The Denali Fund Announces Monthly Distributions

BOULDER, Colo.--(Business Wire)--
The Denali Fund Inc. (NYSE: DNY) announced today that its Board of
Directors has declared a monthly common stock distribution of $0.195
per share for the months of August, September and October, 2008. As
such, the August distribution will be payable August 29, 2008, to
holders of record on August 22, 2008; the September distribution will
be payable September 30, 2008, to holders of record as of September
23, 2008; and the October distribution will be payable October 31,
2008, to holders of record as of October 24, 2008.

The $0.195 per share monthly dividend is equivalent to 14.1% of
the Fund's per share market price and 12.5% of the Fund's most recent
net asset value of $18.70 per share, both on an annualized basis.
Management expects that the distributions paid for August, September
and October will consist of approximately 30% taxable net investment
income and 70% return of capital. However, this could change at any
time. A "return of capital" represents a return of a stockholder's
original investment in the Fund's shares and should not be confused
with a dividend yield. An IRS Form 1099-DIV will be sent to
stockholders indicating the final tax characteristic of the
distributions they received in 2008. The distributions may consist of
ordinary income, if any, long-term capital gains, if any, short-term
capital gains, if any, and return of capital, if any. To the extent
stockholders receive a return of capital they will be required to
adjust their cost basis by the same amount upon the sale of their Fund
shares. Stockholders should seek their own tax advice regarding the
reporting of income and the gain or loss on the sale of the Fund's
shares.

Although the Fund may indicate what it expects the tax
characteristics of its distributions to be, it is subject to change
depending on a number of factors, including market conditions
throughout the year and the magnitude of income and realized gains for
the year. Stockholders can expect to receive tax-reporting information
for distributions from either their brokers or from the Fund's
transfer agent indicating the exact composition per share of the
dividends and distributions received during the calendar year.
Stockholders should consult their tax advisor for proper tax treatment
of the Fund's distributions.

For more information on the Fund please visit us on the web at
www.thedenalifund.com.

Fund Administrative Services, LLC for
The Denali Fund Inc.
Nicole Murphey, 303-449-0426

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