Independent, Fee Only & Family Owned • Published only Hardback CEF Book, in 1991• 27 Years on a CEF Board of Directors (1976-2003)• Scott Letter: 18 years & CEF Universe: 2 ½ Years• $65 Million in Assets Under Management• Clients in 17 states with Average Assets of $500K.• Publically Publish Performance to 2000+ Subscribers

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SEC Registered Investment Advisory Firm

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Closed-End Funds: Overview

• Ability to Use Three Types of Leverage• Fixed Capitalization (no redemption pressure)• Intraday Trading (Control in Price Execution)

• Stop Loss, Limit & Good Till Cancelled Orders• Most CEFs Listed on The New York Stock Exchange• Best Way to Capture Market Inefficiency's: Fear & Greed• A Diversified & Professionally Managed Pool of Assets

More info: http://www.cefadvisors.com/closed_end_funds.html

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• Oldest US Fund Structure – 1893• Best Known for Income, International

& Municipal Bonds • Discounts & Premiums to Net Asset Value

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Closed-End Fund Assets

Source: Investment Company Institute7

Domes

tic E

quity

Intern

ation

al Equ

ity

Domes

tic Tax

able

Bonds

Munici

pal B

onds

Global

Bonds

$0

$20,000

$40,000

$60,000

$80,000

$100,000

200720084Q 20091Q 2010

Assets of Closed-End Funds by type, end of periodMillions of dollars (US)

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Closed-End Funds vs. Open-End Mutual Funds & Exchange Traded Funds

Discount? Trading Capitalization Redemption Pressure Leverage Expense

Ratios

Closed-End Fund Yes! Intraday

Fixed at IPO*(except DRIPs,

Warrants, share buy

back, tender, etc.)

None, manager can make pure

investment decisions

Yes, if the fund wishes

Tends to be lower than

comparable MF peers

Exchange Traded Fund

No* Intraday Creation Unit Redemption

Not really as non

“management”No* Tends to be

lowest

Open-End

Mutual Fund

No

After 4pm post

trading

Constant in and out flow

Yes, can force manager to

make buy/sell decisions

No*

Tends to be higher, many have upfront,

backend, short-term or trading loads

and 12b1 fees.

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Fear and Greed with Closed-End Funds

Individual investors (85% of CEF holders) trade for various reasons, many of which are based on fear or greed. This creates opportunities for a diligent and patient (professional) investors.

There is no better investment structure to take advantage of fear and greed opportunities than with CEFs. They are the only investment vehicles where it is possible to know what it’s worth (NAV) versus the current market price or ‘perceived value’.

Discounts are a very measurable and ongoing way to see what investors are thinking about a fund’s popularity.

** If we like the discount AND we like the asset class or fund, there’s clear upside when the fund’s discount reverts back to a normal levels.

Mutual Funds: By Yield

95.6%

2.1% 2.0% 0.3%

Yield Under 5%

Yield 5%-6.5%

Yield 6.5% -10%

Yield Over 10%

Note: 3968 mutual funds; data as of 7/1/10. We filtered for funds that were; no-load, open, minimum under $25K , expense ratio under 2.5% and a maximum 12b1 fee of 0.25%. There are 22,703 open-end tickers.

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Exchange Traded Funds: By Yield

93.4%

2.4% 2.7% 1.4%

Yield Under 5%

Yield 5%-6.5%

Yield 6.5% -10%

Yield Over 10%

Note: 988 exchange traded funds; Thomson Reuters data as of 7/1/10

Core Income

Universe

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Closed-End Funds: By Yield

19.5%

33.3%

38.3%

8.9%

Yield Under 5%

Yield 5%-6.5%

Yield 6.5% -10%

Yield Over 10%

Note: 627 closed-end funds; data as of 8/4/10 – CEF Connect.com

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CEFs For Income or Total Return?

• Roughly 2/3 of CEFs are bond funds• 155 Equity funds (74%) have a yield over 5%.• Most bond funds pay monthly and most equity

income funds pay quarterly.• Why? 1. Leverage, 2. Discounts, 3. Unique

Sector Exposure.

