In this Issue: March, 2015 Miller/Howard High Income Equity Fund and The New Year

If You Can’t Promote Your Investment Fund with Ease, It’s Wrong Prospect Capital Corporation Beats Expectations Successful Enough to Fail, Or: Why Fund Managers Must Become Financial Storytellers The Mexico Fund - Investment Factors and Economic Outlook

Dividends Help Support The Market Literate Investing The Importance of Total Return in Equity Closed-End Funds Seeking Income, Managing Volatility PSEC - Portfolio and Investment Activity Closed-End Funds: Analysis of the Closed-End Funds Market Measuring the Stock Market Finding High Dividend Yields in Asian Markets River North Opportunities Fund Quarterly Conference Call Cutwater Asset Management Exclusive Interview Aberdeen Asia Pacific Equity Fund Manage Interview Ten Things to Remember When You’re Looking for Work Upcoming Webinars Past Webinars 6th Annual Investment Strategies Conference Award Winning - Pristine Advisers 

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By Thomas Hughes Senior Editor of Global Investor Spotlight

Yield And Performance During Tough Times  

Conditions in the financial markets are tough to say the least. Poor corporate earnings, plunging energy prices and geopolitical risks have driven the US indices down to 3 month lows. This is no doubt having an effect on individual stocks, ETF’s and managed funds alike. The difference is that managed funds often produce market beating income that can take the sting out of market downturns and produce greater total returns over time. Actively managed funds like the Miller/Howard High End Equity Fund focus on the specific conditions, irrespective of industry, that produce desired results, not the vanilla approach that index or sector based ETF’s provide. In this case the focus is income, income growth and capital appreciation. The fund strategy looks for companies that are undervalued with solid balance sheets then targets those with the highest dividends, and the greatest chance for an increase in dividend distribution. This allows for a high level of current income and capital appreciation, the operative factor being stocks in a cycle of dividend. 

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increases tend to attract new buyers and premium pricing. At this time the fund is trading near $10 per share and yields close to 14%.

One of the features that makes this fund so unique when comparing to other closed end funds, mutual funds or ETF’s is that it has a term limit of 10 year. This means that the fund will sell out of its holdings and NAV will be returned to share holders, alleviating concerns of value trap. Most closed end funds including this one, tend to trade at a discount to NAV which means that without a term limit it may not be possible to realize the full value of the investment.

NAV, Discount To NAV And Total Returns  NAV has been declining since the funds inception but can be directly attributed to market conditions in 2015. For one, dividend paying stocks fell out of favor, a situation fund managers are aware of and addressed in the annual letter to shareholders; the HIE is heavily biased toward high paying issues, the very basis of its high yield cash flow strategy. Another reason for declining NAV is plunging oil prices which have taken a toll on the entire energy sector, a sector well known to provide above average dividend distributions as well as dividend growth. Yet another reason for stock market declines, and subsequent declines in HIE’s NAV, can be blamed on the FOMC and the fear of rising in-terest rates. The good news is that fund managers are expecting yield and dividends to regain market leadership in 2016 as prices fall and yields increase.

We expect that lagging valuations and aging demographics are big factors in our favor since these will increase investor demand for income stocks and drive returns for our shareholders. ” Miller/Howard 2015 letter to shareholders” Market conditions and declining NAV have contributed to a decline in share prices as well. In fact, share prices have outpaced the decline in NAV resulting in a discount nearly double the one year average. The current discount is near -14%; the 6 month average is closer to -9%, the one year Z statistic near -1.59%, both suggesting that the fund is undervalued. Additionally, the discount has been narrowing from its peak set a few months ago suggesting that there are already some who recognize the value and returns inherent in this

There’s no way to sugar coat it, total returns over the past 13 months, the life to-date for this fund, are not good. HIE has returned a loss of -43% in terms of prices and over -30% in terms of NAV, both exceeding the industry average and the Morningstar benchmark. In that same time dividends have been paid steadily, amounting to $1.39 per share, nice but not enough to reverse loss of equity. Original shareholders with cost basis near $20 are still realizing negative returns, at least on paper. The thing to keep in mind is that this fund has a term limit and is intended to be held until expiration. Taking that into consideration, and factoring in 10 years of steady dividend payments, total returns for original owners are more like 26%. New owners, at today’s prices, are looking at a potential return of 150%, assuming of course NAV remains stable. If you think the secular bull will drive the market higher over the next 9 years, as I do, potential returns grow.

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S&P 500 earnings are expected to grow at a rate of 7% in 2016 with growth expanding into the end of the year, US GDP is expected to expand to a rate of 3% or greater in 2016, both expected to continue expanding in 2017, three reasons to believe the long term bull market is still alive.

The Fund Is Young But The Dividend Is Healthy  The fund is young, just over a year old, but there are over 100 years of collective experience backing the strategy. Miller/Howard has been in business nearly 20 years specializing in dividend, income, dividend growth and energy focused investment strategies, Mr. Miller himself having more than 20 years in the industry. Their strategy, and the funds very make-up, channel all of that knowledge into one uber strategy. The fund has to date been able to cover all of its distributions through earnings and is only expecting to improve this into the future. Dividends and special dividends received from portfolio holdings cover most of the distributions paid to shareholders to date. This is enhanced through leverage and option strategies but both in a manner that keeps risk low. Leverage is low, only about 16%, very low compared to other high income funds, and is expected to be phased out over time. The remainder of income is earned through options strategies. The funds prospectus allows for up to 20% of the portfolio to be leveraged through options but so far this has not exceeded 8%. To date 31 puts ad 7 calls have been sold; 28 of the puts expired worthless, 3 resulted in the purchase of stock managers wished to buy.

Certainly Worth A Second Look  This fund is certainly worth a second look. Other than risk of continued loss of NAV and/or cuts to the dividend I really can’t see a reason not to own this fund. It provides exposure to dividends, it targets divided growth, it seeks capital appreciation, it pays a healthy income, it trades a significant discount to NAV, total returns if held to term are attractive, it has an exit strategy and over all, market outlook is good.

Put another way, and to modify a quote from the late Richard Feynman, the Nobel laureate and bon vivant of the world of science and physics: It doesn’t matter how beautiful your theory is, it doesn’t matter how smart you are. If you can’t promote your investment fund with ease, it’s wrong. Without an investor relations (IR) or media relations specialist to honor Feynman’s dictum, let me, as said IR consultant, emphasize the following: You will fail. My comment is not an indictment of a fund manager’s intelligence or confidence; it is, instead, a statement

A simple rule: If you cannot explain what your investment fund does — if you cannot translate technical details into intelligible facts — your results, no matter how impressive and separate from the stagnant or mediocre performance of the market as a whole, are irrelevant. For investors make decisions based on what they can measure — and what they can understand. If they find the latter indecipherable, and if they mistakenly believe what is (mostly) impenetrable to a lay audience is also incomprehensible to a group of financial experts, they will pass.

of fact — that you, the reader of this post and the professional responsible for making critical investment decisions, cannot afford to ignore the power of marketing and communications. Silence is not an option, stubbornness is not an alternative and sanctimony is not a choice. Promote your investment fund — or perish.

If You Can’t Promote Your Investment Fund with Ease, It’s Wrong

Patricia Baronowski-Schneider

CEO

Pristine Advisers

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By Thomas Hughes Senior Editor of Global Investor Spotlight

he value of Prospect Capital Corporation has been beaten down on negative sentiment and fear while results

prove the BDC’s ongoing success.

Fear And Loathing Drives PSEC Shares To New Low

I like to refer to Prospect Capital Corporation as the most hated stock in the market and recent activity only proves my point. Fears of a miss-mark of CLO valuation is the most recent cause of the ongoing decline in share value but like all fears is largely unfounded.

Prospect Capital Corpora on Beats Expecta ons The rumor is that there is an ongoing probe by the SEC into action by the company, a rumor that is as yet unsubstantiated. As of a December 2015 8-K filing a probe began in 2014 has been closed with no action taken, since then no other investigations have been disclosed by either PSEC or the SEC. Johnathon Bock, an analyst with Wells Fargo, has reiterated an underperform rating on the stock, citing an alleged conspiracy between the company(PSEC) and its third party valuation firm to over-inflate marks used to value the CLO portion of the portfolio. While a concern, we need to remember that Prospect Capital has long been a leader in the BDC field and set the standard by which others in the class are valued. From the PSEC fiscal 2nd quarter earnings statement:

“When determining the fair value of portfolio investments, the Audit Committee and the Board of Directors of the company, Including our independent directors, consider not just recommendations from management but also a range of valuations from three Independent valuation firms. The Board of Directors looks at several factors in determining where within the range to value each asset, including recent operating and financial trends for the asset, independent ratings obtained from third parties, comparable multiples for recent sales of companies within the industry, and discounted cash flow models. Final selected valuations have never been outside the range provided by third party valuation firms.”

