However, while SPACs are a great low risk investment, they are almost certain to be a drag on relative performance when the market is zooming upward as it has since March 9, 2009. Another investment that we continue to like is the auction rate preferred stock (“ARPs”) issued by closed-end funds. These are low risk, securities that pay money market-like dividends. Since the auctions failed in 2008, they have been trading in a secondary market. The trick is to buy them at a discount to par and to wait for (or persuade) the issuer to provide liquidity at or close to par via redemption or otherwise. We are pleased to report that on February 3rd, Neuberger Berman Real Estate Securities Income Fund (“NRO”) announced that it will tender for all of its outstanding ARPs at 98% of par. This is one of our largest ARP positions. We paid about 85% of par for the NRO ARPs so we should soon be booking a nice realized gain on our investment. However, like SPACs, ARPs are almost totally uncorrelated to the stock market and their value tends to be relatively constant absent a liquidity event so they too have been a drag on the Fund’s performance. Rather than trying to time the market, we believe that our resources are better spent on implementing our investment philosophy, which has proven to provide a sustainable edge in generating good absolute and relative returns over the long term without undue risk to principal. It consists of smart disciplined investment selection and shareholder activism along with some diversification among asset classes to limit our downside risk. As we saw in the second half of 2010, this approach tends to underperform a raging bull market but we think it should lead to outperformance over the long term. We think the future looks bright for the Fund. We are continuing to see excellent values in closed-end funds trading at discounts from net asset value and other undervalued companies, many of which are attractive candidates for our activist style of investing. The moral of Aesop’s fable, The Tortoise and the Hare, i.e. a slow and steady turtle can beat a rabbit in a marathon, is still a valuable one. We can’t promise that our strategy will beat the market every day, every week, every month or even every year. In fact, we will almost certainly lag the market in times of, in the words of former Chairman of the Federal Reserve Board, Alan Greenspan’s, “irrational exuberance.” We recognize that many investors face a unique dilemma today. They are still traumatized from the financial meltdown in 2008 and are fearful of market exposure. Yet, the return on “safe” investments like treasury bills is negligible. In managing the Fund, we strive to provide investors with sustainable alpha, i.e., risk adjusted outperformance over the long term. Even though the markets have been on fire recently, risk is always present. While greed may be the order of the day, fear can raise its ugly head at any time. 5 Special Opportunities Fund, Inc.