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• There are 627 CEFs: 505 (81%) have a 5%+ dist yield and 296

(47%) have a 6.5% dist. yield.

Source: CEFconnect.com

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Impact of Leverage

Credit Quality ranges from AA- to AA+.

5.37%5.71%

5.43%

6.33%

4.50% 4.72% 4.86% 4.97%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

NAV Yield

NEA NIO NPX NPT NXR NUV NXQ NXP

Leveraged Unleveraged

Source: CEF Connect: August 30, 2010

Past performance is not indicative of future results. This presentation is not intended as an offer to sell any of the funds shown. Rather, funds shown are for illustrative purposes only.

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Discount Yield Benefit

Advantage of Paying “90 cents for $1.00 of Assets”Example: Alpine Global Premier Property (NYSE: AWP)

Market Price: $5.99NAV: $7.30Discount: -17.95%

As of August 30, 2010

5.44%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

NAV and Market Price Yield for AWP

Yield on NAV Yield on Market Price

6.61%Discount Yield Benefit = 1.17%

Source: CEF Connect

Past performance is not indicative of future results. This presentation is not intended as an offer to sell any of the funds shown. Rather, funds shown are for illustrative purposes only.

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• CEFs are known for their ‘infamous’ discounts. The discount is the feature built into CEFs that make them unique & potentially quite lucrative.

• We believe that CEFs historically trade at discounts because they can, and you have to price this into the value of the fund.

Closed-End Fund Discounts

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Relative Discount

Relative Discount: The current discount/premium of a closed-end fund vs. the fund’s historical discount/premium. This data point is intended to help identify relative value for the fund vs. the absolute value of the current discount/premium.

Example: MHI 52 Week Premium/Discount Chart08/03/10

Templeton Emerging Markets Income Fund: NYSE: TEI

Chart Source: CEFconnect.com

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Average Distribution Yield for CEFs

as of July 30, 2010

Source: CEFA’s Closed-End Fund Universe, July 30, 2010

US Equ

ity F

unds

Non U

S Equ

ity F

unds

Covere

d Call

Fun

ds

REIT F

unds

Conve

rtible

Bond F

unds

Inves

tmen

t Grad

e Bon

d

Global

Bond F

unds

High Y

ield B

ond F

unds

Senior

Loan

Fun

ds

Nation

al Mun

icipa

l

High Y

ield M

unici

pal

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

6.10%4.70%

10.50%

5.95%6.60% 6.80%

7.65%

9.10%

6.50% 6.10%6.75%

191919

Closed-End Fund Evaluation Factors

Yield• Dividend Policy• Income Yield vs.

Indicated Yield• Undistributed Net

Investment Income• Dividend Changes• Return of Capital• Short-Term and

Long-Term Gains

Fundamental• Manager

Reputation• Portfolio

Characteristics• Who Owns Fund?• Corporate

Governance• Expense Ratio• Regulatory / Tax

Changes

Value

• Historical Discount/Premium

• Liquidity & Volatility

• Correlation Analysis

• 52 Wk Relative Price

• Upcoming CEF IPO’s

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CEFA’s Investment Process

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Buy at a Discount

Actively Monitor Account

Track Relative Value

Anticipate Dividend Changes

When to Raise Cash?

Sell at Premium or Swap Funds

CEF Manager Analysis

Adjust Portfolio

Allocations

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Why, When & How We Buy A CEF?

• We Using Live Trade Data• Relative Value to Peers• Relative Value to Itself• Good News, Yet Unnoticed• Dividend Increase or Good Dividend

Coverage• Sector Optimism• Using Limit Orders & Block Trading Account

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Closed-End Fund Risk Factors

• Discounts can widen further• Liquidity risk: wide bid/ask spread & low trading

volume for some funds• Dividend Cuts• Volatility & Intraday Trading• Return of Capital / Principal

– Can stem from managed or level distribution policy and lead to NAV erosion

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• Most investors would argue that CEFs ….are not a long-term buy & hold vehicle.

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Why Do We Sell?

• If a fund is trading at high premium or relative premium we can sell/swap funds.