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I have no doubt fears raised by Mr. Bock will persist, I also have no doubt that PSEC will continue to outperform its peers. At current share prices to say the stock is undervalued is an understatement; the stock is deeply undervalued with growing income, stable dividend payments and one of the highest yields in the market, close to 20% at current share prices. Once these fears alleviate shave value of PSEC stands to make a substantial comeback.

Fiscal Year 2016 2nd Quarter Earnings Regardless of the fears, despite the naysayers, Prospect Capital Corporation produces results. In their most recent earnings report, released 2/9/2016, for the fiscal 2nd quarter of 2016 (calendar Q4 2015) the company beat expectations for net investment income. NII was reported as $0.28 per share, up 2 cents from the previous quarter, 3 cents better than expected and up from the comparable quarter in the previous year. Total investment income rose 5.2% on a year over year basis and, most importantly, more than covers dividend distributions in the period. Net asset value declined in the period, down to $9.65 from the previously reported $10.17, due primarily to unrealized depreciation and volatility in the capital markets. According to the report roughly 74% of the decline is due to macro changes in the economy followed by an 18% decline attributed to energy and energy related companies and 8% to non-energy related issues. The decline contributed to a small increase in the debt to equity ratio, +1.9% from last report, but the ratio remains well within the margin required to maintain investment grade credit ratings with a stable forward outlook. Total leverage decreased to 4.19X from 4.36X. PSEC 2nd Quarter Earnings Statement “We are pleased with the overall credit quality of our portfolio, with many of

our portfolio, with many of our companies generating [Y/Y and Q/Q] growth in top-line revenues and bottom-line profits ... The majority of our portfolio consists of sole agented middle-market loans that we have originated, selected, negotiated, structured, and closed.” Within the portfolio the mix of assets remains strong. Nearly 52% are 1st lien notes, 18.8% 2nd lien, 17.5% structured credit and 10.2% equity holdings. The annualized yield rose by 30 basis points and is evidence of the ongoing efforts of management to improve the bal-ance sheet. Looking back over the past year annualized yield has risen 0.6% in the last 6 months and 1% over the past 12 months. The real fear for high dividend payers at this time is exposure to the oil patch. Many of those companies are cutting or suspending

dividends raising the specter of cuts in those businesses which rely on them for income. PSEC does not rely on energy companies for income, their portfolio exposure is roughly 3% of portfolio. PSEC 2nd Quarter Earnings Statement “We are currently pursuing initiatives to lower our funding costs (including refinancing of existing liabilities at lower rates), opportunistically harvest certain controlled investments at a gain, optimize our origination strategy mix (including increasing our mix of online loans), repurchase shares at a discount to net asset value, and rotate our portfolio out of lower yielding assets into higher yielding assets while maintaining a significant focus on first lien senior secured lending.” Undervalued With Great Yield

Even with the decline in NAV reported this quarter the stock remains undervalued. Current d iscount to NAV remains near a historic low, near 40%, and well below the historic average which is close to 15%. This valuation provides a very attractive entry, and is backed up by an impressive dividend yield.  

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At current share prices yield is close to 20% and safe compared to other issues with similarly high yield. Based on the historical perspective, the last time PSEC was selling at such at low valuation it returned in excess of 100% over the next 12 months. As a BDC the company is required by law to distribute at least 90% of taxable income. Spillback dividends are allowed, but to date have not been needed to cover distributions. In fact, based on this quarters NII and taxable income, compounded with previous earnings, distributions are well below income and provide an increasing possibility for special dividends or an increased distribution in the not too distant future. At the very least it is highly unlikely the company will cut the dividend as so many other businesses have been doing of late. Payments for the next 3 months have already been declared, in line with previous and equal to $1.00 per share annually. To put this into further perspective the company has earned more than half of this year’s distributions in the first half of the year alone, if they continue to perform as expected full year earnings will come in at the top end of the expected range near $1.10 per share leaving a full $0.10 per share available for additional distribution. No reason to expect a divided cut.

My Final Thoughts Fears have driven share prices down to a historical low while at the same time company operations have been improving. Even if the CLO portion of the portfolio is devalued the dividend and its health remain, and the stock price has already taken that devaluation into account. Discount to NAV plus distributions, dividend health and forward outlook make this one interesting investment for dividend seekers, long and short term investors.

Successful Enough to Fail, Or: Why Fund Managers Must Become Financial Storytellers

I look at a hundred deals a day. I pick one. — Gordon Gekko

Fact: Even in the most bearish conditions — even during the Great Depression, with the sidewalk serving as a landing pad for suicidal stockbrokers; and even during the Great Recession, with investment banks closing, half-built homes and subdi-visions literally collapsing and crises throughout the land — there are still fund managers with a successful return on invest-ment. But, and there is always a point of qualification to outliers of this kind, those fund managers cannot attract additional funds — they will not themselves be able to keep their respective funds alive — unless they can be effective storytellers; they cannot convince existing investors to stay, and prospective clients to come aboard, unless they can communicate their individual strengths, explain their specific strategies, and describe how and why they continue to make money while the rest of the market bleeds an arterial red across balance sheets and quarterly earnings reports worldwide. The fund manager must be, or the team responsible for his investor and media relations must act as, a master storyteller. A storyteller is a superb conversationalist, converting data into dictums and analysis into memorable anecdotes. A financial storyteller does the same things, never allowing numbers to benumb an audience and bore readers. If you want to thrive, in other words, you must speak; you must narrate a tale of triumph during a time of economic and emotional adversity. You must tell your investors the story they need to hear.

Patricia Baronowski-Schneider

CEO

Pristine Advisers

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By Thomas Hughes Senior Editor of Global Investor Spotlight

Investing In China, Is Now The Time

Investing in China continues to be a double edged sword. From one perspective it is the 3rd largest global economy and the fastest growing economy in the developed or developing world. From another, GDP continues to decline in the face of aggressive measures by the government to stimulate and stabilize growth. The 6.9% GDP growth posted in 2015 is at the least an attraction for investors and at best the most obvious source of returns for global investors. The downside being that continuing declines in GDP, as well as bungling of the financial markets, present little reason to believe returns are a safe or promising as they may have once

Regardless of your perspective one thing is clear; China is still growing at a rapid pace and Chinese official remain ready to act as needed to support their economy. Aside from regular cash infusions the most recent and notable action taken is the replacement of the head of the Chinese Securities Regulatory Commission Xiao Gang. Xiao, who took charge of the agency several years ago, has taken the brunt of blame for market turmoil over the past year, turmoil which led to a 5 trillion yen decline in market value, the need for record setting government intervention and the circuit-breaker fiasco at the start of this year. Opportunity Amid Confusion Believe it or not fund managers see the recent instability in China as an opportunity for investors.

There is little hope for a broad recovery, regulators and officials have lost to much credibility for investors to believe in a return to the double digit growth of years gone by, but a stabilization of the markets alone would be enough for the Chinese economy to regain its footing and return to steady growth. Fund managers at the JP Morgan China Region fund had this to say in their latest monthly update. . . “Chinese policymakers continued to lose credibility with markets due to opacity, inconsistency and a lack of intra-institutional coordination. While central banks in other major economies have generally been stabilizing forces in recent years, the PBOC has thus far not been.

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That said, given the growth bias of our portfolio, we only require stability rather than an improbable recovery in either policy credibility or the broader economy, and market dislocations are generally opportunities to add to our holdings in consumer, media, healthcare and technology.” In the near term it seems as if efforts to control fear and stabilize the markets have begun to work. Over the past month Chinese indices have bottomed although there are still signs the economy is slowing; in January manufacturing hit a 3 year low, exports fell by more than -11% YOY and the government adopted a growth target below the 7% target set last year. The one ray of light is consumer spending which, although well below the highs set in 2014 is still quite robust. January sales came in just over 11% and are expected to remain near this level into the coming year. What Is The China Region Fund The JP Morgan China Region Fund is an actively managed closed end fund focused on the greater China region and not just the Chinese mainland, with the focus on long term capital gains. Managers seek to invest in the largest, most stable and growth oriented companies headquartered in China, Hong Kong, Taiwan which do business within and without China. The fund is benchmarked to the MSCI Golden Dragon Index and the CSI 300 Index with a decided bias toward large and mega cap issues which alleviates a lot of the risk associated with the lesser known and less well-established Chinese businesses. One of the many benefits of this fund is the fact that it is a closed end fund. Closed end funds, and this one is no exception, tend to trade at a discount to their net asset values offering investors the chance to own a basket of stocks at a substantially lower price than if they were bought individually. The JFC tends to trade at a discount near -13%, current discount is just over -15% which means the fund is undervalued relative to the three year average. In addition to the NAV discount owners of JFC enjoy the benefits of dividends and capital gains earned by the fund. According to the prospectus all distributions and gains are paid to shareholders

