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Understanding closed-end funds

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					       Understanding
           closed-end funds
                                         John Hancock closed-end funds


Closed-end funds Q&A
Q. What is a closed-end fund?
A. A closed-end fund is an investment company that issues a fixed number of shares
   through an initial public offering (IPO). The combined assets are professionally
   managed and contain a portfolio of securities. After the IPO, closed-end fund shares
   trade in the secondary market, either on an exchange or on the over-the-counter
   market, much like shares of a stock. The trading price of the fund’s shares is
   determined by its market price, not by the fund’s net asset value (NAV).

Q. What is the difference between a closed-end fund and an open-end fund?
A. Open-end funds continuously sell and redeem shares for investors. Closed-end
   funds sell a fixed number of shares once, in an IPO. Closed-end fund shares cannot
   be redeemed directly, and can only be sold in a secondary market, typically the
   Nasdaq or NYSE. Open-end fund share prices are determined by the fund’s NAV and
   are calculated at the end of each business day. Closed-end fund share prices fluctuate
   throughout the day, as they are driven by market price, which is determined by
   supply and demand on a stock exchange.

Q. What is the difference between a closed-end fund and an open-end fund
   that is closed?
A. Closed-end funds initially issue a fixed number of shares, which are then bought and
   sold in the secondary marketplace. Closed funds are open-end funds that no longer
   allow new investors into the fund. This often happens when assets become too large
   to manage.

Q. What is the difference between net asset value (NAV) and market price?
A. Per share NAV is the current value of all the fund’s assets (less liabilities), divided by
   the total number of shares outstanding. Market price is the price an investor pays or
   receives when they purchase or sell shares of a closed-end fund. Again, this price is
   determined by supply and demand for the closed-end fund on a stock exchange.

Q. What causes the market price of a closed-end fund to increase or decrease?
A. The market price of a closed-end fund may fluctuate based on supply and demand in
   the marketplace. There are many factors that determine the market price, including
   overall market perception of the fund’s underlying securities, market activity in
   specific regions or sectors in which the fund invests, interest rate moves, world news
   and events, tax legislation, news or issues relating to portfolio management, fund
   performance, net asset value and dividend and capital gain distributions.
Long-term benefits
Q. How can an investor purchase or sell closed-end fund shares?
A. Investors can purchase or sell closed-end fund shares in the secondary market, either on an exchange or on the over-the-
   counter market, like those of any individual stock. Investors are typically required to pay a brokerage fee for the purchase
   and sale of closed-end fund shares, much like those of a stock.

Q. What is investment leverage?
A. Investment leverage is borrowing assets to purchase additional securities. The expectation is that the borrowing costs will
   be lower than the earnings generated from the additional securities purchased with the leverage proceeds. This technique
   creates an opportunity for closed-end funds to generate additional income to common shareholders with the potential
   for greater yields and total return. Generating extra income can be achieved as long as the fund earns rates that are greater
   than the rate it is required to pay out.

  One form of investment leverage involves the issuance of preferred shares. The fund takes the proceeds from the issuance
  and invests in higher-yielding, dividend-paying securities as compared with the lower dividend payments it is required
  to pay its preferred shareholders. If the performance of the capital contributed by the preferred shares fails to cover its
  respective dividends, the value of the common shares may decrease and dividends on the common shares could be reduced.

Q. What does it mean when a fund trades at a discount or premium?
A. A premium occurs when the market price of a closed-end fund share is more than its NAV. Conversely, a discount occurs
   when the market price of a closed-end fund share is less than its NAV. Since investors receive capital gains and dividend
   distributions on a per share basis, purchasing closed-end fund shares at a discount presents a unique opportunity for
   investors to receive a higher yield on their investment. Investors also benefit from buying shares at a discount when
   purchasing a set number of shares, because their cost is lower. In addition, when investors have a set dollar amount to
   invest, they get more shares when they buy at a discount.



Key characteristics
   With so many investment choices in the market today, closed-end funds offer investors a unique investing opportunity
   unlike any other investment vehicle. The chart below compares the characteristics of closed-end funds with those of
   open-end mutual funds. There is no disputing that open-end funds have their own merits; however, closed-end funds
   offer investors the option to further diversify with a product unlike any other.