• When we enter a set or trailing stop.• Negative news or change in divided policy.• Because another fund is performing better.• Recognize a gain or in order to pause and wait.• If client has predetermined selling point for

some/all the portfolio. – Account drops more than x% in a week, month, quarter. – These can be set manually or automatically. There are

specific risk factors to each approach.

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Dividend Cut 11/14 by CRF

Source: Yahoo Finance, CEF Connect

Hypothetical Portfolio of CEFs

Note: Used category average distribution yield as of July 30 th, 2010. Distribution yield does not take into effect changes in principal or market price values or fluctuations. dividends are not guaranteed and the past cannot be used to predict the future.

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• US Gr. & Inc Funds• Global Dividend Funds• Preferred Equity Funds• Covered Call Funds• MLP Funds• US REIT Funds• International REIT Funds

60% Equity Funds

• Municipal Bond Funds• Convertible Bond Funds• Emerging Markets Income • High Yield Bond Funds• Investment Grade Bonds• Limited Duration Bonds• Mortgage Bond Funds

40% Bond Funds

Average Blended Portfolio Yield

7.85%

In Summary: Why We Like Closed-End Funds

• Diversification• Professional Management• Leverage Used by Fund• Leverage of Discount• Control: Limit & Stop Orders• Fixed Capitalization: No Redemption

Pressures• Capitalize on Market Inefficiencies

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Typical CEFA Client Situation

• Needs to produce above average income while maintaining some growth or inflation protection(5% - 8.5% dist. yield).

• Made some good decisions and some bad decisions. Now needs professional help.

• Doesn’t know when to sell.• Likes a hands-on tactical investment manager

able to give personal specialized service.• Wants to be part of a program that buys assets

below par.• Desires Tax Sensitive Income• Wants a Specialists.

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Current CEFA Portfolio Models

• International Equity (2002)– Equity oriented funds w/ little US equity exposure 2%-3% yield

• Hybrid Income (2006)– 50/50 balance between bond & equity income funds w/ 7%-10% yield

• Balanced/Foundation (2009)– 60/40 balance between bond and equity funds w/ a 5%-7% yield

• Conservative Diversified (2009)– Primarily CEFs, w/ significant exposure to ETFs and mutual funds.

Low correlation asset classes for low volatility.

• CEFA Diversified Growth (1999)- 90% equity, 10% bond: tactical and wide mandate w/ 3%-4% yield

• CEFA Growth & Income (1999)- 80% equity, 20% bond: tactical and wide mandate w/ 4%-5% yield

CEFA Client Examples

• Client #1 - Has $500K IRA and wants $3K a month in income or (7.2%) annualized account distribution. He expects dividends to cover monthly draft.

• CEFA Portfolio: Hybrid Income

• Client #2 – Couple has $600K Trust Account and wants $2K a month in income (4%), but wants 20%-30% in tax-free bond funds and needs significant protection of principal.

• CEFA Portfolio: Balanced/Foundation29

More CEFA Client Examples

• Client #3 - Has $1.2M Trust Account; takes $10K a month (10%). Expects it to come from growth and income. Doesn’t want to worry about markets so has 10% stop points in place for all listed funds.

• CEFA Portfolio: Growth & Income

• Client #4 – Couple has $800K IRA doesn’t need income. Wants it to grow as much as possible, likes exposure to global stocks

• CEFA Portfolio: International Equity

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CEFA Model Performance

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Interna-tional Equity

Diversified Growth

Growth & Income

Hybrid Income

S&P 500

-15

-10

-5

0

5

10

15

20

25

30

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1-Year3-YearInception*

*Diversified Growth & Growth & Income inception is January 31, 1999, International Equity inception is October, 31 2002 and Hybrid Income inception is November 2006. Performance is net of fees & commissions and includes all account s in each composite. Past performance cannot predict future results and investments with CEFA may lose value and are not guaranteed. Data as of 7/31/10

2010 YTD Portfolio Performance (NET)

Intl Equity

Diversified Growth

Growth & Income

Hybrid Income

Balanced / Foundation

Conservative Diversified

First Quarter

+3.71% +3.60% +4.88% +5.56% +6.00% +2.81%

April +1.27% +2.76% +2.16% +1.20% +2.28% +0.84%

May -8.97% -9.15% -7.93% -3.96% -5.51% -3.59

June -0.55% -1.93% -0.67% +1.46% +0.46% -0.24%

July +7.44% +6.72% +5.96% +5.08% +3.66% +2.05%

August -1.12% -1.78% -1.01% +0.12% +0.30% -0.03%

YTD +1.01% -0.57% +2.78% +9.51% +7.00% +1.73%

32Performance is net of fees & commissions and includes all account s in each composite. Past performance cannot predict future results and investments with CEFA may lose value and are not guaranteed. Data as of 8/31/10.