in the form of dividends at least once per year, the past years earnings equal to 7.5% yield at today's share prices. Fund managers tend to focus on the financial and information technology sectors but also have substantial investments in niche sectors giving the best returns. Financials and info tech alone make up more than 60% of fund holdings, the next two largest sectors, Industrials and Consumer Discretionary, make up only about 19% of fund holding with the remaining 21% made up of stocks in the Telecom, Healthcare, Energy, Utilities, Consumer Staples and Materials sectors, and 4.7% cash position. Over the past month allocations in 6 of the 10 sectors have been trimmed with the most notable increases in Consumer Discretionary and the cash position. China And The Future Outlook for China remains positive going out to beyond 2050. The problem is that China's economy is changing from a rapidly growing industrial giant to one that is more focused on the consumer and consumption. This, along with a heavily regulated business sector as well as a marked division between state run and private business makes knowing where to invest in China, and when, one of the toughest decisions for today's investors. Those with intimate of knowledge of the region find it hard enough to wade through the ever changing environment, those without that knowledge may as well through a dart at a list of stocks and invest in whatever gets hit. This is why an actively managed fund like the JFC is a good choice for the individual investor. Fund managers have a finger on the pulse of the region and seek to invest in the fastest growing sectors of the economy.

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Description. Investment objective of long-term capital appreciation by

investing primarily in equity securities of Mexican companies. The Fund has in

place a Managed Distribution Plan (“MDP”) in which it makes quarterly

distributions at an annual rate of 6% of the Fund´s Net Asset Value (“NAV”) per

share recorded on the last business day of the previous calendar year. As of the

end of fiscal 2015, the Fund has made 30 consecutive quarterly distributions

since its implementation on 2008 for a total of $20.59 per share.

The Fund has followed a prudent investment approach by investing in companies with attractive long-term

prospects, strong fundamentals and solid corporate governance. The Fund conducts a thorough research process

that includes the macroeconomic environment, fundamental variables, valuations and management assessment of

issuers in the Mexican market.

Mexico´s Investment Factors. Since the current presidential administration took over on December 2012, Mexico has adopted several structural reforms aimed at strengthening the countries´ fundamentals. The energy

reform, which involved changes in the constitution, is designed to open private investments in the sector; the reform

has been implemented as planned despite low oil prices. The telecommunications reform was designed to increase

competition in the sector and so far results have been positive with the entrance of new players to the market,

resulting in price reductions. The financial reform aims to increase lending as Mexico has a low credit penetration.

Other reforms have been implemented with overall long-term positive results for the country and investments

should accelerate going forward. As a result, Mexico is more integrated in the North America region and we believe

there are many opportunities for Mexican companies to participate in the early stage of an enhanced economic

scenario for the country.

Mexico´s Economic Outlook. The recent drop in oil prices has affected growth and prompted the government to cut expenditures, but at the same time it has generated a positive effect of reducing oil dependence for the

country. Manufacturing activity and domestic consumption remain strong and have driven the recent economic

growth. The Mexican peso depreciated 14% against the U.S. dollar during 2015, less than other emerging markets

currencies, reflecting Mexico´s stronger macroeconomic fundamentals.

Fund´s and Stock Market performance. Due to the Mexican peso depreciation, the MSCI Mexico Index

decreased 17.4% during the last year, but in Peso terms it increased 0.2%. The Fund´s NAV has outperform the

market in all periods analyzed in the table below.

 Data as of February 29, 2016. Source: Impulsora. All figures take into account reinvestment of distributions.

Performance (USD) Cumulative Annualized

1 Month YTD 1 Year 3 Years 5 Years 10 Years

Market Price -0.56% -3.49% -21.30% -12.10% -0.47% 5.23%

NAV per share 0.16% -2.97% -12.71% -8.10% -0.36% 4.69%

MSCI Mexico Index 0.34% -3.09% -17.41% -9.47% -2.55% 3.84%

Bolsa IPC Index 0.12% -3.39% -16.94% -9.77% -3.04% 4.85%

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By Thomas Hughes Senior Editor of Global Investor Spotlight

ividend growth helps drive share prices higher, but where do go to find the best

companies with the greatest possibility of increasing distribution?

Negative Earnings Growth And Increasing Dividends With the trend of negative earnings

growth extending to a 3rd quarter it is

a little surprising the broad market

has not sold off more than it has.

Something is supporting the market and if not earnings what? Based on the data it looks like dividends, buy-backs and other cash-return strategies are what’s doing it. The most recent dividend report from the Fact Set shows that dividend distributions among S&P 500 companies hit another new high in the 3rd quarter of last year, and are expected to continue hitting new highs at least until the middle of 2016. Total payments in the 3rd quarter were greater than $103 billion with the trailing four quarters total great-er than $410 billion, quite a lot of money to attract market participants. The caveat is that not all companies are increasing their distributions.

Some have cut and some have suspended, so knowing where to invest your money in order to capture the payments as well as the capital gains associated with stocks in a cycle of increasing distribution can be difficult to say the least. There are funds and ETF’s that specialize in dividend payers but for the most part are very broadly focused. They do not focus on which companies are increasing distributions or seek to weed out companies that might cut the dividend. One example is the SDY, S&P 500 Dividend Tracker, which owns all dividend payers in the S&P 500...

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has produced little to no capital appreciation over the past 2 years and only yields about 2.5%. One actively managed fund, the Miller/Howard High Income Equity Fund, does exactly that; targeting only high yielding stocks with the greatest chance of distribution increases. For those unfamiliar with it the HIE it is a closed end fund targeting current income and long term capital appreciation with an exit strategy very few funds of the type can boast; a termination date. The termination date is good for a number of reasons but the most important is the guarantee of NAV. Most CEF’s trade at a discount to their net asset value, offering a chance to buy a portfolio of stocks at discount, but also raising the possibility of value trap. At the end of this funds life span the portfolio will be liquidated and shareholders will receive full NAV alleviating any concerns that HIE is a value trap.

The High Income Equity Fund The High Income Equity Fund is by Miller/Howard Investments. The firm has been in business for over 20 years focusing on dividends and income strategies based on dividends. The goal is twofold; first is income, second is capital appreciation. First the fund targets the strongest dividend payers with the lowest market valuation then it weeds out companies with little to no expectation of increasing the distribution in order to focus on those companies with the greatest expectation of increasing the distribution. Lowell Miller founder and Chief Investment Officer, explained his investment thesis rather well in a recent interview. “It’s only logical that, over time, an increase in cash flows to investors will result in a commensurate increase in the value of the equity producing the dividend, all other things being equal. It’s similar to income real estate; the property is valued in large part based on its cash flow. If the rents increase, then the value of the property increases. So the investor benefits from both higher income and from the appreciation that higher income induces.” To date the fund has paid a regular and sustainable dividend that yields over 14% at today’s prices. The distributions are paid from earnings, sales of options and a small amount of leverage, only 16%. When I spoke with Steve Chun, spokes-man for the company, he assured me that responsible distri-butions were one of the principles the fund was founded on, the goal being 100% dividend coverage through portfolio earnings and an eventual increase in distributions.

There is little reason to fear distributions will be paid through NAV destroying practices. From the 2015 annual report … “With these specials, the premiums from selling options, and the regular dividends from the portfolio, as enhanced by our use of leverage, we have generated sufficient income to cover these declared distributions.” The dividend and termination date are reason enough to give this fund a second look, add in a substantial discount to NAV and this fund really begins to look attractive. At current prices the discount is over 14%. Compared to the -11% average and the -1.42 Zee statistic this means that not only is the fund discounted, its offering additional value by trading at a much deeper discount than normal. Long term investors can expect to see share prices trade closer to NAV the closer we get to the termination date.

The Portfolio The portfolio is broad, there is no sector overlooked and no stock is refused so long as it meets the fundamental requirements of the strategy. Cash flow must be positive, the asset must be undervalued, distribution are above average and a high probability of an increase to distribution must be present.

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There are 45 stocks in the portfolio now with the heaviest weighting in REITs, Financials and MLP’s. After that there is a roughly equal weighting, about 9%, in utilities, energy and telecommunications with a smaller weighting of industrials, information technology, consumer discretionary and healthcare. The allocations have been shifting a little over the past few months. The energy sector has been trimmed somewhat due to ongoing weakness in oil prices and the subsequent havoc playing out in the oil patch. Despite the isolated weakness, and it is isolated, the portfolio strategy is producing results. The ratio of holdings that produced distribution increases in the 2015 was 60%, not counting special dividends, with the top performers adding multiple distribution increases with double digit total returns. From the 2015 annual report. “During the reporting period, 60% of our stocks have declared dividend increases, with individual increases averaging 9.7% growth year-over-year, excluding special dividends on an unweighted basis.”

