In an environment of difficult market conditions, closed-end funds delivered comparative solid performance for the 3 months ending June 30, 2002. Domestic equities delivered -8.8% and -8.3% average total returns based on market price and net asset value (NAV) performance, respectively. The category beat the S&P 500 Index by 5.0%, which delivered -13.4% for the same period. The difference is even greater when comparing one year performance with domestic equities posting -5.9% and -8.1% average total returns respectively, versus the S&P 500 Index which delivered -17.9% for the same period. Convertible closed-end funds led the equity sector during the second quarter with -7.0% and -6.7% for market price and NAV performance.

"Closed-end fund managers have not had to deal with net redemptions which plague the mutual fund industry during turbulent times," said Douglas Ober, President of the Closed-End Fund Association (CEFA). "When combined with the general value-investing discipline of closed-end equities, investors benefited."

The leading CEF investment sector was municipal funds, led by state municipal bonds which posted 7.3% and 4.6% average total returns based on market price and NAV, for the 3 month period ending June 30, 2002. "Who would have expected muni funds to produce equity-like returns of over 11% over the twelve months," said Brian Smith, Executive Director for CEFA. Many muni funds are leveraged (See Search List), a unique feature of the closed-end structure.

View Second Quarter 2002 Performance report .