     Discount benefits

                                                   Higher yields based on distributions
                                                 Share Price                       Dividend                       Yield
                                                NAV of $10                          $1.00                        12.5%
    Investor A (with discount)
                                         20% discount = $8 per share

    Investor B (without discount)               $10 per share                       $1.00                        10.0%

                                                      Maximized purchasing power
                                                 Share Price              Total cost of $1,000 shares         Cost benefit
                                                NAV of $10                          $8,000                       $2,000
    Investor A (with discount)
                                         20% discount = $8 per share

    Investor B (without discount)               $10 per share                      $10,000

                                         Greater earning potential by obtaining additional shares
                                                 Share Price            Shares purchased with $10,000       Additional shares
                                                NAV of $10                          $1,250                        250
    Investor A (with discount)
                                         20% discount = $8 per share

    Investor B (without discount)               $10 per share                       $1,000
                                                         Closed-End Fund                                                       Open-End Fund


Asset base                      ■■   No redemption issues in a bear market                           ■■   Potentially high redemption levels in a bear market

                                ■■   Ability to be fully invested with little or no cash positions   ■■   Inability to invest in a large quantity of risky, less liquid
                                                                                                          securities due to cash maintenance requirements
                                ■■   Ability to invest in riskier, less liquid securities for
                                     potentially higher returns



Liquidity                       ■■   Orders are placed throughout the day at market price            ■■   Orders placed at end-of-day NAV

                                ■■   Purchase price is available at time of purchase                 ■■   Must wait for daily closing price for purchase price

                                ■■   Investor must buy and sell in the secondary market at           ■■   Investor can always redeem at NAV, less sales charge
                                     market price, less commissions



Opportunity to invest at        ■■   Opportunity to buy shares at a discount to NAV, plus            ■■   Shares are purchased at NAV with no discount, plus
“bargain” prices                     applicable commissions                                               applicable sales charge

                                ■■   Discount can potentially yield higher returns



Leverage potential              ■■   With a stable pool of assets, it is easier for closed-          ■■   Open-end funds have the ability to leverage, but with
                                     end funds to leverage that asset base and invest the                 fluctuating assets, it can be more difficult to borrow
                                     proceeds in potentially higher-yielding securities                   additional money



No purchase requirements        ■■   No initial or subsequent investment requirement                 ■■   Low initial and subsequent investment requirement




                                                            Ticker                                    Inception                 Distribution               Listed
John Hancock Closed-End Funds                                                        CUSIP
                                                           symbol                                        year                    schedule                exchange

Bank and Thrift Opportunity Fund                            BTO                  409735107                1994                   Quarterly                 NYSE


Income Securities Trust                                     JHS                  410123103                1973                   Quarterly                 NYSE


Investors Trust                                              JHI                 410142103                1971                   Quarterly                 NYSE


Patriot Premium Dividend Fund II                            PDT                  41013T105                1989                   Monthly                   NYSE


Preferred Income Fund                                       HPI                 41013W108                 2002                   Monthly                   NYSE


Preferred Income Fund II                                    HPF                  41013X106                2002                   Monthly                   NYSE


Preferred Income Fund III                                   HPS                  41021P103                2003                   Monthly                   NYSE


Tax-Advantaged Dividend Income Fund                         HTD                  41013V100                2004                   Monthly                   NYSE


Tax-Advantaged Global Shareholder Yield                     HTY                  41013P749                2007                   Quarterly                 NYSE
        Why John hAnCoCk Funds?

        For more than three decades,               A name you know and trust

        John Hancock Funds has been                When you invest with John Hancock Funds, you are investing with
                                                   one of the most recognized and respected names in the financial
        helping individual, corporate
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        and institutional clients reach
                                                   and institutions increase and protect wealth since 1862.
        their most important financial
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        goals. With so many fund
                                                   We offer equity, income, international and sector investment solutions
        companies to choose from,
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        why should you invest with us?             team approach to portfolio management and research, leveraging the
                                                   expertise of seasoned investment professionals.

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                                                   products you may need to build a solid financial foundation. We believe
                                                   in the value of advice and partner with financial professionals in a
                                                   commitment to help you reach your long-term investing goals.




   If you are interested in investing in any of the John Hancock closed-end funds, please contact your
   financial professional. For current fund information, including daily NAVs and market prices, or to
   request closed-end fund literature, call 1-800-843-0090 or visit our Web site at www.jhfunds.com.




Closed-end fund shares are not redeemable, but instead are traded in the secondary market and frequently trade at a discount to net
asset value. Specialized funds may carry additional risks.
NOT FDIC INSUrED. MAY LOSE VALUE. NO BANK gUArANTEE. NOT INSUrED BY ANY gOVErNMENT AgENCY.


                                          John Hancock Funds, LLC
                                          MEMBEr FINrA
                                          601 Congress Street n Boston, MA 02210-2805
                                          1-800-225-6020 n www.jhfunds.com                                                      rMS33 11/07

				
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Description: Open-end fund (LOF), full name is "Listed Open-Ended Fund". Is a listed open-end funds issue, investors can either purchase a specified network and the redemption of Fund shares can also be traded on an exchange of the Fund. But if the designated outlets investors purchase shares in the fund, you want to throw the Internet, need to go through some custody transfer procedures; Similarly, if the exchange line to buy shares in the fund, you want to redeem at a specified network, but also the custody transfer to go through certain formalities.