An Interesting Way To Look At The HIE I like the HIE for several reasons including the yield, yield health, the discount to NAV and the termination date. The other day I read an article on SeekingAlpha with an interesting view of the HIE that sums it all up with a rather interesting view. The Stanford Chemist says this “By buying this fund at an appropriate discount, you are basically getting Lowell Miller’s expertise for free”. I don’t know about free but I do know that new shareholders could expect to see total returns in excess of 145% if the fund is held to termination.

Literate Investing

Patricia Baronowski-Schneider

CEO

Pristine Advisers

Here is a simple rule to investing: If you do not understand where your investment dollar goes — if a prospectus is as unintelligible, to you, as an alien language, with its graphical icons and mathematical symbols — then do the smart thing, which is the wise thing: Ask for a fund manager or an investor relations (IR) specialist to explain this opportunity to you. In the absence of honoring that request, pass. That is, do not try to decipher this material on your own; do not attempt to construct a Rosetta Stone, which partially explains some payouts, confounds your rudimentary knowledge of others and does more to confuse you — to complicate an already complex situation — than it clarifies what you want to know; what you need to know.

An investment adviser should have the responsibility of communicating these points because, while conversant in the technical language of Wall Street, that man or woman is also fluent in the everyday speech of Main Street.

And yes, that undertaking is as much an art as it is a science.

It requires discipline, insight, patience and respect.

That is my job.

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As part of Prospect Capital Corporation’s investment objective to generate both current income and long-term capital appreciation through debt and equity investments, the business development company has built a portfolio that consists of 130 companies with a fair value of $6.2 billion as of 12/31/2015. These investments are spread across 28 industries with deep centers of industry expertise within the Prospect team.

For Prospect’s second fiscal quarter ended December 31, 2015, the company’s net investment income (“NII”) was $100.9 million or $0.28 per weighted average share, an increase of $9.7 million or $0.02 per share compared to the September 2015 fiscal quarter (driven primarily by an increase in dividend income). This also marks an increase of $9.6 million or $0.02 per share compared to the December 2014 quarter.

Prospect’s objective is to sustain and grow net investment income per share in the coming quarters by focusing on matched-book funding to finance disciplined and accretive originations across its diversified lines of business. The company is currently pursuing initiatives to lower its funding costs, including refinancing of existing liabilities at lower rates. The company also aims to opportunistically harvest certain controlled investments at a gain, optimize its origination strategy mix (including increasing its mix of online loans),

repurchase shares at a discount to net asset value, and rotate its portfolio out of lower yielding assets into higher yielding assets while maintaining a significant focus on first lien senior secured lending.

As a tax-efficient regulated investment company, Prospect’s 90% minimum shareholder dividend payout requirement is based on taxable income (“distributable income”) rather than GAAP net investment income. In the December 2015 quarter, the company generated distributable income of $99.9 million or $0.28 per weighted average share, exceeding its $0.25 per share of dividends by $0.03 per share.

Since its IPO ten years ago through its April 2016 distribution, assuming its projected share count for upcoming distributions, the company will have distributed more than $14.62 per share to initial shareholders and over $1.85 billion in cumulative distributions to all shareholders.

PORTFOLIO AND INVESTMENT ACTIVITY

Prospect’s portfolio emphasis during the December 2015 quarter continued to prioritize secured lending. As of December 31, 2015, its portfolio at fair value consisted of 51.9% first lien, 18.8% second lien, 17.5% structured credit (with underlying first lien), 0.5% small business whole loan, 1.1% unsecured debt, and 10.2% equity investments. The fair market value of loan assets on non-accrual as a percentage of total assets was approximately 0.5% at December 31, 2015.

The company currently has multiple primary investment origination strategies, including non-control agented and syndicated lending in private equity sponsored and non-sponsored transactions, control investments in operating and financial companies, structured credit investments, real estate investments, and online lending. As of December 31, 2015, the portfolio's annualized yield was 13.3% across all performing interest bearing investments, an increase of 1.0% over December 2014.

With a scale team of approximately 100 professionals, one of the largest middle-market credit teams in the industry, Prospect believes it is well positioned to select in a disciplined manner a small percentage of investment opportunities out of the thousands it sources annually. In addition, the company continues to retain significant balance sheet strengths, including a majority of unencumbered assets, demonstrated access to diversified funding markets, matched-book funding, unsecured fixed-rate liability focus, and prudent debt to equity leverage.

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Closed‐End Funds An analysis of the closed‐end fund market 

Corporate Loans CEFs The recent increase in short‐term interest rates warrants drawing some a en on to loan closed‐end funds (CEFs) because both their cost of borrowing and the income stream from the underlying loans are impacted by short‐term interest rates. A rac ve valua ons Corporate loans, as an asset class, have been quite unpopular in the past year as retail assets have flowed out of mutual funds and exchange‐traded tracking products (ETPs) that hold loans.  In fact,  according to Morningstar, loan mutual funds and ETPs have experienced a net ou low of almost $21  billion in the past year through November 30, 2015 (see Chart 1).   

Flows into or out of mutual funds tend to correlate with changes in valua ons among similar CEFs.   Accordingly, it is not surprising to see that the average discount of loan CEFs has widened more severely than that of the en re CEF universe (see Chart 2).  At this point, loan CEFs trade at some of the widest discounts in the CEF universe.  Investors are probably concerned about the impact of higher interest rates especially on corpora ons whose debt is rated below investment grade.  Keep in mind that the loans in CEFs are typically rated below invest‐ment grade.  Addi onally, given the dras c decline in oil prices over the past year, concerns regarding energy expo‐sure in the loan market have increased.  Yet one should recognize that the energy exposure in the loan market — about 3% as measured by the largest loan  exchange‐traded fund (ETF)1 — is smaller than that in the high yield bond market — about 11% as  measured by the largest high yield ETF2.  Such concerns have contributed to the decline in the average price of 

Mariana F. Bush,

CFA, Senior Analyst

Adam Shah,

CFA, Senior Analyst

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22

Disclaimers 

Exchange‐Traded Funds (ETF) are sold by prospectus. You should consider the investment objec ves, risks, charges and expenses carefully before inves ng. The prospectus, which 

contains this and other informa on, can be obtained by calling the ETF sponsor or your financial advisor.  You should read it carefully before inves ng.  

Closed‐End Funds (CEFs) are ac vely managed and can employ a number of investment strategies in pursuit of the fund’s objec ves.  Some strategies may increase the overall risk of 

the fund and there is no assurance that any investment strategy will be successful or that the fund will achieve its intended objec ve.  A CEF has both a market price and net asset value 

(NAV), and these two values and their respec ve performances may differ. Changes in investor demand for a par cular fund may cause the fund to trade at a price that is greater 

(lower) than it’s NAV, crea ng a share price premium (discount) to its NAV.  CEFs are subject to different risks, vola lity, fees and expenses.  Many CEFs can leverage their assets to 

enhance yields.  Leverage is a specula ve technique that exposes a por olio to increased risk of loss, may cause fluctua ons in the market value of the fund’s por olio which could 

have a dispropor onately large effect on the fund’s NAV or cause the NAV of the fund generally to decline faster than it would otherwise.   The use of leverage and other risk factors 

are more fully described in each closed‐end fund’s prospectus under the heading “Risks.” 

Investments in fixed‐income securi es are subject to interest rate and credit risks.  Bond prices fluctuate inversely to changes in interest rates. Therefore, a general rise in interest rates 

can result in the decline in the bond's price.  Credit risk is the risk that an issuer will default on payments of interest and principal.  High yield fixed income securi es are considered 

specula ve,  involve greater risk of default, and  tend  to be more vola le  than  investment grade fixed  income securi es. All fixed  income  investments may be worth  less  than  their  

original cost upon redemp on or maturity. 

Inves ng in senior loans should be viewed as specula ve as they carry increased risks of price vola lity, underlying issuer creditworthiness, illiquidity and the possibility of default in the mely payment of interest and principal, which may impact the value of the por olio. 

The sources of closed‐end  fund distribu ons can  include por olio  income, capital gains/losses, and/or return of capital. The final determina on of tax characteris cs of each CEF’s distribu ons will occur a er  the end of the year, at which  me it will be reported to the shareholders. 

This communica on is not an offer to sell or solicita on of offers to buy any securi es men oned herein.  This report is not a complete analysis of every material fact in respect to any fund or fund type.  The opinions expressed have reflect the judgment of the author as of the date of the report and are subject to change without no ce.  Sta s cal informa on has been obtained from sources believed to be reliable but its accuracy is not guaranteed.  Wells Fargo Advisors does not render legal, accoun ng or tax advice.  Please consult your tax or legal advisors before taking any ac on that may have tax consequences. 