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New Client Experience

• Stay in Tough Regularly for first 3 to 4 months.• Personal Needs Addressed for Each Account.• No “Lock up” Period or Redemption Charges. • Client Letter, Scott Letter Interviews & Updates

via Email on the Markets or firm.• Call Your Portfolio Manager with Questions.

• Thorough Qualification and Interview Process to Determine Model.

• New Assets or Accounts: 60 to 120 Days To Fully Invest.

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Next Steps

Ask Questions

?

Sign up for Scott Letter & Updates @

ScottLetter.com

Try Our Weekly Data Service

CEFuniverse.com

Schedule a Follow-Up Meeting @

Management

I Need Help!

Learn More / Stay in Touch Use CEFs on

Your Own

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For Your InformationFree CEF Resources

Investment Company Institute – www.ici.orgCEF Association – www.cefa.comNuveen’s CEF Website – www.cefconnect.comThe Scott Letter: Closed-End Fund Report – www.scottletter.comCEF Quarterly Commentary: Jeff Margolin First Trust:

http://www.ftportfolios.com/Retail/Commentary/CEFCommentaryMain.aspxCEF Quarterly Commentary & Research – Nuveenhttp://www.nuveen.com/CEF/Info/CommentaryResearch.aspxLinkedIn CEF Network:

http://www.linkedin.com/groups?about=&gid=1172377&trk=anet_ug_grpproMorningstar CEF Discussion Group

http://socialize.morningstar.com/NewSocialize/forums/100000006.aspxSeeking Alpha – key word “closed-end fund” - www.seekingalpha.comYahoo Discussion Group: Closed-End Funds 2:

http://finance.groups.yahoo.com/group/closedendfunds2/

More Useful Links at: www.cefadvisors.com/investRes.html

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John Cole Scott, CFSPortfolio Manager, Executive VP of Closed-End Fund Advisors John has worked at the firm since early 2001. He sits on the firm’s investment committee holds the Series 66 License and the Certified Fund Specialist designation (CFS). He is a graduate of The College of William and Mary and has been quoted widely in the financial press and presented at conferences and for investment groups around the country. In 2008 John founded CEFA's Closed-End Fund Universe, a comprehensive weekly data service covering the closed-end fund industry. John is a long time member of The Richmond Association for Business Economics (RABE), serves on the Investment Committee for The New York State Society of The Cincinnati and is Treasurer and Membership Chair for The Virginia Museum of Fine Arts’ Business Council.

Principal’s BiographiesGeorge Cole ScottSr. Portfolio Manager, President of Closed-End Fund Advisors George’s investment career started in 1969 when he joined a brokerage firm after a short career as a journalist. In 1976 he helped a friend buy control of a deeply discounted CEF which became Bergstrom Capital (AMEX: BEM). He served on the board of the highly rated fund for 27 years. In 1987 he founded The Scott Letter: Closed-End Fund Report which was a top rated print newsletter until he became a shareholder in CEF Advisors in 1996. In 1991 he co-authored the only hardback and 500 page book on CEFs with a finance professor. He is a graduate of The University of Washington, hold the Series 66 License and is a long time member of The Society of Financial Analysts and CFA Virginia. He has been widely published, and interviewed as well as consulted with various Closed-End Funds. George is one of two CEF specialists with more than four decades CEF expertise.

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Contact Information

Closed-End Fund Advisors7204 Glen Forest Drive, Suite #105

Richmond, Virginia 23226Phone: (804) 288-2482 / (800) 356-3508

Email: sales@cefadvisors.comwww.cefadvisors.com

Thank you for your time and attention, if you like what you see, we look forward to serving you.