if the stock market is in a downward trend (it is), it seems to me that the NAV would go down regardless of the fund strategy, buy/hold versus div capture. i realize right now they are doing about 35% div capture and 65% buy/hold.
if i'm going from stock to stock on div capture, the NAV goes down because the market goes down. if i do a buy/hold, the NAV goes down because the market goes down.
i too wonder how they can keep paying the dividend with dividends earned. but they claim that is the case. i think it would be helpful for them to simply show us a list of the dividends recvd in 2008 (and the underlying stock symbol). i imagine they'll cite proprietary issues and can't do this.
the one thing that i wonder about is "special dividends". in a market that stays flat, a dividend is paid and the underlying stock will go down. then, it will likely recover that money by the time the next dividend is paid. then the cycle repeats.
in the case of a special dividend, the stock will go down after it is paid and will probably not recover to the pre special dividend price. it is possible but i think most would agree that the chance is remote and if it does it will take alot of time.
what i'd like to know is how much of the dividend income is generated from these special dividends. i see special dividends as return of capital. not dividends. catching a couple of these from time to time (and from the right companies) is okay. however, if mgmt is really using special dividends to support the div payout, i'd like that to stop. i'd rather take a lower yield and have them pay us real dividend income and not erode the NAV with alot of moves in and out for special dividends.