Addi onal informa on available upon request.  Past performance is not a guide to future performance.  The material contained herein has been prepared from sources and data we believe to be reliable but we make no guarantee as to its accuracy or completeness.  This material is published solely for informa onal purposes and is not an offer to buy or sell or a solicita on of an offer to buy or sell any security or investment product.  Opinions and es mates are as of a certain date and subject to change without no ce.  The suitability of the individual securi es should be reviewed by investors and their Wells Fargo Advisors Financial Advisor to determine whether a par cular security is suitable for their por olios, with full considera on given to exis ng por olio holdings.   

Wells Fargo Advisors  is registered with the U.S. Securi es Exchange Commission and the Financial  Industry Regulatory Authority, but  is not  licensed or registered with any financial 

services regulatory authority outside of the U.S.  Non‐U.S. residents who maintain U.S.‐based financial services account(s) with Wells Fargo Advisors may not be afforded certain pro‐

tec ons  conferred by  legisla on  and  regula ons  in  their  country of  residence  in  respect of  any  investments,  investment  transac ons or  communica ons made with Wells  Fargo  

Advisors.  

Wells Fargo Advisors  is the trade name used by two separate registered broker‐dealers: Wells Fargo Advisors, LLC, and Wells Fargo Advisors Financial Network, LLC, members SIPC,  

non‐bank affiliates of Wells Fargo & Company.   First Clearing, LLC Member SIPC  is a registered broker dealer and non‐bank affiliate of Wells Fargo & Company.   ©2016 Wells Fargo 

Advisors, LLC.  All rights reserved.  CAR 0116‐01500 

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Adam C. Anderson, CFP®, CRPC®

Financial Advisor and Managing Director Ameriprise Financial Services, Inc.

Measuring The Stock Market

Every day we hear numbers that evaluate the stock market’s performance, such as the Dow Jones Industrial Average or the NASDAQ Composite Index. There are a myriad of market indices, and it may seem like they are all measuring the same thing. However, each index evaluates the market in a different way.

Dow Jones Industrial Average (DJIA) While the DJIA is often used to represent how the stock market is performing as a whole, the index is made up of only 30 large company stocks. Despite its name, the index is composed of more than just industrial companies. The index includes long established entities like General Electric and 3M as well as newer firms, such as Apple, Nike and VISA. The components of the index change from time-to-time, but it always includes stocks that are among the largest in the market. However, given that the index represents the performance of a very limited number of stocks, it may not signify what is happening in the broader market. The DJIA’s value is calculated by adding up the price of all 30 stocks and then dividing it by a specific measure created by Dow ones.

Standard & Poor’s (S&P) 500 Another reading of large company stock performance comes from the S&P 500 index. Many in the financial industry consider this a more accurate measure of broad market performance than the DJIA because it includes a much larger group of stocks. The index is made up of approximately 500 of the largest companies in the U.S. (currently, there are actually 504 stocks in the index1). This is a “capitalization-weighted” index, meaning that price movements among larger stocks will have more impact on the index than price moves among smaller components in the index. However, the S&P 500 does not account for mid-cap or small-cap stocks’ performance.

NASDAQ Composite Companies that trade on a global electronic marketplace first established by the National Association of Securities Dealers (NASD) are included in this index. More than 3,000 common equities are listed on the NASDAQ exchange, including stocks, American depository receipts (ADRs) and real estate investment trusts (REITs). Some companies may be located outside of the U.S. The index’s composition is largely made up of technology companies, so the performance of that industry can greatly influence the index. Like the S&P 500, the NASDAQ Composite is calculated using a market-cap weighting, with the 100 largest stocks accounting for most of its movement.

Russell 2000 This index measures the performance of small-cap stocks in the U.S. market across a broad swath of industries. It is made up of the 2,000 smallest stocks in the Russell 3000 Index, which tracks broad U.S. stock market performance. The Russell indexes are maintained by Russell Investments, an investment research and management firm. Stocks in the Russell 2000 index cut across a broad swath of industries.

MSCI EAFE Morgan Stanley Capital designed the MSCI EAFE index to help U.S. investors understand how overseas stock markets are performing, particularly in developed countries. The index represents the combined returns of large- and mid-cap stocks in 21 countries across Europe, Australasia and the Far East (EAFE), including Great Britain, Germany, France, Japan and Australia2.

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VIX A recently developed index that has received growing attention is referred to as the VIX. This is actually a ticker symbol representing the Chicago Board of Options Exchange Volatility Index. Some investors watch this index to gain a sense of the expected volatility, or unpredictability, of the stock market. The VIX calculates an expected level of volatility for the market by assessing current market prices for instruments such as puts and calls. The number is quoted as a percentage. If the index is accurate, the higher the percentage, the more likely a significant change in the market will occur. Since this index has been around only 12 years, it has not yet been fully tested as an accurate predictor of market volatility.

Keep in mind that the performance of individual stocks or funds that you own can vary, sometimes significantly, from what is reported about the broader stock market.

Adam C. Anderson, CFP®, CRPC®

Adam C. Anderson is a Financial Advisor and Managing Director with Ameriprise Financial Services, Inc. in Parsippany, NJ. He specializes in fee-based financial planning and asset management strategies and has been in practice for 10 years. You can contact him at 973-917-3904, adam.c.anderson@ampf.com, 3799 US Highway 46 #100, Parsippany NJ 07054 Ameriprise Financial

1 S&P Dow Jones Indices, S&P 500 Fact Sheet, Jan. 29, 2016.

2 MSCI EAFE, Index Overview, Feb. 25, 2016.

Investment advisory products and services are made available through Ameriprise Financial Services, Inc., a registered investment adviser.

Ameriprise Financial Services, Inc. Member FINRA and SIPC

Philip Li, CFA

Senior Fund Manager of

Value Partners Group Limited

Finding High Dividend Yields in Asian Markets

TWST: What is the overall situation right now with the Asian markets? What are you seeing? Mr. Li: There are a lot of things happening, but I think the key point is that Asian equities have been

down recently. A lot of Asian markets — and that includes obviously China and particularly in Southeast Asia — have faced a lot of stress, particularly with growth slowdown. They have also suffered a correction, particularly with currencies across various markets being quite weak in light of the U.S. dollar strengthening. So Asian equities as a whole remain quite volatile for this year.

TWST: Are there certain countries that are more attractive right now in terms of investing than others?

Mr. Li: Yes. There is a definite discrepancy between markets. Within Asia, there is North Asia, which is very underinvested. That provides an opportunity in terms of valuation. In markets like Korea and China, and even Malaysia and Indonesia, which has had a fairly significant correction, we still see a large valuation gap. China stocks are roughly trading at about 10 times p/e for 2016. If you look at the North Asian stocks, they are trading on average about 14 times, so there is a very large discrepancy in valuation. And that’s why we think North Asia is more attractive.

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TWST: Are you finding opportunities in certain sectors over others? Mr. Li: Yes. We have a value investment approach, so we are always looking for value. We look for

companies that are stable and have high dividend yields. So as a result, from the two ways that we are selecting stocks, we tend to focus on stable large-cap companies like banks, particularly in China. But we also do have significant exposure to industrials and consumer stocks, and both of these are somewhat stable or extremely cheap. TWST: China has garnered quite a bit of attention over the last several months, and there is a lot of debate about the Chinese market. How do you view China?

Mr. Li: I was in the States about a month and half ago, and I had the opportunity to speak to a large number of investors, and there’s no doubt that there are worries about GDP growth decline in China. It’s still growing very fast, but that pace of growth is trending downward, and we have seen that trend down for the last five years. So if you look back to when China entered the WTO, just over 10 years ago, we were looking at double-digit growth every single year. Now obviously as that growth has trended down we’re looking at 6.5% to 7%, which is still a very fast pace of growth. So I think the worries are fair that growth has slowed down, and people are concerned about that. But at the same time, we have to be practical. Some people don’t believe the 6.5% growth rate, but even if you say it is more like 5% or 4%, even at that level it’s still a much faster pace of growth compared to most developed markets. TWST: There is also concern about involvement of the Chinese government in the market. Does that impact your investing?

Mr. Li: Certainly the Chinese government does have a lot of control over the economy and the markets. And one of the big inefficiencies is the pricing of money that allows the right amount of capital going to the right industries at the right price. So what I’d say here is that through controlled interest rates and controlled currency, what we have is less flexibility for the market to deploy resources where needed. However, we are optimistic that with reforms, some of this will change and there will be a brighter future.

In terms of our investment approach, obviously we have to be very mindful of this crowding-out effect. And so from a bottom-up perspective, we look at them very closely to make sure they will be able to get financing or to understand why they may not be able to get financing, and that is part of what will drive our investment in China.

TWST: Are there any areas where you will not invest in? Mr. Li: We do not invest in areas that are expensive. So for example, we are not heavily invested in the

Philippines and India right now because they are the most expensive markets in our region. We would have to invest substantially less than the benchmark, given the choice. So we have very, very little exposure there. We also are careful with China because we see corporate governance as a risk. We also try to avoid areas where there are high vulnerabilities. For example, we may at times reduce exposure to the resources area, because that is an area that can carry higher risk than other sectors.

TWST: You mentioned that you have a value focus. How would you define the overall investment philosophy of your fund?

Mr. Li: It’s pretty simple. We want to find stocks that are inexpensive, so we’re looking at stocks or companies on a p/e basis. And the second aspect is yield. Many investors have been looking for yield particularly with low interest rates globally. This is not a trend that started only over the last couple of years. We took over the Asia Pacific Fund two years ago, but the strategy has been in place for more than 14 years. So dividend is the second key focus in our strategy.

When we look for dividend, what we want is companies that are making money that have the ability to pay out those dividends. We also want to have companies with improving prospects so they can increase those dividends. And finally, we want to see companies that are willing to pay dividends. We want to see that they are aligned with investors and that they are committed to pay a dividend both now and in the future. Essentially, that is how we select stocks for the portfolio.

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TWST: Can you walk us through the actual process of stock selection? Mr. Li: We use a 3R framework: right business, right people and right price. Ideally, we are looking for

companies that fulfill all three criteria. We screen the whole market, including Asia, and China, which includes 6,000-plus stocks. We screen the market for high-yielding stocks or stocks which have low p/e ratios. We have a team of over 60 investment professionals who are looking at each sector. From the 6,000 stocks, we are looking to select about 100 stocks, and that is through building our own financial model and through visiting the companies and talking to them, understanding how their business is working, where the growth prospects are, visiting their factories to see if there is a lot of inventory, to see if things are going smooth. We do a lot of due diligence where we do a lot of cross checking to get comfort to buy stocks which are cheap. TWST: What is the rationale behind the 100- stock portfolio? Mr. Li: In the very beginning of the firm, we started with a very concentrated portfolio of about 40-plus holdings. This is over 20 years ago. And what we found is that particularly with investing in emerging markets such as China, there are corporate governance risks that we have to be aware of. As a result, we felt that an ade-quate amount of diversification would provide the best balance. Then the question was, do we go to 50 stocks or 70 stocks or to 100 stocks. And as we have grown the team and as the universe has continually grown, we have increased the portfolio. There are a lot more stocks available in Asian markets today than there were in the past. As our team number has grown to over 60 numbers, we find that that’s a really good ratio in terms of ideas generated per person to the portfolio that we’re managing. This 100-stock portfolio is a comfortable balance for us, where we can still remain concentrated but we also have diversity. Our top 10 represents about 30% of the portfolio. And we have still an adequate tail, which means there are certain names that are coming in and going out because of our buy and sell discipline. TWST: You are bottom-up, but do you also consider the macroeconomy in making investments? Mr. Li: We are definitely very bottom-up from a stock selection perspective. There are also macro factors that drive our considerations. If we see something particularly on the macro side, particularly something that is a warning like a very weak commodity cycle, we will be mindful of that. During certain periods there will be larger areas of vulnerabilities, and we obviously have to look back at valuation. So we are still picking stocks from a bottom-up perspective, but we do have considerations on the macro level. Let’s say we think that markets are falling, we think there is uncertainty in the markets. We may choose to increase the cash level of the portfolio.

TWST: One of the holdings of the fund is China Vanke. Why do you like that name?

Mr. Li: We have been investing in this company for over a decade. China Vanke (HKG:2202) is one of the largest developers in China, and property has always been a contentious sector in China. This stock has an extremely low valuation, only about seven times on p/e basis. As one of the largest companies, they afford some major advantages in the sector such as access to better financing, so they can borrow money much cheaper than their competitors.

Furthermore, we have seen a very massive interest rate-cutting environment. When you have interest rates being cut and also weaker growth in Chinese economy, the Chinese government has been supporting the property sector, and basically reducing the down payments for first and second home mortgages. I think a lot of investors will tend to focus on the potential weaknesses in the property sector in China, but the fact is when you have 30% to 60% down payment on property and limits to how many properties you buy as an individual, you are actually still trying to reign in excess demand. So despite a lot of the worries that we’ve seen in the media on the property sector, there’s too much demand that’s been driving the property price up.

27

We have seen obviously the slowing economy, and in the slowing economy the Chinese policy makers have been loosening up. So we had those rate cuts, we’ve had listening to margin requirements, and that’s always been a boon for property sector. We see China Vanke as a leader, and we like that they are very, very cheap from a valuation perspective, and they’re still growing. It is seldom that you find companies at mid-single digits at this size with such a strong brand and earnings growth. TWST: You also own Samsung Electronics. Why do you still like Samsung?

Mr. Li: Samsung (KRX:005930) obviously is very well-known globally. It is a key competitor with Apple (NASDAQ:AAPL). Samsung has a very large business. Smartphones are a big part of their business — DRAM, module chips are also another big part of their business. They are leaders in this technology, and we’ve seen after a couple of years relatively weaker interest in Samsung handsets. This has finally seen a mild turnaround, so you see the earnings growth for its handset business. So those who follow, you’ve seen the various Samsung S6, Note 5, these have been celebrated by many of the tech reviews as one of the best smartphones available in the market today. And under this environment and trading about 10 times p/e, we think this is very reasonably valued.

More importantly is that Samsung and many Korean companies have always traded at a discount, and this is traded at a low valuation in Asia because they are seen as paying very low dividends. And this is true; dividends are very low in Korea. So dividend yield on average is around, within Korea, 1.7%, and the dividend payout ratios elsewhere have been 20%. So when you compare 20% to the rest of Asia and the world, many of the countries are at 40%-plus in dividend payout ratios. So they have much lower dividends than their peers. What we’ve seen this year is Samsung raised dividends by 40%. Dividends are still low, about 2%, but we think there is a lot of room given that huge cash surplus to increase the dividends, and then we think this will be a perfect fit for high-dividend strategy. TWST: What are the position limits in the portfolio? Mr. Li: We try to keep the positions at below 10%. I mentioned the top 10 is about 45% to 30%, so we’re not really close to that level yet. Other than that, in terms of sector and country, there are very minimal restrictions, so we’re pretty free to do what we’d like and reflect our convictions on the stocks we truly like. TWST: What makes you sell something? Mr. Li: What we are looking for from each stock perceptive is, are they seeing more potential upside or downside. Given our financial models, we also have valuation products for our businesses. If the share price has reached or is near our price target, we might trim and take profit. The other situation, which is not such a happy situation, is that there may be a change in the thesis, an underlying situation has changed, the earnings may deteriorate, and given that view, we will make a change. The last situation is that we find a really attractive alternative idea. Any of those reasons will drive change. We frequently add to positions gradually or sell gradually depending on those situations. TWST: What is your outlook for the Asian markets? Mr. Li: There are a lot of things we are watching in the Asian markets. The key within our area of focus is obviously dividends: are there increasing dividends, are company’s earnings improving. And I think overall, as I said at the beginning, things in Asian markets have been pretty mixed, so we have to be extremely selective from a stock perspective. We also have to watch valuations, and valuations remain very polarizing as I mentioned earlier. We are also watching the strength in the U.S. and the first rate hike. What we’ve seen from a historical perspective is that if rates rise gradually, it’s a positive for Asian equities. If rates in the U.S. rise sharply like we did in the 1990s cycle, then equities in Asia perform less well. What we’ve seen also historically is that markets underperform before the rate hike, and before anticipating the rate hike the markets did poorly. After the rate hike actually the markets tend to do well. But those are less critical compared to our bottom-up stock questions and climates. PHILIP LI, CFA  

Senior Fund Manager  

Value Partners Group Limited  

9th Floor—Nexxus Building  

41 Connaught Road Central  

Hong Kong—(852) 2880 9263  

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29

Alex Jackson Managing Director and Head of the Bank Loan Group Cutwater Asset Management

Alex, you have been a CLO portfolio manager (and more) since the mid-2000s and you have seen many different

cycles. What are you seeing the in the loan markets today and do you see any similarities to the pre-crisis period of

2006-07?

I see some similarities, but more differences. On the similarity front, there is a fear of risk assets, concern about the

impact of commodity prices and a slackening of demand due to a slowdown in CLO issuance. However, the differences

are much greater. For one thing, we don’t have the same sort of asset valuation bubble to contend with and we don’t

have the same degree of leverage in the system that could spur widespread forced selling. Fundamentals, at least in

North America, seem reasonably stable and companies in our portfolio – away from oil and gas – have good liquidity. I

believe that volatility is likely to continue, but do not see an impetus to sell loans to the point that the average bid goes

below the long term average recovery level as we saw in the last cycle.

The following interview is between Sean O. Dougherty, an author and a long time legal and financial professional in the CLO/BDC sectors, and Alex Jackson, Head of Bank Loan Portfolio Management at Insight Investments. It is an excerpt from an article published by Mr. Dougherty, Analysis Of Eagle Point's 4th Quarter Earnings And Projections For 2016 Performance, which examines the CLO equity performance and the impact it has on Eagle Point's financial results.

29

What are you seeing in the loan market right now, other than the oil and gas industries, have you seen overall softening

of credit quality of your average portfolio company. Specifically, do you think the recent widening of loan spreads was a

rational expectation of coming defaults or was it caused by fear in the market place?

I am not seeing widespread degradation in credit quality away from oil and gas. The recent selling was not justified by

recent results, or by 2016 guidance, but rather was caused by fears about china and unforeseen impacts of defaults in

the energy sectors.

What have you been doing with your portfolio over the last few months? Have you been focusing on reducing risk,

building par or increasing yields or some combination of all of the above?

Primary focus has been on building par while keeping risk constant.

The CLO Equity market seems to be in a period of absolute fear of upcoming defaults, which I believe will stay within in

the historically normal range of 3% - 4% over the next few years (many market observers have expressed similar

views). As the portfolio manager for CIFC’s seven CLOs issued in 2006 and 2007, you were responsible for managing

these CLOs in the worst credit crisis in modern times, leveraged loan defaults peaked at just under 14% during your

tenure. How were you able to manage these CLOs during this difficult period and still be able to return over 20% to the

holders of the CLO Equity tranches?

We managed at CIFC by being extremely conservative with sales, preferring to work through problems rather than

selling into the distressed investor community, and focusing on risk reduction and par accretion as the market turned

down by reinvesting principal cash in quality discounted assets, including revolvers, albeit at levels that allowed us to

hold the assets at their face, rather than market value. This careful and continued recalibration of the par balance of the

funds enabled us to continue making equity distributions while most other managers were suffering from shutoffs in

payments and accruing their subordinated management fees.

Also, i should note that structuring skills were instrumental in negotiating favorable terms in our indentures, such as a

weighted average price for excess CCC balances vs. the standard bottom-up price derivation, which gave me additional

flexibility with respect to our corrective actions.

Thank you for your time and those kinds words Alex this has all very extremely informative. However, I would like to ask one last question. On a long-term macro level, since the issuance of your CLO 2015-I, do you think the recent turmoil in the markets will have a long-term impact on your CLO’s performance? Not really. The portfolio is defensively positioned in the context of its risk profile and our projections show no material erosion in long term value, even in stress case scenarios, which allow for significant erosion in defaults and CCC asset balances. I think it’s fair to say that the ability to reinvest in discounted assets during times of stress generally allows good CLO managers to largely compensate for the impact of defaults and excess CCC assets, to the extent that returns can actually exceed originally projected levels – as they did in the last cycle.

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Does the Fed still matter? The U.S. Federal Reserve (Fed) raised interest rates at the end of last year. That decision removed one source of uncertainty for investors in Asia. Many people think U.S. policymakers will be more cautious over further rate increases because of the market turmoil that has marred the start of 2016 and the weak outlook for global growth. This may provide short-term support for equity markets that have become addicted to central bank stimulus, provided there are no other shocks to investor confidence. Any decision to slow the pace of U.S. monetary policy tightening may also hamper the pace of dollar appreciation, perhaps providing a temporary respite from the capital flight out of emerging markets. To be honest, it’s hard to say with any certainty because the situation changes so quickly. The Bank of Japan’s (BOJ) decision to adopt negative interest rates adds to the perception that policymakers in developed markets have run out of options. Fortunately, we believe Asia is on fairly solid ground. Reserves are ample, trade balances are in surplus and deficits are manageable.

Should China’s stockmarket crash be a concern? We believe Chinese equity markets are divorced from reality. In our view, when share prices are driven by the interaction between state-sponsored market manipulation and the speculative instincts of millions of retail investors, they cease to serve as a gauge of a company’s quality. Nor can they offer a glimpse into the health of an economy. That’s why the Shanghai and Shenzhen stock exchanges won’t tell you that, while China needs to work through the effects of a massive misallocation of capital following the global financial crisis, we believe the economy is nowhere near crashing. The economy is slowing – that’s not in dispute. The government wants to achieve more modest growth of 6.5 percent this year, although this could still be ambitious. However, a slowdown is as much by design as it is by accident. Last month’s stock market shakeout was necessary. We believe share prices were too high. Stock markets that operate like casinos simply aren’t good enough if China wants to create capital markets that will channel money towards the most deserving companies, while funding the pension needs of an aging population.

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Indian stocks are also getting battered, what’s the outlook for the economy? Stocks have had a bad run since hitting a record high early last year. The MSCI India has fallen nearly 20 percent since March 2015, and there may be further to go. However, stock market activity seems at odds with the economy, which is one of the fastest growing among the emerging markets. The oil importer is also one of Asia’s main beneficiaries as prices hover around $30 a barrel. While Prime Minister Narendra Modi’s reform agenda has been hindered by political opposition at the national level, some progress is being made at the state level. That said, the country is not immune from a global economy that is struggling to find engines of growth. There are significant headwinds to earnings growth in India and companies’ reluctance to invest suggests confidence remains fragile. The government has prioritized growth over fiscal consolidation for now, and we expect growth this year to be helped by higher consumption and public infrastructure spending. We believe our investments are well positioned to benefit from this.

So why are you still optimistic about the region? We believe that Asian economies are reasonably robust, and that well-run companies will continue to flourish. Aside from that, firms are improving capital management and returning more money to shareholders via dividends and share buybacks. We also see pockets of growth despite the slowdown. In the likes of India and China, the private sector is being let into areas such as banking. Previously, the authorities shielded state firms from competition. India’s private sector lenders boast stronger balance sheets and faster loan and deposit growth than their state-run counterparts. China offers interesting potential opportunities, particularly in hospitality, healthcare and transport.

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What sort of relative valuations are we talking about? Big stock market declines since the start of this year mean Asian shares are trading around their cheapest levels since late 2011. At some 10.5 times price-to-earnings, the MSCI Asia ex-Japan index is trading at a 42 percent discount to the MSCI World Index. Some markets in the region are more expensive than others, and it’s fair to say that India is still a relatively expensive one, even after the recent correction, although Indian companies have traditionally offered some of the best returns-on-equity in Asia. The Philippines would be another relatively expensive market. In contrast, Singapore, China and Hong Kong are markets where valuations are cheaper.

IMPORTANT INFORMATION PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE RESULTS.

International investing entails special risk considerations, including currency fluctuations, lower liquidity, economic and political risks, and differences in accounting methods. These risks are generally heightened in emerging market investments. Concentrating investments in the Asian-Pacific region subjects the Fund to more volatility and greater risk of loss than geographically diverse funds. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis, should not be taken as an indication or guarantee of any future performance analysis forecast or prediction. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creat-ing any MSCI information (collectively, the “MSCI” Parties) expressly disclaims all warranties (including without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages (www.msci.com). Aberdeen Asset Management Inc. (“Aberdeen”) does not warrant the accuracy, adequacy or completeness of the information and materials contained in this document and expressly disclaims liability for errors or omissions in such information and materials. Any research or analysis used in the preparation of this document has been procured by Aberdeen or its affiliates for their own use and may have been acted on for their own purpose. The results thus obtained are made available only coincidentally and the information is not guaranteed as to its accuracy. Some of the information in this document may contain projections or other forward looking statements regarding future events or future financial performance of countries, markets or companies. These statements are only predictions and actual events or results may differ materially. The reader must make his/her own assessment of the relevance, accuracy and adequacy of the information contained in this document and make such independent investigations, as he/she may consider necessary or appropriate for the purpose of such assessment. Any opinion or estimate contained in this document is made on a general basis and is not to be relied on by the viewer as advice. Neither Aberdeen nor any of its agents have given any consideration to nor have they made any investigation of the investment objectives, financial situation or particular need of the viewer, any specific person or group of persons. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of the reader, any person or group of persons acting on any information, opinion or estimate contained in this document. The information herein including any expressions of opinion or forecast have been obtained from or is based upon sources believed by Aberdeen to be reliable but is not guaranteed as to accuracy or completeness. The information is given without obligation and on the understanding that any person who acts upon it or otherwise changes his position in reliance there on does so entirely at his or her own risk. Aberdeen reserves the right to make changes and corrections to its opinions expressed in this document at any time, with-out notice. Any unauthorized disclosure, use or dissemination, either whole or partial, of this document is prohibited and this document is not to be reproduced, copied, made available to others. Closed-end funds are traded on the secondary market through one of the stock exchanges. The Fund’s investment return and principal value will fluctuate so that an investor’s shares may be worth more or less than the original cost. Shares of closed-end funds may trade above (a premium) or below (a discount) the net asset value (NAV) of the fund’s portfolio. There is no assurance that the Fund will achieve its investment objective. In the United States, AAM is the marketing name for the following affiliated, registered investment advisers: Aberdeen Asset Management Inc., Aberdeen Asset Managers Ltd, Aberdeen Asset Mgmt Ltd

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Five Financial Fundamentals:

1. Do you have a will, trust, health care proxy and living will?

2. Are you saving enough for retirement?

3. Would your cash savings cover six months of unemployment expenses?

4. Can your family maintain their lifestyle if you die early?

5. How will you pay for healthcare needs not covered by Medicare when the time comes?

Summary

1. Reduce spending

2. Assess career path

3. Exercise

3. Sleep

4. Eat properly

5. Update your profiles

6. Get out there and meet people

7. Practice interviewing

9. Take a class to hone skills

10. Organize your life.

Ten Things to Remember When You’re Looking for Work

34

 Pris ne Advisers/CEFNetwork Upcoming Webinars

MLP Webinar Date: April 25, 2016 Time: 2:00pm Moderated by: John Cole Sco  of Closed‐End Fund Advisors Panelist:   Charles Helme of BH Asset Management LLC             Emily Hsieh of Alerian        Elliot Miller, re red A orney        Robert Prado, PricewaterhouseCoopers LLP   Closed‐End Funds and Discount/Premium to NAV Date: TBD Moderated by: Ken Fincher, Senior Vice President and Por olio Manager at First Trust  Panelist: Mike Taggart of Nuveen             Achieving Re rement Readiness, Pu ng Realized Income Back into the Equa on

Date: April 19 or April 20, 2016 Moderated by: TBD Panelist: Steve Selengut, President and private Por olio manager at Sanco Services Inc           Others TBD   BDC's and underwri ng standards, how they differ from tradi onal lenders and what makes them be er/safer BDC requirements to give aid/support to company opera ons Date: TBD Moderated by: TBD Panelist:  TBD 

Interna onal Diversifica on using Closed‐End Funds and ETF's  Date: TBD Moderated by: TBD Panelist: Aberdeen          Kevin Carter of Tidal Growth Consultants 

A Be er Buyback Strategy Date: TBD Panelist: Ted Theodore of TrimTabs Asset Management 

If you are interes ng in par cipa ng in any of our webinars (as a panelist or moderator) please contact: Patricia Baronowski‐Schneider / pbaronowski@pris neadvisers.com

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Closed-End Fund Analyst Roundtable Webcast

Thursday, January 28, 2016

Moderated by:

Ken Fincher, Senior VP and Portfolio Manager, First Trust

Panelist included:

Elias Lanik, Senior Closed-End Fund Analyst,

BofA Merrill Lynch Global Research

Mariana Bush, CEF & ETP Research ,

Wells Fargo Advisors

Alexander Reiss, Director, CEF Research,

Stifel, Nicolaus

We were extremely honored to have the top

Closed-End Fund Analysts in the industry come

together and have an open discussion on the

industry.

The topics of discussion included audience participation.

Heightened volatility and covered call CEFs Outlook for discounts

Outlook for earnings/distributions How to think about incorporating CEFs into a portfolio

Can munis continue their surge What next for energy

When will senior loans help New issue market

CLICK HERE for a replay of this Webcast

CLICK HERE to view the transcription

Pristine Advisers/CEFNetwork Past Webinars

Are the Interests of Shareholders and Managers of CEF’s Sufficiently Aligned?

Tuesday, January 26, 2016

Moderated by:

Ken Fincher, Senior VP and Portfolio Manager at First Trust

Panelist included:

Jeremy Bannister of City of London Investment Mgmt

Daniel Lippincott of Karpus Investment Management

Phil Goldstein of Bulldog Investors

CLICK HERE for a replay of this Webcast

CLICK HERE to view the transcription

36

SAVE THE DATE:

Pris ne Advisers / CEFNetwork

6th Annual CEF/BDC/MLP/ETF

Investment Strategies Conference Thursday, October 13th New York Hilton Hotel

For more details and to register CLICK HERE

Qualified Financial Planners can earn 6 CFP Continuing Education Credits for attending.

If you are interested in participating at our events, sponsorship opportunities are available!

ACT NOW before it’s too late!

Join us on our LinkedIn Groups  

BDC Funds ‐ www.linkedin.com/groups/6599442 

CEFNetwork ‐  www.linkedin.com/groups/4119220 

Closed‐End Fund Corporate Governance ‐ www.linkedin.com/groups/6599435 

Closed‐End Fund Events ‐ www.linkedin.com/groups/8206191 

Closed‐End Fund Forum ‐ h ps://www.linkedin.com/groups/4291587

Closed‐End Fund Specialist ‐ www.linkedin.com/groups/2080875 

Equity Income Investors & Professionals Group ‐ www.linkedin.com/groups/5109576 

ETF – Exchange Traded Fund News, Commentary, Events and Discussions ‐ www.linkedin.com/groups/6600634 

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Award Winning

Investor Relations, Public Relations, Media Relations Social Media Strategists

WE Magazine for Women

“2014 Who’s Who Among

Women in Ecommerce”

World Class Magazine

“The Right Connections &

Relationships”

2015 Best in Business

Honor from National Association

of Professional Women

2013 New York

Excellence Award

The Confidence Factor for

Women in Leadership

Women of Distinction

2014 New York

Excellence Award

38

Best Investment Fund Marketer - USA Pristine Advisers is an Investor Relations, Public Relations and Media Relations firm assisting a variety of clients of all shapes, sizes, backgrounds and locations. Patricia Baronowski, President and Founder of Pristine Advisers, provides us with a unique overview of the company and its service offering.

Pristine Advisers manages the IR/PR/Media Relations for various funds in the closes-end space, as well as, ETFs, BDCs, REITs and MLPs. We not only monitor current investors, but we also seek out potentially new investors, analysts, brokers and media to post our clients in a positive light. Our goal is to communicate with the investment community to ensure they are satisfied and that their questions are answered and that they feel comfortable with management and their investments. When shareholders feel comfortable and that their concerns are tended to and their questions are answered and management is in touch with them quarterly at best – this goes a long way for ROI. Our high quality services are supplied to a wide variety of clients, including Closed-End Funds, Exchange-Traded Funds, Hedge Funds, Business Development Companies, Master Limited Partnerships, Restaurants, Mom-and-Pop Shops, Fortune 500 Companies, Extreme Sports Businesses, Authors, etc. We support clients around the world of all shapes and sizes. We’ve helped start-ups, mergers and major corporations with huge success. Many of the clients we have had for over 20 years and who have followed us across three different firms, which is a huge testament to the type of service and commitment we provide our clients. This service has been provided in this market for 29 years. During this time we have seen many market movements, and knowing how to position our clients; that market conditions move up and down; what triggers movements and how Funds or Companies can respond and react to this is vital to our success. As long as the Companies or Funds are proactive and managing their portfolios correctly then a down market could be a great buying opportunity for investors. Everyone wants to buy when prices are low and then sell when they are high. It is all a matter of reading the markets, knowing the Funds, communicating with investors and being proactive and ensuring shareholders are not left in the dark. To ensure that this is not the case and that our information is always up to date, we are continuously monitoring the news to ensure we are up to date on the global markets, investment strategies, etc. and that our clients are doing everything that is possible to ensure shareholders needs are met. Our years of experience in the business has helped to set us apart from our competitors, as it has helped us to gain a thorough knowledge of the clients we represent. Other key factors in ensuring our success include our training and knowledge in the market and the contacts we’ve established through the years. We have accumulated investors, analysts, brokers and media through the years and target a select group of people for our clients, who support us at our investor conferences, whereas some of our peers will simply invite vendors or investors who may be interested in Fortune 500 firms or other businesses and such and really not interested in clients at all. Ultimately all of these factors combine to provide the results which highlight our superior services and dedication to client support. In the past we have managed to increase media exposure for some of our clients by as much as 253%, share price by 18% and funds aver-age annual total return 19%. The future of our market is always evolving and changing, but this is part of what excites us. Working in such a challenging, adapting market is invigorating and ensures no two days are ever the same. I believe one of the changes that will be prominent moving forward is that many firms are hiring internal IR and/or PR people to assist them. Our approach sees us working with the internal IR/PR staff because we have the expertise and experience to support our clients, and do not need to outsource this.